[Senate Hearing 109-320]
[From the U.S. Government Publishing Office]
S. Hrg. 109-320, Pt. 7
Senate Hearings
Before the Committee on Appropriations
_______________________________________________________________________
Military Construction and Veterans Affairs,
and Related Agencies
Appropriations
Fiscal Year 2007
109th CONGRESS, SECOND SESSION
H.R. 5385
PART 7
DEPARTMENT OF DEFENSE
DEPARTMENT OF VETERANS AFFAIRS
Military Construction and Veterans Affairs, and Related Agencies, 2007
(H.R. 5385)--Part 7
S. Hrg. 109-320, Pt 7
MILITARY CONSTRUCTION AND VETERANS AFFAIRS, AND RELATED AGENCIES
APPROPRIATIONS FOR FISCAL YEAR 2007
=======================================================================
HEARINGS
before a
SUBCOMMITTEE OF THE
COMMITTEE ON APPROPRIATIONS UNITED STATES SENATE
ONE HUNDRED NINTH CONGRESS
SECOND SESSION
on
H.R. 5385
MAKING APPROPRIATIONS FOR MILITARY QUALITY OF LIFE FUNCTIONS OF THE
DEPARTMENT OF DEFENSE, MILITARY CONSTRUCTION, THE DEPARTMENT OF
VETERANS AFFAIRS, AND RELATED AGENCIES FOR THE FISCAL YEAR ENDING
SEPTEMBER 30, 2007, AND FOR OTHER PURPOSES
__________
PART 7
Department of Defense
Department of Veterans Affairs
__________
Printed for the use of the Committee on Appropriations
Available via the World Wide Web: http://www.gpoaccess.gov/congress/
index.html
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; (202) 512�091800
Fax: (202) 512�092250 Mail: Stop SSOP, Washington, DC 20402�090001
__________
COMMITTEE ON APPROPRIATIONS
THAD COCHRAN, Mississippi, Chairman
TED STEVENS, Alaska ROBERT C. BYRD, West Virginia
ARLEN SPECTER, Pennsylvania DANIEL K. INOUYE, Hawaii
PETE V. DOMENICI, New Mexico PATRICK J. LEAHY, Vermont
CHRISTOPHER S. BOND, Missouri TOM HARKIN, Iowa
MITCH McCONNELL, Kentucky BARBARA A. MIKULSKI, Maryland
CONRAD BURNS, Montana HARRY REID, Nevada
RICHARD C. SHELBY, Alabama HERB KOHL, Wisconsin
JUDD GREGG, New Hampshire PATTY MURRAY, Washington
ROBERT F. BENNETT, Utah BYRON L. DORGAN, North Dakota
LARRY CRAIG, Idaho DIANNE FEINSTEIN, California
KAY BAILEY HUTCHISON, Texas RICHARD J. DURBIN, Illinois
MIKE DeWINE, Ohio TIM JOHNSON, South Dakota
SAM BROWNBACK, Kansas MARY L. LANDRIEU, Louisiana
WAYNE ALLARD, Colorado
J. Keith Kennedy, Staff Director
Terrence E. Sauvain, Minority Staff Director
------
Subcommittee on Military Construction and Veterans Affairs, and Related
Agencies
KAY BAILEY HUTCHISON, Texas, Chairman
CONRAD BURNS, Montana DIANNE FEINSTEIN, California
LARRY CRAIG, Idaho DANIEL K. INOUYE, Hawaii
MIKE DeWINE, Ohio TIM JOHNSON, South Dakota
SAM BROWNBACK, Kansas MARY L. LANDRIEU, Louisiana
WAYNE ALLARD, Colorado ROBERT C. BYRD, West Virginia
MITCH McCONNELL, Kentucky PATTY MURRAY, Washington
THAD COCHRAN, Mississippi
(ex officio)
Professional Staff
Dennis Balkham
Sean Knowles
Christina Evans (Minority)
B.G. Wright (Minority)
Chad Schulken (Minority)
C O N T E N T S
----------
Wednesday, March 29, 2006
Page
Department of Veterans Affairs................................... 1
Tuesday, May 9, 2006
Department of Defense............................................ 57
MILITARY CONSTRUCTION AND VETERANS AFFAIRS, AND RELATED AGENCIES
APPROPRIATIONS FOR FISCAL YEAR 2007
----------
WEDNESDAY, MARCH 29, 2006
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
The subcommittee met at 2:35 p.m., in room SD-124, Dirksen
Senate Office Building, Hon. Kay Bailey Hutchison (chairman)
presiding.
Present: Senators Hutchison, Craig, Allard, Feinstein,
Johnson, Landrieu and Murray.
DEPARTMENT OF VETERANS AFFAIRS
STATEMENT OF HON. R. JAMES NICHOLSON, SECRETARY
ACCOMPANIED BY:
JONATHAN B. PERLIN, UNDER SECRETARY FOR HEALTH
DANIEL L. COOPER, UNDER SECRETARY FOR BENEFITS
WILLIAM F. TUERK, UNDER SECRETARY FOR MEMORIAL AFFAIRS
TIM S. McCLAIN, GENERAL COUNSEL
ROBERT J. HENKE, ASSISTANT SECRETARY FOR MANAGEMENT
statement of senator kay bailey hutchison
Senator Hutchison. The subcommittee will come to order. Our
hearing today, of course, is to review the fiscal year 2007
budget request for the Department of Veterans Affairs.
I'm very pleased to welcome the Secretary of Veterans
Affairs, Jim Nicholson; Under Secretary for Health, Jonathan
Perlin; Under Secretary for Benefits, Daniel Cooper; Under
Secretary for Memorial Affairs, William Tuerk; General Counsel,
Tim McClain; and Assistant Secretary for Management, Robert
Henke.
We are facing a time when our servicemen and women are
returning from the Global War on Terror in Iraq and
Afghanistan, and many of them are coming home wounded.
Sometimes it would be a loss of limb, sometimes a brain injury
or post-traumatic stress syndrome. The VA will have its hands
full for years to care for those who have defended our country.
Mr. Secretary, I want to say that you have demonstrated
leadership not only in the war on terror and coming forward
last year and saying, ``We need more money,'' working with us
to make that happen in the very best possible way. We
appreciate that forthrightness that you gave, and also what you
did during Hurricanes Katrina and Rita. When we look back on
the emergency planning for the Veterans Affairs, you really did
everything right. Under your watch, the VA did not lose a
patient, and I saw many of those evacuees, myself, in Houston.
And I want to say, especially, thank you to Dr. Perlin for your
real creativity not only for the planning for the hurricanes
but also the electronic health records, which really made a
huge difference for those veterans who were displaced so
quickly. They never lost a record. Everybody was ready to treat
them, it was seamless. And HealtheVet is a terrific system that
you are credited with, and we thank you for that.
Mr. Secretary, I think it's a wonderful news story that the
veterans healthcare system is now getting so much good
publicity, and the care is renowned to be among the best in the
country. And I know that also has caused problems, because now
more veterans, who wouldn't have come to the veterans system
before, now are coming. So, that is creating a bigger workload.
Certainly, the VA's budget request for this year is $80.6
billion in budget authority for fiscal year 2007, $42 billion
is mandatory programs, and discretionary is $38.5 billion. I
think this is a good budget. Most of the increases, however,
are based on increased collections and savings that rely on
enacting legislative proposals that are in your budget request,
including an annual enrollment fee of $250, a pharmacy
copayment increase to $15 for priority 7 and 8 veterans. And
without the proposed legislation, the increase in the medical
services budget would be $2.7 billion, or 8.7 percent. So, we
want to work with you, but I think you know that the committee
is not supportive of the revenue requirements in the budget.
So, we want to talk with you, work with you to try to see how
we can address these issues, and perhaps look for some other
options for revenue.
I also want to mention the Gulf War Illness research, which
is certainly a great area of interest to the committee. And I
note that your research budget is 3.16 percent below last
year's level, so I will want to hear how you plan to do Gulf
War Illness research and the other prosthetic research that I
know you're also looking at doing with that lower budget.
Last year, the subcommittee directed the VA to consolidate
its IT project with procurement, hardware, software, under one
organization overseen by the Office of Information Technology.
And we would like to have an update on how that reorganization
is going. There is also a reduced request for the major
construction account, which I hope that you will also be able
to address.
So, overall, I think, Mr. Secretary, we have a budget with
which we'll be able to work on and we look forward to working
with you. And we do appreciate the leadership that you have
shown at the Department of Veterans Affairs.
With that, I would like to ask my very wonderful colleague
and friend--I started to say my ranking member, but I feel like
she's one of our most productive and equal members of our
committee. And so, I'll call on my colleague Senator Feinstein.
statement of senator dianne feinstein
Senator Feinstein. Thank you very much, Madam Chairman.
And welcome, Mr. Secretary and gentlemen. I wish I could
say ``ladies and gentlemen.'' But at least I can say
``gentlemen.'' Welcome.
I sincerely hope this will be a smoother year than last
year, and that we do not have the repeat of the shortfalls that
we saw last year. As you all well know, California's home to
the largest number of veterans in America. And I think Texas is
either second or third. Certainly,--second?--and then, I guess,
Florida is third. So, this is a major concern to both the
chairman and to myself.
While I believe the fiscal year 2007 budget is a good
starting point from which to formulate the appropriations bill,
I have some concerns in some areas.
The first, and most glaring, are the fee proposals
contained in the budget request. This budget assumes savings
and fee collections of over $795 million by doubling
prescription drug copayments and imposing a $250 enrollment fee
on middle-income veterans, many of whom are struggling to make
ends meet on incomes as low as $26,903 a year. More than
200,000 veterans would be adversely affected by these
proposals. I believe they are unrealistic assumptions. Congress
has rejected them in the past. And I, for one, hope we will
continue to reject them.
Additionally, I remain concerned by the savings the budget
has assumed regarding efficiencies. This year, the President's
budget request contains over a billion in anticipated resource
savings associated with so-called efficiencies. As you know,
last year this subcommittee directed the VA to provide detailed
justification for management efficiencies. It remains clear, to
this day, what those efficiencies actually are. I understand
that this year the VA has termed these savings ``clinical
efficiencies'' rather than ``management efficiencies.'' Mr.
Secretary, I hope in your testimony you will shed some light on
the difference between these two and exactly how you're going
to achieve these efficiencies, or savings, without cutting
services.
I'm also very concerned about the special needs of those
veterans returning from combat in Iraq and Afghanistan. Roughly
505,000 Iraq and Afghanistan veterans have separated from
military service following their tour of combat. The latest
figures show the VA having treated over 144,000 of these for a
variety of healthcare problems. The VA has estimated that it
would treat 110,556 of these veterans in 2006. However,
according to VA statistics, through January the VA had already
treated almost 75,000. And, at that time, there were still 8
months left to go in the fiscal year. In 2007, the VA is
estimated it will treat 109,191 Iraq and Afghanistan veterans.
This seems somewhat low, considering the trend that's upward.
Now, I know, Mr. Secretary, these are tough issues, but I
hope you'll address them. And, if you don't, we certainly will
in our questions. But I want to welcome you, and I want to
thank all of you for the service to our country.
Thanks, Madam Chairman.
Senator Hutchison. Thank you. In order of arrival--Senator
Johnson.
Senator Mitch McConnell has submitted a statement to be
entered into the record.
[The statement follows:]
Prepared Statement of Senator Mitch McConnell
Senator McConnell will continue to work with the Kentucky
Congressional delegation to advocate vigorously on behalf of the
Commonwealth's veterans.
American bravery and courage have been demonstrated in the heroic
efforts of our Nation's veterans since the founding of our country.
That rich tradition continues in the stalwart efforts of today's
generation of American soldiers. In the continued struggle to rid the
world of terrorism, our fighting men and women have time and again
demonstrated their willingness to stand guard against the enemy and
defend our way of life. This protection has come at a great cost,
however, with over 2,600 soldiers having paid the ultimate price for
our freedom. Furthermore, many more soldiers have also sacrificed of
themselves, and as a result, bear the lasting scars--both physical and
mental.
As the nearly 18,000 wounded soldiers who have bravely served our
country in Iraq and Afghanistan return home, it is important that they
receive the first-rate medical care they need. These soldiers--many
from Kentucky--will be dependent on the Department of Veterans Affairs
(VA) to provide them with the proper care.
The VA's CARES Stage I Summary Report for Louisville points out
that there are over 117,000 enrolled veterans living within the
Northern Market of VISN 9--an area that encompasses most of Central and
Eastern Kentucky. Unfortunately, the report also details that only 61.6
percent of those enrolled veterans, many living in Kentucky, have a VA
primary care facility that is readily accessible to them. This is a
full eight percentage points lower than the threshold the VA has deemed
acceptable. Given this fact, and that there are nearly 400,000 veterans
living in Kentucky, it is troubling that the VA has not requested
funding for construction of new veterans' healthcare facilities for any
community within the Commonwealth for the next fiscal year.
As we begin to examine the issues facing our Nation's veterans in
the upcoming year, I will continue to work with my colleagues from
Kentucky here in Congress to advocate vigorously on behalf of the
Commonwealth's noble veterans. All of us are interested in ensuring
that the VA follows through with its proposals to create several new
facilities throughout the State.
STATEMENT OF SENATOR TIM JOHNSON
Senator Johnson. Well, thank you, Madam Chairman. Welcome,
Secretary Nicholson.
I have just come from South Dakota, where we had an
interesting roundtable discussion with returning Afghan and
Iraq veterans, with a particular focus on PTSD and other
emotional mental health issues, and I look forward to your
testimony in that regard.
In order to expedite things this morning, Madam Chairman, I
will submit an opening statement for the committee record, and
I look forward to the testimony of the Secretary.
[The statement follows:]
Prepared Statement of Senator Tim Johnson
I would like to thank Chairwoman Hutchison and Ranking Member
Feinstein for calling today's hearing on the fiscal year 2007 budget
for the Veterans Administration (VA). Your continued efforts on behalf
of our Nation's veterans are greatly appreciated, and I look forward to
working with you both as we move forward with this year's VA budget.
I would also like to thank Secretary Nicholson for appearing before
the Subcommittee, and for your willingness to serve. As Secretary of
the VA, you have a very difficult job and an incredibly important
responsibility to our veterans.
Ensuring that our Nation's veterans receive the benefits they have
earned and deserve is one of my most important duties as a Senator, and
one I do not take lightly. While the President's fiscal year 2007
budget request is a step in the right direction, I am concerned we will
fail to meet our obligations unless additional money is appropriated
above the level requested by the President.
Recently, I had the privilege of meeting with a number of veterans
in South Dakota who have returned from serving in Iraq and Afghanistan.
One young man shared with me the difficulties he has had readjusting to
civilian life following his tour of duty. He was currently attending
college in South Dakota after serving in Iraq with the 82nd Airborne,
and had been waiting months for an appointment with the VA. He required
treatment because he was experiencing stress-related problems following
his deployment.
Even though he wasn't able to schedule an appointment in a timely
fashion, he wasn't resentful. Rather, I was struck by his positive
attitude. Like many soldiers, he was proud of his service in Iraq and
thankful for the opportunity to serve his country. In fact, he said it
made him a better person.
We are all proud of our men and women in uniform, and we must do
all we can to ensure that those returning from combat zones are getting
the help they need. In addition to making certain that the VA has
adequate funding for mental health services and readjustment
counseling, we must also guarantee that the budget is properly funded
each fiscal year and not subjected to emergency supplemental
appropriations.
As you are well aware, the primary reason for the budget shortfall
last year was because the VA underestimated the projected costs of
caring for soldiers returning from Iraq and Afghanistan. In my opinion,
the funding crisis last summer underscored the necessity of mandatory
funding. That is why I introduced S. 331, the Assured Funding for
Veterans Health Care Act of 2005. I firmly believe the VA budget cannot
be subjected to the whims of discretionary spending, and the only
solution to this problem is to support my bipartisan mandatory funding
legislation.
In addition to new veterans enrolling in the VA, we must also
remember those who have served our country in past conflicts. Often
times, these veterans rely upon the VA as their only source of health
care. That is why I am deeply concerned by the Bush Administration's
continued insistence on implementing annual enrollment fees and
increased prescription drug co-payments for our Priority 7 and 8
veterans.
These fees are designed to generate revenue in order to help offset
VA expenditures. However, some veterans may be forced to seek health
care elsewhere because they cannot afford either the annual enrollment
fees or the increased co-payment costs. Rather than relying on budget
proposals aimed at driving veterans out of the VA in order to save
money, we should focus our efforts on providing adequate funding to
ensure all those who have defended our country receive the health care
they have earned and deserve.
Without question, we are facing tough budget choices this year.
However, if we are serious about our national security, and recruiting
the best and brightest to defend our country, we must make honor our
commitment to our Nation's veterans.
Once again, thank you Madam Chairwoman for calling today's hearing.
I look forward to working with my colleagues on the Subcommittee as we
begin consideration of the fiscal year 2007 Military Construction and
Veterans' Affairs Appropriations bill.
Senator Hutchison. Thank you very much.
Senator Allard.
STATEMENT OF SENATOR WAYNE ALLARD
Senator Allard. Madam Chairman, thank you. Thank you
specifically for holding this hearing. It's a necessary
hearing, because we are in the appropriation process, and I'm
looking forward to hearing from the witnesses today before the
committee.
And I would like to especially welcome a good friend of
mine, and a fellow Coloradoan, the Secretary of the Veterans
Administration, Secretary Nicholson. Jim, it's good to see you
here, and thank you.
Clearly, this committee has many new challenges before us
this year. In addition to the roles of veterans from World War
II, Korea, Vietnam, and Desert Storm that the VA already cares
for, the number of men and women injured while performing their
duties in Iraq and Afghanistan grows daily and will only add
continued stress to the Veterans Health Administration. Now,
while these needs increase, the United States also faces a
challenge in reining in Federal spending and reducing our
Federal debt over the next few years. This is a precarious
balancing act that must always focus on answering the call for
those men and women who have served their country courageously.
And, Mr. Secretary, I just look forward to discussing these
issues with you further today.
And, with that, I'd like to, again, reiterate my thanks for
appearing in front of us today, and look forward to your
testimony.
And thank you, Madam Chairman.
Senator Hutchison. Thank you, Senator Allard.
Senator Murray.
STATEMENT OF SENATOR PATTY MURRAY
Senator Murray. Thank you very much, Chairman Hutchison and
Ranking Member Feinstein, for holding today's hearing.
Secretary Nicholson, it's good to see you again before one of
our committees.
And I just want to say, before I do my opening statement,
that I want to just thank Congressman Lane Evans, who announced
his retirement yesterday, for his tremendous service to all
veterans. He owes--we all owe him a debt of gratitude for the
tremendous job he's done, and we will miss him as a Member of
Congress. And I know many people here share that sentiment with
me.
Madam Chairman, I do want to start with the good news in
this budget proposal. After years of seeing inadequate budgets
in a massive shortfall, last year we finally, I think, have a
decent budget proposal for VA healthcare from this
administration, and I want to commend you, Secretary Nicholson,
for the focus you give to the wellness initiatives in your
budget.
But, overall, I have to say, I am still very concerned that
the President's fiscal year 2007 budget doesn't fix the funding
problems and is built around denying care instead of meeting
the real needs. It seems to me this budget takes one step
forward by providing a good number overall for VA healthcare,
but takes two steps backwards in limiting access and not being
based on real needs.
This budget plan actually locks the hospital doors to 1.1
million deserving veterans, and will keep another 200,000
veterans from accessing the VA, and that is on top of the
260,000 veterans that were denied access last fiscal year. So,
while the bottom-line number looks good, how you get there is
troubling.
The Bush administration, as Senator Feinstein mentioned, is
imposing new fees and copayments and blocking access for
veterans to reach that funding number, and I just think that's
wrong.
I know that many times in a budget we rob Peter to pay
Paul, but in this case what we're actually doing is denying
care to 1.1 million veterans to provide care for others. And,
to me, that's just morally wrong. And that is on top of the
VA's efforts to cut back on outreach to 25 million veterans, of
which only 5 million currently access care.
I'm very concerned about the lack of outreach, that it is
keeping many of our veterans who have service-related injuries
out of the VA, and it's especially troubling when many of those
veterans have illnesses specific to their service, like
veterans who suffer from the impacts of Agent Orange or Gulf
War syndrome.
We all know that when veterans signed up to serve, they
were promised healthcare. There wasn't any asterisk. There was
no fine print saying ``exclusions apply.'' We made a promise to
every veteran, and we need to keep that for every veteran.
And I'm also very concerned about the other step backward I
see, and that this budget is still not based on actual demands
so that we can know what we need to see, in terms of numbers,
for fiscal 2007. Everyone in this committee remembers what
happened last year with the tremendous shortfall, and we could
be setting ourselves up again for the same kind of shortfall if
we don't have a budget that's based on real numbers. Now, I
will recognize that the VA is making progress. And I want to
commend Secretary Nicholson for that. He has told us that he's
been asking for discharge numbers from the Department of
Defense, and, under the law that we passed last year, he is
meeting with us quarterly to review those numbers. And I really
appreciate that.
But I am concerned that the VA's model still leaves out
some very critical factors that will impact a number of
veterans. We continue to underestimate the number of veterans
from Iraq and Afghanistan. This--the model does not account for
the many seniors who are today being steered into the VA when
they seek access to the new Medicare drug program. This budget
doesn't take into consideration the influx of Vietnam veterans,
who are now, as they age, increasing their need to have
healthcare and are accessing the VA system for the first time.
It doesn't account for all the veterans who are today in this
country losing their employer-based healthcare and are, for the
first time, turning to the VA for care. And, probably most
importantly, the VA may give the VISNs adequate funds to
provide care, but then it doesn't budget for various programs
that they're mandated to enact, like increased mental health
care. VA should take these programmatic efforts into account
when they do their budgeting to ensure that we do not face any
shortfalls.
So, Madam Chairman, for these reasons, I think we still
don't have an accurate model, and that is really disconcerting
to me. Like many of my colleagues, I spent the March recess
going out, talking to a number of veterans, and I talked to a
representative from the Washington State Department of Veterans
Affairs who told me that they had just completed a voluntary
survey of Guard members in Washington State who recently
separated after serving in Iraq and Afghanistan. And of the
5,300 surveys they sent out, 1,700 responded, 370 of them were
still unemployed since separation. That is 22 percent of them.
And 416 said they were underemployed. That's 46 percent of our
Guard members who are unemployed or underemployed. Veterans
Service officers have told me about veterans coming back from
Iraq and Afghanistan who were able to get an initial
appointment with the VA within 1 to 3 months upon their return,
but then they had to wait 6 months for a consultation, and
another 7 months for surgery. So, it is taking our veterans
still today over a year before they're getting the care that
they are seeking from the VA.
So, Madam Chairman, I will be looking closely at these
numbers and to the Secretary's response today, but our veterans
and our VA staff, as I have said many times, deserve to have a
budget that is based on real numbers and on real demand, and
not on gimmicks and fees that are designed to limit care.
Thank you very much.
Senator Hutchison. Thank you, Senator Murray.
Senator Landrieu, did you have an opening statement?
Senator Landrieu. Madam Chair, I will submit the statement
for the record. I'd like to save my time for some questions on
some specific matters. So, thank you very much.
[The statement follows:]
Prepared Statement of Senator Mary L. Landrieu
Madame Chairman, Senator Feinstein, thank you for calling the
hearing today to discuss the Veterans Affairs fiscal year 2007 budget
submission. I would also like to thank Secretary Nicholson for joining
us today and for answering any questions this Subcommittee may have
regarding the VA's fiscal year 2007 budget submission.
When Americans put on military uniforms and go to the front line,
our Nation makes a long term promise to care for them during their term
of service and long after the battle is over. Unfortunately, over the
years our government has not kept its promise to our Nation's veterans.
Over the past years the Veterans Administration has seen an
overwhelming increase in enrollees, while support for medical services
and benefits has barely increased--not nearly enough to keep pace with
increased need and demand. And, as we all know, some veterans are not
allowed to enroll in the VA health care system at all.
Each of us has a responsibility to ensure that the VA health care
and benefits system receives full authorized funding, and do so without
increasing the out-of-pocket fees paid by veterans. We all have an
obligation to the men and women who serve our Nation, and we must
ensure that the Veterans Administration receives the support it so
desperately needs to meet these goals.
While the VA's fiscal year 2007 request, shows an increase, but
there are a number of red flags raised. In particular, a few areas for
concern are: the proposed increase in prescription co-payment,
establishment of a $250 enrollment fee, mental health, State War
Veterans Homes, burial benefits, and blinded veterans care.
As of this month we have more than 17,000 wounded military men and
women who have earned Purple Hearts in Operation Iraqi Freedom. Coupled
with those who have been wounded in Afghanistan we could see over
21,000 combat wounded by the end of the year. The physical wounds
sustained by our soldiers heal, however, there is mounting evidence
that demonstrates for many of our veterans, the injuries of war never
end.
I would like to commend the VA on setting aside $3.2 billion in the
fiscal year 2007 discretionary funding request for mental health care.
While today's soldier sees an increased chance of survival due to
advances in things such as Kevlar body armor, mental health is not
given the proper attention it requires.
Mental health issues largely manifest themselves in the form of
Post Traumatic Stress Disorder (PTSD) which touches both the active
duty as well as the citizen-soldiers of the National Guard and
Reserves. These brave patriots who fought for this country's ideals
were raised in communities to which they will return to seek comfort
and healing. Because of the silently devastating effects of PTSD,
family members, friends, and members of the community may never know
the extent of the damage caused by a soldier's experience in the war.
If we are not vigilant and continue to seek solutions at the VA
level regarding mental health issues, veterans returning from war will
potentially be under siege for the rest of their lives.
My home State of Louisiana is proud to operate and maintain three
war veteran's homes in Jackson, Monroe, and Jennings. These homes have
been innovative and important to the long term care of many veterans
that live in these three distinct parts of the State. In order to
preserve the fiscal healthcare of these tenants it is critical that we
increase VA per diem payments to State Veterans Homes. VA per diem
payments are authorized to cover up to 50 percent of the average daily
cost of care, the current rate ($63.40 for skilled nursing care) covers
less than 30 percent of that cost. As the number of veterans health
care needs increase the Federal Government must meet its responsibility
to provide the best resources to our veterans.
The per diem program needs protection from attempts to compromise
its future. Congress thwarted an attempt last year by the
Administration to severely restrict per diem payments which, if
enacted, would have cut per diem payments for up to 70 percent of
veterans in State Homes.
There are a range of concerns regarding blinded veterans that
include issues like lengthy delays in admissions at Blind
Rehabilitation Centers (BRC's) to the expansion of Blind Rehabilitative
Outpatient Services (BRO's). Veterans who have lost their vision
deserve first class treatment and a commitment by the VA to address the
issues which will lighten the heavy burden they will endure for a
lifetime.
As with other areas that need improvement, the goal for the VA
should be to deliver the highest quality of care in a timely manner.
Unfortunately, goals often fall short from 400,000 people in a logjam
with claims pending at the Board of Veterans Appeals to blinded
veterans waiting an average of close to 19 weeks to enter one of ten
BRC's. This rehabilitation is essential to assisting blinded veterans
in adjusting to their blindness. We must do better.
Madame Chairman, thank you for you and the ranking member's
leadership and I look forward to the remarks from our guest.
STATEMENT OF R. JAMES NICHOLSON
Senator Hutchison. Secretary Nicholson, welcome.
Secretary Nicholson. Thank you, Madam Chairman, members of
the committee. I have a written statement that I would also
like to submit to the committee to be entered into the record.
Senator Hutchison. Without objection.
Secretary Nicholson. You know, as Secretary, it's a great
privilege, and responsibility, of course, to lead the
Department of Veterans Affairs.
Earlier this year, President Bush announced a landmark
budget for the Department of Veterans Affairs, a budget of
$80.6 billion. That's truly historic in its scope of service to
veterans.
Behind the figures is a great story, one of America's truly
good-news stories. And I'd be remiss, I think, if I didn't
recount one of the best news stories, and one of the least
known, of 2005, although, gratefully, you did mention it, Madam
Chairman, and that is the heroic efforts of the VA employees
during Hurricanes Katrina and Rita. Not only did our staffs
evacuate several hundred patients to other hospitals out of the
Gulf Coast area quickly and efficiently, they did so at great
personal risk and considerable personal loss. One woman, who is
a nurse, caught up with, in a hospital in Houston, where we had
relocated many of her patients off of her ward at the New
Orleans Hospital, said she could see her house during the 4
days they were in there, before we finally got them evacuated,
and all she could see was the roof and the chimney. And she
didn't know the disposition of her own family, but she stayed
right with her patients, and then relocated with her patients,
got on an airplane, actually, and didn't know where she was
going to end up. And that was--that's quite typical of scores
of VA health caregivers in that great catastrophe.
And, Madam Chairman, the citizens of the great State of
Texas opened their hearts, as well, to our veterans that we
relocated there, and their health caregivers, welcomed them to
cities like Houston and San Antonio in their time of need, and
Dallas.
The DeBakey VA Medical Center provided much-needed care and
comfort to all of the displaced citizen soldiers moved there,
that were affected by the hurricane, and they did so in true
Texas style. They were made to feel at home. And we are very
grateful to all of those who made that possible.
It's also a fact that the VA knows how to protect our
veterans' vital health information against this kind of
catastrophic event that swept over the Gulf Coast region.
Because veterans healthcare records are electronic, no matter
where our New Orleans veterans were eventually relocated, their
complete health records were available for them, and for their
givers, in an uninterrupted manner.
Following a decade-long healthcare transformation, the VA
is now at the forefront of America's healthcare industry. And
that's not just a proud Secretary saying that, but, more
importantly, it's being said by a host of organizations within
and outside of the healthcare community.
Let me mention just a few examples. The Journal of American
Medical Association has applauded VA's dedication to patient
safety. Since you're sitting down, I will say even the New York
Times recently characterized the VA as a model for our Nation.
And just recently--I think it was the week before last--the
``NBC Nightly News'' aired a story on the VA that described our
healthcare system as, quote, ``the envy of healthcare
administrators and a model for healthcare nationwide,'' end of
quote.
Our veterans--these are the people that really count to us,
the people that we take care of--they rank our care a full 10
percentage points above their counterparts in the private
sector. For the sixth consecutive year, the American Customer
Satisfaction Index reports that veterans are more satisfied
with their healthcare than any other patients in America.
Because our first-rate, high-quality healthcare--because of
that, veterans are coming to us in ever-greater numbers. Fully
7.6 million veterans are now enrolled for our care. And this
year we expect to see approximately 5.4 million of them. Last
year, we had 55 million patient encounters in our system.
Madam Chairman, President Bush, in his 2007 budget proposal
for the Department of Veterans Affairs, is fulfilling his
promise to our veterans with a strong budget that respects
their service to our country and takes a significant step
toward redeeming America's debt for our heroes. The President's
total request is for $80.6 billion. This is an increase of 12.2
percent over last year's record amount. It is $8.8 billion
above the level of last year. This budget contains the largest
dollar increase in discretionary funding for the VA ever
requested by a President.
Madam Chairman, our written statement presents a detailed
description of the President's proposal for 2007. But I would
like to take a few moments to highlight several of the key
components of this historic budget.
Let's start with veterans healthcare. During 2007, as I
said, we expect to treat approximately 5.4 million patients,
including more than 109,000 combat veterans who served in
Operation Enduring Freedom and Operation Iraqi Freedom. The 3.8
million veteran patients in priorities 1 through 6 will
comprise 72 percent of our total patient population in fiscal
year 2007. This will be an increase of 2.1 percent in the
number of patients in this core group, and will represent the
fourth consecutive year during which those veterans who count
on us the most will increase as a percentage of all patients
treated.
The President's 2007 budget request includes our funding
request for the three medical-care appropriations: $27.5
billion for medical services, including $2.8 billion in
collections; $3.2 billion for medical administration; and $3.6
billion for medical facilities. The total proposed budgetary
resources of $34.3 billion for the medical-care program
represent an increase of 11.3 percent, or $3.5 billion over the
level for last year, and it is 69.1 percent higher than the
funding available at the beginning of the Bush administration.
Madam Chairman, I want to emphasize VA's commitment to
pursue the Gulf War Illness research through our new $15
million a year research partnership over the next 4 years with
the University of Texas Southwestern Medical School. Our Under
Secretary for Health, Dr. Jonathan Perlin, will be joining you
in Dallas soon, with other members of our staff, to discuss
this newest avenue of investigation into what is certainly a
pressing healthcare issue, a consistent, persistent, pressing
issue for our Gulf War veterans, and for their families.
Madam Chairman, the VA is focused on delivering timely,
accurate, and consistent benefits to veterans, and their
families, as well. The volume of claims receipts has grown
substantially during the last few years, and is now the highest
that it's been in 15 years as we received over 788,000 claims
during fiscal year--or during calendar year 2005, last year.
This trend is expected, most assuredly, to continue. We are
projecting the receipt of over 910,000 compensation and pension
claims in 2006, and nearly as many in 2007.
One of the key drivers of new claims activity is the
increase in size of the Active Duty military force, now
including reservists and National Guard members who have been
called to Active Duty to support Operation Enduring Freedom and
Operation Iraqi Freedom. Another is the aging of our veteran
population. This has led to a sizable growth in the number of
new claims, and we expect this pattern to continue.
A natural outcome of this increasing claims workload is
growth in our mandatory spending accounts, which are growing
even faster than VA's discretionary budget. We estimate that
mandatory spending will increase by 14.5 percent, to over $42
billion, from an estimated fiscal year 2006 spending level of
$36.7 billion.
Regarding burials, our veterans are leaving this life at an
ever-increasing pace. In fact, 1,800 a day now pass away.
Buglers will play Taps for more than 107,000 veterans in our
national cemeteries in 2007. That is a 5.4 percent increase
over the 2006 estimate, and 15 percent more than the number of
interments in 2005.
The President's 2007 budget request for the VA includes
$160.7 million in operations and maintenance funding for the
National Cemetery Administration. This represents an increase
of $11.1 million, or 7.4 percent, over the estimate for last
year.
We will expand access to our burial program by increasing
the percent of veterans served by a burial option in a national
or State veterans cemetery within 75 miles of their residence,
to 83.4 percent in 2007. This is an increase of 6.7 percent
over last year. Our plan is for the biggest expansion of the
national cemetery system since the Civil war. And we are on
track.
PREPARED STATEMENT
Madam Chairman, I started out my testimony by saying that
this budget is historic, that this is a landmark proposal of
funding unmatched by any previous VA budget ever. And I also
said that VA's 235,000 employees are doing a terrific job
throughout our country in taking care of our veterans. Veterans
don't seek the spotlight of approval, so, as Secretary of
Veterans Affairs, it's my privilege to lead our national
applause in grateful thanks for every gift our veterans have
given us. This proposed budget for VA is President Bush's
appreciation for them, our heroes.
Thank you, Madam Chairman.
[The statement follows:]
Prepared Statement of R. James Nicholson
Madam Chairman and members of the Committee, good afternoon. I am
pleased to be here today to present the President's 2007 budget
proposal for the Department of Veterans Affairs (VA). The request
totals $80.6 billion--$42.1 billion for entitlement programs and $38.5
billion for discretionary programs. The total request is $8.8 billion,
or 12.2 percent, above the level for 2006. This budget contains the
largest increase in discretionary funding for VA ever requested by a
President.
With the resources requested for VA in the 2007 budget, we will be
able to strengthen even further our position as the Nation's leader in
delivering accessible, high-quality health care that sets the national
benchmark for excellence. Whether compared to other Federal health
programs or private health plans, the quality of VA health care is
unsurpassed. In addition, this budget will allow the Department to
maintain its focus on the timeliness and accuracy of claims processing,
and to expand access to national and State veterans' cemeteries.
As an integral component of our 2007 goals, we will continue to
work closely with the Department of Defense (DOD) to fulfill our
priority that service members' transition from active duty to civilian
life is as seamless as possible.
Ensuring a Seamless Transition from Active Military Service to Civilian
Life
The President's 2007 budget request provides the resources
necessary to help ensure that service members' transition from active
duty military status to civilian life is as smooth and seamless as
possible. Last year through our aggressive outreach programs, VA
conducted nearly 8,200 briefings attended by over 326,000 separating
service members and returning Reserve and National Guard members. We
will continue to stress the importance of an informed and hassle-free
transition for all of our forces coming off of active duty, and their
families, and especially for those who have been injured.
If active duty service members, Reservists, and members of the
National Guard served in a theater of combat operations, they are
eligible for cost-free VA health care and nursing home care for a
period of 2 years after their release from active military service
provided that the care is for an illness potentially related to their
combat service. VA has already facilitated transfers from military
medical facilities to VA medical centers several thousand injured
service members returning from Operation Enduring Freedom and Operation
Iraqi Freedom.
There are many other initiatives underway that are aimed at easing
service members' transition from active duty military status to
civilian life. Within the last year, VA hired an additional 50 veterans
of Operation Enduring Freedom and Operation Iraqi Freedom to enhance
outreach services to veterans returning from Afghanistan and Iraq
through our Vet Centers. They joined our corps of Vet Center outreach
counselors hired earlier by the Department to brief servicemen and
women about VA benefits and services available to them and their family
members. They also encourage new veterans to use their local Vet Center
as a point of entry to VA and its services. Our outreach counselors
visit military installations, coordinate with military family
assistance centers, and conduct one-on-one interviews with returning
veterans and their families.
Last year VA signed a memorandum of agreement with Walter Reed Army
Medical Center to give severely injured service members practical help
in finding civilian jobs. Under this agreement, VA offers vocational
training and temporary jobs at our headquarters in Washington, DC to
service members recovering at the Army facility from traumatic
injuries.
VA and DOD are working together to establish a cooperative
separation exam process so that separating service members only need to
have one medical exam that meets both military service separation
requirements and VA's disability compensation requirements.
Separating military personnel receive enhanced services through the
Benefits Delivery at Discharge (BDD) program. This program enables
separating service members to file disability compensation claims with
VA staff at military bases, complete physical exams, and have their
claims evaluated before, or closely following, their military
separation. With the assistance of VA staff stationed at 140 military
installations around the Nation as well as in Korea and Germany,
service members can begin the VA disability compensation application
process 180 days prior to separation. These applications are now
processed at two locations to improve efficiency and the consistency of
our claims decisions. In addition, our employees conduct transition
assistance briefings in Germany, Italy, Korea, England, Japan, and
Spain.
MEDICAL CARE
The President's 2007 request includes total budgetary resources of
$34.3 billion for the medical care program, an increase of 11.3 percent
(or $3.5 billion) over the level for 2006 and 69.1 percent higher than
the funding available at the beginning of the Bush Administration. The
2007 budget reflects the largest dollar increase for VA medical care
ever requested by a President and includes our funding request for the
three medical care appropriations--medical services ($27.5 billion,
including $2.8 billion in collections); medical administration ($3.2
billion); and medical facilities ($3.6 billion).
The cornerstone of our medical care budget is providing care for
veterans who need us the most--veterans with service-connected
disabilities; those with lower incomes; and veterans with special
health care needs. A key element of this effort is to make sure every
seriously injured or ill serviceman or woman returning from combat in
Operation Enduring Freedom and Operation Iraqi Freedom receives
priority consideration and treatment.
Initiatives
The 2007 budget includes two provisions that, if enacted, will be
instrumental in helping VA meet our primary goal of providing health
care to those who need our medical services the most. The first
provision is to implement an annual enrollment fee of $250 and the
second is to increase the pharmacy co-payment from $8 to $15 for a 30-
day supply of drugs. Both of these provisions apply only to Priority 7
and 8 veterans who have no compensable service-connected disabilities
and do have the financial means to contribute modestly to the cost of
their care. Priority 7 and 8 veterans typically have other alternatives
for addressing their medical care costs, including third-party health
insurance coverage and Medicare, and were not eligible to receive VA
medical care at all or only on a case-by-case space available basis
until 1999 when new authority allowed VA to enroll them in any year
that resource levels permitted.
As you know, these two initiatives are not new, and I recognize
that Congress has not enacted them in the past. However, we are
reintroducing them because I believe they are justifiable, fair, and
reasonable policies. They are entirely consistent with the priority
health care structure enacted by Congress several years ago, and would
more closely align VA's fees and co-payments with other public and
private health care plans. The President's budget includes similar,
small incremental fee increases for DOD retirees under age 65 in the
TRICARE system. The VA fees would allow us to focus our resources on
patients who typically do not have other health care options.
Furthermore, these two provisions reduce our need for appropriated
funds by $765 million as a result of the additional collections they
would generate, and a modest reduction in demand.
The 2007 budget also includes a provision to eliminate the practice
of offsetting or reducing VA first-party co-payment debts with
collection recoveries from third-party health plans. Veterans receiving
medical care services for treatment of nonservice-connected
disabilities would receive a bill for their entire co-payment. If
enacted, this provision would yield about $30 million in additional
collections that could be used to provide further resources for the
Department's health care system.
The combined effect of all three provisions reduces our need for
appropriated funds by $795 million in 2007. I want to work with your
committee and the rest of Congress to gain your support for these
proposals.
Workload
During 2007, we expect to treat nearly 5.3 million patients, of
which 4.8 million are veterans, including over 100,000 combat veterans
who served in Operation Enduring Freedom and Operation Iraqi Freedom.
Among the remaining patients we will treat are qualified dependents and
survivors eligible for care through the Civilian Health and Medical
Program of the Department of Veterans Affairs (CHAMPVA), VA employees
receiving preventive occupational immunizations, and patients receiving
humanitarian care.
The 3.8 million veteran patients in Priorities 1-6 will comprise 79
percent of our total veteran patient population and 72 percent of our
overall total patient population in 2007. This will be an increase of
2.1 percent in the number of patients in Priorities 1-6 and will
represent the fourth consecutive year during which those veterans who
count on us the most will increase as a percentage of all patients
treated.
We have made significant improvements to the actuarial model that
was used to support our 2007 budget request, including development of
an enhanced methodology for determining enrollee morbidity and a more
detailed analysis of enrollee reliance on VA health care compared to
other medical service providers. Also, we have added new data sources,
including the Social Security Death Index, which resulted in a more
accurate count of enrolled veterans. Finally, we have more accurately
assigned veterans into the income-based enrollment priority groups by
using data from the 2000 decennial census.
VA continues to take steps to ensure the actuarial model accurately
projects the needs of veterans from Operation Enduring Freedom and
Operation Iraqi Freedom. However, many unknowns can impact the number
and type of services the Department will need to provide these
veterans, including the duration of the military action, when these
veterans are demobilized, and the impact of our enhanced outreach
efforts. Therefore, we have made additional investments in key
services, such as mental health, prosthetics, and dental care to ensure
we will be able to continue to meet the health care needs of these
returning veterans and veterans from other eras seeking more of these
same services.
Funding Drivers
There are three key drivers of the additional funding required to
meet the demand for VA health care services in 2007:
--inflation;
--expanded utilization of services; and
--greater intensity of services provided.
The impact of the composite rate of inflation within the actuarial
model increased our resource requirements for medical care by $1.2
billion, or 3.9 percent. This includes the effect of additional funds
needed to meet higher payroll costs as well as the influence of growing
costs for supplies, as measured in part by the medical Consumer Price
Index.
VA will experience a significant increase in the utilization of
health care services in 2007 as a result of four factors. First,
overall utilization trends in the U.S. health care industry continue to
increase. Veterans who previously came to VA for a single medical
appointment now more typically require multiple appointments in many
different specialty clinics. And, they return more often for follow-up
appointments in any given year. To illustrate, in 2005 we treated about
5.3 million individual patients but had a total of over 58 million
outpatient visits. These trends expand VA's per-patient cost of doing
business. Second, we expect to see changes in the demographic
characteristics of our patient population. Our patients as a group will
continue to age, will have lower incomes, and will seek care for more
complex medical conditions. These projected changes in the case mix of
our patient population will result in greater resource needs. Third,
veterans are displaying an increasing level of reliance on VA health
care as opposed to using other medical care options they may have
available. This increasing reliance on VA medical care is due at least
in part to the positive experiences veterans have had with the
Department's health care system and is a reflection of our status as
the Nation's leader in delivering high-quality care. And fourth,
veterans are submitting compensation claims with more, as well as more
complex, disabilities claimed. Our Veterans Health Administration does
the majority of disability examinations required in order to evaluate
these claims. This results in the need for a disability compensation
medical examination that is more complex, costly, and time consuming.
General medical practice patterns throughout the Nation have
resulted in an increase in the intensity of health care services
provided per patient, due to the growing use of diagnostic tests,
pharmaceuticals, and other medical services. This rising intensity of
care is evidenced in VA's health care system as well. This has
contributed to higher quality of care and improved patient outcomes,
but it requires additional resources to provide this greater intensity
of services.
The combined impact of expanded utilization and greater intensity
of services increased our resource requirements for medical care by
nearly $1.2 billion.
Quality of Care
VA's standing as the Nation's leader in providing safe, high-
quality health care is evident and has been well documented. For
example:
--in December 2004 RAND investigators found that VA outperforms all
other sectors of American health care across a spectrum of 294
measures of quality in disease prevention and treatment;
--the Department's health care system was featured in the January/
February 2005 edition of Washington Monthly in an article
titled ``The Best Care Anywhere'';
--the May 18, 2005, edition of the prestigious Journal of the
American Medical Association noted that VA's health care system
has ``. . . quickly emerged as a bright star in the
constellation of safety practice, with system-wide
implementation of safe practices, training programs and the
establishment of four patient-safety research centers'';
--the July 18, 2005, edition of the U.S. News and World Report
included a special report on the best hospitals in the country
titled ``Military Might--Today's VA Hospitals Are Models of
Top-Notch Care;'' and
--on August 22, 2005, The Washington Post ran a front-page article
titled ``Revamped Veterans' Health Care Now a Model.''
It should be noted that for the 6 consecutive year, VA set the
public and private sector benchmark for health care satisfaction based
on the American Customer Satisfaction Index survey conducted by the
National Quality Research Center at the University of Michigan. VA's
inpatient index was 83 compared to 73 for the private sector, and our
outpatient index was 80 compared to 75 for the private sector.
These external acknowledgments of the superior quality of VA health
care when compared to other public and private health plans reinforce
the Department's own findings. We use two primary measures of health
care quality--Clinical Practice Guidelines Index and Prevention Index.
These measures focus on the degree to which VA follows nationally
recognized guidelines and standards of care that medical literature has
proven to be directly linked to improved health outcomes for patients.
Our performance on the Clinical Practice Guidelines Index, an internal
accountability measure focusing on high-prevalence and high-risk
diseases that have a significant impact on veterans' overall health
status, is expected to reach 78 percent in 2007, or a 1 percentage
point rise over the 2006 estimate. Similarly, VA's Prevention Index, a
set of measures aimed at preventive health care, including
immunization, health risk assessments, and cancer screenings, is
projected to remain at the estimated 2006 high rate of performance of
88 percent.
Access to Care
With the resources requested for medical care in 2007, the
Department will be able to both maintain its current high performance
dealing with access to medical care as well as seek ways to continually
reduce waiting times for non-urgent care. In 2007 we expect that 93.7
percent of appointments will be scheduled within 30 days of the
patient's desired date. For primary care appointments, 96 percent will
be scheduled within 30 days of the patient's desired date and for
specialty care, 93 percent of all appointments will be scheduled within
30 days of the patient's desired date. No veteran will have to wait for
emergency care.
VA is also committed to ensuring that no veteran returning from
service in Operation Enduring Freedom and Operation Iraqi Freedom has
to wait more than 30 days for a primary care or specialty care
appointment.
We have achieved these waiting times efficiencies by developing a
number of strategies to reduce waiting times for appointments in
primary care and specialty clinics nationwide, to include implementing
state-of-the-art appointment scheduling systems, standardizing business
processes associated with scheduling practices, and ensuring that
clinicians focus on those tasks that only they can perform to optimize
the time available for treating patients. To further improve access and
timeliness of service, VA will fully implement Advanced Clinic Access
nationally, an initiative that promotes the efficient flow of patients.
