    [Senate Hearing 110-248]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 110-248

       MILITARY CONSTRUCTION AND VETERANS AFFAIRS, AND RELATED AGENCIES
                      APPROPRIATIONS FOR FISCAL YEAR 2008

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

                                    HEARINGS

                                    before a

                              SUBCOMMITTEE OF THE

                COMMITTEE ON APPROPRIATIONS UNITED STATES SENATE

                           ONE HUNDRED TENTH CONGRESS

                                 FIRST SESSION

                                       on

                               H.R. 2642/S. 1645

      MAKING APPROPRIATIONS FOR MILITARY CONSTRUCTION, THE DEPARTMENT OF
       VETERANS AFFAIRS, AND RELATED AGENCIES FOR THE FISCAL YEAR ENDING
                   SEPTEMBER 30, 2008, AND FOR OTHER PURPOSES

                                   __________

                             Department of Defense
                         Department of Veterans Affairs

                                   __________

             Printed for the use of the Committee on Appropriations

      Available via the World Wide Web: http://www.gpoaccess.gov/congress/
                                   index.html

                                   __________

                         U.S. GOVERNMENT PRINTING OFFICE

    33-932 PDF                 WASHINGTON DC:  2007
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                          COMMITTEE ON APPROPRIATIONS

                    ROBERT C. BYRD, West Virginia, Chairman
    DANIEL K. INOUYE, Hawaii             THAD COCHRAN, Mississippi
    PATRICK J. LEAHY, Vermont            TED STEVENS, Alaska
    TOM HARKIN, Iowa                     ARLEN SPECTER, Pennsylvania
    BARBARA A. MIKULSKI, Maryland        PETE V. DOMENICI, New Mexico
    HERB KOHL, Wisconsin                 CHRISTOPHER S. BOND, Missouri
    PATTY MURRAY, Washington             MITCH McCONNELL, Kentucky
    BYRON L. DORGAN, North Dakota        RICHARD C. SHELBY, Alabama
    DIANNE FEINSTEIN, California         JUDD GREGG, New Hampshire
    RICHARD J. DURBIN, Illinois          ROBERT F. BENNETT, Utah
    TIM JOHNSON, South Dakota            LARRY CRAIG, Idaho
    MARY L. LANDRIEU, Louisiana          KAY BAILEY HUTCHISON, Texas
    JACK REED, Rhode Island              SAM BROWNBACK, Kansas
    FRANK R. LAUTENBERG, New Jersey      WAYNE ALLARD, Colorado
    BEN NELSON, Nebraska                 LAMAR ALEXANDER, Tennessee

                        Charles Kieffer, Staff Director
                      Bruce Evans, Minority Staff Director
                                     ------

    Subcommittee on Military Construction and Veterans Affairs, and Related
                                    Agencies

                      TIM JOHNSON, South Dakota, Chairman
    DANIEL K. INOUYE, Hawaii             KAY BAILEY HUTCHISON, Texas
    MARY L. LANDRIEU, Louisiana          LARRY CRAIG, Idaho
    ROBERT C. BYRD, West Virginia        SAM BROWNBACK, Kansas
    PATTY MURRAY, Washington             WAYNE ALLARD, Colorado
    JACK REED, Rhode Island              MITCH McCONNELL, Kentucky
    BEN NELSON, Nebraska                 ROBERT F. BENNETT, Utah
                                         THAD COCHRAN, Mississippi
                                           (ex officio)

                               Professional Staff
                                Christina Evans
                                  B.G. Wright
                                 Chad Schulken
                           Dennis Balkham (Minority)
                          Christine Heggem (Minority)

                             Administrative Support

                                 Renan Snowden
                             Katie Batte (Minority)

                                C O N T E N T S

                                  ----------

                            Thursday, March 22, 2007

                                                                       Page

    Department of Defense............................................     1
        Department of the Air Force..................................    31

                            Thursday, April 12, 2007

    Department of Veterans Affairs...................................    53

                            Thursday, April 19, 2007

    Department of Defense:
        Department of the Army.......................................   115
        Department of the Navy.......................................   145

       MILITARY CONSTRUCTION AND VETERANS AFFAIRS, AND RELATED AGENCIES
                      APPROPRIATIONS FOR FISCAL YEAR 2008

                                  ----------

                            THURSDAY, MARCH 22, 2007

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 10:08 a.m., in room SD-124, Dirksen
    Senate Office Building, Hon. Jack Reed (chairman) presiding.
        Present: Senators Reed, Hutchison, Craig, and Allard.

                             DEPARTMENT OF DEFENSE

    STATEMENT OF HON. TINA W. JONAS, UNDER SECRETARY OF
                DEFENSE
    ACCOMPANIED BY PHILIP W. GRONE, DEPUTY UNDER SECRETARY OF DEFENSE
                (INSTALLATIONS AND ENVIRONMENT)

                         statement of senator jack reed

        Senator Reed. Good morning and let me welcome witnesses
    Secretary Tina Jonas and Mr. Phil Grone to testify before our
    Subcommittee today. I want to thank you for appearing before
    the Subcommittee and thank you for your service to our country.
        We will be joined shortly by the Ranking Member, Senator
    Hutchison, and I know her leadership together with Senator
    Feinstein, has set a high standard for this Subcommittee that I
    hope and expect we can continue as we go forward.
        We are now embarking on fiscal year 2008 Military
    Construction budget review. The purpose of today's hearing is
    to receive testimony regarding this year's President's budget
    request for Military Construction, Military Family Housing,
    Base Realignment and Closure, Chemical Demilitarization and
    NATO Security Investment Program. This year's request comes
    among amid requests from the Department including a fiscal year
    2007 global war on terrorism supplemental request.
        The recently completed joint funding resolution that
    completed last year's unfinished Appropriations process and now
    is the largest request for military construction in recent
    history. This request exceeds $21 billion, which represents an
    increase for active component of military construction of 60
    percent over last year's request.
        The budget request for the Army and Marine Corps are nearly
    double last year's level, much of which will pay to grow the
    force by 65,000 soldiers and 27,000 marines. Funding for BRAC
    comprises another large chunk of this budget request. A total
    of $8.2 billion is being requested to implement the 2005 BRAC
    round, which is a 45 percent increase over last year's request
    of $5.6 billion.
        I recognize that there is still some concern in the
    Department about the level of last year's BRAC funding. The
    House Appropriations Committee last week included $3.1 billion
    in the 2007 supplemental funding bill to fully fund BRAC for
    fiscal year 2007 and I expect the Senate Appropriations
    Committee to follow suit later today. Hopefully, that issue
    will be put to rest in the very near future and we can all
    concentrate on the fiscal year 2008 budget.
        In all, there is a great deal of money on the table for
    military construction this year and it is incumbent on this
    subcommittee to closely review the Department's budget request
    to make sure that funding is both justified and properly
    allocated. We look forward to your help and cooperation as we
    tackle that task.
        Again, thank you for appearing before our committee and I
    look forward to your testimony today. At this time, I would
    like to recognize Senator Hutchison to make her opening
    remarks. Senator.

                   statement of senator kay bailey hutchison

        Senator Hutchison. Yes, thank you, Mr. Chairman. Welcome to
    all of you. I look forward to working with the new chairman of
    the subcommittee, Chairman Reed, on the military construction
    and veteran's issues. Chairman Reed certainly has knowledge and
    experience as a former Army officer, and with this
    subcommittee's tradition of bipartisanship, I am confident that
    we can accomplish a lot together. I would also say that I look
    forward to Senator Tim Johnson's speedy recovery and return to
    the subcommittee.
        Today we are looking at the President's budget request for
    Military Construction and Family Housing for the Department of
    Defense, base realignment and closure actions, and the
    Department of the Air Force. As we begin the budget process for
    fiscal year 2008, there are several encouraging trends in the
    military construction budget. The overall request of $21.2
    billion is the largest ever for military construction and it
    includes over $8 billion to implement BRAC actions as that
    program continues to meet the 2011 statutory deadline. It
    includes funds to begin building toward the increased end
    strength of the active duty Army and Marine Corps, which I,
    along with Chairman Reed, have advocated for a number of years.
        I am very pleased to see this development and I am pleased
    to see the Army and Marines planning in a comprehensive way,
    not leaving facilities out of their calculations. At times in
    the past, they have left out housing considerations for our
    young single soldiers and marines, leaving us slightly behind.
    So I hope that we are going to move forward, and in a Senate
    Appropriations Committee meeting later today, we will mark up a
    bill to provide emergency funding, including military
    construction and veteran's funding, to support the global war
    on terror.
        My interest in military construction is not just the size
    of the budget however, but in providing a smooth transition for
    our fighting forces. The Defense Department is executing a
    global re-stationing plan, which will return over 70,000
    troops, mostly Army and Air Force, to the United States to
    places such as Fort Bliss, Texas, and Fort Riley, Kansas. The
    Army is also in the midst of a huge reorganization effort to
    make its brigades more combat ready. The marines are preparing
    to undertake a massive move, relocating 8,000 marines and their
    families from Japan to Guam. Many of these Marines will move
    onto Anderson Air Force Base in Guam.
        The Departments of Defense and State have done a good job
    in gaining Japanese funding to support this move. That makes it
    even more important that we have good coordination between the
    military services to get the move done well. These are all
    incredibly ambitious, and they will be enabled, in some cases
    determined, by the availability of facilities. We will not get
    a second chance to provide the right infrastructure for our
    soldiers, sailors, airmen and marines and our military
    families. That's why funding BRAC effectively is so important.
    The sooner we can get our service men and women out of
    dilapidated facilities and into the new facilities, the sooner
    we will live up to our commitment to provide for them in a way
    that is commensurate with their service to our Nation.
        As we just witnessed so tragically at Walter Reed,
    facilities matter a great deal in the lives of our troops and
    their families, and we must make sure we do this well. I am
    somewhat concerned by the downward trend in military
    construction for our Guard and Reserve components. These brave
    citizen soldiers are making huge contributions to the global
    war on terror, and yet their facilities are often in the worst
    shape. The overall funding level is down 19.1 percent from last
    year. I understand that there is funding for Guard and Reserve
    projects in the BRAC account, but I am still interested in
    seeing their normal MILCON funding improved. So I hope our
    witnesses will be able to speak to this issue.
        The Air Force will be here today. Air Force facilities have
    long had the reputation for outstanding quality, and while the
    Air Force military construction budget is down slightly this
    year, I know the Air Force will make effective use of the
    funding it is requesting. Its contribution to military family
    housing, though smaller than last year's request, is over $1
    billion and will eliminate 3,704 inadequate housing units
    through both traditional and privatized housing. I am eager to
    hear about the progress of build-to-lease and other creative
    housing solutions, like privatization and also the challenges
    with BRAC implementation, its activities in, as well as support
    of the global war on terror.

                               prepared statement

        So these are some of things we will be talking about today
    and I appreciate so much the increases where I think they are
    most needed in the marines and the Army so that we can prepare
    the future realignments. Thank you, Mr. Chairman.
        [The statement follows:]

               Prepared Statement of Senator Kay Bailey Hutchison

        Good afternoon, I would like to welcome our witnesses and guests. I
    would also like to welcome Chairman Reed to the subcommittee. I look
    forward to working with him on military construction and veterans'
    issues for as long as he is our acting chairman. With his knowledge and
    experience as a former Army officer, and with this subcommittee's
    tradition of bipartisanship, which I have previously experienced as
    both chairman and ranking member, I am confident we will accomplish
    much together. I would also like to say we look forward to Chairman Tim
    Johnson's speedy recovery and return to this subcommittee.
        Today, we will examine the President's budget request for military
    construction and family housing for the Department of Defense,
    including the defense agencies, Base Realignment and Closure actions,
    and the Department of the Air Force.
        As we begin the budget process for fiscal year 2008, there are
    several encouraging trends in the military construction budget. The
    overall request of $21.2 billion is the largest ever for military
    construction. This includes over $8 billion to implement BRAC actions,
    as that program continues its sprint to meet the 2011 statutory
    deadline. It also includes funds to begin building toward the increase
    in the end strength of the active duty Army and Marine Corps, which I,
    along with Chairman Reed, have advocated for a number of years. I am
    very pleased to see this development, and I am pleased to see the Army
    and Marines planning in a comprehensive way, not leaving facilities out
    of their calculations. At times in the past, they have left out the
    housing considerations for our young single soldiers and marines,
    leaving us slightly behind. So, this is a very welcome step forward. In
    addition, the Senate Appropriations Committee will meet later today to
    mark up a bill to provide emergency funding, including military
    construction and veterans funding, to support the Global War on Terror.
        Yet, my interest in military construction is not just the size of
    the budget, but in providing a smooth transition for our fighting
    forces. The Defense Department is executing a global restationing plan,
    which will return over 50,000 troops, mostly Army and Air Force, to the
    United States, to places such as Fort Bliss, Texas, and Fort Riley,
    Kansas. The Army is also in the midst of a huge reorganization effort
    to make its brigades more combat ready. The Marines are preparing to
    undertake a massive move, relocating 8,000 Marines and their families
    from Japan to Guam. Many of these Marines will move onto Anderson Air
    Force Base in Guam. The Departments of Defense and State have done a
    good job in gaining Japanese funding to support this move, but that
    makes it all the more important that we have good coordination between
    the military services to get this move right.
        These are all incredibly ambitious agendas within the Department of
    Defense, and they will be enabled, and in some cases determined, by the
    availability of facilities. We will not get a second chance to provide
    the right infrastructure for our soldiers, sailors, airmen and marines
    and our military families. This is why fully funding and effectively
    implementing BRAC is so important. The sooner we can get our servicemen
    and women out of old, dilapidated facilities and into new, state-of-
    the-art facilities, the sooner we will live up to our commitment to
    provide for them in a way that is commensurate with their service to
    our Nation. As we just witnessed so tragically at Walter Reed,
    facilities matter a great deal in the lives of our troops and their
    families. We must get them out of bad facilities and into good ones as
    quickly as possible.
        It is against this backdrop that we begin to examine the budget
    request for military construction. The Army's $4.04 billion request is
    96.1 percent over last year's request and 100.7 percent over last
    year's enacted level. This increase will largely support the Army's
    end-strength increase. The Navy and Marine Corps have requested $2.1
    billion for fiscal year 2008, an 81.1 percent increase over the $1.16
    billion requested last year. The Air Force's budget has slowed this
    year, decreasing 21.1 percent to $912.1 million from last year's
    request of $1.156 billion. We owe our military families the best
    surroundings we can provide them, reflective of the sacrifices they
    make for our Nation, and I commend the Department for making quality of
    life a priority. All in all, the Department of Defense has requested
    $1.22 billion to house troops, $251.4 million to build hospitals and
    clinics, $139.4 million for community support facilities, such as child
    development centers, and over $2.9 billion to build, improve, and
    maintain family housing. The military services also continue to
    aggressively pursue privatized family housing, which has been a great
    success.
        I am somewhat concerned by the downward trend in military
    construction for our Guard and Reserve components. These brave citizen-
    soldiers are making huge contributions to the Global War on Terror, yet
    their facilities are often in the worst shape, and the overall funding
    level is down 19.1 percent from last year's request. I understand there
    is funding for Guard and Reserve projects within the BRAC account, but
    I am still keenly interested in seeing their normal MILCON funding
    improve. I hope our witnesses will speak to this issue, and provide us
    with a plan for getting Guard and Reserve MILCON on the right track.
        The Air Force will also join us today. Air Force facilities have
    long had a reputation for outstanding quality. While the Air Force
    military construction budget is down slightly this year, I trust the
    Air Force will make very effective use of the funding it is requesting,
    and will keep its commitment to maintaining top-flight facilities. Its
    contribution to high-quality military family housing, though smaller
    than last year's request, is impressive again this year, as it is
    requesting over $1 billion to eliminate 3,704 inadequate units through
    both traditional and privatized housing. As everyone remembers, we on
    this subcommittee have worked very successfully with the Air Force in
    recent years to take advantage of creative housing solutions, such as
    build-to-lease and privatization. I am also eager to hear about its
    progress and challenges with both BRAC implementation and hurricane
    recovery, as well as its activities in support of the Global War on
    Terror.
        I look forward to discussing these and other issues with our
    witnesses. Thank you, Mr. Chairman.

        Senator Reed. Thank you, Senator Hutchison. If my
    colleagues want to make a comment--if not, we will go to the
    witnesses.
        Senator Allard. Mr. Chairman, I have a statement to just
    put in the record.
        [The statement follows:]

                   Prepared Statement of Senator Wayne Allard

        Thank you, Mr. Chairman, for the opportunity to address our panel
    today. I appreciate that these individuals are willing to take the time
    to come and discuss the President's fiscal year 2008 budget request
    with us.
        I plan on raising an issue of much importance to southeastern
    Colorado, and that is the proposed expansion of the Pinon Canyon
    Maneuver Site.
        With its close location to Fort Carson, Pinon Canyon was perfectly
    suited for the Army's training needs 20 years ago. However, with the
    arrival of 10,000 new soldiers to Fort Carson, the Army has determined
    that the size of the site needs to be increased in order to meet Fort
    Carson's new operational training requirements.
        Army officials have told me repeatedly that the genesis of Fort
    Carson's expansion proposal occurred when several landowners approached
    Fort Carson and expressed their strong desire to sell. I also
    understand that sufficient numbers of willing sellers exist to support
    a significant expansion of the site. However, many in the community
    surrounding Pinon Canyon have major questions that they have been
    unable to get answers to.
        Until recently, Army leadership and officials at Fort Carson have
    been unable to answer questions regarding the proposal. While I
    understand the difficult position the Army has been on this issue, I
    believe it absolutely necessary that they begin providing the
    information to the community and to Congress prior to any acquisition
    of property.
        The leadership at Fort Carson has done a great job of reaching out
    and providing what information it could to the local communities.
    However, the Pentagon has not been as forthcoming. I believe the
    Congress and the local communities in Southeastern Colorado need more
    information before we can decide whether this proposed expansion is
    necessary and appropriate.
        Thank you again, Mr. Chairman, for the opportunity to share some of
    my priorities with the subcommittee today. I look forward to the
    testimony of our witnesses.

        Senator Reed. Thank you.
        Senator Craig. Mr. Chairman, I will do the same and include
    my comments.
        [The statement follows:]

                   Prepared Statement of Senator Larry Craig

        Madam Chairman, thank you for holding this hearing today. Thanks
    also to the witnesses for testifying today regarding the President's
    fiscal year 2008 budget for Military Construction. During times of both
    war and peace, it is important for the Congress and the Administration
    to work closely together to ensure that our soldiers receive the very
    best we can provide them. The budget we are reviewing today attempts to
    address some of the military construction needs of our soldiers and our
    military bases.
        Although my State of Idaho has relatively few military
    installations, we have real military construction needs that must be
    met to ensure that those men and women based in Idaho are provided with
    the equipment and facilities they deserve for serving this great
    country. To that end, I have worked very hard in Congress to ensure
    that our military installation facilities are kept to high standards.
    Last year, I toured Mountain Home Air Force Base to look at the new
    family housing projects and other needs on base. The family housing is
    quite impressive, and I am pleased that we are able to provide such
    high quality accommodations for our servicemembers and their families.
    Unfortunately, there are other critical needs on base that are not
    being met. The dining facility is inadequate, outdated, and in need of
    improvements, but more important, the Logistics Readiness Center needs
    immediate attention.
        The Mountain Home Readiness Center continues to be housed in a 53-
    year old condemned facility, in which the roof is being held up with
    temporary structural supports. Because it is in such bad shape, 60
    percent of the base's supplies are operating from temporary spaces
    across the base, causing significant delays for training and
    mobilization.
        To me, this is absolutely unacceptable. While our soldiers are
    training and living at home or abroad on military bases, we should do
    our utmost to limit the risks of injury by forcing them to continue to
    use old and condemned facilities. The Mountain Home Air Force Base
    Logistics Readiness Center does not meet adequate standards for a
    military base and I will be working with the Chairman and Ranking
    Member to address this critical funding need.
        With that, I look forward to hearing your testimony.
        Thank you.

        Senator Reed. Thank you very much.
        Ms. Jonas. Mr. Chairman could I also put my full statement
    in the record?
        Senator Reed. Without objection. The statements of the
    witnesses are also in the record, so feel free to summarize
    your comments. Ms. Jonas.
        Ms. Jonas. Mr. Chairman and members of the committee, thank
    you for giving us the opportunity to discuss the fiscal year
    2008 Military Construction budget. I want to start off by
    thanking the committee for their work and the work that you
    will do this afternoon on restoring the $3.1 billion that is
    going to be needed in fiscal year 2007 for base realignment and
    closure. We thank you for your work on that.
        I would like to provide a little bit of context and hit a
    few highlights and then, of course, as you stated Mr. Chairman
    I would like to have the statement in the record.
        As you may already know, the President's fiscal year 2008
    base budget is a total of $481.4 billion. This is a 11.4
    percent increase over the fiscal year 2007 budget and it is
    real growth of about $8.7 billion. We believe it maintains the
    President's commitment, our commitment, to have a high state of
    readiness, to increase our ground force strength, enhance the
    combat capabilities of the United States Armed Forces and
    continue the development and implementation of capabilities for
    the U.S. military's superiority against future threats and of
    course, most importantly, to provide strong support for our men
    and women in uniform and their family members. The military
    construction budget, as you know, is $21.1 billion and we look
    forward to working with the Committee as you mark up that
    legislation.

                               PREPARED STATEMENT

        As already noted in your statements, it does provide for
    the increase of 92,000 additional forces providing, another
    $2.9 billion for family housing, privatizing another 4,261
    housing units, renovating another 3,000 military owned houses
    and operating and maintaining a worldwide housing inventory of
    78,386 homes. So, I'll provide the rest of the statement for
    the record, sir, but we look forward to working with you on
    this request and we appreciate this Committee's strong support
    for our men and women in uniform.
        [The statement follows:]

                      Prepared Statement of Tina W. Jonas

        Mr. Chairman, members of the Committee, thank you for the
    opportunity to discuss the Military Construction component of President
    Bush's fiscal year 2008 budget request for the Department of Defense.
        On behalf of the men and women of the Department--both Service
    members and civilians--I thank the Committee for its continued support
    of America's Armed Forces. We look forward to working with you to
    ensure that our military men and women have everything they need to
    carry out their vital mission.
        As Mr. Grone's statement comprehensively describes the Military
    Construction component of the President's fiscal year 2008 budget
    request and related issues, I will simply add a few comments from the
    perspective of the Office of the Comptroller.
    Fiscal Year 2008 Base Budget
        Mr. Chairman, the President's base budget requests $481.4 billion
    in discretionary authority for the fiscal year 2008. That is an 11.4
    percent increase over the fiscal year 2007 budget, with real growth of
    8.7 percent.
        The base budget sustains the President's commitment to:
      --Ensure a high state of readiness and ground force strength,
      --Enhance the combat capabilities of the U.S. Armed Forces,
      --Continue the development and implementation of capabilities to
            maintain U.S. superiority against future threats,
      --And continue the Department's strong support for Service members
            and their families.
        The Military Construction portion of that request, which supports
    those strategic objectives, is $21.1 billion. It funds the Department's
    most pressing facilities requirements--especially the strategic
    realignment of our forces being carried out under the Base Realignment
    and Closure Commission.
        This includes preparing facilities in the United States for troops
    returning from bases in Europe, and from Iraq and Afghanistan.
        In addition, funds are being sought for new construction and
    replacement of troop housing and for facilities to support the increase
    of 92,000 Service members recently approved by the President.
        The request also includes $2.9 billion for family housing. The
    funding for this vital ``quality of life'' program will enable the
    Department to:
      --Privatize 4,261 housing units,
      --Renovate another 3,000 military owned houses, and
      --Operate and maintain our world-wide housing inventory of 78,386
            homes in order to provide high quality homes to our Service
            members and their families.
    Fiscal Year 2008 Global War on Terror Request
        In addition to the base budget, the President's request for fiscal
    year 2008 includes a separate request of $141.7 billion to continue the
    fight in the Global War on Terror.
        Included in the Request is $738.8 million for limited construction
    projects to support wartime operations and to enhance force protection.
        The funds will provide additional airfield facilities, operational
    facilities, support facilities, billeting, fuel handling and storage,
    utility systems, and roads in Iraq and Afghanistan, as well as military
    construction related to two accelerated Army Brigade Combat Teams and
    one Marine Corps Regimental Combat Team.
        The fiscal year 2007 Emergency Supplemental Request included $3.6
    billion to support the accelerated BCTs/RCT. An additional $1.6 billion
    is needed in fiscal year 2008 to continue that initiative, including
    $169.2 million for the construction of facilities to accommodate
    additional Marine Corps personnel at Camp Pendleton and Twenty-Nine
    Palms, California, and at Camp Lejeune, North Carolina.
        We need to make those investments now. With that in mind, we ask
    the Committee to support the Military Construction portions of the
    President's budget in full.
        Mr. Chairman, we are a Nation at war. The brave men and women who
    today wear the uniform--volunteers all--are fighting to defend our
    freedom and security. They are doing a magnificent job, and they need
    and deserve our support. I thank you, Mr. Chairman--and all the Members
    of the committee--for the support you have shown them in the past and,
    on their behalf, I ask for your continued support in the future.
        Mr. Chairman, thank you for the opportunity to participate in this
    hearing. I welcome your questions.

                          STATEMENT OF PHILIP W. GRONE

        Mr. Grone. Thank you, Mr. Chairman and Senator Hutchison
    and members of the subcommittee. I am pleased to appear before
    you this morning to discuss the budget request for the
    Department of Defense for fiscal year 2008, particularly those
    programs within the jurisdiction of this Subcommittee that
    support the management of our installation assets. As the
    chairman noted and several others have noted as well, the
    Military Construction budget for fiscal year 2008 is the
    largest request that we have made. I would make a point much
    broader than that in terms of support to installation assets
    and to support of mission, whether it's military construction,
    military family housing, base closure, environmental matters,
    installation support, base operating support, the total
    portfolio that supports our mission.
        We are requesting $56 billion from the Congress in
    appropriations for the coming fiscal year to support the
    business area of installation and their critical support to
    mission and to quality of life. It is also the largest request
    in this business portfolio that we have ever requested. A
    couple of key points about the budget request. The budget
    request currently supports a re-capitalization rate of 67
    years, achieving the goal of a 67-year recapitalization cycle
    for the Department's real property assets. In 2001 that rate
    stood at 192 years. Clearly, we are making progress. The budget
    request provides 88 percent of the need to sustain our
    facilities.
        As Senator Hutchison and others have noted, the budget
    request continues our efforts in the area of military family
    housing. Last year's budget provided the resources that would
    allow us to resolve the problem of inadequate family housing in
    the United States by our target of 2007 and we remain on track
    to achieve the elimination of such units overseas by fiscal
    year 2009.
        In the end state, we expect that 90 percent of the
    Department's then existing inventory of military and family
    housing will be privatized and the survey results that we are
    getting back from residents shows that this program is not just
    successful from an acquisition perspective but it is very
    successful from a customer perspective. People like the product
    that is being produced.
        We continue our efforts on energy conservation. In this
    past fiscal year 2006, military installations reduced energy
    consumption by 5\1/2\ percent, exceeding the energy
    conservation goal of 2 percent. So again, we are making
    progress in stewardship and sustainment of resources and
    assets.
        Certainly the largest part of the program we have before
    the subcommittee in terms of the proposal is our request to
    support base realignment and closure and we deeply appreciate,
    and I will second the comments of my colleague to my right, the
    support of the members in the effort to restore the $3.1
    billion necessary to carry out BRAC actions in this fiscal
    year. The $8.2 billion that has been requested for the coming
    fiscal year will enable us to keep to schedule, will enable us
    to successfully complete the round on time and as the members
    know, this round is the most comprehensive, most joint, most
    significant round that affects the total force, not just the
    active component, but the active Guard and Reserve that we have
    ever undertaken and it will show direct benefit to military
    readiness into the future.

                               PREPARED STATEMENT

        So, Mr. Chairman, we have always appreciated the support
    and continue to appreciate the support this subcommittee has
    provided to the Department. We look forward to continuing to
    improve military infrastructure installations in the United
    States and across the globe to support the mission. Thank you,
    sir.
        [The statement follows:]

                     Prepared Statement of Philip W. Grone

        Mr. Chairman, Senator Hutchison, and distinguished members of the
    Subcommittee, I appreciate the opportunity to appear before you today
    to address the President's Budget request for fiscal year 2008 and to
    provide an overview of the approach of the Department of Defense to the
    management of the Nation's military installation assets.
    Overview
        As our Nation's security challenges become more complex, the
    military must become an increasingly agile joint force that is dominant
    across the full spectrum of operations. Installations are a critical
    component to this Nation's force capabilities. DOD is vigorously
    managing its facilities and infrastructure to ensure that it delivers
    cost effective, safe, and environmentally sound capabilities and
    capacities to support the National Defense Mission.
        Not only is the Department incorporating best business practices
    but it is also expanding these practices into new, previously
    unexplored areas. For example, DOD's infrastructure investment strategy
    uses key metrics to provide quality facilities that directly support
    mission and readiness and also developed advanced business processes
    that align more closely to warfighter mission area requirements.
    Implementation of the Real Property Inventory Requirements document
    provides the basis for a more accurate and current asset inventory
    database which will maximize asset management and provide senior
    leaders with an improved decision-making tool to measure performance.
    With the development of a net-centric data warehouse for the
    Department's real property infrastructure and utilization information,
    timely and accurate real property data will be readily available to
    support key facilities metrics. The rigor provided by these practices
    in planning, managing, and maintaining DOD installations improves
    overall efficiency while improving investment decision-making.
    Global Defense Posture
        The Department continues its efforts to realign its permanent base
    structure at home and abroad to effectively enable military
    transformation and to better deal with 21st Century security
    challenges. The Department has begun the process of realigning or
    closing a number of large permanent bases overseas in favor of small
    and more scalable installations better suited for rapid deployments.
    The Global Defense Posture realignment effort identified an overall set
    of plans for returning overseas forces back to military installations
    in the U.S. These plans were integrated with the BRAC process regarding
    relocations from overseas to domestic bases during the prescribed BRAC
    time period. All Services factored requirements of returning forces
    into their domestic infrastructure requirements and this resulted in
    recommendations to accommodate forces at U.S. installations.
        Some overseas changes have already been implemented in accordance
    with ongoing Service transformation efforts and within the framework of
    negotiations with host nations. In many cases, the changes involve
    units that are inactivating or transforming with no significant BRAC
    impact. As we begin implementing the BRAC recommendations there are
    overseas posture changes still being developed or being phased to be
    implemented after the BRAC implementation period. DOD will continue to
    consult with Congress on its plan and will seek your support as we
    implement these far-reaching and enduring changes to strengthen
    America's global defense posture.
    Implementing Base Realignment and Closure (BRAC) 2005
        The President approved and forwarded the Commission's
    recommendations to Congress on September 15, 2005. The Congress
    expressed its support of these recommendations by not enacting a joint
    resolution of disapproval and on November 9, 2005, the Department
    became legally obligated to close and realign all installations so
    recommended by the Commission in its report. BRAC 2005 affects over 800
    locations across the Nation through 25 major closures, 24 major
    realignments, and 765 lesser actions. The significant transformation to
    the Total Force and its operational capability, the Departments
    business operations, and to the savings ultimately derived from BRAC
    require resources to meet adequately the challenges of implementation.
        The Congress provided $1.5 billion to the Department in fiscal year
    2006 ($1.9 billion was requested in the fiscal year 2006 President's
    Budget) to begin implementing the BRAC recommendations. This initial
    funding was used to begin planning, design and construction, program
    management, and the environmental studies that serve as the foundation
    for constructing and renovating facilities to accommodate missions at
    receiving sites. Notable examples include the Brigade Combat Team (BCT)
    complexes at Fort Carson, Colorado, Fort Knox, Kentucky, and Fort
    Bliss, Texas, and a Division Headquarters and Sustainment Brigade
    Headquarters at Fort Riley, Kansas.
        The fiscal year 2007 President's Budget requested $5.6 billion to
    continue implementation. Previous continuing resolutions for fiscal
    year 2007 provided $542 million to the Department for this purpose.
    However, the recently passed Joint Resolution limits fiscal year 2007
    funding to $2.5 billion, a $3.1 billion (55 percent) reduction from the
    President's Budget. This seriously affects construction timelines
    because over 80 percent of the BRAC budget in fiscal year 2007 directly
    supports military construction. This 55 percent reduction will
    significantly jeopardize our ability to execute BRAC 2005 by the
    statutory deadline of September 15, 2011, thereby sacrificing savings
    that could have been achieved during the delayed timeframe, and delay
    achievement of operational mission requirements. The magnitude of the
    reduction requires careful evaluation to support allocating the reduced
    funding within the Department so that only those projects with the
    highest priority, determined by their operational and/or business case
    effects, go forward on the schedule previously provided to Congress.
    While operational impacts are self-explanatory, business case
    considerations are worthy of note. These include cases where
    incrementally funded projects started last year must continue, and/or
    where projects support follow-on actions, produce significant savings,
    or lead to expeditious asset disposal. This evaluation formed the basis
    for the BRAC portion of the expenditure report required by the Joint
    Resolution that was provided to the appropriations committees on March
    16, 2007. Implementing BRAC 2005 actions represents a significant
    financial commitment by the Department. In the fiscal year 2007 budget
    justification material provided to the Congress, the Department
    indicated that, in some cases, the out-year program did not fully
    reflect expected costs for the remainder of the BRAC implementation
    period (fiscal year 2008-2011). The Department of Army anticipated a
    shortfall as much as $5.7 billion and the Air Force estimated its
    shortfall at approximately $1.8 billion over the program.
        The fiscal year 2008 President's Budget request is approximately
    $3.0 billion more than the fiscal year 2007 President's Budget request
    and the $8.2 billion requested, as well as the outyear program,
    represents full funding for BRAC 2005 implementation assuming funding
    is restored for fiscal year 2007. In previous BRAC rounds, the third
    year of implementation was generally the peak of the ``bell shaped''
    investment curve. For BRAC 2005, the fiscal year 2008 budget request
    represents the critical year of execution in the 6-year statutory
    implementation period and includes $6.4 billion for military
    construction, $1.2 billion for operations and maintenance to relocate
    personnel and equipment, $112 million for environmental studies and
    remediation, and $453 million for ``other'' costs primarily associated
    with installation communications, automation, and information
    management system equipment in support of construction projects.
        The Department has embarked on assessing the domino impact the $3.1
    billion reduction will have on the fiscal year 2008-2011 implementation
    program should it not be restored. The complexity and duration of many
    implementation actions required fiscal year 2007 funding. Military
    construction projects and other expenditures related to the movements
    of missions contained in the fiscal year 2008 President's Budget will
    need to be re-baselined.
    Assisting Communities
        The Department, through the Office of Economic Adjustment (OEA) and
    the Defense Economic Adjustment Program (DEAP), continues to work with
    States and communities across the country as they respond to the
    effects of broad changes in Defense infrastructure, including efforts
    resulted from BRAC, Global Defense Posture Realignment, and modularity.
    In the context of BRAC, to date, the Department has recognized 121
    Local Redevelopment Authorities (LRAs) that are responsible for
    creating a redevelopment plan for property made available for civilian
    reuse as a result of BRAC and to directing implementation of the plan.
    The majority of these communities, with assistance from OEA, are
    presently working to develop a consensus for redevelopment that
    reflects the specific market forces, public facility and service needs,
    and private sector circumstances found at each location and to gauge
    local homeless and community economic development interests in these
    properties. At the same time, efforts are being made between these LRAs
    and the Military Departments to link local civilian redevelopment
    activities with the Department's environmental and property disposal
    efforts, including any necessary environmental remediation.
        At the same time, DOD is working with several communities where
    mission growth is projected to impact the surrounding region. Across
    these locations, resources are being applied to assist communities to
    understand and respond to anticipated impacts on local housing,
    schools, water and sewer, and transportation. Additionally, spousal
    employment, health care, public services, and child care are of some
    concern. A primary concern for all is how to develop and apply local,
    State, and private resources to address local need. Through this
    process, possible gaps in these civilian sources are also being
    recognized as opportunities for third party and Federal assistance.
    Presently, these communities are in close dialogue with the local
    installations to understand the timing and scope of these growth
    actions.
        The ability to capably assist these communities, regardless of
    whether there is downsizing or mission growth, must include our Federal
    agency partners. On behalf of the Secretary of Defense, I Chair the
    President's Economic Adjustment Committee (EAC) at the sub-cabinet
    level to coordinate efforts across 22 Federal agencies to assist these
    communities. Under the auspices of the EAC, team visits will likely be
    undertaken to locations to better understand the local adjustment
    challenge and more capably address potential needs for other Federal
    assistance. A report documenting the efforts of the EAC to date will be
    submitted shortly for your review.
    Managing Infrastructure
        The President's budget request for fiscal year 2008 will permit the
    Department to continue its efforts to manage installation assets
    comprehensively and efficiently. Along with continued improvement in
    business practices and a focus on environmental sustainability, the
    Department is focused on improving the quality of military
    installations as evidenced by the emphasis on more accurate Quality
    Ratings that are currently being collected by the military Departments.
    Managing DOD real property assets is an integral part of comprehensive
    asset management. The Department currently manages over 533,000
    buildings and structures, which reside on over 51,400 square miles of
    real estate.
        The President's Management Agenda Real Property Asset Management
    initiative focuses on improved asset management planning, inventory and
    performance measure data, and the disposal of unneeded assets. DOD has
    implemented an asset management plan and provides inventory and
    performance data to the Federal Real Property Profile annually. DOD's
    Real Property Inventory Requirements implementation continues to refine
    the quality of data collected and reported to the government-wide
    database. We continue to improve our progress on the Real Property
    Scorecard.
        The quality of infrastructure directly affects training and
    readiness. To that end, the Department is incorporating installations
    assessments more fully into the Defense Readiness Reporting System. DOD
    has made significant progress in integrating its installations into
    this Department-wide program. There is currently an operational system
    in the Navy, Defense Readiness Reporting System-Navy, which is based on
    the contribution of installations to the achievement of mission
    essential tasks. To better manage infrastructure investments, the
    Department continues to develop models and metrics to predict funding
    needs. The Facilities Program Requirements Suite, a web-based suite of
    real property inventory data models and fact sheets, continues to be
    refined and further expanded to more accurately determine requirements,
    predict funding needs, and better manage infrastructure investments.
        Sustainment.--Facilities sustainment provides funds for maintenance
    and major repairs or replacement of facility components that are
    expected to occur periodically throughout the life cycle. Sustainment
    prevents deterioration, maintains safety, and preserves performance
    over the life of a facility. To forecast funding requirements, DOD
    developed the Facilities Sustainment Model using standard benchmarks
    for sustainment unit costs by facility type (such as cost per square
    foot of barracks) drawn from the private and public sectors. This model
    has been used to develop the Service budgets since fiscal year 2002 and
    for several Defense Agencies since fiscal year 2004. Full funding of
    facilities sustainment has been and continues to be the foundation and
    first element of the Department's long-term facilities strategy and
    goals. In fiscal year 2007, the Department-wide sustainment was
    budgeted at 90 percent. In balancing risk across the Department's
    program, the fiscal year 2008 budget request reflects a slight decrease
    in the department-wide sustainment funding rate to 88 percent, although
    the total amount of funds requested for the program represent an
    increase of $466 million. The Department-wide long term goal remains
    full funding for sustainment to optimize the investment in our
    facilities and ensure their readiness.

                    SUSTAINMENT AND RECAPITALIZATION REQUEST
                   [President's budget in million of dollars]
    ------------------------------------------------------------------------
                                                Fiscal year     Fiscal year
                                               2007 request    2008 request
    ------------------------------------------------------------------------
    Sustainment (O&M-like) \1\..............           6,267           6,733
    Restoration and Modernization (O&M-like              992           1,353
     plus) \1\..............................
    Restoration and Modernization (MilCon)..           6,093           6,736
                                             -------------------------------
          TOTAL SRM.........................          13,352          14,822
    ------------------------------------------------------------------------
    \1\ Includes O&M as well as related military personnel, host nation, and
      working capital funds and other appropriations such as RDT&E

        Recapitalization.--Recapitalization includes restoration and
    modernization, provides resources for improving facilities, and is the
    second element of our facilities strategy. Recapitalization is funded
    primarily with either operations and maintenance or military
    construction appropriations. Restoration includes repair and
    replacement work to restore facilities damaged by inadequate
    sustainment, excessive age, natural disaster, fire, accident, or other
    causes. Modernization includes alteration of facilities solely to
    implement new or higher standards, to accommodate new functions, or to
    replace building components that typically last more than 50 years.
        The current DOD goal remains a recapitalization rate of 67 years.
    In fiscal year 2001, the Department's recapitalization rate was 192
    years. This budget request supports a recapitalization rate of 67
    years, an improvement over last year's budgeted rate of 72 years. The
    improvement in the rate is largely due to investments associated with
    BRAC construction investments and the Global Defense Posture
    realignment. Currently, DOD is in the process of developing and
    fielding a new recapitalization model for assessing the replacement
    cycle that will improve upon the existing recapitalization metric
    through the inclusion of depreciation schedules and other benchmark
    improvements that are derived from private and public sector standards.
        The Department remains committed to maintaining a rate of
    investment in facilities recapitalization that will improve, modernize,
    and restore existing facilities while at the same time replacing
    facilities in support of efforts to reshape and realign infrastructure.
    However, as the Department consolidates and reshapes its
    infrastructure, it will also experience localized growth in the size of
    the facilities footprint. This is necessary to provide the quality and
    quantity of facilities and assets necessary to support military
    personnel and their families. These efforts include facilities to
    support Army Transformation, Navy and Marine Corps barracks, and
    facilities for the beddown of new weapons systems such as Predator, F-
    22, and the Joint Strike Fighter.
        On January 24, 2006, DOD joined 16 other Federal agencies in
    signing a Memorandum of Understanding (MOU) for Federal Leadership in
    High Performance and Sustainable Buildings. The MOU indicates a
    commitment to incorporate sustainable design principles through a
    comprehensive approach to infrastructure management.
        The Department continues to emphasize the elimination of excess and
    obsolete facilities, and to encourage the aggressive pursuit of
    demolition to avoid unnecessary facilities sustainment and support
    costs. This effort to eliminate facilities that are no longer needed is
    separate and distinct from the BRAC process. With approximately 48
    million square feet of infrastructure identified for elimination, the
    military Services and selected Defense Agencies are in the process of
    refining their annual targets for disposal and consolidation of excess
    capacity.
        The Department established a common definition for Facilities
    Operation, formerly referred to as ``Real Property Services.'' The
    budget request includes $7.15 billion for this program, to address
    utilities, leases, custodial services, grounds maintenance, and other
    related functions. The Facilities Operation Model was fielded to
    develop standard requirements, and the Department is continuing to
    refine the model with particular emphasis on Fire and Emergency
    Services, and Real Property and Engineering Management.
        Installations Support.--The Defense Installations Strategic Plan
    articulates the need to define common standards and performance metrics
    for managing installation support, and the Department has made
    considerable progress in this area. DOD's objective is to introduce
    capabilities-based programming and budgeting within a framework for the
    Common Delivery of Installations Support which will link installation
    support capabilities to warfighter requirements. The Common Delivery of
    Installations Support also will play a large role in implementation of
    Joint Basing required by BRAC 2005. Guidance for implementing Joint
    Basing was developed in coordination with the Military Components and
    is currently in the review process.
        During the past year, DOD made significant progress toward
    developing Common Output Level Standards for all other functions of
    Installations Support to include Environment, Family Housing Operations
    and Services (formerly known as Base Operations Support). This effort
    is yielding common definitions and tiered performance output levels.
    These metrics are currently being further refined and a costing model
    initiative will soon be underway.
        The military construction appropriation is a significant source of
    facilities investment funding. The fiscal year 2008 Defense Military
    Construction and Family Housing Appropriation request totals $21.2
    billion. This funding will enable the Department to rapidly respond to
    warfighter requirements, enhance mission readiness, and provide for its
    people. This is done, in part, by restoring and modernizing enduring
    facilities, acquiring new facilities where needed, and eliminating
    those that are excess or obsolete.

         COMPARISON OF MILITARY CONSTRUCTION AND FAMILY HOUSING REQUESTS
          [President's Budget in millions of dollars--Budget Authority]
    ------------------------------------------------------------------------
                                              Fiscal year   Fiscal year 2008
                                             2007 request        request
    ------------------------------------------------------------------------
    Military Construction.................           6,390           9,480
    NATO Security Investment Program......             221             201
    Base Realignment and Closure IV.......             191             220
    Base Realignment and Closure 2005.....           5,626           8,174
    Family Housing Construction/                     2,092           1,080
     Improvements.........................
    Family Housing Operations &                      1,989           1,851
     Maintenance..........................
    Chemical Demilitarization.............             131              86
    Family Housing Improvement Fund.......               3               0.5
    Energy Conservation Investment Program              55              70
                                           ---------------------------------
          TOTAL...........................          16,698          21,165
    ------------------------------------------------------------------------

    Improving Quality of Life
        A principal priority of the Department is to support military
    personnel and their families and improve their quality of life by
    ensuring access to suitable, affordable housing. Service Members are
    engaged in the front lines of protecting our national security and they
    deserve the best possible living and working conditions. Sustaining the
    quality of life of our people is crucial to recruitment, retention,
    readiness and morale. At the outset of this Administration, the
    President and the Department's leadership identified revitalizing
    housing, largely through privatization, as a central priority for the
    Department. An aggressive target of 2007 was established to meet that
    goal. By late fiscal year 2007, DOD will effectively complete all
    procedures to eliminate nearly all inadequate domestic family housing.
    More than 90 percent of our inadequate housing will be turned over to
    the private sector for replacement or renovation and the remainder will
    be in the final stages of solicitation for award. As of February 2007,
    over 110,000 housing units determined to be inadequate have been
    privatized. Inadequate units are considered to be eliminated when they
    are conveyed to the private owner, who then revitalizes the housing.
        The Department continues to rely on three pillars to improve
    housing thereby, enhancing the quality of life for our Service members:
    (1) Provide the basic allowance for housing (BAH) at zero-out-of-pocket
    expense for the average Service member living in private sector housing
    (achieved in 2005, now maintaining); (2) Privatization of family
    housing, where feasible; and, (3) Military Construction funding for all
    other domestic and all overseas locations.
        The Department relies on a ``community first'' (private sector)
    approach to provide quality housing to its members and their families.
    Only when the private market demonstrates that it cannot supply
    sufficient levels of quality, affordable housing does the Department
    provide housing to our military families; first through the use of
    privatization, and where that is not feasible through government-owned
    and leased housing. For example, in the absence of privatization
    authorities overseas, we address our housing needs there through
    military construction and leasing.
        To ensure the Department is making the best investment decisions
    when determining the appropriate level of housing, the government
    provides a single and consistent methodology for calculating its
    housing requirement. This methodology was introduced in January 2003
    and is being utilized extensively by the Services. Currently, 75
    percent of military families living in the Continental United States
    (CONUS), Alaska, and Hawaii receive Basic Allowance for Housing (BAH)
    (with 60 percent living in the local community, and 15 percent in
    privatized housing). An additional 22 percent of our military families
    are provided government-owned housing and 3 percent live in leased
    housing. DOD projects that by the end of fiscal year 2008 over 90
    percent of military families will be receiving BAH, thus allowing
    families the opportunity to make housing choices according to their
    individual preferences.
        As of February 2007, the Department has awarded 71 privatization
    projects, which includes over 147,000 total military family housing
    units privatized. The private sector's cumulative contribution to the
    71 awarded deals awarded thus far totals over $20 billion (or 90
    percent) of total project development costs. The Services have
    contributed $1.5 billion in development costs primarily through equity
    investment or government direct loans.
        For fiscal year 2008, the Department requests $2.93 billion, a
    decrease of $1.2 billion from the fiscal year 2007 President's Budget
    request. The decrease reflects cost savings realized by the Department
    achieving its respective goal to eliminate inadequate housing and to
    privatize the inventory on a cost-effective basis. The Department's
    privatization plans in the fiscal year 2008 budget will ultimately
    result in the privatization of over 90 percent of its domestic family
    housing inventory, or roughly 194,000 units privatized by the end of
    fiscal year 2008.
      --Fiscal year 2008 funding provides for the continuation of the
            privatization program to reduce costs to the government and
            provide quality housing to service members and their families.
            The fiscal year 2008 request will privatize 4,261 family
            housing.
      --Fiscal year 2008 request provides $353 million for the Army and
            Navy ``Grow the Force'' initiative, which will provide housing
            support for end-strength increases.
      --$1.9 billion to operate and maintain approximately 80,000
            government-owned family housing units, and lease 38,000 units
            worldwide.
        In fiscal year 2008 and beyond, DOD will monitor the military
    housing privatization projects over the next 40+ years and conduct
    oversight of their financial performance. DOD will protect the
    government's interest while acknowledging that it is the responsibility
    of the private sector to take the lead on operating these projects.
    Current project highlights include:
      --The majority of the awarded privatization projects initial
            development plans for renovation/construction are on schedule.
      --Thirteen projects have completed their construction/renovation
            schedules
      --The privatization projects are achieving 90 percent occupancy
            across all projects.
      --There have been no defaults for the awarded projects.
      --Awarded projects are receiving high tenant satisfaction ratings.
        Finally, in fiscal year 2008 DOD will continue to push expansion of
    the privatization authorities for unaccompanied housing and lodging. In
    fiscal year 2007, the Navy executed the first Unaccompanied Housing
    pilot project in San Diego in December 2006, with two additional
    projects planned--Hampton Roads, Virginia (award April 2007), and
    Mayport, Florida (future date TBD). The Army anticipates award of the
    first Lodging Privatization project in September 2007.
    Competitive Sourcing
        The Department of Defense continues to strongly support the
    President's Management Agenda Initiative for Competitive Sourcing.
    Introducing private sector competition into commercial functions
    performed by the Department improves business efficiency and reduces
    cost to the taxpayer. Public/private competitions using the procedures
    of OMB Circular A-76 have demonstrated substantial savings whether the
    in-house or private sector wins the competition. During fiscal years
    2000 through 2006, the Department completed 870 such competitions
    encompassing about 91,000 positions. These competitions will have
    resulted in over $9 billion in savings (cost avoidance) over the life
    of the resulting performance periods, normally about 5 years. The
    Department has an additional 7,969 positions currently undergoing
    competitions, plans to compete 10,000 positions in fiscal year 2007,
    and expects to maintain the same level of competitions in fiscal year
    2008.
        These new competitions use the procedures of OMB Circular A-76
    which evaluate public and private proposals concurrently using the
    Federal Acquisition Regulations. As the Department's designated
    Competitive Sourcing Official (CSO), my office is working continuously
    to improve the competition process. For example, competitions that used
    to take up to 48 months to complete can now be completed in as little
    as 12 months. Such improvements will reduce stress on our workforce and
    will make savings available earlier to reinvest in the Department's
    operation.
    Energy Management
        The Department continues to aggressively attempt to reduce its
    energy consumption and associated costs, while improving utility system
    reliability and safety. To that end, DOD developed a comprehensive
    energy strategy and issued updated policy guidance incorporating the
    provisions and goals of the Energy Policy Act (EPAct) of 2005 and is
    implementing the recent enactment of the new chapter 173 of title 10,
    U.S.C. The Department is also in the early stages of implementation of
    Executive Order 13423, recently issued by the President to strengthen
    Federal environmental, energy, and transportation management. This
    strategy will continue to optimize utility management by conserving
    energy and water usage, improving energy flexibility by taking
    advantage of restructured energy commodity markets when opportunities
    present themselves.
        DOD, as the largest single energy consumer in the Nation, consumed
    $3.5 billion of facility energy in fiscal year 2006. Though overall
    cost continues to increase due to commodity costs, consumption has
    decreased from the 2003 baseline. Our program includes investments in
    cost-effective renewable energy sources or energy efficient
    construction designs, and aggregating bargaining power among regions
    and the Services to achieve more effective buying power.
        The Department's efforts to conserve energy are paying off. In
    fiscal year 2006, military installations reduced consumption by 5.5
    percent, exceeding the energy conservation goal of 2 percent. Energy
    conservation projects accomplished through Energy Savings Performance
    Contracts (ESPC) typically account for more than half of all facility
    energy savings. Lapse of ESPC authority in 2004 negatively affected the
    Department's ability to reach the 30 percent reduction goal under
    Executive Order 13123. However, with ESPC authority reauthorized in the
    fiscal year 2005 National Defense Authorization Act and extended for an
    additional 10 years in the Energy Policy Act of 2005, DOD has launched
    an aggressive awareness campaign and is well on its way to meeting the
    new goals established in the Energy Policy Act of 2005. Use of ESPC for
    2006 increased 316 percent, reaching an award value over $586 million.
        DOD has significantly increased its focus on purchasing renewable
    energy and developing resources on military installations. Renewable
    energy projects are consistently more expensive than similar
    conventional energy sources, resulting in limited opportunities but
    that are life cycle cost effective. The Department has increased the
    use of Energy Conservation Investment Program (ECIP) funds for
    renewable energy projects from $5 million in fiscal year 2003 to $17
    million planned in fiscal year 2007, and to $24 million budgeted for
    fiscal year 2008 out of a $70 million ECIP request. The fiscal year
    2007 program for ECIP also contains $2.6 million in hydrogen fuel cell
    projects. The Department easily exceeded the EPAct 2005 renewable
    energy goal of 2.5 percent in fiscal year 2006. The Department's total
    renewable energy purchases and generation accounted for 9.5 percent of
    all electricity use. Also, while EPAct 2005 did not articulate a
    specific water reduction goal, the new Executive Order 13423 does have
    a goal of a 2 percent water reduction per year. The Department has
    reduced water usage by an impressive 29.6 percent from the fiscal year
    2003 baseline year.
    Environmental Management
        Managing Cleanup.--The Department is committed to cleaning up
    property that, as the result of past military activities, is
    contaminated with hazardous substances and military munitions. DOD has
    achieved ``remedy in place'' or ``restoration complete'' status at 85
    percent (16,833 out of 19,796) of its environmental restoration sites
    on active installations. As of the end of fiscal year 2006, 85 percent
    (4,275 out of 5,010) of the environmental restoration sites at BRAC
    locations closed or realigned by the first four rounds of BRAC or
    closed in BRAC 2005 have a cleanup remedy constructed and in place and
    operating successfully, or have had all necessary cleanup actions
    completed in accordance with Comprehensive Environmental Response,
    Compensation, and Liability Act of 1980 (CERCLA) standards. Hazardous
    substance cleanup at Formerly Used Defense Sites (FUDS) has achieved
    ``remedy in place'' or ``restoration complete'' status at 53 percent
    (2,487 out of the 4,654) of known sites.
        As of the end of fiscal year 2006, DOD fulfilled its cleanup
    obligations at over 122 of the approximately 373 identified Military
    Munitions Response Plan (MMRP) sites at BRAC installations, and has
    cleanup actions underway at 251 sites. A similar situation can be found
    at Formerly Used Defense Sites (FUDS), where 29 percent of the MMRP
    sites identified have had all cleanup actions completed. Over 473 of
    the 1,633 FUDS with currently identified Unexploded Ordnance (UXO)
    contamination have been addressed, and another 1,160 are undergoing
    cleanup actions or study.
        Environmental Management Systems.--DOD implemented environmental
    management systems (EMS) as required by Executive Order 13148 at all
    appropriate facilities. This transformation embeds environmental
    management as a systematic process, fully integrated with mission
    planning and sustainment and is essential for continued successful
    operations at home and abroad. Implementing EMS helps preserve range
    and operational capabilities by creating long-term, specific and
    measurable targets in comprehensive programs to sustain capability
    while maintaining healthy ecosystems. Benefits accrued to date are an
    increased awareness of environmental issues and how they can impact
    operations, increased communication and cooperation between
    departments, new initiatives to mitigate environmental impact and risk,
    and strengthened relationships with communities and regulators.
        Pollution Prevention.--Maintaining compliance with environmental
    laws is an integral part of sustaining DOD operations. From fiscal year
    2000 through fiscal year 2006 the Department reduced the number of new
    Federal and State enforcement actions received by 18 percent while the
    number of regulatory inspections increased by 6 percent during the same
    time period. In 2005, DOD installations reached a 95 percent compliance
    rate with wastewater treatment permits. For the 3.4 million customers
    served by DOD drinking water systems, in 2005, less than 7 percent of
    the population received notice that their water exceeded a drinking
    water standard (most ``exceedences'' were not immediate health concerns
    and both interim and long term solutions are either completed or
    underway). The Department continues to demonstrate a commitment to
    reduce solid and hazardous waste. From 2000 through 2005, the
    Department reduced hazardous waste over 15 percent by using various
    pollution prevention opportunities. In 2006, over 3.7 million tons of
    solid waste was diverted from landfills which avoided approximately
    $153 million in landfill costs. This 59 percent diversion rate exceeds
    the Department's diversion goal of 40 percent in 2005. Integrating a
    strong compliance program into installation environmental management
    systems will strengthen this program.
    Sustaining the Warfighter
        Our Nation's warfighters require the best training and the best
    equipment available. This means sustaining our vital range and
    installation infrastructure, both here and abroad, where we test
    equipment and conduct training. Development in the vicinity of DOD
    installations and ranges continues to challenge sustainability. The
    unintended consequences of this encroachment upon our ranges and
    installations are varied, and include such issues as more noise
    complaints from new neighbors; diminished usable airspace due to new
    structures or increased civil aviation; a compromised ability to test
    and train with the frequency needed in time of war; and a loss of
    habitat for endangered species.
        History and experience gained over decades demonstrate that proper
    training of U.S. troops will result in victory. Assured access to
    operational ranges is the only way to continue that training. In 2001
    the Department undertook the Readiness and Range Preservation
    Initiative (RRPI) to achieve a balance between national defense and
    environmental policies. As a result, DOD has successfully balanced the
    statutory requirements of the Migratory Bird Treaty Act, the Marine
    Mammal Protection Act, and the Endangered Species Act with our national
    defense mission requirements. However, the Department continues to seek
    legislative clarification under the Clean Air Act, the Comprehensive
    Environmental Response, Compensation, and Liability Act, and the
    Resource Conservation and Recovery Act.
        The Congress provided statutory authority to use Operations and
    Maintenance (O&M) funds to create buffers around our ranges and
    installations. Using this authority the Department established the
    Readiness and Environmental Protection Initiative, or REPI, and has
    worked with willing partners to cost-share land conservation solutions
    that benefit military readiness and preserve natural habitat. In fiscal
    year 2005, REPI leveraged $12.5 million of O&M funding to secure $48.2
    million worth of buffer land and easements, encompassing 10,238 acres
    at seven installations. The 2006 and 2007 projects will continue to
    leverage REPI funds against partner contributions. REPI and partner
    funding has allowed DOD to protect the Navy's one-of-a-kind La Posta
    Mountain Warfare Training Facility in California; to keep training
    areas open at Marine Corps Base Camp Lejeune, North Carolina; and
    buffer live-fire training ranges at Fort Carson, Colorado. Overall in
    fiscal year 2006, REPI initiated 23 projects in 17 States, and for
    fiscal year 2007 an additional 32 projects have been identified for
    funding. The Department has requested $30 million dollars in the fiscal
    year 2008 budget to support REPI.
        Partnerships are essential to success and the Department continues
    to work with State governments and other Federal agencies in the
    Southeast Regional Partnership for Planning and Sustainability--or
    SERPPAS. In 2006, the State of Alabama joined North Carolina, Florida,
    Georgia, and South Carolina as SERPPAS State members. Through this
    process, the partners hope to promote better planning related to
    growth, preservation of open space and protection of the region's
    military installations. The regional approach to facilitate dialogue
    and to address issues of mutual concern is proving successful, and in
    2006, the Department took the initial steps to establish a regional
    partnership in the Western States.
        In 2006, DOD worked closely with other Federal agencies to sustain
    military readiness. At Fort Riley, Kansas, the Department of
    Agriculture's Natural Resource Conservation Service and the Department
    of Defense signed a Memorandum of Understanding (MoU) to work together
    on conservation efforts that sustain agricultural productivity on
    private lands that will buffer military lands. On energy issues, the
    Department of Defense is working with other Federal agencies to ensure
    that wind farm projects and energy transmission corridors are
    compatible with military readiness activities. The Department is also
    working with the Department of Homeland Security to ensure that our
    military readiness activities and infrastructure in border regions are
    not impacted by new security measures. Outreach to non-Federal and non-
    governmental organizations continues to be a significant part of the
    Department's sustainability program, and today we are working with
    State, county, and local governments, Indian tribal, and environmental
    groups on issues of mutual concern to seek win-win solutions. Overseas,
    DOD is developing mission sustainment procedures to work with our host
    nations Global Defense Posture partners. To sustain today's
    warfighters, and our Nation's future warfighters, the Department of
    Defense will continue its engagement and partnering efforts.
    Integrating Business Enterprises
        The Department as a whole has made significant strides in breaking
    down the cultural and information technology (IT) systems barriers that
    hinder business agility. There is an increased need for tighter
    alignment of end-to-end business functions, better management
    visibility into operations, and a definitive focus on execution
    excellence. The current climate of making measurable business
    improvements every 6 months, tied to releases of the DOD Business
    Enterprise Transition Plan, has succeeded in driving progress. Changing
    the cultural mindset has meant redefining Defense business in terms of
    functions performed and the customers served, rather than who performs
    them. Breaking down IT systems barriers has meant, among other things,
    using common standards to integrate the business data owned by the
    Components.
        The Real Property and Installation Lifecycle Management (RP&ILM)
    Core Business Mission area has had tremendous success with business
    transformation because it has been driven by the top leadership and
    supported across all Components and all levels. Over the past few
    years, RP&ILM has developed enterprise wide capabilities for real
    property accountability and visibility, environmental liability
    accountability and valuation, and hazardous materials operational
    controls. These capabilities are founded on requirements for standard
    business processes, data elements, and business rules. The Military
    Departments and Agencies, in coordination with the DUSD (I&E), have
    begun implementation efforts for these capabilities.
        I&E community leadership actively oversees IT system investments to
    ensure that IT systems are being modernized to support the new business
    enterprise capabilities. I&E has become a leader in implementing DOD's
    net-centric vision and has already stood up a site unique identifier
    registry, that will allow all IT systems (and communities) with a need
    for location information to easily get authoritative source
    information. All of this foundational and transformational work has
    been achieved because of the established RP&ILM governance processes.
    These governance processes support federated management because the
    business owners themselves drive business modernization and the
    associated support IT. This work has also been completely integrated
    into the activities of the Business Transformation Agency, ensuring
    that RP&ILM capabilities support the broader DOD enterprise business
    transformation efforts.
        During the past year, the Department expanded its efforts beyond
    defining transformation requirements to actual implementation of
    business transformation. Each Military Service has either completed and
    is implementing, or is developing implementation plans, to deliver
    these reengineered capabilities. Some of our recent successes include:
      --Ability to assign unique identifiers to all DOD's sites. For the
            first time in our history, the warfighter and business mission
            areas will have the ability to obtain access to real property
            site information at the push-of-a-button, with assurance that
            the data is authoritative and consistent from Service to
            Service.
      --Development of Real Property Inventory Requirements (or RPIR)
            compliance assessment tools and procedures. These tools assure
            that the Services will implement and maintain consistent,
            accurate, and complete information on our vast and
            geographically diverse real property asset portfolio.
      --Update of antiquated policies. Policy change promotes behavioral
            change. Building on this best practice, DOD is in the process
            of updating policies to include modernized processes for
            construction in progress, real property acceptance, and
            workplace hazard communication.
      --Completion of standardized requirements for the management of
            regulatory and chemical hazardous materials information. This
            success allows the Defense Logistics Agency to serve the entire
            Department with standardized regulatory information on
            hazardous materials from a central repository of authoritative
            data. As the Services use this information in their business
            processes, DOD will realize cost savings, and more importantly,
            improve operational control of mission activities involving
            hazardous materials.
      --The funding of a pilot to utilize geospatial information systems
            (GIS) and RPIR processes to determine official DOD boundaries
            for land parcels. The pilot also supports mapping any known
            environmental liabilities as outlined in the new Environmental
            Liabilities requirements. This pilot will enable DOD to reap
            many benefits as accurate geospatial information will be easily
            available and no longer isolated in the real property
            community.
      --The development of Spatial Data Standards for Facilities,
            Infrastructure, and Environment (SDSFIE). Precision and speed
            are no longer unique qualifiers of the operational community
            alone. DOD is applying these drivers to core business mission
            areas as well. Fundamental to total asset management is knowing
            exactly where an asset is geographically located. The SDSFIE
            will ensure a level of accuracy and consistency never before
            seen as the Department geospatially enables its business areas.
                                   conclusion
        In closing, Mr. Chairman, I sincerely thank you for this
    opportunity to highlight the Department's successes and outline its
    plans for the future. I appreciate your continued support of our
    installations and environment portfolio, and I look forward to working
    with you as we transform these plans into actions.

             REGULAR BUDGET REQUEST VS. SUPPLEMENTAL BUDGET REQUEST

        Senator Reed. Thank you very much, Mr. Grone. Let's take 7-
    minute rounds with the anticipation that we will do at least
    two rounds with this panel and I will begin.
        Secretary Jonas, the bundled three separate military budget
    requests together this year, the fiscal year 2008 regular
    request plus the emergency supplemental request for fiscal year
    2007/2008 and there appears to be a number of overlaps in these
    requests. There are CENTCOM projects in both the regular and
    supplemental requests. There is also a large amount of funding
    for the Army and the Marine Corp global force and related
    initiatives in both the regular and supplemental requests. How
    did OSD determine which projects qualify to the regular budget
    and which would deem to be emergencies?
        Ms. Jonas. As a general matter, Mr. Chairman, we try to
    make sure we are including funds in the supplemental that are
    urgent. We work with CENTCOM and with the military services to
    determine, specifically on supplementals, things that are
    operationally important, have a force protection component, or
    a safety concern. That is how we generally try to decide what
    is appropriate for a supplemental.
        With the respect to the growth of force provisions, the
    growing force and accelerating the additional brigade combat
    teams and the regimental combat team for the Marines is urgent
    for the rotational aspect of it. As you know, the combat
    commanders are requesting additional forces and so it was
    believed that we needed to get that done quickly. So, as a
    general matter, that's how we try to work that, sir.

