[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]




                         [H.A.S.C. No. 110-24]

                                HEARING

                                   ON
 
 NATIONAL DEFENSE AUTHORIZATION ACT FOR FISCAL YEAR 2008

                                  AND

              OVERSIGHT OF PREVIOUSLY AUTHORIZED PROGRAMS

                               BEFORE THE

                      COMMITTEE ON ARMED SERVICES

                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                MILITARY PERSONNEL SUBCOMMITTEE HEARING

                                   ON

           VIEWS OF MILITARY ADVOCACY AND BENEFICIARY GROUPS

                               __________

                             HEARINGS HELD

                           MARCH 1, 15, 2007


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                    MILITARY PERSONNEL SUBCOMMITTEE

                     VIC SNYDER, Arkansas, Chairman
MARTY MEEHAN, Massachusetts          JOHN M. McHUGH, New York
LORETTA SANCHEZ, California          JOHN KLINE, Minnesota
SUSAN A. DAVIS, California           THELMA DRAKE, Virginia
NANCY BOYDA, Kansas                  WALTER B. JONES, North Carolina
PATRICK J. MURPHY, Pennsylvania      JOE WILSON, South Carolina
CAROL SHEA-PORTER, New Hampshire
                 Debra Wada, Professional Staff Member
                 John Chapla, Professional Staff Member
                   Margee Meckstroth, Staff Assistant
                     Joseph Hicken, Staff Assistant























                            C O N T E N T S

                              ----------                              

                     CHRONOLOGICAL LIST OF HEARINGS
                                  2007

                                                                   Page

Hearings:

Thursday, March 1, 2007, Fiscal Year 2008 National Defense 
  Authorization Act--Views of Military Advocacy and Beneficiary 
  Groups.........................................................     1
Thursday, March 15, 2007, Fiscal Year 2008 National Defense 
  Authorization Act--Views of Military Advocacy and Beneficiary 
  Groups.........................................................    17

Appendix:

Thursday, March 1, 15, 2007......................................    43
                              ----------                              

                        THURSDAY, MARCH 1, 2007
FISCAL YEAR 2008 NATIONAL DEFENSE AUTHORIZATION ACT--VIEWS OF MILITARY 
                    ADVOCACY AND BENEFICIARY GROUPS
              STATEMENTS PRESENTED BY MEMBERS OF CONGRESS

McHugh, Hon. John M., a Representative from New York, Ranking 
  Member, Military Personnel Subcommittee........................     2
Snyder, Hon. Vic, a Representative from Arkansas, Chairman, 
  Military Personnel Subcommittee................................     1

                               WITNESSES

Barnes, Joseph L., National Executive Secretary, Fleet Reserve 
  Association; Co-Chairman, The Military Coalition...............     2
Becker, F. Jed, Vice Chairman, Armed Forces Marketing Council....    11
Hanson, Capt. Marshall (Ret.), Legislative Director, Reserve 
  Officers Association...........................................     4
Jones, Rick, Legislative Counsel, National Military Veterans 
  Alliance, and Director of Legislative Affairs, National 
  Association for Uniformed Services.............................     5
McAlister, Douglas B., Chairman--American Logistics Association..    13
Raezer, Joyce Wessel, Chief Operating Officer, National Military 
  Family Association.............................................     7
Strobridge, Col. Steven P. (Ret.), Director, Government 
  Relations, Military Officers Association of America, Co-
  Chairman, The Military Coalition, U.S. Air Force...............     9

                                APPENDIX

Prepared Statements:

    Becker, F. Jed...............................................    85
    McAlister, Douglas B.........................................   100
    McHugh, Hon. John M..........................................    49
    Raezer, Joyce Wessel.........................................    51
    Snyder, Hon. Vic.............................................    47

Documents Submitted for the Record:

    Reserve Officers Association.................................   194
    The Military Coalition presented by Col. Steven P. 
      Strobridge, Joseph L. Barnes, and Joyce Wessel Raezer......   115
    The National Military and Veterans Alliance presented by Rick 
      Jones and Capt. Marshall Hanson............................   169

Questions and Answers Submitted for the Record:

    Mrs. Drake...................................................   219
    Dr. Snyder...................................................   209
                              ----------                              

                        THURSDAY, MARCH 15, 2007
FISCAL YEAR 2008 NATIONAL DEFENSE AUTHORIZATION ACT--VIEWS OF MILITARY 
                    ADVOCACY AND BENEFICIARY GROUPS
              STATEMENTS PRESENTED BY MEMBERS OF CONGRESS

McHugh, Hon. John M., a Representative from New York, Ranking 
  Member, Military Personnel Subcommittee........................    17
Snyder, Hon. Vic, a Representative from Arkansas, Chairman, 
  Military Personnel Subcommittee................................    17

                               WITNESSES

Barnes, Joseph L., National Executive Secretary, Fleet Reserve 
  Association....................................................     2
Becker, F. Jed, Vice Chairman, Armed Forces Marketing Council....    11
Hanson, Capt. Marshall (Ret.), Legislative Director, Reserve 
  Officers Association...........................................     4
Jones, Rick, Legislative Counsel, National Military Veterans 
  Alliance, and Director of Legislative Affairs, National 
  Association for Uniformed Services.............................     5
Molino, John, President, American Logistics Association..........    23
Raezer, Joyce Wessel, Chief Operating Officer, National Military 
  Family Association.............................................     7
Strobridge, Col. Steven P. (Retired), Director, Government 
  Relations, Military Officers Association of America, U.S. Air 
  Force..........................................................     9





















FISCAL YEAR 2008 NATIONAL DEFENSE AUTHORIZATION ACT--VIEWS OF MILITARY 
                    ADVOCACY AND BENEFICIARY GROUPS

                              ----------                              

                  House of Representatives,
                       Committee on Armed Services,
                           Military Personnel Subcommittee,
                           Washington, DC, Thursday, March 1, 2007.
    The subcommittee met, pursuant to call, at 2:05 p.m., in 
room 2212, Rayburn House Office Building, Hon. Vic Snyder 
(chairman of the subcommittee) presiding.

  OPENING STATEMENT OF HON. VIC SNYDER, A REPRESENTATIVE FROM 
      ARKANSAS, CHAIRMAN, MILITARY PERSONNEL SUBCOMMITTEE

    Dr. Snyder. The hearing will come to order.
    We are sitting here this afternoon at 2:03 or 2:04 with the 
prospect of a series of votes coming up at, we think, the 2:30-
ish range. And so, what we thought we would do is kind of get 
right with your opening statements, and, with a little luck, we 
will get through your opening statements.
    This was the text of your written statements and I want to 
say two things in my introductory comments.
    First of all, I appreciate the detail and it really brought 
home to me, looking over these statements, the breadth of 
issues that military people and their families have to face, 
but then, correspondingly, the breadth of issues that this 
Congress, representing the American people, need to face in 
order to be sure that we are doing everything we can for our 
military families and retirees.
    So I appreciate the detail that some of you went into in 
these statements. It is helpful.
    The second thing is, we are doing this a little bit 
different this year, and Mr. McHugh and I have talked about 
some of these differences, but we decided to have you all come 
in on this panel as a group.
    Earlier in the year, as you may recall, in past years, we 
have added on sometimes certain issues and have you respond to, 
somebody respond to education or health care, whatever.
    We thought that having you come in earlier in the year with 
these extensive statements that you have provided us may be 
helpful as we move forward toward the defense bill, in terms of 
shaping issues that we may confront. So that was the purpose of 
doing it this way.
    So we appreciate you all being here.
    I want to formally introduce everyone that is here.
    Mr. McHugh. Let me recognize Mr. McHugh before I introduce 
the panel.
    [The prepared statement of Dr. Snyder can be found in the 
Appendix on page 47.]

  STATEMENT OF HON. JOHN M. MCHUGH, A REPRESENTATIVE FROM NEW 
     YORK, RANKING MEMBER, MILITARY PERSONNEL SUBCOMMITTEE

    Mr. McHugh. Thank you, Mr. Chairman. I apologize to both 
our distinguished panel and to you, Mr. Chairman, and the other 
members, for running a bit late. And I don't want to delay us 
further with a long statement.
    This is, as the chairman noted, a little bit different 
approach. I see many, if not friendly, I hope they are 
friendly, but know they are familiar faces. And to those old 
and new, we are deeply appreciative of your being here.
    You are listed as advocacy groups. You do a great job in 
that regard, but more than that, you are an invaluable window 
of light, if you will, between those of us who have the honor 
of sitting on this panel, this Armed Services Committee in the 
Congress, and to those individuals that you represent and the 
interests, more importantly, that lie behind them.
    And we thank you for being here and for sharing that 
insight with us.
    Beyond that, Mr. Chairman, I just ask that my remarks be 
entered in their entirety to the official record, and I would 
yield back to you.
    [The prepared statement of Mr. McHugh can be found in the 
Appendix on page 49.]
    Dr. Snyder. Without objection.
    Let me formally introduce you.
    Mr. Joseph Barnes, the national executive secretary for the 
Fleet Reserve Association; Mr. Marshall Hanson, from the 
Reserve Officers Association; Rick Jones, from the National 
Association for Uniformed Services; Joyce Raezer, National 
Military Family Association; Steve Strobridge, the Military 
Officers Association of America; Jed Becker, the Armed Forces 
Marketing Council; and, Doug McAlister, from the American 
Logistics Association.
    And if you all just could testify in that order, that would 
be just fine.
    Mr. Barnes, we will begin with you.

 STATEMENT OF JOSEPH L. BARNES, NATIONAL EXECUTIVE SECRETARY, 
 FLEET RESERVE ASSOCIATION; CO-CHAIRMAN, THE MILITARY COALITION

    Mr. Barnes. Thank you. Mr. Chairman, Mr. McHugh and 
distinguished members of the subcommittee, thank you for this 
opportunity to present the concerns of the military coalition 
advocacy groups.
    My name is Joe Barnes, and I am the national executive 
secretary for the Fleet Reserve Association and the enlisted 
organization co-chair of the Military Coalition (TMC).
    In the interest of time, I will summarize concerns about 
end-strength, compensation and other active-duty force benefits 
and my colleagues will follow addressing guard/reserve issues, 
retiree survivor concerns, family issues and health care.
    Sustaining adequate, active guard and reserve end-strengths 
to effectively prosecute the war effort and other demanding 
operational commitments throughout the world is very important 
and TMC urges strong support for the Administration's request 
for significant permanent increases for the Army and Marine 
Corps in fiscal year 2008 and beyond.
    Wearing down the force contributes to serious morale, 
readiness and retention challenges. And the coalition remains 
concerned about the Air Force and Navy's ambitious end-strength 
reductions.
    Restoring military pay comparability is a top priority and, 
in recent years, Congress reversed the practice of capping 
annual pay raises below the employment cost index (ECI).
    Despite significant progress on military compensation 
levels, a four percent pay gap remains.
    Basing military pay in the 70th percentile of private-
sector pay for similarly aged, experienced and educated workers 
is one useful reference point. However, military service is 
unique and payments should be monitored and additional target 
raises concerned as needed to achieve that standard.
    The coalition appreciates your role in the House approving 
the 2.7 percent active-duty pay hike last year, which was .5 
percentage point above the ECI and notes that the final 2.2 
percent pay increase enacted for the current fiscal year is the 
lowest in 13 years.
    There has been significant progress to increase housing 
allowances in recent years, thanks, in large part, to the work 
of this distinguished subcommittee.
    Housing standards, however, need to be revised to more 
appropriately reflect where personnel are living. For example, 
only E-9s, which comprise one percent of the enlisted force, 
are eligible for sufficient Basic Allowance for Housing (BAH) 
for single-family detached homes.
    The development of policy with regard to implementing the 
predatory lending cap for loans to military personnel and their 
families has prompted a major public relations campaign by the 
financial industry, intent on rolling back the 36 percent limit 
and other restrictions before they go into effect.
    The coalition strongly opposes any changes to the statutory 
provisions on this issue enacted in the fiscal year 2007 
National Defense Authorization Act.
    Despite progress to improve the Permanent Change of Station 
(PCS) process, including the implementation deadline for full 
replacement value for damaged household goods, inequities 
remain, including mileage rates, which have not been adjusted 
since 1985.
    And unlike Federal civilians, military personnel must make 
house-hunting trips at their own expense.
    In addition, authority is needed to ship a second privately 
owned vehicle (POV) at government expense to accompany overseas 
assignments and to authorize a dislocation allowance for 
service members completing their final change of station upon 
retirement.
    The coalition appreciates your attention to the need, the 
reform of the Montgomery Government Issue Bill (MGIB), Mr. 
Chairman and other members of the subcommittee, and supports 
the total force concept in order to provide equity for service 
being rendered by the guard and reserve personnel.
    Finally, the coalition remains committed to adequate 
funding to ensure access to the commissary benefit for all 
beneficiaries and appreciates this distinguished subcommittee's 
effective oversight of this important benefit.
    Thank you again for the opportunity to present our 
recommendations and I look forward to answering any questions 
you may have.
    [The joint prepared statement of Mr. Barnes, Col. 
Strobridge, and Mrs. Raezer can be found in the Appendix on 
page 115.]
    Dr. Snyder. Thank you.
    Mr. Hanson.

    STATEMENT OF CAPT. MARSHALL HANSON (RET.), LEGISLATIVE 
             DIRECTOR, RESERVE OFFICERS ASSOCIATION

    Mr. Hanson. Thank you, Mr. Chairman, Mr. McHugh and members 
of the subcommittee. The National Military and Veterans 
Alliance appreciates this opportunity to talk about guard and 
reserve issues.
    The reserve force has changed. Pilots and crews are flying 
into the war zone for their weekend drill. Other reservists are 
being asked to de-mine. Twenty-four drill days, with 15 days of 
annual training, to provide active-duty command support during 
a single period.
    Officers and enlisted are traveling halfway across this 
continent to go to their reserve stations because of base 
reallignment and closure (BRAC) and pay billet cuts.
    With an increased tempo, the associations question 
continued cuts in reserve end-strength.
    Pentagon leadership thinks that cash incentives will be a 
force multiplier that gets more work out of the average 
reservist. In addition to sending these young men and women to 
war, some want these reservists to work 80 or more days a year 
in a drilling reserve capacity.
    Yet, despite asking the individual reservists to work 
longer, there is still a statute of limitation on retirement 
credit that a reservist can earn. We hope that this can be 
changed.
    Pentagon planners recognize what a bargain the guard and 
reserve is. There are savings in the infrastructure and 
overhead costs. Most pay and benefits are given on a 
participating basis only. Retirement costs are also typically 
one-quarter of an active-duty retirement.
    TRICARE Reserve Select is supported by cost-sharing from 
reservists, with full TRICARE benefits only starting at age 60.
    Guardsmen and reservists know that they are a bargain and 
they also know that they are now being asked to do the same job 
as their active-duty counterparts. Many within the reserve 
forces are sensitive to the difference in active and reserve 
pay compensation.
    This is why issues, such as early retirement and continuity 
of health care, have become significance to reserve component 
(RC) members. Such issues have become symbols of fairness and 
parity. While reservists know that they can't ask for equal 
compensation, they ask that it will at least be equitable.
    For example, if a reserve member meets training, medical, 
duty hour standards, as set by the active duty, they should 
receive the same special duty and incentive pay as their 
active-duty equivalents rather than be paid a prorated amount.
    Also, if they do the same tours of duty, they should 
receive the same Montgomery Government Issue Bill transitional 
benefits.
    In these modern times, the risk is that too many guardsmen 
and reserve members may see themselves as cogs in a machine. 
Referred to as human capital by Department of Defense (DOD) 
planners, the incentives that reservists are offered are more 
enticement than inspiration, paying upfront cash to motivate 
our young patriots.
    While many military leaders praise Secretary Gates's new 
mobilization policy, many reservists have concerns. A policy 
change from cumulative to consecutive caught many by surprise. 
This coupled with a new paradigm change from a strategic to an 
operational reserve have many re-evaluating their career plans.
    The prospect of serving one year off and five years off, 
while attractive to Pentagon planners, is not as attractive to 
civilian employers.
    We urge the subcommittee to influence the Ways and Means 
Committee to gain tax relief for employers of the guard and 
reserve before we lose employer support.
    Employers and family pressures are the top two reasons 
reservists leave. We also urge support for family programs, as 
well.
    The policy changes put forward by the Pentagon is changing 
the nature of the reserve component. It will force reservists 
to choose between an upwardly mobile civilian career and being 
in the military reserve.
    In order to retain a diversified force, benefit programs 
need to be put into place to encourage people to stay.
    The guard and reserve is the true volunteer force. 
Recruiting and retention will be the long-term metric.
    Thank you for the opportunity to speak. Written testimony 
has been submitted by both the National Military and Veterans 
Alliance and the Military Coalition with suggested legislation. 
Each hopes we can help the subcommittee find the correct 
solutions.
    I am ready for any questions.
    [The joint prepared statement of Mr. Hanson and Mr. Jones 
can be found in the Appendix on page 169.]
    Dr. Snyder. Thank you, Mr. Hanson.
    Mr. Jones.

