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



                         [H.A.S.C. No. 110-123]

                                HEARING

                                   ON
 
                   NATIONAL DEFENSE AUTHORIZATION ACT
                          FOR FISCAL YEAR 2009

                                  AND

              OVERSIGHT OF PREVIOUSLY AUTHORIZED PROGRAMS

                               BEFORE THE

                      COMMITTEE ON ARMED SERVICES

                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                               __________

                     READINESS SUBCOMMITTEE HEARING

                                   ON

                BUDGET REQUEST ON MILITARY CONSTRUCTION

                               __________

                              HEARING HELD

                           FEBRUARY 28, 2008

                                     
[GRAPHIC] [TIFF OMITTED] TONGRESS.#13

                                     

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                         READINESS SUBCOMMITTEE

                   SOLOMON P. ORTIZ, Texas, Chairman
GENE TAYLOR, Mississippi             J. RANDY FORBES, Virginia
SILVESTRE REYES, Texas               WALTER B. JONES, North Carolina
LORETTA SANCHEZ, California          MIKE ROGERS, Alabama
ROBERT A. BRADY, Pennsylvania        JOHN M. McHUGH, New York
JIM MARSHALL, Georgia                HOWARD P. ``BUCK'' McKEON, 
MADELEINE Z. BORDALLO, Guam              California
MARK E. UDALL, Colorado              ROBIN HAYES, North Carolina
DAN BOREN, Oklahoma                  FRANK A. LoBIONDO, New Jersey
NANCY BOYDA, Kansas                  TOM COLE, Oklahoma
CAROL SHEA-PORTER, New Hampshire     ROB BISHOP, Utah
JOE COURTNEY, Connecticut            CANDICE S. MILLER, Michigan
DAVID LOEBSACK, Iowa                 TRENT FRANKS, Arizona
GABRIELLE GIFFORDS, Arizona          CATHY McMORRIS RODGERS, Washington
ELIJAH CUMMINGS, Maryland            DOUG LAMBORN, Colorado
                Dave Sienicki, Professional Staff Member
                 Tom Hawley, Professional Staff Member
                     Megan Putnam, Staff Assistant


                            C O N T E N T S

                              ----------                              

                     CHRONOLOGICAL LIST OF HEARINGS
                                  2008

                                                                   Page

Hearing:

Thursday, February 28, 2008, Fiscal Year 2009 National Defense 
  Authorization Act--Budget Request on Military Construction.....     1

Appendix:

Thursday, February 28, 2008......................................    37
                              ----------                              

                      THURSDAY, FEBRUARY 28, 2008
FISCAL YEAR 2009 NATIONAL DEFENSE AUTHORIZATION ACT--BUDGET REQUEST ON 
                         MILITARY CONSTRUCTION
              STATEMENTS PRESENTED BY MEMBERS OF CONGRESS

Forbes, Hon. J. Randy, a Representative from Virginia, Ranking 
  Member, Readiness Subcommittee.................................     2
Ortiz, Hon. Solomon P., a Representative from Texas, Chairman, 
  Readiness Subcommittee.........................................     1

                               WITNESSES

Anderson, Hon. William C., Assistant Secretary of the Air Force, 
  Installations, Environment and Logistics.......................     9
Arny, Wayne, Deputy Under Secretary of Defense, Installations and 
  Environment....................................................     4
Penn, Hon. B.J., Assistant Secretary of the Navy, Installations 
  and Environment................................................     6
Prosch, Geoffrey, Principal Deputy Assistant Secretary of the 
  Army, Installations and Environment............................    11

                                APPENDIX

Prepared Statements:

    Anderson, Hon. William C.....................................   109
    Arny, Wayne..................................................    46
    Forbes, Hon. J. Randy........................................    43
    Ortiz, Hon. Solomon P........................................    41
    Penn, Hon. B.J...............................................    82
    Reed, David M., Deputy Assistant Secretary of the Army 
      (Installations and Housing) submitted by Geoffrey Prosch...   141

Documents Submitted for the Record:

    Naval Shipyard MCON History (Mil) Chart......................   171

Witness Responses to Questions Asked During the Hearing:

    Mr. Bishop...................................................   179
    Mr. Forbes...................................................   176
    Mr. Hayes....................................................   178
    Mr. Loebsack.................................................   179
    Mr. Marshall.................................................   177
    Mr. Ortiz....................................................   175
    Ms. Shea-Porter..............................................   178
    Mr. Taylor...................................................   177

Questions Submitted by Members Post Hearing:

    Mr. Courtney.................................................   190
    Mr. LoBiondo.................................................   189
    Mr. Ortiz....................................................   183
    Mr. Rogers...................................................   189
    Mrs. Napolitano..............................................   190


FISCAL YEAR 2009 NATIONAL DEFENSE AUTHORIZATION ACT--BUDGET REQUEST ON 
                         MILITARY CONSTRUCTION

                              ----------                              

                  House of Representatives,
                       Committee on Armed Services,
                                    Readiness Subcommittee,
                       Washington, DC, Thursday, February 28, 2008.
    The subcommittee met, pursuant to call, at 1:30 p.m., in 
room 2118, Rayburn House Office Building, Hon. Solomon Ortiz 
(chairman of the subcommittee) presiding.

 OPENING STATEMENT OF HON. SOLOMON P. ORTIZ, A REPRESENTATIVE 
          FROM TEXAS, CHAIRMAN, READINESS SUBCOMMITTEE

    Mr. Ortiz. The subcommittee will come to order.
    I want to thank our distinguished witnesses for appearing 
before the subcommittee. Today, the Readiness Subcommittee will 
hear about our military construction programs. The President's 
budget proposes an increase in military construction that leads 
one to believe that the Department of Defense (DOD) will have a 
well-funded infrastructure program for fiscal year 2009.
    That is a bell for Mr. Reyes because he has a lot of money 
in this budget. If he doesn't make it in time, Randy and I are 
going to split that money. [Laughter.]
    However, I believe that a deeper review of the program may 
reveal that this is not the case. The services are trying to 
perform three complex tasks at the same time: Grow the Force, 
transformation, and maintaining existing infrastructure. 
Unfortunately, this budget proposal does not fully address any 
of these areas.
    First let me say that this committee strongly supports the 
``Grow the Force'' and expansion of the Army and Marine Corps 
end-strength. Unfortunately, this committee has heard reports 
that in many cases, the permanent infrastructure needed to 
support the end-strength increases will arrive well after the 
soldiers and Marines have already reported to their permanent 
duty stations.
    To cover this gap in facilities, the Army and the Marine 
Corps have indicated that they will aggressively pursue a 
temporary building program and can finalize their permanent 
infrastructure. This is a very huge undertaking, with the Army 
alone maintaining over 10 million square feet of space in 
temporary facilities. These facilities will be minimally 
adequate and will affect the quality of life for our service-
members and civilian employees. I understand the driving need 
for space, but I am very concerned that in the end we will 
spend a great deal of money on a short-term solution.
    The services' transportation plans present us with similar 
concerns. I have always opposed Base Realignment and Closure 
(BRAC) and believe that our selection process was badly flawed, 
and the reason I say this is not because it is partisan. I had 
one of my bases shut down, but it was one of the newest bases 
in the Navy's inventory, something to the tune of close to a 
half-billion dollars, but that is another story for another 
day.
    In the 2005 round of BRAC, we did not eliminate any excess 
infrastructure. We only moved facilities around the 
checkerboard. BRAC implementation costs have doubled. Savings 
are down and now I understand that the services may not be able 
to meet the September 2011 deadline. These are all concerning, 
and I hope that our witnesses will address these issues in 
their testimony.
    On a related transformation note, I understand that the Air 
Force budget submissions include a request for additional F-
22s, C-17s, and other aircraft. Unfortunately, the 
infrastructure to support these new airplanes won't be 
available until well after the arrival of these important 
aviation assets. This is a very puzzling disconnect and again 
causes me to worry about the transformation program, that it 
isn't being executed carefully.
    Finally, let me again voice my concerns about the 
maintenance of our existing infrastructure. In the fiscal year 
2009 budget request, the Department has proposed to fund the 
daily maintenance of its facilities at 90 percent of the 
requirement. This means that 10 percent of the things that are 
broken will not be repaired. Imagine if we only fixed 90 
percent of our critical problems in our own homes every year. 
It wouldn't take long before our houses were in a state of 
disrepair.
    In addition to this shortfall, the Army has elected to take 
a pause in recapitalizing the infrastructure, with zero 
restoration. These decisions continue a DOD trend of 
underfunding repairs and will lead to an accelerated decline of 
facilities that will decrease the quality of life and 
negatively impact operations on base. I don't think that this 
is smart management. Gentlemen, I think that we have a lot to 
discuss today, and I look forward to hearing you address these 
important issues.
    And now the chair recognizes the distinguished gentleman 
and my good friend from Virginia, Mr. Forbes, for any remarks 
that he would like to make. Randy.
    [The prepared statement of Mr. Ortiz can be found in the 
Appendix on page 41.]

   STATEMENT OF HON. J. RANDY FORBES, A REPRESENTATIVE FROM 
        VIRGINIA, RANKING MEMBER, READINESS SUBCOMMITTEE

    Mr. Forbes. Mr. Chairman, as always I thank you for your 
leadership and thank you for holding this hearing.
    To our distinguished panel of witnesses, we thank you for 
your service to our country and for being here. We know some of 
you have gone beyond the call of duty to be here on short 
notice, and we just thank you all for taking the time to do 
that.
    This hearing is the first of a series of budget and 
oversight hearings the Readiness Subcommittee will conduct on 
the current state of military readiness, and how this budget 
addresses the real readiness needs of the services. I share the 
chairman's great concern about the state of our military 
readiness and our Nation's ability to respond to troubled areas 
throughout the world. I agree that our military needs more 
resources to replenish and repair equipment worn out in 
fighting the global war on terror. But as we all know, building 
readiness is a complex art with many components.
    Like most complex subjects, success begins with a strong 
base. I bring this up today to underscore that installation 
readiness--the subject of today's hearing--is a vital component 
of military readiness and the base upon which readiness is 
built. Readiness begins with the military services' real 
property infrastructure--the training ranges, airspace, sea 
lanes and buildings used by our troops to prepare for the 
arduous missions they face around the world.
    In that regard, it is important that the record note the 
significant increase proposed in the Defense Department's 
military construction budget for fiscal year 2009, both in the 
recurring military construction budget and the BRAC accounts. 
This is important for a number of reasons.
    First, it shows the administration and the Department of 
Defense are serious about effectively implementing the base 
closure round of 2005. Base closure authority was requested as 
a means to consolidate DOD assets more efficiently. A range of 
projects around the United States bear witness to that resolve, 
from improving medical facilities in the national capital 
region to consolidating Army communications electronics work at 
Aberdeen Proving Ground, Maryland, and a similar consolidation 
of Army logistical activities at Fort Lee, Virginia. Even 
though I was opposed, as the chairman was, to authorizing this 
BRAC round, it is the law and needs to be executed properly. 
Indeed, committed, prompt execution of the round will build 
readiness.
    Second, the budget provides substantial sums for the Army 
and Marine Corps to provide the infrastructure and support of 
these services and Grow the Force initiatives, another 
important readiness component that will ultimately relieve 
stress on the active force. I applaud these increased military 
construction budget and BRAC requests, while realizing that 
execution of such large projects will be challenging.
    Mr. Chairman, I look forward to working with you and our 
witnesses to make these transformational changes a reality and 
thereby doing all we can to improve the readiness of tomorrow's 
military.
    Finally, I would like to ask the witnesses to comment on 
some unfinished business from last year. The Consolidated 
Appropriations Act of the last session reduced BRAC funding by 
over $1 billion. To my mind, that money is as critical to 
restoring readiness to our armed forces as anything we do, as 
it helps the Army and Marine Corps build the needed 
infrastructure for a larger force. I would like to request that 
the witnesses describe the impact on their services if that 
money is not restored.
    Once again, Mr. Chairman, thank you for holding this 
hearing, and I yield back the balance of my time.
    [The prepared statement of Mr. Forbes can be found in the 
Appendix on page 43.]
    Mr. Ortiz. Today, we are very fortunate to have a panel of 
very distinguished witnesses representing the Department. Our 
witnesses include Wayne Arny, the Deputy Under Secretary of 
Defense for Installations and Environment for the Department of 
Defense. Wayne and I--Mr. Secretary--we have known each other 
since my first day in Congress back in 1983, so it is good to 
see you again and congratulations on your new promotion.
    Secretary Arny. Thank you.
    Mr. Ortiz. The next gentleman is Assistant Secretary of the 
Navy for Installations and Environment, B.J. Penn. I have 
worked with you for many, many years.
    Mr. Anderson, thank you, sir. Also, I have worked with you 
before, and thank you so much for joining us. He is the 
Secretary of the Air Force for Installations, Environment and 
Logistics.
    And also my good friend George Prosch, I have known you for 
many years, so we are among friends today. He happens to be the 
Principal Deputy Assistant Secretary of the Army for 
Installations and Environment.
    Without objection, the witnesses' prepared statements will 
be entered for the record.
    Mr. Secretary, good to see you again, and welcome. If you 
are ready with the start of your testimony, you can proceed.

  STATEMENT OF WAYNE ARNY, DEPUTY UNDER SECRETARY OF DEFENSE, 
                 INSTALLATIONS AND ENVIRONMENT

    Secretary Arny. Thank you, sir. You look just as good as 
you did all those years ago. [Laughter.]
    Chairman Ortiz, Congressman Forbes and distinguished 
members of the subcommittee, I am honored to appear before you 
this afternoon. This is my first appearance, as the chairman 
said, before the subcommittee in my new capacity as the Deputy 
Under Secretary. I am pleased to discuss with you the 
President's Budget Request for Fiscal Year 2009 as it applies 
to those programs that support the Department's management of 
installation assets.
    I don't need to tell you that I believe installations are 
the foundation of America's security. They are the critical 
assets that must be available when and where we need them, with 
the capability to support current and future mission 
requirements. Our installations are the core of U.S. combat 
power here and overseas, and they are an inseparable element of 
the Nation's military readiness and wartime effectiveness.
    Our 2009 budget request supports a number of key elements 
of the Department's efforts to manage and maintain these 
assets. First, we continue to recalibrate our bases overseas 
and in the United States through global basing and base 
closure. To ensure the flexibility needed to contend with the 
21st century security challenges, the budget reflects global 
restationing efforts by transforming overseas legacy forces, 
Cold War basing structures, co-station relationships, and 
forward capabilities to better contend with post-9/11 security 
challenges. For example, we are shifting our European posture 
south and east by transforming the 173rd Airborne Brigade in 
Italy and establishing a headquarters and infrastructure 
support for rotational presence in Romania and Bulgaria.
    We are requesting $9.2 billion for BRAC 2005 implementation 
and $393.4 million for prior BRAC cleanup to support the 
stateside portion of our reconfiguration efforts. These amounts 
are approximately $1.1 billion higher than the 2008 request, 
and the $9.2 billion for BRAC 2005 represents full funding for 
the BRAC 2005 implementation assuming--and I go to Congressman 
Forbes and Mr. Chairman your statement--assuming the $939 
million reduction to the 2008 appropriation is restored.
    Regarding the 2008 reduction, we greatly appreciate this 
committee's action to provide authorization to the full amount. 
As Secretary Gates recently testified, if the $939 million is 
not restored, we believe we will have to work very, very hard 
to meet the September 15, 2011 deadline.
    The huge size of the reduction requires careful evaluation 
and management on our part, and when restored, we will need 
that funding this year and next year's funding as early as 
possible in the fiscal year to continue our execution at an 
efficient and effective pace. The point at which we find 
ourselves right now in the BRAC implementation period 
underscores that requirement because every delay makes it 
increasingly difficult to complete implementation by the 
statutory deadline.
    Second, we continue to renew and take care of what we own. 
Our goal has been to achieve a recapitalization rate of 67 
years for our bases, and the 2009 budget request, if enacted, 
exceeds that goal by funding recap at a rate of 56 years. This 
is an improvement over the 76-year rate achieved in the 2008 
budget and is due in part to the impact of funding for BRAC and 
global basing implementation. It equates to an increase of $2.8 
billion compared to the 2008 request.
    We have understood for years the limitations of this 
metric, and it was better than what we had before. We have been 
working with the services and with your staffs to change that. 
Next year, we will transition to a more comprehensive measure 
that we hope will provide a broader, more meaningful index for 
the Department and for Congress to measure our progress.
    For sustainment, this budget request reflects an additional 
$796 million over last year which results in a Department-wide 
funding rate increasing from last year's 88 percent to 90 
percent this year. We would like to hit 100 percent for the 
obvious reasons, some of which you outline, but we have had to 
make difficult tradeoffs within this budget with other parts of 
the budget with the services.
    Third, we continue to provide the best housing available 
for our military members and families, primarily through 
privatized housing, but we will continue to operate housing 
overseas and in some few stateside locations. To date, the 
military services have leveraged DOD housing dollars by 12 to 
1, with $2 billion in Federal investments generating $24 
billion in housing development at privatized installations.
    The 2009 request does include $3.2 billion for housing, an 
increase of $300 million over the 2008 level. This will 
construct new family housing to accommodate Grow the Force, 
improving existing housing, eliminating inadequate housing 
overseas, operate and maintain our remaining government-owned 
housing, and fund the privatization this year of 12,324 
additional homes.
    Fourth, environmental management is critically important to 
our stewardship of what we own now. Employing a strategy that 
goes beyond mere compliance with environmental laws and 
regulations, the Department is transforming our business 
practices by integrating environment into our acquisition 
process, maintaining a high level of environmental quality in 
all our defense activities and preventing pollution at its 
source.
    We are also working to better forecast the impact of 
emerging contaminants. We have established a proactive program 
to make earlier and better-informed decisions. We have 
completed 20 impact assessments in the past 18 months for 
chemicals that include explosives, fuel constituents, corrosion 
preventives, firefighting foams, and industrial de-greasers.
    We have also made significant progress implementing the 
core capabilities of the real property accountability business 
enterprise. This effort spans all components, applying best 
business practices and modern asset management techniques to 
provide access to secure reliable information on real property 
assets on environment, safety and occupational health 
sustainability.
    Last but not least, we continue to fulfill our commitment 
to work with communities and states impacted by our closure and 
growth initiatives, assisting them in collaboration with other 
Federal resources to respond accordingly, thanks to our 
colleagues at the Office of Economic Assistance.
    Mr. Chairman, the Department is working hard to reposition, 
to reshape, and to take care of our installations for the 
future, and we need the items we have requested in this budget, 
as well as the $939 billion for BRAC execution that was cut 
from our 2008 appropriations. We are going to do all that we 
can to make the Department successful, and we appreciate deeply 
all that this committee has done for us over the years. It has 
demonstrated repeatedly its support for installations, and we 
look forward to continuing to work with you this year to 
continue to advance our mutual interests.
    Thank you.
    [The prepared statement of Secretary Arny can be found in 
the Appendix on page 46.]
    Mr. Ortiz. Secretary Penn, whenever you are ready, you can 
proceed with your statement, sir.