                    GLOBAL WAR ON TERROR AND GROW THE FORCE

        Senator Reed. OSD included military construction projects
    for both the global war on terror and the growth force
    initiative in the fiscal year 2008 regular budget. If that's
    the case, why do we need a fiscal year 2008 global war on
    terror emergency supplemental? Why couldn't normal projects be
    included in the regular 2008 budget?
        Ms. Jonas. Sir, the decision as to whether or not the
    request for the global war on terror expenses for 2008 would be
    designated emergency or non emergency was one that was made by
    the Office of Management and Budget.
        What we tried to do is provide the best estimate that we
    could and package it so that Congress could consider it well
    ahead of time. We don't know whether a supplemental will be
    required for fiscal year 2008. As the Deputy Secretary has said
    before, we know this number is an estimate and it's the best we
    could do at that time. It may have to be adjusted upward or
    downward and we would obviously have to work with the Congress
    to make those adjustments, sir.
        Senator Reed. So that you can't rule out a request for
    additional emergency supplemental funding for military
    construction projects in Iraq particularly after this
    supplemental?
        Ms. Jonas. As you know, Mr. Chairman, the conversation that
    goes on with combat commanders on request for forces and needs
    is a continual one. We try to work with them, so I don't know
    at this time. I can't tell you one way or the other whether or
    not they would require that and obviously there is a larger
    national debate that is going on that will affect it, sir.

                        WALTER REED ARMY MEDICAL CENTER

        Senator Reed. Mr. Grone, we are all aware of the tremendous
    firestorm that the Walter Reed situation has generated here and
    across the country. Last week, the House Appropriations
    Committee added that amendment to the supplemental that would
    prohibit any appropriated funds for the use to close Walter
    Reed. If that provision were to become law, what impact would
    it have on the BRAC 2005 process? Would DOD proceed with
    building Walter Reed replacement facilities at Bethesda, Fort
    Belvoir, etc etera, or would this language completely overturn
    the closing of Walter Reed?
        Mr. Grone. Mr. Chairman, certainly as I understand the
    intent of what's contained in the House bill is to prevent us
    from realigning Walter Reed and closing Walter Reed,
    repositioning that mission to Bethesda pursuant was to the
    recommendation of the Secretary ratified by the Commission and
    ultimately supported by the President and the Congress. We
    believe it would have a very significant effect, not just
    conduct of the round overall, but certainly on the immediate
    question of the delivery of military medical care in this
    entire region.
        The recommendation that was developed was carefully drawn
    up by the medical community and carefully assessed through
    multiple reviews. The issue there is maximizing the military
    value of the assets we have, the critical assets we have with
    the Services we need to provide to military personnel, their
    families, retirees, and certainly to our wounded warriors.
        Excess capacity, poor facilitation exist throughout this
    region. Currently we have four inpatient facilities: Walter
    Reed, Andrews, Bethesda, and Fort Belvoir. The notion of
    looking at the entire military medicine on a comprehensive
    basis rather than looking solely at single hospitals was one of
    the great innovations of this prior round and the ability of
    the Joint Cross Service group to do that. Walter Reed is an
    inpatient facility opened in 1977 with the current building,
    Building 2, and has not had any renovations since. The notion
    of combining that mission on a joint basis at Bethesda, where
    you also have synergy with the National Institutes of Health
    and with the Uniformed Services Health Science University was a
    critical part of this.
        We would also lose, if we were compelled to keep Walter
    Reed in its current condition open and operating, we would lose
    $170 million or so in annual recurring savings that would
    accrue from the implementation of the entirety of the
    recommendations affecting military medicine in this region. To
    then go forward if that was open and have to build out Fort
    Belvoir would exacerbate the capacity question, not resolve it,
    the result of which would likely be that we would be
    inefficiently using our resources over time and not effectively
    delivering medical care to our personnel.
        Senator Reed. One of the things that is obvious is that
    great attention has to be paid to this transition.
        Mr. Grone. Yes, sir.
        Senator Reed. If it is going to go forward.
        Mr. Grone. Yes, sir.
        Senator Reed. Which would imply, perhaps, acceleration of
    construction at Bethesda and Fort Belvoir and other facilities,
    attention to outpatient facilities, which may not have been
    included initially in the concept and consideration, frankly,
    for putting more resources into this whole plan, if it goes
    forward. Is that something that you are amenable to?
        Mr. Grone. Sir, we certainly are looking at all of those
    options, and currently the recommendation overall, all of the
    activities in this region--Walter Reed, Fort Belvoir, the other
    issues that are being worked, the many projects that go into a
    $1.6 billion program. Certainly, the question of acceleration
    is an important one. We are looking at that, and there have
    been many useful suggestions made by members of this
    Subcommittee and others for us to look at that.
        We continue to take lessons learned from the clinical work
    that's being done on a daily basis to support those brave
    Americans who are currently here as wounded warriors that we're
    taking care of. So we are trying to embed all of those lessons
    into the process to have the world-class facility of Bethesda
    that we require. So, yes, we are amenable.
        Senator Reed. Thank you very much, Senator Hutchison.
        Senator Hutchison. Thank you, Mr. Chairman. I am glad that
    you raised the point so effectively about what the impact would
    be of the House language because I think it is very important
    that you have a plan for acceleration rather than overturn what
    was hours, days, weeks, months of real in-depth coordination
    that BRAC took to make the decision that it did. I think it
    would be very unwise and I hope Congress will resist that. I
    think Walter Reed at Bethesda is the right joint operational
    strategy that we should continue to implement.
        I would also say that an appropriations bill only lasts for
    1 year. So, it is really only 1 year. It wouldn't have the
    permanent effect that BRAC does and yet it would delay further
    the implementation of BRAC and cause all of the wrong things to
    happen. So I hope you will have a plan that will accelerate it
    and come back to the committee at some point in this
    appropriations year to show us that.
        Secondly, the other policy issue is the jointness. I think
    that all of the medical training facilities research being much
    more joint in the Department of Defense is going to mean we
    have better state of the art facilities for all of our military
    personnel and I think that would be undercut if we just
    precipitously in an appropriations bill changed the BRAC.

                               GUARD AND RESERVE

        Let me just move to the Guard and Reserve issue. Obviously,
    you are putting the emphasis where I think it is a correct
    emphasis and I appreciate that and I applaud you for it. The
    only area that I think we have to watch is that we know Guard
    and Reserve are being very heavily utilized and we want their
    training facilities to be good enough that they have what they
    need to stay up to speed, state of the art, to the extent that
    we can and that means their facilities have to be upgraded as
    well. So, how are you addressing that with this year's slight
    diminishing of the budget?
        Mr. Grone. Well, Senator Hutchison, I think it is important
    that we can get the exact figure for the record, but it is
    important that we take a look at what was remarked earlier of
    the totality of what we are doing for the Guard and Reserve
    because it is important to look not just at what's requested in
    what I would call the regular program, the regular military
    construction programs, but also the important work that is
    being done in the context of the BRAC account itself.
        Total force requirements are critically important, and the
    notion of simply considering the Active on one side and the
    Guard and Reserve on the other is not the way we currently
    think of the use of forces. It is not the way we fight. The
    notion of having a total force package and total force
    integration is critically important and we recognize that. That
    is why what we did as a Department we did inside the BRAC
    account itself.
        So each year that we have brought a BRAC request forward,
    there are pieces that affect not just the Active side of the
    house, but the total forces represented in that account. We
    think that's the platform for transformation initiatives on a
    going-forward basis. And so I think when we look at--and
    certainly there are always going to be folks who think there
    should be more funding for given initiatives. But I think when
    one looks at the regular military construction program and what
    we're going through, BRAC, I think the record of the last
    couple of years will demonstrate an increasing emphasis on
    financing for Guard and Reserve requirements that we even had
    3, 4 or 5 years ago.
        So, I think it is a very positive development. It's a very
    important development, and we want to continue to refine our
    requirements so that we have dollars on the most important
    items, but I can assure you we do take the total force piece of
    this very seriously.
        Senator Hutchison. Okay, well, I appreciate that. I know
    you have to make choices and I don't want to say that you have
    made the wrong choices because I think you've made the right
    choices. I do think we need to always reassess just like we are
    now, looking at the medical facilities of the Armed Services in
    the wake of the Walter Reed situation. We need to also make
    sure that we don't have woefully inadequate Guard and Reserve
    facilities for those who are being called up especially. So, I
    appreciate what you have done.
        Mr. Grone. I absolutely concur.
        Senator Hutchison. Thank you, Mr. Chairman.
        Senator Reed. Thank you, Senator Hutchison.

                             PINON CANYON, COLORADO

        Senator Allard. Thank you, Mr. Chairman and thank you for
    this hearing. Secretary Grone, thank you. There has been a
    recent expansion proposal for Fort Carson. The Colorado Springs
    community is excited about it and as a result of that have
    about 10,000 or so new soldiers coming into Fort Carson.
        It's anticipated that there is a need to expand the
    training area, which is referred to as Pinon Canyon, which is
    out of the Colorado Springs community. It's a ways away and
    fairly isolated but there are some very small communities down
    there and they're real concerned about their tax base and
    they're concerned about how it is going to affect their
    communities and ranches.
        So I was glad to hear when the Secretary of Defense granted
    a waiver of the land acquisition moratorium placed on the Armed
    Services for the possible expansion of Pinon Canyon. Now prior
    to the waiver approval, the Army's hands, particularly those at
    Fort Carson, have been tied because they could not communicate.
    So, now that there is an opportunity for them to communicate
    and I understand the difficult position that they were in, and
    the Army in general is in, is on this issue.
        I believe the time is right for the Army and Department of
    Defense to get out in front on the issue and combat some of the
    misconceptions, I think, about the proposal that is floating
    around, particularly down in the southern part of the State.
        Now, many of these questions I'll ask today continue to be
    raised by the local communities down in southeastern Colorado
    and I am trying to provide a forum for them to be heard. It is
    my understanding that your superior, Under Secretary Ken Krieg,
    signed off on the Army's proposal. Have you seen the Army's
    waiver request?
        Mr. Grone. Yes sir, I forwarded it with recommendation for
    approval to Mr. Krieg.
        Senator Allard. Would you care to comment on it?
        Mr. Grone. We think that the waiver of the moratorium
    obviously was the right and proper decision. The Army brought
    forward a package requesting a waiver to the land acquisition
    moratorium for precisely the reasons you detailed. We don't yet
    know precisely what the size and scope, ultimately, of the
    expansion of Pinon Canyon maneuver site might be. That is part
    of the scoping process that we will need to go through. The
    important part about the approval of the waiver, as you noted,
    is that it allows the Army to begin the planning process,
    public scoping and more open engagement in dialogue with local
    ranchers, the communities, local mayors and the like. That's
    critically important and that process has formally begun. The
    formal NEPA process will begin this summer and fall.
        I met recently within the last few weeks with a couple of
    members of the Colorado House from that region of the State.
    They had the opportunity to give some of their perspectives on
    it as well.
        This is a very important potential expansion, but we want
    to do it carefully. We want to do it only calibrated to the
    requirements of the Army and we want to do it with enormous
    sensitivity to the needs of the local communities as well. So
    the dialogue in that process is very, very important to us.
        Senator Allard. Now, according to my information they've
    targeted about 1 million acres of what they are looking at and
    they are thinking of somewhere around 418,000 acres. Have any
    of those kinds of figures been made available to the public?
        Mr. Grone. I think it is fair to say that I believe the
    notion of the 418,000 acres of potential expansion has been
    made available and that will be part of what we go through the
    scoping process on.
        As I say, Senator, I don't know if at the end of the day,
    it will be 418,000 or some other smaller number. That will
    depend on a number of factors that we really won't be able to
    determine until we go through this extensive consultation and
    environmental impact process.
        Senator Allard. Is there any thought about a permanent
    party station at the site? I guess this brings up some
    questions about infrastructure to that particular area, which
    are pretty limited right now.
        Mr. Grone. It would, but Senator, if I might, I frankly
    would rather defer to the Army to answer the operational or
    stationing questions.
        Senator Allard. Good. From the very beginning, the Army has
    insisted they have identified willing sellers in the area,
    which is how this entire process started. Many in the local
    community there have stated matter of factly that there are no
    willing sellers in their proposal to the Secretary of Defense.
    Has the Army identified potential willing sellers?
        Mr. Grone. They did not identify specific willing sellers.
        Senator Allard. But they did indicate that there were
    willing sellers in general?
        Mr. Grone. The Army believes that there are willing sellers
    in the region and it is possible that we may have an ability
    for arrangements that are something short of fee-simple
    acquisition--licensing, leases, easements. I mean, all of those
    items will have to be a part of that scoping process. I won't
    say that there won't be a fee-simple acquisition because I
    think there likely will be and I do think that there will be
    willing sellers with which the Army will work.
        Senator Allard. Now, with their studies, are there going to
    be some economic evaluations for the area positive or negative
    or are we going to just go into the EIS, environmental impact
    statement and that's it, with no economic considerations?
        Mr. Grone. I think we would be prepared to work with you
    and others on assessing the implications of that. It might be
    appropriate. I would like to go back and take a look at it. The
    Office of Economic Adjustment might be able to help in this
    way.
        Senator Allard. I would like to look and see if we can have
    positive economic figures or negative economic figures for that
    area. I think that would be helpful.
        Mr. Grone. That is a reasonable request, Senator.
        Senator Allard. Now, you could be looking at some public
    land there too. There are some public lands in the area.
        Mr. Grone. There are.
        Senator Allard. I guess they would require, it is my
    understanding, they require an EIS, an environmental impact
    statement, as well as a private lands, is that correct?
        Mr. Grone. Yes.
        Senator Allard. If you do acquire those public lands, what
    happens to those agreements for public grazing permits that
    have already been issued?
        Mr. Grone. In the absence of specifics, I would prefer not
    to answer the hypothetical. Usually, as we go through something
    that involves the public land and if it is withdrawn for
    military purposes, I don't know the specific terms of the
    relationship on those particular parcels, but usually we have
    to come back to Congress and ask for legislation for that
    purpose. Not always, but it sort of depends on the
    circumstances.
        Senator Allard. Let us know about that, if you would, as we
    move along. Just one last question, Mr. Chairman. You had
    stated that in the past you saw no need for eminent domain. Is
    that still your position?
        Mr. Grone. I believe what I indicated earlier was that I
    was reluctant to take any available legal tool off the table.
        Senator Allard. Yes.
        Mr. Grone. But based on what we think we understand in the
    context of willing sellers' we always prefer to work with
    willing sellers but I would not desire to rule out any legally
    available tools.
        Senator Allard. But your thought right now is that you are
    not going to have to use eminent domain because there are
    willing sellers?
        Mr. Grone. My hope is that we will not have to use that.
    That is correct. It is always preferable not to.
        Senator Allard. Okay. Thank you. My time is expired.
        Senator Reed. Senator Craig.
        Senator Craig. Mr. Chairman, thank you very much and again
    I have not had the opportunity to congratulate you publicly on
    your chairmanship here. We look forward to working with you. It
    is a very important committee for a lot of reasons and let me
    thank both the Deputy Secretaries for being with us today. I
    submitted an opening statement and in that statement I am going
    to draw that into this question.

                        FACILITY FUNDING PRIORITIZATION

        When a military base is scheduled to receive funding in a
    future FYDP for new or upgraded facilities, but those
    facilities are currently condemned, as is the case at Mountain
    Home Air Force Base. What does the Department of Defense do to
    ensure that those facilities will receive a priority over other
    facilities outside of waiting for Congress to appropriate the
    funds?
        Essentially, is there a system within DOD to seek out these
    condemned facilities and bump them up in priority status as it
    relates to funding?
        Now, I am not talking about Building 18. I am talking about
    a facility that I visited at my airbase. It is important for
    the committee to know that we have basically one military
    installation in Idaho, Mountain Home Air Force Base, a world-
    class airbase that came through BRAC with flying colors for a
    lot of reasons but I was out there visiting some time ago; well
    a couple of months ago. I try to get there several times a year
    and this large building, it is called Mountain Home Readiness
    Center, is 53 years old. The wind was blowing very hard that
    day and they recommended that I not go in it. And I said no. We
    put hard hats on and went in, Mr. Chairman and looked it over.
    It is propped up, it's braced up, it's old, it's dilapidated
    and it's critically necessary and so back to my question.
        When you've got something that's necessary but condemned
    and a good 30-mile per hour breeze puts people who might enter
    it at risk, how do we handle those things? Does anyone want to
    respond to that? None of you now? Well then, why don't both of
    you respond then?
        Mr. Grone. I have not had an opportunity, although I
    understand your interest, I have not had an opportunity to look
    at this specific project that you mention, but I will do that
    and get back to you on that.
        Each of the military departments have, and they vary by
    military department, each of them have different, for lack of a
    better word, scoring regimes for how they assess military
    construction requirements and how they build their budget. I
    frankly would prefer to defer to Mr. Anderson on the panel that
    follows me to speak more directly to the project itself but
    certainly, if we have a critical facility where there is an
    urgent mission need, there are things we can do in the
    programming process to accelerate those and if there is a
    mission currently in the facility, we can use our unspecified
    minor construction or other authorities to help stabilize or
    reduce the hazard to health and well being of military or
    civilian personnel who might need to enter the facility. So,
    I'd like to take a look at the specifics.
        [The information follows:]

        The Logistics Readiness Center, Facility 1325, was
    constructed in 1953. The facility is in inadequate condition
    and was recently assessed condition code 3, indicating required
    use only. However, since Facility 1325 is the only base
    facility capable of supporting large logistics functions, the
    base must continue to use the facility until it is replaced.
    Operations and Maintenance resources and manpower to maintain
    the facility has been limited to repair of the fire suppression
    system, the loading dock, and the armory. Until the facility is
    replaced, rules for use of the building that mitigate risk to
    personnel have been implemented, such as evacuation when snow
    loads exceed four inches or when equivalent dynamic/dead
    loading occurs. Structural condition of the facility is
    monitored to avoid injury to personnel and damage to war
    readiness supplies.
        Within the facility, physical separation and displacement
    of the organization's assets and resources creates ineffective
    administrative management, compromises security, and degrades
    the Wing's ability to meet mission sustainability. Workarounds
    and fragmented operating sites result in inefficient use of
    critical transportation and manpower resources on a daily
    basis. Excessive handling and deterioration of supplies and
    equipment increase the amount of assets being damaged or lost.
    Work areas are cramped, hampering morale and productivity.
        The planned replacement for this facility is an 8,500 SM
    facility costing $17.5 million. In balancing overall Air Force
    mission priorities, the project is planned for the fiscal year
    2011 military construction (MilCon) program and would provide
    adequate size and configuration for storage of bulk and bin
    items to support Wing and flying missions in a centralized
    location expediting deployment rate and capability. Other
    mission essential operations would also be located in this new
    facility.

        Senator Craig. I am not worried about risk to personnel
    because the airbase is handling it appropriately and they keep
    propping it up and double-checking it and doing all that but
    when 60 percent of the base's supplies have to operate out of
    temporary spaces spread out all over the base, it does not lend
    for great efficiency.
        Mr. Grone. I agree.
        Senator Craig. And it creates significant delays sometimes
    in training and mobilization. As you know, Mountain Home Air
    Force Base and what we do there, we do very well, we drop bombs
    on targets and we have been used very heavily and our people
    have been deployed all over the world on a very regular basis.
    And now, that base is a base of desirability for the Israeli's
    to come and train, the Germans were there, the Singaporean Air
    Force is coming. Why? Because we have the best electronic range
    in the system that likens itself to the Middle East like no
    other range almost in the world and so it becomes a very
    desirable place to come and train. We expect it to not only be
    an appropriate place but a world-class place and a 53-year-old
    wooden building doesn't muster up.
        Mr. Grone. Senator, one of the initiatives that we have
    underway; we had an initiative several years ago on the
    demolition of unneeded facilities. This is separate from BRAC
    and to some degree separate from demolition we would undertake
    with the regular military construction projects. A couple of
    years ago, after successfully completing that initial round of
    initiatives where we targeted something like 80 million square
    feet and took down 83 million, we began a second initiative to
    get at, and encouraged military departments to remove from the
    inventory, precisely the kinds of facilities that you're
    describing today. We are in the middle of building that
    program. So we are, from a policy perspective, in the Office of
    the Secretary of Defense, very interested and desirous of
    moving facilities just like that, that no longer serve a useful
    purpose and that are a hazard, off the inventory and replacing
    them if there remains a mission need with adequately and re-
    capitalizable assets. So it is part of our overall portfolio
    management approach.
        Again, it is something that I take very seriously because I
    do not desire to have the taxpayer paying caretaker costs for
    facilities like that. They are simply not necessary or needed.
    But we also have to recognize that there is a requirement for
    the mission and we will work with you, and sort of with the
    components, to make sure that issues like that are adequately
    addressed.
        Senator Craig. Mr. Chairman, there are a lot of other
    issues that I am concerned about and I certainly one want to be
    associated with both you and the ranking member's remarks in a
    much broader area. It is not my intent to sound totally
    parochial today because the airbase is handling the facilities.
    They are not investing in it. Although the wind is slowly but
    surely taking it down and maybe that's the least expensive way
    to have it come down. But it is simply inappropriate and
    unnecessary and it creates complications in a facility that got
    extremely high marks during BRAC and is considered one of our
    premier bases because of air space and flight times and clear
    days and ranges and all of that that are extremely important to
    us. Thank you, Mr. Chairman.
        Senator Reed. Thank you, Senator Craig. We will begin a
    second round of 7 minutes.

                           BRAC 2005 COST ESCALLATION

        Mr. Grone, you have said in your prepared testimony that
    the BRAC 2005 round now is fully funded through the out-years
    at $31.2 billion. A CRS memorandum has compared the BRAC cost
    estimates in the 2008 budget with those included in the 2007
    budget. The 2008 budget shows a 70 percent increase over the
    cost of the BRAC round that DOD projected last year. Why are
    the original projections so far off base and can we have
    reasonable assurances that these new projections are accurate?
        Mr. Grone. Mr. Chairman, that is a question that a number
    of your colleagues have raised with me and I am pleased that
    you raised it with me because there is an important series of
    points that needs to be made about that difference.
        When the original suite of recommendations were beginning
    to be implemented, we did a re-assessment of the COBRA's cost
    estimates. We determined that there was about a $22.3 billion
    baseline. Based on our COBRA analysis and as you know, that is
    the way we compare varying recommendations against each other
    in the BRAC process itself.
        In all prior rounds of BRAC combined--and this is an
    important point--we spent approximately $24 billion. About one-
    third of that amount was due to military construction, about $8
    billion. In this round of BRAC, given the extensive
    repositioning of assets and missions being undertaken at 800
    separate locations across the country, this round is nearly
    three-quarters military construction. Military construction and
    the construction industry will have, certainly, site adaptation
    issues, cost issues. So built into simply the raw ratio of how
    much MILCON is in the program, I frankly expected that there
    would be some cost increases.
        Now, when we took that $22.3 billion program from COBRA,
    and then moved to implementation, and you spread that
    requirement over the 6-year implementation period, we then
    began to inflate and put appropriate cost parameters around,
    instead of them being fiscal year 2005 dollars, the then year
    dollars for implementation. So applying all of the standard
    inflation factors that we would need to apply, $2 billion of
    the $8 billion difference is solely a factor of inflation.
        A key additional factor was as the Army looked at their
    implementation requirements they made a strategic choice to
    enhance facilities for, particularly, quality of life for
    military personnel and their families and additional training
    ranges in addition to some other items. That package
    represented about a $4 billion add to the program, which the
    Army self-financed. The other remaining $2 billion is caught up
    in a suite of changes that occur when you go from parametric
    analysis to actual site adaptation and sending engineers out
    into the field determining that renovation of a facility would
    be inefficient. New construction would be better. So there is a
    pattern for that $8 billion. Because, the current number is
    based on more rigorous field assessments and more rigorous
    design parameters, will we see marginal adjustments in cost
    over time either to the downside or to the upside? Certainly we
    could see that. But do I expect we are going to see the kind of
    swing we see here? No. I think that this is a very good
    estimate.
        Senator Reed. Have you recalculated the projected savings
    now, given the fact that costs are going up?
        Mr. Grone. Well, the annual recurring savings that will
    accrue are savings that will accrue from changes to military
    and civilian personnel and other items that are not affected by
    the implementation costs, per se. We are tracking annual
    recurring savings much more aggressively than we did in prior
    rounds of BRAC, given the interest to the Congress, the
    Government Accountability Office, and our own management
    principles including financial accountability that my
    colleague, Ms. Jonas, has led in the Department.
        We still believe that the annual recurring savings figure
    of $4 billion after implementation--that is $4 billion every
    year after implementation to the far horizon--remains a
    reasonably accurate and very good estimate of what those
    savings will be.
        Senator Reed. Let me ask you, is the current estimate of
    cost to complete the environmental remediation associated--has
    that cost estimate changed, given there are construction
    aspects there.
        Mr. Grone. The dollar amount for environmental remediation
    inside the implementation period that I believe we provided in
    the budget justification was, I want to say, was nearly $900
    million, so it has gone up a bit since the COBRA analysis. Some
    of that is due to additional understanding of remediation
    matters that may need to be taken, if there is a cost to
    complete beyond that. I am not sure that it is very large, but
    frankly I'd like get back to you for the record on that.
        [The information follows:]

        The cost to complete (program years fiscal year 2007 to
    completion) for BRAC 2005, which includes environmental
    restoration sites and compliance, is estimated to cost $892
    million. The environmental cost estimate has not changed due to
    the construction requirements for BRAC 2005.

                       U.S. SOUTHERN COMMAND HEADQUARTERS

        Senator Reed. I had some additional questions but my time
    is dwindling quickly. One question I do want to address is that
    this year's request includes $237 million for the Consolidated
    Headquarters Facilities for Southern Command in Miami.
        Mr. Grone. Yes, sir.
        Senator Reed. This is a very large expenditure and involves
    a very complicated land lease to execute. It seems that this
    headquarters has been built on rather expensive real estate in
    a metropolitan area when there are perhaps alternatives. For
    example, CENTCOM is located in Tampa at MacDill Air Force Base
    on an existing military facility. There are other areas in
    Florida like Homestead Air Force Base where they might be
    readily available. Why aren't we trying to build this
    headquarters in a less expensive neighborhood?
        Mr. Grone. Mr. Chairman, during the BRAC process itself we
    actually looked at the question of whether the headquarters
    ought to move from Miami and came to the determination, both
    for cost reasons as well military efficiency and the judgment
    of the combatant commander, that Miami remains the appropriate
    location. The reason why the headquarters is fully financed,
    proposed to be fully financed, in the fiscal year 2008 budget
    request is due to OMB policy on full financing of large
    projects such as this one. It is something that is long
    overdue. It is a bit complex as you suggest, but we believe it
    is the right answer for the combatant commander for that
    headquarters.
        Senator Reed. Thank you. Senator Hutchison.
        Senator Hutchison. Yes, I relate to the question where I
    think we have bases that can be more efficient than expensive
    urban land. I certainly think it is wise. We are just moving a
    Reserve facility outside of the interior part of Houston to
    Ellington as one example of a way to be more efficient and also
    realize the value of that real estate. So, if there were any
    opportunities to look at that I would certainly support the
    Chairman's line of questioning. I would just like to ask Mr.
    Grone--given the decision to increase the Army's end strength
    on a permanent basis, or a longer-term basis, is the Department
    of Defense still committed to reducing our footprint in Europe,
    which is something that this subcommittee was very instrumental
    with, and suggested and encouraged because of training
    constraints in European bases and also inefficiencies in a
    number of small bases that didn't have the troop support
    capabilities. So, I wanted to ask if there has been any
    decision to change, as we are increasing our end strength, in
    the bringing home of these 70,000 troops from Europe and Korea?
        Mr. Grone. Senator, we remain committed to the plan as you
    and the subcommittee has been previously briefed. I have,
    currently pending on my desk, the overseas master plans of the
    combatant commanders. We're reviewing those now. I expect to be
    submitting those to the Committee in the coming days and I
    believe from a EUCOM perspective, certainly, when you have an
    opportunity to review the plan you'll see that it is very
    consistent with the prior briefings you have received on the
    subject.
        Senator Hutchison. Good, thank you. I am very pleased to
    hear that. Thank you, Mr. Chairman.
        Senator Reed. Thank you Senator Hutchison. Senator Craig.
        Senator Craig. Nothing further.
        Senator Reed. Senator Allard.
        Senator Allard. No further questions.
        Senator Reed. Thank you for your testimony and for your
    dedicated service to the Nation.
        Ms. Jonas. Thank you, sir.
        Mr. Grone. Thank you, Mr. Chairman.
                          Department of the Air Force

    STATEMENTS OF:
            HON. WILLIAM C. ANDERSON, ASSISTANT SECRETARY OF THE AIR FORCE,
                INSTALLATIONS, ENVIRONMENT AND LOGISTICS
            MAJOR GENERAL CHARLES V. ICKES, DEPUTY DIRECTOR, AIR NATIONAL
                GUARD
            BRIGADIER GENERAL CHARLES D. ETHREDGE, DEPUTY TO THE CHIEF, AIR
                FORCE RESERVE
        Senator Reed. Now, let me call up the next panel. Well, let
    me welcome our second panel and I'm pleased to introduce the
    Honorable William C. Anderson, Assistant Secretary of the Air
    Force for Installations, Environment, and Logistics; Major
    General Charles V. Ickes II, Deputy Director of the Air
    National Guard; and Brigadier General Rick Ethredge, Deputy to
    the Chief of the Air Force Reserve.
        Gentlemen, thank you very much for your presence here today
    and we look forward to your testimony. Secretary Anderson.

                       STATEMENT OF HON. WILLIAM ANDERSON

        Mr. Anderson. Well, good morning. Mr. Chairman and
    distinguished members of the committee, on behalf of American's
    airmen, it is a pleasure to join my colleagues, Generals Ickes
    and Ethredge before you here today. As the Air Force continues
    to train and fight as a total force, it is great that we are
    together as a total force to testify.
        Before I begin, I want to offer the best wishes of the Air
    Force to your chairman, may his recovery be fast and complete.
        I'll keep my opening remarks brief and begin by thanking
    the committee for its continued support of America's Air Force
    and the many brave and dedicated airmen who serve around the
    globe to keep this country safe. As our Nation and department
    finds itself engaged in hostilities and war for the 16
    consecutive year, we're also in a transition period where the
    Air Force continues to evolve and remain indispensable as
    threats to our Nation emerge and change.
        The Air Force is getting smaller, but our commitments have
    not. Airmen perform critical installations, environmental and
    logistics tasks that are intrinsic to every facet in the
    success of our missions. We are making process changes at every
    level of the Air Force, which result in resource savings and
    more efficient operations. In these tumultuous times, our
    priorities remain consistent. Winning the war on terror,
    developing and caring for our airmen, and re-capitalizing and
    modernizing our air and space systems. Air Force facilities,
    housing, and BRAC programs are key in supporting, these
    priorities. At home, our installations provide stable training
    environments as we equip and reconstitute our force.
        Both our stateside and overseas bases provide force
    projection platforms to support combatant commanders. Our bases
    are weapon systems and in order to support our base centric
    concept of operations, the Air Force has developed an
    infrastructure investment strategy that focuses on enabling
    combatant commanders to fight and win the war on terror,
    provide quality facilities, implement BRAC, sustain and re-
    capitalize our aging infrastructure, all the while proactively
    supporting the operational environment.
        The fiscal year 2008 President's budget request for
    traditional MILCON is $1 billion. This budget carefully
    balances our facilities operations and maintenance accounts for
    sustainment, restoration and modernization with military
    construction to make the most effective use of available
    funding to support the Air Force mission.
        The 2008 budget request also includes $363 million for
    housing investment, which balances new construction,
    improvements, and planning and design work. Housing is a good
    news story for airmen. Privatization continues to be a success
    bringing quality homes to airmen and their families in less
    time than would be the case with traditional MILCON. To
    continue our aggressive BRAC implementation schedule, the
    fiscal year 2008 budget request includes an additional $1.2
    billion for BRAC related activities, of which $910 million is
    construction. The Air Force is the lead on 64 BRAC business
    plans and has equity in 16 additional business plans.
        Full support of this funding request is critical to ensure
    we remain on track to meet our required compliance by 2011. We
    are committed to making BRAC and joint basing a raging a
    success. However, several BRAC basing policy elements run
    counter to the spirit of efficiency and cost savings in the
    joint basing construct.
        The Air Force believes total obligational authority (TOA)
    and real property transfer would serve as a disincentive to
    cost savings, efficiency and effective execution of customer
    expectations. These customers, our operational commanders if
    you will, should define requirements necessary to execute the
    mission and manage the funds to meet those needs.

                               PREPARED STATEMENT

        This year, we commemorate the 60 anniversary of our proud
    service, a service born of revolutionary ideas, forged in
    combat and proven through decades of progress and achievement.
    The readiness and capability of our force to fight and win our
    Nation's wars now and in the future depends heavily upon the
    state of our operational infrastructure. We look forward to
    your questions. Thank you.
        [The statement follows:]

                   Prepared Statement of William C. Anderson

        Mr. Chairman, Senator Hutchison and distinguished members of the
    committee, as our Nation, and Department, finds itself in a transition
    period, the Air Force continues to evolve and remain indispensable as
    threats emerge and change. The Air Force is the preeminent force for
    operations beyond the bounds of earth, and is vital and relevant in the
    conduct of ground operations as well. The Air Force has been
    continually engaged in War for the past 16 years. The Quadrennial
    Defense Review guides the Air Force and enables us to deliver sovereign
    options for the defense of the United States of America and its global
    interests. The Air Force is getting smaller, but our commitments have
    not. Airmen performing critical installations, environment and
    logistics tasks are intrinsic to every facet in the success of our
    missions. Our civil engineers are critical to every facet in the
    success of our missions. We currently have over 2,500 engineers in the
    theater of operations directly supporting Operations Enduring Freedom
    and Iraqi Freedom. In order to fulfill our mission, we are making
    process changes at every level of the Air Force with results in
    resource savings and more efficient operations. We have more work to
    do, but by institutionalizing Air Force Smart Operations 21 concepts
    into our daily operations we are leaning our internal processes to
    reduce workload and reduce or eliminate unnecessary work. These efforts
    allow us to meet the enormous challenges of today, the foreseeable
    future, and ultimately, sustain and modernize the world's best air,
    space, and cyberspace force. In these tumultuous times our priorities
    remain consistent: fighting and winning the war on terror, developing
    and caring for our Airmen and their families, and recapitalizing and
    modernizing aging aircraft and spacecraft.
        Air Force facilities, housing and BRAC programs are key components
    of our support infrastructure. At home, our installations provide
    stable training environments as we equip and reconstitute our force.
    Both our stateside and overseas bases provide force projection
    platforms to support Combatant Commanders. Our bases are weapons
    systems and in order to support our base-centric concept of operations,
    the Air Force has developed an infrastructure investment strategy that
    focuses on enabling Combatant Commanders to fight and win the war on
    terror, providing quality of life facilities, implementing BRAC,
    sustaining our infrastructure and striving to recapitalize our aging
    infrastructure, while proactively supporting the operational
    environment. We are the DOD's leader in expeditionary combat support
    and continue that role with pride. Our total force military
    construction, family housing, and sustainment, restoration, and
    modernization programs are paramount to successful operations and
    maintaining a reasonable quality of life for our men and women in
    uniform and their families.
        The fiscal year 2008 President's Budget request for Air Force
    construction is over $2.3 billion, comprised of traditional MILCON
    ($1.0B), BRAC 2005 ($910 million) and housing investments ($363
    million). The Total Force MILCON portion ($1 billion) of Air Force
    fiscal year 2008 President's Budget (PB) construction request reflects
    our highest construction priorities. This request includes $912 million
    for active military construction, $86 million for the Air National
    Guard, and just over $27 million for the Air Force Reserve. While the
    2008 traditional MILCON budget request is approximately $300 million
    lower than last year's, it reflects our highest priorities and most
    urgent needs. Unfortunately, we face demands on our resources that
    require some very tough choices. This budget carefully balances our
    facility operations and maintenance accounts for sustainment,
    restoration, modernization with military construction programs to make
    the most effective use of available funding in support of the Air Force
    mission. The Air Force Total Force sustainment funding in fiscal year
    2008 is $2 billion, 92 percent of the amount called for by the Facility
    Sustainment Model (FSM). The fiscal year 2008 Total Force restoration
    and modernization (R&M) funding is $346 million.
        The Air Force fiscal year 2008 PB request of $363 million for the
    Military Family Housing investment program balances new construction,
    improvements, and planning and design work. While we continue to strive
    to eliminate inadequate housing, we cannot allow more housing to fall
    into disrepair. In addition to the $363 million requested for housing
    investment, we request nearly $688 million for operations and
    maintenance, for a total housing investment of more than $1 billion.
        To continue our aggressive BRAC implementation schedule, the fiscal
    year 2008 PB request includes $1.2 billion for BRAC related activities
    of which $910 million is construction. The Air Force is lead for 64
    BRAC business plans and has financial equity in an additional 16
    business plans. Full support of this funding request is critical to
    ensure we remain on track to meet the requirement for compliance by
    2011.
        Sound investment in our installations postures the Air Force to
    support our priorities of winning the Global War on Terror, support our
    Airmen and their families, and recapitalize and modernize our force. We
    believe the fiscal year 2008 President's Budget proposal will provide
    the construction bedrock for continued success of our mission.
                 fighting and winning the global war on terror
        The Air Force's first priority is to fight and win the Global War
    on Terror (GWOT). We plan to invest $192 million on GWOT-related
    projects that support and enhance the Air Force's ability to deliver
    intelligence, maintenance, and operational capabilities to our
    Combatant Commanders. At MacDill AFB, Florida the Air Force is
    executing two projects at U.S. Central Command (USCENTCOM) by
    completing the Joint Intelligence facility and altering the USCENTCOM
    headquarters facility. The USCENTCOM's area of responsibility is the
    geographic and ideological heart of the GWOT. A war without borders, it
    spans 27 countries in the Central Asian region of the world. The Joint
    Intelligence Center provides the USCENTCOM Commander with the
    situational awareness and long range analyses needed to defeat
    adversaries within the AOR, promote regional stability, support allies,
    and protect U.S. national interests, all aimed toward victory in the
    GWOT. Two projects at RAF Menwith Hill Station, United Kingdom and one
    at Offutt AFB, Nebraska enhance intelligence gathering and analysis
    capabilities for the United States and our allies. The Basic
    Expeditionary Airman Skills Training at Lackland AFB, Texas provides
    facilities for expanded field training that will equip our Airmen as
    they enter the Air Force with the warfighting skills and mindset vital
    in today's operational environment.
                 develop and care for airmen and their families
        The Air Force sees a direct link between readiness and quality of
    life. The Air Force is committed to creating and maintaining a
    consistent, high quality, and safe environment in locations where
    Airmen work, reside, and recreate. Our Total Force Airmen are the most
    valuable assets we have in fighting the GWOT and ensuring our air,
    space and cyberspace dominance. We have to continue to recruit, train,
    equip, and retain the Airmen of tomorrow. As our Air Force becomes more
    capable, more efficient and more lethal, so will our Airmen. The
    quality of life we provide for our Airmen and their families is a
    distinct determining factor in how long they remain in our service. The
    sacrifices our Airmen and their families make are enormous. We are
    deeply committed to providing every Airman and their family with the
    best possible quality of life as they serve our Nation. In this year's
    budget we strive to promote a wide spectrum of projects that take care
    of our Airmen and their families; from quality family housing for our
    families, quality dormitories for unaccompanied Airmen, functional
    fitness centers, and safe child development centers, to exceptional
    training and operational facilities.
    Workplace
        Work-related injuries cost the Air Force over $130 million annually
    and have a significant impact on operational capability. Most
    importantly, workplace injuries negatively impact the quality of life
    for our Airmen and their families. One program being used to achieve a
    reduction in workplace injuries is OSHA's Voluntary Protection Program.
    The SECAF and CSAF have directed ``launching the Voluntary Protection
    Program throughout the Air Force . . . for service wide
    implementation.'' Through the Voluntary Protection Program, every
    Airman and his Wingman are empowered to actively identify and take
    action to eliminate safety and health hazards in the workplace. Our
    goal is to offer an accident-free work environment for each and every
    Airman.
    At Home
        When Airmen deploy, time spent worrying whether their families are
    safe and secure is time not spent focusing on the mission. Quality of
    life initiatives are critical to our overall combat readiness and to
    recruiting and retaining our country's best and brightest. Our quality
    of life initiatives reflect our commitment to our Airmen.
    Family Housing
        The Air Force Family Housing Master Plan details our Housing
    military construction, operations and maintenance, and privatization
    efforts. It is designed to ensure safe, affordable, and adequate
    housing for our members. To implement the plan, our fiscal year 2008
    budget request for family housing is over $1 billion. Consistent with
    Department of Defense Strategic Planning Guidance, the Air Force is on
    track to fund projects through fiscal year 2009 which will eliminate
    inadequate overseas housing.
        For fiscal year 2008, the requested $363 million for our housing
    investment program will replace and improve approximately 2,100 housing
    units at eight overseas bases. An additional $688 million will pay for
    operations, maintenance, utilities and leases to support the family
    housing program.
        We have used the privatization authorities granted by Congress to
    accelerate our family housing improvement program. By the beginning of
    fiscal year 2008, we will have privatized over 44,000 housing units, or
    72 percent of our U.S. housing inventory, far exceeding the DOD goal of
    60 percent. The Air Force is strategically leveraging its $596 million
    investment to bring in $7.37 billion in equivalent MILCON investment
    from the private sector; that is nearly fifteen dollars of private
    investment for each public tax dollar. The Air Force is aggressively
    researching privatization at remaining U.S. MILCON installations where
    feasible.
    Unaccompanied Housing (Dormitories)
        The fiscal year 2008 total Air Force requirement for dormitory
    rooms is 60,200. We have made great progress using the three-phased
    investment strategy outlined in our Dormitory Master Plan. Phase I, now
    construction complete, eliminated central latrine dormitories. With the
    fiscal year 2007 MILCON we have funding necessary to complete phase II
    of our Dormitory Master Plan, our dorm room shortage (deficit), by
    building new dormitories. In Phase III, now underway, we will replace
    existing dormitories at the end of their useful life with a standard
    Air Force designed private room configuration under the ``Dorms-4-
    Airmen'' concept. Our ``Dorms-4-Airmen'' concept capitalizes on our
    wingman strategy and keeps our dorm residents socially and emotionally
    fit.
        Our fiscal year 2008 Program reflects this strategy. The $47
    million request for dormitory investment will replace 368 rooms for
    unaccompanied personnel at both stateside and overseas bases. We are
    equally committed to providing adequate housing and improving the
    quality of life for our unaccompanied junior enlisted personnel as we
    are to our families.
    Fitness and Child Development Centers
        The Air Force maintains its strong commitment to the ``Fit-to-
    Fight'' program. Our goal is for Airmen to make fitness and exercise a
    regular part of their lives and prepare them to meet the rigors of a
    deployed environment, not simply to pass an annual fitness test. Our
    goal is to replace at least one fitness center per year until we have
    the resources to do more. This year we will construct a new fitness
    center at Tyndall AFB, Florida.
        We also remain committed to the children of our Airmen and are
    dedicated to provide them with adequate and nurturing day care
    facilities. In fiscal year 2008 the most urgent need is at Patrick AFB,
    Florida. Our $12 million effort at Patrick AFB will provide supervised
    care for 266 infants and preschool children, replacing a child
    development center that was established in a warehouse built in 1958.
    Operations and Training
        Our MILCON program supports our expanded view of quality of life
    for Airmen by providing facilities from which to train in and operate.
    A new Security Forces Operations Facility at Scott AFB, Illinois will
    provide the men and women of the active duty and National Guard in one
    of our most stressed career fields a functional, consolidated facility.
    The Fire Training Facility at Ramstein AB is jointly funded by NATO and
    provides military critical live-fire and structural fire/crash rescue
    training. Finally, a recapitalization project at the Air Force Academy
    continues the phased upgrade of Fairchild Hall academic building. The
    final renovation and upgrade of Fairchild Hall will be complete with a
    $15 million effort programmed in our fiscal year 2009 MILCON program.
                       recapitalization and modernization
        Our third priority is to modernize and recapitalize the Air Force.
    Air forces succeed when they anticipate and are allowed to shape the
    future strategic environment, and ultimately develop the capabilities
    required for the next fight. Air forces succeed when they are able to
    organize, train, and equip themselves properly for both the current and
    future fights and purposefully build in the flexibility to operate
    across the spectrum of conflict and deliver effects at all levels of
    war--tactical, operational and strategic. Air forces succeed when they
    remain focused on their primary mission of providing asymmetric range
    and payload as an independent force that is part of an interdependent
    joint team. Our MILCON program is a direct reflection of our strong
    commitment to the success of our Air Force and is heavily weighted
    toward modernization and recapitalization support. The fiscal year 2008
    Total Force military construction program consists of 43 projects that
    are essential to modernization and recapitalization, totaling $544
    million.
        The F-22A Raptor is the Air Force's primary air superiority fighter
    and key enabler, providing operational access, homeland defense, cruise
    missile defense and force protection for joint forces. Combat-capable
    Raptors are in full rate production on the world's only 5th generation
    production line. Elmendorf AFB, Alaska will be the second operational
    Raptor base. We are constructing five active duty and reserve projects
    to beddown the world's premier fighter at a cost of $75 million. The F-
    35A Lightning II Joint Strike Fighter (JSF) is our 5th generation
    multi-role strike fighter aircraft optimized for air-to-ground attack.
    The F-35A will recapitalize combat capabilities currently provided by
    the F-16 and A-10 and will complement the capabilities of the F-22A.
    Projects at Eglin AFB, Florida begin the beddown for joint F-35
    training squadrons and combines Air Force and Navy funding totaling $74
    million. Our legacy aircraft remain a vital part of our national
    defense. We are constructing much needed facilities for the Reserve F-
    16 Wing at Hill AFB, Utah and the active duty F-15 Wing at RAF
    Lakenheath, United Kingdom.
        We are also modernizing the weapons these 5th generation aircraft
    and legacy stalwarts will carry. The Small Diameter Bomb (SDB) enhances
    our payload and strike capability while increasing the standoff
    distance for our pilots. We are constructing munitions storage igloos
    at RAF Lakenheath, United Kingdom and Ramstein AB, Germany to provide
    this capability to the warfighter where storage capacity does not
    exist. Our Tactical Air Controllers are embedded with ground forces,
    directing air power, like the SDB, in support of ground operations.
    This year's MILCON program provides active duty and Guard Air Support
    Operations Squadrons the facilities needed on Army Installations like
    Fort Carson, Colorado; Fort Riley, Kansas; Camp Beauregard, Louisiana;
    and Fort Indiantown Gap, Pennsylvania. These facilities support U.S.
    Army brigade transformation and provide the Air Force Tactical Air
    Controllers the training space required to support the critical Close
    Air Support mission.
        We are modernizing and recapitalizing our facilities in support of
    large-frame aircraft as well. The C-17 continues its outstanding
    support for humanitarian operations and the Joint warfighter. MILCON
    projects at Altus AFB, Oklahoma; Hickam AFB, Hawaii; and Travis AFB,
    California nearly completes the beddown of our inter-theater mobility
    workhorse. The C5 provides the strategic span in our air bridge and we
    are investing in six projects worth $50 million at Memphis, Tennessee
    and Martinsburg, West Virginia. Hangar projects at Davis-Monthan AFB,
    Arizona and Cannon AFB, New Mexico increase maintenance capabilities
    for Combat Search and Rescue EC-130s and AC-130s, respectively.
        Intelligence, Surveillance, and Reconnaissance (ISR),
    communications, and space systems play an ever-increasing role in what
    we do. The Distributed Common Ground System (DCGS) provides real-time,
    net-centric, decision-quality information to commanders. Projects that
    enable the DCGS operations will be constructed at Hickam AFB, Hawaii;
    Hulman RAP Terre Haute, Indiana; and Otis ANGB, Massachusetts. MILSTAR
    is a joint service communications system that provides secure, jam-
    resistant, worldwide communications to meet essential wartime
    requirements for high priority military users. Investments at McGhee
    Tyson IAP, Tennessee support this vital communications beddown. The
    lethal combination of air and space assets the United States possesses
    gives us capabilities that are unmatched. The Air and Space Integration
    facility at Schiever, AFB, Colorado enables us to continue this
    dominance and widen the gap on our adversaries. Finally, the
    Communications Frame facility at Bolling AFB will modernize this
    critical node for communications in the National Capital Region.
        Depot Maintenance Reengineering and Transformation remains
    essential to revitalizing depots using LEAN principles to increase
    aircraft availability by reducing depot cycle time, defects, and costs.
    This program has played a significant role in transforming our
    industrial base to support warfighter requirements more effectively.
    The 2008 program continues with four projects at Hill AFB, Utah; Robins
    AFB, Georgia; and Tinker AFB, Oklahoma totaling $66 million.
        The 2008 military construction program has six other modernization
    infrastructure projects worth $178 million. These projects span the
    globe; from a Mobility Processing Center in Germany and storm damage
    repair in the Gulf of Mexico, to an infrastructure project on Guam that
    provides increased force protection for the entrance to Anderson AFB.
    These projects recapitalize our aging infrastructure and enable us to
    support our vision for a modernized force.
                          base realignment and closure
        As we continue supporting our three main priorities, implementing
    the Base Realignment and Closure (BRAC) recommendations is an important
    vehicle for the Air Force to ensure we are more lethal, agile, and
    capable of maintaining total dominance in air, space, and cyberspace
    domains. While the Commission's final decisions fell short of the Air
    Force's overall goals for BRAC, particularly in eliminating excess
    physical capacity, they did help the Air Force take a major step
    towards reshaping its Total Force structure. The Joint Cross Service
    Group recommendations which make up the vast majority of the fiscal
    year 2008 PB request are pivotal to transforming the way the Air Force
    and our sister services train and fight together.
        The Air Force developed and is implementing an aggressive schedule
    for its BRAC 2005 recommendations, and we are working in close
    partnership with our Joint partners and with the Air National Guard,
    the Air Force Reserve, and our major commands to further develop and
    refine this schedule.
        The Air Force is lead military service for 64 BRAC Business Plans,
    and has equity in an additional 16. Our fiscal year 2008 BRAC program
    is comprised of $910 million in MILCON, $223 million in O&M, and the
    balance in the personnel and environmental accounts. Of the $910
    million in MILCON projects, $749 million is driven by Joint Cross
    Service Group recommendations. Joint interdependence adds complexity to
    the execution of this BRAC funding. Business Plans developed to assist
    in execution of BRAC actions have been coordinated and approved by OSD
    and also coordinated with other Service agencies. Coordinating,
    completing, and implementing these plans will ensure the Air Force is
    successful in effectively and efficiently implementing the BRAC 2005
    recommendations. We are confident the Air Force is heading in the right
    direction. We believe if we stay on course we can meet all expectations
    and objectives of the BRAC 2005 round, while minimizing disruptions to
    the mission, our warfighters, their families, and the communities that
    support our Air Force.
        Given the many external influences, and as good stewards of
    taxpayer dollars, we cannot look at BRAC implementation as an isolated
    activity. To be successful, we must orchestrate BRAC implementation
    activities in concert with new Air Force mission beddowns, legacy
    weapons systems and force drawdowns, emerging missions, Total Force
    Integration (TFI), and cross Service initiatives. An example of our
    attainment of this objective from BRAC 2005 recommendations is at Kulis
    Air National Guard Base, Alaska. The 2005 BRAC Commission recommended
    that, contingent on the availability of adequate military construction
    funds to provide the necessary replacement facilities at Elmendorf AFB,
    Kulis ANGB be closed. After an in depth analysis of detailed concepts
    of operations and available infrastructure, the Air Force, the Air
    National Guard, Pacific Air Forces, and my staff, collectively
    concluded on January 30, 2007, that operations at Kulis ANG Base could
    and would be relocated to Elmendorf.
        When this move is complete, the 176th Wing, Kulis ANGB and the 3rd
    Wing, Elmendorf AFB will form one, in a growing number of, Air National
    Guard and active duty associate units in the Air Force. This
    association will facilitate a unique opportunity for the Air Force to
    merge all our Total Force elements--Air National Guard, Air Force
    Reserve and active duty operations--across multiple mission areas,
    including airlift, Combat Search and Rescue, Airborne Warning and
    Control Systems and 5th generation fighters, all in one location and in
    a theater key to our global activities.
    Environmental Cleanup and Property Transfer
        As stewards of public assets the Air Force must manage them to
    achieve maximum value for the taxpayer while at the same time
    overseeing those assets with the utmost regard for environmental
    issues.
        Environmental clean up and transfer of BRAC real property is often
    technically challenging and has involved extended timeframes to
    complete. Nevertheless, the Air Force has deeded 82 percent of 87,000
    acres of BRAC property from previous BRAC rounds. Our real property
    disposal efforts have led to the creation of more than 54,000 reuse
    jobs in the affected communities. To complete the clean up and transfer
    of the remaining property, the Air Force is attempting to leverage
    private sector experience in redeveloping former industrial property
    similar to Air Force facilities. Our way ahead for legacy BRAC property
    includes an emphasis on performance-based contracting including
    guaranteed fixed price terms, regionalized contracts, and innovative
    tools such as early transfer, negotiated sales, and privatization. Our
    objectives remain clear: (1) provide reuse opportunities that best meet
    the needs of the Air Force and local communities, (2) move the process
    along smartly in each situation to get property back into commerce as
    soon as practical and (3) provide transparency in the process.
        The Air Force takes serious its responsibility to protect human
    health and the environment. Since 1991 we have spent $2.6 billion on
    environmental clean up at our BRAC installations--an investment that
    protects human health and the environment for our Airmen, our
    communities, and future generations.
    Way Ahead
        As you are well aware the House and Senate recently approved a
    Continuing Resolution Authority which approved $2.5 billion in BRAC
    funding for the Department of Defense, which is $3.1 billion less than
    requested for fiscal year 2007. If left unchanged, the reduction will
    result in the Air Force receiving far less than expected in fiscal year
    2007 funding. If not corrected, the Air Force, and our sister services
    will have to re-evaluate our plans and will likely experience delays
    and disruptions in construction and the movements of our people and
    assets. Delays could impact mission readiness and the ability to meet
    mandated completion deadlines.
        Prompt action and restoration of full funding will permit the Air
    Force to stay on course in executing our obligation for timely
    completion of the BRAC recommendations approved by the Congress.
        We solicit your support in advocating that action.
                              enhanced use leasing
        At remaining non-BRAC facilities, the Air Force is reshaping our
    infrastructure to meet the demands of the 21st century. The Air Force
    seeks fair market value and utilizes new tools such as Enhanced Use
    Leasing to optimize our resources and obtain value from our excess
    capacity--value we can return to the warfighter. Enhanced Use Leasing
    allows undeveloped and unused military facilities to be used by private
    industry, by leasing them to private entities. For example, an Enhanced
    Use Lease of a vacant 8.33-acre parcel on Kirtland AFB in New Mexico,
    allows the New Mexico Institute of Mining and Technology to construct a
    20,000 square feet commercial office building lab research facility and
    secondary educational facility, which provides rent to the Air Force
    and will improve scientific and educational opportunities for Kirtland
    AFB, the Air Force Research Laboratory, New Mexico Tech and the public
    in general. The Air Force has six current and pending Enhanced Use
    Lease projects and twenty potential Enhanced Use Leases across the
    country.
           maintaining our facilities and operational infrastructure
        The Air Force remains focused on sustaining, restoring, and
    modernizing our operational infrastructure. We have been benchmarking
    the ``best of the best'' asset managers that our country has to offer.
    We are finding and implementing ways to manage better, utilize
    resources more wisely, leverage private sector investment potential,
    and use smart information technology. Our aim is to manage assets by
    optimizing resources to deliver operational infrastructure for the
    warfighter at our installations and ranges. For 2008, we have focused
    sustainment funding on keeping our ``good facilities good'' and
    targeted limited Restoration and Modernization (R&M) funding to fix
    critical facility and infrastructure deficiencies to maintain
    readiness.
        Our sustainment program is aimed at maximizing the life of our
    facilities and infrastructure in order to preserve our existing
    investment. Without proper sustainment, our facilities and
    infrastructure wear out more rapidly. In addition, commanders in the
    field use operations and maintenance (O&M) accounts to address facility
    requirements that impact their mission capabilities.
        When facilities require restoration or modernization, we use a
    balanced program of O&M and military construction funding to make them
    ``mission ready.'' Unfortunately, restoration and modernization
    requirements in past years exceeded available O&M funding, causing us
    to defer much-needed work. It is important for us to steadily increase
    the investment in restoration and modernization in order to halt the
    growth of this backlog, while fully funding sustainment to maximize the
    life of our facilities and infrastructure.
        The Air Force Total Force sustainment funding in fiscal year 2008
    is $1.99 billion, 92 percent of the amount called for by the Facility
    Sustainment Model (FSM). The fiscal year 2008 Total Force R&M funding
    is $346 million, a slight improvement over our fiscal year 2007 PB
    request. This is an area where the Air Force is taking manageable risk
    given our other budgetary priorities.
                   demolition of excess, obsolete facilities
        In addition to modernizing and restoring worn out facilities, we
    also demolish excess and obsolete facilities. This ensures funds are
    focused on facilities we need, not on sustaining those we do not. For
    the past 9 years, the Air Force has aggressively demolished or disposed
    of facilities that were unneeded or no longer economically viable to
    maintain. From fiscal year 1998 through fiscal year 2006, we demolished
    21.9 million square feet of non-housing facilities and infrastructure
    at a cost of $260 million in O&M funding. This is equivalent to
    demolishing more than three average size Air Force installations and
    has allowed us to target our O&M funding on facilities we need for the
    long-term mission. For fiscal year 2008 and beyond, the Air Force will
    continue to aggressively identify opportunities to eliminate excess and
    obsolete facilities.
               planning and design/unspecified minor construction
        This year's Air Force MILCON request includes $75 million for
    planning and design (P&D), of which $12 million is for military family
    housing. The request includes $52 million for active duty, $8 million
    for the Air National Guard and $4 million for the Air Force Reserve.
    These funds will allow us to complete the design work for fiscal year
    2009 construction programs and to start the designs for fiscal year 10
    projects, allowing us to award contracts in the year of authorization
    and appropriation.
        This year's request also includes $26 million for the Total Force
    unspecified minor construction program which is our primary means for
    funding small, unforeseen projects that cannot wait for the normal
    military construction process. Because these projects emerge over the
    course of the year, it is not possible to program the total funding
    requirement.
                             utility privatization
        Similar to our efforts in privatizing housing, the Air Force is
    privatizing utilities where it makes economic sense and does not
    adversely affect readiness, security, or mission accomplishment.
    Because our installations are key to our operational capabilities, our
    network of bases provides necessary infrastructure for deploying,
    employing, and sustaining air and space operations and re-deploying and
    reconstituting the force afterwards. Reliable utility systems are
    critical infrastructure components and essential to air operations and
    quality of life at every Air Force base. Additionally, these systems
    must be consistent with modern technology to optimize energy
    conservation. We believe privatization offers the best solution for
    simultaneously meeting both these requirements.
        To date, under DOD's utilities privatization program, the Air Force
    has conveyed 11 systems under 10 U.S.C. 2688 and 6 additional systems
    using standard FAR clauses, for a total of 17 privatized systems with a
    plant replacement value in excess of $300 million. We are currently
    evaluating an additional 338 systems for privatization. We anticipate
    that we will more than double the number of our privatized utility
    systems in fiscal year 2008. By the time the program concludes, we
    anticipate more than 120 of about 500 systems could be privatized.
    During the course of this process, we expect many competitive
    solicitations will end up as sole source procurements from local
    utility companies.
                                     energy
        The Air Force is serious about being a global leader in facility
    energy conservation and renewable energy. In the last year the Air
    Force chartered a Senior Focus Group and set its strategic vision of
    making energy a consideration in all we do. Our strategy is built
    around a balance of supply side energy assurance and demand side energy
    efficiency. Our new energy strategy for the 21st Century is focused on
    meeting the President's new energy mandates outlined in Executive Order
    13423. Our strategy covers not only our facilities infrastructure, but
    also fuel optimization in our aviation operations and ground
    transportation fleet.
        The Air Force facilities infrastructure strategy is to eliminate
    waste in energy use as the major conservation priority. Conducting
    effective energy audits to identify energy waste streams is the first
    step. Optimizing the efficiency of heating and cooling systems, and
    eliminating over-lighting are just two of the initiatives in our energy
    toolbox.
        Our traditional project goals of delivering high quality facility
    projects on schedule and within budget is expanding the term
    ``quality'' so that our goal becomes the creation of functional,
    maintainable, and high performance facilities. Under Executive Order
    13423 the Air Force will employ the Federal Leadership in High
    Performance and Sustainable Building Guiding Principles to reduce total
    cost of ownership, improve energy efficiency and water conservation, to
    provide safe, healthy, and productivity enhancing environments. We
    currently employ Leadership in Energy & Environmental Design (LEED)
    criteria created by the U.S. Green Building Council as design
    guidelines. The LEED Green Building Rating System is the nationally
    accepted benchmark for the design, construction, and operation of high
    performance green buildings. We are incorporating day-lighting and
    improved building envelop designs to reduce heating, ventilation, and
    air conditioning loads and power use. By fiscal year 2009, 100 percent
    of Air Force eligible MILCON projects will be ``capable of
    certification'' in LEED registration. High quality energy-efficient
    facilities is our goal.
        The Air Force is responding to the effectively doubling of the
    energy conservation mandate of E.O. 13423 by strengthening management
    of our energy programs from base level Energy Management Steering
    Groups, and technically competent energy managers through Major Command
    and Headquarters United States Air Force governance groups.
    Additionally, we are building an investment program based on high value
    initiatives that save energy and help the Air Force mitigate the impact
    of rising utility costs. We are hiring energy professionals to assist
    our Major Commands and installations target the right initiatives. We
    are also partnering with the Office of the Secretary of Defense, the
    Department of Energy, the Environmental Protection Agency (EPA), and
    others to implement best practices across our enterprise.
        In the area of renewable energy, this year we awarded a contract
    that will result in an 18 megawatt (MW) peak power photovoltaic (PV)
    solar array at Nellis AFB, NV--projected to be the largest PV array in
    the world once on line in late 2008. The Air Force is building on a
    long history of facility energy conservation success. Our new energy
    initiatives will enhance our campaign to meet or exceed the goals of
    the new Executive Order.
        Our efforts were recognized in fiscal year 2006 when we received
    the EPA Climate Protection Award as the number one purchaser of
    renewable energy in the Nation. The Air Force continues to be the
    largest user of renewable energy as defined by the Energy Policy Act of
    2005 with the purchase of 990,319 MW of green power representing 9.6
    percentof our total electrical consumption last year. Also, for the
    third year in a row, the Air Force heads the EPA's list of top ten
    Federal Government green power purchasers in the Green Power
    Partnership.
                         civil engineer transformation
        The Air Force Civil Engineers have a long history of supporting all
    the critical Air Force programs mentioned earlier. The engineers are
    also benchmarking with the private sector and aggressively transforming
    their business processes to be more effective and efficient. The Air
    Force civil engineers developed several initiatives to minimize the
    impact of Air Force-wide personnel reductions on their ability to
    provide combat capability and home-station installation support. Rather
    than settle for a fair share distribution across specialties and Major
    Commands, these transformational initiatives targeted specific process
    improvements which resulted in realignments for military and civilian
    authorizations to balance workload and increase combat capability. The
    Civil Engineers are transforming civil engineer functions at all
    organizational levels to centralize the core engineering capabilities
    and streamline their processes. This includes centralizing the
    execution of new and current mission MILCON, housing, and environmental
    restoration construction projects at the Air Force Center for
    Environmental Excellence in San Antonio, Texas. The Civil Engineers
    also applied Operational Risk Management concepts to the way we
    accomplish the fire emergency services support mission. By accepting
    capability-based risks, civil engineers can provide the same level of
    fire and crash rescue service for the airfield and installation, while
    reducing the numbers of fire fighters required on duty during times
    when events are less likely to occur. The transformational initiatives
    mentioned above will allow us to execute our civil engineer mission
    more effectively and increase our combat capability for Explosive
    Ordnance Disposal and Air Force heavy construction units, known as RED
    HORSE Squadrons. As a whole, these initiatives ensure civil engineer
    support to the warfighter remains steadfast and our garrison
    installation support remains at an acceptable level.
                                   conclusion
        September 18 2007, marks the 60 anniversary of the creation of our
    independent United States Air Force. This year we commemorate this
    anniversary of our proud Service--a service born of revolutionary
    ideas, forged in combat, and proven through decades of progress and
    achievement. The readiness and capability of our fighting force to
    fight and win our Nation's wars, now and in the future, depends heavily
    upon the state of our operational infrastructure. As the Air Force
    continues to modernize and recapitalize, we will continue to wisely
    invest our precious military construction funding to fight and win the
    war on terror, develop and care for our Airmen and their families,
    while recapitalizing and modernizing our air and space systems.

        Senator Reed. General Ickes.

                  STATEMENT OF MAJOR GENERAL CHARLES V. ICKES

        General Ickes. Thank you, Mr. Chairman, members of the
    Committee. This is a great opportunity for the Air National
    Guard to be here as part of the total force team. Our story in
    the Air Guard is one of cost effectiveness. We have 177 Air
    National Guard facilities. As a great value, we have
    approximately 1,100 personnel across America that steward a
    remarkable $12 billion plant value facilities program. We have
    more than 60 nominal fee leases where we operate organizations
    on commercial airports for $1 per year, a remarkable, effective
    way to manage the Air Guard.
        We are aggressively managing our inventory, disposing of
    obsolete or unwanted facilities and we are pursuing energy
    effectiveness end efficiencies in everyway we can. However,
    we've got some challenges facing us also. We need to meet the
    requirements of BRAC and that is critical for us because we
    played such a large piece in BRAC. Unique, under what occurred
    during BRAC, we gained almost 2.2 million square feet of
    property in BRAC in the Air National Guard and now will have to
    manage those facilities and decide how we balance that out with
    current inventory. We definitely need to take advantage of the
    next upcoming weapon systems and be able to provide combat
    capability that the Air Force expects out of us. We need to
    ensure our facilities are flexible, efficient, sustainable,
    maintainable and durable.
        This year, our request focus on re-capitalization and
    modernization and also to bed down critical weapon systems that
    are part our effort to reset the Air National Guard, the
    largest reset in the history of the Air National Guard. This
    reset initiatives to implement BRAC, total force integration or
    TFI and other problematic challenges. These initiatives, some
    of which have MILCON costs need to occur in sequence. It is
    very important for us as we build on and off ramps with these
    units were involved in BRAC and reset.
        Fiscal year 2007's joint resolution left us with some
    challenges for this year. We hope we can work together so we
    don't jeopardize our ability to meet our mission requirements
    while we are transforming our force. Installations are
    essential to mission accomplishment and keeping us relevant
    into the future. Thank you very much for our opportunity this
    morning.
        Senator Reed. Thank you, sir. General Ethredge.