This program optimizes clinical scheduling so that each appointment or
inpatient service is most productive. In turn, this reduces unnecessary
appointments, allowing for relatively greater workload and increased
patient-directed scheduling.
Major Changes in Funding
VA's 2007 request includes over $4.3 billion for long-term care
($229 million more than the 2006 level). I can assure you that the
patient and cost projections associated with long-term care have been
checked to ensure that they represent our real need in this area. While
we aim to expand all types of extended care services, we plan to
increase the rate of growth of non-institutional care funding about
twice as much as that for institutional care. With an emphasis on
community-based and in-home care, the Department can provide extended
care services to veterans in a more clinically appropriate setting,
closer to where they live, and in the comfort and familiar settings of
their homes surrounded by their families. During 2007 we will increase
the number of patients receiving non-institutional long-term care, as
measured by the average daily census, to about 36,700. This represents
a 14.4 percent increase above the level we expect to reach in 2006 and
a 33.7 percent rise over 2005.
The Department's 2007 request includes nearly $3.2 billion ($339
million over the 2006 level) to provide comprehensive mental health
services to veterans, including our effort to improve timely access to
these services across the country. These additional funds will help
ensure that VA continues to realize the aspirations of the President's
New Freedom Commission Report as embodied in VA's Mental Health
Strategic Plan and to deliver exceptional, accessible mental health
care.
The Department will continue to place particular emphasis on
providing care to those suffering as a result of their service in
Operation Enduring Freedom and Operation Iraqi Freedom from a spectrum
of combat stress reactions, ranging from readjustment issues to Post-
Traumatic Stress Disorder (PTSD). An example of our firm commitment to
provide the best treatment available to help veterans recover from
these mental health conditions is our increased outreach to veterans of
the Global War on Terror, as well as increased readjustment and PTSD
services. This includes the December 2005 designation of three new
centers of excellence in Waco (Texas), San Diego (California), and
Canandaigua (New York) devoted to advancing the understanding and care
of mental health illness.
VA's medical care request includes $1.4 billion ($160 million over
the 2006 level) to support the increasing workload associated with the
purchase and repair of prosthetics and sensory aids to improve
veterans' quality of life. VA has already provided prosthetics and
sensory aids to military personnel who served in Operation Enduring
Freedom and Operation Iraqi Freedom and the Department will continue to
provide them as needed.
Medical Collections
As a result of improvements in our medical collections processes
and the initiatives presented in this budget request, we expect to
collect over $2.8 billion in 2007 that will substantially supplement
the resources available from appropriated sources. In 2005 we collected
just under $1.9 billion. The collections estimate for 2007 is $779
million, or 37.9 percent, above the 2006 estimate. About 70 percent of
the projected increase in collections is due to the provisions calling
for implementation of a $250 annual enrollment fee, an increase to $15
in the pharmacy co-payment, and elimination of the practice of
offsetting VA first-party co-payment debts with collection recoveries
from third-party health plans. The remaining 30 percent of the growth
in collections will result from continuing improvements in billing and
collections.
We have several initiatives underway to strengthen our collections
processes. These include:
--the Department is implementing a private-sector-based business
model pilot, tailored to our revenue operations, to increase
third-party insurance revenue and improve VA's business
practices. The pilot Consolidated Patient Account Center will
address all operational areas contributing to the establishment
and management of patient accounts and related billing and
collections processes;
--we are working with Centers for Medicare/Medicaid Services
contractors to obtain a Medicare-equivalent remittance advice
for veterans who are covered by Medicare and are using VA
health care services. This project will result in more accurate
payments and better accounting for receivables through use of
more reliable data for claims adjudication;
--our Insurance Identification and Verification project is providing
VA medical centers with an automated mechanism to obtain
veterans' insurance information from health plans that
participate in the electronic data exchange;
--we are testing the e-Pharmacy Claims software that provides real-
time claims adjudication for outpatient pharmacy claims; and
--VA is implementing the Patient Financial Services System pilot that
will increase the accuracy of bills and documentation, reduce
operating costs, generate additional revenue, reduce
outstanding receivables, and decrease billing times.
MEDICAL RESEARCH
The President's 2007 budget includes $399 million to support VA's
medical and prosthetic research program. This amount will fund more
than 2,000 high-priority research projects to expand knowledge in areas
critical to veterans' health care needs, most notably research in the
areas of mental illness ($51 million), aging ($40 million), health
services delivery improvement ($36 million), heart disease ($30
million), central nervous system injuries and associated disorders ($29
million), and cancer ($28 million).
The requested funding for the medical and prosthetic research
program will position the Department to build upon its long track
record of success in conducting research projects that lead to
clinically useful interventions that improve veterans' health and
quality of life. Examples of some of the recent contributions made by
VA research to the advancement of medicine are:
--use of the antidepressant paroxetine decreases symptoms related to
Post-Traumatic Stress Disorder and improves memory;
--physical activity and body-weight reduction can significantly cut
the risk of developing type II diabetes;
--new links have been discovered between diabetes and Alzheimer's
disease; and
--vaccination against varicella-zoster (the same virus that causes
chickenpox) decreases the incidence and/or severity of
shingles.
In addition to VA appropriations, the Department's researchers
compete and receive funds from other Federal and non-Federal sources.
Funding from external sources is expected to continue to increase in
2007. Through a combination of VA resources and funds from outside
sources, the total research budget in 2007 will be almost $1.65
billion, or about $17 million more than the 2006 estimate.
GENERAL OPERATING EXPENSES
The Department's 2007 resource request for General Operating
Expenses (GOE) is nearly $1.5 billion. It is $131 million, or 9.7
percent, above the 2006 current estimate. Within the 2007 total funding
request, $1.168 billion is for the management of the following non-
medical benefits administered by the Veterans Benefits Administration
(VBA)--disability compensation; pensions; education; housing;
vocational rehabilitation and employment; and insurance. This is an
increase of $114 million (or 10.8 percent) over the 2006 level. Our
request for GOE funding also includes $313 million to support General
Administration activities, an increase of $17 million, or 5.7 percent,
from the current 2006 estimate.
Compensation and Pensions Workload, Performance, and Staffing
VA is focused on delivering timely and accurate benefits to
veterans and their families. Improving the delivery of compensation and
pension benefits has become increasingly challenging during the last
few years due to a steady and sizeable increase in workload. This
growing workload is the result of several factors--more claims are
being filed; we are experiencing more direct contact with veterans and
service members, particularly those who served in Operation Enduring
Freedom and Operation Iraqi Freedom; the complexity of claims is
increasing; and more appeals are being filed.
The volume of claims receipts has grown substantially during the
last few years and is now the highest it has been in the last 15 years
as we received over 788,000 claims in 2005. This trend is expected to
continue. We are projecting the receipt of over 910,000 compensation
and pension claims in 2006 (which includes over 98,000 claims resulting
from the special outreach requirements of recently enacted legislation)
and more than 828,000 claims in 2007.
One of the key drivers of new claims activity is the size of the
active duty military force. The number of active duty service members
as well as Reservists and National Guard members who have been called
to active duty to support Operation Enduring Freedom and Operation
Iraqi Freedom have increased. This has led to a sizeable growth in the
number of new claims, and we expect this pattern to persist. An
additional reason that the number of compensation and pension claims is
climbing is the Department's commitment to increase outreach efforts.
Our outreach efforts are critical to the men and women who are entitled
to VA benefits and services. We have an obligation to extend our reach
as far as possible and to spread the word to veterans about what VA
stands ready to provide.
Disability compensation claims from veterans who have previously
filed a claim comprise almost 60 percent of the disability claims
receipts each year, and the number of such claims is climbing at a rate
of 2 to 3 percent annually. Many veterans now receiving compensation
suffer from chronic and progressive conditions, such as diabetes,
mental illness, and cardiovascular disease. As these veterans age and
their conditions worsen, we experience additional claims for increased
benefits.
The growing complexity of the claims being filed also contributes
to our workload challenges. Since the beginning of 2000, the number of
veterans receiving compensation has increased 14 percent, from slightly
over 2.3 million to more than 2.6 million. However, the total number of
disabilities for which veterans are being compensated has increased 37
percent during this time, from nearly 6.0 million disabilities to 8.2
million disabilities. In addition, we expect to continue to receive a
growing number of complex disability claims resulting from Post-
Traumatic Stress Disorder, environmental and infectious risks,
traumatic brain injuries, complex combat-related injuries, and
complications resulting from diabetes. Each claim now takes more time
and more resources to adjudicate. Additionally, as the Department
receives and adjudicates more claims, this results in a larger number
of appeals from veterans and survivors.
In addition to the growing complexity of compensation and pension
claims, there are special outreach requirements that will have a
significant impact on our workload and program performance. These
outreach requirements will result in nearly 100,000 additional claims.
As a result of the increasing volume and complexity of claims, the
average number of days to complete compensation and pension claims is
now projected to rise from 167 days in 2005 to 185 days in 2006, and to
fall slightly to 182 days in 2007. In addition, we anticipate that our
pending inventory of disability claims will climb throughout 2006 as we
receive new claims, reaching nearly 418,000 by the end of this year.
The inventory will fall by 5 percent during 2007 to around 397,000.
Despite these significant workload challenges, we remain committed to
reaching our strategic goal of processing compensation and pension
claims in an average of 125 days.
We will address our ever-growing workload challenges in several
ways. First, we will continue to improve our productivity as measured
by the number of claims processed per staff member. Second, we will
continue to move work among regional offices in order to maximize our
resources and enhance our performance. Third, we will simplify and
clarify benefit regulations and ensure our claims processing staff has
easy access to the manuals and other reference material they need to
process claims as efficiently and effectively as possible. And fourth,
we will further advance our efforts to improve the consistency and
quality of claims processing across regional offices.
Even though we will implement several management improvement
practices, we will need additional staffing in order to address our
workload challenges in claims processing. Our 2007 budget includes
resources to support over 13,100 staff members (including nearly 7,900
staff in direct support of the compensation and pensions programs), or
about 170 above the staffing supported by our 2006 budget.
Education and Vocational Rehabilitation and Employment Performance
Key program performance will improve in both the education and
vocational rehabilitation and employment programs. The timeliness of
processing original education claims will improve by 8 days during the
next 2 years, falling from 33 days in 2005 to 25 days in 2007. In
addition, the rehabilitation rate for the vocational rehabilitation and
employment program will climb to 69 percent in 2007, a gain of 6
percentage points over the 2005 performance level.
Funding for Initiatives
The 2007 request for VBA includes $3.4 million to continue
development of comprehensive training and electronic performance
support systems. This ongoing initiative provides technical training to
compensation and pension staff through a multimedia, multi-method
training approach that has a direct impact on the accuracy and
consistency of our claims processing.
The 2007 resource request for VBA includes $2.0 million to continue
the development of a skills certification instrument for assessing the
knowledge base of current and new veterans' service representatives and
will also result in a skills certification module for a variety of
program staff. This initiative will help identify those employees who
need additional training in order to better perform their duties and
will allow us to improve our screening process involving applicants for
higher-level positions.
NATIONAL CEMETERY ADMINISTRATION
The President's 2007 budget request for VA includes $160.7 million
in operations and maintenance funding for the National Cemetery
Administration (NCA). This represents an increase of $11.1 million (or
7.4 percent) over the 2006 current estimate. The additional funding
will be used to meet the growing workload at existing cemeteries by
increasing staffing and augmenting funds for contract maintenance,
supplies, and equipment. We expect to perform over 107,000 interments
in 2007, or 5.4 percent more than the 2006 estimate and 15.1 percent
more than the number of interments in 2005.
Our resource request also has $9.1 million to address gravesite
renovations as well as headstone and marker realignment, an increase of
$3.6 million from our funding for 2006. These improvements in the
appearance of our national cemeteries will help us maintain the
cemeteries as shrines dedicated to preserving our Nation's history and
honoring veterans' service and sacrifice.
We will expand access to our burial program by increasing the
percent of veterans served by a burial option in a national or State
veterans cemetery within 75 miles of their residence to 83.8 percent in
2007, which is 6.7 percentage points above the 2005 level. In addition,
we will continue to increase the percent of respondents who rate the
quality of service provided by national cemeteries as excellent to 97
percent in 2007, or 3 percentage points higher than the 2005
performance level.
capital (construction and grants to states)
The President's 2007 budget request includes $714 million in
capital funding for VA. Our request includes $399 million for major
construction projects, $198 million for minor construction, $85 million
in grants for the construction of State extended care facilities, and
$32 million in grants for the construction of State veterans
cemeteries.
The 2007 request for construction funding for our medical care
program is $457 million--$307 million for major construction and $150
million for minor construction. All of these resources will be devoted
to continuation of the Capital Asset Realignment for Enhanced Services
(CARES) program to renovate and modernize VA's health care
infrastructure and to provide greater access to high-quality care for
more veterans. When combined with the $293 million that was enacted in
the Hurricane Katrina emergency funding package in late December 2005
to fund a CARES project for a new hospital in Biloxi, Mississippi, the
total CARES funding since the 2006 budget totals $750 million and since
the 2004 CARES report amounts to nearly $3 billion.
Our major construction request for medical care will fund the
continued development of two medical facility projects--$97.5 million
to address seismic corrections in Long Beach; and $52.0 million for a
new medical facility in Denver. In addition, our request for major
construction funding includes $38.2 million to construct a new nursing
home care unit and new dietetics space, as well as to improve patient
and staff safety by correcting seismic, fire, and life safety
deficiencies at American Lake (Washington); $32.5 million for a new
spinal cord injury center at Milwaukee; $25.8 million to replace the
operating room suite at Columbia (Missouri); and $7.0 million to
renovate underutilized vacant space located at the Jefferson Barracks
Division campus at St. Louis as well as provide land for expansion at
the Jefferson Barracks National Cemetery.
We are also requesting $53.4 million in major construction funding
and $25.0 million in minor construction resources to support our burial
program. Our request for major construction includes funds for cemetery
expansion and improvement at Great Lakes, Michigan ($16.9 million),
Dallas/Ft. Worth, Texas ($13.0 million), and Gerald B. H. Solomon,
Saratoga, New York ($7.6 million). Our request will also provide $2.3
million in design funds to develop construction documents for gravesite
expansion projects at Abraham Lincoln National Cemetery (Illinois) and
at Quantico National Cemetery (Virginia). In addition, the major
construction request includes $12 million for the development of master
plans for six new national cemeteries in areas directed by the National
Cemetery Expansion Act of 2003--Bakersfield, California; Birmingham,
Alabama; Columbia-Greenville, South Carolina; Jacksonville, Florida;
Sarasota County, Florida; and southeastern Pennsylvania.
INFORMATION TECHNOLOGY SERVICES
The President's 2007 budget for VA provides $1.257 billion for the
non-payroll costs associated with information technology (IT) projects
across the Department. This is $43.2 million, or 3.6 percent, above our
2006 budget.
The 2007 request for IT services includes $832 million for our
medical care program, $55 million for our benefits programs, $4 million
for our burial program, and $366 million for projects managed by our
staff offices, most notably non-payroll costs in our Office of
Information and Technology and Office of Management to support
department-wide initiatives and operations.
The most critical IT project for our medical care program is the
continued operation and improvement of the Department's electronic
health record system, a Presidential priority which has been recognized
nationally for increasing productivity, quality, and patient safety.
Within this overall initiative, we are requesting $51.0 million for
ongoing development and implementation of HealtheVet-VistA (Veterans
Health Information Systems and Technology Architecture) which will
incorporate new technology, new or reengineered applications, and data
standardization to continue improving veterans' health care. This
system will make use of standards that will enhance the sharing of data
within VA as well as with other Federal agencies and public and private
sector organizations. Health data will be stored in a veteran-centric
format replacing the current facility-centric system. The standardized
health information can be easily shared between facilities, making
patients' electronic health records available to all those providing
health care to veterans.
Until HealtheVet-VistA is operational, we need to maintain the
VistA legacy system. This system will remain operational as new
applications are developed and implemented. This approach will mitigate
transition and migration risks associated with the move to the new
architecture. Our budget provides $188 million in 2007 for the VistA
legacy system.
In support of the Department's education program, our 2007 request
includes $3 million in non-payroll costs to continue the development of
The Education Expert System. This will replace the existing benefit
payment system with one that will allow the Department to automatically
process education claims received electronically.
VA's 2007 request provides $57.4 million for cyber security. This
ongoing initiative involves the development, deployment, and
maintenance of a set of enterprise-wide security controls to better
secure our IT architecture in support of all of the Department's
program operations.
SUMMARY
In summary, Madam Chairman, the $80.6 billion the President is
requesting for VA in 2007 will provide the resources necessary for the
Department to:
--provide timely, high-quality health care to nearly 5.3 million
patients, including 4.8 million veteran patients of which 79
percent are among those who need us the most--those with
service-connected disabilities, lower incomes, or special
health care needs;
--address the large growth in the number of claims for compensation
and pension benefits; and
--increase access to our burial program by ensuring that nearly 84
percent of veterans will be served by a burial option in a
national or State veterans cemetery within 75 miles of their
residence.
I look forward to working with the members of this committee to
continue the Department's tradition of providing timely, high-quality
benefits and services to those who have helped defend and preserve
freedom around the world.
Senator Hutchison. Thank you very much. We appreciate that
testimony.
MEDICAL AND PROSTHETIC RESEARCH
And I would like to ask you a question, with my time, on
the research budget, the area that we discussed, and you
addressed, the Gulf War syndrome research, but the other area
would be the ``smart limb'' technology, prosthetics, and other
research efforts. And I just wanted to get a read from you on
how that is progressing and what other priorities you see. I so
appreciate your commitment to Gulf War, because I think we can
do so much, not only for the veterans who have symptoms, but
for prevention for future potential chemical warfare that might
have a causal connection. But on the area of prosthetics, and
then what other priorities do you see with your research
budget? And are you okay with that slight decrease?
Secretary Nicholson. I'll answer the last part first by
saying, yes, we have--in the last two budget cycles, have had
significant increase in research for prosthetics and for mental
health and post-traumatic stress disorder. In the area of
prosthetics, I think you mentioned ``smart limbs'' or C-limbs,
we call the legs, the below-the-knee prosthetic now, which is a
phenomenal device made of microprocessors that somehow has
figured out how to think like the other leg and function
accordingly. It's just astonishing. It's a product of research
and compassion.
I visit Walter Reed, in Bethesda, regularly, and, every
Friday night that I can, I get together, my wife and I, for
dinner with the wounded folks that are ambulatory enough to go
to a restaurant that--we meet in here, and they are--they are
just amazing. And the work that's being done for them is
amazing, as well. And our commitment to the--you know, to the
research, both in its--it's both clinical and practical,
because we have the opportunity to monitor them, these new
returnees, so closely--is--I think it's just--it's world class.
As to the specific details that inquiries of chemicals and
so forth, I'll defer to Dr. Perlin and ask him if he would
flesh that out with more detail.
Dr. Perlin. Thank you, Mr. Secretary, and thank you, Madam
Chairman.
The research that's being done in VA is truly spectacular.
The Secretary mentioned things like the C-leg, but one of the
products I'm most excited about is the artificial retina. I'm
sure this committee has heard about the cochlear implant that
was developed for hearing for people with loss of the outer
ear, but with the nerves intact. Two of our sites have really
brought the retinal implant to fruition. It's actually being
tested in some patients, and, we believe that--for some
individuals, it will be able to do things as exciting as
restoring vision.
In the area of combat-related research, we will actually
conduct over $160 million of activity in things ranging from
acute and traumatic injury to sensory loss, military
occupational exposures, bioterrorism, and pathogens, brain
disorders, and brain injury. And as the Secretary mentioned, on
top of that our prosthetics program for the delivery of these
devices actually increases to $1.4 billion, an increase of $160
million, 2006 to 2007.
POST-TRAUMATIC STRESS SYNDROME
Senator Hutchison. In my remaining time, would you just
elaborate a little bit on your post-traumatic stress syndrome,
the centers of excellence, progress on that. Is it making a
difference, putting caregivers with that expertise into one
facility that can be a regional magnet? I'd just like to have a
progress report on that.
Secretary Nicholson. The short answer is, yes, indeed. We
now have put a certified post-traumatic stress disorder, PTSD
expert at each one of our 154 medical centers so that we have
at least one in each of our centers. We have positioned others
in some of our vet centers and in some clinics. Because we're
forward-looking, we're--we want to outreach to these young
people who are coming back, and even be suggestive that if
they're experiencing any of these symptoms, that they should
come in and see us, and see one of these experts, because what
they are experiencing is a common reaction to the uncommon
experience they've just been through, and that if we can begin
to treat them early enough, there's a great probability of
success and recovery from any long-term effects of this. And we
also are doing a considerable amount of research, that's being
funded generously by you all, at our National PTSD Research
Center, which is in White River Junction, Vermont.
Senator Hutchison. Thank you very much.
Senator Feinstein.
PROPOSED LEGISLATION ON FEES AND COPAYMENTS
Senator Feinstein. Thank you very much, Madam Chairman.
Mr. Secretary, let me take on the issue of fees. As you
know, last year Senator Burns moved an amendment on the floor
which actually received a vote, a unanimous vote, to reject the
fee proposal. And you've put it back again this year. The $250
annual enrollment fee, a doubling of the pharmaceutical
copayments, eliminating the practice of offsetting or reducing
copayments with collections recovered through third-party
insurers. How many veterans does the VA estimate will be
affected by this policy? These are, I guess, the priority 7 and
8 veterans.
Secretary Nicholson. I think the number, Senator, would be
approximately 200,000. I think it's 198,000.
Senator Feinstein. Okay. That's both priority 7s and 8s.
Secretary Nicholson. Yes.
Senator Feinstein. Is that correct? Okay.
Secretary Nicholson. And we also know, about them, that
about 95 percent of them have insurance. But I think that----
Senator Feinstein. In those--these are people that make
under $26,000 a year, and you're saying----
Secretary Nicholson. Not all of them. Some of them might.
It depends on where they live.
If I might, I would sort of frame it. Because I happen to
personally believe in this. And I'm not just being a good
soldier, putting this in the budget. I think that there's a
real equity in this. And, you know, they--by the way, the
people that enter into the armed services are never told
they're going to have lifetime healthcare. The people who are
told they're going to have lifetime healthcare, and who were
told that, are those that stay in a career. And those that stay
in for a career, maybe 30 years, and do two or three combat
tours, when they come out of the military, they get TRICARE,
which is a program with which they're quite pleased. And I was
involved in that in another way at another job, getting that.
It's a good benefit. But they have a copay and enrollment fee,
which is significantly higher than this, that we are asking
for, for veterans, only for categories 7 and 8, which are
veterans that have had no service-connected disabilities and
who have jobs, and they have served 2 years----
Senator Feinstein. Okay. But let me talk to you about the
real world. This was last year, the Burns amendment. It passed
100 to nothing. This is an election year. Somebody is sure to
make the same amendment again. You're going to lose--if that
happens, what is the total amount that you would lose? Is it
$795----
Secretary Nicholson. $795.
Senator Feinstein [continuing]. Million dollars. What would
your plan be, then, if you lose $795 million? I mean, I think
you've been forewarned. That happens, 100 to zero. Pretty good
warning that somebody's going to try it again. And the
opportunity for it passing is certainly very high.
Secretary Nicholson. I wouldn't argue with that, Senator,
but I--that doesn't mean that it's not the right and equitable
thing to do. But I will tell you, the question is a good one,
about the $795 million, because that's important, because we--
that is assumed in this budget. And if we do not get those
policy proposals, we would need--we will need that money, to do
what we think we have to do in this budget year.
Senator Feinstein. So, what would you do?
Secretary Nicholson. Well, what we would do is ask you to--
if you don't approve that, to increase the appropriation by
that amount.
Senator Feinstein. Okay. Has the VA worked with the Defense
Department to run any kind of actuarial modeling to determine
the impact of these fees on VA patient loads?
Secretary Nicholson. I think the answer is, no, we've not
worked with the Defense Department, but we've certainly worked
with our own actuaries to see what----
Senator Feinstein. Because the----
Secretary Nicholson [continuing]. The effect of----
Senator Feinstein [continuing]. DOD is also requesting
these fees on the DOD healthcare system.
Secretary Nicholson. Yes.
Senator Feinstein. So, I would--so, no modeling has been
done to show what the effect of that is.
Secretary Nicholson. Well, they're two separate systems.
And----
Senator Feinstein. Understand that.
Secretary Nicholson [continuing]. We have----
Senator Feinstein. But you're one government,
theoretically.
Secretary Nicholson. We have not. I think we have not. But
we've certainly modeled it ourself to know what it--the patient
impact would be.
Senator Feinstein. Okay. I have another question. I see the
light is on. Perhaps we could have a second round.
Thank you----
Senator Hutchison. Yes, we will----
Senator Feinstein [continuing]. Madam Chairman.
Senator Hutchison [continuing]. We will have a second
round.
Senator Allard.
Senator Allard. Thank you, Madam Chairman.
ROCKY MOUNTAIN REGION COLORADO
The hospital plans for the Rocky Mountain region, for
veterans I want to address that a little bit. The Fitzsimons
Hospital there in Denver--and it was designed some 50 years
ago, and obviously a lot of what people envisioned for
healthcare then, and what we're getting now, is lot of needs in
the hospital simply can't be met with an older facility. And
so, you are moving ahead with the Rocky Mountain facility. And
I truly appreciate that. My question is, how are you moving
forward with that particular facility? And how does it fit into
the Capital Assessment Realignment for Enhanced Services,
commonly known as the CARES plan?
Secretary Nicholson. Well, thank you, Senator Allard. The
CARES plan is the predicate for the determination that there is
a need for a new hospital in Denver. And that takes into
account current projected patient loads and capacity to serve.
And we are moving forward with that. We are moving forward. We
are--need to build a new hospital in Orlando, in Las Vegas, in
Denver. And we have a recent agreement with the authority that
has control over the land at the old--the Fitzsimons Army
General Hospital. We've agreed to a site and a price, and we
are in stages of seeking approval for getting the money
authorized to acquire the land. And the planning--the site
planning and space planning for the hospital is ongoing. So,
it's moving--it's moving well, but we now need to acquire the
land here----
Senator Allard. And the----
Secretary Nicholson [continuing]. Shortly.
Senator Allard [continuing]. Authorization language, that
would come out of the Veterans Committee itself. And you're
working on that.
Secretary Nicholson. Yes, we are working on it.
Senator Allard. And then, I notice that the President also
has in his budget here some money to begin to finance the new
facility there in Denver.
Secretary Nicholson. Yes. And that's----
Senator Allard. And----
Secretary Nicholson [continuing]. And that's----
Senator Allard. So, right now you don't see any real
hitches. I mean, things are--seem to be moving along pretty
good at this point?
Secretary Nicholson. Yes, they do.
Senator Allard. Okay. That's good news. And thank you for
that effort.
NATIONAL CEMETERY ADMINISTRATION
The other question I have to--has to deal with cemeteries.
How is it that we establish whether an area needs cemeteries--
or is appropriate to put a cemetery in that area? How do we
determine that?
Secretary Nicholson. I have Under Secretary Tuerk here with
me, who is responsible for Memorial Affairs. And I'll let him
give you the detail. Essentially, there are criteria which set
out a goal for the VA to have a cemetery within 75 miles of 90
percent of the veterans in our country. And as I said in my
testimony, we are in the greatest expansion of cemeteries since
the Civil War, because our veterans are aging, and they're
passing on at a pretty rapid rate. We need to be there. And
there is another criteria of distance, and I'll ask Secretary
Tuerk if he'd like to address that.
Senator Allard. Mr. Tuerk.
Mr. Tuerk. Yes, Senator. Generally speaking, we look at a
given site and determine whether there is a national or State
cemetery option available in proximity to that site, defined by
75 miles away. That number is based on our own internal studies
of the distance beyond which veterans tend not to view a
cemetery as a practical alternative.
Over the years, using that 75-mile criterion, we have
identified cities and locations and ranked them according to
the number of veterans who are unserved. For example, starting
back in 1987, Chicago was at----
Senator Allard. Yeah.
Mr. Tuerk [continuing]. The top of the list, with----
Senator Allard. Now----
Mr. Tuerk [continuing]. A million----
Senator Allard [continuing]. Let me get down to specifics,
as my time's about ready to run out here.
Mr. Tuerk. Okay.
Senator Allard. There is a population number that goes into
that--those statistics that you look at, isn't correct?
Mr. Tuerk. Correct, Senator.
Senator Allard. And my information is that this--they're--
they go back quite a distance. What is it? Clear back to the
2000 Census.
Mr. Tuerk. As we have come down the list of----
Senator Allard. Or do they go back to the 1990 Census?
Mr. Tuerk. They are based on the 2000 Census.
Senator Allard. Census, okay.
Mr. Tuerk. And we have come down the list, and the most
recent newly-mandated cemeteries--we had come down to the point
where we're selecting cities that had veteran populations of
about 170,000 that didn't have a cemetery in proximity.
Senator Allard. Yeah. That--you know, I've--some areas of
the country, they really had a--not only have they had a rapid
growth in the population there, but the veteran population has
probably increased even more. And then, on top of the--because
of the war, and then also because of their aging and just the
fact the demographics of people are moving into the area--and
so, if you have an area that, say, is maybe on the borderline
in change, is there a mechanism in there, or do you have to
wait til the next Census before that whole area gets
reevaluated?
Secretary Nicholson. You know, I think the answer, Senator
Allard, is, absent a showing of some kind of an exponential
growth spurt or something, we would have to wait for the next
Census, yes.
Mr. Tuerk. And I'm advised, Senator, that we do have
actuaries retained who try to estimate population changes
between the Censuses every 10 years, but they're not precise
numbers.
Senator Allard. I would just like to solicit your
cooperation in, kind of, working with this formula. We've got
one of those areas in Colorado Springs.
Mr. Tuerk. I would also mention, Senator, that the formula
itself, if it can be properly called that, is not set in stone.
And, as a matter of fact, we are undergoing a program
evaluation right now to examine the underlying assumptions of
that formula and see if it's an appropriate way to proceed
henceforth.
Senator Allard. Well, yeah, I would just ask that Secretary
Nicholson, and maybe you, Mr. Tuerk, would just kind of work
with us a little bit and just see where we are. We've got
somebody that's going to donate land, and there's a huge
growing population in there. And, looking from the Census, it's
probably grown a little bit. I need to kind of work with the
Veterans Affairs to see where you stand on that proposal, and
all I need from you is a commitment to, kind of, work with us a
little bit on that, and work with that formula, and see if
there's a potential need there that--for a cemetery, that
perhaps qualifies, that we've somehow or the other ignored.
Mr. Tuerk. I'm happy to do that, Senator.
Senator Hutchison. Senator Murray.
VA HEALTHCARE
Senator Murray. Mr. Secretary, I just--I want to clarify a
response that you gave to Senator Feinstein. Are you saying
that VA military recruiters are not using VA healthcare as a
recruiting tool?
Secretary Nicholson. No, I didn't say that. I said that
there is no undertaking in the law to provide a recruit for a
lifetime of VA healthcare----
Senator Murray. Right. Well, it's my understanding that
healthcare is the number one tool that recruiters are using
today, in terms of veterans having healthcare. Is that not
accurate?
Secretary Nicholson. I don't--I couldn't--I couldn't tell
you whether it is or not. I----
Senator Murray. Well, I would just submit to this committee
that most of our soldiers who are serving in Iraq and
Afghanistan are under the assumption, having been told by a
recruiter that they would get healthcare, that, indeed, they
would get healthcare. So----
Secretary Nicholson. Well, every member of the Armed Forces
who serves in the combat zone is eligible for VA healthcare.
Senator Murray. That's correct. And they are not told
anytime by a recruiter that they are going to be based on what
income they have when they return.
Secretary Nicholson. They--it shouldn't be, because they're
eligible for it, for----
Senator Murray. Right.
Secretary Nicholson [continuing]. For 24 months, the----
Senator Murray. Because I misunderstood what you said to
Senator Feinstein, then, because I thought you said that
soldiers were not----
Senator Hutchison. He did. He said they're not required to
provide it for a lifetime.
Secretary Nicholson. Right.
Senator Murray. Right. But they are being told by
recruiters that healthcare is part of what they will get for
their service. So, I think----
Secretary Nicholson. Well, I don't know what the recruiters
are telling them. If they're injured--if they're injured in
their service, they would be provided----
Senator Murray. Right. I understand that. But----
Secretary Nicholson [continuing]. Healthcare.
Senator Murray [continuing]. I would just say that we--if
we were not going to guarantee them healthcare, we'd better
tell our recruiters to say something else.
VA BUDGET MODEL
But, anyway, what I really wanted to ask you about was the
model that you have for the 2007 budget. We went through a
tremendous challenge last year, as you will recall. Have you
changed the model for how you project how much money will be
needed by the VA?
Secretary Nicholson. The answer, Senator Murray, is that,
no, we haven't changed the model. We used the same modeling
consultant, but we've certainly supplemented it and looked
outside of it in a--you know, in a subjective way with
looking--more inputs and more intuitive elements. But the basic
model is the same.
And I'll ask Dr. Perlin if he wants to expand on that,
because he is----
Senator Murray. Well, what I'd really like to know is why
you don't base the budget on demand.
Secretary Nicholson. Well, of course, we do base it on
demand. What we're trying to do is project what the demand will
be.
Senator Murray. And you're using the same model as you had
before we had a war in Iraq and Afghanistan?
Secretary Nicholson. Yes. But if you'll remember my
testimony of last year, when I--that we were working on the
2005 budget, it was based on 2002 data. And in 2002 there was
no war. That's just a victim of our cycling times. We're
working 2007 right now, and this--the 2007 data is based on--
you know, on 2004 numbers.
Senator Murray. Well, I just remain sincerely concerned
that the--what we--the demands on the VA today are dramatically
different than they were 5 years ago, on OIF and OEF soldiers
returning, on increasing number of Vietnam veterans who are
accessing it, on the increased cost of healthcare overall, on
the fact that many people are losing healthcare and going into
the VA that weren't, necessarily, before. Why are we not
changing the model so that we don't end up in shortfall come
next July or August here?
Secretary Nicholson. Well, we use the best predictive tools
that are available. That is the model that we use. It's used by
almost all the major healthcare providers and integrated
systems. It's--and then we've supplemented it by some of our
own unique offerings, like long-term care and dental, and so
forth. But it is a dynamic field. I would tell you that. And it
is growing. But let me say that the patient loads are
increasing considerably, but as to the combat, the OIF/OEF,
we--you know, we see about 5.4 million people a year right now;
and, of that number, about 110,000 to 120,000 are those
combatants. That's about 2 percent of----
Senator Murray. Are they----
Secretary Nicholson [continuing]. That total.
Senator Murray. How many OIF and OEF veterans have you
budgeted for this year?
Secretary Nicholson. For 2007, 109,000.
Senator Murray. How many did you see in the first half of
2006?
Secretary Nicholson. Which is about to end--we will have
seen, I think, 85,000.
Senator Murray. How many did you expect to see in 2007,
which you based your budget on?
Secretary Nicholson. 109,000.
Senator Murray. So, in the first half of the year, you saw
85,000, and you're budgeting a whole year on 109,000?
Secretary Nicholson. Budget next year on 109,000, yes.
Senator Hutchison. Did you--you're--I'm not sure I
understand. Are you saying that there were 85,000 just in half
a year?
Senator Feinstein. Yes, that's right.
Senator Hutchison. I don't think that's what you----
Senator Murray. Well, let--you saw 85,000 in 6 months. Your
whole budget for 2007, you said, is--you're basing it a
hundred-and-----
Secretary Nicholson. Nine.
Senator Murray [continuing]. 109. I do not----
Senator Hutchison. Well, wait a minute, let me go back and
then ask--What was the full year, the year before?
Secretary Nicholson. Last year?
Senator Murray. Last year.
Senator Hutchison. Yes.
Secretary Nicholson. It was about--it was, like, at
119,800.
Senator Murray. And we're looking at 2007, and the budget
is based on less than that, 109,000. That's my point. I'm very
concerned about that, obviously.
Senator Hutchison. Well, let's let him answer why that
would be.
Secretary Nicholson. Yeah, sure. Dr. Perlin will.
Dr. Perlin. Thank you, Senator Murray. Your question makes
logical sense, but I want to make sure that we distinguish the
cumulative number of patients we've been from the annual
number. Indeed, the 2007 budget budgets for about 109,000, and
2006 will see--we project about 110,000. And we're running
about 38 percent ahead. I should explain two things. First--and
something that we're really very proud of is that we have much
better hand-in-glove relationship with the Department of
Defense that is reaching out to returning combat veterans,
something I think we all want. And that has increased. And that
gets to the model. The base of the model predicts about 25
percent of the OIF/OEF veteran utilization. The remainder is
the experience in reality. Because, as the Secretary said, the
model, of necessity, is based on experience of a couple of
years back, we don't want to put all of our eggs in that one
basket and ever suffer a repeat of not coming up to the right
numbers.
Senator Murray. But from what I can see is that you are
basing 2007 on less numbers than you saw in 2006. What you're
asking for, for funding, is based less, yet we know that there
are more soldiers returning, more accessing the VA, and more
coming. So, I just have a serious concern about the reality of
the numbers that we're going to see----
Dr. Perlin. I think----
Senator Murray [continuing]. Based on your budget.
Dr. Perlin. I think, certainly, this is one of the things
that we will discuss during our quarterly meetings, are
discussing now, that it's running slightly ahead. I should say
that is line with that. We are actually running below the
projected expenses. So, in point of fact, the budget is----
Senator Murray. Well, and----
Dr. Perlin [continuing]. Completely robust----
Senator Murray. I know you----
Senator Hutchison. No, I----
Senator Murray [continuing]. I've used my time----
Senator Hutchison. No, I want to go ahead----
Senator Murray [continuing]. But they're asking----
Senator Hutchison [continuing]. And finish this thought,
because it--I just am not----
Senator Murray. We're asking our----
Senator Hutchison [continuing]. I think there's a
disconnect.
Senator Murray [continuing]. To do more, in terms of Gulf
War syndrome and reaching out, and we're seeing more veterans,
but we're being asked to fund them at less. So, I'm--I just
think we have a real problem with what we're seeing requested
here.
Senator Hutchison. I think the--there's an increase in the
amount, but you are saying that you expect to see fewer
patients----
Senator Murray. Than we will----
Senator Hutchison [continuing]. This year that we're
talking about, 2007----
Senator Murray. The budget is based on that, that's what--
--
Senator Hutchison [continuing]. Than what you are going to
have in 2006. And I don't think that's what you mean, or else
there's an explanation that's not there.
Secretary Nicholson. Let me try to clarify. The--you're
talking OIF/OEF returnees. And, as I said, that's about 2
percent of our total projected patient load. In total patients,
we are predicting to see an increase. In----
Senator Murray. That's because Vietnam veterans are aging.
It's because a number of people are accessing the VA system for
other reasons.
Secretary Nicholson. Right.
Senator Murray. So, that doesn't surprise me. And that's
good. But for OIF/OEF, you are projecting we will see less than
last year. I'm very worried that is not going to be reality.
And I doubt that's what you're going to see.
Secretary Nicholson. We're--we are projecting that we'll
see about 11,000 fewer than we saw last year. That is, in 2007,
we'll see that, fewer than 2006.
Senator Murray. And I think that's----
Senator Hutchison. What do you base that on, I think is the
question? Is it because you have had the major part of the
injuries or----
Secretary Nicholson. Well----
Senator Hutchison [continuing]. There some--must be some--
--
Secretary Nicholson. It's a question of the cumulative
versus new patients, and the uniques.
I'll ask Dr. Perlin if he can explain that.
Dr. Perlin. Thanks. I think it's important, as was
mentioned at the beginning, there are about half a million
veterans who have separated, having served in combat in OIF/
OEF. And, thus far, about 144,500 have come to VA since the
inception. And so, I think we should put that number aside for
a moment.
Not all of those veterans will come back for return
service, because, by and large, most veterans, fortunately, are
younger and healthier. There will be some that will carry
forward. And so, the way the projection goes is, it's based on
how many veterans will come forward from previous years and how
many new OIF veterans will come into the system.
I think you are absolutely correct that there are, at this
point in the year, more veterans than we had initially
anticipated. And I make this point, because this is part of
Department of Defense's going out and not only doing post-
deployment health assessment, but a reassessment. We're
tracking that number. We are well within budget. And, as the
Secretary says,--because these are obviously extremely
significant veterans and all veterans are significant, we place
particular attention here. The overall budget cares for 98
percent other veterans. And we are absolutely within the
resources, not only as budgeted for this population, but as
budgeted for the entire population, as well.
Senator Murray. Well, Madam Chairman, I have other
questions, but we'll get back to them.
Senator Hutchison. Okay, we certainly will.
Senator Landrieu.
NEW ORLEANS REPLACEMENT HOSPITAL
Senator Landrieu. Thank you, Madam Chair.
My question is specific to the supplemental that was just
passed by the House, Mr. Secretary, that included the $550
million for the new hospital, which, at our agreement, was
taken out of the previous supplemental and put on hold until we
could do a little bit more groundwork on standing up the
medical complex in New Orleans after Katrina and Rita. And I
think we're making some progress on that. And I know you all
have been working very closely with Secretary Leavitt and--as
we try to develop a new system there.
But the House inserted $275 million that could be taken out
of this account for, I guess, quote, ``unanticipated medical
costs of returning veterans fighting global war on terror.'' Do
you support that inclusion of $275 million? Does the
administration support that?
Secretary Nicholson. We did not ask for that, Senator, no.
Senator Landrieu. Is it your intention to use any of that
$550 million for the new hospital with this line item?
Secretary Nicholson. No. We currently do not plan to have
to use any of that for operational purposes, no.
Senator Landrieu. Now, let me be clear. Is it your
intention to use any of this $550 million, which is earmarked,
at your request, for the hospital to use for the $275 million
that the House added into this supplemental?
Secretary Nicholson. No. The answer is, no, we do not.
Senator Landrieu. Okay.
Secretary Nicholson. Which is another way of saying that we
plan to use the $550 million plus the $75 million for the
hospital.
Senator Landrieu. For the purposes in which we have
basically all agreed we need to move forward----
Secretary Nicholson. Right.
MENTAL HEALTH
Senator Landrieu [continuing]. And only postponed it last
time because we agreed with you that it wasn't--it's critical,
but it wasn't critical 3 months ago. It's critical now, as we
only have--just for reference of this committee, I just
learned, today, we only have--let me get these--I'll get the
numbers; I don't want to give the wrong ones--but of the 3,000
beds we had open pre-Katrina--hospital beds--I think we only
have 400 open in the whole metropolitan area, of a city that
had 3,000 hospital beds, of which this hospital is, of course,
closed down. We need to stand it up. So, it's quite urgent, in
terms of healthcare for this whole region.
Let me ask something on mental health. I understand this is
the first year that we've earmarked in the budget, in
discretionary budget, something specific for mental health, or
is that not true? Is it $2.2 million for mental health? It's
not the first time?
Secretary Nicholson. It wouldn't be the first time.
Senator Landrieu. It wouldn't be the first time?
Secretary Nicholson. No.
Senator Landrieu. But we have a slight increase for mental
health?
Secretary Nicholson. We have, I think, $3.2 billion in
the----
Senator Landrieu. $3.2 billion.
Secretary Nicholson [continuing]. Budget for mental health.
Senator Landrieu. Okay. I want to commend you for trying to
push these numbers slightly higher for mental health. It's been
something that many of us on the committee have worked on. What
concerns me is part of the GAO report that was just recently
issued about the lack of assessment teams at the hospitals that
will actually make the determination as to who might be
eligible for these services. I understand that we only piloted
three programs last year--one in California, one in Texas, and
one in New York. So, is there money in this budget to establish
the assessment teams so that we can make the proper assessments
for these veterans to give them the mental health counseling
that has become so obvious?
Secretary Nicholson. Well, they're--absolutely. That's one
of the reasons that, you know, we've--asking for $3.2 billion,
which is an increase of $339 million. And, as I stated earlier,
Senator, we have, in every one of our 156 major medical
centers, like--New Orleans would be one of those--was--we have
a PTSD expert that we've posted in each of these to head those
teams for assessment. And we have a very comprehensive
assessment----
Senator Landrieu. But according to the report, that there
are only three complete teams, and then a coordinator, is that
not true?
Secretary Nicholson. That is not true. I gather that you--
that you--there may be confusion, because you mentioned
California and New York and Texas. What has happened is that
the Congress, you all, in the last few months, have designated
three locations to be centers of excellence----
Senator Landrieu. Okay.
Secretary Nicholson [continuing]. For mental healthcare.
Those are Canandaigua, New York; Waco; Texas, and San Diego,
California.
Senator Landrieu. To coordinate the efforts nationally----
Secretary Nicholson. But those----
Senator Landrieu [continuing]. For these----
Secretary Nicholson [continuing]. Those will just be
supplemental to a vast system now.
GRANTS FOR STATE EXTENDED CARE
Senator Landrieu. Okay. And one final, on the VA nursing
homes, we have a total of $85 million nationally in the budget.
Secretary Nicholson. Yes, I think that's correct. Yes,
ma'am.
Senator Landrieu. The budget was $104 million, last year?
And there's earmarked a fairly large center in California. What
is the total amount of that money, and how will it affect the
building of the other centers around the country?
Secretary Nicholson. I'm going to ask Dr. Perlin to respond
to that particular area you've asked.
Senator Feinstein. Don't think of taking it from
California.
Dr. Perlin. Well, first, thank you very much for the
question. Let me confirm, as the Secretary said, the budget is
$85 million, asked for in the 2007 budget. California is a
large project, unequivocally. We have a few mandates in front
of us. First, we also have to pay attention to life safety. And
we will fund those. In fact, there is conference language that
asked that we do that. And we have not released the ultimate
2007 decision, in terms of priorities. But, obviously, we've
already set aside funding for the California project very
substantially--in fact, $68.2 million--in 2006. And we are
working with California to make sure that we can, obviously,
complete the project in which we both have mutual interests,
and meet needs elsewhere in the country, including not just new
projects, but also life safety.
Senator Landrieu. And I want to say that I most certainly
support it, and I'm sure that the Senator who's given great
leadership to this committee, could justify every penny for
this project. I just raise it that there's a whole country out
there of other veterans' homes that are long on the waiting
list. And to limit the budget to only that, and also try to
accommodate a large project like this, I think, is a disservice
to the rest of the country.
So, I'm going to--my time is up, but let me also just say,
for the record, I'm going to submit a suggestion on the ratios
of how these can be funded in a little bit fairer system than
having every State to have to come up with a match, regardless
of the economic need of the community.
Thank you.
Senator Feinstein. The chairman went down to vote. She's
coming back. And then I'll go. But you're up. So, why don't you
go ahead?
Senator Craig [presiding]. Thank you very much, Madam
Chairman.
Let me submit my full statement for the record and deal
with a couple of questions that I think are legitimate. And
some of them go back to what Senator Murray was discussing
earlier, as it relates to how we get the record straight.
[The statement follows:]
Prepared Statement of Senator Larry Craig
Thank you Madame Chair. My comments will be brief. Mr. Secretary,
good afternoon and welcome. You and I have already spoken at some
length about your budget proposal in my capacity as Chairman of your
authorizing Committee. First, I want to compliment you and the
President once again for making veterans one of the highest priorities
in your budget. This historic request of nearly $80 billion
demonstrates this Nation's commitment to our veterans.
As you know, I supported your budget request in my ``views and
estimates'' letter to the Budget Committee this year. As you also know,
my authorizing Committee only has to comment on your budget. This
Committee, on the other hand, has the responsibility of balancing your
request against all of the other needs of the Federal Government. Mr.
Secretary, quite frankly, that balancing act is becoming increasingly
difficult.
If this Committee follows the recommendations set forth in the
budget resolution we've just passed, including the Burns amendment, we
will provide VA's health care system with a 12.4 percent increase in
direct appropriations. That would mean that since 2001, VA's health
care budget has increased by nearly 70 percent.