 STATEMENT OF HON. B.J. PENN, ASSISTANT SECRETARY OF THE NAVY, 
                 INSTALLATIONS AND ENVIRONMENT

    Secretary Penn. Thank you, sir.
    Chairman Ortiz, Congressman Forbes, members of the 
subcommittee, it is a privilege to come before you today to 
discuss the Department of the Navy's installation and 
environmental efforts. I would like to touch on a few of the 
highlights in this year's budget request--the largest 
facilities budget in well over 15 years. Our request is a 
robust $14.3 billion, or 9.6 percent of the Department's Total 
Obligational Authority (TOA).
    Most apparent is our increase in infrastructure investment, 
both in Sustainment Restoration and Modernization (SRM) and the 
construction accounts. With regard to SRM, the Navy 
acknowledges that years of underfunding have degraded its core 
infrastructure to below industry standards and that is a 
substantial shot in the arm, about 41 percent this year. It is 
necessary to reverse course and maintain these systems so that 
we can maximize their full service life.
    The increase in construction--at 45 percent for military 
construction (MILCON), 13 percent for family housing--continues 
the trend begun last year with the Marine Corps' Grow the Force 
initiatives to ensure their bases are ready to house and 
operate with additional end-strength. Our military construction 
program also includes a number of projects to enhance the 
quality of life of our sailors and Marines, including four 
fitness centers, six child development centers, and four 
enlisted dining facilities.
    Our fiscal year 2009 budget also includes the second 
increment of two MILCON projects that were proposed last year 
for full funding by the administration, but selected by 
Congress for incremental funding. While we did not consider any 
of the projects in our fiscal year 2009 program to be viable 
candidates for incremental funding, we have taken the lead in 
drafting criteria for incrementaling costly construction 
projects and working with DOD and Office of Management and 
Budget (OMB). We commit to work with the Congress to 
reestablish mutually acceptable and objective criteria in time 
for the next budget cycle.
    Fiscal year 2009 marks the first year since 2005 that we 
have asked for appropriated funds for prior BRAC. We have been 
able to finance all or part of our prior BRAC with land sale 
revenue, but we have used all but $25 million which are 
applying to this year's program.
    Our fiscal year 2009 request includes $179 million for 
prior BRAC. We will need appropriated funds in future years to 
complete our cleanup work, despite the prospect of some limited 
revenue from land sale revenue in Roosevelt Roads, Puerto Rico, 
and other small parcels. We have disposed of 91 percent of the 
prior BRAC properties, so there is little left to sell, and the 
real estate market is not as lucrative as it was several years 
ago.
    With respect to the BRAC 2005 program, we have several 
good-news stories to share. Nearly all impacted communities 
have established local redevelopment authorities to guide local 
planning and redevelopment efforts. We were able to facilitate 
the reversion of the former naval station Pascagoula to the 
state of Mississippi last June, and we have been able to hold 
down our cost increases to a modest two percent for the 
implementation period of fiscal year 2006 through 2011.
    However, our ability to meet the statutory deadline of 
September 15, 2011 hinges on the prompt restoration of the 
fiscal year 2008 reduction of $939 million. I ask the 
committee's support to help restore these funds as soon as 
possible. For the Navy, that was $143 million.
    We continue to improve where our sailors, Marines and their 
families live. We have ordered our second barracks 
privatization pilot program in December of 2007--this one in 
Hampton Roads, Virginia--and we have almost finished with 
evaluating our third pilot project in the Jacksonville area. 
Surveys of our residents, both in family and unaccompanied 
housing, show that satisfaction has increased significantly 
since privatization began.
    As a Department, we emphasize and participate in 
communication at all levels of management from the installation 
level, where focus groups bring together the residents, to 
command representatives and the property managers, to the 
annual meetings with partner Chief Executive Officers (CEOs). 
The Department remains engaged through all levels of 
management. The objective is to identify issues early and take 
prompt corrective action when required.
    In fiscal year 2009, the Department is investing over $900 
million in its various environmental programs. We were 
recognized last year for our efforts in several areas, winning 
six ozone protection awards from the Environmental Protection 
Agency (EPA) and the White House, the Closing the Circle award 
for progress in alternative fuels and fuel conservation.
    I am troubled, though, by the press coverage lately about 
how the Navy's training and sonar testing affects marine 
mammals. One of the most challenging threats that our Navy 
faces is the modern quiet diesel electric submarines and the 
tactical use of Mid-frequency active (MFA) sonar as the best 
means of detecting potential hostile vessels.
    The inability to train effectively with active sonar really 
puts the lives of thousands of Americans at risk. As you know, 
the Navy is operating under an exemption to the Marine Mammal 
Protection Act through January of 2009 to give the Department 
enough time to complete the required environmental impact 
statements and obtain letters of authorization for sonar use on 
our maritime ranges and operating areas.
    What gets less airtime is that the Navy will invest $18 
million, or more than any other agency in fiscal year 2008, for 
marine mammal research--again, more than any single agency. 
This research aims to develop effective mitigation and 
monitoring methods to reduce any potential effects to sonar and 
other human-induced sound on marine mammals.
    We have made significant progress in the past year in 
planning for the relocation of Marines from Okinawa to Guam. We 
established the Joint Program Office, both the headquarters and 
forward elements. The environmental impact statement for Guam 
is underway with a targeted record of decision in January, 
2010--in time for construction in fiscal year 2010.
    We are working closely with our counterparts in the 
government of Japan to prepare the details for construction 
requirements and their phasing and construction priorities, and 
we are working with our domestic partners--the government of 
Guam, the Department of Interior, OMB and other Federal 
agencies--to ensure the island meets the challenges of such a 
concentrated influx of people and workload.
    Finally, it has been an honor and privilege to serve this 
great Nation and the men and women of our Navy and Marine Corps 
team, the military and civilian personnel and their families.
    Thank you for your continued support and the opportunity to 
testify before you today, sir.
    [The prepared statement of Secretary Penn can be found in 
the Appendix on page 82.]
    Mr. Ortiz. Thank you, sir.
    Secretary Anderson.

 STATEMENT OF HON. WILLIAM C. ANDERSON, ASSISTANT SECRETARY OF 
    THE AIR FORCE, INSTALLATIONS, ENVIRONMENT AND LOGISTICS

    Secretary Anderson. Good afternoon, Mr. Chairman, 
Congressman Forbes. On behalf of America's airmen, I want to 
thank every member of this distinguished committee for your 
continued support of America's Air Force.
    As our Nation finds itself both in a time of war and a time 
of transition, the Air Force continues to evolve to ensure we 
stand ready to protect America and our interests. Beginning 
with Operations Desert Shield and Desert Storm, the Air Force 
has been in continuous combat operations now for more than 17 
years. We currently have over 22,000 airmen deployed in direct 
support of Operations Enduring and Iraqi Freedom. My team is 
firmly committed to supporting the Air Force's priorities of 
winning today's fight, taking care of our people, and preparing 
for tomorrow's challenges.
    We are changing on a scale that we have not seen since the 
post-Cold War drawdown, and for us to support these priorities 
we must be transformational in all that we do. In order to 
provide global vigilance, global reach, and global power, we 
need high-quality warfighting platforms. Those are our 
installations. I would like to highlight just a few of the 
significant initiatives that we are implementing to ensure 
installation quality and superior warfighter support well into 
the future.
    Under our corps of discovery concept, we benchmarked 
against Fortune 500 companies like GM, GE, IBM and Bank of 
America. We are capturing best practices in all aspects of 
infrastructure, from adopting new asset management philosophies 
to transforming our informational technology systems. With our 
organizational transformation, we are also committed to making 
joint basing a raging success.
    The Air Force believes that joint bases should be the 
preferred duty station for every soldier, sailor, airman and 
Marine. To accomplish this in each instance, we must select the 
highest quality of life standard from among the individual 
bases and mandate that that quality of life standard is 
implemented across the entire joint base. Also maintaining 
individual service control of real property and resources 
allows for the natural tension between customer and supplier. 
This has proven to be the most effective and efficient way for 
suppliers to respond to customer needs.
    On the environmental front, the Air Force has established 
an aggressive internal goal to have all cleanup remedies in 
place at our active installations by the end of 2012. That is 
two years ahead of the current DOD goals. We are proactively 
working with the EPA to break the paradigm of the 
inefficiencies of Federal Facilities Agreements, or FFAs. We 
feel FFAs are non-value-added instruments focusing on 
administrative process, as opposed to timely and effective 
cleanup.
    Our proposed solution is a streamlined effort through an 
interagency agreement that meets the explicit requirements of 
the Comprehensive Environmental Response, Compensation, and 
Liability Act (CERCLA). The Air Force believes this process 
modification will protect our communities, reduce the taxpayer 
burden, and return back land to productive use as quickly as 
possible.
    Let me take a moment to talk about one of my highest 
priorities, and that is energy. The increasing cost of energy 
and the Nation's commitment to reducing its dependence on 
foreign oil have led to the development of the Air Force energy 
strategy to reduce demand, increase supply, and change the 
culture within the Air Force so that energy is a consideration 
in everything that we do. The Air Force is investing in its 
facility energy future with $14 million in 2008 and $229 
million across the remainder of the Five-Year Defense Plan 
(FYDP). We have been recognized as the number one Federal 
purchaser of renewable energy now four years running.
    The Air Force is DOD's leading consumer of jet fuel and 10 
percent of the total U.S. jet fuel market. To meet our jet fuel 
needs of the future, the Air Force is evaluating domestically-
sourced synthetic fuel alternatives. We have certified the B-52 
to fly on a synthetic fuel blend, and are on track to test and 
certify the C-27, B-1 and F-22 on synfuel this fiscal year, 
with the entire Air Force fleet being certified by early 2011.
    At Nellis Air Force Base, Nevada, through a public and 
private partnership, we installed the largest solar array in 
the Americas, producing 14.2 megawatts of clean renewable 
power, while delivering savings of nearly $1 million a year to 
the installation and to the American taxpayer. At our 
underutilized land at Malmstrom Air Force Base in Montana, the 
Air Force is exploring the potential for a privately financed 
and operated coal-to-liquids fuel plant.
    We are also pursuing energy enhanced-use lease projects at 
Edwards Air Force Base in California, Luke Air Force Base in 
Arizona, and Kirtland Air Force Base in New Mexico. We are also 
looking into the merits of hosting a small-package nuclear 
facility on an Air Force installation at the request of several 
Members of Congress.
    At the same time, the Air Force recognizes that energy and 
environment are tightly linked. Not only have we committed to 
purchase only alternative energy sources with a greener 
footprint than current options, but the Air Force is committed 
to being a leader in establishing a global consortium to tackle 
the reduction, capture and reuse of greenhouse gas emissions.
    Being a driving force is not risk-free. Our installations 
are warfighting platforms which must continually perform to 
support the warfighter. The fiscal year 2009 President's budget 
request for the Air Force military construction is more than 
$2.1 billion, comprised of traditional MILCON, BRAC and housing 
investments. Unfortunately, we do face demands on our resources 
that require us to make some very tough choices.
    Our challenging budgetary environment includes increased 
operations, maintenance and personnel costs, the cost of the 
war against terrorism, and inflation factors that reduce 
overall buying power. These demands have forced us to self-
finance the centerpiece of future dominance, a massive and 
critical recapitalization and modernization effort of our aging 
air and space fleet. To accomplish this, we are accepting 
manageable risk in facilities and infrastructure funding.
    The current and future readiness and capability of the Air 
Force to deter our enemies and, when necessary, fight and win 
this Nation's wars depends heavily upon the state of our power 
projection platforms--our installations. As the Air Force 
continues to modernize and recapitalize, we will wisely invest 
our precious funding allocated to military construction, 
operations and maintenance, BRAC, the environment, military 
family housing, and energy. This will enable us to win today's 
fight, take care of our people, and prepare for tomorrow's 
challenges.
    Mr. Chairman, thank you.
    [The prepared statement of Secretary Anderson can be found 
in the Appendix on page 109.]
    Mr. Ortiz. Thank you.
    Secretary Prosch, go ahead with your statement, sir.

