    [Senate Hearing 110-644]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 110-644

       MILITARY CONSTRUCTION AND VETERANS AFFAIRS, AND RELATED AGENCIES
                      APPROPRIATIONS FOR FISCAL YEAR 2009

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

                                    HEARINGS

                                    before a

                              SUBCOMMITTEE OF THE

                COMMITTEE ON APPROPRIATIONS UNITED STATES SENATE

                           ONE HUNDRED TENTH CONGRESS

                                 SECOND SESSION

                                       on

                               H.R. 6599/S. 3301

      MAKING APPROPRIATIONS FOR MILITARY CONSTRUCTION, THE DEPARTMENT OF
       VETERANS AFFAIRS, AND RELATED AGENCIES FOR THE FISCAL YEAR ENDING
                   SEPTEMBER 30, 2009, 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
                                 Chad Schulken
                                  David Bonine
                           Dennis Balkham (Minority)
                             Ben Hammond (Minority)

                             Administrative Support

                                 Renan Snowden
                             Katie Batte (Minority)

                                C O N T E N T S

                                  ----------

                            Thursday, April 10, 2008

                                                                       Page

    Department of Veterans Affairs...................................     1

                            Thursday, April 24, 2008

    Department of Defense............................................    55
        Department of the Navy.......................................    97

                             Thursday, May 8, 2008

    Department of Defense:
        Department of the Army.......................................   123
        Department of the Air Force..................................   135

       MILITARY CONSTRUCTION AND VETERANS AFFAIRS, AND RELATED AGENCIES
                      APPROPRIATIONS FOR FISCAL YEAR 2009

                                  ----------

                            THURSDAY, APRIL 10, 2008

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 2:08 p.m., in room SD-124, Dirksen
    Senate Office Building, Hon. Tim Johnson (chairman) presiding.
        Present: Senators Johnson, Landrieu, Murray, Reed,
    Hutchison, Craig, and Allard.

                         DEPARTMENT OF VETERANS AFFAIRS

    STATEMENT OF HON. JAMES B. PEAKE, M.D., SECRETARY
    ACCOMPANIED BY:
            PAUL HUTTER, GENERAL COUNSEL
            ADMIRAL PAT DUNNE, ACTING ASSISTANT SECRETARY FOR BENEFITS
            DR. MIKE KUSSMAN, UNDER SECRETARY FOR HEALTH
            BOB HOWARD, ASSISTANT SECRETARY FOR INFORMATION TECHNOLOGY
            WILLIAM TUERK, UNDER SECRETARY FOR MEMORIAL AFFAIRS
            BOB HENKE, ASSISTANT SECRETARY FOR MANAGEMENT

                    opening statement of senator tim johnson

        Senator Johnson. The hearing will come to order. Mr.
    Secretary, thank you for appearing before the subcommittee to
    discuss the President's 2009 budget request for the Department
    of Veterans Affairs.
        We welcome you and your associates and we look forward to
    your testimony.
        Over the past several years, Congress has provided the VA
    with substantial increases over the president's annual budget
    requests to address some of the most pressing unmet needs
    facing our country's vets. Last year, Congress provided $3.7
    billion above the president's budget request for the
    department. The bulk of this funding was dedicated to the
    Veterans Health Administration to provide medical care to vets.
        However, we also provided needed increases for hospital
    construction, benefits claims processors, and grants to correct
    deficiencies at State vet homes and cemeteries.
        All of these increases were designed to put the VA on a
    glide path to providing not just high-quality services but
    high-quality services in a timely manner and in facilities
    befitting those who have served this country.
        This year, the president's discretionary budget request for
    the VA totals $44.8 billion. This is a $1.7 billion increase, a
    mere 3.8 percent over the 2008 enacted level.
        While I understand that record budget deficits and a
    teetering economy are going to require belt tightening, I am
    nevertheless deeply concerned that this level of funding may
    not be sufficient to continue to modernize the VA system while
    providing timely services.
        At a time when we should be increasing funding for research
    in complex combat-related injuries, the budget cuts funding for
    medical research. Additionally, the budget cuts over $788
    million for the construction accounts. This is coming at a time
    when there is already a backlog of construction projects on the
    books and when many new construction projects are pending
    before the VA.
        Mr. Secretary, I fear that we are seeing only the tip of
    the iceberg in terms of the challenges the VA will be facing in
    years to come. This subcommittee stands ready to help in every
    way we can to ensure that the VA meets those challenges.
        I look forward to hearing the testimony and working with
    you as the process moves forward.
        I will now turn to Senator Hutchison for her opening
    statement.

                   STATEMENT OF SENATOR KAY BAILEY HUTCHISON

        Senator Hutchison. Thank you very much, Mr. Chairman, and I
    want to say how much I appreciate, Secretary Peake, your first
    official visit as the Secretary. I also want to say that I have
    been so pleased to work so closely with you already in such a
    short time. I have worked with both you and Secretary Kussman
    before and you have been so attentive to the questions that
    we've asked. I appreciate it.
        Having been down to the Rio Grande Valley in Texas and
    looking at the facilities that are going to go in there, it has
    been a substantial improvement in veterans care, and I want to
    say that I wrote you a letter yesterday regarding the El Paso
    Veterans Center which, as you know, came in with the lowest
    grade given in the books of all the veterans facilities. You
    have already responded and I appreciate that you are now on top
    of that because not only do we have a number of veterans in El
    Paso, but we have a whole lot more who will be veterans in the
    future with the 30,000 plus-up that we're going to have at Fort
    Bliss.
        I thank you for that.
        I have just a couple of points and then I want to submit my
    full statement in the record.
        There are two areas where the VA has responded and which we
    must continue to assure that it does respond. The first is in
    the injuries that we are seeing in this war, the present new
    veterans, and that would be the posttraumatic stress syndrome
    and the mental health disorders. That program has now under our
    leadership grown to nearly $4 billion and you now have PTSD
    specialists or treatment teams in every VA medical center,
    including an increasing number of programs for women veterans.
        I'm very pleased with this priority. As you know, Senator
    Murray and I have just introduced a bill that would focus more
    on the unique women's needs in our veterans health care and you
    again, Secretary Peake, have already said that that will be a
    priority for you as well.
        And I think that the other area, of course, is the
    traumatic brain injury treatment research--that we are
    committed to, that the Veterans Administration is also doing a
    great job of promoting as well as the gulf war syndrome
    research, which is still a lingering need--and the treatment
    for the loss of limbs and the rehab that is associated with
    that.

                              PREPARED STATEMENTS

        So, we have a lot of priorities but I can't think of
    anything more important than doing it right and I know that the
    team that you are putting together is going to do that.
        So, I want to thank you. As the former chairman and present
    ranking member, I know that the Veterans Administration has
    grown a lot in the health care field and we will work with you
    to continue that growth.
        Thank you, Mr. Chairman.
        [The statements follow:]

               Prepared Statement of Senator Kay Bailey Hutchison

        Thank you, Mr. Chairman. I am pleased to welcome Secretary Peake
    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, health care, and our national
    cemeteries.
        Mr. Secretary, this subcommittee has always put our Nation's
    veterans first, and I can say with great assurance that we will do
    whatever it takes, in a bipartisan manner, to work with you to continue
    these efforts. From my experience as the recent Chair of this
    subcommittee and now as the ranking member, I respect the dedication
    and hard work of every member on this subcommittee and can assure you
    and our veterans of our support and cooperation.
        There has certainly been a lot of public discussion lately about
    the ability of the Department of Veterans Affairs to deliver on its
    promises to America's veterans. This budget requests $91 billion to
    provide health care and benefits to the men and women whom we have
    asked to secure and protect our Nation. This is $46 billion in
    mandatory benefits and $45 billion for discretionary spending, which
    includes $39 billion for medical programs.
        The Medical Services and Administration account request is $34.1
    billion, a 4.5 percent increase over the fiscal year 2008 appropriated
    level, and the Medical Facilities request is $4.7 billion, a 14 percent
    increase over the fiscal year 2008 level. I know this growth is
    necessary to keep pace with the increasing costs of medical care and
    the heightened strain on our medical facilities.
        As our brave men and women return from war, we want to be certain
    they receive the very best medical care our Nation can provide. I am
    pleased to see that your budget request keeps us on that track. I know
    it is difficult to anticipate every need, but this subcommittee will
    certainly make every effort to not only provide you the resources you
    need, but also to work with you so you can make adjustments as
    necessary to carry out your mission.
        As more of our soldiers return home with delayed Post Traumatic
    Stress Disorder (PTSD), I am pleased to see the emphasis your budget
    places on mental health and rehabilitation. The VA's mental health
    program has grown to nearly $4 billion, and the department now has PTSD
    specialists or treatment teams in every VA Medical Center, including an
    increasing number of programs for women veterans. This subcommittee
    will continue to work with you to respond to the mental health needs of
    our returning veterans.
        I am very appreciative of your recent visit to the Waco Center of
    Excellence in Mental Health. I am confident this facility is fast
    becoming a model for how consolidating personnel, training,
    collaboration and specialized resources produces world class care in
    psychiatric rehabilitation and treatment. 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. It is one of the many great
    success stories of the VA.
        I would also like to commend the VA for its research efforts. The
    VA has become the world's leader in traumatic brain injury treatment
    and research, and I am pleased with the collaborative efforts that have
    been put into investigating gulf war illness. I ask for your assurance
    that research into Gulf War illness will continue until we find a cure.
    We do not 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 effects. I am committed, as you are, to understanding
    and treating the service-connected illnesses of our gulf war veterans.
        As more of our soldiers return home with multiple traumatic
    injuries, they must receive the very best health care our Nation can
    provide. The VA manages the only nationwide network to care for
    polytrauma patients and has become the world's leader in traumatic
    brain injury rehabilitation. I am extremely pleased with the VA's
    decision to build its fifth Level I polytrauma center in San Antonio.
    The San Antonio facility will assist veterans in rehabilitation,
    transitional living, and prosthetics, and based on the VA's experiences
    at the other four facilities, I am confident we can leverage that
    knowledge to make this new facility the VA's flagship for our Nation's
    most seriously wounded veterans.
        New major construction projects like the one in San Antonio are
    vital to expand the VA's health infrastructure and handle its
    heightened workload. This has been an issue discussed many times on
    this subcommittee, but I note this year's major construction request is
    roughly half of last year's appropriation, despite the fact that there
    is more than $2.2 billion in ongoing projects that are not fully
    funded. I hope you will speak to this in your remarks, as I would like
    to hear more on the long-term capital plan of the VA.
        I would also like to thank you again for your visit to Harlingen,
    Texas and the South Texas Valley and for your support of the health
    care needs of the veterans there. I believe the current plan for health
    care in this area could be a great model for VA health care in other
    parts of the Nation. I am most interested in your thoughts and vision
    on this particular model of health care for the future, and I hope you
    will address it in your remarks.
        Mr. Secretary, I would also like to raise some concerns regarding
    the quality of veteran healthcare in El Paso, Texas. As you are aware,
    an internal Department of Veterans Affairs study on performance
    standards and healthcare delivery ranked the El Paso outpatient clinic
    well below the national average, and I find this most disturbing. I am
    committed to making sure that all of our veterans in Texas, and
    elsewhere in this country, receive the very best medical care this
    Nation can provide. I am very concerned about the veterans in El Paso
    experiencing unusually long waiting times for appointments,
    particularly specialty appointments, and having limited access to
    healthcare. I would like to know what the Department is doing to
    improve this situation and how I can be helpful to ensure that the
    veterans in the El Paso area receive the highest quality of healthcare.
        On the subject of Electronic Health Records, it is the goal of
    everyone here today to have veterans seamlessly transition from the DOD
    to the VA. As I have done many times, I would like to commend the VA
    for taking the first step in that process by setting the ``gold
    standard'' for its use of electronic health care records. I hope you
    are able to convince the Department of Defense to build on your proven
    successes and not slow this effort down. Our veterans and our Nation's
    health care professionals need this innovative technology as soon as
    possible. The VA and DOD must be able to transfer medical information
    electronically and in both directions. I witnessed the value of this
    project first hand after the devastating hurricanes that damaged so
    much of our gulf coast in 2005, and I am very proud to say that no
    veteran went untreated, a fabulous achievement for the VA and the
    electronic health records program. As this program continues to be
    developed, I hope you can tell me when it will be completed and what
    the total cost will be.
        Mr. Secretary, not only would a complete and interoperable
    electronic health care record system advance health care, it would
    speed up 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 rose to 183 days in 2007 instead of dropping to
    160 days, as initially estimated. We don't want our veterans waiting
    any longer than absolutely necessary to have their claims processed. We
    recognize that you have aggressively hired claims examiners over the
    past 2 years, but we are concerned that the IT management practices
    designed to help process claims are not what you or we would want them
    to be. This has become one of the major issues before this
    subcommittee. As we learned from the Dole-Shalala Commission it is
    worth looking at the entire claims processing methodology to see if a
    new business process reengineering study is warranted. I welcome your
    comments on this issue as well.
        Mr. Secretary, thank you for taking on this most challenging and
    critically important position of Secretary of the Department of
    Veterans Affairs and I am very confident that your accomplishments as a
    doctor and as a Surgeon General and your vision for health care in
    America make you the right person to lead our Nation's veterans today.
                                     ______

                   Prepared Statement of Senator Patty Murray

        Chairman Johnson and Senator Hutchison, thank you for holding
    today's hearing to examine the President's proposed VA Budget for
    fiscal year 2009.
        Senator Johnson, if I'm not mistaken, this is your first committee
    hearing as Chairman. Given your history of fighting for veterans, I
    know that you will do a fantastic job leading the committee.
        Secretary Peake, it is good to see you again. Nearly 2 months ago,
    you testified in front of the Senate Veterans' Affairs Committee, of
    which I am a member, on the President's proposed fiscal year 2009 VA
    budget.
        I told you then that many veterans--and many members of this
    committee--have placed a tremendous amount of faith in your ability to
    rise to the unprecedented challenges facing the VA today.
        At that time, you had only been on the job for a month and a half.
    You have now been on the job for nearly 4 months. In the short time
    that you have served as VA Secretary, I am sure that you have gained a
    better perspective on the many challenges confronting the VA system.
        That includes issues like:
      --the increasing number of Iraq and Afghanistan veterans suffering
            from TBI and PTSD,
      --the massive claims backlog,
      --VA infrastructure upgrade needs,
      --the growing number of women veterans using the system,
      --and the unique challenges facing rural veterans, which you saw
            firsthand when you visited Walla Walla--in my home State of
            Washington--in February.
        I believe that while that list is long, we can make progress.
        However, I was very troubled to read the Associated Press report on
    Sunday, which found that VA employees had racked up hundreds of
    thousands of dollars on government credit cards at casinos, hotels and
    high-end retailers.
        That report raises serious questions about spending oversight at
    the VA.
        So I look forward to hearing your assessment of what happened--and
    I hope that steps have already been taken to ensure that waste and
    abuse can't happen in the future.
        Mr. Secretary, you also know from our hearing in February that I
    have a number of problems with the President's proposed VA budget.
        First and foremost, I am concerned that it closes the VA's door to
    thousands of our Nation's veterans by proposing new fees and increased
    co-pays that will discourage veterans from accessing the VA.
        While the exact cost of these new taxes on veterans is not included
    in this year's budget, in previous budgets, the administration has
    estimated that these fees and co-pays would result in:
      --nearly 200,000 veterans leaving the system,
      --and more than 1 million veterans choosing not to enroll.
        I'm also extremely disappointed that this budget continues to bar
    Priority 8 veterans from enrolling in the VA healthcare system.
        I understand that you are conducting an in-depth review of this
    policy and I will have some questions for you about this issue later.
        Second, I am concerned that this budget won't meet the real needs
    of veterans once medical inflation and other factors are considered.
        The Independent Budget estimates that the true cost of VA medical
    care is actually $1.6 billion more than the President's request.
        Along the same line, I'm also troubled that the President is
    proposing an 8 percent cut for VA medical and prosthetic research.
        As we all know, one of the signature injuries of the war in Iraq is
    traumatic brain injury. But there is still a great deal we don't know
    about the condition.
        Cutting funding for research seems like the wrong thing to do as we
    attempt to better understand the injuries our veterans are
    experiencing.
        Third, I am incredibly concerned that the President's budget
    proposes cutting funding for major and minor construction by nearly 50
    percent--at a time when the list of needed repairs and expanded
    facilities is stacking up.
        The administration's own budget documents detail the numerous
    projects that won't receive funding this year, including projects in
    Seattle, American Lake and Walla Walla.
        I continue to be absolutely shocked that at a time when thousands
    of new veterans are entering the VA system with serious medical needs
    as a result of the wars in Iraq and Afghanistan, the administration is
    underestimating the cost of medical care, and it is cutting funding for
    construction and medical and prosthetic research.
        And at a time when older veterans are seeking care in record
    numbers, I am stunned that the President is proposing fees and co-pays
    that will shut the door to thousands of patients.
        We know all too well what happens when the VA gets shortchanged.
    The men and women who have served us end up paying the biggest price.
        Our veterans are our heroes, and they deserve the best we can give
    them. I believe we can do a lot better than this budget.
        So, Secretary Peake, I have a number of questions for you, and I'm
    looking forward to your answers.

                        STATEMENT OF SENATOR LARRY CRAIG

        Senator Johnson. Senator Craig.
        Senator Craig. Mr. Chairman, thank you, and it's great to
    see you back chairing the committee.
        Mr. Chairman and Ranking Member Hutchison, let me thank you
    for the hearing today, and Secretary Peake, it's good to see
    you again and thank you for being with us. It's also good to
    see Under Secretary Tuerk. Thank you for being here.
        As many of you know, he served with me as chief counsel on
    the Veterans Affairs Committee when I chaired that a few years
    ago and did an exemplary job there and under his current
    service, I am sure that is the same.
        I'm proud to be in the unique position to serve as an
    appropriator and an authorizer for veterans issues. I think all
    of us realize the challenges that our veterans are facing. It
    is difficult but it is also fluid. Modern day veterans are
    facing issues that a generation ago were either not recognized
    or simply not understood.
        During a time of war, it is essential that the Government
    not turn a blind eye on the needs of veterans, and I think this
    Congress has provided unprecedented increases for our veterans
    to try to meet these demands. We should be proud as a Congress
    of the work we are doing and the work we've done.
        But over the past few years, I've been making the case that
    a better VA doesn't simply mean a more expensive VA. I
    mentioned the unprecedented increases over the past 5 years,
    Mr. Chairman, 11 percent, 13 percent, 15 percent. Last year, I
    believe we topped a near 18 percent in increases for VA and
    there's a practical question to be asked.
        Is that sustainable? Is that a figure that this Congress
    and with all of our budget constraints can sustain? I fully
    expect the President's budget request of $93.7 billion to reach
    upwards of a $100 billion before Congress gets through with it
    and through with the VA MILCON bill, Mr. Chairman.
        This is an enormous figure and it begs the question as to
    whether the VA can effectively and efficiently spend that kind
    of money. Simple systems of bricks and mortar? Well, I have
    suggested that we adapt to current realities. In fact, I must
    say, Mr. Chairman, there were a group of veterans in my office
    yesterday from all parts of Idaho, young men and women who had
    just served in Iraq and Vietnam, and one of them held up a
    credit card and said why can't I have a VA health card that
    allows me to enter any health care facility in my State and
    gain my benefits through this system instead of having to go to
    a specific location 400 miles from where I live to a specific
    hospital?
        In other words, he was a contemporary man, a contemporary
    veteran talking about a contemporary idea, and while I know
    that is an anathema in the system of bricks and mortars and
    bureaucracies today, I suggested to him that he as a young
    veteran start a drumbeat with veterans service organizations
    and by the time he was as old as I am, he might realize the
    opportunity to change the system, to modernize it, and to make
    it so fluid and accessible to veterans in a way that, frankly,
    I think we have to go to in the future.
        Having said that, that doesn't happen tomorrow and it
    certainly isn't going to happen in this budget, but flexibility
    in the system is growing and it should grow. We're going to
    open a new community outpatient--a CBOC, I got it right, in
    Lewiston, and that CBOC is going to contract with the local
    hospital for some of the services they cannot provide and we
    feel must be provided for the veterans. So already that type of
    thing has started.
        Last, Mr. Chairman, I would like to mention a project that
    was started in my home State of Idaho by a former director of
    the Idaho Veterans Cemetery. It's called the Missing in America
    Project and I think it serves a very worthy case.
        Mr. Chairman, I'd like to introduce into the record a
    letter I received from that former director of the Idaho
    Veterans Cemetery regarding this special program and the letter
    contains the information and five specific points I'd like the
    VA to answer and get back to me on.

                           Letter From Richard Cesler

    Honorable Senator Larry Craig,
    U.S. Senator Washington, DC.
        Dear Senator: I appreciate your efforts concerning the ``Missing In
    America Project'' begun in Idaho in 2006 and resulting that year in the
    recovery of 21 veterans and one spouse from Funeral Homes. On November
    9, 2007, 13 additional veterans and three spouses were given honor and
    placed in the Idaho State Veterans Cemetery.
        Those abandoned veterans deserved that honorable placement in our
    State Veterans Cemetery.
        First, however, let me thank you personally for your actions to
    remove the 2 year limitation for plot allowance claim from the Federal
    Code by the enacting of Public Law 110-157, December 26, 2007. This is
    one step towards addressing the issues of recovering our veteran
    heroes.
        My estimation is that there are at least 1,000 or more still left
    for discovery in Idaho alone. There is no law established at this time
    to extract the information from those Funeral Homes that refuse to
    corporate or ignore repeated request to at least provide a list of
    their shelved cremains. This must happen to begin the process of
    identification.
        I would like to pose several questions for the Veterans Affairs
    Secretary Dr. Peake and his staff Directors and Under Secretaries:
      --Are you aware of the issue of abandoned veterans in Funeral Homes,
            coroner offices and other facilities around our nation.
      --What steps has the VA taken to address the issue.
      --Can the VA initiate authority to set up a new division/office to
            address this matter.
      --Is the VA aware that several States have taken action through their
            legal process to help in this recovery. Please be aware that
            this is a slow and painful way to resolve what must truly be a
            Veterans Affairs matter.
      --Will the VA take the steps necessary to begin discussion of this
            issue.
        Thank you for allowing me to honor your achievements with regards
    to veterans during your tenure as my State Senator.
                Best regards,
                                                        Richard Cesler.

        Senator Craig. Essentially, this program works to find
    unclaimed veterans remains in coordination with funeral homes
    across the State, to identify and reinter veterans in State VA
    cemeteries. This seems like the kind of effort the VA should be
    taking a lead on and I hope that you will respond to this
    challenge.
        Related to this subject, I am pleased that the language I
    worked out last year to assist States with the interment of
    unclaimed veterans was signed into law at the close of 2007.
    This law allows the VA to reimburse States, such as Idaho,
    which identify unclaimed remains and reinter them in the State
    VA cemeteries.
        I'm very pleased that I was able to work on this
    legislation, not only to help Idaho but now to help the Nation
    with this kind of an opportunity.
        So once again, gentlemen of the VA, thank you for being
    with us and, Mr. Chairman, thank you, look forward to working
    with you as we bring about the critical and necessary budget
    for our veterans.
        Senator Johnson. There is a vote called, Floor votes.
        Senator Craig. Just now?
        Senator Johnson. Just now. Senator Allard, would you like
    to make a brief statement?
        Senator Allard. Yes, I would like to, if I might, then be
    ready to line up with everybody else for the questioning
    period.
        You're going to continue with questions after our votes, I
    assume?
        Senator Johnson. Yes.
        Senator Allard. Okay. Very good.

                       STATEMENT OF SENATOR WAYNE ALLARD

        Senator Allard. Thank you, Mr. Chairman, for holding this
    important hearing today, and I appreciate all our witnesses
    appearing before the committee this afternoon.
        You know, it's a very difficult time in our Nation's
    history. We have currently in the United States more than 23
    million living veterans, 800,000 of which are veterans
    returning from Operation Enduring Freedom and Operation Iraqi
    Freedom operations.
        As this war continues, the United States will be faced with
    an increasing need for veteran services. Our men and women
    returning from war deserve our utmost care and attention as
    does all our veterans who have so admirably served in the past.
        We're dealing with a different kind of injury than what we
    had in conflicts in the past that we will have to continue to
    deal with throughout the life of the soldiers.
        While it's vitally important to provide our veterans with
    the best service possible, it's also important that we watch
    our Federal spending and look to reduce our Federal debt
    wherever possible in the coming years.
        That being said, it's important that we continue to
    prioritize programs and ensure efficient spending. I hope that
    we're able to answer the needs for all these men and women who
    have been called to serve their country and have done so
    courageously.
        Mr. Secretary, I look forward to discussing these issues
    further this afternoon, and I'd like to again reiterate my
    thanks for appearing in front of us today and looking forward
    to your testimony.
        Thank you, Mr. Chairman.
        Senator Johnson. Yes.
        Senator Hutchison. Mr. Chairman, were you going to recess
    the meeting until after all of the votes?
        Senator Johnson. After all the votes.
        Senator Hutchison. The five?
        Senator Johnson. After the five votes. Mr. Secretary, I
    apologize, but we need to put this hearing into a short recess.
        Senator Hutchison. Five votes, an hour and a half or so.
        Senator Johnson. Yes.
        Senator Hutchison. Sorry.
        Senator Johnson. This hearing will come to order. I
    apologize for the delay.

                          STATEMENT OF JAMES B. PEAKE

        Secretary Peake. With your permission, Mr. Chairman, I have
    a written statement that I would like to submit for the record.
        Senator Johnson. That will be fine.
        Secretary Peake. Mr. Chairman, ladies and gentlemen of the
    committee, I am honored to be here as the sixth Secretary of
    Veterans Affairs and now responsible for the care of our
    veterans. I appreciate the opportunity that the President has
    given to be able to make a difference.
        With me today to present the President's 2009 budget
    proposal for VA is the leadership of our Department. On my far
    left are General Counsel Paul Hutter, Admiral Pat Dunne, our
    Acting Assistant Secretary for Benefits, Dr. Mike Kussman,
    Brigadier General Mike Kussman, our Under Secretary for Health.
    On my far right, Bob Howard, our Assistant Secretary for
    Information Technology, our Under Secretary for Memorial
    Affairs Bill Tuerk, and Mr. Bob Henke, Assistant Secretary for
    Management.
        In my now nearly 3\1/2\ months at the VA, I have seen both
    the compassion and the professionalism of our employees. It is,
    frankly, just what I expected. The culture is one of deep
    respect for the men and women that we serve.
        This group at the table and the VA at large understands
    that America is at war and it is not business as usual. I
    appreciate the importance of and I look forward to working with
    this committee to build on VA's past successes but also to look
    to the future to ensure veterans continue to receive timely,
    accessible delivery of high-quality benefits and services
    earned through their sacrifice and service and that we meet the
    needs of each segment of our veterans population.
        The President's request totals nearly $93.7 billion, $46.4
    billion for entitlement programs and $47.2 billion for
    discretionary programs. The total request is $3.4 billion above
    the funding level for 2008 and that funding level is the one
    that includes a $3.7 billion plus-up from the emergency
    funding.
        This budget will allow the VA to address the areas critical
    to our mission; i.e., providing timely, accessible, high-
    quality health care to our highest-priority patients. We will
    advance our collaborative efforts with the Department of
    Defense to ensure the continued provision of worldclass health
    care and benefits to VA and DOD beneficiaries, including the
    progress toward development of secure interoperable electronic
    medical records systems.
        We will improve the timeliness and accuracy of our claims
    processing and ensure the burial needs of veterans and their
    eligible family members are met and maintain veteran cemeteries
    as national shrines.
        The young men and women in uniform who are returning from
    Iraq and Afghanistan and their families represent a new
    generation of veterans. Their transition and reintegration into
    our civilian society when they take off that uniform is a prime
    focus. Those seriously injured must be able to transition
    between the DOD and VA systems as they move on their journey of
    recovery.
        This budget funds our polytrauma centers and sustains the
    network of polytrauma care that Dr. Kussman and his team have
    put in place. It funds the Federal recovery coordinators
    envisioned by the report of the Dole-Shalala Commission and
    sustains the ongoing case management at all levels of our
    system.
        We know that our prostheses must keep pace with the newest
    generation of prostheses as our wounded warriors transition
    into the VA system and you will see a 10 percent increase in
    our budget for this.
        In 2009, we expect about 333,000 OEF/OIF veterans, a 14
    percent increase. With the potential of rising costs per
    patient, we have budgeted a 21 percent increase in our costs.
    That is nearly $1.3 billion to meet the needs of the OEF/OIF
    veterans that we expect will come to the VA for medical care.
        This budget will sustain our outreach activities that range
    from more than 799,000 letters to the greater than 205,000
    engagements that our vet center outreach personnel have made
    with returning National Guard and Reserve units as part of the
    Post Deployment Health Reassessment process. VBA alone
    conducted about 8,000 military briefings to nearly 300,000
    service men and women. This is also part of seamless
    transition.
        Now with the authority to provide care for 5 years of
    service-related issues, we can without bureaucracy offer the
    counseling, support and care that might be needed to avert or
    mitigate future problems. I highlight the outreach because we
    want these men and women to get those services.
        Mental health, from PTSD to depression to substance abuse,
    are issues that I know are of concern to you and of great
    concern to us. This budget proposes $3.9 billion for mental
    health across the board, a 9 percent increase from 2008. It
    will allow us to sustain an access standard that says if you
    show up for mental health, you will be screened in 24 hours and
    within 14 days have a full mental health evaluation, if needed.
    It will keep expanding mental health access according to a
    uniform mental health package. Trained mental health
    professionals in each CBOC, and there are 51 new CBOCs, by the
    way, planned for 2009, in addition to the 64 that are coming
    from 2008.
        Our vet centers will bring on yet an additional hundred
    OIF/OEF counselors and Dr. Kussman is prepared, as needed, to
    identify and add additional vet centers.
        We appreciate the issues of rural access in this arena and
    our vet centers are budgeted for 50 new vans to support remote
    access and this budget supports their operation as well as
    expanding telemental health to 25 locations.
        But this budget and our mission is more than just about
    these most recently returning service men and women. We should
    remember that 20 percent of VA patients, who in general are
    older and with more comorbid conditions than the general
    population have a mental health diagnosis.
        In fiscal year 2007, we saw 400,000 veterans of all eras
    with PTSD. This budget will sustain VA's internationally
    recognized network of more than 200 specialized programs for
    the treatment of posttraumatic stress disorder through our
    medical centers and clinics that serve all of our veterans.
        We have a unique responsibility to serve those who have
    served before. We still have one World War I veteran in our
    fold. World War II and Korea veterans are recipients of our
    geriatric care and our efforts are aimed at improving long-
    term, not institutional, care where in this budget we have
    increased funding by 28 percent will make a huge difference in
    their quality of life.
        We have currently 32,000 people served by home telehealth
    programs. This budget continues our work in this area and in
    the expansion of home-based primary care. Overall, the
    President's 2009 budget includes a total of $41.2 billion for
    VA medical care, an increase of $2.3 billion over the 2008
    level and more than twice the funding available at the
    beginning of the administration.
        With it, we will provide quality care, improve access, and
    expand special services to the 5,771,000 patients we expect to
    treat in 2009. That is 1.6 percent above our current 2008
    estimate.
        In April 2006, there were over 250,000 unique patients
    waiting more than 30 days for their desired appointment date.
    That's too many. As of January 1, 2008, we had reduced the
    waiting list to just over 69,000. At the end of March, it was
    down to 45,000. Our budget request for 2009 provides the
    resources to virtually eliminate the waiting list by the end of
    next year.
        Information technology crosscuts the entire Department and
    this budget provides more than $2.4 billion for this vital
    function, 19 percent above our 2008 budget, and reflects the
    realignment of all IT operations and functions under the
    management control of our chief information officer.
        A majority, $261 million, of that increase in IT funds will
    support VA's Medical Care Program, particularly VA's electronic
    health record system. I emphasize it here because it is so
    central to the care that we provide, touted in such
    publications as the book ``Best Care Anywhere'' as the key to
    our quality that is lauded worldwide.
        This IT budget also includes all the infrastructure
    support, such as hardware, software, communications systems for
    those 51 CBOCs that I mentioned, and there is $93 million for
    cyber security, continuing us on the road to being the gold
    standard.
        IT will also be key as we begin to move our claims model
    down the road to a paperless process. It is an investment we
    must make. This budget sustains the work in VetsNet that is
    giving us management data to really get after our claims
    processing and Virtual VA, our electronic data repository.
        In addition to IT, this budget sustains a 2-year effort to
    hire and train 3,100 new staff to achieve our 145-day goal for
    processing comp and pension claims in 2009. This is a 38-day
    improvement in processing timeliness from 2007 and a 24-day or
    14 percent reduction from this year.
        This is important because the volume of claims receipts is
    projected to reach 872,000 in 2009, a 51 percent increase since
    2000. The active, Reserve and National Guard returning from OIF
    and OEF have contributed to an increase in new claims and bring
    with them an increased number of issues with each claim.
        If you look at the graph there, you see the claims going up
    in the bottom line. The issues, the number of individual pieces
    of that claim, number of individual issues growing
    significantly at a faster rate, and what our VBA has been able
    to do, even with that, as you see in the middle, the average
    number of days to complete has remained relatively stable and
    we intend to bring that down with these new people.
        The President's 2009 budget includes seven legislative
    proposals totaling $42 million. One of these proposals expands
    legislative authority to cover payments for specialized
    residential care and rehab in VA-approved medical foster homes
    for OIF and OEF veterans with TBIs, as an example.
        We again bring to you a request for enrollment fees for
    those who can afford to pay and for a raise in the co-pays.
    Again this does not affect our VA budget as the funds would
    return to the Treasury, that's $5.2 billion over 10 years, but
    it does reflect the matter of equity for those veterans who
    have spent a full career in the service and under TRICARE do
    pay an annual enrollment fee for life care.
        The 442 million to support VA's Medical and Prosthetic
    Research Program, though less than what we have from the
    augmented 2008 budget, is actually 7.3 percent more than what
    we received in 2006 and about 7.5 percent more than what we
    actually asked for in 2007 and 2008.
        It does contain $252 million devoted to research projects
    focused specifically on veterans returning from service in
    Afghanistan and Iraq, including projects on TBI and polytrauma
    and spinal code injury and prosthetics and burn injury and pain
    and postdeployment mental health. In fact, we anticipate with
    Federal and other grants a full research portfolio of about
    $1.85 billion.
        This budget request includes just over a billion in capital
    funding for VA, with resources to continue five medical
    facility projects already underway in Denver, in Orlando, in
    Lee County, Florida, San Juan and St. Louis, and to begin three
    new medical facility projects at Bay Pines, Tampa, Palo Alto,
    two of which relate to the polytrauma rehabilitation centers
    and continue our priority for this specialized area of
    excellence.
        And finally, we will perform 111,000 interments in 2009, 11
    percent more than in 2007. The $181 million in this budget for
    the National Cemetery Administration is 71 percent above the
    resources available to the Department's Burial Program when the
    President took office.
        These resources will operationalize the six new national
    cemeteries that will open this year, providing a VA burial
    option to nearly 1 million previously unserved veteran families
    and will maintain our cemeteries as national shrines that will
    again earn the highest marks in the government or private
    sector for customer satisfaction.

                               PREPARED STATEMENT

        This budget of nearly $93.7 billion, nearly double from 7
    years ago, and with a health care component more than twice
    what it was 7 years ago, will allow us to make great progress
    in the care of all of our veterans and will keep us on this
    quality journey in health and the management of an
    extraordinary benefit and in ensuring the excellence of our
    final tribute to those who shall have borne the battle.
        It's an honor to be with you today and I look forward to
    your questions.
        [The statement follows:]

                      Prepared Statement of James B. Peake

        Mr. Chairman and members of the committee, good afternoon. I am
    happy to be here and I am deeply honored that the President has given
    me the opportunity to serve as Secretary of Veterans Affairs. I look
    forward to working with you to build on VA's past successes to ensure
    veterans continue to receive timely, accessible delivery of high-
    quality benefits and services earned through their sacrifice and
    service in defense of freedom.
        I am here today to present the President's 2009 budget proposal for
    VA. The request totals nearly $93.7 billion--$46.4 billion for
    entitlement programs and $47.2 billion for discretionary programs. The
    total request is $3.4 billion above the funding level for 2008. The
    President's ongoing commitment to those who have faithfully served this
    country in uniform is clearly demonstrated through this budget request
    for VA. Resources requested for discretionary programs in 2009 are more
    than double the funding level in effect when the President took office
    7 years ago.
        The President's request for 2009 will allow VA to achieve
    performance goals in four areas critical to the achievement of our
    mission:
      --provide timely, accessible, and high-quality health care to our
            highest priority patients--veterans returning from service in
            Operation Enduring Freedom and Operation Iraqi Freedom,
            veterans with service-connected disabilities, those with lower
            incomes, and veterans with special health care needs;
      --advance our collaborative efforts with the Department of Defense
            (DOD) to ensure the continued provision of world-class health
            care and benefits to VA and DOD beneficiaries, including
            progress towards the development of secure, interoperable
            electronic medical record systems;
      --improve the timeliness and accuracy of claims processing; and
      --ensure the burial needs of veterans and their eligible family
            members are met and maintain veterans' cemeteries as national
            shrines.

    ENSURING A SEAMLESS TRANSITION FROM ACTIVE MILITARY SERVICE TO CIVILIAN
                                      LIFE

        One of our highest priorities is to ensure that veterans returning
    from service in Operation Enduring Freedom and Operation Iraqi Freedom
    receive everything they need to make their transition back to civilian
    life as smooth and easy as possible. We will take all measures
    necessary to provide them with timely benefits and services, to give
    them complete information about the benefits they have earned through
    their courageous service, and to implement streamlined processes free
    of bureaucratic red tape.
        We will provide timely, accessible, and high-quality medical care
    for those who bear the permanent physical scars of war as well as
    compassionate care for veterans who suffer from less visible but
    equally serious and debilitating mental health issues, including
    traumatic brain injury (TBI) and post-traumatic stress disorder (PTSD).
    Our treatment of those with mental health conditions will include
    veterans' family members who play a critical role in the care and
    recovery of their loved ones. To help meet the increased need for
    mental health services, especially those returning from the Global War
    on Terror, VA is expanding its training program for psychologists. The
    best resource for VA recruitment of psychologists has been the
    Department's own training program. Nearly three-quarters of the
    psychologists hired in the last 2 years have had VA training.
        The President's top legislative priority for VA is to implement the
    recommendations of the President's Commission on Care for America's
    Returning Wounded Warriors (Dole-Shalala Commission). The Commission's
    report provides a powerful blueprint to move forward with ensuring that
    service men and women injured during the Global War on Terror continue
    to receive the health care services and benefits necessary to allow
    them to return to full and productive lives as quickly as possible. VA
    has initiated studies to determine appropriate payment levels for
    quality of life, transition assistance, and loss of earnings. The next
    step is for Congress to pass the President's legislation, which will
    modernize the disability compensation system. VA is working closely
    with officials from DOD on the recommendations of the Dole-Shalala
    Commission that do not require legislation to help ensure veterans
    achieve a smooth transition from active military service to civilian
    life.
        For example, VA and DOD signed an agreement in October 2007 to
    provide Federal recovery coordinators to ensure medical services and
    other benefits are provided to seriously-wounded, injured, and ill
    active duty service members and veterans. VA hired the first recovery
    coordinators, in coordination with DOD, and they are located at Walter
    Reed Army Medical Center, National Naval Medical Center, and Brooke
    Army Medical Center. They will coordinate services between VA and DOD
    and, if necessary, private-sector facilities, while serving as the
    ultimate resource for families with questions or concerns about VA,
    DOD, or other Federal benefits.
        In November 2007, VA and DOD began a pilot disability evaluation
    system for wounded warriors at the major medical facilities in the
    Washington, DC area--Washington VA Medical Center, Walter Reed Army
    Medical Center, National Naval Medical Center, and Malcolm Grow Medical
    Center. This initiative is designed to eliminate the duplicative and
    often confusing elements of the current disability processes of the two
    departments. Key features of the disability evaluation system pilot
    include one medical examination and a single disability rating
    determined by VA. The single disability examination is another
    improvement resulting from the recommendations of the Dole-Shalala
    Commission and is aimed at simplifying benefits, health care, and
    rehabilitation for injured service members and veterans.
        VA will continue to work with Congress, DOD, and other Federal
    agencies to aggressively move forward with implementing the Dole-
    Shalala Commission recommendations.