STATEMENT OF RICK JONES, LEGISLATIVE COUNSEL, NATIONAL MILITARY 
    VETERANS ALLIANCE, AND DIRECTOR OF LEGISLATIVE AFFAIRS, 
          NATIONAL ASSOCIATION FOR UNIFORMED SERVICES

    Mr. Jones. Chairman Snyder, Ranking Member McHugh, members 
of the subcommittee, thank you very much for the opportunity to 
present testimony on behalf of the alliance.
    I will talk today on survivor and retirement issues. The 
alliance strongly supports action that would end the offset 
that is applied to the military survivor benefit plan due to 
receipt of veterans' dependency and indemnity compensation 
(DIC).
    Michelle Fitz-Henry, the surviving spouse of Senior Chief 
Petty Officer Theodore Fitz-Henry, tells us, ``The service men 
and women who die in service to our country and are no longer 
alive to fight for what meant most to them, their families,'' 
she adds, ``a grateful nation must pick up that fight.''
    To reduce the statement of Administration policy (SAP) 
dollar-for-dollar offset against DIC compensation, which is 
given for an entirely different reason, is the right thing to 
do. Fixing this problem is an issue of basic fairness and your 
action to correct this significant inequity would be long 
remembered as an act of decency and compassion.
    Mr. Chairman, in 1999, Congress reduced the cost of the 
survivor benefit plan when it enacted the paid-up provisions. 
However, there was an inherent inequity contained in the 
language of the approved bill.
    Congress delayed the effective date of this provision until 
October 2008. Some of the members of our organizations have 
been paying premiums for well more than 30 years. In fact, 
Sylvan Ash of California, retired from the Army, informs us 
that he elected to receive a reduced amount of retired pay in 
order to establish annuities for his survivors, that under the 
Uniformed Services Contingency Option Act of 1953, which of 
course, has been amended and renamed in 1961 was the retired 
servicemen's family protection plan and, later, the plan that 
we now have, the survivor benefit plan.
    We urge the subcommittee to accelerate the paid-up 
provision so retirees already qualified and are at least 70 
years old and have paid premiums for more than 30 years are 
required no longer to pay premiums.
    Before I speak about concurrent receipt, I would like to 
raise two concerns related to retirement.
    The alliance is seriously concerned about the situation at 
Walter Reed Army Hospital. The building, we are told, is being 
fixed, but there is a growing caseload of soldiers being placed 
on medical hold.
    We need quality decisions on the future of these wounded 
warriors, but we must never allow these valiant men and women 
to drift in limbo or fall through the cracks of bureaucratic 
neglect.
    We are also concerned that in the midst of the war, the 
number of soldiers approved for permanent disability retirement 
has dropped by two-thirds from 642 in 2001, prior to the war, 
to only 209 in 2005.
    This occurs at the same time as the number of veterans 
using the Department of Veterans Affairs (VA) for prosthetics, 
sensory aids, and related services has increased more than 70 
percent over the same period.
    We urge the committee to take a look at procedures for 
permanent disability. Mr. Chairman, progress has been made in 
overturning the bar on disabled military retirees from 
collecting their full retirement for serving a minimum of 20 
years in the service. Changes in the old way have moved policy 
in the right direction.
    Yet, many more disabled retirees await their inclusion. 
More can be done and it should. The alliance strongly supports 
extension of concurrent receipt to take care of service members 
whose military career was cut short, forced to retire medically 
before attaining 20 years of service.
    These service personnel have sacrificed greatly to protect 
us. Their injuries have caused them to prematurely end their 
military service. We believe these brave men and women deserve 
to get a better deal or to receive, at the very least, a better 
consideration.
    Mr. Chairman, we also support the full phase-in of 
concurrent receipt for individuals rated 100 percent disabled 
as a result of individual unemployability and we look forward 
to the time when the old policy on concurrent receipt is 
completely ended.
    Once accomplished, we will have met the challenge of 
establishing a clear policy of national recognition for those 
who become disabled in service to their nation.
    Mr. Chairman, we also believe that the subcommittee needs 
to take a hard look at the rising number of marriages and 
families that will be forfeits by the current war deployments 
and continued use of the same set of troops.
    Frankly, the same folks cannot do it year after year 
without a loss of their families. We support marriage, but we 
also recognize the reality of divorce, which is especially 
prevalent in the military.
    The military has unique challenges, long deployments, 
frequent moves. Dwell time is short. Involuntary deployments 
are rising. Now is really a good time for the subcommittee to 
focus on the importance of preserving the marriages and 
families of our service folks.
    The alliance also strongly urges this subcommittee to 
conduct hearings on needed changes in the Uniformed Services 
Former Spouses Protection Act. We need to both gather the 
information that is needed to make the appropriate changes and 
to ensure that threat issues are not further exacerbated.
    We encourage your review of this important subject and look 
forward to your actions of the most important of the Uniformed 
Services Former Spouses Protection Act related issues.
    Mr. Chairman, thank you again very much for the opportunity 
to testify.
    [The joint prepared statement of Mr. Jones and Mr. Hanson 
can be found in the Appendix on page 169.]
    Dr. Snyder. Thank you.
    Mrs. Raezer.

  STATEMENT OF JOYCE WESSEL RAEZER, CHIEF OPERATING OFFICER, 
              NATIONAL MILITARY FAMILY ASSOCIATION

    Mrs. Raezer. Dr. Snyder, Representative McHugh and members 
of the subcommittee, I want to thank you for the opportunity to 
share the Military Coalition's concerns about issues affecting 
military families.
    We are grateful to you for last year's many legislative 
provisions that will help families, including the increase in 
DOD supplement to Impact Aid, improvements to casualty 
assistance, and support for wounded service members and their 
families.
    The good news is that programs to support families exist at 
many levels and we want to thank you for your support for so 
many of those innovative programs that serve both military 
families who live on an installation and some of our more 
isolated guard and reserve families.
    The bad news for our nation in this six-year war on terror 
is that the stressors on military families continue to grow. 
The Department of Defense must have the flexibility to meet 
families' emerging needs, including the ones that show up on 
the front page of the newspaper, the mandate to improve 
outreach to families and consistent levels of funding and 
staff.
    Unfortunately, resource issues continue to plague some of 
our basic installation support programs. Family centers, 
libraries and other quality-of-life programs should not have to 
cut staff or limit hours just when families need those services 
the most.
    These support services provide a community for families far 
from home, help them navigate through the challenges of 
military life, provide assistance to special needs family 
members, assist military spouses in gaining employment, and 
improve the financial literacy of service members and families.
    We also ask you to provide additional funding authority for 
respite and extended childcare, an issue where the demand 
continues to grow. Senior enlisted representatives of the 
services recently testified childcare remains one of the top 
quality-of-life issues for the troops that they talk with.
    Just as family readiness is imperative for service member 
readiness, the emotional well-being and mental health of 
service members is linked to that of their families.
    No need is greater for military family readiness in this 
environment than robust continuum of easily accessible and 
responsive mental health services, from stress management 
programs and definitive mental health counseling all the way 
through the therapeutic medical mental health care.
    Today, families report a shortage of providers and 
difficulties in accessing services across this continuum. 
Survivors of active-duty deaths cry out for grief counseling 
and more help for them and their children.
    The need for these services, unfortunately, will continue 
to grow. We ask you to ensure DOD has the resources it needs to 
provide access to a robust continuum of mental health support 
for families, as well as for service members, not only because 
it is the right thing to do, but also to retain those highly 
trained and qualified service members.
    A significant element of family readiness is the quality of 
education for military children. Both DOD and civilian schools 
educating military children must be able to meet the 
counseling, staffing and program challenges arising from new, 
ongoing and changed missions.
    We especially ask that you continue to authorize DOD 
funding of at least $50 million to supplement Impact Aid for 
civilian schools educating military children to help these 
districts provide the support these children need.
    As installations gain population due to BRAC or global 
rebasing, it is important facilities are in place to support 
them. The coalition urges the subcommittee to ensure robust 
family support and quality-of-life programs and facilities are 
in place before families arrive at the new installation and 
remain in place in closing installations until families leave.
    Families making these moves will, in many cases, be either 
recovering from a deployment or anticipating one soon. They 
don't need the additional stress of struggling to find housing, 
experiencing delays in obtaining health care, being unable to 
find childcare or having their children attend school in 
crowded facilities.
    This issue is also bigger than facilities. It also is 
staffing. We have to make sure that staff remains in place at 
closing installations until the families leave. We believe DOD 
may need additional authority to offer incentives to keep staff 
in place at these closing installations until the installations 
are actually closed.
    Because of the value commissaries add to the quality of 
life of the military community, the coalition is concerned that 
the patron-generated commissary surcharge trust fund may be 
come squeezed between rising construction costs and the need to 
build or expand facilities in communities anticipating growth.
    Since there is no more military construction funding to 
offset these new requirements, we appreciate the fact that the 
surcharge funding is there. However, this new construction must 
not come at the cost of maintaining existing facilities and, 
thus, degrading the benefit.
    We also remain concerned about the effects closures of 
military exchanges in Europe will have on the revenues used to 
fund many morale, welfare and recreation (MWR) programs and 
urge you to maintain oversight over the trends in these 
revenues.
    Mr. Chairman, the concern that you continue to show, you 
and the other members of the subcommittee continue to show 
sends an important message to service members and their 
families--Congress understands the link between military 
readiness and the quality of life of the military community.
    Strong families ensure a strong force. Thank you for your 
work in keeping that force strong.
    [The prepared statement of Mrs. Raezer and the joint 
prepared statement of Mrs. Raezer, Colonel Strobridge, and Mr. 
Barnes can be found in the Appendix on page 51 and 115.]
    Dr. Snyder. Thank you.
    Colonel Strobridge.

   STATEMENT OF COL. STEVEN P. STROBRIDGE (RET.), DIRECTOR, 
GOVERNMENT RELATIONS, MILITARY OFFICERS ASSOCIATION OF AMERICA, 
      CO-CHAIRMAN, THE MILITARY COALITION, U.S. AIR FORCE

    Colonel Strobridge. Mr. Chairman, Congressman McHugh and 
members of the subcommittee, my portion of the oral remarks 
will cover health care.
    Clearly, the biggest health care challenge is the $1.9 
billion cut in the TRICARE budget, from a budget standpoint 
anyway. In effect, it assumes that the subcommittee will 
approve all fee increases that the Pentagon proposed last year 
and do that effective October 1.
    We are grateful that the subcommittee rejected that plan 
last year and we are hopeful you will do that again.
    Simply put, we just don't agree that some arbitrary 
percentage of DOD's health costs should be shifted to 
beneficiaries. Frankly, the Defense Department isn't very good 
at managing its costs.
    Last year, the Administration actively opposed Congress's 
efforts to reduce retail pharmacy costs. For years, the 
Pentagon did little to promote the mail order pharmacy system.
    When military doctors deployed to Iraq, the regular 
patients get pushed to more expensive private-sector care. None 
of that is the beneficiaries' fault.
    Last year, we offered a list of 16 ways that the Department 
of Defense could cut costs without penalizing beneficiaries. A 
year later, we still haven't received answers why those 
initiatives couldn't be pursued.
    Beneficiaries shouldn't have to pay a price for that 
inaction.
    We think we have to get away from these arbitrary budget 
cut drills and establish in law, as a matter of principal, what 
health care benefits military people earn through a career of 
service and sacrifice.
    We have statutory standards for other compensation 
elements, such as retired pay, basic pay, housing and 
subsistence allowances, but on health care, much is left to the 
secretary's discretion.
    In the last two years, we have seen how that can 
destabilize budgets and morale, particularly in wartime. In 
this retention risk environment, the last thing that we should 
be doing is cutting military retirement benefits by up to 
$1,000 a year.
    The coalition strongly urges the subcommittee to put 
language in this year's defense authorization bill using 
Congressmen Edwards's and Jones's H.R. 579 and Senator 
Lautenberg's and Hagel's S. 604 as models to recognize in law 
that military retirees pay more than cash fees for their health 
care breach.
    Their decades of personal and family sacrifice constitute a 
heavy prepayment program that few Americans are willing to 
accept.
    The key principal in these bills is that, at most, military 
beneficiaries' health fees shouldn't rise in any year by a 
percentage that exceeds the percentage growth in their 
compensation.
    Before mandating new fees and more restrictions on 
beneficiaries, the government should maximize its own 
efficiency and explore positive incentive for cost-saving 
behaviors.
    We also urge you to adjust employer incentive restrictions 
adopted in last year's Defense Authorization Act that, starting 
next January, will inadvertently penalize many members whose 
employers use non-TRICARE-specific cash programs.
    We know you have asked for a secretarial interpretation of 
that language, but any such reading by the secretary can be 
changed at will. We think it is important to ensure that 
members are protected against discriminatory outcomes by 
statute rather than leaving it subject to interpretation.
    For guard and reserve members, we recommend an option to 
have the government subsidize premiums for employer-provided 
care during periods of mobilization. In the steady-state post-
war environment, the coalition believes this would be more 
practical for beneficiaries and more cost-effective for the 
government, as well.
    In the area of DOD and VA cooperation, we share your 
concern over perpetual interface problems between military and 
VA programs. We think fixing that is going to require creation 
of a joint transition office permanently staffed with DOD and 
VA personnel whose primary task is to make seamless transition 
a reality. That just can't be done as a part-time job.
    I was an Office of the Secretary of Defense (OSD) staff 
officer in the late 1980's and one of my goals at that point 
was to create an electronic separation document. I couldn't get 
it done before being reassigned and now, almost 20 years later, 
that is still on the drawing board.
    In the area of mental health, we applaud the subcommittee's 
attention to the challenges faced by service members and their 
families. We hope that you are going to do all you can to 
ensure central coordination and cross-feed to maximize returns 
between the many different programs that we have going on 
between the services, DOD and the VA.
    We also need extraordinary measures to train and retain 
enough trained mental health professionals to meet rapidly 
rising demands.
    Joyce mentioned the situation at Walter Reed. One of the 
big problems in fixing that is Walter Reed is closing. The 
people that we need to take care of those folks are looking for 
other jobs. We need to find ways to take care of those folks. 
We have got our most vulnerable people at a closing base and we 
all know how vulnerable closing bases are to funding problems, 
no matter how good our intentions.
    Last, but certainly not least, we urge your continued 
attention to ensuring beneficiary access to TRICARE 
participating providers. One key issue, obviously, is restoring 
a reasonable formula for TRICARE and Medicare payment levels 
for doctors.
    Another is protecting access for guard and reserve families 
who don't live near military facilities.
    Many other issues in the health care arena, but in the 
interest of moving on, I will close at that point. And, Mr. 
Chairman, that concludes my share.
    [The prepared statement of Colonel Strobridge, Mr. Barnes, 
and Mrs. Raezer can be found in the Appendix on page 115.]
    Dr. Snyder. Thank you, Colonel.
    Mr. Becker.

    STATEMENT OF F. JED BECKER, VICE CHAIRMAN, ARMED FORCES 
                       MARKETING COUNCIL

    Mr. Becker. Good afternoon, Mr. Chairman and distinguished 
members of the subcommittee. My name is Jed Becker, and I am a 
member of the Armed Forces Marketing Council, or the AFMC.
    I appreciate the opportunity to be here today to offer 
comments concerning the military resale system and the vital 
role it plays in supporting our troops and their families.
    As referenced, the AFMC is a nonprofit business league 
founded in 1969. A number of firms work on the behalf of 
manufacturers who provide consumer products to the military 
retail system around the world.
    Succinctly, the purpose of the council is to encourage the 
worldwide availability of quality consumer products at the best 
possible prices and value and to promote unity of effort in 
this endeavor through a cooperative working relationship among 
Congress, the military, and the supplier industry.
    Member firms are small, privately held businesses, formed 
in response to the need for efficient and centralized sales, 
marketing and merchandising services.
    In order to limit this statement, I have prepared a written 
statement and would ask that those comments are entered into 
the record.
    As backdrop, I would like to note that the military resale 
stands out as a most successful system. In simple terms, it 
works well. It is honest, efficient and responsive. Taxpayers, 
legislators and leaders throughout government can share in the 
pride of this outstanding success story.
    Mr. Chairman, this committee brings a clear legacy of 
prudence in protecting the value of the resale benefit. It has 
protected the system from unfounded reorganizations, while it 
was has correctly encouraged and supported the very competent 
resale operators along their driven path in their process of 
continuous improvement.
    In addition to the broad scope balance provided by your 
oversight, this committee has been effective in recognizing and 
seizing those opportunities at the margin. It has served to 
maximize the value of the benefit, while minimizing the expense 
to taxpayers.
    Looking forward, we would like to call your attention to a 
few matters on which we seek your support. Second destination 
transportation funding, Congress has passed legislation that 
mandates funding the costs of transporting American products to 
foreign base resale operations. Maintaining this commitment of 
is of vital importance to the well-being of military families.
    Your intelligence in directing continuity in this program 
is requested.
    Earlier in my comments, I noted that this committee has 
effectively seized many favorable opportunities at the margin. 
AFMC requests your attention to two such opportunities.
    First, we remind you that the antiquated Armed Services 
Exchange Regulation (ASER) restrictions limit the exchanges in 
terms of the merchandise they can sell. Of particular note, the 
restrictions placed on the sale of furniture and gemstones and 
the conditions under which they were placed.
    These conditions have changed dramatically over the years. 
We urge you to grant relief from these restrictions. Such 
relief would enhance the value of the exchange benefit to all 
qualified shoppers and would do so at no expense.
    Second, the AFMC believes you will find a high yield, no 
cost opportunity to reward our returning veterans for their 
devoted service by offering them transitional commissary and 
exchange benefits.
    Granting such privileges could be implemented simply and 
quickly and, best of all, would not impose any additional 
expense on taxpayers. Such a measure would prove to be prudent 
in the utilization of existing infrastructure, would generate 
incremental MWR dollars and Defense Commissary Agency (DeCA) 
surcharge dollars.
    Council members respectfully urge this committee to 
consider this proposal favorably.
    In closing, I would like to note that the military resale 
industry is fragile. Short-sighted plans disguised as 
innovation will continue to threaten its comprehensive 
efficiency.
    Most easily overlooked in the important and beneficial 
evolution is the fundamental appreciation for the power of two 
factors: the intelligence of our service members and their 
ability to recognize a marginalized benefit and, second, the 
failure to recognize that America is deriving service from 
resale system employees that exceeds their costs.
    With few exceptions, these are people of high order, 
serving those who defend our freedom. Measures that might break 
their spirit of purpose would bring a tragic loss to all of us.
    I am prepared for your questions.
    [The prepared statement of Mr. Becker can be found in the 
Appendix on page 85.]
    Dr. Snyder. Mr. McAlister, I think we have time for your 
opening statement here, but, sorry, everyone will run in a 
cloud of dust.