   STATEMENT OF GEOFFREY PROSCH, PRINCIPAL DEPUTY ASSISTANT 
      SECRETARY OF THE ARMY, INSTALLATIONS AND ENVIRONMENT

    Secretary Prosch. Mr. Chairman, Congressman Forbes, and 
distinguished members of the subcommittee, it is an honor to 
appear before you this afternoon to discuss the Army's military 
construction budget request for fiscal year 2009. We have 
submitted a 25-page detailed written statement. I will briefly 
summarize it in a page-and-a-half.
    Thank you for your continued support to our soldiers and 
their families serving around the world. They are and will 
continue to be the centerpiece of our Army, and their ability 
to successfully perform their missions depends upon your 
continued support. We must transform and rebalance our Army in 
an era of persistent conflict. This transformation affects the 
entire Army, to include our operational forces, our 
institutional Army, and our installation infrastructure.
    We will accomplish these efforts by translating the Army's 
four major imperatives--sustain, prepare, reset, and 
transform--into initiatives such as base realignment and 
closure, global defense posture realignment, Army modular force 
transformation, Grow the Army, the Army Medical Action Plan, 
and the soldier and family action plan.
    Restoring balance to the Army is critical to our success in 
implementing the Nation's military strategy and providing our 
soldiers and families a quality of life commensurate with their 
quality of service. The fiscal year 2009 budget includes 
projects to ensure that our facilities continue to meet the 
demands of the transforming Army and help put the Army back 
into balance.
    The Army's fiscal year 2009 budget request includes $11.4 
billion for military construction appropriations and associated 
new authorizations, Army family housing, and BRAC. And $4.2 
billion of this supports the Grow the Army initiative. We have 
put in place the necessary oversight structure to execute this 
critically important program.
    The Army's BRAC request of $4.5 billion will continue to 
fund both BRAC and global defense posture realignment actions 
necessary to comply with BRAC 2005 law. The Army took a $560.2 
million reduction as our share of the $938 million DOD-wide cut 
to the BRAC account last year. It is absolutely critical that 
we quickly recover and restore these funds this year. This cut 
includes 10 Reserve armed forces centers, 9 training and range 
projects, and 12 quality of life soldier family projects that I 
would be happy to go into more detail on during the hearing.
    Our fiscal year 2009 military construction and BRAC budget 
request is for balanced programs that support our soldiers and 
their families, continued operations, Army transformation, 
readiness, and DOD installation strategy goals. We can execute 
these programs with your support through sustained and timely 
funding.
    Thank you again for the opportunity to appear before you 
today and for your sustained continued support for America's 
Army.
    Mr. Ortiz. Thank you, Mr. Secretary.
    At this moment, I would like to request unanimous consent, 
and after consultation with the minority, I ask unanimous 
consent that Representative Napolitano be allowed to 
participate in today's Readiness Subcommittee hearing and to be 
authorized to question the witnesses. She will be recognized at 
the conclusion of the questions by members of the subcommittee. 
Hearing no objection, so ordered.
    Thank you so much for your testimony. Saying from the 
beginning that I am not partisan, let me ask a question about 
Naval Air Station Kingsville. [Laughter.]
    Naval Air Station Kingsville has significant issues with 
regard to the maintenance and restoration of the facilities. 
The Department elected to fund maintenance facilities 
sustainment at 90 percent of the requirement. This level of 
funding will lead to accelerated deterioration of facilities. 
This question is directed to inquire as to the appropriate 
level of sustainment.
    Mr. Secretary, I believe that you have been to Naval Air 
Station Kingsville, Secretary Arny, and can see the value of 
continued maintenance of facilities over the long term. Yet the 
Department requested the funds for sustainment at 90 percent at 
all installations. Why does the Department continue to advocate 
for facilities sustainment below optimal levels?
    Secretary Penn, I understand the Naval Air Station 
Kingsville was funded at 48 percent of sustainment in fiscal 
year 2008. Can you explain this incredibly low sustainment rate 
and maybe I can understand why this is being done? It is hard 
to understand, but maybe you can make me understand why it is 
at this low level.
    Take your time, take your time. [Laughter.]
    Secretary Penn. Mr. Chairman, as you know, the facilities 
sustainment and recap metrics were developed by DOD as macro-
level programmatic tools, and the results can be distorted both 
up and down when applied at the installation level. For 
instance, Navy centrally manages costly special projects which 
can be in the range of tens of millions of dollars for 
sustainment and recap rates. I think it is that variation that 
you see.
    Mr. Ortiz. Would you like to add anything to that?
    Secretary Arny. From a macro point, as I mentioned to you 
before, the base that I was most used to was Beeville and it is 
gone now, in Texas.
    Mr. Ortiz. We can make it up in Kingsville. [Laughter.]
    Secretary Arny. Okay--especially during the fall, during 
hunting season. I understand Kingsville is very good in the 
fall during hunting season.
    From the macro perspective, Mr. Groening, my predecessor, I 
think went a long way toward bringing sustainment back up to 
higher rates. As you well know, within the services we are 
contending with our procurement associates for scarce funding 
in all of our budgets.
    At the Office of the Secretary of Defense's (OSD's) urging 
initially and then finally mandated that all the services be 
sustained at 90 percent or higher, and it was Mr. Groening's 
goal and I hope to pursue that to get that through the Program 
Objectives Memorandum-10 (POM-10) back up to 100 percent. One-
hundred percent has always been OSD's goal, but up until this 
year, it wasn't mandated. In order to get it back up to the 
rate at which we felt it needed to be, we mandated 90 percent 
and we are going to go to 100 percent. Now, that is on a macro 
scale.
    I have talked with Mr. Penn and his staff and we are 
working with ours to discuss the specific incidence at 
Kingsville, but that is at a macro level and at certain levels 
the regions make their puts and takes on certain bases. We will 
have a specific answer for you on Kingsville.
    Mr. Ortiz. You know, Secretary Penn, the recap rate at 
Kingsville is 230 years. The recap rate at Corpus Christi is 
100 years. Maybe you can explain why there is this big 
difference at the local levels.
    Secretary Arny. If I could comment? Again, from a macro 
level, we have all felt the inadequacy of the recap rate when 
we measure it in years, because it only looks at a specific 
year. Right now, we are boasting in our statements that we have 
recap rates well below 67 years. I mention in my statement that 
is masked by the fact that we are making a lot of investments 
in BRAC.
    So if you look at the BRAC bases where we are realigning, 
like moving Willow Grove in the Navy to McGuire primarily. We 
are moving Brunswick down to Jacksonville. Their recap rates 
will be very, very low in numbers of years. We have all 
recognized over the past few years that recap rates in years is 
not a very good measure. It is the best that we have. And we 
have worked for the past few years, and next year we will have 
a rate that takes these factors into effect.
    So I don't know the specifics on those two bases, and we 
are checking on that, but I think you will find that they 
haven't had a MILCON project in a couple of years. Now, they 
may be in wonderful shape and they don't need one, and then 
next year they may get one or two large projects, which would 
drive their recap rate from 100 or 200 years down to 25 or 50 
years. So it is not a very good measure. It is the best we 
have, but it does have inconsistencies up and down. As far as 
the details of those specifics, we will have to get back to 
you.
    [The information referred to can be found in the Appendix 
beginning on page 175.]
    Mr. Ortiz. One of the reasons why I am concerned with both 
of the bases, as you well know, we are way down south, and it 
doesn't take too much reading or looking at activity to realize 
what is happening in Central and South America. This is why I 
feel that we need to keep our bases in tip-top shape, from 
training, to the facilities deterioration. I could go on and 
on. This is why I am concerned. I hope that by all of us 
working together that we will be able to find the right 
solution to address these problems.
    I don't want to take too much time because we have members 
who are still here even though we will finish at 12 o'clock. 
Let me allow now my good friend, Mr. Forbes, to see if he has 
any questions. Randy?
    Mr. Forbes. Mr. Chairman, could I request that Mr. Hayes go 
out of order and take my spot at this particular point? He has 
a plane to catch, if you don't mind.
    Mr. Ortiz. We understand. Go right ahead.
    Mr. Hayes. Thank you, Mr. Chairman.
    Mr. Arny, Mr. Reed is co-chair of the House Impact Aid 
Caucus, a high priority for all of us to increase impact aid 
assistance to local school districts, and you know the details. 
It is my understanding the Department of Defense has been 
working with the Department of Education to improve the 
process. Could you bring us up to date on the status of those 
efforts and where we are now?
    Secretary Arny. Sir, I am new to education, but I did get a 
briefing and I would be happy to get back to you with more 
details. I know we are working very closely with the Department 
of Education. As a matter of fact, we received legislation I 
think thanks to the Congress that allows us to reach out from 
the Office of the Secretary of Defense to the Department of 
Education to work with them and to work with the communities to 
make sure, especially at the bases where we have significant 
growth, to work with the states in making sure that those 
education facilities are in place as our troops get there.
    Mr. Hayes. I appreciate that. As you know, Fort Bragg is 
the epicenter of the universe.
    Secretary Arny. I thought it was Kingsville. [Laughter.]
    Mr. Hayes. And with the expansion underway, for which we 
are very grateful, and Mr. Prosch is very familiar, and I 
appreciate your efforts on that, and if you will get back to us 
and give us the good news about how we are going to help Dr. 
Harris in the local schools.
    [The information referred to can be found in the Appendix 
beginning on page 178.]
    Mr. Hayes. Mr. Prosch, do you have a comment?
    Secretary Prosch. Well, I would just like to say that OSD, 
with the Office of Economic Adjustments, has done a very good 
job grabbing the bull by the horns here. Working with the 
Department of Education, we have made four joint trips to Fort 
Riley, Fort Drum, Fort Benning and Fort Bliss. I think the 
Department of Education is starting to have confidence in our 
numbers and starting to see progress there. We are hoping that 
we can eventually change this policy to provide impact aid in 
advance, rather than a year after the students are on the 
ground.
    OSD is doing a good job trying to pursue that goal. We are 
hoping to visit OMB, led by OSD, in the near future to try to 
work that policy change, because that would be a tremendous 
advantage and a tremendous tool for some of your poorer 
counties that would have a hard time raising literally hundreds 
of millions of dollars for new schools if they had the 
advantage of having the advance impact aid to hire teachers, to 
buy books, to even lease perhaps mobile classrooms while 
waiting for the brick and mortar.
    So OSD is doing a good job, and I think we are going to see 
some progress here, sir.
    Mr. Hayes. I appreciate that. We will continue to encourage 
them because it is crucially important. It gives our local 
school systems flexibility to do things that they need to do, 
and they are working with us very well.
    Last question, Mr. Reed, again speaking for Fort Bragg, 
reflects the wonderful men and women wearing the uniform 
everywhere. But as BRAC moves forward and U.S. Army Forces 
Command (FORSCOM) and Army Reserve headquarters move to Fort 
Bragg, the status of BRAC implementation--are we on track for 
the fiscal year 2011 deadline?
    And also I know we have a little bit of a traffic delay 
moving our Special Forces folks down to Eglin, with some issues 
there. Could you update us on that? Mr. Prosch, you look like 
you are ready to go. Take it and run with it.
    Secretary Prosch. Yes, sir. Sir, we are on track. We do 
have the FORSCOM headquarters move funded. It would help if we 
could get that $560 million restored to make sure that we can 
take care of all of our needed projects. I would tell you that 
General Wilson is launching tonight down at Eglin Air Base with 
a team to coordinate with the Air Force. We are getting good 
cooperation with the Air Force for the move of the Seventh 
Special Forces Group. We will keep you posted on that.
    We feel confident about the BRAC moves. I was at Fort Bragg 
recently speaking to the Chamber of Commerce. I hosted a 
visiting delegation this morning for breakfast from Fort Bragg. 
So there is an active dialogue going between your district in 
Fayetteville and the Army team.
    Mr. Hayes. Absolutely. I will be there tomorrow.
    Mr. Chairman, thank you.
    Mr. Ortiz [continuing]. So we are happy to have you. 
[Laughter.]
    Mr. Hayes. We have a lot of the district covered there. I 
just kind of take ownership of it.
    Mr. Ortiz. He couldn't make it. He is ill today. That is 
why Mr. Reed is not here, but we have a good replacement for 
him.
    Mr. Hayes. Jim Marshall even speaks favorably. He keeps the 
``air'' in ``airborne.'' Right, Jim?
    Mr. Ortiz. Mr. Marshall.
    Mr. Marshall. Thank you, Mr. Chairman.
    I appreciate all of your services, the work that you do, 
and I particularly appreciate Secretary Prosch being here on 
short notice doing his duty.
    Secretary Arny, I will use Robins Air Force Base as an 
example, but it applies to installations across all of the 
forces and across DOD generally. We have a large number--in the 
thousands--of Robins employees who are working in facilities 
that are World War II warehouses that were renovated at some 
point quite some time ago, and are about as dated as facilities 
can possibly be.
    We also in Robins--and there are a number of other issues, 
but I will just highlight one--Air Force Reserve has some of 
its personnel located off-base. If for no other reason than 
force security, we would like to move those folks from off-base 
on-base.
    With the initiatives that this Congress and DOD put 
together for military housing, we have had remarkable success 
in bringing in private dollars and essentially recapitalizing. 
It has really truly inured to our benefit in ability to retain, 
to recruit, to keep our families happy--that sort of thing.
    I know that DOD has given some thought to using a similar 
device to recapitalize some of the facilities that I have just 
described. There is no question that productivity--just simply 
the wellness of our employees--will be enhanced if we could 
recapitalize and put them in modern facilities, safer 
facilities, more efficient facilities, those sorts of things.
    Now, I know the concern is that the tendency by Congress 
and any given Administration would be to frontload and 
effectively obligate future taxpayers to pay for the toys that 
we are buying right now. That would be true of platforms. It is 
true of weapons systems. It is true of installations as well.
    But I would like you to comment a little bit about, are you 
thinking about any way in which we could move forward? I just 
use Robins as an example because I am familiar with that, but I 
know we have similar problems across the force, and I suspect 
that there are a few instances in which we have brought in 
private developers. They fund it and they fund it against some 
long-term lease agreement, something along those lines entered 
into with DOD, in order to upgrade installations.
    Secretary Arny. We looked at that. I spent the last six 
years working with Mr. Penn and his colleagues in the Navy, and 
worked heavily on privatization for housing and also in family 
housing and bachelor housing. And back in 2002, I took a look 
personally at how we could do privatization for administrative 
facilities, because I agree with you that there are a lot of 
administrative facilities that we use and we don't maintain 
them as well as we should.
    The problem that I have found is we got permission thanks 
to the Congress--begrudgingly I think out of OMB and the 
Congressional Budget Office (CBO)--to do this program. I spent 
2 1/2 years in the 1980's working at OMB so I think I 
understand the mentality. You were right in saying that they 
want to make sure that we don't put a debt on the future that 
we don't clearly lay out there. So they are very much for full 
funding.
    The advantage that we have for privatization is that we 
take the basic allowance for housing and we give it to the 
sailor, soldier, airman and Marine, and then he makes that 
choice. The privatized housing is truly private. It belongs to 
the corporation, which in the Navy's case we are a minority 
partner. We transfer the assets physically to them.
    So you have a stream of potential income to that housing 
that is not controlled by the Department. We give it to the 
sailor and he makes a choice. He either goes into private 
housing or he rents a house off-base or he buys a house off-
base. That has been the key to privatization for housing.
    Unfortunately, in administrative facilities, we don't have 
that. We don't give our units--maybe it would be better if we 
did, if we assigned a certain amount of money to the units and 
then they had to go buy or rent space on the base. To date, and 
I defer to other members of the panel, I have not figured out 
nor have the people working with me, figured out a way to be 
able to do that without----
    Mr. Marshall. Without having the problem that I described, 
that we would frontload everything and pass the buck to the 
next generation.
    Secretary Arny. Yes, sir.
    Mr. Marshall. I will ask a question of Secretary Anderson. 
You mentioned very briefly that at the request of a couple of 
Members of Congress, you were looking in to the possibility of 
nuclear power generation on military facilities. I am 
interested in that.
    My time is up, I think. Mr. Chairman, is my time up or not? 
It was red to start out with, so if I can inquire about this?
    Mr. Ortiz. Go ahead, because we appreciate the fact that a 
lot of members stayed here. We want to allow everybody and I 
know you have flights to catch----
    Mr. Marshall. Well, let me very quickly explore this. Could 
you give us a little detail about that initiative? I was on the 
USS Enterprise this Thanksgiving and was struck by how 
efficient all of our--well, throughout the Navy--the use 
nuclear power has been, and beneficial to us. Could you 
describe a little bit more about what you all have in mind and 
what you might be thinking about?
    Secretary Anderson. Sure. Yes, sir. Just to kind of step 
back a little bit, I think that the request specifically came 
to the Air Force from several members of the Senate, because of 
our status as the largest user of energy in the Federal 
Government. So rather than being a research or policy type of a 
request, it was more looking at us as a large major user of 
energy in this country.
    Back in the summer, we received some requests by letter for 
the Air Force to look at whether it would be feasible to host 
what they call a small package gas-cooled new type of 
technology reactor on an Air Force base, the issue of course 
being that the United States has lost its technological 
advantage or edge in nuclear over the last number of decades.
    As we move forward in finding locally sourced or 
domestically sourced sources of energy, we ought to have 
nuclear in the debate. The Air Force, having bases that are 
secure--you can put these pieces of equipment behind the fence 
and defend them that way--seemed to make a lot of sense.
    In addition, the Defense Sciences Board suggested that the 
vulnerability to the grid would suggest that generating power 
on a military installation makes a lot of sense, and having an 
energy source that only needs refueling every number of months 
or years certainly provides an advantage.
    We spent the entire summer taking a look, talking to the 
Department of Energy, the developers, the financiers in this 
industry, and determined that it would be potentially a 
feasible alternative.
    Mr. Marshall. Let me interrupt if I could.
    Secretary Anderson. Sure.
    Mr. Marshall. Again, everybody's time is kind of precious 
here, as well as yours.
    What size are you thinking? Do you have specific sizes? Do 
you have specific manufacturers? Do you have locations? Could 
you share the names of the senators who are asking that these 
things be put into their states? I assume that is what is going 
on--those sorts of things?
    Secretary Anderson. Okay. Absolutely. The two senators were 
Senators Craig and Domenici. There has been no decision where 
to put these things. We all believe, including the two 
senators, that there has to be a significant amount of research 
done before we decide on a site.
    The size of the reactors are somewhere between, we believe, 
100 to 250 megawatts each as individual units. None are 
currently in production. There are companies around the world 
that are looking at these technologies. None are Nuclear 
Regulatory Commission (NRC) licensed yet, and we know it has to 
occur.
    Our vision, sir, is essentially to do the following. Next 
week, we will be having the nuclear----
    Mr. Marshall. Let me interrupt you.
    Secretary Anderson. Sure.
    Mr. Marshall. Is this an initiative that you are involved 
with DOD-wide, so DOD generally is interested in this?
    Secretary Anderson. I don't want to speak for my 
colleagues.
    Mr. Marshall. Secretary Arny, just briefly?
    Secretary Arny. Again, I am new here. I think some of our 
staff is working with the Air Force. It is one of the items 
that I need to look into.
    Mr. Marshall. I guess, Mr. Secretary----
    Mr. Ortiz. We have other members that----
    Mr. Marshall. Yes. Could you give us as much information in 
writing as you can about this, and then keep us apprised as you 
move forward?
    Secretary Anderson. Absolutely. We will get written 
material to the committee right away.
    Mr. Marshall. Thank you.
    [The information referred to can be found in the Appendix 
beginning on page 177.]
    Mr. Ortiz. Mr. Forbes.
    Mr. Forbes. Thank you, Mr. Chairman.
    I am going to be as concise as I can. If I can throw out 
two questions at one time so that we can get to the answers, 
and if you can't do it today, if you would submit it for the 
record.
    First for Secretary Penn, as you know, the Navy is 
currently looking at the possibility of some Outlying Landing 
Fields (OLFs) in Virginia and North Carolina. I was just 
wondering if you had a timeline for when the environmental 
impact studies would be back on any of those sites.
    Second, are you considering or can you discuss any 
potential incentives that might be utilized for any of the 
local residents and officials who might be impacted by the 
location of those outlying fields?
    And then third, will the Navy be seeking any authorization 
or appropriation for the outlying fields in the current budget?
    As you are looking at that, if the other witnesses would 
consider either for today or to submit for the record, if each 
of you would address what impact specifically in terms of cost 
and/or delays, does the $1 billion cut in BRAC funds have on 
the departments and each of your respective services in terms 
of execution of the 2005 BRAC round, because that is something 
that is important for us to know as we are trying to fight to 
get those funds back in.
    [The information referred to can be found in the Appendix 
beginning on page 176.]
    Mr. Forbes. Secretary Penn, do you have any thought on the 
OLF situation?
    Secretary Penn. Yes, sir, I have. Thank you. Thank you for 
the opportunity.
    As you know, we listened to the population in North 
Carolina, so we have withdrawn Washington County from our 
choices. We have been working closely with both the governor of 
Virginia and North Carolina, to environmental agencies. North 
Carolina has given us two additional sites, and Virginia three 
sites, that we are going to conduct the Environmental Impact 
Statements (EISs) at. We are going to look at them.
    The EIS normally takes 3 years, or 30 months. The cost is 
about $10 million. Thus far, we have no funding, no MILCON 
funding at all in any of the OLF accounts. We have $3 million 
for the EIS for this year and $2 million for next year, and 
that is all we have programmed.
    On incentives, we are looking at several different 
incentives. We are still on the ground level at that with 
everything from schools on, to make it truly beneficial, but 
nothing has been decided yet and we haven't gone to Mr. Arny 
with our recommendations.
    We have no appropriations at all. We really need the OLF. 
We are sending our troops into harm's way. As I say, we have 
two sites in North Carolina, three in Virginia, and we have 
included the tactical airplanes from Norfolk, as well as 
Oceania, in our study. So we want one field where all the 
tactical aircraft can practice their carrier landings.
    Mr. Forbes. The cuts, with specificity, or is that 
something you need to submit for the record at a later point?
    Secretary Prosch. Yes, sir. Let me just say that 
predictable and timely funding is absolutely key for us to be 
able to operate an organization the size of the United States 
Army, with a million men and women in uniform, over 200,000 
civilians, and over 200,000 contractors.
    When funding is unpredictable, it makes it very hard to 
plan long term. One of our great concerns as part of this right 
now is the BRAC funding. Last year, you all did not fund the 
entire BRAC bill, and for the Army we were $560 million short 
going into this year in BRAC funding.
    It is going to make it very, very difficult for us to meet 
what the law requires--finishing BRAC by September, 2011. We 
need the funding. We need it sooner, rather than later, as well 
as military construction funding which is critical to 
maintaining support for our families. We are moving tens of 
thousands of soldiers around the world. We are building 
housing, support structures all around the world.
    The delays that we have experienced in receiving the 
military construction funding has complicated our ability to be 
able to build what we need, when we need it, and maintain the 
type of detailed synchronization that is necessary in order to 
manage the personnel in a huge organization such as the Army. 
So thank you for reconsidering that.
    Secretary Arny. Mr. Forbes, we will get some specifics to 
you. We have been asking for it. As you well know, and I have 
spent most of my life in and around the military, we have a 
``can-do'' attitude. So consequently, when people ask us to 
slip and make a later target time, we always stretch it. 
Sometimes I can't give you the specifics.
    All I know is we are planning. We are planning around it 
now to the point where we believe--at least in the Navy, where 
I was a couple of weeks ago--there are a couple of buildings 
that if we don't get that money by the very beginning of the 
first quarter of 2009, and the immediate response from some 
folks is, well, we can wait until 2009--well, unfortunately, we 
have seen over the past years and you all know, we can't get 
our funding for the 2009 budget in on October 1 of 2009. It 
just doesn't happen.
    So we really do need it prior to the end of this fiscal 
year. In about three months we will be able to see some of the 
ripple effects on the slow-down and perhaps be able to give you 
more details.
    Mr. Forbes. My time is up and I don't want to impose on 
other members, but I just want to let you know, we are trying 
to help all of you. This is the hearing to be able to get that 
information in the record, so I am just giving you that 
opportunity to put it in the record at a later point in time if 
you can. But we need that specificity so that we can try to 
help and make sure that that takes place. So you have that open 
invitation if you would like to later put it in.
    [The information referred to can be found in the Appendix 
beginning on page 176.]
    Secretary Penn. To repeat what Mr. Arny was saying, we are 
going to have to delay some moves from 2008 to 2009, and delay 
the award of two BRAC construction awards. One of the areas is 
in investigative facilities agencies, which we are trying to 
consolidate at Quantico. We are putting all the services down 
there in one large investigative agency. The other is the 
Reserve Center at Fort Lewis, Washington. So if we don't get 
the money as soon as possible, we are not going to do it. We 
can't do it.
    Secretary Anderson. And just briefly from the Air Force 
perspective, of the $1 billion, $235 million fell upon the Air 
Force, and represents 20 percent of our fiscal 2008 programs, 
so it is significant. As you know, sir, because of the 
complexity of many of these, it is a domino effect. So as you 
don't pick over one domino in one year, it certainly trickles 
down and puts us at risk at the end of the game.
    We have already deferred 21 projects, and are trying to 
analyze the impact of that to making the September, 2011 final 
deadline. If that money is restored sometime during this fiscal 
year, we will figure out a way to get back on track. If it is 
permanently lost, though, to be honest, we will be hard broke. 
We will not be able to make if the money goes away permanently.
    Mr. Forbes. Please take advantage of that invitation.
    Mr. Chairman, I want to help you. We just need the 
specificity so we can do it. Mr. Chairman, thank you.
    Mr. Ortiz. Thank you.
    Mr. Forbes, Mrs. Napolitano and any other member that might 
have questions for the record, I ask unanimous that they be 
allowed to submit those questions.
    Mr. Courtney.
    Mr. Courtney. Thank you, Mr. Chairman.
    I want to thank the witnesses. It is good to see Secretary 
Arny and Secretary Penn and the others here today. I 
particularly want to congratulate Secretary Penn on his son-in-
law's appointment as the new Admiral for the squadron in the 
Northeast. We look forward to seeing him in Groton.
    Secretary Penn. Thank you.
    Mr. Courtney. I wanted to just take a moment, Secretary 
Penn, to have your thoughts on the budget which we have before 
us that indicates that the sub base in Groton is going to 
receive $104 million over the next 5 years. That is on top of 
some investment in the base over the last year. It was $14 
million for demolition of some of the old structures that 
Secretary Arny approved. Mr. Ortiz was extremely helpful in 
terms of getting special grant funding for the sub learning 
center at the Groton sub base.
    The reason why I go through this litany is that as you know 
Connecticut has gone through three BRAC rounds where it was the 
perils of Pauline in terms of whether Groton was going to 
survive. Frankly, people have a bit of a concern that it is 
just a matter of time before the Navy puts us on the chopping 
block again. So I was wondering what your perspective is on the 
future of sub base New London in Groton, Connecticut as far as 
the Navy's future plans are concerned.
    Secretary Penn. I think with the MILCON we are programming 
to invest in Groton--as you know, we are doing a pier. We are 
looking at a commissary, a rec center. We just put the new 
Submersible ship-guided nuclear (SSGN) submarine training 
center in. Fortunately, I was just there maybe six months ago, 
and I see a lot of good things happening at Groton. I see it as 
an enduring base.
    We are putting money in there, MILCON in there. I also 
think what the state is doing to enhance the infrastructure is 
going to help long term. We are looking for ways we can work 
with you on that. Thank you for that contribution.
    Mr. Courtney. Absolutely. The sub learning center at the 
end of the day is probably the most exciting new development 
there.
    Secretary Penn. It is.
    Mr. Courtney. As you know, it is the largest operational 
military base in New England, and the people obviously are the 
most important, and the young men who are trained there. It is 
so impressive to see the way the Navy shapes that skill.
    Secretary Penn. Yes, sir.
    Mr. Courtney. One of the projects that is happening this 
year is the construction of the new pier. That, combined with 
the pier that was in last year's plan, goes a long way in terms 
of accommodating the Virginia-class assault attack submarines. 
I guess, though, it is unclear whether or not there are other 
piers slated after we get done with this project this year, is 
it your sense that there is going to continue to be that 
upgrading of that critical part of the infrastructure?
    Secretary Penn. We are still studying that at this time. As 
you notice, we have a two-year window between the construction 
efforts, just to allow us to continue our op tempo that we 
need, but we are still studying that at this time.
    Mr. Courtney. Thank you. As you know, the state of 
Connecticut itself has made a commitment through the 
legislature and the governor's office to partner with the Navy, 
and we look forward to working with you and Secretary Arny in 
terms of moving that forward. I want to thank you for your 
strong statements here today.
    With that, I yield back, Mr. Chairman.
    Mr. Ortiz. Mr. Loebsack.
    Mr. Loebsack. Thank you, Mr. Chairman.
    Thanks to all of you for being here today. I am from Iowa, 
and as I like to say, we don't have a submarine base. In fact, 
we don't have any bases to speak of, but we have lots of 
National Guard folks and Reserve. I think the Iowa National 
Guard has made a tremendous contribution to the operations 
overseas in recent years.
    We have four facilities in Iowa that were included in the 
2005 BRAC, and three of them just happen to be in my particular 
district. So I guess following the tradition here, I am 
learning as a freshman, that I will go ahead and speak 
specifically to my district or ask questions about my district.
    At the same time, I think as Congressman Marshall said, 
too, what I am going to ask probably is very relevant to lots 
of other districts and facilities in other districts around the 
country. I don't think I am being too presumptuous to make that 
statement.
    The Cedar Rapids and Middletown sites include armed forces 
readiness centers and field maintenance shops. The Muscatine 
site is a readiness center. These facilities were built in 
1916, 1950 and 1973 respectively. They are too small to support 
current operations. They contain asbestos. They are prone to 
flooding. Yet the Iowa National Guard does not receive 
sufficient funding, of course, to improve the sites over 15 
years.
    The Iowa National Guard, like National Guard units around 
the country, faces increasing recruiting and retention 
shortfalls. I might say, at a time when they are being called 
upon to perform more of the regular duties of the regular Army 
for example, rundown, unhealthy facilities weigh heavily on 
recruitment and retention, and the readiness centers are 
therefore absolutely vital to the health of the Guard.
    The Army approved and funded designs for all three BRAC 
sites in my district to not only modernize infrastructure and 
maximize funding, but will also allow for increased joint 
operations and training between the Iowa National guard and 
reserve forces. The good news is that the Iowa National Guard 
did receive design funding for these facilities this year, for 
fiscal year 2008.
    However, I was able to follow up testimony of former Under 
Secretary Groening back in December of a phone conversation. At 
that time, he said the construction funding was not slated to 
be provided until fiscal year 2010 construction. So the design 
is there for 2008, but construction not until 2010.
    So I am obviously very concerned that cost overruns and 
delays in the BRAC process have led the Army to prioritize 
funding in such a way that the National Guard in Iowa is being 
left behind, with the possible result that the Cedar Rapids, 
Muscatine, and Middletown sites will have to be scaled back, 
and the effectiveness of BRAC 2005 reduced.
    So I just do want to ask Mr. Arny and Mr. Prosch, obviously 
if you can't provide specifics today--even though I would like 
to hear from you in writing--but I would like to know the 
status, if you will, of the construction funding for these 
particular sites. The design funding is there for 2008, but we 
are not talking about construction money until 2010. So do you 
have any sense of what might happen with that? Might we be able 
to expedite that process and provide the construction funding 
for 2009?