                                  MEDICAL CARE

        The President's 2009 request includes total budgetary resources of
    $41.2 billion for VA medical care, an increase of $2.3 billion over the
    2008 level and more than twice the funding available at the beginning
    of the Bush administration. Our total medical care request is comprised
    of funding for medical services ($34.08 billion), medical facilities
    ($4.66 billion), and resources from medical care collections ($2.47
    billion). We have included funds for medical administration as part of
    our request for medical services. Merging these two accounts will
    improve and simplify the execution of our budget and will make it
    easier for us to respond rapidly to unanticipated changes in the health
    care environment throughout the year. We appreciate Congress providing
    us with the authority to transfer funding between our medical care
    accounts. We will need to exercise this authority in 2008 to help
    ensure we operate a balanced medical program.
        Information technology (IT) plays a vital role in direct support of
    our medical care program and VA is requesting a significant increase in
    IT funding in 2009, much of which will help ensure we continue to
    provide timely, safe, and high-quality health care services. The most
    critical component of our medical IT program is the continued operation
    and improvement of our electronic health record system, a Presidential
    priority which has been recognized nationally for increasing
    productivity, quality, and patient safety. We must continue the
    progress we have made with DOD to develop secure, interoperable
    electronic medical record systems which is a critical recommendation in
    the Dole-Shalala Commission report. The availability of medical data to
    support the care of patients shared by VA and DOD will enhance our
    ability to provide world-class care to veterans and active duty
    members, including our wounded warriors returning from Afghanistan and
    Iraq.
    Workload
        During 2009, we expect to treat about 5,771,000 patients. This
    total is nearly 90,000 (or 1.6 percent) above the 2008 estimate. Our
    highest priority patients (those in priorities 1-6) will comprise 67
    percent of the total patient population in 2009, but they will account
    for 84 percent of our health care costs.
        We expect to treat about 333,000 veterans in 2009 who served in
    Operation Enduring Freedom and Operation Iraqi Freedom. This is an
    increase of 40,000 (or 14 percent) above the number of veterans from
    these two campaigns that we anticipate will come to VA for health care
    in 2008, and 128,000 (or 62 percent) more than the total in 2007.
    Funding for Major Health Care Initiatives
        In 2009 we are requesting nearly $1.3 billion to meet the needs of
    the 333,000 veterans with service in Operation Enduring Freedom and
    Operation Iraqi Freedom whom we expect will come to VA for medical
    care. This is an increase of $216 million (or 21 percent) over our
    resource needs to care for these veterans in 2008.
        The Department's resource request includes $3.9 billion in 2009 to
    continue our effort to improve access to mental health services across
    the country. This is an increase of $319 million, or 9 percent, above
    the 2008 level. These funds will help ensure VA continues to realize
    the aspirations of the President's New Freedom Commission Report, as
    embodied in VA's Mental Health Strategic Plan, to deliver exceptional,
    accessible mental health care. The Department will place particular
    emphasis on providing care to those suffering from PTSD as a result of
    their service in Operation Enduring Freedom and Operation Iraqi
    Freedom. An example of our firm commitment to provide the best
    treatment available to help veterans recover from these mental health
    conditions is our increased outreach to veterans of the Global War on
    Terror, as well as increased readjustment and PTSD services. Our
    strategy for improving access includes increasing mental health care
    staff and expanding our telemental health program that allows us to
    reach about 20,000 additional patients with mental health conditions
    each year.
        Our 2009 request includes $762 million for non-institutional long-
    term care services, an increase of $165 million, or 28 percent, over
    2008. By enhancing 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 health care, home-based primary care,
    purchased skilled home health care, homemaker/home health aide
    services, home respite and hospice care, and community residential
    care. During 2009 we will increase the number of patients receiving
    non-institutional long-term care, as measured by the average daily
    census, to about 61,000. This represents a 38 percent increase above
    the level we expect to reach in 2008.
        VA's medical care request includes nearly $1.5 billion to support
    the increasing workload associated with the purchase and repair of
    prosthetics and sensory aids to improve veterans' quality of life. This
    is $134 million, or 10 percent, above the funding level in 2008. This
    increase in resources for prosthetics and sensory aids will allow the
    Department to meet the needs of the growing number of injured veterans
    returning from combat in Afghanistan and Iraq.
        Requested funding for the Civilian Health and Medical Program of
    the VA (CHAMPVA) totals just over $1 billion in 2009, an increase of
    $145 million (or 17 percent) over the 2008 resource level. Claims paid
    for CHAMPVA benefits are expected to grow by 9 percent (from 7.0
    million to 7.6 million) between 2008 and 2009 and the cost of
    transaction fees required to process electronic claims is rising as
    well.
        Our budget request contains $83 million for facility activations.
    This is $13 million, or 19 percent, above the resource level for
    activations in 2008. As VA completes projects within our Capital Asset
    Realignment for Enhanced Services (CARES) program, we will need
    increased funding to purchase equipment and supplies for newly
    constructed and leased buildings.
    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 health care. VA has received numerous accolades from
    external organizations documenting the Department's leadership position
    in providing world-class health care to veterans. For example, our
    record of success in health care delivery is substantiated by the
    results of the December 2007 American Customer Satisfaction Index
    (ACSI) survey. Conducted by the National Quality Research Center at the
    University of Michigan Business School and the Federal Consulting
    Group, the ACSI survey found that customer satisfaction with VA's
    health care system was higher than the private sector for the eighth
    consecutive year. The data revealed that patients at VA medical centers
    recorded a satisfaction level of 83 out of a possible 100 points, or 6
    points higher than the rating for care provided by the private-sector
    health care industry.
        In December 2007 the Congressional Budget Office (CBO) issued a
    report highlighting the success of VA's health care system. In this
    report--The Health Care System for Veterans: An Interim Report--the CBO
    identified organizational restructuring and management systems, the use
    of performance measures to monitor key processes and health outcomes,
    and the application of health IT as three of the major driving forces
    leading to high-quality health care delivery in VA. In October 2007,
    the Institute of Medicine released a report--Treatment of PTSD: An
    Assessment of The Evidence--that states VA's use of exposure-based
    therapies for the treatment of PTSD is effective. This confirms the
    Department's own conclusions and bolsters our efforts to continue to
    effectively treat veterans of the Global War on Terror who are
    suffering from PTSD and other mental health conditions.
        These external acknowledgments of the superior quality of VA health
    care reinforce the Department's own findings. We use two primary
    measures of health care quality--clinical practice guidelines index and
    prevention index. These measures focus on the degree to which VA
    follows nationally recognized guidelines and standards of care that 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 86 percent in 2009, or a 1 percentage
    point rise over the level we expect to achieve in 2008. As an indicator
    aimed at primary prevention and early detection recommendations dealing
    with immunizations and screenings, the prevention index will also grow
    by 1 percentage point above the estimated 2008 level, reaching 89
    percent in 2009.
        To deal with a nationwide shortage of nurses and to improve the
    quality of care for veterans, VA has created a travel nurse corps to
    enable nurses to travel and work throughout the Department's health
    care system. Beginning as a 3-year pilot, the travel nurse corps is
    based at the Phoenix VA Health Care System and will place as many as 75
    nurses at VA medical centers around the country. Participating nurses
    may be temporarily assigned to distant medical centers and clinics to
    help nursing staffs that have vacancies, reduce wait times, or maintain
    high-skill services and procedures.
    Access to Care
        In April 2006 there were over 250,000 unique patients waiting more
    than 30 days for their desired appointment date for health care
    services. As of March 1, 2008, we had reduced the waiting list to fewer
    than 49,000. Our budget request for 2009 provides the resources
    necessary for the Department to virtually eliminate the waiting list by
    the end of next year. Improvements in access to health care will result
    in part from the opening of new community-based outpatient clinics
    during the next 2 years, bringing the total number to 846 by the end of
    2009.
        The Department will expand its telehealth program which is a
    critical component of VA's approach to improve access to health care
    for veterans living in rural and remote areas. Other strategies include
    increasing the number of community-based outpatient clinics and
    enhancing VA's participation in the National Rural Development
    Partnership that serves as a forum for identifying, discussing, and
    acting on issues affecting those residing in rural areas. In 2009 the
    Department's Office of Rural Health will conduct studies to evaluate
    VA's rural health programs and develop policies and additional programs
    to improve the delivery of health care to veterans living in rural and
    remote areas. In addition, VA created a Rural Health National Advisory
    Committee in February 2008 to advise the Department's senior leaders
    about health care issues affecting veterans in rural areas. The
    committee members will come from the Federal, State, and local sectors,
    as well as from academia and veterans service organizations.
    Medical Collections
        The Department expects to receive nearly $2.5 billion from medical
    collections in 2009, which is $126 million, or more than 5 percent,
    above our projected collections for 2008. About $8 of every $10 in
    additional collections will come from increased third-party insurance
    payments, with almost all of the remaining collections resulting from
    growing pharmacy workload. We will continue several initiatives to
    strengthen our collections processes, including expanded use of both
    the Consolidated Patient Account Center to increase collections and
    improve operational performance, and the Insurance Card Buffer system
    to improve third-party insurance verification. In addition, we will
    enhance the use of real-time outpatient pharmacy claims processing to
    facilitate faster receipt of pharmacy payments from insurers and will
    expand our campaign to increase the number of payers accepting
    electronic coordination of benefits claims.
    Legislative Proposals
        The President's 2009 budget includes seven legislative proposals
    totaling $42 million. One of these proposals expands legislative
    authority to cover payment of specialized residential care and
    rehabilitation in VA-approved medical foster homes for veterans of
    Operation Enduring Freedom and Operation Iraqi Freedom who suffer from
    TBI. Another proposal would reduce existing barriers to the early
    diagnosis of human immunodeficiency virus (HIV) infection by removing
    requirements for separate written informed consent for HIV testing
    among veterans. This change would ensure that patients treated by VA
    receive the same standard of HIV care that is recommended to non-VA
    patients.
        The 2009 budget also contains three legislative proposals which ask
    veterans with comparatively greater means and no compensable service-
    connected disabilities to assume a modest share of the cost of their
    health care. They are exactly the same as proposals submitted but not
    enacted in the 2008 budget. The first proposal would assess Priority 7
    and 8 veterans with an annual enrollment fee based on their family
    income:

    ------------------------------------------------------------------------
                                                                  Annual
                          Family Income                         Enrollement
                                                                    Fee
    ------------------------------------------------------------------------
    Under $50,000...........................................         ( \1\ )
    $50,0000-74,999.........................................            $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 equalize co-payment
    treatment for veterans regardless of whether or not they have
    insurance.
        These legislative proposals have been identified in VA's budget
    request for several years. The proposals are consistent with the
    priority system of health care established by Congress, a system which
    recognizes that priority consideration must be given to veterans with
    service-disabled conditions, those with lower incomes, and veterans
    with special health care needs.
        These proposals have no impact on the resources we are requesting
    for VA medical care as they do not reduce the discretionary medical
    care resources we are seeking. Our budget request includes the total
    funding needed for the Department to continue to provide veterans with
    timely, accessible, and high-quality medical services that set the
    national standard of excellence in the health care industry. Instead,
    these three provisions, if enacted, would generate an estimated $2.3
    billion in revenue from 2009 through 2013 that would be deposited into
    a mandatory account in the Treasury.
        One of our highest legislative priorities is to establish the
    position of Assistant Secretary for Acquisition, Logistics, and
    Construction. The person occupying this new position would serve as
    VA's Chief Acquisition Officer, a position required by the Services
    Acquisition Reform Act of 2003. This will elevate the importance of
    these critical functions to the level necessary to coordinate their
    policy direction across the Department's programs and other government
    agencies. An Assistant Secretary with focused policy responsibility for
    acquisition, logistics, and construction would ensure these vital
    activities receive the visibility they need at the highest levels of
    VA. Legislation to accomplish this was introduced in the Senate on
    October 4, 2007, as S. 2138. We would appreciate Congress' support of
    this legislation.

                                MEDICAL RESEARCH

        VA is requesting $442 million to support VA's medical and
    prosthetic research program. Our request will fund nearly 2,000 high-
    priority research projects to expand knowledge in areas critical to
    veterans' health care needs, most notably research in the areas of
    mental illness ($53 million), aging ($45 million), health services
    delivery improvement ($39 million), cancer ($37 million), and heart
    disease ($33 million).
        One of our highest priorities in 2009 will be to continue our
    aggressive research program aimed at improving the lives of veterans
    returning from service in Operation Enduring Freedom and Operation
    Iraqi Freedom. The President's budget request for VA contains $252
    million devoted to research projects focused specifically on veterans
    returning from service in Afghanistan and Iraq. This includes research
    in TBI and polytrauma, spinal cord injury, prosthetics, burn injury,
    pain, and post-deployment mental health. Our research agenda includes
    cooperative projects with DOD to enhance veterans' seamless transition
    from military treatment facilities to VA medical facilities,
    particularly in the treatment of veterans suffering from TBI.
        The President's request for research funding will help VA sustain
    its 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 have direct application to
    improved clinical care include the use of a neuromotor prosthesis to
    help replace or restore lost movement in paralyzed patients, continued
    development of an artificial retina for those who have lost vision due
    to retinal damage, use of an inexpensive generic drug (prazosin) to
    improve sleep and reduce trauma nightmares for veterans with PTSD, and
    advancements in identifying a new therapy to prevent or slow the
    progression of Alzheimer's disease.
        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 2009. Through a combination of VA resources and funds from
    outside sources, the total research budget in 2009 will be almost $1.85
    billion.

                           GENERAL OPERATING EXPENSES

        The Department's 2009 resource request for General Operating
    Expenses (GOE) is $1.7 billion. Within this total GOE funding request,
    nearly $1.4 billion is for the management of the following non-medical
    benefits administered by the Veterans Benefits Administration (VBA)--
    disability compensation; pensions; education; housing; vocational
    rehabilitation and employment; and insurance. The 2009 budget request
    provides VBA over two times the level of discretionary funding
    available when the President took office and underscores the priority
    this administration places on improving the timeliness and accuracy of
    claims processing. Our request for GOE funding also includes $328
    million to support General Administration activities.
    Compensation and Pensions Workload and Performance Management
        A major challenge in improving the delivery of compensation and
    pension benefits is the steady and sizeable increase in workload. The
    volume of claims receipts is projected to reach 872,000 in 2009--a 51
    percent increase since 2000.
        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 at
    least for the near term. 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 54 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, cardiovascular disease, orthopedic problems,
    and hearing loss. As these veterans age and their conditions worsen, VA
    experiences 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 increased by
    168 percent during the last 7 years, reaching over 58,500 claims in
    2007. Over one-quarter of all 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, TBI, environmental and infectious risks,
    complex combat-related injuries, and complications resulting from
    diabetes. Claims now take 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 and the Office of the General Counsel.
        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, the Department is now required to review the
    claims at more points in the adjudication process.
        VA will address its ever-growing workload challenges in several
    ways. For example, we will enhance our use of information technology
    tools to improve claims processing. In particular, our claims
    processors will have greater on-line access to DOD medical information
    as more categories of DOD's electronic records are made available
    through the Compensation and Pension Records Interchange project. We
    will also strengthen our investment in Virtual VA, which will reduce
    our reliance upon paper-based claims folders and enable accessing and
    transferring electronic images and data through a Web-based
    application. Virtual VA will also dramatically increase the security
    and privacy of veteran data. The Department will continue to move work
    among regional offices in order to maximize our resources and enhance
    our performance. Also, this year we will complete the consolidation of
    original pension claims processing to three pension maintenance centers
    which will relieve regional offices of their remaining pension work. In
    addition, we will further advance staff training and other efforts to
    improve the consistency and quality of claims processing across
    regional offices.
        Using resources available in 2008, we are aggressively hiring
    additional staff. By the beginning of 2009, we expect to complete a 2-
    year effort to hire about 3,100 new staff. This increase in staffing is
    the centerpiece of our strategy to achieve our 145-day goal for
    processing compensation and pension claims in 2009. This represents a
    38-day improvement (or 21 percent) in processing timeliness from 2007
    and a 24-day (or 14 percent) reduction in the amount of time required
    to process claims this year.
        In addition, we anticipate that our pending inventory of disability
    claims will fall to about 298,000 by the end of 2009, a reduction of
    more than 94,000 (or 24 percent) from the pending count at the close of
    2007. At the same time we are improving timeliness, we will also
    increase the accuracy of the compensation claims we adjudicate, from 88
    percent in 2007 to 92 percent in 2009.
    Education and Vocational Rehabilitation and Employment Performance
        With the resources provided in the President's 2009 budget request,
    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 13 days during the
    next 2 years, falling from 32 days in 2007 to 19 days in 2009. During
    this period, the average time it takes to process supplemental claims
    will improve from 13 days to just 10 days. These performance
    improvements will be achieved despite an increase in workload. The
    number of education claims we expect to receive will reach about
    1,668,000 in 2009, or 9 percent higher than last year. In addition, the
    rehabilitation rate for the vocational rehabilitation and employment
    program will climb to 76 percent in 2009, a gain of 3 percentage points
    over the 2007 performance level. The number of program participants is
    projected to rise to 91,700 in 2009, or 5 percent higher than the
    number of participants in 2007.
    Funding for Initiatives
        Our 2009 request includes $10.8 million for initiatives to improve
    performance and operational processes throughout VBA. Of this total,
    $8.7 million will be used for a comprehensive training package covering
    almost all of our benefits programs. A little over one-half of the
    resources for this training initiative will be devoted to compensation
    and pension staff while nearly one-quarter of the training funds will
    be for staff in the vocational rehabilitation and employment program.
    These training programs include extensive instruction for new employees
    as well as additional training to raise the skill level of existing
    staff. Our robust training program is a vital component of our ongoing
    effort to improve the quality and consistency of our claims processing
    decisions and will enable us to be more flexible and responsive to
    changing workload demands.

                        NATIONAL CEMETERY ADMINISTRATION

        Results from the December 2007 ACSI survey conducted by the
    National Quality Research Center at the University of Michigan and the
    Federal Consulting Group revealed that for the second consecutive time
    VA's national cemetery system received the highest rating in customer
    satisfaction for any Federal agency or private sector corporation
    surveyed. The Department's cemetery system earned a customer
    satisfaction rating of 95 out of a possible 100 points. These results
    highlight that VA's cemetery system is a model of excellence in
    providing timely, accessible, and high-quality services to veterans and
    their families.
        The President's 2009 budget request for VA includes $181 million in
    operations and maintenance funding for the National Cemetery
    Administration (NCA), which is 71 percent above the resources available
    to the Department's burial program when the President took office. The
    resources requested for 2009 will allow us to meet the growing workload
    at existing cemeteries by increasing staffing and funding for contract
    maintenance, supplies, and equipment, open new national cemeteries, and
    maintain our cemeteries as national shrines. We will perform 111,000
    interments in 2009, or 11 percent more than in 2007. The number of
    developed acres (7,990) that must be maintained in 2009 will be 8
    percent greater than in 2007.
        Our budget request includes an additional $5 million to continue
    daily operations and to begin interment operations at six new national
    cemeteries--Bakersfield, California; Birmingham, Alabama; Columbia-
    Greenville, South Carolina; Jacksonville, Florida; Sarasota, Florida;
    and southeastern Pennsylvania. Establishment of these six new national
    cemeteries is directed by the National Cemetery Expansion Act of 2003.
    We plan to open fast track burial sections at five of the six new
    cemeteries in late 2008 or early 2009, with the opening of the cemetery
    in southeastern Pennsylvania to follow in mid-2009.
        The President's resource request for VA provides $9.1 million in
    cemetery operations and maintenance funding to address gravesite
    renovations as well as headstone and marker realignment. When combined
    with another $7.5 million in minor construction, VA is requesting a
    total of $16.6 million in 2009 to improve the appearance of our
    national cemeteries which will help us maintain 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 88 percent in 2009, which is 4.6 percentage points above our
    performance level at the close of 2007. 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 2009, or
    4 percentage points higher than the level of performance we reached
    last year.

              CAPITAL PROGRAMS (CONSTRUCTION AND GRANTS TO STATES)

        The President's 2009 budget request includes just over $1 billion
    in capital funding for VA, $5 million of which will be derived from the
    sale of assets. Our request for appropriated funds includes $581.6
    million for major construction projects, $329.4 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 2009 request for construction funding for our health care
    programs is $750.0 million--$476.6 million for major construction and
    $273.4 million for minor construction. All of these resources will be
    devoted to continuation of the Capital Asset Realignment for Enhanced
    Services (CARES) program. CARES will renovate and modernize VA's health
    care infrastructure, provide greater access to high-quality care for
    more veterans, closer to where they live, and help resolve patient
    safety issues. Some of the construction funds in 2009 will be used to
    expand our polytrauma system of care for veterans and active duty
    personnel with lasting disabilities due to polytrauma and TBI. This
    system of care provides the highest quality of medical, rehabilitation,
    and support services.
        Within our request for major construction are resources to continue
    five medical facility projects already underway:
      --Denver, Colorado ($20.0 million)--replacement medical center near
            the University of Colorado Fitzsimons campus
      --Lee County, Florida ($111.4 million)--new building for an
            ambulatory surgery/outpatient diagnostic support center
      --Orlando, Florida ($120.0 million)--new medical center consisting of
            a hospital, medical clinic, nursing home, domiciliary, and full
            support services
      --San Juan, Puerto Rico ($64.4 million)--seismic corrections to the
            main hospital building
      --St. Louis, Missouri ($5.0 million)--medical facility improvements
            and cemetery expansion.
        Major construction funding is also provided to begin three new
    medical facility projects:
      --Bay Pines, Florida ($17.4 million)--inpatient and outpatient
            facility improvements
      --Tampa, Florida ($21.1 million)--polytrauma expansion and bed tower
            upgrades
      --Palo Alto, California ($38.3 million)--centers for ambulatory care
            and polytrauma rehabilitation center.
        In addition, we are moving forward with plans to develop a fifth
    Polytrauma Rehabilitation Center in San Antonio, Texas with the $66
    million in funding provided in the 2007 emergency supplemental.
        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. Further, minor construction resources will be used to
    comply with the energy efficiency and sustainability design
    requirements mandated by the President.
        We are requesting $130.0 million in construction funding to support
    the Department's burial program--$105.0 million for major construction
    and $25.0 million for minor construction. Within the funding we are
    requesting for major construction are resources for gravesite expansion
    and cemetery improvement projects at three national cemeteries--New
    York (Calverton, $29.0 million); Massachusetts ($20.5 million); and
    Puerto Rico ($33.9 million).
        VA is requesting $5 million for a new land acquisition line item in
    the major construction account. These funds will be used to purchase
    land as it becomes available in order to quickly take advantage of
    opportunities to ensure the continuation of a national cemetery
    presence in areas currently being served. All land purchased from this
    account will be contiguous to an existing national cemetery, within an
    existing service area, or in a location that will serve the same
    veteran population center.

                             INFORMATION TECHNOLOGY

        The President's 2009 budget provides more than $2.4 billion for the
    Department's IT program. This is $389 million, or 19 percent above our
    2008 budget, and reflects the realignment of all IT operations and
    functions under the management control of the Chief Information
    Officer.
        IT is critical to the timely, accessible delivery of high-quality
    benefits and services to veterans and their families. Our health care
    and benefits programs can only be successful when directly supported by
    a modern IT infrastructure and an aggressive program to develop
    improved IT systems that will meet new service delivery requirements.
    VA must modernize or replace existing systems that are no longer
    adequate in today's rapidly changing health care environment. It is
    vital that VA receives a significant infusion of new resources to
    implement the IT-related recommendations presented in the Dole-Shalala
    Commission report.
        Within VA's total IT request of more than $2.4 billion, 70 percent
    (or $1.7 billion) will be for IT investment (non-payroll) costs while
    the remaining 30 percent (or $729 million) will go for payroll and
    administrative requirements. Of the $389 million increase we are
    seeking for IT, 86 percent will be devoted to IT investment. The
    overwhelming majority ($271 million) of the IT investment funds will
    support VA's medical care program, particularly VA's electronic health
    record system.
        VA classifies its IT investment functions into two major
    categories--those that directly impact the delivery of benefits and
    services to veterans (i.e., veteran facing) and those that indirectly
    affect veterans through administrative and infrastructure support
    activities (i.e., internal facing). For 2009, our $1.7 billion request
    for IT investment is comprised of $1.3 billion in veteran facing
    activities and $418 million in internal facing IT functions. Within
    each of these two major categories, IT programs and initiatives are
    further differentiated between development functions and operations and
    maintenance activities.
        The increase in this budget of 94 full-time equivalent staff will
    provide enhanced support in two critical areas--information protection
    and IT asset management. Additional positions are requested for
    information security: testing and deploying security measures; IT
    oversight and compliance; and privacy, underscoring our commitment to
    the protection of veteran and employee information. The increase in IT
    asset management positions will bring expertise to focus on three
    primary functions--inventory management, materiel coordination, and
    property accountability.
        Our 2009 budget request contains $93 million in support of our
    cyber security program to continue our commitment to make VA the gold
    standard in data security within the Federal Government. We continue to
    take aggressive steps 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. We are progressing with the implementation of the Data
    Security--Assessment and Strengthening of Controls Program established
    in May 2006. This program was established to provide focus to all
    activities related to data security.
        As part of our continued operation and improvement of the
    Department's electronic health record system, VA is seeking $284
    million in 2009 for development and implementation of the Veterans
    Health Information Systems and Technology Architecture (HealtheVet-
    VistA) program. This includes a health data repository, a patient
    scheduling system, and a reengineered pharmacy application. HealtheVet-
    VistA will equip our health care providers with the modern tools they
    need to improve safety and quality of care for veterans. The
    standardized health information from this system can be easily shared
    between facilities, making patients' electronic health records
    available to all those providing health care to veterans.
        Until HealtheVet-VistA is operational, we need to maintain the
    VistA Legacy system. This system will remain operational as new
    applications are developed and implemented. This approach will mitigate
    transition and migration risks associated with the move to the new
    architecture. Our budget provides $99 million in 2009 for the VistA
    Legacy system.
        In support of our benefits programs, we are requesting $23.8
    million in 2009 for VETSNET. This will allow VA to complete the
    transition of compensation and pension payment processing off of the
    antiquated Benefits Delivery Network. This will enhance claims
    processing efficiency and accuracy, strengthen payment integrity and
    fraud prevention, and position VA to develop future claims processing
    efficiencies, such as our paperless claims processing strategy. To
    further our transition to paperless processing, we are seeking $17.4
    million in 2009 for Virtual VA which will reduce our reliance on paper-
    based claims folders through expanded use of electronic images and data
    that can be accessed and transferred electronically through a Web-based
    platform.
        We are requesting $42.5 million for the Financial and Logistics
    Integrated Technology Enterprise (FLITE) system. FLITE is being
    developed to address a long-standing internal control material weakness
    and will replace an outdated, non-compliant core accounting system that
    is no longer supported by industry. Our 2009 budget also includes $92.6
    million for human resource management application investments,
    including the Human Resources Information System which will replace our
    current human resources and payroll system.

                                    SUMMARY

        Our 2009 budget request of nearly $93.7 billion will provide the
    resources necessary for VA to:
      --provide timely, accessible, and high-quality health care to our
            highest priority patients--veterans returning from service in
            Operation Enduring Freedom and Operation Iraqi Freedom,
            veterans with service-connected disabilities, those with lower
            incomes, and veterans with special health care needs;
      --advance our collaborative efforts with DOD to ensure the continued
            provision of world-class health care and benefits to VA and DOD
            beneficiaries, including progress towards the development of
            secure, interoperable electronic medical record systems;
      --improve the timeliness and accuracy of claims processing; and
      --ensure the burial needs of veterans and their eligible family
            members are met and maintain veterans' cemeteries as national
            shrines.
        I look forward to working with the members of this committee to
    continue the Department's tradition of providing timely, accessible,
    and high-quality benefits and services to those who have helped defend
    and preserve liberty and freedom around the world.