STATEMENT OF DOUGLAS B. MCALISTER, CHAIRMAN--AMERICAN LOGISTICS 
                          ASSOCIATION

    Mr. McAlister. Mr. Chairman and members of the 
subcommittee, the American Logistics Association (ALA) is most 
grateful to you for your strong leadership in preserving and 
improving commissary, exchange and MWR benefits for service 
members, military retirees and their families.
    I ask that my written statement be accepted into the record 
in its entirety.
    It is an honor to be here today as chairman of the board of 
the ALA, representing nearly 250 of America's leading 
manufacturers, 60 brokers, distributors, service companies, 
media outlets, and more than 1,400 individual members who are 
actively engaged in providing goods and services to the 
military resale and MWR activities.
    I want to reaffirm ALA's strong commitment to maintaining 
the commissary and exchange benefit as an integral part of the 
total non-pay compensation package for service members and 
their families.
    Our association actively supports and promotes programs 
that enhances qualify of life for our military.
    Today I would like to address three issues: base access, 
ASER and DeCA full funding.
    Mr. Chairman, I would like to call your attention to a 
highly sensitive issue within the military resale industry: 
base access.
    We understand and fully support the need for increased 
security on our military installations. We feel, however, that 
the Department of Defense has missed an affordable opportunity 
to implement a department-wide system that provides base access 
credentials for those non-DOD employees who do business on 
military installations on a frequent, often daily basis.
    As a result, military installations are looking for and 
selecting standalone solutions instead of capitalizing on the 
combined purchasing power of DOD's 1,100-plus locations.
    Individual military facilities are developing their own 
programs and entering into contractual relationships with 
sincere efforts to comply with the implementation schedule 
expressed in homeland security and other directives.
    Not surprisingly, installations seek to meet this 
requirement in a cost-neutral manner, passing the costs along 
to the individuals who apply for the credentials.
    Even small businesses working with commissaries, military 
exchanges and other quality-of-life enterprises will have many 
employees who call on multiple locations.
    The annual cost of individual base solutions is potentially 
thousands of dollars for small business and nearly $.75 million 
per year for large suppliers and brokers.
    While companies have planned to absorb a reasonable cost 
for a department-wide credential, this extreme additional 
expense will quickly find its way into the cost of goods.
    In effect, military families will be paying for their own 
base security. As prices go up in commissaries, exchanges and 
MWR activities, the value of the resale and quality-of-life 
benefit diminishes.
    ALA member companies are willing to pay a reasonable price 
for a credential that gains them access to the installation. 
The DOD common access card already does this for active-duty 
personnel, civilian employees and contractors.
    We urge Congress to ensure the Department of Defense 
expands access of the common credential program to civilian 
workers who support the military resale and MWR activities.
    DOD has the credential. Now we need a system in place to 
read the credential at the base access point.
    Also, we ask this subcommittee to ensure that the cost of 
these cards do not result in a burden on the uniformed service 
members and their families and that this program be moved 
forward so cards could be issued within six months.
    Our association actively supports and promotes programs 
that enhance the quality of life for military service members. 
Exchanges are a key component of DOD's quality-of-life 
programs.
    Unfortunately, authorized patrons continue to be limited in 
their choice of merchandise sold at exchanges. The Armed 
Service Exchange Regulation, ASER, delineates who is authorized 
to use the exchange benefit and what can or cannot be sold by 
the exchanges.
    We believe shoppers should have a choice, without 
restriction, on merchandise sold in exchanges. Military patrons 
should not be relegated to a second-class status relative to 
product choice and availability.
    Mr. Chairman, ALA is committed to preserving the value of 
the commissary benefit. It is widely recognized as a 
cornerstone of the quality-of-life benefits and a valued part 
of a service member's total compensation package.
    ALA supports cost savings and effective oversight and 
management. However, we remain vigilant about the unrelenting 
DOD pressure on DeCA to cut spending and squeeze additional 
efficiencies from its operations.
    More than any other agency of the Federal Government, DeCA 
deserves credit for its years of effective reform initiatives 
and improved business practices. We urge Congress to continue 
full funding for DeCA.
    Thank you, Mr. Chairman and members of the subcommittee, 
for providing industry this opportunity to present its views on 
these critically important topics.
    I will be happy to answer any questions.
    [The prepared statement of Mr. McAlister can be found in 
the Appendix on page 100.]
    Dr. Snyder. Thank you for all your testimony.
    Friends, we have got a problem with these votes. Mr. McHugh 
and I have been consulting here, and we have had to do this 
once before.
    We have, by our calculation, well over an hour of time that 
we will be over voting, and it will probably be inconvenient 
for some of you, but we think what we had better do is adjourn 
today and work on people's schedules as best we can, as soon as 
possible to come back and start out just with questions.
    We have five votes, plus some debate in the middle of that, 
with a motion to recommit, and, by congressional time, it will 
take longer.
    Between now and then, I have also asked Debra, working with 
our transcriptionist, we will also have transcribed your oral 
statements that you made before. And, without objection, your 
written statements today will be made a part of a record. Those 
will also be distributed to all the members.
    Mr. McHugh. If I may, Mr. Chairman?
    The chairman and I have talked about this. We do have 
precedent. This is really a tough decision for us, and I hope 
you understand.
    But in a very unusual way, perhaps you can see it as our 
being selfish, because truly this is an unusual panel and it is 
a broad-based panel. We have never structured it like this 
before. Frankly, we don't just want your input, we need your 
input.
    And our assessment is, given, as the chairman said, 
congressional time, were we to even ask you to stay and come 
back, the participation would dramatically drop off. It would 
not be the panel it should be, and you would not get the 
attention you need.
    We understand how difficult this will be, but we hope you 
are able to join us at another time when we can do justice to 
the issues and to the individuals that you represent.
    Dr. Snyder. And we are going to try to get that set as soon 
as we can.
    And, in fact, Debra, John, you may want to have some 
conversations today to see what possibilities are with that.
    I apologize for us having to do that. I don't see a good 
way to do this otherwise. But we will work to get your oral 
statements also transcribed.
    And now we had better move in our cloud of dust.
    The committee is adjourned.
    [Whereupon, at 2:46 p.m., the subcommittee was adjourned.]
FISCAL YEAR 2008 NATIONAL DEFENSE AUTHORIZATION ACT--VIEWS OF MILITARY 
                    ADVOCACY AND BENEFICIARY GROUPS

                              ----------                              

                  House of Representatives,
                       Committee on Armed Services,
                           Military Personnel Subcommittee,
                          Washington, DC, Thursday, March 15, 2007.
    The subcommittee met, pursuant to call, at 2:30 p.m., in 
room 2118, Rayburn House Office Building, Hon. Vic Snyder 
(chairman of the subcommittee) presiding.

  OPENING STATEMENT OF HON. VIC SNYDER, A REPRESENTATIVE FROM 
      ARKANSAS, CHAIRMAN, MILITARY PERSONNEL SUBCOMMITTEE

    Dr. Snyder. The hearing will come to order.
    We appreciate you all being here so much. I don't know, you 
all just may bring change to the world, because we had a 
situation on the House floor I am not sure we have had very 
much where we were waiting for the Appropriations Committee to 
finish and so the vote was held open for a long, long time.
    What I will do is defer to Mr. McHugh for any words he may 
have today and welcome, introduce you all. Neither John or I 
are going to do any formal opening statement. You already did 
your opening statements last time, and we will begin our 
questions.
    So, Mr. McHugh, any thoughts that you have.

  STATEMENT OF HON. JOHN M. MCHUGH, A REPRESENTATIVE FROM NEW 
     YORK, RANKING MEMBER, MILITARY PERSONNEL SUBCOMMITTEE

    Mr. McHugh. Thank you for your patience today but also 
returning.
    I made all my brilliant comments during the last session, 
Mr. Chairman; I will refer to those. So I am looking forward to 
the give and take.
    And I deeply appreciate the courtesies you have extended 
the committee with your patience here. Thank you.
    Dr. Snyder. And what I will do is introduce our witnesses.
    Mr. Joseph Barnes, the national executive secretary of the 
Fleet Reserve Association; Mr. Marshall Hanson, legislative 
director for the Reserve Officers Association; Rick Jones, the 
director of legislation for the National Association for 
Uniformed Services; Joyce Raezer, chief operating officer, 
National Military Family Association; Colonel Steve Strobridge, 
director of government relations for the Military Officers 
Association of America; Jed Becker, the vice chairman of the 
Armed Forces Marketing Council; and joining us today is John 
Molino, president of the American Logistics Association. And 
last time we met, you may recall, it was Doug McAlister that 
was with us.
    We appreciate you all being with us.
    In the course of this afternoon, and I will probably do it 
with this first question, but if something has happened since 
the last time you all gave your opening statements and you 
wanted to correct something, add something, we want you to have 
the opportunity to do that.
    My first question--and we are going to put ourselves on the 
five-minute clock here. You all don't worry about that clock, 
that is for our benefit, because with this large a panel, we 
want everyone to have an opportunity to chime in in any way 
they can.
    I would like, just starting at the left and just working 
our way across, given that we are a new Congress, the 
preliminary work is already going on, and we are past the 
preliminary stage, really, in terms of this year's defense 
bill. We are a nation at war. I think all Americans are aware 
of what our fiscal situation is and where we are at with 
national debt and deficit.
    Given all these realities and all the other ones our there 
that you all are aware of, let's just go down the line, what do 
you think the priorities ought to be for this Armed Services 
Committee and this Congress with this year's defense bill, from 
you all's perspective?
    Mr. Barnes. Mr. Chairman, I think, first and foremost, it 
is very important to take care of the personnel and adequately 
support the personnel that are prosecuting the war in Iraq and 
Afghanistan.
    The events of recent weeks with regard to what has 
transpired at Walter Reed Army Medical Center has sent a 
powerful message about what these personnel are encountering, 
primarily with transitioning between care on the DOD side and 
care within the Department of the Veterans Affairs. So I think 
that is overriding with everything.
    We have a very ambitious agenda with regard to the Fleet 
Reserve Association and also the Military Coalition, but I 
think top among that, major concerns, the adequacy of our end-
strengths to sustain the war effort and our demanding 
operational commitments.
    Number two, the compensation level, that is a high response 
issue with regard to surveys that we have done, interaction 
with active and reserve personnel.
    And probably, number three, the health-care benefit, 
adequately funding the DOD health-care plan. Because that, as 
with compensation, touches all personnel, their families, 
dependents and survivors.
    Dr. Snyder. Mr. Hanson.
    Mr. Hanson. Thank you, Mr. Chairman.
    In that I was asked to come here to talk about guard and 
reserve issues, I think I will focus on the priorities in that 
arena.
    The guard and reserve is the true volunteer force. After 
coming off of active duty and perhaps after a short period of 
obligatory service, most people continue in the guard and 
reserve careers on a choice basis that they make themselves, 
because it is basically their second career in addition to 
their civilian career as well.
    Because of this, I think one of the primary concerns we 
have with the guard and reserve community is retention and 
recruiting and that DOD has made many suggestions that we agree 
with but they are near-term incentives.
    And one of the things that we need to look at is long-term 
compensation packages, kind of a rucksack of benefits that an 
individual takes with them, whether they are on active duty or 
returning to the civilian job, such as continuity of health 
care or a retirement package that they can basically have some 
choices on.
    In addition, the other area of concern is to have the 
adequate resourcing to continue their training. With a lot of 
our guard and reservists basically going to war, as you have 
pointed out, and then returning, if we turn back to a drill 
hall where there is any classroom environment, this is going to 
have a direct effect on their retention, because they go from a 
very intense environment back to one with minimal support that 
is not a good situation.
    So we need to look at ways to maintain their readiness, 
maintain their training level and to find them the appropriate 
equipment to keep them up to speed and properly challenged back 
in the civilian reserve side of things, as they were when they 
were in a deployed status.
    Dr. Snyder. Mr. Jones.
    Mr. Jones. Mr. Chairman, our view of the number-one 
priority for this committee and in this Congress is to fight 
for a fair share of the Federal budget. In a $2.9 trillion 
budget, the Defense Department should have sufficient funds to 
manage all its programs, which would defend the country and 
provide the benefits for those who have defended the country 
previously.
    We recognize that over the past several years, the defense 
spending has been on a sharp decline, as a percentage of the 
gross national product. Historically, from the years 1970 to 
2000, that percentage of the gross national product has been 
nearly 5.7 percent. Recently, spending on defense is a little 
more than four percent.
    And we are beginning to see cracks throughout the system as 
defense starts to reprogram their funding. Last year, there was 
a lot of reprogramming--swimming pools closed, facilities 
closed across the country in different bases as efforts were 
made to ensure that funding was available for war-fighting.
    That is, indeed, the number-one priority. But they 
shouldn't be in that position, nor should beneficiaries be in a 
position to have to shoulder more of the burden of our defense 
from a portion of their benefits.
    Another priority of ours is to take care of wounded 
warriors. We think that this committee should focus on the 
wounded warriors, make their benefit more generous.
    One of our issues is to extend Concurrent Receipts to those 
folks who have less than 20 years, who were forced out of the 
military because of their injuries in service. We would like to 
see those benefits that these folks receive be a bit more 
generous rather than having an offset or a choice being made 
between what they might receive from the Veterans Department 
for disability or what they might received from the Department 
of Defense in a medical retirement.
    We would also like to see some attention given to an 
inequity that has been with us for a number of years, and that 
is the Survivor Benefit Program (SBP) and the Dependency and 
Indemnity Compensation Program (DIC). As you know, there is an 
offset there. And, as we see it, each of these benefits, the 
Survivor Benefit plan and the DIC are for different reasons.
    The Survivor Benefit plan is an annuity plan, paid for in 
retirement by a portion of retirement pay as, sort of, an 
insurance while you are in the active duty. The military now 
takes over that expense.
    The DIC, the Dependency and Indemnity Compensation payment, 
is a payment made if an individual dies as a result of injury 
or illness from the military experience.
    To have that payment offset against the annuity payment is 
simply unfair and certainly something I suspect that the 
service member themselves are really unaware of. As they pay 
their survivor benefit annuity on a yearly basis, they have no 
idea that benefit is going to be diminished by the DIC payment 
should they die as a result of their injury.
    So those are a couple of our priorities and a couple of 
priorities we would like to see this subcommittee focus on, but 
the major one, of course, is to get a better share of the 
defense spending and to recognize that the priority of this 
defense spending against all other priorities in the nation, 
domestic and foreign.
    Dr. Snyder. Mrs. Raezer.
    Mrs. Raezer. Thank you, Mr. Chairman.
    I think I would be remiss if I didn't ask this committee, 
most importantly, to remember the link between family readiness 
and service-member readiness and to understand that the pace of 
operations over the past six years has taken its toll. We can't 
talk about emergency, we can't talk about short-term. This is a 
long-term issue.
    Even if the war would end tomorrow, because of all the 
repeated deployments, our families are going to need a lot of 
support to come back to a real ready state. And if we want that 
military force to be ready, we have to look at the needs of the 
families.
    And that is encouraging the military services and all the 
components to continue to focus on innovative family programs 
that provide outreach and pull families in and make them aware 
of the resources available. To especially care for those 
special groups, the survivors and the wounded service members 
and their families, to provide extra support for them and even 
to look at some benefit changes for them.
    One of the items that we brought up in our written 
statement, in terms of the wounded and their families, was to 
provide wounded service members and their families who have 
been medically retired the same type of transition health-care 
benefit that our surviving spouses currently have, where for 
three years they are treated as active duty family members in 
terms of their TRICARE benefit, to give them time to 
transition, to find health-care providers while remaining in 
that active duty status where there are some richer benefits. 
So that would be something that we would like for you to 
consider.
    Making sure that those support programs on installations 
are well-resourced and up and running to support service 
members and families. To pay attention to the mental health 
needs across the whole continuum for both service members and 
families. Making sure preventive care is there as well as the 
medical care that is needed for certain folks.
    And access to care for everyone. The Walter Reed story 
highlighted issues from service member perspectives that we 
have heard from families for years--difficulty in accessing 
care at military treatment facilities. And from our special 
needs families, a real problem with coordination of care.
    And so we would like for you to remember that our direct 
care system is incredibly stressed, and we need to get a better 
resourcing package in place in terms of providers to improve 
access and coordination of care.
    Dr. Snyder. Colonel Strobridge.
    Colonel Strobridge. Yes, sir. I think we are all very 
sensitive to the budget issues that you have to deal with, that 
the Budget Committees have to deal with, and it is tempting to 
say we want all this big laundry list of things. But I do think 
that there are structural things that it is very important for 
the committee to look at.
    In health care, there are a couple of them. One is this 
seamless transition issue that we have been struggling with for 
years on end that never seems to get anywhere. And, largely, it 
is because it is governed by a group that meets periodically 
and actually implemented by people who have all this stuff as 
additional duties.
    We think that it is time to establish a joint DOD-VA 
transition office where this is people's permanent job, to take 
care of all the issues of transitioning between DOD and the VA, 
to take on all these post-traumatic stress disorder (PTSD) 
issues so that it is not just somebody's part-time job. This is 
a full-time job, a full-time mission of a specific agency to 
get that done. Otherwise, it is all going to be subject to the 
next time the guy whose part-time duty it is gets reassigned 
somewhere, somebody else comes in and the ball gets dropped.
    The other issue, I think, on health care, the other 
structural issue is, we have to get, from our perspective, some 
principles established in law as to what the military health 
benefit should be and how benefits are adjusted. All the other 
major core elements in the military compensation package, 
whether it is basic pay, housing allowances, retired pay, those 
are set in law, the adjustment methodologies are set in law. So 
much of the health benefit is left to the secretary's 
discretion.
    That is one of the reasons why we are pushing H.R. 579 and 
S. 604, which basically lay out some principles that recognize 
in the statute that military people pay more for their health 
care than just the premiums that they pay in retirement, just 
their cash co-pays. They prepay for their health care through 
20 or 30 years of lifetime service and sacrifice, and those are 
principles that we think need to be established in law.
    We think one of the principles ought to be that either, as 
under H.R. 579, the adjustments are reserved to Congress or, at 
the very least, the adjustments in any particular year don't 
exceed, as a percentage, the percentage growth in their 
compensation. So those are two structural issues we think need 
to be established.
    Certainly, I am really worried, as I know you are, and 
certainly the people over at the Pentagon are, about the 
retention environment. We have put these folks under stress, 
and we have now heard for years on end these kinds of concerns 
being raised. It is stunning to me that we already haven't had 
far more people voting with their feet than we have.
    We are surging now. It is going to take a long time to plus 
up the forces. To us, we have to be particularly sensitive to 
the retention environment, and that is another reason why we 
are concerned about things like the TRICARE fees. This is the 
last time we need to be reducing people's retirement benefits 
by $1,000 a year, for example.
    We are concerned that this President's budget is the first 
budget since 1999 that doesn't do something to try to continue 
reducing the pay gap after last year's 2.2 percent across the 
board raise. That hit some people in the stomach, I think, when 
they heard that very low number. So we would like to see at 
least some kind of progress on that.
    Rick Jones hit on the Concurrent Receipt and SBP issues. 
Those are obviously big deals. We recognize it is hard to do. 
We recognize there are funding issues. We have talked with the 
committee staff about some options on how to at least make some 
progress on those issues. I think that is important, to try to 
do something to indicate that we are trying to address those 
long-term, hardcore problems.
    Thank you, sir.
    Dr. Snyder. Mr. Becker.
    Mr. Becker. Certainly, this is panel has a broad scope of 
experience, and it has been evident here. I am going to attempt 
to keep my comments to the area of military resale, a leading 
non-paid benefit and a significant contributor to the quality 
of life of military families.
    I think, attempting to address the priorities there bring 
me to a pretty simple approach and that is that we certainly 
have an extremely valuable asset in the form of the 
infrastructure and the system supporting the resale system. I 
believe that assessing that asset and leveraging it for its 
full potential in delivering the benefit to eligible shoppers 
is the greatest opportunity.
    My fear, frankly, is that this asset known as good will 
that our nation shares with our fighting forces and their 
families is very vulnerable if they perceive a marginalization 
in the benefit delivered to them through the resale system.
    And I have to make note that I believe it is a pretty 
dramatic risk for a relatively minor change if we make the 
wrong moves, for they have come to realize it as an exceptional 
benefit and would certainly perceive tremendous loss if it were 
altered significantly.
    Thank you.
    Dr. Snyder. And, Mr. Molino, you are in the position of 
answering questions about a statement that you did not deliver. 
So you can feel free to answer the question of priorities.
    Mr. Molino. I helped write, Mr. Chairman, so that is no 
problem.
    Dr. Snyder. Mr. Molino.