               STATEMENT OF BRIGADIER GENERAL CHARLES D. ETHREDGE

        General Ethredge. Mr. Chairman and distinguished members,
    thank you for the opportunity to be here today. The Air Force
    Reserve is a component of the total force and provides certain
    valuable support to the active duty component. We reflect in
    this our motto, One Air Force, Same Fight, Unrivaled Wingman.
    We demonstrate our motto in many ways and one of these ways is
    through our military construction (MILCON) program.
        To support the Air Force mission as effectively as
    possible, the total force aligned its fiscal year 2008 and 2009
    MILCON program to support the Air Force Chiefs top three
    priorities. Number one, fighting and winning the global war on
    terrorism. Number two, developing and caring for our airmen and
    their families. And, number three, re-capitalizing and
    modernizing the force.
        The total force, including the Air Force Reserve, has
    deliberately taken risks in facilities to support the Air Force
    Chief's third priority of re-capitalizing our aging aircraft
    fleet. As a result, all components of the Air Force, including
    the Air Force Reserve, have lower MILCON TOA's. However, with
    the distribution of the total TOA among the components is
    equitable based on the value of facilities and infrastructure.
        We understand there are not enough resources to support
    every need. The alignment of MILCON projects towards the
    Chief's priorities differs from our past practice of allotting
    MILCON projects as current mission or new mission. By doing
    this, we are providing the most effective use of limited MILCON
    resources to best meet the Reserve's needs while supporting the
    Air Force's mission.
        The Air Force Reserve MILCON program in fiscal year 2008
    and 2009 support the Chief's priority of re-capitalizing and
    modernizing the force by supporting our associate units. The
    Air Force Reserve MILCON TOA for 2008 is $27 million. One-third
    of this is dedicated to planning, design and minor construction
    and two-thirds is dedicated to three construction projects
    supporting the F-22 associated unit at Elmendorf Air Force
    Base, Alaska and the F-16 associate unit at Hill Air Force
    Base, Utah.
        Our fiscal year 2009 program is similar with only $28
    million of TOA. We are applying one-third to planning, design,
    and minor construction and two-thirds for construction projects
    supporting an associate unit for a space wing at Schriever Air
    Force Base in Colorado and an associate KC-135 unit at Tinker
    Air Force Base, Oklahoma. We believe the model we are using to
    align our MILCON efforts with the Air Force Chief's three
    priorities provides coherency between the components, supports
    the Reserve mission, and significantly strengthens us as a
    total force. However, with the smaller amounts that we are
    receiving in TOA for the MILCON, we do see us falling further
    behind as we try to modernize our facilities and look towards
    the future. Thank you, sir.
        Senator Reed. Thank you very much, General. Secretary
    Anderson, we just had an interesting discussion with your
    colleagues about the increases in funding for MILCON, Marine
    Corps and Army and everybody else. The Air Force is asking for
    a 21 percent decrease. At the risk of looking a gift horse in
    the mouth, what is going on here? Is DOD essentially diverting
    resources to other services or has the Air Force reached a
    position where you don't need more MILCON, you need less?
        Mr. Anderson. Well Senator, I think it is maybe a little
    bit of a couple of different things. First of all, as Senator
    Hutchison so kindly brought up earlier today, the Air Force is
    very proud of its reputation over the last 60 years of
    investing very heavily in bricks and mortar and infrastructure
    and it does show at our bases.
        As my colleagues have pointed out, we realize that there is
    a significant need within the Air Force to re-capitalize iron,
    aircraft. We are making a conscious effort to take some degree
    of risk in our MILCON line item for the next couple of years.
    This is not a permanent ratchet down of that level of funding,
    but it is being done for a couple of years to help us re-
    capitalize the aircraft fleet. Now, as we are reducing to some
    degree our MILCON budget, that as you well know, is not the
    only pot of money that we use to manage and maintain our
    infrastructure. We have restoration, sustainment,
    modernization, and operating and maintenance funds. We are
    actually increasing our sustainment, I mean, our restoration
    and modernization accounts over the next couple of years, our
    sustainment account over the next couple of years, to take
    those good assets that we already have across the Air Force and
    continue to keep them good as we work on re-capitalizing the
    fleet.
        It is risk; we all understand its risk. We've all three
    components have determined that this is the appropriate thing
    to do and we are going to work very, very hard to maintain
    quality of life. Our Chief and Secretary have said we are not
    going to in any way impact quality of life for our airmen, the
    quality of life that they've all come to deserve and expect as
    being members of the United States Air Force.
        Senator Reed. So we can anticipate a request next year of a
    decrease in MILCON request, that is within your purview.
        Mr. Anderson. It will be lower next year and then beginning
    after that to start ratcheting up again.
        Senator Reed. There is another issue here that came up
    several years ago. All the services committed to devote more
    resources to the Reserve components and looking at the numbers
    for the Air Guard, that in terms of MILCON, there seems to be a
    steady decline, not an increase. In 2006 Air Guard MILCON was
    $165 million, in 2007 fell to $126 million. This year, the
    request has dropped to $85 million and that is about a 49
    percent decrease in just 2 years and then as you talk about
    projecting cuts going forward that probably, likely we would
    see more cuts.
        The Air Force Reserve budget has fallen from $79 million in
    2006 to $44 million to this year $26 million. Those are steep
    cuts and the Air Guard has 177 locations around the Nation and
    there is a great 143rd Air Wing up in Quonset Point, Rhode
    Island and frankly, you know, I think their needs are
    increasing rather than decreasing, certainly not commensurate
    with this level of support. So can you--how do you respond to
    these significant decreases?
        Mr. Anderson. Again, sir, I think obviously the MILCON
    bucket is an important bucket but there are other buckets of
    funding that are used to maintain and keep current our assets.
    We have increases in some of those other buckets of funds,
    actually offsetting the decrease in MILCON.
        The other piece, as Mr. Grone pointed out in the first
    panel, is the BRAC funding, which is not the same as current
    mission MILCON but it is a huge infusion of capital into Air
    Force assets. As an example, the Kulis Elmendorf movement of
    Kulis Air National Guard into Elmendorf, which also helps
    facilitate Air Force Reserve, Air National Guard and Active
    Duty, are working very closely together--a huge infusion of
    capital and new facilities for all three of the components.
        So when you combine it all together and again, I will
    admit, we are taking risks. There is no question about that.
    When you combine it all together, I believe that in the short
    to medium term, the risks that we're taking are manageable and
    reasonable with an expectation that the Air Force will come
    back to its historical levels of funding within another couple
    of years.
        Senator Reed. You talked about re-capitalization rates, Mr.
    Secretary. What are the rates for the Active Air Force versus
    the Reserve components? Are they equal?
        Mr. Anderson. If you look strictly at MILCON, the Active
    Duty is slightly more favorable than the other two components.
    If you look at all the buckets of funding against the plant
    replacement value, of each of the various components, actually
    the Air National Guard and the Air Force Reserve are slightly
    better than the Active Duty, when you put all the buckets
    together, all of which, though again, I will admit, are really
    level funding amounts.
        Senator Reed. Now, the Air Force has been promoting the
    total force initiative as the centerpiece of its
    transformation. Does the Air Guard have the TFI initiatives,
    which have MILCON requirements that are not in the fiscal year
    2008/2009 budget request?
        Mr. Anderson. If there are needs in that time period that
    you suggested, they are in the budget request. There are
    obviously plans for activities beyond that time period, which
    would be dealt with later but if they are needs for that time
    period, they are fully included in those numbers, yes sir.
        Senator Reed. And that is your understanding, General
    Ickes.
        General Ickes. I think our concern would be are all the TFI
    projects fully funded? Some of that is still to be discussed.
    There are a bunch of projects that had to slide out, based on
    OSD guidance in some directives, so we are a little concerned
    about will TFI be fully funded through the process in a timely
    manner.
        Senator Reed. And General Ethredge, your reaction to that?
        General Ethredge. Some of the TFI initiatives are presently
    funded and for example, in the 2008 budget, the project we have
    at Hill Air Force Base, Utah is a TFI initiative, where we are
    associating changing the structure there from a UE-equipped F-
    16 unit to an Associate Unit and we're building a wing
    headquarters for that wing so we do have some of the TFI
    initiatives included but you know, looking out into the future,
    there are a significant number of TFI initiatives we are still
    investigating that will probably require some further funding.
        Senator Reed. Let me, Senator Allard, by the time I take
    one more question and turn it over to you. The Air Guard noted
    here in the submissions, has no current mission MILCON project
    initiative request while Active Duty Air Force has 27 projects
    totaling $542 million. How does this situation evolve where one
    component, Air Guard, has nothing and Active has 27 projects,
    if there is a total force emphasis?
        Mr. Anderson. Well, Senator, based on a couple of things.
    One is, when you look at a snapshot of a year, the balance,
    obviously, can change. The balance of each of the particular
    funding buckets can change. I would submit that we ought to
    look at a longer term time period to see how it all flows
    together. In its current mission MILCON, new mission MILCON,
    BRAC funding, all needs to be kind of pulled in together. The
    other thing I would submit is, there are a number of Air
    National Guard and Air Force Reserve bases or Guard and Reserve
    operations that actually reside on Active Duty bases. A lot of
    the current mission MILCON is for quality of life items like
    fitness centers and dining halls and what have you. They are
    maybe on the Active Duty list but would be used by all.
        So you've got to kind of look at the whole mix and we need
    to continue to work with the other components to make sure that
    that balance is fair and I think at this point, with the level
    of risk that we're taking, appears to be fair. But we've got to
    continue to look at that and make sure that it is, in fact,
    giving us what we need for the total force.
        Senator Reed. Well, thank you, Mr. Secretary. I think you
    really have to look between the lines to get that fairness. It
    may exist but it seems like it's starkly one-sided and I will
    continue to pay attention to that. Senator Allard.
        Senator Allard. Thank you, Mr. Chairman. I just have a
    couple of questions. It shouldn't take long and I understand
    we've got some votes coming up here in the next five minutes or
    so.
        Secretary Anderson, on February 26, had received a
    delegation letter from the Colorado Delegation in support of
    acquisition of 23 acres immediately adjacent to Peterson Air
    Force Base in Colorado and it's--the base hosts Northern
    Command and Air Force Space Command and it is my understanding
    that this acquisition is for force protection of Peterson and
    that there is a willing seller. Has a determination been made
    if fiscal year 2007 funds will be expended on this effort?
        Mr. Anderson. Well, sir, let me first start talking about
    encroachment kind of in general. The Air Force approach has
    always been that we acquire land as a last resort, if you will.
    Obviously taking land off of the tax rolls and not allowing it
    to be developed can be actually a pretty significant negative
    to a community and we don't want to do that unless we really
    have to, with a willing seller or not.
        The one thing that has really impressed me, quite frankly,
    about what's been going on in Colorado is that there is a
    unique partnership that all of the bases in Colorado have been
    working and it's a very long title and I'll try to give it to
    you here. The Front Range Combined Military Comprehensive
    Planning Committee, which each of the bases in Colorado is
    working with the local communities in a regional way to
    determine, number one, whether there are true encroachment
    issues or not and of course, total force protection is one of
    those particular issues and if there are, how do we work with
    the communities to resolve that issue best?
        At this point, we're still looking at it but it is not
    evident yet whether there is truly a force protection issue
    related to that bit of ground or not but we're still looking at
    it and if it is an appropriate action to take to acquire that
    land, certainly we would go down that route. We're not quite at
    this point to suggest that that is necessary yet. We're going
    to continue to look at it.
        Senator Allard. Yeah, my understanding is that there is
    good community support on it and the Colorado Springs area is
    known for their support of the bases that are posted there. So
    whatever you could do to move that along would be appreciated.
        Mr. Anderson. If necessary, sir, we will absolutely do
    that. Yes, sir.
        Senator Allard. Thank you. Now, last year this committee
    noted in a report, some issues surrounding aging facilities at
    the United States Air Force Academy there, just close by. It is
    my understanding that more than $700 million in military
    construction and operation maintenance dollars were needed to
    be invested in the Academy and have been invested since fiscal
    year 2000. Now, a significant portion of the Academy still has
    an infrastructure concern, is what I'm told. Can you update me
    on the progress of the infrastructure re-capitalization plan
    and what challenges there are to re-capitalize the aging
    facilities at the Air Force Academy?
        Mr. Anderson. Yes, sir. A couple of items that we had a
    deliverable to you or to the committee, I should say, about a
    report, a Master Infrastructure Re-capitalization Plan, which
    is currently in the hands of our civil engineers and our
    finance people and will be delivered to the committee shortly,
    to meet that requirement.
        Senator Allard. Can you make sure we get a copy of that in
    our office? Is that possible?
        Mr. Anderson. Absolutely, yes sir.
        Senator Allard. If not, we'll get it from the committee.
    Just let us know.
        Mr. Anderson. In addition, the findings from 1 year ago,
    we're taking very seriously. A couple of items we're going to
    embark on are the average annual funding rate of about $49
    million a year in operation and maintenance for the Academy and
    an average annual investment of $11.7 million in MILCON through
    2013. Beyond that, we have committed to an annual investment of
    2\1/2\ to three times the normal, the average investment across
    all Air Force bases, for the Academy beyond the year 2014 in
    what we call Fix USAFA.
        For 2007, we're looking at $19 million of operation and
    maintenance funds that had been earmarked or allocated at this
    point, an additional $15 million in 2008 for facility upgrades.
    There is a comprehensive plan, which you will all see that
    takes us out through 2013 to help bring the Academy back to the
    standard it should have.

                         ADDITIONAL COMMITTEE QUESTIONS

        Senator Allard. Yeah, one of the problems we have at the
    Academy is that it was built all at once so everything is aging
    out all at once and we have to figure out a plan and how we're
    going to take care of this stuff so it doesn't happen all at
    once. It creates budget problems, I think. We need to kind of
    stagger it through somehow or the other. But apparently, one of
    the more pressing things right now is the infrastructure, which
    we all understand.
        Mr. Anderson. We agree and we appreciate your leadership
    and helping us through this issue.
        Senator Allard. You bet. Thank you.
        [The following questions were not asked at the hearing, but
    were submitted to the Department for response subsequent to the
    hearing:]

                   Questions Submitted to William C. Anderson

                   Questions Submitted by Senator Tim Johnson

                 ellsworth afb--funding mobility center upgrade
        Question. Over the past decade, the facilities at Ellsworth Air
    Force Base have been substantially upgraded. A primary reason the Base
    Realignment and Closure Commission rejected the Department of Defense's
    recommendation to close Ellsworth was because it is a top-notch
    military installation. Continued upgrades at the base are essential.
    One project integral for mission readiness at the base, which is not in
    the FYDP, is the Mobility Center. Currently, deployment operations are
    housed in three separate buildings that are approximately 50 years old.
        In light of the fact that both active duty service members
    stationed at Ellsworth, as well as South Dakota National Guard units,
    have used the facility repeatedly to deploy in support of the Global
    War on Terror, it is important that these facilities be upgraded as
    soon as possible.
        Can you please provide to me a detailed explanation why the Air
    Force has not supported including this project in the Future Years
    Defense Program?
        Answer. With limited military construction (MILCON) funding
    available in the out years for MILCON requirements, we can only fund
    MILCON projects in the Future Years Defense Program (FYDP) which have
    been vetted through a facility analysis and planning process which
    determine and validate its need. This process is necessary to determine
    if renovation or new construction is the most economical way to meet
    the facility requirements. Prior to the submission of the fiscal year
    2008 President's Budget FYDP, the necessary facility analysis was not
    completed for this project. We are working to complete the facility
    analysis prior to finalizing the fiscal year 2009 President's Budget.
                    ellsworth afb--funding for gate upgrades
        Question. Currently, all three entry gates at Ellsworth Air Force
    Base need significant upgrade to ensure they comply with current anti-
    terrorism requirements. To date, construction for the base gates is
    funded through O&M funds allocated from Air Combat Command.
    Unfortunately, with the rising costs of construction, it has become
    increasingly difficult to finish these upgrades in a timely fashion.
        Can you please comment on whether or not the Air Force would
    support funding these upgrades through the regular MILCON process?
    Doing so may eliminate funding these upgrades incrementally and allow
    the base to comply with current antiterrorism requirements.
        Answer. Military construction (MILCON) funding is one avenue to
    upgrade the gates, in lieu of incrementally funding these upgrades with
    Operation and Maintenance (O&M) funds. However, with reduced MILCON
    funding and other critical mission essential requirements we are unable
    to absorb these upgrade requirements in our MILCON funding line. We
    understand the urgency of these upgrades and because of this the
    decision was made to execute these upgrades incrementally with O&M
    funding.
                                     ______

                 Questions Submitted by Senator Robert C. Byrd

                     criteria for worst performing aircraft
        Question. Mr. Anderson, I understand that the Air Force Chief of
    Staff appeared before the Senate Armed Services Committee earlier this
    week and responded to several questions about C-5 and C-17 aircraft. In
    particular, I note that the Air Force Chief of Staff stated that the
    Air Force would like to retire 25-30 of the worst performing aircraft.
        What criteria is the Air Force using to determine ``worst
    performing'' aircraft?
        Answer. The Chief was referring to retirement of a portion of the
    C-5 fleet. When determining the worst performing C-5 aircraft in order
    to establish retirement order, we take into account maintenance metrics
    such as mission capability rates and maintenance man hours per flying
    hour as well as cost-to-repair factors to determine the specific tail
    number retirement sequence. We also weigh other factors such as the
    accumulated usage of each airframe, and the cost and time to conduct
    required maintenance actions to determine retirement order. Finally, we
    work closely with the C-5 system program office and airframe user to
    ensure a coordinated fleet management process.
                         backfill for retired aircraft
        Question. Mr. Anderson, I understand that the Air Force Chief of
    Staff appeared before the Senate Armed Services Committee earlier this
    week and responded to several questions about C-5 and C-17 aircraft. In
    particular, I note that the Air Force Chief of Staff stated that the
    Air Force would like to retire 25-30 of the worst performing aircraft.
        Does the Air Force plan to fully backfill aircraft that are retired
    at the impacted bases?
        Answer. Under options currently being studied by the Air Force,
    units presently flying C-5A aircraft would retain a strategic airlift
    mission. There are no current plans to close existing units or stand up
    new units at this time. No decision has been made to retire any C-5A
    aircraft.
                                   c-5 fleet
        Question. Mr. Anderson, I understand that the Air Force Chief of
    Staff appeared before the Senate Armed Services Committee earlier this
    week and responded to several questions about C-5 and C-17 aircraft. In
    particular, I note that the Air Force Chief of Staff stated that the
    Air Force would like to retire 25-30 of the worst performing aircraft.
        Under what timeline is the Air Force planning to act and to inform
    Congress and the impacted bases of such retirements?
        Answer. There is no current plan to retire specific aircraft or
    from specific bases. The proper fleet mix of strategic airlift aircraft
    is currently under review. Current legislation does not allow the Air
    Force to retire any C-5 aircraft until the Operational Test and
    Evaluation report of the C-5A aircraft, currently in flight test, is
    delivered. The report will not be delivered until fiscal year 2010, two
    full years after the shutdown of the C-17 production line has begun. If
    relieved of legislative restrictions, the Air Force would be able to
    effectively manage the mix of various aircraft fleets. Preliminary
    options under review include replacing retiring strategic airlift
    aircraft with new C-17s or backfilling with newer C-5Bs from within the
    Air Force. No new units are anticipated. Likewise, closures of existing
    units are not planned. The Air Force will be open and transparent with
    regard to basing plans.
        Question. Mr. Anderson, I understand that the Air Force Chief of
    Staff appeared before the Senate Armed Services Committee earlier this
    week and responded to several questions about C-5 and C-17 aircraft. In
    particular, I note that the Air Force Chief of Staff stated that the
    Air Force would like to retire 25-30 of the worst performing aircraft.
        Are any of the C-5As that are scheduled to arrive at the 167th
    Airlift Wing over the next 2 years among the worst performers noted by
    the Air Force Chief of Staff?
        Answer. The Air Force has not determined which specific C-5A
    aircraft will go to Martinsburg, West Virginia. The Air Force must
    conduct further analysis to finalize the specific aircraft involved and
    when they will be available for transfer to the 167th Airlift Wing.
        Question. Mr. Anderson, I understand that the Air Force Chief of
    Staff appeared before the Senate Armed Services Committee earlier this
    week and responded to several questions about C-5 and C-17 aircraft. In
    particular, I note that the Air Force Chief of Staff stated that the
    Air Force would like to retire 25-30 of the worst performing aircraft.
        Is it true that the Air Force's Fleet Viability Board found the C-
    5A fleet to be healthy and with decades of service life remaining? Is
    it also true that the C-5s have about 70 percent service life remaining
    and can serve through 2040?
        Answer. The Fleet Viability Board found the C-5A fleet could be
    kept viable at least until 2029 (25 years from 2004 assessment) with
    the addition of the Avionics Modernization Program and Reliability
    Enhancement and Re-engine Program modifications. In addition, the Board
    projected the C-5A will likely need an avionics upgrade on the scale of
    today's Avionics Modernization Program around fiscal year 2020 to deal
    with technology obsolescence and future operational requirements.
    According to testing and analyses, from a structural fatigue
    standpoint, it is true the C-5A has at least 70 percent service life
    remaining. The Board has not performed any further analysis projecting
    beyond 2029.
        Question. Is it true that during IRAQI FREEDOM operations, the C-5
    flew 23 percent of the missions and delivered nearly 47 percent of the
    cargo; carried 63 percent more cargo per mission than the C-17; and
    delivered more cargo than any other aircraft?
        Answer. The following mission data collected by Air Mobility
    Command shows the most current figures:
      --The C-5 flew 16 percent of the missions (C-17 flew 29.8 percent)
      --The C-5 delivered 25.3 percent of the cargo (C-17 delivered 36.4
            percent)
      --The C-5 carried 25 percent more cargo per mission than the C-17
            (Average of 50 short tons per mission for C-5; 38 short tons
            per mission for C-17)
      --The C-5 ranked third in delivered cargo amongst aircraft types (#1.
            Commercial: 427,769 short tons, #2. C-17: 433,421 short tons,
            #3. C-5: 301,202 short tons)
        Excluding commercial aircraft from the analysis, and only counting
    military aircraft, the percentages are:
      --The C-5 flew 26.4 percent of the missions (C-17 flew 50.5 percent)
      --The C-5 delivered 39.5 percent of the cargo (C-17 delivered 56.8
            percent)
      --The C-5 carried 25 percent more cargo per mission than the C-17
            (Average of 50 short tons per mission for C-5; 38 short tons
            per mission for C-17)
      --The C-5 ranked second in delivered cargo amongst aircraft types
            (#1. C-17: 433,421 short tons,#2. C-5: 301,202 short tons)

                                                                       OPERATION IRAQI FREEDOM DEPLOY/SUSTAINMENT/REDEPLOY TOTALS
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                          Percent         Percent
              Aircraft Type              Missions         Sorties           Pax            STons         Offloads      Flying Hours      Missions         Sorties      Percent STons   STons/Mission
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    C-5.............................           6,016          32,277         156,526         301,202          13,395         172,481            15.6            19.6            25.3           50.07
    C-17............................          11,514          54,056         232,812         433,421          25,044         216,697            29.8            32.8            36.4           37.64
    C-130...........................           1,440           7,432           6,002           2,253             779          36,811             3.7             4.5             0.2            1.56
    C-141...........................           1,426           8,317          33,356          16,780           3,553          40,042             3.7             5.1             1.4           11.77
    Commercial......................          15,856          56,084       2,127,858         427,769          24,649         299,686            41.0            34.1            35.9           26.98
    KC-10...........................             521           2,283          10,403           7,699           1,115          13,609             1.3             1.4             0.6           14.78
    KC-135..........................           1,690           3,560          16,986           1,491           1,477          27,939             4.4             2.2             0.1            0.88
    OTHER...........................             185             567             185               2              60             912             0.5             0.3             0.0            0.01
                                     ---------------------------------------------------------------------------------------------------------------------------------------------------------------
          Total.....................          38,648         164,576       2,584,128       1,190,617          70,072         808,177  ..............  ..............  ..............  ..............
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

                                                             OPERATION IRAQI FREEDOM DEPLOY/SUSTAINMENT/REDEPLOY TOTALS EXCLUDING COMMERICAL
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                          Percent         Percent
              Aircraft Type              Missions         Sorties           Pax            STons         Offloads      Flying Hours      Missions         Sorties      Percent STons   STons/Mission
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    C-5.............................           6,016          32,277         156,526         301,202          13,395         172,481            26.4            29.8            39.5           50.07
    C-17............................          11,514          54,056         232,812         433,421          25,044         216,697            50.5            49.8            56.8           37.64
    C-130...........................           1,440           7,432           6,002           2,253             779          36,811             6.3             6.9             0.3            1.56
    C-141...........................           1,426           8,317          33,356          16,780           3,553          40,042             6.3             7.7             2.2           11.77
    KC-10...........................             521           2,283          10,403           7,699           1,115          13,609             2.3             2.1             1.0           14.78
    KC-135..........................           1,690           3,560          16,986           1,491           1,477          27,939             7.4             3.3             0.2            0.88
    OTHER...........................             185             567             185               2              60             912             0.8             0.5  ..............            0.01
                                     ---------------------------------------------------------------------------------------------------------------------------------------------------------------
          Total.....................          22,792         108,492         456,270         762,848          45,423         508,491  ..............  ..............  ..............  ..............
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

        Question. Please explain why a modernized fleet of 111 C-5s and 190
    C-17s, a ratio that has been validated by the U.S. Air Force and other
    military organizations and studies, is now no longer an adequate
    solution to meet the Nation's strategic airlift requirements.
        Answer. The current programs of record and the resulting 301
    strategic airlift aircraft meet current and projected requirements at
    the ``bare minimum'' of acceptable risk. The question at hand is the
    future viability of the Air Force strategic airlift fleet. As the C-5A
    fleet continues to age beyond an average of 35 years, the increased
    investment required to modernize and replace portions of the airframe
    facing stress cracks and corrosion makes this the opportune time to
    shape the future fleet.
        Question. Are there other aircraft in the U.S. inventory, beyond
    the C-5, that are capable of moving 100 percent of the Department of
    Defense airlift requirements?
        Answer. The Air Transportability Test Loading Agency (ATTLA) is the
    Department of Defense agency responsible for the approval of airlift
    cargo. The C-5 is the only aircraft capable of moving 100 percent of
    the ATTLA approved items. Air Mobility Command identified seven
    critical, time-sensitive items or National Security Sensitive items
    that are only airlifted via the C-5. This being said, a robust,
    modernized C-5 fleet is a force multiplier, carrying roughly twice the
    palletized payload of a C-17. This enables the C-17 fleet to fully
    exploit its unique multi-role, aeromedical, airdrop, special-operations
    and austere airfield capabilities (short/unimproved airfields, direct
    delivery). The programmed strategic airlift fleet, when fully mobilized
    and augmented by the Civil Reserve Airlift Fleet, provides sufficient
    airlift capability to support U.S. strategic and operational objectives
    during large-scale deployments, while concurrently supporting other
    high priority operations and sustainment of forward deployed forces.
        Question. Mr. Anderson, I also understand that at the Armed
    Services, the Air Force Chief of Staff made comments about the
    extensive maintenance requirements associated with the C-5 aircraft. As
    you are aware, the Air Force is launching a new regionalized approach
    to standardizing and reducing the time of Isochronal (ISO) Inspection
    for C-5 Aircraft. In fact, 167th Airlift Wing at the Martinsburg Air
    National Guard Base has recently been selected as one of three regional
    sites that will conduct these inspections. ISO inspections are
    conducted on C-5 aircraft every 420 days in accordance with Air Force
    Regulations, and include hundreds of inspections covering the airframe,
    propulsion, and all systems of the C-5 aircraft. Under regionalized
    ISOs on the 420 day schedule, inspections will only require 15 days per
    inspection, rather than the current 40-day endeavor.
        Do you believe that this new streamlined process developed by the
    Air Force, which will be in place next year, will help with the C-5
    reliability issues that have been raised by the Air Force?
        Answer. The primary benefit of regionalized ISO will be increased
    aircraft availability through reduced inspection and repair time, but
    it would not address the reliability issues plaguing the C-5A.
        Question. Mr. Anderson, I have also heard the Air Force is
    concerned about possible cost overruns associated with the Reliability
    Enhancement and Re-Engining Program (RERP) for the C-5 fleet, which is
    leading the Air Force to consider the premature retirement of the C-5A
    aircraft. In reviewing the planned modification schedules for RERP, it
    appears that the Air Force has stretched this program out to the point
    where the Air Force itself has contributed much to the overall program
    cost growth that is currently under discussion.
        (a) Is it possible that the Air Force's desire to slow down the
    program drives inefficiencies, which drives up costs? (b) What would it
    take to accelerate the C-5 RERP program and create greater efficiencies
    in production? (c) Does the C-5 RERP pay for itself and generate
    substantial additional savings over the projected service life of this
    aircraft?
        Answer. The Air Force does not desire to slow down C-5 RERP.
    Rather, the delays and ``stretch'' to the RERP schedule are due
    primarily to upward cost pressures for RERP production associated with
    GE engines, Goodrich pylons and Lockheed Martin touch labor. A detailed
    Air Force cost estimating effort is underway (projected to be complete
    by July 2007) that will determine the extent of the cost growth and
    result in a service cost position for the C-5 RERP. Given a constrained
    program budget across the Future Years Defense Program (FYDP), any RERP
    production cost growth will translate into reductions to the planned
    annual kit quantities and delay the RERP schedule and projected
    completion dates.
        To keep RERP on its previous schedule (and limit the inefficiencies
    due to reduced production quantities), it would likely take significant
    RERP funding increases across the FYDP and beyond. The exact amount
    will not be known until the ongoing cost estimating effort is completed
    in July 2007. Adding significant funding within the FYDP above what has
    been previously programmed for RERP will be extremely challenging given
    the current fiscally constrained environment.
        Ongoing evaluation of C-5 RERP has brought previous estimates of
    cost savings into question. The assumptions that led to predictions of
    substantial cost savings through 2040 did not account for the recently
    identified cost pressures associated with engines, pylons, and touch
    labor. Analysis of overall RERP cost savings is part of the cost
    estimating effort projected to complete in July 2007.
        Question. What is the interpretation of the Air Force with regard
    to Section 132 of fiscal year 2004 Defense Authorization Act?
        Answer. The language of Section 132, fiscal year 2004 Defense
    Authorization Act, Limitation on Retiring C-5 Aircraft, provides: ``The
    Air Force may not proceed with a decision to retire C-5A aircraft from
    the active Air Force inventory that will reduce the active C-5 fleet
    below 112 aircraft until two conditions are satisfied: (1) the Air
    Force has modified a C-5A aircraft to the RERP configuration as planned
    under the program as of May 1, 2003, and (2) the DOD Director of
    Operational Test and Evaluation conducts an operational evaluation of
    the RERPed aircraft and provides an operational assessment to the
    Secretary of Defense and Congressional Defense Committees.''
        The operational evaluation referred to above requires an evaluation
    conducted during operational testing and evaluation of the RERPed
    aircraft that addresses the performance of the aircraft concerning
    reliability, maintainability, and availability with respect to critical
    operational issues. The operational assessment referred to above is a
    operational assessment of the C-5 RERP program to determine the overall
    strengths and weaknesses of the program to improve performance of the
    RERPed C-5 aircraft relative to requirements and specifications in
    effect May, 1, 2003, for reliability, maintainability, and availability
    of the RERPed C-5 aircraft.
        Question. I am advised the USAF Program of Record supports
    modernization of the entire C-5 fleet. Likewise, I understand the 2006
    Quadrennial Defense Review and the 2005 Mobility Capabilities Study
    validated the requirement and support modernization of the entire C-5
    fleet. Further, the President's fiscal year 2008 budget request for the
    Air Force supports C-5 aircraft modernization through the Avionics
    Modernization and the Reliability Enhancement and Re-Engining Programs.
        With all of these official milestone C-5 modernization decisions in
    place, what has changed and why is the Air Force publicly discussing
    the retirement of C-5As at this time, conflicting with its own studies
    and analysis?
        Answer. C-5 modernization, specifically the Reliability and Re-
    Engining Program (RERP), is facing increasing cost pressures bringing
    into question the cost effectiveness of the program for a fleet of 111
    aircraft. It is also our desire to continue the recapitalization of Air
    Force aircraft. Additionally, the C-5A fleet is showing some
    significant metal corrosion and stress cracking adding to the
    investment required to maintain viability of this fleet. The average
    age of the current Air Force fleet is 26 years per aircraft. The C-5A
    portion of the fleet is, on average, over 35 years old. Continuing the
    retirement of legacy aircraft facilitates the equipping of an Air Force
    able to maintain the required airlift capability for combatant
    commanders in both peacetime and contingency operations.
        Question. Mr. Anderson, I understand the Air Force Chief of Staff
    appeared before the Senate Armed Services Committee earlier this week
    and responded to several questions about C-5 and C-17 aircraft. In
    particular, I note that the air Force Chief of Staff stated the Air
    Force would like to retire 25-30 of the worst performing C-5 aircraft.
        Is this the official position of the Air Force on the matter?
        Answer. The Air Force official position is that we would like the
    ability, with the Chief of Staff of the Air Force, to manage the Air
    Force fleet without congressional restriction and mandate. Air Force
    professionals have the right experience and knowledge to make the best
    force structure decisions with regard to air and space power. With that
    being said, we are exploring every option to find the most effective
    and fiscally responsible answer to meet the strategic airlift needs of
    the Air Force of today and tomorrow.
        If the decision is made to retire some number of C-5A aircraft, the
    Air Force would use mission capable rate, maintenance man-hour/flying
    hour, cumulative flight hours, total outstanding structural repair and
    modification costs, total landings, and next programmed depot
    maintenance input dates as factors to stratify the fleet.

                              SUBCOMMITTEE RECESS

        Senator Reed. Thank you, Senator Allard. Gentlemen, thank
    you very much for your testimony.
        This subcommittee is recessed.
        [Whereupon, at 11:30 a.m., Thursday, March 22, the subcom
    mittee was recessed, to reconvene subject to the call of the
    Chair.]

       MILITARY CONSTRUCTION AND VETERANS AFFAIRS, AND RELATED AGENCIES
                      APPROPRIATIONS FOR FISCAL YEAR 2008

                                  ----------

                            THURSDAY, APRIL 12, 2007

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 10:12 a.m., in room SD-124, Dirksen
    Senate Office Building, Senator Jack Reed presiding.
        Present: Senators Reed, Byrd, Murray, Hutchison, Craig, and
    Allard.

                         DEPARTMENT OF VETERANS AFFAIRS

    STATEMENT OF R. JAMES NICHOLSON, SECRETARY
    ACCOMPANIED BY:
            MICHAEL J. KUSSMAN, M.D., ACTING UNDER SECRETARY, VETERANS
                HEALTH ADMINISTRATION
            WILLIAM F. TUERK, UNDER SECRETARY FOR MEMORIAL AFFAIRS,
                NATIONAL CEMETERY ADMINISTRATION
            ROBERT J. HENKE, ASSISTANT SECRETARY FOR MANAGEMENT, DEPARTMENT
                OF VETERANS AFFAIRS
            ROBERT T. HOWARD, ASSISTANT SECRETARY FOR INFORMATION AND
                TECHNOLOGY, DEPARTMENT OF VETERANS AFFAIRS
            RON AUMENT, DEPUTY UNDER SECRETARY, VETERANS BENEFITS
                ADMINISTRATION

                     OPENING STATEMENT OF SENATOR JACK REED

        Senator Reed. Let me call this hearing to order.
        And, this morning we're joined by the chairman of the full
    committee, Senator Robert Byrd. And, I would like to, at this
    time, recognize Chairman Byrd for his statement.
        Senator Byrd, please.

                      STATEMENT OF SENATOR ROBERT C. BYRD

        Senator Byrd. I thank you.
        Mr. Chairman, in the fourth century Augustine of Hippo
    said, ``In doing what we ought, we deserve no praise because it
    is our duty.''
        Mr. Chairman, over the last several years the
    administration has repeatedly shirked its duty by sending
    budget requests to Congress that have short-changed our
    veterans. When the supplemental request was received a few
    months back, there was no request for additional funding from
    the Department of Veterans Affairs to treat those veterans who
    have been injured during the wars in Iraq and Afghanistan,
    including those injured who required special care and those who
    require long-term care.
        To address these very pressing needs, the Senate recently
    added $1.77 billion to the emergency supplemental
    appropriations bill. The continued neglect of America's
    seriously injured veterans demands an emergency response from
    Congress.
        As the chairman of the full Appropriations Committee, I am
    at a complete loss as to why this administration does not feel
    the same way. While the VA continues to try to address the
    injuries and unique illnesses suffered by Vietnam and Persian
    Gulf war veterans, a new surge of injured warriors are flooding
    our veterans hospitals. Each conflict and each patient presents
    a unique dilemma. The VA must be ready to step up to the
    daunting challenge. The backlog of claims within the Department
    of Veterans Affairs remains unacceptable.
        We continue to receive reports of veterans who are forced
    to wait far too long for an appointment. Now, I'll say that
    again. We continue to receive reports of veterans and from
    veterans and by veterans who are forced to wait far too long
    for an appointment. And, the number of veterans entering the
    system continues to grow at a rapid pace. The ongoing wars in
    Iraq and Afghanistan combined with a growing number of patients
    from previous conflicts have resulted in an unprecedented
    strain.
        Attempts at seamless transition between the Department of
    Defense and the Department of Veterans Affairs date back to the
    1980s. And, while billions of taxpayer dollars have been
    invested in the development of electronic medical record
    keeping standards in each agency, a reliable system has yet to
    be established.
        In West Virginia, we received positive comments regarding
    the quality of care, but very negative comments regarding
    appointments to get that care.
        I believe that these veterans, as a result of their service
    to our country, deserve the best possible care, not on your
    timeline, and I say this most respectfully, not on your
    timeline, but on theirs. And, we, meaning Robert C. Byrd and
    the members from both sides, we should do everything we can to
    ensure that their service and sacrifices are honored.
        Mr. Chairman.
        Senator Reed. At this point, I'd like to recognize the
    ranking member, Mrs. Hutchison, for her statement.

                   STATEMENT OF SENATOR KAY BAILEY HUTCHISON

        Senator Hutchison. Mr. Chairman, I'm happy to defer to you
    for a statement first.
        Senator Reed. I think in fairness we'll go back and forth,
    so why don't you go ahead now.
        Senator Hutchison. Thank you. Thank you, Mr. Chairman.
        I'm pleased to welcome the Secretary and the other
    witnesses and guests today, because we all know this is a very
    important subject and the budget that you have presented is
    certainly one that we must appropriately address.
        The medical services account is up 6.49 percent and medical
    administration requests up 8.49 percent and this is necessary
    growth to keep pace with the increasing workload. That is in
    addition to over $1.5 billion that we put in a supplemental
    appropriation to assure that you would have the money to meet
    the increasing demand from the, for the Veterans Affairs
    Medical Services. I am especially pleased to see the emphasis
    that you have placed on post-traumatic stress syndrome and the
    incidence of traumatic brain injury, which we will discuss
    further, I'm sure, but this is something that we see many of
    our returning soldiers dealing with, and that you have
    increased that part of your appropriations request is very
    good.
        We also--I want to say that the $3 billion committed to
    mental health services, I am seeing that commitment to the
    Centers of Excellence and Mental Healthcare certainly coming to
    fruition. At the Waco Veterans Center--which has been one of
    the three designated, the other two being in California and New
    York--we're seeing that the collaboration with research
    facilities at Baylor University, Texas A&M, Fort Hood Army
    Hospital, and the Mental Health Association from the State of
    Texas, the facility at Waco has become a critical cornerstone
    in providing quality care. And I think that we're going to see
    great benefits from that. And, I appreciate your working to
    make that facility one that I think is going to be a true
    Center of Excellence.
        I also want to say that you have stepped up to the plate on
    gulf war syndrome. The research being done on that is very
    important for--not only today--but future warriors who will go
    into chemical or biological weaponry. I think it is important
    that we learn once and for all how the chemicals that we know
    our soldiers were exposed to, coming back with these symptoms,
    can be addressed. So, I appreciate that despite some of the
    chatter out there and some of the controversy, that you have
    remained committed to finding out what is the cause and
    therefore, what can be the cure.
        Another area of concern for me, has been the inability of
    the VA and the Department of Defense to coordinate the
    electronic transfer of records. One of the things that the
    committee has done through the years with myself and Senator
    Feinstein in complete agreement, and the full committee chair
    and ranking member in complete agreement, has been that the VA
    has a great electronic transfer system of records. That was
    shown in Katrina when not one veteran had a lost record.
    Wherever that veteran ended up from New Orleans, their records
    were electronically transferred and that, that veteran got the
    care and the medicine that he or she needed.
        However, the Department of Defense is not coordinated with
    the Veterans Administration so, we have found that there has
    been a disconnect when the returning veteran of today is trying
    to get into the Veterans' system from active duty service, and,
    we want to, we want to remedy that.
        I'm going to introduce an amendment to the Defense
    appropriations bill to ensure that the DOD healthcare records
    become electronic, and compatible, with the VA. That will mean
    that you, within your parameters and laws, will have to work
    with the Department of Defense, but it will be in everyone's
    interest that we improve that system.
        In addition, the number of days of processing required for
    benefits has certainly come under scrutiny. We are concerned
    that the processing of claims now has an average of 177 days
    and I know that you are aggressively hiring claims examiners
    and that you are providing in this appropriation for more
    claims examiners. I hope that this will be a major focus of
    your administration going forward. Someone should not have to
    wait more than 30 days to have the claims processed and I hope
    that that is your goal.
        I want to bring up in the major construction area. You've
    got, in this year's major construction request, $341 million
    for one project. That is over 53 percent of your major
    construction budget. This is a project that has already had
    $259 million appropriated for it, of which only $53 million has
    been obligated since 2004. So, I have to ask the question, why
    you're tying up so much money into one project if you are not
    obligating the funds? This is Las Vegas. The project was
    originally scheduled to cost $286 million. Last year, the
    project was projected to cost $406 million and now, 4 months
    later, your staff is reporting that the cost has risen to over
    $600 million. I understand that an additional 90,000 square
    feet has recently been added to the project after the design
    was complete and so, I want to, to have a little more
    exploration of that and particularly because I know that there
    is least one study of there for South Texas to have a Veterans'
    Administration hospital, and that Booz Allen Hamilton has been
    tasked to do that. We've waited for over a year for that
    report, but I'd just like a little more explanation about why
    the major construction funding seems to be taken up with a
    project that doesn't seem to be going forward, and seems to be
    increasing in the amount of the allocation to it.
        So, I hope that we can address some of these issues, but in
    the main, Mr. Secretary, I want to say that as the former
    chairman and now ranking member of this subcommittee, I
    appreciate how hard you have worked to be transparent with this
    committee, to address the issues of concern that we have had
    with our different chairmen and ranking members. Your staff has
    been very accessible and when you had the shortfall, you
    stepped up to the plate, you didn't try to, you didn't try to
    soften that there was going to be a shortfall. You came right
    to the committee, you asked for the help, and you got it. So, I
    appreciate the working relationship that we've had.

                               PREPARED STATEMENT

        I appreciate the great job that veterans believe that you
    do, even with some of the things that I've talked about. The
    veterans are coming for veterans' healthcare in droves. The
    numbers are increasing exponentially. So, you are doing a good
    job in many areas and we want to make sure you have the funding
    you need to do the good job and to grow and do an even better
    job.
        Thank you very much.
        [The statement follows:]

               Prepared Statement of Senator Kay Bailey Hutchison

        Thank you, Mr. Chairman. I am pleased to welcome Secretary
    Nicholson and our other witnesses and guests. Today, we will examine
    the President's budget request for the Department of Veterans Affairs,
    including funds for veterans' benefits, healthcare, and national
    cemeteries.
        There has been a lot of public concern lately about the ability of
    the Department of Veterans Affairs to deliver on its promises to
    America's veterans. This budget entrusts $84 billion to the Department
    of Veterans Affairs to provide healthcare and benefits for our
    veterans. This is $45 billion in mandatory benefits and $39 billion for
    discretionary spending, which includes $37 billion for medical
    programs.
        The Medical Services account request is up 6.49 percent to $1.656
    billion and the Medical Administration request is up 8.49 percent to
    $265 million. I know this growth is necessary to keep pace with the
    increasing workload you are taking on and we will do everything we can
    to work with you to take care of our Nation's veterans. We are
    concerned that as our brave men and women return from the war they
    receive the very best medical care our Nation can provide. I am please
    to see that your budget request keeps us on that track. I know it is
    difficult to anticipate every need, but I know this subcommittee is
    solidly behind providing everything you need to carry out your mission.
        As more of our soldiers return with delayed Post Traumatic Stress
    Syndrome (PTSD) and the incidence of Traumatic Brain Injury is at an
    alarmingly high rate, I am please to see the emphasis you placed on
    these problems in you budget request. I'm sure we will discuss these
    issues at length today.
        We are pleased to see that you have submitted all VA facilities to
    a thorough review to make sure there is no Building 18 in your system;
    and we are happy to find out there is not. Still, we recognize that our
    duty to veterans goes beyond buildings. It goes straight to the people
    and processes that ensure excellence in the spectrum of health,
    benefits, and memorial affairs.
        We are pleased to see that $3 billion has been committed to mental
    health services, including PTSD. The Waco Center of Excellence in
    Mental Health is a model for how consolidating personnel, training and
    specialized resources produces world class care. Their work includes
    close collaboration with the research facilities at Baylor University,
    Texas A&M University Medical School, Fort Hood Army Hospital, and the
    Mental Health Association from the State of Texas. The facility at Waco
    has become a critical cornerstone in providing quality care to our
    veterans and it is one of the many success stories for the VA. The VA
    is receiving great benefits from this hospital. I appreciate the work
    you have personally done for this facility and the other two in
    California and New York.
        I am also pleased that collaborative research into Gulf War illness
    has continued for a second year, and I ask your assurance that this $15
    million annual investment continues for the sake of our deserving
    veterans. I appreciate the efforts you and your staff have made to make
    the collaborative agreement between the Dallas VA Medical Center and
    the University of Texas Southwestern Medical College a win-win for the
    VA, UT and especially our veterans. We do not yet understand all of the
    factors that have caused serious health problems for our veterans who
    fought in the Gulf region but we are seeing the many affects. I am
    committed, as are you, to not turning a blind eye to veterans who may
    have suffered harm during either of the Gulf Wars. Instead, we will
    actively seek to understand and treat the service connected illnesses
    of our Gulf War veterans, whatever their cause.
        We look forward to the good work you will do as the Chair of the
    Task Force on Returning Global War on Terror Heroes. We trust that as
    you examine the system of care for our wounded veterans, you will take
    every opportunity to break through old agency processes to coordinate
    easily accessible and effective care for our veterans. There is no
    excuse for allowing bureaucratic barriers, especially between DOD and
    the VA, to get in the way of caring for our service men and women's
    needs.
        Electronic healthcare records proved how valuable they are during
    hurricanes Katrina and Rita. Because of the VA's great electronic
    healthcare system, not one veteran went without healthcare. You have
    said many times the VA has become the ``gold standard'' for its use of
    electronic healthcare records, and I think we all agree with you. While
    you are chairing this new task force I hope you are able to convince
    the Department of Defense not to develop records systems in parallel
    that do not build on your proven successes.
        Another area of concern for me is the inability of the VA to
    receive medical records from the Department of Defense automatically
    and electronically. I understand you are cooperating in a pilot program
    with the DOD to test the bi-directional transfer of records. We cannot
    afford to wait too long for a solution to this problem. Not only does
    this jeopardize healthcare, it physically slows down claims processing
    times, and we are very aware of the large backlog of claims.
        We are concerned that the average number of days to process
    benefits claims has risen to around 177 days instead of dropping to 160
    days, as originally estimated for 2007. We don't want our veterans
    waiting over 30 days to have their claims processed. We recognize that
    you have aggressively hired 580 claims examiners over the past 2 years,
    and now you need even more. But, we are concerned that the inability to
    electronically transfer medical records and the IT system and
    management processes designed to help process claims are not as good as
    you or we would want them to be.
        I will introduce an amendment to the Department of Defense
    appropriations bill to insure DOD healthcare records become electronic
    and are compatible with and easily transfer to the VA for a real
    seamless transition. In addition, we will then look to you to
    streamline your processes within the law, set explicit efficiency
    goals, and hold staff and contractors accountable to these high
    standards of productivity. We must improve the wait times for claims
    processing. That will be one of the major issues before this
    subcommittee.
        Another issue that has been discussed many times on this
    subcommittee is VA's major construction plan. I particularly note that
    in this year's major construction request you ask for $341.4 million
    for one project. This is over 53 percent of the entire major
    construction budget. This project already has $259 million appropriated
    for it, of which only $53 million has been obligated since 2004. Why
    tie up so much money into one project if you are not obligating the
    funds? Is this realistic? This project was originally projected to cost
    $286 million. In November of 2006 your staff reported the project was
    then projected to cost $406 million. Now 4 months later your staff
    reports the cost has risen to over $600 million. This can't be all
    inflation and construction demand. I understand that an additional
    90,000 square feet has recently been added to the project, after design
    was complete, and according to your architecture contractor the
    original plan we approved was not realistic. I hope you will speak to
    this in your remarks, as I would like more information on your plans.
        Mr. Secretary, last year I asked you to evaluate the inpatient
    healthcare needs of the South Texas Valley region. I understand you
    contracted for this study but it has been a year and I am still waiting
    for the results. Would you please advise me when I can expect the
    results from this study?
        I look forward to discussing these and other issues with our
    witnesses. Thank you, Mr. Chairman.

        Senator Reed. Thank you, Senator Hutchison.
        I have a prepared statement, but I think Senator Byrd made
    a very compelling case and I'd be prepared to submit my
    statement to the record. And, I know that there's a hearing
    going on simultaneously involving Veterans' Administration and
    we want to, I think, move quickly to questions. I presume my
    colleagues have no formal statements at the time.

                              PREPARED STATEMENTS

        Senator Craig. I'll make a statement in my questioning
    period.
        Senator Allard. I'd just, Mr. Chairman, I'd just like to
    have my statement made a part of the record.
        [The statements follow:]

                    Prepared Statement of Senator Jack Reed

        Mr. Secretary, thank you for appearing before the subcommittee
    today to discuss the President's fiscal year 2008 budget request for
    the Department of Veterans Affairs. We welcome you and your associates,
    and we look forward to your testimony.
        I believe that the Department of Veterans Affairs is at a critical
    point. Two years ago, Congress and the Nation got a sobering wake up
    call when the VA owned up to a $3 billion shortfall in medical funding
    due to faulty budget projections. While the rest of America was focused
    on the growing number of casualties from the wars in Iraq and
    Afghanistan, the VA apparently neglected to factor them into its
    projections, thus leaving a gaping hole in its budget.
        Congress moved swiftly to remedy that shortfall, and since then, we
    have been watching the VA budget very closely, as I'm sure you have
    noticed. I commend you for sending up a more realistic budget request
    last year, and again this year, and I believe that the VA is moving in
    the right direction.
        Unfortunately, I do not believe that the VA is moving fast enough
    or aggressively enough to meet the challenges that are bearing down on
    it. Two weeks ago, the Senate passed a war supplemental funding bill
    that included $1.7 billion for the VA, primarily to meet the unique
    medical needs of Iraq and Afghanistan war veterans. The House passed a
    similar measure. The need for such funding seems obvious to me, and yet
    the President did not request one penny in the supplemental for Iraq
    and Afghanistan veterans.
        It is difficult to comprehend how the President and the Department
    of Veterans Affairs can reach the conclusion that no supplemental
    funding is needed for Iraq and Afghanistan veterans in the face of what
    has become the longest and costliest conflict for U.S. troops since
    Vietnam. No matter how you crunch the numbers, they just don't add up.
    Hundreds of thousands of new combat veterans are entering the VA
    healthcare system, some with catastrophic injuries that will require
    life-long care, and yet the Administration seems to think these
    veterans can simply be absorbed into the system without a major
    reassessment and reinforcement of the VA's budget.
        That is a perilous assumption. It is essential for the VA to
    prepare for the future now, not when the next crisis is upon us. We
    have all seen the reports in the media about the rundown facilities and
    substandard treatment of some of our wounded service members at
    military and VA hospitals. I am pleased that both the Defense
    Department and the VA are moving to address these issues. We know there
    are problems today, and it is no great stretch to recognize that these
    problems will only grow worse if they are not addressed quickly and
    comprehensively. This is not the time for penny-wise, pound-foolish
    budget decisions. I fear that the President's budget request for fiscal
    year 2008, while adequate to keep the VA afloat today, is dangerously
    shortsighted in terms of building the capacity that our veterans will
    need in the years to come.
        Although we may not always agree on policies or priorities, it is
    important to remember that we are all committed to helping our Nation's
    veterans. Mr. Secretary, we want to work with you, and we ask you to
    work with us. We had some problems during the drafting of the
    supplemental in getting timely and accurate information from the VA to
    verify certain data and statistics. I would like your personal
    assurance that your agency will cooperate fully with congressional
    requests for this type of data in the future so that we can tackle
    these very important issues together.
        There is much more that I could say, and would like to say, about
    the pressing needs of our Nation's veterans. But as you know, Mr.
    Secretary, there is a joint hearing of the Senate Armed Services and
    Veterans Affairs Committees underway at this time on disability and
    transition issues affecting both DOD and the VA. Many members of this
    panel who are also members of those committees, and I expect that many
    of our members would like an opportunity to attend that hearing as
    well. So in the interests of time, I suggest that we limit opening
    statements to the Chairman and Ranking Member, and I would ask that you
    keep your opening remarks brief so that we can get directly to our
    questions. We will, of course, include your full statement in the
    record, as well as the opening statements of any members who wish to
    submit them.
        Thank you again for appearing before the subcommittee today.
                                     ______

                   Prepared Statement of Senator Wayne Allard

        Thank you, Mr. Chairman, for holding this important hearing today.
    I appreciate all of our witnesses appearing before the committee today,
    and would like to especially welcome Secretary Jim Nicholson, a long
    time friend and fellow Coloradan.
        This committee continues to face the challenges of balancing both
    the needs of veterans returning from combat in Afghanistan and Iraq as
    well as those who served their country in World War II, Korea, Vietnam
    and Desert Storm. As every day passes and more veterans return home,
    greater stresses are brought upon the Veterans Health Administration.
        Despite the excellent quality of care provided by the VA, there
    have been a number of incidents over the last year that have reflected
    poorly upon the military and veterans health systems. It is my hope
    that Congress can continue to work with the VA to ensure that the needs
    of all of our veterans are met and that they continue to receive
    exceptional care.
        Of course, accomplishing these objectives is not easy if we also
    intend to reign in Federal spending and act fiscally responsible. These
    are the challenges that await, and I look forward to working with the
    panel to deliver to our veterans the quality healthcare they deserve.
        Mr. Secretary, again I'd like to reiterate my appreciation to the
    panel for appearing in front of us today and I look forward to your
    testimony. Thank you Mr. Chairman.

        Senator Reed. All statements were made part of the record
    upon submission.
        And, at the request of Senator Byrd and we informed him,
    Mr. Secretary, we'd request you'd take an oath of your
    testimony. Please stand.
        Senator Craig. Oh, you've got to be kidding me.
        Senator Reed. Do you solemnly swear that the testimony you
    will give to the committee today is the truth, the whole truth,
    and nothing but the truth, so help you God?
        Secretary Nicholson. I do.
        Senator Reed. Thank you, Mr. Secretary.
        Senator Craig. Mr. Chairman, in all due courtesy to the
    chairman of the full committee, since when did we start asking
    for oaths? I've never seen that practice in my 10 years of
    serving on the Appropriations--are we suggesting that the
    testimony that's about to be given is not truthful?
        Senator Reed. No.
        Senator Craig. Then why are we asking for an oath?
        Senator Byrd. I'll tell you why.
        Senator Reed. Mr. Chairman----
        Senator Craig. Please do. This is a precedent-setting
    event, and it ought to be on the record.
        Senator Reed. Mr. Chairman and Senator Craig for the
    record, we informed the Secretary. He had no objection to it.
    We informed the ranking member. She had no objection to it. I
    think it's the right of any member of the committee, with at
    least three members present, to request that any witness take
    the oath.
        Senator Craig. I appreciate that.
        Senator Reed. Those are the rules.
        Senator Craig. Let the record show that I object, because I
    think it reflects an attitude of suspicion. Thank you.
        Senator Reed. The record will so show that.
        Secretary, your statement, please.
        Secretary Nicholson. Thank you, Mr. Chairman, Senator
    Hutchison, members of the committee, Chairman Byrd.
        I have a written statement that I would like to submit for
    the record.
        Senator Reed. Mr. Secretary, your statement will be made
    part of the record. You can make a statement, a summary, or
    any----
        Secretary Nicholson. Yes, sir.
        Senator Reed [continuing]. Form thereof. Thank you, Mr.
    Secretary.

                        STATEMENT OF R. JAMES NICHOLSON

        Secretary Nicholson. First, I'd like to introduce my VA
    colleagues that are at the table with me starting at my far
    left and your right is Under Secretary Bill Tuerk, who's the
    Under Secretary for Memorial Affairs. Next is Mr. Ron Aument,
    who is the Deputy Under Secretary for Benefits. My immediate
    left is Dr. Mike Kussman, who is the senior executive in charge
    of the Veterans Health Administration. My right and your left
    is Assistant Secretary Bob Howard, who's the Assistant
    Secretary for Information Technology. And, at my immediate
    right is Assistant Secretary Bob Henke, who is the Chief
    Financial Officer for the Department of Veterans Affairs.
        I also would like to mention that, I like everyone else, is
    heartened to learn that Senator Johnson seems to be firmly on
    the road to recovery and we look forward to his return to the
    Senate and to our working with him to care for our veterans.
        Mr. Chairman, I'm here today to discuss President Bush's
    landmark 2008 budget proposal of nearly $87 billion for the
    Department of Veterans Affairs, which represents a 77 percent
    increase in veterans spending since this President took office
    on January 20, 2001. Medical care itself is up 83 percent.
        This funding level allows for the VA to continue improving
    the delivery of benefits and services to veterans and their
    families in three critical primary areas.
        One, to provide timely, high-quality healthcare to veterans
    returning from service in Operation Iraqi Freedom and Operation
    Enduring Freedom. Veterans with service-connected disabilities,
    those with lower incomes, and veterans with special healthcare
    needs. To improve the delivery of benefits through the
    timeliness and accuracy of claims processing and to increase
    veterans access to a burial option in a National or State
    veteran cemetery. This budget will also allow us to continue
    our progress toward becoming a national leader in information
    technology and data security.
        Mr. Chairman, I will outline the major portions of our
    proposed budget. The Veterans Health Administration, our total
    medical care request is $36.6 billion in authority for our
    healthcare. VA healthcare is now almost universally acclaimed
    as the best healthcare in the world. During 2008, we expect to
    treat about 5.8 million unique veteran patients. We will see
    each of them on an average of 10 times, approximately,
    resulting in our seeing over 1 million patients per week.
        With the resources requested for medical care in 2008, the
    Department will continue our exceptional performance, providing
    access to healthcare. Ninety-six percent of primary care
    appointments and 95 percent of specialty care appointments are
    scheduled within 30 days of the patient's desired date.
        The President's request includes nearly $3 billion to
    improve access to mental health services across the country.
    The VA is a respected leader in mental health and PTSD research
    and care. About 80 percent of the funds for mental health go to
    treat seriously mentally ill veterans, including those
    suffering from post-traumatic stress disorder. Our approach to
    PTSD is the, is to promote early recognition of this condition
    to prevent lasting impairment.
        Medical research--the President's 2008 budget includes $411
    million to support VA's unparalleled medical and prosthetic
    research program. This amount will fund nearly 2,100 high-
    priority research projects to expand knowledge in areas most
    critical to veterans' particular health needs. Nearly 60
    percent of our research budget is devoted to OIF/OEF healthcare
    issues.
        In response to the unique injuries of the current war, the
    VA has expanded its four traumatic brain injury centers, which
    are in Minneapolis, Palo Alto, Richmond, and Tampa, to become
    polytrauma centers encompassing additional specialties to treat
    patients from multiple complex injuries. We're now expanding
    our polytrauma network to 21 sites and 76 clinic support teams
    around the country providing state of the art treatment closer
    to injured veterans' homes.
        The VA has taken steps to raise awareness of TBI, that is
    traumatic brain injury, issues by requiring specific training
    on TBI. The course advises practitioners that brain trauma
    causes both acute and delayed symptoms and that prompt
    identification and multi-disciplinary evaluation and treatment
    are essential to successful recovery. On April 2, we began
    screening all OIF/OEF patients who come to us, to assess the
    possibility that they may have developed mild or moderate
    traumatic brain injury.
        Seamless transition--one of the most important features of
    the President's 2008 budget request, is to make injured service
    members' transition from active duty to veteran status as
    smooth as possible. And we will not rest until every seriously
    injured service member returning from combat receives the
    quality treatment they need in a compassionate and timely way.
        In that regard, Mr. Chairman, I have recently directed the
    hiring of 100 new patient advocates to serve as the voices for
    our severely wounded soldiers, as they transition from DOD
    hospitals, to our VA system, to their lives as civilians.
        In response to Walter Reed, on March 6 the President issued
    an Executive order forming a Presidential commission, led by
    Senator Dole and Secretary Shalala, tasked to review the care
    provided to our wounded servicemen and women. Their work is
    ongoing. In addition, President Bush appointed me, in that same
    Executive order, to Chair an inter-Cabinet taskforce that will
    report to the President on Federal services for our returning
    troops.
        The taskforce is examining services that are currently
    provided, as well as existing gaps in those services. It is
    seeking recommendations from Federal departments on ways to
    fill those gaps as quickly as possible. This taskforce will
    report to the President on April 19.
        Let me speak of veterans' benefits. The VA's primary focus
    within the administration of benefits remains unchanged,
    delivering timely and accurate benefits to veterans and their
    families. Improving the delivery of compensation and pension
    benefits has become increasingly challenging, but we will
    succeed. The volume of claims applications has grown
    substantially during the past few years, and is now the highest
    it's been in 15 years. We received more than 806,000 claims
    last year. Our pending inventory of disability rating claims is
    currently about 400,000 claims, and averages a processing time
    of 177 days. And this is too long.
        We must and will reduce the pending inventory and shorten
    the time veterans must wait for decisions on their claims.
    Through a combination of aggressive management and productivity
    improvements and our 2008 request we will add 450 additional
    staff and continue to improve our performance, while
    maintaining high quality. With this budget, we project that we
    will reduce our claims processing time by 18 percent, while
    maintaining high quality. Further, we continue to prioritize
    the claims processing for those claims of our OIF/OEF combatant
    veterans.
        For the National Cemetery Administration, we expect to
    perform nearly 105,000 interments, in 2008. And, this is
    primarily the result of the aging of the World War II and
    Korean War veteran population. We are experiencing the biggest
    expansion of the National Cemetery System since the Civil War,
    including six new cemeteries in this, President Bush's 2008
    budget. Every day now, more than 1,800 veterans die. Most of
    them are World War II and Korean War veterans.
        Let me mention capital programs. The VA's 2008 request
    includes $1.1 billion in new budget authority for our capital
    programs. Our request includes $727 million for major
    construction projects, $233 million for minor construction, $85
    million in grants for State extended-care facilities, and $32
    million in grants to build State veterans' cemeteries. The 2008
    request for construction funding for our healthcare programs is
    $750 million. These resources will be devoted to the
    continuation of the Capital Asset for Realignment for Enhanced
    Services, or CARES program.
        Over the last 5 years, $3.7 billion in total funding has
    been provided for CARES. With our request for major
    construction are the resources to continue six medical facility
    projects already underway. They are in Pittsburgh, Denver, Las
    Vegas, Orlando, Lee County, Florida, and Syracuse, New York.
    Funds are also included for six new national cemeteries in
    Bakersfield, California, Birmingham, Alabama, Columbia-
    Greenville, South Carolina, Jacksonville, Florida, Southeastern
    Pennsylvania, and Sarasota County, Florida.
        Information technology--the VA's 2008 budget request for IT
    is $1.86 billion, which includes the first phase of our
    reorganization of IT functions in the Department. This major
    transformation of IT will bring our program in line with the
    best practices in the IT industry. Greater centralization will
    play a significant role in ensuring that we fulfill our promise
    to make the VA the gold-standard for data security within the
    Federal Government, just as we have done with electronic
    medical records.
        And speaking of electronic medical records, the most
    critical IT project for our medical care program, is the
    continued operation and improvement of the Department's
    electronic health records. Electronic health records are a
    Presidential priority and VA's electronic health record system
    has been recognized nationally as the model for increasing
    productivity, quality, and patient safety.
        And, I would like to point out--and I take great pride in
    doing so--the, an article of Monday's Washington Post in the
    Health section saying, ``The VA takes the lead in paperless
    care.'' And, it takes up almost the entire section, extolling
    the VA healthcare and the VA electronic medical records. And,
    it makes me very proud of the people who work for the VA and
    who have achieved that.
        We will continue to lead the way with electronic health
    records and we want to work closely with the Department of
    Defense and other Federal agencies to make the electronic
    sharing of medical information universally a reality, sooner
    rather than later.
        Mr. Chairman, I also want to take this opportunity to
    inform you that I have formed a special Advisory Committee on
    OIF/OEF veterans and their families. Under its charter, the
    committee will focus on advising me, directly, to ensure that
    all men and women with active military service in Iraq and
    Afghanistan are transitioned to the VA in a, in a hassle-free,
    informed manner. The committee will pay particular attention to
    severely disabled veterans and their families.
        Yesterday I was in Las Vegas speaking at a VA-DOD
    conference of 1,400 people focused on improving healthcare to
    transitioning combat veterans. In recent months, as I've
    traveled across the country, I have met with the leadership of
    the Southern, Central, and Northern Commands to talk to them
    about how the VA and the DOD could work better together to care
    for our soldiers, sailors, airmen, Marines, and Coast Guardsmen
    who are returning from the global war on terror.