        Senator Johnson. Thank you, Secretary Peake. Before we
    begin with questions, I suggest we limit the time to 7 minutes
    per member. After each member has had their opportunity to ask
    questions, we can determine whether a second round is
    necessary.
        Mr. Secretary, the VA's fiscal 2009 budget request proposes
    to cut $38 million for medical and prosthetic research. Your
    testimony states that the VA will allocate $53 million on
    research into mental illness. I will note that this is a $9.3
    million cut into this designated research area.
        Why is the VA cutting funding for research in the areas
    such as mental health at a time when more and more vets are
    being diagnosed with complex mental health disorders?
        Secretary Peake. Sir, we do appreciate the importance and
    emphasize the importance of continuing research in the area of
    mental health, particularly in PTSD, given the current
    situation.
        We have--we also work with DOD and bring in other grants to
    help support our efforts. We have mental health system centers
    that are in place to study PTSD and mental health issues of our
    service men and women. Some of that is actually supported also
    by Dr. Kussman's operational dollars, some $440 million,
    supports some of the people that actually work in those
    centers.
        So, I think with--given the fact that we have $252 million
    really designated for the specific OIF/OEF kind of related
    research and the ability to bring in other dollars will allow
    us to keep our emphasis on this very important problem.
        Senator Johnson. South Dakota is home to many Native
    Americans. What is the VA doing to address the needs of Native
    American veterans who live on reservations which can be
    hundreds of miles from a VA medical facility? How does this fit
    into the VA's plan to better serve those vets who live in rural
    areas?
        Secretary Peake. Sir, I think the point that some of our
    Native American veterans have been some of our under served
    veterans is real and as a matter of fact, in some of my first
    trips, we went to Walla Walla, Washington, and Billings,
    Montana, Helena, Montana, and some of the town hall meetings
    made some of these points.
        We have already put a video teleconferencing link in
    Montana to try to prove that point as an access point for
    people being able to understand their benefits. We have just
    recently established a Native American Council that we are
    putting together within the VA. It will actually be chaired by
    a Native American who is one of our hospital directors but to
    bring all the various pieces of the VA together around these
    issues.
        We are working on a new memorandum with the Indian Health
    Service to find better ways to do partnerships with them and so
    we also recognize the importance and this was highlighted when
    I spoke with one of the large Native American organizations
    recently, that we really have to be able to work with 57
    different sovereign nations and we absolutely understand that
    and are looking to ways to be able to do that more effectively.
        Senator Johnson. Mr. Secretary, the ban on new priority 8
    veterans that's been growing in the system has been in place
    for 5 years. This year, our vets with no service-connected
    disability and an annual salary as low as $28,430 would not be
    able to enroll in this system.
        Have you considered raising the threshold to allow more
    priority 8 vets in?
        Secretary Peake. Sir, we have. We are looking at what the
    impact of that might be, depending on different threshold
    levels. We want to make sure that we are able to meet the
    standards for those who are highest-priority patients, those
    with service-connected disabilities, those with special needs
    and those with truly significant income problems.
        It is more than just a money issue. It is the facilities
    issue and we have already talked about trying to work down our
    backlog so that we do have the capacity to meet the needs of
    those who are currently enrolled and are users and so we want
    to make sure that we can meet that priority first, but we are
    studying, just as you say, sir, looking at the level of it.
        Senator Johnson. What is the timeline on the decisionmaking
    process? How soon will we know one way or the other about
    Category 8?
        Secretary Peake. Well, sir, I don't know exactly when we
    will have that analysis back. I would expect to be able to get
    it back this year and be able to then work through what the
    right level would be, if indeed we would raise it.
        Senator Johnson. The construction of medical facilities is
    of paramount importance. The backlog of urgently needed
    projects is growing.
        Why has the VA not budgeted adequately to accelerate the
    pace of construction?
        Secretary Peake. Well, sir, we've--$1 billion for
    construction is not an insignificant amount, but we have also
    been working on using leases, finding other ways of partnership
    to try to help. We have also been putting money, you may
    notice, into the repair and maintenance to try to eat away at
    the backlog, to maintain some of our buildings that we do have.
        It is--and we are trying to understand the best way to
    partner with our, as an example, our academic partners, as we
    were talking about in Denver, to try to find ways to get the
    most bang for the buck.
        Senator Johnson. $1 billion is an impressive amount of
    money on the one hand, but on the other hand, when you have a
    war costing $10 to $12 billion a month, it is not so much.
        Senator Allard.
        Senator Allard. Thank you, Mr. Chairman. Again, I'd like to
    welcome the Secretary, and as we discussed just before we
    reconvened here, you had been to Denver this last week and so
    I'm curious to just hear what your impressions are, address the
    progress that you've seen, and how you would evaluate the
    project from what you saw on this weekend's briefing and tour
    there of the new site that was set up in Denver.
        Secretary Peake. Well, sir, on Sunday, I met with Senator
    Salazar and Congressman Pomodor and we walked and went around
    the site. I think I would just say that I'm enthused and
    optimistic about the opportunity to really be able to make a
    cornerstone of our integrated health care system for that
    region.
        We understand that it is not Denver standalone as we look
    to our planning and when you look at the synergy that we can
    have with that wonderful medical center that has developed out
    there on the old Fitzsimmons campus, I think we have tremendous
    opportunity.
        In fact, we will have a meeting Monday with the leadership.
    We had a meeting with the leadership also this last Monday in
    Denver and then we'll have a meeting in Washington with the
    leadership to really hammer out our road ahead. The site is
    coming together.
        There's an issue about the swimming pool, just a
    legislative correction that's going to be needed to be able to
    give us the site, and then the UPI building, that paper is
    coming to my desk this week. So, I think that will give us the
    area to do the work in, and then we need to figure exactly what
    work to do and we will be putting that together this next week.
        Senator Allard. Now there's been some speculation about
    some comments you made about redesign of the project. You're
    not talking about a total comprehensive redesign, are you?
    You're talking about looking at maybe adjustments to perhaps
    the current design to make sure that you have the most modern
    facility is the way I understand without a complete overhaul.
        I wonder if you could kind of clarify that.
        Secretary Peake. Well, sir, what I--I think what we are
    looking to do is ensure that we can meet the needs of the
    veterans with the light rail coming in to the site, to be able
    to make sure we have the right-sized ambulatory environment, to
    make sure that we have the best mix with the university of the
    bedded requirement and we will have a bedded requirement for
    some time.
        So, we may be able to leverage the university, give them
    the opportunity to build their bed tower earlier as we become a
    part of that, while we then optimize that particular location
    for the ambulatory piece. It is a redesign but it is--we're at
    a stage where that's not going to be a major--a slowdown or a
    setback. As a matter of fact, it probably will speed things up
    potentially.
        Senator Allard. I mean that's good news to see it speeding
    up, and I think there was concern that if the design was too
    radical, it would slow down the project, meaning we'd have to
    start all over.
        Secretary Peake. Working with the university, they could
    probably get it up quicker than we could.
        Senator Allard. Yes. Well, that's all good news. Now, in
    this year's budget, 2008 budget, there's a $168.3 million
    allocated for the project, and this year in the president's
    budget, they had $20 million was requested.
        Now do you believe the amount is sufficient to keep the
    project on track for a spring 2013 opening?
        Secretary Peake. Sir, I do. I think, part of it is when you
    get the money that you can spend. So, I think we've got enough
    money to be able to complete the acquisition of the land and
    get moving on the design. We will need more money obviously in
    the 2010 budget. This is a project that we're going to move
    along.
        Senator Allard. We actually have another partner in this
    thing. We've got the Veterans Administration, plus the CU
    Medical School, but then there's the city and county of Aurora.
        Secretary Peake. And I met with the mayor, Mayor Tauer, as
    well.
        Senator Allard. And they very much want to see things move
    forward.
        Secretary Peake. His vision with the light rail has been
    very--I mean that really adds to the value of our proposal.
        Senator Allard. Yes, I would think so, and we've encouraged
    him and we've pushed for the light rail in that particular part
    of the city in order to provide a number of transportation
    alternatives to the veterans that might want to go the CU
    Medical Center, including the veterans hospital that we
    anticipate having close by.
        Okay. Let me move on to the cemetery needs for the State of
    Colorado, and I think, Bill, Mr. Tuerk, you have been out to
    Colorado and kind of understand our needs. Logan Cemetery, I've
    been told, is--and we've discussed this, I think, with
    representatives from the--if not you, at least representatives
    from the Veterans Administration, that it's been projected that
    by 2020, it's going to be full.
        Mr. Tuerk. That's correct, Senator. I visited the cemetery
    last week to get a real lay of the land on the area that had
    not yet been buried out and we figure that space will be
    depleted in about 2020.
        Senator Allard. So you would agree with those estimates
    then, and I guess it's hard, you know. We have had a lot of
    retired veterans move into Colorado, particularly the Colorado
    Springs area. I think they've got the second highest population
    of retired--I shouldn't say veterans, retired military in the
    country and so there is concern about, you know, space,
    particularly in the Colorado Springs area because of the rapid
    growth of retirees.
        They get stationed there and then they decide they like
    Colorado and they want to come back there and retire, and I
    guess it's kind of hard to anticipate just what the retired
    military and veterans population would be in Colorado, but
    you're fairly comfortable with the 2020?
        Mr. Tuerk. Well, Senator, let me say this. I'm comfortable
    that 2020, give or take a year, maybe two, is a good solid
    estimate, based on current burial rates and current capacity at
    Fort Logan.
        I'm also confident that the cities of Denver and Colorado
    Springs will have an ongoing need for VA burial services after
    Fort Logan is filled, and this budget request specifically is
    designed to start addressing the need in cities like the
    Denver-Colorado Springs area by asking for a separate land
    acquisition line item, so that we may start now to plan for the
    transition from a cemetery like Fort Logan that's going to have
    to close. We can't expand Fort Logan, we're landlocked at this
    point.
        We're asking for that funding for the purpose of starting
    the transition to the successor cemetery to be built in
    anticipation of the closing of Fort Logan.
        Senator Allard. We're filling up, yes. Now, is that under
    the construction initiative? Is that the $5 million that's in
    the----
        Mr. Tuerk. That is correct, sir.
        Senator Allard. Okay. And so I wanted you to speak to that
    but you've already pretty well spoke to it.
        You're comfortable with that money there to meet your
    current needs as far as cemetery expansion? Do we need any more
    money there?
        Mr. Tuerk. Well, I don't know yet, Senator, to be honest,
    because we don't have the authority to go scout for land yet
    and I don't yet have a sense of what it might cost for the
    acres that we might need.
        It seems to me the ideal location for the successor
    cemetery would be somewhere between Denver and Colorado
    Springs, somewhere on the I-25 corridor, and I'm advised that
    land there is not going to be inexpensive, but I----
        Senator Allard. You've got that right.
        Mr. Tuerk [continuing]. Have not yet gotten a sense of the
    precise quantum of funding we'll need to acquire a property.
        Senator Allard. Yes, and I think the other thing, too, is
    water, if you get an area that's too rural there, water could
    be a problem. Even if you don't get one, the whole area in
    Douglas County, that would be the area between Colorado Springs
    and Denver, there is some water issues, and I think when you're
    shopping for land, I hope that you will pay attention to the
    utilities and availability of water because you plant a lot of
    grass and in a State like Colorado, it's semi-arid, you'll use
    a fair amount of water.
        So, I would just caution you to be careful about where you
    go. Just don't--you have to look at the value of the land
    obviously but you need to look at the water availability and
    utility availability.
        Mr. Tuerk. We'll be very conscious of the factors, Senator.
        Senator Allard. That's a rapidly growing county and at one
    time it was the fastest-growing county in the country and I
    think they're among the fastest now, but still there's a lot of
    growth in that area and I wouldn't expect that the land values
    in there would depreciate much, if at all.
        Mr. Tuerk. I understand.
        Senator Allard. More inclined to go up. So, the sooner you
    can get those purchases kind of nailed in, I think it would be
    better, frankly, because I don't see it being cheaper with
    time.
        Okay. I just wanted to make sure that on those two projects
    for Colorado, that we were moving forward. They're projects
    that I've worked hard with the previous Secretary and the
    Secretary before that Secretary and I support your mission. I
    think it's vital that we provide good care.
        I'm pleased with what has happened in Colorado where we had
    the closing of one VA hospital down on the Arkansas River there
    and we replaced it with clinics and so those clinics now with
    electronic records, I see where there was some opposition. The
    patients aren't much happier because they're much more
    available on a local basis and they don't like that and then
    they get referred to a now central facility in Denver. We want
    that to be a good facility. So, the electronic records, I was
    very pleased to see what you're doing in the electronic
    records. It brings accountability, brings some uniformity and
    helps you, I think, manage and set up goals and objectives to
    be able to measure results.
        So, I'm pleased with your direction in that and I commend
    you for it and I do think that at one time veterans were
    hesitant to go to veterans facilities. They're looking at it as
    top-of-the-line now and looking forward to getting medical
    services from the VA and I compliment you on your efforts.
        Senator Johnson. Senator Landrieu.
        Senator Landrieu. Thank you, Mr. Chairman. Thank you, Mr.
    Secretary, and I appreciate the testimony.
        I just have three questions. One of the major projects that
    we have ongoing in Louisiana, and I'm sure you are familiar
    with it, is the Veterans Hospital that we lost in the storms,
    it will be 3 years this August, and I want to first commend
    your staff there and the staff of the Veterans Administration
    for the excellent job they did in terms of evacuation and
    response.
        I don't think we lost a single patient. The team there
    performed magnificently, and given the stress on many of the
    other hospitals, public and private, the veterans team is
    really to be commended.
        In that regard, as you know, we have already appropriated
    $625 million for the replacement of the medical center. There
    have been some plans laid out, of course, and to rebuild that
    center. There's some questions--or hospital. There's some
    questions about its size and et cetera, but my question is do
    you--is the regional planning commission downtown site still
    the preferred location for the new medical center, to your
    knowledge?
        Secretary Peake. Yes, ma'am, and it's across the street
    from the LSU complex that they're looking at.
        We think we have made some breakthroughs here. There was
    some question about whether we're going to have to do a full
    environmental study or not and what our folks have been down--
    actually, Mr. Hutter has been down there working and we have--
    we're going to resign the MOU with the city to allow them to go
    ahead and get moving on the land acquisition.
        We think we have good support now from the historic people
    which was up in the air and we've got a game plan for 2012
    opportunity to open.
        Senator Landrieu. Well, I appreciate that because that was
    my next question.
        The chairman is well aware of the struggle that we are
    going through to try to streamline this recovery process and
    one of the maddening requirements because we're using the
    community development block grant as we thought, we've learned
    since then, but initially we thought might be the quickest way
    to get money to locals has become a difficult way because of
    the requirement of the national environmental protection
    review, not because that's a problem but because FEMA also
    requires it and so for every project being built in the gulf
    coast, it's not one environmental review but two.
        It's costly, it's expensive, it's a waste of time and
    money. So, I'm very pleased to see that you all have found a
    way legally through getting one that would be accepted by both
    Federal agencies, and is that what you're testifying to today,
    Mr. Hutter? Could I ask you?
        Mr. Hutter. Yes, Senator. We had a very successful meeting,
    two actually, in the last month with not only the city but the
    State and our Federal partners in this regard to move forward
    with one focused study with respect to the NEPA requirements
    and one focused study with respect to the historic preservation
    requirements, and we are--I'm glad to report that we are arm in
    arm with our partners in that regard.
        Senator Landrieu. And I just want to show the chairman.
    This is the study that's been completed. As you can see, it's
    quite lengthy. I have not read it but intend to skim it, but
    this is a study and I'd like to show the staff, it's already
    been done and to require another study that basically is going
    to do the same thing just because of the, you know, technical
    part of having to use community development block grant, I
    think, is unnecessary. So, I'm very happy that progress has
    been made.
        My second question relates actually to blind veterans. It's
    something that I've decided to try to concentrate on for a
    variety of reasons. I understand that there are 52,000 blind
    veterans enrolled in the VA Blind Services.
        Currently, according to DOD, there have been 1,169 combat
    eye trauma injuries evacuated from OIF and OEF operations and
    about 16 percent of all wounded evacuated have eye injuries,
    plus there's some other indications that we should focus on
    this.
        Last year or January, Secretary Nicholson announced plans
    for a 3-year commitment to this continuum of care and I'm sure,
    Mr. Secretary, you're aware of this.
        My question is, is the VA continuing this program? Can you
    provide an update about where we are in implementing this
    program to the visually impaired?
        Secretary Peake. Yes, ma'am. We are continuing the program.
    I was just out at Hines looking at our new center and it's
    really spectacular.
        In terms of the--we have the inpatient centers as well as
    the network that's reaching out to allow more ambulatory care
    which is kind of the direction we are going in generally to
    allow people to stay near their homes and be able to get the
    kind of care that they need.
        I think we'll reach out and get more people actually
    availing themselves of our services rather than having to make
    them come to just the inpatient centers, but we have those
    programs still.
        I was at our blind center at West Palm not too long ago and
    they had actually shortened down some of the time that people
    come and spend with us because it made it more available to
    them. So, I think we are--there have been about 58, I think,
    OIF/OEF folks admitted to our inpatient blind rehab programs,
    but as you point out, there are others with optical injuries
    that have the opportunity to come and see us. So, I think we
    are well prepared to continue that.
        Senator Landrieu. You know, and all injuries are, you know,
    heart-wrenching, but the plight sometimes of these individuals
    who are otherwise relatively healthy but have just lost their
    sight, with the right kind of training and opportunities, can
    re-engage in a very significant way, either, you know,
    operating within the military or continuing to, you know, be
    very, very productive, and I'm happy that you said that we're
    trying to be creative with using outpatient services because
    you can see here on the map that the inhouse places are really
    one in Puerto Rico, Birmingham, Alabama, Georgia, Connecticut.
        There are very few in the West, and although I don't
    represent a Western State, it does concern me that we really
    don't have enough sites in the Western part of the country, so
    we might want to think about that as we develop this network,
    and then most importantly and cost effectively, using some
    university-based centers that might be effective in sort of a
    partnership.
        The reason I raise this, and I'll finish with this in a
    moment, is I helped to create such a center not for veterans
    but for Louisiana citizens, a combination of the National
    Conference of Blind with the University Tech in one of our
    cities in North Louisiana and it's become a real sort of model
    for rehabilitation of individuals.
        So, I'm going to pursue that with you later, and my final
    question is, I was rereading the Critical Health Care Mission
    of Veterans Affairs, Mr. Chairman, and, of course, one of them
    is Health Care to Veterans, obviously, to educate and train
    health care professionals, to conduct medical research, but the
    fourth was interesting.
        It says, ``To serve as a back-up to DOD health system in
    war or in other emergencies and support to communities
    following domestic terrorist incidents and other major
    disasters.''
        And again based on the experience that Louisiana,
    Mississippi just went through with this, my question is, have
    you not requested a special line item to meet the directions of
    this fourth stated mission, and if so, where is it, and if not,
    what could we do to maybe plus up this particular aspect of
    your agency?
        Secretary Peake. We have an Assistant Secretary for
    Emergency Preparedness and Operations. If you really think
    about it and you look at Dr. Kussman's integrated health
    system, we are forward deployed all across this country and so
    the day to day operations of those extraordinary facilities, as
    you described the work that went on down there in Louisiana,
    and I agree with you about the credit that is due to them for
    that extraordinary effort, is available really everywhere.
        As a senior medical Army guy for Hurricane Andrew relief, I
    integrated with the VA Medical Center down there very early on
    because they had the infrastructure to support other things
    that we were bringing in. So, it is an extremely important part
    of our readiness, but I'm not sure that it is all captured in a
    single line item that is part of our day to day operations.
        Senator Landrieu. Well, I'd like to pursue that with you.
    My time is up, but I do see that--and I know you've got many
    missions to accomplish and this is not, you know, your primary,
    but I think an important secondary mission to be models of, you
    know, top-level evacuation and disaster response and it's a
    culture within, of course, the military that I think could be
    very helpful to local communities and so your budget, I know,
    is very tight, but as a member of the Homeland Security
    Committee and now a veteran of this recovery effort myself, I
    look forward to working with you all to see what I can do to be
    helpful to that part of your mission because I think it's
    critical in the event that we have another major disaster or a
    major terrorist attack, note that the one we had in New York
    was quite major, but something that really displaces millions
    of people.
        It gets to be very hairy, as you know, in what happens at
    home. So, I thank you very much and I'll wait for additional
    time for my second round of questions.
        Senator Johnson. Senator Reed, thank you so much for
    substituting for me during recent months.
        I now recognize Senator Reed.
        Senator Reed. Thanks very much, Mr. Chairman, and let me
    just tell you the most electrifying sight of recent days to me
    is to see you sitting in that chair and presiding. So, I want
    to thank you for being the chairman of this committee and for
    your participation. It was a pleasure to work with you, Mr.
    Chairman, as you were there, both inspirationally and very,
    very practically. Thank you so much, sir. Thank you.
        General Peake, good to see you onboard, sir. You are
    probably the best qualified person in a long time for the
    position, combat veteran of Vietnam, a general officer,
    somebody who understands your department's missions in every
    dimension. So, thank you very much. Gentlemen, thank you all,
    too, for what you do.
        We are all concerned and I think you will second this
    concern about the mental health of our soldiers. This is
    something that is becoming one of the signature injuries of
    these conflicts, both TBI and also mental health stress, and
    there are lots of reasons for it. We don't have to go into
    them.
        But we have a particular problem in the VA system, I
    believe, because these veterans are qualified to some health
    benefits, but their spouses and their children are also subject
    to these stresses. Regular forces, uniformed forces, their
    dependents are eligible for mental health care. They're on
    bases typically. They can go to the clinics. They can get the
    support. That's not the case too often with the veterans
    populations you're dealing with and just a for instance, our
    National Guard troops deploy from Rhode Island. They're in the
    middle of the fight.
        I just visited last January the 69th MP Company that are
    training the Iraqi Highway Patrol in Ramadi. Their families,
    their children, their spouses back home in Rhode Island, the
    only place they can go to in proximity is a VA system.
        So, the bottom line question is, what are you trying to do
    to reach that population? Do you need authority? Do you need
    resources? What can you tell us, sir?
        Secretary Peake. Sir, first of all, those soldiers that are
    in Iraq or Afghanistan or on active duty, their families do
    have TriCare. They do have that opportunity.
        The real issue for us, and you hit on something that we're
    concerned about, is when they come back, get separated and
    they're not medically retired, you know, the Reserve is back,
    they can avail themselves for 5 years of our services. They can
    come in and we can see them for service-connected issues, even
    without having to go through the adjudication process, and we
    can give counseling to their family members if it's part of the
    counseling of the soldier, of the veteran, in many cases a
    reservist, and what we can't do is write a prescription
    legally. You know, you can do it on the side and then you're
    medically legally liable yourself.
        So, there are some issues that we are interested in
    exploring about how to better take care of the family because,
    frankly, the health any more is not just about the veteran,
    it's veterancentric, so that means we need a healthy family
    around it, and we agree with you that's an issue that we need
    to deal with.
        Senator Reed. I would very much like to work with you, sir,
    because I think also you're right, because when I've talked--
    you have an excellent VA facility in Rhode Island. Mr. Ing is
    the director there and his staff, down to the men and women
    that clean the facility, are impressive and they've impressed
    me tremendously.
        But sometimes they have to stretch a bit to make it when it
    comes to the family because of counseling the soldier. That's
    something else I think we should work on with them. I want to
    work with you on this. This, I think, is a critical issue going
    forward.
        I'm going to change the subject slightly. You're
    undertaking a major development, the HealtheVet System
    Information Technology. Staff has gone through and they looked
    at your budget. It's not clear what the total cost is, not
    clear if you've got a scheduled deployment over time with costs
    associated, and so let me just say do you have a total cost
    figure? Do you have a deployment schedule, something that we
    can look at?
        Secretary Peake. Well, sir, we are working very vigorously
    right now to get that all laid out in a programmatic kind of
    Palm fashion here and, you know, we have got ballparks that,
    you know, we can--this is a very, very big project. It is one
    that is essential to our future.
        As Senator Allard said, this medical record piece is more
    than--it's really just more than the medical record. It's
    really the whole system of care integrated and it will be--I
    think it will take us right now till 2018 probably to get it
    all done with maybe somewhere in the $10 billion range to be
    able to really effect it and so we're going to need to be able
    to come back to you with really good plans and good costing
    because I know that's a lot of money, but it is a very critical
    thing for our future.
        Senator Reed. Thank you, General, very much, and this is a
    topic, I think, related to the first line of treating these
    current veterans.
        What we see and what you see, too, is that you've got a
    soldier or a marine or a sailor, Air Force man or woman who
    comes through the system, they're up at Walter Reed, they're
    discharged, they're separated, now they're back home, miles
    away from the VA center, you know. They've been briefed about
    their benefits, but for 18-20 or even 50-year-olds, they want
    to go home after an injury, the briefing is sort of not
    retained sometimes.
        What are you doing to reach out to identify all these
    reservists and Guardsmen, tracking them down, making sure in
    good faith that they know what they deserve and they're
    consciously saying I don't need it?
        Secretary Peake. Well, sir, you're right. You want to hit
    them at the teachable moment and that teachable moment may be
    after they've gone and so we do a number of things already. We
    reach out with letters and follow-up letters from both the
    Secretary and the VBA and those folks, but those sometimes wind
    up in File 13 just like lots of other things.
        We are working hard with our vet centers to do outreach so
    that there's somebody physically. We are hiring additional OIF/
    OEF people to be a part of that outreach so they have somebody
    they can recognize and hook up with.
        We are expanding our community-based outreach centers, 64
    this year, 51 in the 2009 budget, and then the other thing that
    we are doing which will start in May is to reach out
    telephonically. You know, if you think about it, sir, there are
    a 1.5 million people deployed, about 800,000 have separated,
    about half of those are active, half of them are Reserve and
    Guard. About 300,000 have already touched us at the VHA health
    system.
        When they come and they touch us, they get mental health
    screening, TBI screening, suicide kinds of screening, but
    that's 500,000 out there that haven't, and so we're going to be
    telephoning. We're setting up the call centers to try to make
    those contacts, to find out if they need case management. It's
    really refreshing the relationship that the VA has maybe at the
    time when it is the teachable moment. So, we are enabled now by
    the fact that for 5 years, we're able to see them because of
    the NDAA and we want to make sure that they're aware of that.
    So, we're reaching out in a marketing connection and actually
    teaching and I think that that will go a long way to achieving
    what you're talking about.
        Senator Reed. And I presume you'll be prepared to brief us
    periodically about how successful and you're going to develop
    the metrics to----
        Secretary Peake. Yes, sir.
        Senator Reed [continuing]. What percent of the population
    you're contacting?
        Secretary Peake. Exactly.
        Senator Reed. Thank you, sir. Just a final question because
    my time is rapidly expiring.
        You've mentioned that the extension from 2 to 5 years now
    for OEF/OIF veterans to come into the system virtually without
    any questions or qualifications, just come on in, that,
    together with the normal flow of patients.
        Have you recast your projections about the number of
    patients who come to see you and are they reflected in the
    budgets that you're looking at, not just this year but going
    out 5 years?
        Secretary Peake. Well, sir, it's reflected in the budget
    for this year. We're anticipating about 14 percent. We budgeted
    21 percent. So, yes, I think we've got it covered for this year
    and we will assess ourselves and as we build our budget for
    next year, we will then try to accommodate for what we believe
    is a reasonable number.
        Senator Reed. Thank you, sir. One of the things that--and
    again, because of Chairman Johnson's insistence and also the
    effort of Senator Hutchison, who is the ranking member, and the
    whole--on a bipartisan basis, we have significantly increased
    resources. I suspect we're going to do it again.
        My fear is 5 years from now, when the memories fade but the
    veterans are still here, we won't be as responsive. So, I would
    hope everything you do now points the way and lets us know that
    5 years from now we're going to need this much money and more
    and I will appreciate that.
        Secretary Peake. Thank you, sir. We do appreciate this
    window of interest.
        Senator Reed. Thank you very much, sir. Gentlemen, thank
    you.
        Senator Johnson. Mr. Secretary, thank you for appearing
    before the subcommittee today.
        We all look forward to working with you this year as the
    2009 budget process moves forward.

                         ADDITIONAL COMMITTEE QUESTIONS

        For the information of the subcommittee members, if you
    have questions for the record that you would like to submit,
    please do so by the close of business on April 15, 2008.
        [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 fiscal year 2008 Milcon/VA bill provided additional
    funding which allowed the VA to raise the travel reimbursement rate. On
    February 1, 2008, the VA increased the rate to 28.5 cents per mile from
    11 cents per mile. Additionally the bill directed the VA to study the
    feasibility of establishing a transportation pilot program aimed at
    improving access to medical facilities. Veterans residing in rural
    areas have voiced serious concern over the ability to get
    transportation to medical facilities.
        In South Dakota, the Rural Transit Authority is recognized by the
    Center for Medicare and Medicaid Services and the transit authority can
    bill them for travel expenses that they provide. In the VA's evaluation
    of transportation programs, have you considered implementing a similar
    program?
        Answer. While VA does not have all the details about the
    arrangement between the Rural Transit Authority and the Centers for
    Medicare and Medicaid Services, VA's existing statutory authority (38
    U.S.C. 111) does not authorize VA to recognize a transit entity to
    directly bill VA for services provided to veterans.
        VA currently has authority to provide a mileage reimbursement
    benefit or fund special mode transport (when medically indicated) to
    certain eligible veterans, including those living in rural areas, when
    traveling to VA or VA authorized health care. Mileage reimbursement
    provides an offset for a veteran's necessary travel expenses, while
    VA's special mode authority (e.g. ambulance, wheelchair van) allows
    arrangement of medically required travel at VA expense.
        In addition, most Veterans Health Administration (VHA) Veterans
    Integrated Service Networks (VISNs) have established travel networks
    that provide transportation to and from their facilities. While these
    do not guarantee transportation for all veterans, they have increased
    accessibility for many.
        The Disabled American Veterans (DAV) Veteran Service Organization
    also provides transportation for veterans, including rural veterans in
    some areas who do not otherwise have means of travel. This volunteer
    system has increased accessibility to veteran health care.
        Finally, in response to Executive Order 13330, Human Service
    Transportation, that established the Federal Interagency Transportation
    Coordinating Council on Access and Mobility (CCAM), VA has been working
    with the CCAM to enhance transportation services for veterans. In
    response to a 2006 policy issued by the CCAM on March 2, 2007, VHA
    issued Under Secretary for Health Information Letter (IL) 10-2007-006,
    Human Service Transportation Coordination. The purpose of the IL was to
    provide medical centers appropriate guidance for implementation of
    ``Human Transportation Services Coordination.''
        The IL strongly recommended that each facility take the following
    steps to comply with Executive Order 13330:
      --Evaluate transportation services offered within the facility.
      --Participate in any coordinated transportation planning processes in
            the local community.
      --Consider offering any excess capacity in VA transportation services
            to other Federal agencies under agreements that provide for
            reimbursement to VA.
      --Consider the feasibility of using any excess capacity in the
            transportation service of another Federal agency under an
            agreement that provides for reimbursement to that agency.
      --Consider informing veterans of the transportation services of other
            government agencies that might be available to them.
        Question. Also, given skyrocketing gasoline costs, does the VA plan
    to raise the beneficiary travel reimbursement rate higher in fiscal
    year 2009?
        Answer. In accordance with Title 38 USC Section 111(g)(1), which
    requires the Department to undertake an evaluation of mileage rates
    when GSA changes employee travel reimbursement rates, VA will continue
    to evaluate the reimbursement rate taking into consideration veterans
    travel costs, including the rising cost of gasoline, and resources
    available for delivery of health care benefits for all eligible
    veterans.
                                     ______

                Questions Submitted by Senator Daniel K. Inouye

        Question. The State of Hawaii and the U.S. territories in the
    Pacific region have a high number of veterans. This remote geographic
    location makes it difficult for these veterans to travel the great
    distances that may be required to treat their conditions or to address
    their needs. What kind of plan does VA have in mind to address the
    needs of veterans located in Hawaii and U.S. territories in the Pacific
    region in the next 5 years, and what is being done to implement some of
    these goals?
        Answer. The VA Pacific Island Health Care System (VAPIHCS) was
    established to meet the needs of veterans located in Hawaii and U.S.
    territories in the Pacific region. The VAPIHCS is an integrated
    healthcare system consisting of Community Based outpatient Clinics,
    outreach clinics and other programs tailored to provide quality
    healthcare to veterans in outlying and rural areas.
        VAPIHCS has six CBOCs located on Kauai, Maui, Hawaii (Hilo and
    Kona), Guam, and American Samoa. A VA physician visits the two VA
    outreach clinics located on Lanai monthly. Traveling providers also
    include affiliate faculty specialist physicians who travel to Hawaiian
    neighboring islands to provide face to face consultations. Veterans on
    Molokai have access to contracted providers for healthcare, including
    mental healthcare. VA expends approximately $3.5 million on veteran
    beneficiary travel related to their medical care referrals.
        We also employ a range of service delivery methods administered at
    the local level to address rural and highly rural veterans' access to
    care. For example, VA's Telehealth program provides a variety of
    medical specialty consultations and mental health services to all VA
    CBOCs. VA has also increased CBOCs, mail-order pharmacy, My-HealtheVet,
    and specialty programs--such as Home Based Primary Care and Mental
    Health Intensive Care Management programs.
        Question. Could you please provide an update regarding the VA's
    plan to achieve the Congressional mandate in section 1635 of the 2008
    National Defense Authorization Act for developing and implementing a
    fully interoperable and capable electronic health record system by
    September 2009?
        Answer. VA is working closely with DOD to implement the provisions
    of Section 1635 of the 2008 National Defense Authorization Act (NDAA).
    On April 29, 2008, VA and DOD delivered a joint NDAA Implementation
    plan to Congress (Implementation Plan). The Implementation Plan
    includes a detailed schedule for electronic health record (EHR)
    requirements development, acquisition and testing activities, and
    implementation milestones to achieve the interoperable EHR by September
    2009.
        The Implementation Plan provides that by September 2009, VA and DOD
    will have implemented improvements and enhancements to the currently
    planned and existing bidirectional exchange of viewable electronic
    health information. For example, VA and DOD providers already exchange
    electronic pharmacy data, allergy data, theater clinical data, provider
    notes, problem lists, and procedures. VA and DOD exchange also
    inpatient information, such as consultations and discharge summaries,
    where available, from key military treatment facilities such as
    Landstuhl Regional Medical Center, Pre- and Post-Deployment Health
    Assessments and Post-Deployment Health Reassessments. By the end of
    2008, VA and DOD will add the capability to share more data, such as
    vital signs, history information and questionnaires.
        To validate that existing and planned data exchanges are supporting
    essential capabilities, and to move beyond the planned 2008 data
    exchange, VA and DOD established a Joint Clinical Information Board
    (JCIB). The JCIB is a joint board of clinician experts and treating
    physicians that has been given the lead to define the requirements for
    the interoperable EHR. This work includes defining what information
    must be shared and how that information must be shared. The JCIB will
    close the gap between what we are now sharing in viewable format, and
    what we must share in viewable and other formats, such as computable to
    achieve full interoperable capability.
        The JCIB has already defined and validated EHR requirements, and
    those requirements are now in coordination for approval. Upon approval
    of the JCIB's EHR requirements and funding, the Departments plan to
    proceed with acquisition and development activities, testing, and
    implementation of interoperable electronic health record capabilities.
    VA is confident that it will achieve the target of fully interoperable
    electronic health record capability with DOD by September 2009.
        In addition to having formed the JCIB, on April 17, 2008, VA and
    DOD formed the Interagency Program Office (IPO) as required by the law.
    On that date, the Departments appointed an acting director from DOD and
    an acting deputy director from VA. The IPO will be responsible for
    coordinating management oversight of VA and DOD projects supporting an
    interoperable electronic health record.
        Question. How does VA intend to provide effective case management
    to the thousands of veterans who have sustained serious wounds since
    September 11, 2001, with six Federal Recovery Coordinators in place? At
    this time, it appears the resources dedicated to addressing this issue
    does not come close to meeting the need.
        Answer. VA has a fully integrated case management team approach to
    assist veterans with access to care and in applying for benefits. On
    October 30, 2007, VA and DOD signed a Memorandum of Understanding for
    the joint oversight of the Federal Recovery Coordination Program
    (FRCP). The FRCP provides an integrated patient centered approach to
    care management and access to severely wounded, ill and injured service
    members, families, and veterans.
        Federal Recovery Coordinators (FRC) provide oversight, management,
    and implement the Federal Individualized Recovery Plan (FIRP). The FIRP
    describes the objectives and resources necessary to assist the severely
    wounded, ill and injured service member, family, and veteran. This
    enables this group to achieve their life long needs and goals through
    the recovery, rehabilitation, and reintegration phases of care. In
    addition to the FRCP director and supervisor, VA has been actively
    recruiting for additional staff to join the FRCP. This effort has
    yielded the recruitment of an additional five FRC staff members who
    will be joining the program by mid June. The additional five FRCs will
    be located in the following locations: National Naval Medical Center,
    Balboa Naval Medical Center, Brooks Army Medical Center, Providence
    Rhode Island VA Medical Center, and Houston VA Medical Center.
    Unfortunately, due to personal reasons one existing FRC staff member
    located at Walter Reed Army Medical Center will be leaving the program
    the first of June; however, with the five additional staff members now
    joining the FRCP, a total staff of 10 FRCs will be in place by mid
    June.
        Phase One of the FRCP, scheduled to be completed in May 2008,
    targeted those catastrophically wounded, ill or injured arriving from
    theatre to the military treatment facility (MTF). Phase Two, which will
    begin immediately after phase one is completed, will expand FRCP's
    scope to include those service members and veterans who were discharged
    from an MTF prior to January 2008.
        In support of the second phase, as well as ongoing activities of
    the FRCP, VA is recruiting a registered nurse (RN) case reviewer. The
    RN case reviewer, located at VA Central Office, will conduct patient
    interviews to determine if the patient would benefit from an FRC or any
    other care management program.
        VA is also advertising for three additional FRC positions, beyond
    the initial 10 FRCs, who will be located at VA Medical Centers to
    assist patients who have already been through the MTF and are now in
    the community. These individuals will in turn become part of the FRC
    staff and should be in place by July 2008. Contact with these patients
    will be via televised (V-tel) meetings, phone and eventually secure
    email.
        While the FRCP provides for the severely wounded, ill and injured
    service members, families, and veterans, other VA employees are
    stationed at eleven of the major military treatment facilities
    receiving casualties from Iraq and Afghanistan. VA staff brief service
    members about VA benefits, including healthcare, disability
    compensation, vocational rehabilitation, and employment. VA registers
    these veterans into the VA system and begins the process for applying
    for service connected compensation benefits. Beginning these processes
    prior to discharge from military service helps eliminate any gaps in
    services or benefits. VA social workers and nurses facilitate the
    transfer of veterans from these major MTFs to the VA polytrauma center
    or medical center closest to their home of record, whichever is most
    appropriate for the specialized services their medical condition
    requires.
        Additionally, each VA Medical Center has an OEF/OIF case management
    team in place. Members of the team include: a program manager, clinical
    case managers, VBA Veterans Service Representatives, and Transition
    Patient Advocates (TPA). The program manager, who is either a nurse or
    social worker, has overall administrative and clinical responsibility
    for the team. The program manager must ensure that all OEF/OIF veterans
    are screened for case management. Severely injured OEF/OIF veterans are
    provided with a case manager and any other OEF/OIF veteran screened may
    be assigned a case manager upon request. Clinical case managers, who
    are either nurses or social workers, coordinate patient care activities
    and ensure that all VHA clinicians providing care to the patient are
    doing so in a cohesive and integrated manner. VBA team members assist
    veterans by educating them about VA benefits and assisting with the
    benefit application process. The TPAs serve as liaisons between the
    VISN, the VA Medical Centers, VBA and the patients. As the liaison, the
    TPA acts as a communicator, facilitator and problem solver.
                                     ______

                  Questions Submitted by Senator Patty Murray

        Question. Secretary Peake, earlier this week the AP reported on
    $2.6 billion in credit card charges by VA employees. Most of the
    charges were routine, but as you know, some charges raised red flags
    among government auditors. I understand that the VA Inspector General
    and the GAO are now investigating the charges, but this report raises
    serious questions about spending controls at the VA.
        Can you share with the committee what you know about the charges
    and what you are doing to prevent any similar problems from happening
    in the future?
        Answer. During November 2007, VA provided the Associated Press (AP)
    with a summary of the purchases made with VA purchase cards in response
    to their Freedom of Information Act request. The data included the
    amounts of the purchases and merchant/vendor information. It did not
    include specific details about each purchase. The AP reported VA
    employees spent specific amounts at certain merchants which were deemed
    questionable, but because the AP did not have specific purchase
    details, their implications of inappropriate use were not based on
    fact.
        What's noteworthy is the AP reported the purchase card data
    provided revealed ``few outward signs of questionable spending, with
    hundreds of purchases at prosthetic, orthopedic and other medical
    supply stores.''
        The AP reported purchases were made at casinos and luxury hotels in
    Las Vegas. VA, like many public and private groups, hosts conferences
    and meetings in Las Vegas due to the ease of participant travel, the
    capacity of the facilities, and the overall cost associated with
    hosting a large conference. Our investigation of the purchases made at
    these locations has shown that all charges were related to securing
    conference and meeting room space. The AP reported VA employees were
    using the card at casinos and luxury hotels and gave the false
    impression that VA employees used the card for personal use and or
    gain, which is not the case.
        The AP also reported the card was used at movie theaters. Once
    again, this report creates a false impression. The Veterans Health
    Administration participates in various forms of outpatient recreational
    therapy for patients. Hosting supervised outpatient therapy treatments
    in a controlled setting such as a movie theater is often used to
    provide patients with an opportunity to spend a small amount of time
    away from a hospital setting, socializing them in the community, as
    they progress in their care. Card usage for such events is appropriate.
    In this case, the AP reported erroneous conclusions about particular
    purchases and created the false impression of misconduct. However, if
    we do find evidence of fraud, waste, or abuse in a program such as
    this, appropriate disciplinary action will be taken.
        With respect to what VA is doing to prevent misuse of these cards,
    internal controls are established to prevent such misuse. VA has
    recently developed online training for cardholders and requires that
    cardholders and approving officials complete the training. This new
    training platform allows VA to monitor completion of training
    nationally and at the facility level via electronic reports, rather
    than file folders of training certificates. The platform is
    automatically set to require cardholders and approving officials to
    take refresher training every 2 years. Cardholders who do not complete
    the training within the allotted timeframe will have their cards
    cancelled.
        Also cardholders are required to reconcile their accounts monthly
    and each cardholder has an approving official, typically the
    supervisor. The approving official is responsible for reviewing the
    purchases made by the cardholder, approving them for payment and
    ensuring cardholders are held responsible for inappropriate charges.
        Since the release of the 2004 Inspector General and Government
    Accountability Office (GAO) reports, VA has focused on actively
    monitoring the more than 4 million annual purchase card transactions
    totaling over $2 billion. VA currently performs three audit processes
    in the review of purchase card transactions: a random audit of all
    transactions (selection criteria provides a 95 percent confidence
    level), a quarterly data mining audit, and on-site facility reviews.
        During the quarterly process, all transactions are tested against
    specific rules in an effort to identify fraud, waste, and abuse. The
    transactions identified in this process are sent to the facility
    responsible for the purchase. The facility is required to provide
    supporting documentation. Less than 0.0008 percent of total
    transactions show potential fraud, waste, or abuse. Of these, the
    majority involved compromised card numbers. These are reported
    immediately and active measures are put in place to prevent future
    reoccurrence.
        These audit processes also identify VA employee missteps. Annually
    about 0.002 percent of the 4 million transactions, or about $300,000 in
    purchases, involve procedural missteps usually where a cardholder
    exceeded his or her warrant or limit. These actions are ratified or
    corrected by local facility management, usually within 30 days. Since
    2004, the number of these procedural missteps has significantly
    decreased from 419 to 95.
        GAO conducted a forensic audit of government charge card programs
    at the request of the U.S. Senate Permanent Subcommittee on
    Investigations, Committee on Governmental Affairs. The auditors
    selected transactions randomly and used data mining techniques to
    identify questionable transactions. VA responded to multiple inquiries
    from December 2006 through April 2007.
        The majority of the transactions were for equipment purchases;
    however, transactions for hotels, training, services, and awards were
    also selected. In the recently released report from GAO pertaining to
    this audit, VA was not specifically identified as being noncompliant
    with current regulations. More than 50 transactions were researched
    with a total dollar value in excess of $300,000. In conclusion, the
    vast majority of VA employees have a demonstrative record of
    appropriate purchase card use.
        Question. Secretary Peake, at the Senate Veterans' Affairs
    Committee hearing in February, you said that you were willing to work
    with the committee to consider modifying the policy, adopted in 2003,
    that prohibits middle-income veterans, also known as Priority 8
    veterans, from enrolling in the VA health care system. I understand
    that the VA is now developing actuarial modeling and will soon be
    conducting in-depth analysis to assess the timeline needed to build
    capacity for such a policy change.
        Can you share with the committee where those studies stand and when
    they will be complete?
        Answer. VA recently conducted an in-depth study to evaluate the
    impacts on the VA health care system under current enrollment policy
    and full enrollment entitled Analysis of the Requirements to Reopen
    Enrollment of Priority 8 Veterans. The analysis identified significant
    challenges with regard to building capacity, both in terms of
    infrastructure and staffing, required to reopen enrollment to Priority
    8 veterans in the near term without severely disrupting VA's ability to
    provide timely, high quality care to currently eligible veterans.
        Demand for VA health care services is projected to continue to grow
    under the current enrollment policy due to new enrollment of veterans
    in Priorities 1 through 7 and the aging of the enrolled population.
    While VA expects to virtually eliminate waiting lists by the end of
    next year, we need to continue to build capacity to meet the projected
    growth in demand for health care from currently eligible veterans
        Currently, VA is developing actuarial estimates to assess the
    impact of reopening enrollment based on various income levels above the
    current VA Means Test and Geographic Means Test thresholds.
        Question. Secretary Peake, as you know, it is projected that the
    number of female veterans who use the VA system will double in the next
    5 years, assuming current enrollment rates stay the same, making female
    veterans one of the fastest growing subgroups of veterans. Last week, I
    introduced legislation with Senator Hutchison and other members to help
    the VA better care for the growing number of women veterans who will be
    entering the VA system.
        Have you had a chance to review our bill--the Women Veterans
    Healthcare Improvement Act of 2008 (S.2799)--and if so, do you have a
    position on it?
        Answer. VA provided its views on S.2799, the Women Veterans Health
    Care Improvement Act of 2008, in testimony before the Senate Committee
    on Veterans' Affairs on May 21, 2008. This testimony also provides
    information about current efforts by VA to respond to the needs of
    women veterans. An excerpt from the testimony is noted below. On May 2,
    VA began reaching out to nearly 570,000 combat veterans of the Global
    War on Terror to ensure they know about VA medical services and other
    benefits. The Department will reach out and touch every veteran of the
    war to let them know it is here for them. This is an example of VA
    acting proactively, and it enhances our ability to make women veterans
    aware of the many services and benefits VA provides.