I know we all strongly support our veterans, especially in a time
of war. The care of our veterans is not a partisan issue. But, this
Committee is the place where the ``rhetoric meets the road.'' If we do
not make some serious decisions about VA's health care spending rates,
its budget will double every 6 years and will eventually collide with
all other areas of Federal spending--things like agriculture, parks,
and education. That is not a disputable fact. It's a mathematical
reality.
I know many of you on this Committee are not prepared to begin
charging certain veterans or increasing the copayments many of them
already pay for medications. I understand that. But, I strongly believe
that the time is coming for us to take the necessary steps to properly
manage VA's health care system even if that means charging $21 per
month for certain veterans to access the system.
I say to my colleagues: we are charged with the oversight and
funding of what is now considered to be one of the Nation's best health
care systems. It is a system of first choice, not one of last resort.
Today's veterans enjoy good access to high quality medical care. Now we
have a responsibility to ensure that its financial footing is sound and
sustainable so that tomorrow's veterans will also receive the benefits
of VA's enormous success.
Those management decisions will not be easy. Good management rarely
is easy. But, failure to make the decisions will be even harder on
tomorrow's veterans than it is on us today. I am prepared to talk or
work with any of you on ways to address this issue. In my capacity as
Chairman of the authorizing committee, I have already challenged our
VSOs to work with me. What I am not prepared to do is ignore this issue
and simply pass it on to the next guy. The challenge is too real and
the consequences too serious.
Mr. Secretary, thank you again for being here. Thank you Madame
Chair.
Senator Craig. And I know Louisiana and California feed
over money, but right now----
Senator Feinstein. Well, I made it pretty clear.
Senator Craig. She's got to understand who runs this
committee. No.
OIF/OEF VETERANS
During the floor debate in the Senate budget resolution, I
heard many of my colleagues express concerns about certain
facts. It has reemerged again today as it relates to OIF and
OEF veterans and numbers coming in. And I think it's important
that we get the record as clear as we can in light of this
historic budget. And it is a historic budget in size and scope.
You are comfortable with the 2 percent figure at this moment as
it relates to veterans coming into the system out of these two
conflicts.
Secretary Nicholson. Yes, sir, we are. The size of the
force over there is also somewhat diminished. And so, we're
comfortable, based on the experience that we've had, yes.
Senator Craig. More importantly, the funds that VA has
budgeted for in OIF and OEF veterans in this fiscal year, how
do you--how do actual expenditures compare with what VA
budgeted for thus far?
Secretary Nicholson. They are running less, by about 34
percent, than we had budgeted for this category of patients.
Senator Craig. So, in light of where the money seems to be
headed at this moment, based on your projections, you feel
you're on target.
Secretary Nicholson. Yes, I do. We're, I think, in good
shape. We are seeing somewhat more at this point, the halfway
point in the year, but our costs are less. So, we think that we
will be able to see--care for those that we see.
Senator Craig. And this also includes the outreach that DOD
is currently doing.
Secretary Nicholson. Yes, sir.
Senator Craig. Could you explain the distinction between
the cumulative number of OIF and OEF veterans who have been
treated at the VA since budget assumes will seek treatment in
the current year--the current fiscal year of 2007?
Secretary Nicholson. Yes. Because we see--let's say, in the
beginning, we--you know, we see X number, and then in the next
year, or the next measuring unit, we would see Y. But some of Y
are made up of those that we had already seen. So, in terms of
unique patients--that is, individual patients--it would be
different.
Senator Craig. Okay. Madam Chairman, I have some additional
questions I want to ask. Are you prepared to recess, and we'll
run and vote and come back?
Senator Feinstein. I thought--the chairman's going to come
back. But I thought I'd go down. And that way, we'd just keep
it going.
Senator Craig. All right.
Senator Feinstein. We'll do a second round.
Senator Craig. Okay.
Senator Feinstein. But if you're not finished, and would
like to do more, I can run and vote, and--well, you have to
vote, too.
Senator Craig. Well, why don't you go ahead, and I'll stay
here until the--until the chairman gets back. And if I find I'm
at risk, I'll recess it until she gets here.
Senator Feinstein. All right, excellent.
Senator Craig. Thank you.
Senator Feinstein. I will go, because I don't want to miss
you. We've got to talk reprogramming the money, which I know
you'll be delighted about.
QUARTERLY REPORTING TO CONGRESS
Senator Craig. I think, for the record, it's also important
to establish, based on, I think, the frustration of those on
the authorizing committee and the appropriating subcommittee
here, had in light of the past fiscal environment and the
shortfalls that became obvious, at our request, and your
urgence, we have established a quarterly reporting system so
that we can effectively monitor both outlays and anticipations
of movement beyond where the budget was established. We've had
that--we've had the first quarter report, and those will
continue.
Would you wish to comment on that as it relates to that
process, the modeling process, and, frankly, a new tracking
mechanism that you've incorporated that includes those kinds of
outputs to us?
Secretary Nicholson. Yes, Senator. Yes, Senator, I would. I
welcome the chance to comment on that, because, as I've said
earlier, this is a dynamic arena that we are in, with a war
going on and a large number of patients and potential patients
for this large system. So, we are very glad that we've gone to
a quarterly reporting system with you, the oversight people,
the Congress. With OMB, we're doing it monthly. And we've
instituted that. So, to do that monthly, we have, you know, an
almost daily tracking system, from a management point of view.
So, we have a--we have a much better feel for what is going on
at any given time than we've had in the past. And if we see not
just red lights, but yellow lights, we plan to be as fully
transparent as possible with you all about this, and the fact
that we may need your help to help the veterans.
Senator Craig. Well, I think that's important, that the
record show that, from that which some have a reason to be
concerned and have--and are making judgments to where we are
today, it is significantly different than how we have operated
in the past, and, I think, appropriately so, as we deal with a
dynamic process and the potential that that might change in
relation to conflict and activities and the outreach programs
the DOD is working in, in relation to that 24-month window in
which those coming out of Iraq and Afghanistan have opportunity
of services beyond what might be connected to actual injury or
problems arising from their service in the theater.
For the sake of me not missing a vote, or prolonging it,
I'm going to recess the subcommittee for a few moments. The
chairman will return, and I will return, also. So, the
subcommittee will stand in recess.
INFORMATION TECHNOLOGY SYSTEMS CONSOLIDATION
Senator Hutchison [presiding]. I want to reconvene the
hearing. There were two, and possibly three Senators who do
plan to come back for a second round. But I wanted to ask if
you could give me an update on the IT consolidation.
Secretary Nicholson. Yes, I can, Madam Chairman. By way of
background, we've done a spectacular job at the VA--and I say
``we,'' it's really the people who proceeded me; we're sitting
on their shoulders--and, you know, our electronic medical
records, it's a phenomenal achievement. But now we need to
bring the rest of the information technology of the VA into the
21st century. And it's a very spread-out system. It covers this
Nation--Hawaii, Alaska, Philippines, Guam. And there are a
lot--there have been a lot of individual kinds of systems and
applications out there, which is very inefficient, very
expensive, and not effective.
And so, we hired a very prestigious consultant to come in
and look at that, and make a set of recommendations to us. And
they have done that. And we have chosen to implement
essentially what they recommended, which is to centralize the
IT in this big bureau. And that is underway. I've signed the
implementing documents to do that. It involves the transference
of thousands of people in the Department from where they have
been into the governance of the chief information officer, the
Assistant Secretary for IT.
Senator Hutchison. Have you been able to see any results
yet, or is it just premature to see if there are savings or
efficiencies?
Secretary Nicholson. Well, it's just--it has just begun.
Senator Hutchison. Just begun.
Secretary Nicholson. Uh-huh.
RIO GRANDE VALLEY, TEXAS
Senator Hutchison. I wanted to ask you something on a
parochial level. The veterans in South Texas, as you know, have
been very concerned about their lack of a hospital there, and a
major clinic. You have, I think, come out with a terrific
proposal for a clinic in conjunction with a medical facility
that I think is going to be--it sounds, by the description,
like it's going to be a wonderful service for our veterans. But
then, on the subject of the hospital, I had had a
recommendation from a city council member that there was a
facility that had been closed that should be suitable for a
hospital. And you agreed to look into it. Has there been any
result from that yet, or is that still in progress, as well?
Secretary Nicholson. That is in progress. What I agreed to
was to do a study, an assessment of the needs in that Rio
Grande----
Senator Hutchison. Valley.
Secretary Nicholson [continuing]. Valley area to, number
one, try to assess what the populations of veterans were, what
their needs are, and what we have there available to serve
them, and what is possible that we could add. But that is an--
--
Senator Hutchison. In progress.
Secretary Nicholson [continuing]. Ongoing progress, yes.
Senator Hutchison. Well, that's what I asked for. And then
I did make the suggestion, which is in your office, of just
looking at this facility. I haven't seen it myself, so I'm not
saying it's appropriate, but if it is something that would be
feasible and lower cost and be more efficient, and if the
population warrants it in your priority list. Today, they have
to travel several hundred miles from that lower Rio Grande
Valley to San Antonio VAMC to Audie Murphy VAMC, if they are
going to need day surgery or day care, but some of it would be
overnight, as well. So, I would just look forward to hearing
about that.
The other area was your major construction account, which
is also somewhat reduced. And I just wanted to ask what your
thinking was on being able to justify a reduction in the major
construction account.
Secretary Nicholson. Well, we have, as I mentioned, several
ongoing projects, big projects. You know, the VA has not built
a hospital--not opened a new hospital now, I think, in 13
years, but we need to some new hospitals, and we're ongoing in
that process. But you can't spend all the money at one time.
And so, while we're going forward with Las Vegas and going
forward with Orlando, they really didn't need a lot of money in
the 2007 budget. So, we have in there the other projects. We
have several that need seismic repair. They're--it's just one
of those things, doesn't add much value to--it's like putting
new plumbing in your house, but you have to do it, if it's
needed. And, in this case, we have some properties that are
subject to earthquake vulnerabilities, and we're having to
spend, as you can see there, considerably amount of money for
seismic. And so, it--you know, it's a matter of those felt
safety needs versus some of the projects that needed some money
to keep them moving in this process.
Senator Hutchison. Are you looking, in the next 5 years, at
a 5-year plan for new hospitals, where you do see significant
needs? Is that part of your assessment, both for the Rio Grande
Valley, but for other places?
Secretary Nicholson. Yes. In fact, the CARES process, which
is a major comprehensive assessment to the capital assets of
the agency, versus projected populations, projected out to, I
think, the year 2012, and we have that data, and that's been
the basis for the decisions for new hospitals, in the case of
those that I've mentioned.
Senator Hutchison. And, of course, I know that I'm--I'm
dealing right now with the supplemental, and we have a major
commitment for New Orleans. And then there will be a major
commitment for the Armed Forces Retirement Home in Gulfport and
then a major commitment in Biloxi for facilities, as well. So,
I suppose that those are going to be coming into the regular
budget after they are built and able to operate.
Secretary Nicholson. Well, for operating, the--indeed, they
will. But New Orleans is in a supplemental----
Senator Hutchison. Right.
Secretary Nicholson [continuing]. Mode at--I think right
now we have requested $600 million and $75 million has
previously been appropriated.
Senator Hutchison. Right.
Secretary Nicholson [continuing]. It's only 8 miles away.
Senator Hutchison. Right. And that is going to be more a
regional center, as I understand it.
Secretary Nicholson. Yes.
Senator Hutchison. We're working right now on the
supplemental for what we can do with that--the land there at
Gulfport. I think we have a good solution for compensating the
Veterans Affairs for that land.
Secretary Nicholson. At Gulfport?
Senator Hutchison. Yes.
Secretary Nicholson. Uh-huh, yes.
Senator Hutchison. Yes.
CLAIMS PROCESSING
Can you give us an update on the progress the VA is making
on reducing the backlog of benefit evaluations?
Secretary Nicholson. Yes. I'll give you a--you know, kind
of the big picture. Then I'm going to ask Under Secretary
Cooper to, if he would, give you the detail.
But we are hiring new people, and training them, in the
effort to bring down the backlog. I just visited a--one of our
major regional offices in St. Paul last week. They're hiring
and training. There is a training gap with these people. It
takes about 15 months to really qualify a claims adjudicator,
you know, to do this, and do it carefully and accurately.
And, with that, I'd ask Admiral Cooper if he'd have
anything to add.
Admiral Cooper. Yes. We're attempting to attack that every
way we possibly can. We are hiring more people, and we're going
to do centralized training to ensure that we get them trained
properly to do the same thing across the country at 57
different regional offices. So, training is one of the main
things.
We're looking at some consolidation. We have a program
called Benefit Delivery at Discharge, which is for those people
coming out of the service at the end of their careers, and we
have consolidated that activity at two sites--one in Winston-
Salem, North Carolina, and other in Salt Lake City--so that
those two regional offices are doing those particular claims
and, therefore, hopefully doing them better and eventually a
little bit faster.
We do a lot of brokering. We try to look at those regional
offices which have a little bit more capacity. And as soon as a
claim is ready to rate, we broker it to those offices, so we
don't have an issue of not having enough people to rate the
claim at a specific site.
So, we're doing a lot of moving around. Primarily, however,
it is through training and hiring that we hope to eventually
succeed.
The major problem, however, is that we can do a lot for
output, but incoming is something we can't control. And as long
as the incoming keeps increasing, then we're sort of fighting
against it. But eventually we will get there.
Senator Hutchison. Senator Craig.
Senator Craig. Thank you very much, Madam Chairman.
VA BUDGET
Let me make a few comments, and then I have one last
question. I'll stay within our time limits here that are--I
think are important to make, because what I think I have said,
and others have said, and I think it's important that the
record show, that under this precedent we are looking at a
historic request of nearly $80 billion for veterans in this
country. That is a phenomenal prioritizing of resource, and it
demonstrates, without any question, in my opinion, the
commitment of this administration.
I also want to tell you that I've had a bite at this apple
prior to this subcommittee getting it. As chairman of the
authorizing committee, I have the responsibility of doing views
and estimates in a letter to the Budget Committee for the
purpose of establishing the level of funding that we will deal
with here, and that you in this committee must allocate. And,
in doing so, I think it is important to understand that we have
a problem growing here that we chose not to face this year on
the floor. And I think the Senator from California, in part,
touched it when she talked about the Burns amendment, stepping
back from the fees for 7s and 8s, and also the pharmaceutical
fee.
Here's the reality, though. This is a 12.4 percent increase
over last year. And I think it's important to understand that.
That means that, since 2001, VA healthcare budgets have
increased by 70 percent. That's also to suggest that if we
continue this trend, VA budgets will double every 6 years. And
I must tell this committee, that is not a sustainable course.
No matter how much we want for our States, or expect, or try to
find and get unique services, we cannot sustain by continuing
to ask at the level we're asking unless we ask something
different.
So, I chose this year to accept the administration's
approach, and to suggest that 7s and 8s, who have no
connection, in the sense that they are service-connected or
disabled--and, as you've already heard the Secretary say, of
which many of them already have healthcare--to pay less than a
carton of cigarettes a month to have access to the best
healthcare system in the country. And every VSO said no. And
the Congress said no.
Well, what the Congress is failing to recognize is that
they cannot sustain what they're doing. And we have to change
that. And I'm willing now to stand up and speak out and say
it's time to change. I accept what we've done. I accept what
this committee's been handed. And we will monitor and try to
act as wisely as we can. But we have a phenomenal collision on
course at this moment, because we are dealing, as I think we
all recognize, with largely discretionary funding that collides
with everything else we want to do. And mathematically the
reality at hand is the reality of great complication.
I've challenged all of the VSOs to work with me in the
coming year, because there was a time not long ago when they
accepted exactly what they rejected this year. And what we have
to look at are a variety of different approaches, I think, to
find revenue sources, the some $790 million that we decided not
to fund through these kind of new revenues. And, therefore,
because we decided not to fund them, and by funding them,
199,000, or somewhere near that, of that large number would
have dropped off from the 7s and 8s, because they have
alternative healthcare. That would have changed the real value
of this--of revenue in the reality of savings over--to well
over $800 million.
Well, we've chosen not to do that, so it's real dollars. It
isn't the $795 million that we would have gained by the new
revenue sources. It's actually over $800 million. I say that. I
think it's important that it be said for the record. It is my
opinion. And I will speak it as loudly as I can, recognizing
that my priority is to serve veterans, and the priority of this
committee and the Congress is to serve veterans, is to suggest
that we must find a sound and sustainable course of funding for
VA, not just for today's veterans, but for tomorrow's veterans,
in a very real problem that we have out there.
And I'm going to fight awfully hard over the course of the
next 12 months as to our--the priorities we establish and how
they get funded, because there is a reality that I think can--
that all of us can withstand the test of. Those who are in
need, those who deserve treatment, are being treated, and
they're being treated by the best healthcare system in the
world. And we've extended, to 24 months out, for those coming
out of Iraq and Afghanistan, services that heretofore they had
not had unless they were directly connected to a theater of a
war and a disability involved. It's important that, I think, we
say that.
Now, in saying that, let me ask this question. Mr.
Secretary, in my analysis of, and your feedback, over the
period of the last several months as we've looked at this
budget in dealing with 7 and 8 priority veterans, and
anticipating that by the action of raising a monthly fee so
that they could gain access, or be eligible for access, that
there would have been a certain number who would have left,
simply stepped back from it, because they had alternative forms
of healthcare, they would choose not to pay the $21 a month. Is
that correct?
Secretary Nicholson. That's correct, Senator.
Senator Craig. And we believe that was about how many?
Secretary Nicholson. About, I think, 199,000--200,000.
Senator Craig. And it is an--it is believed, based on your
surveys, that 95 percent of those had healthcare, and that's
why they would have stepped back.
Secretary Nicholson. Yes, sir.
Senator Craig. And so, the reality of the $790 million
raised by both pharmaceuticals and prescription drug copay and
also the fee would have been $790 million, but this loss, in
total benefit to the budget, would have been over $800 million.
Is that not correct?
Secretary Nicholson. $795 million is the amount.
Senator Craig. In new revenue.
Secretary Nicholson. No. It's the----
Senator Craig. Oh----
Secretary Nicholson [continuing] Combination.
Senator Craig [continuing]. Combination of, okay.
Secretary Nicholson. Revenue plus----
Senator Craig. I wanted to make sure I--I was dancing off
the top of my head in memory, and I wasn't quite sure. So, 795.
Secretary Nicholson. $795 million.
Senator Craig. $795 million.
Well, Madam Chairman and Ranking Member, that's a reality
check. And that's why I say what I say, because we're going to
squeeze these budgets, and squeeze them hard, to maximize
service to our veterans. At the same time, we are on an
unsustainable course. I do believe that. Because I think the
three of us will be presiding over $100 billion budget to the
VA in a very short time, and certainly within our tenure, at
the current rate.
And my suggestion to you is that you're going to have a
budget chairman at some point in time tell this committee that
that money simply is no longer available at that level of
increase.
Thank you, Madam Chairman.
Senator Hutchison. Thank you, Senator Craig.
I appreciate what you have said. It is--it's a tough
situation. And I am working with my staff on some potential
alternatives, that are not this one, but maybe other things,
that wouldn't hit a $28,000 level of annual income. But I would
look forward to working with you, Senator Feinstein, with the
VA, to see if there are other options besides the ones that are
envisioned in the bill that might be acceptable to the VSOs and
the committee, as well.
Senator Craig. Well, Madam Chairman, thank you. I know that
you and I have had those discussions. I really appreciate that
kind of thinking, because I think to continue to serve at the
level of service we want to provide for our veterans, we're
going to have to become creative in looking at a variety of
approaches to resolve this issue.
Thank you.
Senator Hutchison. Senator Feinstein.
Senator Feinstein. Thank you very much, Madam Chairman.
And I think, Senator Craig, what you've said is both wise
and sobering. The question is really whether somebody on the
floor comes up with something, whether there are enough
lemmings that are going to follow along. And--oh, I'm--
shouldn't have said that word.
But I'm really concerned, because we have a lot of wounded,
and we have a lot of people now that are going to be using
veterans services for a long, long time, and many with, you
know, terrible injuries. And so, we have to be ready for it.
MEDICAL SERVICES REPROGRAMMING
And I'm concerned with the planning model used, Mr.
Secretary. And let me tell you how I'm concerned. You've
submitted a reprogramming request, which is what I want to talk
about. And that proposal is to transfer $370 million from the
medical services account to the medical administration account.
You say that it's needed to perfect the distribution of funds
between these two accounts as a result of requesting and
receiving the 2005 supplemental of $1.5 billion, and the 2006
budget amendment of $1.452 billion, entirely in the medical
services account. Both of those came to the medical services
account.
Now, what concerns me is that you're transferring this
money, but you're not annualizing the cost, and you're saying
that it was known at the time that this was going to be done.
It was never told to us that this was going to be done, when
last year's budget was considered. And this is going to fund
salaries in the new account, but, as I understand it, it isn't
annualized.
Would you please comment on what impact this is going to
have on the delivery of healthcare services? Do we now figure
that you're going to be short $370 million for healthcare
services? And, also, as you know, one budget affects the other,
so does this mean that you're going to need, at some point
during the year, an additional $370 million above the
President's 2007 figure? Your comments are very important.
They're going to be inscribed----
Secretary Nicholson. Yes, I--thank you, Senator Feinstein.
I hope that I can allay your apprehensions about this, because
there should be none. Zero. This will have no impact on the
delivery of healthcare. This is an accounting issue.
The Congress authorized us three accounts: a medical--a
services account, an administration account, and a facilities
account. And we were given money and--through a supplemental.
And it was deposited into one account, although the
justification that we gave for it was the detail of how we're
planning to use the account. But the money was deposited into
one account. This is not new, by the way. This has happened in
previous years.
Now what we're asking is that we transfer this money, which
happens to be in the--I think about 1.2 percent of the total;
it's $370 million--into the medical administration account. And
that--you're right, that is where we pay the help there. But it
was--it is not a diminution of the resources needed for medical
services. It was just that it was all put into one account. It
would be like if you had, you know, gotten your paycheck into
one account, but you use it out of three to run your
operations. That's all it is.
Senator Feinstein. Okay. So, it's just going to be an
accounting. We will asterisk the record, and hopefully will not
have to send it to you later in the year.
MENTAL HEALTH FUNDING
Okay. One of my concerns is that, once again, you may--and
I don't know that you are, but you may be underfunding. And if
I look at just one thing, veterans patients in fiscal year 2005
and the first 4 months in 2006--these are mental disorders. In
2005, from October 1, 2004 to September 30, 2005, there were
31,860. In 2006, from October 1, 2005 to January 30, 2006--
that's just 4 months--you almost reach that number. There's
24,268. My question is--I hope your modeling is dynamic enough
to pick up the increase, and do it accurately.
Secretary Nicholson. Okay, I--that's a good question, and
I'm going to ask Dr. Perlin to give you the detail on it.
Dr. Perlin. Thank you, Mr. Secretary.
Senator Feinstein, that's a great question. As you know,
here we are in 2006, talking about 2007. And, of course, we're
using data from the completed year of 2004. And that's the
reality of the budget cycle. Now, the model is, as the
Secretary said, really a terrific model. It's used by over 100
million--or used to predict the costs of over 100 million
beneficiaries, including in all the Blue Cross programs, Aetna,
Cigna, public programs, DOD components, Medicaid programs, et
cetera. So, it's very good. But obviously there is a lag time
inherently. And so, I think what we've tried to say is, with
your encouragement, we have the quarterly meetings, so, on top
of the model, we superimpose the reality. And, in fact, the
mental health budget is, as the Secretary has discussed,
extremely robust, $3.2 billion, up $339 million. And, in fact,
it actually is not only sufficient to meet the needs of those
veterans, but to anticipate even--and improve--services to
really the height of world-class service. So, it is a solid
budget, but it is the reality on top that's much more dynamic
than the model could ever be.
Senator Feinstein. So, in other words, you've corrected the
planning model that you had used before that got us into the
problems where we were, and you can assure us that there isn't
going to be a problem this year, this next year.
Dr. Perlin. There will not be a problem this year. It's a
solid model. And----
Senator Feinstein. Well, this next--the 2007 year.
Dr. Perlin [continuing]. And as changes--as changes, or if
world conditions that can't be foreseen by any of us this
moment change, that's the purpose of the quarterly meeting. But
we stand by this model, these projections, and our comfort in
them is solid.
Senator Feinstein. Okay. I know we have a vote, Madam
Chairman. I think that's it for me.
OIF/OEF VETERANS
Why--one last question--why is the VA estimating a decrease
of Iraq/Afghanistan veterans in 2007, when the trends suggest
you might see more, rather than fewer?
Secretary Nicholson. Senator, we've, you know, looked at
that carefully. We now have several years of data also to look
at. And the--you know, the size of the force is actually
diminished in the deployment in the combat zone. That
influences that number, as well. It is diminished by about
11,000 that we're projecting in the 2007 budget from what we're
projecting that we will see in 2006.
Senator Feinstein. I have 109,191 in 2007.
Secretary Nicholson. Right.
Senator Feinstein. And for the entire fiscal year, VA has
estimated we treated a total of 110,556 Iraq and Afghanistan
war veterans. Is that wrong?
Secretary Nicholson. For 2006?
Senator Feinstein. For the entire fiscal year.
Secretary Nicholson. Yeah.
Senator Feinstein. That's this fiscal year, right? Yeah, in
this fiscal year, 110,000. You're estimating, for the next
fiscal year, 109,000. So, you're cutting it back. Now, you're
saying there are fewer troops?
Secretary Nicholson. Cutting it back by 1,000.
Senator Feinstein. Right.
Secretary Nicholson. Uh-huh.
Senator Feinstein. It's the----
Secretary Nicholson. It's based on--you know, we're
consulting much closer with DOD on deployments, and it's--you
know, it's not materially different. It's about 1,000. The
number I gave you before was based on our 2005 experiences.
Senator Feinstein. Well, I hope so. I hope that comes true,
that there is not going to be some other event that's going to
greatly increase the numbers. But----
Secretary Nicholson. Well, I'd like to----
Senator Feinstein [continuing]. I guess my overall----
Secretary Nicholson [continuing. Comment on that.
Senator Feinstein [continuing]. Point is that you--even a
12.4 percent increase, you are really closely budgeted.
Secretary Nicholson. I would agree with that, Senator
Feinstein. And, as I've said, and I would say again, that I
think we're doing, you know, an able and a careful job of
trying to predict this. But it is a dynamic situation. We are
at war. And there are a lot of veterans out there that are
eligible for VA care who have not yet, you know, made it
available--or taken advantage of it. So, it is dynamic. And
that's why I think that we all ought to recognize that this
could change, which is why we've instituted these quarterly
reviews with the Congress, and a monthly review with the OMB.
Senator Feinstein. Well, I think it'd be very useful--and
I'm glad you're doing this quarterly--for us to know, because,
you know, post-traumatic stress disorder is only a $5.5 million
increase over last year, and I just cross my fingers and hope
that this is adequate and that we don't run into the same
problem.
So, I thank you very much. And I thank you. The facilities
really, I think, are greatly improved in their management and
their care and concern, and I very much appreciate that, and--
--
Secretary Nicholson. Thank you.
Senator Feinstein [continuing]. I want you to know that.
Senator Hutchison. Secretary Nicholson has asked to leave
at 4:30. Obviously, Senator Murray, you just returned. Would
you be able to wrap up in 5 minutes? And would you be able to
stay, Secretary--Mr. Secretary----
Secretary Nicholson. Sure.
Senator Hutchison [continuing]. For another 5 minutes or
so?
Have you voted already on final passage? I think I'm going
to go ahead and leave, if you will wrap up. And just know that
he was trying to leave at 4:30, and then end the hearing. I
would appreciate it.
Senator Murray [continuing]. Your answers, the shorter my
time.
Senator Hutchison. All right. Thank you.
Senator Murray [presiding]. No, I do have a couple of quick
issues and really appreciate your bearing with us as we go back
and forth on votes.
BELLINGHAM, WASHINGTON
But, Mr. Secretary, I wanted to ask you about the CBOC
situation in Bellingham, Washington. We got a white paper--
actually sent one to this committee--about evaluating those in
the context of fiscal year 2007 budget. If I could just ask you
real quick what the timeline is on that, and when can our
veterans expect to see progress on the Bellingham CBOC?
Secretary Nicholson. Senator Murray, we have that on our
list, and we're--we have it under review. But I would be unable
to commit to you today when we might do that.
Senator Murray. Okay. If I could follow up with you on
that, I was home over the recess and got asked about that
constantly, so I told my vets I would be seeing you and I would
ask the question. So----
Secretary Nicholson. We have committed one to--a new one to
North Central Washington, as you know.
Senator Murray. Right. Right. And I was there, and that's
why everybody in Bellingham wanted to know.
TRIBAL MENTAL HEALTH
On tribal veterans, as you know, our tribal veterans have
participated in the armed services in a higher per-capita rate
than any other minority group. And I met with a number of
tribal veterans over the recess, as well, who were very
concerned about getting access to culturally relevant services.
And I'm especially worried that out in VISN 20 Camp Chapparal,
which is a tribal mental health camp--I don't know if you're
aware of the services that are there--they're--they've lost
half their funding. And they're really disappointed. And many
tribal veterans expressed to me that they thought the VA was
trying to--had made--actually made a conscious decision to
ignore their needs. So, I just wanted to raise that with you.
And if we could explore with you how we can make sure that that
is funded----
Secretary Nicholson. Thank you, Senator. I'm going to ask
Dr. Perlin if he'd respond to that.
Dr. Perlin. Thank you, Senator Murray.
And, as you know, we make a serious commitment. Secretary
Nicholson, in fact, in this budget, supports a $339 million
increase to bring the mental health budget to $3.2 billion. We
take this very seriously. And I've been driving a mental health
strategic plan, and we appreciate your support.
I appreciate your bringing that to my attention. I will
look into it and we'll be back to you----
[The information follows]
The Veterans Integrated Service Network (VISN) 20 and its
predecessor organizations provided funding for a week for Camp
Chaparral from 1992 through 2004 for as many as 75 participants each
year. Over the years, VA funding climbed from $10,000 to $50,000 per
year.
In fiscal year 2005, funding was discontinued for Camp Chaparral
due to budgetary concerns and the need to direct all discretionary
funding to direct patient care, with an agreement to reconsider funding
the Camp in fiscal year 2006. The Yakima Tribe was able to secure
funding elsewhere for a smaller version of the Camp and VISN 20
facilities sent 15 participants.
For fiscal year 2006, the Camp is a project that VISN 20 intends to
support. Planning for this year's Camp Chaparral is proceeding, and it
will be held in August 2006. To adjust for continued budgetary
restraints and tight staffing levels, a smaller number of primarily
clinical VA staff will attend in a shorter time frame, allowing VA
staff to have this valuable experience without an entire week away from
their duty stations. VISN 20 staff has been working directly with
members of the Yakima Tribe on the planning of this year's Camp.
Senator Murray. If you can--if we could have a conversation
about that, if you could let me know, because it's an extremely
important out there in VISN 20.
Dr. Perlin. Right.
Senator Murray. So, if we could follow up with you on that?
Dr. Perlin. Absolutely.
Senator Murray. Okay.
GULF WAR RESEARCH DATA
I wanted to ask about Gulf War research data, because, at
the end of the year, VA is going to reach its deadline for data
collection on Gulf War veterans. We are still learning an awful
lot about the exposure issues to our veterans from the Gulf
War, and I wondered if you would be willing to extend, or
eliminate, that deadline so we could continue the data
collection.
Secretary Nicholson. Well, we, you know, have just
committed, and have entered into an agreement with the
University of Texas Southwest Medical Center in Dallas, to
extend our research endeavors with them. They've had a team of
people there working on it for a long time under a Dr. Haley.
And that commitment that we have is a 4-year commitment at $15
million a year. I mean, that presupposes that--you know, the
approval of that, although we would be able to, I think, manage
that within our overall research budget. So, we're very
committed to continuing that research.
Senator Murray. Okay. Even though the deadline is this
year? So, you'd be willing to continue to collect data past
this year?
Secretary Nicholson. Yeah, the answer is yes. We're very
committed--I'm going to ask Dr. Perlin, though, because I may
be missing the important point of the deadline.
Dr. Perlin. Thank you, Senator Murray.
I think one of the things that now exists that didn't exist
10 years ago when we were first looking at how to capture
information about Gulf War veterans and their health outcomes
was that then one tried to establish a one-off registry. As
you've heard a lot of discussion, and we appreciate your
support for the electronic health record, but there is no
better mechanism for capturing data, not just the facts that
are in one registry, but across the entire spectrum of whatever
the individual comes in with, than the electronic health
record. And so, our commitment to understanding the health
outcomes of Gulf War veterans will actually be realized in far
better ways than we could have envisioned 10 years ago. We use
the health record, and you actually generate a cohort of every
Gulf----
Senator Murray. So, you will----
Dr. Perlin [continuing]. War veteran.
Senator Murray [continuing]. Still be collecting that data,
in a--but in a different way?
Dr. Perlin. We will be collecting data that actually
supercedes and augments in the health record.
Senator Murray. Okay. I think that's really important,
because we're still learning a lot.
Dr. Perlin. Yes, ma'am.
STANDARDIZING DIABETES MONITORING EQUIPMENT
Senator Murray. Let me quickly ask you about the diabetes
monitoring issues, the standardization of that. I am hearing a
lot of concern from our folks back at home. And I know you were
asked by the chairman in the House, but I'm not sure I knew the
answer, that, as you know, Congress has reaffirmed its support
for the current system on a number of occasions, and most
recently in the fiscal year 2006 Military Quality of Life Act.
I want to read it to you, because it's important. Section 220
of that bill said, ``None of the funds available to the
Department of Veterans Affairs in this act or any other act may
be used to replace the current system by which the Veterans
Integrated Service Networks select and contract for diabetes
monitoring supplies and equipment.''
As we look at your budget request, I want to take a moment
for us--I think it's important to understand--to confirm that
the clear congressional direction is not to allow--or not to
have standardized diabetes equipment purchases. To your
knowledge, in the months that has been passed, has your
Department or any of your staff continued to pursue a proposal
to standardize diabetes monitoring supplies and equipment?
Secretary Nicholson. No.
Senator Murray. Well, okay. To your knowledge, no one has
been told to do this.
Secretary Nicholson. No. The--no.
Senator Murray. Okay. Well, it----
Secretary Nicholson. Dr. Perlin, you can comment further,
if you like.
Dr. Perlin. Thank you, Mr. Secretary.
Senator Murray, in fact, I think what's worth noting is
that the ability to educate veterans well about their diabetes,
to achieve benchmark outcomes, as in the TRIAD study, where
diabetic patients in VA get better care than in other health
systems in the country, comes from some degree of consistency
and use. But the concern, as we've understood it, is that no
veteran be forced to abandon the equipment they're using, or
for us to have a rigid one-device type of activity.
Senator Murray. Right.
Dr. Perlin. So, that guidance, in terms of not transforming
from where we are, has been well received and well understood.
But I think I would be remiss if I didn't acknowledge that
there is some degree of consistency so that there can be
consistent training and supplies availability. But we are not--
--
Senator Murray. Well, they are--it has been reported, and I
think it's true, that a number of VISN directors still believe
that there is direction from your Department, despite
congressional attention, to go to a standardized approach.
Could you write a letter to each of your VISN directors and
tell them that the--reaffirming the current process for
selecting diabetes monitoring equipment? And, if you could, if
you could provide us with a copy of that correspondence, so we
can let them----
Dr. Perlin. Well, I would like to look into the issue,
because there has not been instruction to--instruction has been
to follow the precepts of what was provided.
Senator Murray. I'm sorry----
Dr. Perlin. I will be happy to look into the issue.
[The information follows:]
The Department of Veterans Affairs (VA) is not pursuing a proposal
to standardize self monitoring blood glucose equipment through a single
national contract. Clear communication has been provided to VA Central
Office pharmacy program managers and VISN Formulary Leaders regarding
the prohibition to pursue standardization contracting. This direction
to VA came from the fiscal year 2006 Appropriation Bill, which
prohibits VA from expending funds to pursue a national contract.
Dr. Perlin. To the best of my knowledge----
Senator Murray. Okay.
Dr. Perlin [continuing]. There has not been additional----
Senator Murray. Okay.
Dr. Perlin [continuing]. Standardization.
Senator Murray. Okay. If we could have a conversation with
you about that, I'd really appreciate it, because I think there
is confusion out there on that issue.
VETERANS INTEGRATED SERVICE NETWORK 20
I will just ask one more question. And I know you are over
your time limit. But I just want you to know that as a person
who represents VISN 20, I am concerned about us being
consistently the worst VISN for outcomes in primary and
specialty care, and would just like your assurances that you
will work with us to try and address this issue. And I'd love
to hear your response, maybe in writing, about what we can do
to try and get better care out there.
Secretary Nicholson. We'd be happy to do that. We have a
new VISN director, as you know, and have charged him with, you
know, some certain performance expectations for improvement.
And we're very hopeful. He's a very capable person. So----
Senator Murray. Yeah.
Secretary Nicholson. But we'd be happy to discuss it----
Senator Murray. Good. I----
Secretary Nicholson [continuing]. With you at any time.
[The information follows:]
As of May 5, 2006, VISN 20 has 6,443 veterans waiting for primary
care appointments. This is an 11 percent decrease since April 1, 2006,
when 7,246 veterans were waiting.
The newly appointed Network Director, Mr. Dennis M. Lewis, FACHE,
is providing aggressive leadership to improve access both for primary
and specialty Care. In fiscal year 2005 and 2006 to date, he has
committed over $31 million to increase operating rooms and intensive
care units and medical/surgical beds to rebuild VISN 20's
infrastructure and increase inpatient capacity.
In December 2005, each facility director in VISN 20 was assigned as
the ``champion'' of an initiative to address the challenge of
increasing access and improving quality. The VISN has now developed
strategies for improving performance in clinical measures of care;
increasing enrollment in care coordination home tele-health; breaking
the cycles of peaks and valleys in specialty care capacity, and fully
implementing panel management.
The initiatives are closely monitored for progress, and facility
leadership is required to update the VISN on the results of actions
taken. In addition, the VISN is tracking the aggressive recruitment and
hiring of staff that will also increase capacity. More recently, each
facility has been required to implement group clinics by the end of May
2005 to increase capacity and to identify what services patients
require. In all of the strategies that have been developed and are
being implemented, the Network Director has emphasized that quality
care requirements must be paramount in any approach that increases
capacity and access.
ADDITIONAL COMMITTEE QUESTIONS
Senator Murray. We would all like to understand why it's
the case, and what's contributing to that, and make sure we're
focused on doing better. So, I appreciate your response.
And thank you very much, Mr. Secretary, Dr. Perlin, and
everyone. We really appreciate your patience with all of us.
[The following questions were not asked at the hearing, but
were submitted to the Department for response subsequent to the
hearing:]
Questions Submitted by Senator Kay Bailey Hutchison
Question. I'm a little concerned the VA is presenting a research
budget of $399 million, a 3.16 percent decrease from fiscal year 2006.
It is even below the fiscal year 2005 appropriated level. Last year, we
asked the VA to place a high priority on Gulf War Illness research,
smart limb technology, prosthetics, and other research efforts. This is
a time when your research budget should fully fund research and
development for advanced medical technologies and prostheses.
Would you please tell us how the VA will meet these research
obligations, even though your budget request for research is less than
last year's level?
Answer. The Department of Veterans Affairs (VA) is committed to
improving the impact of its research program by ensuring that resources
are targeted to projects with the highest scientific merit and most
relevance to the needs of veterans.
VA is projecting total resources of $1.649 billion in fiscal year
2007 which is an increase of $17 million or 1.1 percent over the 2006
level. These resources consist of $399 million in direct appropriation;
$366 million in medical care support funding; $676 million in other
Federal grants such as from Department of Defense and the National
Institute for Health; and $208 million from private or university
funding.
In fiscal year 2007, VA expects to fund about 2,045 direct projects
and 2,839 full-time equivalents. In fiscal year 2006 and 2007, the
research account no longer pays for its Information Technology (IT)
equipment because the central IT Systems appropriation now pays for
this type of equipment. The funding which will support IT projects for
research is about $15 million in each of these fiscal years. The goals
for research are to ensure a balance among the competing needs for
meritorious projects, to evaluate and fund existing programs at
appropriate levels, and to fund new projects to ensure the advancement
of health care for our veterans. Strategies to accomplish these goals
include using attrition, transitioning to shorter durations of awards,
and conducting competitive reviews of research centers. VA is using
performance-based criteria to decide whether to modify, terminate, or
expand programs.
For example:
--Evaluation of Centers of Excellence.--Centers of Excellence (CoEs)
are established only on a competitive basis and their
performance is regularly reevaluated through explicit review.
In the past year, the Health Services Research and Development
Service (HSR&D) closed a HSR&D Center of Excellence because it
was not contributing sufficiently to scientific advances. In
addition to freeing $458,000 per year for more productive
activities, this action is expected to stimulate increased
productivity among other CoEs.
--Evaluation of Research Enhancement Award Programs.--The Biomedical
Laboratory and Clinical Science Research and Development
Services reduced the number of Research Enhancement Award
Program (REAP) sites from 34 to 19. This was done to maintain
program quality (a REAP application success rate of 25
percent), improve program focus by making REAP awards for study
of diseases that are most commonly treated within the VA health
care system, and to match resources to those research groups
that have contributed most to scientific productivity. The
resulting savings of $3.75 million was used to fund an
increased number of individual merit review applications.
Clinical Research Productivity.--Developing and implementing small
clinical trials within the Medical Research Service was not resulting
in larger clinical trials. To address this problem, the Medical
Research Service was reorganized into the Biomedical Laboratory and
Clinical Science Research and Development Services. The management of
small clinical trials was transferred into the Clinical Science
Research and Development Service (CSR&D) and the Cooperative Studies
Program (CSP) was merged into CSR&D. As a result, the CSP clinical
trials planning groups can now assist individual investigators planning
small clinical trials. This is expected to significantly increase
clinical research productivity.
Question. The Subcommittee feels strongly that the VA establishes
specialized medical treatment facilities for mental health and Post
Traumatic Stress Disorder as ``Centers of Excellence.'' These centers
will allow the VA to consolidate its specialists in personnel,
training, and resources to reach the best results for our veterans. For
Mental Health/PTSD, in particular, the VA was directed to establish
three centers located in the Medical Centers in Waco, Texas; San Diego,
California; and Canandaigua, New York.
Please tell us what progress has been made in each of these
centers. Are any of these Centers operational?
Answer. While none of these sites are currently operational, the
Office of Mental Health Services has been working closely with
individuals from Central Texas VA Health Care System (CTVHCS) at WACO
and VISN 17; Canandaigua VA Medical Center and VISN 2; and San Diego VA
Medical Center and VISN 22 to develop and refine plans for implementing
the Centers of Excellence on mental health and Post- Traumatic Stress
Disorder. Each of the Centers will include Research and Educational as
well as clinical missions to allow them to work toward developing new
knowledge and new care providers, as well as to meet current care
needs. Each of the Centers will be multifaceted in their activities.
Nevertheless, it is possible to summarize their areas of focus:
Canandaigua will focus on best practices for treatment of PTSD and
other stress-related disorders and for prevention of complications.
CTVHCS will focus on both smooth transition from the Armed Forces to
the community and the VA and on rehabilitation and recovery. San Diego
will focus on the clinical neuroscience underlying the onset of PTSD
and related conditions as well as their response to treatment. The
implementation of these Centers will proceed in steps with the early
selection and funding for leadership and administrative staffing. This
will be followed by expedited development and interactive review of the
research, educational, and clinical plans, and full funding of the
Centers to implement these programs.
Question. The purpose of the CARES program is to systematically
renovate and modernize the VA's health care infrastructure and to
provide greater access to high-quality care for more veterans. The VA
is requesting $399 million for Major Construction, a 52 percent
decrease from the budget request level in fiscal year 2006. There are
now 17,000 OIF/OEF wounded soldiers, sailors, Marines, airmen, National
Guard and Reserve forces requiring medical care.
With many of these many men and women requiring long-term care and
rehabilitation, what impact will this increased workload have on the
CARES decisions made in 2004?
Does the VA have any plans for a new CARES evaluation or study?
Answer. Since the 2004 CARES decisions were made, VA has modified
the VA Enrollee Health Care Projection Model (VAEHCPM) to include OIF/
OEF workload projections. This additional workload has been and with
each model update will be integrated into decisions regarding the level
and types of services OIF/OEF veterans need, including long-term care
and rehabilitation services. In light of the enhancements to the
VAEHCPM and the emphasis on services to OIF/OEF veterans, we do not
anticipate a separate evaluation or study regarding long-term care/
rehabilitation services for this group of veterans.
Question. For the Compensation and Pension programs, the VA is
requesting $38 billion, $4.1 billion above the fiscal year 2006 level
or a 12 percent increase. In fiscal year 2005, the VA's average days
pending in rate-related actions was 122; the projections for fiscal
year 2006 is 150 and for fiscal year 2007 is 141, with a strategic
target of 78.
What efforts will VA make to decrease their claims from 150 in
fiscal year 2006 to 141 in fiscal year 2007?
Answer. In the fiscal year 2007 budget submission, VA projected a
significant increase in the volume of incoming disability compensation
claims as a result of the special outreach mandated in the Military
Quality of Life and Veterans Affairs Appropriations Act for 2006. The
increased workload is projected to be received in fiscal year 2006 and
to continue to impact our pending workload and timeliness of processing
into fiscal year 2007. Timeliness of processing is projected to begin
to improve toward the end of fiscal year 2007 as these additional
claims are processed and the pending claims inventory is returned to
more normal levels.
VBA is currently in the process of a major hiring initiative that
will add over 850 new employees this year. Our aggressive fiscal year
2006 hiring plan will allow us to enter fiscal year 2007 at or above
our requested level for fiscal year 2007 of 13,104 FTE. We anticipate
that the training and experience these new employees will receive this
year will enable them to have a positive impact on workload reduction
efforts in fiscal year 2007, resulting in improved timeliness of
processing.
Training for all of our employees continues to be enhanced to
ensure they have the necessary skills and tools to perform their duties
timely and effectively. An annual core training curriculum for all
decision makers is now in place that includes special broadcasts on
current issues and training on the more complex aspects of claims
processing.
Question. How will you reach your strategic target of 78 average
days for claims processing?
Answer. We are continuing to evaluate the feasibility of a 78-day
strategic goal for the average age of claims in our pending inventory
(``average days pending''). Last year, VA changed the strategic goal
for average days to process a rating decision from 100 days to 125 days
based on recent changes in the law and in the nature and number of
disabilities being claimed that have significantly lengthened the
disability decision process. Our review will determine whether a
similar change is appropriate in the strategic goal for ``average days
pending.''
______
Questions Submitted by Senator Mitch McConnell
Question. Since May 2004, when the Capital Asset Realignment for
Enhanced Services (CARES) decision was released,
PricewaterhouseCoopers' consultants have been working with the VA and
the local community to determine the future healthcare facility needs
for people living near Louisville, Kentucky. It is my understanding
that its report and recommendations have been submitted to the VA.
When do you expect the decision to be made on the future of the
Louisville medical facility?
Answer. The Secretary is reviewing and making his decisions
concerning Stage I Reports for each study site independent of one
another. This will result in multiple announcements in the near future.
Question. Louisville and Lexington, Kentucky's two largest cities
are part of VISN 9 which are not scheduled to receive any funding for
fiscal year 2007 for constitution projects.
Why is this?
Answer. There are two reasons the Louisville and Lexington VAMCs
are not scheduled to receive Minor Construction funding in fiscal year
2007:
--Of the five Minor Construction projects submitted by VISN 9 for
fiscal year 2007, one was from a medical center within these
two cities--Louisville VAMC. The rest of VISN 9's projects were
for the other medical centers within the VISN.
--Louisville's project is a Research project, ``Renovate Building 8B
for Research.'' Although Research projects receive
approximately 5 percent of the Minor Construction funding,
there were 25 Research projects competing for the resources.
Based on the anticipated appropriations, this will most likely
fund the top two Research projects; Louisville's Research
project ranked in the middle of the list.