    Secretary Arny. I think I will defer to Mr. Prosch for the 
details, and we can work with them to get details for you. I 
suspect from looking at it, that they are funded. As you said, 
they are probably in 2010. This cut of $939 million doesn't 
help us getting that money earlier, rather than later, and may 
cause it to slip, but I am only guessing at this point. So it 
is urgent for us to get that in. I will check. I defer to Mr. 
Prosch on the details.
    Secretary Prosch. Sir, the Cedar Rapids, Muscatine and 
Middletown armed forces rec centers are ready to award. The 
funds are available in 2008. We would like to provide for the 
record all of our projects that are being impacted by the $560 
million cut. I would like to thank this committee for giving us 
tools such as MILCON exchange and like-type exchanges that 
allows us to do some innovative things with our armed forces 
rec centers during the BRAC era, where you could take an old, 
perhaps worn-out armed forces rec center in a large urban area 
where the land is quite valuable, and you can use that to build 
a more modern facility outside of town that could be a joint-
type facility. So your committee has helped us to that and we 
thank you for that.
    The costs are acted for fiscal year 2010, and no scope has 
been left out. But we need your help to encourage all of 
Congress to ensure that these 10 armed forces rec centers are 
not left out due to that $560 million cut. We will keep you 
posted with the details, sir.
    Mr. Loebsack. I do appreciate that. Thank you very much. 
Again, I think it is just important that we recognize how 
important the National Guard is in our efforts overseas, and 
how important they continue to be in the coming years. As a 
congressman from Iowa, I think it is really critical that I 
state that publicly. So thank you very much. Thank you.
    Secretary Prosch. Yes, sir.
    [The information referred to can be found in the Appendix 
beginning on page 179.]
    Mr. Ortiz. Mr. Bishop.
    Mr. Bishop. Thank you, Mr. Chairman.
    For the four gentlemen here, I appreciate your willingness 
to serve the country, as well as the military, and your 
willingness to be here this afternoon when we work so hard 
today on the floor. We are probably tuckered out by it.
    I am happy for you guys to be here. I wish to say, I am not 
necessarily happy for me to be here because, as you know, I am 
going to continue being parochial. The reason I am here is 
obviously because not everything is satisfactory. In my state, 
there are two Army--actually, I only have about four questions, 
two for Mr. Prosch and perhaps another two, if I could, to 
Secretary Anderson.
    Mr. Prosch, first of all, in my state there is the Dugway 
Proving Grounds and the Tooele Army Depot. Dugway Proving 
Grounds is vital to the chemical and biodefense system of this 
United States. It is the only place you really have to be able 
to do that, and it is truly an isolated and remote facility by 
every definition.
    You are going to take an hour's drive getting there to the 
nearest community from Dugway. The only positive thing about 
that is you can drive as fast as you can because no one else 
will really care about it. The only limitation is the road that 
is not all that cool anyway.
    Since 9/11, the workload has been increased by 800 percent 
at Dugway, but the infrastructure has simply not. The 
infrastructure, the water system, the biolevel 3 labs--the 
biolevel 3 labs are still being done in temporary trailers, 
which is not the greatest situation in any of the weather 
conditions out there. The community club is 50 years old. Part 
of it is condemned. It doesn't have running water in it. Even 
though there was design money in 2006 that was appropriated for 
it, it has now been pushed off the MILCON FYDP so far to the 
right.
    The water system is also 50 years old and inadequate. It 
was on the FYDP last year, scheduled for year 2010. Once again, 
it has disappeared from that particular list this year. The 
biolevel lab is a $29 million project that is necessary for 
existing space, and once again that keeps being pushed to the 
right as well.
    The first time we saw this year's proposal, there were no 
MILCON anywhere in the FYDP for any of these proposals. I 
understand one of them may be on in year 2012. I am not quite 
sure. The problem I have here is we have talked about this in 
the past. To be honest, the answers are simply not acceptable.
    These are impossible conditions in these two areas. The 
Tooele Army Depot, which has provided a great deal of the 
ordnance in our conflicts, has not had any MILCON since 1994 in 
that area, and they are still required to try and be 
competitive in the system that we have, without the 
infrastructure to do it.
    The question I have is that when I look at the situation, 
and I may be inaccurate, it seems like the 800-pound gorilla in 
the room is BRAC--the MILCON requirements for BRAC--which seems 
to be eating the lunch of the other requirements we have for 
ongoing programs and existing facilities.
    Perhaps the only question that I could possibly ask--I 
could ask you when this is going to be rectified, but I don't 
think you can give me an answer. But perhaps the only question 
I could ask, is it really the costs for BRAC-related MILCON, as 
well as--before 2012 is kind of an arbitrary figure. If indeed, 
that could be extended somehow, a couple of years? Could some 
crumbs from the BRAC-necessary MILCON be extended to some of 
these other programs that are ongoing? Because basically, this 
is an extremely frustrating situation for these two areas.
    Mr. Prosch.
    Secretary Prosch. Thank you, sir.
    We understand. We have competing operational demands for 
MILCON. It is not just BRAC, but BRAC is a mandated law that we 
must comply with. We are also growing the Army by 74,000 
soldiers. We are bringing 41,000 soldiers back from Germany and 
Korea under the global defense posture and realignment. We are 
balancing the force. We are trying to improve quality of life.
    So the Army's priority is to create operational depth and 
strategic flexibility in order to rebalance the force. We have 
competing priorities and we have limited resources. 
Unfortunately, our non-operational facilities are competing for 
these limited resources when we prioritize. I understand how 
you feel that your research, development, test and evaluation 
(RDT&E) installation has been disadvantaged. I will promise to 
work with you and try to articulate your very valid points you 
have made today, sir.
    Mr. Bishop. Sir, I don't want to be overly critical because 
everyone has talked to you about needs they have in their 
particular areas. But once again, this is 15 and 20 years on 
stuff that is significant. I recognize the prioritization has 
to be there. If you can find out a way, realizing the military 
in my estimation is underfunded in every branch and we have 
been for many years, if you can find a way to work through 
that, I would be more than happy to work on those issues, but 
this is coming up here.
    I have a second specific question just for you. I want to 
make sure I read this so I get it properly. My office has been 
told by the Army legislative liaison that it is Army policy not 
to release the full Army FYDP that comes over to the Hill, on 
which our 2009 MILCON budget is based, to member offices, even 
to member offices that are on the Readiness Subcommittee. They 
state that it is only going to be provided--the detailed 
information to committee staff. I simply do not know if this is 
correct. If it is, is there a policy decision for withholding 
this information from committee member staff?
    Secretary Prosch. Sir, I would defer to OSD, that has told 
us to comply with that guidance.
    Mr. Bishop. It is the correct policy, though? It is an 
official policy?
    Secretary Arny. Yes. We will get back to you, sir.
    [The information referred to can be found in the Appendix 
beginning on page 179.]
    Mr. Bishop. That is fair enough. That is fair enough.
    Secretary Anderson, if I could ask you two quick questions. 
First, if you have any comment on the enhanced use lease policy 
we are trying to accomplish at Hill Air Force Base, and the 
position on how this is progressing.
    The second question I also have is once again a long-time 
interest, an energy policy of the United States should be one 
that makes us energy independent. The question I have is it in 
any way possible for the Air Force to be energy independent if 
indeed we do not have some form of coal to gas, coal 
liquefaction projects that are going on.
    Secretary Anderson. Okay, yes, sir. First, let me talk 
quickly about the Hill Air Force Base enhanced use lease. From 
my perspective, sir, that is a real good-news story. We have 
recently gone through the bid process and have accepted a 
developer called Sunset Ridge Development, and entered 
negotiations to enter into a contract.
    Mr. Bishop. Can I interrupt?
    Secretary Anderson. Yes, sir.
    Mr. Bishop. Maybe to help this process go on, are you 
satisfied with how it is progressing down there?
    Secretary Anderson. Satisfied? Absolutely. Yes, sir.
    Mr. Bishop. I am, too.
    Secretary Anderson. Good. Okay.
    Mr. Bishop. Let us go to coal-to-gas, if you could.
    Secretary Anderson. Okay. From my position, not being an 
energy policy person, but a businessman, based on current 
technologies, the world can't survive without using coal, and 
we have to figure out how to use it in an environmentally 
friendly way. The United States is the number one depository of 
coal in the world, and if we don't use it as part of our energy 
independence strategy, we are never going to get there, but 
that is Bill Anderson talking.
    Mr. Bishop. I am seeing that. I am sorry. I will just 
summarize this and I am done.
    Mr. Ortiz. Please do because we have other members that----
    Mr. Bishop. Yes, I just saw the red light and I apologize.
    It becomes essential. Without that, we are not going to be 
independent for military needs.
    Secretary Anderson. In my opinion, yes, sir.
    Mr. Bishop. Thank you.
    And I apologize. Thank you, sir.
    Mr. Ortiz. I know you are very valuable to our team, so 
don't leave now.
    Mr. Bishop. If I was that valuable, I wouldn't be sitting 
this far away from you. [Laughter.]
    Thank you, sir.
    Mr. Ortiz. Ms. Shea-Porter.
    Ms. Shea-Porter. Thank you.
    Today has been a very good day. I have had the privilege of 
being at the national defense authorization budget for the Army 
hearing with the Secretary of the Army and General Casey. I 
also had the honor of speaking on the floor to honor a fallen 
soldier from my district.
    And then I went to the Budget Committee hearing to speak 
about military families and more money for TRICARE. And now I 
have the honor to be here. So I just want to say that always we 
think about the men and women who serve this country and we 
thank them and we are working for them.
    Now, I am going to get a little provincial myself, but this 
is actually pretty important because I want to talk about the 
Portsmouth Naval Shipyard. The Portsmouth Naval Shipyard 
continues to show that it is the best yard in the fleet. They 
regularly exceed the Navy's expectations by bringing projects 
in under cost and ahead of schedule. They are the fastest and 
the most efficient. They are so good at what they do that 
detachments from Portsmouth have been sent to San Diego to get 
the operations on track.
    Despite their proven record of quality and efficiency, they 
have received virtually no support from the Navy. Portsmouth 
has not received a single MILCON project from the Navy since 
1971. For the last 37 years, they have relied on congressional 
earmarks for 51 projects and BRAC and the global war on terror 
(GWOT) money for others. In comparison to the other public 
yards, Portsmouth has received only eight percent of the total 
MILCON for public shipyards since 1992.
    In 30 months, the first Virginia-class submarine will 
arrive at Portsmouth for maintenance, and Portsmouth needs the 
waterfront maintenance facilities promised by the Navy. Pearl 
has gotten their facilities, but Pearl doesn't have the first 
ship.
    So Mr. Arny, I wanted to ask you, please, why does the Navy 
seem to be leaving Portsmouth off the list? And why isn't the 
Navy funding the facilities at Portsmouth that they need to 
take care of our newest, best Navy platforms?
    Secretary Arny. I will defer the details to my Navy 
colleague, Mr. Penn. I will let him, because I am not sure what 
the MILCON is specifically for Portsmouth. Again, we are trying 
to maintain all our bases at a high enough level, and I know 
that Portsmouth feels like it has been left out. I know the 
Navy has a plan to fix that.
    Ms. Shea-Porter. Okay. You know, it is not just perception. 
I have a chart here that is absolute reality. I would be very 
happy to show it to you. It is color-coded so you can catch it 
very quickly. We have been left out, so I appreciate your 
attention to it.
    Secretary Penn. I will have to take that question for the 
record. I will have to see your chart and we will address it 
appropriately.
    Ms. Shea-Porter. Thank you. I appreciate your attention and 
I will look forward to your reply.
    I yield back. Thank you.
    [The chart referred to can be found in the Appendix on page 
171.]
    Mr. Ortiz. The kind--response? If not, my good friend, the 
kind gentleman from Mississippi decided to pass and allow Ms. 
Bordallo to ask a question.
    Ms. Bordallo. I want to thank my colleague, Mr. Taylor, for 
such a kind gesture.
    Mr. Chairman, thank you for calling this hearing and for 
your continued----
    Mr. Taylor. Ms. Bordallo, could I have a note for my wife?
    [Laughter.]
    Ms. Bordallo. Yes, yes, I will. He owes me one so I think 
we are even.
    I want to thank you, Mr. Chairman, for your leadership on 
this subcommittee and for calling this meeting today.
    Secretary Arny, thank you for coming here today and 
congratulations on your promotion. I knew you in your other 
life.
    And Secretary Penn, who I see almost daily.
    And Secretary Anderson and Secretary Prosch, thank you for 
testifying today.
    Secretary Penn, I appreciate your working closely with our 
office to identify and work on solutions for some of the 
difficult issues that we face in Guam. We have made some 
progress this year, and I look forward to working with you 
during this critical year of the buildup.
    As you know, I have called for the drafting of a memorandum 
of understanding (MOU) between the government of Guam and the 
appropriate Federal agencies. Guam will need substantial 
assistance in bringing its infrastructure, schools, hospitals 
and utilities up to par in order to handle the influx of people 
as a result of the buildup. Guam will need a commitment of 
funding, especially as new administrations take over here in 
Washington and even back in Guam.
    Moreover, a commitment of funding in writing will signal to 
private industry that the Federal Government is serious about 
the buildup. Can you share with this committee your feelings on 
an MOU? And also can you give us an indication where you are in 
the process of working MOUs between the Federal Government and 
the government of Guam?
    Secretary Penn. As you know, ma'am, we have established an 
interagency working group with the Department of Interior and 
with the governor of Guam to identify the requirements and to 
marshal resources across the Federal Government to address the 
needs. OMB is also participating. In fact, we had a meeting--I 
think it was Tuesday--with five other government agencies to 
address the process and what we need to do. In fact, GovGuam 
gave us a sheet where they requested $3 billion to get their 
programs going.
    Just before I came here this afternoon, I was with 
Secretary Kempthorne at the DC Hospital Association to see if 
we can't get some partnership going with the hospital on Guam. 
We have the military hospital, but the civilian hospital is 
what we need. In fact, we wanted to do the entire Marshall 
Islands and the government of the Marianas. The Secretary of 
Interior has the administrative responsibility for coordinating 
the Federal policies out there for us. The policy is being 
elevated. I will say it like that.
    As far as the MOU, I can't specifically say when that will 
be signed, what it will contain. I heard you Tuesday when you 
talked about it. We listened to you. We will make something 
happen with that.
    Ms. Bordallo. Good. I think it will just give the people of 
Guam, the leaders of Guam some assurance that what we are 
really doing here is really going to happen. Some of us are a 
little bit queasy. We see the 2009 budget request and a lot of 
it does not include anything in the way of assistance to Guam.
    Secretary Penn. We cannot do construction. We can't turn 
the first shovel of dirt until the National Environmental 
Policy Act (NEPA), the EIS process is completed.
    Ms. Bordallo. That is correct.
    Secretary Penn. And we will not be able to request this 
funding until fiscal year 2010. I was in Japan maybe two weeks 
ago, three weeks ago, talking with their Minister of Defense 
and others about the sincerity of their budget issues. As you 
know, several people there have turned over. They are still 
moving forward. Okay? We are moving forward on this and 2014 is 
still our date.
    Ms. Bordallo. Good. Thank you, Mr. Secretary.
    I have another question for you. The special purpose 
entities, the SPEs, will be funding some of the most critical 
components of the buildup, including the military housing and 
the utilities. Some of us here in Congress are concerned that 
the SPE funding portion is too limited in scope.
    Moreover, we want to ensure that utility improvements and 
military housing construction are done to U.S. standards. So 
can you first update the committee on the status of 
negotiations between the U.S. Government and the government of 
Japan, which you just spoke to, on the SPE funding portion of 
the Guam military buildup?
    And second, can you address some of the concerns that have 
been raised about implementation of the SPEs, notably the 
restriction on how SPE funding will be utilized?
    Secretary Penn. We have a number of details we are working 
with Japan. Some of the examples include the applicability of 
the Federal Acquisition Regulation (FAR), the FARs, the 
interpretation with utility systems on Guam, and privatization 
of funds. The government of Japan is not familiar with the way 
we do public-private venture (PPV), so this is a totally new 
experience for them. We are meeting with the government of 
Japan and representatives monthly. In fact, they will be Guam 
next week when we are there for the industry forum. I am sure 
we will meet at that time as well. We are just working through 
these details.
    We have Mr. Scott Forrest, who does the planning, 
programming, and budgeting (PPB) for us in the Navigation 
Package (NAVPAC) going to the meetings. He is traveling to Guam 
and trying to explain the process as to how it works so they 
will be better prepared to make the decision. They will be 
funding several of the SPEs for us.
    Ms. Bordallo. Good.
    And finally, Secretary Penn, I am somewhat concerned about 
the level of military construction funding for fiscal year 
2009, which I just mentioned, and you said until we get our 
environmental study, and of course our master plan should be 
ready sometime next month.
    Secretary Penn. Yes, ma'am.
    Ms. Bordallo. But the President's budget has only 
programmed $169 million of construction work on Guam, which is 
about a 26 percent decrease in construction spending since last 
year. In our previous conversations, we both have recognized 
that Guam has construction capacity constraints and that 
military construction funding would need to be ramped up in the 
years before the realignment construction begins in order to 
enhance Guam's construction capacity. So that is why I was 
surprised at this year's decrease in funding.
    Can you comment on why there was an overall decrease in 
Navy military construction? And also can you comment on why 
there were not any projects that are specifically directed at 
preparing Guam for realignment of Marines from Okinawa? 
Particularly the first part of that question, because not 
anything to do with the Marines, but just beefing up our 
construction on Guam as is.
    Secretary Penn. Our 2009 MILCON is $141 million, compared 
to the $285 million we had in 2008. You are correct there. All 
of the money is used to upgrade our existing facilities. As you 
know, we went for several years without putting any MILCON, 
really any money into Guam. We thought it might be BRAC'd 
eventually, so we didn't invest the money.
    Now that it is not, we are doing several things. In fact, 
the things we are doing, we are putting in there now, we 
decided to do before we knew the Marines were coming, such as 
the hospital and other things. We are investing substantial 
amounts in Guam over the next few years.
    Ms. Bordallo. All right. I am just concerned, because I 
just feel, you know, we should really be stepping up this 
activity, and to see it being decreased just prior to this 
buildup concerns me. So I just wondered what the rationale was. 
Let us face it, it is not just the Marines, but the Air Force 
will be enhanced, the Navy will be enhanced. So there is a need 
for funding in these areas. I have just been concerned.
    Secretary Anderson, yesterday I was at the Air Force's 
posture hearing and asked Secretary Wynne about the 32 percent 
overall decrease in Air Force military construction funding. I 
was disappointed in Secretary Wynne's answer to my question. He 
simply does not make any sense to me, or it simply does not 
make any sense to me that we are procuring new airframes 
without having places to house this new equipment.
    I believe the Air Force is taking a very dangerous approach 
to the future quality of their installations. I am concerned 
about the quality of life, which has been a hallmark for the 
Air Force and the readiness of our airmen will suffer.
    So my question is, I am particularly concerned about 
construction projects at Anderson. I understand that there is 
about a $700 million unfunded requirement for construction at 
Anderson over the next several years. I further understand that 
the environmental impact statements for these projects have 
been completed and they simply need funding. The Navy and 
Marines anticipate beginning the bulk of their construction 
activities in fiscal year 2010 and 2011, the same time that the 
Air Force anticipates its construction to occur.
    I fear that the Navy and the Marine Corps projects will 
take precedence over the Air Force projects. So I simply do not 
understand why funding was not programmed in earlier years to 
meet the demands of realigning forces from Korea to Anderson 
Air Force Base, who by chance arrive earlier on Guam than the 
Marines.
    There are also examples of F-22s in Alaska and Hawaii that 
will without supporting infrastructure for several years. At a 
macro level, you are cutting personnel and facilities, but 
increasing the number of planes. I always believed that you 
need people and facilities before you get the planes. So can 
you please explain this?
    Secretary Anderson. Yes, ma'am. Let me see if I can try. 
There are a lot of good questions in your comments. First, it 
is not a matter of more planes. It is a matter of replacing 
older--very old, sometimes--aircraft, with newer technology 
that is easier to maintain, less expensive to the taxpayer, and 
the whole nine yards.
    Let me try to touch directly on Guam and Anderson and 
Elmendorf or Alaska, if I could. In Guam, there are plans to do 
some significant intelligence, surveillance, and reconnaissance 
(ISR) and strike MILCON over the next couple of years. You are 
correct. It has slid to the right, farther out. That was based 
on some hard choices that we had to make based on limited 
funding. We had to look at the whole realm of all Air Force 
projects, not just Guam, but the whole Air Force worldwide, and 
prioritize based on the amount of money available.
    You are correct. The MILCON program for that is programmed 
in wedges in the fiscal year 2009 to 2013 FYDP. In fiscal years 
2010, 2011 and 2012, you are again correct that that does run 
up against what the Navy is doing. All I can tell you is the 
relationship between the Air Force and the Navy on Guam has 
been a terrific one, with the commanders on the ground working 
together to work through these issues, with BJ's team and my 
team working together. It will be difficult. I am not going to 
try to candy-coat it, but I am confident that the Navy and the 
Air Force can work together and get this right.
    Regarding the F-22s in Alaska, we are delaying the 
construction of new facilities that can house these aircraft. 
They are specifically built for the F-22. That doesn't mean 
that they will be sitting out in the snow. F-15s are coming out 
of Elmendorf. There are hangars that are not perfect for an F-
22, but they keep the F-22 out of the snow and the weather. We 
are going to have to do work-arounds.
    It is going to be harder for the people. But again, we have 
to prioritize our construction projects and we will get the new 
hangars built. We can keep the F-22s safe and secure and do the 
mission and get the pilots up and rated to do what they have to 
do for national security in the older facilities until the 
money comes around.
    Ms. Bordallo. So you do have temporary housing for these?
    Secretary Anderson. Yes, ma'am. Absolutely.
    Ms. Bordallo. All right.
    I would also like one last question, Mr. Chairman, to 
address what level of cooperation in integration you have 
provided to the Joint Guam Program Office as you develop this 
year's budget. I feel if there was more cooperation, maybe we 
would not be having this discussion today. Do you cooperate 
with the Joint Program Office?
    Secretary Anderson. As a matter of fact, we have Air Force 
assets in the Joint Program Office.
    Secretary Penn. And we have what we call a Guam Executive 
Council----
    Ms. Bordallo. Yes, I understand.
    Secretary Penn [continuing]. Which is joint. In fact, I 
think some people from your staff sit there as well. But we 
have frequent meetings, a lot of correspondence.
    And we have two of your people----
    Secretary Anderson. I believe so, yes.
    Secretary Penn [continuing]. In the Guam Executive Office.
    Ms. Bordallo. Yes.
    I want to thank you all.
    Mr. Chairman, it is just that this buildup is such a 
magnificent size and we are doing so much work right now, not 
just within the military, but also the other Federal 
Governments, to build up Guam and be ready for the Marines when 
they arrived.
    Also, since I do have the Air Force here, I do want to 
extend my condolences to the Air Force on the crash of the B-2 
plane out there. That was just a tremendous shock to all of us 
on Guam. Thank goodness that the pilots are well. I understand 
one was injured, but he is in Tripler Hospital right now 
recovering from a back injury. So our deepest sympathies to the 
Air Force, but thank goodness no life was lost.
    Secretary Anderson. Thank you for your concern.
    Ms. Bordallo. Thank you.
    Thank you, Mr. Chairman.
    Mr. Ortiz. Thank you.
    Mr. Taylor.
    Mr. Taylor. Thank you, Mr. Chairman.
    Thank you, gentlemen, for staying around this long.
    A couple of weeks ago, I was fortunate enough to have 
dinner with Admiral Ruffed, the Chief Naval Officer (CNO), and 
several of the base commanders from South Mississippi--and I am 
sorry for the mental lapse. Interestingly enough, I have 
probably been tracking insurance industry issues more than 
anybody, given what happened in my congressional district in 
the wake of Katrina.
    But one of the things I had failed to consider was that 
every one of those base commanders made a point to the CNO that 
their folks--and Secretary Penn, you very appropriately point 
out that three out of four sailors and Marines live off-
station. Their point is that every one of those folks who is 
living on the economy was having trouble making ends meet, due 
primarily to the dramatic increase in the cost of wind 
insurance in coastal America.
    Keeping in mind that half of all Americans live in coastal 
America, that a very high percentage of all of our military 
installations are in coastal America, whether it is Eglin Air 
Force Base, Keesler Air Force Base--fill in the blanks. I would 
imagine more than half of our installations are in coastal 
America.
    Your concern about the basic allowance for housing--are you 
factoring that in? Because the last thing I want to hear is 
that people are getting out of the military because they can't 
keep up with the basic allowance for housing because our folks 
aren't taking a look at the dramatic increases. I will give you 
a for-instance: in South Mississippi today, a single unit to be 
rented--$300 a month per unit per month just for wind 
insurance. That is not homeowner's, that is not flood--that is 
just for wind insurance.
    I have tracked this around the country and the insurance 
industry has pulled out of every coastal state one by one, 
leaving that burden to the states. The states have had to 
dramatically increase rates. I am just curious if you all have 
taken that into account when you determine basic allowance for 
housing, because quite frankly, I hadn't thought of it until 
those base commanders brought it to the CNO's attention.
    The second is a request. I realize that the Navy Commander 
and the Air Force Colonel are the only two people in this room 
who are guaranteed a job next January. The rest of us are iffy. 
[Laughter.]
    But in the time that all of us are here, I can't emphasize 
enough, based on what I saw after Hurricane Katrina, that when 
people come to you with proposals that say let us privatize our 
water wells, let us use the city sewer system, please don't. In 
South Mississippi, the only people who could take a shower 
south of I-10, the only people who had flush toilets south of 
I-10 for several weeks after that hurricane, were the people on 
our military installations.
    At the Seabee base, the only hot meals being served in 
South Mississippi south of I-10 for probably 3 or 4 days after 
that storm, were served at the Seabee base because they had 
their own water wells, because they had their own water 
treatment plant, and the same thing with Keesler Air Force 
Base, and the same thing with the folks out at the Stennis 
Space Center. That really is something. You don't miss your 
water until the well runs dry.
    The city well was not operating. The city sewage treatment 
plants were not operating. They were overwhelmed. They had a 
million things to do. And I know it was one of the initiatives 
of former Secretary Rumsfeld to privatize that. Please think 
this through before you do that.
    If there is an attack on the homeland, it is going to look 
a lot like Katrina. There is going to be no electricity. There 
is going to be no just-in-time at your local gas station, at 
your local food mart. And we are going to count on our bases as 
the place where the cavalry rides to the rescue from. One of 
the many differences between things going well in Mississippi 
and things going poorly in New Orleans is that we had wall-to-
wall military installations to call on to ride to the rescue, 
and they didn't.
    And again, just an observation, the last thing is for 
Secretary Anderson. I read your statement, and perhaps I missed 
it, but I am aware that you are fairly close to making a 
decision on the cyber-command for the Air Force.
    Secretary Anderson. Yes, sir.
    Mr. Taylor. I was curious if that money had been budgeted 
and how close you are to making that decision.
    Secretary Anderson. I can give it to you relatively 
quickly, if I could.
    Mr. Taylor. Okay.
    Secretary Anderson. Because this is such an important 
decision, standing up a new major command, and also standing up 
a capability in a new domain, we are going to take this very, 
very carefully. We have a provisional command set up. Barksdale 
is the temporary location for that command. We anticipate 
planting a flag for a permanent command probably in October, 
but that will not be the time at which we will be in a position 
to determine where the final location for the command is going 
to be.
    We are going to take this step by step, making sure that we 
give the communities adequate time to talk to us, give us their 
impression of the value that they would provide to this 
command. I am going to send a letter out early next month 
telling all the governors that there will be a call for 
information. That call for information will come somewhere in 
early May. We will expect to have the information back in the 
July timeframe, and then spend the summer and the fall sending 
teams out to the various bases.
    So far, we have gotten indications of interest from 16 
different states, going out and really understanding what the 
issues are. We probably won't narrow down to the final four or 
five, whatever it happens to be, short list candidates probably 
until the end of the year if we want to do this right.
    Mr. Taylor. Do you expect a final decision on your watch?
    Secretary Anderson. The final decision will probably not 
come on my watch. No, sir. The wickering down to the final 
short list will be, in my guess, probably February or March of 
2009, which is after I will be gone, and the final decision 
will occur.
    Mr. Taylor. If I can backtrack to the statement that again, 
my gut tells me that the vast majority of our military 
installations are within 50 miles of a coastline. And given 
that this is not just a Mississippi phenomenon with the 
incredible increases in insurance, because so many people live 
off-station, to what extent have you all factored that into 
your determination of Basic Allowance for Housing (BAH)?
    Secretary Arny. Let me take a shot at that. We do annual 
updates in the Basic Allowance for Housing. We go out and seek 
these kinds of inputs.
    Mr. Taylor. Do you ask that question specifically?
    Secretary Arny. Pardon?
    Mr. Taylor. Do you ask, because this is a fairly new 
phenomenon in the past three years of having to buy a separate 
wind policy from your homeowner's policy.
    Secretary Arny. I understand that. The base commanders make 
their inputs into our system for all four of the services, 
including the Marine Corps. Now, it does take a while to react, 
but if it has been a couple of years phenomenon, that should be 
being cranked in. I will go ask that specifically. It is more 
of a personnel issue.
    We don't do the BAH ourselves. The personnel folks do, but 
I will go back and ask that specific question as to how that is 
being handled, because there also may be some things we can do 
to make sure that rate comes down to something more reasonable.
    Mr. Taylor. Secretary Arny, the thing I would ask you to 
also consider is that when you are crunching the numbers to 
decide whether or not we are going to do base housing as a 
Nation, or go to a public-private partnership, our Nation is 
self-insured. If you go to a public-private venture, that is 
most certainly going to be a factor in that business person's 
equation.
    Again, this is a fairly recent phenomenon that I hope we 
are factoring into these equations because I don't see it going 
away anytime soon. We have a legislative effort to address that 
that is stalled in the United States Senate. But until that 
happens, this is something that men and women who serve our 
country are going to have to deal with, and we as a Nation in 
fairness to them have to deal with.
    Secretary Arny. We try to account for all those factors to 
make sure it is zero out-of-pocket.
    Mr. Taylor. Thank you, sir.
    Thank you, Mr. Chairman.
    [The information referred to can be found in the Appendix 
beginning on page 177.]
    Mr. Ortiz. I think we are going to have to do what we did. 
Secretary Penn, do you remember when we went to the private-
public housing? In the beginning, it was so expensive for some 
of those service people. What we did, we supplemented some of 
the rent payments.
    But he has brought up a very, very good point, Congressman 
Taylor. If there is any way that we can look at it to see how 
we can help, because he is right. You know, I represent a naval 
city, and we have some of the same problems you are talking 
about with most of us. I hope that we can look into it and see 
if there is any way that we can do something similar to what we 
did when we first initiated the public-private housing venture.
    Any questions? I will tell you what. This was a good 
hearing today. We certainly appreciate your expertise in the 
areas that we are talking about, and your dedication and your 
service to our country. We look forward to working with you. We 
serve the same country. We are in the same boat, and we are 
going to have to continue to work together.
    I would like to have unanimous consent to allow members to 
submit questions for the record. Hearing no objection, so 
moved.
    This hearing is adjourned. Thank you so much.
    [Whereupon, at 3:20 p.m., the subcommittee was adjourned.]
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                  WITNESS RESPONSES TO QUESTIONS ASKED