                               PREPARED STATEMENT

        I've also met with the Commandant of the Marine Corps, the
    Chiefs of the Reserve Components and the Senior Enlisted
    Advisors of the Active and Reserve components, including the
    Coast Guard, for that same reason.
        We at the VA recognize and take very seriously our noble
    mission of serving those who have served us. This budget of the
    President's will allow us to fulfill our responsibilities.
        Thank you, Mr. Chairman.
        [The statement follows:]

                    Prepared Statement of R. James Nicholson

        Mr. Chairman and members of the Committee, good morning. I am
    pleased to be here today to present the President's 2008 budget
    proposal for the Department of Veterans Affairs (VA). The request
    totals $86.75 billion--$44.98 billion for entitlement programs and
    $41.77 billion for discretionary programs. The total request is $37.80
    billion, or 77 percent, above the funding level in effect when the
    President took office.
        The President's requested funding level will allow VA to continue
    to improve the delivery of benefits and services to veterans and their
    families in three primary areas that are critical to the achievement of
    our mission:
      --to provide timely, high-quality healthcare to a growing number of
            patients who count on VA the most--veterans returning from
            service in Operation Iraqi Freedom and Operation Enduring
            Freedom, veterans with service-connected disabilities, those
            with lower incomes, and veterans with special healthcare needs;
      --to improve the delivery of benefits through the timeliness and
            accuracy of claims processing; and
      --to increase veterans' access to a burial option in a national or
            state veterans' cemetery.
    ensuring a seamless transition from active military service to civilian
                                      life
        The President's 2008 budget request provides the resources
    necessary to ensure that service members' transition from active duty
    military status to civilian life continues to be as smooth and seamless
    as possible. We will continue to ensure that every seriously injured or
    ill serviceman or woman returning from combat in Operation Iraqi
    Freedom and Operation Enduring Freedom receives the treatment they need
    in a timely way.
        Recently I announced plans to create a special Advisory Committee
    on Operation Iraqi Freedom/Operation Enduring Freedom Veterans and
    Families. The panel, with membership including veterans, spouses, and
    parents of the latest generation of combat veterans, will report
    directly to me. Under its charter, the committee will focus on the
    concerns of all men and women with active military service in Operation
    Iraqi Freedom or Operation Enduring Freedom, but will pay particular
    attention to severely disabled veterans and their families.
        We will expand our ``Coming Home to Work'' initiative to help
    disabled service members more easily make the transition from military
    service to civilian life. This is a comprehensive intergovernmental and
    public-private alliance that will provide separating service members
    from Operation Iraqi Freedom and Operation Enduring Freedom with
    employment opportunities when they return home from their military
    service. This project focuses on making sure service members have
    access to existing resources through local and regional job markets,
    regardless of where they separate from their military service, where
    they return, or the career or education they pursue.
        VA launched an ambitious outreach initiative to ensure separating
    combat veterans know about the benefits and services available to them.
    During 2006 VA conducted over 8,500 briefings attended by more than
    393,000 separating service members and returning reservists and
    National Guard members. The number of attendees was 20 percent higher
    in 2006 than it was in 2005 attesting to our improved outreach effort.
        Additional pamphlet mailings following separation and briefings
    conducted at town hall meetings are sources of important information
    for returning National Guard members and reservists. VA has made a
    special effort to work with National Guard and reserve units to reach
    transitioning service members at demobilization sites and has trained
    recently discharged veterans to serve as National Guard Bureau liaisons
    in every state to assist their fellow combat veterans.
        Each VA medical center and regional office has a designated point
    of contact to coordinate activities locally and to ensure the
    healthcare and benefits needs of returning service members and veterans
    are fully met. VA has distributed specific guidance to field staff to
    make sure the roles and functions of the points of contact and case
    managers are fully understood and that proper coordination of benefits
    and services occurs at the local level.
        For combat veterans returning from Iraq and Afghanistan, their
    contact with VA often begins with priority scheduling for healthcare,
    and for the most seriously wounded, VA counselors visit their bedside
    in military wards before separation to assist them with their
    disability claims and ensure timely compensation payments when they
    leave active duty.
        In an effort to assist wounded military members and their families,
    VA has placed workers at key military hospitals where severely injured
    service members from Iraq and Afghanistan are frequently sent for care.
    These include benefit counselors who help service members obtain VA
    services as well as social workers who facilitate healthcare
    coordination and discharge planning as service members transition from
    military to VA healthcare. Under this program, VA staff provide
    assistance at 10 military treatment facilities around the country,
    including Walter Reed Army Medical Center, National Naval Medical
    Center Bethesda, Naval Medical Center San Diego, and Womack Army
    Medical Center at Fort Bragg.
        To better meet the healthcare needs of the newest generation of
    combat veterans returning from Iraq and Afghanistan, VA has established
    a polytrauma system of care for veterans and active duty personnel with
    lasting disabilities due to polytrauma and traumatic brain injury. This
    system of care will provide the highest quality of medical,
    rehabilitation, and support services. This initiative was developed
    consistent with three fundamental principles--(1) geographic
    distribution of specialty rehabilitation programs so as to facilitate
    transitioning veterans into their home communities; (2) use of an
    interdisciplinary model of care delivery where specialists from several
    medical and rehabilitation disciplines work together to develop an
    integrated treatment plan for each veteran; and (3) provide lifelong
    services for veterans with severe impairments and functional
    disabilities resulting from polytrauma and traumatic brain injury.
        VA has expanded its four polytrauma centers in Minneapolis, Palo
    Alto, Richmond, and Tampa to encompass additional specialties to treat
    patients for multiple complex injuries. Our efforts are being expanded
    to 21 polytrauma network sites and clinic support teams around the
    country providing state-of-the-art treatment closer to injured
    veterans' homes. We have made training mandatory for all physicians and
    other key healthcare personnel on the most current approaches and
    treatment protocols for effective care of patients with traumatic brain
    injuries. At each of our medical centers, we will screen all recent
    combat veterans for traumatic brain injury. We have also created an
    outside panel of experts to review VA's complete polytrauma system of
    care, including programs focused specifically on patients with
    traumatic brain injuries. Furthermore, we established a polytrauma call
    center in February 2006 to assist the families of our most seriously
    injured combat veterans and service members. This call center operates
    24 hours a day, 7 days a week to answer clinical, administrative, and
    benefit inquiries from polytrauma patients and family members.
        VA is improving coordination of care for veterans with polytrauma
    and traumatic brain injury by assigning a social work case manager to
    every patient treated at the polytrauma centers. These case managers
    handle the continuum of care and care coordination, act as the point of
    contact for emerging medical, psychosocial, or rehabilitation problems,
    and provide psychosocial support and education. In addition, we are
    using state-of-the-art video conferencing that permits top specialists
    to take an active role in the treatment of patients in remote
    locations.
        VA has significantly expanded its counseling and other medical care
    services for recently discharged veterans suffering from mental health
    disorders, including post-traumatic stress disorder. We have launched
    new programs, including dozens of new mental health teams based in VA
    medical facilities focused on early identification and management of
    stress-related disorders, as well as the recruitment of about 100
    combat veterans as counselors to provide briefings to transitioning
    service members regarding military-related readjustment needs.
                                  medical care
        We are requesting $36.6 billion for medical care in 2008, a total
    more than 83 percent higher than the funding available at the beginning
    of the Bush Administration. Our total medical care request is comprised
    of funding for medical services ($27.2 billion), medical administration
    ($3.4 billion), medical facilities ($3.6 billion), and resources from
    medical care collections ($2.4 billion).
    Legislative Proposals
        The President's 2008 budget request identifies three legislative
    proposals which ask veterans with comparatively greater means and no
    compensable service-connected disabilities to assume a small share of
    the cost of their healthcare.
        The first proposal would assess Priority 7 and 8 veterans with an
    annual enrollment fee based on their family income:

    ------------------------------------------------------------------------
                                                                  Annual
                          Family income                       enrollment fee
    ------------------------------------------------------------------------
    Under $50,000...........................................         ( \1\ )
    $50,000-$74,999.........................................            $250
    $75,000-$99,999.........................................             500
    $100,000 and above......................................             750
    ------------------------------------------------------------------------
    \1\ None.

        The second legislative proposal would increase the pharmacy co-
    payment for Priority 7 and 8 veterans from $8 to $15 for a 30-day
    supply of drugs. And the last provision would eliminate the practice of
    offsetting or reducing VA first-party co-payment debts with collection
    recoveries from third-party health plans.
        While our budget requests in recent years have included legislative
    proposals similar to these, the provisions identified in the
    President's 2008 budget are markedly different in that they have no
    impact on the resources we are requesting for VA medical care. Our
    budget request includes the total funding needed for the Department to
    continue to provide veterans with timely, high-quality medical services
    that set the national standard of excellence in the healthcare
    industry. Unlike previous budgets, these legislative proposals do not
    reduce our discretionary medical care appropriations. Instead, these
    three provisions, if enacted, would generate an estimated $2.3 billion
    in mandatory receipts to the Treasury from 2008 through 2012.
    Workload
        During 2008, we expect to treat about 5,819,000 patients. This
    total is more than 134,000 (or 2.4 percent) above the 2007 estimate.
    Patients in Priorities 1-6--veterans with service-connected conditions,
    lower incomes, special healthcare needs, and service in Iraq or
    Afghanistan--will comprise 68 percent of the total patient population
    in 2008, but they will account for 85 percent of our healthcare costs.
    The number of patients in Priorities 1-6 will grow by 3.3 percent from
    2007 to 2008.
        We expect to treat about 263,000 veterans in 2008 who served in
    Operation Iraqi Freedom and Operation Enduring Freedom. This is an
    increase of 54,000 (or 26 percent) above the number of veterans from
    these two campaigns that we anticipate will come to VA for healthcare
    in 2007, and 108,000 (or 70 percent) more than the number we treated in
    2006.
    Funding Drivers
        Our 2008 request for $36.6 billion in support of our medical care
    program was largely determined by three key cost drivers in the
    actuarial model we use to project veteran enrollment in VA's healthcare
    system as well as the utilization of healthcare services of those
    enrolled: inflation; trends in the overall healthcare industry; and
    trends in VA healthcare.
        The impact of the composite rate of inflation of 4.45 percent
    within the actuarial model will increase our resource requirements for
    acute inpatient and outpatient care by nearly $2.1 billion. This
    includes the effect of additional funds ($690 million) needed to meet
    higher payroll costs as well as the influence of growing costs ($1.4
    billion) for supplies, as measured in part by the Medical Consumer
    Price Index. However, inflationary trends have slowed during the last
    year.
        There are several trends in the U.S. healthcare industry that
    continue to increase the cost of providing medical services. These
    trends expand VA's cost of doing business regardless of any changes in
    enrollment, number of patients treated, or program initiatives. The two
    most significant trends are the rising utilization and intensity of
    healthcare services. In general, patients are using medical care
    services more frequently and the intensity of the services they receive
    continues to grow. For example, sophisticated diagnostic tests, such as
    magnetic resonance imaging (MRI), are now more frequently used either
    in place of, or in addition to, less costly diagnostic tools such as x-
    rays. As another illustration, advances in cancer screening
    technologies have led to earlier diagnosis and prolonged treatment
    which may include increased use of costly pharmaceuticals to combat
    this disease. These types of medical services have resulted in improved
    patient outcomes and higher quality healthcare. However, they have also
    increased the cost of providing care.
        The cost of providing timely, high-quality healthcare to our
    Nation's veterans is also growing as a result of several factors that
    are unique to VA's healthcare system. We expect to see changes in the
    demographic characteristics of our patient population. Our patients as
    a group will be older, will seek care for more complex medical
    conditions, and will be more heavily concentrated in the higher cost
    priority groups. Furthermore, veterans are submitting disability
    compensation claims for an increasing number of medical conditions,
    which are also increasing in complexity. This results in the need for
    disability compensation medical examinations, the majority of which are
    conducted by our Veterans Health Administration, that are more complex,
    costly, and time consuming. These projected changes in the case mix of
    our patient population and the growing complexity of our disability
    claims process will result in greater resource needs.
    Quality of Care
        The resources we are requesting for VA's medical care program will
    allow us to strengthen our position as the Nation's leader in providing
    high-quality healthcare. VA has received numerous accolades from
    external organizations documenting the Department's leadership position
    in providing world-class healthcare to veterans. For example, our
    record of success in healthcare delivery is substantiated by the
    results of the 2006 American Customer Satisfaction Index (ACSI) survey.
    Conducted by the National Quality Research Center at the University of
    Michigan Business School, the ACSI survey found that customer
    satisfaction with VA's healthcare system increased last year and was
    higher than the private sector for the seventh consecutive year. The
    data revealed that inpatients at VA medical centers recorded a
    satisfaction level of 84 out of a possible 100 points, or 10 points
    higher than the rating for inpatient care provided by the private-
    sector healthcare industry. VA's rating of 82 for outpatient care was 8
    points better than the private sector.
        Citing VA's leadership role in transforming healthcare in America,
    Harvard University recognized the Department's computerized patient
    records system by awarding VA the prestigious ``Innovations in American
    Government Award'' in 2006. Our electronic health records have been an
    important element in making VA healthcare the benchmark for 294
    measures of disease prevention and treatment in the United States. The
    value of this system was clearly demonstrated when every patient
    medical record from the areas devastated by Hurricane Katrina was made
    available to all VA healthcare providers throughout the Nation within
    100 hours of the time the storm made landfall. Veterans were able to
    quickly resume their treatments, refill their prescriptions, and get
    the care they needed because of the electronic health records system--a
    real, functioning health information exchange that has been a proven
    success resulting in improved quality of care. It can serve as a model
    for the healthcare industry as the Nation moves forward with the
    public/private effort to develop a National Health Information Network.
        The Department also received an award from the American Council for
    Technology for our collaboration with the Department of Defense on the
    Bidirectional Health Information Exchange program. This innovation
    permits the secure, real-time exchange of medical record data between
    the two departments, thereby avoiding duplicate testing and surgical
    procedures. It is an important step forward in making the transition
    from active duty to civilian life as smooth and seamless as possible.
        In its July 17, 2006, edition, Business Week featured an article
    about VA healthcare titled ``The Best Medical Care in the United
    States.'' This article outlines many of the Department's
    accomplishments that have helped us achieve our position as the leading
    provider of healthcare in the country, such as higher quality of care
    than the private sector, our nearly perfect rate of prescription
    accuracy, and the most advanced computerized medical records system in
    the Nation. Similar high praise for VA's healthcare system was
    documented in the September 4, 2006, edition of Time Magazine in an
    article titled ``How VA Hospitals Became the Best.'' In addition, a
    study conducted by Harvard Medical School concluded that Federal
    hospitals, including those managed by VA, provide the best care
    available for some of the most common life-threatening illnesses such
    as congestive heart failure, heart attack, and pneumonia. Their
    research results were published in the December 11, 2006, edition of
    the Annals of Internal Medicine.
        These external acknowledgments of the superior quality of VA
    healthcare reinforce the Department's own findings. We use two primary
    measures of healthcare quality--clinical practice guidelines index and
    prevention index. These measures focus on the degree to which VA
    follows nationally recognized guidelines and standards of care that the
    medical literature has proven to be directly linked to improved health
    outcomes for patients. Our performance on the clinical practice
    guidelines index, which focuses on high-prevalence and high-risk
    diseases that have a significant impact on veterans' overall health
    status, is expected to grow to 85 percent in 2008, or a 1 percentage
    point rise over the level we expect to achieve this year. As an
    indicator aimed at primary prevention and early detection
    recommendations dealing with immunizations and screenings, the
    prevention index will be maintained at our existing high level of
    performance of 88 percent.
    Access to Care
        With the resources requested for medical care in 2008, the
    Department will be able to continue our exceptional performance dealing
    with access to healthcare--96 percent of primary care appointments will
    be scheduled within 30 days of patients' desired date, and 95 percent
    of specialty care appointments will be scheduled within 30 days of
    patients' desired date. We will minimize the number of new enrollees
    waiting for their first appointment. We reduced this number by 94
    percent from May 2006 to January 2007, to a little more than 1,400, and
    we will continue to place strong emphasis on lowering, and then
    holding, the waiting list to as low a level as possible.
        An important component of our overall strategy to improve access
    and timeliness of service is the implementation on a national scale of
    Advanced Clinic Access, an initiative that promotes the efficient flow
    of patients by predicting and anticipating patient needs at the time of
    their appointment. This involves assuring that specific medical
    equipment is available, arranging for tests that should be completed
    either prior to, or at the time of, the patient's visit, and ensuring
    all necessary health information is available. This program optimizes
    clinical scheduling so that each appointment or inpatient service is
    most productive. In addition, this reduces unnecessary appointments,
    allowing for relatively greater workload and increased patient-directed
    scheduling.
    Funding for Major Healthcare Programs and Initiatives
        Our request includes $4.6 billion for extended care services, 90
    percent of which will be devoted to institutional long-term care and 10
    percent to non-institutional care. By continuing to enhance veterans'
    access to non-institutional long-term care, the Department can provide
    extended care services to veterans in a more clinically appropriate
    setting, closer to where they live, and in the comfort and familiar
    settings of their homes surrounded by their families. This includes
    adult day healthcare, home-based primary care, purchased skilled home
    healthcare, homemaker/home health aide services, home respite and
    hospice care, and community residential care. During 2008 we will
    increase the number of patients receiving non-institutional long-term
    care, as measured by the average daily census, to over 44,000. This
    represents a 19.1 percent increase above the level we expect to reach
    in 2007 and a 50.3 percent rise over the 2006 average daily census.
        The President's request includes nearly $3 billion to continue our
    effort to improve access to mental health services across the country.
    These funds will help ensure VA provides standardized and equitable
    access throughout the Nation to a full continuum of care for veterans
    with mental health disorders. The resources will support both inpatient
    and outpatient psychiatric treatment programs as well as psychiatric
    residential rehabilitation treatment services. We estimate that about
    80 percent of the funding for mental health will be for the treatment
    of seriously mentally ill veterans, including those suffering from
    post-traumatic stress disorder (PTSD). An example of our firm
    commitment to provide the best treatment available to help veterans
    recover from these mental health conditions is our ongoing outreach to
    veterans of Operation Iraqi Freedom and Operation Enduring Freedom, as
    well as increased readjustment and PTSD services.
        In 2008 we are requesting $752 million to meet the needs of the
    263,000 veterans with service in Operation Iraqi Freedom and Operation
    Enduring Freedom whom we expect will come to VA for medical care.
    Veterans with service in Iraq and Afghanistan continue to account for a
    rising proportion of our total veteran patient population. In 2008 they
    will comprise 5 percent of all veterans receiving VA healthcare
    compared to the 2006 figure of 3.1 percent. Veterans deployed to combat
    zones are entitled to 2 years of eligibility for VA healthcare services
    following their separation from active duty even if they are not
    otherwise immediately eligible to enroll for our medical services.
    Medical Collections
        The Department expects to receive nearly $2.4 billion from medical
    collections in 2008, which is $154 million, or 7.0 percent, above our
    projected collections for 2007. As a result of increased workload and
    process improvements in 2008, we will collect an additional $82 million
    from third-party insurance payers and an extra $72 million resulting
    from increased pharmacy workload.
        We have several initiatives underway to strengthen our collections
    processes:
      --The Department has established a private-sector based business
            model pilot tailored for our revenue operations to increase
            collections and improve our operational performance. The pilot
            Consolidated Patient Account Center (CPAC) is addressing all
            operational areas contributing to the establishment and
            management of patient accounts and related billing and
            collections processes. The CPAC currently serves revenue
            operations for medical centers and clinics in one of our
            Veterans Integrated Service Networks but this program will be
            expanded to serve other networks.
      --VA continues to work with the Centers for Medicare and Medicaid
            Services contractors to provide a Medicare-equivalent
            remittance advice for veterans who are covered by Medicare and
            are using VA healthcare services. We are working to include
            additional types of claims that will result in more accurate
            payments and better accounting for receivables through use of
            more reliable data for claims adjudication.
      --We are conducting a phased implementation of electronic, real-time
            outpatient pharmacy claims processing to facilitate faster
            receipt of pharmacy payments from insurers.
      --The Department has initiated a campaign that has resulted in an
            increasing number of payers now accepting electronic
            coordination of benefits claims. This is a major advancement
            toward a fully integrated, interoperable electronic claims
            process.
                                medical research
        The President's 2008 budget includes $411 million to support VA's
    medical and prosthetic research program. This amount will fund nearly
    2,100 high-priority research projects to expand knowledge in areas
    critical to veterans' healthcare needs, most notably research in the
    areas of mental illness ($49 million), aging ($42 million), health
    services delivery improvement ($36 million), cancer ($35 million), and
    heart disease ($31 million).
        VA's medical research program has a long track record of success in
    conducting research projects that lead to clinically useful
    interventions that improve the health and quality of life for veterans
    as well as the general population. Recent examples of VA research
    results that are now being applied to clinical care include the
    discovery that vaccination against varicella-zoster (the same virus
    that causes chickenpox) decreases the incidence and/or severity of
    shingles, development of a system that decodes brain waves and
    translates them into computer commands that allow quadriplegics to
    perform simple tasks like turning on lights and opening e-mail using
    only their minds, improvements in the treatment of post-traumatic
    stress disorder that significantly reduce trauma nightmares and other
    sleep disturbances, and discovery of a drug that significantly improves
    mental abilities and behavior of certain schizophrenics.
        In addition to VA appropriations, the Department's researchers
    compete for and receive funds from other Federal and non-Federal
    sources. Funding from external sources is expected to continue to
    increase in 2008. Through a combination of VA resources and funds from
    outside sources, the total research budget in 2008 will be almost $1.4
    billion.
                           general operating expenses
        The Department's 2008 resource request for General Operating
    Expenses (GOE) is $1.472 billion. This is $617 million, or 72.2
    percent, above the funding level in place when the President took
    office. Within this total GOE funding request, $1.198 billion is for
    the administration of non-medical benefits by the Veterans Benefits
    Administration (VBA) and $274 million will be used to support General
    Administration activities.
    Compensation and Pensions Workload and Performance Management
        VA's primary focus within the administration of non-medical
    benefits remains unchanged--delivering timely and accurate benefits to
    veterans and their families. Improving the delivery of compensation and
    pension benefits has become increasingly challenging during the last
    few years due to a steady and sizeable increase in workload. The volume
    of claims applications has grown substantially during the last few
    years and is now the highest it has been in the last 15 years. The
    number of claims we received was more than 806,000 in 2006. We expect
    this high volume of claims filed to continue, as we are projecting the
    receipt of about 800,000 claims a year in both 2007 and 2008.
        The number of active duty service members as well as reservists and
    National Guard members who have been called to active duty to support
    Operation Enduring Freedom and Operation Iraqi Freedom is one of the
    key drivers of new claims activity. This has contributed to an increase
    in the number of new claims, and we expect this pattern to persist. An
    additional reason that the number of compensation and pension claims is
    climbing is the Department's commitment to increase outreach. We have
    an obligation to extend our reach as far as possible and to spread the
    word to veterans about the benefits and services VA stands ready to
    provide.
        Disability compensation claims from veterans who have previously
    filed a claim comprise about 55 percent of the disability claims
    received by the Department each year. Many veterans now receiving
    compensation suffer from chronic and progressive conditions, such as
    diabetes, mental illness, and cardiovascular disease. As these veterans
    age and their conditions worsen, we experience additional claims for
    increased benefits.
        The growing complexity of the claims being filed also contributes
    to our workload challenges. For example, the number of original
    compensation cases with eight or more disabilities claimed nearly
    doubled during the last 4 years, reaching more than 51,000 claims in
    2006. Almost one in every four original compensation claims received
    last year contained eight or more disability issues. In addition, we
    expect to continue to receive a growing number of complex disability
    claims resulting from PTSD, environmental and infectious risks,
    traumatic brain injuries, complex combat-related injuries, and
    complications resulting from diabetes. Each claim now takes more time
    and more resources to adjudicate. Additionally, as VA receives and
    adjudicates more claims, this results in a larger number of appeals
    from veterans and survivors, which also increases workload in other
    parts of the Department, including the Board of Veterans' Appeals.
        The Veterans Claims Assistance Act of 2000 has significantly
    increased both the length and complexity of claims development. VA's
    notification and development duties have grown, adding more steps to
    the claims process and lengthening the time it takes to develop and
    decide a claim. Also, we are now required to review the claims at more
    points in the adjudication process.
        We will address our ever-growing workload challenges in several
    ways. First, we will continue to improve our productivity as measured
    by the number of claims processed per staff member, from 98 in 2006 to
    101 in 2008. Second, we will continue to move work among regional
    offices in order to maximize our resources and enhance our performance.
    Third, we will further advance staff training and other efforts to
    improve the consistency and quality of claims processing across
    regional offices. And fourth, we will ensure our claims processing
    staff has easy access to the manuals and other reference material they
    need to process claims as efficiently and effectively as possible and
    further simplify and clarify benefit regulations.
        Through a combination of management/productivity improvements and
    an increase in resources in 2008 to support 457 additional staff above
    the 2007 level, we will improve our performance in the area most
    critical to veterans--the timeliness of processing rating-related
    compensation and pension claims. We expect to improve the timeliness of
    processing these claims to 145 days in 2008. This level of performance
    is 15 days better than our projected timeliness for 2007 and a 32-day
    improvement from the average processing time we achieved last year. In
    addition, we anticipate that our pending inventory of disability claims
    will fall to about 330,000 by the end of 2008, a reduction of more than
    40,000 (or 10.9 percent) from the level we project for the end of 2007,
    and nearly 49,000 (or 12.9 percent) lower than the inventory at the
    close of 2006. At the same time we are improving timeliness, we will
    also increase the accuracy of our decisions on claims from 88 percent
    in 2006 to 90 percent in 2008.
    Education and Vocational Rehabilitation and Employment Performance
        With the resources we are requesting in 2008, key program
    performance will improve in both the education and vocational
    rehabilitation and employment programs. The timeliness of processing
    original education claims will improve by 15 days during the next 2
    years, falling from 40 days in 2006 to 25 days in 2008. During this
    period, the average time it takes to process supplemental claims will
    improve from 20 days to just 12 days. These performance improvements
    will be achieved despite an increase in workload. The number of
    education claims we expect to receive will reach about 1,432,000 in
    2008, or 4.8 percent higher than last year. In addition, the
    rehabilitation rate for the vocational rehabilitation and employment
    program will climb to 75 percent in 2008, a gain of 2 percentage points
    over the 2006 performance level. The number of program participants
    will rise to about 94,500 in 2008, or 5.3 percent higher than the
    number of participants in 2006.
        Our 2008 request includes $6.3 million for a Contact Management
    Support Center for our education program. These funds will be used
    during peak enrollment periods for contract customer service
    representatives who will handle all education calls placed through our
    toll-free telephone line. We currently receive about 2.5 million phone
    inquiries per year. This initiative will allow us to significantly
    improve performance for both the blocked call rate and the abandoned
    call rate.
        The 2008 resource request for VBA includes about $4.3 million to
    enhance our educational and vocational counseling provided to disabled
    service members through the Disabled Transition Assistance Program.
    Funds for this initiative will ensure that briefings are conducted by
    experts in the field of vocational rehabilitation, including
    contracting for these services in localities where VA professional
    staff are not available. The contractors would be trained by VA staff
    to ensure consistent, quality information is provided. Also in support
    of the vocational rehabilitation and employment program, we are seeking
    $1.5 million as part of an ongoing project to retire over 650,000
    counseling, evaluation, and rehabilitation folders stored in regional
    offices throughout the country. All of these folders pertain to cases
    that have been inactive for at least 3 years and retention of these
    files poses major space problems.
        In addition, our 2008 request includes $2.4 million to continue a
    major effort to centralize finance functions throughout VBA, an
    initiative that will positively impact operations for all of our
    benefits programs. The funds to support this effort will be used to
    begin the consolidation and centralization of voucher audit, agent
    cashier, purchase card, and payroll operations currently performed by
    all regional offices.
                        national cemetery administration
        The President's 2008 budget request includes $166.8 million in
    operations and maintenance funding for the National Cemetery
    Administration (NCA). These resources will allow us to meet the growing
    workload at existing cemeteries by increasing staffing and funding for
    contract maintenance, supplies, and equipment. We expect to perform
    nearly 105,000 interments in 2008, or 8.4 percent higher than the
    number of interments we performed in 2006. The number of developed
    acres (over 7,800) that must be maintained in 2008 will be 7.3 percent
    greater than last year.
        Our budget request includes $3.7 million to prepare for the
    activation of interment operations at six new national cemeteries--
    Bakersfield, California; Birmingham, Alabama; Columbia-Greenville,
    South Carolina; Jacksonville, Florida; southeastern Pennsylvania; and
    Sarasota County, Florida. Establishment of these six new national
    cemeteries is directed by the National Cemetery Expansion Act of 2003.
        The 2008 budget has $9.1 million to address gravesite renovations
    as well as headstone and marker realignment. These improvements in the
    appearance of our national cemeteries will help us maintain the
    cemeteries as shrines dedicated to preserving our Nation's history and
    honoring veterans' service and sacrifice.
        With the resources requested to support NCA activities, we will
    expand access to our burial program by increasing the percent of
    veterans served by a burial option within 75 miles of their residence
    to 84.6 percent in 2008, which is 4.4 percentage points above our
    performance level at the close of 2006. In addition, we will continue
    to increase the percent of respondents who rate the quality of service
    provided by national cemeteries as excellent to 98 percent in 2008, or
    4 percentage points higher than the level of performance we reached
    last year.
              capital programs (construction and grants to states)
        VA's 2008 request includes $1.078 billion in appropriated funding
    for our capital programs. Our request includes $727.4 million for major
    construction projects, $233.4 million for minor construction, $85
    million in grants for the construction of State extended care
    facilities, and $32 million in grants for the construction of State
    veterans cemeteries.
        The 2008 request for construction funding for our healthcare
    programs is $750 million--$570 million for major construction and $180
    million for minor construction. All of these resources will be devoted
    to continuation of the Capital Asset Realignment for Enhanced Services
    (CARES) program, total funding for which comes to $3.7 billion over the
    last 5 years. CARES will renovate and modernize VA's healthcare
    infrastructure, provide greater access to high-quality care for more
    veterans, closer to where they live, and help resolve patient safety
    issues. Within our request for major construction are resources to
    continue six medical facility projects already underway:
      --Denver, Colorado ($61.3 million)--parking structure and energy
            development for this replacement hospital
      --Las Vegas, Nevada ($341.4 million)--complete construction of the
            hospital, nursing home, and outpatient facilities
      --Lee County, Florida ($9.9 million)--design of an outpatient clinic
            (land acquisition is complete)
      --Orlando, Florida ($35.0 million)--land acquisition for this
            replacement hospital
      --Pittsburgh, Pennsylvania ($40.0 million)--continue consolidation of
            a 3-division to a 2-division hospital
      --Syracuse, New York ($23.8 million)--complete construction of a
            spinal cord injury center.
        Minor construction is an integral component of our overall capital
    program. In support of the medical care and medical research programs,
    minor construction funds permit VA to address space and functional
    changes to efficiently shift treatment of patients from hospital-based
    to outpatient care settings; realign critical services; improve
    management of space, including vacant and underutilized space; improve
    facility conditions; and undertake other actions critical to CARES
    implementation. Our 2008 request for minor construction funds for
    medical care and research will provide the resources necessary for us
    to address critical needs in improving access to healthcare, enhancing
    patient privacy, strengthening patient safety, enhancing research
    capability, correcting seismic deficiencies, facilitating realignments,
    increasing capacity for dental services, and improving treatment in
    special emphasis programs.
        We are requesting $191.8 million in construction funding to support
    the Department's burial program--$167.4 million for major construction
    and $24.4 million for minor construction. Within the funding we are
    requesting for major construction are resources to establish six new
    cemeteries mandated by the National Cemetery Expansion Act of 2003. As
    previously mentioned, these will be in Bakersfield ($19.5 million),
    Birmingham ($18.5 million), Columbia-Greenville ($19.2 million),
    Jacksonville ($22.4 million), Sarasota ($27.8 million), and
    southeastern Pennsylvania ($29.6 million). The major construction
    request in support of our burial program also includes $29.4 million
    for a gravesite development project at Fort Sam Houston National
    Cemetery.
                             information technology
        VA's 2008 budget request for information technology (IT) is $1.859
    billion. This budget reflects the first phase of our reorganization of
    IT functions in the Department which will establish a new IT management
    structure in VA. The total funding for IT in 2008 includes $555 million
    for more than 5,500 staff who have been moved to support operations and
    maintenance activities. Prior to 2008, the funding and staff supporting
    these IT activities were reflected in other accounts throughout the
    Department.
        Later in 2007 we will implement the second phase of our IT
    reorganization strategy by moving funding and staff devoted to
    development projects and activities. As a result of the second stage of
    the IT reorganization, the Chief Information Officer will be
    responsible for all operations and maintenance as well as development
    activities, including oversight of, and accountability for, all IT
    resources within VA. This reorganization will make the most efficient
    use of our IT resources while improving operational effectiveness,
    providing standardization, and eliminating duplication.
        This major transformation of IT will bring our program under more
    centralized control and will play a significant role in ensuring we
    fulfill my promise to make VA the gold standard for data security
    within the Federal government. We have taken very aggressive steps
    during the last several months to ensure the safety of veterans'
    personal information, including training and educating our employees on
    the critical responsibility they have to protect personal and health
    information, launching an initiative to expeditiously upgrade all VA
    computers with enhanced data security and encryption, entering into an
    agreement with an outside firm to provide free data breach analysis
    services, initiating any needed background investigations of employees
    to ensure consistency with their level of authority and
    responsibilities in the Department, and beginning a campaign at all of
    our healthcare facilities to replace old veteran identification cards
    with new cards that reduce veterans' vulnerability to identify theft.
    These steps are part of our broader commitment to improve our IT and
    cyber security policies and procedures.
        Within our total IT request of $1.859 billion, $1.304 billion (70
    percent) will be for non-payroll costs and $555 million (30 percent)
    will be for payroll costs. Of the non-payroll funding, $461 million
    will support projects for our medical care and medical research
    programs, $66 million will be devoted to projects for our benefits
    programs, and $446 million will be needed for IT infrastructure
    projects. The remaining $331 million of our non-payroll IT resources in
    2008 will fund centrally-managed projects, such as VA's cyber security
    program, as well as management projects that support department-wide
    initiatives and operations like the replacement of our aging financial
    management system and the development and implementation of a new human
    resources management system.
        The most critical IT project for our medical care program is the
    continued operation and improvement of the Department's electronic
    health record system, a Presidential priority which has been recognized
    nationally for increasing productivity, quality, and patient safety.
    Within this overall initiative, we are requesting $131.9 million for
    ongoing development and implementation of HealtheVet-VistA (Veterans
    Health Information Systems and Technology Architecture). This
    initiative will incorporate new technology, new or reengineered
    applications, and data standardization to improve the sharing of, and
    access to, health information, which in turn, will improve the status
    of veterans' health through more informed clinical care. This system
    will make use of standards accepted by the Secretary of Health and
    Human Services that will enhance the sharing of data within VA as well
    as with other Federal agencies and public and private sector
    organizations. Health data will be stored in a veteran-centric format
    replacing the current facility-centric system. The standardized health
    information can be easily shared between facilities, making patients'
    electronic health records available to them and to all those authorized
    to provide care to veterans.
        Until HealtheVet-VistA is operational, we need to maintain the
    VistA legacy system. This system will remain operational as new
    applications are developed and implemented. This approach will mitigate
    transition and migration risks associated with the move to the new
    architecture. Our budget provides $129.4 million in 2008 for the VistA
    legacy system. Funding for the legacy system will decline as we advance
    our development and implementation of HealtheVet-VistA.
        In veterans benefits programs, we are requesting $31.7 million in
    2008 to support our IT systems that ensure compensation and pension
    claims are properly processed and tracked, and that payments to
    veterans and eligible family members are made on a timely basis. Our
    2008 request includes $3.5 million to continue the development of The
    Education Expert System. This will replace the existing benefit payment
    system with one that will, when fully deployed, receive application and
    enrollment information and process that information electronically,
    reducing the need for human intervention.
        VA is requesting $446 million in 2008 for IT infrastructure
    projects to support our healthcare, benefits, and burial programs
    through implementation and ongoing management of a wide array of
    technical and administrative support systems. Our request for resources
    in 2008 will support investment in five infrastructure projects now
    centrally managed by the CIO--computing infrastructure and operations
    ($181.8 million); network infrastructure and operations ($31.7
    million); voice infrastructure and operations ($71.9 million); data and
    video infrastructure and operations ($130.8 million); and regional data
    centers ($30.0 million).
        VA's 2008 request provides $70.1 million for cyber security. This
    ongoing initiative involves the development, deployment, and
    maintenance of a set of enterprise-wide controls to better secure our
    IT architecture in support of all of the Department's program
    operations. Our request also includes $35.0 million for the Financial
    and Logistics Integrated Technology Enterprise (FLITE) system. FLITE is
    being developed to address a long-standing material weakness and will
    effectively integrate and standardize financial and logistics data and
    processes across all VA offices as well as provide management with
    access to timely and accurate financial, logistics, budget, asset, and
    related information on VA-wide operations. In addition, we are asking
    for $34.1 million for a new state-of-the-art human resource management
    system that will result in an electronic employee record and the
    capability to produce critical management information in a fraction of
    the time it now takes using our antiquated paper-based system.
                                    summary
        Our 2008 budget request of $86.75 billion will provide the
    resources necessary for VA to:
      --strengthen our position as the Nation's leader in providing high-
            quality healthcare to a growing patient population, with an
            emphasis on those who count on us the most--veterans returning
            from service in Operation Iraqi Freedom and Operation Enduring
            Freedom, veterans with service-connected disabilities, those
            with lower incomes, and veterans with special healthcare needs;
      --improve the delivery of benefits through the timeliness and
            accuracy of claims processing; and
      --increase veterans' access to a burial option by opening new
            national and State veterans' cemeteries.
        I look forward to working with the members of this committee to
    continue the Department's tradition of providing timely, high-quality
    benefits and services to those who have helped defend and preserve
    freedom around the world.

        Senator Reed. Thank you very much, Mr. Secretary, for your
    statement.
        We will engage in our 6-minute rounds of questioning. And,
    I will yield my initial 6 minutes to Senator Byrd.
        Senator Byrd, do you have questions?
        Senator Byrd. Mr. Secretary we have been told that the VA
    hospitals are juggling the books to make it appear that the
    time to get an appointment is shorter than it is. Allegedly,
    appointments are being made, then cancelled, and rescheduled to
    make it appear that the time from making the appointment, to
    actually seeing a doctor, is shorter than it is. Are you aware
    of this practice?
        Secretary Nicholson. Senator Byrd, I've been Secretary now,
    for about 26 months and in that time, I have had it brought to
    my attention that this might be happening in isolated cases.
    And, I'm also told that the Inspector General looked into this.
    Because this would be a very unacceptable practice, and that it
    may have been found in very isolated cases, but it certainly is
    not systemic.
        I'm going to read this, because I'm under oath so I want to
    be as precise as I can be. First of all, I can tell you that
    the VA is very committed to improving access. All veterans who
    have urgent or emergent needs that come to a hospital are seen
    immediately. We are focused on getting appointments within 30
    days of the veteran's desired date.
        In fiscal year 2006, which was the last fiscal year, the VA
    provided 39 million outpatient appointments to 5.3 million
    veterans. Ninety-five percent of those were provided within 30
    days of the desired date, 98 percent of those were provided
    within 60 days of the desired date. And, most of those outliers
    were appointments for sub-specialty needs in other clinics.
        We also implemented the Advanced Clinical Access Program as
    a process to speed up the appointment process and it has worked
    very successfully. Because this is pretty extraordinary when
    you think of the volume that we do, that 95 percent of them get
    an appointment within 30 days.
        Now, I would also like to say if you have an incident of
    that or if a veteran has talked to you with that, I would very
    much appreciate if you would bring that to me with specificity,
    because I will direct the Inspector General to look into that.
    Because if that is happening, that is unacceptable even on an
    isolated incident and we will investigate that.
        Senator Byrd. Right? Now this is a second question. Will
    you look into this again and respond to the subcommittee?
        Secretary Nicholson. Yes, indeed. I will look into it, and
    I will repeat and say that if you have the specific case or
    incidences, it would greatly help us in looking into it.
        Mr. Chairman, I want to thank you and I want to thank all
    members. And, I want to thank the witnesses.
        Senator Reed. Thank you very much, Mr. Chairman.
        Senator Byrd. Yes, sir.
        Senator Reed. Senator Hutchison, your questions please?
        Senator Hutchison. Thank you, Mr. Chairman. I want to start
    with the issue of the claims backlog, Mr. Secretary. I know
    that you have said that you are appointing patient advocates
    and more claims adjusters. What do you--what is your goal to
    try to get this backlog really alleviated? I'm told that the
    current backlog is over 400,000, and you're saying 800,000 new
    claims are coming in annually. I sympathize with you--that is a
    huge workload.
        One of the things that has been suggested is that you maybe
    transfer some of the claims adjustment issues from regions that
    are overloaded to regions that might not be as overloaded, is
    that something that you're looking at? What is your plan to
    address this comprehensively?
        Secretary Nicholson. Well, first to your specific question
    at the end there, Senator Hutchison, we are doing that now.
    We're, the term of art that they use is ``brokering'' in that
    where a regional office might not be as loaded as another, we
    take bundles of claims to those, and have them evaluated by
    that office. They all use the same criteria, so they're, in
    that respect, able to do that, there's no jurisdictional border
    that would prohibit that.
        This is a beguiling problem. In a way we're kind of the
    victim of our own success, because we have a very active
    outreach effort going on, and education program going on to
    inform veterans, to inform Active duty members of the potential
    of benefits that may be available to them at the VA. In fact,
    we have VA personnel embedded at over 140 military
    establishments today, whose mission is to talk to people who
    are on the verge of getting out of the service. So that they
    know what is available, what they've earned, what they may be
    eligible for. We also have implemented a program called
    benefits during discharge, which allows us to accelerate the
    adjudication of a claim for a, about to be, or just departed
    Active duty member, and that has helped.
        This backlog, by the way, has come down--a few years ago is
    was like 212 days or something--and I would say, and I would
    commend the people in the Veterans' Benefit Administration
    because they really are working hard, we had 806,000 come in,
    and they----
        Senator Hutchison. Could I?
        Secretary Nicholson [continuing]. Processed almost that
    many.
        Senator Hutchison. Could I interrupt you for just a minute,
    because some of the people who cause this backlog are people
    who are coming in asking for benefits long after they have
    served, so it could have been in the Korean War or Vietnam or
    something. So, that is one category.
        But, do you prioritize people who are coming out right now,
    and particularly those who are injured? Is there a strata where
    you put people who are injured in Iraq, Afghanistan or any
    Active Duty, or any person now serving Guard, Reserve,
    whatever, do you make that a priority? So that somebody who's
    leaving because they're--they've lost a limb, or they have
    severe disabilities gets a, more immediate action?
        Secretary Nicholson. Yes, we do, Senator. We prioritize the
    returning OIF/OEF, Iraq and Afghanistan veterans, we prioritize
    them, and we prioritize the claims of veterans who are 70 years
    old, or older.
        Senator Hutchison. Okay.
        Secretary Nicholson. And we have special teams that are
    working to expedite those claims, in both cases.
        Senator Hutchison. Okay. Well, I just want to highlight,
    and I have, and you have responded, that this has to be taken
    care of.
        I want to ask a quick question, and then I hope I have time
    for----
        Senator Reed. There will be a second round.
        Senator Hutchison. Okay. Quick question on the study for
    south Texas for a Veterans Hospital--it just seems like it's
    been over--I know it's been over a year, that seems awfully
    long--could you tell me the status, and can we expect a report?
    We're told now, July--is that a set time, and I'd just like a
    status report on that?
        Secretary Nicholson. The study is still ongoing, and we do
    expect it to be completed in July, yes.
        Senator Hutchison. Thank you. Last question, or, for this
    round--the data security issue--I just can't not address that,
    since it's been in the news so much lately.
        We understand that Mr. Howard in your agency has begun
    using a Fidelis testing software to monitor VA employees'
    compliance, in addition to all of the education that you are
    giving to employees, regarding the need for this privacy and
    security of data.
        However, the testing software showed that there were--just
    in the week of March 5-11, 2007, violations in the Boston VA,
    of the security procedures. Can you tell me if you--how you
    think that happened, after all the education efforts, and what
    you are doing to assure the privacy of data of our veterans?
        Secretary Nicholson. Well, first of all, in a transcendent
    way, we're totally transforming the IT system in the VA. We've
    moved thousands of people from a decentralized format to a
    centralized format under the cone of the Assistant Secretary
    for IT, which is General Howard.
        We have intensive training going on, we're trying to re-
    culturate the entire organization about the seriousness of
    data. It's handling, and it's security. And, we're making
    considerable progress. We have, taking the personal laptops and
    computers, personally owned, from people and giving them
    Government computers, we want the information on there to be
    encrypted. But, we're still dealing with human beings, some of
    whom have bad habits, and some of whom still have an overly lax
    attitude about the severity of this. But, I would say that
    we've made a lot of progress, we're encouraging self-reporting,
    we get those Security Operation Center reports every day, and
    people, I think, are quite forthcoming about the reporting of
    it, we take immediate corrective action if it's a serious
    episode.
        I'd like to invite, if I could, General Howard, if he would
    like to add anything specifically, particularly with regard to
    your question about the software.
        Senator Hutchison. Yes, I should have addressed that to
    you, thank you.
        General Howard. Senator Hutchison, the software you're
    referring to is one of several products that we're testing
    right now, Fidelis. The incidents you refer to were a result of
    the testing we were conducting, and just to let you know that
    what that was, monitoring activity, e-mail-type activity over
    the network. This particular software has the capability to
    terminate sessions, based on certain rules, and that's why
    we're very interested in it, and that's why we uncovered emails
    that were transmitting large amounts of information that should
    not have been transmitted. In fact, there were several of them
    that were serious enough that we actually reported them as
    ``incidents'' and those are the ones that you're referring to.
        What has happened to the individuals who were involved in
    that, I'm not sure. They were in the Veterans' Health
    Administration, I think. Dr. Kussman is looking at that. There
    weren't a lot of them, but there were several.
        And I'll just summarize, the software like this we do
    intend to deploy, along with other techniques to help us better
    control activity on our networks.
        Senator Reed. Thank you, Senator Hutchison, and the vote as
    we have realized, has been delayed, and we will have at least
    two rounds, so I think everyone will have ample time to ask
    questions.
        Thank you, Mr. Secretary, for your statement today and your
    response to questions.
        Let me agree with you that 177 days is just much too long
    to process a claim. What is your target date in terms of your,
    ordering your or requesting your organization to manage down
    to?
        Secretary Nicholson. Well, the ultimate target date, Mr.
    Chairman is 125 days. But, because of the prioritization that
    we're giving to these young combatants returning from the War,
    I've put down a marker for us to do those in 100 days.
        Now, this is a complicated process, and it would take up
    quite a bit of the time of your hearing to really give you a
    primer on it, but I'll do it in a truncated form, and maybe use
    an example.
        A veteran comes into us--and by the way, veteran's claims
    are never res judicata--ever. They can continue to bring them
    back, if they're denied on an appeal, they can re-apply, if
    they get an award at a certain percent, they can come back in
    and, they are never finished. And, of those 800,000, roughly,
    that we saw last year, about half of them had been in there
    before.
        The Congress and the courts have afforded continual rights
    to the veteran claimants, and I'm just stating this, I'm not
    evaluating it or editorializing on it. But, for example, if a
    claimant comes in and said, ``I have, an arthritic knee, and I
    got it, I know I got in a parachute jump in the 82d Airborne
    Division in 1988,'' we must, in our fiduciary, go back and see,
    one, was the guy a parachutist? Was he in the 82d? Did he jump
    on that day? Did he go to the dispensary because he said he
    hurt his knee? And we need to find evidence of that, and those
    paper files, non-electronic, need investigating. And, if we
    need to go back to a veteran claimant and say, ``We need more
    verification or another document,'' he has 60 days, each time
    we do that, he has 60 days within which to respond to us.
        The culmination of this is while we can shorten it, and
    we're going to mobilize on this OIF/OEF on a test basis to see
    if we can't do that in 100 days, and they will have to work
    with us--it has some organic difficulties.
        Senator Reed. I recognize the complexity, because we have
    veterans coming through our offices every day asking for
    assistance. But, if your target is 125 days, do you have the
    resources in this budget, and succeeding budget plans to meet
    that target for all veterans?
        Secretary Nicholson. In this budget, as I testified, we are
    asking for resources to increase claim evaluators in the amount
    of 450, and again, they take a fair amount of training, but we
    project that would reduce it to 145 days.
        Senator Reed. So, we still have a ways to go, to get----
        Secretary Nicholson. Still have a ways to go to get the
    145.
        Senator Reed. Thank you, Mr. Secretary.
        Mr. Secretary, let me also commend you for the screening of
    all OIF/OEF veterans for traumatic brain injuries, and it's a
    great first step, but can you tell us what the next step is,
    after that? After you've identified these individuals?
        Secretary Nicholson. Yes, sir. As I've said, we're going to
    screen all of them now, and we've just about completed the
    training of all of our staff, our clinicians, to be able to do
    that. And then, they will commence a treatment regime for those
    that have any showing of either mild or moderate brain damage.
    I attended yesterday a session we had with DOD on this subject,
    so I learned a lot just yesterday about this, but it's often
    very difficult to discern whether or not they have any physical
    symptoms of it at some point.
        But we are being very diligent, we think, and of those
    that--through their answers to the questions that we give them
    seem to indicate, because of some experience, some moment of
    forgetfulness or something--we would then refer them for a
    neurological assessment. I think we have set up a very good
    program.
        Senator Reed. One of the difficulties is that once the
    person leaves the military, they leave the post, and the post
    hospital, and the whole structure, very structured environment,
    and go off to their--many times--small towns, where the VA
    doesn't have a huge presence. Are you reaching out to private
    clinicians to be able to treat these individuals who are
    identified with traumatic brain injuries, and doing it in a
    systematic way?
        Secretary Nicholson. We have been having some meetings, in
    fact, we had one in my conference room recently with the
    Association of the Private Rehabilitative Clinics, and we are
    interfacing with them, and we have a policy--if we cannot
    provide that kind of therapy and care to a veteran on a
    reasonable basis, we then can allow them to go out to the
    outside on a contract basis, and get this care, yes.
        Senator Reed. And, are you programming funds for this
    activity in this budget and succeeding budgets?
        Secretary Nicholson. Yes, we are. I'll ask Dr. Kussman to
    maybe give you more detail, Mr. Chairman.
        Dr. Kussman. Thank you, Mr. Secretary.
        The Secretary has alluded to the fact that we have this
    screen, and on the basis of the screen, if the questions are
    answered positively, they get a referral for a neuro-cognitive
    assessment, that is not as easy as it sounds, as you know.
    There's no x-ray or blood test that can be done to assess it,
    but further evaluation would then determine what kind of
    treatment, if anything.
        We're fortunate, the few studies that have been done are
    looking at mild to moderate TBI, longitudinally, long term,
    have shown that most people--thank goodness--will get better.
    And, so the important thing is to be able to identify them, and
    then follow them, in making sure that they get better, and if
    they don't, do everything possible to assist them.
        We do need to aggressively assist the civilian community,
    because as you allude to, the average practitioner in the
    country probably doesn't have much experience with TBI, and
    that's a fertile area that we need to look at.
        Senator Reed. Thank you very much, Doctor.
        Senator Craig.
        Senator Craig. Mr. Chairman, thank you very much. Let me
    make a comment more than a question, because as the chairman,
    now ranking member of the authorizing committee, I've had an
    opportunity to look at the budget of VA, to the extent that
    we've even offered views and estimates necessary to go to the
    Budget Committee, so that the budget that we now have in front
    of us to appropriate to, I've already screened.
        And so, as a result of that, I want to make this statement,
    and then ask a question.
        Mr. Chairman, just 2 months ago, the Veterans Affairs
    Committee held the hearings on the budget. At that time, I
    remarked to Secretary Nicholson that it must have been a little
    difficult to develop a budget without the knowledge of the
    fiscal year 2007 appropriation, because we had not yet passed
    it. As everyone knows, we now have passed the bill, the VA
    received about a $3.5 billion increase in funding relative to
    the 2006 budget. Of course, not long after the bill passed, we
    also passed a supplemental appropriation for, fiscal year 2007,
    which added another $1.7 billion, bringing the total increase
    for this year to about $5.2 billion, or just over a 15.5
    percent increase. Most of the money is for the medical system
    which, assuming enactment at some point of a supplemental bill,
    will have about $35 billion this year.
        Mr. Secretary, you've requested about $36.5 billion for
    medical care for next year. A few months ago that was a pretty
    strong increase, of about $2.9 billion. However, at this point,
    your increase would be about $1.3 billion over what you're
    likely to have for the rest of the fiscal year.
        Further, the Senate has gone on record as suggesting that
    we need around $40 billion for medical care, alone, next year.
    The money is coming in, in my opinion, in huge waves.
        Mr. Chairman, I recognize that returning troops from Iraq
    and Afghanistan are going to require a substantial infusion of
    money over the long term. And, I am committed to doing
    everything and anything we can to help the men and women who
    return from war injured, physically and mentally. I have even
    suggested that we should let them go outside of the VA system,
    where necessary. And we just have had reports this morning
    coming in, that maybe in the area of prosthesis and other
    areas, where VA is not yet geared up, and yet the private
    sector is clearly out there in advance of that, that some of
    our military people ought to be able to go there, or our
    veterans.
        But right now, I fear, we are almost throwing money at VA,
    with little planning on the part of the Agency as to how it
    could possibly be spent. And then, 6 months from now, we are
    going to hold another hearing, asking the VA one of two
    questions, Mr. Chairman: Why didn't you spend it all? That will
    be one of the questions, or, Why didn't you spend it all
    wisely?
        I hope we are mindful of those possibilities during this
    fiscal cycle. Additionally, Mr. Chairman, I know all of us here
    at the committee are concerned about VA's claims processing
    systems, and problems, I'd like to suggest that maybe money
    isn't a solution to all of those problems that plague the VBA.
    With the additional employees VA has requested for fiscal year
    2008, VBA staffing will have a increase 61 percent since 1997,
    and funding for compensation and pension service will have
    increased 118 percent. Yet probability--but productivity has
    been deteriorating, and the number of pending cases has been on
    the rise.
        And while more staffing may help, I don't believe that
    simply adding more employees is a long-term solution to the
    problem. For many years, experts have stressed that significant
    improvements may not be possible without fundamental changes in
    the system.
        A 1996 Veterans' Claims Commission concluded that problems
    with the existing systems are so many and varied, that it
    cannot be fine-tuned into a system that will consistently
    produce timely and high-quality adjudication products. After
    years of struggling to improve the performance of the existing
    system, it may be time to acknowledge that those experts were
    right--that fundamental changes are needed before we see the
    kind of lasting improvement we desire. And, Mr. Secretary, I am
    pleased that you are moving in that direction.
        Those are the issues that concern me. The question is, Mr.
    Chairman, the 2007 supplemental--Mr. Secretary, the 2007
    supplemental and the budget resolution of 2008, which provide
    VHA with about $5 billion more than your agency believes is
    necessary to fund operations--question, Do you believe VA can
    responsibly allocate that level of increased resources in such
    a short period of time? And what might be some of the
    challenges or issues you would encounter in planning to spend
    that amount of money?
        Secretary Nicholson. Well, I think it's a very good
    question, Senator Craig, I mean, we're a big agency with over
    1,400 points of where we dispense medical care, from Maine to
    Manila and we have a huge benefits operation going on, given
    also the real estate stock that we have, and the age of it, we
    probably could always use, use more resources.
        A very important part of the question to me is, can you
    spend it within the timeframe that you're supposed to? And
    sometimes, I think to do that prudently, is difficult. We have
    had incidents where we've been given more money to spend in
    mental health. That money, though, was subject to a CR, the CR,
    late in the fiscal cycle was released, and in that envelope
    that we had left, we did not spend it all, and we were
    criticized for that.
        But, the reason for that--and the same applying
    prospectively--is that we're talking about people with real
    specialties, and, they don't all grow on trees, and they're not
    all willing to move to certain locations, to be there where we
    want to set up a Center of Excellence, or where we have a
    particular need, so we have to recruit them. And these things
    take, they take time.
        So, I think the time part of it, is one that I--couldn't
    sit here, and certainly couldn't under oath say we could spend
    all of this within the prescribed time of that fiscal envelope,
    no.
        Senator Craig. Thank you.
        Mr. Chairman, thank you.
        Senator Reed. Thank you very much, Senator Craig.
        Senator Allard.
        Senator Allard. Thank you, Mr. Chairman.
        First of all, I want to recognize the improvement that's
    happened at the VA in the past several years. Some of it
    started before you assumed your term, so I have to credit your
    predecessor as well, but I think you've continued to improve on
    it, and I note that the American Customer Satisfaction Index,
    on their seventh consecutive year says that VA has earned
    higher marks in the private healthcare industry--this is on
    customer satisfaction--and I think you're to be commended about
    that.
        Colorado, as you're well aware of, has experienced a
    bigger, and a more important role, as far as our National
    defense is concerned, in many aspects, particularly as we move
    toward a modern military. And, I would say, before 9/11 that
    the healthcare that we provided our veterans in Colorado, at
    best, was marginal.
        But, the Veterans Administration has been willing to make
    some tough decisions in Colorado, we closed a VA hospital--how
    many times does that happen in a State? And, in replace of
    that, we put in some regional clinics. And, so, what it did,
    was made medical services much more available to a segment of
    the population that weren't being well served.
        And, the input that I'm getting from those veterans in
    southern Colorado, where that was located, has been very
    positive, since they appreciate the fact that they have these
    clinics.
        And one aspect in going through these clinics, and
    personally visiting them that--we've looked at is their
    electronic record keeping and everything, and it's phenomenal.
    And, I think that's added to that, also, I hope you continue
    that.
        I would like to join with Senator Hutchison in saying that
    we need to work on getting a transition from active military
    over to the veterans. And, I understand how complicated that
    could be, particularly if they come back home, and maybe they,
    then they re-enroll or something, back and forth. But, I do
    think that's something we really work on, and I think it's a
    doable thing, but we need to work on compatibility in our
    programming.
        In--so, you know, with the closure of the Fort Lyons
    Hospital and then those clinics opening up, Colorado, and those
    veterans feel well served. We've had a hospital in Colorado
    that has--you know, as far as medical care been doing pretty
    good, but it's just been getting outdated and old. And, as a
    result of that, you've recognized that need, and now in the
    Denver area, you're in the process of putting together, and
    constructing, we made the land agreements and everything,
    putting a plan together for a Veterans' Hospital in Denver to
    serve the entire Rocky Mountain Region, and provide some very,
    very high quality care, I'm convinced.
        And, I understand that Veterans' Hospitals don't come
    cheaply, and I appreciate your recognizing the needs--which are
    rather unique in the State of Colorado, because of our growing
    veteran population--people get assigned there, they decide to
    come back there and retire. And, so we're experiencing
    unprecedented growth, I think, in the veterans population, but
    your modernizing the VA has helped, and I think, provide good
    care despite that stress.
        Now, I've asked you to update the committee, what plans you
    foresee for the Veterans' Hospital there at the Fitzsimmons
    site in the future, and how you plan on meeting--you've got an
    additional amount in the budget of $62 million or so, which is
    an increase from last year. Now, we're going to have some
    expensive years ahead of us, now, we get into actual
    construction. Could you kind of indicate to me how you plan on
    generating the revenue, and what you plan on doing with those
    extra monies that's going to be needed to finish the
    construction of that hospital?
        Secretary Nicholson. Yes, I can, Senator Allard.
        We have slightly over $100 million approved so far for that
    project, as you know, because you've worked on this, and been
    very helpful. We've chosen the architect engineer, we've
    acquired the major part of the site for this, after months and
    months of negotiation with the city of Aurora to put this
    hospital out where it belongs, which is right next to the
    interstate highway, and right next to the University of
    Colorado Hospital, with whom the VA has been affiliating for
    over 50 years. In fact, it's interesting for some people to
    know that the first liver transplant ever--successful liver
    transplant ever done on a human being was done at the Denver VA
    Hospital, in consult with the University of Colorado.
        We will now continue to assemble the rest of the ground
    that we have, so we have the resources for that, and to do the
    design of the hospital. We, though, must come back here to the
    Congress, and get the subsequent approvals for the funding that
    it's going to take to build and finish the hospital. Assuming
    that we get that, we believe that we can have this hospital
    open sometime in 2011.
        Senator Allard. You think you can get that in the
    President's budget request? A good chance?
        Secretary Nicholson. Yes, sir, I do.
        Senator Allard. Okay, very good.
        I'd like to--discuss other Colorado business, because of
    our unique growth in military retirees as well as veterans, we
    have sort of a unique situation in the Colorado Springs area,
    in the fact that there's an increased demand for a cemetery to
    serve those that are in southern Colorado. And, I've introduced
    some legislation to take care of the Pike Peaks Region. I
    understand the challenges you're having with the number of
    people that you have to have to justify a cemetery within a 75-
    mile region, and we've been visiting with Mr. Tuerk more, with
    this.
        And, so, I'm going to address this question to Mr. Tuerk,
    if I might. You mentioned in our discussion that it is not
    necessarily set in stone. That there are exceptions you have,
    maybe it's not easy to get the exception but it is possible in
    some unique situations, maybe, to get an exception.
        You mentioned last year that the formula, again as I
    stated, was not set in stone. Could you advise us on the
    progress of updating the formula? To be more accommodating to
    some of these unique situations, such as the Pikes Peak Region?
        Mr. Tuerk. Yes, Senator, I'm happy to have the opportunity
    to do that.
        The policy that we have adopted, and that the Congress has
    adopted in directing where we will locate new cemeteries, as
    you know, states that a new cemetery will be placed in a
    location that has 170,000 veterans, who are not served by
    another existing National or State Veterans cemetery. You're
    certainly correct that Colorado Springs is an area of
    significant growth--by our estimates there are 261,000
    veterans, within 75 miles of Colorado Springs.
        The question, though, for purposes of our determinations
    and, heretofore, the Congress's determinations on where we
    ought to go, is how many veterans, within proximity to a given
    city, aren't already served by an existing cemetery. You
    understand how that plays out with respect to Colorado Springs
    vis-a-vis Fort Logan National Cemetery, southwest of Denver.
        It is correct, as you said, that no formula is set in
    stone. We try to be flexible in making our determinations of
    where to put resources, and our recommendations to Congress on
    where it should decide our resources ought to be placed. And,
    when I say it's not set in stone, I mean it is subject to
    change.
        As we have discussed, I have commissioned a program
    evaluation by an outside consultant to look at our methodology
    for siting cemeteries to consider factors that you have brought
    to my attention, that Senator Salazar has brought to my
    attention, and members of Colorado's House delegation have
    brought to my attention about traffic issues between Colorado
    Springs and Fort Logan, and the significant growth the
    significant military presence, in the region. We have
    instructed our consultant to take those factors into account as
    it critically looks at the way we site cemeteries now. That
    program evaluation is in progress. We have hired a contractor,
    and we have set him off to work. He will report next year. He
    has not yet completed his analysis of the methodology that we
    have used to date on siting new cemeteries.
        Senator Allard. Well, then, you know, if we could exclude
    the Denver area, which we talked about, just the Pikes Peak
    Region, we've come up with 175,000 population, we talked about
    the Region, we pull in the area south of Colorado Springs and
    go south, we can come up with 175,000 on that. So, take a close
    look, and I'm glad to hear that you're working on the formula
    and looking at the unique aspects of Colorado and the situation
    there.
        Fort Logan which is also, is the cemetery you mentioned in
    southwest Denver--I've had some personal experience with that
    in the last year or so, we buried both of my wife's parents in
    Fort Logan. It's a great facility, but in visiting with those,
    you know, it doesn't have too much--there's still some capacity
    there, but you know, that capacity in 10 years is going to be
    gone.
        I, as well as you, know it takes awhile to get cemeteries
    built and get them in line, so I hope you keep that in mind
    when you're doing that. Thank you.
        Mr. Tuerk. We are very mindful of that, Senator. We are
    developing the last 66 acres of the Fort Logan site. We've
    encountered a problem with respect to some of it, that we can't
    turn into burial space. Right now we project that Fort Logan
    will continue to offer burial services until at least 2020, and
    we are very mindful of that, and are thinking ahead on where we
    might go to continue to provide services to the Denver/Colorado
    Springs area at the point in time when Fort Logan will have to
    close.
        Senator Allard. Thank you very much for your comments, and
    I have some additional questions on the second round.
        Senator Reed. Thank you very much, Senator Allard. We have
    a vote under way right now, for your information. And Senator
    Murray is voting, and she will join us shortly, and I'll begin
    the second round, Mr. Secretary and, Senator Craig raised some
    very interesting questions about the capacity to spend money,
    and I guess one point should be noted, is that in the Senate
    supplemental for the VA funding is ``no year'' funding, meaning
    that you will not have a specific amount of time to spend it,
    so that will give you a little more flexibility, we hope, going
    forward.
        I just would note, and Senator Allard has left, but the
    Denver Post reports that nearly 2 in 10 Fort Carson GIs got
    brain injuries in Iraq. They're screening. Which, if you do
    some back-of-the-envelope calculations of the several hundreds
    thousands of troops that have gone through Iraq and
    Afghanistan, if 20 percent is the number, that's going to
    present the VA with a very huge increase in very complicated
    cases, going forward.
        And it raises, perhaps the flip side, of Senator Craig's
    question, which is, do you have a number right now, going
    forward over the next--over the next 10 years, of how much
    we're going to have to devote to caring for these veterans?
        I've asked the same question of Dr. Chu on the DOD side.
        Secretary Nicholson. The answer is no, we do not, Senator.
    We monitor very closely, but we have not projected it out to a
    10-year number, no.
        Senator Reed. Well, Mr. Secretary, I think that's something
    collectively we have to do. Because the fear I have, and I
    think it's your fear also, is that at some point in time, when
    this situation has been resolved one way or the other in Iraq,
    Afghanistan, we'll still have these veterans, and it will be a
    disservice to them at that point, when the attention has waned,
    not to have at least understood the demands we need.
        And that also goes to the budget numbers that I've seen so
    far. You, quite rightly, reference the increase in the
    President's budgets, particularly for healthcare over the last
    several years, but if we look at the 5-year discretionary
    budget projections for VA medical care, it shows no growth at
    all. According to the historical tables that accompany the 2008
    budget request, hospital and medical care will actually
    decrease slightly by 2012. And, again, how realistic is that if
    we're looking at these, this patient flow coming into the
    system?
        Secretary Nicholson. Well, we've used a model, Senator
    Reed, it's proprietary, it's operated by a company called
    Milliman and over the years they've been very uncanny,
    accurate, not without exception. But, there is a decrease in
    the number of veterans in the country, on a net basis, because
    of the mortality rates. I would ask Dr. Kussman if he'd like to
    add anything to that medical projection.
        Dr. Kussman. Sir, as far as the severe TBI--the number that
    had been transferred to us throughout the war is 369 severe
    trauma, that have come to our polytrauma centers. No one really
    knows the number of mild to moderate. And, that's why we're
    putting this screening mechanism in. I think that at Fort
    Carson, it's a similar type of screening. We've worked with DOD
    and so, these are new numbers.
        As I mentioned earlier, hopefully these mild to moderate
    TBI, as I said, frequently will get better on its own and
    hopefully won't need a lot of care, hopefully these service
    members, who have suffered this, will return to whatever their
    baseline was before they suffered the injury.
        But, it's a very important thing. We need to get the
    information. This is a very important issue for us and we will
    monitor it very closely.
        Senator Reed. Well, I would suggest that, perhaps, the
    model has to be reviewed significantly. And, I do think we need
    a--at least a conceptual notion of how much money, going
    forward, we're going to need. And, not just the next 5 years,
    but these young people are going to be in your system for 50
    years, probably.
        And, let me ask a final question before I turn it over to
    Senator Murray and ask her to continue.
        One of the issues that's consistently in the public view,
    is homeless veterans. And, it seems to be a contradiction in
    terms, that someone who's served their country in the uniform
    of the country should not be without a home. There are some
    programs that have been proposed. And, one is a innovative
    program between the Veterans Administration and HUD where
    section 8 vouchers are combined with VA-supported services.
    That fund, that program has not been funded to date at any
    robust level. But just your opinion, Mr. Secretary, if that's
    the type of approach that would make sense in terms of dealing
    with this issue of homeless veterans.
        Secretary Nicholson. Yes, Mr. Chairman. In my opinion that
    would be very helpful. We have some microcosms of that. In
    fact, I'm going next month, I think, to open a facility that
    we've done in south Chicago in the old St. Leo's Parish Corner,
    we've done with Catholic charities there in Chicago and, and
    using HUD Section 8 to support the transitional housing costs.
    We've also sited a clinic on that facility. That's an excellent
    model.
        I was very recently in San Diego with Chairman Filner at a
    place called Veterans' Village, where we were supporting a lot
    of transitional housing there. That has a great deal of
    promise, I think, and it's the right model. Because what we do
    is, we support a non-profit sponsor who operates the facility
    and we help in its construction and then we have the per diem
    maintenance for the veterans who reside there. But we need more
    of that.
        Senator Reed. Thank you, Mr. Secretary. Let me just say
    we'll keep the record open for three additional days if there
    are questions from members of the panel.
        I'll recognize Senator Murray. I'll endeavor to get back
    after the vote, but if I don't, you finish your questions. Feel
    free to conclude the hearing.
        Thank you.
        Senator Murray [presiding]. Thank you very much, Mr.
    Chairman and thank you, Mr. Secretary.
        It has been a couple of months since you testified before
    the Veterans' Committee so, you know, I've been amazed at the
    number of things that have occurred since then. Obviously with
    the Walter Reed issue and the growing awareness of facilities
    across the country with needs, the internal VA report that
    showed the problems that need to be addressed and, of course,
    we have learned a lot more about the signature issue of this
    war, traumatic brain injury and the number of men and women out
    there who have been impacted that--some of them not yet caught.
    And, I appreciated some of the work you're doing to find those
    men and women and make sure we address that extremely important
    issue.
        The Senate has now passed a budget for fiscal year 2008
    that provides the VA with more money than the President's
    budget for medical care, for IT, medicom prosthetic research,
    and a lot more. I wanted to ask you. Do you support the higher
    level of veterans funding in the Senate Budget?
        Secretary Nicholson. Well, we've had a lot of consultation
    with staff on those amounts and the application of them and the
    way that we would utilize them. We, as part of the
    administration, have submitted a robust budget for 2007 and
    felt--and it was eventually approved and--that that is a solid
    budget. But, we can use, if you so choose in the Congress, we
    can make good use of the money.
        Senator Murray. And the additional money that is in the
    supplemental for polytrauma care and other issues for
    healthcare for veterans. I assume you would be supportive of
    that as well?
        Secretary Nicholson. We can use it, yes ma'am.
        Senator Murray. I appreciate that very much.
        We've talked, I heard you talk a little bit about
    polytrauma care. We have $90 million in that supplemental. I
    think this is an issue that we all have got to put down
    everything else we do and really address those issues. So, I
    appreciate it.
        I did want to ask you a little bit about the TBI. We are
    ready to give you the resources you need. I know that you're
    screening Iraq and Afghani veterans for TBI now and I think it
    would really be helpful for the VA to start that screening
    process a lot sooner.
        Back in August 2006, the Pentagon Medical Board proposed
    that the Defense Department begin tracking which service
    members were exposed to IEDs on the battle--even those without
    physical injury or serious at the time--because we know the
    shockwaves have an impact on the diagnosis of TBI. Do you agree
    that it would be helpful to the VA if those men and women were
    diagnosed before they left the service, or at least that you
    knew they'd been in the vicinity of an explosion before they
    entered the VA system?
        Secretary Nicholson. I'll give you my view and then I'll
    refer to Dr. Kussman, who is the Chief Medical Officer of the
    VA.
        I think that it would be useful because the sooner that we
    can detect it, the sooner that we can begin to treat it, and
    thus, the sooner we can bring about healing.
        Senator Murray. Yeah.
        Secretary Nicholson. And, through therapy and treatment.
    Now, I ask Dr. Kussman if he'd like to expand medically.
        Dr. Kussman. Yes, sir. Thank you.
        Yes, Senator, we've been working with DOD to develop an
    adequate screening mechanism. As you know, it's hard to do that
    because there's no test, as I mentioned earlier, or no blood
    test that you can do to make the diagnosis. I think we, with
    the DOD and the VA, do very well with severe TBI. Those people
    get into the medical evacuation chain and I think that
    together----
        Senator Murray. Well, it's more a physical injury.
        Dr. Kussman. That's correct. But, as far as the mild to
    moderate, one of the challenges is, and the difficulty is that
    the patient frequently doesn't even know they have it.
        Senator Murray. Right.
        Dr. Kussman. And so, we've developed a very, I think--and
    time will tell how accurate it is--but a good screening
    mechanism using the best knowledge from the civilian community,
    DOD, and us to ask people when they come in, everybody who is
    OIF/OEF, and we hope that DOD will use that as well during the
    post-deployment screen. On the basis of that, if the person
    answers yes to the questions then they would be referred for a
    neural cognitive evaluation by the subject-matter experts and
    then they determine what kind of treatment, if anything, needs
    to be done. Because, as you know, some of the mild or moderate
    do----
        Senator Murray. But, Dr. Kussman, I've talked to a number
    of the doctors at the polytrauma centers who tell me that there
    isn't necessarily a set of questions you can ask and know. And,
    in fact, the soldier may not even remember that he was in the
    vicinity of a, of an explosion in certain cases.
        Dr. Kussman. That's what makes it so challenging, but we
    need to have a least some mechanism for asking the right kinds
    of questions.
        Senator Murray. Yeah, that's why I was asking, if it would
    be helpful for the Pentagon to track battlefield exposures to
    IEDs, and then share that information with the VA.
        Dr. Kussman. If there's a mechanism for them to identify
    everybody who was near an IED, particularly ones that have been
    in contact with more than one IED. That would be very helpful,
    yes.
        Senator Murray. Well, Secretary Nicholson, would you be
    willing to write a letter to Secretary Gates and ask him if
    they would begin to track that information and share it with
    you so that we can make sure we don't lose these men and women?
        Secretary Nicholson. Yes, I would be willing to write him a
    letter. He serves on the taskforce, the inter-Cabinet taskforce
    that I chair on OIF/OEF heroes. And, discuss that it was
    brought up in this hearing and ask him to consider it. Yes, I
    would.
        [The information follows:]

        Secretary Nicholson sent a letter to Secretary Gates dated May 14,
    2007 encouraging the tracking of all soldiers at or near the site of an
    improvised explosive device (IED) incident so that soldiers could be
    closely monitored for subsequent health changes. In addition, the VA
    Deputy Secretary Gordon H. Mansfield and DOD Deputy Secretary Gordon
    England have already held discussions and as a result the topic will be
    brought before the DOD/VA Joint Executive Council and the DOD/VA Health
    Executive Council (HEC). The next HEC is scheduled to meet on May 24,
    2007.