    STATEMENT OF JOHN MOLINO, PRESIDENT, AMERICAN LOGISTICS 
 ASSOCIATION [CONTINUATION OF DOUGLAS B. MCALISTER, CHAIRMAN, 
           AMERICAN LOGISTICS ASSOCIATION STATEMENT]

    Mr. Molino. Let me begin by thanking you for your 
indulgence and the committee's indulgence, allowing me to 
represent ALA in lieu of our chairman, who was unable to be 
here again today.
    In a way, it is tough to be last, but let me just say, I 
don't disagree with anything my colleagues have said. And I 
would like to, if I could, answer this question--I will take it 
up a notch and answer it as the father of two soldiers.
    I think your priorities ought to be to make sure there are 
enough people in uniform, that they are trained and that they 
are adequately equipped. I think you should never forget that 
families also serve, and I think this subcommittee has a record 
of never forgetting that families also serve.
    Consider the promises you make and whatever promises you 
make, make sure you deliver on those promises. When I served in 
the Pentagon, we had a document we called, ``The Social 
Compact,'' and what that document did was it recognized that 
there was a relation between the service member, the family and 
the nation, as represented by the Department of Defense. And 
there are expectations, mutual expectations and mutual 
responsibilities, and I think it is most important to deliver 
on all of those.
    Dr. Snyder. Thank you.
    Mr. McHugh.
    Mr. McHugh. Thank you, Mr. Chairman.
    Welcome again.
    I heard Colonel Strobridge talk about some of the options 
that, I guess, at least he, and perhaps others, have discussed 
with respect to SBP-DIC, Concurrent Receipt. Those, as you 
know, we have been chipping away at, and I think ``chipping'' 
is the operative word there.
    But just to kind of set the stage, to eliminate SBP-DIC--
and many of you probably know this, but I just want to get on 
the record--the offset would be $8.9 billion in mandatory 
spending and $3.6 billion in discretionary spending over 10 
years. Concurrent Receipt, totally, would cost $32 billion in 
mandatory spending and $10 billion in discretionary spending 
over 10 years.
    The chairman of the full committee and the ranking member, 
and I know that our chairman and I, were given the opportunity 
to look at that. We tried to make some inroads to the Budget 
Committee, and this is a new Budget Committee in its leadership 
structure, and maybe they are going to do absolutely amazing 
things, but in lieu of that, and until that happens, let's hear 
some of those suggestions, for the record, that you have talked 
about with the staff, because those are big numbers, as you 
know.
    I am not lecturing you at all. As I said, I am setting it 
out for the record. And I would be very interested in hearing 
how you suggest we might approach the remaining challenge that 
I think all of us agree needs to be addressed.
    Colonel Strobridge. Sure. Well, we have approached the 
committee in the past and said we understand that those are big 
numbers. I think we have a record and the committee has a 
record of trying to address these things. If we can't do the 
whole thing, we at least take steps. And the committee has done 
an admirable job of that on Concurrent Receipt.
    We are in the process of a 3.5-year transition on the age 
62 SBP offset. We certainly appreciate those. And I think a lot 
of us think that that is probably the way we are going to have 
to address some of these other issues, if we can't do them all.
    I think Rick hit the nail on the head on the Concurrent 
Receipt. To us, the most egregious inequity under Concurrent 
Receipt is that--let me give you three examples.
    If we have a member who has 20 years of service and a 10 
percent combat-related disability, whatever 10 percent is, 
maybe you lose a finger, I am not sure what a 10 percent 
combat-related disability turns out to be, but that persons 
receives their full-earned retired pay plus their VA disability 
compensation.
    If we have a person who was an early retiree during the 
drawdown and retired with 15 years of service and subsequently 
developed a 50 percent or greater non-combat-related 
disability, that person now is at least midway through a 10-
year plan of phasing out that offset. So they receive their 
full-earned retired pay plus their disability compensation.
    Yet a person who has 19 years and 10 months and is shot 
through the spine and becomes a quadriplegic in Iraq has to pay 
his full disability compensation out of his earned retired pay 
to the point where they may lose their entire retired pay. We 
think that is just not right. The whole point of a 20-year 
standard assumes that the person had a choice in serving 20 
years.
    To us, if a person gets that kind of combat wound and their 
lives are devastated to the extent where we have to mandatorily 
retire them before 20 years of service, to us, that becomes a 
vesting issue. We should vest their retired pay at the same 2.5 
percent of pay, times years of service that we currently do for 
the people over 20.
    And I think when you look at the cost of that kind of 
option, and there are several sub-options below that, it is way 
less and it is relatively small. We recognize it is still 
mandatory money, but the numbers are a tiny fraction of the 
numbers that you mentioned for the other. So, to us, that would 
be the top priority on Concurrent Receipt.
    On the SBP-DIC offset, to us, we go back to the first step 
that we had on Concurrent Receipt, which, as you may recall, 
was a special pay. We avoided the mandatory payment issue by 
establishing a special pay that was a flat rate, and it was a 
fairly modest flat rate. There are ways to address that. If you 
had to, if the mandatory issue becomes too big or its too 
expensive to do the whole thing, there are ways to address some 
kind of phase-in increment in SBP-DIC.
    And as we have said sometimes in the past, whatever amount 
of money is available, we will work with the staff to design a 
plan to come up with an initiative to fit that amount of money. 
The important thing, I think, is for these people whose lives 
are devastated by these offsets, we need to send some kind of 
message that we are not just going to give up because we can't 
do the whole thing, that we are going to try to make at least 
some kind of initial step.
    Mr. McHugh. Thank you.
    Mr. Jones.
    Mr. Jones. Mr. McHugh, the numbers that you cite are, 
indeed, large, if taken in isolation and when taken in 
isolation--$9 billion over 10 years. The 10-year budget would 
probably be about $43 trillion over that same 10-year period as 
a percentage of a $43 trillion budget, we are really dealing 
with 0.05 percent of that money to correct an inequity.
    There is a perspective here, and I wonder if those numbers 
that you use that Congressional Budget Office (CBO) suggests 
include the present value of the return of premiums on even the 
total of returned premiums. As you know, once an individual 
dies and leaves a survivor and the survivor is eligible, both 
for SBP and DIC, the SBP amount is offset by DIC, but the 
premiums paid to achieve that SBP offset are returned without 
interest to the survivor.
    So there is a present value that needs to be considered in 
that calculation. I don't think it takes up for the full 
amount, certainly, but oftentimes the figure are a bit 
deceiving when taken in isolation.
    This is really not a great deal of money in perspective of 
how much money is available within the total budget. And, 
indeed, how much money is being spent on any number of lesser 
priority programs, even programs that, however worthy, are not 
necessarily federal. The Federal obligation here is one that is 
locked in by contract under the SBP, and there is simply an 
inequity here, a problem that the SBP payment on annuity is not 
paid out.
    So we would ask that you consider both the funding of this 
within the context of the overall budget and as a priority and 
we would hope you would make it a priority and fight for it, 
sir.
    Mr. McHugh. Well, if I may, I don't disagree with your 
logic on CBO, but we don't get to make that choice, as you 
know. And we don't have dynamic scoring, and the Congress has 
to deal with the calculations on mandatory and discretionary 
spending that are given to us, and those are the numbers that 
are given to us.
    I also don't disagree with your very reasoned and 
passionate argument about what is fair here and what our 
obligation is. And as I said, I think we have tried to respond 
to that in the past. But we are facing, and really what I was 
inquiring about is, absent headroom of any kind--and I don't 
know what the Budget Committee is going to do--but absent 
headroom of any kind, what can we do to address the inequities 
you cite so eloquently with less money?
    Acceleration of Concurrent Receipt is currently underway. 
Do we take some other approach? That is really what I was 
searching for. You and I don't disagree for one second as to 
anything you just said on those programs and how they have to 
be corrected, but we do have a budget reality that is going to 
be a big challenge. But I appreciate your commitment and your 
passion.
    I don't know if any of your fellow panelists want to make 
any comments.
    Mr. Barnes. Mr. McHugh, I would just add that these are 
high priority issues for our association, the bulk of which are 
military retirees. I also share an observation with regard to 
the discussion about the percentage of Gross Domestic Product 
(GDP) that is allocated to defense.
    In the 1990's, there was a significant drawdown, as we are 
all aware, and during that time, funding shifted from DOD and a 
much larger end-strength to many social programs. And during 
previous periods of war, as has been referenced by--I think 
Rick mentioned the percentage during past periods of war has 
been a much more significant percentage of GDP.
    Our membership views this as something that they deserve, 
that they are entitled to, that they have earned. And they look 
at other spending priorities, they look at earmarks, what has 
gone on with the earmarks process, they look at the messages 
that are being spent, as an example, with regards to what is 
going on with the patients are Walter Reed, and question what 
are the priorities here.
    So I just want to make that point. I know you are aware of 
this, and you have been very, very supportive of it.
    And one last observation with regard to the SBP part. 
Understanding the funding challenges here but the paid-up SBP 
issue is a very high priority with our membership, and that is 
part of the overall discussion here, but that aspect of this is 
very important to our membership.
    Mr. McHugh. Mr. Chair, if I might, I don't know--is 
somebody else going to comment?
    Mrs. Raezer.
    Mrs. Raezer. Yes, thank you, Representative McHugh.
    I just wanted to add that ending the DIC offset is a big 
concern for our organization. We have run numbers on what 
happens to survivor income given how the various benefit 
programs work. And because of that offset, some of our 
surviving families of our career service members take a huge 
hit in terms of their benefits, when that service member dies.
    We have looked at the mix of benefits in young families, 
career families. In many cases, the junior families, when that 
service member dies, because of the mix of benefits, their 
monthly income actually goes up, but the families of the more 
senior service member, especially if they have older children, 
their benefit makes their monthly income actually go down 
significantly, in some cases.
    What I was talking earlier about, long term, this is one of 
those long-term issues in terms of our nation's commitment to 
survivors to provide the earned benefit that really they 
receive for two different reasons.
    So I echo what Colonel Strobridge said. We are willing to 
work with your staff and you however we can, identify money and 
then work on a plan to phase some help in.
    Mr. McHugh. If I might, Mr. Chairman, I certainly don't 
want to speak for you, but I think that is an opportunity that 
after allocations come out we might want to take advantage of.
    I would just say, as well, the full committee, in its views 
and estimates letter, had sought headroom in these areas. We 
will, I would assume, as a committee and as individuals, 
continue to press the Budget Committee. If you can help us 
there--I will speak for myself here--if you can help us there, 
it would be greatly appreciated and mutually beneficial.
    Thank you, all.
    Thank you, Mr. Chairman.
    Dr. Snyder. Thank you.
    Mrs. Shea-Porter.
    Ms. Shea-Porter. Thank you very much, Mr. Chairman.
    My question, I hope I don't botch your name, is it Mrs. 
Raezer?
    Mrs. Raezer. Yes.
    Ms. Shea-Porter. Okay. I was a military spouse myself, and 
I understand a lot of the pressures that the families are 
feeling, but this was during the Vietnam era.
    And so I wanted to ask you if you would take us through 
maybe the first six months of what happens after a military 
member is either 100 percent injured or died? What is it like 
for the family? What is happening and what is the transition 
like? And who steps into their lives to help them and where the 
gaps are?
    Mrs. Raezer. I am going to speak in general terms, 
understanding that at any time an individual family may fall 
through the cracks or an individual family may find exceptional 
service above and beyond.
    But when the service member has been killed in combat or a 
training accident, whatever, there is a casualty assistance 
process that starts at the installation, in terms of the 
notification and the support to help the family through the 
paperwork, arrange for the funeral, be with them to work 
through that process. Some installations also have established 
care teams of volunteers who come in, kind of, behind the 
casualty assistance, the notification and the official folks to 
provide more informal support, whatever that family needs. In 
many cases, the installation throws a lot of resources, 
whatever you need.
    Folks often are fine when they are in that installation 
cocoon, because the support services are all there and can help 
them. Those support services can vary for our guard and reserve 
families or the folks who are farther from the installation, 
the parents of the single service members have a different 
experience sometimes than the families on the ground.
    There are benefits that kick in. There is that $100,000 
death gratuity that comes pretty fast in most cases, unless 
there are some child issues that we have heard about in the 
Washington Post and other articles.
    Then there is the service member's group life insurance, 
there is a whole benefit package mixed in that then depends 
on--there is the DIC from the VA, but then you also have social 
security, SBP and how that benefit package works really depends 
on the age of the children, number of children, family 
circumstances. All of that gets very complicated for the 
survivors.
    Survivors are allowed, if they are in housing on a military 
installation, to remain there for a year before they have their 
government move, and they do get that government move to go 
wherever they want their permanent home to be. So they are 
given more time than they used to be.
    The survivor benefit package has improved over the years, 
and we are very grateful for this subcommittee's work in that 
effort.
    And the casualty assistance support has also improved 
thanks to, in part, a lot of the survivors saying, ``Hey, it is 
not right, it needs to be improved,'' and then the 
congressional enforcement and direction.
    For the wounded, things can get a little crazier because of 
where is the service member, how long are they going to be at 
what hospital working the benefits, the traumatic service 
member group life insurance based on the injury has certainly 
helped, because it has given folks the money to help with some 
of those immediate expenses. But families are still--they have 
somebody with casualty assistance working with them to get them 
to the right hospital.
    Unfortunately, what happens sometimes is that they do fall 
through the cracks in terms of coordinating care. We see this 
most often with folks who aren't familiar with the military 
bureaucracy--parents of single service members, some of our 
guard and reserve families who are dealing with that military 
bureaucracy for the first time and so don't know where to go, 
what questions to ask. And so if services aren't coordinated 
and if pieces of bureaucracy aren't working well together, then 
you can have families fall through the cracks.
    What has been interesting for us to see now, if they are 
medically retired, they will have to move out of quarters, if 
they are in military housing. What we found is that most 
commanders will work with the family in terms of helping them 
through that transition process, but there is a time.
    You have got to be medically retired, you are in a 
different set of benefits, you are treated as a retiree in 
terms of TRICARE, which means you are going to pay for TRICARE 
Prime. You may not be able to enroll in a military hospital for 
TRICARE Prime because their priority is active duty family 
members. You lose things like TRICARE Prime Remote and special 
programs. You are in a different dental program that you are 
paying more for than if you are still active duty.
    So that transition can be difficult, especially if you are 
moving away from that installation cocoon back into a 
community. And there are also the children's schooling issues, 
the spouse employment.
    One of the concerns we have had with the issues facing the 
wounded is it is not just what is happening to the service 
member and the future of their income but what is happening to 
the spouse's income, because the spouse may have to assume more 
of that caregiver role--either take leave from their job, quit 
their job, and then if they move away from where they have been 
assigned, find a new job that fits in with those caregiving 
responsibilities, which has caused some problems for some of 
our spouses.
    Ms. Shea-Porter. So in what period of time do you think the 
military families feel the most vulnerable and maybe the most 
left behind by the system? Where do we, if we can, really focus 
our energy and our commitment.
    Mrs. Raezer. We have heard from families that it can be 
anywhere in the process. For some families, they get that 
initial rush of attention when the injury or when the death 
first occurs and then it kind of fades away. For other 
families, it is from the beginning. They have had to ask a lot 
of questions and fight to get certain benefits.
    So what a lot of the families say is, ``Give us a phone 
number, give us somebody to call who whenever we find out our 
benefits have changed or we are encountering a new situation, 
we have somewhere to go.''
    Some of our survivors, for example, say one of the hardest 
things is when they make that permanent move away from the 
installation and they have to change TRICARE providers, they 
have to fill out different paperwork and they really realize 
they are on their own outside of that installation support 
system.
    But it happens at different places for different folks, and 
that is why having that go-to number, that go-to office, there 
is the focus for these issues, this is your ombudsman, this is 
who you can call to get some support from survivor issues.
    We have had a lot of survivors tell us, for example, that 
they love their casualty assistance officers, they have been so 
supportive, but then maybe three, four months down the road, 
when those survivors may still need some help working through 
the government bureaucracy, their casualty assistance officer 
has been deployed. So that has come up. Most of them say, 
``Just give us some kind of ongoing contact.''
    Ms. Shea-Porter. So is the problem that at the very 
beginning--is there a solution for this where a family who is 
about to have a member deployed could benefit from a session 
where they are actually handed a list of numbers--it is a 
magnet sitting on the side of the fridge--or is it something 
that they just can't absorb it until it actually happens?
    Mrs. Raezer. They are given a lot of numbers. There is 
Military OneSource that can provide some of these services, and 
that's been a help, and we encourage as much information as 
possible and as much education as possible, and we encourage 
repeats of that information, because you always find a 
teachable moment, and some family members are very focused on 
some of these issues prior to deployment or right after the 
service member deploys; others don't want to think about it. 
And that is where sometimes trouble comes when folks haven't 
thought about it.
    Ms. Shea-Porter. Right.
    Mr. Hanson. Now, on the family support for the guard and 
reserve, Joyce has pointed out two issues that are very 
important. One is the distance from the established military 
bases and also with groups that are not familiar with the 
military bureaucracy.
    Now, to their credit, each state has set up through the 
guard a family support center, which is doing very well within 
the guard system, and there is an open invitation for 
reservists to also participate through the same facility, 
although we are still trying to deal a little bit with the 
territorial area where reservists shy away from going to a 
guard activity.
    In addition, the reserve chiefs are starting to develop 
their own programs, because family support is top priority for 
all these commands. And I think Joyce emphasized it, and I just 
want to touch upon it again, the key importance, especially for 
family members of the guard and reserve, is the education, 
teaching them what is available out there, because they are 
even further removed from the military side.
    And I think it is going to take, in some cases, a very 
proactive reaching out to these families to let them know what 
is available who otherwise feel that they are left alone out 
there, and that is the worst case any family, active or 
reserve, should be in.
    Ms. Shea-Porter. Anybody else like to comment?
    Colonel Strobridge. If I may add one thing about the 
retired survivors, the older survivors and some of the problems 
that they face, and one of the reasons why we are so concerned 
about the SBP-DIC offset.
    As Joyce said, when you are near a military installation, 
when you are on active duty, there are all kinds of 
opportunities for support. When you are retired and the service 
member who has been disabled dies of service-connected cause, 
maybe a year or two years or three years or five years after 
leaving service, that support is not there. And these survivors 
really are at a loss as to how to deal with this.
    They are not familiar with the benefits. Very often, they 
are not aware even that you can apply to the VA to get 
dependency and indemnity compensation. They may find out a 
couple years later and apply late. Then they receive a lump sum 
check from the VA, a large lump sum check, which they are 
relieved to get. They may pay some bills.
    All of a sudden, that gets over to the finance center, they 
then get a bill from Defense Finance & Accounting Service 
(DFAS) saying, ``Now you have got DIC, you owe us,'' and we 
literally have widows getting a bill that says, ``You owe us 
$20,000 and you need to pay by such and such a time, and we are 
going to charge you interest on it.'' They are frantic, because 
there is no explanation of why they owe this, there is no 
calculation; it is just a dollar figure.
    And if these have gone a long time like that, this is a 
two-step process where part of it is done by computer and then 
the rest of it is done by a person. In those kinds of cases, 
they will then, maybe a month later, get another bill for a 
different amount. Does this mean the first one was wrong? In 
fact, it is two bills; they owe both. And so they may get one 
for $20,000 and another one for $10,000.
    As you can imagine, these people are frantic, and they do 
all kinds of things to get money to pay this bill, and then 
they get a check from DFAS for a refund of premiums. They don't 
know where this is coming from. None of this is explained to 
them. It is just a terrible, terrible process to put these 
widows through, and it just happens so often to us. That is one 
of the reasons we have got to get this taken care of.
    Ms. Shea-Porter. I do remember where people said they had 
felt like they had been thrown out of the family if they had an 
injury or a death, and I am hearing the same thing again all 
these years later. So we have to address this, not only because 
it is morally the right thing to do, but they tell stories to 
others who might consider enlisting. And so for many, many 
reasons, we need to take care of these problems, and I 
appreciate you sharing them.
    Mrs. Raezer. What has been interesting is we have seen some 
installations who have responded to the survivor needs by 
actually setting up survivor centers and counseling groups and 
support groups. And I didn't mention that the Army Casualty 
Assistance Office has set up a toll-free number and a Web site 
to help provide resources for these Army survivors. But 
families do feel, in some cases, that they are out of the 
family, and it is hard for them. They have already dealt with 
one loss. To deal with the loss of their community is what many 
of them talk about.
    Ms. Shea-Porter. All of us here appreciate the service.
    Thank you.
    Dr. Snyder. Mr. Murphy.
    Mr. Murphy. Thank you, Mr. Chairman.
    Thank you for everything you do for our troops and for our 
country; we appreciate that.
    As you know, when our troops are activated and sent 
overseas, they sacrifice a lot in order to serve our country. 
Oftentimes, they leave their jobs, their friends and, most 
importantly, their family.
    Having served myself two deployments after 9/11 for the 
Army and sitting next to a military spouse here, we know how 
important it is to have unwavering support for our troops, 
especially the Family Readiness Groups (FRG). They are 
absolutely critical, and not just for the families but for the 
soldiers or the troops deployed.
    We mentioned at the last hearing, Mr. Chairman, that a 
warrior's mind is even more important than the warrior's body, 
especially in those settings where they are overseas in harm's 
way.
    I am very proud and I would like to mention the fact that 
the Family Readiness Group of the 913th Airlift Wing, right 
next to my district in Willow Grove, Pennsylvania was recently 
selected as the Air Force Reserve winner of this year's 
Department of Defense Reserve family readiness award. They do 
phenomenal work, and I want to make sure that they continue to 
serve our troops and their families, and I wanted to recognize 
them today, and thank you for being there.
    But I wanted to talk about as far as the operational tempo 
of the FRGs. With funding levels as they are, do you think it 
is possible for our nation's FRGs to continue operating at 
current levels or will the services have to scale back? And if 
they have to, how do you see this hurting our reservists and 
their families, and our active duty troops as well?
    And, Ms. Raezer, I probably would turn to you first, and 
then if others could also comment.
    Mrs. Raezer. Well, we hear from the Family Readiness Group 
leaders and the unit volunteers, the key volunteers in Marine 
Corps, the ombudsman in the Navy and the Coast Guard, the 
family volunteers in the Air Force, we hear from all of them a 
lot, and what they tell us is that they are getting exhausted. 
Many of them are suffering from compassion fatigue. They have 
been giving and giving. They understand their importance as 
mentors and as supporters for other families in their units, 
but they are getting tired.
    The military services have come up with some ways to help 
the volunteers. The Army has a contract for what is Family 
Readiness Group assistance who are folks who work as kind of an 
admin support level for a command and are responsible for 
supporting several Family Readiness Groups in setting up 
meetings, doing newsletters, manning the Web sites to take some 
of that administrative burden off the Family Readiness Group 
leaders.
    Each unit has some kind of rear detachment presence. The 
Marine Corps has both family readiness officers who stay behind 
and family readiness Non-Commissioned Officers (NCO) who stay 
behind to help support the families. And that kind of command-
linked support is very, very important for our Family Readiness 
Group leaders and our key volunteers in taking some of the 
burden off them.
    One of the things that come up from our volunteers the most 
is that they want professional support to back them up. They 
say, ``Family members are coming to us who are suicidal, have 
financial problems, issues with their children, asking us to be 
social workers, to be chaplains, to be medical personnel. We 
can't do that. We can be volunteers to organize them and help 
build morale and direct them to resources, but we can't be the 
professional. We need that professional support.''
    One program we were really pleased to see was the 1st 
Armored Division out of Germany, actually the 1st Brigade 
Combat Team instituted a program where mental health resources 
in the community, the alcohol and substance abuse counselors 
from the schools, social workers who were attached to the 
clinics, each of those medical personnel was assigned as a 
liaison with a certain company, certain battalion family 
readiness structure, and they were that professional backup, 
and the families tell us having that extra security really 
helped a lot.
    So it is getting that professional backup to the family 
readiness volunteers. We are very concerned about volunteer 
burnout. We hear from quite a few saying, ``I have done two 
deployments, I have done three deployments. I cannot be in this 
volunteer role in another deployment.''
    So getting that professional support to back them up is 
critical, and recognizing just how much they support the 
mission is essential. So the support needs to grow.
    Mr. Hanson. In addition, for guard and reserve units, 
typically you will find that the commanding officer's spouse is 
assigned informally as a unit ombudsman to work with the 
spouses of the other unit members. Most frequently, this is 
done without any formal training, so they are kind of learning 
on the job, trying to find the resources that are available to 
them. So you can only imagine the type of frustration that 
these spouses may be facing when they become a supplemental 
staff to a deployed unit.
    And statistics show that it is spouse support of the 
guardsman or reservist that is either the number-one or number-
two reason why they leave the service. So these pressures are 
building and are probably getting worse. And we are seeing a 
big change occur because in the past the reserve has been a 
strategic reserve where it is called upon for that----
    Mr. Murphy. Mr. Hanson, I am sorry, can you just repeat 
what you just--you said the number-one reason people are 
leaving is spouse support?
    Mr. Hanson. When we survey reservists or guardsmen who are 