                           DURING THE HEARING

                           February 28, 2008

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              RESPONSE TO QUESTIONS SUBMITTED BY MR. ORTIZ

    Secretary Arny. The Department uses the Facilities Sustainment 
Model, which was developed several years ago as a programmatic model. 
It takes a holistic view of the Services' total inventory and 
calculates a sustainment requirement for programming purposes so as to 
prevent deterioration, maintain safety, and preserve performance over 
the life of a facility. It was not intended to be used at the 
installation level. Percentages at the installation level, if 
calculated, may present an inaccurate view of the installation's 
requirement, and consequently, a possible misrepresentation of 
sustainment funding at an installation in any given year. Hence, we do 
not evaluate percentages at the installation level, including at Naval 
Air Station Kingsville.
    The Department of Defense (DOD) has used the current facilities 
recapitalization metric since 2002 to assess the adequacy of the 
investment in modernizing and restoring our inventory of facilities. 
The metric is based upon the premise that the investment should be 
sufficient to replace the facilities inventory at a rate equal to its 
expected service life, estimated at 67 years using a ``weighted 
average'' calculation of plant replacement value (PRV) about ten years 
ago. The metric divides the PRV of the inventory by the annual 
investment in recapitalization, yielding a recapitalization rate 
expressed in years.
    While the recapitalization metric has served the DOD well, it has 
several limitations that the DOD now seeks to reduce or eliminate for 
the FY 2010 budget submission. These limitations include the following:

        1.   The investment target, expressed as a funding rate 
        necessary to replace the facilities inventory every 67 years, 
        was calculated using PRV and inventory from the late 1990s that 
        is no longer current.

        2.   The investment target is an overall DOD average and does 
        not represent the facilities inventory for each DOD Component 
        that can vary significantly from one Component to the next.

        3.   The investment target is based upon preliminary DOD rough 
        estimates of expected service life values for various facility 
        types that have since been refined by various published 
        industry sources.

        4.   The recapitalization metric does not differentiate between 
        costs to renovate facilities versus costs to replace 
        facilities, both of which are ``recapitalization.'' This 
        difference can equate to approximately 40% of a facility's 
        calculated PRV.

    The Department is transforming the recapitalization metric to 
address each of these limitations in support of the FY 2010 budget 
submission. There are three aspects to this transformation:

        1.   The format of the new metric will change from a rate 
        expressed in ``number of years'' to a rate expressed as a 
        percent of the investment target that is funded. This will 
        parallel the facilities sustainment metric (and others) and 
        provide a common funding expression between Components, even 
        those with significant differences in facilities inventory and 
        resultant differences in ``average'' inventory service lives.

        2.   The investment target will change from the ``67-year 
        average'' target to specific target values for each Component 
        based upon current Component-specific inventory and published 
        parameters for facility service lives and depreciation. The DOD 
        Facilities Modernization Model performs this function.

        3.   Finally, the method of identifying and accounting for 
        recapitalization investments is being refined to differentiate 
        between types of recapitalization methods (specifically, 
        between renovation and replacement).

    Since its inception, the facilities recapitalization metric has 
served as an important tool to evaluate the adequacy of the DOD's 
aggregate investment to counter facility obsolescence. The improvements 
planned for the FY 2010 budget and Future Year Defense Plan are 
expected to significantly improve its accuracy and usefulness for this 
purpose.
    Regarding use of the facilities recapitalization metric at the 
installation level, if calculated, it may present an inaccurate view of 
the installation's requirement, and consequently, a possible 
misrepresentation of recapitalization funding at an installation in any 
given year. Hence, we do not evaluate the facilities recapitalization 
metric at the installation level, including at Naval Air Station 
Kingsville and Naval Station Corpus Christi. [See page 20.]
                                 ______
                                 
             RESPONSES TO QUESTIONS SUBMITTED BY MR. FORBES

    Secretary Arny. The Department is still tracking to complete the 
Base Realignment and Closure (BRAC) 2005 process by September 15, 2011. 
If the $939 million reduction to the BRAC account is not restored, or 
even if it is restored late in the process, we will have to work 
``very, very, hard,'' as Secretary Gates recently testified, to meet 
the statutory deadline. This could involve eliminating non-mission 
construction (gyms, child development centers, medical clinics); 
shifting Operation and Maintenance (O&M) funding to the last 
implementation years (furnishings and personnel moves); and/or 
introducing the potential for delaying some recommendations (e.g., 
reserve center consolidations). [See page 19.]
    Secretary Penn. The Navy does not currently have security concerns 
about Balfour Beatty plc (a London-based public company traded on the 
London Stock Exchange) acquiring GMH's Military Housing Division 
(inclusive of GMH's interest in the Northeast and Southeast projects).
    Balfour Beatty itself is already the design/builder for the 
Northeast and Southeast projects and has recently been awarded, in a 
joint venture with Clark Construction, a $641 million contract to 
design and build additions and renovations at the new Walter Reed 
National Military Medical Center in Bethesda, Maryland. [See page 19.]
    Secretary Anderson. The $939 million Omnibus reduction to the 
Department of Defense BRAC 2005 account must be restored. If left 
unfunded, the reduction will result in the Air Force receiving $235 
million less than required in Fiscal Year 2008. The Air Force will 
experience delays and disruptions in construction and the movement of 
our people and assets. Delays will impact our ability to meet mandated 
completion deadlines.
    To implement BRAC 2005 and implement the Commission's 
recommendations, the Air Force uses a continuous process to identify, 
analyze, refine, coordinate, and validate requirements. Although the 
Air Force has not cut any projects due to this reduction, it has 
deferred BRAC MILCON projects, O&M requirements, and planning and 
design. Those deferments are based on today's planned award dates. The 
Air Force reserves the right to adjust its strategy and the deferral 
list in order to maintain the needed flexibility to execute its 
program.
    Our initial analysis of the reduction indicates the Air Force will 
be required to accept risk in the following areas:

        -   Military Construction (MILCON): Will defer 21 projects, to 
        include one housing project, valued at $126.4M (15% of total 
        BRAC MILCON). All deferred projects have estimated award date 
        after 1 June 08

        -   Planning and design (P&D): Will defer $5.2M in requirements 
        (28% of total P&D)

        -   Operations and Maintenance (O&M): Will defer $97.8M in 
        requirements (36% of total O&M)

    If the reduction is restored sometime during this fiscal year, we 
will figure out a way to get back on track. If it is permanently lost, 
we will be hard broke; delays in accomplishing the FY08 requirements 
will have ripple effects impacting mission readiness and our ability to 
meet the mandated BRAC 2005 completion deadline of September 2011. [See 
page 34.]
    Secretary Prosch. The Army's apportionment ($560.2M) of the cut in 
FY08 BRAC funding places the Army at very high risk of meeting every 
aspect of the BRAC Law. Based on the cut, the following FY08 projects 
cannot be completed:

        -  10 Armed Forces Reserve Centers
        -   9 Training and Readiness Projects
        -  12 Quality of Life Projects (Family Support, Medical, etc.)

    Delay in funding drives up costs due to reduced competition from 
market saturation, compressed construction time to meet required 
facility timelines, construction cost inflation (which can also be 
impacted by labor and material shortages due to market saturation) and 
decreased planning flexibility.
    Military construction constitutes a crucial portion of our plan to 
sustain, reset, prepare, and transform the Army, all of which supports 
the global war on terror, Army Modular Force Transformation, Global 
Defense Posture Realignment, and Grow the Army. If the Army must 
reprogram $560.2M for Military Construction to BRAC, it would delay by 
a year the facilities for the equivalent of one Brigade Combat Team 
causing another $560.2M worth of projects to be delayed.
    Regarding the 2005 BRAC round, If funding is restored in FY08 the 
Army will be successfully in complying with BRAC Law. If funding is not 
restored until FY09, there is a very high risk the Army will not be 
able to be compliant. If funding is restored in FY10, FY11 or not 
restored, BRAC compliance is impossible. [See page 19.]
                                 ______
                                 
             RESPONSE TO QUESTIONS SUBMITTED BY MR. TAYLOR

    Secretary Arny. All military housing allowances are based on rental 
costs, not ownership costs. Basic Allowance for Housing (BAH) inside 
the U.S. has three components: rent, utilities and insurance. The 
insurance covers normal renters-insurance for damage and replacement of 
the contents of a dwelling; it does not cover the dwelling itself, 
which is a landlord's responsibility. Normally, landlords include their 
cost of insurance on the dwelling in the quoted rent, so higher 
insurance costs are assumed to be included in the BAH of the dwelling. 
Note, however, that this cost of insurance is not separately 
identifiable in the calculation of BAH. [See page 34.]
                                 ______
                                 
            RESPONSE TO QUESTIONS SUBMITTED BY MR. MARSHALL

    Secretary Anderson. At the request of Senators Craig and Domenici, 
the Air Force is considering the merits of nuclear power production in 
order to mitigate the impact of decreased availability and rising costs 
of any one energy source, and because production of nuclear power 
produces no emissions of greenhouse gasses.
    Right now, we are in the early stages of gathering data to 
determine exactly what is feasible given the mission requirements of 
the Air Force. In January 2008, the Air Force issued a request for 
information (RFI) to gauge industry's interest in the concept, and to 
solicit their ideas on potential technologies, financing options, and 
other aspects of a potential project. The Air Force has received ten 
responses to the now closed-RFI. The Air Force's intent is to follow 
the RFI with a request for expression of interest and qualifications, 
and plans to evaluate them by July 2008. Pending the results of that 
evaluation, the Air Force will make a decision about further pursuing 
nuclear as an option, by October 2008. The Air Force will provide a 
written update to the committee after the July and October milestones.
    The Air Force has asked private industry, via the RFI, to suggest 
potential technologies and financing options for a potential nuclear 
power plant. We expect those options may include some advanced 
technologies that industry feels are too financially risky to pursue 
without a controlled, secure environment such as the Air Force can 
offer by hosting a nuclear project. Any nuclear plant hosted by the Air 
Force will need to be licensed by the Nuclear Regulatory Commission. 
The Air Force will work closely with the NRC to ensure its future 
industry partners comply with all applicable environmental regulations, 
including NEPA reviews. Ultimately, potential sites will be fully 
vetted with Congress, industry, and the local communities as part of 
the scoping and planning process.
    The Air Force is considering nuclear energy as part of our overall 
strategy to reduce demand, increase supply and change our culture to 
make energy a consideration in all we do. The Air Force is committed to 
increasing our renewable energy portfolio and the availability of 
energy through the use of public-private partnerships. In fact, at 
Nellis Air Force Base, Nevada, a public-private partnership built and 
now operates the largest solar photovoltaic array in the Americas and 
provides an annual savings of almost $1 million in reduced energy costs 
to the base.
    The arrangement envisioned is for the Air Force to provide a site 
to host an appropriately-sized plant in exchange for electric power 
generated by the plant, along with perhaps process heat and other 
considerations offered by industry, using its Enhanced Use Lease (EUL), 
or similar authorities. Under a EUL, the Air Force can benefit by 
leasing underutilized land, in exchange for tangible benefits offered 
by the developer, owner, and operator of a potential nuclear plant. 
These benefits could include, lease payments, facility construction or 
other considerations. The Air Force is looking to industry to propose 
arrangements that maximize the benefit to the Air Force for any 
potential nuclear project. We plan only to support the potential owner, 
operator and licensee of a plant at an Air Force installation; the Air 
Force will not own, operate, or license a nuclear plant. [See page 18.]
                                 ______
                                 
              RESPONSE TO QUESTIONS SUBMITTED BY MR. HAYES

    Secretary Arny. In late June 2008, the Department of Defense (DOD) 
and the Department of Education (ED) will sign a Memorandum of 
Understanding (MOU) between the two departments to establish a 
framework for collaboration to assist communities and local educational 
agencies (LEAs) as they prepare for projected increases in military 
dependent students at military installations due to Base Realignment 
and Closure (BRAC), Global Defense Posture Realignment (GDPR), and Grow 
the Force. Some of the MOU's objectives are to promote and enhance 
policies that will improve military children's education and overall 
well-being; explore legislative options to ease transition issues for 
military children; forge effective partnerships with schools and 
districts; coordinate the DOD and ED Impact Aid programs; and develop 
data protocol for military, DOD civilian and contractor student data as 
they relate to impacted installations, communities, and LEAs.
    The ED reauthorization proposal for the Impact Aid Program, Title 
VIII of the Elementary and Secondary Education Act, contains language 
to allow Impact Aid payments to be based on current fiscal year student 
counts for school districts that experience an increase from the 
previous year to the current year of at least 10 percent or 100 in 
students enrolled as a result of Defense program changes (e.g. BRAC, 
global rebasing, other). This change would allow districts to receive 
additional funding when new students enroll, rather than waiting for 
the next fiscal year. Also, the DOD Office of Economic Adjustment, in 
coordination with the ED Offices of Elementary and Secondary Education 
and Management, the U.S Department of Army, and DOD Military Community 
and Family Policy, has conducted site visits to a representative sample 
of locations (Fort Benning, Fort Bliss, Fort Drum, and Fort Riley) to 
provide program stakeholders (Federal, state and local) with on-the-
ground knowledge of issues surrounding mission growth, improve 
communications among all partners, identify gaps/lags in capacities, 
and to more extensively document specific requests for Federal action 
to assist communities and states responding to student migration. Draft 
reports on these visits were distributed to LEAs, community and state 
representatives, and installation attendees as well as Federal senior 
leaders for review and comment. Upon finalization, the information will 
be shared with the Economic Adjustment Committee and made publicly 
available upon request. Visits are now underway to Fort Bragg and Fort 
Carson to continue on-the-ground documentation as well as share best 
practices from previous site visits. [See page 14.]
                                 ______
                                 
                   RESPONSE TO QUESTIONS SUBMITTED BY
                            MS. SHEA-PORTER

    Secretary Penn. The Presidential Budget for 2009 contains $67M in 
future MILCON programming to improve the condition and operational 
efficiency of Portsmouth Naval Shipyard (PNSY).





The PBO9 FYDP includes:

                2011                  Structural Shops Consolidation                                      $23.8M

                2012                  DD#3 Waterfront Support Facility                                    $16.8M

                2013                  Gate 2 Security Improvements                                         $4.1M

                2013                  Consolidate Global Sub Complex Facility                             $12.2M

                2013                  CBQ Building 373 Addition Phase 1                                    $9.7M



    In addition, PNSY has had six Special Projects worth $19M in the 
past two years. With an eye to the future, the shipyard now has a 
comprehensive re-investment plan that includes approximately $160M in 
out-year MILCON.
    In the meantime, Portsmouth Naval Shipyard is fully mission capable 
of supporting the Virginia Class submarines. The Navy will continue to 
target investments throughout future programming processes. [See page 
27.]
                                 ______
                                 
             RESPONSE TO QUESTIONS SUBMITTED BY MR. BISHOP

    Secretary Arny. The Department does not have written policy 
regarding release of project level detail contained in the Active 
Components Military Construction Future Years Defense Program (FYDP) to 
Congress. Our practice has been to release information to professional 
staff members of committees when requested. [See page 25.]
                                 ______
                                 
            RESPONSES TO QUESTIONS SUBMITTED BY MR. LOEBSACK

    Secretary Arny. Regarding construction funding, projects are 
competing with other requirements within Base Realignment and Closure 
(BRAC) Program. As submitted in the FY 2009 BRAC request, these 
projects are currently programmed for construction in FY 2010.
    Regarding design funding, design is typically initiated two years 
before construction. The three projects in question have not had any 
scope reductions and their designs are nearly complete.
    The Department of Defense is committed to all BRAC requirements 
being completed by September 15, 2011. [See page 23.]
    Secretary Prosch. Regarding construction funding, projects are 
competing with other requirements within BRAC Program. As submitted in 
the FY09 BRAC request, these projects are currently programmed for 
construction funding in FY10.
    Regarding design funding, design is typically initiated two (2) 
years before construction. The three projects in question are ready to 
award any time. Costs for these projects are accurate for FYI0 
execution. No scope has been left out of the project.
    Projects are competing with other requirements within BRAC Program. 
The Army's priority for BRAC funding at this time is for projects 
impacted by the FY08 BRAC to ensure successful BRAC compliance. [See 
page 23.]
?