        Senator Murray. Okay, I would appreciate that. I think it
    would be helpful. I've talked to too many of these young kids
    who, not many of them are young any more, are a year and a half
    after they separate, all of a sudden their family recognizes
    they are not tracking correctly, they can't remember things,
    whatever their issue is. And, if we can get them in sooner than
    a year and a half later, it would be great. I think if the
    Pentagon were able to share that information with the VA, we
    would be in a much better place to find them before they're
    lost for a year and a half of their lives. So, I would
    appreciate if you would be willing to do that.
        Secretary Nicholson, I also wanted to ask you, I saw in
    Salon.com yesterday a report on a focus group that the VA
    conducted at Walter Reed with Iraq and Afghani troops and their
    families way back in 2004. And, the focus group found that
    injured soldiers at Walter Reed were frustrated, confused,
    sometimes angry with the bureaucratic problems at Walter Reed.
    Were you ever briefed on that focus group report from 2004
    about Walter Reed?
        Secretary Nicholson. No, I was not, Senator. And, I asked
    Dr. Kussman about it this morning. And so, I'll ask him to
    respond.
        Dr. Kussman. Yes, Senator, I certainly read that report as
    well. As you know----
        Senator Murray. Read it yesterday, or read it----
        Dr. Kussman. No, I meant I read the----
        Senator Murray. Article.
        Dr. Kussman [continuing]. The Salon.com article. I'm aware
    of the report. That report was generated about 9 months into
    our seamless transition activities related to OIF/OEF. And, it
    was directed by the Chief of Staff at that time, this was
    before Senator----
        Senator Murray. Right.
        Dr. Kussman. I mean, Secretary Nicholson came. And, the
    effort here was for us to look at what our benefits counselors
    and social workers were doing, whether we were getting the
    information across to these veterans. We learned there were
    about six veterans and some members of families that came,
    obviously a small sample, but the effort here was to learn what
    we were doing well and not doing well.
        And, we did learn a lot of things. Several things came out
    of it about improving information, improving communication,
    when we should interact with the veterans. This taskforce was a
    multidisciplinary with that there were representatives from DOD
    there on the committee. The report went to all the members of
    the Committee, but it was geared to look at what the VA was
    doing over at Walter Reed, and determining whether we were
    accomplishing our mission.
        Senator Murray. Yeah, it's just, it's troubling that, that
    long ago there was a report somewhere that these issues were
    festering over there. And, it was not shared with anybody at
    the VA at the time?
        Dr. Kussman. Oh no, it was. We knew about it. Again, most
    of that had to do with our questions related to, and again
    small numbers, but related to whether the VA was doing its
    mission.
        Senator Murray. Was there follow-up then, after that?
        Dr. Kussman. There was a very thorough action plan that was
    established after that to address the issues of communication,
    timing of visiting, repeating visits. And, that was part of the
    reason we set up our seamless transition office. Because prior
    to that, it had been a task force that was established and we
    needed more effort.
        Senator Murray. But, was that focus group information
    shared with the DOD?
        Dr. Kussman. As I said, there were members from the DOD on
    the committee, but it wasn't directed to what DOD was doing.
        Senator Murray. So, the DOD was aware of that report.
        Dr. Kussman. There were DOD members on the committee.
        Senator Murray. Was it shared with the White House?
        Dr. Kussman. No, I don't believe it was shared with the
    White House.
        Senator Murray. But, the DOD was aware of it, as well.
        Dr. Kussman. There were members on the committee.
        Senator Murray. Okay. It's just troubling that it all came
    to light years later. Okay well, let me ask a few parochial
    questions in my few remaining minutes and I will turn it over
    to Senator Allard.
        Secretary Nicholson, while you're here today, I wanted to
    ask you about the Wenatchee VA clinic. You know, it was
    supposed to open this spring, it was pushed to August, and now
    we're told it's going to be September. Can I have your
    assurance that our Wenatchee VA clinic is going to be open, and
    that you're doing everything in your power not to have another
    delay for these folks who have been waiting for this for years?
        Secretary Nicholson. I'm going to have to defer to Dr.
    Kussman, or get back to you in writing.
        Can you respond?
        Dr. Kussman. I have to apologize. I don't have the
    specifics, but I can assure you that it's on the list and we'll
    do everything we can.
        Senator Murray. It's been on the list forever.
        Dr. Kussman. Well, we'll look into it and get back to you.
        [The information follows:]

        The lease for 13,000 sq ft of space at 2530 Chester Kimm Road,
    Wenatchee, Washington, was awarded November 16, 2006.
      --The design phase for the new clinic was completed on March 20,
            2007.
      --Negotiations regarding tenant improvements concluded March 28,
            2007.
      --The Notice to Proceed was issued April 2, 2007.
      --Construction commenced on April 3, 2007.
      --Under the 100 day agreement, construction must be completed by
            August 22, 2007.
      --Activation of the clinic is projected for September 17, 2007 and is
            still on target.
      --The VISN will continue to provide regular updates on the progress
            to congressional and other stakeholders.
        The VISN office provides periodic updates on the status of the
    clinic with scheduled monthly reports.

        Senator Murray. Okay. Well, they've waited a long time for
    this. And, there was a lot of expectation it was going to be
    open more than a year ago. Then we were told this spring, then
    it was August, now it's September. And, nobody believes us
    anymore, that this is going to open. So, I just want your
    assurance that you can make a call, Mr. Secretary, and find out
    where this is, and move it along?
        Secretary Nicholson. Oh, yes, I'll do that, promptly.
        Senator Murray. Okay, very good.
        I have several other questions that I will submit for the
    record. I wanted to ask you about Walla Walla. I asked you
    about that before and haven't received any response back on
    that, Mr. Secretary. If you can get back to me on some of the
    mental healthcare issues on Walla Walla, I would really
    appreciate it.
        [The information follows:]

        The VAMCs in Walla Walla and Spokane will cooperatively manage
    inpatient mental healthcare for the Washington, Oregon and Idaho
    counties in their service areas. This will include residential
    rehabilitation care for substance abuse and PTSD provided mostly at the
    Jonathan M. Wainwright Memorial VAMC in Walla Walla and through
    community contracts in Spokane. Inpatient psychiatry will be provided
    at the Spokane VAMC in Spokane, Washington and through community
    facilities in Lewiston, ID and Yakima and Tri-Cities, Washington.
    Expanded outpatient mental health services will continue to be provided
    at the VAMCs, the existing and planned community based outpatient
    clinics, and in other locations as determined.

        Senator Murray. Thank you very much. And, I will turn it to
    Senator Allard.
        Senator Allard. Thank you. Mr. Secretary, another issue
    that has been brought to my attention last week--I think you
    were hanging around Colorado about that time--is that your
    agency had done some inspections on some nursing homes in
    Colorado. And, as you know this is a partnership between the
    Federal and State. I have visited one of those nursing homes,
    it's probably the one that passed. There's five of them
    altogether, I think, that we had there that were inspected.
    And, four of them were criticized in the report and I think
    they, the way they described it is that four nursing homes
    underperformed but only one of five had patient-related quality
    care issues. So, apparently the patients were getting pretty
    good care.
        But I was curious to know what there was about that report
    that was so troubling. The one facility that I went to is the
    newer facility and I was most impressed, by it and with the
    staff as well as the facilities there. So I doubt if that's the
    one. The one there at Fitzsimmons. I doubt, that's probably the
    one that passed is my guess. But, I'm wondering what, on the
    other four, can you share with me about what was going on there
    that was of concern to the inspectors? I suppose Colorado has
    to take some strong initiative here to begin to brief these up.
    What it is that we can do to encourage and to move forward on
    that?
        Secretary Nicholson. Yes, Senator Allard, as you know, we
    support the construction of those State VA nursing homes, two-
    thirds/one-third, and then we support the operation of it
    through a, per diem for veterans who are in there. We also have
    a contractual prerogative and, you would say, duty also, to see
    that they're being maintained at the acceptable standards. So,
    in order to ensure ourselves we're doing that, we inspect them.
    And, our inspectors found those deficiencies in those Colorado
    VA nursing homes that are run by the State, that are the
    responsibility of the State.
        As to the specifics of those, I will defer to Dr. Kussman
    to respond.
        Dr. Kussman. I'd have to get back to you, sir, with the
    specifics of all of them, but as the Secretary alluded to, we
    review these by policy every year, to go----
        Senator Allard. Sure.
        Dr. Kussman. And to review the State homes because the
    veterans in there are our responsibility. We will then
    recommend to the State home what we think needs to be done.
    Generally, it could be patient safety, or some construction
    issues or whatever.
        Senator Allard. Sure.
        Dr. Kussman. And, then we go back within 30 days to review
    that to see if they've done it. And, then the State is usually
    informed at the same time of that. Because, as the Secretary
    mentioned, they are State homes and they're responsible for
    fixing those things.
        Ultimately, to protect the veterans, if the appropriate
    corrections aren't done, then we could refuse to send the per
    diem there and that usually gets everybody's attention.
        Senator Allard. Yeah. Well, that's been my understanding,
    that you're going to do some follow-up inspections on these
    facilities and that's what needs to be done. I commend you for
    that. I just was curious as to whether there were things that
    were going to be easily corrected or whether we're looking at
    new facilities because some of those nursing homes are aging in
    time.
        Dr. Kussman. I don't want to prejudice the response because
    I don't know the specifics.
        Senator Allard. Yeah.
        Dr. Kussman. But, generally they're relatively, not major
    construction issues, but how the patients are treated and other
    safety issues.
        Senator Allard. What I'm going to do is have my staff get
    in touch with you. Is that appropriate? And, kind of share with
    us the nature of those. I don't know if we need to go into all
    the little specifics, but the nature of it and how easily
    correctable they might be. And, my understanding is that they,
    weren't affecting the healthcare of those patients that were in
    those facilities.
        Okay.
        Secretary Nicholson. We'd be happy to respond back to you
    with the detail of those inspections, Senator.
        [The information follows:]

        State veterans homes are owned, operated, and the responsibility of
    the State, in this case Colorado. VA provides oversight to assure
    safety and quality healthcare of the veteran residents in the homes
    through annual inspections and interim inspections as deemed necessary.
    The inspections review all aspects of healthcare, including direct
    observation of care and care practices, medical record review, resident
    interviews, physical plant, and sanitation inspections.
        VA is aware of three press reports regarding State homes in
    Colorado. The following are the allegations in the press reports and
    the findings by VA and by State agencies addressing the allegations.
    The response addresses the issues noted in press release only and does
    not reflect the entire VA Annual Survey Report.
    Failure to Report a Death of a Patient After a Fall
        This report cited a 100 bed State home at Rifle, CO. Upon review of
    the allegation, it was found that the veteran did not fall. He had
    multiple medical problems and was admitted to a local hospital. This
    veteran died within 24 hours of admission from a massive intracranial
    hemorrhage. Massive intracranial hemorrhage is not necessarily
    associated with trauma to the head. A VA physician reviewer concluded
    that advanced directives were followed and the continuation of care and
    the decisions made were appropriate. The resident's wife was satisfied
    with the care he received.
    42 Residents at State Veterans Home in Walsenburg Suffered Bed Sores
        This report referenced a 120 bed nursing home at Walsenburg, CO.
    During the VA survey of September 2006, there were three residents in
    the facility with pressure areas. This VA annual survey found 42
    incidents of pressure ulcers for the entire year. Not all were acquired
    in the State home. These were noted and treated. The facility has an
    appropriate mechanism for prevention, detection, and treatment.
    Pressure ulcers acquired in the facility are tracked and remain at 2
    percent annual average, which is well below the national average. A
    focused review by VA on April 4, 2007, showed the facility at a rate of
    1 percent acquired pressure ulcers.
    Life-safety Issues and Accessibility Issues at a Home
        A press article stated that twenty-five assisted-living
    ``cottages'' at the Homelake facility contain aging and defective
    electrical systems, asbestos and lead paint. They also lacked
    functioning emergency-response systems, according to State inspection
    reports. Most of those aging cottages lack ``grab bars'' in bathing
    areas, their front doors are not wheelchair accessible, and their
    narrow entrances and concrete stoops create tripping hazards for the
    elderly residents, according to the inspection reports.
        These issues have been identified in VA annual survey reports for
    the past 3 years and increased emphasis has been placed on their
    resolution. VA indicators of compliance for State domiciliaries
    (standard 2c) State that--reasonable timetable (up to 5 years) is
    established for completion of corrective action for life safety
    deficiencies.
        The major factor that limited the home's ability to correct these
    deficiencies was State funding. On March 1, 2007, the State provided
    additional information to VA to support a life safety determination for
    the project On March 23, 2007; the project was determined to be a life
    safety project, based on the additional documentation. The State has
    certified State matching funds (good until 2010) and the project will
    be ranked as a life safety project on the fiscal year 2008 Priority
    List. Depending on the fiscal year 2008 appropriations, the project may
    be funded in fiscal year 2008. Separate from this request, an
    allocation of $60,000 was made by the Department of Human Services so
    that work can begin immediately to correct the life safety
    deficiencies.

        Senator Allard. Thank you.
        You know, Madame Secretary, I think if we have any other
    questions we'll submit those for the record.
        It's noon, I noticed. Mr. Secretary, I notice that we have
    pretty well ran them through the ringer this morning, so I
    thank you for allowing me a second round.
        Senator Reed [presiding]. Thank you, Senator Allard.
        Mr. Secretary, gentlemen, thank you for your testimony.
        Mr. Secretary, you have a final point?
        Secretary Nicholson. Mr. Chairman, if I might.
        Senator Reed. Yes, sir.
        Secretary Nicholson. As a matter of privilege I remain very
    proud of the people who work at the VA and how hard they work
    and how committed, dedicated they are to veterans. I received a
    couple of wonderful testimonials, unsolicited--under oath--they
    were unsolicited.
        Senator Reed. That's why we did it, Mr. Secretary. So, you
    could verify it under oath. These are unsolicited.
        Secretary Nicholson. But, if I could, I received and I'd
    like to enter them into the record.
        Senator Reed. Without objection, they'll be entered into
    the record.
        [The information follows:]

               Prepared Statement From Disabled American Veterans

        The news media recently uncovered a serious situation at the Walter
    Reed Army Medical Center in Washington. I am sure you have been
    affected by stories of neglect, abuse and the consequent overflowing
    frustrations of our wounded American military heroes that brought their
    plight so much national focus.
        Like many, Disabled American Veterans (DAV), with 1.3 million
    service-disabled veteran members, was appalled and demanded that the
    Department of Defense immediately correct these deplorable conditions
    at its premier medical treatment facility. A Nation at war cannot
    tolerate bureaucratic delays, substandard housing and less than
    compassionate treatment of its soldiers and marines who have sacrificed
    so much while serving their country.
        While media reports of the Walter Reed scandal have cast a shadow
    on military and veterans' medicine, I want to reassure you that DAV is
    very proud of you and the Department of Veterans Affairs (VA)
    healthcare system. Problems arise from time to time in any system that
    provides for the needs of large populations, but, at its root, VA
    healthcare is a constant and shining emblem of how to reform a system
    for excellence. Over the past 2 or 3 years we have seen mounting
    evidence that VA is a source of dependable, safe and efficient
    healthcare for veterans. The system provides a wonderful resource for
    sick and disabled veterans, that in so many ways is unique to our
    experience. You offer veterans the best quality at the least cost, and
    the lowest error rates of any healthcare system to which you might be
    compared. Your medication safety program, electronic health record and
    prevention programs are the envy of American medicine. VA serves the
    Nation's veterans well, while supporting and developing new generations
    of healthcare professionals and advancing the standard of care through
    its renowned biomedical research and development programs.
        We, the members of DAV, want you to know that we consider VA to be
    a national treasure. While we may have experienced a momentary
    controversy brought about because one military medical treatment
    facility let down our disabled service members, we hold the Veterans
    Health Administration--and the work each of you do every day for sick
    and disabled veterans--in the highest regard. On behalf of DAV, I
    salute you.
                                     ______

                            Letter From Tom Poulter

                                 National Headquarters,
                                          5413-B Backlick Road,
                                        Springfield, VA, April 4, 2007.
    Hon. R. James Nicholson,
    Secretary, Department of Veterans Affairs, 810 Vermont Avenue NW,
            Washington, DC 20420.
        Dear Mr. Secretary: In representing the 40,000 Patriot members of
    the Military Order of the Purple Heart, it is my honor to write to you
    concerning the overall condition and service of the Department of
    Veterans Affairs. For the record, the MOPH is very grateful for the
    assistance and service provided by the Department of Veterans Affairs
    and offers our continuing support to your staff and employees who do so
    much for so many. The Veterans Administration is ``World Class'' in my
    opinion offering patient care that far surpasses that obtained in
    civilian hospitals. This has been confirmed by studies done by the New
    England Journal of Medicine. I have yet to have one of my members
    complain about any care received by the VA. And we all remember how it
    used to be after Vietnam and as late as the early 1990's.
        As a Veteran Service Organization, the MOPH is extremely pleased
    with the reaction time for benefit adjudication by the VA. In addition,
    we remain assured that any disability claim is treated in a fair and
    unprejudiced manner and that the disability ratings are for the most
    part commensurate with the claim of the veteran. No one can predict
    when a war will break out in today's environment leading to unplanned
    increases in the number of claims the VA receives. However, even with
    the overwhelming number of new claims, the VA is treating each with
    courtesy and respect and doing their very best to make sure the veteran
    is given every benefit to which he is entitled.
        Further, as the VA plans and works under the budget as supplied by
    the Congress, we find no major areas of neglect in the physical
    properties. They are all well maintained and sanitary as befits the
    healthcare system. This is highly commendable considering that the VA
    is always working under a continuing resolution from Congress. I am the
    fourth consecutive National Commander of MOPH to ask the Congressional
    Veterans Affairs Committee for assured funding of the VA as our number
    one priority.
        The one issue that we can all agree on happens to be the personnel
    of the VA. The MOPH believes that the employees of the VA are some of
    the best trained and most responsible people found anywhere in the U.S.
    healthcare system. Their concern for the veteran is evident in every
    contact made and every service provided. We praise you and your staff
    for providing us with the finest employees of any healthcare system in
    the World. And for that you deserve our most sincere appreciation.
        Mr. Secretary, you and your staff are doing an excellent job with
    the Department of Veterans Affairs. If you ever require anything of us,
    please do not hesitate to call. We are all in total support of your
    efforts.
                With Highest Regards,
                                                   Tom Poulter,
                                                    National Commander.
                                     ______

                           Letter From Linda A. Foss

                                               17 Anchorage Rd,
                                          Franklin, MA, March 11, 2007.
        Dear Secretary R. James Nicholson: Due to the recent media coverage
    of the conditions at Waiter Reed, I feel I must get this letter to you.
        My youngest sister, Luella Winne, had a right radical mastectomy
    with a trans-flap reconstruction at your Albany VA facility last April
    17.
        Being an R.N., B.S., with experience at several major medical
    facilities in Boston, I need to tell you that your facility destroyed
    all my preconceived expectations of a Veteran's hospital. I wish
    civilian facilities could be as efficient as yours.
        On the day of surgery, we walked into your lobby to be greeted by
    many Senior veterans gathered and conversing. They greeted us with a
    smile and a tip of their caps. Luella responded with a ``Stand tall
    soldier. I sensed a deep camaraderie, that my sister responded to, that
    I would never fully understand. I am so grateful she has that support
    in her life.
        I would like to state the fact that every employee (from janitor to
    physician) appeared to enjoy being there--it was wonderful to see and
    feel.
        From a professional point of view, I was acutely observant of your
    medical staff. They never missed a step, from checking her wristband
    for identification, to lending a kind ear during this very emotional
    time. I have nothing but praise for your O.R., ICU, 5th floor surgical
    unit and the oncology infusion unit. Because of my sister's vegan
    lifestyle, your , dieticians were involved, daily, in her menu
    planning, which included many trips to a local health food store to
    accommodate her unique dietary needs.
        Due to the 10 hour surgery, Luella was directly admitted to your
    ``state of the art'' surgical ICU. Late that evening, the Nursing
    Supervisor came to me and offered mea room on the 9th floor so I could
    get some rest, I was amazed with the kindness I received that night. I
    would have napped in the waiting room, because my family's home was 90
    minutes away.
        Luella and I have returned several times for follow-up visits at
    the surgical clinic. Your clinic staff was responsive to all her needs
    with respect, kindness and compassion. The attention she received was
    not unique, as I observed their interaction with other Veterans as
    well.
        Luella will continue her journey as a cancer survivor. She is still
    receiving chemotherapy, weekly now and her prognosis is excellent. The
    staff in the Infusion Unit is exceptional.
        Your hospital is spotless. Much pride is visible in the manner in
    which Albany VA is maintained. So, I close knowing that Luella has such
    a wonderful gift in your facility. 1 have confidence that she could not
    have received better care anywhere else in my experience. Be proud of
    your staff, they are very special.
                Thank you so very much,
                                                 Linda A. Foss,
                                                             R.N., B.S.
                                     ______

                     Letter From VADM Norbert R. Ryan, Jr.

                      Military Officers Association of America,
                                     Alexandria, VA, February 12, 2007.
    Vice Admiral Daniel L. Cooper (USN-Ret),
    Under Secretary for Benefits, Department of Veterans Affairs,
            Washington, DC.
        Dear Mr. Secretary: On behalf of the 360,000 members of the
    Military Officers Association of America, I'm writing to express MOAA's
    deep appreciation for your rapid response to ensure expedited
    consideration of disability benefit applications from all injured OlF/
    OEF Veterans.
        Your action has taken a major step to provide dignity and help to
    thousands of heroes who, through no fault of their own, would find
    themselves at great risk without this kind of support from their
    nation. Their service in the combat zone deserves every bit of
    assistance we can give them. The action of your Regional offices will
    ensure they receive that help.
        All of us at MOAA express our thanks and gratitude for your
    national brokering strategy.
                Sincerely,
                                               Norbert R. Ryan,
                                                             President.

        Secretary Nicholson. And, to just say that one was from the
    Military Order of the Purple Heart saying that, ``The Veterans
    Administration is world-class,'' this is the President of this
    organization, ``offering patient care that far surpasses that
    obtained in civilian hospitals. I have yet to have one of my
    members complain about any care received by the VA.'' And, it
    goes on.
        And, another is from the Disabled American Veterans, from
    their National Commander saying that, ``The VA healthcare is a
    constant and shining emblem of how to reform a system for
    excellence. The VA is a source of dependable, safe, and
    efficient healthcare for veterans. We consider the VA to be a
    national treasure. And, we hold the Veterans Health
    Administration, the work each of you do every day for sick and
    disabled veterans in the highest regard.'' That's signed by
    their National Commander. And, I appreciate the chance to put
    that in the record on behalf of our employees.
        Thank you.
        Senator Reed. Thank you, Mr. Secretary.
        Senator Allard. Mr. Chairman.
        Senator Reed. Senator Allard, please.
        Senator Allard. If I might just follow-up on that. I don't
    think you were here when I made some of my remarks. But, you
    know, the American customer satisfaction index, they've rated
    better than the private sector now, they're on their seventh
    consecutive year. That's much better than their record was
    prior to 9/11. I think they're to be commended for that effort.

                         ADDITIONAL COMMITTEE QUESTIONS

        Senator Reed. Well, I think that's accurate. I can reflect
    on the Veterans Hospital at Davis Park in Providence, Rhode
    Island and the spirit and the dedication to the veterans and
    the commitment to excellence is evident every time I go there.
    So, I accept those accolades for the record.
        But again, Mr. Secretary, thank you for your testimony.
    Gentlemen, thank you, and thank you for your continued efforts
    on behalf of veterans.
        Secretary Nicholson. Thank you, Mr. Chairman.
        [The following questions were not asked at the hearing, but
    were submitted to the Department for response subsequent to the
    hearing:]

                   Questions Submitted by Senator Tim Johnson

        Question. The President's fiscal year 2008 Budget request
    recommends only a $4.5 million increase for Vets Centers. In South
    Dakota, there is a high demand for the counseling and readjustment
    services these centers provide. For instance, South Dakota is a prime
    example of how important Vets Centers are to large rural States. Many
    veterans in South Dakota have to travel great distances to their local
    VA in order to receive counseling treatment, unless they can receive it
    at a Vets Center closer to home. Furthermore, the Department of Defense
    is using our National Guard and Reserve members in greater numbers than
    ever before. In South Dakota, 87 percent of the Army National Guard, as
    well as 74 percent of the Air National Guard, has been mobilized in
    support of our efforts in Iraq and Afghanistan. Finally, recent reports
    indicate that servicemembers serving multiple deployments may be at
    greater risk for being diagnosed with PTSD.
        In light of the above considerations, is it realistic to believe
    this small increase is sufficient to meet the growing demand for the
    services that our Vets Centers provide?
        Answer. The $4.5 million increase for fiscal year 2008 represents
    the additional funding for only the first of two Vet Center program
    expansions approved by VA since 2006. In April 2006 VA approved of a
    plan to establish two new Vet Centers in Atlanta, Georgia, and Phoenix,
    Arizona, and to augment the staff at 11 existing Vet Centers. This
    brought the number of Vet Centers nationally to 209.
        In February 2007, we announced our plan to again increase the
    number of Vet Centers nationally to 232. Over the next year and a half,
    the Department of Veterans Affairs (VA) will be establishing new Vet
    Centers in 23 communities and augmenting staff at 61 existing Vet
    Centers. Our Vet Center expansion plans include augmenting the staff at
    the Sioux Falls, SD, Vet Center by one position.
        When taken together with the program's additional 100 OEF/OIF
    Global War on Terror (GWOT) Outreach Specialists hired in 2004 and
    2005, these program expansions have increased program staffing by a
    total of 269 positions from pre-2004 staffing levels. Based on these
    increases, and without cost of living adjustments added, the fiscal
    year 2008 budget for the Vet Center program will be $125 million, which
    is a 25 percent increase over the program's fiscal year 2006 $100
    million budget. We are committed to effectively serving the increasing
    number of returning combat veterans and will evaluate the need for
    additional Vet Center resources on an ongoing basis.
        Question. Last month, the Sexual Assault Prevention and Response
    Office (SAPRO) within the Department of Defense released the Military
    Services Sexual Assault Annual report detailing sexual assault in the
    military. According to the report, sexual assault reports increased 24
    percent from Calendar Year 2005. Furthermore, it is commonly known that
    sexual assault victims are prone to developing post-traumatic stress
    disorder (PTSD). In addition, a recent New York Times Magazine article
    suggested that some female soldiers serving in combat have been
    sexually assaulted during their tour of duty. As a result, this select
    group of servicemembers--combat veterans who suffered sexual assault--
    may be at a higher risk for PTSD or the prevalence of PTSD symptoms
    will be exacerbated since they have been exposed to multiple traumatic
    events.
        What is the VA doing to address the unique service-related needs of
    these women? What PTSD programs are available to women within the VA
    who have suffered sexual assault?
        Answer. Every VA facility in the country has a designated Women
    Veterans Program Manager and a Military Sexual Trauma (MST)
    Coordinator. These are advocates who help women access VA services and
    programs, State and Federal benefits, and community resources.
        In fiscal year 2007, VA's Office of Mental Health Services (OMHS)
    established a MST Support Team to ensure that VA is in compliance with
    mandated monitoring of MST screening, treatment, and education/training
    efforts and to promote best practices in the field. The MST Support
    Team provides regular feedback to the MST Coordinators and VISN-level
    MST Points Of Contact (POC) on facility MST screening rates and
    treatment of sexual trauma. The Team has launched several initiatives
    to promote provider competence in evidence based care including the
    monthly MST Teleconference Training Series and a National MST Clinical
    Training Conference scheduled for September 2007.
        All VA medical centers provide mental health services to women.
    Additionally, every Vet Center has specially trained sexual trauma
    counselors. Nationwide, there are four specifically designated Women's
    Stress Disorder Treatment Teams (WSDTTs) located in Albuquerque, NM;
    Boston, MA; Loma Linda, CA; and Madison, WI. They are outpatient mental
    health programs specializing in treatment of posttraumatic stress
    disorder and other mental health disorders related to trauma exposure.
    An increasing number of other VA facilities have specialized outpatient
    mental health services and clinics for women and/or focusing on sexual
    trauma that are not formally designated as WSDTTs.
        In addition to the outpatient care available at every VA, thirteen
    programs currently offer residential or inpatient setting-based
    treatment for sexual trauma-specific PTSD and other related disorders;
    at least two additional programs are currently under development.
    Programs range from those solely dedicated to the treatment of sexual
    trauma; to those with a special track emphasizing the treatment of
    sexual trauma; to those with two or more staff members with expertise
    in sexual trauma who, in the context of a larger program not focused on
    sexual trauma, provide treatment targeting this issue. Although some of
    these programs treat men as well as women, each makes accommodations to
    ensure they provide treatment sensitive to women's needs (e.g.,
    separate living arrangements; women's only groups).
    VISN 1
        VA Boston HCS/Jamaica Plain Campus, Boston, MA: Women Veterans'
    Therapeutic Transitional Residence Program.
    VISN 2
        VA Western New York HCS/Batavia Campus, Batavia, NY: Women
    Veterans' Residential Program.
    VISN 5
        VA Maryland HCS/Baltimore Division, Baltimore, MD: Dual Diagnosis
    PTSD/Substance Abuse PRRP.
    VISN 8
        Bay Pines VAMHCS, Bay Pines, FL: Center for Sexual Trauma Services.
    VISN 10
        Cincinnati VAMC, Cincinnati, OH: Residential PTSD Program.
        VAMC Dayton, Dayton, OH: Sexual Health Clinic and Domiciliary
    Program.
    VISN 12
        Clement J. Zablocki VAMC, Milwaukee, WI: Rehabilitation and
    Transition Unit--Trauma Track.
        North Chicago VAMC, North Chicago, IL: Stress Disorder Treatment
    Unit.
    VISN 15
        VA Eastern Kansas HCS/Topeka Division, Topeka, KS: Stress Disorder
    Treatment Program.
    VISN 17
        VA Central Texas Veterans HCS/Temple Division, Temple, TX.
    VISN 20
        VA Puget Sound HCS/Seattle Division, Seattle, WA: Evaluation and
    Brief Treatment PTSD Unit.
    VISN 21
        VA Palo Alto HCS/Menlo Park Division, Menlo Park, CA: Women's
    Trauma Recovery Program.
    VISN 22
        VA Long Beach Healthcare System, Long Beach, CA: ``Renew''.
        Question. The St. Louis Regional Processing Center is responsible
    for processing education benefits claims for veterans in South Dakota.
    Since early last year, I have received multiple reports from local
    veterans and school officials that processing delays continue to plague
    the St. Louis facility making it difficult for veterans to receive
    their education benefits in a timely fashion.
        Furthermore, South Dakota has been reassigned a new Education
    Liaison Representative five times since 1999, the most recent
    reassignment occurring in October 2006. The South Dakota State
    Approving Agency values a strong working relationship with their
    Education Liaison Representative as it helps facilitate the claims
    process. However, the continued insistence on reassigning a new
    Education Liaison Representative to South Dakota disrupts working
    relationships and the State Approving Agency's ability to provide
    timely assistance to our veterans.
        Can you please provide an update on the status of claims processing
    at the St. Louis Regional Processing Center? If there is a backlog of
    claims pending, what resources does the VA need in order to eliminate
    this backlog?
        Answer. Education claims receipts have increased during this school
    year as a result of the implementation of the Reserve Educational
    Assistance Program (REAP) and an increase in participation in the
    educational benefit programs.
        The education workload at the St. Louis Regional Processing Office
    has been significantly reduced from 29,639 pending claims in late
    January to 7,632 pending claims as of April 30, 2007. The St. Louis RPO
    has also significantly improved claims processing timeliness from 41
    days for original claims and 22 days for supplemental claims in October
    2006, to 26 days for original claims and 11 days for supplemental
    claims during the month of April 2007.
        The additional education program staff hired in 2007 and the
    funding requested in the 2008 budget will allow us to continue to
    improve performance.
        Question. In addition, do you have concerns that the continued
    reassignment of Education Liaison Representatives (ELRs) will
    negatively impact the ability of State Approving Agencies to assist
    veterans as they access their education benefits?
        Answer. The Education Liaison Representative (ELR) for South Dakota
    changed a number of times as a result of employee retirements. In
    October 2006, Ms. Loretta Tollin was assigned as South Dakota's new
    ELR. This is a long-term, permanent assignment. We are confident that
    the State Approving Agency will find her highly attentive to South
    Dakota's requirements, and she will strengthen their ability to timely
    assist veterans in South Dakota.
        Question. The Capital Asset Realignment for Enhanced Services
    (CARES) decision approved construction for two new Community Based
    Outpatient Clinics (CBOCs) in South Dakota. These facilities would be
    located in Watertown and Wagner. It is my understanding that business
    plans are to be submitted to the VA Central Office for each proposed
    facility during fiscal year 2007.
        Can you please provide me with a detailed update on the status of
    the proposed facilities in Watertown and Wagner?
        Answer. Proposals for both were submitted in the last request for
    submission of business plans for CBOCs and are currently under review.
                                     ______

                 Questions Submitted by Senator Robert C. Byrd

        Question. Mr. Secretary, what specific measures are the Department
    of Veterans Affairs taking to reduce the backlog of claims and when
    should we expect to see visible improvements?
        Answer. VA faces many challenges in managing the disability claims
    workload and producing timely decisions. These challenges include:
      --growth in disability claims received (up 38 percent since 2000)
      --increasingly complex nature of the claims workload
      --impact of expanded outreach efforts
        We are devoting additional resources to claims processing.
    Increasing staffing levels is essential to reducing the pending
    inventory and providing the level of service expected by the veterans
    we serve and the American people.
        We began aggressively hiring additional staff in fiscal year 2006,
    increasing our on-board strength by over 580 employees between January
    2006 and January 2007. With a workforce that is sufficiently large and
    correctly balanced, VBA can successfully meet the needs of our
    veterans.
        Our plan is to continue to accelerate hiring and fund additional
    training programs for new staff this fiscal year--adding over 400
    employees by the end of June. If we are funded at the level we
    requested in our 2008 budget submission, we will continue to add staff
    in 2008.
        Because it requires an average of 2 or 3 years for our decision-
    makers to become fully productive, increased staffing levels do not
    produce immediate production improvements. Performance improvements
    from increased staffing are more evident in the second and third years.
        We have therefore also increased overtime funding this year and
    recruited retired claims processors to return to work as reemployed
    annuitants in order to increase decision output.
        We have deployed new training tools and centralized training
    programs that support more timely, accurate, and consistent
    decisionmaking. New employees receive comprehensive training and a
    consistent foundation in claims processing principles through a
    national centralized training program called ``Challenge.'' We have
    implemented an 80-hour mandatory training requirement for all
    employees.
        We have implemented a ``brokering'' strategy to help balance the
    inventory of claims across regional offices. Claims that are ready for
    decision are sent from offices with high inventories to other stations
    with capacity to process additional rating workload.
        We also established two Development Centers to specialize in
    ``brokering'' cases from other offices to assist in developing the
    required evidence and preparing cases for decision.
        Our goal for this year is to reduce average processing time to 160
    days (currently 177 days)--and to 145 days in 2008.
        Question. We have been told that VA hospitals are juggling the
    books to make it appear that the time to get an appointment is shorter
    than it is. Allegedly, appointments are being made, then cancelled and
    rescheduled to make it appear that the time from making the appointment
    to actually seeing a doctor is shorter than it is. Are you aware of
    this practice? Will you look into it and respond back to me?
        Answer. It is possible that a VERY small number of patients could
    have been taken off the wait list and later rescheduled. If this was
    done, it is contrary to policy and official procedures and is likely a
    result of employee error.
        If information is coming from the OIG, we are visiting the sites
    where they found issues to determine the extent of the problem and to
    implement corrections as appropriate.
        Question. Efforts at electronic record transfer between the
    Department of Defense and the Department of Veterans Affairs date back
    to the 1980s. What progress is being made in developing the capability
    to transfer electronic records between the departments?
        Answer. VA and DOD have achieved a significant level of success and
    are currently using interoperable electronic health records that are
    standards-based and bidirectional to share clinical data. Pursuant to
    the Joint Electronic Health Interoperability Plan (JEHRI), our long
    term strategy to achieve interoperability, and the guidance and
    leadership of the DOD/VA Joint Executive Council, VA and DOD are
    presently sharing almost all of the electronic health data that are
    available and clinically pertinent to the care of our beneficiaries
    from both departments.
        VA receives these electronic data through successful one-way and
    bidirectional data exchange initiatives between existing legacy VA and
    DOD systems. These data exchanges support the care of separated and
    retired Service members who seek treatment and benefits from the VA and
    the care of shared patients who use both VA and DOD health systems to
    receive care.
        Since beginning transfer of electronic medical records to VA, DOD
    has transferred data on almost 3.8 million unique separated service
    members to VA clinicians and claims staff treating patients and
    adjudication disability claims. Of these individuals, VA has provided
    care or benefits to more than 2.2 million veterans. These data include
    outpatient pharmacy (government and retail), laboratory results,
    radiology reports, consults, admission, disposition and transfer data,
    and ambulatory coding data. In 2006, DOD began transferring pre- and
    post-deployment health assessment data and post deployment health
    reassessment data on separated members and demobilized National Guard
    and Reserve members. Leveraging some of the technical capability to
    transfer records one-way, VA and DOD began the bidirectional sharing of
    electronic health records on shared patients. Data shared
    bidirectionally include outpatient pharmacy and allergy data,
    laboratory results, and radiology reports. This capability is now
    available at all VA sites of care and is currently installed at 25 DOD
    host locations. These 25 locations consist of 15 DOD medical centers,
    18 DOD hospitals and over 190 DOD outpatient clinics and include Walter
    Reed Army Medical Center, Bethesda National Naval Center, and Landstuhl
    Regional Medical Center. VA is working closely with DOD to expand this
    capability and by June 2008, VA will have access to these data from all
    DOD locations. VA also is working with DOD to increase the types of
    data shared bidirectionally. Successful pilot projects demonstrated the
    capability to share narrative documents, such as discharge summaries
    and emergency department notes and this capability is now being used at
    four locations and will be expanded to others. Additional work
    scheduled for the remainder of fiscal year 2007 and 2008 will add data
    such as progress notes, problem lists, and history data to the set of
    information that is shared bidirectionally between DOD and VA
    facilities.
        VA and DOD also have accomplished the ground-breaking ability to
    share bidirectional computable allergy and pharmacy data between next-
    generation systems and data repositories. This capability permits VA
    and DOD systems to conduct automatic drug-drug and drug-allergy
    interaction check to improve patient safety of those active dual
    consumers of VA and DOD healthcare who might receive prescriptions and
    other treatment from both VA and DOD facilities. At present, we have
    implemented this capability at seven locations and are working on
    enterprise implementation schedules.
        Whereas our earliest efforts focused on the sharing of outpatient
    data, VA and DOD also have made significant progress toward the sharing
    of inpatient data. Most recently, we began sharing significant amounts
    of inpatient data on our most critically wounded warriors. Previously,
    these data were only available to VA from DOD in paper format. We have
    successfully achieved the capability to support the automatic
    electronic bi-directional sharing of medical digital images and
    electronically scanned inpatient health records between DOD and VA.
    This effort has been successfully piloted, at least in one direction
    from DOD to VA, between the Walter Reed Army Medical Center and the
    four Level 1 VA Polytrauma Centers located in Tampa, Richmond, Palo
    Alto and Minneapolis. Clinicians at the Tampa and Richmond Polytrauma
    centers are routinely using it to view data on transferred patients. VA
    and DOD are finalizing a long-term strategy that will facilitate the
    expansion of this work across the enterprise systems of each
    department.
        In addition to our joint work to share scanned documents and
    digital radiology images, VA and DOD have undertaken a groundbreaking
    challenge to collaborate on a common inpatient electronic health
    record. On January 24, 2007, the Secretaries of VA and DOD agreed to
    study the feasibility of a new common in-patient electronic health
    record system. During the initial phase of this work, expected to last
    between 6 and 12 months, VA and DOD are working to identify the
    requirements that will define the common VA/DOD inpatient electronic
    health record. The Departments are working to conduct the joint study
    and report findings as expeditiously as possible. At the conclusion of
    the study, we hope to begin work to develop the common solution.
        Question. What challenges are created in treating Department of
    Defense patients in VA Polytrauma centers without the ability to
    transmit their records electronically?
        Answer. As is commonly understood, much of the DOD inpatient data
    exists in paper format and is not available in electronic format.
    Without question, this creates some challenges. However, to ensure VA
    is fully supporting the most seriously ill and wounded service members
    who are being transferred to VA polytrauma facilities, VA social
    workers located in Military Treatment Facilities (MTF) ensure that all
    pertinent inpatient records are copied and transferred with the
    patient. Once the patient arrives at VA for care we are now able to
    support the automatic electronic transfer of inpatient data to VA
    clinicians who will treat these patients.
        VA has successfully achieved the capability to electronically
    transfer DOD medical digital images and electronically scanned
    inpatient health records within VA. This effort has been successfully
    piloted between the Walter Reed Army Medical Center and three of the
    four Level 1 VA Polytrauma Rehabilitation Centers located in Tampa,
    Richmond, and Palo Alto. We are working now to add the fourth
    Polytrauma Rehabilitation Center at Minneapolis to this pilot project,
    and anticipate this will be accomplished soon. VA is also working to
    add this capability from Bethesda National Naval Medical Center and
    Brooke Army Medical Center to the four VA polytrauma centers. In the
    future, we hope to add the capability to provide this data bi-
    directionally in the event the patients return to DOD for further care.
        VA and DOD also have established direct connectivity between the
    inpatient electronic data systems at Walter Reed Army Medical Center
    and Bethesda National Naval Medical Center and clinicians at the four
    Level 1 VA Polytrauma Rehabilitation Centers. These direct connections
    are secure and closely audited to ensure that only authorized personnel
    at the VA facilities access the electronic military data on the OEF/OIF
    service members who are coming to or who have transferred to the VA
    Polytrauma centers. VA and DOD are finalizing a long term strategy that
    will facilitate the expansion of this work across the enterprise in
    both departments.
        Question. What is the status of the replacement of Department of
    Veterans Affairs' facilities that were destroyed by Hurricane Katrina?
        Answer. The functions that were at VA medical center (VAMC)
    Gulfport, MS, will be replaced at VAMC Biloxi, MS. VAMC Gulfport was
    destroyed by the storm surge. Several buildings collapsed. The facility
    was shutdown completely and secured. Recent activities include
    structural analysis for cleanup operations, records recovery, site
    cleanup, asbestos abatement and building demolition. At VAMC Biloxi,
    there are several phases of the major project in various stages of
    design. The first of these phases could start construction in late
    2007.
        The existing hospital location of VAMC New Orleans, LA, was
    determined to be too costly to reactivate. VAMC New Orleans replacement
    is awaiting land acquisition. VA has reactivated portions of the
    existing facility, as well as leased spaces in other locations, in
    order to provide outpatient care in the interim.
        Question. Have you revised the headcount of VA patients to account
    for the current and projected casualties from Iraq and Afghanistan?
    What headcount was used in formulating the current budget request?
        Answer. From the 2007 President's budget, we have revised our
    estimates to include the current and projected casualties for Iraq and
    Afghanistan. As reflected in VA's budget submission for fiscal year
    2008, we estimate that we will treat over 263,000 OEF/OIF veterans at a
    cost of approximately $752 million.
        Question. In your opinion, how is the so called seamless transition
    between DOD and VA working?
        Answer. Since its inception, the seamless transition program has
    achieved numerous accomplishments that result in great improvements
    toward the seamless transition of OEF/OIF service members into civilian
    life. The ability to register for VA healthcare and file for benefits
    prior to separation from active duty is the result of the seamless
    transition process.
        VA/DOD Social Work Liaisons and VBA Benefit Counselors are now
    located at ten MTFs to assist injured and ill service members transfer
    healthcare needs to VA medical facilities closest to their home or most
    appropriate for their medical needs and to ensure that returning
    service members receive information and counseling about VA benefits
    and services. VHA staff has coordinated over 7,000 transfers of OEF/OIF
    service members and veterans from an MTF to a VA medical facility.
    Active duty Army Liaison Officers are assigned to each of the four VA
    Polytrauma Rehabilitation Centers to assist service members and their
    families from all branches of Service on issues such as pay, lodging,
    travel, movement of household goods, and non-medical attendant care
    orders. The Office of Seamless Transition established an OEF/OIF
    Polytrauma Call Center to assist our most seriously injured veterans
    and their families with clinical, administrative, and benefit
    inquiries. The Call Center which opened February 2006, is operational
    24 hours a day, 7 days a week to answer clinical, administrative, and
    benefit inquiries from polytrauma patients and their families. In
    addition, the Call Center has made 2,702 outreach phone calls to
    seriously injured OEF/OIF veterans, contacting 807 veterans since
    February 2007. Through these outreach phone calls, we have been able to
    provide these veterans additional assistance with outstanding health or
    benefits concerns.
        VA has implemented an automated tracking system to track service
    members and veterans transitioning from MTFs to VA facilities As part
    of this system, VHA implemented a 2007 performance measure to ensure
    that VHA assigns a case manager to seriously injured service members
    being referred from a DOD medical treatment facility to a VA treatment
    facility in a timely fashion. This performance measure monitors the
    percent of severely ill/injured service members and veterans who are
    contacted by their assigned VA case manager within 7 days of
    notification of transfer to the VA system. During the period October
    2006 through March 31, 2007, 152 severely ill/injured patients were
    transferred from MTFs to VAMCs. Ninety-five percent (144) were
    contacted by their assigned VA case manager within 7 days of
    notification of transfer to VA.
        VA is participating in DOD's Post Deployment Health Reassessment
    (PDHRA) program for returning deployed service members. Since its
    inception, over 83,956 Reserve and Guard members completed the PDHRA
    on-site screen resulting in over 20,397 referrals to VHA facilities and
    10,401 referrals to Vet Centers.
        To ensure that OEF/OIF combat veterans receive high quality
    healthcare and coordinated transition services and benefits as they
    transition from the DOD system to the VA, VA developed a robust
    outreach, education and awareness program. The signing of a Memorandum
    of Agreement (MOA) between the National Guard and VA, in May 2005, and
    the formation of VA/National Guard State coalitions in each of the 54
    States and territories now provide the opportunity for VA to gain
    access to returning troops and families as well as join with community
    resources and organizations to enhance the integration of the delivery
    of VA services to new veterans and families. This is a major step in
    closer collaboration with the National Guard soldiers and airmen. A
    similar MOA is being developed with the U.S. Army Reserve Command and
    the U.S. Marine Corps at the national level. VA and the National Guard
    Bureau teamed up to train 54 National Guard Transition Assistance
    Advisors who assist VA in advising Guard members and their families
    about VA benefits and services.
        Building on these accomplishments, VA continues to monitor and
    improve the delivery of healthcare services and benefits to severely
    injured OEF/OIF service members and veterans. Toward that end, VA is
    addressing future challenges, such as expanding our web-based tracking
    application and integrating it with VISTAweb and VA's Computerized
    Patient Record System (CPRS), and contacting all severely ill and
    injured veterans to assure their needs are being met.
                                     ______

                  Questions Submitted by Senator Patty Murray

        Question. Secretary Nicholson, at a hearing 2 months ago, I
    submitted some questions for the record and I still not received a
    response. As you know, we can't provide what our veterans need if we
    can get accurate and timely answers from the VA. I would ask that you
    please provide a written answer to the following questions by Monday,
    April 23, 2007.
        Answer. Responses to these questions were forwarded to the Senate
    Veterans Affairs Committee on April 20, 2007, and are repeated below
    for the record.
        Question. Mr. Secretary, turning to Walla Walla, Washington--As you
    know, in 2003 the VA CARES Commission tried to close the facility that
    69,000 veterans rely on. I worked with the community and the VA, and I
    appreciate you committing to build a new facility in Walla Walla. The
    community and I have some questions about the care that will provided
    in that new facility--particularly mental healthcare, long-term care,
    and inpatient medical care.
    Mental Healthcare
        Question. As you know, mental healthcare is not available in the
    surrounding community.
        Can you explain how veterans in Walla Walla will get mental
    healthcare under your proposal? Also, how will they get drug
    rehabilitation?
        Answer. The VAMCs in Walla Walla and Spokane will cooperatively
    manage inpatient mental healthcare for the Washington, Oregon, and
    Idaho counties in their service areas. This will include residential
    rehabilitation care for substance abuse and PTSD provided mostly at the
    Jonathan M. Wainwright Memorial VAMC in Walla Walla and through
    community contracts in Spokane. Inpatient psychiatry will be provided
    at the Spokane VAMC in Spokane, Washington, and through community
    facilities in Lewiston, ID, and Yakima and Tri-Cities, Washington.
    Expanded outpatient mental health services will continue to be provided
    at the VAMCs, the existing and planned community based outpatient
    clinics, and in other locations as determined.
    Long-Term Care
        Question. There is very little long-term care available in the
    region. You've made a commitment to me that long-term care won't go
    away before a new facility is built.
        Will you continue to provide long-term care at the Walla Walla
    facility as long as it's needed, and will you commit to working with
    the State to build a State nursing home?
        Answer. Long-term care will be provided at the Walla Walla facility
    or the surrounding community as long as it's needed. In regards to
    working with the State to build a State nursing home, VISN 20's network
    director, has recently requested that Walla Walla's new director work
    with the director of the Washington State Department of Veterans
    Affairs to begin the process of establishing a nursing home.
    Applications for VA grants to assist in the construction of State
    nursing homes for fiscal year 2008 must be submitted by August 15,
    2007.
        Question. How should vets who need long-term care today get it?
        There has been no change in the provision of long term care at the
    Walla Walla facility at this time.
    Inpatient Care
        Question.Can you assure me that veterans in Walla Walla will not
    lose access to inpatient care as this transformation moves forward?
        Answer. Veterans with service-connected conditions will continue to
    receive acute inpatient care in community facilities close to their
    homes. Walla Walla facility staff will ensure that the quality and
    accessibility of care are maintained.
                                     ______

                    Questions Submitted by Senator Jack Reed

        Question. Secretary Nicholson, many of our troops have served
    multiple tours of duty in Iraq and Afghanistan, and have been deployed
    each time for months on end. I am growing increasingly worried about
    the strain that these multiple and increasingly dangerous deployments
    are having not only on the service members but also on their families.
        The common consequences of combat--substance abuse, mental health
    disorders, and physical injuries--affect not just the service member
    but every member of his or her family as well. While the service member
    remains on active duty, their family members have access to counseling
    and psychiatric services through military healthcare system. But once
    the service member transitions to the VA, there is no network in place
    to provide mental health assistance to their families.
        I would expect that the percentage of Iraq and Afghanistan combat
    veterans with spouses and young children is significantly higher than
    in previous extended conflicts. Has the VA undertaken any assessment of
    the mental health needs of the family members of these veterans?
        Answer. We agree that military families face a variety of
    stressors. Most families of deployed service members ``rise to the
    occasion'' and adapt successfully to this stressful experience.
    However, some service members who experience mental health disorders
    such as post-combat stress and PTSD may find reunification notably
    stressful (e.g., being startled by loud noises and disturbed by the
    chaos of a family with young active children). Thorough attention to
    service members and their family members' levels of stress and trauma
    is important for several reasons. First, increased stress in the family
    (especially tension and hostility) can trigger the veteran's PTSD
    symptoms. Second, family members who are hurt by the service member's
    behavior are often less supportive. This loss of social support is
    critical, as intimate relationships are a primary source of support for
    most people, and high levels of social support have been associated
    with decreased intensity of PTSD.
        VA's authority to provide mental health counseling to family
    members is limited to counseling in connection with the treatment of
    certain veterans. As a result, we have not undertaken an assessment of
    the prevalence of the need for counseling.
        Question. Psychiatric care and medications can be enormously
    expensive. Other than informal counseling through such services as Vet
    Centers, is the VA studying the possibility of extending mental health
    benefits to the families of Iraq and Afghanistan veterans--and if so,
    what statutory changes need to be made in order for this to occur?
        Answer. Currently, the law permits VA to provide such counseling,
    training, and mental health services for family members as are
    necessary in connection with the care of a veteran receiving treatment
    for a service-connected disability (38 USC 1782). Family members of
    veterans receiving care for nonservice-connected disabilities can
    receive such services only if those services were initiated during the
    veterans' hospitalization, and continuation of the family services on
    an outpatient basis is essential to permit the discharge of the veteran
    from the hospital.
        Question. Do you see this as an emerging problem, and what do you
    think the VA could or should do to screen and treat the spouses and
    children of combat veterans for mental health problems?
        Answer. Many VA facilities offer mental health services such as
    family psycho-education and spouse education/support groups. Broadening
    the scope of VA's mental health services to spouses and children of
    combat veterans would have to be deliberated further.
        Question. Secretary Nicholson, we know that on any given night more
    than 25 percent of homeless persons--nearly 200,000 people--are
    veterans. Already, some of these men and women are veterans of the
    current conflicts in Iraq and Afghanistan--although most of them are
    veterans from Vietnam, the first Gulf War, and peacetime service. In
    2005, VA's own CHALENG Community Homelessness Assessment report
    identified a need for 25,000 new permanent housing beds and 12,000 new
    transitional housing beds to help these homeless veterans.
        VA has effective programs that can meet these needs--the HUD-VASH
    supportive housing program that combines HUD Section 8 vouchers and VA
    supportive services for long-term homeless veterans with mental health
    and/or substance abuse problems, and the Grant and Per Diem program
    that funds transitional housing to help homeless veterans get jobs and
    return to independent living. However, HUD-VASH has not been funded
    since the 1990's, and Grant and Per Diem funding is not keeping pace
    with the need for housing. Do you agree that these programs are
    effective, and if so, do you believe that this Committee should provide
    the VA with increased resources for these programs--so that the VA can
    ensure that no veteran becomes or stays homeless?
        Answer. The number of transitional housing beds for homeless
    veterans has risen dramatically during the past 5 years, more than
    doubling the number of operational beds to more than 8,000 today. In
    addition we have already approved an additional 2,500 to 3,000 with the
    last three rounds of funding including the approximate 800 to 1,000 new
    beds to be created under a Notice of Funding Availability published on
    May 4, 2007.
        After this round of funding is awarded, VA will have in operation
    or awaiting opening between 12,500 and 13,500 transitional housing
    beds. In addition we are in the processes of awarding funding to more
    than double the number of Special Needs grants to organizations that
    serve veterans with additional healthcare challenges.
        VA has submitted a budget for 2008 that proposes to increase
    funding to further expand the capacity to offer services under the GPD
    program. Although funding amounts are still pending, it is expected
    that under the GPD Program for 2008, VA will be able to add to its
    current transitional housing bed capacity.
        The HUD-VASH Program has approximately 1000 housing units in
    operation at the present time. There is still significant need for
    additional permanent housing for veterans and VA will continue to work
    with HUD and the Congress to meet that long identified unmet need.
        VA remains committed working collaboratively with communities
    across the country to expand its capacity to serve homeless veterans
    with housing and other programs that will address the problems of
    homeless veterans.
                                     ______