Question. The CARES study recommends seven Community Based
Outpatient Clinics for VISN 15, which includes Daviess, Hopkins, and
Graves Counties in Kentucky. Although the budget request includes three
projects for VISN 15, none of the fiscal year 2007 funds will be spent
on any of the proposed projects in Kentucky.
Please explain why Kentucky is not slated to receive any of the
VISN 15 funding for fiscal year 2007.
Answer. The Capital Asset Realignment for Enhanced Services (CARES)
study proposed three Community Based Outpatient Clinics (CBOC) for
Kentucky that are in the VISN 15 service area. One of the locations,
the Hanson CBOC (Hopkins County, KY) was activated in August 2005. The
other two CBOCs for Daviess and Graves Counties, KY, remain pending.
Contingent upon funding available in fiscal year 2007, Marion (IL)
VAMC will submit a business plan proposal for an additional Kentucky
CBOC. Activation will be contingent on VHA review and VA approval.
Question. Does the VA have criteria in place for determining the
order in which the recommendations made in the CARES study will be
implemented? If so, please provide those criteria to the Committee.
Answer. The VA has a long-standing process to prioritize
infrastructure projects. Projects are evaluated against a CARES-
specific decision model comprised of the following criteria (in
priority order):
--Service Delivery Enhancements (includes realignments)
--Safeguard Assets
--Special Emphasis Programs
--Capital Asset Priorities/Portfolio Goals
--Departmental Alignment
--Financial Priorities
Public Law 108-170, the Veterans Health Care, Capital Asset, and
Business Improvement Act of 2003, required VA to evaluate projects
based on a methodology that prioritizes realignments and safety
projects in the first and second priorities. The VA decision model
described above has been validated by OMB and Congress as a tool for
judging competing needs for scarce capital asset project funds in
Agency budget requests to Congress. A more detailed description of the
decision criteria can be found in Appendix C of Volume 3, Construction
and 5 Year Capital Plan, of the fiscal year 2007 Congressional Budget.
______
Questions Submitted by Senator Dianne Feinstein
Question. The Death Pension is a benefit paid to eligible
dependents of deceased wartime veterans. However, it is clear that
under the current income eligibility formula, death pension does not
meet its original intent of covering the living expenses of dependents
of deceased wartime Veterans.
Can you describe the current formula and income eligibility levels
that are now employed to determine whether a dependent of a deceased
wartime Veteran may receive compensation through the VA?
Answer. Under the provisions of Public Law 95-588, VA's Improved
Pension is an income maintenance program designed to assure a level of
income to wartime veterans and their survivors. To be eligible, a
claimant may not have income countable for VA purposes that exceeds the
yearly income limit (maximum annual pension rate) shown in the chart
below. The maximum pension rate is higher for veterans than for
survivors.
The claimant's countable income determines the amount of VA
benefits paid. There is a dollar-for-dollar reduction from the maximum
rate for all income received by a claimant (excluding other needs-based
program payments such as SSI or welfare). Medical expenses that exceed
5 percent of the maximum annual pension rate and for which the claimant
is not reimbursed are deducted from the claimant's countable income to
increase the amount of pension payable. The monthly rate payable is
calculated by subtracting the claimant's countable annual income from
the maximum annual pension rate and dividing the difference by 12.
----------------------------------------------------------------------------------------------------------------
Maximum Annual
Death Pension Pension Rate (as Minimum Monthly Maximum Monthly
of 12/1/05) Payment Payment
----------------------------------------------------------------------------------------------------------------
Surviving Spouse--Without Dependents................... $7,094 $1 $591
Surviving Spouse--With One Dependent................... 9,287 1 774
Surviving Spouse Aid & Attendance--Without Dependents.. 11,340 1 945
Surviving Spouse Aid & Attendance--With One Dependent.. 13,529 1 1,127
Surviving Spouse Housebound--Without Dependents........ 8,670 1 723
Surviving Spouse Housebound--With One Dependent........ 10,860 1 905
Child Only............................................. 1,806 1 151
----------------------------------------------------------------------------------------------------------------
Question. What do you believe would be a more acceptable and
appropriate yearly income threshold that would ensure that low-income
dependents of wartime Veterans receive adequate compensation through
death pension benefits?
Answer. In December 2004, the Evaluation of the VA Pension Program
concluded that survivors receiving pension are worse off, on average,
than similarly situated low-income female and elderly Americans. On the
other hand, veterans receiving pension were found to be generally
better off than their peers. According to the report, this situation
exists because veterans are eligible to enroll in VA healthcare,
whereas survivors are not. Consequently, very few veterans in receipt
of pension are also receiving Medicaid or SSI benefits. A much larger
number of survivors, more than 40 percent, receive SSI and Medicaid.
VA has not determined what, if any, changes should be made to the
income threshold for the death pension program. It is possible that
raising the maximum annual pension rate for survivors, especially those
not entitled to Medicare, could jeopardize their continued eligibility
for Medicaid. An increase in the death pension rate could potentially
worsen some pension beneficiaries' overall financial position due to
the loss of healthcare coverage. We believe that any proposal being
considered by Congress to raise the income limit for death pension
eligibility should take this factor into consideration.
Question. Does VA have any plans to alter the current income
threshold and eligibility formula to better provide for the needs of
dependents of wartime Veterans through the death benefits program?
Answer. Legislation would be required to change the current income
threshold and eligibility formula for the death pension program. VA
does not have any current plans to propose legislative changes to the
death pension program.
______
Questions Submitted by Senator Mary L. Landrieu
Question. I would like to ask you a question regarding the New
Orleans VA Medical Center. In the House of Representatives' passed
version of the Hurricanes of the Gulf Coast Supplemental #4, $550
million was appropriated to reconstruct the New Orleans VA Medical
Center. Included in this appropriation was language allowing you to
transfer up to $275 million to the VA Medical Services account for
unanticipated medical costs of returning veterans fighting the Global
War on Terror.
Do you support the inclusion of this language?
Answer. VA appreciates the House action in this matter; however, VA
does not expect to utilize this authority for either the remainder of
fiscal year 2006 or fiscal year 2007 for the medical costs of returning
veterans fighting the Global War on Terror because these requirements
are already funded in the fiscal year 2006 and proposed fiscal year
2007 budgets. VA needs the referenced funds to construct a new medical
facility for New Orleans to replace the one severely damaged by the
Hurricanes last year.
Question. Is this a warning sign that maybe the VA has
miscalculated funding needs, yet again, and will need additional money
to cover the unanticipated medical costs of returning Global War on
Terror veterans?
Answer. The President's amendment to the fiscal year 2006 budget
request provided an additional $1.977 billion for the current fiscal
year. These resources will enable VA to continue to provide the high-
quality health care to our Nation's veterans. The President's 2007
request includes total budgetary resources of $34.3 billion for the
medical care program, an increase of 11.3 percent (or $3.5 billion)
over the level for 2006 and 69.1 percent higher than the funding
available at the beginning of the Bush Administration. The cornerstone
of our medical care budget is providing care for veterans who need us
the most--veterans with service-connected disabilities; those with
lower incomes; and veterans with special health care needs. A key
element of this effort is to make sure every seriously injured or ill
serviceman or woman returning from combat in Operation Enduring Freedom
and Operation Iraqi Freedom receives priority consideration and
treatment. These resources will enable VA to continue to provide the
high-quality health care to our Nation's veterans.
Question. If this money is transferred, it is a sure possibility
this will prevent the final completion on the rebuilding of the new New
Orleans VA Medical Center.
If this is happens, how would the VA plan on funding the completion
of the hospital?
Answer. As previously stated, VA needs these funds for the
construction of a new medical center for New Orleans.
Question. Would you replace the funds in the VA's annual
appropriations budge?
Answer. Again, VA does not expect a need to do this. The entire
$561 million will be required to rebuild the New Orleans VA Medical
Center.
Question. Many concerns regarding mental health stem from
nondisclosure by Service members. This nondisclosure has the potential
to disrupt early intervention and see an underestimation of future
demand for VA mental health services.
With an ever-growing focus on mental health, in your estimation,
how well-equipped is the VA to deal with this problem?
Answer. In terms of capacity to provide mental health services to
those who do disclose problems, I have reviewed the capability of the
Veterans Health Administration (VHA) to meet the needs for inpatient
and outpatient Post-Traumatic Stress Disorder (PTSD) diagnosis and
treatment as well as diagnosis and treatment of other mental health and
substance abuse concerns of veterans. This review has included
monitoring on a quarterly basis the mental health diagnosis and
treatment needs of recently discharged service members from Operation
Iraqi Freedom and Operation Enduring Freedom. I have found that VHA has
adequate capabilities to serve their needs.
In anticipation of any unmet needs or capabilities, VHA identified
significant additional resources in fiscal year 2005 and fiscal year
2006 in a variety of mental health programs, including specialized PTSD
and Readjustment Counseling Center programs to supplement current
services. Since PTSD often coexists with substance abuse disorder,
depression, and homelessness, VA supplemented programs in those areas
in fiscal year 2005 and fiscal year 2006. In fiscal year 2005, new and
enhanced PTSD programs received funding of $9,953,186, and a new class
of programs specifically designed for early identification and care for
returning veterans (Returning Veterans Outreach Education and Care
(RVOEC) programs were provided funded of $6,676,312. In addition, in
fiscal year 2005, $7,987, 505 was provided for substance use disorder
treatment programs; $8,249,348 was provided for Homeless Domiciliary
programs; and $4,500,000 was provided for homeless grant and per diem
programs. In fiscal year 2006, $10,865,874 will be provided for new/
enhanced PTSD programs; $6,932,646 will be used for new RVOEC programs;
and $16,651,698 will be spent on substance use disorder treatment
programs. Readjustment Counseling Service hiring of counselors who are
veterans of the Global War on Terror will be provided up to $1,100,000
in fiscal year 2006.
Your question also addresses a more subtle issue, which is how to
encourage self-disclosure of mental health concerns on the part of
returning service members and veterans. You are correct that our system
can only provide services when individuals do self-disclose and then
can be guided in terms of how the system can best respond to the
problems they are experiencing. There are several issues embedded
within this overall concern. Generally, there are three major issues we
can address: efforts to destigmatize mental health problems; efforts to
help veterans progress in terms of readiness to change; and efforts to
educate veterans and their families about resources available if they
do self-disclose.
First, concerning destigmatization, the Mental Health Strategic
Plan, which is based in large part on the President's New Freedom
Commission on Mental Health report as adapted for VA, suggests a wide
array of activities to combat stigma in relation to mental health. Many
of these have already been completed, including various educational
efforts with VA staff. Ultimately, it is the larger society that needs
to change in terms of reducing the stigma of mental health problems,
but VA is committed to taking a leading role in that effort. VA also
supports the efforts of the Department of Defense to deal with this
issue in relation to active service members.
Second, there is a large and important literature on the importance
of understanding and respecting the process of becoming ready to seek
help and change for mental health problems. Individuals progress from
an early period of unawareness of and inability to identify developing
concerns through stages to a point of readiness to engage in action to
change the problem. It is important to match clinical services provided
to this level of readiness in order to accomplish optimal outcomes. We
have designed our programs to follow that natural progression, with
outreach and educational efforts designed to help those who are earlier
in the process and a variety of active clinical programs, as described
in the opening paragraphs, for those who are ready to act and receive
clinical care for their mental health concerns.
Third, veterans may fail to self-disclose problems if they are not
aware of the availability of services to meet their needs.
Understanding this, we have developed the new class of programs
described above, the Returning Veterans Outreach Education and Care
(RVOEC) programs. These are specifically designed to meet the needs of
newly returning veterans. As the title suggests, efforts are made to do
outreach to identify such veterans, to educate them about available
mental health services and the process of accessing these services, and
to be supportive and contribute to destigmatization by normalizing
adjustment concerns veterans may have. Similar efforts are made through
the Veterans Readjustment Counseling programs; the RVOEC teams work
with and through medical facilities so that such services are available
to veterans throughout the system. These and other efforts ultimately
are designed to teach veterans, their families, and the community at
large that effective treatments are available for PTSD, depression, and
other stress-related conditions and that VA has the ability to offer
those treatments to them, if they present themselves for care.
Ultimately, veterans are more likely to self-disclose if they know that
their concerns will be handled respectfully, sensitively, and by
offering appropriate, effective treatment.
Question. Last year the Administration proposed to restrict per
diem payments to only a small fraction of veterans living in State
Homes and placed a moratorium on construction grants. As you also know,
Congress restored construction grant funding to $85 million last year.
However, this was almost a $20 million cut from fiscal year 2005
levels. Although, the fiscal year 2007 budget request did not repeat
these ill-advised proposals, the construction grant request was only
for $85 million. It has been expressed to me, by the National
Association of State Veterans Homes, that although $85 million is
better than $0 funding, they wish to see the budget restored back to
$104.3 million.
Did you consult with the National Association of State Veterans
Homes before you submitted your request for the fiscal year 2007
budget?
Answer. VA program staff regularly participates in the bi-annual
national meetings of National Association of State Veterans Homes
(NAVSH), and the Secretary has met with the organization's executive
leadership. NAVSH interests and concerns are well known to VA through
these continuing interactions.
Question. How many construction grants will be given with this $85
million, how many Homes will see a piece of the $85 million?
Answer. It is not possible to predict how many construction grants
will be given until: (1) the fiscal year 2007 Priority List is
finalized and approved in September 2006; (2) the final price of the
projects in Priority Group 1 is determined; and (3) the amount of
carryover of fiscal year 2006 funds, if any, is established.
Question. How will the construction of the new State Home in
California affect availability of funds to award other contracts? How
will it affect the repairs and such at other State Homes?
Answer. Under the current regulations, VA's conditional award of a
grant for the construction of the new State home in California before
the end of this fiscal year would preclude the award of any other
construction grants in fiscal year 2007 except those that are
conditionally awarded a grant this fiscal year.
Question. State Veterans Homes are critical to the healthcare needs
of veterans throughout the United States. As critical as State Veterans
Homes have been in my State, I have worked hard to insure the proper
fiscal attention is given them.
Do you share the critical need for State Homes and, if so, do you
agree that Congress should mandate new consultation and reporting
requirements for VA prior to the implementation of any proposed changes
to the current per diem system?
Answer. State Veterans Homes are an important option for veterans
in considering their health care needs. We do not agree that Congress
should mandate new consultation and reporting requirements for VA. VA
consults extensively with individual State homes, with the National
Association of State Veterans Homes (NASVH), and with the National
Association of State Directors of Veterans Affairs (NASDVA) and
provides relevant information regarding State Veterans Home programs to
all of those stakeholders when it is cleared for public release.
Question. Blinded Veterans have limited mobility and, oftentimes,
insufficient infrastructure to deal with their specific needs. There
are only 10 VA Blind Rehabilitation Centers across the country with a
waiting list that causes an average waiting time of more than 9 weeks.
How is the VA working to improve the efficiency and availability of
care for blind veterans?
Answer. VA Blind Rehabilitation Service is making significant
improvements in both the efficiency and availability of care for
blinded veterans. The VA Blind Rehabilitation Service Program Office,
in conjunction with the Visual Impairment Advisory Board, has developed
a continuum of care model. This model is designed to ensure that the
visual needs of veterans are addressed throughout the progression of
the vision loss in settings most convenient to the patient. When
possible, services are provided in the veteran's local community. The
inpatient Blind Rehabilitation Centers will continue to provide
advanced rehabilitation services. The intensity of the intervention is
tailored to the complexity of the patient's needs and additional
services at the next level of care can be provided as the patient's
vision rehabilitation needs increase. Placement of the services will be
determined by patient demographics.
Under the CARES planning process, two Blind Rehabilitation Centers
at Biloxi and Long Beach will be created. In addition, Cleveland VAMC
is adding a new Center. The new Centers will significantly reduce
waiting times and service patients in those demographic areas.
To further reduce waiting times for admission to a Blind
Rehabilitation Center, Blind Rehabilitation Service developed a
community-based Computer Access Training program to augment the
inpatient Computer Access Training that is provided in the Blind
Rehabilitation Centers. In this program, local service providers teach
Computer Access Training to veterans in their home area, where
feasible. Locally provided Computer Access Training has proven to be a
cost effective alternative, which reduced waiting, increased access,
and benefited blinded veterans.
Blind Rehabilitation Service has expanded services to blinded
veterans in their local communities with the establishment of Blind
Rehabilitation Outpatient Specialist (BROS) positions at VA medical
centers. There are now 28 BROS positions.
Since initiating these efforts, the waiting times for admission to
an inpatient Blind Rehabilitation Center have decreased 37 percent from
fiscal year 2004 through fiscal year 2005. Waiting times for admission
to a Blind Rehabilitation Center Computer Access Training program
decreased 23 percent for the same time period.
The VA Blind Rehabilitation Service Program Office is working with
the Information Technology Office to develop a new national database to
monitor all aspects of blind rehabilitation service delivery including
waiting times. The anticipated release date is during the fall of 2006.
This database will increase the efficiency of patient care for blinded
veterans.
SUBCOMMITTEE RECESS
Senator Murray. This Subcommittee is recessed.
[Whereupon, at 4:38 p.m., Wednesday, March 29, the
subcommittee was recessed, to reconvene subject to the call of
the Chair.]
MILITARY CONSTRUCTION AND VETERANS AFFAIRS, AND RELATED AGENCIES
APPROPRIATIONS FOR FISCAL YEAR 2007
----------
TUESDAY, MAY 9, 2006
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
The subcommittee met at 2:28 p.m., in room SD-124, Dirksen
Senate Office Building, Hon. Kay Bailey Hutchison (chairman)
presiding.
Present: Senators Hutchison, Allard, and Feinstein.
DEPARTMENT OF DEFENSE
STATEMENT OF HON. TINA W. JONAS, UNDER SECRETARY OF
DEFENSE (COMPTROLLER)
ACCOMPANIED BY PHILIP W. GRONE, DEPUTY UNDER SECRETARY OF DEFENSE
(INSTALLATIONS AND ENVIRONMENT)
OPENING STATEMENT OF SENATOR KAY BAILEY HUTCHISON
Senator Hutchison. I will call our hearing to order and
thank you very much for being with us today. We have the
Honorable Tina Jonas, the Under Secretary of Defense,
Comptroller, and of course the Honorable Philip Grone, the
Deputy Under Secretary of Defense for Installations and
Environment. We have certainly worked well with you and
appreciate all the efforts that you are making.
The Defense Department is executing a very bold
restructuring plan. I would have to say that I feel very good
about what you are doing because I think our committee started
really focusing on overseas basing and wanting to look at the
overseas bases at the same time that we were looking at our
domestic bases, and I think that the Department of Defense has
now determined, because of that look, that we should have
50,000 or perhaps even as much as 70,000 troops, mostly Army,
coming back to the United States.
The Army is in the midst of a huge reorganization effort to
make its brigades more combat ready and we have the global war
on terror, which is being fought, of course, in Iraq and
Afghanistan and around the world. It is against this backdrop
that we began to examine the budget request for military
construction. At first glance it appears to be a robust
request. The total requested is $16.7 billion, a 37.8 percent
increase from last year's request. However, $3.75 billion of
this is an increase in the BRAC account, which provides for
realignment of troops, but does not address the backlog of
facilities that need to be replaced or rebuilt.
In the military construction budget, the Army's $2.06
billion request is 39.2 percent over last year's request. I
stated in our MILCON hearing last year that the Army should be
investing in more infrastructure, so I am pleased to see this
development. The Army continues to bear the brunt of the
fighting in Iraq. Much is being asked of our soldiers and we
need to be doing as much as possible to provide facilities that
will help the Army recruit and retain quality soldiers and
families.
I am also pleased to note that the Army National Guard and
Army Reserve requests have continued last year's trend with
good growth. The Guard and Reserve have been underfunded for so
long and really have been asked to do a lot. So we have a long
way to go to bring them into the right level, but their
military construction budgets are improving.
The Navy has requested $1.162 billion for 2007 and that is
a 12.9 percent increase over last year. This includes an
increase in Marine Corps funding, including facilities for the
newly established Marine Corps Special Ops Command and a
special emphasis on barracks projects. Given the level of
sacrifice our young marines have made in Iraq, I think it is
most appropriate that we focus on providing them the quality
housing for when they return.
The growth of the Air Force's budget has slowed this year
and I think that too is the right approach. Most of this budget
is traditional construction to provide housing at bases where
privatization is not viable. I do hope the Air Force is going
to continue to fully examine all of the tools available,
including privatization and build to lease authorities to
provide quality housing, before making large financial
commitments such as housing projects, and we can certainly go
into that in further detail later.
With that, I would like to call on my distinguished
colleague Senator Feinstein, the ranking member of this
committee.
STATEMENT OF SENATOR DIANNE FEINSTEIN
Senator Feinstein. Thank you very much, Madam Chairman, and
thank you for your leadership of this subcommittee. As you
know, it is a great pleasure to work with you.
I also am pleased to welcome Secretary Jonas and Mr. Grone
and look forward to their testimony. Obviously, the first
consideration of this committee is to meet the needs of our
military personnel, and hopefully that we pay particular
attention, not only to mission support projects, but also the
quality of life issues that are so important.
I note the very large amount that is added to our budget
for the BRAC, the new round of BRAC, and I would like to
commend the Department for the advances that it has made in
military housing through privatization and express the hope
that you will track this carefully and maintain careful
oversight to ensure that projects are not only well planned and
executed, but that it achieves its potential. My experience of
this has been that you have to watch it over time and make some
judgments based on a time line that is more than the time you
cut the ribbon.
I also am concerned about the execution of the BRAC program
and particularly about the pace of environmental remediation. I
have been concerned about this for years and do the best I can
to include additional dollars for remediation. My State,
California, has huge needs in terms of environmental
remediation and it has dramatically slowed down the
transitioning of closed bases into the private sector. So I
think it is very important that the Department finishes what it
starts in terms of BRAC cleanup and do it as expeditiously as
possible before we have a whole new host of requirements from
the BRAC 2005 round.
I think Senator Hutchison has said it very clearly on
global rebasing. I will not go over it again, but I think we
are interested in an update on this with regard to recent
agreements reached with Japan, Romania, and Bulgaria. I am
interested in your assessment of recent Italian elections and
whether that would impact any of the basing that the United
States does in Italy and particularly to expansions at Vicenza.
Thank you very much and I look forward to the testimony.
Senator Hutchison. Well, thank you, Senator Feinstein.
One of the things that we are hearing in the underground, I
guess you would say, is that the implementation of the BRAC
recommendations is moving more slowly than predicted. There
are, as you know, some major areas where there are going to be
relocations. Two happen to be in my State, Fort Bliss, which
will be taking some of the troops that will be coming home from
Germany, and Fort Sam Houston, which is going to take so many
of the medical training responsibilities from other areas of
the country and consolidate them.
My question for you, Secretary Grone, is, are we moving as
expeditiously as we need to be moving? Are you concerned that
we are not going to be able to provide housing and facilities
for the people to comply with the BRAC recommendations?
Mr. Grone. Madam Chairman, that is a very important and
comprehensive question. Let me provide the subcommittee with a
sense of where we are today----
Senator Hutchison. My staff just reminded me that I did not
let you make your opening statements. I apologize. Please, let
me let both of you make your opening statements, and then you
already know what the question is, so we will start the
questioning right after. Excuse me.
Mr. Grone. I thought that was a statement on value added.
Senator Hutchison. So Secretary Jonas.
STATEMENT OF TINA W. JONAS
Ms. Jonas. Maybe we can make this quick. I will just submit
my statement for the record if that is all right with you. I
just want to thank this committee for its support of our fiscal
year 2007 budget request. Just to put in context where we are,
our overall Department of Defense budget request was $439.3
billion, which of course is divided among the various
committees. This committee has responsibility for $16.7 billion
of military construction and family housing included in our
request. I would just urge that the committee view this request
favorably and I am going to submit the balance of the statement
for the record.
[The statement follows:]
Prepared Statement of Tina W. Jonas
Madam Chairman, members of the Committee, I am pleased to be here
today to discuss the military construction component of President
Bush's fiscal year 2007 budget request for the Department of Defense.
I would like to begin by saying thank you to the Committee for your
continued strong support for the men and women of America's Armed
Forces and their families. The Department looks forward to continuing
to work with this Committee to ensure that our service members have
everything they need to accomplish their mission.
The President's fiscal year 2007 budget request is $439.3 billion
for the Department of Defense. This is a 7 percent increase over the
fiscal year 2006 enacted level of $410.8 billion.
This Committee has jurisdiction over $16.7 billion for military
construction and family housing. This is a $4.7 billion increase over
the fiscal year 2006 enacted level of $12 billion.
STRATEGIC PRIORITIES
The budget supports the President's 2005 National Security
Strategy, the long war against terrorist extremists, and the strategic
priorities of the 2006 Report of the Quadrennial Defense Review. The
budget invests in the capabilities and forces the Nation needs to:
--prevail in irregular warfare operations, including wars of long
duration, like the global war on terror;
--defend the homeland, especially against catastrophic terrorism and
other advanced threats;
--maintain America's military superiority, to ensure our ability to
deter or defeat threats from other nation-states; and
--continue the Department's strong support of our military men and
women and their families.
MILITARY CONSTRUCTION AND FAMILY HOUSING OVERVIEW
The military construction and family housing portion of the
President's fiscal year 2007 request supports the Department's most
pressing facilities requirements.
Through the maintenance and modernization of existing facilities,
the request improves working and living conditions, replaces facilities
that are no longer economical to repair, and advances the restructuring
of bases and facilities, at home and abroad.
The budget funds 48 new barracks projects for unmarried personnel
living on-base, as well as meets the Department's goal of funding the
elimination of remaining inadequate military family housing units in
the continental United States by 2007.
The Department's privatization program has been central to
achieving our housing goal of providing high-quality accommodations for
military families much sooner than would otherwise be possible. By the
end of fiscal year 2007, the Department will have privatized 186,000
family housing units.
BASE REALIGNMENT AND CLOSURE (BRAC)
The fiscal year 2007 budget provides $5.6 billion to implement the
decisions of the 2005 Base Realignment and Closure Commission.
Those decisions, which became law on November 9, 2005, support
several of the Department's goals including: force transformation; a
rebasing of our forces to address new threats, strategy, and force
protection concerns; the consolidation of business-oriented support
functions; and the promotion of joint and multi-Service basing.
CLOSING
Madam Chairman, I thank you for this opportunity to describe these
components of the President's budget for fiscal year 2007. These funds
will enhance the well being of our service members and their families,
strongly support current requirements and missions, and provide needed
streamlining and recapitalization of DOD facilities. I urge the
Committee's support for the President's request.
Thank you.
Senator Hutchison. Thank you. I will say I have read your
opening statements, so that might be why I was not focusing on
your giving them. But I do want it to be a part of the record,
so please, Mr. Secretary.
STATEMENT OF PHILIP W. GRONE
Mr. Grone. Madam Chairman, I will likewise be brief and
will also submit both the written and the oral statement for
the record. I do want to make a couple of points, if I might.
You spoke of the robustness of budget request in general
terms, but also spoke about the condition of facilities. I
think it is important to point out that the budget request
supports a facilities recapitalization rate of 72 years, which
nearly achieves the Department's goal of a 67-year
recapitalization rate cycle for our real property assets. In
2001 that rate stood at 192 years. So with the assistance of
the Congress, we have brought our regular program very much
with BRAC and with other investments here we are making to
improve assets generally; and while we still have a lot of work
to do, we are making significant progress with the support of
this subcommittee.
You also spoke about, you and Senator Feinstein both spoke
about, the importance of military housing privatization and
certainly that remains a central part of our overall strategy
to improve the quality of life for servicemen and women and
their families. In the end state we expect about 89 percent of
the Department's military family housing inventory to be
privatized, and the response we are getting from a perspective
of competition, new entrants to the market, we are very
satisfied with what we are seeing in the market in terms of
interrelationship with the services and I hope we will have an
opportunity to explore some of the thoughts Senator Feinstein
had in her opening remarks as we continue this afternoon.
With regard to BRAC, it's important to point out a couple
of points. First, as you know, we are going to carry out 25
major base closures, 24 major realignments, and over 760 other
actions across the total force, active, guard, and reserve, as
a result of the recommendations that are now law. That is
nearly twice the number of actions undertaken in all prior
rounds of BRAC combined. So this is an important and extensive
effort at installation transformation that supports the mission
transformation of the armed forces.
Importantly in that regard, 40 percent of the
recommendations affect more than one component. So there is a
high level of cross-service, inter-service joint activity that
is deeply embedded in the BRAC recommendations that we must
carry out. So too, as the chairman spoke of, our global posture
efforts and BRAC are also linked in the return of forces from
abroad to places like Fort Bliss, Fort Riley, Fort Carson, and
other locations. It is critically important that we are able to
proceed with the resources on the time and the schedule that we
have laid out in order to accomplish everything that needs to
be accomplished by September 15, 2011, which is the legal
deadline.
Importantly in relation to BRAC, because I know it is an
interest of members, just last week we conducted our first
comprehensive conference with communities that are affected by
this round of BRAC, both those communities that will go through
closure and downsizing as well as those communities that are
going to grow as a result of realignment activities. We brought
together nearly 950 people from across the country, members of
the Federal inter-agency, a full array of the Department's
assets, to begin to work with communities in a comprehensive
way to plan both for the transition of assets to effective
civilian economic reuse, as well as to plan for the future for
those assets and those installations that are going to be
enduring to the Department's mission over the long term.
PREPARED STATEMENT
The investments that we have requested for BRAC are
critical in that regard and we look forward to the support of
the subcommittee and of the Senate for that request. In the
end, we are working very hard, as both of you have indicated,
working with you to reposition, reshape, and sustain our
installations for the future, and we look forward to continuing
to work with you to ensure that we can realize those objectives
in the most cost efficient and effective way possible.
Thank you, Madam Chairman.
[The statement follows:]
Prepared Statement of Philip W. Grone
Madam Chairman, Senator Feinstein, and distinguished members of the
Subcommittee, I appreciate the opportunity to appear before you today
to address the President's Budget request for fiscal year 2007 and the
management approach the Department of Defense has undertaken to
reposition, to reshape, and to sustain the Nation's military
installation assets.
In 2001, the Department issued its first ever Defense Facilities
Strategic Plan. Three years later, in September 2004, a comprehensive,
capabilities-based, and performance-oriented Defense Installations
Strategic Plan was in place. The 2004 plan addressed recommendations
made by the Government Accountability Office (GAO) and was approved by
OMB as being consistent with the guiding principles of the Federal Real
Property Council in meeting the objectives of the President's
Management Agenda. An update in 2005 reflected ongoing efforts, recent
progress, and the changes resulting from decisions that produced the
fiscal year 2006 President's Budget. The next full issue of the plan
will be published in the fall of 2006. This new plan will more fully
integrate environmental management systems, safety, and occupational
health into a comprehensive approach to asset management.
For the past several years, the Department of Defense has been
vigorous in its pro-active efforts in managing the Department's
facilities and infrastructure. DOD's infrastructure investment strategy
rigorously utilizes key metrics to provide the quality facilities that
directly support mission and readiness. To that end, DOD developed
advanced business processes that align more closely to warfighter
mission area requirements. The rigor provided by these practices in
planning, managing, and maintaining DOD installations improves overall
efficiency while improving investment decision-making.
The President's budget request for fiscal year 2007 will permit the
Department to continue its efforts to manage installation assets
comprehensively and efficiently. Along with continued improvement in
business practices and a focus on environmental sustainability, the
Department is improving the quality of military installations.
Global Defense Posture Realignment
While the Department addresses better business practices, it is
also working to realign infrastructure to effectively address military
transformation and 21st Century security challenges. The Defense
posture of the past 50 years reflected the Cold War strategy, with
United States. forces forward deployed primarily to fight near where
they were based. Today's challenges require a more agile, faster, and
leaner force that can project power into areas further from where they
are based. This agility requires not only a shift in military forces,
capabilities and equipment, but also a new strategy for United States
global defense posture.
In September 2004, the Department completed a 2-year comprehensive
review of its global posture strategy. This review led to the most
thorough restructuring of U.S. military forces overseas since the major
elements of the U.S. Cold War posture were set in 1953. The new posture
will enable the Department to respond more quickly to worldwide
commitments and make better use of its capabilities.
The Department has already begun the process of realigning or
closing a number of large permanent bases in favor of small and more
scalable installations better suited for rapid deployments. In July
2005, the return of eleven Army bases in Germany was announced as part
of the 1st Infantry Division headquarters' redeployment plan, scheduled
to occur in the summer of this year. The United States signed an
agreement with the Government of Romania in December 2005 that will
allow access for U.S. forces to Romanian training facilities. The
United States and Japan issued the Security Consultative Committee
document entitled, ``U.S.-Japan Alliance: Transformation and
Realignment for the Future,'' on October 29, 2005, outlining several
initiatives, including posture realignments that will adapt the
Alliance to today's regional and global security environment. In Korea,
we are working closely with our partner to implement the 2004 Amended
Land Partnership Plan and the Yongsan Relocation Plan. These efforts
are reshaping United States presence on the peninsula significantly in
recognition of the Republic of Korea's increasing lead in the
conventional defense of the ROK and the evolving role of U.S. forces.
The Global Defense Posture realignment identified an overall plan
for returning overseas forces back to military installations in the
United States. This plan was integrated into the BRAC process regarding
relocations from overseas to domestic bases during the prescribed BRAC
time period. All Services factored requirements of returning forces
into their domestic infrastructure requirements and this resulted in
recommendations to accommodate forces at U.S. installations. Some
overseas changes have already been implemented in accordance with
ongoing Service transformation efforts and within the framework of
negotiations with host nations. In many cases, the changes involve
units that are inactivating or transforming with no significant BRAC
impact. As we begin implementing the BRAC recommendations there are
overseas changes still being developed or being phased to be
implemented after the BRAC implementation period. DOD will continue to
consult with Members of Congress on its plan and will seek your support
as we implement these far-reaching and enduring changes to strengthen
America's global defense posture.
Base Realignment and Closure 2005
The Department has effectively accounted for the domestic
implications of the global posture review--with forces and personnel
either returning to or moving forward from U.S. territory--within the
BRAC decision-making process. Even though global posture changes will
be executed over several years and will continue to be adjusted as
strategic circumstances change, the Department will incorporate
projected overseas posture changes into the BRAC implementation
process.
The 2005 Base Realignment and Closure (BRAC) process was designed
to rationalize the Department's base infrastructure within the United
States in support of the Department's long-term strategic capabilities.
The Department's BRAC process addressed five key goals:
--Transforming the current and future force and its support systems
to meet new threats,
--Eliminating excess physical capacity,
--Rationalizing the base infrastructure with defense strategy,
--Maximizing both warfighting capability and efficiency; and
--Examining opportunities for joint activities.
The Secretary of Defense transmitted his recommended closures and
realignments to the 2005 Defense Base Closure and Realignment
Commission and to the Congress on May 13, 2005, and published them in
the Federal Register on May 16, 2005, pursuant to Public Law 101-510,
as amended. The recommendations strengthen national security by
reshaping the domestic installations at which U.S. military forces
perform their assigned missions and aligns the Department's base
structure with the force structure that is expected to be needed over
the next 20 years, an unprecedented long view. Additionally, the
recommendations accommodate the Department's global reposturing of its
forces; facilitate the ongoing transformation of U.S. forces to meet
the challenges and opportunities of the 21st Century; and restructure
important support functions to capitalize on advances in technology and
business practices.
The BRAC Commission reviewed the 222 recommendations submitted by
the Secretary and accepted, without change, about 65 percent. The
Commission's resulting recommendations will affect over 800 locations
through 25 major closures, 24 major realignments, and 765 lesser
actions. On November 9, 2005, the Department became legally obligated
to close and realign all installations so recommended in the
Commission's report to the President because the President accepted
those recommendations and the congressional review period lapsed
without enacting a resolution of disapproval. Although these
recommendations are estimated to save the Department tens of billions
of dollars over 20 years and significant amounts annually after
implementation, the investment needed to support the transformation of
domestic military infrastructure in support of the Total Force is
substantial--estimated, based on our COBRA-based assessment of the
Commission's actions, at $22.8 billion.
BRAC Implementation
The large number of transformation recommendations, particularly
recommendations to establish joint operations, present significant
implementation challenges. To meet these challenges, the Department
initiated a process to develop Business Plans that lay out the
requisite actions, timing of those actions, and associated costs and
savings associated with implementing each recommendation. The Business
Plans will serve as the high level foundation for the complex program
management necessary to ensure BRAC 2005 recommendations are
implemented efficiently and effectively.
The Department recently delivered its report describing the
specific programs, projects, and activities for the $1.46 billion
appropriated in fiscal year 2006 to begin implementing the BRAC
recommendations. This initial spending plan will begin the planning and
design and environmental studies that serve as the foundation for
constructing and renovating facilities to accommodate missions at
receiving sites. For fiscal year 2007, the Department is requesting
$5.62 billion for BRAC 2005 implementation and $191.22 million for
previous rounds.
The Department recognizes it has an obligation to assist
communities affected by BRAC 2005; communities that have an honored
heritage of support to the Armed Forces. The Defense Economic
Adjustment Program will continue to assist communities to plan for the
civilian redevelopment of available real and personal property; and
implement local adjustment actions to assist impacted workers,
businesses, and other affected community interests. The Department
actively partners with affected communities as we both seek
opportunities for quick civilian reuse of former military
installations. For communities engaged with installations that will
receive new missions, the Department also recognizes the importance of
ensuring communities have the capacity to support the Defense mission
with adequate planning, housing, education, infrastructure, and
community services, and the Department is working with these
communities to enhance their ability to support DOD installations and
our men and women in uniform. To facilitate these actions, resources
from 22 Federal Agencies have been drawn together through the
coordination of the Economic Adjustment Committee (EAC). The Secretary
of Defense, through the DUSD (I&E), chairs the EAC. Secretaries of
Commerce and Labor, through their designees, are Co-Vice Chairs. For
these purposes, the budget request contains $60 million for the
Department's Office of Economic Adjustment to enable affected
communities to plan and carry out adjustment strategies, engage the
private sector in ventures to plan and undertake economic and base
redevelopment, and partner with the Military Departments as they
implement BRAC actions. An important milestone took place last week in
Atlanta, GA, as the Department held the OSD/Military/Community
Conference that brought together hundreds of State and local
representatives of BRAC 05 communities to obtain information from OSD
and Military Service representatives regarding BRAC implementation.
Managing Infrastructure
Managing DOD real property assets is an integral part of
comprehensive asset management. The Department currently manages nearly
507,000 buildings and structures with a plant replacement value of over
$650 billion, and more than 46,000 square miles of real estate.
The quality of infrastructure directly affects training and
readiness. To that end, the Department is incorporating installations
more fully into the Defense Readiness Reporting System. This will allow
us to measure the capability of defense installations and facilities
and other elements of our infrastructure to provide appropriate support
to forces in the conduct of their wartime missions. To better manage
infrastructure investments, the Department developed models and metrics
to predict funding needs: Sustainment and Recapitalization.
Facilities sustainment provides funds for maintenance and major
repairs or replacement of facility components that are expected to
occur periodically throughout the life cycle of facilities. Sustainment
prevents deterioration, maintains safety, and preserves performance
over the life of a facility. To forecast funding requirements, DOD
developed the Facilities Sustainment Model using standard benchmarks
for sustainment unit costs by facility type (such as cost per square
foot of barracks) drawn from the private and public sectors. This model
has been used to develop the Service budgets since fiscal year 2002 and
for several Defense Agencies since fiscal year 2004. On January 24,
2006, DOD joined 16 other Federal agencies in signing a Memorandum of
Understanding (MOU) for Federal Leadership in High Performance and
Sustainable Buildings. The MOU indicates a commitment to incorporate
sustainable design principles through a comprehensive approach to
infrastructure management.
Full funding of facilities sustainment has been and continues to be
the foundation of long-term facilities strategy and goal. In fiscal
year 2006, the Department-wide sustainment funding rate is 92 percent.
In balancing risk across the Department's program, the fiscal year 2007
budget request reflects a slight decrease in the department-wide
sustainment funding rate to 90 percent. Our long term goal remains a
department-wide sustainment funding rate of 100 percent to optimize our
investment in facilities.
Recapitalization, which includes restoration and modernization,
provides resources for improving facilities, and is the second element
of our facilities strategy. Recapitalization is funded primarily with
either operations and maintenance or military construction
appropriations. Restoration includes repair and replacement work to
restore facilities damaged by inadequate sustainment, excessive age,
natural disaster, fire, accident, or other causes. Modernization
includes alteration of facilities solely to implement new or higher
standards, to accommodate new functions, or to replace building
components that typically last more than 50 years.
Similar private sector industries replace their facilities every 50
years, on average. The current DOD goal is 67 years, based upon an
assessment of the Department's inventory in the late 1990's. In fiscal
year 2001, the Department's recapitalization rate was 192 years. This
budget request supports a recapitalization rate of 72 years, and
includes investments associated with BRAC and Global Defense Posture
realignment. The Defense Department remains committed to achieving a
rate of investment in facilities recapitalization that will improve,
modernize, and restore its facilities consistent with expected future
service lives. Currently, DOD is in the process of developing and
fielding a new recapitalization model for assessing the replacement
cycle that will improve upon the existing recapitalization metric
through the inclusion of depreciation schedules and other benchmark
improvements.
SUSTAINMENT AND RECAPITALIZATION REQUEST
[President's budget in millions of dollars]
------------------------------------------------------------------------
Fiscal year
-------------------------------
2006 Request 2007 Request
------------------------------------------------------------------------
Sustainment (O&M-like) \1\.............. 6,529 6,267
Restoration and Modernization (O&M-like) 1,008 984
\1\....................................
Restoration and Modernization (MilCon).. 3,474 6,093
-------------------------------
Total SRM......................... 11,011 13,344
------------------------------------------------------------------------
\1\ Includes O&M as well as related military personnel, host nation, and
working capital funds.
In 1998, the Department undertook a 6-year program to eliminate 80
million square feet of obsolete and excess facilities. Six years later,
DOD concluded that effort by exceeding its target--removing a total of
86 million square feet. In a continuation of that effort, the
Department completed a survey of disposal requirements in December
2004. Based on that survey, the military services and selected Defense
agencies have established new targets to rid the Department of an
additional 50 million square feet of unneeded facilities by the year
2013. These demolition targets are not included as part of BRAC
disposal.
The Department has established a common definition for Facilities
Operation, formerly referred to as ``Real Property Services.'' The
budget request includes $6.06 billion for this program, to address
utilities, leases, custodial services, ground maintenance, and other
related functions. A prototype model for Facilities Operation will be
fielded in the coming year.
Installations Support
The Defense Installations Strategic Plan articulates the need to
define common standards and performance metrics for managing
installation support. Our objective is to introduce capabilities-based
programming and budgeting within a framework for the Common Delivery of
Installations Support framework which will link installation support
capabilities to warfighter requirements. To that end, we are developing
common definitions for Facilities Operation.
The Common Delivery of Installations Support will form the basis
for implementing guidance for twelve Joint Base sites identified in
BRAC 2005. Guidance for implementing Joint Basing is being developed in
coordination with the Military Components and using input from
installation level leadership.
During the past year, DOD made significant progress toward
developing Common Output Level Standards for all other functions of
Installations Support to include Environment, Family Housing Operations
and Services, which were formerly knows as Base Operations Support.
This effort is yielding common definitions and tiered performance
output levels. These metrics are currently being further refined and a
costing model initiative will soon be underway.
The Military Construction appropriation is a significant source of
facilities investment funding. The fiscal year 2007 Defense Military
Construction and Family Housing appropriation request totals $16.7
billion. This budget request will enable the Department to rapidly
respond to warfighter requirements, enhance mission readiness, and
provide for our people. This is done, in part, by restoring and
modernizing enduring facilities, acquiring new facilities where needed,
and eliminating those that are excess or obsolete.
COMPARISON OF MILITARY CONSTRUCTION AND FAMILY HOUSING REQUESTS
[President's budget in millions of dollars--budget authority]
------------------------------------------------------------------------
Fiscal year
2006 Fiscal year
appropriation 2007 request
------------------------------------------------------------------------
Military Construction................... 6,161 6,385
NATO Security Investment Program........ 177 221
Base Realignment and Closure IV......... 255 191
Base Realignment and Closure 2005....... 1,504 5,626
Family Housing Construction/Improvements 1,811 2,092
Family Housing Operations & Maintenance. 2,206 1,990
Chemical Demilitarization............... .............. 131
Family Housing Improvement Fund......... 3 3
Energy Conservation Investment Program.. 50 60
-------------------------------
Total............................. 12,167 16,698
------------------------------------------------------------------------
Housing Revitalization
At the outset of this Administration, the President and Secretary
Rumsfeld identified elimination of inadequate family housing and
revitalizing housing, largely through privatization, as a central
priority for the Department. An aggressive target of 2007 was
established to meet that goal. The Administration has relied on three
pillars to improve housing thereby, enhancing the quality of life for
our Service members: (1) Provide the basic allowance for housing (BAH)
at zero-out-of-pocket expense for the average Service member living in
private sector housing (achieved in 2005, now maintaining); (2)
Privatization of family housing, where feasible; and, (3) Military
Construction funding for all other domestic and all overseas locations.
Sustaining the quality of life for our military families is vital to
recruitment, retention, readiness, and morale.
Through the expanded use of the privatization authorities granted
under the fiscal year 1996 Military Housing Privatization Initiative,
the Department has achieved the elimination of inadequate housing at
U.S. based installations where those authorities apply. The fiscal year
2007 budget funds elimination of all inadequate domestic family housing
by 2007, and eliminates remaining inadequate houses overseas by 2009.
The Department relies on a ``community first'' (private sector)
policy to provide quality housing to its members and their families.
Only when the private market demonstrates that it cannot supply
sufficient levels of quality, affordable housing does the Department
provide housing to our military families; first through the use of
privatization, and where that is not feasible through government-owned
and leased housing. For example, in the absence of privatization
authorities overseas, we address our housing needs there through
military construction and leasing.
To ensure the Department is making the best investment decisions
when determining the appropriate level of housing, the government
provides a single and consistent methodology for calculating its
housing requirement. This methodology was introduced in January 2003
and is being utilized extensively by the Services. Currently, 75
percent of military families living in CONUS, Alaska, and Hawaii
receive Basic Allowance for Housing (BAH) (with 60 percent living in
the local community, and 15 percent in privatized housing). An
additional 22 percent of our military families are provided government-
owned housing and 3 percent live in leased housing.
The Department has skillfully used privatization to more quickly
eliminate inadequate housing and to provide additional housing where
shortfalls existed. As of May 2006, the Department has awarded 60
privatization projects. This includes over 124,000 military family
housing units privatized. The total number of units privatized has
increased by more than 35 percent, over this same time last year. DOD
policy requires that privatization yield at least 3 times the amount of
housing as traditional military construction for the same amount of
appropriated dollars. The 60 awarded projects have permitted the
Department, in partnership with the private sector, to provide housing
for about $1.2 billion in military construction investment. The same
level of construction activity would otherwise have required over $14
billion if the traditional military construction approach was utilized.
This reflects an average ratio of over 14 to 1, well exceeding program
expectations.
Additionally, the private sector's cumulative contribution to the
60 awarded deals totals over 90 percent of the $14 billion in total
project costs. Prudent business practice requires the private sector to
be committed to each project with a significant financial investment in
the project's ultimate success. The Services have funded the remaining
$1.2 billion in development costs primarily through equity investment
or government direct loans. (The Total Project Funding graph (Enclosure
1) depicts the cumulative total contribution of the private sector and
government.)
The Department's privatization plans in the fiscal year 2007 budget
will ultimately result in the privatization of 87 percent of its
domestic family housing inventory, or roughly 186,000 units privatized
by the end of fiscal year 2007. By the end of fiscal year 2006, we will
have privatized 153,000 housing units. The overall goal is to privatize
89 percent of the domestic housing inventory or about 195,000 housing
units by the end of fiscal year 2010.
For fiscal year 2007, the Department requests $4.081 billion in new
budget authority for family housing construction and operations and
maintenance:
--$1.94 billion to construct 3,073 new/replacement units and improve
3,330 existing units.