        EXCERPT FROM MAY 21, 2008 SENATE COMMITTEE ON VETERANS' AFFAIRS

        In general, title I of S. 2799 would require VA to conduct a number
    of studies related to health care benefits for women veterans. Section
    101 would require VA, in collaboration with VHA's War-Related Injury
    and Illness Study Centers, to contract for an epidemiologic cohort
    (longitudinal) study on the health consequences of combat service of
    women veterans who served in OEF/OIF. The study would need to include
    information on their general, mental, and reproductive health and
    mortality and include the provision of physical examinations and
    diagnostic testing to a representative sample of the cohort.
        The bill would require VA to use a sufficiently large cohort of
    women veterans and require a minimum follow-up period of 10 years. The
    bill also would require VA to enter into arrangements with the
    Department of Defense (DOD) for purposes of carrying out this study.
    For its part, DOD would be required to provide VA with relevant health
    care data, including pre-deployment health and health risk assessments,
    and to provide VA access to the cohort while they are serving in the
    Armed Forces.
        We do not support section 101. It is not needed. A longitudinal
    study is already underway. In 2007, VA initiated its own 10-year study,
    the ``Longitudinal Epidemiologic Surveillance on the Mortality and
    Morbidity of OIF/OEF Veterans including Women Veterans.'' Several
    portions of the study mandated by section 101 are already incorporated
    into this project and planning for the actual conduct of the study is
    underway. The study has already been approved to include 12,000 women
    veterans. However, section 101 would require us to expand our study to
    include women active duty service members. We estimate the additional
    cost of including these individuals in the study sample to be $1
    million each year and $3 million over a 10-year period.
        Section 102 would require VA to conduct a comprehensive assessment
    of the barriers to the receipt of comprehensive VA health care faced by
    women veterans, particularly those experienced by veterans of OEF/OIF.
    The study would have to research the effects of 9 specified factors set
    forth in the bill that could prove to be barriers to access to care,
    such as the availability of child care and women veterans' perception
    of personal safety and comfort provided in VA facilities.
        Neither do we support section 102. It is not necessary because a
    similar comprehensive study is already underway. VA contracted for a
    ``National Survey of Women veterans in fiscal year 2007-2008,'' which
    is a structured survey based on a pilot survey conducted in VISN 21.
    This study is examining barriers to care (including access) and
    includes women veterans of all eras of service. Additionally, it
    includes women veterans who never used VA for their care and those who
    no longer continue to use VA for their health care needs. We estimate
    no additional costs for section 102 because VA's own comparable study
    is underway, with $975,000 in funding committed for fiscal years 2007
    and 2008.
        Section 103 would require VA to conduct, either directly or by
    contract, a comprehensive assessment of all VA programs intended to
    address the health of women veterans, including those related to PTSD,
    homelessness, substance abuse and mental health, and pregnancy care. As
    part of the study, the Secretary would have to determine whether the
    following programs are readily available and easily accessed by women
    veterans: health promotion programs, disease prevention programs,
    reproductive health programs, and such other programs the Secretary
    specifies. VA would also have to identify the frequency such services
    are provided; the demographics of the women veteran population seeking
    such services; the sites where the services are provided; and whether
    waiting lists, geographic distance, and other factors obstructed their
    receipt of any of these services.
        In response to the comprehensive assessment, section 103 would
    further require VA to develop a program to improve the provision of
    health care services to women veterans and to project their future
    health care needs. In so doing, VA would have to identify the services
    available under each program at each VA medical center and the
    projected resource and staffing requirements needed to meet the
    projected workload demands.
        Section 103 would require a very complex and costly study. While we
    maintain data on veteran populations receiving VA health care services
    that account for the types of clinical services offered by gender, VA's
    Strategic Health Care Group for Women Veterans already studies and uses
    available data and analyses to assess and project the needs of women
    veterans for the Under Secretary for Health. Furthermore, we lack
    current resources to carry out such a comprehensive study within the
    18-month time-frame. We would therefore have to contract for such a
    study with an entity having, among other things, significant expertise
    in evaluating large health care systems. This is not to say that
    further assessment is not needed. We recognize there may well be gaps
    in services for women veterans, especially given that VA designed its
    clinics and services based on data when women comprised a much smaller
    percentage of those serving in the Armed Forces. However, the study
    required by section 103 would unacceptably divert significant funding
    from direct medical care. Section 103 would have a cost of $4,354,000
    in fiscal year 2008.
        Section 104 would require VA to contract with the Institute of
    Medicine (IOM) for a study on the health consequences of women
    veterans' service in OEF/OIF. The study would need to include a review
    and analysis of the relevant scientific literature to ascertain
    environmental and occupational exposure experienced by women who served
    on active duty in OEF/OIF. It would then have to address whether any
    associations exist between those environmental and occupational
    exposures and the women veterans' general health, mental health, or
    reproductive health.
        We do not object to section 104. We suggest the language be
    modified to allow VA to decide which organization is best situated to
    carry out this study (taking into account the best contract bid). While
    IOM has done similar studies in the past, this provision would
    unnecessarily foreclose the possibility of using other organizations.
    We estimate the one-time cost of section 104 to be $1,250,000, which
    can be funded from existing resources.
        Section 201 would authorize VA to furnish care to a newborn child
    of a woman veteran who is receiving VA maternity care for up to 30 days
    after the birth of the child in a VA facility or a facility under
    contract for the delivery services. We can support this provision with
    modifications. As drafted, the provision is too broadly worded. We
    believe this section should be modified so that it applies only to
    cases where a covered newborn requires neonatal care services
    immediately after delivery. The bill language should also make clear
    that this authority would not extend to routine well-baby services.
        We are currently unable to estimate the costs associated with
    section 201 without data on projected health care workload demands and
    future utilization requirements. We have contracted for that data and
    we will forward the estimated costs for this section as soon as they
    are available.
        Section 202 would require the Secretary to establish a program for
    education, training, certification and continuing medical education for
    VA mental health professionals furnishing care and counseling services
    for military sexual trauma (MST). VA would also be required to
    determine the minimum qualifications necessary for mental health
    professionals certified under the program to provide evidence-based
    treatment. The provision would establish extremely detailed reporting
    requirements. VA would also have to establish education, training,
    certification, and staffing standards for VA health care facilities for
    full-time equivalent employees who are trained to provide MST services.
        We do not support the training-related requirements of section 202
    because they are duplicative of existing programs. In fiscal year 2007,
    VA funded a Military Sexual Trauma Support Team, whose mission is, in
    part, to enhance and expand MST-related training and education
    opportunities nationwide. VA also hosts an annual 4-day long training
    session for 30 clinicians in conjunction with the National Center for
    PTSD, which focuses on treatment of the after-effects of MST. VA also
    conducts training through monthly teleconferences that attract 130 to
    170 attendees each month. VA has recently unveiled the MST Resource
    Homepage, a webpage that serves as a clearinghouse for MST-related
    resources such as patient education materials, sample power point
    trainings, provider educational opportunities, reports of MST screening
    rates by facility, and descriptions of VA policies and benefits related
    to MST. It also hosts discussion forums for providers. In addition, VA
    primary care providers screen their veteran-patients, particularly
    recently returning veterans, for MST, using a screening tool developed
    by the Department. We are currently revising our training program to
    further underscore the importance of effective screening by primary
    care providers who provide clinical care for MST within primary care
    settings.
        We object strongly to the requirement for staffing standards.
    Staffing-related determinations must be made at the local level based
    on the identified needs of the facility's patient population, workload,
    staffing, and other capacity issues. Retaining this flexibility is
    essential to permit VA and individual facilities to respond to changing
    needs and available resources. Imposition of national staffing
    standards would be an utterly inefficient and ineffective way to manage
    a health care system that is dynamic and experiences continual changes
    in workload, utilization rates, etc.
        Section 203 would require the Secretary to establish, through the
    National Center for PTSD, a similar education, training, and
    certification program for health care professionals providing evidence-
    based treatment of PTSD and other co-morbid conditions associated with
    MST to women veterans. It would require VA to provide these
    professionals with continuing medical education, regular competency
    evaluations, and mentoring.
        VA does not support section 203 because it is duplicative of, and
    would divert resources from, activities already underway by the
    Department. VA is strongly committed to making state-of-the-art,
    evidence-based psychological treatments widely available to veterans
    and this is a key component of VA's Mental Health Strategic Plan. We
    are currently working to disseminate evidence-based psychotherapies for
    a variety of mental health conditions throughout our health care
    system. There are also two programs underway to provide clinical
    training to VA mental health staff in the delivery of certain therapies
    shown to be effective for PTSD, which are also recommended in the VA/
    DOD Clinical Practice Guidelines for PTSD. Each training program
    includes a component to train the professional who will train others in
    this area, to promote wider dissemination and sustainability over time.
        Section 204 would require the Secretary, commencing not later than
    6 months after the date of enactment, to carry out a 2-year pilot
    program, at no fewer than three VISN sites, to pay veterans the costs
    of child care they incur to travel to and from VA facilities for
    regular mental health services, intensive mental health services, or
    other intensive health care services specified by the Secretary. The
    provision is gender-neutral. Any veteran who is a child's primary
    caretaker and who is receiving covered health care services would be
    eligible to participate in the pilot program. VA does not support this
    provision. Although the inability to secure child care may be a barrier
    to access to care for some veterans, funding such care would divert
    those funds from direct patient care. We estimate the cost of section
    204 to be $3 million.
        Section 205 would require VA, not later than 6 months after the
    date of enactment, to conduct a pilot program to evaluate the
    feasibility of providing reintegration and readjustment services in a
    group retreat setting to women veterans recently separated from service
    after a prolonged deployment. Participation in the pilot would be at
    the election of the veteran. Services provided under the pilot would
    include, for instance, traditional VA readjustment counseling services,
    financial counseling, information on stress reduction, and information
    and counseling on conflict resolution.
        VA has no objection to section 205; however, we are unclear as to
    the purpose of and need for the bill. We note the term ``group retreat
    setting'' is not defined. We would not interpret that term to include a
    VA medical facility, as we do not believe that would meet the intent of
    the bill. We also assume this term would not include Vet Centers as we
    could not limit Vet Center access to any one group of veterans.
    Moreover, many Vet Centers, such as the one in Alexandria, Virginia,
    are already well designed to meet the individual and group needs of
    women veterans. Section 205 would have no costs.
        Section 206 would require the Secretary to ensure there is at least
    one full-time employee at each VA medical center serving as a women
    veterans program manager. We strongly support this provision. The
    position of the women veterans program manager has evolved from an
    overseer of local programs to ensure access to care for women veterans
    to a position requiring sophisticated management and administrative
    skills necessary to execute comprehensive planning for women's health
    issues and to ensure these veterans receive quality care as evidenced,
    in part, by performance measures and outcome measurements. The duties
    of this position will only continue to grow as we strive to expand
    services to women veterans. Thus, we believe there is support for the
    dedication of a full-time employee equivalent at every VA medical
    center. We estimate section 206 would result in additional costs of
    $7,131,975 for fiscal year 2010 and $86,025,382 over a 10-year period.
        Next, section 207 would require the Department's Advisory Committee
    on Women Veterans, created by statute, to include women veterans who
    are recently separated veterans. It would also require the Department's
    Advisory Committee on Minority Veterans to include recently separated
    veterans who are minority group members. These requirements would apply
    to committee appointments made on or after the bill's enactment. We
    support section 207. Given the expanded role of women and minority
    veterans serving in the Armed Forces, the committees should address the
    needs of these cohorts in carrying out their reviews and making their
    recommendations to the Secretary. Having their perspective may help
    project both immediate and future needs.
        Question. What VA is doing with regard to the increasing numbers of
    women veterans coming to the system and how is VA ensuring that their
    needs are being met?
        Answer. In fiscal year 2007-08 VA funded a telephone-based survey
    of 3500 women veterans (both users and non-users of VA) to assess
    access to care, barriers to care and their specific healthcare needs.
    We have just completed an educational needs assessment of primary care
    providers and have planned a series of five ``mini residencies'' in
    fiscal year 2008, each training 40 providers, to update skills in
    women's health. We are also offering a national conference for primary
    care providers in summer, 2008.
        In fiscal year 2007, women comprised 5.19 percent of all veteran
    users. However, the number of women using VA health care will continue
    to rise dramatically, and is projected to be 8.11 percent of all
    veteran users by fiscal year 2011. Since 2002, almost 39 percent of
    those women who have been deployed in OEF/OIF and discharged from
    active duty have enrolled in VA health care. We are very committed to
    not only addressing the current health needs of these returning women
    veterans but of keeping them healthy for life. We are creating new
    prevention programs directed to this young, relatively fit and healthy
    population.
        The average age of all women seen by VA in fiscal year 2007 is 48.8
    years old. This means that fully half of the women veterans seen in VA
    are of child-bearing age. Of the OEF/OIF women veterans, 86 percent are
    under age 40. This presents challenges for VA to address the
    reproductive health needs of our women veterans and to design and
    implement programs which address inadvertent exposure to medications
    which carry an increased risk of birth defects.
        While we are focusing on our young returning women veterans, we are
    committed to not losing sight of the health needs of aging women
    veterans. We have addressed this population through:
      --Cardiac risk intervention proposed initiative: American Heart
            Association Guidelines
      --Cancer prevention proposed initiative: implementing tracking
            processes to address breast, cervical and colorectal cancer
            screenings in women
      --Updating and improving our ongoing programs in gender specific care
            such as cervical cancer screening (pap Smears) and management
            of menopausal symptoms.
        Question. Secretary Peake, when you were in front of the VA
    Committee in February, you mentioned that the average age of VA
    infrastructure is 57 years. All across the country there VA facilities
    in need of major repair. Yet, the President's budget cuts funding for
    major and minor construction programs by nearly 50 percent. In my home
    State of Washington, that means four major construction projects on the
    VA's priority list won't receive funding. In Seattle, I have two
    construction projects that are ranked at number 4 and number 5 on the
    fiscal year 2009 list that won't receive any funding. I also have
    important projects at the American Lake and Walla Walla VA Medical
    Centers that score well on this year's priority list, but do not
    receive funding under this budget.
        Why is the administration cutting the VA construction budget by
    nearly half when, all across the country, VA facilities are in
    desperate need of repair?
        Answer. VA deeply appreciates the support of Congress in providing
    funds for maintaining and improving its capital infrastructure. VA
    capital needs are evaluated, along with other Department needs on
    annual basis, and all funding decisions are reflected in the
    President's Budget submission. The Department is requesting $800
    million for non-recurring maintenance projects which is a $227 million
    increase over what was originally requested in fiscal year 2008. This
    account is used to maintain and repair VA medical facilities.
    Additionally, as reflected in the fiscal year 2009 VA budget
    submission, (Construction and 5-Year Capital Plan, Volume 4--pages 7-
    200 and 7-201) there are currently 40 ongoing VA major medical facility
    projects. Congress has appropriated $3.7 billion to date for projects
    and other related medical major construction line items since fiscal
    year 2004.
        Question. (VHA) DE Mr. Secretary, you recently sent me a response
    for the record to my earlier question stating that the VA has no
    intention of exercising the transfer authority we provided you for
    fiscal year 2008 that would assist the VA in building a training
    pipeline for psychologists skilled in treating PTSD, TBI and other post
    deployment issues. The Graduate Psychology Education Program at HHS has
    been up and running for 7 years and could easily be augmented to
    address VA concerns in setting up training sites.
        With at least a third of returning Iraq and Afghanistan veterans
    suffering with mental health challenges, don't you think there is
    benefit--certainly there is available funding to find $5 million--for
    the VA to institute multiple approaches to building up a pipeline of
    specialists for the next several decades?
        Answer. No--VA believes there would be limited benefits to
    increasing the pipeline of psychologists at the level proposed.
    Currently, there is an oversupply of psychology doctoral students
    relative to the number of available internship positions nationally.
    Each year, 20 percent or more students coming out of doctoral programs
    and seeking internships fail to match with an internship program
    because there is an oversupply of graduate students relative to the
    numbers of internship positions available. For the current year, 743 of
    3492 applicants failed to match an internship position.
        Instead of creating more doctoral students in psychology and
    enlarging the imbalance, VA believes that the pipeline would be better
    enhanced by creating additional internship positions. Through its
    Psychology Education Enhancement Initiative, VA in fact has committed
    an additional $5.3 million annually to increasing its psychology
    training positions nationally. About 60 of these are for Internship
    positions, while 100 are for Postdoctoral Fellowship positions.
        It is not clear, as stated in the question, that augmenting the HHS
    Graduate Psychology Education program would facilitate VA training
    opportunities or the care of veteran patients. It is our understanding
    that the Graduate Psychology Education program does not have provisions
    for VA service commitments, through which graduates would be obligated
    to come to VA or to treat veteran patients.
        Question. Secretary Peake, when Congress passed the Wounded Warrior
    bill as part of the of the Defense Authorization bill last year, we
    authorized the creation of three military centers of excellence--for
    TBI, PTSD, and Eye Trauma. The language of this Bill stated that these
    Centers would be a collaboration between the VA and the DOD, promoting
    the free exchange of information and ultimately benefitting our wounded
    warriors with these devastating injuries. The Pentagon is moving
    forward with Centers of Excellence for TBI and Mental Health. However,
    it is my understanding that the Pentagon is not going to establish the
    Military Eye Trauma Center called for in the Wounded Warrior bill,
    despite there having been approximately 1,400 combat eye wounded
    evacuated from Iraq and Afghanistan.
        Can you tell me where things stand and why this has not been
    implemented?
        Answer. VA and DOD are collaborating to develop the Center of
    Excellence in Eye Trauma pursuant to the National Defense Authorization
    Act. The Departments have held several planning meetings. One option
    under consideration is to use the existing TBI Center of Excellence as
    a model. The Center of Excellence in Eye Trauma is anticipated to be
    completed in fiscal year 2009.
        Question. Once again, the President has proposed to send the money
    generated by the new veterans' healthcare user fees and increased co-
    pays directly to the Treasury. These new taxes on veterans have been
    rejected by Congress each and every year President Bush has proposed
    them. Yet, here we are again, having to fight the same old budget
    gimmick. Moreover, the President's proposed tax on veterans would be
    used to balance his budget--including to finance tax cuts for the
    wealthy.
        Can you tell the veterans across the country why you think the
    President's proposed tax on them is necessary and should be used to
    balance the budget?
        Answer. The 2009 budget contains three legislative proposals that
    ask veterans with comparatively greater means and no compensable
    service-connected disabilities to assume a modest share of the cost of
    their health care. 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 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 third proposal would eliminate the practice of offsetting or
    reducing VA first-party co-payment debts with collection recoveries
    from third-party health plans.
        The three proposals are consistent with the priority system of
    health care established by Congress, a system which recognizes that
    priority consideration must be given to veterans with service-connected
    disabilities, those with lower incomes, and veterans with special
    health care needs.
        These proposals have no impact on the resources we are requesting
    for VA medical care as they do not reduce the discretionary medical
    care resources we are seeking. Our budget request includes the total
    funding needed for the Department to continue to provide veterans with
    timely, accessible, and high-quality medical services that set the
    national standard of excellence in the health care industry. Instead,
    these three provisions, if enacted, would generate an estimated $2.3
    billion in revenue from 2009 through 2013 that would be deposited into
    a mandatory account in the Treasury.
        Question. Dr. Peake, the administration's budget proposes a $4
    million cut to the office of the VA Inspector General. As you know, the
    VA IG regularly conducts assessments at each and every VA health care
    facility across the country, and has played a constructive role in
    identifying issues relating to wait times, traumatic brain injury, and
    cases of waste, fraud and abuse.
        At a time when the VA is taking on more responsibilities and an
    increasing workload, how does the administration justify a cut to the
    IG?
        Answer. While the 2009 IG budget request does support fewer
    positions for the Office of Inspector General (OIG) in fiscal year
    2009, the resource level is sufficient to meet its mandated obligations
    and to respond to the most urgent issues raised by Congress and the VA.
    OIG will continue to assess and prioritize its workload to maximize
    productivity and ensure the greatest impact possible. This level of
    funding will allow OIG to continue to address the challenges and
    growing demand for VA services.
        Question. Secretary Peake, according to the Independent Budget for
    fiscal year 2009, in the past, population-based surveys have
    demonstrated that veterans report higher rates of alcohol abuse than
    nonveterans and are more likely to meet criteria for alcohol abuse and
    dependence. Recent studies have demonstrated no reduction in overall
    veteran need for substance abuse services and an increase in alcohol
    concerns by OEF/OIF veterans.
        What should the VA be doing to address the increasing incidence of
    substance abuse problems?
        Answer. VA is involved in a variety of initiatives to better
    address substance abuse. This includes enhancing substance abuse
    services integrated with primary care and as a component of general
    mental health services as well as substance abuse specialty services.
    Services in these three settings are necessary to address the needs of
    patients with distinct clinical profiles differing in terms of the
    severity of the substance use problem and the extent to which it
    coexists with other conditions.
        To help recognize substance abuse problems, VA screens veterans in
    primary care and general mental health services at a minimum of once
    per year to identify patients who are consuming alcohol at hazardous
    levels. Patients who score positive on the screen are to be given an
    intervention immediately within primary care or, if the problem appears
    more severe than can be handled in this manner, the patient is to be
    referred to a specialty substance abuse clinic. Another important
    initiative is providing integrated care for substance use disorder
    treatment to patients who suffer co-occurring problems with substance
    abuse, e.g., integrated care for PTSD and substance abuse.
        Question. Secretary Peake, I really appreciated the time that you
    took to visit the Walla Walla VA Medical Center in February. I think
    you gained a unique perspective on the issues affecting the 69,000
    veterans who rely on that facility. As you can imagine, I stay in close
    contact with the veterans in the Walla Walla region. They continue to
    tell me how grateful they are for your support of a new residential
    rehab unit for mental health. Despite this, they remain very concerned
    about the stalled action on construction of a new outpatient clinic. I
    share that concern. As you know, the project is ranked 14th on the
    major construction list. But it will not receive any funding in this
    year's budget.
        Will you pledge to work with me to make sure that the Walla Walla
    outpatient clinic receives design funding in next year's budget?
        Answer. I assure you that the Multi-Speciality Clinic at Walla
    Walla will again be considered for funding in fiscal year 2010. If it
    is determined through the VA's established capital investment process,
    that the Walla Walla project is one of the Departments highest ranked
    projects, I pledge that I will work closely with you and other members
    of Congress to ensure that the design of this project (along with VA's
    other highest priority projects) is funded in fiscal year 2010.
        Question. Secretary Peake, in February, the VA set up a temporary
    CBOC in Northwest Washington that is operating out of a van. As you may
    know, the permanent CBOC in Northwest Washington was supposed to be
    fully operational by February 2008.
        Can you tell me when veterans in Northwest Washington can expect
    the permanent CBOC to be fully open?
        Answer. On May 27, 2008 the mobile clinic in Northwest Washington
    moved to a 2,400 square foot interim building on the campus of the
    United General Hospital in Sedro-Woolley. Puget Sound expects to
    activate a permanent site in early fiscal year 2009.
                                     ______

              Questions Submitted by Senator Kay Bailey Hutchison

        Question. Mr. Secretary, I would like to compliment the VA for its
    successes in the area of electronic health records. The VA is the
    leader in its use of electronic health records and is truly second to
    none, including the Department of Defense. However, these two agencies
    are not electronically sharing medical records as well or as fast as we
    had hoped. We all are working hard to see that our injured veterans
    receive world class care, and I think we all agree that in order for
    that to happen, veterans must move seamlessly from active duty in the
    Department of Defense to the Department of Veterans Affairs. We have
    discussed this a number of times but we still cannot completely
    transfer medical records between Departments and many records are still
    being lost between the time a soldier leaves the Department of Defense
    and arrives at the VA. Being a retired general officer, you know
    firsthand the challenges the VA faces in this area. My staff has asked
    for a separate detailed briefing on this project which I hope will
    answer many questions.
        Mr. Secretary, please separate the Electronic Health Records
    project from the larger HealtheVet program and tell this committee when
    will this electronic health records project be finished, how much will
    it cost, and what is the schedule and cost for the larger program?
        Answer. VA considers the pursuit of an electronic health record
    integral to nearly all of its healthcare operations and cumulative--it
    is a complete health record including all aspects of a patient's care.
    It is imperative to understand the electronic health record as a view
    of data that is generated as a by-product of conducting daily
    healthcare operations. This method of collecting personal health
    information provides the best assurance of its timeliness,
    completeness, and accuracy. Because of this comprehensive scope,
    integral relationship to IT support for healthcare operations, and the
    close integration of the Electronic Health Record with HealtheVet, VA's
    budget data does not excerpt Electronic Health Record capability as a
    separate line item. It would be counter to the key design paradigm the
    VA is following described above to do so; both cost and schedule of
    electronic health record development mirror that of the transition to
    HealtheVet. Portions of the health record are already underway, and
    some will be complete as VA delivers portions of the VistA-HealtheVet
    Transition Plan as early as 2010. Final components are slated for later
    release, delivering in 2018. HealtheVet is currently estimated just
    over $10 billion for the full lifecycle, a significant portion of which
    is dedicated to the electronic health record. Already underway are
    extensive cost estimation and validation activities for the HealtheVet
    transition.
        Will you tell us your perception as to why the VA and the DOD have
    not been able to bridge this electronic gap as soon as we had hoped,
    and what are you doing to address this problem?
        Answer. VA and DOD have had significant success in sharing
    electronic health information that is available to be shared in
    enterprise-wide VA and DOD systems and for this reason, are
    successfully sharing the vast majority of information that is needed in
    the care and treatment of patients. For instance, our current
    bidirectional exchange makes almost all essential health information
    viewable, where that information is available from DOD's AHLTA system
    and legacy system, CHCS. Recent efforts have improved our ability to
    access available electronic inpatient information from DOD, as DOD has
    worked to standardize its implementation of an inpatient capability
    across major military treatment facilities.
        Some DOD medical information was stored in paper format, or in
    stand alone DOD systems that did not interface with enterprise systems.
    In this instance, VA and DOD worked to together to ensure that
    necessary information was shared, even if not in electronic format.
        VA and DOD are jointly developing an Information Interoperability
    Plan. The scope of this plan is to define a VA/DOD strategy for
    achieving the level of information interoperability essential to
    ensuring seamless continuity of care and benefits to our Nation's Armed
    Forces and Veterans. Specifically, the plan will:
      --Define a strategic information interoperability maturation and
            organizing framework;
      --Map the current and future essential health, personnel, and benefit
            information sharing;
      --Identify capability gaps;
      --Determine milestones to measure progress of near-, mid-, and long-
            term interoperability goals; and
      --Leverage the national standardization activities led by the
            Department of Health and Human Services to foster health
            information sharing.
        Question. Mr. Secretary, I would like to discuss another area of
    Information Technology. I understand that electronic health records are
    a way to provide better healthcare and claims service to our veterans
    and is your number one priority, but Congress has funded other VA
    programs, Financial Logistics Integrated Technology Enterprise (FLITE),
    for example, to modernize and integrate the VA's financial and
    healthcare systems. I would like to commend the staff of FLITE for
    creating the first and only VA IT program that has established a change
    management board, locked the program's scope, and set a clear timetable
    with recognizable milestones. This is a tremendous accomplishment. As
    we all have seen from failed IT projects at other Departments, the
    number one cause of the failure is the lack of defined requirements and
    management discipline. (The Census Bureau just announced losing a $3
    billion project because they had 417 requirement changes after
    development began.)
        I am interested to know VA's priority for FLITE and ask why VA
    reduced its budget and stretched the schedule out 12-18 months when
    this project is correcting a material weakness identified by several
    independent reports, and I'm told is doing exceedingly well?
        Answer. VA had many difficult decisions to make regarding where IT
    funding would be allocated for fiscal year 2008 and fiscal year 2009.
    Our commitment to invest in veteran facing development initiatives
    coupled with needed resources to improve our infrastructure limited the
    funding for other high priority IT needs. The FLITE Program is a high
    priority in VA. Significant progress continues to be made developing
    both logistics and financial components of the program.
        Question. Mr. Secretary, this subcommittee is committed to
    providing the veterans of Operation Enduring Freedom and Operating
    Iraqi Freedom with the best medical care our Nation can provide. No one
    has ever questioned that. Many of our veterans are returning from these
    conflicts with wounds that transcend the medical traditions of
    compartmentalized care and require extremely specialized and more
    collaborative treatments. I know VA is working very well with many
    major medical and research universities to provide this specialized
    care.
        From your experience as a doctor and Surgeon General, and now VA
    Secretary, please tell me what steps you are taking to fully
    rehabilitate these patients with combinations of traumatic brain
    injury, post-traumatic stress disorder, chronic pain and other highly
    specialized abnormalities by capitalizing on collaborative efforts with
    major medical and research universities.
        Answer. As a result of new modes of injury (improvised explosive
    devices), improved body armor, and surgical stabilization at the
    frontline of combat, more soldiers are returning with complex, multiple
    injuries (polytrauma), including amputations, brain and spinal cord
    injuries, eye injuries, musculoskeletal injuries, vision and hearing
    loss, burns, nerve damage, infections, and emotional adjustment
    problems.
        In response, VA's Office of Research and Development has expanded
    its efforts in polytrauma research and established a Polytrauma and
    Blast-Related Injury (PT/BRI) Quality Enhancement Research Initiative
    (QUERI) coordinating center to promote the successful rehabilitation,
    psychological adjustment, and community reintegration of these
    veterans. Two priorities have been identified: (1) traumatic brain
    injury (TBI) with polytrauma, and (2) traumatic amputation with
    polytrauma. The primary target is Operation Enduring Freedom and
    Operation Iraqi Freedom (OEF/OIF) VA patients, many of whom remain on
    active duty during their initial course of treatment in VA. However,
    these activities will benefit all VA patients with complex injuries,
    regardless of service era and mechanism of injury.
        VA also recently issued a special solicitation for research
    projects on the long-term care and management, including family and
    community reintegration, of veterans with polytrauma, blast-related
    injuries, or TBI.
        VA investigators are actively leveraging expertise in TBI and
    associated co-morbidities including post-traumatic stress disorder,
    depression, substance abuse, and chronic pain, as well as in best
    practices for medically complex patients within the broader academic/
    scientific community. In addition to their VA roles, nearly all the
    principal investigators on these VA projects have affiliations at major
    medical and research universities including the University of
    Minnesota, University of Florida, Stanford University, Yale University
    and Virginia Commonwealth University, to name a few. In addition,
    experts from major universities and research institutions who do not
    hold VA appointments serve as co-investigators and consultants on many
    of these projects.
        Question. Mr. Secretary, I understand the VA is experiencing a
    serious challenge to reduce the backlog of claims that have built up
    since 2000. I also understand that the number of claims has increased
    by roughly 50 percent since 2000--from 550,000 to 850,000--and that
    roughly one in four claims have eight or more disability issues, which
    increases complexity. Many of these claims have to be re-adjudicated
    several times, which has further slowed the processing time of new
    claims. Last year, the VA set its priority to reduce claims processing
    times to 160 days. Instead, the average waiting time has increased to
    183 days. The claims backlog still stands at roughly 400,000 claims. As
    I have said to this subcommittee before, we do not want our veterans
    waiting any longer than necessary for the VA to process their claims.
    The Dole-Shalala commission recommended the VA reassess the overall
    process for claims and benefit processing.
        Have you begun to reassess the overall claims and benefit processes
    to see if a complete process reengineering or methodology change may
    solve the problem?
        Answer. The President's Commission on Care for America's Returning
    Wounded Warriors (Dole/Shalala Commission) recommended that VA
    compensate veterans for lost quality of life due to disability in
    addition to its current statutory requirement to compensate veterans
    for average loss of earning capacity resulting from injury or disease
    incurred in or aggravated by service. In February 2008, VA contracted
    with Economic Systems Inc. to do two 6-month studies in response to the
    Dole/Shalala recommendations. One study is focused on transition
    benefits that would assist veterans and their families as they
    transition from military status to veteran status. The second study is
    focused on quality of life and earnings loss payments. The study is
    scheduled to be completed by early August 2008.
        VA and DOD are jointly piloting a streamlined Disability Evaluation
    System (DES) process for service members being separated due to
    disability. Our stated goal is to be able to authorize any compensation
    to service members who are eligible on the date of separation from
    service. Although very early in the process, one service member has
    completed the process and was awarded benefits on the date of
    separation.
        VA is actively looking at consolidating the adjudication of claims
    for certain types of benefits to improve overall service delivery. This
    would include sending all pension claims to the Pension Maintenance
    Centers and sending all service-connected survivor benefit claims to
    centralized processing centers. We believe this specialization will
    improve service delivery of these benefits while freeing up additional
    resources to focus on disability claims.
        Question. How do you plan to reduce this backlog and make
    electronic claims processing a priority for the VA in order to improve
    accuracy and reduce processing times? What can Congress do to assist
    you in these efforts?
        Answer. The Veterans Benefits Administration (VBA) is aggressively
    pursuing measures to decrease the pending inventory of disability
    claims and shorten the time veterans must wait for decisions on their
    claims.
        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 American
    people. We began aggressively hiring additional staff in fiscal year
    2007, increasing our on-board strength by over 2,650 employees between
    January 2007 and April 2008. With a workforce that is sufficiently
    large and correctly balanced, VBA can successfully meet the needs of
    our veterans.
        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.
        VBA, in collaboration with VA's Office of Information and
    Technology (OI&T), is developing the Paperless Delivery of Veterans
    Benefits Initiative. This initiative is envisioned to employ a variety
    of enhanced technologies to support end-to-end claims processing. In
    addition to imaging and computable data, we will also incorporate
    enhanced electronic workflow capabilities, enterprise content and
    correspondence management services, and integration with our modernized
    payment system, VETSNET. In addition, we are also exploring the utility
    of business rules engine software for both workflow management and to
    potentially support improved decision making by claims processing
    personnel.
        The initiative builds on two pilot programs currently underway.
    These pilot projects have demonstrated the utility of imaging
    technology in our Compensation and Pension business line. Both projects
    utilize our Virtual VA imaging platform, which is a document and
    electronic claims-folder repository.
        To fully develop this initiative, VBA will be engaging the services
    of a Lead Systems Integrator (LSI). The LSI will work closely with VBA
    and our OI&T partners to fully document business and system
    requirements. In addition, we will document demonstrable milestones and
    performance metrics, as well as life-cycle funding requirements.
    Ensuring a consistent funding stream to support this business
    transformation effort will be a critical success factor.
        The recent Claims Processing Improvement study, conducted by IBM
    Global Business Systems, endorsed this strategy as a means to increase
    the efficiency of claims processing and enhance service delivery to our
    veterans.
        Question. Mr. Secretary, as you know, we are all committed to
    ensuring that our soldiers returning from the War on Terror receive
    treatment for mental health problems as well as physical health needs.
    As more of our soldiers return home with Post Traumatic Stress Disorder
    (PTSD), this has become more of an issue. In 2006, Congress instructed
    the VA to establish three new Mental Health Centers of Excellence
    across the country to improve treatment, prevention, rehabilitation,
    and clinical services for our Nation's veterans. As I mentioned earlier
    you were kind enough to visit the center in Waco, Texas. I understand
    the VA has undertaken new initiatives to reduce the stigma associated
    with mental health disease and to reach out to more veterans and their
    families. I want to emphasize how important families are in the
    recovery of our wounded veterans.
        What is the VA doing to expand access to mental health care for
    returning OIF/OEF veterans and their families, and tell us about the
    VA's attempts to reduce the stigma associated with mental health care?
        Answer. The Mental Health Enhancement Initiative (MHEI) has
    expanded programs and access to mental health services in PTSD (e.g.,
    outpatient PTSD capability in every VAMC and many CBOCS). Another
    component of MHEI has been to create Services for Returning Veterans-
    Mental Health teams; these are specifically created to provide rapid
    assessment and care for emotional/behavioral health issues of returning
    veterans.
        Other MHEI expansions in mental health and substance use disorders
    also benefit OEF/OIF veterans. VA mental health is increasingly
    integrating mental health services in primary care venues through
    evidence based care management and collaborative care models. Receiving
    mental health care in the primary care setting is an especially
    effective way to reduce stigma and to communicate that mental health
    needs are an integral component of the overall health care needs of
    returning veterans.
        Evidence Based Practices in exposure-based therapy of PTSD (the
    approach strongly endorsed by the recent Institute of Medicine report
    on PTSD treatment) are being disseminated across the system. The VA
    Office of Mental Health Services (OMHS) also has implemented a
    continuum of family services that includes family consultation, family
    education, and family psychoeducation for eligible veterans within
    existing statutory/regulatory authority. In providing this continuum,
    the OMHS has offered specialized evidence-based family psychoeducation
    training for clinicians.
        The Mental Health Strategic Plan has initiatives to reduce the
    stigma associated with mental illness through partnership with other
    agencies and within VA. Many VA Medical Centers hold Recovery
    Celebrations that recognize veterans who have made significant strides
    towards their recovery. The VA also hires peer counselors as a way to
    reduce stigma.
        Vet Centers provide mental health services to veterans and family
    members through a network of non-institutionalized community based Vet
    Centers. A majority of Vet Center staff are veterans themselves and
    understand the unique circumstances surrounding the veteran's
    readjustment to civilian life and its impact on his or her family. This
    helps to reduce the stigma associated with mental health care. Vet
    Centers provide typical mental health services such as individual and
    group counseling sessions. Since the beginning of the Global War on
    Terror, the Vet Center program has expanded from 206 Vet Centers in
    fiscal year 2003 to 232 Vet Centers by the end of fiscal year 2008.
        Question. What training programs are the VA developing for the
    families of wounded soldiers to help them provide care once the service
    member returns home?
        Answer. With regard to readjustment and mental health problems of
    returning veterans, the National Center for PTSD, in collaboration with
    the Department of Defense, has developed an excellent guide for
    families, titled Returning from the War Zone: A Guide for Families;
    this guide is available on the Web at http://www.ncptsd.va.gov/ncmain/
    veterans/. It covers important topics for families to understand during
    the readjustment process and when a veteran is having more significant
    mental health problems. It has frequent hits and downloads and we have
    received very positive feedback on it. The introduction gives a good
    sense of the content:
        This guide is for services members and their families. It contains
    information to help military family members understand what to expect
    during the reintegration following time in a war zone, and to help them
    adapt back to home life with their loved one.
        Reintegration is an adjustment for all involved. This information
    aims to make this process as smooth as possible and covers:
      --A description of the common reactions that occur following
            deployment to a war zone
      --How expectations about homecoming may not be the same for service
            members and family members
      --Ways to talk and listen to one another in order to re-establish
            trust, closeness and openness
      --Information about possible problems to watch out for
      --How to offer and find assistance for your loved ones
      --What help is available and what it involves . . .
        In addition to the web-based guide, current best practices in
    mental health care emphasize intensive outpatient care, with the family
    involved in planning and implementing care and with the family
    receiving training on readjustment and handling mental health problems,
    along with the veteran. This helps send the message that recovery is
    possible and that the goals of treatment are to enhance the veteran's
    active roles in the community, family, workplace, etc. This recovery-
    oriented approach is greatly enhanced by family involvement during
    outpatient mental health care, and VA clinicians have been encouraged
    to emphasize this approach to the extent they can under current law.
    However, for those veterans who are not service-connected the current
    law only permits VA to provide counseling, training and mental health
    services to family members if those services were initiated during the
    veteran's hospitalization and the continued provision of these services
    on an outpatient basis is essential to permit the discharge of the
    veteran from the hospital. In addition, current regulations generally
    do not allow VA to provide counseling, training, and mental health
    services to the family unless the veteran is enrolled and gives his or
    her permission for the family to be involved in the processes of
    diagnosis, treatment planning, and treatment implementation.
        While Vet Centers do not provide training to assist family members
    in taking care of service members at home, they do provide family
    counseling and care-giver support as it relates to the readjustment of
    the veteran subject to the limitations for family members of
    nonservice-connected veterans noted above.
        Question. Mr. Secretary, as you are aware, we had quite a
    revelation this week concerning the El Paso, Texas outpatient clinic
    being rated well below the national average by your own internal
    survey. As I mentioned in my letter to you yesterday I found this most
    disturbing and I want to be sure we work together to turn this around
    immediately. I am concerned that the veterans in the El Paso area are
    experiencing unusually long waiting times for specialty care
    appointments, particularly orthopedics and ophthalmology, and that
    their access to care in general is certainly not up to the standards we
    have come to expect from the Department of Veterans Affairs. After
    discussions with the VISN 18 Director it is my understanding that the
    Department is implementing a management plan to correct these issues to
    ensure that the veterans in the El Paso area receive the highest
    quality of health care this Nation can provide.
        Mr. Secretary, would you please comment on the details of this
    management plan to correct the situation in El Paso and what I can do
    to assist you in these efforts?
        Answer.
    Wait times
        The El Paso VA Health Care System (EPVAHCS) has improved the wait
    times for access to care in many areas. As the table below shows,
    EPCAHCS is currently seeing:

    ------------------------------------------------------------------------
                                                                  Average
            March 2008 data from VSSC          Percent seen    patient wait
                                              within 30 days       time
    ------------------------------------------------------------------------
    Primary Care--New Patients..............           98.80            13.1
    Primary Care--Established Patients......          100.00             1.0
    Ophthalmology--New Patients.............           88.20            22.3
    Ophthalmology--Established Patients.....           97.70             1.9
    Orthopedics--New Patients...............           98.20            12.9
    Orthopedics--Established Patients.......           96.80            10.4
    ------------------------------------------------------------------------

    Management Plan
        The Veterans Health Administration prepares a quarterly report with
    data on access, clinical care, and patient satisfaction at VA Medical
    Centers. Based on the fiscal year 2007 quarterly results for the
    EPVAHCS, a number of actions have been implemented to improve all
    aspects of quality, access, and patient satisfaction. This action plan
    includes five major areas of concern: access to care, customer service,
    telephone responsiveness, employee morale, and organizational health.
    The following summary provides the actions, goals, and timelines for
    continued improvement.
    Access to care
      --The EPVAHCS secured the assistance of a national consultation team
            in September 2007 to help their primary care staff work on
            improving access to care. For February 2008, 100 percent of
            EPVAHCS primary care patients were seen within 30 days. For
            specialty care, 97 percent were seen within 30 days.
      --Facility leadership has asked the Advanced Clinic Access (ACA)
            National Consultation Team to return in July 2008 to assist
            with implementation of ACA in specialty care.
      --EPVAHCS continues to move forward with an after hours clinic. In
            March 2008, pharmacy hours were extended to cover the later
            hours of operation. Due to concerns about the safety of
            patients, EPVAHCS has initiated discussions with William
            Beaumont Army Medical Center to jointly staff an urgent care
            center that will provide urgent care during both normal clinic
            hours and also evenings and weekends. It is anticipated that
            this process will be initiated by September 2008.
      --Customer Service.--A customer service program has been initiated to
            educate staff about expectations for professional interactions
            with customers. EPVAHCS plans to have 75 percent of their staff
            educated about the customer service standards by June 2008 and
            100 percent no later than September 2008. EPVAHCS has a goal of
            achieving a 2 percent improvement in customer service scores by
            the end of the fiscal year and 5 percent improvement by the
            second quarter of fiscal year 2009.
      --Telephone Responsiveness.--Telephone equipment was installed on
            February 28, 2008. Data from the new system became available in
            March 2008. As a result of the initial data, a decision was
            made to add staff to primary care, pharmacy, and the telephone
            operations units. A systems redesign team for telephone
            responsiveness was initiated to explore both the hardware and
            human factor issues related to the telephone system, and has a
            long term goal of answering all calls by the third ring.
      --Employee Morale.--The national VA All Employee Survey data for the
            three most recent surveys shows that employees rated their
            overall satisfaction as 3.8, 3.7 and 3.7 (on a scale of 1 to
            5); the results show that satisfaction is stable. This compares
            to the national satisfaction level of 3.77. EPVAHCS has worked
            with the National Center for Organizational Development (NCOD)
            to hold an annual management retreat, supplemented by quarterly
            retreats with front line staff, to engage employees at all
            levels of the organization in strategic planning and follow-up
            of ongoing improvement efforts.
      --Organizational Health.--The management team has instituted several
            new processes in an effort to lead changes in staff
            interactions with veterans and each other. EPVAHCS has held
            several all employee meetings to discuss corporate expectations
            that both supervisors and staff adhere to national standards
            and expectations. NCOD is currently conducting a review of the
            organization's overall health.
    Staffing Improvements
        The following positions have been, or are in the process of, being
    filled:
      --Nurse Practitioner, Primary Care, Las Cruces Community Based
            Outpatient Clinic (LCCBOC), filled April 28, 2008.
      --Physician, LCCBOC, vacant since December 2007, still under
            recruitment. Temporarily filled with a locum tenens contractor
            since March 2008. Current contract extended through August 1,
            2008.
      --Nurse Practitioner, El Paso, filled effective May 8, 2008.
      --Another Nurse Practitioner position, filled with a Physician,
            January 2008.
      --Other Physician positions in the process of being filled at the El
            Paso site:
      --Two physician positions filled March 2008; credentialing is in
            process.
      --Physician position filled; start date May 27, 2008.
      --Physician position filled; new employee has a private practice to
            shut down, therefore a starting date is pending.
      --Physician position selected on May 9, 2008; credentialing is in
            process.
      --There is ongoing recruitment for an additional two new Physician
            positions and a new Nurse Practitioner position at the El Paso
            site. Applications are currently being accepted.
      --A second Orthopedic Surgeon in Specialty Care will start at the end
            of July or early August. This new physician will increase
            orthopedic services by 100 percent.
      --Another Teleretinal Imager is being recruited. This will increase
            teleretinal imaging by 50 percent.
      --In addition, two more optometrist positions have been approved and
            are in the process of recruitment.
      --For all specialty care areas, El Paso has been referring patients
            who cannot be seen within 30 days to the private sector (when
            there are specialists available).
        Question. Mr. Secretary, over the past several years, the VA has
    faced a heightened medical workload. I understand the challenges of
    working within fiscal constraints, but I am concerned that major
    construction projects for new hospitals and clinics are vital to expand
    the VA's health infrastructure and give our veterans the best health
    care this nation can provide. This has been an issue discussed many
    times on this subcommittee, but I particularly note this year's major
    construction request is roughly half of last year's appropriation.
        Will you comment on the VA's long-term capital plan and how you see
    it evolving?
        Answer. The main purpose of the VA 5-Year Capital Plan is to
    provide a systemic and comprehensive framework for the effective
    management of the Department's capital investments, the ultimate goal
    of which is to lead to improved health care and benefits (including
    burial services) delivery for our Nation's veterans. Although the
    overall goal of the plan will remain constant, the mode of attaining it
    will mostly likely change in the future.
        The plan will continue to provide important information on the top
    construction priorities (existing and future) and the continued
    implementation of CARES decisions. As also shown in the fiscal year
    2009 budget submission, the future funding needs for these existing
    ongoing projects is currently $2.3 billon. Along with the existing
    projects, there are a number of known potential major medical facility
    projects which are also listed in the VA budget submission
    (Construction and Capital Plan, Volume 4--pages 7-86 through 7-89). The
    list of potential projects are updated each year as part of the annual
    VA capital investment process, and projects may be added or deleted
    from this list.
        VA will also continue to work to better assist homeless veterans.
    The Department is currently performing a Site Review Initiative whose
    goal is, to decrease the amount of underutilized real property and
    maximize its value through VA's enhanced-use leasing program. VA would
    reinvest realized proceeds to enhance services to veterans.
        In addition, future capital plans will continue to place increased
    emphasis on the utilization of renewable energy. The growing importance
    of physical security of VA infrastructure will also be reflected in
    future plans. VA will continue to strive to be a leader in these areas
    as well as ensuring we are caretakers to the environment.
                                     ______

                 Questions Submitted by Senator Mitch McConnell

        Question. In the context of the Department of Veterans Affairs,
    what Dole-Shalala Commission recommendations still require legislative
    remedies?
        Answer. For each Dole-Shalala Commission recommendation, there are
    action steps that provide VA with guidance on how to implement a
    specific recommendation. The following action steps within a specific
    recommendation still require legislation.

          RECOMMENDATION 2--COMPLETELY RESTRUCTURE THE DISABILITY AND
                              COMPENSATION SYSTEMS

    Action Step
        Congress should clarify the objectives for DOD and VA disability
    systems, in line with this recommendation.
        Status--Legislation Required
        The administration submitted draft legislation to Congress on
    October 16, 2007, to address this recommendation.
    Action Step
        Congress should restructure VA disability payments to include:
      --``transition payments''--to cover living expenses for disabled
            veterans and their families. They should receive either 3
            months of base pay, if they are returning to their community
            and not participating in further rehabilitation OR longer-term
            payments to cover family living expenses, if they are
            participating in further rehabilitation or education and
            training programs.
      --once transition payments end, disabled veterans should receive
            earnings-loss payments--to make up for any lower earning
            capacity remaining after training
      --quality-of-life payments--to compensate for non-work-related
            effects of permanent physical and mental combat-related
            injuries
    Status--Legislation Required
        The administration submitted draft legislation to Congress on
    October 16, 2007, to address this recommendation. In order to be
    prepared for legislative changes consistent with this recommendation,
    VA contracted with Economic Systems, Inc. to conduct two studies. The
    results of both studies are to be reported in August 2008.
    Action Step
        To improve completion rates in its VRE program, VA should:
      --pay a bonus (10 percent of annual transition pay) for completing
            first and second years of VRE training and 5 percent for
            completing the third year
        Status--Legislation Required
        The administration submitted draft legislation to Congress on
    October 16, 2007, to address this recommendation.
        recommendation 4--significantly strengthen support for families
    Action Step
        DOD and VA should provide families of service members who require
    long-term personal care with appropriate training and counseling to
    support them in their new care giving roles.
        Status--Legislation Required
        The administration submitted draft legislation to Congress on
    October 16, 2007 to address this recommendation.
        Question. Could you please provide a status update on the
    community-based outpatient clinic slated for Owensboro, Kentucky?
        Answer. Owensboro is a Marion VAMC CBOC and it is expected to open
    by the end of fiscal year 2008. The CBOC will provide primary care and
    mental health services.
        Question. Could you please provide a status update on the
    community-based outpatient clinic slated for Grayson County, Kentucky?
        Answer. Grayson County is a Louisville VAMC CBOC and it is expected
    to open by the end of fiscal year 2008. The CBOC will provide primary
    care and mental health services.
        Question. Since I represent a State with a significant population
    of rural veterans, I am concerned about access to health care for
    veterans who live in remote areas. What is the Department doing to look
    after rural veterans in States such as Kentucky?
        Answer. VHA has established the Office of Rural Health (ORH) to
    address the needs and challenges of providing healthcare to veterans in
    rural areas. The ORH collaborates with other VA program offices and
    leverages rural health expertise from the public and private sector, to
    identify service delivery gaps and assess multiple care delivery models
    to ensure those veterans in rural and highly rural locations have
    access to health care.
        VHA employs a range of service delivery methods, administered at
    the local level, to address rural and highly rural veterans' access to
    care. Examples of these include expanded Telehealth services, increased
    CBOCs, mail-order pharmacy, My-HealtheVet, and specialty programs such
    as Home Based Primary Care and Mental Health Intensive Care Management.
        The most recent ORH initiatives to increase access in rural areas
    included development of outreach clinics, which are part time
    outpatient clinics providing primary care and mental health care, and a
    pilot project to establish Mobile Health Clinics. Specific to Kentucky,
    VHA currently has 13 CBOCs opened in Kentucky, seven of which are
    located in rural areas:
      --Prestonburg (Floyd County)
      --Somerset (Pulaski County)
      --Morehead (Rowan County)
      --Bowling Green (Warren County)
      --Fort Campbell (Christian County)
      --Hanson (Hopkins County)
      --Paducah (McCracken County)
        An additional seven CBOCs have been approved. They will open before
    the end of fiscal year 2008, with one slated for early fiscal year
    2009. All will be located in rural areas:
      --Berea (Madison County)
      --Hazard (Perry County)
      --Leitchfield (Grayson County)
      --Carollton (Carroll County)
      --Hopkinsville (Christian County)
      --Owensboro (Daviess County)
      --Mayfield (Graves County)
        Question. Does the Department of Veterans Affairs need any
    additional legislative authority to improve its delivery of health-care
    services to veterans, in particular, those suffering from post-
    traumatic stress disorder or traumatic brain injury?
        Answer. We continuously evaluate the need to ensure that veterans,
    including those with post-traumatic stress disorder or traumatic brain
    injury, receive optimal care. The President's 2009 budget includes a
    proposal to expand legislative authority in title 38, United Stated
    Code, section 1720, to cover payment of Specialized Residential Care
    and Rehabilitation for OIF/OEF Traumatic Brain Injured (TBI) Veterans.
    This expansion of authority will permit VA payment for residential
    rehabilitation of TBI veterans with special needs through the Medical
    Foster Home component of VA's Community Residential Care Program. This
    legislation allows VA to develop comprehensive treatment programs for
    OIF/OEF TBI patients that can be located close to the patient's
    hometown. We look forward to working with Congress to enact this
    legislative proposal. The administration will send to Congress any
    additional legislative proposals as they are identified.
                                     ______

                Question Submitted by Senator Robert F. Bennett

        Question. Mr. Secretary, over the last several months the
    Department of Veterans Affairs has announced the establishment of a
    number of Vet Centers around the country. I have been provided a brief
    overview of the decision making process for determining the locations
    of these new Vet Centers, but many questions remain. Can you or your
    staff provide me with a more comprehensive explanation and also discuss
    considerations for future centers?
        Answer. Vet Center site selection is based on an evidence-based
    analysis of demographic data from the U.S. Census Bureau, DOD Defense
    Manpower Data Center (DMDC), VetPop2007 (VA's latest official estimate
    and projection of the veteran population) and by input from the seven
    Readjustment Counseling Services regional offices.
        The main criteria for new Vet Center site selection is the veteran
    population, area veteran market penetration by Vet Centers,
    geographical proximity to VA Medical Centers, and Community Based
    Outreach Clinics in the Vet Center's Veterans Service Area. This
    analysis includes information from the DMDC as to the current number of
    separated OEF/OIF veterans and the reported distribution of home zip
    codes of separated OEF/OIF veterans, as well as the number who were
    married and those with children. Special consideration for relatively
    under-served veterans residing in rural areas at a distance from other
    VA facilities is also reviewed. Proposals are developed and vetted
    through local and regional Vet Center leadership, and then submitted to
    the Under Secretary for Health for review and approval.

                              SUBCOMMITTEE RECESS

        Senator Johnson. Again, thank you, Mr. Secretary, for your
    testimony.
        This hearing is recessed.
        [Whereupon, at 4:43 p.m., Thursday, April 10, 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 2009

                                  ----------

                            THURSDAY, APRIL 24, 2008

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 10:25 a.m., in room SD-124, Dirksen
    Senate Office Building, Hon. Tim Johnson (chairman) presiding.
        Present: Senators Johnson, Landrieu, Murray, Hutchison, and
    Allard.

                             DEPARTMENT OF DEFENSE

    STATEMENT OF HON. TINA W. JONAS, UNDER SECRETARY OF
                DEFENSE (COMPTROLLER)

                    OPENING STATEMENT OF SENATOR TIM JOHNSON

        Senator Johnson. This hearing will come to order. I welcome
    everyone to this morning's hearing to discuss the president's
    2009 budget request for Military Construction and associated
    programs. We will hear from two panels of witnesses today,
    beginning with representatives from the Office of the Secretary
    of Defense.
        Secretary Jonas, Mr. Arny, thank you both for coming today.
    We look forward to hearing your testimony.
        The president's Military Construction budget request for
    2009 is a record $24.4 billion, an increase of $3.8 billion
    over the 2008 enacted level. Much of this increase can be
    attributed to BRAC 2005 which at $9.2 billion is now in its
    highest stage of construction funding, and to DOD's ``grow the
    force'' initiative to increase the end strength of the Army and
    the Marine Corps.
        These initiatives, together with DOD's Global Defense
    Posture Realignment and the military's ongoing engagement in
    two wars, have resulted in an unprecedented level of
    construction spending and force realignments that will have a
    long-term impact on our Nation's defense.
        A continuing concern for this committee is the level of
    funding requested for the Guard and Reserve. In spite of the
    huge burden these men and women have been tasked to bear, total
    aggregate funding for the Guard and Reserve components is down
    12.3 percent from what the Congress provided in 2008. The Air
    Guard and Air Force Reserve in particular have seen dramatic
    cuts in their military construction requests which are down 60
    percent and 28 percent, respectively, from what the
    administration requested last year.
        Finally, in addition to the 2009 budget request, the
    president has asked for $2.4 billion for military construction
    in emergency supplemental funds, primarily for the wars in Iraq
    and Afghanistan. On top of that, the department has identified
    another $1.1 billion in emergency construction funding that it
    is seeking in the supplemental.
        In short, a great deal of money is being requested for a
    broad array of overlapping initiatives and programs. It is the
    responsibility of this subcommittee to examine these requests
    closely to ensure that funding is properly allocated and
    prioritized.
        We will continue to monitor the department's ability to
    execute such a large military construction program,
    particularly with the aggressive schedule required to complete
    the BRAC 2005 program by 2011. We look forward to your help and
    cooperation in that task.
        Senator Hutchison, would you care to make some opening
    remarks?

                   STATEMENT OF SENATOR KAY BAILEY HUTCHISON

        Senator Hutchison. Thank you very much, Mr. Chairman. I'm
    very pleased to have the Department of Defense and the Navy
    here to discuss the Military Construction budget.
        As we begin this process, I think there are some very
    encouraging trends in military construction. The overall
    request is $24.4 billion, the largest ever for military
    construction, and especially important to me is the $9 billion
    to implement the BRAC actions.
        We are trying very hard to continue to meet the 2011
    statutory deadline and I think the emphasis on BRAC is very
    well founded. I look forward to your comments, Mr. Arny, to
    tell us how we're going to stay on that schedule.
        The overall Department of Defense budget is balanced and
    consistent with the stated needs of the department, including
    funds to increase the end strength of active duty forces which
    I have advocated for a number of years. I'm glad that the
    services are planning in a comprehensive way, not leaving
    facilities out of their calculations, and emphasizing quality
    of life, particularly for our younger enlisted service members.
        My interest in military construction is in providing the
    right facilities for our fighting forces. The Army is
    undertaking a huge restationing of troops back to the United
    States and this committee has really been the leader in
    producing. Our overseas basing commission was intended to look
    at overseas bases and whether they were meeting the needs of
    today's Army and marines especially, Navy and Air Force as
    well, and to make sure that we were doing it right. That caused
    the Department of Defense to do the correct assessment and now
    we will have more soldiers restationed back in America where we
    have better training facilities and we can put in more
    permanent housing and quality of life structures.
        The marines are also preparing to undertake a massive move,
    relocating 8,000 service members and their families from Japan
    to Guam. Many of these marines will move on to Anderson Air
    Force Base. The Departments of Defense and State have done a
    good job in gaining the Japanese funding to help with this move
    and that makes it all the more important that we have good
    coordination between the services to get it right.
        These are two of the incredibly ambitious agendas within
    the Department of Defense and I'm pleased to support the
    infrastructure for all of our military families for BRAC to
    house those who are coming back and, of course, those who might
    be moving.
        It is against this backdrop that we begin to look at the
    budget request from the Navy and Marine Corps. $3.1 billion is
    a 42 percent level over the 2008 enacted level. This increase
    will largely support the Marine Corps' end strength increase
    through the ``grow the force'' initiative. I'm very pleased
    that the Marine Corps is getting this plus-up. They are
    carrying such a heavy load in the war on terror. They're doing
    a great job and they do need the end strength increase.
        The Army has requested $4.6 billion for fiscal year 2009,
    an 18 percent increase over the 2008 level. The Air Force
    budget has slowed again this year, decreasing 19 percent from
    last year's enacted level.
        I'm very pleased that the request for the Army Reserve is
    up to $282 million, representing a 90 percent increase from the
    2008 enacted level. I think that is very important. Again, the
    Army--especially, the Army Reserve--is certainly carrying a
    heavy burden load in this war, as are all of our Reserve
    components. Increasing the support for them, I think, is very
    important.
        I hope that Ms. Jonas will speak to the overall trend on
    the Naval and Air Force Reserve components because there's a
    downward trend there. We will have another Air Force hearing, I
    know, later in this process.
        The Navy and Marine Corps representatives will join us
    later today and I'm looking forward to hearing about their
    needs and priorities for 2009. I support the Department of the
    Navy's emphasis on bachelor quarters, child development centers
    and fitness centers. The Marine Corps' plan to grow by 27,000
    members as they transition to a 202,000 end strength is
    certainly well planned and I'm pleased to see that the MILCON
    and Housing requests will accommodate, train and house these
    additional personnel and their families.

                               PREPARED STATEMENT

        So with that, I appreciate very much what I'm seeing and
    look forward to hearing more of the details. I probably will
    have to leave before the question period, but I do want to hear
    your opening statements.
        So thank you very much.
        [The statement follows:]

               Prepared Statement of Senator Kay Bailey Hutchison

        Good morning Mr. Chairman. I would also like to welcome our
    witnesses and guests. Today, we will examine 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 Navy, including the United States Marine Corps. I look forward to
    discussing the construction needs of our soldiers, sailors and airmen
    with Ms. Jonas, BRAC issues with Mr. Arny, and the needs of the Navy
    and Marine Corps with the second panel. I understand the Army and Air
    Force will be here on May 8 to discuss their needs.
        As we begin the budget process for fiscal year 2009, there are
    several encouraging trends in the military construction budget. The
    overall request of $24.4 billion is the largest ever for military
    construction. This includes over $9 billion to implement BRAC actions,
    as that program continues its sprint to meet the 2011 statutory
    deadline. I am very pleased to see this emphasis on BRAC and look
    forward to Mr. Arny's comments on how we can stay on schedule.
        The overall Department of Defense budget is very balanced and
    consistent with the stated needs of the Department. It includes funds
    to increase the end strength of the active duty forces, which I have
    advocated for a number of years. I am glad to see the Services planning
    in a comprehensive way, not leaving facilities out of their
    calculations and emphasizing quality of life, particularly for our
    younger enlisted service members.
        My interest in military construction is in providing the right
    facilities for our fighting forces. The Army is undertaking a huge
    restationing of troops back to the United States, and I am proud to say
    Fort Bliss and Fort Hood will be welcome recipients of a large part of
    these moves.
        The Marines are also preparing to undertake a massive move,
    relocating 8,000 servicemembers and their families from Japan to Guam.
    Many of these Marines will move onto Anderson Air Force Base. 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 Services to get
    this move right.
        These are but two of the incredibly ambitious agendas within the
    Department of Defense, and it is critical they have the right
    facilities to support these actions. We have 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 home 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.
        It is against this backdrop that we begin to examine the budget
    request for military construction. The Navy's and Marine Corps' $3.1
    billion request is 42 percent over the fiscal year 2008 enacted level.
    This increase will largely support the Marine Corps' end-strength
    increase through the ``Grow the Force'' initiative. The Army has
    requested $4.6 billion for fiscal year 2009, an 18 percent increase
    over the fiscal year 2008 enacted level. The Air Force's budget has
    slowed again this year, decreasing 19 percent to $935 million from last
    year's fiscal year 2008 enacted level.
        I am glad to see the fiscal year 2009 request for the Army Reserve
    is up to $282 million, representing a 90 percent increase from the
    fiscal year 2008 enacted level. I am somewhat concerned, however, by
    the downward trend in military construction for our Naval and Air Force
    Reserve components. I hope Ms. Jonas will speak to that overall trend,
    and we will discuss it with those services at the appropriate point in
    the hearing process. 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 Navy and Marine Corps representatives will join us later today
    and I am anxious to hear from Secretary Penn, Major General Payne and
    Rear Admiral Handley about their needs and priorities for fiscal year
    2009. I fully support the Department of the Navy's emphasis on bachelor
    quarters, child development centers and fitness centers. The Marine
    Corps' planned growth of 27,000 members as they transition to a 202,000
    end strength as a result of the Grow the Force initiative certainly is
    well planned, and I am pleased to see the Milcon and housing request
    which will accommodate, train and house these additional personnel and
    their families.
        We owe our military members and their families the best facilities
    we can provide them, and I commend the Department for making quality of
    life a top priority. All in all, I believe the Department of Defense
    has requested the right mix of military construction projects that will
    enable our service members to meet the Department of Defense's
    objectives.
        I look forward to discussing these and other issues with our
    witnesses. Thank you, Mr. Chairman.

        Senator Johnson. Senator Murray.
        Senator Murray. Mr. Chairman, thank you very much for
    holding this hearing. I do not have an opening statement, but I
    will reserve my time for questioning.
        Thank you.
        Senator Johnson. Senator Landrieu.
        Senator Landrieu. Thank you, Mr. Chairman. The same. I have
    a statement I would like to submit to the record and then will
    reserve my time for questions.
        [The statement follows:]

                 Prepared Statement of Senator Mary L. Landrieu

        Mr. Chairman, Senator Hutchison, before 1941 the War Department
    operated out of five separate buildings, which took up a majority of
    the National Mall. It wasn't until Brigadier General Brehon Sommervell
    offered a solution to the War Department's critical shortage in office
    space. On September 11, 1941 the Department began construction began on
    the largest office building in the United States, the Pentagon. To
    date, this five sided, five story and five layered building remains the
    symbol of our Nation's military. It sits on 34 acres of land, including
    the five acre center court, making a footprint large enough to
    accommodate five capitol buildings. The Pentagon was an $83 million
    project and was completed 16 months after groundbreaking.
        Today, the Department of Defense, currently manages over 533,000
    building and structures, which resides on over 51,400 square miles of
    real estate. We must continue to improve the quality of our Nation's
    military installation and infrastructure. The President has requested
    $25.2 billion in fiscal year 2009 for Department of Defense military
    construction and family housing. This will enable the Department to
    replace, restore and modernize our Nation's military installation
    assets. With a more accurate quality rating we may be able to fully
    understand the condition of our U.S military infrastructure. We must
    return to the efficient and affordable approach taken with the
    construction of the Pentagon.
        As you know, the State of Louisiana is deeply committed to the
    success of the Federal City Project at Naval Support Activity New
    Orleans--West Bank and we stand ready to do whatever it takes to make
    this project a success. Federal City is the largest economic
    development project in the State of Louisiana, and one that is vital to
    the economic recovery of New Orleans.
        The State of Louisiana has given unprecedented support by commiting
    to invest $150 million into the project to create a great public-
    private base on which to house the Marine Forces Reserve (MarForRes)
    Headquarters. Last Tuesday, our Governor sent a letter to Secretary
    Winter, fully committing $150 Million in State funds--funds that can
    only be used for the Federal City Project.
        The Federal City project will result in Military Construction and
    BRAC saving to the Department of Navy of approximately $75 million,
    conservatively. Additional savings will be realized from the shared
    services costs that will be spread among Federal City tenants. From a
    Federal fiscal perspective it is not sound federal polity to turn down
    $150 million in state subsidy to the Federal City project, of which
    over half will be directed to the Navy. Without this subsidy, The
    Department of Navy will be forced to find an unbudgeted $150 million to
    $200 million in BRAC funding, an approach I do not support.
        I am well aware of the commitment that the Secretary has made to
    make the Federal City concept work. However, I will be very troubled
    should any deviation or lack of support for that commitment fall, to
    make Federal City happen with Marine Forces Reserve as its anchor
    tenet. Nonetheless, I am very excited about the project and look
    forward to the September ground breaking ceremony that will allow
    construction activities to begin. I will discuss this matter in great
    detail with you all today, and would greatly appreciate the cooperative
    effort of the Department of Navy staff has had with the New Orleans
    Federal Alliance, and hope that we can continue to work together to
    move this project into reality.
        Today's operations tempo on our military is very taxing on our
    soldiers, sailors, marines and airmen. When they return from combat
    operations they deserve adequate living quarters that they are proud to
    call their home. I have major concerns that the Department has not
    adequately addressed this issue. Many soldiers live and work in poorly
    maintained facilities all over the world. For example, the barracks
    that soldiers are currently living in at Fort Polk. Between 1977 and
    early 1980, 34 Barracks were built at Fort Polk at a cost of around $5
    million each, for a total of $170 million. In fiscal year 2005 to
    present, 19 barracks were converted to fit new 1+1 construction
    standards of 140-183 square feet. In addition to cramp quarters and
    out-dated barracks, 16 barracks still suffer from irreparable and
    insufferable mold damage. As of today, new construction is not expected
    until 2013, which is estimated to cost approximately $188 million.
        Recently an Installation Status Report shows that a majority of the
    thirty-four barracks on Fort Polk do not meet an acceptable living
    standards under the Departments own barrack standards. The report shows
    sixteen have a red rating, meaning substandard living conditions for
    the soldiers; eleven are adequate but on in need of desperate repair
    with the remaining seven building deemed decent living accommodations.
    The Fort Polk Sustainment, Revitalization and Modernization program has
    been substantially under funded in the past and continues to be
    underfunded. The lack of these dollars has had a detrimental effect on
    the maintenance of these barracks. During the years 2001-2005 required
    a minimum of $10 million a year, but only 30 percent was funded over
    the 5 year period. In the past 3 years the Army has done better to
    improve the barracks by providing 32 million in sustainment dollars.
    This has helped but still leaves about 80 percent of the barracks in
    un-livable conditions.
        As it feels like we constantly point out the things that are wrong
    within the Department of Defense, I would like to take a moment to
    commend the Department on their successes. DOD for the past several
    years has been very successful replacing or renovating their housing
    facilities on base, with privatized housing. For example, in 2003 Fort
    Polk began renovating their family housing, by means of Residential
    Communities Initiative, which is privatization of military family
    housing. On April 10, 2003 the Army awarded their first contract. The
    immediate impacts of the RCI have been: new playgrounds, 6 recreational
    areas, 21 pocket parks, and 77 bus stops. The economic impact for the
    local community has been overwhelming with: $240 million being spent in
    first 11 years and construction expenditure to date is $105 million,
    which 77 percent has been spent with small and local businesses. The
    base plans to continue with their initiative by constructing 405 new
    homes, renovating 3,416 of the 3,466 existing homes and demolishing 50
    old homes.
        In light of this fact and the major improvements to our soldiers
    and there families we need to act and take the appropriate action for
    our single enlisted soldiers. We should exploit the accomplishments
    that the Defense Department has already achieved through privatization
    of housing and look at the opportunity to privatize barracks.
        One of the great things about our military is the 200 year
    tradition of the volunteer soldier--the citizen soldier. They serve
    their country courageously, with honor, and with the greatest regard
    for human life possible. It is our task to ensure that their country
    treats them with honor, and with the greatest regard for their
    families, their sacrifice and their safety, when they are deployed and
    returning home. We have over 180,000 troops currently serving in Iraq
    and Afghanistan and we have lost 4,536 brave Americans since the
    beginning of operations. The irreplaceable cost in Iraq and Afghanistan
    is not the enormous sum before us, but the father, mother, son or
    daughter serving our country.
        Mr. Chairman, I look forward to hearing the testimony from our
    witnesses today and hope that they are ready to honestly and openly
    answer any questions this committee may ask.
        Thank you, Mr. Chairman.

        Senator Johnson. Secretary Jonas, Mr. Arny, thank you again
    for appearing before our subcommittee. Your full prepared
    statements will be placed in the record, so I encourage you to
    summarize your remarks to allow more time for questions.
        Secretary Jonas.

                           STATEMENT OF TINA W. JONAS

        Ms. Jonas. Thank you very much, Mr. Chairman. I appreciate
    the opportunity to appear before this subcommittee, and I want
    to personally thank the subcommittee for all the support that
    it gives our men and women in uniform.
        I will give a brief statement and then address the issue of
    the Air Guard matter as the Senators have limited time today.
        First of all, from an overall department perspective, I
    want to thank Congress, this committee in particular. We have
    before the Congress a fiscal year 2009 request of $515.4
    billion. That is a $35.9 billion increase or 7.5 percent
    increase over the enacted level for 2008. If you put that in
    inflation adjusted dollars, we're up about 5.4 percent over the
    prior year.
        We believe this budget provides for a high state of
    readiness for additional ground force strength, which the
    committee has noted; for additional combat capabilities for our
    U.S. Armed Forces; and keeps us and our technology advancing to
    address future potential threats.
        We continue to provide strong support for our Nation's
    military members and their families. The military construction
    budget, of course, is a big part of what is necessary in the
    quality of life area. As noted by the chairman, we're
    requesting $21.2 billion or an increase of 3.4 percent over the
    prior year for military construction. We are hoping to increase
    our end strengths by 92,000 soldiers and marines over the
    coming years. As the Senators have also noted, the BRAC funding
    that we requested is at its peak, about $9.1 billion, to
    implement the recommendations of 2005.
        I again want to thank the committee and express
    appreciation for the support that we receive from the Congress
    as a whole.
        There are two issues, sir, that I would like to address.
    One is we appreciate the ongoing efforts of the Congress to
    fully fund the BRAC amount for the 2008 period. We've had
    discussions with the House as well and we think that's moving
    quite well. Full funding is important for us to be able to make
    our deadlines.

                               PREPARED STATEMENT

        Second, pursuant to our conversation yesterday, Mr.
    Chairman, I had a meeting with the Air Force Comptroller
    yesterday about the levels of funding for the Air Guard in
    particular and we're going to conduct an ongoing study. We want
    to take a look at the outyear funding, and I have submitted a
    copy of the letter, that I sent to him, to you.
        I understand the concerns of the committee and I'll pay
    particular attention to that issue.
        Mr. Chairman, I will submit the rest of my statement for
    the record.
        [The statement follows:]

                      Prepared Statement of Tina W. Jonas

        Mr. Chairman, I just have a brief statement, and I will submit it
    for the record. Mr. Arny has a lengthier statement for the record as
    well, so I will keep it brief.
        Mr. Chairman and members of the Committee, thank you for the
    opportunity to discuss the Military Construction component of President
    Bush's fiscal year 2009 budget request for the Department of Defense.
        On behalf of the men and women of the Department--both Service
    members and civilians--I also want to 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.
        Mr. Chairman, the President's base budget for Defense is $515.4
    billion in discretionary authority for fiscal year 2009. That is an
    increase of $35.9 billion or 7.5 percent over the enacted level for
    fiscal year 2008. Taking inflation into account, the real growth in
    this request is 5.4 percent. We are very pleased with that in the
    Department.
        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 $21.2 billion, an increase of $3.4
    billion or 19 percent over the prior year. It funds the Department's
    most pressing priorities and facilities requirements, including new
    construction, replacement of troop housing, and facilities to support
    the increase of 92,000 soldiers and Marines over a 5-year period.
        Also included in that amount is $9.1 billion to implement the
    recommendations of the 2005 Base Realignment and Closure Commission.
    This is the peak year for investment in BRAC, and these funds are
    critical if we are to successfully complete those projects by the
    deadline of 2011. We are also looking forward to reaping the savings
    from the anticipated BRAC, but we cannot realize those savings unless
    we are successful in Defense appropriations.
        In addition to the $21.2 billion needed for facilities, the
    Department is also requesting $3.2 billion for family housing. This
    funding is vital for ``quality of life'' programs and will enable the
    Department to privatize an additional 12,324 units and to eliminate
    inadequate housing units overseas. The requested amount is
    approximately $300 million or just over 10 percent higher than the
    prior year. A big portion of that is for the Grow the Force initiative
    that we are pursuing.
        So on behalf of the Department and the men and women of the Armed
    Services, I want to thank the committee for letting us appear here
    today, and I look forward to your questions.

        Senator Johnson. Will be received. Mr. Arny.

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

        Mr. Arny. Thank you, Chairman, Ms. Hutchison, other
    distinguished members of the subcommittee. It's my pleasure to
    join Ms. Jonas, who I've known for many years, to appear before
    you on behalf of the department for our military construction
    budget.
        I just have a couple short remarks, too, in terms of our
    budget. We are continuing to recalibrate our bases overseas and
    the United States through our global basing efforts and through
    our BRAC. As Ms. Jonas said, it's important for us on the BRAC
    issue that we receive the $939 million that was reduced last
    year in order for us to stay on track. We know that's an issue
    for you all and it is for us, and we'll work with you on that
    and work with all the committees to provide you whatever you
    need so that we can get that money back on track. Our folks are
    doing the best they can but they need those funds to keep the
    BRAC 2005 on track.
        On recap and modernization and sustainment, we have a
    higher request in this year's budget than last. Our Housing and
    MILCON Programs are also higher than last year and the Navy in
    particular is leading the way on bachelor housing
    privatization.
        All of these programs and others are discussed in greater
    length in my prepared statement.
        I was also going to discuss with you the MILCON funding for
    Guard and Reserves. I think Ms. Jonas has covered that. We do
    review it. We believe, to the best of our knowledge, that the
    program is balanced from our total perspective. We at OSD do
    review it every year and we will continue to examine the
    specifics to make sure that all of the various branches of the
    services are covered.
        As you've seen, our MILCON is up and also our BRAC MILCON
    is up $200 million from last year for the Guard and Reserve. A
    lot of that goes into the Reserve centers but that's up as
    well.
        The last issue I'd like to discuss briefly is joint basing.
    It's been very important to us in BRAC 2005. One of the major
    efforts, other than reductions in moving folks around, was to
    introduce joint basing into the Department of Defense.
        We had it in the Reserve side in kind of a cobbled together
    way. It was working out pretty well, but we had a number of
    major bases that were either very close to each other or were
    actually shared common borders and it just didn't make sense to
    do--for instance, at Lakehurst, McGuire Air Force Base,
    Lakehurst Naval Air Station, and Fort Dix, to have all three of
    those share common borders and yet have three different
    installation managements.
        So part of BRAC 2005 was to do joint basing. Before I took
    over this--and we're on track. I am here to report that we are
    on track. Before I took over this position, the Deputy
    Secretary of Defense had issued the Joint Basing Implementation
    Guidance which was a big step in the right direction.
        What that paper stated, the most controversial issue we had
    was when we joined the bases, would the supported base transfer
    real property and total obligational authority to the
    supporting command? To illustrate that, at the McGuire-
    Lakehurst-Dix, the Air Force is in the lead. So the Air Force
    is the supporting component. The Army and the Navy are the
    supported components.
        When we fully implement joint basing, the Army and the Navy
    will transfer all of their real property to the Air Force. So
    from then on, the Air Force is responsible for maintaining the
    installations on all three bases. The Navy and the Army will
    transfer the TOA initially and from then on, the Air Force will
    budget for all of the maintenance and repair of those
    facilities and replacement. Okay?
        Now, the one difference is if the Navy, which is mostly
    Naval Air Systems Command, the Navy decides to build a new
    catapult, that's mission, a new hangar, they decide to bring in
    a new mission to the Navy base, it will be their
    responsibility, if it requires new MILCON, say they need a new
    hangar, there's no hangar on the joint base that can
    accommodate them, so the three of them get together and decide,
    well, we need a new hangar, the MILCON for that hangar will be
    budgeted by the Navy, supported by the Navy, defended before
    you all. When it's passed and that hangar gets built, then that
    property will transfer to the Air Force and you can see, I
    can--you'll see if you look at the--we had 26 bases, I believe
    the number was. We've combined them down to 12 joint bases.
        Guam is one of the big issues we have right now. Guam will
    be a joint base with the Navy lead and we have worked--when I
    took over in the middle of February, the Deputy Secretary made
    his decision on the joint basing guidance. We had working
    groups in place that had not been active for about a year. We
    began to meet on a weekly and sometimes more than weekly basis
    to implement that guidance.
        I'm here to report that the guidance is out. We're having a
    joint basing conference up in Seattle at the end of June for
    Lewis McCord where Lewis is the--Fort Lewis is the lead and
    McCord Air Force Base is the follow-on. We're having a joint
    basing conference. We had a joint--we had a VTC to all the
    bases around the country, including Guam, put out the guidance.
    We have a phased schedule and initial IOCs are September of
    this year.