              Questions Submitted by Senator Kay Bailey Hutchison

        Question. Mr. Secretary, I would like to compliment you again on
    the VA's successes in the area of electronic records. The VA's system
    is second to none, including the Department of Defense. It is a
    priority of this committee to see that our injured veterans receive
    world class care. We hear too often that the so called ``seamless
    transition'' is not seamless. A great many records are being lost
    between the time a soldier leaves the Department of Defense and arrives
    at the VA. The Department of Defense and the VA cannot electronically
    share medical records. I know you have several pilot test sites working
    on this problem. Why are the Department of Defense and VA not able to
    bridge this electronic gap? We are funding a working group that we
    hoped would fix this problem. I would like to see the Department of
    Defense adopt your electronic architecture to facilitate transferring
    records to the VA. Will you tell us where we are today and what are you
    doing to address the problem of sharing electronic healthcare records
    with the Department of Defense?
        Answer. VA and DOD have achieved a significant level of success and
    are currently using interoperable electronic health records that are
    standards-based and bidirectional to share clinical data. Pursuant to
    the Joint Electronic Health Interoperability Plan (JEHRI), our long
    term strategy to achieve interoperability, and the guidance and
    leadership of the DOD/VA Joint Executive Council, VA and DOD are
    presently sharing almost all of the electronic health data that are
    available and clinically pertinent to the care of our beneficiaries
    from both departments.
        VA receives these electronic data through successful one-way and
    bidirectional data exchange initiatives between existing legacy VA and
    DOD systems. These data exchanges support the care of separated and
    retired service members who seek treatment and benefits from the VA and
    the care of shared patients who use both VA and DOD health systems to
    receive care.
        Since beginning transfer of electronic medical records to VA, DOD
    has transferred data on almost 3.8 million unique separated service
    members to VA clinicians and claims staff treating patients and
    adjudication disability claims. Of these individuals, VA has provided
    care or benefits to more than 2.2 million veterans. These data include
    outpatient pharmacy (government and retail), laboratory results,
    radiology reports, consults, admission, disposition and transfer data,
    and ambulatory coding data. In 2006, DOD began transferring pre- and
    post-deployment health assessment data and post deployment health
    reassessment data on separated members and demobilized National Guard
    and Reserve members. Leveraging some of the technical capability to
    transfer records one-way, VA and DOD began the bidirectional sharing of
    electronic health records on shared patients. Data shared
    bidirectionally include outpatient pharmacy and allergy data,
    laboratory results and radiology reports. This capability is now
    available at all VA sites of care and is currently installed at 25 DOD
    host locations. These 25 locations consist of 15 DOD Medical Centers,
    18 DOD Hospitals and over 190 DOD outpatient clinics and include Walter
    Reed Army Medical Center, Bethesda National Naval Center and Landstuhl
    Regional Medical Center. VA is working closely with DOD to expand this
    capability and by June 2008, VA will have access to these data from all
    DOD locations. VA also is working with DOD to increase the types of
    data shared bidirectionally. Successful pilot projects demonstrated the
    capability to share narrative documents, such as discharge summaries
    and emergency department notes and this capability is now being used at
    four locations and will be expanded to others. Additional work
    scheduled for the remainder of fiscal year 2007 and 2008 will add data
    such as progress notes, problem lists and history data to the set of
    information that is shared bidirectionally between DOD and VA
    facilities.
        VA and DOD also have accomplished the ground-breaking ability to
    share bidirectional computable allergy and pharmacy data between next-
    generation systems and data repositories. This capability permits VA
    and DOD systems to conduct automatic drug-drug and drug-allergy
    interaction check to improve patient safety of those active dual
    consumers of VA and DOD healthcare who might receive prescriptions and
    other treatment from both VA and DOD facilities. At present, we have
    implemented this capability at seven locations and are working on
    enterprise implementation schedules.
        Whereas our earliest efforts focused on the sharing of outpatient
    data, VA and DOD also have made significant progress toward the sharing
    of inpatient data. Most recently, we began sharing significant amounts
    of inpatient data on our most critically wounded warriors. Previously,
    these data were only available to VA from DOD in paper format. We have
    successfully achieved the capability to support the automatic
    electronic bi-directional sharing of medical digital images and
    electronically scanned inpatient health records between DOD and VA.
    This effort has been successfully piloted, at least in one direction
    from DOD to VA, between the Walter Reed Army Medical Center and the
    four Level 1 VA Polytrauma Centers located in Tampa, Richmond, Palo
    Alto and Minneapolis. Clinicians at the Tampa and Richmond Polytrauma
    centers are routinely using it to view data on transferred patients. VA
    and DOD are finalizing a long term strategy that will facilitate the
    expansion of this work across the enterprise systems of each
    department.
        In addition to our joint work to share scanned documents and
    digital radiology images, VA and DOD have undertaken a groundbreaking
    challenge to collaborate on a common inpatient electronic health
    record. On January 24, 2007, the Secretaries of VA and DOD agreed to
    study the feasibility of a new common in-patient electronic health
    record system. During the initial phase of this work, expected to last
    between 6 and 12 months, VA and DOD are working to identify the
    requirements that will define the common VA/DOD inpatient electronic
    health record. The Departments are working to conduct the joint study
    and report findings as expeditiously as possible. At the conclusion of
    the study, we hope to begin work to develop the common solution.
        Question. Mr. Secretary, you now have over $1.2 billion invested in
    Information Technology each year. A critical part of this will go
    toward upgrading VA's electronic medical records and VA's benefit
    processing systems.
        What IT governance structure have you put in place to ensure that
    these critical priorities are aggressively and successfully pursued?
    Who is the one person you designated to be directly responsible for
    these technical programs to ensure they will be completely successful?
        Answer. Over the last 18 months we have dramatically transformed
    the VA IT Management System. Significant parts of this transformation
    have been put in place in the last 6 months. Specifically:
      --October 31, 2006, VA established a single IT leadership authority
            under the VA Chief Information Officer (CIO). This assigned the
            responsibility and accountability for all IT activities in VA
            to the Assistant Secretary for Information and Technology, the
            VA CIO. This ensured that there was a single focus for all
            Information Technology efforts at VA.
      --On February 27, 2007, VA consolidated all IT staff and resources
            into a single organization; accordingly, consolidating the
            authority and responsibility for all IT efforts at VA. In
            addition, I directed that this new organization to implement
            success based processes for all IT efforts at a department
            level; therefore, ensuring that these critical priorities are
            successfully pursued.
      --Finally, on March 12, 2007, the new IT Governance Plan was
            approved. The plan is intended to be an integral component to
            the VA Governance Framework and will serve as a mechanism to
            ensure compliance with all Federal IT mandates. It is a vehicle
            that enables VA to centralize its IT decision making. VA will
            be able to better align IT strategy to business strategy,
            maintain and develop the Enterprise Architecture, enhance
            Information Protection/Data Security, manage IT investments,
            and reconcile disputes regarding IT. IT Governance is the
            responsibility of the VA Executive Board, the Strategic
            Management Council (SMC) and other executive managers. While
            the VA CIO has full IT decision authority on all IT related
            activities and issues, the VA business units have recourse to
            the SMC chaired by the Deputy Secretary and intimately to the
            Executive Board chaired by myself. This will ensure that IT
            efforts are focused on delivering services to our veterans and
            that critical priorities are aggressively pursued.
        Our new OI&T structure, our IT Governance Plan and the
    implementation of ``core best business IT practices'' puts in place a
    robust VA IT Management System under the single IT leadership authority
    of the VA CIO. It provides the necessary oversight, safeguards, check
    and balances to ensure we achieve our IT objectives.
        Question. Who is the one person you designated to be directly
    responsible for these technical programs to ensure they will be
    completely successful?
        Answer. The Honorable Robert T. Howard, the Assistant Secretary for
    the Office of Information and Technology, and the Department's Chief
    Information Officer is designated to be directly responsible for
    technical programs and to ensure they will be completely successful.
        Question. VA's claims processing backlog is currently over 400,000.
    And, you predict over 800,000 new claims annually. Yet, despite immense
    resources allocated for VA IT infrastructure, VBA continues to use old
    systems that require staff to re-enter information by hand. In the last
    2 years the Veterans Benefit Administration has not been a priority in
    the Information Technology budget. I understand there are competing
    issues, but this is a critical mission of the VA.
        How do you plan to make electronic claims processing a priority for
    the VA and identify opportunities for improved accuracy and automation
    in claims handling in fiscal year 2008?
        Answer. Every year, more than 42 million disability compensation
    and pension payments are made to veterans and beneficiaries through the
    Benefits Delivery Network (BDN). BDN has been operational since the
    late 1960s, and the hardware and software that make up the system are
    obsolete. Each year the maintenance of obsolete technology becomes more
    expensive and more risky.
        We are focusing our efforts on completing VETSNET, the replacement
    system for BDN. There are many reasons why the completion of the
    VETSNET system is important. VETSNET will ensure continuity of benefit
    payments to veterans and beneficiaries, and there are other advantages
    as well. The system makes veterans' claims information available on-
    line, which allows work on a claim to take place across regional office
    jurisdictions to better balance workload and provide improved customer
    service. Further, VA will be able to readily make software
    modifications to support improved work processes, legislative mandates,
    and security enhancements. It will also be possible to incorporate and
    enhance decision-support and ``expert system'' applications.
        In addition to completing VETSNET, VA is conducting a pilot program
    to incorporate imaging technology into our disability compensation
    processing. Our pilot program involves claims from recently separated
    veterans filed through our Benefits Delivery at Discharge Program
    (BDD). We are receiving the veterans' service medical records
    electronically and are maintaining electronic claims folders for all
    claims filed under this pilot program. However, because of the
    magnitude of the paper records we store, the extent to which we can
    ``paperlessly'' process claims from veterans of all periods of service
    has yet to be determined.
        VBA has been exploring the use of electronic, rules-based claims
    processing for certain aspects of compensation and pension claims
    adjudication. Electronic, rules-based claims processing technology
    reduces variances among VA's regional offices, increases decision
    accuracy, and increases employee productivity.
        VA is also using imaging to process adjustments to pension awards,
    and to manage workload. Paperless claims processing offers many
    benefits, such as increasing workload efficiencies, eliminating the
    need for storage of folders, and increasing customer satisfaction
    through the instant availability of imaged information. Through the use
    of our imaging system (Virtual VA) and the associated electronic claims
    folder, employees nationwide have the ability to instantly access
    claims information (service medical records, other medical documents,
    personnel records, and claims applications). Web-based imaging programs
    allow users to navigate and search for information faster than turning
    pages.
        Question. What have you done to improve the accuracy and longer
    than average processing times for the Houston Regional Office?
        Answer. As of January 31, 2007, the accuracy rate for benefit
    entitlement at the Houston Regional Office was 86 percent. In an effort
    to achieve the fiscal year 2007 accuracy goal of 90 percent, the
    Houston RO continues to take aggressive measures to improve the
    accuracy of claims processing. As of March 2007, Houston increased from
    six to eleven the number of senior Veteran Service Center (VSC)
    employees responsible for reviewing quality and evaluating training
    needs. These eleven senior VSC employees are dedicated solely to
    improving the accuracy of Houston RO claims decisions.
        From the end of fiscal year 2005 through April 2007, the Houston RO
    has improved the average processing time of disability claims by 12
    days, from 217 to 205 days. To assist Houston management with the
    development of a comprehensive plan for improvement, VBA sent a team to
    Houston to review critical elements of the station's performance and
    operations. The team recommended strengthening the workload management
    plan and providing additional training for claims processors.
        The Houston RO has been given authority to hire additional claims
    processors in conjunction with the current national hiring initiative.
    The Houston RO had 286 FTE in its Veterans' Service Center at the
    beginning of fiscal year 2007 and is authorized to increase to 293 FTE.
    Four experienced claims processors are also transferring to Houston
    from other regional offices in the near future. The Houston RO also
    hired three retired decision makers whose sole responsibility is to
    process claims pending over 1 year or from claimants over the age of
    70.
        VBA continues to use an aggressive brokering strategy to decrease
    the inventory of claims across the Nation. Cases are sent from stations
    with high inventories to other stations with the capacity to take on
    additional work. This strategy allows the organization to address
    simultaneously the local and national inventory by maximizing resources
    where they exist. During fiscal year 2006, the Houston RO brokered
    nearly 5,000 rating claims, and the office continues to broker rating
    workload this fiscal year.
        Question. I am searching for new and innovative ways we can help
    you solve this problem. One method your Under Secretary for Benefits,
    Admiral Cooper, has instituted is ``brokering'', or the practice of
    moving cases from Regional Offices with larger workloads to regional
    offices with a lesser load.
        Can you tell us which regional offices have the highest workload
    per claims examiner and how this ``brokering'' has affected that
    office?
        Answer. At the end of April 2007, the regional offices with the
    highest workload per full time employee (FTE) were Detroit and Chicago.
    To assist these stations in reducing the number of pending claims and
    improving timeliness, VBA brokered cases from these offices to stations
    with additional capacity. During the first and second quarters of
    fiscal year 2007, the Detroit RO brokered 3,249 claims and the Chicago
    RO brokered 2,913.
        Brokering plans are developed on a monthly basis. Stations are
    selected for brokering based on the percentage gap between their
    current inventory of pending claims and their established end-of-year
    inventory target. Stations with the greatest percentage gap are asked
    to send ready-to-rate cases to other stations for rating decisions. The
    stations participating in brokering changes over time as stations are
    able to bring the pending inventory in line with established targets.
        Can you supply the subcommittee with a list of all Regional Offices
    and the associated workload per claims examiner?
        Answer. See attached spreadsheet.

                                                DISABILITY RATING CLAIMS
    ----------------------------------------------------------------------------------------------------------------
                                                                        March 2007       May 2007       Pending per
                                                                      Decisionmakers      Pending      Decisionmaker
    ----------------------------------------------------------------------------------------------------------------
    USA.............................................................           5,409         403,268  ..............
    Albuquerque.....................................................              51           3,875              76
    Anchorage.......................................................              18           1,368              76
    Atlanta.........................................................             157          17,175             109
    Baltimore.......................................................              63           5,680              90
    Boise...........................................................              32           1,522              48
    Boston..........................................................              51           4,803              94
    Buffalo.........................................................              60           5,353              89
    Chicago.........................................................             116          14,093             121
    Cleveland.......................................................             182          13,998              77
    Columbia........................................................             136           6,959              51
    Denver..........................................................             106           7,911              75
    Des Moines......................................................              35           4,393             126
    Detroit.........................................................              97          13,456             139
    Fargo...........................................................              25           1,241              50
    Fort Harrison...................................................              24           1,887              79
    Hartford........................................................              32           2,581              81
    Honolulu........................................................              32           3,067              96
    Houston.........................................................             193          19,878             103
    Huntington......................................................              73           4,266              58
    Indianapolis....................................................              80           8,758             109
    Jackson.........................................................              74           6,555              89
    Lincoln.........................................................              58           2,839              49
    Little Rock.....................................................              65           3,909              60
    Los Angeles.....................................................             115          10,178              89
    Louisville......................................................              76           6,833              90
    Manchester......................................................              17           1,491              88
    Milwaukee \1\...................................................             177           5,888              33
    Montgomery......................................................             115          11,484             100
    Muskogee........................................................             140           6,329              45
    Nashville.......................................................             144           8,833              61
    New Orleans.....................................................              82           7,431              91
    New York........................................................              80          10,421             130
    Newark..........................................................              47           4,425              94
    Oakland.........................................................             128          14,276             112
    Philadelphia \1\................................................             255           7,106              28
    Phoenix.........................................................             108           8,095              75
    Pittsburgh......................................................              73           6,668              91
    Portland........................................................              71           6,962              98
    Providence......................................................              27           1,369              51
    Reno............................................................              44           4,302              98
    Roanoke.........................................................             131          14,950             114
    Salt Lake City..................................................              92           4,060              44
    San Diego.......................................................             139           7,966              57
    San Juan........................................................              62           3,690              60
    Seattle.........................................................             139           9,487              68
    Sioux Falls.....................................................              20           1,026              51
    St. Louis.......................................................             142           8,755              62
    St. Paul \1\....................................................             197           4,753              24
    St. Petersburg..................................................             370          24,446              66
    Togus...........................................................              54           2,470              46
    Waco............................................................             263          18,415              70
    Washington, DC..................................................              15           1,234              82
    White River Junction............................................              10             868              87
    Wichita.........................................................              39           3,724              95
    Wilmington......................................................              14             742              53
    Winston-Salem...................................................             263          19,024              72
    ----------------------------------------------------------------------------------------------------------------
    \1\ Pension Maintenance Center.

        Question. We have discussed hiring more personnel, emphasizing IT
    solutions and now ``brokering''. We have to come up with something to
    relieve the pressure on the claims process and ensure our veterans have
    their claims processed in a timely manner. Can you offer any additional
    areas where we in Congress can help you with this problem?
        Answer. In addition to enhanced technology and management
    practices, increasing staffing levels is key to reducing the pending
    inventory and providing the level of service expected by the American
    people and that our veterans deserve. We very much appreciate the
    support of Congress in providing the resources that are allowing us to
    aggressively add more decisionmakers in our regional offices. We
    increased our on-board strength by over 580 employees between January
    2006 and January 2007. Our plan is to continue to accelerate hiring and
    fund additional training programs for new staff this fiscal year,
    adding 400 additional employees by the end of June.
        The Veterans Disability Benefits Commission is charged with
    assessing and recommending improvements to the laws and benefit
    programs for disabled veterans. We look forward to learning the
    Commission's findings and recommendations for revising and simplifying
    our laws and regulations and improving the delivery of benefits and
    services.
        Question. Mr. Secretary, your agency reports a $5 billion backlog
    in facility maintenance. Every VA facility reported their maintenance
    condition which you relayed to Congress. Yet, the Facilities Condition
    Assessment you delivered to Congress was not in any priority order. I
    am concerned about working our way through this list giving the most
    critical problems the top priority. Facility directors often hold back
    maintenance funds till the end of the year in case they need additional
    funds for medical services.
        How will you ensure that your facility directors spend all of the
    NRM funds as budgeted and appropriated and are incentivized to address
    the non-recurring maintenance projects?
        Answer. VHA is currently working to alter the historical trends of
    NRM obligations and to normalize the obligation of NRM funds throughout
    the fiscal year. Annually VISN's submit an NRM obligation plan and a
    report is provided to the VA Deputy Secretary indicating the variance
    of actual and planned NRM Obligations.
        Question. Mr. Secretary, as you know, this committee is interested
    in ensuring that our returning soldiers receive treatment for mental
    health problems as well as physical health needs.
        What is the VA doing to expand access to mental healthcare for
    returning OEF/OIF vets at our new Mental Health Centers of Excellence?
        Answer. Like other Centers of Excellence (COEs) within the Office
    of Mental Health Services, the new COEs in Mental Health and PTSD in
    Canandaigua, San Diego and Waco were established to support programs in
    research, education, and clinical care. In following this mission,
    their structure and processes are similar, in many ways, to the Mental
    Illness Research Education and Clinical Centers.
        The COE in Canandaigua has a focus on the secondary prevention of
    adverse consequences of serious mental illnesses, particularly on
    suicide prevention. It has appointed Dr. Kerry Knox as its director,
    initial support has been provided, and Dr. Knox is currently leading
    the development of the program plan. While this is in progress, the COE
    is serving as a center for technical assistance and program leadership
    for VA national efforts at suicide prevention.
        The COE in San Diego has a focus on understanding the processes of
    stress and resilience as well as vulnerability and recovery from PTSD
    and other stress related conditions throughout the adult lifespan. This
    includes pre- and post-deployment studies that are being conducted in
    collaboration with the Marine base and Camp Pendleton. It has appointed
    Dr. James Lohr as its director. He has led the development of a program
    plan that has been peer reviewed, approved, and fully funded. The
    Center is currently in the process of implementing its program plan.
    Its clinical activities include enhanced staffing for evaluations of
    returning veterans for deployment-related mental health conditions.
        The COE at Waco has a focus on deployment and stress-related mental
    health conditions, and the transition between DOD and VA care. Its
    proximity and the ongoing relationships of its staff with the Army
    installation at Fort Hood is a major resource. It is currently in the
    process of finalizing the recruitment of its director who will lead the
    development of its program plan. Meanwhile, the Center has implemented
    its activities by initiated specific clinical projects. In one, Dr.
    Kathryn Kotrla is leading a partnership with the State of Texas in
    developing a web-based directory of mental health resources for
    returning veterans and their families and in training providers and
    others on its use. In another, the Center is working in partnership
    with the Office of Research and Development, and the National Center
    for PTSD to support a clinical trial of a care management strategy for
    primary care treatment of PTSD.
                                     ______

                  Questions Submitted by Senator Wayne Allard

        Question. Many of my colleagues from States similar to Colorado
    face a challenge with bringing veteran's healthcare to rural
    communities. I hear from many veterans that live far from VA health
    centers with these concerns. Community Based Outpatient Clinics have
    helped to alleviate some of the geographical obstacle problems that
    many rural veterans have, and Colorado has opened many new clinics in
    the past few years.
        The VA announced earlier this year it was to place a clinic in
    either eastern Colorado or western Kansas, and I was told by VISN 19 in
    Denver to expect a final decision on the placement of this clinic by
    the end of this month. Do you have an update on that decision?
        Answer. The lease for a community outreach clinic was awarded to
    the City of Burlington, Colorado on April 30. Congressional
    notifications were made on May 1, 2007. The location for the clinic is
    the Medical Arts Building, 1177 Rose Avenue, Burlington, CO 80807 It is
    anticipated that the clinic renovations will be completed and the
    clinic should open around October 1, 2007.
        Question. Are there other solutions that the VA is attempting to
    address this problem of rural healthcare with?
        Answer. Beyond establishing CBOCs, VHA employs other means to
    provide healthcare to veterans residing in rural areas. The strategic
    direction for providing services to veterans residing in rural areas is
    to provide non-institutional care and to bring care into veterans'
    homes. Examples of this are telehealth, mail order pharmacies, and home
    based primary care. We are setting the industry standards for using
    advanced technology with our telehealth healthcare delivery programs.
    With this advanced technology, we are providing services directly to
    veterans in their homes and expanding specialized care, such as
    specialized mental heath services, in our Community-Based Outpatient
    Clinics (CBOCs) through telemedicine capabilities.
        When a veteran needs to come to a facility, VHA has established
    outreach clinics which are part time clinics that operate under a
    ``hub'' CBOC. These allow for access in more rural areas that do not
    have the demand for services that a more urban area would have.
    Additionally, VA operates Vet Centers often located in rural areas that
    provide mental health services.
        What about the challenges associated with Veterans that are in
    places deemed ``geographically inaccessible'' by the VA?
        Response: VHA acknowledges that those veterans who live in highly
    rural areas have greater access challenges than veterans who live in
    urban and rural areas. To address this challenge, VHA has strengthened
    telehealth healthcare delivery programs. This includes implementation
    of a national care coordination home telehealth program (CCHT). CCHT
    assists in monitoring and treatment of common diseases/conditions of
    patients in their own homes. VA is leading the industry in telehealth
    application and research. VHA will further expand this program in
    efforts to address the access challenges of our veterans who reside in
    highly rural areas.
                                     ______

                 Questions Submitted by Senator Mitch McConnell

        Question. I am deeply concerned about the details that have come to
    light regarding the quality of care provided at Walter Reed Army
    Medical Center. While not directly involving the Department of Veterans
    Affairs (VA), the news about Walter Reed carries with it important
    implications for the VA. I know you agree that both our brave soldiers
    and our veterans deserve the best possible care and that the situation
    at Walter Reed is unacceptable. In your response to a letter I sent you
    on March 6, 2007, regarding the quality of care provided to our
    veterans, you stated that you had ``directed that all facilities for
    which [you are] responsible be inspected by management to assure that
    they are up to par.''
        What criteria were used to make these evaluations?
        What were the findings of this review overall?
        Answer. Each VISN and facility was asked to provide a description
    of substandard cleanliness conditions (e.g. unsanitary conditions,
    peeling paint, and exposed wall and ceiling structures). Many
    facilities went above and beyond our expectations in reporting their
    issues. Specifically, a majority of the items reported were of a
    routine and recurring nature and items that you would expect to see at
    any medical center on a daily or weekly basis.
        The Environment of Care (EOC) report identified 90 percent of the
    items as routine wear and tear for and included items such as paint
    repair, wall repair, and ceiling and floor tiles. Exterior items
    needing repair included sidewalks and doors, bathrooms, and light
    fixtures.
        Nearly one-half of all items identified were addressed by March 30,
    with 85 percent of the items expected to be corrected by September 30,
    2007. The remaining items represent larger ``wear and tear'' and
    infrastructure issues typical for healthcare facilities. Corrective
    actions have already begun on these with some being part of longer term
    existing projects and the remaining added to the facility's non-
    recurring maintenance (NRM) or major projects list.
        VHA has had extensive oversight processes in place to assess and
    identify Environment of Care issues. Environment of Care walking rounds
    are conducted on a weekly basis in a specific area in facilities. The
    EOC rounds are led by the Associate Director and cover each area of the
    facility at least twice annually. Any findings noted on EOC rounds are
    tracked by facility leadership through to resolution. The Networks have
    also been directed to establish a VISN Environment of Care Team that
    will conduct unannounced visits at each facility at least once
    annually.
        Question. I am particularly concerned about the nearly 360,000
    veterans in the Commonwealth of Kentucky. I want to ensure they are
    receiving top quality healthcare from our State's VA facilities. Please
    provide a detailed description of the results of your findings for each
    Kentucky VA facility that includes both the criteria and your analysis
    of whether each facility meets acceptable standards for those criteria.
        Answer. Each VISN and facility was asked to provide a description
    of substandard cleanliness conditions (e.g. unsanitary conditions,
    peeling paint, and exposed wall and ceiling structures). Additionally,
    they were asked to provide a plan for correction including timelines
    and the reason why the condition was not immediately correctable.
        The findings within VISN 9 for Kentucky were limited to only one
    facility, the Lexington VA Medical Center. The findings were related to
    the need to replace carpet in three areas (primary care, medicine, and
    surgery administrative areas) and furniture in five areas (ambulatory/
    primary care, surgical care, intensive care unit, and emergency
    department waiting rooms, and a mental health unit group room.) All
    furniture and carpet issues were due to normal wear and tear. The plan
    for correction should be completed by July 30, 2007
        Question. I was encouraged to see that the VA's Fiscal Year 2008
    Budget Submission included the new medical facility in Louisville,
    Kentucky among the top-five priority major construction projects for
    the Veterans Health Administration.
        Please explain the current status of this project, as well as your
    outlook for completion of this facility.
        Is the March 23, 2007 announcement that the VA had completed its
    advertisement and evaluation process for selecting an architectural and
    engineering (A/E) team to provide full design services for the
    construction of the replacement medical facility an indication of the
    Department's commitment to complete this important project in a timely
    manner?
        What deadline has the VA established for finalizing a contract with
    the selected A/E team?
        If a deadline has not been established, when do you expect to
    finalize a contract?
        When do you expect the site selection board to recommend its
    ``preferred site?''
        Answer. As a result of the Capital Asset Realignment for Enhanced
    Services (CARES) process, a decision was made to plan for the
    construction of a new VA medical center in Louisville. At the present
    time, no funding is available for the acquisition of a site for this
    project. The site selection process, including conducting the necessary
    environmental impact studies will take about 1 year and will be timed
    to coincide with the ability to be considered for fiscal year 2009
    funding consideration. This process is expected begin this summer.
        In the meantime, the Department has selected an architect
    engineering firm as the designer for the project. The firm's initial
    work will include supporting the VA in evaluating sites identified
    through the search process and developing a space program for the
    project. Once a site has been selected, the firm will proceed into
    design. It is anticipated there will be individual contract actions
    with the firm for the start-up studies.
        This project is one of several large project requirements
    identified in the CARES process and will be considered along with
    others for funding as future budget requests are developed. Site
    acquisition and design funding will be a consideration for funding in
    fiscal year 2009.
        Question. I commend the Department, under your direction, for
    working to address the growing need for specialized care for veterans
    returning from Operation Enduring Freedom and Operation Iraqi Freedom
    who are suffering from polytraumatic injuries. I am particularly
    encouraged by your recent action to expand this specialized care
    through 21 Polytrauma Network Sites (PNS) nationwide.
        (a) What is the timeline for these PNS facilities to become
    operational?
        (b) What services will PNS facilities, such as the Lexington VA
    Medical Center in Lexington, Kentucky, provide veterans recovering from
    polytraumatic injuries that are not available at other VA medical
    centers?
        (c) In what ways will these new sites help reduce the strain
    endured by family members of severely wounded veterans?
        Answer. (a) All 21 Polytrauma Network Sites (PNS) are operational.
    (b) The PNS have dedicated interdisciplinary teams consisting of a
    physiatrist, rehabilitation nurse, psychologist, speech-language
    pathologist, physical therapist, occupational therapist, social worker,
    blind rehabilitation outpatient specialist, and certified prosthetist.
    The teams have received training in conditions associated with
    polytraumatic injuries including brain injury, amputation, visual
    impairment, pain management, and PTSD. They have also received training
    in the special needs of families and caregivers.
        (c) The role of the PNS is to manage the post-acute complications
    of polytrauma and to coordinate life-long rehabilitation services for
    patients with polytrauma within their VISN. As part of the Polytrauma
    System of Care (PSC), PNS are responsible for identifying VA and non-VA
    services available across the VISN to support the needs of patients and
    families with polytrauma.
        Case management has a crucial role in ensuring lifelong
    coordination of services for patients with polytrauma and TBI, and is
    an integral part of the system at each polytrauma care site. The PSC
    uses a proactive case management model, which requires maintaining
    routine contacts with veterans and their families to coordinate
    services and to address emerging needs. As an individual moves from one
    level of care to another, the case manager at the referring facility is
    responsible for a ``warm hand off'' of care to the case manager at the
    receiving facility closer to the veteran's home. Every combat injured
    veteran with TBI is assigned a case manager at the facility closest to
    his home. The assigned case manager handles the continuum of care and
    care coordination, acts as the POC for emerging medical, psychosocial,
    or rehabilitation problems, and provides patient and family advocacy.
        A Polytrauma Telehealth Network (PTN) links facilities in the
    Polytrauma System of Care and supports care coordination and case
    management. The PTN provides state-of-the-art multipoint
    videoconferencing capabilities. It ensures that polytrauma and TBI
    expertise are available throughout the system of care and that care is
    provided at a location and time that is most accessible to the patient.
    Clinical activities performed using the PTN include remote
    consultations, evaluations, and even treatment, and education for
    providers and families
        Question. The VA's 2004 Capital Asset Realignment for Enhanced
    Services (CARES) study recommended seven Community Based Outpatient
    Clinics (CBOCs) for VISN 15, which includes Daviess, Hopkins, and
    Graves Counties in Kentucky. Although the VA's budget request includes
    over 35 CARES major construction projects--several of which are CBOCs--
    none of the fiscal year 2008 CARES projects is located in VISN 15. More
    troubling, within the VA's Fiscal Year 2008 Five-Year Capital Plan,
    eight potential major construction projects for VISN 15 are identified,
    nearly all of which are to be located within Missouri, yet none of
    Kentucky's CBOCs in VISN 15 is included in that plan.
        (a) Given that none of the three Kentucky CBOCs is registered on
    the VA's Five-Year Capital Plan, when can these communities expect to
    utilize the facilities they were promised?
        (b) What options are the VA considering to ensure that veterans
    living in western Kentucky have access to quality healthcare close to
    home?
        Answer. (a) There were three Community Based Outpatient Clinics
    (CBOCs) identified in the CARES study for Western Kentucky that are
    located in the VISN 15 service area. The Hopkins County CBOC, co-
    located at the Western Kentucky Veterans Center in Hanson, Kentucky,
    opened in August 2005. VHA is currently evaluating options, including
    CBOCs, to improve access in Kentucky.
        (b) Veterans in Western Kentucky currently have access to three VA
    clinics in VISN 15. They may obtain care at the CBOC in Paducah, the
    Hopkins County CBOC, or the Evansville Outpatient Clinic. VHA is
    currently evaluating options, including CBOCs, to improve access in
    Kentucky.
                                     ______

                Questions Submitted by Senator Robert F. Bennett

        Question. Regarding the construction of a planned 120 bed Utah
    State Veterans' Nursing Home in Ogden, Utah, about which my office has
    been in contact with the Department of Veterans Affairs, I am concerned
    about the prioritization of the facility. The nearest comparable
    facility located in Salt Lake City, Utah, continues to place an
    increasing number of veterans on a waiting list to which many of the
    veterans will not live to see an end. I would like to greater
    understand the process used in determining the order of construction of
    nursing homes in various States. For example, is a formula used that
    would continually place the needs of States with comparatively smaller
    populations of veterans behind more populous States? I would appreciate
    an in-depth overview of the decision-making process regarding
    construction of these facilities, with particular attention to the
    planned Utah State Veterans' Nursing Home in Ogden.
        Answer. Projects submitted to VA for consideration under the State
    Home Construction Grant program are prioritized using criteria set
    forth in the law, as implemented by VA regulations in 38 CFR Part 59.
    In prioritizing projects, the law gives the highest ranking to those
    projects that are to correct life safety deficiencies at existing State
    Homes. The next highest priority is given to construction of new
    capacity in States that have a great need for nursing home beds. Title
    38 CFR Part 59.40 identifies the maximum number of nursing home and
    domiciliary care beds for veterans by State. The limits are currently
    based on projected demand for such beds for veterans that are 65 and
    older projected to the year 2009. VA may participate in a construction
    grant to build new beds (up to 65 percent of allowable costs) in those
    States up to the maximum bed limits. There is a 2-hour travel time
    exception that may be approved by VA's Secretary. The annual fiscal
    year priority list is developed in accordance with the priorities set
    forth in the law, as implemented in title 38 CFR 59.50. A copy of the
    prioritization for priority group 1 and the first page of the fiscal
    year 2007 Priority List illustrate the development of the annual list.
    All initial applications and pending projects will be considered as of
    August 15, 2007, for ranking on the fiscal year 2008 Priority List. If
    a project is to be ranked in priority group 1, the State authorization
    for a project and the State 35 percent Certification of State Matching
    Funds for the project must be approved. Usually during September, the
    annual Priority List is approved by VA's Secretary. When Congress
    appropriates VA's fiscal year 2008 State Home Construction Grant
    budget, VA will inform the States with the highest ranking projects
    that funds are available for their project in fiscal year 2008.
    Annually, VA utilizes nearly all appropriated funds. To receive a
    grant, a State informed of the availability of funds must meet all the
    requirements for a grant award during the fiscal year. The proposed
    Ogden home will continue to be ranked on the annual Priority List until
    it receives a grant, unless the State elects to withdraw the
    application for funding.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                              SUBCOMMITTEE RECESS

        Senator Reed. This hearing is recessed.
        [Whereupon, at 12:03 p.m., Thursday, April 12, the
    subcommittee was recessed, to reconvene subject to the call of
    the Chair.]

       MILITARY CONSTRUCTION AND VETERANS AFFAIRS, AND RELATED AGENCIES
                      APPROPRIATIONS FOR FISCAL YEAR 2008

                                  ----------

                            THURSDAY, APRIL 19, 2007

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 10:01 a.m., in room SD-138, Dirksen
    Senate Office Building, Hon. Jack Reed presiding.
        Present: Senators Reed, Nelson, Hutchison, and Allard.

                             DEPARTMENT OF DEFENSE

                             Department of the Army

    STATEMENT OF HON. KEITH E. EASTIN, ASSISTANT SECRETARY
                OF THE ARMY, INSTALLATIONS AND ENVIRONMENT
    ACCOMPANIED BY:
            LIEUTENANT GENERAL ROBERT WILSON, ASSISTANT CHIEF OF STAFF FOR
                INSTALLATION, UNITED STATES ARMY
            MAJOR GENERAL DAVID P. BURFORD, ASSISTANT TO THE DIRECTOR, ARMY
                NATIONAL GUARD
            BRIGADIER GENERAL RICHARD J. SHERLOCK, DEPUTY CHIEF, ARMY
                RESERVE

                         STATEMENT OF SENATOR JACK REED

        Senator Reed. Good morning. Let me call the hearing to
    order and recognize my colleagues who are here, particularly
    the ranking member, Senator Hutchison. Her leadership over the
    last several years in this committee has put us in excellent
    position to consider the proposals that we're considering
    today, with respect to the Army and to the Navy.
        I'm very pleased to welcome Secretary Eastin, Generals
    Wilson, Burford, and Sherlock to testify today before the
    subcommittee. I thank you for appearing and also thank you for
    your service to the country. Thank you very much.
        The purpose of today's hearing is to receive testimony
    regarding this year's President's budget request for military
    construction for the Army, the Army National Guard, and the
    U.S. Army Reserve. This year's request shows significant change
    from previous years. The Army request has nearly doubled from
    $2 billion to $4 billion. Much of this is to accommodate the
    Army's Grow the Force Initiative.
        The Reserve component request, on the other hand, are both
    seeing a significant decrease in infrastructure funding, all
    this at a time when the Reserve Forces are fully engaged with
    its Active Duty counterparts in Iraq, Afghanistan, and
    throughout the world. And, I intend to address this further
    during the questioning period.
        Again, let me thank you for appearing before our committee.
    I look forward to the testimony and let me recognize the
    ranking member, Senator Hutchison.
        Senator.

                   STATEMENT OF SENATOR KAY BAILEY HUTCHISON

        Senator Hutchison. Thank you, Mr. Chairman. I am pleased to
    be able to talk to two of the Services that are going to
    experience the most growth in the next few years. And, it's a
    growth that I certainly support. In addition to this growth,
    the marines are also preparing to undertake a massive move,
    relocating 8,000 marines from Japan to Guam. This will be
    enabled through military construction and with the help of our
    Japanese partners. I will say that the Japanese have been very
    good partners in this regard, and we appreciate that very much.
    The Navy is currently tasked with overseeing all of these
    efforts on Guam to ensure that the move is done in a joint way.
        The Army's initiative to grow by 65,000 Active Duty
    soldiers, 8,200 National Guard soldiers and 1,000 Reservists
    over the next 5 years--has caused, of course, an increase in
    Army military construction. Many of the soldiers that are
    coming back from overseas or are part of the increase will be
    stationed at Fort Bliss and Fort Hood, in my home State of
    Texas. I believe the increase in end-strength is absolutely the
    right thing to do. And, I think it is important that our
    military installations be able to plan appropriately for the
    increase in end-strength and the move from overseas.
        At the end of BRAC and the global re-stationing, 90 percent
    of the U.S. Army will be based in the United States. This will
    provide more operational freedom of action, better training,
    and better family support for the Army than would be possible
    otherwise. I am pleased the Department of Defense and the Army
    have stayed on course for the restructuring, re-stationing, as
    well as increasing the end-strength of the Army. Along with
    BRAC, it will produce a stronger, more deployable, and more
    efficient Army, in which the vast, but constantly stretched,
    resources of our Army can be used in the most efficient manner.
        The new San Antonio Military Medical Center at Fort Sam
    Houston, developed through the BRAC process, will serve as an
    excellent example of how consolidation can benefit the Army and
    the larger Department of Defense and Veterans' community
    through the synergies and expertise developed.
        The Navy and Marine Corps increase will be used, in part,
    to support the growth of the Marine Corps by 22,000 Active Duty
    Marines over the next 4 years. The Navy and Marine Corps
    request will also support several other initiatives, including
    the Home Port Ashore Program, which gets sailors off ships and
    into barracks. This program will provide great quality of life
    improvements for our sailors and will be fully funded in 2008.
    I'm very pleased with this initiative of the Navy.
        I'm somewhat concerned about the downward trend in military
    construction for our Guard and Reserve components. These brave
    citizen-soldiers are making huge contributions in the global
    war on terror, and yet, their facilities are often in the worst
    shape. The overall funding level is down 19 percent from last
    year's request and 18 percent from the fiscal year 2007 enacted
    level.
        I understand there is funding for Guard and Reserve in the
    BRAC account, but I'm also interested in seeing that we keep up
    with the normal military construction funding to improve these
    facilities.
        I thank you for all the work that you are doing in the
    military construction area and certainly, in the main, you will
    have the support of this committee. Thank you.
        Senator Reed. Thank you very much, Senator Hutchison. And,
    all of those statements of my colleagues were made part of the
    record, but if Senator Nelson, Senator Allard, you'd make brief
    opening comments.
        Senator Nelson.
        Senator Nelson. I'll wait until----
        Senator Reed. Senator Allard.
        Senator Allard. Mr. Chairman, I do have some comments and
    I'll, I'll put them in the record----
        Senator Reed. Thank you.
        Senator Allard [continuing]. So we can proceed with the
    hearing. Thank you.
        Senator Reed. Thank you very much.
        Mr. Secretary.

                          STATEMENT OF KEITH E. EASTIN

        Mr. Eastin. Good morning. Thank you, Mr. Chairman, Senator
    Hutchison, and other members. I have a written statement. I ask
    that you would include it in the record.
        Senator Reed. All written statements will be made part of
    the record. You can summarize. In fact, we prefer you
    summarize.
        Mr. Eastin. I will try to be short. We have a lot to do
    today and I know my colleagues in the Navy are following right
    behind.
        I have with us today, Lieutenant General Robert Wilson, who
    is the Commander of the Installation Management Command, Major
    General Dave Burford, who is here representing the Army
    National Guard, and Brigadier General Rich Sherlock, who will
    be talking to you about the Reserves.
        The Army has a very ambitious program, as you can see, not
    only monetarily, but ambitiously in terms of its operations. We
    are converting from a division-centric force to a brigade-
    centric force. We're calling that transformation. We're in the
    middle of a BRAC operation that will be moving some 50,000
    people--civilians and military--around the country. We'll be
    moving some soldiers back from Germany and from Korea, another
    45,000 or 50,000 there. And then, to top it all off, we decided
    to grow the active Army about 65,000, of which, give or take
    37,000 will hit in the early years. So, we have a lot people
    moving around and where people move they have to have places to
    reside, raise their families, train, deploy from, and keep
    their equipment. So, with each of these moves comes a rather
    hefty military construction requirement.

                               PREPARED STATEMENT

        So, but what we have in the BRAC, in the BRAC moves, we are
    doing 13 closures of installations, 53 realignments of various
    installations and operations, closing 387 Guard and Reserve
    centers, but at the same time, building 125 new centers for
    them to take place. All in all, in the BRAC world alone, we
    have 1,300 discrete moves that are required by the BRAC
    Commission. So, it's an ambitious program and one that, that we
    hope you will support financially because it's required to keep
    our all-volunteer Army alive, keep their families well
    situated, and keep the fight progressing.
        With that, I'll pass this over to General Wilson, and he
    can make a statement.
        [The statement follows:]

    Prepared Statement of Keith E. Eastin, Robert Wilson, David P. Burford
                            and Richard J. Sherlock

                                  introduction
        Mr. Chairman and members of the subcommittee, it is a pleasure to
    appear before you to discuss the Army's Military Construction budget
    request for fiscal year 2008. We have a robust budget that is crucial
    to the success of the Army's new initiatives and sustains vital,
    ongoing programs of critical importance to the Army. We appreciate the
    opportunity to report on them to you. We would like to start by
    thanking you for your unwavering support to our soldiers and their
    families serving our Nation around the world. They are and will
    continue to be the centerpiece of our Army, and they could not perform
    their missions so successfully without your steadfast support.
                                    overview
              transforming installations while the army is at war
        Installations are the home of combat power--a critical component of
    the Nation's force capabilities. Your Army is working hard to ensure
    that we deliver cost-effective, safe, and environmentally sound
    capabilities and capacities to support the national defense mission.
        The tremendous changes in our national security environment since
    the terrorist attacks on our Nation clearly underscore the need for a
    joint, integrated military force ready to defeat all threats to U.S.
    interests. To meet these security challenges, we require interrelated
    strategies centered on people, forces, quality of life, and
    infrastructure. Regarding infrastructure, we need a global framework of
    Army installations, facilities, ranges, airfields, and other critical
    assets that are properly distributed, efficient, and capable of
    ensuring that we can successfully carry out our assigned roles,
    missions, and tasks that safeguard our security at home and abroad.
        Army infrastructure must enable the force to fulfill its strategic
    roles and missions to generate and sustain combat power. As we
    transform our operational forces, so too must we transform the
    institutional Army and our installation infrastructure to ensure this
    combat power remains relevant and ready. We will accomplish these
    efforts by the combined stationing efforts of Base Realignment and
    Closure (BRAC) 2005, Global Defense Posture Realignment (GDPR), Army
    Modular Force Transformation, and the President's ``Grow the Force''
    initiative.
                                   stationing
        The stationing initiative is a massive undertaking, requiring the
    synchronization of base realignments and closures, military
    construction and renovation, unit activations and deactivations, and
    the flow of forces to and from current global commitments. Our
    decisions to synchronize activities associated with stationing and
    realigning our global basing posture continue to be guided by the
    following key criteria:
      --Meeting operational requirements
      --Providing economic benefits
      --Using existing infrastructure to reduce cost and excess capacity
      --Funding critical requirements to achieve unit mission
      --Compliance with applicable laws
      --Minimizing the use of temporary facilities
      --Giving facility priority to ranges, barracks, housing, vehicle
            maintenance shops, headquarters and operations, dining and
            instruction facilities
        Completion of this combined set of initiatives will result in an
    Army that is better positioned to respond to the needs and requirements
    of the 21st Century security environment, with our soldiers and
    families living at installations that are truly ``Flagships of Army
    Readiness''.
                             infrastructure quality
        In addition to mission support, our installations provide the base
    of support for soldiers and their families. The environment in which
    our soldiers train, our civilians work, and our families live plays a
    key role in recruiting and retaining the high quality people the Army
    needs. Through efforts such as Barracks Modernization and Residential
    Communities Initiative (RCI) housing privatization, the Army has made
    tremendous progress in improving the quality of life for soldiers and
    their families. These efforts will combine with the Army's
    stabilization of the force to forge greater bonds between units,
    soldiers, families, and the communities in which they live.
        The quality of our installations is critical to support the Army's
    mission, its soldiers, and their families. Installations serve as the
    platforms we use to train, mobilize, and rapidly deploy military power.
    When forces return from deployments, installations enable us to
    efficiently reset and regenerate combat power for future missions. In
    the past year, the Army has made tremendous progress in enhancing
    training and improving its ability to generate and reset the force.
                   global defense posture realignment (gdpr)
        The United States' global defense posture defines the size,
    location, types, and roles of military forces and capabilities. It
    represents our ability to project power and undertake military actions
    beyond our border. Together with our overall military force structure,
    our global defense posture enables the United States to assure allies,
    dissuade potential challengers, deter enemies, and, if necessary,
    defeat aggression. The new global defense posture will be adjusted to
    the new security environment in several key ways: (1) expand allied
    roles, build new partnerships, and encourage transformation, (2) create
    greater operational flexibility to contend with uncertainty (3) focus
    and act both within and across various regions of the world, (4)
    develop rapidly deployable capabilities, and lastly, the United States
    and its allies and partners will work from a different paradigm than in
    the past: GDPR will relocate approximately 45,500 soldiers and their
    families from Europe and Korea to the United States over the next 5 to
    6 years. These moves are critical to ensure Army forces are properly
    positioned worldwide to support our National Military Strategy. The new
    posture will yield significant gains in military effectiveness and
    efficiency in future conflicts and crises and will enable the U.S.
    military to fulfill its many global roles. The new posture will also
    have a positive effect on our military forces and families. While we
    will be moving toward a more rotational and unaccompanied forward
    presence, these rotations will be balanced by more stability at home
    with fewer overseas moves and less disruption in the lives of spouses
    and dependents.
                               army modular force
        The Army Modular Force initiative transforms the Army from units
    based on the division organization into a more powerful, adaptable
    force built on self-sufficient, brigade-based units that are rapidly
    deployable. These units, known as Brigade Combat Teams (BCTs), consist
    of 3,500 to 4,000 soldiers. BCTs increase the Army's combat power while
    meeting the demands of global requirements without the overhead and
    support previously provided by higher commands. The main effort of Army
    transformation is the Army Modular Force, which reorganizes the Total
    Army: the Active Component, Army National Guard, and Army Reserve into
    modular theater armies, theater support structure, corps and division
    headquarters, BCTs, and multi-functional and functional support
    brigades. The Army is reorganizing from a division-based to a modular
    brigade-based force to achieve three primary goals:
        First, increase the number of available BCTs to meet operational
    requirements while maintaining combat effectiveness equal to or better
    than previous divisional brigades. Second, create brigade-size combat
    support and combat service support formations of common organizational
    designs that can be easily tailored to meet the varied demands of the
    geographic combatant commanders and reduce the complexities of joint
    planning and execution. Third, redesign organizations to perform as
    integral parts of the joint force, making them more effective across
    the range of military operations and enhancing their ability to
    contribute to joint, interagency, and multinational efforts. By
    implementing the Army Modular Force, the Army is transforming to be
    better prepared to meet the challenges of the new security environment
    characterized by continuous full-spectrum operations against adaptive
    enemies in complex environments.
        The fiscal year 2008 budget includes projects to ensure that our
    facilities continue to meet the demands of force structure, weapons
    systems, and doctrinal requirements. As of fiscal year 2006, we have
    funded 93 percent of the military construction requirements for the
    Stryker Brigade Combat Teams, including Army National Guard
    requirements in Pennsylvania. Remaining construction funding for both
    the Active Army and Army National Guard will be requested in future
    budget requests.
        New facility requirements for transforming units are being
    provided, where feasible, through the use of existing assets. Where
    existing assets are not available, the Army is programming high-
    priority projects to support soldiers where they live and work. The
    Army is requesting $414 million for fiscal year 2008 to provide
    permanent facilities in support of the BCTs. The remaining Army Modular
    Force requirements will be addressed in future budget requests.
                                 grow the army
        The President's recent Grow the Force initiative announced on
    January 10, 2007, will increase the Army by 74,000 soldiers over the
    next 5 years. Part of this year's request, $2.363 billion, supports
    this initiative. Grow the Army projects include essential facilities
    required to support the increase in end strength such as brigade
    complexes and associated combat support, combat service support,
    training, and quality of life facilities worldwide. Funding is
    requested for planning and design and military construction projects in
    the active Army, Army National Guard, and for Army Family Housing.
    Details for these projects will be provided separately.
                                 the way ahead
        To improve the Army's facilities posture, we have undertaken
    specific initiatives or budget strategies to focus our resources on the
    most important areas--Range and Training Lands, Barracks, Family
    Housing, and Workplaces.
        Range and Training Lands.--Ranges and training lands enable our
    Army to train and develop its full capabilities to ensure our soldiers
    are fully prepared for the challenges they will face. Our Army Range
    and Training Land Strategy supports Army transformation and the Army's
    Sustainable Range Program. The Strategy identifies priorities for
    installations requiring resources to modernize ranges, mitigate
    encroachment, and acquire training land.
        Barracks.--Providing safe, quality housing is a crucial commitment
    the Army has made to its soldiers. We owe single soldiers the same
    quality housing that is provided to married soldiers. Modern barracks
    are shown to significantly increase morale, which positively impacts
    readiness and quality of life. The importance of providing quality
    housing for single soldiers is paramount to success on the battlefield.
    The Army is in the 15 year of its campaign to modernize barracks to
    provide 134,500 single enlisted permanent party soldiers with quality
    living environments. The new complexes meet DOD ``1+1'' or equivalent
    standard by providing two-Soldier suites, increased personal privacy,
    larger rooms with walk-in closets, new furnishings, adequate parking,
    landscaping, and unit administrative offices separated from the
    barracks.
        Family Housing.--This year's budget continues our significant
    investment in our soldiers and their families by supporting our goal to
    have contracts and funding in place to eliminate remaining inadequate
    housing at enduring overseas installations by the end of fiscal year
    2009. The United States inadequate inventory was funded for elimination
    by the end of fiscal year 2007 through privatization, conventional
    military construction, demolition, divestiture of uneconomical or
    excess units and reliance on off-post housing. For families living off
    post, the budget for military personnel maintains the basic allowance
    for housing that eliminates out of pocket expenses.
        Workplaces.--Building on the successes of our family housing and
    barracks programs, we are moving to improve the overall condition of
    Army infrastructure by focusing on revitalization of our workplaces.
    Projects in this year's budget will address requirements for
    operational, administration, instructional, and maintenance facilities.
    These projects support and improve our installations and facilities to
    ensure the Army is deployable, trained, and ready to respond to meet
    its national security mission.
                              leveraging resources
        Complementary to these budget strategies, the Army also seeks to
    leverage scarce resources and reduce our requirements for facilities
    and real property assets. Privatization initiatives such as RCI,
    utilities privatization, and build-to-lease family housing in Europe
    and Korea represent high-payoff programs which have substantially
    reduced our dependence on investment funding. We also benefit from
    agreements with Japan, Korea, and Germany where the Army receives host
    Nation funded construction.
        In addition, Congress has provided valuable authorities to utilize
    the value of our non-excess inventory under the Enhanced Use Leasing
    program and to exchange facilities in high-cost areas for new
    facilities in other locations under the Real Property Exchange program.
    In both cases, we can capitalize on the value of our existing assets to
    reduce un-financed facilities requirements.
        The Army is transforming military construction by placing greater
    emphasis on installation master planning and standardization of
    facilities as well as planning, programming, designing, acquisition,
    and construction processes. Looking toward the immediate future, we are
    aggressively reviewing our construction standards and processes to
    align with industry innovations and best practices. In doing so, we
    expect to deliver quality facilities at lower costs while meeting our
    requirements more expeditiously. By encouraging the use of manufactured
    building solutions and other cost-effective, efficient processes, the
    Army will encourage non-traditional builders to compete. Small business
    opportunities and set-aside programs will be addressed, as well as
    incentives for good performance. Work of a repetitive nature coupled
    with a continuous building program will provide the building blocks for
    gaining efficiencies in time and cost.

                                                  MILITARY CONSTRUCTION
    ----------------------------------------------------------------------------------------------------------------
                                                                                 Authorization of
              Military Construction Appropriation              Authorization      Appropriations     Appropriation
                                                                  Request            Request            Request
    ----------------------------------------------------------------------------------------------------------------
    Military Construction Army (MCA).......................     $3,385,329,000     $4,039,197,000     $4,039,197,000
    Military Construction Army National Guard (MCNG).......                N/A        404,291,000        404,291,000
    Military Construction Army Reserve (MCAR)..............                N/A        119,684,000        119,684,000
    Army Family Housing Construction (AFHC)................        419,400,000        419,400,000        419,400,000
    Army Family Housing Operations (AFHO)..................        742,920,000        742,920,000        742,920,000
    BRAC 95 (BCA)..........................................         73,716,000         73,716,000         73,716,000
    BRAC 2005 (BCA)........................................      4,015,746,000      4,015,746,000      4,015,746,000
    GWOT MCA...............................................        738,850,000        738,850,000        738,850,000
                                                            --------------------------------------------------------
          TOTAL............................................      9,375,961,000     10,553,804,000     10,553,804,000
    ----------------------------------------------------------------------------------------------------------------

        The Army's fiscal year 2008 budget request includes $10.6 billion
    for Military Construction appropriations and associated new
    authorizations, Army Family Housing, and BRAC.
                       military construction, army (mca)
        The Active Army fiscal year 2008 Military Construction budget
    request is $3,385,329,000 for authorization and $4,039,197,000 for
    authorization of appropriations and appropriation, including
    $1,608,129,000 for Grow the Army. This year's projects support the
    infrastructure necessary to ensure continued Soldier readiness and
    family well-being.
        Soldiers as our Centerpiece Projects.--The well-being of our
    soldiers, civilians, and families is inextricably linked to the Army's
    readiness. We are requesting $590 million of our MCA budget for
    projects to improve Soldier well-being in significant ways.
        The Army continues to modernize and construct barracks to provide
    enlisted single soldiers with quality living environments. This year's
    budget request includes 14 barracks projects to provide improved
    housing for 3,703 soldiers and new barracks in support of major
    stationing moves as we recast the footprint of the Army. With the
    approval of $1,392 million for new barracks in this budget, 82 percent
    of our requirement will be funded at the ``1+1'' or equivalent
    standard.
        We are requesting the third increment of funding, $47.4 million,
    for the previously approved, incrementally funded, multiple-phased
    barracks complex at Fort Bragg, North Carolina. In addition, we are
    requesting the second increment of funding, $102 million, for the
    brigade complex at Fort Lewis, Washington. We will award the complex as
    a single contract to gain cost efficiencies, expedite construction, and
    provide uniformity in like facility types. The budget also includes a
    $175 million for two training barracks complexes at Fort Benning,
    Georgia, and another at Fort Bragg, North Carolina, which will house
    2,580 training soldiers.
        Overseas Construction.--Included in this budget request is $382
    million in support of high-priority overseas projects. In Germany, we
    continue our consolidation of units to Grafenwoehr as part of our
    Efficient Basing--Grafenwoehr initiative. This allows us to close
    numerous installations as forces relocate to the United States and
    within Europe reducing base support requirements and enhancing Soldier
    training. In Korea, we are again requesting funds to further our
    relocation of forces on the peninsula. This action is consistent with
    the Land Partnership Plan agreements entered into by the United States
    and Republic of Korea Ministry of Defense. Our request for funds in
    Italy is GDPR related and relocates forces from Germany to Vicenza to
    create a full Airborne BCT as part of the Army's transformation to a
    modular force. The Airborne BCT complex also includes new barracks to
    house 513 soldiers. Additional locations in Germany will close as
    construction is completed.
        Mission and Training Projects.--Projects in our fiscal year 2008
    budget will provide maintenance facilities, brigade complexes and
    headquarters, operational and administration facilities, and training
    ranges. These projects support and improve our installations and
    facilities to ensure the Army is deployable, trained, and ready to
    respond to meet our National Security mission. The budget request also
    includes two overseas Forward Operating Site base camps for $74 million
    that will provide a brigade (minus)-sized operational facility to
    support rotational training, allow for increased U.S. partnership
    training, and promote new military to military relationships.
        We will also construct a battle command training center and
    simulations training facility, urban operations terrain, urban assault
    course, modified record firing ranges, and digital multipurpose
    training ranges. These facilities will provide our soldiers realistic,
    state-of-the-art live-fire training. We are requesting a total of $177
    million for these high-priority projects. We are also requesting
    funding of $22.3 million for two defense access roads.
        Army Modular Force Projects.--Our budget continues support of the
    transformation of the Army to a modern, strategically responsive force
    and contains $315 million for three brigade complexes and other
    facilities. The new barracks will house 1,156 soldiers in support of
    the Army Modular Force.
        SOUTHCOM Headquarters Project.--Our budget supports a new
    consolidated headquarters building with other support facilities. Our
    budget request contains $237 million for the new facilities that will
    replace multiple leased facilities scattered throughout the Miami,
    Florida, metropolitan area. The new consolidated building will support
    over 2,800 Active, Reserve and civilian personnel whose mission is to
    achieve U.S. strategic objectives within their area of responsibility
    which spans 32 countries.
        Global War on Terrorism Projects.--The budget request also includes
    $738.8 million for 33 critical construction projects in Iraq and
    Afghanistan to support Operations Iraqi Freedom and Enduring Freedom
    including $19.4 million for planning and design. These funds will
    provide force protection, airfield facilities, operational facilities,
    support facilities, fuel handling and storage, and roads.
        Other Support Programs.--The fiscal year 2008 budget includes $481
    million for planning and design of future projects, including $383
    million to Grow the Army. As executive agent, we also provide oversight
    of design and construction for projects funded by host nations. The
    fiscal year 2008 budget requests $23 million for oversight of
    approximately $800 million of host nation funded construction for all
    Services in Japan, Korea, and Europe.
        The budget request also contains $23 million for unspecified minor
    construction to address unforeseen critical needs or emergent mission
    requirements that cannot wait for the normal programming cycle.
                   military construction, army national guard
        The Army National Guard's fiscal year 2008 Military Construction
    request for $404,291,000 for appropriation and authorization of
    appropriations, including $77 million for Grow the Army, is focused on
    Current Readiness, Transformation, other support, and unspecified
    programs.
        Current Readiness.--In fiscal year 2008, the Army National Guard is
    requesting $36.9 million for four projects to support current
    readiness. These funds will provide the facilities our soldiers require
    as they train, mobilize, and deploy. Included are one logistics
    building and three Readiness Centers.
        Army Modular Force.--The Army National Guard is also requesting
    $237.8 million for 28 projects in support of new missions. There are 13
    projects for the Stryker Brigade Combat Team initiative, four for the
    Army Division Redesign Study, eight range projects to support the Army
    Range and Training Land Strategy, and three Aviation Transformation
    projects to provide facilities for modernized aircraft and change unit
    structure.
        Other Support Programs.--The fiscal year 2008 Army National Guard
    budget also contains $43.8 million for planning and design (including
    $17 million for Grow the Army) of future projects and $8.7 million for
    unspecified minor military construction to address unforeseen critical
    needs or emergent mission requirements that cannot wait for the normal
    programming cycle.
                      military construction, army reserve
        The Army Reserve fiscal year 2008 Military Construction request for
    $119,684,000 (for appropriation and authorization of appropriations) is
    for Current Readiness, other support, and unspecified programs.
        Current Readiness.--In fiscal year 2008, the Army Reserve will
    invest $73.2 million to build five new Army Reserve Centers, $17
    million for a combined maintenance facility, and $8.5 million to
    construct a regional medical training facility--for a total facility
    investment of $98.7 million. Construction of the five Reserve Centers
    will support over 1,700 Army Reserve soldiers and civilian personnel.
    In addition, the Army Reserve will invest $7.0 million to construct a
    training range and a training range support facility, which will be
    available for joint use by all Army components and military services.
        Other Unspecified Programs.--The fiscal year 2008 Army Reserve
    budget request includes $10.9 million for planning and design for
    future year projects and $3.0 million for unspecified minor military
    construction to address unforeseen critical needs or emergent mission
    requirements that cannot wait for the normal programming cycle.
                    army family housing construction (afhc)
        The Army's fiscal year 2008 family housing request is $419,400,000
    for authorization, authorization of appropriation, and appropriation,
    including $266 million for Grow the Army. It continues the successful
    Whole Neighborhood Revitalization initiative approved by Congress in
    fiscal year 1992 and our RCI program.
        The fiscal year 2008 new construction program provides a Whole
    Neighborhood replacement project at Ansbach, Germany, in support of 138
    families for $52.0 million using traditional military construction.
        The Construction Improvements Program is an integral part of our
    housing revitalization and privatization programs. In fiscal year 2008,
    we are requesting $266.0 million in support of Grow the Army, as well
    as $99.4 million for direct equity investment in support of the
    privatization of 3,998 homes at Fort Wainwright, Alaska, Fort Sill,
    Oklahoma, and Fort Jackson, South Carolina.
        In fiscal year 2008, we are also requesting $2.0 million for
    planning and design for future family housing construction projects
    critically needed for our soldiers.
        Privatization.--RCI, the Army's housing privatization program, is
    providing quality housing that soldiers and their families can proudly
    call home. The Army is leveraging appropriated funds and existing
    housing by engaging in 50-year partnerships with nationally recognized
    private real estate development, property management, and home builder
    firms to construct, renovate, repair, maintain, and operate housing
    communities.
        The RCI program will include 45 locations, with a projected end
    state of over 86,000 homes--99 percent of the on-post family housing
    inventory in the United States. To date, the Army has privatized 35
    locations, with almost 75,000 homes. Initial construction and
    renovation at these 35 installations is estimated at $9.8 billion over
    a 3 to 10 year development period, of which the Army has contributed
    about $0.8 billion. Although most projects are in the early phases of
    their initial development, since 2001 our partners have constructed
    8,613 new homes, and renovated 8,415 homes. The fiscal year 2008 budget
    request of $99.4 million will allow the Army to expand the portfolio of
    privatized family housing to three additional installations.
                     army family housing operations (afho)
        The Army's fiscal year 2008 Family Housing Operations request is
    $742,920,000 (for appropriation and authorization of appropriations),
    which is approximately 64 percent of the total family housing budget.
    This account provides for annual operations, municipal-type services,
    furnishings, maintenance and repair, utilities, leased family housing,
    demolition of surplus or uneconomical housing, and funds supporting
    management of the Military Housing Privatization Initiative.
        Operations ($139 million).--The operations account includes four
    sub-accounts: management, services, furnishings, and a small
    miscellaneous account. All operations sub-accounts are considered
    ``must pay accounts'' based on actual bills that must be paid to manage
    and operate family housing.
        Utilities ($145 million).--The utilities account includes the costs
    of delivering heat, air conditioning, electricity, water, and
    wastewater support for family housing units. While the overall size of
    the utilities account is decreasing with the reduction in supported
    inventory, per-unit costs have increased due to general inflation and
    the increased costs of fuel.
        Maintenance and Repair ($216 million).--The maintenance and repair
    account supports annual recurring projects to maintain and revitalize
    family housing real property assets. Since most family housing
    operational expenses are fixed, maintenance and repair is the account
    most affected by budget changes. Funding reductions result in slippage
    of maintenance projects that adversely impact Soldier and family
    quality of life.
        Leasing ($206 million).--The leasing program provides another way
    of adequately housing our military families. The fiscal year 2008
    budget includes funding for 11,836 housing units, including 3,680
    existing Section 2835 (``build-to-lease''--formerly known as 801
    leases) project requirements, 1,907 temporary domestic leases in the
    United States, and 6,249 foreign units.
        Privatization ($37 million).--The privatization account provides
    operating funds for implementation and oversight of privatized military
    family housing in the RCI program. RCI costs include selection of
    private sector partners, environmental studies, real estate surveys,
    and consultants. These funds support the preparation and execution of
    partnership agreements and development plans, and oversight to monitor
    compliance and performance of the privatized housing portfolio.
                      base realignment and closure (brac)
        The Army is requesting $4,015,746,000 for BRAC 2005 which is
    critical to the success of the Army's new initiatives, and $73,716,000
    for legacy BRAC to sustain vital, ongoing programs. All BRAC activity
    takes place within the context of achieving the Army's goals of winning
    the Global War on Terrorism, transforming from a division-structured,
    forward-deployed force to one comprised of agile BCTs stationed on U.S.
    soil and Growing the Army in a manner that maintains the Army's ability
    to win decisively any time, any where.
        BRAC 2005 is carefully integrated with the Defense and Army
    programs of GDPR, Army Modular Force, and Grow the Army. Collectively,
    these initiatives allow the Army to focus its resources on
    installations that provide the best military value, supporting improved
    responsiveness and readiness of units. The elimination of Cold War era
    infrastructure and the implementation of modern technology to
    consolidate activities frees up financial and human resources to allow
    the Army to better focus on its core war fighting mission. These
    initiatives are a massive undertaking, requiring the synchronization of
    base closures, realignments, military construction and renovation, unit
    activations and deactivations, and the flow of forces to and from
    current global commitments. If done efficiently, the end results will
    yield tremendous savings over time, while positioning forces, logistics
    activities, and power projection platforms to efficiently and
    effectively respond to the needs of the Nation.
        As an essential component of Army transformation, BRAC 2005
    decisions optimize infrastructure to support the Army's current and
    future force requirements. Under BRAC 2005, the Army will close 13
    Active Component installations, 387 Reserve Component installations and
    8 leased facilities. BRAC 2005 realigns 53 installations and/or
    functions and establishes Training Centers of Excellence, Joint Bases,
    a Human Resources Center of Excellence, and Joint Technical and
    Research facilities. To accommodate the units relocating from the
    closing Reserve Component installations, BRAC 2005 creates 125 multi-
    component Armed Forces Reserve Centers and realigns the Army Reserve
    command and control structure. By implementing BRAC 2005 decisions, the
    Active Army will maintain sufficient surge capabilities to expand to 48
    maneuver brigades and handle increased production, training, and
    operational demands now and in the future. BRAC 2005 better postures
    the Army for an increase in end strength by facilitating the Army's
    transformation to a modular force and revitalizing and modernizing the
    institutional Army through consolidation of schools and centers.
        In total, over 150,000 soldiers and civilian employees will
    relocate as BRAC is implemented over the next 5 years. The over 1,300
    discrete actions required for the Army to successfully implement BRAC
    2005 are far more extensive than all four previous BRAC rounds combined
    and are expected to create significant recurring annual savings. BRAC
    2005 will enable the Army to become a more capable expeditionary force
    as a member of the Joint team while enhancing the well-being of our
    soldiers, civilians, and family members living, working, and training
    on our installations.
                       brac 2005 implementation strategy
        The Army has an aggressive, carefully synchronized, fully
    resourced, BRAC fiscal year 2006-2011 implementation plan, designed to
    meet the September 2011 deadline, while supporting our national
    security priorities. National Environmental Policy Act (NEPA)
    requirements necessary to support our implementation plan were
    initiated in fiscal year 2006 to enable the early award of essential
    construction projects. Our BRAC construction plan is fully coordinated
    and carefully synchronized to support our overall strategy for re-
    stationing, realigning, and closing installations while continuing to
    fully support ongoing missions and transformation initiatives. This
    construction plan identifies requirements, defines scope, and considers
    existing installation capacity and infrastructure needs. It is an
    extremely complex plan that manages numerous construction projects, re-
    stationing actions, BRAC moves, and deployment timelines to allow the
    Army to implement the BRAC statute while supporting critical missions
    worldwide.
        Seventy-five percent of all required construction projects are
    planned for award by the end of fiscal year 2009, and 100 percent by
    the end of fiscal year 2010. This will enable the major movement of
    units and personnel in fiscal years 2010 and 2011, with expected
    completion by the mandated BRAC 2005 deadline.
        In fiscal year 2006 the Army awarded 11 BRAC military construction
    projects to support re-stationing and realignments, including: three
    projects to support GDPR; two incremental projects for BCTs, and five
    Armed Forces Reserve Centers, totaling over $788 million. In fiscal
    year 2007, the Army plans to award and start construction on 75
    projects: 23 projects to support GDPR; 27 Reserve Component projects in
    14 States, and 25 other Active Component projects estimated to cost
    over $3.3 billion, including planning and design for fiscal year 2008
    and 2009 projects. This will lay the foundation for follow-on projects,
    and in earnest, start the implementation of our synchronized
    construction program.
        As signed into law, the Revised Continuing Appropriations
    Resolution, 2007 (Public Law 110-5) does not allow us to accomplish our
    fiscal year 2007 BRAC construction and threatens to derail our
    carefully integrated implementation plan. The Appropriation provides
    less than half of the total BRAC funds requested, creating a shortfall
    of approximately $2 billion for the Army. If the Army program is not
    fully funded, we will be significantly challenged to execute BRAC as
    intended. Construction of required facilities will be delayed, and the
    resulting impact will cascade through our re-stationing,
    transformation, and growth plans for years to come.
                       brac 2005 fiscal year 2008 budget
        The Army's fiscal year 2008 budget request of $4,015,746,000 will
    continue to fund both BRAC and GDPR actions necessary to comply with
    BRAC 2005 Law. The Army plans to award and begin construction of 89
    military construction projects, plus planning and design for fiscal
    year 2009 and 2010 projects. This is estimated to cost $3,241,521,000
    and includes: 16 additional GDPR projects, 31 Army National Guard and
    Army Reserve projects, and an additional 42 Active Component projects.
        A significant portion of the Army's BRAC request supports the
    transformation and re-stationing of the operational force. BRAC
    military construction projects support major realignments of forces
    returning to the United States from Europe, as well as several
    stateside relocations. The fiscal year 2008 budget request also funds
    projects supporting Reserve Component transformation in 19 States. This
    is a healthy start to addressing BRAC 2005 recommendations impacting
    the Army Reserve and Army National Guard.
        The BRAC budget request will also fund furnishings for 86 BRAC
    projects awarded in fiscal years 2006 and 2007 as the buildings reach
    completion and occupancy. The request also funds movement of personnel,
    ammunition, and equipment associated with 25 BRAC Commission
    Recommendations.
        The Army will continue to procure investment type equipment in
    fiscal year 2008 in support of our BRAC military construction program
    as part of the ``other procurement'' budget line. This equipment
    exceeds the investment and expense unit cost threshold of $250,000 each
    and includes information technology infrastructure and equipment for
    the 86 previously awarded BRAC projects, which will be impacted if
    fiscal year 2007 funding is not fully restored.
        In fiscal year 2008, the Army will initiate environmental closure
    and cleanup actions at 14 BRAC properties. These activities will
    continue efforts previously ongoing under the Army Installation
    restoration program and will ultimately support future property
    transfer actions. The budget request for environmental programs is
    $86,756,000, which includes Munitions and Explosives of Concern and
    Hazardous and Toxic Waste restoration activities.
                                   prior brac
        Since Congress established the Defense Base Closure and Realignment
    Commission in 1990, the Department of Defense has successfully executed
    four rounds of base closures to reduce and align the military's
    infrastructure to the current security environment and force structure.
    As a result, the Army estimates approximately $11.7 billion in savings
    through 2007--nearly $1 billion in recurring, annual savings from prior
    BRAC rounds.
        The Army is requesting $73.7 million in fiscal year 2008 for prior
    BRAC rounds ($3.4 million to fund caretaking operations of remaining
    properties and $70.3 million for environmental restoration) to address
    environmental restoration efforts at 147 sites at 14 prior BRAC
    installations. To date, the Army has spent $2.7 billion on BRAC
    environmental restoration for installations impacted by the previous
    four BRAC rounds. We disposed of 235,361 acres (89 percent of the total
    acreage disposal requirement of 258,607 acres), with 23,246 acres
    remaining.
                           operation and maintenance
        The Army's fiscal year 2008 Operation and Maintenance budget
    includes $2.740 billion in funding for Sustainment, Restoration, and
    Modernization (S/RM) and $8.133 billion in funding for Base Operations
    Support (BOS). The S/RM and BOS accounts are inextricably linked with
    our military construction programs to successfully support our
    installations. The Army has centralized the management of its
    installations assets under the Installation Management Command to best
    utilize this funding.
        Sustainment, Restoration, and Modernization (S/RM).--S/RM provides
    funding for the Active and Reserve Components to prevent deterioration
    and obsolescence and restore the readiness of facilities on our
    installations.
        Sustainment is the primary account in installation base support
    funding responsible for maintaining the infrastructure to achieve a
    successful readiness posture for the Army's fighting force. It is the
    first step in our long-term facilities strategy. Installation
    facilities are the mobilization and deployment platforms of America's
    Army and must be properly maintained to be ready to support current
    missions and future deployments.
        The second step in our long-term facilities strategy is
    recapitalization by restoring and modernizing our existing facility
    assets. Restoration includes repair and restoration of facilities
    damaged by inadequate sustainment, excessive age, natural disaster,
    fire, accident, or other causes. Modernization includes alteration or
    modernization of facilities solely to implement new or higher
    standards, including regulatory changes to accommodate new functions,
    or to replace building components that typically last more than 50
    years, such as foundations and structural members.
        Base Operations Support.--This account funds programs to operate
    the bases, installations, camps, posts, and stations for the Army
    worldwide. The program includes municipal services, government civilian
    employee salaries, family programs, environmental programs, force
    protection, audio/visual, base communication services, and installation
    support contracts. Army Community Service and Reserve Component family
    programs include a network of integrated support services that directly
    impact Soldier readiness, retention, and spouse adaptability to
    military life during peacetime and through all phases of mobilization,
    deployment, and demobilization.
                                    summary
        Mr. Chairman, our fiscal year 2008 Military Construction and BRAC
    budget requests are balanced programs that support our soldiers and
    their families, the Global War on Terrorism, Army transformation,
    readiness, and DOD installation strategy goals. We are proud to present
    this budget for your consideration because of what this budget will
    provide for our Army:
      --138 homes replaced or renovated
      --3,998 additional homes privatized
      --Approximately 42,600 government-owned and leased homes operated and
            sustained at the end of fiscal year 2008
      --Portfolio management of 78,426 privatized homes
      --33 projects in support of Operations Iraqi Freedom and Enduring
            Freedom
      --9,461 soldiers get new barracks
      --$254 million in Training Ranges
      --$6.1 billion invested in Soldier/Family Readiness
      --$2,363 million to Grow the Army
        Base Realignment and Closure:
      --Statutory compliance by 2011 for BRAC
      --89 Military Construction projects
      --Planning & Design for fiscal year 2009-2010 Projects
      --Remaining NEPA for BRAC 2005 actions
      --Continued Environmental Restoration of 23,246 acres
        Army National Guard:
      --Improved Readiness Centers and an Armed Forces Reserve Center
      --Completion of eight range projects
      --Continued support of our Stryker Brigade Combat Team
      --Three Aviation Transformation projects
      --Three maintenance facilities
        Army Reserve:
      --Medical personnel get new training facility
      --New combined maintenance facility
      --New live fire training range facility
      --1,743 soldiers get new Reserve Centers
      --Center of gravity for Army Reserve families
        Base Operations Support:
      --Goal is to meet essential needs for all BOS programs: Base
            Operations, Family, Environmental Quality, Force Protection,
            Base Communications, and Audio/Visual.
        Sustainment/Restoration and Modernization:
      --Funds Sustainment at 86 percent of the OSD requirement, with plans
            to achieve 90 percent of the requirement through efficiencies.
        Our long-term strategies for installations will be accomplished
    through sustained and balanced funding, and with your support, we will
    continue to improve Soldier and family quality of life, while remaining
    focused on Army and Defense transformation goals.
        In closing, we would like to thank you again for the opportunity to
    appear before you today and for your continued support for America's
    Army.