--$1.99 billion to operate and maintain approximately 95,052
government-owned family housing units, and lease another 25,935
units worldwide.
Funding to support the privatization of family housing is
programmed and budgeted in the family housing construction
appropriations and is transferred to the DOD Family Housing Improvement
Fund (FHIF) when the privatization projects are executed. The fiscal
year 2007 construction account requests a total of $154 million in
funding for privatization. This amount, anticipated to be transferred
to the Family Housing Improvement Fund during fiscal year 2007 along
with $261 million in previously appropriated construction funds. This
$415 million will be used to finance the privatization of approximately
32,377 units.
Competitive Sourcing
The Department of Defense continues to strongly support the
President's Management Agenda Initiative for Competitive Sourcing.
Introducing private sector competition into commercial functions
performed by the Department improves business efficiency and reduces
cost to the taxpayer. Public/private competitions using the procedures
of OMB Circular A-76 have demonstrated substantial savings whether the
in-house or private sector wins the competition. During the fiscal
years 2000 through 2005, the Department completed 848 such competitions
encompassing about 87,018 positions. These competitions will have
resulted in over $10 billion in savings (cost avoidance) over the life
of the resulting performance periods, normally about 5 years. The
Department currently has an additional 2,800 positions undergoing
competition and expects to increase competitions in fiscal year 2006.
These new competitions use the procedures of the revised OMB
Circular A-76, which evaluates public and private proposals
concurrently using the Federal Acquisition Regulations. As the
Department's designated Competitive Sourcing Official (CSO), my office
is working to improve the competition process. For example,
competitions that used to take up to 48 months to complete should now
be completed in as little as 12 months. Such improvements will reduce
stress on our workforce and will make savings available earlier to
reinvest in priorities for our war fighters.
Utilities Privatization and Energy Management
The Department seeks to reduce its energy consumption and
associated costs, while improving utility system reliability and
safety. To that end, DOD developed a comprehensive energy strategy and
issued updated policy guidance incorporating the new provisions and
goals of the Energy Policy Act of 2005. This strategy will continue to
optimize utility management by conserving energy and water usage,
improve energy flexibility by taking advantage of restructured energy
commodity markets when opportunities present themselves, and modernize
our infrastructure by privatizing deteriorated and outdated utilities
infrastructure where economically feasible.
DOD, as the largest single energy consumer in the Nation, consumed
over $2.97 billion of facility energy in fiscal year 2005. Conserving
energy and investing in energy reduction measures makes good business
sense and frees up resources for higher DOD priorities, such as
readiness and modernization. Our program includes investments in cost-
effective renewable energy sources or energy efficient construction
designs, and aggregating bargaining power among regions and the
Services to achieve more effective buying power.
The Department's efforts to conserve energy are paying off. In
fiscal year 2005, military installations reduced consumption by 3.3
percent despite a 6 percent increase in the cost of energy commodities
from fiscal year 2004. With a 28.3 percent reduction in standard
building energy consumption in fiscal year 2005 from a 1985 baseline,
the Department fell just short of the 2005 and 2010 facility energy
reduction goals stipulated by E.O. 13123 (see Energy Progress Chart,
Enclosure 2). This is mostly attributable to the lapse of Energy
Savings Performance Contract (ESPC) authority in fiscal year 2004.
Energy conservation projects accomplished through ESPC contracts
typically account for more than half of all facility energy savings.
However, with ESPC authority reauthorized in the fiscal year 2005
National Defense Authorization Act and extended for an additional 10
years in the Energy Policy Act of 2005, DOD has launched an aggressive
awareness campaign and is well on its way to meeting the new goals
established in the Energy Policy Act of 2005. DOD reduced energy
consumption in energy intensive and industrial facilities by 21.6
percent from the 1990 baseline, exceeding the 20 percent goal of E.O.
13123 (See Energy Progress Chart, Enclosure 3).
DOD has significantly increased its focus on purchasing renewable
energy and developing resources on military installations. The
Department has increased the use of Energy Conservation Investment
Program (ECIP) funds for renewable energy projects from $5 million and
$11 million in fiscal year 2003 and fiscal year 2004, respectively, to
$13 million in fiscal year 2005, $17 million in fiscal year 2006, and
$17 million in fiscal year 2007. The fiscal year 2007 program for ECIP
also contains $2.6 million in hydrogen fuel cell projects. The
Department easily exceeded the E.O. 13123 renewable energy goal of 2.5
percent in fiscal year 2005. The Department's total renewable energy
purchases and generation accounted for 8.3 percent of all electricity
use. Also, while E.O. 13123 did not articulate a specific water
reduction goal, the Department has saved an impressive 28.3 percent
since the fiscal year 2000 baseline year.
To improve utility systems, the Department has reaffirmed its
preference to modernize military utility systems through privatization.
The DOD Utilities Privatization Program has made solid progress over
the past 2 years. The Services have greatly simplified and standardized
the solicitation process for obtaining industry proposals. Of 2,601
utility systems serving the DOD, the Department has privatized 512
systems. When taken together with the 736 systems that were already
owned by other entities, that reflects a significant portion of systems
serving the Department that benefit from private sector ownership. Over
475 additional systems are currently under evaluation as each Service
and the Defense Logistic Agency continue aggressive efforts to reach
privatization decisions on all systems.
Environmental Management
The Defense Department continues to lead in every aspect of
environmental management. The Department is proud of and committed to
its environmental program in support of the global basing mission.
Developing natural infrastructure capacity tools and models for
installation planning and sustainment is a priority.
Environmental Management Systems
DOD is implementing environmental management systems (EMS) as
required by Executive Order 13148 at all appropriate facilities, except
for six installations affected by hurricane Katrina. This
transformation embeds environmental management as a systematic process,
fully integrated with mission planning and sustainment and is essential
for continued successful operations at home and abroad. Implementing
EMS will help preserve range and operational capabilities by creating a
long-term, comprehensive program to sustain capability while
maintaining healthy ecosystems.
ENVIRONMENTAL PROGRAM--SUMMARY OF REQUEST \1\
[President's budget in millions of dollars--budget authority]
------------------------------------------------------------------------
Fiscal year
-------------------------------
2006 request 2007 request
------------------------------------------------------------------------
Environmental Restoration............... 1,370 1,403
BRAC Environmental \2\.................. 449 553
Compliance.............................. 1,561 1,527
Pollution Prevention.................... 143 128
Conservation............................ 205 195
Technology.............................. 206 200
International \3\....................... 3 3
-------------------------------
Total............................. 3.934 4.006
------------------------------------------------------------------------
\1\ Includes operations & maintenance, procurement, RDT&E, and military
construction funding.
\2\ Funding levels reflect total requirement.
\2\ International is included in Pollution Prevention and Compliance.
For fiscal year 2007, DOD's budget request includes $4.006 billion
for environmental programs. This includes $1.403 billion for cleanup,
$0.553 billion for BRAC environmental, $1.527 billion for compliance;
about $0.1 billion for pollution prevention, and about $0.2 billion
each for conservation and environmental technology.
Managing Cleanup
The Department is committed to cleaning up property that, as the
result of past military activities, is contaminated with hazardous
substances, pollutants, or military munitions. DOD has achieved
``remedy in place'' or ``restoration complete'' status at 78 percent
(16,591 out of 21,192) of its contamination sites on active
installations. As of the end of fiscal year 2005, 83 percent (4,287 out
of the 5,183) of the contamination sites at BRAC locations closed or
realigned by the first four rounds of BRAC have a cleanup remedy
constructed and in place and operating successfully, or have had all
necessary cleanup actions completed in accordance with Comprehensive
Environmental Response, Compensation, and Liability Act (CERCLA)
standards.
Hazardous waste cleanup at Formerly Used Defense Sites (FUDS) has
achieved ``remedy in place'' or ``restoration complete'' status at 49
percent (2,263 out of the 4,668) of known sites.
Leading Compliance through Pollution Prevention
The Department continues its commitment to going beyond compliance
in executing its environmental initiatives. Using compliance as the
baseline the Department has instituted processes that effectively and
efficiently execute compliance using pollution prevention (P2)
strategies and focusing on sustaining the warfighter mission. The
Department issued DOD Directive 4715.1E on Environment, Safety, and
Occupational Health (ESOH) Management, delineating policies and
responsibilities that enable the Department to invest in initiatives
that support mission accomplishment, enhance readiness, reduce future
funding needs, prevent pollution, prevent illness and injury, and
ensure cost-effective compliance.
One example is the Department's risk management approach to
integrating ESOH considerations into systems acquisitions. DOD
successfully integrated MIL-STD 882D (Standard Practice for System
Safety) into the acquisition process to ensure that Program Managers
identify know their ESOH risks and take the measures necessary to
manage or mitigate those risks early in the design process, reducing
environmental burdens and mission impacts throughout the life-cycle of
the system.
Another example is the DOD Green Procurement Program. The DOD Green
Procurement Program was established to ensure DOD compliance with
Federally mandated green procurement programs, yet DOD enlarged its
program to consider such factors as energy use, conservation of
resources, price, performance, and safety to support both DOD's mission
and protection of the environment. DOD demonstrated its commitment to
going beyond mere compliance by signing the Federal Agency Memorandum
of Understanding on electronic stewardship; actively participating in
the Federal Electronics Challenge; and participating in the Green
Suppliers Network to incorporate process, energy, and material
efficiencies into the supply chain--all of which can lead to
substantial environmental benefits and reductions in costs.
Range Sustainment
The sustainability of military installations, particularly testing
and training ranges, is critically important to readiness. The often
accelerating pace of development in the vicinity of our installations
and ranges poses ongoing challenges and leads to secondary effects
including loss of habitat for endangered species; more noise complaints
from new neighbors; diminished usable airspace due to new structures or
increased civil aviation; and a compromised ability to test and train
with the frequency resources needed in time of war.
Exacerbating the encroachment challenge, the demands of the
military mission are not static in nature and a number of factors are
changing the way the Department will need to test and train in the
future. Upcoming mission adjustments and relocations associated with
the recent BRAC decisions and the return of large numbers of troops and
their families to bases in the United States as a part of global
rebasing will require expanded training opportunities and place a
growing demand on receiving installations. And the integration of
training opportunities necessary to satisfy joint mission requirements,
combined with the increasing testing and training battlespace needs of
new weapons systems and evolving tactics associated with force
transformation, point to a military need for more, rather than less
range space. The confluence of these competing trends makes it clear
that encroachment remains a powerful challenge to military readiness,
and requires a comprehensive and continuing response.
Sustainable Ranges Initiative.--The White House Conference on
Cooperative Conservation, held last summer in St. Louis, Missouri,
brought together land managers and conservation advocates from Federal
agencies, states, academia, and industry to look for a new path towards
collaborative conservation of the Nation's natural resources.
Consistent with its desire to balance its duty to conduct life-
saving military training with its stewardship responsibilities, the
Department has been very active in its efforts to mitigate encroachment
effects and to ensure the long-term sustainability of both its military
test and training missions and the natural resources entrusted to DOD's
care. In 2006, DOD's range sustainment initiative will focus on
addressing emerging encroachment issues and taking advantage of
opportunities to extend our outreach and partnering gains. At the same
time, DOD will build on past efforts to institutionalize capabilities,
tools, and processes that will support range sustainment goals well
into the future.
--Conservation Partnering and Buffer Program Expansion.--
Congressional support for DOD's Readiness and Environmental
Protection Initiative has enabled DOD to establish an effective
and growing program to partner with conservation entities to
protect key lands in the vicinity of military ranges that offer
the dual promise of preserving natural resource values and
allowing more flexible use of DOD lands inside the fence line.
In 2005, the first year of this funded program, DOD used the
$11.5 millions appropriated by Congress to execute a number of
landmark conservation buffer projects near Army and Marine
Corps ranges and installations. Buffering successes at Fort
Carson, CO; Marine Corps Base Camp Lejeune, NC; and the Navy's
La Posta Mountain Warfare Training Facility, CA, are notable
2005 program accomplishments. Congress has allocated $37
million to expand the Conservation partnering program in fiscal
year 2006. Projects are still being finalized, but will include
a significantly greater number of projects supporting Army,
Marine, and Navy buffering priorities across the United States.
--Regional Partnering Initiatives.--In 2005, the Department
participated in a pilot partnership effort called the Southeast
Regional Partnership for Planning and Sustainability, or
SERPPAS. Teaming Service flag officers with leaders from the
State governments of Florida, Georgia, South Carolina, and
North Carolina, this effort has demonstrated potential as a
vehicle for effective communication and joint action to
identify issues and implement solutions of mutual benefit to
the partners. This pilot offers promise not only in the
Southeast, but as a model for regional action elsewhere.
--Range Assessments.--Military use of munitions on its ranges is an
elemental aspect of effective testing and training. However, to
ensure that the effects of our ongoing and legacy use of
munitions do not harm public health or the environment, DOD is
actively assessing all its ranges to ensure there is no off-
range migration of munitions' constituents into surrounding
lands or waters.
Warfighter Support through Safety and Health
The Nation's leading businesses see the prevention of injuries and
illnesses as a core business value that reduces human, social,
financial, and productivity costs and improves the bottom line. DOD
also has a bottom line: operational readiness.
The Department's efforts to integrate safety and health into every
aspect of the mission, gives commanders the flexibility they need to
make informed risk decisions--decisions that enable them to eliminate,
modify, or accept risks based on the situation they are encountering.
In March of 2005 DOD published policy requiring safety and occupational
health management systems at all management levels. This industry
proven approach horizontally integrates safety across all of our
business areas. The Department is accelerating this initiative by
partnering with the DSOC (Defense Safety Oversight Council) to
establish a Center of Excellence to help installations achieve OSHA VPP
(Voluntary Protection Program) recognition. DOD has also issued policy
to include Military Flight Operations Quality Assurance. This process,
gives pilots the ability to ``review the game tape'' of virtually every
mission they fly and identify potentially dangerous tendencies that can
be corrected before they become habits.
The Department is also transforming explosives safety. The
Department of Defense Explosives Safety Board (DDESB) continually
assesses and improves explosives safety throughout the ammunition and
explosives life cycle, proactively seeking early awareness and
consideration of explosive safety in operational and contingency
planning activities. This year DOD updated its policy to assist
commanders in making informed risk decisions involving explosives while
ensuring maximum operational capabilities and the protection of
personnel, property, and the environment from the damaging effects of
explosives.
Integrating the Business Enterprise
As our Nation's security challenges become more complex, our
military must become an increasingly agile joint force that is dominant
across the full spectrum of operations. The highly flexible, yet
precise, Armed Forces of the 21st Century require an equally flexible
and responsive business and financial support infrastructure that can
adapt to rapidly changing conditions in both peace and war. Defense
Business Transformation is being driven by a series of strategic
objectives, which include: supporting a joint warfighting capability;
enabling rapid access to information for strategic decisions; reducing
the cost of Defense business operations; and improving the financial
stewardship of assets.
To support the Department's process of identifying joint needs,
analyzing capability gaps, and implementing improvements, the DOD
Business Mission Area is aligned with the warfighting mission. This new
unifying framework, documented in the DOD's roadmap for transformation,
the Enterprise Transition Plan, is a capabilities and lifecycle-based
approach to enterprise business planning and execution, and consists of
five integrated Core Business Missions, or CBMs: Human Resources
Management; Weapon System Lifecycle Management; Real Property &
Installations Lifecycle Management; Material Supply & Service
Management; and Financial Management. The Deputy Under Secretary of
Defense (Installations & Environment) is the leader of the Real
Property & Installations Lifecycle Management CBM. Working with the
Military Components, considerable progress has been made in
transforming business processes over the last 2 years.
Last year, DOD completed a Business Process Reengineering (BPR)
effort for managing the Department's real property inventory. The
inventory reform effort will provide the DOD warfighter and business
mission with relevant access to needed information on real property.
The Services and Defense Agencies have begun to re-architect their
business processes and systems to ensure that they will be able to
comply with the standard business processes and data elements
identified during the BPR. Together, these processes and data elements
will enable greater visibility of real property assets and associated
financial resources. The Department has also completed a thorough
assessment of information systems that will support the inventory. The
Military Components are developing plans for economic and timely
investment in, and achievement of, this new information environment.
In addition to the inventory, these efforts led to development of a
site-unique identifier, or UID registry that will improve the
visibility of our real property assets. The process of assigning a UID
to sites has already begun. This year the registry effort will be
expanded to address real property assets, such as facilities, runways,
and piers. Ultimately, this registry will provide a link between real
property resources and their locations to our warfighting and business
personnel and the property they operate.
Organizing the Department's extensive geospatial and imagery assets
through the Defense Installation Spatial Data Infrastructure program,
or DISDI, has enabled business transformation on many fronts. For
example, the innovative use of commercial satellite imagery combined
with locally validated mapping features significantly heightened the
quality of the fiscal year 2005 Base Realignment and Closure, or BRAC,
deliberations. During this first year of operations, DISDI saved more
than $20 million across the business mission simply by sharing
commercial satellite imagery across the Department. 2005 also saw DISDI
completing the first worldwide inventory of geospatial assets. This, in
turn, is enabling Defense-wide software licensing agreements which will
reduce future software costs by more than 25 percent.
Reengineering of environment, safety, and occupation health focused
on two initiatives. First, DOD completed reengineering associated with
recognizing, valuing, and reporting environmental liabilities, and
created a standard data model for the majority of these liabilities.
The Department will finish the remaining environmental liabilities this
year, resulting in a complete, accurate, and visible inventory of
environmental liabilities reconciled with asset records. Completion of
this project will also eliminate a material weakness. Second, DOD began
re-engineering the management of hazardous materials throughout the
Department. Although the Services and Agencies handle many hazardous
materials, different processes are in place to manage the products and
their support information. These reengineering efforts are designed to
eliminate the costly, redundant, and ultimately unsafe practices
associated with these multiple processes.
The Department's plans for this fiscal year, also documented in the
Enterprise Transition Plan, will see the continuation of the unique
identification implementation through the continued population of the
site registry. The DISDI program will complement the site registry
development effort by accurately mapping the physical extent of DOD's
sites, based on their legal descriptions. Of greater significance, the
Department will build and deploy the infrastructure to manage asset
UIDs, and begin the process of assigning them to facilities in our
portfolio. In addition, two new reengineering efforts will be
undertaken, focusing on construction in progress and explosives safety
management.
Conclusion
In closing, Madam Chairman, I sincerely thank you for this
opportunity to highlight our successes and outline our plans for the
future. I appreciate your continued support of our installations and
environment portfolio, and I look forward to working with you as we
transform our plans into actions.
Senator Hutchison. Thank you.
Now, I will open with my questions on what seems to be a
slow start, at least, in providing for the people who are going
to be adding, as opposed to obviously you do need to take care
of the people that are being subtracted from. But can you tell
me how you are going to deal with people who are scheduled to
be coming in and are not having the facilities for them and
what are you doing to address that?
Mr. Grone. Well, we are addressing that through our
planning process. The planning process that we undertook,
keeping in mind given where we are now in May 2006, the
recommendations became law in November, our first Congressional
appropriation was secured in December. In the intervening
months we have gone about a fairly robust planning scenario for
the execution, particularly for those moves that are involved
in the fiscal 2006-fiscal 2007 timeframe. We have a number of
critical approved business plans, and certainly for the Army,
for everything that has been requested and appropriated for
fiscal 2006, as well as for those things we are working through
in fiscal 2007.
We have business plans and a planning process that can
begin to lay out the schedule and the expenditure of those
funds. I fully expect that we are going to obligate all of the
fiscal year 2006 money by the end of the fiscal year, based on
what I know today. Certainly the fiscal year 2007 funds are
critical in that regard as well.
From a community perspective, the Army and the components
are engaged, but particularly the Army, in a fairly intensive
dialogue with local communities. It is important that we have
facilities in place, ready to receive forces, with a minimal
use of temporary facilities. We do not want temporary
facilities to be the permanent solution. But we are also
working critically with local communities, particularly in West
Texas, but certainly not exclusively in West Texas, on key
questions involving housing, schools, transportation, and the
like. We believe that we have a very good handle working with
the community there on what the needs are and how we might sort
of tier that so that we schedule the moves in such a way that
we can take the maximum use of the time that we have, the
resources that we have, but parallel that with a community
planning process which is very important to our overall
success.
Senator Hutchison. Well, I think we need to--I hope that
you are going to be really carefully looking at that and
monitoring it, because there are concerns.
Secretary Jonas, your budget request for the NATO security
investment program is up 25 percent from last year's enacted
levels. Could you explain why there is such a large increase?
Ms. Jonas. I will. My understanding of the increase of $14
million is due to missions associated with Iraq and
Afghanistan. Phil may be able to clarify further on those
points, but that is my understanding of the increase over the
enacted level.
My understanding is that a number of projects of the
funding is to support the infrastructure program are also not
just for the standard infrastructure that we require for the
capability packages that we build inherently, but also for
those things that are needed to stand up and help stand up the
NATO response force as a long-term NATO investment in alliance-
wide security. We can certainly provide for the subcommittee in
whatever level of detail is required the assumptions for that,
for that increase.
But in order to ensure that the alliance continues with its
ongoing transformational activity to meet ongoing needs, needs
of the United States and the allies for infrastructure, as well
as to support the stand-up of the NATO response force, this was
the level of funding that was judged to be necessary to support
that. But certainly we can provide whatever else is necessary
to help you with that.
[The information follows:]
NATO has substantially increased the amount of funds to support
operations and missions. The NATO operations and missions in
Afghanistan, Iraq and the Balkans directly support the GWOT.
Below are the NSIP expenditures for NATO Missions/Operations for
2005 and prior and the estimated expenditures for 2006 and 2007. The
NSIP expenditures have increased and are expected to continue to do so.
The total operations and mission expenditures (NATO-wide) are:
--2002--$53 million
--2003--$61 million
--2004--$77 million
--2005--$108 million
--2006--$143 million (estimated)
--2007--$226 million (estimated)
In addition to the above, we also anticipate substantial
expenditures during 2007 for two capability packages to provide the
deployable assets to support the NATO Response Force (NRF). The NRF is
NATO's immediate reaction force with Notice to Move of 5 days (concept
briefed to the Staffers in April) and would be the initial forces
deployed for any new GWOT operations. The total NSIP estimated
expenditures are $244 million for NRF deployable communications assets
(recently approved) and $176 million for the NRF deployable facilities
(this CP under review not yet approved) and the anticipated NSIP
expenditure profile is as follows:
--2007--$31 million
--2008--$124 million
--2009--$223 million
NATO's contribution to coalition operations could allow the United
States to draw down forces in Afghanistan by as many as 3,000.
Additional U.S. forces in Afghanistan could transition from a war-
fighting to a peacekeeping role.
Senator Hutchison. Well, I would want to be assured that
these facilities would be used for the war on terror, for Iraq
and Afghanistan, because I think, while NATO is beginning to be
more helpful in Afghanistan and somewhat in Iraq, it has been a
slow start. I do not want to build a lot more infrastructure
for NATO that does not go for our mutual threat. I consider the
war on terror our mutual threat, but NATO has been perfectly
willing to let America carry the major share of this burden.
So what I would like is backup that in fact this is all
going for Iraq and Afghanistan and the war on terror, which is
legitimate and I am hopeful that NATO will take a major role.
But if it is for more NATO facilities that are just European-
based, then I would have a problem. So I would like that backup
and assurance that it is for the war on terror.
My last question to you, Ms. Jonas, is, I have been working
with General Hobbins, commander of the U.S. Air Forces, Europe,
to get the Air Force to pursue more creative options for
housing around Spangdahlem, and particularly to get the German
government to be more helpful. He tells me that they are
working on getting extensions of loan guarantees on build-to-
lease housing agreements that would go up to 15 years, to make
build-to-lease more attractive to private developers. The
German standards are very high. It is very expensive. I have
talked to General Hobbins on several occasions about it, as
well as General Jones.
I just want to ask you if you are also looking at this
issue with the Air Force and at the Department-wide level
trying to assure that we get some of the same help from the
German government that the Army has gotten and that we have
gotten from other governments where they desire our troops to
be there?
Ms. Jonas. Madam Chairman, I appreciate the question and of
course the Secretary is very interested in making sure that we
get proper host Nation support in all types of areas. So I'm
sure this would be no different. My understanding is that
legislation has been submitted to the Congress to extend the
lease period to 15 years. Some of the committees I guess have
acted on that already. But we will certainly do whatever we can
to try to get the best deal for the taxpayers. So you have my
assurance that we will work with the Air Force to try to get
the very best outcome we can.
Senator Hutchison. Thank you.
Mr. Grone. Madam Chairman, if I might. There was one piece
in the answer to your question I want to make sure that the
subcommittee understands, the question of the dialogue and the
oversight. When Ms. Jonas's deputy and I delivered the budget
justification materials earlier this year, we committed to all
of the oversight committees that we would periodically come
back up and give you sort of an in-progress report on where we
were, both in terms of where we were having successes and where
we were hitting hard spots.
It is my view that we not simply make that an annual
discussion at the time of the budget request, but as a matter
of our commitment we will be up here every quarter or so to
have conversations with you and your staff about exactly where
we are in the implementation process in order to address any
questions or concerns that you may have. So I want to make sure
that the subcommittee understands that we view this as an
important part of the dialogue to ensure that we can execute
implementation as effectively as we can. I neglected to mention
that earlier and I appreciate the opportunity to clarify that.
Senator Hutchison. Thank you very much.
Senator Feinstein.
Senator Feinstein. Thank you very much, Mr. Madam Chairman.
I wanted to just ask you a question about northern Italy,
particularly the Vicenza area and Camp Ederle, which I had the
pleasure of visiting. It is my understanding that additional
property has been acquired nearby because Ederle is just
packed, and the new site, which runs as I understand it, next
to an air strip, would also be very full.
What is the position of the new Italian government, or is
there a position, on these facilities and how do you see the
MILCON coming down for this new base?
Mr. Grone. Well, Senator Feinstein, I am not aware of any
particular position, change in position, certainly. We have an
understanding with the government of Italy for the rebasing of
the 173d in the Vicenza area. I am certainly not aware of
anything that would upset that, would upset that understanding
and that commitment between allied partners.
The combatant commander, EUCOM, and the Army looked very
carefully at the siting for those units and came to the
conclusion that for both purposes of efficiency, cost, and
schedule and performance to be able to get those units based
when they need to be resited, as well as the ability to access
the savings that would accrue from getting out of non-enduring
sites in Germany, which is about a $22 million a year savings,
that the current siting in the Dal Molin area was the
appropriate location.
I understand that some of the members have, including
yourself, have some questions about that and we will work with
EUCOM to provide whatever backup you require. But it is the
combatant commander and the Army's judgment that this is the
right site for the mission as they see it for the foreseeable
future.
Senator Feinstein. It would be interesting to watch and see
what happens.
Let me ask you a BRAC question. You testified before the
Armed Services Readiness Subcommittee in March on the outlook
for funding in the 2005 BRAC program through completion. In
response to a question as to whether the Pentagon had
identified enough funding in its long-term spending plan to
cover the cost of the program in the out years, you were quoted
as saying, quote: ``I cannot tell you how short or imbalanced
the program might be.''
Have you now completed the detailed planning for the 2005
round and can you tell this committee whether the Defense
Department has allocated sufficient resources in the out years
to fully fund the program?
Mr. Grone. Well, Senator Feinstein, we have allocated
significant resources over the program.
Senator Feinstein. How much?
Mr. Grone. $18 billion.
Senator Feinstein. Is it not estimated at $23 billion?
Mr. Grone. Yes. In the period in which I answered the
question, although we know more today, we are not quite
finished with all of the business plans. For those things that
require near-term funding, in 2006 and 2007, to support the
budget request we have very solid plans and planning processes
to support the execution of those funds, as we have detailed to
the committees in the budget justification documents. For those
things that are beginning to be implemented 2008 and out, we
were working through them and we are still in the tail end of
working through all of the cost structure. I expect it will be
somewhere around that $23 billion figure in the end, but
whether it will be a little bit more or a little bit less we
are still not yet prepared to say. We likely will be prepared
to say so in a matter of weeks as we finish some of the more
complex business plans.
Senator Feinstein. Would you be willing to provide this
committee with a detailed BRAC funding plan, much like a FYDP,
essentially for the years 2005 to 2011?
Mr. Grone. Well, we will be able to tell you in the near
term an estimate of what we expect the total program costs to
be. What we will sort out in the program review is exactly
which money will go in what year, but the leadership is
committed, after we have done all of this reestimation of the
costs, to marry that up against detailed implementation plans
to fully fund the program. So that when you receive the fiscal
2008 budget request it will reflect a fully funded program from
2008 to the balance of the program.
We have resources in every year of the FYDP for BRAC today.
We will have more when we bring up the next budget request. As
I indicated to Senator Hutchison a few moments ago, this is
part of the continuing dialogue between the Department and the
oversight committees, to ensure that you have a sense of where
we are at any one given point in time.
So we will continue to work the costs. One of the issues
here is that we want to make sure that BRAC dollars are being
expended solely to execute BRAC decisions and that there are
not other facility requirements or other things that sort of
get in there as people see an opportunity here to perhaps get
well at the installation level, which is understandable. But we
owe it to ourselves and we owe it to the oversight committees
to ensure that all we are doing with BRAC dollars is the things
that are required from a facility perspective to implement the
BRAC decisions, and that is what we are working through right
now.
Senator Feinstein. Well, now that people are beginning to
come back from Iraq, are there adequate places to put them?
Mr. Grone. Yes.
Senator Feinstein. So you will not need any additional
funds for that?
Mr. Grone. I think that is a divisible question from the
BRAC question.
Senator Feinstein. It is different, I understand.
Ms. Jonas. With regard to your overall question, Senator,
about fully funding BRAC, I can assure you that this is one of
the highest priorities of the Deputy Secretary as we begin to
go into our programming period for the 2008 and beyond program.
He is well aware of the requirements. So we commit to you to
fully fund the program.
Senator Feinstein. Okay. Let me ask you about the housing
and particularly the GAO report on management issues involving
the military housing privatization program. I gather they found
that 36 percent of the 44 awarded housing projects had
occupancy rates below expectations, rates below 90 percent. For
example, the GAO flagged one Air Force project, Patrick Air
Force Base in Florida, in which the occupancy rate by military
families was only 29 percent. They raised the concern that
significantly below expected occupancy rates could impact the
financial viability of housing projects, private housing
projects, and could impact the amount of money the Department
needs to budget for military housing allowances.
What are you doing to ensure that these privatization
projects are really used fully?
Mr. Grone. Well, certainly, Senator, housing privatization
is a key to our overall strategy. In recent years we have
continued to refine our housing requirements process to ensure
that as we bring projects on line they fill in the gap between
what is already provided by the private sector and what we
truly require in terms of housing privatization.
The occupancy rates are interesting in the sense that they
give you sort of a snapshot in time of how well they are
occupied by military families. But in no case of which I am
aware, and I went back as recently as yesterday to look at this
question--there is no project that is in fiscal or financial
distress as a result of occupancy rates. Each of the projects
has a waterfall associated with them that allows occupancy by
non-military personnel, usually starting with DOD civilians,
retired military personnel and the like.
Senator Feinstein. So in other words, in the Florida case,
that 29 percent is military families, the rest is replaced by
others?
Mr. Grone. Well, I do not know in that case and I would
have to go back and look at it, and I would be happy to do that
for the record----
Senator Feinstein. Would you do that?
Mr. Grone [continuing]. How many of the other units were
off line due to renovation and reconstruction schedules. So to
say that 29 percent or 30 percent or whatever, 80 percent or 90
percent, is occupied by military families is only part of the
snapshot. The question is what is happening in the rest of
those units and is it along the schedule that the developer
expected when they were turning the units over. That is
something we would have to go back into each project and look
at. We would be happy to do that.
Generally, the work we have done with GAO, frankly, has
been very positive. They have been very helpful, provided a
very helpful oversight perspective on a number of aspects of
the program, and we have improved program implementation,
program evaluation and oversight over the months and years as a
result of some of that independent look. So I actually view
that GAO report a little bit more positively in terms of the
direct suggestions that they have for program improvement, many
of which we are going to take on board.
[The information follows:]
Patrick AFB housing privatization project was awarded in October
2003, at that time, the Air Force transferred 960 inadequate housing
units to the new ownership, who planned to replace 552 units and
demolish 408 units without replacement. A total 592 family housing
units were consistently ``online'' during the reporting period covered
in the GAO Report (Military Housing: Management Issues Require
Attention as Privatization Program Matures). The family housing units
off-line at Patrick AFB were quickly demolished by the developer to
clear an area for new construction prior to the GAO reporting period.
The only other units off-line temporarily were those in transition
between tenants for approximately 1 week for change of occupancy
maintenance (COM). They are considered available/online for rental and
were often rented while in COM.
Responding to the larger question concerning construction/
renovation schedules, MHPI developers have achieved 90 percent of their
new construction goals and over 100 percent of their renovation goals
identified in their original proposals. The achievement of over 100
percent in renovations is related to some re-scoping of projects, in
terms of shifting from deficit reduction (new unit construction) to an
emphasis on accelerating renovations, as is the case at Fort Meade,
Maryland.
Please see the attached MHPI Project construction/renovation
progress graph.
Senator Feinstein. I do not want to waste a lot of time,
but my point is that if you would take a look at this and get
back to us I would appreciate it.
Mr. Grone. Absolutely.
Senator Feinstein. Let me ask one other question. Has the
Department identified adequate resources to fully fund the
environmental cleanup of the 2005 BRAC round?
Mr. Grone. That will be part of the fully funded program as
we bring it forward.
Senator Feinstein. I bet the answer is no.
Mr. Grone. In all honesty, Senator Feinstein, I understand
from prior rounds of BRAC we expended about $24 billion to date
on all activities associated with that. About $8 billion of
that is in the environmental remediation category. For this
round of BRAC, we are not closing significant operational
ranges. Some of the installations that might have had some
remediation challenges associated with them the commission
chose to leave open. So we are frankly expecting in this round
a far more manageable, far more understood in terms of the
universe of environmental remediation challenge.
I think the cost to complete, based on what we know today,
is somewhat on the order of less than $1 billion. We would be
happy to keep you up to date on that as we go forward. But I
think----
Senator Feinstein. Total cost is under $1 billion?
Mr. Grone. For the 2005 decisions. That is not the cost to
complete from prior rounds. That is a different question. We
are looking at the discrete decisions that were made for the
BRAC 2005 round. The environmental liability associated with
that is far less than it was in prior rounds of BRAC, because
of the nature of the installations that were closed and the
investments we have made to date in environmental cleanup at
those locations. They are two different sets of installations
and we would be happy to parse that for you so you understand
it as well as you can.
Senator Feinstein. Thank you, Madam Chairman.
Senator Hutchison. Senator Allard.
STATEMENT OF SENATOR WAYNE ALLARD
Senator Allard. Thank you, Madam Chairman.
Briefly, I just want to comment that people in Colorado and
particularly around the Colorado Springs area, where we have a
number of bases down there, are particularly pleased with the
results of the BRAC round. They were apprehensive about it, and
we were not all winners, there were some losers, but I think
overall they were pleased with it.
I think they are viewing that the implementation of that,
at least up to this point, has been successful from their
perspective. So I just wanted to let you know that.
Colorado Springs as a community has been extremely
supportive of their military personnel and they have a lot of
supportive programs there. I think that Fort Carson in
particular is one of the bases that is desirable as far as the
Army is concerned and I think that is reflected in the
reenlistment rate. Fort Carson has one of the highest
reenlistment rates of any of the bases in the country. So there
are a lot of positive things that are really happening there.
One of the things that is being discussed is actually
expanding Fort Carson, particularly expanding its training
area. The head of the Fort Carson mentioned that possibility
and I encouraged him to go ahead and begin to talk to residents
that would be affected to expand the Pinion Canyon area. That
is where a large--it is about 235,000 acres there for training.
I do believe that there is a necessity there because of the
increased number of Army units who will be coming into Fort
Carson, as well as the high technology that is now on the
ground. You have to have more training area in order to be able
to train with the high technology. So I like the--I generally
have encouraged them to move ahead with that, but with the
caveat they need to talk with the land owners down in that
area.
They are looking at an area that is more than 5 times, I
think, what the original training area down there. So there is
a lot of land to look around. It is going to be difficult, I
think, for any one ranch, for example, to block an expansion
because you can always go in another direction.
So acting on some assurances from the commander there at
the Air Force, he said he did not think it was going to be
necessary to require any eminent domain. They had enough
choices there and enough different directions, he did not think
that would be a problem.
So the first question I want to place to you, Secretary
Grone, has to do with land acquisitions as far as the Army is
concerned. Eminent domain is not a good word as far as the West
is concerned. I would like to know, do you support the use of
eminent domain for expanding military installations?
Mr. Grone. Senator, that is a very complex question. My
view is--and we have done this, as you know, in the context of
the readiness and environmental protection initiative, where we
have recently as part of that program worked with some willing
sellers around the Fort Carson, around Fort Carson proper----
Senator Allard. Yes.
Mr. Grone [continuing]. To provide buffer and some
additional area within which----
Senator Allard. That is moving along very successfully.
Mr. Grone [continuing]. The service can conduct its
mission.
As a general rule we always prefer to work with willing
sellers. I would not want to say that in all cases eminent
domain should be ruled out as an option or a tool. Sometimes it
is a necessary tool, depending on the circumstances, the
specific circumstances of a case.
Senator Allard. Sure.
Mr. Grone. So I would never want to take any legally
available tool to the Department for the execution of its
national security mission off the table. But in general, as you
know, our presumption as we have gone through a good deal of
these activities has been to work with willing sellers, and we
have had a lot of success in doing so.
So I frankly would defer a specific answer to the question
without knowing context.
Senator Allard. I think that is a reasonable response and
it is what I would have expected in response. So then, looking
at the Pinon Canyon area, do you see any real need for using
eminent domain in the Pinon Canyon area?
Mr. Grone. Well, I cannot comment on that because I know
what I have read in the press, frankly, about the case. The
Army has not yet presented an option or a plan for acquisition.
Senator Allard. So it has not been approved by DOD or
anything like that?
Mr. Grone. No, not at this time. The Secretary has not been
presented with a set of options on that question.
Senator Allard. Do you like the idea that when you make the
property purchases that you go with fair market value?
Mr. Grone. We have executed a good deal of our land
acquisitions at fair market value.
Senator Allard. Yes. The reason for my questions is that I
have introduced some legislation that addresses the eminent
domain issue, but it also says that you will not pay more than
fair market value. The idea is that you do not want anybody
holding out with the idea that they are going to get some super
price over here. So if we legislatively say you are not going
to get it, maybe that would discourage that type of behavior.
We want this to be fair. We want a willing seller, we want
a willing buyer. We want to be fair to the taxpayers. We do not
want to overpay on some of the property in that. Do you have
any concerns about that kind of approach?
Mr. Grone. It is very difficult to comment specifically
until we have a plan or a request to proceed from the Army. So
I think I would like, frankly, to defer the answer to the
question until we get to the point where we are actually
talking about a specific proposal. We can have an appropriate
discussion about it at that time. I just do not know enough
about the context to know whether it is the right answer or the
wrong answer. It is too early.
Senator Allard. Okay. Madam Chairman, I see my time has
expired.
Senator Hutchison. No, go ahead and finish, because if you
have something else----
Senator Allard. Yes, there is another follow-up I wanted,
if I might.
Senator Hutchison. Sure.
Senator Allard. Also in there, we have put in the
legislation that you study the economics of the area, impact on
the economics and the environmental impact on the area. I would
assume this is something you are going to do anyhow. Am I
correct in that?
Mr. Grone. Certainly from an environmental perspective,
with any major land acquisition we would have to conduct the
appropriate NEPA analysis, whether it is a full EIS or an EA
depending upon the circumstances and concerns. We would have to
do an environmental analysis in any event.
Senator Allard. Now, I am going to move on to another
subject and that has to do with the Department of Defense's
request for an assembled chemical weapons alternative program.
You provided money here for the first year and we appreciate
what you have done here in the first year. Again the question
is on the out years, similar to what Senator Feinstein had
brought up.
Can I have some assurances that you are going to be looking
at at least a similar amount of appropriations as you put in
this year--I think it is $100 million if I am correct--and for
the next 2 years trying to sustain that level of funding?
Mr. Grone. I do not have the--go ahead.
Ms. Jonas. Senator, we will be working with----
Senator Allard. Yes, maybe it is Secretary Jonas. That
should be directed to you.
Ms. Jonas. Obviously, this is a high priority program, and
I know Secretary Krieg has worked this very hard. So it will be
one of the things that is on our mind as we work the 2008 and
out process. I am not sure how that is going to turn out, but I
know that the Deputy Secretary is well aware of your concerns
on this and we want to move positively forward.
Senator Allard. Now, also to Secretary Jonas, on the
readiness and environmental protection initiative, which again
was mentioned earlier here, about the buffer around Fort Carson
so that we do not have urban encroachment onto that base and
continue to carry out their missions there. I think you had $20
million was put in there. I do not think that is adequate. From
what I understand, there are a lot of bases that are beginning
to understand the impact of urban encroachment on their bases
and their mission.
I am pleased that the House and Senate Armed Services
Committee agreed to add $30 million to the program. I guess it
brings it up to a total of $50 million altogether. Why did the
Department of Defense provide only $20 million for the
readiness and environmental defense initiative when there is a
clear need for that money and agreed--not only would I agree
with that, but the House Armed Services Committee as well as
the Senate Armed Services Committee agreed that there was a
greater need?
Mr. Grone. Well, Senator, based on the resource trades we
had to make as we were building the budget, $20 million was the
amount that we came to in the last program review. I think you
agree that it is proving to be a very effective program,
although it is a young program.
Senator Allard. Yes.
Mr. Grone. A number of the activities we had--I do not want
to call them pilots because they are beyond pilots. But it is a
new program. We are having great success with it. Frankly, it
is a program that I would like to continue to see us work to
expand as necessary if we have defined requirements. That is
one of the sort of key aspects of this.
It is not the only way in which we resource that program
because the components have the ability to marry those funds up
or on their own initiative use their operations and maintenance
funding to take advantage of unique opportunities that arise in
the year of execution, working with willing sellers. We are
building the program around the priorities of the components. I
appreciate very much the support that the committees have given
us for the program and I think as we mature the program,
continue to have success with it, continue to build the right
relationships locally and among the States for partnership and
cooperation in this area, the program will settle in at a level
that is reasonable.
But for the purposes of the President's budget, looking at
all the other requirements that we had in front of us, that was
the amount of money we settled on for the President's budget. I
understand what the authorizers have done and we will continue
to work with you on that.
Senator Allard. We are very pleased with the program, the
way it is starting out with Fort Carson. We do have a lot of
open space around there, but people are starting to build homes
right up to the edge of the fort, and the next thing you know
there are complaints about the gunfire and everything else that
is going on. So I think this is a vital program and the sooner
we can get to this and deal with it, not only in Colorado but I
think throughout the country, we will sort of have a buffer
zone and try and work out a relationship with the conservation,
wildlife conservation groups and what-not, there might be a way
of kind of coming to a solution here that would benefit the
military as well as those who want open space. It is
reasonable, I think, to say that somebody should not be
building their home right next to a base and then complain
about the loud noise when they do. But people do it. They build
up to airports the same way. I do think that we need to do
everything we can to prevent that from happening, to sustain
the bases we have left, because there are fewer of them and
they become more vital, I think, to the function of our
military.
Thank you, Madam Chairman.
Senator Hutchison. Thank you, Senator Allard, and I thank
this panel. I appreciate your time and the efforts you are
making, and you are excused.
Mr. Grone. Thank you, ma'am.
Senator Hutchison. I would like to call the second panel:
the Honorable Keith Eastin, the Assistant Secretary of the
Army; the Honorable B.J. Penn, the Assistant Secretary of the
Navy; and the Honorable William C. Anderson, the Assistant
Secretary of the Air Force.
Secretary Eastin, would you like to start.
STATEMENT OF HON. KEITH E. EASTIN, ASSISTANT SECRETARY
OF THE ARMY, INSTALLATIONS AND EQUIPMENT,
DEPARTMENT OF THE ARMY
Mr. Eastin. Yes, I have an opening statement and I also
have a longer statement. I would request that be included in
the record today.
Senator Hutchison. Without objection.
Mr. Eastin. In the interest of saving the committee's time,
I will try to abbreviate what my clever staff has put here in
these many, many pages, just to say that the Army has a very
ambitious program. The BRAC program, which started last year,
includes not only the traditional BRAC, which is closing bases,
realigning bases, making things more efficient, but it also
includes bringing back approximately 52,000 soldiers from Korea
and Europe. It includes resetting the force from a division-
centric force to a brigade-centric force. It also includes the
actions bringing back and rotating troops in and out of Iraq
and Afghanistan, as well as some other actions. So it is a very
complicated process and, I might add, an ambitious process that
I think the Army has well planned.
PREPARED STATEMENT
It takes care of our soldiers. We see that they have places
to come home to when they come home from Europe and Korea, and
it takes care of our soldiers' families.
So we would hope that you would see this as an integrated
and ambitious plan, but one that is necessary in the pursuit of
the defense of the Nation, and would support it as you have
before, and we appreciate it. Thank you.
[The statement follows:]
Prepared Statement of Keith E. Eastin
INTRODUCTION
Madam Chairman and members of the Subcommittee, it is a pleasure to
appear before you to discuss the Army's Military Construction budget
request for fiscal year 2007. We have a robust budget that is critical
to the success of the Army's new initiatives and sustainment of ongoing
programs of critical importance to the Army. We appreciate the
opportunity to report on them to you. We would like to start by
thanking you for your unwavering support to our Soldiers and their
families serving our Nation around the world. They are and will
continue to be the centerpiece of our Army, and they could not perform
their missions so successfully without your steadfast support.
OVERVIEW
TRANSFORMING INSTALLATIONS WHILE THE ARMY IS AT WAR
Installations are the home of combat power--a critical component of
the Nation's force capabilities. Your Army is working to ensure that we
deliver cost-effective, safe, and environmentally sound capabilities
and capacities to support the national defense mission.
The tremendous changes in our national security environment since
the terrorist attacks on our Nation clearly underscore the need for a
joint, integrated military force ready to defeat all threats to United
States interests. To meet these security challenges, we require
interrelated strategies centered on people, forces, quality of life,
and infrastructure. Regarding infrastructure, we need a global
framework of Army installations, facilities, ranges, airfields, and
other critical assets that are properly distributed, efficient, and
capable of ensuring that we can successfully carry out our assigned
roles, missions, and tasks that safeguard our security at home and
abroad.
Army infrastructure must enable the force to fulfill its strategic
roles and missions in order to generate and sustain combat power. As we
transform our operational forces, so too must we transform the
institutional Army and our installation infrastructure to ensure this
combat power remains relevant and ready.
STATIONING
To transform from a forward-deployed to a U.S.-based power
projection force, we are consolidating overseas units at enduring
locations and bringing back units to the United States through the
effort we collectively call ``stationing.'' Our stationing effort is an
integrated plan driven by the convergence of three distinct
initiatives: Base Realignment and Closure (BRAC) 2005, Integrated
Global Presence and Basing Strategy (IGPBS), and the Army Modular Force
(AMF) Initiative. Stationing will allow the Army to focus its resources
on installations that provide the best military value and to best
posture units for responsiveness and readiness. Eliminating Cold War
era infrastructure and employing modern technology to consolidate
activities allows the Army to free financial and human resources that
we can then focus on our core warfighting mission. The stationing
initiative is a massive undertaking, requiring the synchronization of
base closures, realignments, military construction and renovation, unit
activations and deactivations, and the flow of forces to and from
current global commitments. Our decisions to synchronize activities
associated with restationing and realigning our global basing posture
have been guided by the following key criteria:
--Meeting operational requirements
--Providing economic benefits
--Using existing infrastructure to reduce cost and excess capacity
--Funding critical requirements to achieve unit mission
--Compliance with applicable laws
--Minimizing the use of temporary facilities
--Giving facility priority to ranges, barracks, housing, vehicle
maintenance shops, headquarters and operations, dining and
instruction facilities
The completion of this combined set of stationing initiatives will
result in an Army that is better positioned to respond to the needs and
requirements of the 21st Century security environment, with our
Soldiers and families living at installations that are truly
``Flagships of Army Readiness.''