leaving, they either give spousal support as their number-one 
or number-two reason that they are leaving, because of 
pressures at home, because of circumstances, and this is only 
growing greater and greater with the ongoing deployments that 
are occurring.
    And with the shift of the reserves from a strategic to an 
operational reserve where former weekend warriors are becoming 
part-time warriors, you are seeing these pressures only grow. 
And I know there is a lot of discussion among the serving 
members, and I imagine amplified even more among the spouses, 
with DOD's new policy where they are saying the reservists can 
anticipate that for one year on and five years off they are 
going to be on call for the long war.
    So as Steve said earlier in his testimony, the concerns of 
members voting with their feet and leaving is a great one I 
think with all the associations in this panel, and we are 
watching this situation quite closely.
    Mr. Murphy. Real quick----
    Dr. Snyder. Go ahead.
    Mr. Murphy. Is there any codification, either in the 
National Guard or reserves or active duty, with these Family 
Readiness Groups whether or not they allow a deployed troop or 
fiancee or girlfriend to be included or is it informally they 
allow them?
    Mrs. Raezer. The practice has been pretty much across the 
board since the beginning of the war is the call is the service 
members on whether a parent or a girlfriend or significant 
other can get on a mailing list. We have seen Family Readiness 
Groups reach out to the parents of the service members. And if 
the service member chooses, it is the service members' call, 
the service member can give that contact information to the 
family readiness volunteer.
    It is one of the things we have been watching, because now 
you have expanded the number of people who are in contact with 
that family volunteer, and we don't want to overload, but the 
services have recognized that their service members come with 
many family members, and so there has been an outreach 
through--the Web sites have certainly made it easier. They can 
e-mail newsletters to keep those family members in touch.
    We have heard of several guard and reserve units where it 
has been parents of single service members who has actually 
become the Family Readiness Group leaders. So when it is 
working well, that outreach and involvement opens up a whole 
new pool for volunteers and gets more family members involved.
    Colonel Strobridge. Congressman Murphy, I think you started 
your question asking about the resources and funding for the 
Family Readiness Groups, and one of the things that we have 
been hearing is that because these groups are part of the base 
operation support, those accounts are in fact getting robbed to 
fund operational needs.
    That always happens. We hear libraries closing, gyms 
closing, all kinds of support services being curtailed. Well, 
that is also happening to the funding for the Family Readiness 
Groups to issues like child care where the services, basically, 
are being curtailed in order to get money to meet operational 
wartime requirements.
    I think that is a concern across the board, but it is 
disturbing at the very time when we need these groups the most. 
We have spent a lot of time and several years building them up 
to the point where they were pretty well funded. All of a 
sudden, we are seeing that that funding is decreasing for that 
purpose, and that is a big concern.
    Mr. Murphy. Thank you, Mr. Chairman.
    Dr. Snyder. We are going to go another round here.
    Mrs. Raezer, would you tell us any thoughts you have about 
child care, part one, part two, DOD schools?
    Mrs. Raezer. Child care in two words: not enough. We are 
so----
    Dr. Snyder. Not enough quantity or not enough quality?
    Mrs. Raezer. Not enough quantity.
    The quality is there. DOD has created a quality child-care 
system that takes a lot of the worry off the mind of a service 
member who has their child in a DOD child-care facility.
    But what we hear from families is that in too many places 
there are waiting lists. The number-one thing we hear in terms 
of access is the support for the volunteers and support for 
folks who don't need full-time child care but who need respite 
care or part-time child care, either to volunteer or work a 
part-time job or when you have a service member deployed deal 
with other issues in the family and need child care that is 
deployment-related child care on installations is in very short 
supply.
    We thank Congress because there has been additional funding 
for child care that is provided some subsidies for guard and 
reserve folks who are out where there aren't military child 
development centers, to help those folks access child care with 
some financial support. DOD has worked partnerships with 
private, non-profit National Association of Child Care Resource 
and Referral Agencies (NACCRRA) that helps in finding child 
care for service members and families.
    So there has been progress but not enough. One of our big 
concerns is with the BRAC and the global rebasing that some of 
these installations stateside that are going to grow, we need 
to get those child-care facilities plugged in and ready before 
the families arrive. And so we have very, very concerned. There 
has been some temporary solutions that have been put in law to 
help, but we need the BRAC funding and we need the construction 
for those facilities.
    But in terms of quality, families are very, very pleased 
with the quality they get at the DOD child development centers. 
It is just the quantity. We have been impressed with the 
innovations, like some of the Navy's 24-hour centers in Norfolk 
and Hawaii that meet the needs of those communities. More needs 
to be done to attract and keep military spouses who are the 
family child-care providers, whether they are on the 
installation or maybe in the community.
    DOD is only gradually putting in place provisions to allow 
folks who have been living on an installation, who were trained 
up, certified as family child-care providers and then moved to 
another community and have to live off-base. DOD needs to keep 
them as child-care providers, and it has been moving kind of 
slow to do that. So we would like to see them continue to look 
at that military spouse pool in terms of child care.
    Regarding DOD schools, the biggest concern our families 
have right now in terms of DOD schools, where there are DOD 
schools, is what happens with the move out of Europe. A lot of 
concern about the stability of the staffing and the programs in 
the communities that are closing, that they will remain until 
those schools are closed, and then what happens if children are 
moving back to communities, will there be enough space for 
them?
    The way we see the moves going, however, back to the 
states, most of those kids won't be eligible for DOD schools. 
They will be going into civilian schools somewhere, and so our 
concern really with the moves from Europe is how are the 
civilian schools going to be ready to be able to educate these 
large numbers of students moving in?
    But the DOD schools have done quite well in supporting 
families when the service members are deployed. We hear good 
things from families in Europe. The big concern is the 
drawdown, the good teachers leaving a school that is going to 
close in a year or two to make sure they have a job somewhere 
else. So whatever can be done to keep those community schools 
viable up until the day the families leave really needs to 
happen.
    The other thing that we would add is, in the last drawdown 
in Europe, a lot of the new teachers--the seniority system 
worked, and so the new, young, innovative teachers, the last 
hired, were the ones who were let go, and some of the older 
teachers who didn't have an incentive to retire stayed. And 
there were some issues in the 1990's regarding DOD schools and 
quality, and a lot of it was related to some of the drawdown 
that happened.
    We would hope there is something in place that would allow 
Department of Defense Education Activity (DODEA) to offer 
selective retirements bonuses to people who need to retire but 
work to retain some of the good, new blood they have brought 
in, because the teacher quality issue is so important.
    Dr. Snyder. Mr. McHugh.
    Mr. McHugh. You caught me in mid-ice cube, Mr. Chairman. 
[Laughter.]
    Let me turn to my friends on the resale side of the table. 
As all of you know, the overseas population that has 
traditionally been such an important part of the customer base 
of these facilities, exchanges and commissaries, overseas are 
beginning to be redeployed back to the United States.
    Appropriated funds support coming out of DOD for those 
activities, where applicable, has been steady but steady does 
not take into effect the impact of inflation. You can argue 
that each year without an increase is, in real terms, a 
decrease.
    And then yet I think we have seen through the management of 
the commissaries and the exchanges great efficiencies, great 
effectiveness to hold the line. But I worry about their ability 
to continue to do so. And on the commissary side I worry about 
the five percent built in markup, would that have to be 
increased. I worry about pricing opportunities, staffing 
levels, et cetera, et cetera.
    I was wondering if you could sketch out for us, for the 
benefit of the subcommittee members here and also for the 
record, where you see the greatest challenges for the resale 
system, as it looks to you from this point, and what you think 
we might best, as a Congress, first turn our attention toward?
    Mr. Becker, you want to start? Mr. Molino? Whichever, 
whomever.
    Mr. Molino. We tossed a coin, and I lost, sir, so I will go 
first.
    Mr. McHugh. So you are going second.
    Okay.
    Mr. Molino. I was at the hearing when the retail chiefs 
testified, Mr. McHugh, and I heard your concerns voiced that 
day and again today, and I think you are right on the money. I 
think the biggest challenge on the exchange side of the house 
is clearly with the Army-Air Force exchange. Navy and Marines 
are not seeing the impact of rebasing and global repositioning 
but AAFES is.
    Now, of course, AAFES also happens to be the 500-pound 
canary in this equation, and if they suffer consequences of 
customer loyalty going away when they become Continental United 
States (CONUS)-based, the impact on the dividend is going to be 
enormous. And, frankly, it is frightening.
    As you know from previous meetings we had when I served in 
the Pentagon, it was a great motivator of mine to look for 
creative ways to approach this situation, because I think 
looking over the horizon AAFES has some serious issues they 
have to consider insofar as being a CONUS-based business. With 
so many opportunities outside the gate that a military family 
base, two-thirds of which live off the installation, have to 
drive past these retail opportunities before they get on the 
installation.
    On the DeCA side of the house, Mr. Nixon's quite eloquent 
about that: The cost of construction is just such now that the 
five percent surcharge is challenged greatly to be adequate to 
recapitalize. If we just look at what the department is doing 
on Guam, there is nothing there that isn't shipped there. So 
you have the cost of shipping, the cost of steel, the cost of 
all this stuff that goes into it.
    I agree with you that increasing the surcharge is, we all 
hope, not the way we have to go. When you walk into the 
commissary as a customer, you know the formula pretty much. 
Most are pretty well-informed shoppers. They understand that 
the price they see is essentially what was paid for that 
product and that at the end they end the five percent surcharge 
to cover recapitalization.
    These are challenges that need to be faced and need to be 
reconsidered. I don't have a magic answer. I know that we are 
working with the exchanges and with the commissaries so that we 
can collaboratively look for solutions and that we can advocate 
on their behalf when those solutions become apparent.
    Now, I will turn it over to the smart guy to come up with 
the real answers, though, if you don't mind.
    Mr. Becker. Thank you.
    It would be difficult to expand too much on that, sir, and 
I think those comments I certainly concur with across the 
board.
    I would only have to reemphasize the significance of 
recapitalization of the infrastructure itself that is being 
used to provide those benefits. The operators have done, in my 
view, an exceptional job with the resources they have been 
afforded, and I think it is something we can all be very proud 
of.
    Certainly, the changes and the demands going forward are 
going to introduce some significant shifts, and they are going 
to have to be addressed. I admire the optimism expressed by 
some of the resale system commanders with respect to how well 
they can manage in these challenging environments, but I do 
feel as if our agreements that offered to these service members 
and their families will require incremental support, 
particularly in the area of infrastructure recapitalization.
    I think looking forward, the challenges are relatively 
difficult to address because of the environment, because of the 
number of issues that require attention. I think my opening 
comments, if I can reflect on those, refer to an opportunity at 
the margin, and I think that, in particular, is deserving of 
attention, because the perception of the quality of the 
benefit, I think, is at greater risk for relatively small sums 
versus the cost of maintaining the infrastructure.
    Mr. McHugh. Mr. Chairman, the light is on, so why don't 
we----
    Dr. Snyder. Go ahead.
    Mr. McHugh. Well, I was going to just give him a chance to 
hit a softball and say, what about ASER?
    Mr. Becker. So I get the coin now. Appreciate the 
opportunity here, and I think this, again, should bring us to 
reflecting on the infrastructure that you already effectively 
own.
    It is there. The restrictions that were placed on products 
to be sold in the military resale system are clearly 
antiquated. The terms of sale that take place every day when 
they shop in the exchanges are exceptional. They were defined 
and designed to accommodate a unique shopper.
    Having that already in place and being the most complex 
aspect and then failing to offer goods in this day and age 
should be sold through the exchanges seems to be an 
underutilization of a great asset. I say that in the form of 
credit and cost associated with credit, discontinuance on 
payments for deployed service members. All of those terms that 
are designed to accommodate them should be utilized and 
leveraged as a benefit more fully, and expanding those 
categories would certainly do that.
    Mr. Molino. I have very little to add. Jed hit it right on 
the head, though. If you expand that which they have access to 
within the current system, then all of those rules of sales 
apply, especially the deferral of payments while the member is 
deployed. If he or she buys that product downtown, that level 
of understanding and sympathy is certainly not there, in 
addition to just the right way to give them the choices that 
they should have in this day and age.
    Mr. McHugh. Thank you for your forbearance, Mr. Chairman. I 
am lobbying for lobbyists today. I lobbied our left side of the 
table, now I am going to lobby the right side.
    As you two gentlemen know so very well, this subcommittee 
and committee have been not fully open to wiping away some 
restrictions, but we have provided some flexibilities that the 
other body, as we say, has not been so receptive toward.
    So I would just ask you if--and I am not questioning their 
motivations or even, at this moment, their decision, but, 
clearly, it takes three to tango in the Arthur Murray School of 
Government--the House, the Senate and the Administration. So it 
might behoove you, and us, if you had a chat with our brethren 
in the Senate on these issues as well. And I am sure you will.
    So thank you.
    Thank you, Mr. Chairman.
    Dr. Snyder. Mrs. Shea-Porter.
    Ms. Shea-Porter. I appreciate the comments that you were 
making and the troubles that are existing, but I wanted to ask 
you, are the big box companies the ones that you seem to be 
dancing around right now when you talk about offering products 
and being able to compete?
    Mr. Molino? Either one?
    Mr. Becker. That certainly is the most competitive front, 
and I think as their proposals become more compelling to a 
consumer, and in this case the military family, again, we lose 
them to terms that are less favorable, frankly.
    But, yes, those are the competitors that are doing the best 
job of increasing the quality of their proposal to those 
consumers.
    Ms. Shea-Porter. Okay. So you are basically still limited 
in a product can offer, and that keeps you from being 
competitive. And I see a nod there.
    Can you tell me, because I am not as aware of this as my 
colleagues who have been here longer, what kind of products? I 
have an idea that there is furniture and some others, but is it 
across the spectrum or are they just particular items?
    Mr. Molino. There is a long history with furniture, ma'am, 
about whether it be just knock-down furniture or of a permanent 
structure. Electronics, the size of the television, the nature 
of the projection, of the image, that is where the committee 
has drawn the line, the Congress has drawn in the line. And 
then in jewelry, the size of the diamond. You can buy the 
diamond, but if it is too big, you have to buy it off the 
installation. Essentially, that kind of wraps it up.
    Mr. McHugh is absolutely right, though. This panel has been 
far more willing and open to hear alternatives and has taken 
the lead in pulling back on the restrictions, the ASER 
restrictions, and the real challenge is on the other side of 
the Hill to get this a little clearer.
    Ms. Shea-Porter. Can you talk to me a couple minutes, 
please, about the exchanges overseas and what our service men 
and women are facing there. Do they have what they need and are 
you able to offer a price that is more competitive than the 
markets overseas?
    Mr. Molino. In the overseas environment, for fairly obvious 
reasons, customer loyalty is not an issue. I mean, if you 
generally want American goods and shop as you would at home, it 
is the exchange.
    The concern I voiced earlier, and I apologize if I mislead 
you in any way, is that as the bases close overseas, the 
concern is that shopper loyalty, especially in the AAFES 
system, when they come back to the continental United States 
and the big boxes are indeed out there, outside the gate, and 
you have to make the conscious choice to drive past the big box 
or the category killer to get to the military exchange.
    But everything we have been hearing from the industry and 
from the beneficiaries is a level of satisfaction with the 
stockage in exchanges overseas.
    Ms. Shea-Porter. Thank you.
    Dr. Snyder. Mr. Murphy.
    Mr. Murphy. Thank you, Mr. Chairman.
    When I talked to the recent veterans from Iraq and 
Afghanistan about health care, the largest complaint that they 
have is access to a doctor in the months immediately following 
their discharge from active duty service.
    I believe that working on a seamless transition between DOD 
and the VA health care is critical. Often veterans are forced 
to wait months to get a doctor's appointment after their active 
duty service ends. It seems to me that in the transition 
between active duty and civilian life, both departments should 
shoulder the responsibility to care for these veterans who have 
served so bravely and so honorably.
    What are your opinions on this matter? Should DOD be 
required to assist the VA? If not, then what reforms should be 
taken at the VA to make sure that our veterans that have 
recently left active duty have rapid access to a physician?
    Mr. Becker. Mr. Murphy, I will start on that.
    There is a great deal of concern in our association, as the 
other associations represented here have been addressing, some 
of the bureaucratic issues associated with the seamless 
transition issue for many years. They are not getting an 
intense spotlight based on incidents at Walter Reed Army 
Medical Center.
    There are provisions, laws on the books that date back as 
far as 20, 25 years with regard to sharing between the two 
departments to ease the transition; however, those have not 
been effectively implemented.
    The bureaucratic challenges, and there are many aspects of 
that, from the type of medical records, whether it be 
electronic with two different systems between the two 
departments, or reliance on hard copies for administrative 
processing here, compounded with requirements within each of 
the individual services with regard to separation, 
categorizing, determining the level of injury and what have 
you, the boards that are associated with that, makes this very, 
very complex, and we are seeing that firsthand.
    Fortunately, the spotlight is on right now, and there is a 
window of opportunity to address this and hopefully untangle 
some of the administrative challenges with two major 
departments: the Department of Defense and the Department of 
Veterans Affairs.
    There was a commission several years ago that specifically 
addressed and looked at DOD-VA health-care sharing, and we 
testified on that and monitored that very closely. 
Unfortunately, as with many study groups, commissions and what 
have you, the recommendations do not get teeth or they are not 
fully implemented, and that is a source of great frustration 
with our membership.
    Mr. Hanson. Continuing on down the panel, because I think 
each association will have a lot to contribute on your 
question, sir, is the nature of our concerns. And Joe brought 
up a lot of the points that I wanted to highlight, but I think 
each association on this panel supports having separation 
physicals, rather than medical screening, which DOD encourages.
    And I think you have already heard testimony to the fact 
that when an individual gets to a demobilization site, 
oftentimes they are faced with two lines, one to quickly 
demobilize and get back to their home and the other one where 
they are told that if you go through the separation physical, 
it will take a week or two longer.
    And oftentimes there is a choice by our young heroes that 
home is more important than perhaps getting the I's dotted and 
T's crossed, and they lose that ability to get a physical 
baseline. And then when ailments show up a month or two or 
longer later, they have to go into the VA system and get into 
the longer queue of getting evaluated by the Veterans Affairs.
    In addition, if you look, there is even longer lines that 
occur when you come to the actual Medical Evaluation Board 
(MEB) process where individuals who have disabilities and 
injuries have to go through the MEB and then the Physical 
Evaluation Boards. And I sat on the Navy's Physical Evaluation 
Board as a reserve representative for two years in the process, 
because rather than talking weeks, then you are talking months 
of delay.
    And, oftentimes, we are seeing our young men and women sign 
waivers and lower disability ratings than they should deserve 
because, then again, they want to go home, be with their 
families and face the complications of medical hold.
    And we feel that these individuals should be given a choice 
to where if they want to go home and then report back for the 
processing of these Medical Evaluation Boards and Physical 
Evaluation Boards, they should be able to basically commute to 
where the decisions are being done at the expense of the 
government, to where they can be near their support base rather 
than be stuck in some type of hold barracks, as is being 
discussed with Walter Reed.
    Mr. Jones. Mr. Murphy, we need to get DOD out of its 
stovepipe mentality with regard to their appreciation of their 
own electronic records. We were appalled last January to learn 
that DOD established some legal barriers to disrupt the 
transformation of information from DOD to VA at four trauma 
centers, putting at hazard the proper care of our wounded, most 
critically wounded soldiers.
    That dispute has been settled, but that is one dispute 
among many that occur between DOD and VA.
    The seamless transition of medical records was supposed to 
have been accomplished by 2005, according to DOD and VA. As you 
look at testimony over the years, it just seems as always is 
DOD is in the way. They always seem to think their method is 
superior. Yet we find that wounded warriors in Landstuhl are 
being transferred with their records paper clipped, stapled or 
baby-pinned to their uniforms. They aren't being transferred 
with electronic records.
    DOD has nowhere near, what we believe anyway, nowhere near 
the established sophistication that VA has in its medical 
recordkeeping area. And we would like to see that barrier 
broken down. We don't want our folks to fall through the 
bureaucratic cracks.
    This transition is important. We need to care for these 
folks, and one way is to make sure that we recognize that DOD 
and VA are dealing with the same individual and that these 
privacy laws that prevent, according to some of the lawyers at 
DOD, the transmittal of information back and forth shouldn't be 
a barrier at all. We need to, as some would say, get some new 
layers.
    Mrs. Raezer. Another issue that is important is the 
education to the service member and the family about the 
various benefits and how they work together. You take a guard 
or reserve member coming off active duty, for six months they 
are eligible for Transitional Assistance Management Program 
(TAMP), which means they are still eligible for TRICARE. They 
also can use the VA. Their family still has the TAMP benefit.
    And then the guard or reserve member now also has the 
option of buying into TRICARE Reserve Select, some of them are 
going back to their employer-sponsored insurance, and so there 
is a lot of confusion about how all of these benefits work 
together, when do you go to the VA, when do you use TRICARE, 
and it is confusing for the family and the service member. And 
sometimes not knowing where to go keeps people from going 
anywhere and they don't know how these benefit programs work 
together.
    So there is a lot more education that needs to be done, 
because sometimes the families aren't getting any of the 
briefings because they are back at home already, and the 
service member, as has been noted, is in the line, all they 
want to do is go home, and they are not picking up the right 
information that they and their families may need later in 
terms of accessing their health care.
    Colonel Strobridge. I come back, I think, to the point 
where you have DOD people working DOD's side of the problem 
from DOD's perspective. You have VA people working VA's problem 
from the VA's perspective. They are well-intentioned, but there 
is nobody managing and in charge of the whole process. And we 
feel very strongly that there needs to be established a joint 
DOD-VA transition office that is permanently staffed, whose 
mission is to manage people during their last 6 months or 12 
months on active duty through to their first 12 months under 
the VA system, to be in charge of coordinating those efforts so 
it is not just somebody's part-time job.
    And, to us, this would be a full-time, permanent 
organization. To us, that is the only way these problems are 
going to get solved. We have been working on them for 20 years, 
and they are still around. To us, you have got to make is 
somebody's primary job to make it happen and not just a bunch 
of part-time people meeting once a month.
    Mr. Murphy. All right. Thank you.
    Thank you, Mr. Chairman.
    Dr. Snyder. As I mentioned earlier, Susan Davis, the 
congresswoman from California, is in a House Admin meeting, but 
I wanted to ask one question that she had passed on to me, the 
issue of--and I should have asked it myself since I was a 
family doctor in the olden days--but I think I will direct it, 
Mrs. Raezer, to you and to Colonel Strobridge the issue of 
TRICARE and TRICARE providers.
    What are you currently hearing from your folks about how 
they are doing as far as getting a physician that accepts 
TRICARE and how you see that is going?
    Mrs. Raezer. When my association hears from active duty 
family members, the number-one access issue is, as I stated 
earlier, access to an appointment in a military treatment 
facility.
    Now, our guard and reserve families and some of our retiree 
families who are our away from military treatment facilities 
(MTF) also report--and it is sporadic, I mean, there is some 
places where it is difficult to find a provider who understands 
TRICARE or accepts TRICARE, if there is a TRICARE network, will 
be in the TRICARE network.
    What we have found is that the MTF access issue is actually 
noisier for our population, as the military's deployed 
providers. That remains a problem. But we are pleased to see 
some of the efforts, the TRICARE management activity, 
individual TRICARE contractors, in trying to pull more people 
into the network, to pay providers faster, to encourage them to 
accept TRICARE patients.
    Some of the governors, especially in the western states, 
have had some success in appealing to the patriotism of their 
state's providers to say, ``We have this guard and reserve 
population out here, their families need medical care, the 
military retirees need medical care. We need you to accept 
TRICARE,'' and they have had a certain amount of success in 
certain states. Idaho, for example. So it is a community 
effort.
    Dr. Snyder. You may remember that Dr. Schwarz, Joe 
Schwarz----
    Mrs. Raezer. Yes.
    Dr. Snyder [continuing]. And I did a joint statement that 
was put in an American Medical Association (AMA) publication 
nationally regardless of what you think about rates or 
whatever, you need to step forward. I don't know if it did any 
good or not, but we felt better about it.
    Mrs. Raezer. Well, but it is a shame it has to get to that 
level, that you have to result to these appeals to patriotism. 
So there still needs to be continued work on TRICARE 
reimbursement rates. Doctors continue to say they are too low. 
DOD's specific requirements for claims are cumbersome. A lot of 
doctors feel that they are, and they cite that as an example. 
But, luckily, many of the claims are being paid faster, which 
has helped a lot of folks.
    Dr. Snyder. Mr. McHugh, do you have anything further?
    Mr. McHugh. No.
    Dr. Snyder. Ms. Shea-Porter, do you have anything further?
    Ms. Shea-Porter. I just wanted to say thank you again for 
appearing. It has been very, very informative for me, as a new 
member and also as a former military spouse, to see that a lot 
of things haven't changed.
    Dr. Snyder. And there may be members that have questions 
for the record, and, as you know how it works around here, the 
more timely you are in responding, the more it can shape it our 
behavior as we head down this line.
    I want to thank you again for coming back here this week, 
and maybe we will see you next week. Thank you all very much. 
We appreciate you being here.
    This hearing is adjourned.
    [Whereupon, at 4 p.m., the subcommittee was adjourned.]