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


              QUESTIONS SUBMITTED BY MEMBERS POST HEARING

                           February 28, 2008

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

      
                    QUESTIONS SUBMITTED BY MR. ORTIZ

    Mr. Ortiz. The Army and the Marine Corps continue to move 
aggressively to implement their Grow the Force initiatives and have 
submitted a military construction budget request for an additional $2.9 
billion in fiscal year 2009. General Casey has recently indicated that 
he would like to accelerate the stationing of additional Brigade Combat 
Teams. Are the Defense agencies and specifically the Defense Health 
Program properly synchronized with the Services to obtain timely, full-
spectrum capabilities?
    Secretary Arny. The Army and Marine Corps are currently working 
very closely with the Defense Agencies to determine the impact of 
Growing the Forces on Defense-Wide MILCON requirements. They are 
currently developing estimates and will determine how and when to 
incorporate these requirements into the Future Years Defense Program 
(FYDP). The full extent of these impacts will be known in February 2009 
when the Fiscal Year 2010 budget is submitted.
    Mr. Ortiz. The Department has submitted a fiscal year 2009 military 
construction budget request of $862 million to support a Ballistic 
Missile Defense European Capability to provide a defense of Europe 
against a limited intermediate and long-range ballistic missile attack 
from the Middle East. How close are we to having an agreement with our 
European allies to host these capabilities? Considering the current 
support of our European allies in this effort, is a European missile 
capability a prudent investment?
    Secretary Arny. The Department is proceeding with formal bi-lateral 
negotiations with the governments of Poland and the Czech Republic on 
establishing European missile defense sites. We are very pleased with 
the progress we have made in negotiations with both Poland and the 
Czech Republic, and are confident that we will be able to conclude 
these negotiations soon.
    The Department's European theater strategy objectives include 
ensuring that the U.S., its citizens and interests, including friends 
and allies, are secure from attack; that U.S. forces in Europe can 
conduct a range of military operations successfully; that strategic 
access and freedom of action are secure; that transnational terrorist 
entities are defeated and the environment is unfavorable to terrorism; 
that security conditions are conducive to a favorable international 
order; that strong alliances and partnerships effectively contend with 
common challenges; and that transformation evolves. The Department's 
European Missile Defense program remains a priority within the 
Department and is integral to our transformation.
    Mr. Ortiz. The BRAC 2005 process requires the Department of Defense 
to complete associated realignments and closures by September 2011. 
Because of a $1.1 billion decrement to the BRAC 2005 account by the 
Consolidated Appropriations Act of 2008, the Navy and the Air Force 
have both indicated that they will not be able to complete their 
realignments on time. Considering the current BRAC 2005 appropriation, 
is the Department still tracking to complete the BRAC 2005 process by 
Sept. 2011? Does the Department need additional flexibility in schedule 
to accomplish the BRAC 2005 timeline?
    Secretary Arny. The Department is still tracking to complete the 
BRAC 2005 process by September 15, 2011. If the $939 million reduction 
to the BRAC account is not restored, or even if it is restored late in 
the process, we will have to work creatively to meet the statutory 
deadline. This could involve eliminating non-mission construction 
(gyms, child development centers, medical clinics); shifting Operation 
and Maintenance (O&M) funding to the last implementation years 
(furnishings and personnel moves); and/or introducing the potential for 
delaying some recommendations (e.g., reserve center consolidations).
    Mr. Ortiz. DOD has indicated full funding for sustainment is their 
goal. OSD has proposed 90% funding of the sustainment account. Does OSD 
believe that the sustainment model accurately forecast sustainment 
requirements? Considering the long term detrimental effects of not 
fully funding sustainment, what is the risk associated with accelerated 
deterioration?
    Secretary Arny. Yes, DOD believes that the Facilities Sustainment 
Model accurately forecasts sustainment requirements for our inventory 
of facilities. The requirements are based on commercial benchmarks to 
the extent that appropriate benchmarks are available. The risk of not 
fully funding sustainment is potentially higher repair costs in the 
long term.
    Mr. Ortiz. DOD initially reported that they would complete the 
utility privatization effort by 2000. After spending $248 million on 
the program and privatizing 94 of the 1,499 systems, DOD intends to 
complete additional evaluation of the remaining projects by 2010. What 
additional tools does OSD need to support completing a first round of 
utility privatization evaluations? In retrospect, should this program 
been initially authorized? Is OSD confident in completion of the first 
round of privatization projects by 2010?
    Secretary Arny. As of December 2007, the Department has privatized 
a total of 519 utility systems, 150 of which have been under the 
Utilities Privatization Authority. Utilities Privatization is an 
important tool for managing the Department's $72 billion utility 
infrastructure. DOD is committed to utilizing private sector 
innovations, efficiencies, and financing, when economical, to improve 
utility systems supporting military operations, to improve the quality 
of life, and to sustain aging utility infrastructure and keep pace with 
future requirements. Various administrative and budgetary challenges 
have led to extending the program beyond 2010. The current schedule 
projects completion of the program by 2015.
    Mr. Ortiz. DOD is on track to privatize 87% of the family housing 
units including 188,000 units by 2010. Considering that 36% of the 
awarded privatization projects have occupancy rates below expectations, 
are the housing private partners going to be able to continue the long 
term investment and financial solvency to continue this program? What 
are the challenges that need to be corrected? Compared with the larger 
outlays required in our personnel accounts to support Family Housing 
Privatization, is the overall Family Housing program saving money or 
has it just moved money from a discretionary account to a mandatory 
funding account? Does privatization mask the overall cost afforded to 
General/Flag Officer quarters?
    Secretary Arny. We are currently projecting to privatize over 
194,000 units by FY 2010. Of the 87 awarded projects our average 
occupancy rate is about 90 percent. While there are some exceptions, 
due to construction related issues and general market conditions, only 
the projects owned by American Eagle are in financial jeopardy. 
Comparing occupancy numbers to pro forma provides insufficient 
information as to the projects' financial health, particularly while 
the projects are in their initial development period (80 percent of 
projects). Also, to ease concerns about our private partners, we 
recently conducted a financial analysis of the private housing partners 
and found them all to continue to be financially healthy and solvent. 
We have every reason to believe that the private partners will be able 
to continue the long-term investment needed to maintain the financial 
solvency of this program.
    While we have recently identified the Government Accountability 
Office (GAO) eight Military Housing Privatization Initiative (MHPI) 
projects (five Air Force, one Army, two Navy) that are behind schedule, 
or have encountered difficulties (construction/renovation schedules not 
met due to financial problems, or environmental/construction issues), 
we see no major structural challenges in the MHPI program that need to 
be corrected by governmental action. The remaining 79 awarded military 
housing privatization projects are significantly further ahead in terms 
of revitalized housing than where they would be under a government 
military construction approach. We need to allow the private sector to 
work through challenges with their projects and not intervene.
    Life cycle cost analyses performed on all 87 projects show the cost 
of privatization (including the projected Basic Allowance for Housing 
payments) are typically lower than government ownership, usually in the 
10-15 percent range. The Government Accountability Office reviewed 
DOD's cost analysis methodology exhaustively in 2001 and agreed 
privatization was less costly over the life of the projects, based on 
``should costs'' for government ownership vice actual budgeted costs. 
Privatization does not mask the overall cost afforded to General/Flag 
Officer quarters (GFOQs). In fact, spending on GFOQs is likely more 
constrained since such spending directly reduces funds available for 
housing lower ranking military members.
    Mr. Ortiz. Are the three primary Environmental Impact Statements 
covering mid-frequency active sonar use in the Navy's training ranges 
still on track to be completed by January 2009? Should the 
environmental compliance process encounter delays, what will be the 
impact on the Navy's readiness and how is the Navy prepared to respond?
    Secretary Penn. The Hawaii Range Complex EIS remains on schedule 
for completion in June 2008, and the Southern California Range Complex 
and the Atlantic Fleet Active Sonar Training EISs remain on schedule 
for completion in January 2009. We have worked closely and continually 
with relevant federal and state regulators to ensure that these 
completion dates are met, and all associated environmental compliance 
documentation will be issued before January 2009. Delays in these 
documents will likely delay critical training until the documentation 
is in place. Should this occur, the Navy will respond based on 
circumstances at that time.
    Mr. Ortiz. The Marine Corps has requested $1.2 billion in the 
budget request for 2009 to support an end strength increase of 27,000 
marines. Will infrastructure be built in time to support the arrival of 
the new 27,000 Marines? What alternatives is the Marine Corps pursuing 
to accommodate growth?
    Secretary Penn. Infrastructure will not be built in time to support 
the arrival of the new 27,000 Marines. Due to the long lead time 
necessary for securing funds and construction of permanent facilities, 
units may be in interim facility solutions for 2-4 years after unit 
standup. Temporary facility solutions include a combination of 
utilization of existing facilities, slowing down planned building 
demolition for use in the short term, and use of temporary facilities 
(trailers, sprung shelters and pre-engineered buildings).
    Mr. Ortiz. The Navy has been aggressive in using privatization 
authority to support this program. They have awarded a project for San 
Diego and are processing additional requests for Norfolk and 
Jacksonville. How can the Navy ensure filly occupancy of privatized 
bachelor quarters? What is the termination liability associated with 
this effort? Does the Navy expect to request expanded authority beyond 
the current pilot projects?
    Secretary Penn. The Navy has awarded two pilot Unaccompanied 
Housing Privatization (UHP) pilot projects to-date. The projects are at 
San Diego, awarded December 2006, and Hampton Roads, VA, awarded 
December 2007. A concept for the third authorized pilot project is 
being developed for the Jacksonville/Mayport, Florida area. The Navy is 
investigating the expanded use of privatization authorities to meet the 
projected need for housing single Sailors.
    As with Navy family housing privatization projects, the Navy UHP 
projects do not include any occupancy guarantees. We believe there is 
sufficient demand for the housing. Occupancy at our first two pilot 
projects exceeds 95 percent. In the unlikely event that Navy 
unaccompanied personnel do not sufficiently occupy the properties, 
there is a priority of DOD and non DOD prospective tenants to whom the 
housing could be rented. This tiered market concept is also similar to 
that employed in family housing privatization projects.
    For its UHP projects, the Navy uses the same business approach, 
featuring investments in business entities (e.g., limited liability 
companies) as employed for its family housing projects. If a UHP 
project fails due to default, the Navy has no outstanding financial 
obligations or commitments. If the Project Company defaults with 
respect to its construction and operation obligations set forth in the 
Ground Lease, the Navy (subject to certain cure rights accorded the 
Trustee and the Bondholder Representative) has the ultimate right to 
terminate the Ground Lease, in which event the Project Company must 
surrender, for no consideration, the land, improvements and personal 
property constituting the project to the Navy.
    The Navy has not included a request for the expansion of the 
barracks privatization authority, beyond the initial three pilot 
projects, in this year's budget submission. Given our experience with 
the pilot authority to date, we believe that the privatization 
authorities can be a useful and effective tool in improving housing for 
our single Sailors, especially as a complement to the Homeport Ashore 
program, and would like to see the authority expanded beyond its pilot 
status.
    Mr. Ortiz. Government of Japan and SECDEF have concluded an 
agreement that detailed the financing of $10.27 billion required to 
support the relocation of 8,000 marines from Okinawa to Guam. Has the 
Department programmed sufficient funding to meet the agreement 
timelines? Is the Government of Japan moving concurrently with the 
Department's time lines? Considering the historic construction 
limitations at Guam, can Guam support a sustained $3 billion/year 
construction effort? Considering the large construction workforce 
necessary to support, what living conditions will be employed and where 
will the workforce originate?
    Secretary Penn. On April 23, 2006, Secretary of Defense Rumsfeld 
and Japanese Minister of Defense Nukaga reached an agreement for 
sharing the development costs of Marine forces relocating from Okinawa 
to Guam. Key elements of the Guam cost-sharing agreement include: 1) 
the U.S. will relocate approximately 8,000 USMC personnel, plus 
dependents from Okinawa to Guam and 2) Japan will provide up to $6.09 
billion of cost-sharing consisting of $2.8 billion in direct payments 
and $3.29 billion of equity investments and loans to special purpose 
entities that will provide housing and utilities necessary to support 
the Marine units. The U.S. share of the Guam development costs is 
estimated at $4.2B. Yes, the Department has programmed sufficient 
funding to meet the agreement timeline. The Department has programmed 
$2.5B in the PB-09 FYDP, which ends in FY13. The next budget will 
extend the FYDP to FY15. The Government of Japan is moving concurrently 
with the DOD timeline. Representatives from the Department of Navy and 
the Government of Japan are meeting regularly to discuss the details 
for implementing the agreement and establish funding requirements to 
commence construction in 2010.
    Although construction on Guam at the peak of the realignment will 
be significantly higher than previously achieved levels on Guam, 
several initiatives are underway to facilitate demands on Guam's 
infrastructure and the workforce. The Departments of Interior, State 
and Labor are working to establish training programs to equip the local 
workforce with the required skills. Nonetheless, a significant portion 
of the construction labor must be provided by a non-Alien workforce 
holding Hii (b) Visas. To meet this workforce requirement, 
Congressional action is needed to provide a waiver on the cap of 
required Hii (b) Visas.
    An Interagency Task Force, co-chaired by the Department of the Navy 
and the Department of Interior, is identifying Guam's critical 
infrastructure needs directly related to the success of the 
construction program. Through the Interagency Task Force, the 
Government of Guam, the Port Authority and Maritime Administration are 
making progress towards significantly upgrading and expanding the 
commercial port. We are working with the Federal Highways 
Administration in addressing Guam's roads. DOD is also pursuing 
industry best practices through Industry Forums, including innovative 
ideas for housing and caring for workers from off-island.
    Mr. Ortiz. The Marine Corps continues to request temporary space in 
budget request for fiscal year 2009 to support end strength growth. 
Temporary, relocatable space represents the least cost effective 
alternative in facility management. What is the Marine Corps' plan to 
discourage future use of relocatable spaces? How does the Marine Corps 
intend to address the existing relocatable, temporary space at various 
Army installations?
    Secretary Penn. The target date for achieving the 202,000 Marine 
Corps end-strength is Fiscal Year 2011. Due to the long lead time for 
permanent facilities, units maybe in temporary facility solutions for 
2-4 years after unit standup. The Marine Corps agrees that the use of 
temporary and relocatable facilities is not an ideal solution. However, 
temporary and relocatable structures must be used by the Marine Corps 
until permanent construction can be funded, built and occupied. The use 
of temporary relocatables will vary by requirement and location. When 
relocatables are no longer needed, leased relocatables will be removed 
from the site by the lessor and purchased relocatables will be disposed 
of by the installation.
    Mr. Ortiz. The Navy has indicated that they will not be able to 
complete BRAC 2005 by September 2011 without a restoration of $140 
million that was eliminated in the Consolidated Appropriations Act of 
2008. What are the effects associated with limited or late BRAC 2005 
funding? With available funding, will Navy be able to complete the BRAC 
2005 process by September 2011?
    Secretary Penn. Limited or late restoral of Navy's share of the 
FY08 BRAC cut ($143 million) will delay the award of two BRAC 
construction projects for a total of $97 million (Investigative 
Agencies Consolidation, Quantico VA; Reserve Center, Fort Lewis, WA) 
and delay move-related expenditures in the amount of $46 million (O&M) 
from FY08 to FY09. These delays will add uncertainty and hardships in 
the careers and families affected by the move, and delay achieving 
management efficiencies and savings that were the basis for the BRAC 
decisions. The available appropriations are insufficient and jeopardize 
DoN's ability to accomplish BRAC by the Sep 15, 2011 statutory 
deadline.
    Mr. Ortiz. The fiscal year 2009 budget request contains $1.0 
billion, approximately $400 million less than appropriated in fiscal 
year 2008. The Army has more construction at one installation than the 
entire Air Force, Air National Guard and Air Reserve military 
construction combined. This decline in infrastructure investment is 
causing significant inefficiencies locally and accelerating degradation 
of assigned aviation assets. Examples include: new aviation assets are 
arriving without hangars and other support infrastructure (Elmendorf 
AFB (AK) F-22s arrive with no completed infrastructure to support); 
trainers remain in warehouses until the appropriate supporting 
infrastructure is programmed and built. Why did Air Force not program 
infrastructure in time to support valuable aviation assets?
    Secretary Anderson. The fiscal year 2009 budget request supports 
the Secretary of the Air Force and Air Force Chief of Staff priorities 
to Win Today's Fight, Take Care of Our People, and Prepare for 
Tomorrow's Challenges. In order to recapitalize and modernize our aging 
aircraft fleet, the Air Force accepted short-term risk in 
infrastructure to fund higher priority Secretary of the Air Force and 
Air Force Chief of Staff programs. Although sometimes inefficient, 
using operations and maintenance readiness and infrastructure funds was 
considered when deciding to defer military construction, yet still meet 
critical mission needs.
    Mr. Ortiz. The Air Force has proposed to allocate a significant 
portion of their military construction account toward new aviation 
assets, consequently, driving up the overall recapitalization rate to 
109 years (DOD goal is 67 years). Why did Air Force elect to take risk 
in the facility accounts and delay critical restoration and 
modernization activities? What is the long term effect of a delay in 
funding restoration and modernization activities?
    Secretary Anderson. We recognize the Air Force recapitalization 
rate (110 years w/ BRAC; 188 years w/o BRAC) cannot be sustained 
without degradation to our installation weapon-system capability. 
Modernizing our aging fleet is the Air Force's toughest challenge; the 
Air Force elected to take risk in facility accounts in order to 
recapitalize and modernize weapon systems. The Air Force increased 
Restoration and Modernization operations and maintenance funding by 
$168M in the FY09 budget request compared to the FY08 budget request. 
Although not enough to fund the $9.3B backlog of Restoration and 
Modernization projects, the increase in funding helps mitigate the risk 
to infrastructure and facilities. In addition the AF funded facility 
sustainment at 90% of the OSD requirement model; this sustainment 
funding level is intended to keep good facilities in operational 
condition to meet mission needs.
    The long-term effect of a delay in funding restoration and 
modernization activities is difficult to ascertain. Since Air Force 
installations are weapons systems and provide power projection 
platforms, we cannot continue to take the same levels of risk in the 
infrastructure accounts and provide the required level of facility 
support needed to accomplish our world-wide combat mission.
    Mr. Ortiz. The Air Force has indicated that they will not be able 
to complete BRAC 2005 by September 2011 without a restoration of $235 
million that was cut in the Consolidated Appropriations Act of 2008.
    Secretary Anderson. The $939 million Omnibus reduction to the 
Department of Defense BRAC 2005 account must be restored. If left 
unfunded, the reduction will result in the Air Force receiving $235 
million less than required in Fiscal Year 2008. The Air Force will 
experience delays and disruptions in construction and the movement of 
our people and assets. Delays will impact our ability to meet mandated 
completion deadlines.
    To implement BRAC 2005 and implement the Commission's 
recommendations, the Air Force uses a continuous process to identify, 
analyze, refine, coordinate, and validate requirements. Although the 
Air Force has not cut any projects due to this reduction, it has 
deferred BRAC MILCON projects, O&M requirements, and planning and 
design. Those deferments are based on today's planned award dates. The 
Air Force may further adjust its strategy and the deferral list in 
order to maintain the needed flexibility to execute its program.
    Our initial analysis of the reduction indicates the Air Force will 
be required to accept risk in the following areas:

        -   Military Construction (MILCON): Will defer 21 projects, to 
        include one housing project, valued at $126.4M (15% of total 
        BRAC MILCON). All deferred projects have estimated award date 
        after 1 June 08

        -   Planning and design (P&D): Will defer $5.2M in requirements 
        (28% of total P&D)

        -   Operations and Maintenance (O&M): Will defer $97.8M in 
        requirements (36% of total O&M)