                           STATEMENT OF ROBERT WILSON

        General Wilson. Mr. Chairman, Senator Hutchison,
    distinguished members of the subcommittee, on behalf of the
    senior leaders in the Army and over 1 million soldiers that
    comprise our Army, thank you for the opportunity to discuss the
    Army's fiscal year 2008 military construction budget request,
    specifically, our $2.3 billion request for resources to grow
    the Army. I would also like to extend our heartfelt gratitude
    for the subcommittee's support for our soldiers, civilians, and
    families over the years. Our brave men and women could not
    perform their mission so superbly without your steadfast
    support. Thank you.
        As we increase our commitments in Iraq and Afghanistan, we
    face challenges that exceed the level of demand and vision in
    the recent Quadrennial Review Defense Strategy. Today, over
    248,000 soldiers are deployed, fighting the long war on
    terrorism or forward-stationed, deterring the Nation's
    adversaries. Over the last 4 years, we have maintained up to 21
    brigade combat teams deployed in Afghanistan or Iraq. And, the
    recent decision to grow the Army, as has been referred to, of
    74,000--65,000 in the Active Army, 8,200 in the National Guard,
    and 1,000 in the Army Reserve--addresses our need to increase
    capacity and build strategic and operational depth to sustain
    our increased and enduring levels of force deployment.
        Army growth will focus our brigade combat teams with the
    essential combat support and combat service support units and
    include Active and Reserve component rebalancing efforts to
    mitigate the high-demand, low-density capability shortfalls. We
    plan to grow six new brigade combat teams in the Active
    component, expanding our rotational pool to 76 brigade combat
    teams and approximately 225 support organizations in the
    operational force of the Army. Through this growth, we plan to
    provide a continuous supply of 20 to 21 brigade combat teams to
    meet our global commitments.
        For the Active Army, the fiscal year 2008 budget request
    contains $2 billion for 53 Grow-the-Force projects at 20 United
    States installations, as well as $278 million to support Army
    family housing at four installations. These projects will build
    the infrastructure needed to grow the combat support and combat
    service support units to address our current critical
    shortfalls. These shortfalls include examples, military police
    units, explosive ordinance disposal companies, and engineer
    battalion headquarters and companies.
        By the end of the year, we will make decisions on where to
    station the additional brigade combat teams using a BRAC best
    military value process, while using existing available
    facilities and capacity for near term stationing unit until the
    permanent facilities are built.
        The Army is conducting a detailed installation-level
    assessment to inform permanent stationing decisions for the new
    BCTs. A programmatic environmental impact statement is
    scheduled for completion in November 2007.
        We ask for the timely passage of the fiscal year 2007
    supplemental request and for your full support for our fiscal
    year 2008 budget request. Delays or reductions or diversions of
    this request will jeopardize the execution of our carefully
    synchronized stationing plan and limits our ability to provide
    the necessary strategic depth, improve readiness, and meet
    global commitments, while providing our soldiers and families
    the quality of life they deserve.
        We look forward to working with the subcommittee to ensure
    the Army has the infrastructure necessary to meet our global
    demands, grow the Army, and sustain the all-volunteer force.
    Our soldiers and their families deserve nothing less.
        Thank you again for your continued support. I look forward
    to your questions.

                       FISCAL YEAR 2008 BUDGET EXECUTION

        Senator Reed. Thank you, General Wilson.
        Let me begin the questioning. Secretary Eastin, you've
    already noted that this a significant increase in the request--
    doubling, basically--for the Army, and then there's additional
    $8 billion in BRAC funding, which is projected to come online,
    which raises the obvious question--are you capable of executing
    and spending all this money in an efficient fashion, going
    forward?

                                 MILCON PROCESS

        Mr. Eastin. We believe we are. The Army Military
    Construction Project process has been going through a
    transformation where we believe that our construction will be
    much more efficient in terms of uniform designs, one design for
    barracks around the country, modified instead of redesigning it
    for each and every installation, some modular construction, and
    manufactured buildings that are hauled to the site. So,
    basically we get down to our problems being site prep in
    themselves, which is kind of standard.
        But, the Corps of Engineers has been tasked to speed up the
    process. We have not been sitting around on our hands, this has
    all been very carefully planned out. You know, we get some
    hiccups when supplementals don't come and some projects start
    late, but currently--and I've checked this as of last night--
    all of our BRAC moves and construction is on schedule. Don't
    ask me next month, but right now it is and I believe we will
    not have any difficulty, on the assumption that we get a
    supplemental or, as I think has been widely indicated to the
    hill, we are down about, a little more than $2 billion in the
    BRAC account that did not survive and I believe is included in
    the supplemental. So, as soon as we can get that, it's going to
    assure our ability to do this.
        Senator Reed. What's the impact on construction cost?
    You've got a big ramp-up focused in some key installations. Do
    you anticipate construction costs to be beyond the estimate?
        Mr. Eastin. We've taken most of that into account. Of
    course, that's mostly what's happened in the gulf States due to
    demand created by Katrina, has impacted some of this. But I
    believe that currently those impacts are known and have been
    programmed for within our MILCON request.

                           GROW THE FORCE STATIONING

        Senator Reed. You've, we've talked about the Global Defense
    Posture Review and, in that regard, planning to return 50,000
    from overseas to the United States, then simultaneously you
    have a Grow-the-Force initiative of increasing the absolute
    size of the Army. Will the Grow-the-Force initiative alter your
    plans to redeploy troops back into the United States?
        General Wilson. Mr. Chairman, as of right now we're staying
    on plan for the GDPR and BRAC, as is, by BRAC law. We, our
    initial Grow-the-Force decisions and recommendations we have
    made in 2007 with the $400 million in supplemental and the $2.3
    billion in 2008, we have looked at combat support, combat
    service support shortfalls, generally, as those forces, within
    CONUS. So, we haven't impacted on that now, we are continuing
    to assess the impact of where to place the brigade combat teams
    and we're looking at all available space for that. But, right
    now, we have not made any decisions and the senior leadership
    of the Army has not made any decisions to do otherwise.
        Senator Reed. So, you're still looking at the issue.
    There's a possibility, remote, that you might have to delay
    some of the redeployments because of facilities, is that fair?
        General Wilson. I would put it like this, Mr. Chairman.
    With the extension of time in overseas, the 15 months and
    things, it's going to have some adjustments on the redeployment
    of some of the 1st Armored Division units back to the United
    States. And, we're still assessing that. As you know, we have a
    new Chief of Staff of the Army and he has not been fully read
    in and made the decisions on where to go in the future.
        Senator Reed. Thank you, General Wilson.

                   RESERVE COMPONENT FISCAL YEAR 2008 PROGRAM

        As I alluded to, and as Senator Hutchison alluded to, the
    regular Army MILCON budget has seen a robust growth, but
    Reserve and National Guard requests have actually shrunk a bit.
        And so, I'm going to ask General Burford and General
    Sherlock, I understand the Guard requested 25 projects and the
    Army Reserve requested only eight projects nationwide. Do you
    think that these are adequate to accomplish your mission? And
    to not only maintain your infrastructure, but to significantly
    upgrade it, given the role of both the Guard and the Reserve in
    combat operations? General Burford?
        General Burford. Sir, we do. If you look at the bare
    numbers on the requests in the Army National Guard from fiscal
    year 2005 to 2008, you could draw the conclusion that there is
    a downward spiral. But, if you look at the other funding that
    comes through to the Guard, you'd also notice in fiscal year
    2006 the hurricane supplemental was more than the request
    itself. Likewise, there are monies in the BRAC that flow
    through in 2008 that will create a project envelope, we think,
    which meets the Army's needs and the directions they've given
    us to modularize and transform our force.
        Senator Reed. General Sherlock, your comments?
        General Sherlock. Sir, we think our 2008 military
    construction request is adequate. With the reduction of the
    program as a result of the reprioritization of Army
    construction programs based on BRAC and GDPR, our request for
    2008 will support our readiness force.
        Senator Reed. Let me go back to, General Wilson, to the
    Grow-the-Force initiative. You know, even with these huge
    appropriations, there's always a need to find money. And, the
    question is, and I'll raise it as, are some of these National
    Guard and Reserve projects being used as bill-payers for the
    Grow-the-Force initiative?
        General Wilson. The answer is no, Mr. Chairman, it's not.
    We, when we did our assessment for the POM and up through the
    BRAC year of 2011, that was all before the Grow-the-Force
    decision. And, we still have those. And some of those are
    unfunded until the remainder of the BRAC bill is funded. We are
    looking at rebalancing and total operational and support
    requirements in the Grow-the-Force decisions.

                         MILITARY CONSTRUCTION IN ITALY

        Senator Reed. In my final remaining time, General Wilson,
    just a status report on Vicenza. Last year the Army request
    included $223 million, the total of $275 million request for
    Dal Molin, and this year's budget request is for $173 million.
    That's nearly $400 million in 2 years and, does the funding for
    this year's project complete the Vicenza request?
        General Wilson. Yes it does, Mr. Chairman.
        Senator Reed. And are your plans to relocate the 173rd
    Airborne on track with respect to Italy?
        General Wilson. We're still waiting for the signed document
    from the minister of defense, although we have verbal
    information that he's going to sign that. And, as soon as
    that's done, and of course, resources are there, we're going to
    then relocate the four units from Germany to Dal Molin.
        Senator Reed. Right. There still seems to be some question
    through the ministry of defense and the Government of Italy, at
    least, questions and concerns is that fair to say, in terms of
    the redeployment? Secretary Eastin, you might want to comment.
        Mr. Eastin. We are in daily contact with them, and have
    been assured by some of the highest levels in the Italian
    Government that this will not be a problem. And, in fact, we
    are planning to get into the ground with construction, probably
    late August, early September. We've been told there are ongoing
    meetings there, and I think we're probably within 10 days of
    having a signed document.
        Senator Reed. Thank you very much, Mr. Secretary.
        Senator Hutchison.

                        GDPR/BRAC EXECUTION AND TIMELINE

        Senator Hutchison. Thank you, Mr. Chairman. I just want to
    put a fine point on the first question that was asked by the
    Chairman, and that is--in the supplemental, we do have the rest
    of the BRAC funding, which was a commitment made to me, on the
    floor of the Senate, by the chairman of the Appropriations
    Committee, and that commitment is being met.
        And, if you get that funding, is the answer that you gave
    to the chairman that you will be able to stay on time to finish
    the BRAC requirements for the Army by 2011?
        Mr. Eastin. As I tried to indicate somewhat cutely--don't
    talk to me next month, but right now, we are, and we believe we
    can if we get funding here in the next couple of months, or so.
        But, we have a lot--as I indicated before--we have 1,300
    separate moves, and they're all integrated, it's like a pile of
    pick-up sticks, if you pull one of them out, a lot of them move
    around. And, when you pull out the factor of trying to get some
    design work done this year for a project next year, or try to
    get a project going that was designed last year. And we had
    planned funding in the January-February timeframe, and it's not
    there, it complicates things. But, right now, we're on track.
        Senator Hutchison. Well, thank you, we certainly intend to
    try to keep on track from now forward. I think that the
    chairman and I agree on that.
        And, I would like to have you report to us if you are
    getting off-track, in any significant way. I realize that month
    to month you may have fluctuations, but we would need to know
    that.
        Mr. Eastin. Yeah, my office tracks these things every
    couple of weeks, we get updates on them, and I will be happy to
    do that. I know you have a proper oversight responsibility in
    this, and we're looking for a lot of money, so we'll be happy
    to share that with you.
        Senator Hutchison. General Wilson, another fine point I
    want to put on the chairman's question. When Under Secretary
    Grone was at our previous hearing, he committed that the re-
    stationing would stay on track. Now, that initiative was
    started by this subcommittee, Senator Feinstein and after
    visits to foreign bases, particularly in Germany, and after
    reviewing the military construction requests, which indicated
    that having so many small bases was not efficient. We worked
    with the Department of Defense and the initiative was made
    there to do the re-stationing back to America for training
    purposes and efficiency.
        Are you saying to this committee, also, that that re-
    stationing is going to stay on track?
        General Wilson. Senator, they're continuing overseas with
    their relocation plans, and turning over bases, and
    consolidating bases, based on the BRAC GDPR decision and law.
    I'm also saying, we are assessing--the senior leadership of the
    Army--is assessing where to place units for Grow the Army, and
    they haven't restricted anything, but they have not reopened
    any changes to the re-stationing plan.
        Senator Hutchison. Well, if there is any beginning
    initiative to change what you have announced, I would want to
    be notified, and I'm sure the whole committee would, because
    the whole strategy of bringing people home for training, and
    for efficiency, I think, is the right one, and adding the Grow-
    the-Force, plus the re-stationing, does mean that 90 percent of
    our Army will be housed in America. And I think that's a good
    thing.
        So, I hope there is no backtracking of that, and I know
    there has been pressure from some of the mayors of German towns
    and that sort of thing, but we think it is in the best interest
    of America to have the big bases that you are keeping there,
    because they are efficient and important, but that we continue
    working on closing the others, and re-stationing back here.
        General Wilson. I clearly understand.

                            GROW THE ARMY INITIATIVE

        Senator Hutchison. General Wilson, there is $18 million in
    the emergency supplemental for facilities at Fort Hood, as part
    of the Army's Grow-the-Force initiative. I don't know if you're
    familiar with this, but Fort Hood, actually, in BRAC, lost
    troop strength, because of movements out of Fort Hood, and it
    is one of our largest Army bases in America. And, I certainly
    know that they operate more efficiently at the higher level,
    the 50,000 to 55,000 level. Is there a plan to put some of the
    additional 65,000 in the Grow-the-Force initiative at Fort
    Hood?
        General Wilson. Senator, we've decided--we're putting 176
    soldiers, four explosive ordinance detachment (EOD) companies
    there, that decision was made at $18 million for projects and
    construction for 2007. That was combat support and service
    support units that we talked about earlier that we needed high-
    demand low-density units.
        We're putting four EOD companies there, in 2008 we're
    building, putting another $46 million into unit operation
    facilities, and in barracks, another $45 million to facilitate
    that growth. The other decisions have yet to be made on the
    brigade combat team.
        Senator Hutchison. Approximately how many soldiers would be
    involved at this point in your projections in growth at Fort
    Hood?
        General Wilson. The only decisions that have been made thus
    far in 2007 and 2008 with the Grow-the-Force dollars, have been
    those 176 soldiers from the four EOD companies.
        Senator Hutchison. But in the future, as you're looking for
    spaces, I would assume Fort Hood would be on the list?
        General Wilson. Absolutely. And as you recall, we're moving
    one of our brigades there temporarily now, to build it, in
    order to meet operational requirements overseas.
        Senator Hutchison. Fort Bliss is already slated to receive
    a large number of the troops coming back from Germany. Is it
    slated for any of the Grow-the-Force troop structure increase?
        General Wilson. Yes, Senator, it is. In 2007, three EOD
    companies, 132 personnel, one MP company, 171 personnel, and
    engineer company, 191 personnel, and an EOD battalion
    headquarters of 36 people. That's about $12 million, $13
    million, $2.5 million and $5 million in construction.
        In 2008, we're placing another $84 million of construction
    there for the Army Evaluation Task Force.
        Senator Hutchison. Thank you.
        General Wilson. So, those decisions have been made in the
    combat support, combat service support arena.
        Senator Hutchison. I'm sorry, my time is up, but I have one
    more question which I'll submit. Is that okay?

                             SOUTHCOM HEADQUARTERS

        Quickly, one of the things that we've tried to do in this
    committee is, where possible, not invest in expensive real
    estate for bases. I'm talking about, now, the U.S. Southern
    Command, SOUTHCOM, in Miami, and I think that the Army did a
    great thing at Ellington Field, moving out of expensive real
    estate in Houston, to a bigger area that would be more
    efficient.
        I was going to ask you, did you consider for the SOUTHCOM
    headquarters MacDill AFB in Tampa, or Homestead Air Reserve
    Base in South Miami, Dade County, as alternatives to the more
    expensive location in Miami?
        General Wilson. Senator, I know that the two, that the
    SOUTHCOM Commander, Admiral Stavridis was most interested in
    was either Homestead, or in Miami. And, his recommendation was
    Miami, for several operational reasons. And that is the
    location, of course, they submitted that we supported for, to
    take those 8 of the 9 leased facilities, and can consolidate
    them into that one new structure.
        Mr. Eastin. Senator, if I may, the land was contributed to
    the Army on a 50-year lease by the State, so there is no land
    cost there, this is pure MILCON. I think the land cost was
    about $200 for some sort of deed transfer or something like
    that. But, I mean, they wanted to keep us in Miami, we wanted
    to be in Miami, there's a lot of other related operations
    there. And to consolidate them under this plan worked well for
    SOUTHCOM, and I think was quite cost-effective.
        Senator Hutchison. I may have another question on that, but
    my time is up. Thank you very much.
        Senator Reed. Thank you very much, Senator Hutchison,
    Senator Nelson?

                           NATIONAL GUARD FACILITIES

        Senator Nelson. Thank you, Mr. Chairman. And, good morning
    and thank you for your service to our country.
        I recognize that the budget is stretched thin, and we are
    going to have to make the best judgments we can about where we
    build, how we build and how we structure our force.
        I've not been a fan of the BRAC, because I've always felt
    that what we've made decisions on is the economics, rather than
    need first. And I would prefer to see needs established first
    as the driver for where the facilities are, or where the
    facilities aren't, rather than as just a matter of reducing
    costs.
        In that connection, I'd like to ask some questions, though,
    about BRAC and the Grow-the-Force initiative as it relates to
    National Guard facilities. It's my understanding that the Army
    is inserting both BRAC projects into the Army National Guard's
    MILCON projects, as well as Grow-the-Force projects, and that
    this has resulted in delayed funding for projects identified as
    critical by the adjutant generals and the Governors to the out-
    years of fiscal year 2012 and fiscal year 2013.

                             ROLE OF GOVERNORS/TAGS

        I've been told that this all happened without the
    consultation of the Governors, and/or the adjutant generals.
    And, as a former Governor who spent a great deal of time
    working with my adjutant general, and had need of the use--
    unfortunately the need and use of our National Guard in
    Nebraska, I just wonder if this is accurate.
        And I guess I would ask you first, Secretary Eastin.
        Mr. Eastin. I don't believe that is accurate, and Major
    General Burford can discuss this a little bit more, but it is
    our goal to work with each of the States. The Guard itself is a
    very important part of our force, both here and out at the
    point of the spear. So, we are not trying to short-change any
    of these, or to sidestep any of the State authorities. I think
    they play an important part in this, and will continue to do
    so.
        Senator Nelson. General Burford, when I talk about
    consultation, I'm not talking about you tell them what's
    happened, I'm talking about true consultation, before a
    decision is made.
        General Burford. Sir, we have a specific process our Guard
    has to go through in order to site and execute projects. Of
    course, you're aware that the Governor has the statutory
    authority to position his or her Guard Units.
        As you might imagine, with 54 States and territories the
    list of wants and needs is greater than the ability to satisfy
    that.
        We also have to look forward to what the Army sees the
    Guard providing as a force in the future, and even in this
    year's list, you might look at the 30-odd projects and see 13
    occurring in one State simply to support the Stryker brigade
    combat team development. We have to be responsive to the
    direction and the path that we're aimed toward. Occasionally
    that will cause us to change and alter what we thought were our
    long-range plans because, as you know, we're under a 6-year
    FYDP planning requirement, which is different from the other
    components. It makes it very challenging.
        Senator Nelson. Well, I understand that, but can you tell
    me that this was discussed with the Governors, and/or the
    adjutant generals before any of the decisions were made?
        General Burford. Sir, I think the process was probably
    evolving too rapidly for the Governors and their staffs to
    discuss adequately. It happened very quickly. The Army National
    Guard and the National Guard Bureau discussed it to the best of
    their ability in the time allowed.

                   ARMY NATIONAL GUARD MILCON BUDGET PROCESS

        Senator Nelson. Well, about 15 years, for 15 years, the
    Installation Restoration Program has been in place to ensure
    fairness in military construction during funding distributed
    through the States for the Army National Guard, Congress had
    oversight in establishing the IRP, and the Governors and
    adjutant generals approved it. It appears that, if this hasn't
    been disregarded, it certainly wasn't given the full spirit or
    application that was intended for the last 15 years.
        General Burford. I think you're referring to the IRP, the
    Infrastructure Requirements Plan. Yes, sir, it was. Those
    projects were given a score based on need, on the age of the
    facility they might replace, any safety or health consequences,
    and the priority the adjutant general may have placed on that
    project. That gives us a list of at least 108, to which the
    Army National Guard adds up to 5 annually. Those have to be
    folded into the transformation necessity of the future, and how
    quickly we're asked to get to that position, as well as the
    limitations of the BRAC calendar, as laid out for us to meet.
        It's a dynamic process that changes every year. Some of the
    projects that we have come in on forms called 1390, sometimes
    those are incomplete. Sometimes the completion is not
    accomplished until after the need to evaluate those, and rank
    order those projects. It's very challenging.
        Senator Nelson. Well, I understand that, but I guess, my
    whole question is, there doesn't really seem to be a
    significant level of consultation with the Governors, because I
    don't have any Governor telling me that they were consulted to
    any significant degree about any of these decisions. And,
    that's my concern. That's been my concern with the BRAC, among
    other things, it's my concern with force structure changes and
    the decisions that are going to be made in bringing back troops
    from across the board, all over the world. That there isn't the
    full discussion going on with the governors. It's a decision
    made in the Pentagon that's passed down, and it's already a
    fait accompli by the time they're even made aware of it.
        General Burford. Point taken, sir. I can't personally speak
    for who got told what and when and when the decision points
    were, but I would tell you that the process happened very, very
    quickly, and answers were required before consultations could
    be fully executed with all of the States involved.
        Senator Nelson. Well, would it be possible for somebody to
    find out for me when that contact was made and who it was made
    with, and by whom?
        Mr. Eastin. I will, we'll chase that down and get it up to
    you or your staff.
        Senator Nelson. Sure.
        Mr. Eastin. Thank you.
        [The information follows:]

                  Role of the Governors and Adjutants General

        As the statutory channel of communications with the States,
    the National Guard Bureau is in regular and ongoing
    communication with the Adjutants Generals (TAGs) and Governors
    regarding the requirements and concerns of the States and
    territories. The National Guard Bureau channels those
    requirements into the Department of Defense processes for
    prioritizing military construction projects and other spending
    needs. Requirements emerging from BRAC are considered in this
    process as well and may be prioritized more highly than other
    requirements. However, because Department of Defense (DOD)
    policy prohibits the release of budget materials during the
    internal DOD budget deliberations, the TAGs and Governors are
    not formally involved in the actual budget formulation process.
    Nonetheless, I can assure you that their ongoing input on their
    needs and requirements was weighed very carefully in the
    formulation of the budget request. Unfortunately, this
    limitation and the extremely short timeframe did not afford the
    opportunity to advise States of the impact on their projects
    before the official notification that came with the publishing
    of the fiscal year 2007 President's Budget in February 2007.

        Senator Nelson. I would appreciate it. Don't mean to be
    argumentative, I just want to make sure that this is being
    handled in the way that we expect it to be handled, and the way
    the Governors expect it to be handled, handled with the
    reliance on the Guard as an operational force, as opposed to a
    supplemental force today, I think it's probably more critical
    than it, perhaps, it's ever been.
        General Burford. And we would agree, sir. We fight tooth
    and nail for what we think is our ability to station and fund a
    force that's adequate for the future, as well as today. In the
    budget proposal for fiscal year 2008 you'll find that the
    National Guard has put in a wedge for growing the Army. So,
    we're trying to look ahead to what the needs are before it
    becomes an emergency.

         FISCAL YEAR 2008 MILITARY CONSTRUCTION, NATIONAL GUARD BUDGET

        Senator Nelson. Now, it's my understanding the MILCON
    budget for the Guard has been reduced by about $400 million,
    and I know my time's up--is that accurate?
        General Burford. You said reduced by $400 million?
        Senator Nelson. I think by $400 million. This has, this for
    the repositioning of the troops coming in from Europe.
        General Burford. Not to my knowledge, sir. The Guard part
    has not been reduced.
        Senator Nelson. All right, what we'll do is we'll flesh
    this out a bit more, submit a question for the record and get a
    response back.
        General Burford. Absolutely.
        [The information follows:]
                          National Guard Milcon Budget
        The Army National Guard Military Construction budget was not
    reduced by $400 million.
            statement on behalf of the adjutants general association
    Problems
        MILCON for the National Guard has been historically under funded.
    We need $1.5 billion per year in the Army National Guard (ARNG) and
    $250 million per year in the Air National Guard (ANG) for a period of
    not less than 20 consecutive years to buy down the backlog to
    recapitalize (revitalization and requirements dollars) to sustain an
    operational reserve force across the Nation.
        DOD Base Realignment and Closure (BRAC) has been severely under
    funded. The Department of Defense (DOD) is moving State priority
    projects from the Future Years Defense Program (FYDP)to pay for the
    BRAC program.
        Transformation of the National Guard for missions required for the
    Global War on Terrorism, Global Defense Posture Realignment (GDPR),
    Army Modular Force Transformation, Grow the Army, Total Force
    Initiative (TFI), and other initiatives, require additional facilities.
    Any construction required by DOD initiatives must not deter from
    established programs identified in Problem 1, above.
    Discussion
        Historically, MILCON for the National Guard has been severely
    under-funded. The result is that our facilities are not meeting the
    recommended quality (C-2) requirements as outlined in the DOD
    regulations. Further, we have not met the requirements to build the
    mission-critical facilities we need to provide an operational reserve
    force to meet the Guard mission.
        The DOD is attempting to significantly alter and reduce the MILCON
    program for the Guard in order to cover implementation of BRAC and
    other initiatives. The ANG was decremented by $300 million in the
    fiscal year 10-13 FYDP. The ARNG was decremented by $1.5 billion in the
    fiscal year 2008-13 FYDP.
        In comparing the programs, the ARNG was decremented 9.8 percent at
    the same time that others in the Army were increased 26.2 percent and
    the Army Reserves were increased by 10.1 percent.
        By law, the Governors and Adjutants General identify and prioritize
    projects for the Future Years Defense Program (FYDP) to meet State and
    DOD mission requirements. This process is necessary to ensure that
    National Guard and State considerations are included in military
    facility preservation and modernization efforts.
        We are opposed to significant changes in the MILCON process to
    recover money for other programs and initiatives.
        DOD is unilaterally determining which projects will be deleted from
    the FYDP or moved to out years and inserting projects, which are not
    the most mission-essential as determined by the States.
        States not previously impacted by BRAC stand to lose vital projects
    that will set back modernization efforts for years. States impacted by
    BRAC may lose projects of higher priority in their States than BRAC-
    directed projects.
        The BRAC process must proceed as directed by law, however its
    implementation should not come at the expense of mission-essential
    facilities in the National Guard. Further, we are concerned that DOD,
    by their actions, may be usurping the intent of the law (32 USC 104)
    that ``each State . . . fix the location of the units and headquarters
    of its National Guard.''
    Recommendations
        Fund the Military Construction Program for the National Guard at
    $1.5 billion per year for the ARNG and $250 million per year for the
    ANG for 20 consecutive years to recapitalize, revitalize and sustain
    facilities.
        The Adjutants General are very supportive of the DOD initiatives
    and programs, but those programs should come with their own funding.
        We request that Congress direct DOD to find alternate ways to
    execute their BRAC program and other initiatives without diverting
    MILCON funds from Guard mission-essential facilities.
        Submitted on behalf of the Adjutants General Association of the
    United States. Information was supplied specifically by the
    Infrastructure/Facilities/Information Technologies Committee.

        Senator Nelson. Thank you very much, I appreciate it.
        Senator Reed. Thank you very much, Senator Nelson, I think
    there will be several questions for the record, which we'll get
    to you as promptly as possible, and ask you to reply as
    promptly as possible.
        Senator Allard.
        Senator Allard. Thank you, Mr. Chairman. I'd ask unanimous
    consent that along with my opening remarks here in the
    committee, that we submit for the record, a memorandum dated
    April 13, 2007, to the Colorado Gubernatorial and Congressional
    Delegations, and its accompanying information page.

                       PINON CANYON MANEUVER SITE (PCMS)

        Secretary Eastin, in February, Under Secretary Krieg
    granted a waiver on the land acquisition moratorium regarding
    the expansion of Pinon Canyon. This waiver now allows the Army
    to interact with the community on these issues. But, in the
    past, you were prevented from doing so.
        Now, this is an important step, and involving those that
    would be affected firsthand by this potential expansion.
    Despite the progress, a great deal of concern still exists
    within the community about this potential expansion,
    particularly on the need for this site, and the importance of
    Pinon Canyon.Sec.
        Now, the report issues by the Army in compliance with
    fiscal year 2007 Defense Authorization Act, stated the Army
    reached the decision to expand Pinon Canyon primarily as a
    result of your strategic shift, and plan for transformation,
    which includes a change to more modular brigade combat teams.
    Additionally, the increase in new soldiers, as a result of
    BRAC, contributes to the need for the expansion.
        Due to the shift to modularity, each brigade combat team
    requires about 95,000 acres more of training land, more land
    than it did before. Now, here's the question--is it fair to
    conclude that primary reason for expansion of the Pinon Canyon
    maneuver site is to better suit the Army's transformation plan
    for the 21st Century, as well as the addition of another
    brigade combat team at Fort Carson?

                                  PINON CANYON

        Mr. Eastin. Yes, Senator, as I think we've discussed
    before--especially with Stryker brigades and other heavy
    equipment--they travel a lot faster, a lot wider, they maneuver
    in groups that basically eat up a lot more land, and some of
    the old training facilities are insufficient for that. I think,
    overall in the Army, we have identified needs of about 5
    million new acres. We're not, of course, looking for all of
    that at Pinon Canyon.
        But, this is operationally driven, and it is close, Pinon
    Canyon is not adjacent to, but within driving distance of Fort
    Carson, which is a major installation, and we wanted to
    continue it to be a major installation. So, we've identified
    land around the country, that is necessary to improve our
    training ranges, and our training capabilities in Pinon Canyon
    was one of those, that's why we're increasing the size, or are
    proposing to.
        Senator Allard. Now, would you speak to the uniqueness to
    the Pinon Canyon, and its importance to the Army? I've been
    told that Pinon Canyon resembles the mountainous terrain of
    Afghanistan, could you elaborate, perhaps, a little more on its
    uniqueness?
        Mr. Eastin. This is probably not in my lane, I have had the
    pleasure of being out in Pinon Canyon, I have not had the
    pleasure of being in Afghanistan, and I would hesitate to
    condemn the good citizens of southeast Colorado, as being part
    of Afghanistan, but----
        Senator Allard. General Wilson, do you want to comment?
        General Wilson. Yes, Senator, thank you. I had the pleasure
    of commanding Fort Carson for almost 2\1/2\ years, I had a
    great opportunity to spend time in Pinon Canyon, and it's got a
    full range of environmental conditions there, terrain--high
    terrain, like you would see in Afghanistan. It's got open
    terrain, so you can train full-spectrum operations there, and
    you can train people from the Special Forces like 10th Special
    Forces Group, as well as armored and light infantry units, and
    aviation units. So, it's an exceptionally good training area,
    that tracks well with our modular force conversion, which is a
    required, it's a bigger footprint and larger terrain areas, and
    a larger footprint that's going to Fort Carson.
        Senator Allard. And that's--that sets it apart from your
    other training areas.
        General Wilson. We have other training areas like that that
    have the space, but not necessarily the range of geographic
    locations like we just discussed, yes, sir.
        Senator Allard. Thank you. I appreciate you responding to
    that.

                               ADDITIONAL ACREAGE

        Now, back to you, Secretary Eastin, there's about--when we
    get done with the total plan, I'm understanding about 724,000
    acres--you're immediately trying to acquire 418,000 acres more
    for the expansion. Do you visualize any plans to go beyond the
    418,000 targeted acres now for expansion?
        Mr. Eastin. We have no current plans at all to go beyond
    that. We've got 235,000 acres now, we would be adding 418,000
    acres. I need to stress that this is going to be a very long-
    term proposition. The first 250,000 that we're proposing to
    acquire, we've only put in our POM (program objective
    memorandum) enough money to go through 2013, so----
        Senator Allard. Two hundred and fifty thousand acres--
        Mr. Eastin. By 2013, so----
        Senator Allard. And then there's 168,000, you just don't
    have any idea?
        Mr. Eastin. Not yet.
        Senator Allard. That probably is based, a little bit, on
    willing sellers, right?
        Mr. Eastin. Yes, exactly.
        Senator Allard. Your recent information memo stated that an
    environmental impact analysis would be conducted during the
    NEPA environmental process, I appreciate your effort in doing
    that. I don't think we picked up when that analysis--when you
    would anticipate it to be complete?
        Mr. Eastin. Well, to answer your question straight up,
    probably about 18 months from now.
        Senator Allard. I see.
        Mr. Eastin. But we have to do some planning to figure out
    what exact acres we want. We will be discussing this with the
    community down there, which acres we want and where we would
    prefer them. And then you have to do an environmental impact
    statement to determine what alternatives there might be locally
    for moving in one particular place or another place, and how
    that impacts both the environment, air quality, historic sites,
    that sort of thing.
        Senator Allard. Now, in the terms of economic impacts,
    would the Army--are they willing, or are they looking at a
    permanent party station in the area, as a commitment to
    bringing infrastructure dollars to the region?
        Mr. Eastin. At the moment, we are not looking for anything
    significant in the way of permanent party there. Very few
    people are needed on the land to maintain it. But in terms of
    bringing a brigade down there or something, that is not
    currently planned.
        Senator Allard. Okay, now there's forest land there that's
    been incorporated into the total area that you're looking at
    for purchasing. Has the Forest Service been approached at all,
    and how serious is your consideration in the use of some of the
    forest land?
        Mr. Eastin. I don't know--excuse me--I don't know if
    they've been approached, we've looked at their land, and it is
    not exactly where we would like it. We will include that in the
    environmental impact studies that we were performing to see if
    some of that can be used. I would prefer to, personally, use
    other Government land, and not take things out of private
    property if we can help it, but we still have to study on
    whether that land is appropriate for what we need to do down
    there.
        Senator Allard. And, my understanding is you're--as you're
    trying to expand, your basis will be willing seller/willing
    buyer, is that correct?
        Mr. Eastin. That's our strong basis, I know that's been a
    concern of the community, and it's a concern here. We like to
    be good neighbors, and being good neighbors doesn't mean taking
    their land, so.
        Senator Allard. Thank you for your comments.
        Thank you, Mr. Chairman.

                         ADDITIONAL COMMITTEE QUESTIONS

        Senator Reed. Thank you, Senator Allard.
        Gentlemen, thank you for your testimony and for your
    service to the Nation and the Army, and they'll be a few
    questions, I think, the panel will submit, and we'll ask for
    your prompt response. Thank you very much.
        Mr. Eastin. Thank you.
        [The following questions were not asked at the hearing, but
    were submitted to the Department for response subsequent to the
    hearing:]

                 Questions Submitted by Senator Robert C. Byrd

                  spring valley formerly utilized defense site
        Question. Mr. Eastin, it is my understanding that your office is
    the Executive Agent for Formerly Utilized Defense Sites (FUDS), with
    the U.S. Army Corps of Engineers' having Program Execution
    responsibility.
        Please describe the work activities scheduled for the Spring Valley
    FUDS for fiscal year 2007.
        Answer. This fiscal year's primary work activities include:
    removing munitions from a known disposal pit at an American University
    (AU)-owned property; removing arsenic-impacted soil from approximately
    25 residential properties; digging test pits on another AU-owned
    property to determine whether it contains munitions or munitions
    debris; continuing the groundwater investigation which includes
    installing 10 new wells, and sampling wells and creeks; and conducting
    geophysical investigations on approximately 17 residential properties
    and clearing metallic anomalies on 7 previously investigated
    residential properties.
        Question. I understand that the Army Corps of Engineers is
    projecting a project closeout for the Spring Valley site in 2011.
    Please describe in detail what work remains, including associated costs
    to complete and timeframe.
        Answer. The following table describes remaining work and associated
    costs to closeout the Spring Valley Site in 2011:

                            [In millions of dollars]
    ------------------------------------------------------------------------
                                                 Timeframe
          Project Activities Remaining         (fiscal year)      Amount
    ------------------------------------------------------------------------
    Glenbrook Road Munitions Recovery.......            2007             8.7
    Glenbrook Road Test Pits................            2007             2.4
    AU Property Leases......................            2007             0.3
    Arsenic Grids near AU Hughes Hall.......            2007             0.6
    Residential Arsenic Soil Removals.......       2007-2009             9.7
    Residential Geophysical Investigation...       2007-2909             8.1
    Groundwater Investigation \1\...........       2007-2009             1.6
    Public and Stakeholder Outreach.........       2007-2011             1.5
    Soil and other Media Sampling/                 2007-2010             2.5
     Remediation............................
    Property Impact Reimbursements..........       2007-2009             0.5
    Remedial Investigation/Feasibility Study       2007-2011             1.5
     Report.................................
    AU Landscape Damage Reimbursements......            2008             1.3
    Ordnance Disposal.......................            2008             2.4
    AU Public Safety Building Remediation...            2008             1.8
    Dalecarlia Woods Geophysical                        2009             0.9
     Investigation..........................
    Dalecarlia Woods Intrusive Investigation            2010             2.7
    AU Trees Reimbursement..................            2010             0.8
    Project Closeout........................            2011             2.0
    Long Term Monitoring....................       2011-2050             0.8
                                                             ---------------
          Total Cost........................  ..............            50.1
    ------------------------------------------------------------------------
    Assumes no groundwater remediation is required.

        Question. Is the Corps continuing to search for remaining munitions
    and contaminants? Is it likely that this clean-up effort could go on
    well beyond the projected closeout date of 2011 and the costs to
    complete the effort could increase dramatically?
        Answer. The U.S. Army Corps of Engineers (USACE) is continuing to
    search for remaining munitions and Department of Defense (DOD)-related
    contaminants. If a significant amount of ordnance or DOD-related
    contamination is discovered beyond what is presently known, the
    projected 2011 close-out date could be extended.
        Question. I understand that the Department established an $11
    million annual baseline for the Spring Valley FUDS in 2002, based on
    known requirements and estimates that were valid at that time. Given
    new information from the Corps that indicates a high probability of
    buried hazardous material affecting the American University (AU) Public
    Safety Building, the AU Admissions Building, the AU President's
    residence, and an adjacent residence owned by AU, is there cause for
    the Department to develop a new large-scale review of the Spring Valley
    FUDS to determine the full extent of the contaminants and to re-
    baseline the annual funding level for the Spring Valley FUDS,
    accordingly?
        Answer. The USACE believes that the current baseline funding with
    periodic plus-ups such as the $3.0 million provided for fiscal year
    2007 and other funding in previous years will be adequate to complete
    the current known workload at the project area by 2011. This schedule
    is based on addressing Spring Valley in a timely manner without
    severely impacting other competing FUDS Military Munitions Response
    Program priorities.
        Question. Does the Department have the ability supplement the $11
    million for the Spring Valley FUD on an as-needed basis?
        Answer. Supplements to annual funding projections for Spring Valley
    have been made on an as-needed basis through reallocation of dollars
    within the annual FUDS appropriation. This has resulted in the
    deferment of funding for cleanup of other FUDS properties.
        Question. What is the Corps' full capability for this project in
    fiscal year 2008?
        Answer. USACE has the capability to perform additional work in
    fiscal year 2008 at an additional cost of $7.9 million above the fiscal
    year 2008 baseline amount of $11 million. USACE would advance the
    execution of several of the work activities currently scheduled for
    fiscal year 2009 and fiscal year 2010. Again, this action would be at
    the expense of delaying cleanup activities scheduled for other FUDS
    properties if no additional program funding is appropriated.
        Question. Please describe what authority the department has to
    provide compensation to individuals and organizations impacted or
    displaced by FUDS activities.
        Answer. The USACE is authorized to reimburse property owners of
    properties which undergo investigation and remediation activities for
    the independently appraised values for landscape items which are
    damaged or destroyed. In some cases, the USACE relocates residents from
    their properties and covers the expense of temporary lodging or leasing
    of the property if the remediation activities render the dwelling
    temporarily uninhabitable.
        Question. What compensation has been provided to the residents of
    Spring Valley neighborhood and American University for the major
    disruption this project has had upon their property and to the
    operations of the university?
        Answer. Direct reimbursements have been made to compensate affected
    property owners for damaged and destroyed landscape items due to
    investigation and remediation activities and for temporary lodging or
    leasing of a property if required. Since 2000, we have spent
    approximately $6.8 million on damaged and destroyed landscape items,
    temporary leases, or easements on properties and relocations. AU has
    been reimbursed $572,000 for Child Development Center relocation and
    playground equipment, and for AU-owned property leases and damage
    reimbursements.
        Question. When the Corps remediates a property or structure within
    a FUDS, is it required to restore the property or structure to its
    original stature?
        Answer. The USACE performs restoration at properties which undergo
    remediation activities (backfilling, grading, new sod, etc.) and
    reimburses the property owner for the independently appraised value of
    any and all landscape items which are damaged or destroyed. On a rare
    occasion where there may be damage to a structure related to our
    investigation or remediation efforts, the structure would be restored
    to its original condition.
        Question. In June 1995, the Corps issued a report, with concurrence
    from the Environmental Protection Agency, concluding that Spring Valley
    was safe after a two-year effort to clean up munitions, arsenic
    contaminated soil, and other contaminates that were discovered in 1993.
    I understand that the Corps reopened the Spring Valley case in 1998 at
    the insistence of the DC Department of Health and expanded the
    investigation to include every property located in the Spring Valley
    FUDS boundary. As we are all aware, this investigation revealed much
    more work was yet to be completed on the Spring Valley FUDS and the
    Corps is now in the second phase of clean up for this FUDS.
        When the cleanup is determined to be complete for current ongoing
    tasks, how does the Corps intend to monitor affected sites?
        Answer. The USACE plans on conducting long term monitoring of the
    site in consultation with regulatory agencies and partners.
        Question. If, after the stated completion of the cleanup,
    additional munitions, chemicals, or other hazardous waste are detected
    in Spring Valley, will the Corps return to immediately undertake an
    additional comprehensive clean-up?
        Answer. As the program executor for the FUDS program, the USACE
    would be able to respond appropriately to any future discoveries of
    ordnance or DOD-related contamination that poses an unacceptable risk
    to human health or the environment in the Spring Valley neighborhood.
                                     ______

              Questions Submitted by Senator Kay Bailey Hutchison

                                   fort hood
        Question. General Wilson: You mentioned that 176 personnel are
    already slated to come to Fort Hood as part of the Army's ``Grow the
    Force'' initiative. Are these people going to be part of the permanent
    end-state population of Fort Hood? What do you project the end-state
    population to be at Fort Hood?
        Answer. Yes, the previously mentioned 176 personnel, comprised of
    explosive ordnance detachment companies, will become part of the Fort
    Hood's permanent end-state population. Fort Hood's projected total
    population of 55,441 in fiscal year 2013 includes 40,799 military
    personnel, 5,188 U.S. direct hire civilians, and 9,454 others, such as
    other service and Department of Defense military and civilian
    personnel, private organizations, and contractors.
                                    southcom
        Question. Mr. Eastin, Can you provide the committee with
    information that details why you chose not to locate this facility on
    land owned by the Federal Government? Specifically, what made MacDill
    AFB and Homestead ARB unacceptable?
        Answer. MacDill AFB and Homestead ARB were considered mutually
    unacceptable due to the lack of proximity to international airports; 26
    partner nation consulates; Coast Guard District 7 Headquarters;
    universities that collaborate on Latin American Studies (University of
    Miami, Florida International University, Florida Atlantic University);
    and Federal agency regional offices (Homeland Security, Justice, Drug
    Enforcement Agency, State, Treasury, and Federal Aviation
    Administration). Additionally, MacDill AFB and Homestead ARB are
    located within mandatory hurricane evacuation zones and lack sufficient
    land to accommodate a SOUTHCOM Headquarters facility.
        MacDill AFB was also considered unacceptable because it is not
    located near housing communities in either Broward or Dade Counties,
    which would require moving assigned military and civilian personnel at
    government expense or cause them to seek employment elsewhere.
        Homestead ARB was also considered unacceptable because of multiple
    quality of life considerations including housing, schools, and medical
    care. Although Homestead ARB has some facilities to permit co-use,
    there is a lack of nearby hotels to support exercises, contingencies,
    and conferences. Additionally, existing SOUTHCOM personnel would be
    required to relocate at their own expense or commute greater distances
    in highly congested traffic and incur a daily $6 toll fee.
                                     ______

                Questions Submitted by Senator Robert F. Bennett

                             dugway proving grounds
        Question. I am concerned by what seems to me to be a perpetual lack
    of Army support for military construction projects at Dugway Proving
    Grounds in Utah. Dugway provides an essential service for the Army and
    the country, but from my perspective seems to be a very low priority.
    Of particular concern to me is the proposed Life Sciences Test Facility
    Addition. This project has been pushed back a number of times by the
    Army and is now scheduled for construction in 2012. Can you please
    provide me with a detailed explanation of the Army's decision making
    process with regards to this facility? Will this facility will stay on
    the FYDP for 2012 or do you anticipate further delays?
        Answer. The Army is working to improve facilities and
    infrastructure at Dugway Proving Ground. The Army is currently
    completing construction of significant improvements to the runway and
    other features at the Dugway airfield. Over the last 6 years,
    approximately $60 million in military construction has or is being
    executed at Dugway Proving Ground, in addition to Army Family Housing
    and non-appropriated fund construction. The Joint Chemical and
    Biological Defense Program has also funded improvements to the old
    chemical lab along with other infrastructure to increase test
    capability at Dugway Proving Ground as part of the defense-wide
    program.
        The Army Test and Evaluation Command submitted the Life Sciences
    Test Facility Annex as a high-priority project during the last military
    construction requirements data call and was able to retain the project
    in the Future Years Defense Program for fiscal year 2012. The Life
    Sciences Test Facility project is a Joint Chemical Biological Defense
    Program requirement, and the Office of the Special Assistant to the
    Secretary of Defense for Nuclear, Chemical and Biological Programs is
    working to establish a Defense-wide military construction program for
    the Chemical and Biological Defense Program.
        Question. Additionally, I would like to get your assessment of the
    dining facility project at Dugway. As you know, the mission of Dugway
    requires that it be remotely located. The downside to the remote
    location is that personnel stationed there often feel isolated as it is
    not convenient to drive to the nearest town. The current dining
    facility is an antiquated building and does not serve the unique needs
    of the personnel at Dugway. The proposed new dining facility, which
    would double as a community center, would provide a welcome boost to
    morale and give personnel an acceptable option for dining and community
    events. When do you anticipate construction on this project will begin?
        Answer. At this time, the dining facility project is scheduled to
    be programmed in the Army's fiscal year 2010-2015 Future Years Defense
    Plan.
                             Department of the Navy

    STATEMENT OF HON. B.J. PENN, ASSISTANT SECRETARY OF THE
                NAVY, INSTALLATIONS AND ENVIRONMENT
    ACCOMPANIED BY:
            MAJOR GENERAL JAMES F. FLOCK, ASSISTANT DEPUTY COMMANDANT FOR
                INSTALLATIONS AND LOGISTICS (FACILITIES)
            REAR ADMIRAL MARK A. HANDLEY, NAVY, DIRECTOR OF ASHORE
                READINESS
        Senator Reed. Now, let me call forward the second panel.
        Let me welcome our second panel, the Honorable B.J. Penn,
    Assistant Secretary of the Navy for Installations and
    Environment, Major General James F. Flock, Assistant Deputy
    Commandant for Installations and Logistics (Facilities), and
    Rear Admiral Mark A. Handley, the Navy's Director of Ashore
    Readiness.
        And Secretary Penn, much like the Army's request, the Navy
    has requested an 80 percent increase in funding for military
    construction this year, and I hope to address this and other
    questions following your opening statement. Mr. Secretary,
    please go forward.
        Mr. Penn. Mr. Chairman, members of the subcommittee, thank
    you for the opportunity to discuss the Department of the Navy's
    installations and environmental efforts. I am accompanied by
    Major General James F. Flock, and Rear Admiral Mark A. Handley.
        Major General Flock has 32 years of distinguished service
    as a Naval Aviator in the United States Marine Corps. He now
    serves as the Deputy Commandant for Installations and
    Logistics. Major General Flock graduated with a Bachelor's
    Degree in Mechanical Engineering, and has a Bachelors of Arts
    in National Security and Strategic Studies. He has had
    extensive aviation assignments, flying the F-4 Phantom, and the
    F-18 Hornet aircraft, and has logged over 4,900 hours in
    tactical jet aircraft.
        I personally met the General when he was in Okinawa when he
    was a wing commander, a few years ago.
        Admiral Handley has 26 years of service in the United
    States Navy, he is the Deputy Commander of Naval Installations
    Command, and Director of Ashore Readiness, Office of the Chief
    of Naval Operations. Rear Admiral Handley has a Bachelor's
    Degree in Mechanical Engineering, and a Master's of Engineering
    in Construction.
        Admiral Handley has served in a variety of facilities
    assignments in the United States Navy, and overseas, including
    deployment with the 1st Marine Expeditionary Force to Fallujah,
    Iraq for Operation Iraqi Freedom.
        Both are highly-qualified subject matter experts.
        I would like to briefly highlight a few topics that are
    discussed in more detail in my written statement.
        Senator Reed. Your written statement will be part of the
    record, Mr. Secretary.
        Mr. Penn. Thank you, sir.
        I am pleased to report a very substantial increase in
    investment for installations and environment programs in this
    budget. We are asking for a total of $11.5 billion in fiscal
    year 2008, an increase of $1.8 billion above last year's
    request.
        I appreciate the efforts by the Congress to restore $3.1
    billion for BRAC 2005 implementation in the fiscal year 2007
    supplemental. The funds are critical to allow us to stay on
    track, and obtain the intended operational efficiencies, while
    minimizing further turbulence in the future of our personnel
    and communities affected by BRAC 2005.
        We continue to finance our prior BRAC environmental clean-
    up and property disposal from the sale of other prior BRAC
    property. We have budgeted to spend the last of the $1.1
    billion in land sale revenue in fiscal year 2008, while our
    cost to complete environmental cleanup on all remaining prior
    BRAC property has increased by $725 million since last year.
        Most of the increase is due to the recognition last year of
    substantial low-level radioactive contamination at the former
    Hunters Point Naval Shipyard in San Francisco. The low-level
    radioactive material is buried underground, undetectable on the
    surface, and poses no risk to humans if left undisturbed.
        We are working this issue with the city, the regulators and
    the congressional delegation.
        I commend the Marine Corps for its commitment to eliminate
    by 2012, its barracks shortfall for their currently approved
    175,000 personnel in-strength. The budget includes $282 million
    for 10 BRAC projects at seven Marine Corps base locations. The
    budget also includes about $950 million across the baseline and
    supplemental budgets for a mix of facilities to grow the Marine
    Corps permanent in-strength to 202,000 by 2011.
        This initiative, which is separate from the current
    operations in Iraq and Afghanistan, will allow the Marine Corps
    to reduce the strain on individual marines by establishing a
    more stable deployment-to-dwell ratio, and enhance irregular
    warfare capabilities.

                               PREPARED STATEMENT

        Both the Navy and Marine Corps are continuing family
    housing privatization efforts. Our investment of less than $600
    million has attracted over $6.6 billion in private sector
    capital to eliminate inadequate homes for our sailors and
    marines with families.
        The Navy is successfully applying privatization to improve
    housing for unaccompanied sailors, the Navy signed the first
    Department of Defense barracks privatization contract in
    December 2006, it's located in San Diego, and this project will
    provide 941 new two-bedroom, two-bathroom apartments and
    privatize an existing building. Construction will be completed
    in 2009.
        The Navy is also in exclusive negotiation with the
    developer for a second barracks privatization project in
    Norfolk.
        Thank you, Mr. Chairman.
        [The statement follows:]

                        Prepared Statement of B.J. Penn

        Mr. Chairman and members of the committee, I am pleased to appear
    before you today to provide an overview of the Department of Navy's
    shore infrastructure.
                      the navy's investment in facilities
        The Department of Navy's (DoN) shore infrastructure is where we
    train and equip the world's finest Sailors and Marines, while
    developing the most sophisticated weapons and technologies. The DoN
    manages a shore infrastructure with a plant replacement value of $187
    billion on 4.5 million acres. Our fiscal year 2008 shore infrastructure
    baseline budget totals $11.5 billion, representing about 8 percent of
    the DoN's fiscal year 2008 baseline request of $139 billion. There is
    an additional $410 million for facilities in the fiscal year 2007
    global war on terror (GWOT) Supplemental, and $169 million in the
    fiscal year 2008 GWOT request. Together, that represents a $1.8 billion
    increase compared to the fiscal year 2007 request of $10.3 billion.
        The Base Operating Support (BOS) request of $5.6 billion, excluding
    environmental, comprises the largest portion of the Navy's facilities
    budget request. This account funds the daily operations of a shore
    facility, e.g., utilities, fire and emergency services; air and port
    operations; community support services; and custodial costs.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Our fiscal year 2008 request of $5.6 billion for BOS reflects a
    $558 million increase from the enacted fiscal year 2007 level. The Navy
    increase of $356 million and Marine Corps increase of $202 million will
    return capability levels to those executed in fiscal year 2005,
    restoring reductions taken during fiscal year 2007 that are
    unsustainable, particularly in the area of information technology and
    counter terrorism and security guards as we substitute civilian and
    contract personnel in place of military personnel.
        The fiscal year 2008 military construction (active + reserve)
    baseline request of $2.2 billion is $992 million more than the enacted
    fiscal year 2007 level of $1.2 billion. The fiscal year 2008 request
    includes $59 million for Navy and Marine Corps reserve construction
    efforts. This level of funding supports traditional recapitalization
    projects for the existing infrastructure. It also provides facilities
    for 15 new Navy weapon systems, new facilities for the Marine Corps'
    plan to Grow the Force from the current 175,000 permanent end strength
    to 202,000 by 2011, and new barracks to ensure that all unaccompanied
    enlisted Marines are suitably housed by 2012.
        The fiscal year 2008 Family Housing baseline request of $670
    million is $140 million less than the fiscal year 2007 enacted level of
    $810 million. Within this sum, there is $299 million for replacement
    family housing on Guam and Marine Corps privatization. Housing
    operations and maintenance funds decline to $371 million as government
    owned worldwide inventory of 26,335 homes in fiscal year 2007 falls by
    15,481 homes to 10,854 homes in fiscal year 2008 due to privatization.
        Sustainment, Restoration and Modernization (S/RM) includes military
    construction and operation and maintenance funds. Our fiscal year 2008
    request of $1.83 billion represents only the amount of S/RM funded with
    Operations and Maintenance, and is $133 million above the enacted
    fiscal year 2007 level of $1.70 billion. Although fiscal year 2008
    funding is 8 percent higher than fiscal year 2007, sustainment levels
    are lower because of inflation and an increase in modeled requirements.
        Our fiscal year 2008 request of $898 million for environmental
    programs at active and reserve bases is comprised of operating and
    investment appropriations. This amount is about the same as the fiscal
    year 2007 request.
        Our BRAC program consists of environmental cleanup and caretaker
    costs at prior BRAC locations, and implementation of BRAC 2005
    recommendations.
      --Our fiscal year 2008 prior BRAC program of $179 million is $163
            million below our fiscal year 2007 program of $342 million. The
            entire prior BRAC effort continues to be financed with revenue
            obtained from the sale of prior BRAC properties. We have not
            sought appropriated funds for prior BRAC since fiscal year
            2005, however, the fiscal year 2008 program depletes the
            remainder of the land sale revenue received in previous years
            from disposing prior BRAC property.
      --The fiscal year 2008 budget of $733 million to implement the BRAC
            2005 recommendations is $434 million above the amount allocated
            by the Department of Defense (DOD) to the DoN following the
            reduction enacted in the House Joint Resolution 20.
    Impact of House Joint Resolution 20
        The Department of Defense has been proceeding with BRAC 2005
    implementation through most of fiscal year 2007 under a series of
    Continuing Resolutions (CRs). The enactment of the House Joint
    Resolution 20 on 15 February provided an annual DOD BRAC 2005
    appropriation, albeit at a substantial $3.1 billion reduction to the
    PB-07 $5.6 billion request. The DoN had received $66 million of the
    $690 million budget request under the CRs, with most of the funds
    provided in January. The duration of the CR, and the magnitude of the
    funding reduction, has severely complicated program execution.
        The BRAC 2005 account is a DOD account. The Office of the Secretary
    of Defense has now allocated $297 million of the $2.5 billion
    appropriated by the Congress in fiscal year 2007 to the DoN, leaving us
    with a $398 million shortfall in fiscal year 2007. There is, however,
    no doubt that a 55 percent reduction from the President's fiscal year
    2007 budget request will create substantial turmoil in all of the
    Services and Defense Agency implementation plans and schedules. Our
    BRAC 2005 design and construction projects represent 81 percent of the
    fiscal year 2007 (49 construction projects at 20 locations) and 69
    percent of the fiscal year 2008 request (29 construction projects at 18
    locations), so any reduction of funds in fiscal year 2007 will require
    that we defer numerous construction projects, causing a bow wave of
    construction projects into fiscal year 2008. This will require a
    wholesale review of fiscal year 2008 execution plans and schedules as
    we accommodate construction projects deferred from fiscal year 2007.
    Delaying closures and realignments also requires us to replace funds
    which had been taken as savings in the budget. Finally, it adds further
    uncertainty in the lives of our military, civilian, and contract
    employees as they ponder their future, and jeopardizes our ability to
    meet the September 2011 deadline to complete all closures and
    realignments.
        The President submitted an amended fiscal year 2007 request on
    March 8, 2007 with accompanying offsets for $3.1 Billion in additional
    BRAC 2005 funds. I urge your support for the amended fiscal year 2007
    budget submitted to the Congress.
        Here are some of the highlights and additional details on these
    programs.
                             military construction
    Military Construction Projects
        The DoN's fiscal year 2008 Military Construction program requests
    appropriations of $2.1 billion including $110 million for planning and
    design and $10 million for Unspecified Minor Construction. This fiscal
    year 2008 baseline request is $975 million above, and nearly doubles,
    the fiscal year 2007 enacted level of $1.129 billion. The fiscal year
    2008 authorization request is $1.8 billion. This level of construction
    funds presents what I believe will be a substantial, long-term
    commitment for naval facilities.
        The active Navy program totals $1,126 million and includes:
      --$486 million for 15 construction projects supporting the fielding
            of new weapons system platforms or research facilities for
            future weapon systems. All construction projects are scheduled
            to finish building and outfitting the facility just-in-time to
            coincide with the arrival of the new platform and its planned
            initial operating capability. The new platforms include: LPD-
            17, T6-A, LCS, SSN-774, E2-D, JPALS, FA-18E/F, MH-60, MUOS, EA-
            18G, T-AKE, and D5 LE. One example of these new platforms is a
            $101.8 million extension to Kilo wharf in Guam to support the
            arrival of the new T-AKE class Combat Logistics Force ships in
            fiscal year 2010 that provide underway replenishment to Navy
            ships at sea, replacing the current T-AE and T-AFS class ships;
      --$175 million to continue funding for six previously approved
            incrementally funded construction projects. An example is a
            $16.6 million recruit training center infrastructure upgrade at
            Naval Training Center Great Lakes IL. This project is the final
            phase of the infrastructure improvement effort at Great Lakes.
            In accordance with Administration policy, there are no new
            incrementally funded construction projects in this budget
            request;
      --$146 million for four other waterfront recapitalization projects
            not associated with new weapons systems. An example is a $91
            million CVN maintenance pier replacement at Naval Base Kitsap,
            WA;
      --$139 million for utilities infrastructure improvements to meet
            current mission and operational requirements at Naval Base Guam
            and Naval Support Activity Diego Garcia;
      --$24 million for training projects at Naval Air Station Corpus
            Christi, TX and Naval Station Great Lakes, IL;
      --$22 million in three infrastructure improvement projects at Camp
            Lemonier in Djibouti in support of CENTCOM's forward operating
            base.
        The active Marine Corps program totals $1,037 million, including:
      --$361 million for facilities to support the ``Grow the Force''
            initiative, which I will discuss this in greater detail below;
      --$282 million for ten bachelor quarters at seven locations including
            Marine Corps Base Camp Lejeune, NC, and Marine Corps Air
            Station Yuma, CA;
      --$167 million for 11 operations and training facilities, including
            an Infantry Squad Defense Range at Marine Corps Base Camp
            Pendleton CA, and three facilities for the Marine Corps Special
            Operations Command units at Camp Pendleton. CA and Marine Corps
            Base Camp Lejeune, NC;
      --$52 million for two training facilities, including student quarters
            for the basic school at Marine Corps Base Quantico, VA;
      --$32 million for three other quality of life projects, including a
            fitness center at Marine Corps Base Camp Pendleton CA;
      --$31 million for four maintenance projects including a jet engine
            test cell at Marine Corps Air Station New River NC;
      --$13 million for infrastructure improvements including main gate
            improvements at the Blount Island Command, FL and Marine Corps
            Base Camp Pendleton, CA.
        The Navy and Marine Corps Reserve Military Construction
    appropriation request is $59.2 million, $16 million more than the
    enacted fiscal year 2007 level of $43 million. There are three reserve
    centers at various locations and a Mobile Inshore Undersea Warfare Unit
    operation facility at Naval Station Everett WA.
    Marine Corps Grow the Force
        To meet the demands of the Long War and respond to inevitable
    world-wide crises that arise, the Marine Corps must be sufficiently
    manned in addition to being well trained and properly equipped. A key
    objective is to establish a 1:2 deployment-to-dwell ratio for all
    active component forces. This ratio relates how long our forces are
    deployed versus how long they are at home. The goal is for every 7
    months a Marine is deployed, he will be back at his home station for 14
    months. Marine operating forces are routinely falling short of this
    target. To fix this imbalance, the President announced in January a
    need to increase the Marine Corps permanent end strength from 175,000
    to 202,000 by 2011, along with a larger increase for the Army. The
    Marine Corps growth will occur in stages, the first of which will build
    three new infantry battalions and elements of their supporting
    structure of about 5,000 Marines.
        The fiscal year 2008 baseline budget includes $4.3 billion for pay
    and allowances for the first increment of Marines, military
    construction and base operating support for permanent barracks and
    operations centers, procurement of additional H-1 aircraft and
    increased aviation support, along with recruiting, training, equipment
    and ammunition to bring units to full operational capability. The
    funding for infrastructure and facilities to initially support this
    initiative are in three separate budget documents now before Congress:
      --The fiscal year 2007 Supplemental includes $324 million for
            planning & design, and eight military construction projects;
      --The fiscal year 2008 Global War on Terror includes $169 million for
            planning & design, ten military construction projects, and
            family housing privatization seed money for follow-on projects;
      --The fiscal year 2008 baseline budget includes $458 million for
            planning & design, 20 military construction projects including
            two Wounded Warrior barracks, and additional family housing
            privatization seed money for follow-on projects.
        Because Marines will begin to arrive before construction at many
    locations is complete, the Marine Corps is planning to lease, rent, or
    purchase temporary support facilities. Based on the composition of the
    additional units, we are determining the optimal permanent bed down
    locations for these units for future construction requirements.
                             facilities management
    Facilities Sustainment, Restoration and Modernization (SRM)
        The Department of Defense uses a Sustainment model to calculate
    life cycle facility maintenance and repair costs. These models use
    industry-wide standard costs for various types of building and
    geographic areas and are updated annually. Sustainment funds in the
    Operation and Maintenance accounts are used to maintain facilities in
    their current condition. The funds also pay for preventative
    maintenance, emergency responses for minor repairs, and major repairs
    or replacement of facility components (e.g. roofs, heating and cooling
    systems). Both the Navy and the Marine Corps have accepted more risk in
    facilities sustainment funding in fiscal year 2008 to fund higher
    priority requirements. With respect to the table, the Marine Corps
    moved additional funds to sustainment in fiscal year 2006 to restore
    reductions taken in fiscal year 2005. The Navy would require $240
    million and the Marine Corps $64 million to fund sustainment to the DOD
    goal of 100 percent of model requirements in fiscal year 2008.