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                            A P P E N D I X

                           March 1, 15, 2007

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              PREPARED STATEMENTS SUBMITTED FOR THE RECORD

                           March 1, 15, 2007

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                   DOCUMENTS SUBMITTED FOR THE RECORD

                           March 1, 15, 2007

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             QUESTIONS AND ANSWERS SUBMITTED FOR THE RECORD

                           March 1, 15, 2007

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                   QUESTIONS SUBMITTED BY DR. SNYDER

    Dr. Snyder. Retention trends in the Reserve components show 
evidence of erosion over the past year. Given the recent change in 
policy regarding the termination of the 24 month cap on mobilization 
during the declaration of an emergency associated with the War on 
Terrorism, Reservists are now subject to multiple tours on active duty. 
What do you think will be the reaction of reservists to this change in 
policy and how will it affect retention?
    Mr. Hanson. At best the reaction will be a wait and see; the worst 
reaction will be angst.
    With current incentives to enlist and reenlist on Active Duty, 
those Reservists in the Army and Marine Corps who are willing to be 
mobilized are going back on Active Duty to receive the incentive bonus. 
The remaining Reserve population will be those more likely to be 
affected by multiple tours on active duty.
    Army and Army Guard Reservists are pleased that deployments will be 
reduced to 12 months from 18 to 21 month mobilizations. Feedback to the 
Pentagon was that employers found an 18 month deployment not 
manageable.
    The Pentagon hopes that a 1 year mobilization, 5 year at home 
rotation is an ideal number to retain Reservists. (Yet there is already 
talk about requiring a stop loss in the 4th year to insure Reservists 
mobilize).
    The test will be time. If the Pentagon can't meet the goal of 1:5, 
Reservists will lack confidence in Pentagon leadership, and retention 
will erode. If mobilizations last beyond twelve months, retention rates 
will drop.
    One to two military tours are doable; the question will be the 
impact of a third or fourth tour. Pressures from civilian employers and 
family members will determine retention rates. Repeat mobilization will 
add stressors.
    Trust is a key factor. This trust was already shaken by the change 
in DOD policy from 24 months accumulative to 24 months consecutive (to 
align with the law). Additionally, the change in the announced policy 
by Secretary of Defense Gates between January 19, 2007 and April 11, 
2007 has created further doubts. Changing the compensation for extended 
deployment duration from a cash compensation to administrative leave, 
has annoyed a number of Reservists.
    Recent BRAG decisions have also increased the burden on drilling 
Reservists. Promotions tend to be to vacancies, requiring members to 
travel greater distances at greater personal expense. Patriotism is 
quickly offset by negative cash earnings. A day of travel in each 
direction turns a weekend training into a four day exercise, 
complicating matters with an employer.
    The general reaction is that DOD mobilization policies are for the 
good of the services, and not for the individual.
    Retention is the greatest challenge in the mid-level ranks: E6 thru 
E8 and O-3 thru O-5. Current cash incentive programs do not offset the 
pressures of dual careers, and maturing families that face these Guard 
and Reserve members. If the decision isn't made to separate between 10 
and 15 years, then many are leaving when they qualify for retirement at 
20 years.
    TRICARE Reserve Select and the ability to earn an earlier paid 
retirement are the incentives that will encourage these middle managers 
to stay longer.
      While TRS will be optimized on 1 October 2007, TRICARE Standard 
(which is the mechanism for TRS) needs to be made into a premium health 
program that Reservists can use throughout the nation. With portable 
healthcare, many Reservists will have an incentive to remain.
      With many members retiring at around age 40, a retirement at age 
60 is not an attractive investment on personal time. RC members should 
have the ability to earn an earlier retirement by amount and the 
duration of service.
    Benefits and compensation that originated with a strategic Reserve 
60 years ago need to be updated for a Reserve that has evolved into an 
operation force.
    Dr. Snyder. There is a legislative initiative in the fiscal year 
2008 budget to simplify special and incentive pays by combining them 
into fewer categories. Do you support the proposal?
    Mr. Hanson and Mr. Jones. Simplifying pay and incentive systems, 
while an ideal, should never result in the exclusion of individuals or 
skillsets for which the original incentive was intended.
    Dr. Snyder. What are the core Reserve family support programs that 
you believe are critical to families that are not provided now, but 
need to be made available?
    Mr. Hanson. The presumption should not be that all families own 
computers. A family support system that is internet driven is not 
outreach. The Reserve Component services have to get out and contact 
the families. Families should be able to talk to people. Regional and 
state coordinators need to be assigned. Cooperation between the 
services should be emphasized as there is not a need for parallel 
organizations.
    Dr. Snyder. Given that the solutions for many of the retiree and 
survivor issues involve increased entitlement spending, which remains a 
very challenging fiscal reality for the Congress, what alternatives 
might be available to avoid or reduce entitlement spending? How may 
these strategies be applied to concurrent receipt, survivor benefit 
plan, and reserve retirement issues for a number of years?
    Colonel Strobridge and Mr. Jones. The Coalition and Alliance shares 
the Subcommittee's frustration that entitlement spending rules have 
constrained the Subcommittee's capacity to redress these severe, 
multiple inequities. It has not been easy to see these rules applied to 
military compensation programs when there have been so many instances 
in which Congress has waived the same rules to approve other, far 
larger, entitlement program and revenue changes. Nevertheless, the 
Coalition has continually expressed its willingness to work with the 
Subcommittee to find ways to continue to make progress on these 
important issues. One way is to prioritize needs. On concurrent 
receipt, we believe the most severe inequities involve the 
ineligibility of severely injured members who are forced into medical 
retirement before attaining 20 years of service, and the exclusion of 
unemployables from eligibility for immediate, full concurrent receipt. 
On the Survivor Benefit Plan, one alternative would be to phase out the 
DIC offset over a period of years. On the issue of Reserve retirement, 
the Coalition has supported a reduced-cost option to reduce the Reserve 
retirement age by 3 months for every 90 days mobilized since 9/11/01.
    Dr. Snyder. Both of your organizations would support the lifting of 
product limitations established in the ASER. Given that the jewelry and 
furniture industries are still comprised of small local retailers in 
many sections of the country, how do you propose to protect the 
interest of those businesses while lifting the ASER restrictions on 
jewelry and furniture in the military exchanges?
    Mr. McAlister. To the extent that the premise of this question is 
accurate, the Congress has established a methodology to deal with these 
concerns. In the absence of a credible threat to small, local 
retailers, the presumption should not be to restrict the military 
member and the military family.
    Military installations routinely become key parts of their 
respective communities. In addition to being an excellent source of 
employment, military installations are good neighbors and military 
families, more often than not, live in the community and have an 
unquestioned positive impact on the local economy.
    It isn't equitable to continue to recognize this overall good by 
universally restricting consumer choice solely because the individual 
carries a military identification card in his/her wallet. The question 
appears to assume incorrectly that a threat to local small business 
will arise in every case. That simply is not the case.
    Lifting the existing restrictions will certainly encourage military 
beneficiaries to show on the installation, where the ``profits'' are 
returned to Service members in the form of MWR dividends. Beyond that, 
and unlike the environment outside the installation's gate, the 
interest rate charged for credit purchases is reasonable. Star Card 
payments can be suspended when the Service member is deployed and the 
stress on the family is greater. And when a Service member pays with 
his or her life, Star Card account balances are eliminated. ASER 
restrictions take these options and advantages away from the Service 
member.
    The ALA position is that restrictions should be lifted and that 
military Service members and their families should be allowed to shop 
freely with maximum choice and personal discretion when shopping for 
products currently restricted by the ASER.
    Dr. Snyder. Your statement makes the case that DOD has been given 
sufficient time to develop a common base access card and process to 
give vendor employees easier and less costly base access. Given that 
the establishment of security standards are the responsibility of the 
local commanders, wouldn't a common base access card inappropriately 
intrude on that responsibility? Is the burden on our retail friends so 
cumbersome and costly that Congress should instruct the DOD on base 
security matters?
    Mr. McAlister. DOD has certainly had enough time to develop and to 
begin distributing a credential to vendors and other service personnel 
who provide a valuable service to the military community on 
installations around the world and who rely on reasonable access to 
military installations on a daily (or moderately less frequent) basis.
    We admittedly do not understand fully DOD's logic behind the course 
it decided to pursue to get a credential into the hands of this 
population. An extension of the existing CAC (Common Access Card) seems 
to us to have been a more direct and more easily implemented solution. 
The CAC's chip could identify the bearer as a vendor; the limited 
access that that implies and a distinctive outer marking (perhaps a 
stripe of a bold color) could send the same message on sight.
    Indeed, the proposed identification credentials being developed 
through outsourcing look extremely similar to the CAC. DOD appears to 
be taking a needlessly circuitous route to a solution.
    With millions of Common Access Cards issued and currently in the 
hands of DOD personnel and contractors, the Defense Department has 
learned how to issue and make use of smart ID cards. The opportunity to 
take advantage of a fairly straight-forward solution has apparently 
been missed.
    As we became more aware of DOD's chosen course of action, ALA began 
to work closely with the only contractor we could identify who was 
approved by DOD and was working on a solution that will be fully 
compliant with HSPD-12.
    Without pointing fingers or seeking to fix blame, ALA and its 
member companies remain extremely frustrated that the process moves 
forward at a pace that can only be described as glacial. At times, 
there appeared to be no forward movement at all.
    If, however, this remains DOD's chosen course, ALA will continue to 
collaborate, we will continue to be part of the solution, and we will 
continue to be impatient with the remarkably slow movement evident in 
this regard.
    As an aside, when we do get to the point that credentials (that are 
HSPD-12 compliant) can be issued, ALA's Board of Directors has decided 
that the credentials will be made available to ALA members at cost, as 
a ``benefit'' of membership.
    We have reached this position in an environment where credentials 
that are not HSPD-12 compliant are available (and often sanctioned) at 
rates and fees that are easily described as exorbitant.
    It is unfortunate that many installations have had no choice, but 
to sanction these overpriced options. Installation commanders are under 
pressure to maintain security while ensuring the installation remains 
viable as a community where people live and conduct commerce.
    Just as the Department issues a Department-wide credential for 
active duty, Reservists, family members, retirees, contractors, and 
others, it should do the same for vendors. Just as the existing 
Department-wide credentials do not ``inappropriately intrude'' on the 
responsibility of local commanders, neither would our proposal. In 
fact, commanders would be aided by our proposal. In no case would 
anything we propose interfere with the ultimate authority of a 
commander to make binding decisions regarding base access.
    Dr. Snyder. You both would oppose any proposal to force the 
consolidation of the exchanges to increase cooperation on certain 
business functions. Given the history that would suggest that the 
exchanges are not inclined to seek opportunities to cooperate, why do 
you believe that they are now prepared to move forward?
    Mr. McAlister. Rear Admiral Cowley (Commander, NEX) has observed 
that one of the benefits of the Unified Exchange Task Force effort is 
that the Exchanges now know a lot more about each other's business 
practices and operations. As a result, the stage is better set for the 
Exchanges to find common ground upon which to cooperate with the net 
result being better business practices and a better benefit for the 
Service member and the military family.
    The current generation of Exchange leadership gives every 
indication that they see the benefits of cooperative efforts--both 
individually and collectively. As these gentlemen move on in their 
professional and personal lives, ALA remains hopeful that their 
successors will see the wisdom of collaboration to the extent that it 
is mutually beneficial.
    Finally, as Mr. McHugh insightfully alluded during the recent 
hearing when the Exchange leaders testified, if cooperative efforts are 
substantive and their results are not fruitful, there is nothing to 
preclude another effort by the Department or others to consolidate the 
Exchanges.
    Dr. Snyder. There is evidence that the exchanges and the commissary 
service are now discussing options for operating combined stores with 
both exchange and commissary goods being sold under one roof. From your 
business perspective, do you believe it could be efficiently 
accomplished? What are the sticking points that prevent this 
consolidation and do you believe the necessary compromises can be 
achieved?
    Mr. McAlister. There are two refreshing aspects to this initiative 
that deserve mention. The first is that DeCA and the Exchanges are 
discussing the possibility from the perspective of improving the 
benefit (and the shopping experience) for the Service member and the 
military family. As long as this remains the focus, this effort will 
not go off track. The second positive aspect is the apparent attitude 
with which all parties are proceeding: one of ``can do''.
    There are several obstacles to making this a reality. A short list 
includes: the APF/NAF dichotomy, personnel systems and payroll 
differences, credit card transaction merchant fees, and the differing 
store operation costs between grocery and department stores. There are 
certainly others, but none are insurmountable, if all concerned truly 
have a common goal. Whether the solutions lie in statutory or policy 
changes, a mature, responsible approach will certainly convince the 
Congress and/or the Department of Defense that the ideas are sound and 
worthy of support.
    Finally, other difficulties that would have been ``show stoppers'' 
a few short years ago, can now be addressed formally and with 
technology; again, if all concerned want to reach consensus and a 
solution.
    Dr. Snyder. What is the greatest concern for families who are being 
impacted by the high operational tempo? Is additional compensation 
enough to offset the stress of deployments?
    Mrs. Raezer. The greatest concern for families is the effect, both 
ongoing and future, of frequent, long deployments on the stability of 
family relationships and well-being. Families tell us the impact of 
deployment is cumulative--each deployment brings different stresses 
that are added to the unresolved stresses of the previous deployment 
and reunion. Unpredictability also takes its toll to families who are 
never sure when the service member's departure date for deployment will 
be accelerated or when the service member's time in theater will be 
extended. Families report the service member's time at home between 
deployments is too short for the family to recover fully from the 
deployment. Service members are barely home, it seems, before they are 
training to go again. Families are especially worried about the effects 
of separation and deployment stress on their children. They also fear 
the possible mental health issues that will affect the service member 
on his or her return. A consistent level of support services, including 
mental health services, must be available at all times, not just when 
the service member is deployed.
    Additional deployment-related compensation helps a family deal with 
the additional expenses and financial stressors often associated with a 
deployment--additional child care, mailing packages, larger phone 
bills, household and auto repair expenses. However, it does nothing to 
relieve the far greater stresses on spouses and children caused by 
their worry about the service member's safety and the long-term effects 
of family separation on family well-being. Additional money may make 
deployment more palatable for some, who see the extra cash as a way to 
save for long term financial security or to pay off debts, but it does 
not reduce the underlying stress families experience when someone they 
love is deployed to a war zone. In some cases, the offer of large tax 
free retention bonuses in theater poses a difficult choice for service 
members who know the toll deployment takes on themselves and their 
family, but also crave the financial security this money would bring. 
The consequences can be complex for the family when a service member, 
without the benefit of a face to face family discussion, makes the 
decision in theater to re-enlist and accept the bonus even though they 
know this decision practically guarantees they will have to deploy 
again.
    Dr. Snyder. Are DOD and the Services doing enough to support spouse 
education and, if not, what more needs to be done?
    Mrs. Raezer. DOD and the Services have made greater strides in the 
area of spouse employment than spouse education, but are now beginning 
to do more to support military spouses' educational goals. The biggest 
task is increasing the understanding of states and institutions of 
higher learning about the unique educational needs of military spouses. 
Because of the family demands of deployments and frequent moves, 
military spouses are more likely to be part-time students. They need to 
be able to transfer credits from school to school with ease and need 
access to scholarships or other financial support for which part-time 
students are eligible. Military spouses are very focused on obtaining 
education that will launch them in portable careers. DOD must do more 
to work with the Department of Labor and private entities to provide 
opportunities for military spouses to obtain job certifications. The 
Services must more consistently open up the support of their education 
centers to military spouses, which means they must not cut essential 
staff in these centers. Because many of the most significant barriers 
to military spouse education are at the school or state level, we have 
been pleased DOD has become more proactive in making states aware of 
the educational needs of military families. States control issues such 
as eligibility for in-state tuition and licensing and certification 
requirements for many positions. They must be encouraged to become more 
military-friendly and ease the educational and employment transitions 
of military spouses.
    We have been watching the Army pilot allowing service members 
eligible for certain retention bonuses to choose to transfer up to one-
half of their Montgomery GI Bill benefit to spouses. Since a lack of 
financial assistance is one of the key barriers to military spouse 
education, military families often ask why a service member cannot 
transfer some of their GI Bill benefit to family members.
    Dr. Snyder. TRICARE's physician payment rates are tied to 
Medicare's rates. I understand that Medicare's rates may be cut in 
2008. What will the impact be on beneficiaries if TRICARE's rates are 
reduced as a result of the Medicare cut?
    Mrs. Raezer. NMFA believes that cuts in Medicare, and thus TRICARE, 
rates will make providers more reluctant to treat TRICARE patients. 
While some may continue to treat current TRICARE patients, they may 
balk against taking any new ones, which could be critical because of 
the military's mobility and because so many uniformed medical personnel 
are being deployed, thus reducing capacity of military treatment 
facilities. We've been pleased that some Governors have reached out to 
doctors in their states, urging them to accept TRICARE patients despite 
the low reimbursement rates. We need doctors everywhere to participate 
in TRICARE so the families of deployed National Guard and Reserve 
service members and the members and families now paying premiums for 
TRICARE Reserve Select coverage have access to providers. We are 
already hearing from some states that reduced Medicare/TRICARE 
reimbursement rates for mental health services are causing some 
providers to cut their TRICARE patient loads. While TRICARE is now a 
very fast payer in most cases, there are still administrative burdens 
that, tied with lower reimbursement rates, will discourage providers 
from accepting military families as patients.
    Dr. Snyder. Are DOD and the services doing enough to support spouse 
education and, if not, what more needs to be done?
    Mrs. Raezer. DOD and the military Services have made tremendous 
strides in supporting military spouse employment by entering into 
partnerships with corporate employers and working with states to ease 
the transferability of professional licenses and to provide 