    If the reduction is restored sometime during this fiscal year, we 
will figure out a way to get back on track. If it is permanently lost, 
we will be hard broke; delays in accomplishing the FY08 requirements 
will have ripple effects impacting mission readiness and our ability to 
meet the mandated BRAC 2005 completion deadline of September 2011.
    Mr. Ortiz. The Army has programmed $11.2 billion for the Grow the 
Army initiative and has proposed $4.2 billion in fiscal year 2009 
military construction to support their end strength growth. Considering 
the intent to accelerate the Grow the Force initiative, will all of the 
supporting infrastructure be available to directly support the arrival 
of the growth?
    Secretary Prosch.The Army Military Construction budget request was 
carefully built to synchronize delivery of permanent construction on a 
timeline that meets the effective dates for activation of the six Grow 
the Army Brigade Combat Teams. $4.1 billion of our overall fiscal year 
2009 Military Construction budget request supports the Growth 
initiative for a 74,200 Soldier increase. This will fund unit bed-down 
and operational requirements (barracks, maintenance, unit 
administration, dining facilities, classrooms, and command and control 
headquarters), quality of life facilities (child development centers, 
housing, physical fitness, and physical fitness centers), and training 
ranges. A full and timely funding stream is essential to supporting 
Army growth.
    Mr. Ortiz. The Army has been particularly impacted by a reduction 
of $560 million in the Consolidated Appropriations Act of 2008. What 
impact will the delay in BRAC 2005 finding affect the restationing of 
forces? Is Army tracking to complete the implementation of BRAC 2005 by 
September 2011?
    Secretary Prosch.We need your help in supporting the remaining 
requirements for BRAC 2005. If the $560 million decrement is not 
restored this year, the Army will not meet all of its requirements in 
accordance with BRAC Law. BRAC is an integral component of our 
stationing plan and our complex Military Construction program is 
interdependent with BRAC. Delays or cuts to either of these 
interrelated programs put our ability to grow and restore balance at 
risk. We are at a crucial juncture in the BRAC program. To successfully 
execute BRAC, we carefully synchronized 1,300 actions. Without full and 
timely funding, 31 of 90 FY 2008 BRAC-directed projects will not be 
completed, including 10 Armed Forces Reserve Centers, 9 training and 
readiness projects, and 12 quality of life projects.
    Mr. Ortiz. The Army has reported that it has a 5,000,000 acre 
training deficit across multiple installations. How does the Army 
intend to address the existing deficit in training space?
    Secretary Prosch. The Army currently operates at an overall 
training land deficit of 2 million acres in the Continental United 
States. The training land shortfall is expected to more than double by 
2011 to nearly 5 million acres as a result of several factors. These 
include fundamental changes in the way the Army organizes, trains, and 
equips our Soldiers as a result of the new missions and enemies we 
face. In addition, over 41,000 Soldiers are being relocated from 
overseas back to the United States as part of the Global Defense 
Posture Realignment, which transfers a large training land requirement 
on top of an existing installation footprint. We are also Growing the 
Army by over 74,000 Soldiers. All of these trends have significantly 
increased Army training land requirements.
    The Army is always working to mitigate this shortfall through a 
variety of means. The Army pursues focused management to maximize 
existing land holdings, buffering through partnerships, and utilization 
using other Federal lands, where possible. However, all of these 
mitigation measures, including training on other federally owned lands, 
cannot eliminate the training land deficit. Therefore, one of the 
options that must remain available to the Army is the acquisition of 
land where it is feasible and fiscally prudent.
    The Army's policy is to purchase land only where; large land 
holdings exist, it is cost effective, minimal environmental issues 
exist, land is contiguous to existing training land, and population 
density is low.
    Last, live and realistic training remains the cornerstone of Army 
mission readiness, and virtual and computer-aided simulations, while 
important, cannot replace certain kinds of real-life training 
experiences. The Army has a responsibility to develop combat-ready 
Soldiers. To meet this obligation, we must not only provide the right 
equipment, but also the right training. Fundamentally, we must train 
the way we fight.
    Mr. Ortiz. The Army has reported that it has 10,000,000 square feet 
of relocatable space to support end strength growth. What is the Army's 
plan to discourage future use of relocatable spaces? How does the Army 
intend to address the 10,000,000 square feet of existing relocatable, 
temporary space at various Army installations?
    Secretary Prosch.The Army will use relocatable buildings only as a 
last resort when no other solutions are available to provide urgently 
needed interim facilities to meet peak surge missions or pending 
completion of regularly programmed military construction projects.
    The Army is programming military construction projects to build 
permanent facilities to replace the existing relocatable building 
inventory. Seventy-three percent (73%) of existing relocatables 
currently have permanent facility projects prioritized in the fiscal 
year 2009-2013 Future Years Defense Program. We will program projects 
for any remaining relocatables requiring permanent facilities during 
the fiscal year 2010-2015 Military Construction program development.
    Mr. Ortiz. The Army has proposed no funding for the O&M, 
Restoration and Modernization account for fiscal year 2009 budget 
request and has applied this funding toward new construction 
requirements. This decision will realize short term capital but will 
lead to accelerated facility degradation. Why has the Department 
eliminated funding for the periodic restoration of facilities?
    Secretary Prosch. Based upon Army's significant investment in 
military construction projects in FY 2009 and investment in facility 
sustainment (90% of OSD's Facility Sustainment Model), the Army decided 
not to put funding in the FY 2009 budget for O&M, Restoration and 
Modernization. The Army believes that this will not lead to accelerated 
facility degradation.
                                 ______
                                 
                   QUESTIONS SUBMITTED BY MR. ROGERS

    Mr. Rogers. Does the Army track actual numbers of soldiers, 
civilians, contractors and their related dependents, particularly their 
school-aged dependents, on the ground?
    Secretary Prosch. Yes, the Army tracks actual Soldiers and 
civilians from the Defense Enrollment Eligibility Reporting System 
(DEERS) annually. The DEERS, part of the Defense Manpower Data Center, 
collects and updates actual population of service members and 
dependents (spouses and children by age group) by location during in 
and out processing. DEERS also includes civilians and contractors from 
the Defense Civilian Personnel System and the Contractor Verification 
System. The Army Stationing and Installation Plan (ASIP) is the Army's 
official source of installation populations for resource and support 
planning. ASIP is updated quarterly and documents the composition and 
location of authorized Army force structure, student loads, trainee 
loads, rotational loads, and actual tenants (other Services, 
contractors, DOD agencies, etc.). ASIP population is available for the 
current year and six planning years and is consistent with approved and 
documented Army force structure documents.
    Projected school age dependent population is calculated for full-
time Army military and civilians using a ratio of .484 [(.48 married) x 
(1.6 children) x (.63 are school age)]. School age dependent population 
projections for school years 2007-2011 were published in the 
``Department of Defense Update to the Report on Assistance to Local 
Educational Agencies for Defense Dependents Education'' in March 2008 
based on 31 October 2008 ASIP population.
    Mr. Rogers. Do individual instillations track the actual numbers of 
people on the ground?
    Secretary Prosch. Army installations are not required to maintain 
``actual'' population counts due to the volatility of base populations 
and the workload required to maintain what can be daily changes. 
Individual garrisons may track actual populations, or sub-populations 
at their own discretion. However, this is not recognized by the Army as 
an official source of population data.
    Mr. Rogers. We need to develop a way to determine the actual 
numbers. I would like the Army to provide me with the numbers of folks 
on the ground now--soldiers, civilians and any contractors that have 
school-aged dependents--and a historical snapshot of what has been on 
the ground in those communities in the previous five years. I think 
this will present a better picture of what we need. Thank you for your 
time and service.
    Secretary Prosch. There is no single database that maintains actual 
population data for military, civilian, contractor, plus dependents. 
DEERS collects service members and dependents (spouses and children by 
age group), civilians, and contractors. Dependents of civilians and 
contractors are not included in DEERS. DEERS data are available for 
2002 to present. The ASIP maintains actual population data for 
contractors based on input from each installation and is available from 
2000 to present. The Army is working to establish a system to obtain 
Army, civilian, and associated mission support contractor dependent 
student data as it relates to the identified installations, 
communities, and Local Educational Activities.
    Below are ``actual'' populations for Army Soldiers (Active and 
Reserve Component) and Army Civilians from the Defense Manpower Data 
Center reported to Headquarters Department of Army by fiscal year (FY), 
FY 2008 totals are as of April 2008. Actual contractors were reported 
in the ASIP by FY, FY 2008 contractors are as of March 2008.



    Population Type        FY08      FY07      FY06      FY05      FY04
------------------------------------------------------------------------
Military (Active)         517,780   502,790   482,400   494,290  482,400

Military (Reserve)        542,590   536,270   555,000   555,000  555,000

Civilians                 207,200   206,390   229,000   223,000  223,000

Contractors               167,074   165,138   163,351   150,048  142,558
------------------------------------------------------------------------

                                 ______
                                 
                  QUESTIONS SUBMITTED BY MR. LOBIONDO

    Mr. LoBiondo. Can you explain why the Air National Guard and the 
Air Force Reserve regular MILCON programs have dramatically declined? 
In FY06, Air Guard MILCON was $165 million, decreased to $123 million 
FY07, and then substantially decreased again in FY08 to $85 million.
    Secretary Anderson. The Air Force is taking Total Force risk in 
infrastructure, which is balanced across all component programs between 
BRAC, MILCON, and O&M. The ANG and AFRC receive their full share of new 
mission and current mission funding, which is allocated based on their 
Plant Replacement Value (PRV). In FY06 and FY07, the ANG and AFRC had a 
larger new mission MILCON requirement in their PB request than in 
FYO8PB or FYO9PB. As a result, their total MILCON funding was larger in 
FY06/FY07 than in FY08/09. There simply is not enough funding within 
the current Air Force budget to accommodate all requirements. The Air 
Force budget request carefully balances our facility operations and 
maintenance accounts for sustainment, restoration, and modernization 
with the military construction program to make the most effective use 
of available funding.
    Mr. LoBiondo. Likewise, for the Reserves, the MILCON budget has 
fallen from $79 million in FY06 to $44 million in FY07, FY08 down again 
to $26 million. As I review your FY09 MILCON request, I see the Air 
National Guard's budget decreased yet again, now four consecutive years 
in a row, in FY09 to $34 million. For FY09, the Reserve's budget is 
reduced by 30% from $27 million to $19 million. Is the Air Force 
managing risk on the backs to the Reserve Components? If risk is 
managed across components, why is it the Air Forces Active Duty MILCON 
budget has typically increased across these same years? Is it fair to 
include BRAC MILCON funding as a factor in your allocation process? 
Doesn't this skew against the Reserve Component, having been impacted 
by BRAC more so than the AD component?
    Secretary Anderson. The Air Force is not managing risk on the backs 
of the Reserve Components. The Air Force is taking Total Force 
infrastructure risk across all component programs (BRAC, MILCON, and 
O&M.)
    The Active Force MILCON budget is typically larger than the Reserve 
component because of larger new mission beddowns coupled with a bigger 
share of Plant Replacement Value (87%) for current mission allocation.
    Since the allocation process did not factor BRAC, the process is 
not skewed against the Reserve Component. The FYO9PB facility 
recapitalization rate including BRAC is Total Force: 110 years (188 
years w/o BRAC); ANG: 69 years (140 years w/o BRAC), AFRC: 87 years 
(156 years w/o BRAC); Active Force: 119 years (197 years without BRAC.)
                                 ______
                                 
                  QUESTIONS SUBMITTED BY MR. COURTNEY

    Mr. Courtney. As you know, much of the housing at Sub Base New 
London has been privatized to GMH Military Housing. In my discussions 
with the leadership of the base, this arrangement appears to be 
positive and beneficial to the sailors and families at the base. I note 
that on February 12, 2008, GMH announced the transfer of the military 
housing division to a U.S. subsidiary of Balfour Beatty plc, a British 
corporation. Does the Navy have any concerns about moving control of 
military housing to a foreign company and any possible impact to 
military housing or the security of bases such as Sub Base New London?
    Secretary Penn. The Navy does not currently have security concerns 
about Balfour Beatty plc (a London-based public company traded on the 
London Stock Exchange) acquiring GMH's Military Housing Division 
(inclusive of GMH's interest in the Northeast and Southeast projects).
    Balfour Beatty itself is already the design/builder for the 
Northeast and Southeast projects and has recently been awarded, in a 
joint venture with Clark Construction, a $641 million contract to 
design and build additions and renovations at the new Walter Reed 
National Military Medical Center in Bethesda, Maryland.
                                 ______
                                 
                 QUESTIONS SUBMITTED BY MRS. NAPOLITANO

    Mrs. Napolitano. Do you think it was fair that the Air Force 
stopped the negotiated sale with the City of Norwalk for the Norwalk 
Tank Farm because the City did not want to pay for contamination cause 
by the Air Force's lessee, Kinder Morgan?
    Secretary Arny. The Air Force was not responsible for terminating 
the negotiated sale. This decision was made by the General Services 
Administration (GSA), DOD's real estate agent. GSA terminated the 
negotiated sale because of the disparity between the City's best and 
final offer and GSA's appraised fair market value of the Norwalk Tank 
Farm property (Property). Moreover, we are not aware that the City was 
asked or that a term of the negotiated sale included City payment of 
Kinder Morgan Energy Partner's (KMEP) remediation costs. Based on Air 
Force discussions with KMEP, KMEP has steadfastly maintained a desire 
to pursue its remedial obligations through to completion rather than 
have these responsibilities delegated to or funded by a third party.
    Mrs. Napolitano. Has a city or government agency ever bought a 
property through the military construction exchange process?
    Secretary Arny. Yes, the Army has exchanged Reserve Component 
property with this type of entity on several occasions. Examples 
include: the City of Oakland, California; the East Bay Municipal 
Utility District, Oakland, California; the Port of Oakland, California; 
the City of Houston, Texas; the University of Texas; the City of 
Beachwood, Ohio; Minnesota Department of Transportation; Kalamazoo, 
Michigan Airport Authority; Oklahoma City, Oklahoma; South Fayette 
School District, McDonald, Pennsylvania; City of Caven Point, New 
Jersey; and the Chicago Airport Authority, Illinois. All of the 
Military Departments are currently considering this type of exchange 
with government entities where appropriate.
    Mrs. Napolitano. In the late 1980s, the Air Force informed the 
Norwalk City Council, of which I then was a member, that they were 
going to fully remediate the Tank Farm property and transfer it to the 
City of Norwalk if no other federal agency wanted it. Why has the Air 
Force reneged on this promise?
    Secretary Anderson. The Air Force has not reneged on its promises. 
Under federal real property disposal authorities applicable to the Air 
Force, after determining no further Department of Defense (DOD) need 
for the Tank Farm Property (Property), the Air Force turned the 
Property over to the General Services Administration (GSA). By law, GSA 
must act as DOD's property disposal agent. GSA, in turn, determined no 
further federal need for the property and commenced a negotiated sale 
with the City of Norwalk. After two years of negotiations, the City and 
GSA were unable to reach agreement on price. GSA determined the City's 
best and final offer to be well below the property's fair market value 
using an appraisal prepared by a competent, professional appraiser. The 
significant disparity led GSA to terminate the negotiated sale. 
Thereafter, the Air Force regained control of the property and 
commenced its own disposal process. The City voluntarily declined to 
participate in this process despite repeated invitations and 
encouragement by the Air Force to do so.
    The Air Force commenced remediation of the property in 1995. It has 
worked steadfastly since the time under the auspices of the California 
Regional Water Quality Control Board (RWQCB), Los Angeles District. It 
has made significant progress and site close out is anticipated by 
2011. The decision to privatize clean-up or contractually obligate the 
purchaser/developer to assume the Air Force's remediation obligations 
changes nothing in terms of the final outcome. The property will be 
remediated and the Air Force remains obligated in the event of 
developer default. Based on its experience with privatized remediation, 
the Air Force believes developer completion of remediation will occur 
faster than the timeline contemplated by the Air Force. This will 
facilitate redevelopment and reuse of the property--a goal supported by 
the city.
    Kinder Morgan Energy Partners (KMEP) has likewise diligently 
pursued remediation of its portion of the property and the 
contamination caused by its activities/facilities. Going forward, KMEP 
will retain responsibility for its remediation obligations, also under 
the auspices of the RWQCB, through to completion in 2012. The Air Force 
intends to enter into an environmental agreement with KMEP, stipulating 
KMEP's continued obligations. However, in the unlikely event of 
default, the Air Force retains the ultimate responsibility to complete 
the work.
    Mrs. Napolitano. What experience does the Air Force have with 
disposing of contaminated properties through the military construction 
exchange process? Why does the Air Force persist in pursuing a real 
property exchange when a city expressed great interest in procuring the 
property? What experience does the Air Force have with disposing of 
properties that contain contamination cause by an Air Force lessee?
    Secretary Anderson. A Real Property Exchange (RPX) is the only 
disposal method available to the Air Force which allows the Air Force 
to receive consideration in the form of military construction (MILCON). 
A RPX allows the Air Force to exchange the Norwalk Defense Fuel Support 
Point property (Property) for construction of needed facilities at 
March Air Reserve Base (March ARB).
    The city is not precluded from bidding to acquire the property 
under the RPX disposal process. In fact, the structure of an Air Force-
City transaction under the RPX process would be identical to what the 
city attempted to negotiate with GSA--city alignment with a developer 
and developer payment of the consideration. An RPX transaction has the 
added advantage of direct deed transfer to the developer without need 
for the city to first acquire ownership of the property as required by 
a negotiated sale.
    Broken down into its constituent parts, an RPX is basically the 
disposal of property and the construction of MILCON. The Air Force has 
extensive experience in both.
    The Air Force also has considerable expertise in disposing of 
contaminated properties and ``privatizing'' the clean-up via the Base 
Realignment and Closure (BRAC) and active duty processes. Examples of 
transactions where the developer assumed the Air Force's and/or its 
lessee's remedial obligations include the National Imagery and Mapping 
Agency (NIMA) disposal in St. Louis, MO (chemical contaminants in soil, 
sediment, surface water and ground water); the former Lowry AFB 
disposal in Denver, CO (solvent contamination of water, long term 
maintenance of landfills, asbestos in soil); the former McClellan AFB 
disposal in Sacramento, CA (a National Priorities Site and DOD's most 
contaminated installation; nonclorinated contaminates in shallow soil): 
and the Escanaba disposal in Escanaba, MI (creosote and petroleum 
contaminants). The Air Force is currently working with the General 
Services Administration to dispose of a former Fuel Support Point in 
Cincinnati, OH and terms of sale include purchaser assumption of 
petroleum related contamination.

                                  
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