INFRASTRUCTURE QUALITY
In addition to mission support, our installations provide the base
of support for Soldiers and their families. The environment in which
our Soldiers train, our civilians work, and our families live plays a
key role in recruiting and retaining the high quality people the Army
needs. Through efforts such as Barracks Modernization and the
Residential Communities Initiative (RCI), the Army has made tremendous
progress in improving the quality of life for Soldiers and their
families. These efforts will combine with the Army's stabilization of
the force to forge greater bonds between units, Soldiers, families, and
the communities in which they live.
The quality of our installations is critical to the support of the
Army's mission, its Soldiers, and their families. Installations serve
as the platforms we use to train, mobilize, and rapidly deploy military
power. When forces return from deployments, installations enable us to
efficiently reset and regenerate combat power for future missions. In
the past year, the Army has made tremendous progress in enhancing
training and improving its ability to generate and reset the force.
Through its stationing plans, the Army will be able to focus future
resources on key installations that provide the most value to our
mission and provide the quality of life that our Soldiers and families
deserve.
BASE REALIGNMENT AND CLOSURE (BRAC) 2005
BRAC 2005 is the fifth round of BRAC actions that is now approved
for implementation beginning in fiscal year 2006. BRAC 2005 actions are
designed to optimize the Army's infrastructure assets in concert with,
and in support of, the operational capacity and warfighting
capabilities of the Army. BRAC 2005 is also designed to enhance the
opportunities for joint activities with the creation of joint
installations and joint operations that create more efficient and
effective common business-oriented functions within the Department of
Defense. As with prior rounds, the Army will achieve savings by
divesting of installations that are no longer needed and are less
efficient and effective in supporting a Joint and Expeditionary Army.
BRAC 2005 goes beyond savings and provides transformational facilities
and new opportunities for Joint operations and Joint business
functions. As we reposition forces from overseas, our installations
must support a Joint and Expeditionary Army.
BRAC recommendations became law on November 9, 2005, and by law,
all recommendations must be completed by September 14, 2011. The
Department of Defense and the Army recommended 12 major and 1 minor
Army base closures and 53 Army base realignments. In addition, 176 Army
Reserve and 211 National Guard facilities will close across 39 States
and territories whose units will relocate to 125 new Armed Forces
Reserve Centers.
BRAC execution should contribute to the following Army goals:
--Reducing cost and generate savings which can be reinvested
--Optimizing military value
--Advancing the Army Modular Force Initiative
--Accommodating the rebasing of overseas units
--Enabling the transformation of both the Active and Reserve
Components as well as rebalancing the forces
--Contributing to joint operations
INTEGRATED GLOBAL PRESENCE AND BASING STRATEGY (IGPBS)
IGPBS will relocate over 50,000 Soldiers and their families from
Europe and Korea to the United States over the next 5 to 6 years. These
moves are critical to ensure Army forces are properly positioned
worldwide to respond in support of our National Military Strategy. The
majority of the moves/restationing actions are incorporated within the
BRAC Budget, but IGPBS also includes intra-theater moves. These include
moves within Korea relocating units from north of Seoul to Camp
Humphreys; within Germany from numerous installations to our major hub
at Grafenwoehr/Vilseck, and moves from Germany to Italy to support the
standup of a full Airborne Brigade Combat Team in Vicenza.
ARMY MODULAR FORCE
The fiscal year 2007 budget includes projects to ensure that our
facilities continue to meet the demands of force structure, weapons
systems, and doctrinal requirements. As of fiscal year 2006, we have
funded 93 percent of the Military Construction requirements for the
Stryker Brigade Combat Teams, including National Guard requirements in
Pennsylvania. Remaining construction funding for both the Active Army
and Army National Guard will be requested in future budget requests.
The Army Modular Force (AMF) initiative transforms the Army from
units based on the division organization into a more powerful,
adaptable force built on self-sufficient, brigade-based units that are
rapidly deployable. These units, known as Brigade Combat Teams (BCTs),
consist of 3,500 to 4,000 Soldiers. BCTs increase the Army's combat
power while meeting the demands of global requirements without the
overhead and support previously provided by higher commands.
New facility requirements for transforming units are being
provided, where feasible, through the use of existing assets. Where
existing assets are not available, the Army is programming high-
priority projects to support Soldiers where they live and work. The
Army is requesting $242 million in fiscal year 2007, to support BCTs.
The remaining AMF requirements will be addressed in future budgets.
BRAC 2005 IMPLEMENTATION STRATEGY
The Army will execute BRAC 2005 by implementing interrelated events
starting with realignment of the operational forces of the Active Army,
both inside and outside the United States, at installations DOD-wide,
capable of training modular formations at home station. The Army will
create Joint and Army Training Centers of Excellence to enhance
coordination, doctrine development, training effectiveness, and improve
operational and functional efficiencies.
The Army will transform the Reserve Components by realigning and
closing facilities to reshape the command and control functions and
force structure and to create Joint or multi-functional installations.
The Army will close 387 Army Reserve and National Guard facilities and
build 125 new multi-component Armed Forces Reserve Centers distributed
throughout the United States and Puerto Rico. The new Armed Forces
Reserve Centers will improve the readiness and ability of Reserve and
National Guard units to train, alert, and deploy in support of current
and future contingency operations, including homeland defense. In
addition, the Army will disestablish ten Army Reserve Regional
Readiness Commands and establish four Regional Readiness Sustainment
Commands and six new deployable warfighting units.
In the United States, the Army will consolidate four Installation
Management Agency regions into two and also consolidate the
Installation Management Agency, Army Community and Family Support
Center, and the Army Environmental Center in San Antonio, Texas.
The Army will partner with DOD to consolidate DOD Research,
Development, Test, and Evaluation organizations to enhance support of
DOD transformation and Joint Operations and realign or close
installations to co-locate headquarters with subordinate commands or to
station organizations with their service counterparts to provide
responsive, quality, and cost-effective medical and dental care.
Finally, the Army will transform materiel and logistics operations by
realigning or closing installations to integrate critical munitions
production and storage, manufacturing, depot-level maintenance, and
materiel management to enhance Joint productivity and efficiency and to
reduce cost.
BRAC 2005 BUDGET
The Army will apply all the necessary resources to accomplish the
BRAC 2005 mission. In fiscal year 2006, the Army will execute over $865
million to initiate both BRAC and IGPBS, and begin required National
Environmental Policy Act actions for all BRAC 2005 requirements. The
Army will begin planning and design for projects in fiscal years 2006,
2007, and 2008, and begin construction of ten projects in fiscal year
2006. The Army will execute $3,608 million to continue actions for BRAC
2005 requirements in fiscal year 2007.
PRIOR BRAC
In 1988, Congress established the Defense Base Realignment and
Closure Commission to ensure a timely, independent, and fair process
for closing and realigning military installations. Since then, the
Department of Defense has successfully executed four rounds of base
closures to reduce infrastructure and align the military's
infrastructure to the current security environment and force structure.
Through this effort, the Army estimates approximately $10.7 billion in
savings through 2006--more than $900 million annually from previous
BRAC rounds..
The Army is requesting $51.3 million in fiscal year 2007 for prior
BRAC rounds ($6.2 million to fund caretaking operations of remaining
properties and $45.1 million for environmental restoration). In fiscal
year 2007, the Army will complete environmental restoration efforts at
two installations, leaving eight remaining BRAC installations requiring
environmental restoration.
To date, the Army has spent $2.5 billion on BRAC environmental
restoration. We have disposed of 229,129 acres (89 percent of the total
acreage disposal requirement of 258,607 acres), with 29,478 acres
remaining to dispose of at 15 installations.
THE WAY AHEAD
To improve the Army's facilities posture, we have undertaken
specific initiatives or budget strategies to focus our resources on the
most important areas--Range and Training Lands, Barracks, Family
Housing, and Workplaces.
Range and Training Lands.--Ranges and training lands enable our
Army to train and develop its full capabilities to ensure our Soldiers
are fully prepared for the challenges they will face. Our Army Range
and Training Land Strategy supports Army transformation, and the Army's
Sustainable Range Program. The Strategy identifies priorities for
installations requiring resources to modernize ranges, mitigate
encroachment, and acquire training land.
Barracks.--Providing safe, quality housing is a crucial commitment
the Army has made to its Soldiers. We owe single Soldiers the same
quality housing that is provided to married Soldiers. Modern barracks
are shown to significantly increase morale, which positively impacts
readiness and quality of life. The importance of providing quality
housing for single Soldiers is paramount to success on the battlefield.
The Army is in the 14 year of its campaign to modernize barracks to
provide 136,000 single enlisted permanent party Soldiers with quality
living environments. The new complexes meet DOD ``1+1'' or equivalent
standard by providing two-Soldier suites, increased personal privacy,
larger rooms with walk-in closets, new furnishings, adequate parking,
landscaping, and unit administrative offices separated from the
barracks.
Family Housing.--This year's budget continues our significant
investment in our Soldiers and their families by supporting our goal to
have contracts and funding in place to eliminate inadequate housing at
enduring installations by fiscal year 2007 in the United States and by
fiscal year 2008 overseas. For families living off-post, the budget for
military personnel maintains the basic allowance for housing that
eliminates out of pocket expenses.
Workplaces.--Building on the successes of our family housing and
barracks programs, we are moving to improve the overall condition of
Army infrastructure by focusing on revitalization of our workplaces.
Projects in this year's budget will address requirements for
operational, administration, instructional, and maintenance facilities.
These projects support and improve our installations and facilities to
ensure the Army is deployable, trained, and ready to respond to meet
its national security mission.
LEVERAGING RESOURCES
Complementary to these budget strategies, the Army also seeks to
leverage scarce resources and reduce our requirements for facilities
and real property assets. Privatization initiatives such as the
Residential Communities Initiative (RCI), Utilities Privatization, and
build-to-lease family housing in Europe and Korea represent high-payoff
programs which have substantially reduced our dependence on investment
funding. We also benefit from agreements with Japan, Korea, and Germany
where the Army receives host nation funded construction.
In addition, Congress has provided valuable authorities to utilize
the value of our non-excess inventory under the Enhanced Use Leasing
program and to exchange facilities in high-cost areas for new
facilities in other locations under the Real Property Exchange program.
In both cases, we can capitalize on the value of our existing assets to
reduce un-financed facilities requirements.
The Army is transforming military construction by placing greater
emphasis on installation master planning and standardization of
facilities as well as planning, programming, designing, acquisition,
and construction processes. Looking toward the immediate future, we are
aggressively reviewing our construction standards and processes to
align with industry innovations and best practices. In doing so, we
expect to deliver quality facilities at lower costs while meeting our
requirements more expeditiously. By encouraging the use of manufactured
building solutions and other cost-effective, efficient processes, the
Army will encourage non-traditional builders to compete. Small business
opportunities and set-aside programs will be addressed, as well as
incentives for good performance. Work of a repetitive nature coupled
with a continuous building program will provide the building blocks for
gaining efficiencies in time and cost.
MILITARY CONSTRUCTION
The Army's fiscal year 2007 budget request includes $7.63 billion
for Military Construction appropriations and associated new
authorizations, Army Family Housing, and Base Realignment and Closure.
----------------------------------------------------------------------------------------------------------------
Authorization of
Military Construction Appropriation Authorization Appropriations Appropriation
Request Request Request
----------------------------------------------------------------------------------------------------------------
Military Construction Army (MCA)....................... $1,982,432,000 $2,059,762,000 $2,059,762,000
Military Construction Army National Guard (MCNG)....... N/A 473,197,000 473,197,000
Military Construction Army Reserve (MCAR).............. N/A 166,487,000 166,487,000
Army Family Housing Construction (AFHC)................ 594,991,000 594,991,000 594,991,000
Army Family Housing Operations (AFHO).................. 676,829,000 676,829,000 676,829,000
BRAC 95 (BCA) \1\...................................... 51,340,000 51,340,000 51,340,000
BARC 2005 (BCA) \1\.................................... 3,608,234,000 3,608,234,000 3,608,234,000
--------------------------------------------------------
TOTAL............................................ 6,913,826,000 7,630,840,000 7,630,840,000
----------------------------------------------------------------------------------------------------------------
\1\ BRAC Fiscal Year 2007 Budget will be submitted by OSD in March 2006.
MILITARY CONSTRUCTION, ARMY (MCA)
The Active Army fiscal year 2007 Military Construction budget
request is $1,982,432,000 for authorization and $2,059,762,000 for
authorization of appropriations and appropriation. These projects will
provide the infrastructure necessary to ensure continued Soldier
readiness and family well-being.
Soldiers as our Centerpiece Projects.--The well-being of our
Soldiers, civilians, and families is inextricably linked to the Army's
readiness. We are requesting $934 million or 46 percent of our MCA
budget for projects to improve well-being in significant ways.
The Army continues to modernize and construct barracks to provide
enlisted single Soldiers with quality living environments. This year's
budget request includes 24 barracks projects to provide improved
housing for 5,450 Soldiers and new barracks in support of major
stationing moves. With the approval of $840 million for new barracks in
this budget, 89 percent of our requirement will be funded at the
``1+1'' or equivalent standard.
We are requesting the second increment of funding, $135 million,
for four previously approved, incrementally funded, multiple-phased
barracks complexes. In addition, we are requesting full authorization
of $408 million for an incrementally funded brigade complex, but only
requesting $102 million in appropriations for this project in fiscal
year 2007. Our plan is to award this complex subject to subsequent
appropriations, as single contracts to gain cost efficiencies, expedite
construction, and provide uniformity in like facility types. The fiscal
year 2007 budget also includes a $26 million physical fitness center,
which incorporates a child development center, and eight additional
child development centers for $68 million. This will provide more than
1,800 child spaces to allow Soldiers to focus on their missions,
knowing their families are being provided for.
Overseas Construction.--Included in this budget request is $526
million in support of high-priority overseas projects. In Germany, we
continue our consolidation of units to Grafenwoehr as part of our
Efficient Basing--Grafenwoehr initiative. This is our fifth and next to
last year of funding. Funding requested this year will bring us to 89
percent funded for this initiative. This initiative allows us to close
numerous installations as forces relocate to the United States and
within Europe saving base support and enhancing training. In Korea, we
are again requesting funds to further our relocation of forces on the
peninsula. This action is consistent with the Land Partnership Plan
agreements entered into by the United States and Republic of Korea
Ministry of Defense. Our request for funds in Italy is IGPBS related
and relocates forces from Germany to Vicenza to create a full Airborne
BCT as part of the Army's transformation to a modular force. The
Airborne BCT complex also includes new barracks to house 570 Soldiers.
Additional locations in Germany will close as construction is
completed.
Current Readiness Projects.--Projects in our fiscal year 2007
budget will enhance training and readiness by providing deployment and
maintenance facilities, brigade complexes and headquarters, other
operational and administration facilities, and an overseas Forward
Operating Site base camp for $34.8 million that will provide a brigade
(minus)-sized operational facility to support rotational training,
allow for increased U.S. partnership training, and promote new military
to military relationships.
We will also construct a battle seminar facility, combined arms
collective training facilities, shoot houses, digital multipurpose
training ranges, and purchase land to support collective training.
These facilities will provide our Soldiers realistic, state-of-the-art
live-fire training. We are requesting a total of $613 million for these
high-priority projects. We are also requesting the second and final
phase of funding of $13 million for a defense access road.
Army Modular Force Projects. Our budget supports transformation of
the Army to a modern, strategically responsive force. Our budget
request contains $276 million for five brigade complexes and other
facilities. Additionally, there are eight child development centers,
and new barracks to house 1,130 Soldiers in support of the Army Modular
Force.
Other Support Programs.--The fiscal year 2007 MCA budget includes
$192 million for planning and design of future projects. As executive
agent, we also provide oversight of design and construction for
projects funded by host nations. The fiscal year 2007 budget requests
$21 million for oversight of approximately $800 million of host nation
funded construction for all Services in Japan, Korea, and Europe.
The fiscal year 2007 budget also contains $23 million for
unspecified minor construction to address unforeseen critical needs or
emergent mission requirements that cannot wait for the normal
programming cycle.
MILITARY CONSTRUCTION, ARMY NATIONAL GUARD
The Army National Guard's fiscal year 2007 Military Construction
request for $473,197,000 (for appropriation and authorization of
appropriations) is focused on Current Readiness, Transformation, and
other support and unspecified programs.
Current Readiness.--In fiscal year 2007, the Army National Guard
has requested $161 million for eight projects to support current
readiness. These funds will provide the facilities our Soldiers require
as they train, mobilize, and deploy. Included are four maintenance
facilities, two training projects, one Readiness Center, and an Armed
Forces Reserve Center.
Army Modular Force.--This year, the Army National Guard is
requesting $234 million for 32 projects in support of our new missions.
There are 12 projects for the Stryker Brigade Combat Team initiative,
eight for our Army Division Redesign Study, seven Range projects to
support the Army Range and Training Land Strategy, and five Aviation
Transformation projects to provide facilities for modernized aircraft
and change unit structure.
Other Support Programs.--The fiscal year 2007 Army National Guard
budget also contains $57 million for planning and design of future
projects and $21 million for unspecified minor military construction to
address unforeseen critical needs or emergent mission requirements that
cannot wait for the normal programming cycle.
MILITARY CONSTRUCTION, ARMY RESERVE
The Army Reserve's fiscal year 2007 Military Construction request
for $166,487,000 (for appropriation and authorization of
appropriations) is for Current Readiness and other support and
unspecified programs.
Current Readiness.--In fiscal year 2007, the Army Reserve will
invest $125.1 million to construct five new Army Reserve Centers and
two Armed Forces Reserve Centers; and invest $13.7 million to construct
a general purpose warehouse--for a total facility investment of $138.8
million. Construction of the seven Reserve Centers will support over
3,800 Army Reserve Soldiers and civilian personnel. In addition, the
Army Reserve will invest $5.2 million to construct three training
ranges, which will be available for joint use by all Army components
and military services.
Other Unspecified Programs.--The fiscal year 2007 Army Reserve
budget request includes $19.5 million for planning and design for
future year projects and $3.0 million for unspecified minor military
construction to address unforeseen critical needs or emergent mission
requirements that cannot wait for the normal programming cycle.
ARMY FAMILY HOUSING CONSTRUCTION (AFHC)
The Army's fiscal year 2007 family housing request is $594,991,000
(for authorization, authorization of appropriation, and appropriation).
It continues the successful Whole Neighborhood Revitalization
initiative approved by Congress in fiscal year 1992 and our Residential
Communities Initiative (RCI) program.
The fiscal year 2007 new construction program provides Whole
Neighborhood replacement projects at five locations in support of 538
families for $241.8 million using traditional military construction.
The Construction Improvements Program is an integral part of our
housing revitalization and privatization programs. In fiscal year 2007,
we are requesting $180.1 million for improvements to 1,084 existing
units at four locations in the United States and three locations in
Europe, as well as $156.8 million for scoring and direct equity
investment in support of the privatization of 1,615 units at five RCI
locations.
In fiscal year 2007, we are also requesting $16.3 million for
planning and design for future family housing construction projects
critically needed for our Soldiers.
Privatization.--RCI, the Army's Family Housing privatization
program, is providing quality, sustainable housing and communities that
our Soldiers and their families can proudly call home. This highly
successful program is a critical component of the Army's effort to
eliminate inadequate family housing in the United States. The fiscal
year 2007 budget request of $156.8 million provides equity investment
to privatize housing at two installations and revise development plans
to build new housing at three previously privatized installations.
We are leveraging appropriated funds and Government assets by
entering into long-term partnerships with nationally recognized private
sector real estate development/management and homebuilder firms to
obtain financing and management expertise to construct, repair,
maintain, and operate family housing communities.
The RCI program currently includes 43 installations with a
projected end state of over 82,000 units--over 90 percent of the family
housing inventory in the United States. The Army has privatized over
60,000 homes through December 2005, and by the end of fiscal year 2007,
we will have privatized housing at 36 installations with an end state
of more than 76,000 homes.
ARMY FAMILY HOUSING OPERATIONS (AFHO)
The Army's fiscal year 2007 family housing operations request is
$676,829,000 (for appropriation and authorization of appropriations),
which is approximately 53 percent of the total family housing budget.
This account provides for annual operations, municipal-type services,
furnishings, maintenance and repair, utilities, leased family housing,
demolition of surplus or uneconomical housing, and funds supporting
management of the Military Housing Privatization Initiative.
Operations ($125 Million).--The operations account includes four
sub-accounts: management, services, furnishings, and a small
miscellaneous account. All operations sub-accounts are considered
``must pay accounts'' based on actual bills that must be paid to manage
and operate family housing.
Utilities ($106 Million).--The utilities account includes the costs
of delivering heat, air conditioning, electricity, water, and
wastewater support for family housing units. While the overall size of
the utilities account is decreasing with the reduction in supported
inventory, per-unit costs have increased due to general inflation and
the increased costs of fuel.
Maintenance and Repair ($205 Million).--The maintenance and repair
(M&R) account supports annual recurring projects to maintain and
revitalize family housing real property assets. Since most Family
Housing operational expenses are fixed, M&R is the account most
affected by budget changes. Funding reductions result in slippage of
maintenance projects that adversely impact Soldier and family quality
of life.
Leasing ($215 Million).--The leasing program provides another way
of adequately housing our military families. The fiscal year 2007
budget includes funding for 12,091 housing units, including existing
Section 2835 (``build-to-lease''--formerly known as 801 leases) project
requirements, temporary domestic leases in the United States, and 6,387
units overseas.
RCI Management ($26 Million).--RCI management program provides
operating funds for the privatization of military family housing. RCI
costs include pay and travel of Army personnel, selection of private
sector partners, environmental studies, real estate surveys,
consultants to assist with developing and implementing projects, and
oversight and analyses of the privatized housing portfolio.
OPERATION AND MAINTENANCE
The fiscal year 2007 Operation and Maintenance budget includes
$2.384 billion in funding for Sustainment, Restoration, and
Modernization (S/RM), $30.6 million for demolition, and $6.396 billion
in funding for Base Operations Support (BOS). The S/RM and BOS accounts
are inextricably linked with our Military Construction programs to
successfully support our installations. The Army has centralized the
management of its installations assets under the Installation
Management Agency to best utilize this funding.
Sustainment, Restoration, and Modernization (S/RM).--S/RM provides
funding for the Active and Reserve Components to prevent deterioration
and obsolescence and restore the readiness of facilities on our
installations.
Sustainment is the primary account in installation base support
funding responsible for maintaining the infrastructure to achieve a
successful readiness posture for the Army's fighting force. It is the
first step in our long-term facilities strategy. Installation
facilities are the mobilization and deployment platforms of America's
Army and must be properly maintained to be ready to support current
missions and future deployments.
The second step in our long-term facilities strategy is
recapitalization by restoring and modernizing our existing facility
assets. Restoration includes repair and restoration of facilities
damaged by inadequate sustainment, excessive age, natural disaster,
fire, accident, or other causes. Modernization includes alteration or
modernization of facilities solely to implement new or higher
standards, including regulatory changes to accommodate new functions,
or to replace building components that typically last more than 50
years, such as foundations and structural members.
Base Operations Support.--This account funds programs to operate
the bases, installations, camps, posts, and stations for the Army
worldwide. The program includes municipal services, government civilian
employee salaries, family programs, environmental programs, force
protection, audio/visual, base communication services, and installation
support contracts. Army Community Service and Reserve Component family
programs include a network of integrated support services that directly
impact Soldier readiness, retention, and spouse adaptability to
military life during peacetime and through all phases of mobilization,
deployment, and demobilization.
HOMEOWNERS ASSISTANCE FUND, DEFENSE
The Army is the DOD Executive Agent for the Homeowners Assistance
Program (HAP). This program provides assistance to eligible military
and civilian employee homeowners by providing some financial relief
when they are not able to sell their homes under reasonable terms and
conditions as a result of DOD announced closures, realignments, or
reduction in operations when this action adversely affects the real
estate market. For fiscal year 2007, HAP will maintain a baseline
program. The fiscal year 2007 baseline program will be sustained with
prior year unobligated funds and revenue from sales of acquired
properties. The HAP baseline program assistance will be continued for
personnel at installations that are impacted by non-BRAC DOD closure or
realignment activities resulting in adverse economic effects on local
communities.
SUMMARY
Madam Chairman, our fiscal year 2007 budget is a balanced program
that supports our Soldiers and their families, the Global War on
Terrorism, Army transformation, readiness, BRAC 2005, and DOD
installation strategy goals. We are proud to present this budget for
your consideration because of what this $7.63 billion fiscal year 2007
budget will provide for our Army:
--New barracks for 7,150 Soldiers
--New housing for 1,622 families
--Management of 76,668 privatized homes
--Operation and sustainment of 45,454 government-owned and leased
homes
--New or improved Readiness Centers for over 3,300 Army National
Guard Soldiers
--New Reserve Centers for 3,800 Army Reserve Soldiers
--$175 million investment in training ranges
--Facilities support for two Stryker Brigades
--Facilities support for the Integrated Global Presence and Basing
Strategy, European Theater
--Facilities support for six Modular Force Transformations
Our long-term strategies for installations will be accomplished
through sustained and balanced funding, and with your support, we will
continue to improve Soldier and family quality of life, while remaining
focused on Army and Defense transformation goals.
In closing, we would like to thank you again for the opportunity to
appear before you today and for your continued support for America's
Army.
Senator Hutchison. Secretary Penn.
STATEMENT OF HON. B.J. PENN, ASSISTANT SECRETARY OF THE
NAVY, INSTALLATIONS AND ENVIRONMENT,
DEPARTMENT OF THE NAVY
Mr. Penn. Madam Chairman, members of the subcommittee: I am
honored to represent the sailors, marines, and civilians who
serve in harm's way, along with those who provide critical
support roles, to defend our freedom in far-away places and
under difficult circumstances.
I would like to talk about one specific aspect that is of
great interest. That is implementation of BRAC 2005. BRAC 2005
recommendations differ from previous rounds in that there are
fewer closures and many more realignments. We have put in place
the management structure, oversight, and funding to accomplish
all our closures and realignment actions within the 6-year
statutory timeframe. Once implemented, we predict savings in
excess of $1 billion per year for the Department of the Navy.
For those locations we are departing due to closure or
realignment, the Department of the Navy is deeply grateful for
the support communities have given us over the years. They
understand our unique mission needs and made our sailors,
marines, and their families feel at home and a part of the
community during your typical 2- to 3-year assignment.
Whether closing or realigning, change inevitably brings
turbulence and uncertainty. That turbulence can be felt at
bases we are saying goodbye to or at our new receiver base
locations. To the affected communities, we will work with each
of you to find equitable solutions during the 6-year statutory
implementation period. To our sailors, marines, and
particularly our dedicated civilian employees, we will work
with you to ease your transition.
I recognize the concern by some members of Congress and
communities regarding whether the substantial revenues the
Department of Navy has obtained from the sale of property
closed under the four previous BRAC rounds will lead us to seek
property sale as the primary or exclusive disposal method for
BRAC 2005. I want to emphasize that we will tailor a disposal
strategy for each individual closing base in close consultation
with local community representatives. We will not resort to one
size fits all pursuit of public sale.
For example, in the less than 2 years since closing the
former Naval Station Roosevelt Roads, Puerto Rico, the Local
Redevelopment Authority has progressed rapidly in developing a
reuse plan that uses just about all the disposal actions
available--public benefit conveyances for conservation areas,
port, airport, hospital and medical clinics, economic
development conveyance for a science and research park,
property transfer to the Army and the Coast Guard, along with a
portion for public sale.
PREPARED STATEMENT
For properties appropriate for sale, we will work with the
local municipality regarding any entitlements, land use zoning,
or timing concerns before initiating the sale. Any revenue from
land sale will be deposited in the BRAC 2005 account and used
to defray BRAC 2005 implementation costs.
I look forward to working with the members of this
committee and I wish to thank you for what you do for us. Thank
you, ma'am.
[The statement follows:]
Prepared Statement of B.J. Penn
Madame Chairman and members of the committee, I am pleased to
appear before you today to provide an overview of the Department of
Navy's shore infrastructure.
The Navy-Marine Corps team continues to operate in a complex,
uncertain, and threatening global security environment. We must
capitalize on our strengths as a rotational, forward-deployed, surge-
capable force if we are to meet the challenges of a new era. We
demonstrated our capabilities last year as we continued efforts to win
the Global War On Terror while responding to major natural disasters,
the Indonesian Tsunami and Hurricane Katrina, while continuing recovery
efforts from Hurricane Ivan in 2004. We have a well skilled, highly
motivated military, civilian and contract workforce; with the help of
this committee, we must provide them the necessary tools to accomplish
the mission.
HURRICANE RECOVERY EFFORTS
Hurricane Ivan
Ivan ravaged the Florida panhandle on mid September 2004, damaging
570 housing units, 850 structures, and destroying 100 buildings across
Naval Air Station Pensacola and Naval Air Station Whiting Field. A
facilities task force, led by RADM Shear, worked rapidly to restore
critical mission capabilities and initiated the deliberate planning
required to restore both bases.
As we look back, the Hurricane Ivan recovery is a tremendous
success story. In parallel with initial recovery actions, we sought not
simply to rebuild, but to reshape our facilities footprint to improve
operational effectiveness, consolidate functions, and eliminate on-base
excess capacity. Using the Navy Ashore Vision 2030 as a guiding vision
and other strategic host and tenant planning documents, we project an
overall 900,000 square foot reduction, along with reduced operating and
maintenance costs, and efficiency improvements such as consolidating
like functions from damaged facilities, and relocating destroyed
facilities to more storm resistant locations.
The fiscal year 2005 Disaster Supplemental provided $468 million in
Operations and Maintenance and $139 million military construction funds
for our recovery efforts. We have obligated all Operations and
Maintenance funds, and five of the eight planned construction projects.
We plan to award the remaining three construction projects by May 2006.
Despite additional damage from Hurricane Katrina, NAS Pensacola and
Whiting Field are fully mission capable.
Hurricane Katrina
Hurricane Katrina and subsequent storms severely impacted seven
major bases, destroying buildings, rendering thousands homeless, and
effectively shutting down operations for weeks while recovery began in
earnest. Less than 20 percent of the 1,160 buildings across the seven
affected bases escaped damage. Using techniques developed after
Hurricane Ivan, we were prepared to promptly initiate recovery actions
to ensure mission requirements were met while being good stewards of
taxpayer funds.
The Department of Navy has received $1.5 billion in Operations and
Maintenance funds, of which $853 million provided immediate facility
and base support needs. Over 60 percent of these funds have been
obligated to date. We have received an additional $411 million in
military construction to support 34 construction projects. We expect to
award all of these construction projects by the end of this fiscal year
and I am confident that our facility execution is on pace to meet
requirements and support recovery efforts.
The Administration recently requested a fourth Supplemental for
Hurricane Recovery, which included $43 million in Operations and
Maintenance and $78 million military construction. These funds will
replace collateral equipment, complete facility repairs, and provide
military construction funds at Naval Air Station Joint Reserve Base
Belle Chase LA; Construction Battalion Center, Gulfport MS; and John C.
Stennis Space Center, MS. This Supplemental request also includes
important fund transfer authority that will allow us to more
effectively use available funds as we continue recovery efforts.
Task Force Navy Family
The devastation to our infrastructure wrought by the recent spate
of hurricanes has also left a wide swath of devastation in the personal
lives of our military, civilian, retirees and their families as they
tackle their own recovery efforts. The Navy established Task Force Navy
Family immediately after the hurricane to provide personalized
assistance to help our Navy family members return to a sense of
normalcy. A case manager helps family and service members on all
aspects of personal recovery, from securing accommodations, replacing
vital documents, filing insurance claims, or reuniting with their pets.
As we transition Task Force Navy Family functions into our existing
Navy personnel support architecture, we will continue to help each
member and family through this time of crisis until all needs are met.
THE NAVY'S INVESTMENT IN FACILITIES
The Department of Navy's shore infrastructure is a critical factor
in determining our operational capabilities and shaping our security
posture. It's where we train and equip the world's finest Sailors and
Marines, while developing the most sophisticated weapons and
technologies. The Department of Navy manages a shore infrastructure
with a plant replacement value of $180 billion on 4 million acres. Our
fiscal year 2007 shore infrastructure budget totals $10.3 billion,
representing about 8 percent of the Department of Navy's fiscal year 07
request of $127 billion.
The Base Operating Support request of $5.0 billion, excluding
environmental, comprises the largest portion of the Navy's facilities
budget request. This account funds the daily operations of a shore
facility, e.g., utilities, fire and emergency services; air and port
operations; community support services; and custodial costs.
Our request for fiscal year 2007 of $5.0 billion reflects a $321
million increase from the enacted fiscal year 2006 level. This change
is due in part to pricing changes as well as transfer of Norfolk and
Portsmouth Naval Shipyards to mission funding.
Fiscal year 2007 military construction request of $1.2 billion is
the same as the enacted fiscal year 2006 level. The request includes
$48 million for Navy and Marine Corps reserve construction efforts.
This level of funding keeps us on track to eliminate inadequate
bachelor housing, and provides critical operational, training and
mission enhancement projects.
While our fiscal year 2007 Family Housing request of $814 million
is about the same as fiscal year 2006 enacted level of $808 million,
there are substantial changes within the account: construction funds
increase, including seed funds for Navy and Marine Corps privatization,
and operations and maintenance funds decline as government owned
inventory falls by 4,820 homes due to privatization.
Sustainment, Restoration and Modernization (S/RM) includes military
construction and operation and maintenance funds. Our fiscal year 2007
request of $1.7 billion represents only the amount of S/RM funded with
Operations and Maintenance, and is $192 million below the enacted
fiscal year 2006 level due to efficiencies.
Our $897 million environmental program at active and reserve bases
is comprised of operating and investment appropriations, which combined
are $31 million below the fiscal year 2006 enacted level. Most of the
reduction is due to reduced shipboard procurement needs and not
continuing one-time Congressional adds in research and technology
development.
Our BRAC program consists of environmental cleanup and caretaker
costs at prior BRAC locations, and implementation of BRAC 2005
recommendations.
--Our prior BRAC request is $334 million, an increase of $31 million
over our fiscal year 2006 program of $303 million. The entire
prior BRAC effort is financed with revenue obtained from the
sale of prior BRAC properties.
--This fiscal year 2007 budget continues to implement the BRAC 2005
recommendations. The Department of Defense recently submitted
the fiscal year 2006 plan to the Congress, including $247
million for the Department of Navy. The fiscal year 2007
request rises to $690 million.
Here are some of the highlights of these programs.
MILITARY CONSTRUCTION
Military Construction Projects
The Department of Navy's fiscal year 2007 Military Construction
program requests appropriations of $1.2 billion including $67.8 million
for planning and design and $9 million for Unspecified Minor
Construction. The authorization request totals $825.6 million. The Navy
and Marine Corps Reserve Military Construction appropriation request is
$48.4 million.
The active Navy program consists of:
--$85 million for four quality of life projects for Homeport Ashore,
Great Lakes Recruit Training Command recapitalization and the
Naval Academy.
--$348 million for ten waterfront and airfield projects. $207 million
of this is for six projects supporting new weapons platforms
such as H60R/S, SSGN, F/A 18 E/F/G, and T-AKE.
--$48 million for four special weapons protection projects.
--$88 million for six Operational Support projects such as the Joint
Deployment Communications Center in Norfolk, VA.
--$29 million for two Research, Development, Testing and Evaluation
(RDTE) projects supporting new VXX and MMA weapons platforms;
and
--$30 million for three training facilities supporting simulators for
MH60 and a Damage Control Wet Trainer.
The active Marine Corps program consists of:
--$180 million for five bachelor quarters, three dining facilities
and a battle aid station;
--$85 million for seven operations and training facilities;
--$33 million for continuing an environmental compliance project at
Marine Corps Base Camp Pendleton;
--$60 million to provide six maintenance facilities at Marine Corps
Air Station New River, Camp Pendleton CA, and Marine Corps Air
Ground Task Force Center Twentynine Palms CA;
--$51 million for a variety of projects including land acquisition,
armories, a missile magazine, ammunition supply point upgrades,
and a fire station;
--$62 million for the final settlement for acquiring Blount Island
property
The Navy and Marine Corps Reserve program consists of two
Administrative and Boat Storage Facilities for Inshore Boat Units, five
Reserve Centers, and an Aviation Joint Ground Support Facility.
Incremental funding of Military Construction Projects
Military construction projects are said to be incrementally funded
when full authorization and only partial appropriation is sought in the
first year. None of the annual appropriation requests provide a
``complete and usable'' portion of the facility. The Office of
Management and Budget directed a new policy beginning with the fiscal
year 2007 budget submission that permits incremental funding of new
construction projects only on an exception basis. Previously approved
incrementally funded projects, and construction projects for BRAC are
exempted. This new policy replaces the previous policy, which allowed
incremented projects in part if the cost exceeded $50 million and
construction was expected to exceed 2 years. Our fiscal year 2007
budget request includes only one new incrementally funded project, the
National Maritime Intelligence Center.
Marine Corps Special Operations Command (MARSOC)
On 28 October 2005, the Secretary of Defense approved a Marine
component within the Special Operations Command. The new Marine
component will provide approximately 2,600 Marine and Navy billets
within U.S. Special Operations Command (SOCOM), led by a Marine
Brigadier General. The MARSOC will conduct direct action, special
reconnaissance, counterterrorism and foreign internal defense. MARSOC
will have an initial operational capability this fall and full
operational capability by 2010. The budget request includes $152
million for construction projects at Camp Lejeune and Camp Pendleton
for the standup of MARSOC.
Certification of fiscal year 2007 construction costs
The Conference Report accompanying the Military Quality of Life and
Veterans Affairs Appropriations Act of 2006 directed each Assistant
Secretary with responsibility for installations to certify that the
impact of natural disasters on project costs had been considered in
preparing the budget submission. Our fiscal 2007 military construction
request includes a directed 3.1 percent inflation cost adjustment.
While we have been experiencing up to a 30 percent cost increase for
construction costs in the Southeast and Gulf Coast, our fiscal year
2007 request contains relatively few projects in this area. We expect
that labor and material costs will stabilize by the time these projects
are ready to be executed in fiscal year 2007.
FACILITIES MANAGEMENT
Facilities Sustainment, Restoration and Modernization (SRM)
The Department of Defense uses a Sustainment model to calculate
life cycle facility maintenance and repair costs. These models use
industry-wide standard costs for various types of building and
geographic areas and are updated annually. Sustainment funds in the
Operation and Maintenance accounts are used to maintain facilities in
their current condition. The funds also provide for preventative
maintenance, emergency responses for minor repairs, and major repairs
or replacement of facility components (e.g. roofs, heating and cooling
systems) that have reached the end of their service life. Both the Navy
and the Marine Corps are budgeting and nearly achieving the Department
of Defense goal of 95 percent sustainment.
[Percent]
----------------------------------------------------------------------------------------------------------------
Fiscal year
Percent sustainment -----------------------------------------------
2005 2006 2007
----------------------------------------------------------------------------------------------------------------
USN Budget...................................................... 95 95 95
USN Actual/Plan................................................. 90 92 ..............
USMC Budget..................................................... 95 94 93
USMC/Actual/Plan................................................ 94 92 ..............
----------------------------------------------------------------------------------------------------------------
Restoration and modernization provides major recapitalization of
our facilities using Military Construction, Operation and Maintenance,
Navy Working Capital Fund, and Military Personnel funds. The ``recap''
metric is calculated by dividing the plant replacement value by the
annual investment of funds and it is expressed as numbers of years. The
Department of Defense goal is to attain a 67-year rate by fiscal 2008.
This is a relatively coarse metric, as demonstrated by the dramatic
improvement in execution from the substantial investment of the fiscal
year 2005/2006 Hurricane Supplemental, which substantially improved
only those bases affected by the storm. We are working with the Office
of the Secretary of Defense and the other Components to develop a recap
model similar to the Sustainment model.
----------------------------------------------------------------------------------------------------------------
Fiscal year
Recap years -----------------------------------------------
2005 2006 2007
----------------------------------------------------------------------------------------------------------------
USN Budget...................................................... 136 105 83
USN Actual/Plan................................................. 78 56 ..............
USMC Budget..................................................... 95 102 112
USMC Actual/Plan................................................ 72 94 ..............
----------------------------------------------------------------------------------------------------------------
Base Operating Support Models
The Navy uses business-based models and capabilities based approach
to budget for Base Operating Support costs. The models use defined
metrics and unit costs that are benchmarked against historic
performance and industry standards, and link resources to definable,
variable levels of outputs. Funding requirements are identified for at
least three levels of output (or capability level) for each major shore
service and support function, and the cost and risk of each output
level. This new CBB process allows us to set funding levels on needed
output levels, deliverables, and associated risks rather than prior
funding levels. In a resource-constrained environment, it is imperative
that we program, budget and execute the right resources at the right
time for the right service.
Naval Safety
Navy Secretary Winter has continued former Navy Secretary England's
commitment to making mishap reduction one of the top five Department of
Navy performance objectives. We want safety to be an active--not
passive--aspect of our work and play. In addition to keeping our people
safe, there are substantial cost avoidance through robust risk
management. Fiscal year 2005 produced solid progress in Navy and Marine
Corps mishap reduction. At the end of fiscal year 2005, we performed
better than the 5-year average in two-thirds of the mishap categories.
One very successful effort has been the Occupational Safety and
Health Administration (OSHA) Voluntary Protection Program (VPP), which
focuses on management leadership and employee involvement teaming
together to improve safety. Portsmouth VA , Norfolk VA, and Puget Sound
WA Naval Shipyards have successfully achieved VPP STAR recognition from
OSHA, while Pearl Harbor Naval Shipyard's application is under review.
Lost workday rates due to injury have been reduced by 50 percent at
Norfolk and 60 percent at Puget Sound in 3 years, 37 percent at Pearl
Harbor in 2 years, and Portsmouth has consistently exceeded the
Department of Defense 50 percent mishap reduction goal.
Facilities Management Consolidation
Commander, Navy Installations (CNI) has now successfully completed
its second year and has made significant improvements to Navy shore
services. Among the many significant CNI efforts this year was the
hurricane disaster recovery response in the Gulf Coast Region. Recovery
and assessment teams responded promptly to restore infrastructure, make
immediate repairs and capture critical data to plan for long term
rebuilding of devastated bases like the Seabee Base in Gulfport, MS;
Stennis Space Center in Bay St. Louis, MS; Naval Bases in New Orleans
as well as several Reserve Centers in the Gulf Region.
Similarly, the Marine Corps is transforming its bases from
singularly managed and resourced entities to ones strategically managed
in geographic regions. Our bases and stations (except recruit training
depots) will fall under the direction of five Marine Corps Installation
Commands with the majority of the installations under the oversight of
Marine Corps Installation Command--East and Marine Corps Installation
Command--West. Regionalization will enhance warfighter support, improve
alignment, enhance the use of regional assets, return Marines to the
Operating Forces, and reduce costs.
Encroachment mitigation
We are successfully applying the recent authority to enter into
agreements with state and local governments and eligible non-government
organizations to address potential development near our installations
and ranges that could limit our ability to operate and train. In the
past 2 years we have acquired restrictive easements from willing
sellers covering over 3,360 acres in the vicinity of Marine Corps Base
Camp Lejeune NC, Marine Corps Air Station Beaufort SC, Mountain Warfare
Training Facility La Posta CA, Naval Air Station Pensacola FL, and
Outlying Landing Field Whitehouse FL. We have used our Operation and
Maintenance funds and Department of Defense Readiness and Environmental
Protection Initiative (REPI) funds. Our partners have used our
contributions together with their own resources to acquire property
interests from willing sellers and re-conveyed restrictive easements to
us.
We expect that this program will continue to grow. Navy and Marine
Corps are developing service-wide encroachment management programs to
guide future priorities. Marine Corps is participating in conservation
forums across the country with a variety of state and local governments
and conservation organizations. The fiscal year 2007 President's budget
includes $8.5 million for Navy and $5 million for Marine Corps
encroachment protection initiatives, and we expect allocation of a
share of the fiscal year 2007 $20 million REPI funds
Energy
Through the end of fiscal year 2005 the Department of Navy reduced
its energy consumption, compared to a fiscal year 1985 baseline, by
nearly 30 percent, thus meeting Executive Order 13123 goals.
Last year the Navy opened a wind/diesel power plant at Naval
Station Guantanamo Bay, Cuba. The four--950 KW windmills generate 30
percent of the base's electrical needs. The Navy also awarded a
geothermal power plant at NAS Fallon, NV that will generate a minimum
of 30 MW of power. Similar to the Navy's existing 270 MW geothermal
power plant at Naval Air Warfare Center China Lake, CA these power
plants generate electricity from the earth's heat without creating
pollution. The Navy is testing a wave power buoy off Marine Corps Base
Kaneohe, HI and is finalizing the design of an Ocean Thermal Energy
Conversion (OTEC) plant off Diego Garcia that will produce the island's
electrical and potable water requirements using the temperature
difference between warm surface water and cold, deep ocean water. These
projects will reduce the Department of Navy's use of foreign oil,
reduce greenhouse gas production and improve energy security.
HOUSING
Our fiscal year 2007 budget continues progress in improving living
conditions for Sailors, Marines, and their families. We have programmed
the necessary funds and expect to have contracts in place by the end of
fiscal year 2007 to eliminate all of our inadequate family and
virtually all inadequate unaccompanied housing.
Family Housing
Our family housing strategy consists of a prioritized triad:
--Reliance on the Private Sector.--In accordance with longstanding
DOD and DON policy, we rely first on the local community to
provide housing for our Sailors, Marines, and their families.
Approximately three out of four Navy and Marine Corps families
receive a Basic Allowance for Housing and own or rent homes in
the community.
--Public/Private Ventures (PPVs).-- With the strong support from this
Committee and others, we have successfully used statutory PPV
authorities enacted in 1996 to partner with the private sector
to help meet our housing needs through the use of private
sector capital. These authorities allow us to leverage our own
resources and provide better housing faster to our families.
--Military Construction.--Military construction will continue to be
used where PPV authorities don't apply (such as overseas), or
where a business case analysis shows that a PPV project is not
financially sound.
As of March 1, we have awarded 19 projects totaling over 38,000
units. As a result of these projects, over 24,000 homes will be
replaced or renovated. Additionally, close to 3,000 homes will be
constructed for Navy and Marine Corps families. Through the use of
these authorities we have secured about $4 billion in private sector
investment from $453 million of our funds for the 19 projects. This
represents a leverage ratio of over nine to one.
During fiscal year 2006 and 2007, we plan to award ten Navy and
Marine Corps family housing privatization projects totaling almost
28,000 homes. By the end of fiscal 2007, the Navy and Marine Corps will
have privatized 97 percent and 98 percent, respectively, of their U.S.
housing stock.
Our fiscal year 2007 family housing budget request includes $305
million for family housing construction and improvements. This amount
includes $175 million proposed for use as a Government investment in
family housing privatization projects planned for fiscal year 2007
award. It also includes the replacement or revitalization of inadequate
housing located at locations where privatization is not planned, most
notably Guam and Japan. Finally, the budget request includes $509
million for the operation, maintenance, and leasing of Government-owned
inventory.
Unaccompanied Housing
Our budget request of $207 million for milli unaccompanied housing
construction projects continues the emphasis on improving living
conditions for our unaccompanied Sailors and Marines. There are three
challenges:
--Provide Homes Ashore for our Shipboard Sailors.--There are
approximately 13,000 E1-E3 unaccompanied Sailors worldwide who
live aboard ship even while in homeport. The Navy's goal
remains to program funding through fiscal year 2008 to achieve
its' ``homeport ashore'' initiative by providing ashore living
accommodations for these Sailors. We intend to achieve this
goal through a mix of military construction, use of
privatization authorities and, for the interim, more intensive
use of our unaccompanied housing capacity by assigning two or
more Sailors per room. Our fiscal year 2007 budget includes one
``homeport ashore'' construction project for $21 million to
complete Naval Station Everett, WA (410 Spaces).