                               PREPARED STATEMENT

        So we are on track, moving forward, and I myself am going
    to visit all the joint bases. We know we're going to get lots
    of questions from the field. We're keeping our working groups
    in place that have put all this together. We have some 200
    different levels of measurement and to answer Senator
    Hutchison's question, we believe now firmly that joint basing
    will be in place and is working well.
        So with that, the rest of our statement is in the record
    and we're prepared to answer your questions.
        [The statement follows:]

                        Prepared Statement of Wayne Arny

        Chairman Johnson, Senator Hutchison, distinguished members of the
    subcommittee. I appreciate the opportunity to appear before you today
    to address the President's Budget request for fiscal year 2009 and to
    provide an overview of the approach of the Department of Defense to the
    management of the Nation's military installation assets.
    Overview
        Installations are the foundation of America's security--these
    assets must be available when and where needed, with the capabilities
    to support current and future mission requirements. As the enterprise
    managers of the defense installations portfolio, we recognize the
    importance of ensuring their capabilities are delivered--effectively
    and efficiently.
        America's military installations, including their associated
    environment, must sustain the home station and forward presence of U.S.
    forces and support training and deployments to meet the Nation's
    defense needs. They must provide a productive, safe, and efficient
    workplace, and offer the best quality of life possible for our military
    members and their families, as well as the civilian and contractor
    workforce.
        The President and the Secretary of Defense challenged the military
    to transform itself to meet current and future threats to America's
    security. In addition to leading-edge weapon systems, doctrinal
    innovation, and the employment of technology, this transformation also
    requires a similar change in our approach to the fundamental
    infrastructure business practices and to the infrastructure
    ``backbone'' of the Department of Defense.
        The Office of the Deputy Under Secretary of Defense (Installations
    and Environment) is a focal point in this transformation by fostering
    the best management practices in our traditional areas and by extending
    these practices as our force and base structures evolve.
    Global Defense Posture
        Supporting the warfighter involves much more than episodic spurts
    of support during combat and other operational missions. Supporting the
    warfighter requires a long-term, day-to-day commitment to deliver
    quality training, modern and well-maintained weapons and equipment, a
    safe, secure and productive workplace, a healthy environment, and good
    living conditions for our members and their families. Our installations
    are the core of U.S. combat power--and our installation assets are an
    inseparable element of the Nation's military readiness and wartime
    effectiveness.
        The fiscal year 2009 request continues the Department's efforts to
    strengthen foward U.S. military presence, including facilities,
    personnel, infrastructure, and equipment. The Department continues to
    realign U.S. global defense posture to better contend with post 9/11
    security challenges by transforming overseas legacy forces, Cold War
    basing structures, and host-nation relationships into a flexible,
    forward network of access and capabilities with allies and partners.
    These efforts include:
      --Continued force posture realignments within and from Central Europe
            which enable advanced training and lighter, more flexible
            ground force capabilities to support NATO's own transformation
            goals;
      --Shifting our European posture South and East by transforming the
            173rd Airborne Brigade in Italy and establishing a headquarters
            and infrastructure support for rotational presence in Romania
            and Bulgaria;
      --Setting conditions for future realignments in the Pacific as part
            of U.S.-Japan force posture changes that will have far-
            reaching, beneficial impacts for the U.S.-Japan alliance;
      --Continued consolidation and reduction of forces on the Korean
            peninsula to strengthen our overall military effectiveness for
            the combined defense of the Republic of Korea; and
      --Developing basic infrastructure and capabilities for current and
            future operations in the U.S. Central Command area of
            responsibility and other war on terrorism operating regions.
        Additionally, the fiscal year 2009 request supports new
    Departmental initiatives, including the establishment of U.S. Africa
    Command, as DOD's global defense posture plans evolve and mature.
        The Department continues to maintain and strengthen host-nation
    partnerships supporting support for these posture changes. The fiscal
    year 2009 global defense posture projects ensure continued
    strengthening of forward capabilities for the Global War on Terror and
    other expeditionary non-traditional missions, commitment to alliance
    goals, and collective defense capabilities, and enhanced deterrent
    capabilities for addressing future security challenges.
    Implementing Base Realignment and Closure (BRAC) 2005
        As previously discussed to before this Committee, BRAC 2005 is the
    largest round of base closures and realignments undertaken by the
    Department. After an exhaustive examination of over 1,200 alternatives,
    the Secretary of Defense forwarded 222 recommendations to the BRAC
    Commission for its review. The Commission accepted about 65 percent
    without change and its resulting recommendations were approved by the
    President and forwarded to the Congress. The Congress expressed its
    support of these recommendations by not enacting a joint resolution of
    disapproval by November 9, 2005; therefore, the Department became
    legally obligated to close and realign all installations so recommended
    by the Commission in its report. These decisions affect over 800
    locations across the Nation and include 24 major closures, 24 major
    realignments, and 765 lesser actions. The BRAC Act requires that the
    Department begin implementation of each recommendation within 2 years
    of the date the President transmitted the Commission's report to the
    Congress and complete implementation of all recommendations within 6
    years of that date which is September 15, 2011.
        Beyond the comparative size, it is important to note that BRAC 2005
    is the most complex round ever. This complexity is not merely a
    function of its magnitude, but is, to the largest extent, a function of
    the original goal established for this round: that BRAC 2005 would
    focus on the reconfiguration of operational capacity to maximize war
    fighting capability and efficiency. Focusing on operational capacity
    requires that we appropriately assess the increased military
    capabilities we are achieving through these recommendations.
        The BRAC program is substantial; it represents a $33.2 billion
    requirement over 2006-2011 and $4 billion in annual savings after full
    implementation (after fiscal year 2011). The Department originally
    estimated BRAC 2005 investment using the Cost of Base Realignment
    Actions (COBRA) model at $22.5 billion (adjusted for inflation) with
    Annual Recurring Savings of $4.4 billion. When compared to our current
    requirement there is a $10.7 billion or 48 percent increase in these
    costs.
        There are a number of reasons for this increase, and even though
    the reasons have been discussed in previous hearings they deserve
    repeating. The ``COBRA'' model used in arriving at the original
    estimates is a tool for comparative analysis that ensures all
    installations were treated equally as required by the BRAC law. As an
    analytical tool it is dependent on the quality of the input, which is
    based on the known conditions at the time the recommendations were
    developed without the benefit of detailed site surveys and thorough
    planning charrettes. As such, resulting estimates were never intended
    to be budget quality.
        As a consequence, the primary cost increase drivers were market
    driven military construction (MILCON) factors and Army specific
    investments. MILCON makes up approximately 70 percent of this BRAC
    program (compared to about 33 percent in previous BRAC rounds).
    Therefore, this round was particularly influenced by price growth in
    the construction industry. Given the significance of MILCON on this
    round's implementation, it is not surprising that 85 percent of the
    cost growth is associated with construction.
        Equally significant was the Army leadership's decision to invest an
    additional $4 billion to recapitalize its total force, accommodate
    larger Army units and a growing force, and address the inflation
    addressed above. The Army leadership consciously chose to ensure that
    its troops had improved war fighting facilities such as training
    ranges, robust reserve component infrastructure, and quality of life
    facilities.
        DOD also chose to make similar investments in other areas. For
    example, acting on the recommendations of the Independent Review Group
    that examined conditions at Walter Reed, the Department committed to
    accelerate the closure of Walter Reed. In addition, DOD leadership
    directed that the quality and scope of the new National Military
    Medical Center and the Fort Belvoir Community Hospital incorporate
    lessons learned from the current conflict. Investments in improvements,
    such as more single patient rooms and wounded warrior support
    infrastructure, increased costs. Similar cost growth has occurred for
    largely the same reasons in the San Antonio Military Medical Center.
        Other DOD Components chose to recapitalize (build new) rather than
    renovate and expand existing facilities to accommodate mission change
    and incorporate lessons learned. For example, both the Missile Defense
    Agency and the National Geospatial Intelligence Agency determined that
    increased costs to build special compartmental intelligence facilities
    were worth the added investment to meet mission needs. The Army
    originally intended to use existing space at Fort Knox, KY for the co-
    location/consolidation of its military personnel and recruiting command
    with the Accessions and Cadet Command creating a Human Resources Center
    (HRC) of Excellence. The Army determined the increased cost to build a
    ``new'' HRC complex was more cost effective than renovating 1950's era
    facilities spread throughout the installation.
        Finally, there were also increases in non-MILCON cost categories;
    such as environmental cleanup costs. Theses costs were not included in
    the original COBRA estimates by design. If clean up costs had been
    incorporated in COBRA, the process would have had an artificial bias to
    close only ``clean'' bases.
        The Congress provided $7.2 billion to the Department in fiscal year
    2008 to continue implementation of the BRAC recommendations, $939
    million less than what the fiscal year 2008 President's Budget
    requested. This cut compounds the problems already created from delayed
    appropriations in the last 2 fiscal years. Delays and cuts adversely
    affect construction timelines because approximately 70 percent of the
    BRAC 2005 effort directly supports military construction. Delays in
    funding and the $939 million reduction present severe execution
    challenges and seriously jeopardize our ability to meet the statutory
    September 15, 2011 deadline. This will mean sacrificing savings that
    could have been achieved and delaying movement of operational missions.
        If the $939 million reduction is not restored, or even if it is
    restored late in the process, we will have to work, very, very hard to
    meet the statutory deadline. 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, as
    determined by their operational and/or business case effects, go
    forward on the schedule previously provided to Congress.
        The $9.2 billion for BRAC 2005 implementation and $393.4 million
    for continuing environmental cleanup and caretaker costs at previous
    BRAC sites requested in the fiscal year 2009 President's Budget is
    approximately $1.1 billion more than the fiscal year 2008 President's
    Budget request. The $9.2 billion request represents full funding for
    BRAC 2005 implementation assuming the fiscal year 2008 reduction is
    restored.
        As my predecessor previously testified, the Department recognized
    the challenges for this BRAC round and responded by initiating a
    process to develop Business Plans that establish the requisite actions,
    the timing of those actions, and the costs and savings associated with
    implementing each recommendation. The documentation of savings in
    Business Plans directly responds to the observations made by the U.S.
    Government Accountability Office in previous reports regarding the
    Department's BRAC implementation process. Additionally, the OSD Office
    of the General Counsel has been a key player in reviewing the Business
    Plans to ensure that they are legally sufficient and to verify that the
    Department is meeting its legal obligations.
        During the past year of BRAC implementation, the Department has
    several significant efforts that are underway. Specifically the award
    of a $429 million (first increment) military construction project for
    the National Geo-Spatial Agency headquarters at Fort Belvoir, Virginia,
    and award of 17 military construction projects at Fort Bliss, Texas to
    support Army Global Rebasing, Transformation and BRAC. At Fort Sill,
    Oklahoma the military construction project supporting the establishment
    of the Net Fires Center that will improve training capabilities while
    eliminating excess capacity at institutional training installations is
    progressing. At Fort Bragg, North Carolina, two BRAC projects totaling
    $80 million were awarded and at Fort Riley, Kansas, there are 6 BRAC
    MILCON projects that support Global Rebasing currently on going. We
    continue to make great progress at Fort Lee, Virginia, with the award
    of the projects that will support the creation of a Combat Service
    Support Center of Excellence and at Fort Benning, Georgia, with the
    consolidation of the Armor and Infantry schools. The Navy's largest
    BRAC 2005 operational action is to close Naval Air Station Brunswick,
    Maine and consolidate the East Coast maritime patrol operations in
    Jacksonville, Florida. The Navy awarded contracts for the final two
    increments to complete the contracting actions required to build a new
    hangar ($123 million) for the P-3 squadrons that will move to
    Jacksonville. When completed in fiscal year 2011, the Navy will have
    streamlined East Coast maritime patrol operations and expects to save
    over $100 million per year.
    Assisting Communities
        The Department, through the Office of Economic Adjustment (OEA) and
    the Defense Economic Adjustment Program (DEAP), continues to work with
    States and the more than 175 communities across the country impacted by
    the effects of BRAC 2005, Global Defense Posture Realignment (GDPR),
    Army Modularity, and ``Grow the Force'' actions.
        To date, the Department has recognized Local Redevelopment
    Authorities (LRAs) for 110 BRAC sites, encompassing more than 47,000
    acres of surplus property. These LRAs are expected to provide
    leadership and develop a redevelopment plan at each location. In some
    instances LRAs may also direct implementation of the redevelopment
    plan. The Department is assisting these LRAs as they conduct homeless
    outreach and seek to balance the needs of the communities in the
    vicinity of the installation for economic redevelopment and other
    development with the needs of the homeless as established by statute.
    Efforts to date have yielded completed redevelopment plans at 62
    locations. Once completed, a redevelopment plan is to be included as
    part of an application to the U.S. Department of Housing and Urban
    Development (HUD) for that Department's review for compliance with the
    statute.
        Following HUD's review, the Military Departments work closely with
    affected LRAs to tailor disposal actions that consider local
    circumstances. The Department has an array of legal authorities by
    which to transfer property on closed or realigned installations. These
    include public benefit transfers, economic development conveyances at
    cost and no cost, negotiated sales to State or local government,
    conservation conveyances, and public sales, and the Military
    Department's National Environmental Policy Act analyses give
    substantial deference to the LRA's redevelopment plan.
        The Department has disposed of approximately 481,290 acres, or 95
    percent of the real estate made available in prior BRAC rounds (1988,
    1991, 1993, & 1995). Federal assistance to these locations has exceeded
    $1.9 billion to date, and local redevelopment efforts in turn have
    resulted in the creation of over 137,500 jobs, more than offsetting the
    129,600 civilian jobs that were lost as a result of the BRAC actions.
        In addition to those communities that are affected by the closure
    and downsizing of military installations, OEA is working with locations
    experiencing a growth of missions and/or personnel. These locations are
    in close dialogue with their local installations to understand the
    timing and scope of this growth and many are developing growth
    management plans for additional community services and facilities to
    ease the absorption of the new DOD associated population. OEA hosted a
    December 2007 ``Growth Summit'' in St. Louis, bringing more than 260
    Summit participants from affected communities and their neighboring
    military installations, where mission growth is expected, together with
    cognizant Federal agencies. The Summit introduced communities and these
    Federal agencies to each other and provided an opportunity for
    participants to share their challenges, plans, and experiences
    regarding a variety of specific community growth issues including
    education, housing, transportation, workforce adjustment,
    infrastructure, healthcare, and compatible use/sustainability.
        The challenge for many of these locations is to respond to a myriad
    of hard infrastructure (road, schools, houses, water and sewer) and
    soft infrastructure (public services, health care, child care, spousal
    employment) issues that directly bear on the quality of life for our
    warfighters, their dependents, and the homeowners, businesses, and
    workers in the surrounding communities. A primary concern is how to
    blend and apply local, State, and private resources to address local
    needs. Through this process, potential gaps in these civilian sources
    are emerging and OEA is working with each affected State and locale to
    understand these gaps and raise them with other Federal Agencies for
    consideration and action.
        The ability to support States and communities affected by these DOD
    actions goes beyond the Department's capacities, resources, and
    authorities. Accordingly, the Department relies upon the Economic
    Adjustment Committee (EAC) to implement the Defense Economic Adjustment
    Program (DEAP) pursuant to Executive Order 12788 (as amended). The EAC
    is comprised of 22 Federal agencies to coordinate interagency and
    intergovernmental adjustment assistance and serve as a clearinghouse
    for the exchange of information between Federal Government, State, and
    community officials involved in the resolution of economic adjustment
    concerns resulting from DOD actions. To help facilitate this exchange
    of information, OEA has begun a major initiative this fiscal year to
    develop an information portal to support the mission of the EAC. By
    providing all stakeholders with a shared understanding of planned
    drawdowns, increases, and other vital information, the EAC will be able
    to best facilitate cooperation among Federal, State, local and regional
    partners, in order to minimize confusion, delay, and sub-optimal
    progress.
        In response to BRAC 2005, approximately $300 million in Federal
    grants, loans, and technical assistance has been was provided to date
    to assist State and local governments, businesses, and workers to date.
    Efforts under the auspices of the EAC are presently concentrated on
    worker assistance, education and transportation support for ``growth''
    communities, public benefit property conveyance issues, and economic
    development assistance. For example, senior Defense and Education
    officials have already visited some growth locations to better
    understand the issues associated with changes in school age dependent
    student enrollment and to develop an understanding of responses
    necessary to assist local education efforts to adjust to these changes.
    Managing Infrastructure
        Along with continued improvement in business practices, the
    Department is focused on improving the quality of military
    installations as evidenced by the emphasis on more accurate Quality
    Ratings, which 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
    545,000 facilities on approximately 30 million acres of land.
        The Department's Real Property Asset Management plan, recently
    published in the form of the 2007 Defense Installations Strategic Plan,
    directly supports the President's Management Agenda by identifying
    specific goals and objectives to improve the fidelity of inventory
    reporting and tracking the metrics designed to monitor improvement
    progress. This plan also focuses on improved asset management planning,
    inventory submission and performance measure data, and the disposal of
    unneeded assets. The Department's progress in meeting these goals is
    monitored and reported quarterly through the President's Management
    Agenda scorecard. As part of the Federal Real Property Council's
    government-wide initiatives to improve real property inventory
    reporting, the Department continues to provide inventory and
    performance data to the Federal Real Property Profile annually.
        One of the primary tools contributing to the improvement of data
    integrity has been the implementation of DOD's Real Property Inventory
    Requirements document. This document refines the quality of data
    collected by improving the specificity of the data elements requested
    for submission and by standardizing the data elements collected among
    the Military Departments. Our annual data collection process is
    currently undergoing a significant upgrade with the development of a
    net-centric data warehouse that will soon directly interface with the
    Military Department's native real property inventories and eliminate
    the old painstaking manual data collection processes that had a high
    potential for unintended errors.
        Facilities sustainment is a key element of our approach to
    maintaining our real property. Sustainment represents the funds for
    necessary maintenance and for the major repairs or replacement of
    facility components that are expected to be made periodically
    throughout the life cycle. Sustainment prevents deterioration,
    maintains safety, and preserves performance over the life of a
    facility. It has been and continues to be the top priority in the
    Department's facilities strategy. To forecast sustainment funding
    requirements, DOD developed the Facilities Sustainment Model several
    years ago using standard benchmarks for sustainment unit costs by
    facility type (such as cost per square foot of barracks) drawn from the
    private and public sector sources. The cost factors used to establish
    those benchmarks are updated on a regular basis. Our Department-wide,
    long-term goal continues to be full sustainment of our facilities to
    optimize our investment and ensure readiness. As a reflection of the
    importance of facilities sustainment to the overall health of our
    inventory, the fiscal year 2009 budget request reflects an increase in
    the Department-wide sustainment funding rate from 88 percent in the
    fiscal year 2008 budget request to 90 percent, which equates to a $796
    million increase.

                    SUSTAINMENT AND RECAPITALIZATION REQUEST
                   [President's budget in millions of dollars]
    ------------------------------------------------------------------------
                                                Fiscal year     Fiscal year
                                               2008 request    2009 request
    ------------------------------------------------------------------------
    Sustainment (O&M-like) \1\..............           6,686           7,482
    Restoration and Modernization (O&M-like             1193           1,780
     plus) \1\..............................
    Restoration and Modernization (Military           5, 908           8,102
     Construction)..........................
                                             -------------------------------
          TOTAL SRM.........................          13,787          17,364
    ------------------------------------------------------------------------
    \1\ Includes Operations and Maintenance (O&M) as well as related
      military personnel, host nation, and working capital funds and other
      appropriations such as Research, Development, Test and Evaluation
      (RDT&E)

        Another key element of our stewardship is recapitalization.
    Recapitalization includes restoration and modernization, using the
    resources necessary for improving facilities. It is the second element
    of the Department's 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. Our
    DOD goal has been to achieve a recapitalization rate of 67 years, and
    the fiscal year 2009 budget request exceeds that goal by funding
    recapitalization at a rate of 56 years. This is an improvement over the
    rate of 76 years achieved in the fiscal year 2008 budget, and is due,
    in part, to the impact of BRAC and Global Basing. The fiscal year 2009
    budget request increased by $2.781 billion from the fiscal year 2008
    budget request for recapitalization.
        We are in the process of refining the way that we measure our
    investment in recapitalization, and will no longer be measuring a rate
    in years. The new method, which will be implemented in fiscal year
    2010, will focus on the modernization of the inventory of existing
    facilities, and will be tailored to the actual inventory of facilities
    within each Military Department.
        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, Army and Marine Corps Grow-The-Force
    initiatives, and bed-down of new weapons systems, such as F-22 and the
    Joint Strike Fighter.
        Elimination of excess and obsolete facilities in the inventory, an
    effort separate and distinct from the BRAC process, continues to be
    another key element of the Department's asset management plan. The
    Military Departments continue to maintain and execute robust disposal
    and demolition programs in order to reduce overall operating costs
    associated with facilities sustainment and installation support,
    improve the overall safety and aesthetics of our installations, and
    ensure that only essential infrastructure is retained in the inventory.
    In July 2007, the Military Services and selected Defense Agencies
    updated their disposal targets, and our goal now is to eliminate over
    60 million square feet of facilities and additional excess
    infrastructure by the year 2013. But there is much more work to be
    done.
        We are continuing our efforts to forecast our disposals more
    accurately, to capture that information in the real property inventory,
    and to assess the impact of disposals on the entire inventory of
    facilities more accurately. We are doing this by assessing the net
    result of a comparison of the value of infrastructure removed from the
    inventory with the value of infrastructure added to the inventory. This
    will contribute to a more accurate view of the level of
    recapitalization of our global inventory of facilities.
        The fiscal year 2009 budget request includes $7.72 billion for
    Facilities Operations, formerly referred to as ``Real Property
    Services.'' This program provides the municipal services on our
    installations, such as utilities, fire protection, custodial services,
    grounds maintenance, and other related functions. To forecast
    Facilities Operations requirements, DOD developed the Facilities
    Operations Model using commercial and public sector benchmarks to
    determine the funding requirements for the essential services at our
    installations.
        We continue to make progress in defining common standards and
    levels of support for a variety of services provided on our
    installations. We are in the process of realigning the manner in which
    we track individual services so that we can more effectively determine
    the budget requirements for those services that are essential to the
    health, welfare, and quality of life of the service members, families
    and civilian employees who live and work on our installations. The
    processes that are being developed are included in our implementation
    of the BRAC 2005 Joint Basing recommendation. We have made considerable
    progress in that area and are on track to meet the statutory deadline
    for the establishment of joint bases. The initial implementation
    guidance for the joint bases was recently issued, and the specific
    details for implementing this BRAC recommendation and achieving its
    benefits are well underway.
        The Military Construction appropriation is a significant source of
    facilities investment funding. The fiscal year 2009 Defense Military
    Construction and Family Housing Appropriation request totals $24.4
    billion, which is an increase of $3.235 billion from the fiscal year
    2008 budget request. This funding will enable the Department to respond
    to warfighter requirements rapidly, enhance mission readiness, and
    provide for its people. In addition to new construction needed to bed-
    down forces returning from overseas bases, this funding is used to
    restore and modernize enduring facilities, while eliminating those that
    are excess or obsolete. A large part of the increase in the Military
    Construction requirements ($1.86 billion) supports the President's
    Grow-the-Force initiative, projects needed to support the realignment
    of forces, projects to improve and update facilities used by the Guard
    and Reserves forces, and facility projects needed to take care of our
    people and their families, such as family and bachelor housing, Wounded
    Warrior housing, and child development centers.

         COMPARISON OF MILITARY CONSTRUCTION AND FAMILY HOUSING REQUESTS
           [President Budget in Millions of Dollars--Budget Authority]
    ------------------------------------------------------------------------
                                            Fiscal year 2008    Fiscal year
                                                 request       2009 request
    ------------------------------------------------------------------------
    Military Construction.................           9,480            11,283
    NATO Security Investment Program......             201               241
    Base Realignment and Closure IV.......             220               393
    Base Realignment and Closure 2005.....           8,174             9,065
    Family Housing Construction/                     1,080             1,457
     Improvements.........................
    Family Housing Operations &                      1,851             1,741
     Maintenance..........................
    Chemical Demilitarization.............              86               134
    Family Housing Improvement Fund.......               0.5               1
    Energy Conservation Investment Program              70                80
    Homeowners Assistance.................  ................               5
                                           ---------------------------------
          TOTAL...........................          21,165            24,400
    ------------------------------------------------------------------------

        In January 2006, the Department joined 16 other Federal agencies in
    signing a Memorandum of Understanding (MOU) for Federal Leadership in
    High Performance and Sustainable Buildings. The guiding principles of
    sustainable design defined in the MOU are to employ integrated design
    principles, optimize energy performance, protect and conserve water,
    enhance indoor environmental quality, and reduce environmental impact
    of materials. The Department is committed to incorporate sustainable
    design principles through a comprehensive approach to infrastructure
    management. We are pursuing Leadership in Energy and Environmental
    Design (LEED) Silver as a goal for nearly 70 percent of the fiscal year
    2009 Military Construction Program. In addition, the Department is
    working to assess and address existing facilities' sustainable
    practices.
    Improving Quality of Life
        Access to quality, affordable housing is a key quality-of-life
    factor affecting service member recruitment, retention, morale, and
    readiness. Through privatization and increases in housing allowances,
    DOD has made great strides in increasing service members housing
    choices. Privatization allows for rapid demolition, replacement, or
    renovation of inadequate units and for the sale without replacement of
    inadequate units no longer needed. Privatization enables DOD to make
    use of a variety of private sector approaches to build and renovate
    military housing faster and at a lower cost to American taxpayers.
        To date, the military Services have leveraged DOD housing dollars
    by 12 to 1, with $2 billion in Federal investments generating $24
    billion in housing development at privatized installations. The fiscal
    year 2009 budget request includes $3.2 billion, an increase of $300
    million above the fiscal year 2008 enacted level, which will construct
    new family housing to accommodate Grow the Force, improve existing
    housing, eliminate inadequate housing overseas, operate and maintain
    government-owned housing, and fund the privatization of 12,324
    additional homes.
        The housing privatization program was created to address the
    oftentimes poor condition of DOD-owned housing and the shortage of
    affordable private housing of adequate quality for military service
    members and their families. Privatization allows the military services
    to partner with the private sector to generate housing built to market
    standards for less money and frequently better quality than through the
    military construction process. Additionally, and almost of greater
    importance, the projects include 50 years of maintenance and
    replacement where necessary. Although nearly all projects have been
    awarded, we are still in the early stages of the program since the
    housing will be privately owned for 50 years. With privatization deal
    structures and an income stream in place, full revitalization will be
    completed within a ten-year development period.
        As of the end of 2007 through the privatization program, and some
    military construction projects, we have privatized over 80 percent of
    the domestic inventory. Additionally, DOD has eliminated 92 percent of
    inadequate family housing units in the Continental United States and
    territories (CONUS) including all inadequate units for the Army, Navy,
    and Marine Corps. While there are some remaining inadequate Air Force
    units, these are being addressed in fiscal year 2008. Inadequate units
    are considered to be eliminated when they are conveyed to the private
    owner, who then revitalizes the housing.
        Tenant satisfaction is high, particularly for revitalized and newly
    constructed housing. Given DOD's objective of improving quality of life
    for its service members, the degree of satisfaction service personnel
    experience in privatized housing units is a critical indicator of
    overall program success. Since DOD provides military families with
    Basic Allowance for Housing (BAH) at privatized bases, a military
    family's decision to live in privatized housing is a significant
    measure of satisfaction. The occupancy rate of nearly 90 percent
    program-wide demonstrates the overall success of the program in
    providing suitable housing.
        A number of installations face changes and challenges as military
    family housing requirements expand and contract due to Base Realignment
    and Closure (BRAC) restructuring, global re-posturing, joint basing, or
    Grow the Force requirements. While some installations may find they
    have a surplus of housing as a result of these changes, others may
    experience a deficit. However, even as needs for military family
    housing may change, ensuring that our service members and their
    families have access to safe, desirable, and affordable housing will
    remain constant. The Services continue to evaluate installation housing
    requirements and the opportunities to meet additional housing needs
    through privatization continue to expand.
        Under the Military Housing Privatization Initiative (MHPI), private
    sector developers and lenders develop, maintain, and operate the
    privatized housing and resolve issues when they arise. Market forces
    drive contractor performance and the primary enforcement mechanism is
    the ability of the military members to choose where to live. If a
    housing project is not meeting performance expectations, lenders have
    the option, with the approval of the Department, to replace the owner
    with a more viable entity. One developer, American Eagle, currently
    owns five projects and is experiencing financial difficulties. American
    Eagle was the general partner or owner of six MHPI projects, including
    one Navy project, one Army project, and four Air Force projects. The
    company sold its Navy project in late 2007 and is in the process of
    selling its remaining five projects. The Army project, at Fort Leonard
    Wood, Missouri, is stable and in the process of being sold to another
    developer. American Eagle continues to fund maintenance of the existing
    inventory of homes for the four Air Force projects. The Air Force is
    maintaining constant dialogue with the projects' owner and bondholders
    while American Eagle pursues the transfer to another developer. The
    Department recently conducted an assessment of the overall financial
    condition of DOD housing privatization owners. This assessment shows
    that with the 87 awarded MHPI projects involving over 173,000 units,
    the likelihood of developers experiencing financial stress is low
    across the board.
        The fiscal year 2009 budget request includes funding to eliminate
    inadequate family housing outside the United States. The budget request
    reflects a military construction cost of $125 million for the Army to
    construct 216 family housing units in Korea as an alternative to the
    build-to-lease effort.
        The Department is also committed to improving housing for our
    unaccompanied Service members. DOD continues to encourage the
    modernization of Unaccompanied Personnel Housing (UPH) to improve
    privacy and provide greater amenities. In December 2007, the Navy
    executed its second Unaccompanied Housing privatization pilot project.
    The Hampton Roads, Virginia, unaccompanied housing project will
    construct 1,187 new apartment units and privatizes 726 existing
    unaccompanied housing units at Naval Station Norfolk. Navy pilot
    projects, enabled by use of partial allowance, have successfully
    improved the quality of life of unaccompanied personnel. The Department
    is now considering future uses of this methodology.
        In fiscal year 2007, the Army added bachelor officer quarters and
    senior enlisted bachelor quarters to its existing privatization
    projects at Fort Bragg, North Carolina; Fort Stewart, Georgia; Fort
    Drum, New York; Fort Bliss, Texas/White Sands Missile Range, New
    Mexico, and Fort Irwin, California. In fiscal year 2008, the Army will
    complete and begin implementing a Lodging Development Management Plan
    covering the 13 installations that are part of the Privatization of
    Army Lodging program Group A.
    Energy Management
        The Department continues to aggressively implement energy
    conservation measures and avoid associated costs while improving
    utility system reliability and safety. To that end, the Department
    developed comprehensive policy guidance incorporating the provisions
    and goals of Executive Order 13423, Strengthening Federal
    Environmental, Energy, and Transportation Management which the
    President signed on January 24, 2007. This policy guidance will
    continue to optimize utility management by conserving energy and water
    usage, and improving energy flexibility by taking advantage of
    restructured energy commodity markets when opportunities present
    themselves. Requirements of the recently passed Energy Independence and
    Security Act of 2007 will be incorporated as Federal guidance is
    developed. The Department is in the process of developing
    implementation guidance.
        The Department's efforts to conserve energy are paying off. DOD is
    the largest single energy consumer in the Nation and consumed $3.4
    billion in facility energy in fiscal year 2007, a modest but
    significant savings of $80 million from fiscal year 2006. DOD facility
    energy consumption intensity is down more than 10 percent from the 2003
    baseline, and non-tactical vehicle petroleum consumption has dropped
    5.4 percent since fiscal year 2005. 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.
        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 that
    are life cycle cost effective, so innovative strategies have been
    employed, such as the power purchase agreement resulting in 14
    megawatts of solar electrical production at Nellis Air Force Base,
    Nevada. 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 $28.2 million planned in fiscal year
    2008, and plans call for ECIP to increase $10 million per year, up to
    $120 million in fiscal year 2013, and renewable energy projects will
    continue to be a high priority. The Department exceeded the Energy
    Policy Act (EPAct) 2005 renewable energy goal of 2.5 percent in fiscal
    year 2007, reaching 5.5 percent of facilities electrical consumption
    under the Department of Energy accounting guidelines. In 2005, DOD set
    a goal to reach 25 percent renewable energy procured or produced by
    fiscal year 2025 and Congress placed this goal in the National Defense
    Authorization Act 2007. I am pleased to say that the Department reached
    11.9 percent renewable energy procured and produced for fiscal year
    2007, placing it well on track to achieve the goal. While EPAct 2005
    did not articulate a specific water reduction goal, Executive Order
    13423 includes a goal of a 2 percent water reduction per year. The
    Department began tracking water consumption in fiscal year 2002. By
    fiscal year 2007, DOD has reduced water consumption intensity by an
    impressive 25 percent and total water consumption by 27 percent or 43.8
    million gallons per year. While we will continue to strive to exceed
    the requirements, our prior achievement has served to set the baseline
    low, so continuing the trend will be a challenge.
    Environmental Management
        The Department continues to demonstrate leadership in protecting
    and conserving the natural resources on the approximately 30 million
    acres entrusted to it. Through our environmental management programs we
    are integrating environmental sustainability into all aspects of the
    day-to-day operations of the Department, helping us to achieve our
    goals for pollution prevention, cleanup, and conservation. Over the
    last ten years, the Department has invested almost $42 billion to
    ensure the success of our environmental programs, and the fiscal year
    2009 budget request of $4.3 billion will sustain our environmental
    progress in support of the warfighter.
        Executive Order 13423, ``Strengthening Federal Environmental,
    Energy, and Transportation Management'', directed Federal agencies to
    ``lead by example in advancing our Nation's energy security and
    environmental performance.'' Since signature of the Executive Order
    last January, the Department has established an Executive Steering
    Committee of senior officials from across the Department to develop the
    long-term strategic goals necessary to implement this order. These
    goals and supporting policies will integrate and strengthen our
    existing environmental, energy, and transportation programs to improve
    our management of toxic and hazardous chemicals, further enhance
    management of our natural resources, encourage sustainable development,
    and improve the management of energy use.
        Our ability to link the natural and built infrastructure with
    national security and readiness enables the Department to integrate
    environmental sustainability into all aspects of military operations--
    from design to disposal. Our Natural Infrastructure Management (NIM)
    initiative provides a framework for identifying and managing the
    Department's natural assets--air, land and water--together with
    operational or mission requirements, so that the Department can predict
    current and future natural infrastructure needs and investment needed
    to sustain those assets. The Department piloted a NIM prototype at
    representative installations in 2005 and 2006, and is now developing
    policy and guidance to ensure that natural infrastructure assets are
    recognized and leveraged effectively to support current and future
    mission capability.
        The Department uses Integrated Natural Resource Management Plans
    (INRMPs), critical habitat designations have been avoided at 35
    installations. That, coupled with our conservation efforts to protect
    species at risk and common species before they become rare, provides
    the Department more flexibility in its mission activities.
        The Department conducts environmental cleanup or restoration in
    cooperation with Federal and State agencies due to past use of
    hazardous substances, pollutants, contaminants, and military munitions
    on areas of active and former installations. The Department prioritizes
    resources for Installation Restoration Program (IRP) sites to address
    past releases of hazardous substances, pollutants, and contaminants,
    and Military Munitions Response Program (MMRP) sites to address hazards
    associated with unexploded ordnance and discarded military munitions on
    a ``worst first'' basis. By the end of fiscal year 2007, the Department
    had completed cleanup at 69 percent or 21,600 of the 31,500 IRP and
    MMRP sites. For IRP, the Department achieved a remedy in place (RIP) or
    response complete (RC) at 89 percent of active installation sites, 68
    percent of sites at Formerly Used Defense Sites (FUDS), and 85 percent
    of sites on installations closed or realigned in the first four rounds
    of BRAC and BRAC 2005. For MMRP, the Department has fulfilled its
    cleanup obligations at over 53 percent of BRAC installation sites, and
    24 percent of the sites at FUDS, with the remaining MMRP, as well as
    IRP, sites either undergoing cleanup actions or investigations.
        Employing a strategy that goes beyond mere compliance with
    environmental laws and regulations, the Department is transforming our
    business practices by integrating environment into our acquisition
    process, maintaining a high level of environmental quality in defense
    activities, and preventing pollution at its source. From fiscal year
    2000 through 2007 there was a 23 percent reduction in the number of new
    Federal and State enforcement actions received despite an 8 percent
    increase in the number of regulatory inspections. For January through
    June 2007, the latest information available, installations achieved a
    95 percent compliance rate with wastewater treatment permits, and 98
    percent of the 3.6 million customers served by DOD drinking water
    systems received drinking water that met or exceeded Safe Drinking
    Water Act standards, which compares favorably with the Environmental
    Protection Agency's goal of 95 percent. Using an integrated approach
    that enhances waste reduction and optimizes solid waste reduction, in
    2007 the Department diverted almost 3.5 million tons or 60 percent of
    our solid waste from landfills avoiding approximately $180 million in
    landfill costs, and reducing hazardous waste disposal by 20 percent
    compared to 1999. The Department is also effectively managing air
    quality, reducing hazardous air pollutant emissions at our
    installations by 728 tons in 2006. To further reduce waste and resource
    consumption, in 2004 the Department established a Green Procurement
    Program (GPP), which encourages Components to buy recycled, recovered,
    and bio-based products whenever feasible. Through the GPP, the
    Department has become the leader in green procurement, and we continue
    to make further improvements to GPP, most recently issuing policy
    direction in December 2007 requiring DOD contracting officers to use a
    contract provision giving preference to biobased products. Through GPP
    and all other environmental programs we will ensure a more secure and
    sustainable future for the environment and our Armed Forces.
    Emerging Contaminants
        Our experiences with the mission and environmental consequences
    associated with perchlorate, ozone depleting substances, and other
    chemicals with evolving regulatory standards indicate a need to
    establish a proactive program to make earlier, better-informed,
    enterprise-wide risk management decisions regarding these emerging
    contaminants (EC). This new program is already helping us better
    protect human health and the environment, and enhance military
    readiness. Simply put, the EC program identifies risks early in the
    process, before regulatory actions take place or materials become
    unavailable, thus protecting our people, assets, and mission.
        Within the EC program we have established a three-tiered process to
    (1) identify and inform DOD decision-makers early, (2) assess the
    impacts of evolving science and the potential risks to human health and
    DOD's mission implied by that science, and (3) develop appropriate risk
    management options for DOD program managers. Twenty EC impact
    assessments have been completed in the past 18 months for chemicals
    that include explosives, fuel constituents, corrosion preventatives,
    fire-fighting foams, and industrial degreasers. Examples of risk
    management options resulting from these assessments include conducting
    research to fill basic science gaps, improving material handling and
    personal protection practices, developing new or improved remediation
    technologies, and developing less toxic substitute materials or
    processes. One of the major thrusts of the program is to work closely
    with the DOD industrial base to conduct life-cycle analyses regarding
    less toxic alternative chemicals for use in weapons platforms, systems
    and equipment.
        Because of the many national policy issues related to ECs, we are
    working with a variety of external stakeholders, including a number of
    Federal and State regulatory agencies, industry, academia, and
    professional organizations. As an example, we formed an EC working
    group with the Environmental Protection Agency and the Environmental
    Council of States. That working group has four consensus work products
    aimed at resolving issues and clarifying policies and practices
    involving ECs--all in various stages of completion.
        Our experience with Perchlorate is particularly instructive.
    Perchlorate has been used by DOD since the 1940s as an oxidizer in
    explosives, pyrotechnics, rocket fuel, and missiles. Its high ignition
    temperature, controllable burn rate, and stable chemical
    characteristics reduce handling and storage risks and the likelihood of
    unexpected detonations which makes it among the safest and least
    expensive explosive we use. DOD was quickly blamed for perchlorate
    found in drinking water supplies in over 34 States.
        DOD has acted responsibly as the science and understanding of
    perchlorate has evolved--including sampling, cleanup activities, and
    $114 million in research focused on perchlorate treatment technologies,
    substitutions, and analytical techniques. To ascertain our
    responsibility for perchlorate releases and public exposure, DOD issued
    clear policy in 2006 requiring sampling and compliance with applicable
    Federal and State standards. The latest round of DOD-wide sampling data
    shows that we are taking appropriate response actions and that DOD
    installations, overall, do not appear to be a significant source of
    perchlorate contamination in the Nation's drinking water. In
    California, where perchlorate has been a particular concern, our joint
    review with the State has found that of the 924 current and formerly
    used Defense sites, 99 percent do not appear to pose a current threat
    to drinking water. The remaining 1 percent has some confirmation
    sampling underway or the assessments are still being reviewed by
    Californian regulatory agencies.
        DOD also demonstrated that the sources of widespread, low levels of
    perchlorate exposure are complex. For example, we now know that annual
    imports of perchlorate in fireworks alone exceed the amount of
    perchlorate annually purchased by DOD. Road flares may also be a
    significant source of groundwater contamination. Other DOD investments
    are paying dividends--we have found suitable substitutes for a number
    of military pyrotechnics and research for other applications is on-
    going. DOD can now differentiate natural from manmade sources of
    perchlorate and is working on refining this technique to distinguish
    the different manmade sources to ensure that DOD only pays for clean up
    for which it is responsible.
    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 where we test equipment and conduct
    training. Incompatible land use 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 challenges as more noise complaints from new
    neighbors, complaints about smoke and dust, diminished usable airspace
    due to new structures or increased civil aviation, a loss of habitat
    for endangered species, and a compromised ability to test and train
    with the frequency needed in time of war.
        History and experience gained over decades demonstrate that
    realistic and 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 to achieve a balance between national defense
    and environmental policies. As a result, DOD is successfully balancing
    environmental statutory and regulatory requirements with our national
    defense mission requirements.
        In 2002, 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 $58 million worth of buffer land and easements,
    encompassing 14,688 acres at seven installations. In fiscal year 2006,
    REPI leveraged $37 million of O&M funding to secure $71 million worth
    of buffer land and easements, encompassing 18,833 acres. The fiscal
    year 2006 acreage will increase pending the completion of some
    unfinished projects. The 2007 and 2008 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; just to name
    a few projects. Overall in fiscal year 2007, REPI initiated 26 projects
    in 17 States, and for fiscal year 2008 an additional 46 projects have
    been identified for funding. For fiscal year 2008 the Congress
    appropriated $46 million for REPI. The President's Budget request for
    fiscal year 2009 for REPI is $40 million.
        After several years of implementing REPI projects, the Department
    of Defense asked the RAND Corporation to assess the program's
    effectiveness. In 2007, RAND issued its report, titled The Thin Green
    Line: An Assessment of DOD's Readiness and Environmental Protection
    Initiative to Buffer Installation Encroachment. The report found that
    REPI projects were beneficial to the military, to the environment, and
    they improved the quality of life in communities where the projects
    were located. REPI projects are providing land buffers around military
    installations and ranges, and have been proven effective in relieving
    military training and testing activities from encroachment pressures.
        The RAND report shows that REPI projects have had a wide range of
    environmental benefits; including helping to preserve habitat,
    biodiversity and threatened and endangered species; protecting wildlife
    corridors; and helping with water quality and supply concerns. REPI's
    benefits not only help buffer military activities and enhance
    Department of Defense environmental programs; they also improve the
    military installation's reputation with surrounding communities. For
    example, according to the RAND report, REPI has also affected the
    quality of life around Fort Carson by protecting large open spaces.
    Similarly, REPI projects such as the ones near Naval Air Station Fallon
    in Nevada can also help preserve the local agricultural way of life.
        Many of the issues that concern the Department of Defense are also
    of mutual concern to other Federal agencies and State governments.
    These issues cross administrative boundaries and occur at the regional
    scale. The Department of Defense is working in partnership at the
    regional level with State governments and Federal agencies to
    facilitate dialogue and to address issues of mutual concern. These
    partnerships are proving essential to sustaining our ranges and
    installations. For example, the Department of Defense continues to work
    with State governments and other Federal agencies in the Southeast
    Regional Partnership for Planning and Sustainability--or SERPPAS. The
    States of Alabama, Florida, Georgia, North Carolina, and South Carolina
    are engaged with the Department of Defense and other Federal agencies
    in this important regional scale initiative. Through the SERPPAS
    process, the partners are promoting better planning related to growth,
    the preservation of open space, and the protection of the region's
    military installations.
        In 2007, DOD continued to work closely with other Federal agencies
    to sustain military readiness. On energy issues, the Department of
    Defense continues to work with other Federal agencies to ensure that
    wind farm projects and energy transmission corridors are compatible
    with military readiness activities. The Department also continues to
    work 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, Tribal, and environmental groups
    on issues of mutual concern to seek win-win solutions. Overseas, DOD
    continues to develop 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.
    Safety and Health Risk Management
        A significant responsibility of Installations and Environment is
    oversight of occupational safety and health. Secretary Gates has
    challenged us to reduce preventable accidents and this has driven real
    improvements. Over the last year, the Department experienced an overall
    improvement in its safety and health performance.
        For civilian employees, we are meeting the President's goals in the
    Safety, Health and Return-to-Employment (SHARE) initiative by
    decreasing our lost time injury rate by 5 percent. We plan to continue
    to improve by increasing the number of installations participating in
    OSHA's Voluntary Protection Program. This program engages every person-
    commanders, middle managers, employees, and military members--in
    changing attitudes toward accident prevention.
        For motor vehicle safety, motor vehicle crashes--both in military
    operations and on U.S. highways--continue to be the number one cause of
    military fatalities outside of direct combat. We continue to work with
    tactical vehicle developers to provide safer vehicles for combat
    operations, and work with the Services and Combatant Commands to
    improve operating doctrine for using the vehicles in a manner that
    minimizes crashes. The greatest risk to our soldiers returning from
    Iraq is being the victim of a crash on U.S. highways. The Military
    Services recognize this challenge, and have aggressive programs to
    reorient soldiers back to safe driving habits in the United States.
    While our highway crash experiences are very similar to the general
    public, we still work to prevent each of these losses. Every fatality
    still means that one of our Nation's sons or daughters has been
    needlessly lost.
        For aviation safety, we have made long-term progress in reducing
    aviation accidents, reducing the overall rate of Class A accidents by
    20 percent since fiscal year 2002. The Military Services continue to
    improve aircraft technology to provide our pilots with more capable and
    safer aircraft, and to improve training and information needed for
    improved pilot performance. Strategic improvements in aviation safety
    will be supported through our partnership on the Next Generation Air
    Transport System (NextGen) Joint Planning and Development Office.
        Future improvements in DOD Safety and Health performance will be
    guided by our principles of applying management systems for continuous
    improvement, and engaging all of the risk decision makers in improve
    awareness and attitudes toward reducing risk.
    Integrating Business Enterprises
        We have made significant and tangible progress implementing the
    core capabilities of the Real Property Accountability (RPA) business
    enterprise priority. This effort spans all Components, applying best
    business practices and modern asset management techniques to provide
    the warfighter access to secure, reliable information on real property
    assets and environment, safety, and occupational health sustainability.
    RPA is one of the six overall DOD business enterprise priorities
    articulated in the DOD Enterprise Transition Plan, which is the
    Department's roadmap for the improvement of critical business
    operations. As DUSD(I&E), I am the lead in the Department for ensuring
    that RPA stays on schedule.
        RPA is aligning end-to-end business processes and enhancing
    management visibility into operations by establishing and integrating
    common processes and data standards, redefining defense business in
    terms of functions managed and customers served rather than who
    performs the task.
        RPA correlates directly to the Under Secretary of Defense
    (Acquisition, Technology, and Logistics) goal of ``Capable, Efficient,
    and Cost Effective Installations'' and will help us to improve
    installation planning and operations by embracing best business
    practices and modern asset management techniques. The RPA initiatives
    have already improved awareness of the importance of accurate
    inventories, optimized resources, and enhanced access to real property
    information.
        The groundwork for RPA is nearly complete. Over the past few years,
    the Department has developed enterprise-wide capabilities for real
    property accountability and visibility, environmental liabilities
    accountability and valuation, and hazardous materials operational
    controls. These capabilities are founded on requirements for a common
    business process model, standard data elements and data definitions,
    business rules, and recommendations for policy changes. The Components
    are fine-tuning and implementing plans to fully integrate these
    requirements into their operating environments.
        Another key accomplishment in this area was the establishment of
    the Real Property Unique Identifier Registry which reached full
    operational capability for assigning real property unique asset
    identifiers in December 2007. An initial step forward into a federated
    location construct, the registry will provide authoritative physical
    location information for DOD real property to communities outside of
    the real property and installations management core business mission.
    Other successes over the past year include:
      --Assignment of unique identifiers to all DOD's real property assets
            to provide more granular physical location data for DOD's legal
            interests in all user communities. Current accurate location
            information provides enhanced access to essential data for
            strategic decisions, increasing accountability, and reducing
            costs.
      --Incorporation of fundamental geospatial standards in the Business
            Enterprise Architecture, the Department's business information
            infrastructure. Utilization of these standards provide a common
            set of mapping information and tools which enhance geospatial
            visualization capabilities while avoiding redundant acquisition
            of geospatial resources across the Department.
      --Real property inventory tools and procedures have been developed,
            and we have made progress towards implementing and maintaining
            consistent, accurate, and complete information on the real
            property portfolio across the Department.
      --Initial operating capability for the Hazardous Material Master Data
            Capability, a year ahead of schedule, which placed the chemical
            and regulatory data essential for safe and effective handling
            of hazardous materials in a production environment. In
            partnership with the Defense Logistics Agency, we will improve
            the availability of accurate, authoritative hazard data while
            eliminating redundant data purchases, entry, and maintenance
            burden across the Department.
        Over the past few years, the Department has developed enterprise
    wide capabilities for real property accountability and visibility,
    environmental liabilities accountability and valuation, and hazardous
    materials operational controls. Accurate and timely data is fundamental
    to effective management of assets, and ultimately to military success.
    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. To meet the ever changing warfighting landscape
    our military must be flexible and responsive and our installations must
    adapt, reconfigured, and be managed to maximize that flexibility and
    responsiveness. I appreciate your continued support and I look forward
    to working with you as we transform these plans into actions.