                                                       SUSTAINMENT
                                                      [In percent]
    ----------------------------------------------------------------------------------------------------------------
                                                                                       Fiscal years
                                                                     -----------------------------------------------
                                                                           2006            2007            2008
    ----------------------------------------------------------------------------------------------------------------
    USN Budget......................................................              95              95              83
    USN Actual/Plan.................................................              79              95  ..............
    USMC Budget.....................................................              95              93              89
    USMC Actual/Plan................................................             126              93  ..............
    ----------------------------------------------------------------------------------------------------------------

        Restoration and modernization provides major upgrades of our
    facilities using Military Construction, Operation and Maintenance, Navy
    Working Capital Fund, and Military Personnel funds. The DOD uses a
    ``recap'' metric to gauge investment levels. The ``recap'' metric is
    calculated by dividing the plant replacement value by the annual
    investment of funds and is expressed in years. The DOD goal is to
    attain a 67-year rate by fiscal year 2008. This is a relatively coarse
    metric, as demonstrated by the dramatic improvement in execution as a
    result of funds from the fiscal year 2006 Hurricane Supplemental, which
    substantially improved only those bases affected by the storm. The Navy
    recap rate also benefits from military construction included in BRAC
    2005 implementation. We are working with the Office of the Secretary of
    Defense and the other Components to develop a recap model similar to
    the Sustainment model, planned for release in the next budget cycle.

                                                       RECAP YEARS
    ----------------------------------------------------------------------------------------------------------------
                                                                                       Fiscal years
                                                                     -----------------------------------------------
                                                                           2006            2007            2008
    ----------------------------------------------------------------------------------------------------------------
    USN Budget......................................................             105              83              63
    USN Actual/Plan.................................................              45              67  ..............
    USMC Budget.....................................................             101             112             103
    USMC Actual/Plan................................................              97             109  ..............
    ----------------------------------------------------------------------------------------------------------------

    Naval Safety
        The DoN has embraced the Occupational Safety and Health
    Administration (OSHA) Voluntary Protection Program (VPP), which seeks
    to foster a cooperative relationship between management, labor, and
    OSHA as a means to improve workplace safety. The VPP focuses on four
    major tenets: increased leadership and employee involvement in safety;
    effective worksite hazard analysis; a focus on hazard prevention and
    control; and effective safety and health training for employees. The
    DON has achieved ``Star'' status, OSHA's highest level of achievement,
    at four sites representing over half of the VPP star sites in DOD. The
    Naval activities include three Naval shipyards, our largest industrial
    facilities. Statistical evidence for VPP's success is impressive. The
    average VPP worksite has a Days Away, Restricted or Transferred (DART)
    injury case rate of 52 percent below the average for its industry,
    which is consistent with what we have seen.
    Joint basing
        The Office of the Secretary of Defense released a draft Joint Base
    Initial Implementation guidance on 31 January 2007 for coordination by
    the Components. The Navy and Marine Corps have been working closely
    with the Components for over a year in developing a common framework
    and standards to establish joint bases. The DON supports the transfer
    of funding and real estate from the supported component to the
    supporting component for installation management functions, which will
    be the responsibility of the supporting component to provide at the
    joint base.
    Encroachment Partnering
        We are successfully applying the authority in the fiscal year 2003
    National Defense Authorization Act to enter into agreements with state
    and local governments and eligible non-government organizations to
    address potential incompatible development near our installations and
    ranges, and to preserve nearby habitat to relieve current or
    anticipated environmental restrictions that might otherwise restrict
    military training, testing, or operations on the installation. Both the
    Navy and Marine Corps are using this authority to reduce or eliminate
    encroachment concerns. Through fiscal year 2006 Department of the Navy
    has protected nearly 16,000 acres near its installations under this
    program at a cost of $12.5 million while our partners have contributed
    $20.5 million. The DoN has also entered into several longer term
    agreements under which we and our partners will seek additional
    encroachment buffering opportunities. Examples include:
      --An agreement with Beaufort County, South Carolina under which we
            will share costs to acquire interests in the vicinity of Marine
            Corps Air Station Beaufort.
      --An agreement with Churchill County, Nevada under which we will
            share costs to acquire interests in the vicinity of Naval Air
            Station Fallon.
    Energy
        The DoN is pursuing ways to meet the requirements of Executive
    Order 13423 and the Energy Policy Act of 2005. Central to this plan is
    our continued development of geothermal power plants. Navy has
    partnered with the renewable energy industry on a 270 MW geothermal
    plant at Naval Air Warfare Station China Lake, CA; awarded a geothermal
    power plant contract for Naval Air Station Fallon, NV; and is
    evaluating a project at Naval Facilities Engineering Center El Centro,
    CA. Other on-base renewable projects include photovoltaic, wind, wave
    and ocean thermal energy conversion projects. I issued a new DoN policy
    last fall requiring all new buildings to be built to a LEED Silver
    level.
                                    housing
        Our fiscal year 2008 budget continues to improve living conditions
    for Sailors, Marines, and their families. We have programmed the
    necessary funds and expect to have contracts in place by the end of
    fiscal year 2007 to eliminate all inadequate family housing. Renovation
    and new construction will be completed such that Sailors and Marines
    are no longer occupying inadequate homes by fiscal year 2012. We
    continue to provide homes ashore for our junior shipboard unaccompanied
    Sailors, to provide appropriate living spaces for our junior enlisted
    bachelor Marines, and to address long standing family housing deficits.
    We have programmed the necessary funding to eliminate over 99 percent
    of the inadequate permanent party unaccompanied bachelor quarters (BQs)
    housing spaces still served by ``gang heads.'' As we near finishing
    privatizing existing military family housing, we are making tangible
    progress in applying that same privatization approach to meet our
    unaccompanied housing needs.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Family Housing
        As in past years, our family housing strategy consists of a
    prioritized triad:
      --Reliance on the Private Sector.--In accordance with longstanding
            DOD and DoN policy, we rely first on the local community to
            provide housing for our Sailors, Marines, and their families.
            Approximately three out of four Navy and Marine Corps families
            receive a Basic Allowance for Housing (BAH) and own or rent
            homes in the community.
      --Public/Private Ventures (PPVs).--With the strong support from this
            committee and others, we have successfully used PPV authorities
            enacted in 1996 to partner with the private sector to help meet
            our housing needs through the use of private sector capital.
            These authorities allow us to leverage our own resources and
            provide better housing faster to our families. Maintaining the
            purchasing power of BAH is critical to the success of both
            privatized and private sector housing.
      --Military Construction.--Military construction will continue to be
            used where PPV authorities don't apply (such as overseas), or
            where a business case analysis shows that a PPV project is not
            financially sound.

                          PLANNED PRIVATIZATION AWARDS
    ------------------------------------------------------------------------
                            Location                               Homes
    ------------------------------------------------------------------------
                        Fiscal Year 2007
    Southeast Region........................................           5,501
    Midwest (Phase 2).......................................             326
    San Diego (Phase 4) (Southwest Region)..................           3,254
    MCB Hawaii (Phase 2)....................................             917
    MCB Camp Lejeune/MCAS Cherry Point/Westover JARB........           1,985
    MCB Camp Pendleton/MCLB Albany..........................             294
                                                             ---------------
          Fiscal Year 2007 Total............................          12,277
                                                             ===============
                        Fiscal Year 2008
    MCB Camp Lejeune........................................             451
    MCB Camp Pendleton......................................             301
    MCAGCC 29 Palms.........................................             279
                                                             ---------------
          Fiscal Year 2008 Baseline Subtotal................           1,031
                                                             ===============
    MCB Camp Pendleton......................................              66
    MCAGCC 29 Palms.........................................               6
                                                             ---------------
          Fiscal Year 2008 GWOT Subtotal....................              72
                                                             ===============
          Fiscal Year 2008 Total............................           1,103
                                                             ---------------
          Total Fiscal Year 2007-2008.......................          13,380
    ------------------------------------------------------------------------

        As of March 1, 2007, we have awarded 24 privatization projects for
    over 50,000 homes. As a result of these projects, over 30,000 homes
    will be replaced or renovated, about 5,000 new homes will be built, and
    the remaining 15,000 were privatized in good condition and did not
    require any improvements. Through the use of these authorities we have
    secured over $6 billion in private sector investment from $588 million
    of our funds, which represents a ratio of almost twelve private sector
    dollars for each taxpayer dollar.
        During the remainder of fiscal year 2007 and in fiscal year 2008,
    we plan to award nine Navy and Marine Corps family housing
    privatization projects totaling over 13,000 homes. By the end of fiscal
    year 2007, the Navy and Marine Corps will have privatized 95 percent
    and over 99 percent, respectively, of their U.S. housing stock.
        Our fiscal year 2008 and outyear family housing privatization
    projects are targeted at reducing family housing deficits by
    constructing additional housing for our families where the private
    sector cannot accommodate their needs. These authorities will ensure
    the availability of housing to address increased requirements
    associated with the Marine Corps' ``Grow the Force'' initiative, stand-
    up of the Marine Corps Special Operations Command, and address our
    remaining housing deficit.
        Our fiscal year 2008 baseline family housing budget request
    includes $298 million for family housing construction and improvements.
    This amount includes $188 million for the Government investment in
    family housing privatization projects planned for fiscal year 2008
    award. It also includes the replacement or revitalization of housing in
    Guam and Japan where privatization is not planned. Finally, the budget
    request includes $371 million for the operation, maintenance, and
    leasing of remaining Government-owned or controlled inventory. The
    latter represents a 66 percent decline since 1999 when the DoN began in
    earnest to privatize its inventory of government owned housing. In
    addition, our fiscal year 2008 family housing Global War on Terrorism
    request includes another $12 million for the Marine Corps in family
    housing improvements.
    Unaccompanied Housing
        Our baseline budget request of $323 million \1\ for 11
    unaccompanied housing projects continues the emphasis on improving
    living conditions for our unaccompanied Sailors and Marines. Marine
    Corps has an additional BQ for $41 million in the fiscal year 2007 GWOT
    Supplemental, and another BQ and dining hall in the fiscal year 2008
    GWOT. There are three challenges:
    ---------------------------------------------------------------------------
        \1\ Excludes two Marine Corps Wounded Warrier barracks.
    ---------------------------------------------------------------------------
      --Provide Homes Ashore for our Shipboard Sailors.--Approximately
            13,000 E1-E3 unaccompanied Sailors worldwide lived aboard ship
            even while in homeport. The fiscal year 2008 budget supports
            Navy's goal of providing ashore living accommodations for these
            Sailors. It includes one ``homeport ashore'' construction
            project for $47 million to complete Naval Base Kitsap
            Bremerton, WA (198 modules). We are requesting a second phase
            of funding for this project previously authorized in fiscal
            year 2005. The primary demographic are Sailors assigned to the
            nuclear carrier USS JOHN C. STENNIS, which is homeported in
            Bremerton. Efforts to build this barracks as a pilot BQ PPV
            proved uneconomical due to the large number of vacancies that
            would occur when STENNIS deployed.
          In addition to the E1-E3 shipboard Sailors, there are
            approximately 6,000 unaccompanied E-4 Sailors with less than
            four years service who are assigned to sea duty. Although they
            are entitled to receive BAH, funding for housing allowances
            remains un-programmed. We will accommodate those Sailors within
            our existing unaccompanied housing capacity to ensure they do
            not return to live aboard ship upon promotion to E-4.
      --Ensure our Barracks Meet Today's Standards for Privacy.--We are
            building new and modernizing existing barracks to increase
            privacy for our single Sailors and Marines. Reflecting the
            Commandant of the Marine Corps' priority to ensure single
            Marines are adequately housed, the fiscal year 2008 budget
            includes $282 million in MILCON funding (a 124 percent increase
            over fiscal year 2007 funding levels) for the construction of
            3,750 permanent party and trainee spaces at seven Marine Corps
            installations. The Marine Corps has programmed the necessary
            funding from fiscal year 2008 through 11 to ensure Marines for
            their current approved 175,000 end strength are adequately
            housed by 2012. These barracks will be built to the 2 + 0 room
            configuration, as have all Marine Corps barracks since 1998.
          We appreciate the Congress authorizing the Services to adopt
            private sector standards for the construction of military
            unaccompanied housing. We believe that we can provide market-
            style housing with improved amenities (such as increased common
            space for residents) at a cost equivalent to that associated
            with building smaller modules to rigid military specifications.
            In implementing this authority, we will ensure that Service-
            specific operational requirements are not compromised, such as
            the core Marine Corps' tenets for unit cohesion and
            teambuilding.
      --Eliminate Gang Heads.--The Marine Corps had programmed all
            necessary funding, through fiscal year 2005, to eliminate
            inadequate unaccompanied housing with gang heads \2\ for
            permanent party personnel. They will, however, continue to use
            these facilities on an interim base to address short-term
            housing requirements resulting from temporary end strength
            increases in recent supplemental appropriations. The Navy will
            achieve over 99 percent of this goal by fiscal year 2007.
    ---------------------------------------------------------------------------
        \2\ Gang heads remain acceptable for recruits and trainees.
    ---------------------------------------------------------------------------
    Unaccompanied Housing Privatization
        We awarded our first pilot unaccompanied housing privatization
    project to Pacific Beacon LLC in December 2006. When complete in 2009,
    this project will provide 941 new two-bedroom/two-bathroom apartments
    for E-4 and above enlisted personnel in San Diego, CA who are
    unsuitably housed in the private sector or who are living in Government
    quarters that could be used by shipboard Sailors. An existing
    unaccompanied housing building, containing 258 modules, was also
    privatized as part of this agreement. Our partner will provide
    additional quality of life amenities to existing buildings, such as a
    swimming pool.
        We are in exclusive negotiations with a prospective private partner
    for a second pilot project at Hampton Roads, VA. This project is set
    for contract award this spring, after the required Congressional
    notices. This project will build more than 1,000 new two-bedroom/two-
    bathroom apartments and privatize over 700 existing unaccompanied
    housing modules for unaccompanied shipboard E1-E3 personnel.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        We appreciate Congress extending the authorities and streamlining
    the notification process in last year's Authorization Act. We continue
    to pursue candidates for the third pilot, targeting the Mayport/
    Jacksonville, Florida area, and expect to have preliminary results this
    spring on a feasibility study. We will also look at other candidates
    including additional phases at San Diego and Hampton Roads.
        Recognizing that these are long-term endeavors, we take seriously
    our responsibility to monitor the agreements to ensure that the
    Government's interests are adequately protected. We have instituted a
    portfolio management approach that collects and analyzes financial,
    occupancy, construction, and resident satisfaction data to ensure that
    the projects remain sound and that the partners are performing as
    expected. Customer surveys show overall improvement in member
    satisfaction after housing is privatized.
                                buildup on guam
        U.S. national interests and treaty commitments require
    strengthening of U.S. military capabilities in the Western Pacific.
    U.S. forces must be positioned to maintain regional stability, ensure
    flexibility to respond to regional threats, project power throughout
    the region, defend our assets as well as those of our allies, and
    provide forces to respond to global contingencies.
        The relocation of III Marine Expeditionary Force personnel from
    Okinawa to Guam under U.S.-Japan Alliance Transformation and
    Realignment is part of a broader realignment that, when implemented,
    will strengthen our regional posture, deter potential aggressors, and
    provide capabilities that can be flexibly deployed in contingencies,
    which are essential for the Defense of Japan and for peace and security
    in the region. For the Marines, this development will balance the
    Marine Air Ground Task Force (MAGTF) lay down across the region with
    improved flexibility. The  8,000 Marines and their 9,000 dependents
    leaving Japan will reduce the footprint of U.S. forces in Okinawa. This
    will facilitate consolidation of U.S. bases on Okinawa to allow
    additional land returns in Japan, while reinvigorating Guam's economy
    through economic stimulus, infrastructure improvements, and external
    investments.
        The Government of Japan will fund most of the infrastructure
    construction costs over the planned seven year time period to implement
    the realignment actions in mainland Japan, Okinawa, and Guam. On Guam,
    Japan will contribute $6.09 billion of cost sharing toward the
    estimated $10.27 billion development cost associated with the
    realignment of Marines from Okinawa to Guam. Japan's contribution
    consists of $2.8 billion in cash for operational facilities, barracks,
    and quality of life facilities, and $3.29 billion in equity investments
    and loans to special purpose entities that will provide housing and
    utilities for the Marines on Guam.
        The Deputy Secretary of Defense directed the Navy to establish a
    Joint Guam Program Office (JGPO) to coordinate and manage the
    relocation of the Marines from Okinawa to Guam. There will be JGPO
    offices in Arlington, VA and in Guam, along with a liaison billet in
    Hawaii with USPACOM, and another in Japan with USFJ. The JGPO will work
    closely with the Office of Economic Adjustment and the Government of
    Guam to ensure this initiative is mutually beneficial to DOD and to the
    people of Guam.
        JGPO will oversee National Environmental Policy Act (NEPA) studies
    that will provide the foundation for the Environmental Impact Statement
    (EIS) and parallel development of a Guam Master Plan. We have $10
    million in fiscal year 2007 and are requesting $28M in multiple
    appropriations in the fiscal year 2008 baseline budget to continue
    these efforts. My office released the NEPA Notice of Intent in the
    Federal Register on March 7, 2007. The Draft EIS, Final EIS, and Record
    of Decision, including public comment periods could take up to 3 years
    to complete. The EIS will address the impact of relocating III MEF with
    the Air, Ground, and Combat Service Support elements from Okinawa to
    Guam. The housing, operational, quality of life, and services support
    infrastructure for the Marines will be identified during the planning
    process, and assessed through the environmental analysis. It will also
    assess the impacts of improving the Apra Harbor waterfront to construct
    a pier capable of berthing a transient aircraft carrier as well the
    infrastructure requirements needed to station a U.S. Army ballistic
    missile defense task force on Guam. We will ask for the necessary
    military construction funds beginning with the fiscal year 2010 budget
    submission.
                                  environment
    Endangered Species Protection
        For nearly a century, San Clemente Island, CA was ravaged by the
    destructive forces of invasive species, which severely degraded the
    island's entire ecosystem. Eleven endemic and/or native plants and
    animals neared extinction, and are now protected under the Endangered
    Species Act.
        Today, the status of most of these species has been significantly
    enhanced because of the Navy's environmental stewardship. The Navy
    eradicated all non-native feral grazing animals in the early 1990s and
    removed exotic plants which were overwhelming native species. The
    island has been healing through natural processes and Navy protective
    measures and restoration efforts. In response to a request from the
    Navy, the U.S. Fish and Wildlife Service in October 2006 recommended
    de-listing the Island Night Lizard on San Clemente Island as a result
    of a 5-year review. The final decision is still pending.
        Camp Pendleton uses its Integrated Natural Resources Management
    Plan (INRMP) to manage the ecosystem on this 125,000-acre installation,
    recognizing that the military mission as a central and integral element
    of the ecosystem. During the last 2 years, the INRMP demonstrated its
    benefit by excluding the base from Critical Habitat (CH) designations
    by the U.S. Fish and Wildlife Service (USFWS) for seven species. In
    each case, the Secretary of the Interior found that Camp Pendleton's
    INRMP provided a benefit to the species, and agreed to exclude all
    Base-managed lands from designation as critical habitat, per Section
    4(a)(3) of the Endangered Species Act., and required no further
    restrictions on military training activities.
        In 2006, the USFWS released 5-year status reviews for two species
    inhabiting Camp Pendleton: the least Bell's vireo and the California
    least tern. The USFWS recommended both birds be upgraded from
    ``endangered'' to ``threatened'' due in large measure to Camp
    Pendleton's management efforts, such as habitat enhancement, cowbird
    control, and focused predator management. A final decision is pending.
    Navy Marine Mammals/Sonar R&D investments
        The Navy recognizes the need to protect marine mammals from
    anthropogenic sound in the water. The Navy invests $10 million to $14
    million per year for research into hearing and diving physiology,
    behavioral response to human-generated sound, mitigation options, and
    simulation tools. Approximately 33 universities, institutes, and
    technical companies are supported by Navy research grants. All the
    research is aimed a developing a broad, scientific understanding of
    marine mammals. The Navy recently expanded its research on the effects
    of mid-frequency sonar to include effects on fish.
    MMPA National Defense Exemption
        On 23 January 2007 the Department of Defense issued a National
    Defense Exemption (NDE) under the Marine Mammal Protection Act (MMPA)
    for all military readiness activities that employ mid-frequency active
    sonar or Improved Extended Echo Ranging Sonobuoys during major training
    exercise, within established DOD maritime ranges, or establish
    operating areas. A 6-month NDE had expired on December 30, 2006.
        The Navy is working closely with the National Oceanic and
    Atmospheric Administration (NOAA), which has jurisdiction on MMPA
    enforcement, to address procedural issues, identify and implement
    mitigation and monitoring measures to minimize potential effects to
    marine mammals, and establish mutually acceptable threshold criteria.
    The Navy has also established an outreach workgroup with the many non-
    governmental organizations that have a vested interest in the
    protection of marine species. The Navy has begun the public NEPA
    process on its three most active ranges--Hawaii, Southern California,
    and East Coast, and is committed to completing environmental
    documentation for all ranges by the end of 2009.
    Shipboard Programs
        The Navy continues modernizing its vessels to comply with more
    stringent environmental regulations. The Navy completed its Afloat
    Pollution Prevention Equipment installations in September 2006 with 152
    installations on Navy surface ships. The equipment reduces the need for
    hazardous material, and the generation of hazardous waste. The Navy
    continues to convert its shipboard air conditioning and refrigeration
    plants from Ozone Depleting Substances (ODS) to non-ODS refrigerants.
    As of March 1, 2007, we had completed 516 of 690 conversions of
    shipboard air condition systems and 600 of 614 conversions of shipboard
    refrigeration systems. Navy expects to complete its transition to non-
    ODSs by 2014.
        The Navy has also completed 114 of 334 upgrades to its plastic
    waste processors (PWPs), which allow ships at sea to compress plastics
    into a solid disk for disposal or recycling ashore. The new PWPs reduce
    maintenance, improve reliability and throughput, and include a self-
    cleaning future, giving our sailors the best equipment to meet no-
    plastics discharge requirements while at sea.
    Environmental Compliance by Shore Installations
        The Navy continues to improve its shore installation compliance
    environmental standards. Solid waste diversion has climbed from 42
    percent in fiscal year 2004 to 60 percent in fiscal year 2006 for
    combined municipal waste and construction and demolition debris,
    compared with an EPA national average diversion rate of 32 percent. Our
    hazardous waste disposal amounts are down to an all time low of 54,000
    tons of hazardous waste, compared to 207,000 tons when DOD starting
    using this metric in 1992, this despite increased optempo to support
    the Global War On Terror. Domestically, 91 percent of Navy permits are
    in full compliance with Clean Water Act standards, and 97 percent meet
    all Safe Drinking Water Act standards, both increases from recent
    years.
        The Marine Corps has made similar progress. For example, the number
    of new enforcement actions against the Marine Corps in fiscal year 2006
    has declined by 25 percent compared to the average number in fiscal
    year 2001 through fiscal year 2005. This decrease occurred at a time of
    high operational tempo and more regulatory inspections.
    Alternative Fuel Vehicles
        The Navy has many initiatives to reduce its reliance on imported
    oil. Last year, Navy doubled biodiesel usage for non-tactical vehicles.
    Biodiesel fuels are now available at Navy Exchange fuel stations in
    Norfolk, VA; Crane, IA; and Charleston, SC. After successfully
    completing a pilot scale system, the Naval Facilities Engineering
    Services Center (NFESC) is building a full-scale biodiesel production
    facility at Naval Base Ventura County, Port Hueneme, CA. NFESC
    distributed 92 neighborhood electrics last year. These electric
    vehicles can be charged at any 110 volt outlet and are well-suited for
    use in ports, air stations, and large supply buildings.
    Installation Restoration Program (IRP)
        The DoN has completed cleanup or has remedies in place at 78
    percent of our 3,700 contaminated sites. We plan to complete the
    program by the year 2014. The cost-to-complete the installation
    restoration program continues a downward trend with efficiencies of
    $600 million over the past 10 years. Use of new technologies, land use
    controls, remedy optimizations, contract efficiencies, and a dedicated
    professional staff have contributed to these efficiencies. Our fiscal
    year 2008 request of $301 million consists of $271 million for IRP, and
    $41 million for program management, and $43 million for munitions
    response.
    Munitions Response Program (MRP)
        The DoN is proceeding with cleanup of Munitions and Explosives of
    Concern (MEC) and Munitions Constituents (MC) at all Navy and Marine
    Corps locations other than operational ranges. We plan to complete
    preliminary assessments this year at all 213 known sites on 56 active
    installations. Site inspections and sampling will be completed by 2010.
    We will not have credible cleanup cost estimates until these
    assessments are completed in 2010.
        Navy continues clearing munitions from Vieques, PR. About 65 acres
    of beaches have been surface cleared of munitions on the eastern side
    of the island, and we are removing surface MEC and MC on 1,100 acres of
    the former bombing range Live Impact Area and the artillery range. A
    total of 290 acres, including the ``Red'' and ``Blue'' beaches have
    been cleared. Our revised cost to complete for Vieques is $255 million,
    with completion expected in 2020.
                                   brac 2005
        In developing the BRAC 2005 recommendations, the DoN sought to
    eliminate excess capacity, improve operational readiness, capitalize on
    joint basing opportunities with the other Components, maintain quality
    of service, and achieve cost savings. The BRAC 2005 Commission
    recommendations became legally binding on the DOD on November 9, 2005.
    In contrast to prior BRAC commissions, the BRAC 2005 recommendations
    have fewer closures and many more realignments, particularly
    realignments that involve more than one military Service or Defense
    Agency. The DoN has 6 ``fence line'' closures and 81 realignment
    recommendations involving 129 bases. Our remaining environmental cost
    to complete for fiscal year 2008 and beyond is $94 million.
    Accomplishments
        Given that all closures and realignments in BRAC 2005 must by law
    be completed by September 2011, we must move quickly to construct the
    necessary facilities to relocate units from their current location to
    their new location. We initiated BRAC 2005 implementation in fiscal
    year 2006 by awarding 12 BRAC construction projects at the ``receiver''
    locations. The Department of Navy obligated 96 percent of the total
    fiscal year 2006 $252 million BRAC 2005 funds we received.
        Nearly all impacted communities have established a Local
    Redevelopment Authority (LRA) to guide local planning and redevelopment
    efforts. The DOD Office of Economic Adjustment has been providing
    financial support through grants and technical assistance to support
    LRA efforts.
        To date, the Navy has terminated leases at eleven reserve centers
    thereby returning these properties to their owners, and completed 14
    surplus determinations, allowing us to proceed with disposal actions to
    non DOD recipients at these locations. We expect to complete the
    remaining two surplus determinations this spring. We also completed 23
    Environmental Condition of Property Reports, providing copies to local
    communities and Federal agencies to support their redevelopment
    efforts. These environmental reports provide a comprehensive summary of
    all known environmental contamination, as well as the studies,
    analyses, and cleanup that have been done, are now underway, or remain
    to be done.
        Navy has completed operational closure of 12 bases. We have
    received approval from OSD for 58 out of 64 business plans for which
    the DoN is the executive agent. These business plans, which average 40
    pages in length, include extensive details on costs, savings,
    schedules, and support documents for each construction project. We
    continue efforts to gain OSD approval for the remaining business plans,
    which involve more complex moves and joint basing decisions.
                    prior brac cleanup and property disposal
        The BRAC rounds of 1988, 1991, 1993, and 1995 were a major tool in
    reducing our domestic base structure and generating savings. The
    Department of Navy has achieved a steady state savings of approximately
    $2.7 billion per year since fiscal year 2002. All that remains is to
    complete the environmental cleanup and property disposal on portions of
    17 of the original 91 bases.
    Property Disposal
        Last year we conveyed 906 acres in 12 separate real estate
    transactions at six prior BRAC bases. We also completed Findings of
    Suitability for Transfer (FOST) for 940 acres. The FOST certifies that
    DOD real estate is environmentally suitable for transfer by deed under
    Section 120(h) of the Comprehensive Environmental Response,
    Compensation, and Liability Act (CERCLA) \3\.
    ---------------------------------------------------------------------------
        \3\ 42 U.S.C. Section 9620(h).

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Land Sale Revenue
        We have continued our success in using property sales to assist in
    funding environmental cleanup and property disposal as well as recover
    value for taxpayers from the disposal of Federal property. Through a
    combination of cost Economic Development Conveyances, Negotiated Sales,
    and Public Sales, the Department of Navy has received over $1.1 billion
    in revenues from the sale of prior BRAC property. Nearly all of this
    revenue has been generated since fiscal year 2003. In fiscal year 2006,
    we completed the sale of 3,719 acres at the former Marine Corps Air
    State El Toro, CA for $649.5 million. We also sold 167 acres at the
    former Naval Hospital Oakland, CA for $100.5 million. Beginning in
    fiscal year 2003, we have used these funds to accelerate environmental
    cleanup, and to finance the entire Department of the Navy prior BRAC
    effort including caretaker costs since fiscal year 2005.
        We have put this land sale revenue to good use! We have issued
    Findings of Suitability to Transfer for over 4,500 acres which enabled
    us to continue our disposal efforts. A few of the significant disposals
    include the last parcels at Naval Shipyard Charleston, SC; Naval Air
    Station Key West, FL; San Pedro Housing Area for Naval Shipyard Long
    Beach, CA; and Naval Hospital Oakland, CA, as well as the first parcel
    at Hunter's Point Naval Shipyard. In addition, Navy accelerated cleanup
    on the majority of MCAS El Toro, a National Priorities List (NPL) site.
    We have also completed the cleanup of over half of Naval Station
    Treasure Island and determined it acceptable for transfer. Significant
    cleanup activities were undertaken at both Hunter's Point Naval
    Shipyard, as well as Alameda Naval Air Station, all of which are NPL
    sites, greatly improving the protection to human health and the
    environment.
        Two significant property sales remain, both planned to begin in
    fiscal year 2009: approximately 176 acres at the former Naval Training
    Center Orlando, FL; and about 1,450 acres at the former Naval Station
    Roosevelt Roads, PR. We will spend the last portions of the $1.1
    billion in land sale revenue in fiscal year 2009. Revenue projections
    for Orlando and Roosevelt Roads are unknown, but are expected to be
    well below that obtained from the sale of California property at El
    Toro and Tustin. In the absence of additional land sale revenue, we are
    evaluating the need to resume appropriated funds in future budgets.
    Prior BRAC Environmental Cleanup
        The DON has spent about $3.5 billion on environmental cleanup,
    environmental compliance, and program management costs at prior BRAC
    locations through fiscal year 2006. With our planned programs of $342
    million in fiscal year 2007 and $179 million in fiscal year 2008, we
    expect the environmental cost to complete for fiscal year 2009 and
    beyond at $1.168 billion. This is an increase of $725 million since
    last year. Nearly all of this cost increase is due to the recent
    discovery of substantially more low level radioactive waste at the
    former Hunters Point Naval Shipyard in San Francisco, CA and some at
    the former Naval Air Station Alameda, CA.
    Hunters Point Naval Shipyard
        Hunters Point Shipyard represents one of the most unique prior BRAC
    challenges. Maritime use of Hunters Point began in the 1850's. The Navy
    purchased the property in 1939, and began to expand the shipyard and
    build facilities. Between 1939 and 1974, Hunters Point was one of the
    Navy's largest industrial shipyards and was home to the Naval
    Radiological Defense Laboratory (NRDL). The Navy used Hunters Point to
    decontaminate ships that had been used during atomic weapons testing
    under Operation Crossroads. NRDL conducted radiological research in
    numerous buildings on the base.
        The Navy closed Hunters Point in 1974, and then leased most of the
    property in 1976 to a private ship repair company. The Environmental
    Protection Agency placed the shipyard on the National Priorities List
    in 1989. The Department of Defense listed the shipyard for closure as
    part of BRAC 1991.
        The Navy has conducted expansive records and data search to
    identify all areas of potential contamination, as required under
    CERCLA. This included conducting a Historic Radiological Assessment and
    extensive sampling to identify potential contamination from past
    radiological activities. There are 78 installation restoration sites
    and 93 radiological sites, and Navy has spent about $400 million on
    cleanup efforts. While the base does not present a risk to human
    health, the additional data has revealed a much greater degree of
    contamination than previously known. The previous cost to complete was
    $110 million. The revised fiscal year 2008 cost to complete is $670
    million, which excludes submerged lands. We will have an independent
    outside consultant review the situation and seek options that balance
    cleanup costs and health risks to humans and the environment. Land use
    controls must be part of the remedy for Hunters Point.
        The City of San Francisco recently proposed building a new football
    stadium using a portion of Hunters Point. Such a proposal represents a
    very compatible reuse that could be effectively integrated into the
    cleanup program. While this appears to be an excellent opportunity for
    combining cleanup with transfer and redevelopment of Hunters Point, it
    will require significant financial resources in the near term that are
    not now budgeted.
                            hurricane supplementals
        Following the experience learned from Hurricane Ivan in 2004, the
    Navy was prepared to respond quickly to the Hurricane Katrina and
    lesser storms in 2005 that affected eight major Navy bases. With
    Supplemental funds provided by Congress, we have made the necessary
    repairs to get our facilities back to full mission capability. The
    funding allowed us to begin the cleanup as the long term
    reconstruction. We have awarded 37 percent of the $493 million in
    military construction and family housing construction projects to date,
    with plans to award the balance by the end of this fiscal year.
                  meeting the construction execution challenge
        The ambitious programs I have outlined, encompassing military and
    family housing construction, continuing recovery efforts in the Gulf
    Coast, BRAC-related construction, and support for the Global War on
    Terror represent an execution effort of over $4 billion in fiscal year
    2008 compared to the fiscal year 2005 effort of $2.5 billion. The Grow
    the Force and barracks initiative by the Marine Corps, and the buildup
    on Guam initiative will add a sustained annual program of $2-3 billion
    through the FYDP.
        The Naval Facilities Engineering Command (NAVFACENGCOM) has, with
    the exception of fiscal year 2006, obligated between 92 percent to 98
    percent of all authorized and appropriated DoN construction projects
    (including congressional adds) in the first year funds became
    available. That obligation rate dropped to 74 percent in fiscal year
    2006, primarily due to pricing issues caused by material and labor
    shortages in the aftermath of hurricanes in 2004 and 2005.
        NAVFACENGCOM has substantial additional contracting capacity, and
    will seek to aggregate related projects while preserving competition
    and small business interests. For example, NAVFACENGCOM sponsored an
    industry conference in January 2007 to explore opportunities for cost
    and scheduling efficiencies. This is an execution challenge that
    NAVFACENGCOM can do.
                                   conclusion
        The Navy cannot meet the threats of tomorrow by simply maintaining
    today's readiness and capabilities of our physical plant. We must
    continue to transform and recapitalize for the future without
    jeopardizing our current readiness and the strides we have made--and
    continue to make--in managing our shore infrastructure. With our
    partners in industry, the acquisition community, and with the
    continuing support of the Congress, the Department of Navy will build
    and maintain installations that are properly sized, balanced--and
    priced for tomorrow.
        Thank you for the opportunity to testify before this committee. I
    look forward to a productive dialogue with the Congress on the
    Department of the Navy's shore infrastructure.

        Senator Reed. Thank you very much, Mr. Secretary. And,
    thank you General Flock and Admiral Handley.
        I have a series of questions. I think I'll run past my
    initial time, but I'll just take the first few minutes and then
    turn to my colleagues and expect, if not a second round, then
    I'll offer additional questions at the end.

                           CAMP LEMONIER IN DJIBOUTI

        First, Mr. Secretary, I want to focus a bit on Camp
    Lemonier in Djibouti. There was a request in the supplemental
    for several projects that's being debated right now between the
    House and Senate, but one of the perceptions that we had with
    respect to the request and supplemental is that it looked like
    permanent construction that you were looking at, not emergency
    supplemental construction. And, then I noticed in the fiscal
    year 2008 budget request, there is three additional projects at
    Camp Lemonier.
        The first question is, if this is a permanent
    establishment, why are we doing anything in the supplemental.
    Why aren't all requests in the 2008 budget or in regular budget
    orders, either you or the Admiral?
        Mr. Penn. Admiral.
        Admiral Handley. Thank you, Mr. Chairman. In addressing the
    MILCON requirement for Djibouti, we do look at Djibouti as an
    expeditionary base and we do not see it as, necessarily, an
    enduring base, but we do look at a few factors. One of those
    are the operational requirements and those are the facilities
    that you see in the 2008 budget and those are the taxi-way
    projects and the operational facilities that we have there.
        In the supplemental projects you see some utility projects,
    some water storage, some water production, electrical
    distribution, those projects are really based on a 5-year
    horizon that we looked at our best economic value by which we
    can provide that. Today, we ship water in at a very expensive
    rate. We think if we put in some water production and some
    water storage facilities, over a 5-year period, it turns out to
    be more economical for us.
        Senator Reed. Well, thank you, Admiral, but there's another
    factor, in terms of the operational aspects, and that is the
    new command that's being set up for Africa, with a new
    commander. And, I wonder if anyone has, from that emerging
    leadership level, commented about Djibouti or is that a place
    where we're going to locate this command or was there any
    discussion to date, Secretary?
        Mr. Penn. No, sir, they're looking at going farther south
    into South Africa for the location of the command.
        And, just to add to what the Admiral said, all of our
    facilities in Djibouti are austere, for living for instance, we
    have the compressed living units, which are basically trailers.
        Senator Reed. So, at this juncture, your perception is that
    that is not going to be an enduring base at all.
        Mr. Penn. Correct.
        Senator Reed. It's a temporary base.
        Mr. Penn. Yes, sir.
        Senator Reed. And, this probably tracks with the, sort of
    the arrangement you have with the Government of Djibouti, which
    is the lease term. As I understand it, it's a 5-year lease for
    $30 million a year and two 5-year options. Is that accurate?
    That's, if you don't have that data initially, just get back to
    us.
        Mr. Penn. Yes, sir, it is accurate.
        Senator Reed. And, the overall project cost to develop Camp
    Lemonier is in excess of $300 million. Is that a fair estimate
    at this juncture?
        Mr. Penn. I think that's a fair estimate, yes, sir.
        Senator Reed. And again, this is not an enduring base. This
    is something that has a planning life, what's, 5 years,
    Admiral?
        Admiral Handley. Let me clarify, Mr. Chairman. We do see an
    enduring mission in that area. We have taken it as an
    expeditionary base. For those reasons, you don't see projects
    like barracks and gymnasiums and others. And, we really have
    focused on operational facilities and some of those utilities,
    and essentially the backbone structure in order to operate out
    of there.
        Senator Reed. And, a final question that, with respect to
    the Navy and the Marine Corps and the Combatant Commanders. Has
    Djibouti been identified as a, if not a permanent enduring
    base, one that will, we want to, sort of, stake out for a long,
    long time in terms of not just operational and logistical, but
    strategic reasons? General Flock, is that, does the Marine
    Corps have a comment on that?
        General Flock. Mr. Senator, I think that you're going to
    see United States forces there for a while, as long as the GWOT
    continues.
        Senator Reed. Well, thank you.

                                      GUAM

        Let me turn to another request and that is, the Navy has,
    as we've noted, an 81 percent increase in MILCON, which is a
    very robust increase. Some of this, a lot of it is attributed
    to Grow-the-Force in the United States Marine Corps, which
    we're aware of. There's another $333 million for the move to
    Guam, which is a significant increase in the construction
    effort over the next 5 years for Guam. And, I'll ask the
    question I asked the Army, do you think in particular, with
    respect to Guam, that this huge infusion of construction monies
    can be adequately managed, both in terms of spending
    efficiently, and also not producing a huge increase in
    construction costs?
        Mr. Penn. Yes, sir. In fact, we have a, speaking of the
    management, the former IG is my program manager for this move
    and he's preparing for all sorts of investigations and so
    forth, so we are staying on top of that. It's going to be quite
    a growth for construction, as the Admiral can address, so we'll
    almost have to double our construction load for this.
        Admiral Handley. Mr. Chairman, if I could also expound, the
    projects that you see in the fiscal year 2008 submission are
    Navy requirements for existing forces that are there. It does a
    couple of things, but again, we're looking to focus on
    utilities backbones and infrastructure that are also for the
    current requirement, but we also are looking to the future and
    see a significant increase in construction in Guam and we're
    very concerned about the capacity of construction, so as a, if
    you'll call it a ramp on that construction, this is a very good
    transition to make sure that capacity stays there. But, each
    one of those projects provide a vital infrastructure or quality
    of life for those sailors that are on there today.
        Senator Reed. Thank you. Let me ask a final question before
    I yield to Senator Hutchison, but I do have additional
    questions later.

                                 WHIDBEY ISLAND

        Two projects were submitted in last year's Presidential
    budget request that should have been incremented projects. One
    project was an Air Force project at MacDill Air Force Base, the
    other was a Navy project at Whidbey Island, Washington State.
    Initial increments of these projects were funded in Congress's
    fiscal year 2007 joint funding resolution. The Air Force chose
    to request funding for the remaining increment in this budget,
    the fiscal year 2008 budget, however the Navy did not fund the
    remaining portion of the Whidbey Island. Can you tell us why
    you're not doing that, Mr. Secretary?
        Mr. Penn. Yes, sir. At the time of the PB08 lock, not all
    four congressional committees had completed their bills and we
    really thought that there was a possibility of the full funding
    at that time, so we made a mistake. We erred in judgment for
    that.
        Senator Reed. Will you correct the mistake?
        Mr. Penn. Yes, sir. We will start the construction and we
    will roll the balance of funding into the fiscal year 2009
    budget request. And, the hangar really needs to be fixed up
    that was being built about a thousand years ago it seems, and I
    was in that hangar myself; it needs the work.
        Senator Reed. We might follow-up, just to get some more
    details on this issue----
        Mr. Penn. We have a lot on it.
        Senator Reed [continuing]. But thank you, Mr. Secretary.
        And, at this point, let me recognize Senator Hutchison.
        Senator Hutchison. Thank you, Mr. Chairman.

                         FULLY FUNDING MILCON PROJECTS

        Admiral Handley, the Navy has been directed by OMB to
    request several large MILCON projects all at once, rather than
    in the increments, as has been done so many times in the past.
    Funding the large projects all at once ties up the money for
    the present years when it's going to take more than a year to
    build something. And, my question is, if you do make requests,
    such as has been suggested, can you execute those within a
    year?
        Admiral Handley. Ma'am, your question goes to execution,
    and we can clearly execute within a year when it goes down to
    project award. The outlays, obviously, will go over the entire
    construction period. And, we recognize the benefits of
    incrementation because it does allow you to phase the funding
    along with that. But, in this area we have followed OMB
    guidance and we have submitted fully-funded projects, which we
    have been required to do.

                            GUARD AND RESERVE MILCON

        Senator Hutchison. Mr. Penn, we've talked about Guard and
    Reserve with the Army and the marines. My question to you is
    the same. Do you feel that your Guard or Reserve funding is
    enough for your future needs, or do you feel that the Guard and
    Reserve is being, sort of, held static to try to pay for the
    increases that you're going to need because of the Marine Corps
    increase in end-strength?
        Mr. Penn. No, ma'am. I think the Department of Navy is
    doing extremely well. In fact, our Reserve MILCON in fiscal
    year 2008 is $20 million higher than enacted in 2007.
        Senator Hutchison. And, you think, you feel that is
    adequate for keeping your facilities up to----
        Mr. Penn. Yes ma'am, I do.
        Senator Hutchison [continuing]. Standard? All right. Thank
    you very much.
        Thank you, Mr. Chairman.
        Senator Reed. Senator Allard.

                            PRIVATIZATION OF HOUSING

        Senator Allard. Mr. Chairman, I just have a brief question
    regarding your housing in Fort Carson on the Army side in
    Colorado. We've gone to privatization of the housing, it's
    worked very good. I mean, the facilities have allowed the fort
    to move ahead quickly to meet its expansion needs as well as
    being nice accommodations as far as the soldiers are concerned.
        And, I noticed in your report, Mr. Secretary, that you had
    talked about your housing, at least, and I assume you have some
    privatization of housing, and kind of share with the committee
    how that is working as far as the Navy is concerned.
        Mr. Penn. Sir, it's working extremely well. We have it at
    major locations, major installations throughout the country
    and, I think that if you have a young person going into this
    housing, they will be part of our permanent force, the housing
    is so nice; Corian countertops, energy efficient appliances,
    and in some of the major areas, San Diego and so forth, we have
    a very high cost of living, as you know, and we're putting
    folks into those new quarters and they're phenomenal. Everyone
    loves them. They will wait a longer period of time just to move
    into the housing. We have privatized housing in all of our
    major locations in Hawaii, and it's just fantastic. I can't say
    enough about it.
        Senator Allard. That's all I have, Mr. Chairman. Thanks.
        Senator Reed. Well, thank you very much, Senator.

                             NEWPORT, RHODE ISLAND

        Let me resume with a few questions of particular concern to
    me because they involve Newport, Rhode Island. And, I'm glad
    Admiral Handley is here because he served as a facilities
    engineer at the Naval War College, so he has great expertise.
        Mr. Secretary, I understand that the Navy's preparing a
    master plan for the use and/or disposal of land at Newport,
    Rhode Island because of the changing missions for the base,
    particularly the old Newport Naval Hospital. Could you just
    confirm that this master planning is underway, give me an idea
    of when it might be complete, and also when the results will be
    given to my staff and myself?
        Mr. Penn. Yes, sir. The master plan is underway. CNIC,
    Commander Naval Installation Command is preparing the master
    plan. We expect preliminary results in June, the final plan in
    September. We are having discussions with the Coast Guard, our
    sister service, about the facilities there and we will share
    the master plan with your office when completed.

                                   NAVY PIERS

        Senator Reed. Thank you very much, Mr. Secretary. And,
    there's another issue here, we've talked about this previously,
    and that is the Navy piers. We understand there are two piers
    that are----
        Mr. Penn. Yes, sir.
        Senator Reed [continuing]. Need significant reconstruction,
    perhaps prohibitively expensive in terms of repairing those two
    piers, but there's a possibility of a smaller pier being
    constructed, significantly smaller, that could serve the needs
    of the Navy and perhaps the Coast Guard, also. And, I know
    you're looking into this, and I appreciate that. Could we have
    some type of discussion prior to, let's say the middle of June,
    with respect to possible options to go forward that, because as
    far as the long-term utility of the base, some pier arrangement
    is, I think, very important and essential. And, if you could
    plan to visit with us before the middle of June, that would be
    very good.
        Mr. Penn. Will do, sir.
        Senator Reed. Thank you very much.

                               BRIDGE REPLACEMENT

        And, a final point is that, we have a vehicular bridge,
    which I think Admiral Handley's crossed over many times. In
    2006 we appropriated $10.62 million to replace the bridge.
    Construction has not begun because the Navy insists it needs
    additional funding. The subcommittee attempted to add an
    additional $3.41 million in last year's bill, but because of
    the delay in passage of the bill, it never reached the
    President's desk for signature.
        We're still committed to doing this, but the bridge is
    deteriorating and it's causing operational constraints. One
    issue is just the passage of emergency fire equipment to get
    cross-post in an expeditious way and having been on the bridge
    many times, it's not the most convenient for emergency
    equipment.
        I think we've got to solve this problem and I would suggest
    that construction begin as soon as possible. We've put a
    significant down payment to do that, to get that done. So, when
    can you start construction, given the fact we've already
    appropriated $10 million? And, is there a possibility of
    reprogramming to make it happen faster? Admiral.
        Admiral Handley. Sir, I obviously share your concern on
    that bridge having both myself and then fiance at the time that
    I met in Newport, cross that bridge.
        Senator Reed. I think you've got a deal here.
        Admiral Handley. I was formerly also down at NAVFAC
    MIDLANT, responsible for the engineering and spoke several
    times with the designers responsible for finding solutions and
    we looked at a number of alternatives, including alternate
    locations to try and get it within the dollars. What it comes
    down to, is we need to have a complete and usable facility,
    obviously you can't get a bridge that goes three-quarters of
    the way across. And so, we will make sure that your staff has
    what the current estimate is as we go another year into this.
        But, we'll need to get the full amount in order to execute
    this. We don't currently have the ability to reprogram it; I
    think you and your staff know we have been faced with
    significant escalation in the MILCON program just from the cost
    of construction, cost of concrete, steel, and some of the
    impacts in the gulf coast with the volume of construction. So,
    we'll make sure that, that figure goes into your staff, but I
    think we're going to have to look at, when we get the
    additional funds for it, we'll be ready to execute a design-
    build contract to get that bridge replaced.
        We have looked at the current load capacity on it, and I
    think you know we've restricted the load to, I think, 12 tons
    and does not allow for fire engines to go across, which from a
    safety perspective is absolutely a necessity. But, we're
    committed to replacing that bridge, we just need to get the
    money right.
        Senator Reed. Well, I am equally committed to replacing the
    bridge for the one concern, you just reiterated, which is the
    safety services getting back and across in coverage.

                                   WRAMC BRAC

        Let me raise another, different question, more policy
    related. And, that is the discussion about the development at
    Bethesda, the Naval Hospital. BRAC has basically suggested that
    Walter Reed be closed, there's a great discussion now on
    whether that's going to be done, but also that the Navy will
    absorb part of this facility, Walter Reed, and will create a
    very significant concentration of medical headquarters.
        And, I'm just wondering, has the Navy thought about the
    additional barracks that are necessary to house enlisted
    personnel? Given the significant cost of living around
    Washington, I suspect young sailors and soldiers who are going
    to be stationed there won't have the wherewithal to go out on
    the economy easily. With the increase, we've been told that not
    only the footprint, but the size of operations that you're
    going to have significantly more personnel stationed there than
    you have now. And, then also, there are obviously, issues of
    environmental impacts.
        I think we've all had the privilege, I say that, kind of
    ironically, of going up Wisconsin Avenue or going down
    Wisconsin Avenue in the morning or the evening when NIH and
    Bethesda are going in and out--the facilities traffic will be
    much greater--I just, want to get a sense right now, Mr.
    Secretary, are you thinking beyond the broad outlines of taking
    some Walter Reed facilities, moving them over there within the
    BRAC.
        Mr. Penn. Yes, sir, we are thinking of that. As you know,
    the Navy responsibility for the move is primarily the NEPA,
    which consists of a $700,000 EIS analysis, and we do the design
    and construction, which is $497 million from Army BRAC funds.
    The Maryland delegation has requested that we do an expanded
    NEPA, which we are doing to look at the transportation, all the
    travel, the barracks, and so forth. In fact, we're looking at a
    back gate into Bethesda off of the beltway. We're trying to
    incorporate, encompass all thoughts. The barracks discussion is
    under way at this time. No decision has been reached yet, but
    I'm sure we'll do the right thing.
        Senator Reed. Well, it seems to me it's going to be a very
    expensive thing. We're talking about access directly to the
    beltway, perhaps even increased rail or rail stations to be
    more accommodating. And, I think the sooner we confront those
    costs and, perhaps not just in a specific Bethesda focus, but
    in the context of the Washington Metropolitan area and military
    medical facilities we'll be better off.
        Mr. Penn. Yes, sir. I concur.
        Senator Reed. I encourage you to do that.
        Senator Hutchison, do you have additional? Thank you very
    much, Senator Hutchison.
        Thank you, gentlemen, for your testimony and service to the
    Marine Corps and the Navy, and we look forward to working with
    you.
        Mr. Penn. Thank you very much, sir.

                             CONCLUSION OF HEARINGS

        Senator Reed. The hearing is recessed.
        [Whereupon, at 11:16 a.m., Thursday, April 19, the hearings
    were concluded, and the subcommittee was recessed, to reconvene
    subject to the call of the Chair.]

           LIST OF WITNESSES, COMMUNICATIONS, AND PREPARED STATEMENTS

                                  ----------
                                                                       Page
    Allard, Senator Wayne, U.S. Senator From Colorado:
        Prepared Statements of....................................... 5, 59
        Questions Submitted by.......................................   109
    Anderson, Hon. William C., Assistant Secretary of the Air Force,
      Installations, Environment and Logistics, Department of the Air
      Force, Department of Defense...................................    31
        Prepared Statement of........................................    32
        Questions Submitted to.......................................    46
    Aument, Ron, Deputy Under Secretary, Veterans Benefits
      Administration, Department of Veterans Affairs.................    53

    Bennett, Senator Robert F., U.S. Senator From Utah, Questions
      Submitted by.................................................112, 143
    Burford, Major General David P., Assistant to the Director, Army
      National Guard, Department of the Army, Department of Defense..   115
        Prepared Statement of........................................   118
    Byrd, Senator Robert C., U.S. Senator From West Virginia:
        Questions Submitted by..................................47, 98, 140
        Statement of.................................................    53

    Craig, Senator Larry, U.S. Senator From Idaho, Prepared Statement
      of.............................................................     5

    Disabled American Veterans, Prepared Statement...................    93

    Eastin, Hon. Keith E., Assistant Secretary of the Army,
      Installations and Environment, Department of the Army,
      Department of Defense..........................................   115
        Prepared Statement of........................................   118
        Statement of.................................................   117
    Ethredge, Brigadier General Charles D., Deputy to the Chief, Air
      Force Reserve, Department of the Air Force, Department of
      Defense........................................................    31
        Statement of.................................................    41

    Flock, Major General James F., Assistant Deputy Commandant for
      Installations and Logistics (Facilities), Department of the
      Navy, Department of Defense....................................   145
    Foss, Linda A., Letter From......................................    94

    Grone, Philip W., Deputy Under Secretary of Defense
      (Installations and Environment), Department of Defense.........     1
        Prepared Statement of........................................     9
        Statement of.................................................     8

    Handley, Rear Admiral Mark A., Navy, Director of Ashore
      Readiness, Department of the Navy, Department of Defense.......   145
    Henke, Robert J., Assistant Secretary for Management, Department
      of Veterans Affairs............................................    53
    Howard, Robert T., Assistant Secretary for Information and
      Technology, Department of Veterans Affairs.....................    53
    Hutchison, Senator Kay Bailey, U.S. Senator From Texas:
        Prepared Statements of....................................... 3, 56
        Questions Submitted by.....................................104, 142
        Statements of............................................2, 54, 116

    Ickes, Major General Charles V., Deputy Director, Air National
      Guard, Department of the Air Force, Department of Defense......    31
        Statement of.................................................    40

    Johnson, Senator Tim, U.S. Senator From South Dakota, Questions
      Submitted by...................................................46, 96
    Jonas, Hon. Tina W., Under Secretary of Defense, Department of
      Defense........................................................     1
        Prepared Statement of........................................     7

    Kussman, Michael J., M.D., Acting Under Secretary, Veterans
      Health Administration, Department of Veterans Affairs..........    53

    McConnell, Senator Mitch, U.S. Senator From Kentucky, Questions
      Submitted by...................................................   110
    Murray, Patty, U.S. Senator From Washington, Questions Submitted
      by.............................................................   102

    Nicholson, R. James, Secretary, Department of Veterans Affairs...    53
        Prepared Statement of........................................    64
        Statement of.................................................    60

    Penn, Hon. B.J., Assistant Secretary of the Navy, Installations
      and Environment, Department of the Navy, Department of Defense.   145
        Prepared Statement of........................................   147
    Poulter, Tom, Letter From........................................    93

    Reed, Senator Jack, U.S. Senator From Rhode Island:
        Opening Statement of.........................................    53
        Prepared Statement of........................................    58
        Questions Submitted by.......................................   102
        Statements of................................................1, 115
    Ryan, VADM Norbert R., Jr., Letter From..........................    95

    Sherlock, Brigadier General Richard J., Deputy Chief, Army
      Reserve, Department of the Army, Department of Defense.........   115
        Prepared Statement of........................................   118

    Tuerk, William F., Under Secretary for Memorial Affairs, National
      Cemetery Administration, Department of Veterans Affairs........    53

    Wilson, Lieutenant General Robert, Assistant Chief of Staff for
      Installation, United States Army, Department of Defense........   115
        Prepared Statement of........................................   118
        Statement of.................................................   127

                                 SUBJECT INDEX

                                  ----------

                             DEPARTMENT OF DEFENSE

                                                                       Page
    BRAC 2005 Cost Escallation.......................................    27
    Facility Funding Prioritization..................................    25
    Global War on Terror and Grow the Force..........................    19
    Guard and Reserve................................................    21
    Pinon Canyon, Colorado...........................................    22
    Regular Budget Request vs. Supplemental Budget Request...........    18
    U.S. Southern Command Headquarters...............................    29
    Walter Reed Army Medical Center..................................    19

                          Department of the Air Force

    Additional Committee Questions...................................    46
    Backfill for Retired Aircraft....................................    47
    Base Realignment and Closure.....................................    36
    Civil Engineer Transformation....................................    40
    Criteria for Worst Performing Aircraft...........................    47
    C-5 Fleet........................................................    47
    Demolition of Excess, Obsolete Facilities........................    38
    Develop and Care for Airmen and Their Families...................    34
    Ellsworth AFB--Funding:
        For Gate Upgrades............................................    47
        Mobility Center Upgrade......................................    46
    Energy...........................................................    39
    Enhanced Use Leasing.............................................    38
    Fighting and Winning the Global War on Terror....................    33
    Maintaining our Facilities and Operational Infrastructure........    38
    Planning and Design/Unspecified Minor Construction...............    39
    Recapitalization and Modernization...............................    35
    Utility Privatization............................................    39

                             Department of the Army

    Additional:
        Acreage......................................................   139
        Committee Questions..........................................   140
    Army:
        Family Housing:
            Construction (AFHC)......................................   123
            Operations (AFHO)........................................   123
        Modular Force................................................   119
        National Guard Milcon Budget Process.........................   135
    Base Realignment and Closure 2005 (BRAC).........................   124
        Fiscal Year 2008 Budget......................................   125
        Implementation Strategy......................................   125
    Dugway Proving Grounds...........................................   143
    Fiscal Year 2008:
        Budget Execution.............................................   128
        Military Construction, National Guard Budget.................   136
    Fort Hood........................................................   142
    GDPR/BRAC Execution and Timeline.................................   131
    Global Defense Posture Realignment (GDPR)........................   119
    Grow:
        The Army.....................................................   120
            Initiative...............................................   132
        The Force Stationing.........................................   129
    Infrastructure Quality...........................................   119
    Leveraging Resources.............................................   121
    MILCON Process...................................................   128
    Military Construction:
        Army (MCA)...................................................   121
            National Guard...........................................   122
            Reserve..................................................   123
        In Italy.....................................................   130
    National Guard:
        Facilities...................................................   133
        MILCON Budget................................................   136
    Operation and Maintenance........................................   126
    Pinon Canyon.....................................................   138
        Maneuver Site (PCMS).........................................   138
    Prior BRAC.......................................................   126
    Reserve Component Fiscal Year 2008 Program.......................   130
    Role of Governors:
        And Adjutants General........................................   136
        TAGs.........................................................   134
    SOUTHCOM.........................................................   142
        Headquarters.................................................   133
    Spring Valley Formerly Utilized Defense Site.....................   140
    Stationing.......................................................   118
    The Way Ahead....................................................   120
    Transforming Installations While the Army is at War..............   118

                             Department of the Navy

    BRAC 2005........................................................   158
    Bridge Replacement...............................................   165
    Buildup on Guam..................................................   155
    Camp Lemonier in Djibouti........................................   161
    Environment......................................................   156
    Facilities Management............................................   150
    Fully Funding MILCON Projects....................................   163
    Guam.............................................................   162
    Guard and Reserve MILCON.........................................   164
    Housing..........................................................   151
    Hurricane Supplementals..........................................   160
    Meeting the Construction Execution Challenge.....................   160
    Military Construction............................................   148
    Navy:
        Investment in Facilities.....................................   147
        Piers........................................................   165
    Newport, Rhode island............................................   165
    Prior BRAC Cleanup and Property Disposal.........................   158
    Privatization of Housing.........................................   164
    Whidbey Island...................................................   163
    WRAMC BRAC.......................................................   166

                         DEPARTMENT OF VETERANS AFFAIRS

    Additional Committee Questions...................................    95
    Capital Programs (Construction and Grants to States).............    72
    Ensuring a Seamless Transition From Active Military Service to
      Civilian Life..................................................    64
    General Operating Expenses.......................................    70
    Information Technology...........................................    72
    Medical:
        Care.........................................................    66
        Research.....................................................    69
    National Cemetery Administration.................................    71

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