unemployment compensation to spouses who must quit their job when their 
service member receives Permanent Change of Station orders. However, 
support for military spouse education has been more problematic. 
Military spouses clearly recognize the importance of education and are 
driven by a personal commitment to achieve their education goals and 
improve their families' futures by finding employment in their chosen 
field. The military lifestyle--frequent moves and deployments--creates 
barriers to their educational advancement. The challenge to complete a 
degree before the next move or continue their education during a 
deployment forces family decisions about keeping families together, 
putting spouses' education goals on hold, or changing their education 
paths mid-stream.
    DOD be prepared to assist military spouse-scholars in overcoming 
the obstacles they face: balancing education, work, and family; 
overcoming the high cost of education pursuits; dealing with lengthy 
and multiple deployments, frequent moves, and the lack of access to or 
understanding of available support resources. It must also work with 
the states and with educational institutions to ensure spouse-scholars 
have a level playing field with other students. DOD must make more 
part-time child care available so that military spouses can pursue 
their education. It must improve outreach by the Service installation 
education centers to ensure spouses know of the assistance available to 
them. It must also continue its work with the states to expand in-state 
tuition benefits. NMFA would also ask Congress to consider an expansion 
of the limited authority for service members to transfer some of their 
Montgomery GI Bill to their spouses as a way to help the entire 
military family.
    Dr. Snyder. Given that the solutions for many of the retiree and 
survivor issues involve increased entitlement spending, which remains a 
very challenging fiscal reality for the Congress, what alternatives 
might be available to avoid or reduce entitlement spending? How may 
these strategies be applied to concurrent receipt, survivor benefit 
plan, and reserve retirement issues for a number of years?
    Colonel Strobridge and Mr. Jones. The Coalition shares the 
Subcommittee's frustration that pay-go spending rules have constrained 
the Subcommittee's capacity to redress these severe, multiple 
inequities. It has not been easy to see these rules applied to military 
compensation programs when there have been so many instances in which 
Congress has waived the same rules to approve other, far larger, 
entitlement program and revenue changes. Nevertheless, the Coalition 
has continually expressed its willingness to work with the Subcommittee 
to find ways to continue to make progress on these important issues. 
One way is to prioritize needs. On concurrent receipt, we believe the 
most severe inequities involve the ineligibility of severely injured 
members who are forced into medical retirement before attaining 20 
years of service, and the exclusion of unemployables from eligibility 
for immediate, full concurrent receipt. On the Survivor Benefit Plan, 
one alternative would be to phase out the DIC offset over a period of 
years. On the issue of Reserve retirement, the Coalition has supported 
a reduced-cost option to reduce the Reserve retirement age by 3 months 
for every 90 days mobilized since 9/11/01.
    Dr. Snyder. I think we can all agree that this is a very difficult 
recruiting and retention environment. Do you believe that the services 
are well postured to recruit the quality force that you believe is 
needed?
    Colonel Strobridge. It's difficult to assert that the Army is well-
postured to do that. In the current environment, it's clear that the 
Army is straining to meet its recruiting numbers and has had to ease 
some quality norms in order to make its goal. We certainly don't fault 
the Army for doing that; we believe they have done well to meet their 
goal under these conditions. We'd prefer that they didn't have to relax 
quality guidelines to do so, but we expect that trend will continue 
this year.
    Dr. Snyder. I noted in your statement that you call for an enhanced 
pay raise of at least 3.5 percent, .5 percent above the budget request. 
By my calculation, the pay gap has been reduced to 3.9 percent. While I 
recognize that additional compensation is always a useful benefit, 
isn't the 3.9 percent gap just a rough measure of comparability and 
aren't we in the comfort zone so long as we remain close to private 
sector pay raises?
    Colonel Strobridge and Mr. Barnes. The Military Coalition believes 
strongly that pay comparability with private sector workers is a 
fundamental underpinning of the All-Volunteer Force. From that 
standpoint, we either hold to the comparability standard or we don't. 
Unfortunately, ``close'' is in the eye of the beholder. In the past, 
whenever we've rationalized deviating from the comparability standard, 
this has inevitably led to additional deviations that ultimately 
created a pay gap that caused a retention problem. For the last two 
years, the military pay raise hasn't even matched inflation, which 
means that military pay has actually declined in purchasing power. 
Virtually every knowledgeable military personnel manager agrees that 
today's force is overstretched, and that isn't going to change in the 
near future. The whole point of the pay comparability standard is to 
prevent retention problems rather than being forced to react to them 
after they occur. By that criterion, the Coalition believes it is as 
important now as it has been at any time in the past to continue making 
steady progress toward restoring full pay comparability. Every military 
member knows the real meaning of ``close enough for government work.'' 
That's a message we shouldn't be sending them about our commitment to 
their pay comparability.
    Dr. Snyder. Your statement makes clear your objection to any effort 
to ``civilianize'' the military retirement system. But what do you say 
to young service members who desire a more flexible retirement system 
that affords them greater portability and immediate cash rewards for 
continued service?
    Colonel Strobridge and Mr. Barnes. The military retirement system 
offers better benefits than civilian retirement systems precisely 
because military service entails more arduous service conditions than 
civilians have to endure, and earning military retirement eligibility 
requires service under those conditions for a period of two decades or 
more. The primary reason for the military's unique retirement system is 
its crucial role in maintaining national military readiness. There is 
no more evidence of its value than today's high-stress environment. If 
today's members with 10 to 12 years of service, facing a third tour in 
Iraq, had a choice to separate with a pro-rata share of their 
retirement, we believe the Army would be undergoing a severe retention 
crisis as well as a major recruiting challenge. In essence, offering 
vesting for reduced service actually reduces the incentive value for 
career service. Thus, if we had a vesting system, the military would 
have to offer additional incentives for continued service--in other 
words, the government would have to bid against itself for members' 
service. The Military Coalition's primary concern is maintaining a 
strong national defense through incentivizing career service of quality 
personnel. Over the last 40 years, there has been recurrent criticism 
of the expense of the military retirement system--enough so that the 
Coalition believes neither the Executive Branch nor the Legislative 
Branch has shown much interest in significantly increasing expenditures 
on military retirement. But that is precisely what would have to happen 
to sustain a career force under a vesting system. The alternative 
scenario offered by various studies, which the Coalition does not 
support, would be to offset those costs by extending the retirement age 
or other effective reductions in career compensation. The Coalition 
does not support cutting benefits for people who serve full careers in 
order to fund additional compensation for those who choose to leave 
service before serving full careers.
    Dr. Snyder. Given that the solutions for many of the retiree and 
survivor issues involve increased entitlement spending, which remains a 
very challenging fiscal reality for the Congress, what alternatives 
might be available to avoid or reduce entitlement spending? How may 
these strategies be applied to concurrent receipt, survivor benefit 
plan, and reserve retirement issues for a number of years?
    Colonel Strobridge and Mr. Jones. The Coalition shares the 
Subcommittee's frustration that entitlement spending rules have 
constrained the Subcommittee's capacity to redress these severe, 
multiple inequities. It has not been easy to see these rules applied to 
military compensation programs when there have been so many instances 
in which Congress has waived the same rules to approve other, far 
larger, entitlement program and revenue changes. Nevertheless, the 
Coalition has continually expressed its willingness to work with the 
Subcommittee to find ways to continue to make progress on these 
important issues. One way is to prioritize needs. On concurrent 
receipt, we believe the most severe inequities involve the 
ineligibility of severely injured members who are forced into medical 
retirement before attaining 20 years of service, and the exclusion of 
unemployables from eligibility for immediate, full concurrent receipt. 
On the Survivor Benefit Plan, one alternative would be to phase out the 
DIC offset over a period of years. On the issue of Reserve retirement, 
the Coalition has supported a reduced-cost option to reduce the Reserve 
retirement age by 3 months for every 90 days mobilized since 9/11/01.
    Dr. Snyder. TRICARE's physician payment rates are tied to 
Medicare's rates. I understand that Medicare's rates may be cut in 
2008. What will the impact be on beneficiaries if TRICARE's rates are 
reduced as a result of the Medicare cut?
    Colonel Strobridge. We believe there will be a significant adverse 
impact on military beneficiaries if Medicare and TRICARE physician 
payment rates are cut in 2008, and that the impact will be even more 
severe on TRICARE-eligibles than on Medicare-eligibles. The reason is 
that TRICARE imposes even more administrative requirements on providers 
than Medicare does, and most providers have fewer TRICARE-eligible 
patients than Medicare-eligible patients. Further, TRICARE has yet to 
implement the payment increases implemented by Medicare for 2007 for 
physicians who comply with certain quality standards. All of these 
circumstances--lower payment levels, greater administrative hassles, 
and lower patient volume--lead providers to drop TRICARE patients 
before dropping Medicare patients. The impact will be greatest for 
those beneficiaries who don't live in the vicinity of military 
installations. Among other adverse consequences, many of our Guard and 
Reserve families to whom Congress has recently extended TRICARE 
eligibility may find themselves in the situation that local doctors 
will refuse to accept them as patients.
    Dr. Snyder. The President's budget proposes to increase the end 
strength for the Army and Marine Corps. However, the Navy and Air Force 
continue their personnel drawdown. What is the impact been on personnel 
in the Navy and Air Force as a result of the continued drawdown during 
a time of war?
    Mr. Barnes. The inadequacy of service end strengths relative to 
prosecuting the war effort and other operational commitments is wearing 
down Navy and Air Force personnel, impacting recruiting and retention 
levels and service members' quality of life. We're aware of this from 
interaction with active duty and Reserve personnel and their spouses 
and key indicators such as the reappearance of the term ``hollow 
force'' in conjunction with the Guard and Reserve Commission's work, 
and numerous press reports and editorials about strains not only on the 
Army and Marine Corps but all services. The situation was also 
referenced in recent discussions with members of the National Academies 
Naval Studies Board who referenced Navy ships being understaffed due to 
shortages of personnel in key ratings and the need for senior enlisted 
personnel to cover the responsibilities for the vacant personnel in 
addition to their own. The Navy is assuming reduced end strength 
requirements before new platforms with dramatic new technologies are 
commissioned and put into service in the fleet. In addition, more ships 
are needed and may be authorized in the pending FY 2008 National 
Defense Authorization Act.
    The Air Force budget has been restricted to the point that a 
reduction in personnel is necessary in order to update an aging fleet 
of aircraft and equipment. To meet those required reductions in our 
enlisted force, the Air Force instituted a date of separation rollback 
and employed other tools such as, restricting Career Job Reservations, 
reduction in accessions, and the Non-Commissioned Officer Retraining 
Program.
    Overall, the Air Force's goal is a reduction of over 10,000 
enlisted members by the end of FY07. Although difficult, the budget 
necessitates personnel reductions in order to ensure the Air Force 
maintains the equipment and right size and mix of forces to meet the 
fiscal and global challenges of today and tomorrow.
    Significant resources are committed to the training and development 
of service personnel over a number of years and it's impossible to 
simply advertise and refill positions that have been eliminated in 
order to achieve budget savings to free up funds for weapons and 
hardware. In short, military readiness is significantly compromised 
when arbitrary reductions are implemented--only to have to be 
reinstated thereafter.
    Dr. Snyder. I noted in your statement that you call for an enhanced 
pay raise of at least 3.5 percent, .5 percent above the budget request. 
By my calculation, the pay gap has been reduced to 3.9 percent. While I 
recognize that additional compensation is always a useful benefit, 
isn't the 3.9 percent gap just a rough measure of comparability and 
aren't we in the comfort zone so long as we remain close to private 
sector pay raises?
    Colonel Strobridge and Mr. Barnes. The Military Coalition believes 
strongly that pay comparability with private sector workers is a 
fundamental underpinning of the All-Volunteer Force. From that 
standpoint, we either hold to the comparability standard or we don't. 
Unfortunately, ``close'' is in the eye of the beholder. In the past, 
whenever we've rationalized deviating from the comparability standard, 
this has inevitably led to additional deviations that ultimately 
created a pay gap that caused a retention problem. For the last two 
years, the military pay raise hasn't even matched inflation, which 
means that military pay has actually declined in purchasing power. 
Virtually every knowledgeable military personnel manager agrees that 
today's force is overstretched, and that isn't going to change in the 
near future. The whole point of the pay comparability standard is to 
prevent retention problems rather than being forced to react to them 
after they occur. By that criterion, the Coalition believes it is as 
important now as it has been at any time in the past to continue making 
steady progress toward restoring full pay comparability. Every military 
member knows the real meaning of ``close enough for government work.'' 
That's a message we shouldn't be sending them about our commitment to 
their pay comparability.
    Dr. Snyder. Your statement makes clear your objection to any effort 
to ``civilianize'' the military retirement system. But what do you say 
to young service members who desire a more flexible retirement system 
that affords them greater portability and immediate cash rewards for 
continued service?
    Colonel Strobridge and Mr. Barnes. The military retirement system 
offers better benefits than civilian retirement systems precisely 
because military service entails more arduous service conditions than 
civilians have to endure, and earning military retirement eligibility 
requires service under those conditions for a period of two decades or 
more. The primary reason for the military's unique retirement system is 
its crucial role in maintaining national military readiness. There is 
no more evidence of its value than today's high-stress environment. If 
today's members with 10 to 12 years of service, facing a third tour in 
Iraq, had a choice to separate with a pro-rata share of their 
retirement, we believe the Army would be undergoing a severe retention 
crisis as well as a major recruiting challenge. In essence, offering 
vesting for reduced service actually reduces the incentive value for 
career service. Thus, if we had a vesting system, the military would 
have to offer additional incentives for continued service--in other 
words, the government would have to bid against itself for members' 
service. The Military Coalition's primary concern is maintaining a 
strong national defense through incentivizing career service of quality 
personnel. Over the last 40 years, there has been recurrent criticism 
of the expense of the military retirement system--enough so that the 
Coalition believes neither the Executive Branch nor the Legislative 
Branch has shown much interest in significantly increasing expenditures 
on military retirement. But that is precisely what would have to happen 
to sustain a career force under a vesting system. The alternative 
scenario offered by various studies, which the Coalition does not 
support, would be to offset those costs by extending the retirement age 
or other effective reductions in career compensation. The Coalition 
does not support cutting benefits for people who serve full careers in 
order to fund additional compensation for those who choose to leave 
service before serving full careers.
    Dr. Snyder. If Congress is only able to move forward on one issue 
that would have the highest impact on retirees and survivors, what 
would that be?
    Colonel Strobridge and Mr. Barnes. This is like the sword of 
Damocles dangling over our heads by a thread. The question on selecting 
one priority from many that affect military retirees and survivors will 
hang over us until Congress and the administration set aside the 
irresponsible behavior of putting non-defense, lesser priority programs 
ahead of defense and higher priorities within the national budget.
    The issues--of eliminating the remaining inequities within the SBP 
program, correcting a death gratuity benefit system to ensure 
caregivers of minor children are not overlooked, rebalancing the 
USFSPA, or ending the bar on disabled military retirees from collecting 
a full retirement--will hang over us, until congressional influence is 
applied, strong effort is given, and a way is found to fix the issues.
    In this regard, it is important to point out that the current 
defense budget, at the height of the War on Terror, represents only a 
little more than 4 percent of the gross national product, as opposed to 
the average of 5.7 percent of GNP in the peacetime years between 1940 
and 2000.
    It should be clear to even the casual observer that if we cannot 
meet the benefits military retirees earned and richly deserve within a 
$2.9 trillion budget, then something is desperately wrong with the 
priorities being selected.
    Dr. Snyder. Both of your organizations would support the lifting of 
product limitations established in the Armed Services Exchange 
regulations (ASER). Given that the jewelry and furniture industries are 
still comprised of small local retailers in many sections of the 
country, how do you propose to protect the interests of those 
businesses while lifting the ASER restrictions an jewelry and furniture 
in the Military exchanges?
    Mr. Becker. It does not appear feasible for either the Armed Forces 
Marketing Council (AFMC) or its member firms to undertake protecting 
the interests of small local retailers in the vicinity of exchange 
stores. Other than to encourage the exchange services to limit their 
sales of these items to authorized patrons only, there is little else 
the AFMC can do. Our primary mission is to ensure that we supply 
consumer products to the military resale systems at the best possible 
prices and value. The primary mission of resale systems is to have 
those products available and to offer a non-pay compensation benefit to 
military members and tier families.
    It is the AFMC's contention that further lifting of the 
restrictions on furniture and jewelry is both necessary and prudent, 
and would yield very positive results both for the patrons and the 
exchange services. While local retailers may lose some sales, the 
impact has been determined to be negligible and is far outweighed by 
the benefits to be gained.
    Furthermore, the exchange services are to be held to operating by 
business standards and required to produce profits to subsidize MWR 
programs, they should be allowed to compete, as would any normal 
private sector business enterprise. It should be noted that over the 
years ASER restrictions have been relaxed selectively without the 
predicted adverse economic impact and furor from the private sector.
    The construction and renovation restriction prohibits many exchange 
stores from stocking any furniture, and in those stores that can stock 
it the selection is severely limited. Furthermore, the wholesale cast 
limitation of $900 per unit, established ten years ago, precludes the 
sale of many quality brands, and within same brands, full suites (e.g., 
bedroom or dining room) cannot be made available, because one item 
within the suite exceeds the wholesale cost limitation. These 
restrictions are of particular concern in the face of BRAC 2005 and 
force realignments that will accelerate the relocation tempo for 
families, and in turn trigger an increase in the need for furniture 
purchases, particularly for those returning from overseas locations.
    The prohibition on the sale of individual diamond stones exceeding 
one carat precludes the sale of the fastest growing segment of the 
jewelry business.
    Given these restrictions, military families are forced to shop 
``outside the gate'' where they encounter significantly higher prices, 
as well as much higher interest rates that are often presented 
deceptively.
    By lifting the ASER restrictions placed on these product 
categories, military families will be able to purchase these items in 
the exchanges where they qualify for the unique set of terms that are 
available to support the exceptional conditions of military service:

     For those who pay the ultimate sacrifice, Star Card 
account balances are written off
     Deferment of Star Card payments and interest is available 
to Service members during hazardous area deployments, significantly 
lightening the stressful financial burden often faced by families, as 
well as giving peace of mind to the deployed
     Star Card interest rates of about 12% are significantly 
lower than private sector rates of as much as 20% or higher
     Patron savings are consistently 20% or higher
     Affordable delivery service
     Worldwide availability of repairs, returns, and trade-up 
policy on diamonds

    Ultimately, the real issue is whether Service members and their 
families deserve to have these products available. If so, their 
interests must take precedence over the interests of the businesses 
outside the gate.
    Dr. Snyder. You both oppose any proposal to force the consolidation 
of the exchanges. However, you seem to be supportive of current efforts 
by the exchanges to increase cooperation on certain business functions. 
Given the history that would suggest that the exchanges are not 
inclined to seek opportunities to cooperate, why do you believe that 
they are now prepared to move forward?
    Mr. Becker. The Armed Forces Marketing Council (AFMC) does not 
agree with the suggestion that the exchange services are not inclined 
to seek opportunities to cooperate. Despite the complexities and 
justifiable differences of operations, exchanges have a long history of 
cooperative efforts that have been under appreciated.
    Informal collaboration among the exchange services has taken place 
for decades in some areas including procurement and supply, especially 
in overseas markets. A more expanded cooperative effort began in 1991 
following the penning of a note by then Chairman of the Joint Chiefs of 
Staff, General Colin L. Powell, on a JCS memorandum regarding exchange 
consolidation. His note stated that exchanges were financially sound, 
and that the three systems should be challenged to achieve savings 
through ``collaboration rather than consolidation.''
    The Exchange Cooperative Efforts Board (ECEB) was established to 
develop and implement mutually beneficial operating efficiencies. 
Specific areas addressed have included, merchandising, store 
operations, non-retail operations, distribution and logistics, 
finances, human resources, information technology (IT), and 
administration and organization. To better facilitate the work of the 
ECEB, the exchange services have positioned staff members at each 
other's headquarters whose mission is devoted solely to cooperative 
efforts. The AFMC believes there are positive, practical steps that 
will improve the foundation on which collaborative efforts will advance 
in the future.
    In April 2006, the exchange commanders signed a joint letter to 
their respective Boards of Directors committing themselves to a new 
level of commitment through direr leadership involvement in achieving 
cooperative working relationships. Some successful examples of 
cooperative efforts include the establishment of the combined catalog 
programs, internet shopping and fulfillment operations, and Star Card 
programs.
    Given the above efforts and achievements, the AFMC is convinced the 
exchange services are sincerely committed to seeking continued 
opportunities to cooperate in appropriate business functions.
    Dr. Snyder. There is evidence that the exchanges and the commissary 
service are now discussing options for operating combined stores with 
both exchange and commissary goods being sold under one roof. Front 
your business perspective, do you believe it could be efficiently 
accomplished? What are the sticking points that prevent this 
consolidation and do you believe the necessary compromises can to 
achieved?
    Mr. Becker. Commissaries and exchanges as they currently operate 
are viewed as ``premier quality of life benefits'' that are highly 
valued by military members and their families and contribute to 
recruiting, retention, and readiness.
    It is the contention of the Armed Forces Marketing Council (AFMC) 
that any effort to combine the operation of commissaries and exchanges 
could reduce the value of the benefit by shifting the sale of many 
commissary items, now sold at cost, at marked up prices. The Council 
does recognize that under certain circumstances, such as base closures, 
it might not be economically feasible to operate and maintain separate, 
stand-alone commissary stores. This should be the only circumstance 
under which some form of combined operation should be considered. Where 
one is required, it is the opinion of the AFMC that the overriding 
objective should be retention of the commissary benefit to patrons.
    Granted that combination under one roof might produce efficiencies 
from shared equipment, supplies, and facilities, the single most 
complex problem will arise when it becomes necessary to address the 
division of overlapping product categories; such as, health and beauty 
care, beverages, pet food, cleaning supplies, batters, and myriad 
household products. To eliminate these items from either commissaries 
or exchanges will have adverse consequences for ore or the other.
    Should those items be removed from the commissary stock assortment 
in a combined store, patrons will no longer be able to purchase the 
items at cost as is now the case, and the compensation value of 
commissaries will be severely reduced. This would result in reduced 
patronage of the stores and reduced surcharge revenue for DeCA, so 
necessary for construction, renovation, and equipment procurement.
    Conversely, if the items are removed from the exchange stock 
assortment in a combined store, patronage and sales will decrease with 
a resultant reduction in earnings for recapitalization and dividend 
contributions to MWR funding. The MWR shortfall would require an offset 
by appropriated funds or a reduction in services to service members and 
their families.
    While there is little doubt that compromises can be reached, they 
cannot be achieved without adverse consequences to one or both systems, 
and ultimately to the patrons.
                                 ______
                                 
                   QUESTIONS SUBMITTED BY MRS. DRAKE
    Mrs. Drake. How do you view the current status and/or process for 
base credentialing? Is it on track for a timely implementation?
    Mr. McAlister. Although DOD has provided guidance regarding 
physical security, a well-defined road map to meet DOD's objectives has 
been difficult to find. In order to have a timely implementation a 
well-defined plan needs to be established and communicated to all 
parties, funds allocated to support the security system, and personnel 
to deploy the program to every military installation.
    Mrs. Drake. What suggestions or recommendations, based on industry 
best practices, could be utilized for the Department of Defense's 
credentialing program?
    Mr. McAlister. The following is an overview regarding best 
practices:

    1. Industry Best Practices Already In Place with DOD:

      a.  Network: DOD is already using best practices from the banking 
industry as part of the trust model to exchange credential information 
with the DOD network.

      b.  Credential: The standards developed by NIST for the actual 
credential are consistent with industry basic security standards.

      c.  Credential Process: DOD's process for establishing the 
identity of the corporation, corporate sponsor, and corporate employee 
requiring base access are consistent with industry best practices.

      d.  Credential Security: DOD supports industry best practices for 
record keeping, auditing and the minimum standards to avoid 
compromising the entire process and undermining trust in the 
credential.

    2. Industry Best Practices DOD should follow to insure success:

      a.  Implementation: One of industry's fundamental best practices 
for credential program is utilize input from everyone involved in the 
process (Base access representatives, Federated network provider, 
Credential sponsors, etc.) to minimize potential problems when 
deployment takes place.

      b.  Communication: Insuring everyone understands their roles and 
responsibilities are a fundamental best practice. DOD needs to insure 
information is distributed effectively and on a timely manner to 
everyone involved in the credential program.

      c.  Funding: To insure successful a program must be fully funded 
for:

        i.   Equipment to authenticate HSPD-12 compliant credentials at 
the base access point.

        ii.  Resources to validate DOD employees backgrounds and 
provide FIPS 201 compliant credentials as quickly as possible.

        iii.  Updating software at every location on base to insure the 
software fully meets HSPC-12 security standards.

    Mrs. Drake. In your written statement, you state your view that the 
Department of Defense missed an opportunity to assume a role in the 
implementation of a Department-wide system to provide base access 
credentials to those non-DOD employees who do business on military 
installations on a frequent--often daily--basis. It is my concern that 
this seeming lack of interest will create an additional expense that 
will find its way into the cost of goods for our service members. What 
are your recommendations to resolve the potential for such a situation? 
Based on the DOD directive on security each of the services are 
responsible for providing guidance to their installation commanders.
    Mr. McAlister. We see great potential for our ALA credential team 
to have a meeting with those who will be involved in developing the 
guidance for each of the services. The meeting would enable us to 
explain our Federated PIV credential program and their ability to 
authenticate information for contractors. Although senior DOD officials 
have indicated they want all contractors to have Federated PIV 
credentials and eliminate the practice of providing contractors CAC 
cards, the DOD directive indicates contractors would be issued CAC or 
DBIDS cards. The ALA working team would quickly identify these and 
other potential shortfalls in the department's methodology. OSD should 
be willing to work with other groups to in ``building and maintaining'' 
an interoperable identify ``cross-credentialing'' network focused on 
security, privacy, trust, standard operating rules, policies and 
technical standards.
    One of the most advanced smart ID card programs in the United 
States is the Department of Defense (DOD) Common Access Card (CAC), a 
smart card that serves as the DOD standard identification for active 
duty military personnel, selected reserve personnel, civilian 
employees, and eligible contractor personnel. The CAC is the principal 
card used for logical access to DOD computer networks and systems, and 
will be the principal card used to enable physical access as systems 
are installed for authentication and access at DOD facilities. As of 
July 2006, DOD had issued over 10 million smart cards. As with all 
Federal agencies, DOD is now migrating to a FIPS 201-compliant Common 
Access Card. The Department of Defense (DOD) will deploy tools to 
authenticate an individual's claimed identity electronically, including 
DBIDS. DBIDS is a Department of Defense (DOD) identity authentication 
and force protection tool that is fully operational in military 
locations around the world. It serves as a physical access control and 
critical property registration system, using bar codes and biometrics 
to identify cardholders. DBIDS is authorized to issue DOD identity 
credentials for those individuals needing physical access and not 
otherwise eligible for a CAC.

                                  
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