--Ensure our Barracks Meet Today's Standards for Privacy.--We are
building new and modernizing existing barracks to increase
privacy for our single Sailors and Marines. The Navy uses the
``1+1'' standard for permanent party barracks. Under this
standard, each single junior Sailor has a private sleeping area
and shares a bathroom and common area with another member. To
promote unit cohesion and team building, the Marine Corps was
granted a waiver to adopt a ``2+0'' configuration where two
junior Marines share a room with a bath. The Navy will achieve
these barracks construction standards by fiscal year 16; the
Marine Corps by fiscal year 2012. We have also been granted a
waiver to the ``1 + 1'' standard to allow us to build an
enlisted unaccompanied housing project in Norfolk to private
sector standards. We believe this will provide better housing
for unaccompanied Sailors without increasing the average
housing cost.
--Eliminate gang heads.--The Marine Corps has programmed all
necessary funding, through fiscal year 2005, to eliminate
inadequate unaccompanied housing with gang heads \1\ for
permanent party personnel. The Navy will achieve over 99
percent of this goal by fiscal year 2007.
---------------------------------------------------------------------------
\1\ Gang heads remain acceptable for recruits and trainees.
---------------------------------------------------------------------------
Unaccompanied Housing Privatization
We continue to pursue unaccompanied housing pilot privatization. We
are in exclusive negotiations with a private partner for our first
pilot project at San Diego. This project would build 700 apartments for
unaccompanied E4s and above and privatize 254 existing Government-owned
unaccompanied housing modules. Although the construction of new units
does not directly target the Homeport Ashore requirement (unaccompanied
E1-E3s assigned to sea duty), it will help by freeing up existing rooms
as other Sailors move out of Government-owned unaccompanied housing and
move into privatized housing. We expect to award this project this
spring.
We have also started procurement for a second pilot project at
Hampton Roads, Virginia. This project would build 725 apartments at up
to three different sites and privatize 806 existing unaccompanied
housing modules. All housing will be targeted to unaccompanied
shipboard E1-E3 personnel. We recently selected four highly qualified
teams and invited them to submit detailed technical and financial
proposals. We expect to award this project in April 2007.
Last year we were evaluating the Pacific Northwest as a third pilot
site. We have since concluded that the Pacific Northwest is not viable
because the requirement is linked with one large ship (unlike San Diego
and Hampton Roads which are fleet concentration areas), the private
partner cannot recapitalize the housing over the long term given
projected cash flows. We will now proceed to use the fiscal year 2005
appropriated and authorized funds as a MILCON project at Bremerton. We
are evaluating opportunities at other locations.
ENVIRONMENT
Marine Mammals/Sonar R&D investments
The Navy recognizes the need to protect marine mammals from
anthropogenic sound in the water and has budgeted $10 million in fiscal
year 2006 and 2007 for research and development efforts. Funding will
focus on techniques to track the location of marine mammals, their
abundance and movement (particularly beaked whales); determining sound
criteria and thresholds; and developing new mitigation and monitoring
techniques. The Navy has expanded its research on the effects of mid-
frequency sonar to include effects on fish. Navy's Protective Measures
Assessment Protocol (PMAP) has become a routine operating procedure
during all exercises. PMAP measures include surface vessels using
trained look-outs in marine mammal areas, and submarines monitoring
passive acoustic detection for vocalizing marine mammals.
Shipboard Programs
The Navy continues to convert air conditioning and refrigeration
plants on its surface fleet from ozone depleting CFCs to
environmentally friendly coolants. We plan to spend a total of $400
million on this effort, including $22 million in fiscal year 2007. We
expect to complete the conversion of nearly 900 CFC-12 plants by the
year 2008, and over 400 CFC-114 plants by the year 2014.
The Navy has also been installing pollution prevention equipment on
16 ship classes. We will have spent $35 million to install suites of
pollution prevention equipment (e.g., aqueous parts washers, cable
cleaners/lubricators, paint dispensers) on ships upon completion this
September.
Natural and Cultural Resources
The Department spends about $30 million per year on natural and
cultural resources at Navy and Marine Corps installations. Resources
are invested in preparing, updating, and implementing Integrated
Natural Resources Management Plans (INRMPs). Protecting threatened and
endangered species and their habitats is a major aspect of the INRMPS
at many bases. The National Defense Authorization Act of 2004 included
a provision that allowed the Secretary of Interior to forgo designation
of critical habitat on military lands upon a determination that the
INRMP provided sufficient species and habitat protection. I am pleased
to report that all final critical habitat designations since 2004 have
excluded designations on Navy and Marine Corps property.
Our cultural resources provide a tangible link with our past while
supporting the mission of today's Navy and Marine Corps warfighters.
Both Navy and Marine Corps are developing Cultural Resources Management
Plans similar to INRMP. A major effort is to prepare broad based
programmatic alternatives to case-by-case consultation similar to the
highly successful program comments on Capehart-Wherry era family
housing. DON is also working to expand its efforts to make cultural
resources management an integral part of our broader asset management
program.
Alternative Fuel Vehicles
In fiscal year 2005 the Department of the Navy met or exceeded the
Alternative Fuel Vehicle (AFV) acquisition mandates from the Energy
Policy Act and Executive Order 13149. The Department was named winner
of the National Biodiesel Board's National Energy Security Award and
the U.S. Marine Corps won a White House Closing the Circle Award for
meeting Executive Order 13149 requirements 3 years earlier than
required. Among the AFV related initiatives are increased use of
Biodiesel (B-20), increased fleet fuel economy, increased procurement
of hybrid vehicles and increased use of neighborhood vehicles. Ethanol
(E-85) is becoming a more significant alternate fuel. The Navy has
approximately 7,000 vehicles capable of operating on E-85. We are also
investigating the use of hydrogen fuel cell vehicles.
Installation Restoration Program (IRP)
The Department of the Navy has completed cleanup or has remedies in
place at 75 percent of our 3,700 contaminated sites. We plan to
complete the program by the year 2014. The cost-to-complete the
installation restoration program continues a downward trend with
efficiencies of $600 million over the past 10 years. Use of new
technologies, land use controls, remedy optimizations, contract
efficiencies, and a dedicated professional staff has contributed to
these efficiencies. Our fiscal year 2007 request of $304 million
consists of $219 million for IRP, $41 million for program management,
and $44 million for Munitions response.
Munitions Response Program (MRP)
This relatively new program provides cleanup actions for Munitions
and Explosives of Concern (MEC) and Munitions Constituents (MC) at all
Department of the Navy locations other than operational ranges. We plan
to complete preliminary assessments at all 213 known sites on 56 active
installations by 2007. Site inspections (which include sampling) will
be completed by 2010. We will not have credible cleanup cost estimates
until these assessments are completed in 2010. We are conducting major
cleanups at the former range on Vieques, Puerto Rico and at Jackson
Park Housing Complex in Washington State, in addition to efforts at
prior BRAC locations.
PRIOR BRAC CLEANUP & PROPERTY DISPOSAL
The BRAC rounds of 1988, 1991, 1993, and 1995 were a major tool in
reducing our domestic base structure and generating savings. The DON
has achieved a steady state savings of approximately $2.7 billion per
year since fiscal year 2002. All that remains is to complete the
environmental cleanup and property disposal on portions of 17 of the
original 91 bases.
Last year we conveyed the last 427 acres at the former Naval
Complex, Charleston, SC and the last acre at Naval Air Station, Key
West, FL. Additionally, at the former Hunters Point Naval Shipyard in
San Francisco, the DON conveyed the first parcel of 75 acres to the San
Francisco Redevelopment Agency. Of the original 161,000 acres planned
for disposal from all four prior BRAC rounds, we expect to have less
than 5 percent (about 8,000 acres, excluding Roosevelt Roads) left to
dispose by the end of this fiscal year.
Land Sale Revenue
We have continued our success in using property sales to assist in
environmental cleanup and property disposal as well as recover value
for taxpayers. We have used General Services Administration (GSA) on-
site auctions, GSA Internet auctions, and Internet auctions using
commercial real estate brokers. Through a combination of cost Economic
Development Conveyances, Negotiated Sales, and Public Sales, the DON
has received over $1.1 billion in revenues. We have applied these funds
to finance and accelerate our entire fiscal year 2006 and fiscal year
2007 environmental cleanup at the remaining prior BRAC locations.
Last year the DON completed its largest public sale via Internet
auction consisting of four parcels totaling 3,720 acres at the former
Marine Corps Air Station, El Toro in Irvine, CA, for a total of $649.5
million. The Internet auction public sale of 62 acres at the former San
Pedro housing site in Los Angeles, CA, sold for $88 million. We also
completed a GSA internet auction for the former Naval Hospital Oakland,
CA. Known as Oak Knoll, we anticipate closing escrow for $100.5 million
in early March 2006. These sales have provided the communities with
taxpayer and community benefits by getting the property onto local tax
rolls and redeveloped more quickly, with the local community
controlling that development through traditional land use planning and
zoning. It benefits DOD and the Federal taxpayer by divesting unneeded
property sooner and reducing the environmental cleanup time and expense
incurred by DOD. These sales enabled the buyers to work with the
homeless assistance organizations to provide the type of services
needed in that community, either in land and buildings or funds for
needed programs. In addition, the El Toro sale enabled the community to
fulfill its vision of creating a public park without using local tax
dollars.
We are pursuing disposal of the former Naval Station Roosevelt
Roads through a mix of public benefit, economic benefit, property
transfer to Army, as well as property sale planned for late 2007.
Prior BRAC Environmental Cleanup
The DON has spent over $2.6 billion on environmental cleanup at
prior BRAC locations through fiscal year 2005. We estimate the
remaining cost to complete cleanup at about $482 million for fiscal
year 2008 and beyond, most of which is concentrated at fewer than
twenty remaining locations and includes long-term maintenance and
monitoring obligations for remedies already installed and operating at
many locations. As we have done previously, the DON will use any
additional land sale revenue beyond that projected in our fiscal year
2006 budget to further accelerate cleanup at these remaining prior BRAC
locations, which are primarily former industrial facilities that tend
to have the most persistent environmental cleanup challenges.
Significant environmental progress is planned for fiscal year 2006/
2007, with nearly half of the funding planned for three bases. At
Alameda Naval Air Station, progress will include funding environmental
planning, design, and construction activities for the majority of
active sites. Hunters Point Shipyard's progress will include completion
of the radiological program for all land parcels and completion of all
Remedial Investigations and Feasibility Studies. Progress at the former
Moffett Federal Air Field includes completion of all remaining
environmental construction activities.
BRAC 2005 IMPLEMENTATION
The BRAC 2005 Commission recommendations became legally binding on
the Department of Defense on 9 November 2005. In contrast to prior BRAC
commissions, the BRAC 2005 recommendations have fewer closures and more
realignments, particularly realignments that involve more than one
military Service or Defense Agency. The Department of Navy has 6
``fence line'' closures and 81 realignment recommendations involving
129 bases.
BRAC 2005 Implementation Funds
I am pleased to report that the Department of the Navy has fully
financed its BRAC 2005 implementation plans across the FYDP. We have
put in place the management structure, oversight, and funding to
accomplish all closure and realignment actions within the 6 year
statutory time frame.
We are financing our implementation plans through a combination of
(1) funds previously set aside by OSD for this purpose and recently
allocated in all years of the FYDP (i.e., the BRAC wedge); (2)
identification, capture, and reinvestment into the BRAC account of
savings (primarily infrastructure and civilian personnel savings)
generated by closure and realignment actions; (3) investment of $500
million in Navy funds. Additional savings, notably MILPERS savings and
realignment of Fleet Readiness Centers, are being used to finance other
Department of the Navy priorities. Annual savings exceed annual costs
in fiscal year 2010. The budget reflects only modest savings in fiscal
year 2007, but it is expected that overall savings will exceed $1
billion annually after fiscal year 2011.
Preparing to Implement BRAC 2005
Due to the complexity of the many joint recommendations, the
Department of Defense is using detailed business plans for each BRAC
recommendation to ensure consistent, timely execution and all necessary
coordination across the Components. Each of our business plans, which
averages 40 pages in length, includes extensive details on costs and
savings, schedules, and supporting Form DD1391s for each construction
project. Each business plan must be reviewed and approved by the
Infrastructure Steering Group \2\ prior to any expenditure of funds for
a given recommendation. We expect approval of the first Navy business
plans in the near future. In the meantime, the first BRAC 2005 funds
are being released by OSD to begin formal planning efforts, beginning
construction design and prepare contracting documents, and initiate
National Environmental Policy Act (NEPA) studies for disposal and
receiver sites.
---------------------------------------------------------------------------
\2\ The Infrastructure Steering Group is chaired by the Under
Secretary of Defense for Acquisition and Technology and Logistics, and
includes the Deputy Under Secretary of Defense and Service Assistant
Secretaries for Installations and Environmental, and the Service Vice
Chiefs of Staff.
---------------------------------------------------------------------------
We prioritized our fiscal 2006 and fiscal year 2007 implementation
plans to give priority to actions with higher savings, funding all NEPA
requirements, initiating the necessary military construction planning
and design, and incrementally funding larger MILCON projects based on
how much work can be accomplished in each fiscal year. All construction
projects in fiscal year 2006 use design/build as the acquisition
methodology and qualify as a NEPA categorical exclusion. Fiscal year
2007 projects are primarily design build, and require no more than a
NEPA Environmental Assessment before construction can begin. We are
working closely with the other Components to establish firm
requirements, schedules, and the scope and funding for required
military construction for implementing joint recommendations.
The table below depicts our fiscal year 2006 and fiscal 2007 plans.
At several receiver sites, design and construction will begin in 2006
in conjunction with planning of closure actions at the respective
closing installations. Realignments of several commands from leased
space to owned space in the National Capital Region will begin in
fiscal 2006. Five major realignments will start in fiscal 2007. Other
smaller closure and realignments begin in fiscal yeaer 2006 and
continue in fiscal year 2007.
[Millions of dollars]
------------------------------------------------------------------------
Fiscal year
Significant Action -------------------------------
2006 2007
------------------------------------------------------------------------
BRAC planning, design and management.... 60 59
NEPA environmental planning & cleanup... 17 6
Design/build MILCON & closure efforts:
Naval Air Station Brunswick, ME..... 23 95
Naval Support Activity New Orleans, 55 125
LA.................................
Naval Station Pascagoula, MS........ 17 2
Naval Station Ingleside, TX......... 5 103
Closure efforts at Naval Air Station .............. 36
Atlanta, GA........................
Closure efforts at Naval Supply .............. 23
Corps School Athens, GA............
Initiate relocations from leased space .............. 23
in National Capitol Region.............
Initiate realignments:
Fleet Readiness Centers at various 1 36
locations..........................
NAVFAC EFD/EFAs, various locations.. 14 37
Naval Station Newport, RI........... .............. 28
San Antonio Regional Medical Center, .............. 49
TX.................................
Naval Integrated Weapons & Armaments .............. 42
RDAT&E Center......................
Other closure/realignment efforts....... 23 49
-------------------------------
Total............................. 247 690
------------------------------------------------------------------------
BRAC 2005 Significant Actions.
We are building on our experience with cleanup and property
disposal from prior BRAC rounds. A BRAC Program Management Office has
overall responsibility for coordination of BRAC actions, as well as for
completing cleanup and disposal of the remaining property from all BRAC
rounds.
Much has changed since the last BRAC round in 1995. Environmental
contamination at remaining bases has largely been characterized, and
cleanup has been completed or is now well underway. In contrast to
prior BRAC, the cost to cleanup environmental contamination at BRAC
2005 locations is about $60 million. Private sector capabilities have
emerged and matured for ``brownfield'' redevelopment and insurance
industry products to address environmental liabilities when there is a
CERCLA early transfer of contaminated property. We expect to take
advantage of these private sector capabilities.
The Department will use a mix of public and economic benefit
conveyances, transfers to other Components or Federal agencies, as well
as public sale for property disposal. We expect developers with the
experience and expertise to complete the cleanup during redevelopment.
Communities get the property onto local tax rolls and redeveloped more
quickly, and controls development through traditional land use planning
and zoning.
MEETING THE EXECUTION CHALLENGE
The ambitious programs I have outlined above, encompassing military
and family housing construction, continuing recovery efforts in the
Gulf Coast, and BRAC-related construction, represent an execution
effort of over $3.4 billion over the fiscal year 2006/2007 timeframe. A
daunting challenge, but one that the Navy is well-positioned to meet.
The global pre-positioned presence of a highly trained workforce that
offers the full spectrum of products and services allows us to shift
execution outside of traditional regional boundaries to balance spikes
in workload caused by events such as the natural disasters of 2004 and
2005 and BRAC. The Navy has a wide array of contracting tools and in-
place capacity to efficiently address substantial workload increases.
We will work to master the challenges with the supply of a competitive
contractor workforce, and market conditions affecting costs of
materials and equipment.
CONCLUSION
We cannot meet the threats of tomorrow by simply maintaining
today's readiness and capabilities of our physical plant. We must
continue to transform and recapitalize for the future without
jeopardizing our current readiness and the strides we have made--and
continue to make--in managing our shore infrastructure. With our
partners in industry, the acquisition community, and with the
continuing support of the Congress, the Department of Navy will build
and maintain installations that are properly sized, balanced--and
priced for tomorrow.
Senator Hutchison. Thank you.
Secretary Anderson.
STATEMENT OF HON. WILLIAM C. ANDERSON, ASSISTANT
SECRETARY OF THE AIR FORCE, INSTALLATIONS,
ENVIRONMENT, AND LOGISTICS, DEPARTMENT OF
THE AIR FORCE
Mr. Anderson. Madam Chairman and members of the committee:
I will make my remarks brief here this afternoon.
The Air Force has three main challenges: winning the long
war on terror, developing and caring for our airmen, and
recapitalizing and modernizing our air and space systems. I
will quickly highlight how we plan to meet these challenges in
military construction, environmental, and base realignment and
closure programs.
Our first challenge is winning the long war on terror. As I
testify today we have approximately 2,400 deployed Air Force
civil engineers. About a 1,000 of those are deployed outside
the wire in direct support of coalition missions. To date the
Air Force civil engineers have overseen repair of 469 schools,
the construction of 11 clinics, the rebuilding of three
airports and numerous military facilities such as barracks and
dining halls.
Our second challenge is developing and caring for our
airmen. Our total force MILCON, family housing, sustainment,
restoration and modernization programs are paramount to
supporting operational requirements and maintaining a suitable
quality of life for our men and women in uniform and their
families.
One program that is particularly successful for the troops
is eliminating inadequate dorms. With your help, the Air Force
is on track to replace all inadequate dorms and the budget
request before you will complete the funding of those efforts.
Another success story is family housing. The Air Force's
budget request completes funding for stateside housing and
continues our progress overseas. Combined with our highly
successful privatization program, we think this is a good news
story for the airmen and their families.
Being good stewards of the environment is another way we
develop and care for our airmen. For example, the Air Force is
testing, evaluating, purchasing, and using green technologies
with alternative non-hazardous products in aircraft painting,
de-icing, and other operational areas to reduce the generation
of waste and eliminate worker exposure to hazardous substances.
We are expanding the usage of alternative fuels, like ethanol,
in our military and Government fleet vehicles. In 2005 the Air
Force was the Nation's largest purchaser of renewable power
from wind, solar, geothermal, and other green sources.
We are diligently implementing an Air Force-wide
comprehensive safety and health program. By benchmarking
industry best in class programs and to leverage our own
experience, the Air Force is reducing the risk of injuries and
keeping the environment free of contaminants.
Finally, our military construction and realignment and
closure programs are vital to optimizing our weapons systems
capabilities and effects. The latest round of base realignments
and closures will provide more opportunities to improve our Air
Force. Our BRAC activities for fiscal years 2006 and 2007 are
fully funded and we have begun implementation of these actions.
In conclusion, Madam Chairman, I thank the committee for
strong and continued support. The readiness of our airmen and
the capabilities of our weapons systems depend upon the
infrastructure we support with the Air Force's military
construction, housing, environmental and safety programs. I
welcome any questions the committee may have.
[The statement follows:]
Prepared Statement of William C. Anderson
Madam Chairman, Senator Feinstein, and distinguished members of the
committee, as the Air Force continues to transform, we have three major
priorities: winning the Global War on Terror, developing and caring for
our Airmen, and maintaining, modernizing and recapitalizing our
aircraft and equipment. The Quadrennial Defense Review (QDR) guides and
supports Air Force transformation and enables us to deliver more
sovereign options for the defense of the United States of America and
its global interests. We will fund transformation through
organizational efficiencies, process efficiencies, and reduction of
legacy systems, which will ultimately reduce our manpower requirements.
Our military construction (MILCON) and Base Realignment and Closure
(BRAC) programs are vital to achieving our vision to develop and care
for our Airmen, as well as optimizing our weapon systems' capabilities
and effects. Quality bases, facilities and dwellings are the foundation
of developing and caring for our Airmen.
The Air Force fiscal year 2007 MILCON submission represents our
commitment to these three priorities. A key and essential enabler in
Air Force transformation, MILCON continues critical weapon system
beddowns and improves the Quality of Life (QOL) of our Airmen. This
year's Air Force MILCON budget request is the largest in 15 years, over
$1.3 billion, with increases across the spectrum of air and space
operations and throughout our Total Force. Our fiscal year 2007 family
housing submission will keep us on target to eliminate inadequate
housing and enables us to exceed our goal to privatize 60 percent of
our CONUS housing by the end of fiscal year 2007. The risk taken in
facility recapitalization and facility sustainment allows the Air Force
to support modernization and transformation. However, even with the
risks taken we continue to fund our most critical requirements: (1) new
missions, (2) depot transformation, (3) housing and dormitories, (4)
fitness centers and (5) child care centers. The facility
recapitalization rate for fiscal year 2007 is 125 years. OSD's
Strategic Planning Guidance directs meeting the 67-year recap rate
metric in fiscal year 2008 and maintaining thereafter, and Air Force
proposals over the remainder of the Future Years Defense Plan (FYDP)
have us on track to meet that guidance.
Sound investment in our installations allows us to take care of our
people and their families through quality of life and work place
improvements. We believe the fiscal year 2007 President's Budget (PB)
proposal will provide the construction bedrock for continued success of
our mission.
Introduction
Air Force facilities and housing are key components of our support
infrastructure. At home, our installations provide a stable training
environment and a place to equip and reconstitute our force. Both our
stateside and overseas bases provide force projection platforms to
support Combatant Commanders. Because of this, the Air Force has
developed an investment strategy focused on supporting QDR
transformational decisions, providing quality dorms for Airmen,
providing quality family housing for our families, implementing BRAC,
properly sustaining our infrastructure, striving to recapitalize our
aging infrastructure, and working to build an appropriate installation
support baseline. Our total force MILCON, family housing, and
sustainment, restoration, and modernization programs are paramount to
supporting operational requirements and maintaining a suitable quality
of life for our men and women in uniform and their families.
The Air Force fiscal year 2007 PB request of just over $1.3 billion
for Total Force MILCON reflects our highest construction priorities. It
balances transformation, QOL improvements, new mission requirements,
future project designs, and limited funding for emergency requirements.
This request includes $1.16 billion for active MILCON, $126 million for
the Air National Guard, and more than $45 million for the Air Force
Reserve.
The Air Force's fiscal year 2007 PB request of $1.18 billion for
the Military Family Housing investment program balances new
construction, improvements, and planning and design work. Combined with
our highly successful privatization program, we think this is a good
news story for Airmen and their families. While we continue to strive
to eliminate inadequate housing, we cannot allow more housing to fall
into disrepair. We need your support to keep our housing operations and
maintenance submission intact.
In fiscal year 2007, we will bolster our operation and maintenance
(O&M) investment in our facilities infrastructure. This investment has
two components: Sustainment (S) and Restoration and Modernization
(R&M), which we refer to together as our SRM program. Sustainment funds
are necessary in order to keep ``good facilities good.'' R&M funding is
used to fix critical facility deficiencies and improve readiness. In
this request we have dedicated $1.68 billion to Total Force
sustainment. That is 86 percent of the requirement from OSD's
Facilities Sustainment Model. Additionally, in fiscal year 2007 the Air
Force's Total Force R&M funds is only $310 million. This means we must
defer some R&M requirements, which has a cumulative effect on Air Force
facilities and infrastructure that we must reverse. In the out years we
hope to invest more heavily in critical infrastructure maintenance and
repair through our O&M program in order to achieve the Department of
Defense goal of a facility recapitalization rate of 67 years by 2008
and to fully fund facility sustainment by 2008. At the same time, we
will incorporate the principles contained within the Air Force Smart
Operations for the 21st Century (AFSO 21) to modernize tools we use to
manage our infrastructure management function, thereby reducing costs.
This effort will include a focus on operational efficiency and a
holistic view of Air Force asset management.
Accommodate Transformation
Our Airmen are without a doubt the best in the world, but superior
weapons have also played a key role in recent joint warfighting
successes in the Global War on Terror. Transformational and advanced
weapon systems enable our Combatant Commanders to respond quickly in
support of national security objectives, and the military construction
budget directly supports many of the transformational QDR decisions.
The fiscal year 2007 Total Force military construction program consists
of 29 projects that are essential to transformation, totaling $544
million. The Global Hawk beddowns in Guam and Europe, and Predator
beddowns at Creech AFB, Nevada; March ARB, California; Ellington Field,
Texas; and Hector IAP, North Dakota support QDR decisions to vastly
increase Unmanned Aerial Vehicle coverage and to boost Intelligence,
Surveillance and Reconnaissance (ISR) capabilities to identify and
track moving targets in denied areas. The Combat Search and Rescue
Group headquarters at Davis-Monthan AFB, Arizona helps to enable our
Special Operations Forces to perform the most demanding and sensitive
missions worldwide. The Distributed Common Ground Systems at Langley
AFB, Virginia; Beale AFB, California; and Osan AB, Korea harness the
power of information and allow us to conduct integrated, net-centric
warfare that our enemies cannot match. The C-130J tactical airlift
beddown at Ramstein AB, Germany improves our Joint Mobility capability
to operate in irregular warfare environments. Depot Maintenance
Reengineering and Transformation at Hill AFB, Utah, and Robins AFB,
Georgia is transforming our industrial base to support warfighter
requirements more effectively. Integrated Global Presence and Basing
Strategy projects at Andersen AFB, Guam provide the foundational
infrastructure for our joint air strike and reconnaissance capabilities
in the Pacific. F-22A Raptor aircraft beddown at Elmendorf AFB, Alaska;
Hill AFB; and Tyndall AFB, Florida ensures fifth generation stealth
capabilities are available when and where they are needed.
The Global War on Terror has changed the role of Airmen in how we
provide effects and capabilities to Combatant Commanders. Our Airmen
now work and live ``outside the wire'', and to ensure our Airmen have
the right skills and more efficiently wage the war on terrorism we are
standing up the Common Battlefield Airmen Training Complex. Training
will include weapons proficiency, land navigation, small units tactics,
physical conditioning, and further instill the warrior mindset in our
Pararescuemen, Combat Controllers, Tactical Air Control Party
personnel, Battlefield Weathermen, and other Battlefield Airmen career
fields. Additionally, to ensure seamless integration into the joint
battlefield, we are constructing Tactical Aircraft Control Program
facilities at Fort Bliss, Texas, and Fort Knox, Kentucky.
A significant portion of our 2007 MILCON budget goes toward
expediting our transformation into a fully integrated (joint and
coalition) planning and operational environment. These facilities
enable and enhance QDR requirements for improved Joint Command and
Control capabilities. Strategic Planning facilities at Hurlburt Field,
Florida for Air Force Special Operations Command, and Andrews AFB,
Maryland for the National Capital Region are key links to our highly
networked, virtual environment that enables real-time collaboration and
rapid production of high quality planning products. At MacDill AFB,
Florida the Air Force is constructing a consolidated Joint Intelligence
Center for United States Central Command (USCENTCOM). USCENTCOM's area
of responsibility is the geographic and ideological heart of the Global
War on Terror. A war without borders, it spans 27 countries in the
Central Asian region of the world. The Joint Intelligence Center
provides the USCENTCOM Commander with the situational awareness and
long range analysis needed to defeat adversaries within the AOR,
promote regional stability, support allies, and protect United States
national interests.
Beddown new Missions
In addition to the transformational new missions, we continue to
beddown missions that capitalize on existing capabilities. One of the
key enablers of the national defense is our strategic airlift
capability. We are continuing our investment to beddown C-5s at Memphis
IAP, Tennessee, and Martinsburg, West Virginia. The extensive beddown
program for the C-17s continues at Elmendorf AFB; Travis AFB and March
ARB, California; Dover AFB, Delaware; Hickam AFB, Hawaii; Jackson Air
Guard Station, Mississippi; and Lakehurst Naval Air Station, New
Jersey. Thanks to your support, the construction funding requirements
for Charleston AFB, South Carolina, and McChord AFB, Washington are
complete. The request for fiscal year 2007 includes thirteen C-17
beddown projects worth over $184 million.
Continue to Invest in Quality of Life Improvements
The Air Force sees a direct link between readiness and quality of
life. We strive to provide quality family housing for our families,
quality ``Dorms-4-Airmen'', functional fitness centers, and safe child
development centers. When Airmen deploy, time spent worrying whether
their families are safe and secure is time not spent focusing on the
mission. Our QOL initiatives are critical to our overall combat
readiness and to recruiting and retaining our country's best and
brightest. Our QOL initiatives reflect our commitment to our Airmen.
Family Housing
The Air Force Family Housing Master Plan details our housing
MILCON, O&M, and privatization efforts. It is designed to ensure safe,
affordable, and adequate housing for our members. To implement the
plan, our fiscal year 2007 budget request for the family housing
investment program is $1.9 billion, the largest in Air Force history.
Department of Defense Strategic Planning Guidance is to eliminate
inadequate family housing units in the United States by 2007 and
overseas family housing units by 2009. The fiscal year 2007 budget
request completes our efforts to meet the goal in the CONUS, and
continues our progress overseas. In fiscal year 2007 our installations
in Germany, Japan, and the United Kingdom have housing projects that
not only support our Airmen directly, but also spur additional private
investor interest to provide quality housing for years to come. We
thank you for your assistance in helping keep us on the path to meet
these goals.
For fiscal year 2007, the $1.18 billion requested for our housing
investment program will provide approximately 2,300 new homes at 10
bases and improve more than 2,200 homes at 13 bases. An additional $755
million will be used to pay for operations, maintenance, utilities and
leases to support the family housing program.
Dormitories
We are just as committed to providing adequate housing for our
unaccompanied junior enlisted personnel. We are making great progress
in our Dormitory Master Plan, a three-phased dormitory investment
strategy. Phase I, eliminating central latrine dormitories, is complete
and we are now concentrating on the final two phases of the investment
strategy. In Phase II, we are building dormitories in a new
configuration called ``Dorms-4-Airmen,'' a four-person module, to
eliminate our room shortage. This is a Chief of Staff approved standard
for future dormitories. This new module design increases privacy by
offering a private bathroom within the occupant's private living area
and increases social interaction space in the kitchen and living room.
Finally, in Phase III, we will replace existing dormitories at the end
of their useful with the new Dorms-4-Airmen module to improve the QOL
of our young Airmen.
The total Air Force requirement for dormitory rooms is 60,200. With
the fiscal year 2007 proposal, we are on track to replace all
inadequate permanent party dormitory rooms by fiscal year 2007 and all
inadequate technical training dormitories by fiscal year 2009. This
request includes $159 million for nine dormitory projects--creating
1,426 new rooms for unaccompanied personnel at both stateside and
overseas bases. We anticipate our requests in fiscal year 2008 and
fiscal year 2009 to only include technical training dormitories.
Community Support
Our MILCON program also supports the Air Force holistic approach
to wellness. The four pillars of Air Force Wellness are social,
emotional, physical and spiritual aspects of life. Our ``Dorms-4-
Airmen'' design underpins on our Wingman concept by keeping our dorm
residents socially and emotionally fit. Our fitness centers are a
critical component of the Air Force's QOL and mission accomplishment.
Our expeditionary nature requires that Airmen deploy to all regions of
the world, and into extreme environments, and they must be physically
prepared to deal with these challenges. In 2007, we will construct a
fitness center at Eielson AFB, Alaska. Our focus on QOL improvements
links directly with the Air Force overall modernization and
transformation program and will support our Airmen and their families
as they prepare to meet the challenges of an ever-changing world.
Sustain, Restore, and Modernize our Infrastructure
The Air Force remains focused on sustaining, restoring, and
modernizing our infrastructure. As I stated previously, in 2007, we
have focused sustainment funding on preserving our existing investment
in facilities and infrastructure and targeted limited R&M funding to
fix critical facility deficiencies to maintain readiness.
Our sustainment program is aimed at maximizing the life of our
infrastructure and preserving our existing investment. Without proper
sustainment, our infrastructure wears out more rapidly. In addition,
Commanders in the field use O&M accounts to address facility
requirements that impact their mission capabilities.
When facilities require restoration or modernization, we use a
balanced program of O&M and MILCON funding to make them ``mission
ready.'' Unfortunately, R&M requirements in past years exceeded
available O&M funding, causing us to defer much-needed work. It is
important for us to steadily increase the investment in restoration and
modernization in order to halt the growth of this backlog, while fully
funding sustainment to maximize the life of our good infrastructure.
The Air Force Total Force fiscal year 2007 sustainment funding is
$1.68 billion and R&M funding is $310 million. This budget carefully
balances SRM, and MILCON programs to make the most effective use of
available funding in support of the Air Force mission.
I am concerned about the potential impact of a change in the
appropriation acts that separates the SRM Account from the rest of the
O&M appropriation. This would, in effect, create a fence around SRM. In
past years, all O&M was funded from the Defense Appropriation.
Commanders used the flexibility to move money between O&M accounts to
effectively manage budget shortfalls and unexpected requirements such
as utility rate increases, natural disasters, infrastructure failures,
or mission-driven requirements. Without legislation that would permit
the movement of funds between all O&M accounts, Commanders would face
serious challenges addressing these emergent requirements. Let me say,
I share the concern expressed by members of Congress about the use of
SRM or Base Support accounts as ``bill payers.'' However, for 19 of the
past 21 years the Air Force has obligated more in SRM than was
requested in the President's Budget. Air Force Commanders are committed
to taking care their mission, people, AND facilities. Accordingly, if
any legislative action is necessary, I believe combining legislative
language allowing free movement of funds among all O&M accounts, with
obligation floors for SRM and Base Support is the most effective
solution. In this way, Commanders will have the ability to best
allocate resources to meet an increasing set of challenges, including
support for critical facility repairs. A critical component of the
Commander's effort will include driving greater efficiencies and higher
productivity by reforming our business practices under AFSO 21, there
by driving more value out of every taxpayer dollar we spend.
Continue Demolition of Excess, Obsolete Facilities
In addition to modernizing and restoring worn out facilities, we
also demolish excess and obsolete facilities. This ensures funds are
focused on facilities we need, not on sustaining ones we do not. For
the past eight years, the Air Force has aggressively demolished or
disposed of facilities that were unneeded or no longer economically
viable to maintain. From fiscal year 1998 through fiscal year 2005, we
demolished 20.3 million square feet of non-housing facilities and
infrastructure at a cost of $238 million in O&M funding. This is
equivalent to demolishing more than three average size Air Force
installations and has allowed us to target our infrastructure funding
on facilities we need for the long-term mission. For fiscal year 2007
and beyond, the Air Force will continue to aggressively identify
opportunities to eliminate excess and obsolete facilities.
Mission Support
The Air Force MILCON program is carefully shaped to reflect the
most urgent priorities. We have decentralized the process for existing
mission projects so that MAJCOM Commanders have more input into which
construction priorities get executed. We provide them a funding target
based on their percentage of Air Force Plant Replacement Value, and
they have flexibility in prioritizing the projects most important to
their mission. This is appropriate because they are closer to the
missions and uniquely situated to determine priorities. The 2007 MILCON
program has 16 mission support projects worth $155.3 million. These
projects range from the most basic electrical and water distribution
infrastructure on one end of the spectrum to high tech space test and
evaluation facilities on the other end of the spectrum.
Planning and Design/Unspecified Minor Construction
This year's Air Force MILCON request includes $124.6 million for
planning and design (P&D), of which $13.2 million is for military
family housing. The request includes $87.5 million for active duty,
$18.8 million for the Air National Guard, and $5.1 million for the Air
Force Reserve. These funds will allow us to complete the design work
for fiscal year 2007 construction programs and to start the designs for
fiscal year 2008 projects, allowing us to award contracts in the year
of authorization and appropriation.
This year's request also includes $25.5 million for the Total Force
unspecified minor construction program which is our primary means for
funding small, unforeseen projects that cannot wait for the normal
military construction process. Because these projects emerge over the
course of the year, it is not possible to predict the total funding
requirement. When unspecified minor construction requirements exceed
our funding request, we augment them by reprogramming available MILCON
construction funds.
Optimize use of Public and Private Resources
Housing Privatization
Air Force Airmen and their families appreciate your staunch
commitment to their quality of life. We have used privatization
authorities to accelerate our housing program. To date, we have awarded
17 privatization projects providing 16,200 privatized homes for our Air
Force families. That translates to the Air Force leveraging an
investment of $209 million with private sector funding to provide $2.4
billion in total development, yielding a leverage of approximately $11
of private investment for each public tax dollar.
Since last year, the Air Force completed construction of our fifth
privatization project, Phase I of the Wright-Patterson AFB, Ohio,
privatization project, joining the four previously completed projects
at Dyess AFB, Texas; Elmendorf AFB (Phase I); Lackland AFB (Phase I),
Texas; and Robins AFB (Phase I), providing a total of 3,856 homes for
our Air Force families. Additionally, the Air Force has eight projects
under various stages of construction at Buckley AFB, Colorado;
Elmendorf AFB (Phase II); Hanscom AFB, Massachusetts; Hickam AFB (Phase
I); Kirtland AFB, New Mexico; Little Rock AFB, Arkansas; Moody AFB,
Georgia; and Patrick AFB, Florida. When these eight ongoing projects
are complete, we will have 12,352 more new homes available for
families. Recently, the Air Force awarded four more privatization
projects at Dover AFB, Hill AFB, Offutt AFB, Nebraska, and Scott AFB,
Illinois, which are mobilizing for construction this Spring.
Three years ago the Air Force committed to a goal of privatizing 60
percent of U.S.-based family housing by 2007; we are proud to say we
will eclipse that mark by an additional 15 percent and will privatize
75 percent of our (government-owned) housing in the United States and
its territories. In total, the Air Force will leverage $575 million in
MILCON dollars, yielding total construction development expenditures on
and around Air Force installations exceeding $7.9 billion and providing
over 47,000 quality homes for our Air Force families.
Utility Privatization
In addition to privatizing housing, the Air Force is interested in
privatizing utilities where it makes economic sense and does not
adversely affect readiness, security, or mission accomplishment. Our
installations are key to our operational capabilities. Our network of
bases provides necessary infrastructure for deploying, employing, and
sustaining air and space operations and re-deploying and reconstituting
the force afterwards. Our bases are also the training platforms from
which skilled Airmen learn their trades and prepare for deployment.
Reliable utility services are essential to operations at every Air
Force base.
To date, the Air Force has conveyed 16 utility systems: 10 under
OSD's utilities privatization program (10 U.S.C. 2688) and 6 under
previous efforts. Some 275 systems are currently in the solicitation
process. By the time the program is complete, we anticipate as many as
100 of about 500 systems could be privatized. During the course of this
process, we expect that many competitive solicitations will end up as
sole source procurements from local utility companies.
Base Realignment And Closure 2005
The Secretary of Defense transmitted his recommended closures and
realignments, to include those recommendations developed by and
affecting the Department of the Air Force, to the Defense Base Closure
and Realignment Commission and to the Congress on May 13, 2005, and
published them in the Federal Register on May 16, 2005, pursuant to
Public Law 101-510, as amended. The Air Force recommendations
reaffirmed the Department of Defense's commitment to defend the
homeland, to establish a capabilities-based defense strategy, and to
challenge the military departments to transform themselves to better
meet new threats in a changed security environment. Consistent with the
goals outlined by the Secretary of Defense, the Department of the Air
Force established four BRAC goals to support right-sizing of its force
and to enhance its capabilities:
--Maximize warfighting capability efficiently,
--Transform the Total Air Force by realigning infrastructure to meet
future defense strategy,
--Maximize operational capability by eliminating excess physical
capacity, and
--Capitalize on opportunities for joint activity.
These goals were formulated with a Total Force perspective--active
duty, Air Force Reserve and Air National Guard--to optimize operational
capability in response to a projected declining force structure given a
20-year view. In turn, these facilitated ongoing transformation within
the Air Force to meet the challenges and opportunities of the 21st
Century, and restructure important support functions that capitalize on
advances in technology and business practices. Of the 222
recommendations submitted by the Secretary of Defense, the BRAC
Commission accepted, without change, about 65 percent. In all, the
Commission revised 34 percent of the recommendations regarding the Air
Reserve Component, and 37 percent of the Joint Cross-Service Group
recommendations that affected Air Force installations. While the
Commission's final decisions fell short of the Air Force's overall
goals for BRAC--particularly in eliminating excess physical capacity--
they did, however, help us take a major step towards reshaping our
Total Force structure. For example, as a result of BRAC, Air Reserve
Component flying squadrons are increased to a more effective
operational size, such as from 15 aircraft per fighter squadron to 18
per squadron after BRAC, and from 8 aircraft per mobility squadron to
12 after BRAC. This increases the percentage of Reserve Component
squadrons that are optimally-sized from the current 4 percent to 59
percent. Additionally, the Air Force will cease flying operations at 23
locations in response to a declining fighter and mobility force, and
the Air Force will realize new operational synergies through Joint
recommendations that pair Air Force and Army forces at locations such
as Eglin AFB, Florida and Shaw AFB, South Carolina. As the Air Force
continues to transform, BRAC is but one tool we will use to align our
force to future defense strategy.
Brac Implementation
The Air Force has begun to develop an implementation schedule for
its BRAC 2005 recommendations, and is working in close partnership with
the Air National Guard, the Air Force Reserve, and our active duty
major commands to further develop and refine this schedule. In the
previous four rounds of BRAC, the Commission recommended 22 major
closure and 17 major realignment actions of Air Force installations. In
comparison, the 2005 BRAC Commission recommended 5 major closures and
12 major realignments of Air Force installations. Additionally, there
were numerous other smaller realignment actions at Air Force
installations, many of which were transformational in nature. Given the
transformational nature of this BRAC round, these types of
recommendations, particularly those that consolidate or co-locate joint
activities, or those that establish joint operations, pose new
implementation challenges for the Air Force. To implement these joint
recommendations, and to best realize their full intent and operational
payoff, we are working hand-in-hand with our sister Services, the
affected defense agencies, and the Office of the Secretary of Defense.
As directed by the Deputy Under Secretary of Defense (Installations and
Environment), we are developing 64 BRAC Business Plans to effect those
actions for which the Air Force was designated as the lead military
department for implementation. These Business Plans serve as a high-
level foundation to outline required actions, the timing of these
actions, and the associated costs and savings associated with
implementing each recommendation, and will ensure our BRAC 2005
recommendations are implemented efficiently and effectively.
The Department of Defense recently delivered its budget
justifications reports describing the specific programs, projects, and
activities for the $1.46 billion appropriated in fiscal year 2006 to
begin implementing its BRAC actions. This figure includes $231 million
for Air Force BRAC 2005 activities during fiscal year 2006, which will
begin the P&D phases and requisite National Environmental Policy Act
(NEPA) environmental studies that precede the construction and
renovation of facilities needed to relocate functions, missions, and
weapons systems.
Our fiscal year 2007 BRAC MILCON program includes a robust 76
projects totaling $508.8 million, including P&D and the Air Force share
of Joint Cross-Service Group projects.
With respect to the BRAC Commission's language on Cannon AFB, New
Mexico, the Air Force is leading the Department of Defense's review on
potential reuse of the installation. This action is consistent with the
Commission's recommendation that, after disestablishing the host
fighter wing, the Air Force ``shall establish an enclave at Cannon Air
Force Base that shall remain open until December 31, 2009 during which
time the Secretary of Defense shall seek other newly-identified
missions with all military services for possible assignment to Cannon
Air Force Base. If the Secretary does not find a mission for Cannon Air
Force Base by December 31, 2009, Cannon Air Force Base and the enclave
shall be closed.'' The Air Force has aggressively pursued the
Commission's direction to seek potential re-use, and expects to provide
the Secretary of Defense with its findings and recommendations this
summer.
As the Air Force begins to gauge the impact of other processes
external to BRAC, such as the results of the QDR and the Air Force's
Total Force Integration implementation plan, it will continue to refine
its facility requirements needed to implement BRAC actions as a direct
result of these and other transformational influences. While it is yet
unknown what impact the projected end strength reductions might have,
or the exact facility requirements that are needed for emerging Total
Force missions, be assured the Air Force will continue to adjust its
infrastructure footprint to best align its infrastructure as
efficiently for the future in full compliance with all statutory
obligations.
Downsizing infrastructure during BRAC was a difficult task, as all
Air Force bases are outstanding installations that stand as a credit to
our Nation and to the exceptional communities that support them.
However, we had to make hard infrastructure decisions to posture
ourselves for new security challenges, and to preserve limited
resources for readiness and modernization. As such, the Air Force
recognizes it has an obligation to assist its partner communities
affected by BRAC 2005. In previous rounds of BRAC, the Air Force
established an excellent record of closing bases as quickly as
possible. This aggressive approach provided the quickest savings to the
Air Force and assisted local communities in their efforts to begin
economic revitalization. The Air Force will continue to maximize
savings at closure installations and work closely with local
communities to facilitate a prompt transition and the best reuse
opportunities. The Defense Economic Adjustment Program will continue to
assist communities to plan for the civilian redevelopment of available
real property, and implement local adjustment actions to assist
impacted workers, businesses, and other affected community interests.
The Air Force also recognizes the importance of ensuring that those
communities whose Air Force installations gain new missions under BRAC
have the capacity to support these new missions with adequate planning,
housing, education, infrastructure, and community services. The Air
Force is working with these communities to plan and carry out
adjustment strategies that will enhance their ability to support both
our Airmen and other uniformed men and women at the receiving
installations.
Environmental Cleanup And Property Transfer
Environmental clean up and transfer of BRAC real property is often
technically challenging and has involved extended timeframes to
complete. At the end of fiscal year 2005, the Air Force has deeded
approximately 75 percent of 87,000 acres of BRAC property from previous
BRAC rounds. Our real property disposal efforts have led to the
creation of over 54,000 reuse jobs in the affected communities. To
complete the clean up and transfer of the remaining property, the Air
Force is attempting to leverage private sector experience in developing
former industrial property similar to Air Force facilities.
Privatization and guaranteed fixed price contracting are two promising
examples of this type of process innovation. Our objectives remain
clear: (1) providing reuse opportunities that best meet the needs of
the Air Force and local communities, (2) moving the process along
smartly in each situation to get property back into commerce as soon as
practical and (3) providing transparency in the process.
As we transfer BRAC real property for civic and private reuse, the
Air Force has a continuing responsibility for environmental clean up
from past industrial activities. The Air Force takes our responsibility
to protect human health and the environment seriously, and, since 1991,
we have spent more than $2 billion on environmental clean up at our
BRAC installations. For fiscal year 2007, the Air Force is requesting
$116 million for clean up activities.
At our remaining non-BRAC facilities, the Air Force is reshaping
our infrastructure to meet the demands of the 21st century. The Air
Force will utilize new tools to optimize our resources and obtain value
from our excess capacity. We are developing enhanced use leasing as a
means of returning value from underused Air Force property and as a
flexible alternative to property disposal or demolition.