        Senator Johnson. Thank you, Mr. Arny. I suggest we will
    have 7 minute rounds of questions.
        Secretary Jonas, I would first like to thank you for your
    very prompt response to the concerns I mentioned to you
    yesterday regarding the level of military construction funding
    in the 2009 budget request for the Guard and Reserve,
    particularly with regards to the Air Force.
        Secretary Jonas, I have some questions about the Iraq war
    supplemental which this committee is currently considering. In
    late March, the Defense Department submitted a supplemental
    budget adjustment to Congress. This adjustment apparently did
    not go through OMB and was not submitted as a budget amendment.
        Can you explain the purpose of this budget adjustment and
    does it have the full support of the DOD? Why was the
    adjustment request not submitted to OMB? Has it been cleared by
    the OMB and does the president support it?
        Ms. Jonas. Thank you, Mr. Chairman. Quite simply, in the
    spring, the Vice Chief for the Army and his staff notified us
    that some of the equipment purchases they were planning to
    make, for example, their family of medium tactical vehicles,
    were going to slip and there were some other items that were
    going to not come on contract right away.
        Knowing that, we discussed it with the Army further and I
    talked with the Deputy Secretary and I felt that it was our
    responsibility to let the Congress know and to provide the
    committees with some additional recommendations of where the
    funds could be better spent.
        Pursuant to that, we approached the chairmen of the Defense
    Committees and we briefed the subcommittees here about the
    recommendations we would have. We did speak with OMB about it
    and we felt that they were fine with us trying to work it
    through with our committees, so that's how we ended up with
    where we are, sir.
        We felt, and I think as this committee understands well,
    rather than try to maintain money for trucks that wouldn't
    deliver this year, it would be better to put it toward a higher
    priority need. Clearly we believe the BRAC and MILCON pieces
    are very important and we felt that it was a nice opportunity
    to be able to adjust appropriately.
        Senator Johnson. Prior to the submission of the
    supplemental budget adjustment, the president had requested
    $976 million, nearly a billion, for emergency military
    construction in Iraq. The adjustment reduced that request by
    $101 million but that still leaves $875 million for Iraq
    reconstruction in the request.
        Secretary Gates has said many times that the United States
    is not building permanent military bases in Iraq. So why are we
    continuing to spend so much money in military construction in
    Iraq? What are the department's projections for military
    construction requirements in Iraq in 2009?

                MILITARY CONSTRUCTION PROJECT EVALUATION IN IRAQ

        Ms. Jonas. Mr. Chairman, the rule set that we try to use
    when we're adjudicating whether or not something is appropriate
    for the supplemental is we try to make sure a project fits
    within one of these categories: an operational need, a safety
    requirement or quality of life.
        We have tried rigorously to stick to these general
    categories and we have had conversations with those who are
    responsible for the theater operations. In fact, I spoke with
    General Dempsey, the acting commander of CENTCOM, just
    yesterday, pursuant to one of your questions provided to me
    yesterday.
        It is our preference to do only what we need to do and
    certainly, as the Secretary has stated, we are not in favor of
    any permanent type of location. I am willing to work with the
    committee to address any concerns that you have over individual
    projects.
        Senator Johnson. Mr. Arny, I understand that you are
    conducting a study on the adequacy of OMB's baseline
    construction and inflation rate of 2 percent, which is used to
    develop the military construction budget.
        What is the status of the study and what can be done to
    improve the accuracy of the military construction cost
    escalation? Based on what you have reviewed, do you believe the
    2 percent inflation rate factored into the 2009 budget request
    is adequate?
        Mr. Arny. This problem arose, at least I became aware of
    it, in BRAC 2005 because we were taking the COBRA figures that
    were put together and we were trying to translate them into
    real buildings.
        With most of our MILCON, the problem is not as large as it
    was for BRAC because the standard MILCON project takes--becomes
    a germ in--becomes an idea on a base maybe 5-6 years before it
    actually gets here. So we're able to go and design that
    facility based on parametric studies and when we hit the BRAC
    one, we just had basically the COBRA models. We had to
    translate that into what we thought the building would actually
    cost, but at the same time, we were hit with Katrina and the
    Navy, where I was at the time, the Navy in particular was hit
    with a number of hurricanes in the Southeast and we knew that
    inflation, construction inflation would be much higher than
    standard nationwide inflation.
        That's when we discovered we had no mechanism to really
    handle that. So we knew that many of our buildings were
    designed at cost underneath of what we would pay for it. I also
    asked the question why didn't we see this over the past 10 or
    15 years. Well, say from 5 years ago to 15 years ago,
    construction prices were getting better and better. We'd
    estimate a project would cost a $100 and it would come in at
    $95.
        So the facilities guys always had a little bit of extra
    money in the pot. So if they found local inflation was higher,
    they could move money around inside and you never saw it at our
    level, but not only did we get Katrina and a number of other
    effects that we couldn't calculate in, but even on some of the
    projects that we'd been designing for a long time, we
    discovered that they were going out of sight and we were having
    to come back to you multiple times in some cases, one in
    particular in the Northwest, and ask for more money or the
    worst case we were getting, our engineers were going in and
    downscoping a project.
        They'd say okay, at a hundred bucks to build this project,
    the bid came in at a $120, I'm going to take $20 off the
    project and, you know, my philosophy, our philosophy was if the
    requirement is for x, you want to build to x, not x minus 20
    percent.
        The problem became is that--and I used to work at OMB. OMB
    looks at a larger perspective, not down at construction, and
    construction is a very small percentage of what we're doing in
    the whole budget. So we did a Lean 6 Sigma Study on it because
    we thought the facility pricing guide was what was hurting us
    which laid in normal inflation rates.
        What that study told us, it wasn't the facility pricing
    guide, it was the fact that we had no mechanism to account for
    local construction inflation. For instance, in Seattle area, we
    had a nuclear weapon storage facility and we knew hurricane
    problems down in the Southeast but it was coming in at 15
    percent, 20 percent over cost. We couldn't understand where it
    was coming from.
        Well, when you look at construction costs in Seattle, they
    were increasing 15 percent a year primarily, people believe,
    because of the Vancouver Olympics were driving the cost of
    everything up.
        So what we've done is we're working--the Navy was doing it
    for all of OSD. We're working with the Comptroller, because
    they were part of our team, to see what could we all--what
    measure could we find that everybody would agree on was a
    normal measure and then we're going to OMB to say, look, let us
    work with you to find a mechanism to put in local inflation.
        So again having worked at OMB, the philosophy is the Navy
    must be out--OSD must be out to steal more of our money. What
    we've convinced them finally is we're not out to take more
    money. We want each project that goes through the budget to be
    properly priced, so when the engineer in the field opens the
    bid, that bid is close to what we estimated. They understand
    that now and our next step is to take that study, we've got the
    final results coming in, and to sit down with OMB and to try
    and figure out what common--we'll never be perfect because
    everything we do lags reality a little bit, but at least I
    foresee it where, when the services give it to OSD, we change
    the numbers around and make sure it's perfect.
        When OSD gives it to OMB, that's another chance to change
    the projects around and move money around and make sure they're
    perfect and when we give it to the Congress, then we can work
    with the Congress so that as you're passing the bill, you make
    sure with us that they're as close as possible, and again I
    think we've made tremendous headway over the past couple of
    years convincing OMB that we're not out to rob them, we're just
    out to get the right price for the contracts.
        Senator Johnson. Senator Hutchison.
        Senator Hutchison. Thank you very much. I visited Bagram
    Air Force Base at the end of February and General Rodriguez
    said that since it has been declared an enduring base, that he
    is no longer able to use his command contingency account funds
    when a contingency is needed and they are building very good
    added facilities for fuel storage, better runways, and also an
    apron for helicopters, all of which is very necessary.
        But my question is are you looking at the situation at
    Bagram and perhaps looking either for an exception there so
    that he can react to the immediate needs as they are at the
    same time beginning to build up better facilities, and we will
    certainly be, at least I will be supportive for military
    construction for an enduring base structure so that they will
    be able to have that capability when our marines move in also
    in larger numbers.
        So what are you doing to address that at Bagram?
        Mr. Arny. The issue is new to me, Senator. I do know that
    we did get a request in for commitment for use of contingency
    funds at Bagram and we will examine that.
        Senator Hutchison. Okay. Well, I do hope you will----
        Mr. Arny. Absolutely.
        Senator Hutchison [continuing]. Because what they're doing
    is terrific and they're using a lot of local contractors and
    labor and it's working well. They're also building better
    housing there which is so needed, Mr. Arny, if ever there was a
    priority.
        They're still using some of the Russian facilities there
    and since we know we're going to be building it up, that needs
    to be a priority, but he also needs to have some contingency
    capabilities. So I'd like to have your view on it when you can
    examine it better.
        Second, incremental funding. Many times, we are looking at
    large military construction projects. We know that the total
    amount cannot be spent in 1 year and we would like to be able
    to divide it into usable portions so that we can use the money
    more effectively where we know it can be spent and that has
    been something that our committee has been united in doing.
        However, the services tell us that it puts a strain on
    their ability to budget for the next year because they can't
    plan for incremental funding for a project because of OSD
    guidance.
        So I'm asking you if not allowing the services to
    accommodate incremental funding and putting it into units that
    would be in sort of what you can do on a 1-year basis wouldn't
    be more prudent, and since you have said that you came from OMB
    which around here is sort of like saying I'm a lawyer, but
    since you have experience with OMB,----
        Mr. Arny. Ms. Jonas came from OMB, too.
        Senator Hutchison [continuing]. I'm wondering if you could
    work out a solution on this that's more responsible for the use
    of our dollars. So whichever former OMB person would like to
    take that, I'm happy to have it.

                     INCREMENTAL FUNDING OF MILCON PROJECTS

        Ms. Jonas. I will note that I was a lowly examiner at OMB
    and I think Wayne was a program associate director.
        Thank you, Senator, for that question. This has come up
    frequently. We do have a limited number of larger programs in
    the budget. For example, we have some Chem-demil items in
    MILCON and we've got about 13 follow-on projects that are
    incrementally funded.
        We frequently engage OMB on this topic. What would be
    helpful to us is some guidelines from the committees that we
    might use to engage OMB in discussion to define when projects
    could be considered for incremental funding.
        Currently, if a project will cost $100 million, OMB will
    consider incremental funding. Some of the House committees use
    a $50 million threshold. $50 million threshold, but it's
    clearly--it happens and is worked through on a yearly basis.
    It's--but I understand it causes concern for the services and I
    understand with the many important Milcon projects it can be
    very difficult to fully fund every project.
        We're engaged on a continual basis with OMB on this. We had
    a conversation about it in December before we submitted the
    budget and I'm sure that dialogue will continue. We haven't
    gotten to the ultimate set of ground rules that we want, but I
    do understand the concerns and it kind of runs around a $100
    million threshold.
        Senator Hutchison. Well, I would like--I mean, we would
    like to work with you, but I think you would be the ones on the
    ground who would know where does a $100 million make sense but
    where is $50 million more reasonable, depending on the part of
    the country where a construction project would be going and the
    capability of finding the contractors and the workforce and the
    numbers that you would need.
        I think we would be certainly willing to consider something
    in our bills that would accommodate a policy that I'd like to
    see come from the Department of Defense in general. I just
    think it would help us in budgeting and it would certainly keep
    the services from having to hold money and not use it when they
    know they can't use it.
        Mr. Arny. Philosophically, it really is anathema to OMB to
    do that. Both of us having worked there, we understand that,
    but having worked there, we did make a lot of headway. In
    December, I went over with Ms. Jonas's team and we said, look,
    you can mandate all you want to that there be no incremental
    funding, but I worked for four budgets on the Senate Armed
    Services Committee and I said, the committees are going to take
    that money from you and it really hurts the services because
    they have to put that money in there. Guess what? They've got
    to put it back in the next year.
        So whether or not you agree with it philosophically, it's
    going to happen because all four MILCON committees have said
    it's going to happen. So let's reach agreement between the
    three parties on what the rules are and once we know what the
    rules are, then I said the committees have been very good in
    following those rules. So it's not a case of people running
    around amuck. They have a set of rules. Let's all agree. If you
    don't like the rules, rather than saying let's not do it at
    all, let's agree on the rules.
        I think we made tremendous headway and they were wrapped up
    in the budget, so we said we'd come back this spring and talk
    to them.
        Senator Hutchison. Okay. Thank you very much. I have some
    other questions which I will pursue for the record because my
    time is up. Thank you.
        Senator Johnson. Senator Murray.
        Senator Murray. Thank you very much, Mr. Chairman. As you
    probably know, the decision on the KC-X Tanker Recapitalization
    has been a very important issue to me and I've been asking a
    number of questions to try to get a more complete understanding
    of how that decision was made, and I would like to know what
    role OSD played in the need for military construction funds on
    that contract and wondered if you can tell me what interaction
    your office had in the evaluation and planning for the MILCON
    costs that are associated with the KC-X Tanker.
        Mr. Arny. That was handled by the services during the
    execution and as far as I know, we at OSD--I had just got here.
    We at OSD had no interaction on it.
        Senator Murray. You had no interaction or anything?
        Mr. Arny. No.
        Senator Murray. Well, our budgets are extremely tight and
    we've got to be able to fully plan for the costs that are
    associated. So we need some complete answers on the total cost
    of that contract.
        The Secretary of Defense obviously is responsible for
    proper planning for our military, so I do have a few questions
    that I would like you to consider. You may not be able to
    answer them, but if you can get them back to me, I'd appreciate
    it.
        I'm told that the evaluation of MILCON costs associated
    with the KC-X was normalized to the one base where the Boeing
    767 and the Airbus A-330 cost difference was the smallest. It
    seems to me it would make more sense to have a complete and
    robust evaluation of MILCON costs for all KC-X bases performed.
        Do you have a comment on that?
        Mr. Arny. No. I have to get back to you on that.
        [The information follows:]

        With respect to Military Construction (MILCON), the Air Force
    evaluates MILCON requirements and estimates the funding through an
    iterative process. As the program progresses through System Development
    and Demonstration (SDD) and aircraft basing decisions are finalized,
    the initial MILCON estimates will be updated to reflect specific MILCON
    projects. This refinement is a normal part of the process. The Air
    Force calculated and took into consideration MILCON cost estimates for
    active duty bases, overseas locations, Guard, and Reserve Components.
    Since a basing strategy has not been finalized, the Air Force conducted
    site surveys of several existing tanker bases. These surveys were used
    as a basis for estimating MILCON costs for ten bases, which included
    four Air National Guard/Air Force Reserve bases and two overseas
    locations. The Air Force is confident in this initial MILCON estimate
    and will continue to refine it based on specific requirements as basing
    decisions are made. It is important to note that MILCON cost estimates
    were not considered in isolation by the source selection team, but were
    included as a component of the Most Probable Life Cycle Cost,
    accounting for approximately 2 percent of the total cost.

        Senator Murray. You do?
        Mr. Arny. I just am not familiar with the issue.
        Senator Murray. Okay. If you could get back. I'd like to
    know--well, I do know that there will be associated costs with
    either the Boeing 767 or the Airbus A-330, but I would like to
    know how the differences in size and weight of those two
    tankers was considered in the evaluation when that was done and
    what oversight DOD has when a service is preparing for a major
    procurement.
        So if you could answer--well, you probably don't know about
    the size and weight and whether that was in the evaluation, but
    maybe you can answer the question for me, what oversight does
    DOD have when a major procurement is happening with one of the
    services?
        Ms. Jonas. Senator, that would fall under the purview of
    our Under Secretary for Acquisition and Technology and
    Logistics, John Young. We'd be happy to have his staff get back
    with you on this particular matter.
        Senator Murray. Okay. You don't know if he had any
    oversight on that issue?
        Ms. Jonas. I don't.
        Mr. Arny. I know he was overseeing it.
        Ms. Jonas. But we don't know the details of it.
        Senator Murray. All right. Well, if you could get back to
    me on the first part of that, and I also would like to know
    about the participation of Active Duty, National Guard, Air
    Force Reserves. All of them have individual needs of their own
    in this contract, and I'd like to know whether the Active Duty
    and Reserve component provided cost estimates to the Defense
    Department as they were being considered, if you could find
    that out for me.
        Mr. Arny. Will do.
        [The information follows:]

        The Air Force calculated, and took into consideration, MILCON cost
    estimates for active duty bases, overseas locations, Guard and Reserve
    Components. Since a basing strategy has not been finalized, the Air
    Force conducted site surveys of several existing tanker bases. These
    surveys were used as a basis for estimating MILCON costs for ten bases,
    which included four Air National Guard/Air Force Reserve bases and two
    overseas locations. The Air Force is confident in this initial MILCON
    estimate and will continue to refine it based on specific requirements
    as basing decisions are made. It is important to note that MILCON costs
    estimates were not considered in isolation by the source selection
    team, but were included as a component of the Most Probable Life Cycle
    Cost, accounting for approximately 2 percent of the total cost.

        Senator Murray. And also, I wanted to know about the
    construction costs for hangars, ramps, taxiways, all of those
    things. If you can let us know whether that was evaluated and
    what were those costs with this contract. Finally, I did want
    to know if the dollars for the increased MILCON required to bed
    down the next generation tanker was included in the 5-year
    budget plan. You might know that.
        Mr. Arny. I will check on it for you.
        [The information follows:]

        The Air Force calculated, and took into consideration, MILCON cost
    estimates for active duty bases, overseas locations, Guard and Reserve
    Components. Since a basing strategy has not been finalized, the Air
    Force conducted site surveys of several existing tanker bases. These
    surveys were used as a basis for estimating MILCON costs for ten bases,
    which included four Air National Guard/Air Force Reserve bases and two
    overseas locations. The Air Force is confident in this initial MILCON
    estimate and will continue to refine it based on specific requirements
    as basing decisions are made. It is important to note that MILCON costs
    estimates were not considered in isolation by the source selection
    team, but were included as a component of the Most Probable Life Cycle
    Cost, accounting for approximately 2 percent of the total cost.

        Senator Murray. Okay. All right. Because I'm very
    concerned. I think that obviously with this new tanker,
    construction will have to begin in fiscal year 2009 or 2010 in
    order to be ready for the first delivery of the tanker. So this
    is something this committee needs to understand. So if you
    could please get that for me, and I do have a couple other
    questions in regards to that, but I would really appreciate it
    if you could get those questions back to me. It will have a
    military construction impact for us and I want to know if that
    was ever considered, what was considered, how it was evaluated,
    and what it's going to cost us.
        Let me go to joint basing then. Obviously I hear a lot
    about it, McChord and Fort Lewis are in my State, and I know
    it's not an easy undertaking. I was listening carefully to your
    comments on that.
        I do understand the Air Force will have the supportive
    component at Lewis and McChord, but the airfield operations,
    from what I understand, are going to remain under the Air Force
    scope.
        So I wanted to know, does that mean that they are also in
    charge of the Fort Lewis airfield operations?
        Mr. Arny. Yes and no. In the case of the Army, the Marine
    Corps and the Navy, airfield operations is not considered--is
    considered an installation function. So in the case of McGuire-
    Lakehurst-Dix, both the Army and the Navy were happy with the
    Air Force running the airfield. As an old naval aviator myself,
    as, you know, the squadron came in, as long as somebody was
    there to pump the fuel, I didn't care if he belonged to the Air
    Wing or if he belonged to the base, just as long as somebody--
    as long as there was an airfield that didn't have a big pothole
    in it, I didn't worry about it.
        But in the Air Force, their philosophy is different and
    airfield operations is truly core mission because they deploy
    their whole air wings. The Navy deploys by squadrons and it's a
    different organization.
        So what we did for those airfields is we said, okay, there
    are only three bases affected, Lewis, McChord, Guam and Hickam,
    Pearl Harbor Hickam, and in that case, all of the real
    property, the hangars, the flight line, the runway itself, all
    that transfers to the lead service. So Fort Lewis will own all
    of the facilities. The flight operations themselves for McChord
    will be run by the wing commander. Okay?
        Senator Murray. What about the Fort Lewis airfield?
        Mr. Arny. At Fort Lewis, what we said is Fort Lewis, the
    Army can still run it or if the Army wants the Air Force to do
    it, it doesn't prevent it. Right now, it's an option for the
    base. So the flight ops at Fort Lewis right now are being run
    by the Army. When--now the two bases are sitting down and
    starting 2 weeks ago to craft----
        Senator Murray. So you're telling me it's undecided?
        Mr. Arny. It's up to them. It's up to them how they want to
    do it.
        Senator Murray. Okay. I also wanted to get your reaction to
    the fact that I have heard from some Air Force personnel that
    the Army is used to living their way and that the Army housing
    is substandard to the Air Force, and I wondered what you
    thought of that.
        Mr. Arny. It's the difference between perception and
    reality. The Air Force has always believed, and as an old Navy
    guy, both my sons are naval officers, frankly, prior to housing
    privatization, I probably couldn't disagree with you.
        Senator Murray. I didn't say it. Air Force personnel said
    it to me.
        Mr. Arny. I couldn't disagree with them. There was always a
    perception that the standard joke in the Navy was the Air Force
    goes to build a base, they build the officers club, they build
    the golf course, they build the exchange, and then they come
    back to Congress to get more money to build the airfield. That
    was the standard joke.
        But we believe, especially with housing privatization, that
    the housing is standard across all the services now. That
    notwithstanding, one of the biggest--one of the most important
    efforts we've done over the past 3 years is to develop common
    standards of output for levels of service.
        Senator Murray. I think whatever service you're in, you
    ought to get the same standard of living conditions.
        Mr. Arny. And that's what we've done, and the joint bases--
    and that's why we've had all the services together. They all
    agree. These are the standards. So if at a particular base, the
    standards for housing is lower, we're going to raise that
    standard.
        Senator Murray. Okay.
        Mr. Arny. If the standard for service for child care is
    different, it's now going to be the same on the joint bases. So
    if you go from one part of the joint base to the other, the
    standard will be the same.
        Senator Murray. Okay. I think the perception of the Air
    Force personnel saying that to me is we don't want to go down
    to the Army standard.
        Mr. Arny. No, they're coming up. That was the point. We all
    had to agree.
        Senator Murray. I think that attitude needs to be we're
    going to bring them up to our standard.
        Mr. Arny. Yeah. Well, in any case, sometimes the standard
    they felt was coming up to wasn't any different than the other
    standard. It was a perception. Where it's a reality, we've all
    agreed on what the standard is. Whether it's--we've all agreed,
    the services have all agreed on the services we're going to
    provide.
        Senator Murray. Thank you very much, and thank you, Mr.
    Chairman.
        Senator Johnson. Senator Landrieu.
        Senator Landrieu. Thank you, Mr. Chairman. Mr. Arny, I'd
    like to--it's actually a great segue into my questioning
    because my question is actually about Fort Polk in Louisiana
    and I'm not sure if you're personally familiar with the space,
    but it's one of our joint training bases and a very important
    base for our operations, ongoing and past, as it has been and,
    of course, will be in the future.
        We have over 8,000 soldiers there, but most of our forces
    that deploy will spend some time at Fort Polk before they leave
    and there's some almost not real fire but close to it exercises
    that go on. I've been able to visit the base several times
    since I've been a senator.
        My question is, following up on what Senator Murray said,
    about the housing for the single barracks, the single enlisted.
    We have about 60 percent family married, 40 percent single.
    We've made a lot of progress with the new initiative which I'm
    pleased to have been a part of for privatization of family
    housing.
        So my question is are you aware of a recent installation
    status report that shows that 80 percent of the barracks at
    Fort Polk currently do not meet acceptable ratings under the
    ISR Quality Standard? Are you aware at the current rate it will
    be in another 20 years before these renovations have occurred?
    These barracks were built an average of 35 years ago. So they
    will have withstood for 50 years, having been built 30 years
    ago. They're just basic concrete.
        I've toured some of them. They're in deplorable condition.
    They have mold and mildew, but at the rate we're going, it will
    be 20 years before we can get them any relief under the current
    budget.
        My question is are you reviewing the possibility of some
    sort of privatization effort like the Navy has undergoing at
    San Diego for the possibility of some of our Army
    installations, particularly at Fort Polk?
        Mr. Arny. Yes, ma'am. We've left that generally up to the
    individual services and I came from the Navy and at one
    conference, the Army and the Air Force both said they're going
    to wait for the Navy, and I think we have enough evidence to
    show what privatization can do and I have been told that the
    Army indeed at Fort Polk was one of--was the example we talked
    about, is looking very closely at privatization, and I think if
    they can figure out the financial aspects of the BAH.
        I mean, the down side to that privatization effort is you
    must give the BAH to the soldier and let him make a choice
    whether he's going to live in there. On the other hand, the
    housing he gets is much, much better, as we've seen in San
    Diego, also in Norfolk as the Navy's doing a second project in
    Norfolk, and a third one down in the Jacks-Mayport area.
        So I think the answer is yes, I am told the Army is looking
    at that and we'll be happy to support them in that effort.
        Senator Landrieu. Okay. Well, I'd like to go a step
    further. Would you be willing to recommend to the Army a step
    forward in developing because if they do have some hesitancy,
    which I understand there is, pressing them to at least explore
    the option of a pilot that they could test before they decide
    to move forward and work out whatever kinks there are. I'm sure
    there will be some. Would you be willing to think about a pilot
    and would Fort Polk maybe be in a position to serve as one of
    those pilots?
        Mr. Arny. Given the efforts that they've already made, I
    think it's definitely a possibility. I'd be happy to. Plus the
    new installation deputy assistant secretary is a former Navy
    facilities engineering command, so he has more familiarity.
        Senator Landrieu. And I understand that family housing
    would be a greater priority than single housing, but I think
    that all housing and quality of life issues is very important
    with a volunteer force and we're trying to retain the best and
    the brightest and I do believe that these quality of life
    issues is very, very important and to serve in Iraq, I
    understand the housing in Iraq actually on the front line is
    better than these soldiers have when they're at Fort Polk, and
    there's just not--I just don't think that that is appropriate.
    So I appreciate that.
        My second question, I'm going to ask it now but it really
    is for the Navy, but because both Senator Hutchison and I are
    co-chairing something that starts at 11 o'clock, Mr. Chairman,
    and I have to slip out, I'd like to just place this question to
    the record and if you, Mr. Arny, would like to respond, that's
    great. Perhaps the next panel could respond to this in my
    absence.
        We had, as you know, you mentioned Hurricane Katrina and
    we've been dealing with that now for 3 years. It will be the
    anniversary in August. Right before Katrina, the BRAC
    Commission visited New Orleans and in their tour of the country
    and actually recommended that the Naval Support Activity be
    realigned.
        The Commission stated that if our State would put up some
    additional funding and the Federal-city project begun on
    September 30, 2008, the Marine Forces Reserve Headquarters was
    to be relocated at the Naval Support Activity Base on West Bank
    property.
        The State of Louisiana has moved forward basically on that
    recommendation. I think that the entire BRAC Commission, there
    were only two revisions, Mr. Chairman, onsite when the
    Commission came, and ours was one, because we basically
    convinced them that their original recommendation would cost
    the government much more money than what our recommendation was
    and they accepted it and they made the change. We were only one
    of two in the country.
        So this is following up on that sort of, you know, idea
    that our locals had, but the problem now is that the marines
    that are saying that they are open to moving in, the Coast
    Guard is making this now their headquarters, they're claiming
    that the burden that they're going to have to pick up is more
    than if they would sort of stay where they are. Now where they
    are is unacceptable.
        I know you probably aren't familiar with this exact
    situation, but could I have your commitment to look into it and
    see if we could, you know, just make sure the Marines are
    getting all the information that they need so we can move
    forward under the recommendation actually of the BRAC
    Commission?
        Mr. Arny. I'd be glad to.
        Senator Landrieu. Okay. If you would, and we'll submit more
    questions along that line, and I appreciate it because the
    final thing, Mr. Chairman, this Federal-city project is one of
    the very big projects that we were just about ready to take up
    when Katrina and Rita hit and the city was devastated.
        The great news is this West Bank facility had hardly any
    damage and was on high ground on the West Bank. So it really is
    like putting a flag up for this whole region and as the
    Federal-city project comes together, Coast Guard and Marine
    Reserves sharing it, it's going to really realign our buildings
    very nicely and maybe use some of the older buildings that
    people are moving from to convert to some new opportunities for
    the region.
        So it's more than just a base alignment. It's really
    helping the region to recover and I'd appreciate some special
    attention, if you don't mind.
        Thank you so much.
        Senator Johnson. Senator Allard.
        Senator Allard. Mr. Chairman, thank you. It's good to see
    you in charge of the committee here.
        I have some questions related to the Chemical Depot and as
    you know,--oh, first of all, Mr. Chairman, I have an opening
    comment I'd like to make part of the record. Thank you.
        Section 8119 of the fiscal year 2008 Defense Appropriation
    Act mandated that, and I quote out of the act, that ``the
    Department of Defense shall complete work on a destruction of
    the United States stockpile of lethal chemical weapons,
    ammunitions, including those stored at Bluegrass Army Depot,
    Kentucky, and Pueblo Chemical Depot, Colorado, by the deadline
    established by the Chemical Weapons Convention, and in no
    circumstances later than December 31, 2017.''
        Now it's my understanding that the current 2009 MILCON
    budget of $134 million for the Assembled Chemical Weapons
    Alternative, the ACWA, Program, the program that is carrying
    out--that's the program that's carrying out the destruction of
    these munitions, does not incorporate the 2017 deadline.
        Now, Under Secretary Jonas, the 2009 ACWA budget which
    includes both MILCON and research and development dollars is
    roughly equal to the amount appropriated in 2008. Could you
    confirm for me the current status of the 2009 budget request
    for the ACWA Program?

