[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

                               __________

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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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