Conclusion
In conclusion, Madam Chairman, I thank the committee for its strong
support of our military construction, housing and transformational
efforts. The near and long term readiness of our Airmen depends upon
this infrastructure. We will continue to be good stewards of our
installations' assets and the environment and will continue to work
hard to ensure Air Force infrastructure is properly distributed to
optimize military readiness as well as meet our Nation's defense needs.
At the same time we will continue to modernize our infrastructure
management processes, within the overall Air Force transformation
process, to ensure we are good stewards of the taxpayer's dollars. I
would be pleased to take your questions.
Senator Hutchison. Thank you very much.
I want to start, Mr. Eastin, with the question that was
brought up by Senator Feinstein regarding Vicenza, Italy. The
Army is proposing to invest almost $500 million over the next 2
years to consolidate the 173d Airborne Brigade, including $223
million for this next fiscal year. I am told that the 173d
deploys out of Aviano, which is 3 hours away, and that a large
portion of the Vicenza consolidation would be housed at Dal
Molin, which is a small piece of land that has no force
protection.
My question is, have you thought this through?
Mr. Eastin. We have thought it through greatly. We have
looked at various other places to accomplish this. Right now
the 173d of course is in three places. It is part at Ederle,
part at Bamberg, and part at Schweinfurt in Germany. Ever since
Hannibal, I do not think it has been particularly good to have
part of your force on one side of the Alps and the other part
on the other. So the intention is to bring it all in one place,
that place being south of the Alps, which operationally I am
told--I do not propose to be the combatant commander in this
case, but I am told that it significantly eases the ability to
deploy from having to get only one clearance for airspace from
one country rather than several, which would happen up in
Germany.
Senator Hutchison. Why was Aviano not considered as the
place for consolidation, since the airfield is there?
Mr. Eastin. You would think that, but the government of
Italy has offered up the site at Dal Molin and there is enough
land there to accomplish the mission with keeping two of the
battalions over at Ederle. The Aviano site would require the
purchase of more land from, I might add, probably less than
willing sellers. I do not know what their eminent domain
activity is in Italy. I suspect it is a little broader than
ours is here.
We have also looked at Sigonella. We have the same problem
with land there. We have looked at Amendola; the same problem
with land there. Just it is a very land-intense operation and
it would require the purchase of more land in the other places,
and with the additional expense entailed.
So while it may not be intuitive to deploy from Aviano, it
is but a couple or 3 hours away on a rather super highway and
can easily be done, and for training purposes they can train in
Ederle and at Dal Molin and then when they need aircraft, go to
Aviano.
Senator Hutchison. We will certainly want to keep looking
at that. Your $500 million to consolidate at Vicenza--for
another couple of hundred million you might be able to
consolidate everything where people could live, have force
protection, and the airfield. It sounds like you have made the
decision, but it is something I hope you will continue to
monitor.
Mr. Anderson, Spangdahlem. As I mentioned earlier, the Air
Force is requesting another $39 million for more housing at
Spangdahlem and $70 million at Ramstein. Are you looking at the
housing market in these locations and the options that would be
the most efficient for housing our people, particularly at
Spangdahlem, where it just seems like an awfully high price
with no effort so far from the German government.
Mr. Anderson. Yes, Ma'am, we are. I actually, knowing of
course that this was a looming issue, last winter I went over
there myself to take a firsthand look and talk with local
leaders, local German leaders, and our base commanders. I was
actually hoping to link up with you on your trip and I
understand that for other reasons you could not join us in
Spangdahlem.
Senator Hutchison. Yes, we had votes late that night.
Mr. Anderson. I was hoping to walk it with you and we could
talk as we went.
But anyway, the Air Force has been working very closely
with Carl Peter Bruch, who is the state secretary of the German
state in that area, looking at various options. There are
obviously, as you know, numerous different options: build-to-
lease, true privatization, MILCON. Each of the two locations
are very different, Ramstein being much more suburban-urban,
with Spangdahlem being a very rural location. They both have
two very different issues. Ramstein, because of the build-up of
the military in that area because of the Rhein-Main closure and
movement, the fact that it is not only U.S. military in that
area but some of our coalition partners, allies are also using
the base and in need of housing, and the housing that is in
most need, enlisted family housing, is identical to the type of
housing stock that the young German family needs, which is also
apparently their biggest need.
The local community, the State, is working with us to look
at options for either privatization or build-to-lease. They
believe that they can potentially deal with part of our need.
We already have 2,000 housing units in stock that we use
already. They believe they can take care of part of our need,
but not all of it. The MILCON request would in essence take
care of the difference.
Spangdahlem, in a rural area, we need 860, I believe it is
863--I may be off a few--housing units per our estimations. The
community believes that it can absorb about 360 of those in
that rural community along with some other housing that they
are building for local German nationals, and plans are moving
ahead to work with the German government to make that happen.
The remainder of the housing would have to be covered, we
believe, on base through MILCON. But the German government is
stepping up and trying to help us through this. It is not an
easy equation for them, and I realize it is not an easy
equation for you either.
Senator Hutchison. Well, I appreciate that you did that. I
wish I could have been there as well. And I know it is a rural
area, which makes it more difficult. But if the German
government is in fact being encouraged, that is a good sign,
and I hope that you will continue to pursue the most efficient
situation.
Mr. Anderson. We will, Ma'am.
Senator Hutchison. Mr. Penn, I wanted to ask you about the
area around Naval Air Station Kingsville. There is apparently a
need to expand training ranges at Kingsville and there is some
acreage for sale which maybe the National Guard of Texas is
looking at buying. But the Department of the Navy might also be
looking at that.
That base is I think well positioned to grow in the future,
particularly if there is encroachment on other training bases
around the country that are still in flux. My question is, to
what extent is the Department of Navy looking at that before it
might go--and let me say, I do not know who owns the property.
I do not have any idea, except that the community is very
supportive of expanding the training capabilities of Naval Air
Station Kingsville. So I wondered if Navy is looking seriously
at doing that before it goes somewhere else.
Mr. Penn. Yes, Ma'am, we are. In fact, I visited Kingsville
the end of last year and the Navy--it may end up being a
bidding war between the Navy and my friend from the Army here.
But the ECUs, we are looking at for expansion of ECUs. As you
mentioned earlier, the encroachment is--Kingsville, when I was
going through flight training Kingsville was--nothing was
around it. But now within a mile or so there are houses and
developments springing up.
Senator Hutchison. Well, as you know, it is a unique area
where you can have live fire training. There is a lot of
potential for it. It would be good for a training base for
reserve, but it also has such, I think, a higher level of use
for Navy for the potential expansion of the training air.
Mr. Penn. They have unencumbered air space, which is
something we need.
Senator Hutchison. Well, I hope that you are looking at
that, because I think from the standpoint of the strength of
the Navy base it would be better to have that be Navy-owned
than if it were turned into a Guard base and then it might end
up being the whole thing a Guard base. So not that that is bad,
but it is not the highest use when air space that is
uncongested is so rare for the Navy. So I want to make sure
that that is on your radar screen.
Mr. Eastin, Red River Army Depot. Red River, as everyone
knows, was taken off the closure list by the BRAC last year and
we are going to add one military construction project to Red
River that was not on the President's request. But I want to
ask you if you are now in the Army looking at really upgrading
Red River so that it can continue with the great work force it
has to do the best possible job on the tanks and trucks that it
has the unique capability to repair and upgrade?
Mr. Eastin. As you know, Madam Chairman, Red River was
initially thought of as being part of the BRAC process. That
has been taken off the table. It is now an active Army
installation and we intend to support it fully and support its
mission.
Senator Hutchison. Thank you.
That is all the questions I have. Senator Allard.
Senator Allard. Thank you, Madam Chairman.
I just would like to follow up on some of my comments I
made earlier. Again, I could not be more pleased with the
presence of Fort Carson in Colorado and the people in Colorado
Springs and the way they cooperate. I had an opportunity to get
down there and personally visit with all the men and women that
have served us so ably in Iraq, and they are just wonderful,
courageous people. I do not think we really recognize the great
service they are doing for this country enough. They have
served in some of the toughest areas in Iraq and Afghanistan
and, as I mentioned earlier, have a reenlistment rate, and I
want to do everything I can to make sure they get the adequate
training they need and to make sure that we can make life as
appealing as we possibly can in the bases that we have in
Colorado Springs.
As you gathered from my earlier comments, I am supportive
of the expansion of the training facilities there in Fort
Carson. Kind of the hangup on all this is eminent domain. It
seems to me that with all the acres that are around the current
training site that there is going to be plenty of options for
the Army and probably they do not need to use eminent domain. I
have been assured that that is not your intention.
So my colleague Senator Salazar is holding a public meeting
down in Pueblo and they will be talking about the expansion. I
think you are going to have a representative there. I wonder if
you can share with us some of your thoughts about Pinon Canyon.
Mr. Eastin. First, it is DOD policy, as well as that of the
Army, not to discuss land acquisition until decisions have been
made. Somehow or other the cat got out of the bag here and I
think the cat has left the building already. The Pinon Canyon
area is very important to the Army. It supplies a vast and open
space to do training with, as you said, modern weapons that
shoot accurately at a greater distance. We have a proposal in
the works--I have not seen it yet--as to acquiring land in the
Pinon Canyon area. We have some 250,000 acres there now. I
think what I have seen about this, it will probably add
somewhere about slightly north of 400,000 more acres.
Senator Allard. Out of 1 million, 1 million acres.
Mr. Eastin. It is nice to have an area where you have 1
million lying around somewhere.
Senator Allard. Yes.
Mr. Eastin. As you know, back in 1982 to 1987 we acquired
the Pinon Canyon area. Half of those acquisitions were done by
open purchases and another roughly half were done through
condemnations. Of those condemnations, there are several ways
to condemn things. You can argue over nickels and dimes and
finally settle the issue rather than arguing in a major way by
condemning it. Other times, property owners have come to us and
said, for tax purposes please condemn this land from us.
Senator Allard. So you will do condemnation just because
you have a willing seller and a willing buyer, but you will do
it to provide some tax benefits for the seller.
Mr. Eastin. And in the current exercise we are going
through in Pinon Canyon some of that was actually started by a
couple landowners who wanted to sell to us.
Senator Allard. Yes.
Mr. Eastin. Clearly the preferred way is to handle this
through a willing seller and a willing buyer and we will do
that. I do not think to take off the table the possibility of
condemnation as a way to handle some recalcitrant--we call them
``doughnut holes.'' We acquire friendly all the land around the
outside and one guy is left in the middle, and you have to have
air rights to shoot over his property or something. It is hard
to train that way.
But on to the issue of fair market value, basically even in
a condemnation action you would be getting fair market value as
determined by one or more appraisals. But I want to just
emphasize to you that our firm intention is to buy this from
people who want to sell it to us, not some other way.
Senator Allard. Well, your comments are encouraging and,
like I say, we have so much land there in order to meet your
needs, and if you have a plan over 20 years or 10 years I
cannot help but think at some point in time you will reach an
environment where you can have a willing seller, a willing
buyer. There is nothing pressuring--down in Pinion Canyon,
there is nothing really pressuring. Nobody is out there--there
are no urban areas pressing on it or anything like that and it
is a relatively undeveloped area, just ranches out in that
area. I think with time, with patience, you can probably
acquire those without eminent domain.
Of course, I had not thought about the possibility that an
owner may request that you do an eminent domain for tax
purposes, and I think we will take a second look at our piece
of legislation to make sure we do not take that opportunity
away.
Mr. Eastin. We do appreciate that, according to a survey
that someone in my office had done, there were 2,000 people in
the million acres.
Senator Allard. That includes the heavily populated towns
we have there, too.
Secretary Anderson, about the Air Force, I want to talk a
little bit about the academy there. I just finished a board of
visitors meeting there and they presented to us a plan to
recapitalize the facilities at the Air Force Academy. Most of
the buildings there are over 50 years old. They were built all
at once and they are over 50 years old, so now they need to
begin to think to cycle them through over time.
Some of them were not built there in a way to endure our
temperature changes, for example, so we have problems with
cracking cement in some areas and not holding up like expected.
Many of the buildings right now are incurring some pretty high
operational costs there at the academy. So they have begun to
talk about some kind of recapitalization plan there.
Do you have any idea when the Air Force might look at these
facilities at the academy in a serious way and look at the
possibility of putting together a plan there or working with
the academy and putting together a plan?
Mr. Anderson. Senator, having walked the academy and looked
at the buildings like you did, I understand what you are
talking about and I agree with some of the issues you discuss.
As you rightly mentioned, the academy is beginning to take a
look at the strategy for recapitalization. It has not yet risen
to my level for review. I do not offhand know the time frame.
We would be happy to get back with you on that in a written
response if you would like.
But I do understand that that process has begun and yes,
the civil engineering organization within the Air Force and my
office will be looking at that as soon as it is available.
ADDITIONAL COMMITTEE QUESTIONS
Senator Allard. I would appreciate a written response as to
kind of what you are thinking about as far as long-term
planning to make sure that we are thinking--I think it is time
for us to begin to consider those buildings that are most at
risk and those that are least at risk and put them on a
priority list and begin to see, look at the dollars they might
incur to keep it up. I think we want to keep the academy in
good shape if we possibly can.
Thank you for your responsiveness, both of you. I
appreciate it.
Thank you, Madam Chairman.
[The following questions were not asked at the hearing, but
were submitted to the Department for response subsequent to the
hearing:]
Question Submitted to Philip W. Grone
Question Submitted by Senator Kay Bailey Hutchison
BUSINESS PLAN
Question. Mr. Grone, I understand Department of Defense is
requiring the Services and defense agencies to develop business plans
for each of the approved BRAC recommendations. Among other things,
these plans develop updated costs and savings for each recommendation
and an implementation schedule for each recommendation.
When do you expect to have all the business plans approved?
Answer. The Department is aggressively developing, reviewing and
approving the Business Plans supporting the Base Realignment and
Closure (BRAC) recommendations. The Department anticipates these plans
will be approved on a time schedule which allows them to inform the
program review process this summer in advance of developing the fiscal
year 2008 President's Budget.
______
Questions Submitted by Senator Dianne Feinstein
BRAC PROPERTY APPRAISALS
Question. Since the Defense Base Closure and Realignment Act of
1990, as amended, does not require appraisals prior to the conveyance
of pre-2005 properties, why is the Department requesting such
appraisals for pre-2005 properties?
Answer. In anticipation of the 2005 BRAC round, the Department of
Defense revised its regulation at 32 CFR Part 174 and subsequently
issued the Base Redevelopment and Realignment Manual (BRRM) March 1,
2006 (the BRRM replaces and cancels the Base Reuse Implementation
Manual (BRIM), December 1, 1997). These two new issuances provide
revised and updated procedures to be followed by the Military
Departments in the disposition of BRAC property. It is not the intent
nor is it the expectation of the Department that actions from past BRAC
rounds which have been largely completed should be reopened to comply
with the new procedures. In some instances, e.g., the requirement to
seek to obtain fair market value for Economic Development Conveyances,
the statutory changes and their regulatory implementation only apply to
the 2005 BRAC round. To the extent an action from a prior round is
still largely open and an appraisal could be accomplished without
impairing a mostly complete action, it would be perfectly appropriate
to do such an appraisal. But this will have to be determined on a case-
by-case basis depending on the status of the disposal action.
Question. Please provide the Committee with a BRAC 2005 FYDP for
the fiscal year 2007 through fiscal year 2011.
Answer. The BRAC 2005 FYDP for the fiscal year 2007 through fiscal
year 2011 period is as follows:
--fiscal year 2007 ($5,626.223 million);
--fiscal year 2008 ($5,696.754 million);
--fiscal year 2009 ($2,996.036 million);
--fiscal year 2010 ($1,563.785 million); and
--fiscal year 2011 ($921.615 million).
This distribution of resources over the program and related
information was included in the budget justification materials provided
to Congress in support of the President's fiscal year 2007 budget
request, specifically the ``DOD Base Realignment and Closure 2005
Commission Executive Summary Fiscal Year 2007 Budget Estimates Program
Year 2007.''
GLOBAL REBASING
Question. Mr. Grone, would you update the committee on the status
of the Pentagon's global rebasing plan? I understand that the
Government of Japan has reached agreement with the United States to
cover 60 percent of the cost of moving approximately 8,000 Marines from
Okinawa to Guam instead of the 75 percent that the U.S. originally
counted on, leaving the U.S. share of the relocation cost at about $4.2
billion.
Answer. On May 1, 2006, the U.S.-Japan Security Consultative
Committee (SCC), consisting of the Secretaries of Defense and State and
their Government of Japan counterparts, released the ``U.S.-Japan
Roadmap for Realignment Implementation'' document detailing the
schedules and timelines for implementing the realignment initiatives in
the October 29, 2005 SCC document, ``U.S.-Japan Alliance:
Transformation and Realignment for the Future''. One of the several
initiatives contained therein concerns the move of approximately 8,000
Marines and their approximately 9,000 dependents from Okinawa to Guam.
The implementation plan for this initiative provides that the United
States will fund approximately $4.18 billion out of an estimated
development cost of $10.27 billion, or about 40 percent. The total U.S.
cost to develop the facilities and maintain the forces on Guam will be
somewhat higher when we factor in O&M costs associated with the move,
the cost of closing down facilities in Okinawa, the procurement costs
to equip new facilities on Guam, and the costs for leasing real estate
on Guam.
The total package of realignments of United States forces in Japan
involves several other initiatives for which Japan will pay nearly all
the facilities development costs and that will result in a more secure
and capable forward presence for our forces. These initiatives include
a new plan to relocate the capabilities of Marine Corps Air Station
Futenma out of urbanized Ginowan city to the rural areas near Camp
Schwab that is politically and technically feasible where previous
plans were not. These initiatives also include agreement on a plan to
relocate the jet aircraft from Carrier Air Wing Five out of the
urbanized Atsugi area to Marine Corps Air Station Iwakuni, which is in
a much less developed area of Japan. Although the Japanese Government
has not provided an official estimate of the total costs it will bear
for the entire package of realignments in Japan and on Guam, we
understand that the Government of Japan's preliminary estimates are in
the range of $15-$20 billion.
Question. Given the increasing pressure on the defense budget how
does the Pentagon plan to pay its share of the cost of that move? Is
the funding built into the current FYDP?
Answer. The fiscal year 2007 President's Budget contains $15
million for planning activities and initial environmental study actions
relating to the move of 8,000 Marines and their dependents from Okinawa
to Guam. In addition, the fiscal year 2007 President's Budget contains
funding for force posture adjustments on Guam that are not directly
associated with the U.S.-Japan Alliance Transformation and Realignment
effort, such as additional submarines, Global Hawk, tankers, and
rotational fighters and bombers. Funding for the development costs for
relocating the Marines from Okinawa to Guam is not yet reflected in the
FYDP. The department continues to define the requirements and refine
the development cost projections. We plan to examine and analyze
funding issues during the fiscal year 2008-2013 Program Budget Review
this year.
ENERGY CONSERVATION
Question. Mr. Grone, we are all aware of the current crisis at the
gas pumps. This committee has had a long-standing concern about the
dependence on foreign oil by the Defense Department, as it relates both
to cost and to national security, and has actively encouraged DOD to
pursue the use of alternative energy at military installations.
Last year, the Defense Department submitted a report, as requested
by this committee, on the potential of increasing the use of
alternative energy at U.S. military installations. What steps has the
Defense Department has taken, as a result of that study, to increase
reliance on alternative energy sources, particularly wind and
geothermal power, at U.S. military bases?
Answer. In March 2005, DOD completed an $8.5 million renewable
energy assessment at all military installations. As indicated in our
fiscal year 2005 annual energy management report, 8.8 percent of DOD's
electricity portfolio is now composed of renewable energy. We have
additionally published a stretch goal of 25 percent by 2025 that we are
working steadily toward. Senate Report 109-105, accompanying the
Military Construction Appropriations Act for fiscal year 2006,
requested the Secretary of Defense report on the steps the Department
has taken to execute the implementation plan contained in the
Department's March 2005 Renewable Energy Assessment. On April 4, 2006,
DOD forwarded an update to the congressional defense committees. Rather
than replicate that report in this response, a complete copy of that
report, which will answer your question in greater detail, is available
at http://www.acq.osd.mil/ie/irm/Energy/Energy.htm. However, I would
like to take the opportunity to highlight a few key points. Since our
assessment, we have methodically increased the amount of our Energy
Conservation Investment Program (ECIP) budget that we are devoting to
renewable energy generation projects from about $5 million in fiscal
year 2003 to about $19 million in the fiscal year 2007 President's
Budget. Of the $19 million in fiscal year 2007, $2.6 million in
hydrogen fuel cell projects is included.
Question. Water conservation is another very important issue in
many States, including my state of California. Would you provide this
committee for the record with your recommendations as to how the
Defense Department can take advantage of new technologies to improve
water conservation at military installations?
Answer. Important to sustaining Department of Defense (DOD)
operations is our commitment to the protection of our natural
resources. Water is an essential natural resource that supports the
installation mission, and water conservation is key for protecting that
resource. DOD strives to increase water conservation awareness and
reduce water use, particularly where scarce water supplies may impact
mission accomplishment. Reducing use of potable water can decrease
water pollution, increase energy savings, and create more efficient use
of water resources. DOD is committed to the protection and sustainment
of our water resources. From fiscal year 2000 to fiscal year 2004, DOD
installations decreased portable water consumption by 15.6 percent. In
2005, DOD updated its energy management policy in DOD Instruction
4170.11, ``Installation Energy Management.'' This Instruction is based
on the Energy Policy Acts of 1992 and 2005, and Executive Order 13123,
``Greening of the Government Through Efficient Energy Management.'' It
requires DOD Components to ``maximize energy and water conservation
efforts'' on existing installations and, as part of DOD's sustainable
building design requirement, in new building construction and major
renovation projects. Under DOD's water conservation effort,
installations develop water management plans, conduct water audits, and
implement cost-effective water reduction and conservation practices.
After implementing basic water conservation measures, installations
focus on water reuse and reclamation projects. Typical projects are on-
site recycling for vehicle wash facilities and cooling towers, and
reclaimed water for irrigation, landscaping, and dust control. DOD
facilities will continue to utilize life-cycle cost analysis to make
decisions about investments in new products, services, technologies,
and construction, that will lower DOD costs and reduce energy and water
consumption.
BUSINESS PLAN
Question. How do the implementation schedules proposed in the
business plans compare with those originally proposed by the
Department?
Answer. The Department is fully committed to implementing all BRAC
2005 recommendations in accordance with the statutory 6-year period.
The Cost of Base Realignment Actions (COBRA) model used to analyze
these recommendations typically front loaded the implementation
schedule to initiate actions in the first few years in order to
adequately compare basing options. BRAC implementation for some actions
is being delayed compared to the schedule implied by COBRA of the
previous rounds, primarily due to the complexity and large number of
joint recommendations.
______
Questions Submitted to Keith E. Eastin
Questions Submitted by Senator Dianne Feinstein
KOREA
Question. Last year the Committee was told by the Services that
costs had increased and that there would be no savings, yet, we find
this year that the opposite is true.
Can each of you validate these costs and provide the Committee with
a more realistic estimate of the amount needed for these facilities?
Answer. The fiscal year 2007 Korea barracks cost estimates have
been adjusted to take advantage of the favorable bid climate existing
in Korea for the past several years. Unit costs were adjusted from $138
per square foot (SF) to $79 per SF by taking into account actual bid
data over the last 3 years. This permits the Army to buy down the
barracks requirements at Camp Humphreys earlier for approximately 710
soldiers.
This table compares barracks projects for Korea over the past 4
years and includes scope and unit costs. There were no barracks
projects in fiscal year 2005 in Korea.
BASIS FOR ESTIMATING COST OF BARRACKS PROJECTS IN KOREA
--------------------------------------------------------------------------------------------------------------------------------------------------------
Unit cost at award
Programmed scope Project amount ($ Project award ($ Programmed Unit unit cost
Fiscal year Location (barracks) millions) millions) cost (barracks) ($/ (barracks) ($/
(square feet) square foot) square foot)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2003............................ Camp Carroll....... 107,940 20.0 11.5 142.77 98.38
2003............................ Camp Henry......... 53,970 10.2 7.7 142.80 132.12
2003............................ Camp Humphreys..... 94,163 36.0 28.2 146.32 135.25
2004............................ Camp Humphreys..... 53,970 25.0 15.6 142.92 99.44
2004............................ Camp Humphreys..... 134,032 40.0 30.3 143.21 102.47
2006............................ Camp Humphreys..... 134,032 25.0 13.1 137.59 88.13
2006............................ Camp Humphreys..... 189,768 42.6 25.6 137.59 104.91
2006............................ Camp Humphreys..... 134,032 37.5 23.1 137.58 87.34
2007............................ Camp Humphreys..... 268,064 42.0 TBD 79.00 TBD
2007............................ Camp Humphreys..... 268,064 35.0 TBD 79.00 TBD
--------------------------------------------------------------------------------------------------------------------------------------------------------
HOUSING PRIVATIZATION
Question. The GAO also found deficiencies with the management of
Army and Air Force housing privatization projects, including lower than
anticipated occupancy rates.
Would you comment on what you are doing to improve housing
requirement analyses and oversight?
Answer. The Army largely was pleased with the results of the GAO
review on housing privatization. While noting some areas where
improvements were needed, GAO recognized the Army's ``robust and
comprehensive'' oversight, and did not find any oversight concerns in
the Army projects it reviewed. The lower than expected occupancy at
projects noted by GAO does not pose a challenge to the effectiveness or
long-term viability of those projects. The Army has in place a rigorous
portfolio and asset management process to carefully monitor each
project's compliance with the development schedule, as well as the
financial condition and credit-worthiness of the project. GAO expressed
concerns that lower than expected occupancy at the Fort Meade project
had the potential to create a financial risk in the long term. The Army
already was engaged with the development partner to re-size that
project in light of the revised housing requirement due to changes in
local market conditions. That effort continues, and the Army is
confident in the long-term viability of the project. The GAO also
recommended the Under Secretary of Defense for Installation and
Environment expedite issuance of revised guidance to improve the
reliability of housing requirements assessments. The Army will work
with the Under Secretary's office to improve the housing requirements
analysis process where practical.
______
Questions Submitted to B.J. Penn
Questions Submitted by Senator Dianne Feinstein
ENVIRONMENTAL CLEANUP ACCELERATION
Question. I want to commend the Navy on its efficient use of
proceeds from the sales of previously BRAC'd properties toward
environmental remediation. It is my understanding that about $1 billion
in Navy cleanup remains and that proceeds from these sales will fully
cover any remaining costs the Navy will have regarding environmental
cleanup, is that correct?
Answer. Thank you for recognizing our efforts. The Navy BRAC
environmental program has been using proceeds from land sales to fund
all environmental studies and cleanup at prior BRAC locations. While we
continue striving to keep the prior-BRAC program self sustaining,
revenue that the Department has received to date from completed sales
is insufficient to pay for the projected cost to complete of all
environmental cleanup and property disposal at prior BRAC locations.
Future sales, notably the former Naval Station Roosevelt Roads PR, may
provide additional funds, however additional appropriated funds may
also be required in the future.
Question. Because the Navy essentially has its own funding for
cleanup, is there any reason why it cannot accelerate cleanup actions
across the country?
Answer. The Navy has already accelerated cleanup actions across the
country, executing a program on the order of $300 million/year. The
speed of the cleanup is regulated by many factors including technical
staffing expertise, contract capacity, regulatory oversight, CERCLA
process rate-limiting steps and public participation timeframes, to
name a few. The Navy has found that consistent execution of a program
of this size exercises the limits of many of these factors. We do not
believe it would be prudent to further accelerate cleanup across the
country. We are, however, prepared to invest additional BRAC funds to
support efforts for early property transfers, should such an
opportunity arise.
POINT LOMA, CALIFORNIA
Question. Are you aware of the situation at Point Loma, and does
the Navy need any funding this year or additional authorities to
protect the land surrounding the tank farm?
Answer. Yes, we are aware of the fuel plume at Naval Base Point
Loma. The Navy and Defense Energy Support Center (DESC) have been
working together to address this issue, prevent any further migration,
and clean the site. The Navy does not need any additional funds or
authorities.
Question. Do you agree with the DLA's assessment that the tank
replacement project could not be executed in fiscal year 2007?
Answer. The Navy agrees with the DLA's assessment. The DLA fiscal
year 2008-10 MILCON Project is a 3-phased project for $125 million to
replace all existing bulk storage infrastructure at the Defense Fuel
Support Point, Pt. Loma with modern tanks and equipment. It is at the
35 percent design stage. Due to the magnitude, scope, current design
phase and the National Environmental Policy Act (NEPA) environmental
impact/statement requirements, the Navy agrees with DLA that
acceleration of the fiscal year 2008 MILCON is not feasible and would
likely compromise both the design and Federal environmental protection
requirements.
HOUSING PRIVATIZATION
Question. The Government Accountability Office's recent report on
military family housing privatization management included strong
criticism of the Navy's oversight of its program. For example, GAO
noted that although the Navy established a portfolio management group
in 2004 which was supposed to prepare consolidated portfolio summary
reports, no report had been submitted as of January 2006. GAO also
reported that inaccurate project status information was reported to OSD
for five of eight Navy and Marine Corps projects that the agency
reviewed. This included data on projects at San Diego and Camp
Pendleton.
What is the Navy doing to improve oversight of its housing
privatization program and ensure that DOD and Congress have accurate
information on the performance of the Navy's housing privatization
projects?
Answer. As GAO indicates in their report, the Navy had begun a
comprehensive review of potential enhancements to portfolio management
prior to initiation of the GAO review. Navy and Marine Corps
representatives have met with their counterparts in the Army and Air
Force to review their portfolio management approaches and are working
to incorporate best industry practices. In recognition of the
Government's minority role in privatization projects, the Navy is
striving to achieve a balance between the appropriate level of
Government oversight while maintaining limited Governmental
involvement.
We recognize the need to improve the portfolio management system to
ensure accurate reporting. The Navy is committed to working with OSD
and the other Services to improve the accuracy and timeliness of
privatization evaluation reports and, where necessary, establish clear
definitions for use in reporting.
Question. The Navy has undertaken a pilot program to privatize
bachelor enlisted housing at three locations, including San Diego. What
is the Navy doing to ensure that these projects are being adequately
monitored and do not experience the same management shortfalls that
have affected the Navy's family housing privations program?
Answer. The Navy has begun a comprehensive review of potential
enhancements to the management of the privatized housing portfolio.
This includes portfolio summary reports and briefings for key Navy and
Marine Corps leadership. The process, including enhancements, will be
applicable to both privatized family and unaccompanied housing.
BRAC PROPERTY APPRAISALS
Question. Secretary Penn, since the Defense Base Closure and
Realignment Act of 1990, as amended, does not require appraisals prior
to the conveyance of pre-2005 properties, why is the Navy delaying the
negotiation and conveyance of NAS Alameda and NS Treasure Island until
such appraisals are completed?
Answer. The Navy is dedicated to the disposal of all BRAC
properties under its jurisdiction and at no time has delayed
negotiations nor conveyance of properties based upon the completion of
appraisals.
The appraisals are required by current DOD regulations (32 CFR
174.9) implementing the Economic Development Conveyance (EDC) process.
In the case of NAS Alameda, negotiations had been renewed with the
Alameda Reuse and Redevelopment Authority in March 2004 to reflect
changes in its redevelopment plan within the context of an EDC. Both
parties determined that the current Memorandum of Agreement for an EDC
would need to be amended to reflect the changes and provide adequate
consideration for the transfer. During these negotiations, the DOD
implementing regulations were revised and the Navy recognized that a
formal appraisal would be required to convey the property. An estimate
of fair market value had already been determined and the Navy has been
working with OSD to ensure that the estimate can be applied to meet the
new appraisal requirement.
In the case of Treasure Island, similar to Alameda, the
redevelopment plan has continued to evolve and the same changes in the
implementing regulations requiring an appraisal apply. The Navy is
awaiting supplemental information from the Local Reuse Authority (LRA)
in support of an EDC Application. The Navy is prepared to evaluate the
application as soon as the information has been submitted by the LRA.
In the interim, the Navy is continuing its remediation efforts (50
percent of the property is currently environmentally suitable for
transfer) and is moving forward with an appraisal.
______
Questions Submitted to William C. Anderson
Questions Submitted by Senator Kay Bailey Hutchison
BRAC PROJECTS
Question. Mr. Anderson, the final 2005 BRAC recommendations
included the realignment of March (California), Hector (North Dakota),
and Ellington (Texas) Air National Guard bases. The BRAC Commission
noted that the Air Force could assign a new mission to these bases, to
include unmanned aerial vehicles. The Air National Guard fiscal year
2007 military construction budget request includes $17.5 million for
projects to bed down Predators at these bases. While I support these
projects, and am very pleased to see the Predator coming to Ellington
Field, I don't understand why these projects are requested as military
construction and not BRAC projects.
Can you explain this to me?
Answer. Regarding the Air National Guard units at March Air Reserve
Base, California, Hector Field, North Dakota, and Ellington Field, the
BRAC Commission recommendation states these units may assume a mission
relevant to the security interests of their respective states and
consistent with the Air Force's Total Force Integration effort to
include, but not limited to, the unmanned aerial vehicle (UAV) mission.
For these Predator UAV beddowns as subsequently identified by the Air
Force, the acquisition program funds the full life-cycle costs of the
weapon system, to include construction costs. Therefore, these costs
are not paid for by BRAC. Costs directly related to BRAC actions are
being clearly tracked and executed to ensure compliance in accordance
with BRAC statute.
Question. Does this not obscure the cost of BRAC?
Answer. No, in the case of Predator, the acquisition program funds
the full life-cycle costs of the weapon system, including construction
cost. Therefore, these costs are not paid for by BRAC. Costs directly
related to BRAC actions are being clearly tracked and executed to
ensure compliance in accordance with BRAC statute.
KOREA
Question. Last year the Committee was told by the Services that
costs had increased and that there would be no savings, yet, we find
this year that the opposite is true.
Can each of you validate these costs and provide the Committee
with a more realistic estimate of the amount needed for these
facilities?
Answer. The significant savings are due to a temporary, highly
competitive bid climate in Korea expected to subside by the end of
fiscal year 2006.
Due to the delayed decisions on the U.S.-Korean Land Partnership
Plan and the Department of Defense (DOD) announcement to move U.S.
Soldiers south of the Han River, many major U.S. military construction,
Non-Appropriated Fund (NAF), and Host Nation Fund Construction (HNFC)
projects were cancelled or delayed. Korean contractors were hard hit by
the loss of tens of millions of dollars in business. Therefore, Korean
contractors have been submitting very competitive proposals for the few
large fiscal year 2004, fiscal year 2005 and early fiscal year 2006
military construction projects. This is especially true for dormitories
where we have standardized our dormitory designs and contractors have
become very familiar with and efficient in their construction.
With the reduction in U.S. military construction, we expected
Korean contractors would shift their resources to the local economy.
This did not happen because U.S. military type construction is a niche
industry, in which successful contractors recruit, train, and retain
personnel literate in English and U.S. building codes and standards.
The temporary ``buyers'' construction market is reflected in two fiscal
year 2006 dormitory projects receiving 24 and 21 bids, respectively.
Typically, only three to five bids are received. Thus, contractors are
providing competitive bids until the major flood of Army relocation
construction starts in late fiscal year 2006. In fiscal year 2006, it
is expected land promised by Korea to the United States will be ready
for construction. At Kunsan Air Base alone, by September 2006, over
$450 million of HNFC facility projects will be ready to advertise to
support relocating two Army Aviation Battalions. This contracted
construction amount is expected to grow to over $780 million by
December 2006. Also, relocation of Yongsan Garrison to south of Seoul
is scheduled at the same time at a total cost of approximately $3
billion. Korean contractors expect a building boom and the cost of
military construction projects will increase due to less bid
competition and a tightened labor and construction supply market.
Despite the projections above, the fiscal year 2007 dormitory project
at Kunsan Air Base was programmed to match bid data from the two fiscal
year 2006 dormitories. We analyzed the ``per room'' cost for each
dormitory and programmed the fiscal year 2007 dorm to be in line with
those figures. The fiscal year 2007 Kunsan dormitories project cost was
based on the best available information. The existing construction
climate, plus the anticipated construction climate in fiscal year 2007
and beyond, makes it a challenge to program projects.
HOUSING PRIVATIZATION
Question. The GAO also found deficiencies with the management of
Army and Air Force housing privatization projects, including lower than
anticipated occupancy rates.
Would you comment on what you are doing to improve housing
requirement analyses and oversight?
Answer. The Government Accountability Office (GAO) Report on
Military Housing, Management Issues Require Attention as the
Privatization Program Matures, states ``we found that the Army and the
Air Force have robust, well-developed portfolio oversight programs to
help top management monitor implementation of their privatization
programs. Both of these services collected and analyzed detailed
performance information on each project.'' The report further states
``the Army and the Air Force also prepared quarterly portfolio summary
reports, which monitored project execution, analyzed trends,
highlighted current and potential performance issues, and documented
recent and planned actions to address any project concerns.''
Several projects in the Air Force portfolio have occupancy levels
less than originally projected. As the GAO report indicates, this is
due to several factors, one being accurate determination of housing
requirements.
Most of our privatization Housing Requirement and Market Analysis
(HRMA) documents were published in 2003. We are now updating the HRMAs
at bases scheduled for privatization just prior to solicitation. The
new housing requirement will be included in the request for proposals
(RFP). This will ensure the developer bids on the most current
anticipated housing requirement for each privatization effort.
______
Questions Submitted by Senator Dianne Feinstein
MC CLELLAN AFB
Question. The nationwide need for BRAC environmental cleanup
funding is great. I have worked very hard to increase the level of BRAC
funding to ensure that, despite other pressures on the Federal budget,
cleanup schedules do not fall behind. It is imperative that we keep the
promises made to these local communities when their bases were closed.
With respect to McClellan, I am troubled that the funds intended for
McClellan are going elsewhere and in result this is putting McClellan
at a clear disadvantage. For example, in fiscal year 2006 $37.4 million
was required for ongoing cleanup efforts at McClellan. However, the Air
Force Real Property Agency, and the Air Force, have stated that they
expect to use only $22.7 million of these required funds.
Where is the remaining $14.7 million being spent?
Answer. Based on previous inquiries from the committee staff, we
believe your reference to $37.4 million is a transposition error and
should read $34.7 million. We framed our response based upon our $34.7
million reference.
McClellan received $31.9 million of the $34.7 million requirement.
The fiscal year 2006 requirement was funded across multiple years. We
had the opportunity to forward fund $9.2 million of the fiscal year
2006 activity, funded through fiscal year 2005 and prior year funds,
and we did so to accelerate the project. We then funded an additional
$22.7 million with fiscal year 2006 appropriations, for a total of
$31.9 million. As on all major Air Force projects, we continually look
for cost savings opportunities. As relates to the fiscal year 2006
activities at McClellan, our environmental engineering team was able to
generate $2.6 million in savings opportunities to date. We anticipate
an additional $200,000 in contract savings as well, bringing the total
to $34.7 million. These savings represent permanent reductions on cost
of the overall project, directly benefiting the taxpayer.
Question. Can you please provide the Committee with a timetable and
full accounting of past and projected BRAC funding for this site
through the completion of the remediation process.
Answer. Thank you, Ma'am, for your continued commitment to BRAC
clean up funding. We appreciate the long-term view and continued
emphasis on our program.
[Millions of dollars]
------------------------------------------------------------------------
Fiscal year Amount
------------------------------------------------------------------------
2001.................................................... 25.7
2002.................................................... 39.1
2003.................................................... 20.1
2004.................................................... 26.3
2005.................................................... 37.1
2006.................................................... 22.7
2007.................................................... 25.1
2008.................................................... 33.5
2009.................................................... 52.1
2010.................................................... 71.4
2011.................................................... 72.2
------------------------------------------------------------------------
Fiscal year 2001-fiscal year 2005 obligated amounts by execution year
for McClellan AFB.
Source: DFAS, as of March 31, 2006.
The Air Force is currently on target to obligate $22.7 million for
McClellan in fiscal year 2006 and $25.1 million in fiscal year 2007 as
noted in the fiscal year 2007 President's Budget request.
The current Air Force estimates for fiscal year 2008-11 and the
remaining cost for completion (fiscal year 2012 to fiscal year 2034)
estimate of $415.7 million were recently published in the Defense
Environmental Programs Annual Report to Congress fiscal year 2005
(page. J-1-50). These estimates are likely to change as the Air Force
is pursuing initiatives that are expected to impact these estimates and
the funding distribution over time. The Air Force is currently in the
annual cost preparation and validation cycle, which will result in
revised numbers to reflect these initiatives. The initiatives are:
--62-Acre Pilot Privatization Project.--McClellan has been working
with the County of Sacramento and regulatory agencies to
execute environmental cleanup of 62 acres using a Firm Fixed
Price Privatization agreement. Agreement in principle has been
reached and efforts are underway to complete documentation to
execute the agreement by the end of calendar year 2006. The Air
Force prefers privatization, because it reduces and controls
cost, speeds property transfer, and links the cleanup with
property development activities. This pilot project will serve
as the template for future privatization discussions for the
remainder of the base.
--Focused Strategic Sites Record of Decision.--A Feasibility Study
and Proposed Plan are in preparation for the 11 highest cost
sites on the former McClellan AFB. These sites represent
approximately 38 percent of the McClellan cleanup cost. Costs
vary depending on cleanup alternatives, but the Feasibility
Study shows that environmentally protective remedies are
available at costs less then currently projected. The Record of
Decision is scheduled for
--Integrated Air Force Real Property Agency BRAC Master Plan.--The
Air Force is in the final stage of developing revised cleanup
and property disposal plans that will restructure cleanup
program execution. The plans will alter traditional execution
approaches, and identify streamlined methods to accomplish the
work. The preferred alternative for most bases is cleanup by
privatization, or multi-base Guaranteed Fixed Price Remediation
(GFPR) contracts. The Air Force has seen success at sites such
as the Davis Transmitter site where cost and time to clean up
were significantly reduced through GFPR and introducing new
technologies. These plans are scheduled for completion and
agency approval during summer 2006.
CONCLUSION OF HEARINGS
Senator Hutchison. That concludes our questions. I thank
all of you for making very good presentations and we look
forward to working with you through the year. The meeting is
recessed.
[Whereupon, at 3:46 p.m., Tuesday, May 9, the hearings were
concluded, and the subcommittee was recessed, to reconvene
subject to the call of the Chair.]
LIST OF WITNESSES, COMMUNICATIONS, AND PREPARED STATEMENTS
----------
Page
Allard, Senator Wayne, U.S. Senator From Colorado, Statements of. 5, 83
Anderson, Hon. William C., Assistant Secretary of the Air Force,
Installations, Environment, and Logistics, Department of the
Air Force, Department of Defense............................... 109
Prepared Statement of........................................ 110
Questions Submitted to....................................... 129
Cooper, Daniel L., Under Secretary for Benefits, Department of
Veterans Affairs............................................... 1
Craig, Senator Larry, U.S. Senator From Idaho, Prepared Statement
of............................................................. 32
Eastin, Hon. Keith E., Assistant Secretary of the Army,
Installations and Equipment, Department of the Army, Department
of Defense..................................................... 87
Prepared Statement of........................................ 87
Questions Submitted to....................................... 125
Feinstein, Senator Dianne, U.S. Senator From California:
Questions Submitted by.......................51, 122, 125, 127, 130
Statements of................................................ 2, 58
Grone, Philip W., Deputy Under Secretary of Defense
(Installations and Environment), Department of Defense......... 57
Prepared Statement of........................................ 62
Question Submitted to........................................ 122
Statement of................................................. 61
Henke, Robert J., Assistant Secretary for Management, Department
of Veterans Affairs............................................ 1
Hutchison, Senator Kay Bailey, U.S. Senator From Texas:
Opening Statement of......................................... 57
Questions Submitted by.................................48, 122, 129
Statement of................................................. 1
Johnson, Senator Tim, U.S. Senator From South Dakota:
Prepared Statement of........................................ 4
Statement of................................................. 4
Jonas, Hon. Tina W., Under Secretary of Defense (Comptroller),
Department of Defense.......................................... 57
Prepared Statement of........................................ 60
Statement of................................................. 59
Landrieu, Senator Mary L., U.S. Senator From Louisiana:
Prepared Statement of........................................ 8
Questions Submitted by....................................... 52
McClain, Tim S., General Counsel, Department of Veterans Affairs. 1
McConnell, Senator Mitch, U.S. Senator From Kentucky:
Prepared Statement of........................................ 4
Questions Submitted by....................................... 50
Murray, Senator Patty, U.S. Senator From Washington, Statement of 6
Nicholson, Hon. R. James, Secretary, Department of Veterans
Affairs........................................................ 1
Prepared Statement of........................................ 12
Statement of................................................. 9
Penn, Hon. B.J., Assistant Secretary of the Navy, Installations
and Environment, Department of the Navy, Department of Defense. 95
Prepared Statement of........................................ 96
Questions Submitted to....................................... 127
Perlin, Jonathan B., Under Secretary for Health, Department of
Veterans Affairs............................................... 1
Tuerk, William F., Under Secretary for Memorial Affairs,
Department of Veterans Affairs................................. 1
SUBJECT INDEX
----------
DEPARTMENT OF DEFENSE
Page
Army Family Housing:
Construction (AFHC).......................................... 93
Operations (AFHO)............................................ 93
Additional Committee Questions................................... 122
Army Modular Force............................................... 89
BRAC 2005:
Budget....................................................... 90
Implementation............................................... 106
Strategy................................................. 89
Base Realignment and Closure (BRAC)..............................60, 88
Projects..................................................... 129
Property Appraisals........................................122, 128
Business Plan..................................................122, 125
Environment...................................................... 104
Energy Conservation.............................................. 124
Environmental Cleanup Acceleration............................... 127
Facilities Management............................................ 100
Global Rebasing.................................................. 123
Homeowners Assistance Fund, Defense.............................. 94
Housing.......................................................... 101
Privatization.........................................128, 127, 130
Hurricane Recovery Efforts....................................... 96
Infrastructure Quality........................................... 88
Integrated Global Presence and Basing Strategy (IGPBS)........... 89
Korea..........................................................125, 129
Leveraging Resources............................................. 91
Military Construction............................................91, 98
Army......................................................... 91
National Guard........................................... 92
Reserve.................................................. 93
McClellan AFB.................................................... 130
Meeting the Execution Challenge.................................. 108
Military Construction and Family Housing Overview................ 60
Operation and Maintenance........................................ 94
Prior BRAC Cleanup & Property Disposal........................... 105
Point Loma, California........................................... 127
Prior BRAC....................................................... 90
Stationing....................................................... 88
Strategic Priorities............................................. 60
The Navy's Investment in Facilities.............................. 97
The Way Ahead.................................................... 90
Transforming Installations While the Army is at War.............. 87
DEPARTMENT OF VETERANS AFFAIRS
Additional Committee Questions................................... 48
Bellingham, Washington........................................... 44
Capital (Construction and Grants to States)...................... 19
Claims Processing................................................ 37
General Operating Expenses....................................... 17
Grants for State Extended Care................................... 32
Gulf War Research Data........................................... 45
Information Technology Services.................................. 19
Information Technology Systems Consolidation..................... 35
Medical:
And Prosthetic Research...................................... 20
Care......................................................... 13
Research..................................................... 16
Services Reprogramming....................................... 41
Mental Health.................................................... 30
Funding...................................................... 42
National Cemetery Administration.................................18, 24
New Orleans Replacement Hospital................................. 30
OIF/OEF Veterans.................................................33, 42
Post-Traumatic Stress Syndrome................................... 21
Proposed Legislation on Fees and Copayments...................... 21
Quarterly Reporting to Congress.................................. 34
Rio Grande Valley, Texas......................................... 36
Rocky Mountain Region Colorado................................... 23
Standardizing Diabetes Monitoring Equipment...................... 46
Tribal Mental Health............................................. 44
VA:
Budget....................................................... 38
Healthcare................................................... 26
Model........................................................ 26
Veterans Integrated Service Network 20........................... 47
-