                                  ACWA PROGRAM

        Ms. Jonas. Thank you, Senator Allard. It's good to see you
    as well.
        We currently have $65.1 million in the bill and I know this
    is a high priority for you and I know the deadline has been of
    interest. We are currently in the process of evaluating a 2010
    baseline. As you know, the services begin building their
    budgets way before you see them, and we've raised this as an
    issue to make sure that we've got the right profile for the
    2010 baseline.
        That's where we are at the moment, but again we have $65.1
    million in the current budget for Pueblo.
        Senator Allard. Okay. So you don't know for sure whether
    the amount that you have in there is adequate with the
    congressionally-mandated 2017 deadline?
        Ms. Jonas. I have not spoken directly with Under Secretary
    Young who has responsibility for this, but I will raise it with
    him.
        Senator Allard. I appreciate that.
        Ms. Jonas. And I will--get together frequently. I'll raise
    it with him and let him know of your concern.
        I know the Secretary is well aware of this program and has
    personally engaged with other Senators on it as well. It is
    high profile and we'll make sure that we deal with it in the
    2010 baseline.
        Senator Allard. Now, if it's not, I have to say it's not,
    when can Congress expect to receive the completed budget
    adjustments in order to authorize and appropriate the necessary
    funds to meet the deadline?
        Mr. Arny. We're required to give you, I think, a semiannual
    assessment, I'm learning this subject myself, and June 2008,
    late June 2008 is when we'll have that semiannual report to
    you.
        Senator Allard. Okay. Now procedurally, how do you
    anticipate this taking place? Ms. Jonas, would you perhaps send
    a letter to the Appropriations Committee to ensure that the
    fiscal 2009 budget numbers are appropriate in order to comply
    with the 2017 mandate?
        Ms. Jonas. What I would be willing to do, sir, is to re-
    engage with Mr. Young and have him take a look at it. He's the
    one that sponsors the program, and we will evaluate it. We
    certainly are interested in the information that will come
    forward in the June piece. We estimated the $65.1 million to be
    adequate for the current requirement. If it's not, we'll have
    to look at our options to deal with it.
        Senator Allard. And will you get a memo or something to
    us----
        Ms. Jonas. Certainly.
        Senator Allard [continuing]. After that conversation?
        Ms. Jonas. Certainly.
        Senator Allard. We would appreciate it.
        Ms. Jonas. We can do that.
        Senator Allard. Okay. Now earlier this week, I received
    notice from the ACWA that implementation of some local
    subcontracts may be delayed at the Pueblo Chemical Agent
    Destruction Pilot Plant, PCADPP, facility. This delay may occur
    because it was determined that the total cost for design,
    construction and overhead associated with the PACDPP would
    exceed the amount currently authorized by the fiscal year 2003
    National Defense Authorization Act.
        In order to remedy this situation, I've been informed that
    DOD has requested an increase in the authorization for the
    PACDPP in the upcoming MDAA. This is of concern to me not only
    because of the potential delay in the destruction of these
    chemical munitions but also for economic impact on jobs in
    Colorado.
        Under Secretary Jonas, will this issue be factored into the
    budget readjustments for ACWA and PACDPP that is likely to come
    later this year?
        Ms. Jonas. I'll defer to Mr. Arny. He knows more on this
    issue. Again, I'm learning the subject as I go along here.
        Senator Allard. Me, too.
        Mr. Arny. But yeah, yeah. There was a concern expressed by
    folks. There was--we did look into it and in fact they were
    reaching the level, the top of their authorization. We have put
    that request for more authorization in. I'm not exactly sure of
    the process, I'm learning that myself, but it will be factored
    in with our ongoing efforts.
        Both the ACWA and ourselves are working that to make sure
    they have the authorization as quickly as possible.
        Senator Allard. And to what amount do you foresee the
    overall budget increase for both the ACWA and the PACDPP----
        Mr. Arny. I don't know at this time.
        Senator Allard [continuing]. In order to fix this problem?
    You don't know what that will be?
        Mr. Arny. I don't know.
        Senator Allard. Okay. As soon as you get that number, we'd
    appreciate that. Communicate it to us again in a memo or
    something. We'd very much appreciate it.
        Mr. Arny. Will do.
        Senator Allard. The Defense--I want to talk a little bit
    about the Defense Access Road at the Pueblo Chemical Plant.
    This particular project has had some funding delays and
    apparently its completion has backed up other construction
    projects at the site because the Defense Access Road involves
    numerous Federal, State and local agencies planning and
    coordination has been made much more difficult with these
    delays.
        It is a priority of mine obviously to see this completed
    from existing MILCON funds which I believe is a component of
    the reprogramming request allocated for the Defense Access
    Road.
        Are you aware of this DAR reprogramming request?
        Mr. Arny. Yes.
        Senator Allard. I'm also told, and I'm told it's due to the
    Appropriations Committee, and could you provide a status update
    on this request?
        Mr. Arny. With the data I have, we expect to transmit the
    proposal this month. We're try to move the reprogramming
    request this month.
        Senator Allard. Okay.
        Mr. Arny. And we should be able to enable construction in
    the 2008 construction season.
        Senator Allard. Okay. Thank you. I have one question on
    housing, if I might, Mr. Chairman, to complete this, just
    briefly.
        You know, we've had some problems with the housing markets
    and whatnot, and do you see this creating any problems for your
    housing programs that you've established at the various
    installations? Because a lot of it, I know Senator Landrieu was
    concerned about privatization. We do a lot of privatization at
    Fort Lewis--I mean at Fort Carson. She's concerned about Fort
    Lewis.
        And so we're wanting to know, do you see any problems with
    the housing issues that we're having and how they may impact
    housing for the bases?
        Mr. Arny. So far, we don't see that affecting the housing
    property. In fact, if construction costs go down, that would
    benefit us in terms of the renovations and where we are
    recapitalizing the housing.
        Senator Allard. You anticipate that to drop then?
        Mr. Arny. Right.

                         ADDITIONAL COMMITTEE QUESTIONS

        Senator Allard. And do you see any change in department
    policy as a result of the housing and construction market?
        Mr. Arny. Not today, no, I don't.
        Senator Allard. Thank you.
        Senator Johnson. Secretary Jonas and Mr. Arny, you are
    excused.
        Ms. Jonas. Thank you, Mr. Chairman.
        Mr. Arny. 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 Tina W. Jonas

                   Questions Submitted by Senator Tim Johnson

                               BUDGET MANAGEMENT

        Question. Secretary Jonas, the fiscal year 2009 Military
    Construction budget request of $24.4 billion is a record request. Given
    all of the moving parts of this request--including BRAC, Grow the
    Force, and global rebasing--what steps has the Department taken to
    synchronize the construction of projects among all these initiatives?
        Answer. The President and the Secretary challenged the military to
    transform itself in order to meet current and future threats to
    America's security. The Department is using Base Realignment and
    Closure (BRAC), Grow the Force, and Global rebasing to accomplish this
    transformation. The Department recognizes the challenges of
    implementing these initiatives but believes we have the processes in
    place to ensure success and are taking a balanced approach. For
    example, in the case of BRAC, the Department initiated a process to
    develop business plans that establish the requisite actions, the timing
    of those actions, and the costs and savings associated with
    implementing each recommendation, including the necessary military
    construction. In regard to execution of all of these construction
    projects, the U.S. Army Corps of Engineers and the Naval Facilities
    Engineering Command have been fully integrated and involved with the
    development of the Military Construction budget request.
        Question. Is it likely that the Army and Marine Corps will need to
    rely on temporary housing for some of the troops that are relocating
    due to BRAC, Grow the Force, or global rebasing?
        Answer. Temporary or re-locatable buildings are only considered for
    urgent operational requirements that cannot be met with existing
    facilities. At the beginning of fiscal year 2008, the Army was using
    about 10 million square feet of temporary buildings for permanent party
    and training barracks. The Army is planning to program Military
    Construction (MILCON) funds through fiscal year 2015 to replace most of
    these temporary buildings with permanent ones. The Marine Corps expects
    that force structure changes will also require the use of temporary
    buildings on a limited basis.

                     SUPPLEMENTAL--WARRIOR TRANSITION UNITS

        Question. What more can the Defense Department do to ensure that
    members of the Guard and reserve who are wounded in combat--and their
    families--receive the same level of transitional care that is being
    provided to our active duty troops?
        Answer. The Department of Defense (DOD) has formed a strong
    partnership with the Department of Veterans Affairs (VA), other Federal
    agencies, and professional advocacy groups to provide outreach and
    prevention programs to Reserve and National Guard members. Military
    medical treatment facilities deliver specialty care and DOD partners
    with VA to provide state-of-the-art care at polytrauma centers, as well
    as other rehabilitative care and transition assistance programs for
    wounded warriors in all components. Additionally, Reserve and National
    Guard members can make use of a range of extended TRICARE health
    benefits.
        The intent of these arrangements is to provide the same level of
    care to all. Ensuring that we meet the standards is the work of the
    Senior Oversight Committee, chaired by the Deputy Secretaries of
    Defense and Veterans Affairs.
        Question. Does OSD support this proposal, and if so, why were more
    centers not included in the Supplemental?
        Answer. The Department continues to support increased care for our
    wounded, ill and injured Service members. The Warrior Transition
    construction requirements included in the fiscal year 2008 supplemental
    request reflect the most urgent needs based on the amount of
    construction required and the timetable for unit restationing. The
    Department is still reviewing the cost estimates and locations of
    additional Warrior in Transition units for inclusion in future
    requests.
        Question. Is there a similar program for wounded Marines?
        Answer. In April 2007, the Marine Corps Wounded Warrior Regiment
    was activated to achieve unity of command and effort in order to
    develop a comprehensive and integrated approach to Wounded Warrior
    care. There are two Wounded Warrior Battalions headquartered at Camp
    Lejeune, North Carolina, and Camp Pendleton, California. The Battalions
    include liaison teams at major military medical treatment facilities,
    Department of Veterans Affairs Poly-trauma Centers and Marine Corps
    Base Naval Hospitals. The Battalions work closely with our warfighting
    units to ensure our wounded, ill and injured are cared for and continue
    to maintain the proud tradition that ``Marines take care of their
    own.''
        Question. When do you expect to request funding for these
    additional centers?
        Answer. The Department is still reviewing the cost estimates and
    locations of additional Warrior in Transition units for inclusion in
    future requests.
                                     ______

              Questions Submitted by Senator Kay Bailey Hutchison

                                  JOINT BASING

        Question. Ms. Jonas, one of the BRAC decisions was to establish
    joint bases where it is geographically feasible. I understand there are
    twelve test joint bases in the plan, one of which will combine Lackland
    AFB, Randolph AFB and Ft Sam Houston into one such base under the
    jurisdiction of the Air Force. I would like you to comment on how the
    test is progressing and what you are discovering.
        Specifically, I would like to know how the Department will handle
    requests for Milcon projects in another Service's budget? Would you
    tell us what the plan for this is?
        Answer. The Department has recently completed its joint basing
    guidance for facilities investment, which addresses funding
    responsibilities for supporting and supported components. The policy
    prescribes responsibility for construction funding to the component
    generating the construction requirement. Construction funding in
    support of ``installation support'' missions is the responsibility of
    the supporting component, and construction funding in support of all
    other missions is the responsibility of whichever component is
    responsible for that mission. Regardless of the funding organization,
    the supporting component is responsible for executing the construction
    project as well as subsequent sustainment, restoration, and
    modernization.

                              INCREMENTAL FUNDING

        Question. Doesn't it make sense to allow the Services to
    incrementally request funds for a project if we approve the entire
    project and agree to incrementally fund it? Wouldn't that help
    everyone?
        Answer. It is the Administration's current position that military
    construction projects be fully funded, except for very large projects
    that have a major national security impact. This is intended to ensure
    the maximum flexibility of future military construction budgets.
        Question. Are you doing anything with OMB to work out a solution
    for this problem that could help everyone?
        Answer. We are planning to revisit the issue with OMB as we develop
    the fiscal year 2010 President's Budget.

                 USE OF THE COMMANDER CONTINGENCY ACCOUNT (CCA)

        Question. Ms. Jonas, When I visited Bagram Air Base, Afghanistan in
    February, Major General Rodriguez told me that since we are declaring
    Bagram as an ``Enduring Base''--meaning we plan to be there for the
    foreseeable future--he can no longer use funds from the CAA account.
    According to the Air and Ground unit Commanders at Bagram, this
    restriction is restricting their ability to react quickly to emerging
    construction needs.
        What is the Department doing to request an exception for places
    such as Bagram when we are operating on a contingency basis from an
    enduring location, and what can we do to help?
        Answer. The current authorization language for the use of the
    Contingency Construction Authority (CCA) does not permit the use of
    this authority for projects at enduring locations. Bagram has been
    identified by the Department in the Overseas Master Plan as an enduring
    location. The Department submitted an fiscal year 2009 legislative
    proposal that would allow for the Secretary of Defense to waive the
    restriction on the use of CCA at enduring locations if the Secretary
    determines that construction of additional capabilities or capacity at
    such installations located in Afghanistan are vital to support urgent
    operational requirements
                                     ______

                 Question Submitted by Senator Mitch McConnell

        Question. The report due on June 30, 2008 will be the first
    opportunity the Department of Defense has had to lay out how it plans
    to comply with the 2017 deadline mandated by this statute. Included in
    these plans will be funding levels that the Department believes it
    needs to comply with the law. If in fact the Department decides it
    needs funding above the fiscal year 2009 request to comply with the
    law, will this need for additional funding be conveyed to Congress
    through a formal budget amendment? If not, by what means will the
    Department formally request such additional funds?
        Answer. As required by Section 8119 of the fiscal year 2008 DOD
    Appropriations Act, the Department is currently reviewing various
    options (to include cost estimates) and the feasibility for completing
    the destruction of the chemical weapons stockpile by 2012 and 2017. The
    assessment of these options will be reflected in the semi-annual report
    to Congress in late June 2008, and will be considered during the
    development of the fiscal year 2010 President's Budget request.
                                     ______

                       Questions Submitted to Wayne Arny

                Questions Submitted by Senator Mary L. Landrieu

                               FORT POLK BARRACKS

        Question. Picerne Military Housing proposed privatization pilot
    project would require no up-front investment from the Army, but would
    have to provide $26 million in Basic Housing Allowance every year for
    the life of the 50 year contract with Picerne Military Housing. The
    Navy currently has 2 junior enlisted barracks privatization pilot
    projects underway in San Diego and Hampton Roads Port VA.
        Are you aware of the current conditions of the Fort Polk barracks?
        Answer. Yes, we are aware of the condition of the Fort Polk
    barracks and we are encouraged that the Army has committed significant
    funding to renovate the barracks including correcting mold problems.
    Regarding the photographs of rooms of two Fort Polk barracks buildings
    you sent to Secretary of the Army Geren, the Army informed us that the
    Fort Polk Garrison verified that Building 1950 is vacant and programmed
    for renovation. The four rooms in Building 2272 are vacant and off-
    limits to any Soldier. All other rooms in Building 2272 were inspected
    by indoor air quality inspectors and will continue to be monitored to
    ensure the rooms meet health and safety standards. The Army also
    informed us that subsequent to the hearing, a 100 percent barracks
    inspection for life, health, and safety issues was conducted at Fort
    Polk and all Soldiers were found to be living in safe and acceptable
    barracks.
        Question. It is estimated that $188 million will be needed to bring
    the barracks up to acceptable living standards, in addition to the
    annual $15 million in sustainment funding every year. Would you
    consider a pilot project to privatize the junior enlisted barracks at
    Fort Polk?
        Answer. We encourage the Services to pursue barracks privatization
    wherever it is economically feasible and consistent with their mission.
    The Army currently has limited their single Soldier housing
    privatization efforts to senior Soldiers (Staff Sergeant and above) and
    then only at locations where there are no available or affordable
    rentals off post. While privatizing all the barracks at an installation
    (like at Fort Polk) could be problematic, because even the most junior
    Soldiers could choose to live off-base, we believe the Army could
    benefit from initially pursuing a few limited barracks privatization
    projects for junior enlisted Soldiers similar to the Navy's pilot
    projects. However, even with a pilot barracks project of limited scope,
    the Army is concerned that privatization would hinder Army Ethos, unit
    cohesion, esprit de corps, and development of unit leadership and
    warrior skills.
        Question. If not, what is your plan to rectify the living quarters
    for these soldiers, and do you believe this to be a cheaper and more
    efficient alternative to privatization?
        Answer. Funding has been provided to Fort Polk for renovations to
    the heating ventilation and air conditioning systems, as well as
    funding for additional preventive maintenance of Building 2272. The
    Fort Polk Garrison Command continues investing maintenance funds to
    keep buildings from deteriorating while awaiting renovation through the
    Barracks Upgrade Program. The Navy has demonstrated that barracks
    privatization is less costly than the Military Construction alternative
    in the San Diego and Hampton Roads pilot projects. However, those
    projects are authorized the use of a partial housing allowance in their
    pilot legislation (title 10, United States Code, section 2881a).
        Question. With the Army growing the force to 95,000 troops and the
    facilities already behind the funding curve how will the Department
    address these funding shortfalls in Military Construction to maintain
    and bring the barracks up to code?
        Answer. The Army's tightly synchronized Military Construction
    (MILCON) program supports the successful transformation of the Army to
    a U.S.-based Modular Force. Facility support of initiatives, including
    Base Realignment and Closure (BRAC), Grow the Force, and global
    rebasing, is key to this transformation. To achieve the Army's goals,
    installation facility support plans are in place to accommodate
    Soldiers while minimizing turbulence.
        The Army analyzed several scenarios and instituted facility support
    plans with programmed and timely MILCON as the centerpiece of their
    success. As a result, currently scheduled MILCON plans address
    maintaining existing barracks and completion of the permanent party
    barracks buyout plan.
        Question. Can you give an update on how well the San Diego
    Privatization project for Single Sailors is going? Has there been any
    case where non-military personnel have been allowed to rent these
    rooms?
        Answer. The Navy awarded its first unaccompanied housing
    privatization project in San Diego, using the pilot authorities (title
    10, United States Code, section 2881a) in San Diego in December of
    2006. The project included the construction of 941 new two-bedroom/two-
    bath apartments for unaccompanied Sailors and the privatization of 254
    existing unaccompanied housing units (known as ``Palmer Hall'').
    Construction of the new apartments is on-going and is expected to be
    complete by the Spring of 2009. The privatization of existing units has
    been extremely successful. The housing has been virtually fully
    occupied with units rented by targeted unaccompanied military
    personnel. There have been no non-military occupants. There has been a
    dramatic improvement in satisfaction among the residents of Palmer
    Hall, earning the project an industry award for customer service.
                                     ______

                 Questions Submitted by Senator Robert C. Byrd

    FORMERLY UTILIZED DEFENSE SITE--AMERICAN UNIVERSITY EXPERIMENT STATION/
                             SPRING VALLEY PROJECT

        Question. I commend the Army Corps of Engineers (Corps) for recent
    improvements in its efforts to remediate areas in Spring Valley that
    are saddled with hazardous World War I Army Experiment Station (AES)
    debris. However, it is hard to overlook the slow progress and
    incomplete nature that marked the Corps' earlier clean-up efforts. In
    many respects, it was frustration over the ineffective work of the
    1990's and early 2000's that prompted Congress to direct significant
    resources to the program and request that the Corps complete the clean-
    up process by 2011. There are numerous examples of areas that the Corps
    has declared clear, only to be called back when the grounds were found
    to be littered with harmful material. Please explain to the Committee
    the steps being taken by the Corps today to determine the location of
    other burial/disposal sites on the campus; the nature and extent of
    additional material located on those sites, and the program of
    remediation to remove that material in its entirety.
        Answer. The Army continues to make the best use of available
    historical and technical tools, but the extensive development in the
    area since the early 1900s makes this investigation a challenge. In
    full consultation with the public in the surrounding community,
    University, and the regulatory agencies, the Army has made every effort
    to identify areas on the site that require additional investigation and
    has either completed these actions or is actively engaged in
    investigations or cleanups. As new information becomes available, it is
    shared with University officials and other stakeholders, and the next
    steps towards project completion are planned in partnership with
    regulatory agencies.
        Question. While difficult to quantify, there is no doubt that the
    Corps work on the AES Spring Valley site has seriously disrupted
    American University campus operations and, as a result, created direct
    and indirect financial hardship for the institution. Has the Corps made
    any effort to ascertain the financial impact that current and past
    clean-up activities have had on the University?
        Answer. The Army has coordinated scheduling of actions with
    American University (AU) on their campus in order to minimize impacts
    to the University while making progress on the restoration work and
    ensuring safety. In areas where this work involves movement of soils or
    disturbance of property, the Army conducts restoration activities in
    accordance with the rights-of-entry granted by the University to the
    Army.
        Question. One of the unfortunate facts that the current clean-up
    program has brought to light is the inherent uncertainty of the cleanup
    process. Please detail for the Committee the limitations of today's
    technology to identify the location and properties of the material
    which may still remain on the campus and in the surrounding
    neighborhood.
        Answer. The Army makes the best use of available historical and
    technical tools in conducting response actions. While the historic
    record contains thousands of documents that describe activities that
    were conducted on the Spring Valley Formerly Utilized Defense Site,
    there remain uncertainties about location and detail of operations that
    were conducted. The Army is employing the best available subsurface
    detection technology and through its extensive network of subject
    matter experts, and highly specialized research centers, continues to
    evaluate new technologies for implementation that may enable better
    understanding of subsurface conditions, including the existence of non-
    metallic anomalies, such as laboratory glassware.
        Question. Upon completion of the current remediation program, and
    given the uncertainty noted above, what assurances of further
    remediation will the Corps provide American University should new
    discoveries of buried World War I or II munitions, chemicals, and/or
    potentially harmful lab equipment be made? Is the Corps prepared to
    commit the resources needed to complete the work in an expedited
    manner?
        Answer. Any future discoveries of releases related to historic Army
    activities at the Spring Valley Formerly Used Defense Sites will be
    carefully evaluated, and, if additional action is required, the Army
    will seek the necessary resources and take action to protect human
    health and the environment in accordance with applicable laws. If
    future actions are required, they will be completed as promptly as
    possible and will include frequent communication with regulators and
    other stakeholders, and with full public involvement.
        Question. Notwithstanding the uncertainty of potential discoveries
    at the Radio Tower, the Beeghly building, and the playing fields, do
    you believe that the 2011 target completion date is still accurate?
    Please provide a timeline indicating anticipated work remaining at the
    site, when that work is scheduled to take place, and how much each
    segment of the clean-up is anticipated to cost.
        Answer. Barring a major new discovery, the target completion date
    remains 2011. Investigations and cleanup specific to the American
    University campus are scheduled for completion in fiscal year 2009,
    with work on properties outside of the University scheduled for
    completion in fiscal year 2010. The site-wide Remedial Investigation/
    Feasibility Study, the final component of the work as currently
    identified, is expected to be completed in fiscal year 2011. As
    reported in the 2007 Defense Environmental Program Annual Report to
    Congress, the cost-to-complete estimate from fiscal year 2008 to
    completion is approximately $36.4 million.
        Question. With respect to recent findings of extremely high arsenic
    readings on Glenbrook Road, have the findings been consistent with the
    Corps expectations? Do the findings suggest that there may be
    additional burial cites that were not contemplated?
        Answer. The arsenic levels identified at the 4835 Glenbrook Road
    property are consistent with historical maps which show that storage of
    chemicals did occur in the area. Areas of elevated arsenic are being
    remediated and work to date does not suggest the presence of additional
    burial sites.
        Question. With respect to the resumption of activities adjacent to
    the Korean Embassy on Glenbrook Road, was this work anticipated when
    the Corps withdrew from the site many years ago?
        Answer. When the original work in the area adjacent to the Korean
    Ambassador's residence was conducted in 2002, the property owner at
    4825 Glenbrook Road granted right-of-entry to the Army to conduct the
    investigation, but would not renew it to allow completion of the work
    when the original right-of-entry expired. When ownership of the
    property later changed hands, the Army was granted access to complete
    the necessary actions and resumed work at this location in 2007.
        Question. What guarantees can the Corps offer that when it leaves
    the AES Spring Valley site, the land will truly be clear of buried
    munitions and chemicals, including those located under the Public
    Safety Building and the Glenbrook Road properties?
        Answer. The efforts by the Army on this project represent a
    responsible acknowledgement of the challenges posed by cleanup of an
    extremely complex legacy site. A thoughtful, iterative, and deliberate
    approach is being taken on the project, in full partnership with the
    U.S. Environmental Protection Agency, the D.C. Department of the
    Environment, American University, and community involvement. When risks
    are identified, response actions are conducted by the Army in
    accordance with applicable laws to meet standards that are protective
    of human health and the environment, in consultation with regulators,
    project stakeholders, and the public.

                             Department of the Navy

    STATEMENT OF HON. B.J. PENN, ASSISTANT SECRETARY OF THE
                NAVY, INSTALLATIONS AND ENVIRONMENT
    ACCOMPANIED BY:
            MAJOR GENERAL EUGENE G. PAYNE, JR., ASSISTANT DEPUTY COMMANDANT
                FOR INSTALLATIONS AND LOGISTICS (FACILITIES)
            REAR ADMIRAL MARK A. HANDLEY, DEPUTY COMMANDER, NAVY
                INSTALLATIONS COMMAND
        Senator Johnson. I'm pleased now to welcome our second
    panel of witnesses. The Honorable B.J. Penn, Assistant
    Secretary of the Navy; Major General Eugene Payne, Jr.,
    Assistant Deputy Commandant for Installations and Logistics;
    and Rear Admiral Mark Handley, Deputy Commander for the Navy
    Installations Command.
        Before we begin, I note that there are votes scheduled to
    begin at 11:40.
        Gentlemen, we look forward to your testimony. Mr. Penn,
    proceed.
        Mr. Penn. Thank you, Mr. Chairman. Chairman Johnson,
    members of the subcommittee, it's a privilege to come before
    you today to discuss the Department of the Navy's installation
    efforts.
        I am joined this morning by Major General Payne, the Marine
    Corps' Assistant Deputy Commandant for Installations and
    Logistics, and Rear Admiral Handley, Director of the Navy's
    Shore Readiness Division.
        I would like to touch on a few highlights in this year's
    budget request, the largest facilities budget in well over 15
    years. Our request is a robust $14.3 billion or 9.6 percent of
    the Department's TOA.
        Most apparent is our increased infrastructure investment,
    both in SRM and construction accounts. The increase in
    construction runs about 45 percent in MILCON for a total of
    $3.2 billion and 13 percent in family housing for a total of
    $383 million.
        This continues the trend begun last year with the Marine
    Corps' ``grow the force'' initiative to ensure their bases are
    ready to house and operate with additional end strength.
        Our Military Construction Programs also include a number of
    projects to enhance the quality of life of sailors and marines,
    including four fitness centers, six child development centers,
    and four enlisted dining facilities.
        Our fiscal year 2009 budget also includes the second
    increment of two MILCON projects that were proposed last year
    for full funding by the administration but selected by Congress
    for incremental funding. While we did not consider any of the
    projects in our fiscal year 2009 program to be viable
    candidates for incremental funding, we have taken the lead in
    drafting criteria for incrementing costly construction projects
    and are working with DOD and OMB.
        We commit to work with the Congress to re-establish
    mutually acceptable and objective criteria in time for the next
    budget cycle.
        Fiscal year 2009 marks the first year since 2005 that we've
    asked for appropriated funds for prior BRAC. We've been able to
    finance all or part of prior BRAC with land sale revenue, but
    we've used all but $25 million which we are applying to this
    year's program.
        Our fiscal year 2009 request includes a $179 million for
    prior BRAC. We will need appropriated funds in future years to
    complete our clean-up work, despite the prospect of some
    limited revenue for the sale of Roosevelt Roads, Puerto Rico,
    and other small parcels we've disposed of. We have disposed of
    91 percent of the prior BRAC properties, so there was little
    left to sell and the real estate market is not as lucrative as
    it was several years ago.
        With respect to the BRAC 2005 Program, we have several good
    news items to share. Nearly all impacted communities have
    established local redevelopment authorities to guide local
    planning and redevelopment efforts.
        We were able to facilitate the reversion of the former
    Naval Station Pascagoula to the State of Mississippi last June
    and we've been able to hold down our cost increases to a modest
    2 percent for the implementation period of 2006 through 2011.
        However, our ability to meet the statutory deadline of
    September 15, 2011, hinges on the prompt restoral of the fiscal
    year 2008 reduction of $939 million. I ask the committee's
    support to help restore these funds as soon as possible.
        We continue to improve where our sailors, marines and their
    families live. We have awarded a second barracks privatization
    project in December 2007, this one in Hampton Roads, Virginia,
    and we're almost finished with evaluating our third pilot
    project in the Jacksonville-Mayport area.
        Surveys of our residents, both in family and unaccommodated
    housing, show that satisfaction has increased significantly
    since privatization began. As a department, we emphasize and
    participate in communication at all levels of management. The
    objective is to identify issues early and take prompt
    corrective action when required.
        We have made significant progress in the past year in
    planning for the relocation of the marines from Okinawa to
    Guam. We established the Joint Program Office both at
    headquarters here in Washington and a forward element on Guam.
    The environmental impact statement for Guam is underway with
    the targeted Record of Decision in January 2010, in time for
    construction in fiscal year 2010.
        We are working closely with our counterparts in the
    Government of Japan to prepare the details for construction
    requirements, their phasing and funding priorities, and we are
    working with our domestic partners, the Government of Guam, the
    Department of the Interior, OMB, and other Federal agencies to
    ensure that the island can meet the challenges of such a
    concentrated influx of people and workload.

                               PREPARED STATEMENT

        Finally, it has been an honor and privilege to serve this
    great Nation and the men and women of our Navy and Marine Corps
    team, both the military and civilian personnel and their
    families.
        Thank you for your continued support and the opportunity to
    testify before you today, sir.
        [The statement follows:]

                      Prepared Statement of Hon. B.J. Penn

        Chairman Johnson, Senator Hutchison, and members of the Committee,
    I am pleased to appear before you today to provide an overview of the
    Department of Navy's investment in its shore infrastructure.

                      THE NAVY'S INVESTMENT IN FACILITIES

        We live in an increasingly globalized and interlinked world--
    through our economic, communication, and financial networks, yet a
    world in which rogue nations, terrorists, and even the forces of nature
    disrupt the delicate balance between war and peace on a daily basis. A
    Cooperative Strategy for 21st Century Seapower establishes that we must
    not only be capable of winning wars, but must also strive to prevent
    war by fostering the collective security of all by working with our
    interagency, international, and private sector partners.
        To fulfill this challenge we must ensure our Sailors and Marines
    have the training, education, and tools necessary to prevail in
    conflict and promote peace abroad. The Department of Navy's (DoN)
    investment in our shore infrastructure represents our deepening
    commitment to this goal. Our installations are where we homeport the
    Fleet and her Marine forces, train and equip the world's finest Sailors
    and Marines, and develop the most sophisticated weapons and
    technologies. Our fiscal year 2009 shore infrastructure baseline budget
    totals $14.3 billion, representing 9.6 percent of the DoN's fiscal year
    2009 baseline request of $149 billion.

        The Base Operating Support (BOS) request of $6.5 billion, excluding
    environmental, comprises the largest portion of the Department'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; custodial and grounds
    maintenance costs.
        Our fiscal year 2009 request of $6.5 billion for BOS reflects a 9.4
    percent increase from the fiscal year 2008 request. The Navy request of
    $4.3 billion includes an increase of $348 million over last year's
    request and matches the budget request with recent execution
    performance. The Marine Corps request is $2.1 billion, an increase of
    $207 million over last year's request, and is consistent with their
    execution experience.

        The fiscal year 2009 military construction (active + reserve)
    request of $3.2 billion is $1.1 billion more than the fiscal year 2008
    request. This is a 50 percent increase above the fiscal year 2008
    request, and nearly three times the size of the fiscal year 2007
    request. This unprecedented growth in Department's military
    construction request is primarily due to the Marine Corps' ``Grow the
    Force'' initiative.
        The fiscal year 2009 Family Housing request of $759 million
    represents a 13 percent increase over our fiscal year 2008 request.
    This growth is also spurred by the need for additional family housing
    for the Marine Corps' Grow the Force initiative. The Navy and Marine
    Corps have continued to improve their overseas housing, which is not
    eligible for privatization as has been done in the United States.
        Sustainment, Restoration and Modernization (S/RM) includes military
    construction and operation and maintenance funds. Our fiscal year 2009
    request of $2.7 billion funds the Department at 90 percent of the DOD
    sustainment model requirement and includes only the amount of S/RM
    funded with Operations and Maintenance. It represents a 41 percent
    increase over our fiscal year 2008 request to improve sustainment of
    existing facilities and rehabilitate older buildings to meet current
    standards.
        Our fiscal year 2009 request of $966 million for environmental
    programs at active and reserve bases is comprised of operating and
    investment appropriations,\1\ roughly $58 million more than our request
    for fiscal year 2008 due to higher compliance and conservation costs.
    ---------------------------------------------------------------------------
        \1\ Including the following accounts: RDT&E,N; MC,N; OP,N. Excludes
    BRAC environmental.
    ---------------------------------------------------------------------------
        Our BRAC program consists of environmental cleanup and caretaker
    costs at prior BRAC locations, and implementation of BRAC 2005
    recommendations.
        Our fiscal year 2009 prior BRAC program consists of $179 million in
    appropriations and $25 million in remaining land sales revenue from
    past prior BRAC property sales. This is the first time since fiscal
    year 2005 that the Department has requested appropriated funds for
    prior BRAC as we have exhausted our land sales revenue from previous
    sales. We anticipate some limited future revenue as we move to dispose
    of the former Naval Station Roosevelt Roads in Puerto Rico and some
    other smaller property sales. We will use revenue from these future
    sales to accelerate cleanup at the remaining prior BRAC locations.
        The fiscal year 2009 budget includes a request of $871 million to
    implement the BRAC 2005 recommendations. We are proceeding apace with
    implementation; however, there has been considerable turbulence in
    execution in part due to the late receipt of Congressional
    appropriations. The fiscal year 2008 $939 million Congressional
    reduction to this DOD account, for which the Navy share is $143
    million, adds additional execution concerns which I will address later
    in the statement. I urge the Congress to promptly restore the fiscal
    year 2008 reduction.
        Here are some of the highlights of these programs.

                             MILITARY CONSTRUCTION

        The DoN's fiscal year 2009 Military Construction program requests
    appropriations of $3.2 billion including $239 million for planning and
    design and $13.7 million for Unspecified Minor Construction.
        The active Navy program totals $1.1 billion and includes:
      --$176 million to fund five waterfront projects: Wharf Upgrades in
            Diego Garcia to support stationing of a Land-class tender;
            Berth Lima Conversion at Naval Air Station North Island, CA to
            accommodate homeporting an additional 3rd nuclear powered
            aircraft carrier, subject to the completion of an ongoing
            Supplemental Environmental Impact Statement; the second
            increment of the Magnetic Silencing Facility in Naval Station,
            Pearl Harbor, HI; a pier replacement project at Submarine Base
            New London, CT; and Improvements to Alpha Wharf at Naval
            Station Mayport, FL, to make structural and utilities repairs
            to the existing bulkhead.
      --$62 million to fund three airfield projects: the second increment
            of the Hangar 5 Recapitalization at Naval Air Station, Whidbey
            Island, WA; an Aircraft Maintenance Hangar and Aircraft Parking
            Apron at Camp Lemonier, Djibouti.
      --$60 million to fund four expeditionary operations projects,
            including headquarters for the 25th Naval Construction Regiment
            in Naval Construction Battalion Center, Gulfport, MS; two
            projects supporting Joint Forces Command, one in Naval Station
            Pearl Harbor to build a Deployment Staging Area and another at
            MacDill Air Force Base, FL to construct a Communications
            Squadron Equipment Facility.
      --$111 million to fund two training projects: a Special Programs
            Barracks to conduct remedial training at Recruit Training
            Command, Great Lakes, IL; and an Integrated Training Center for
            the P-8A, the replacement for the Maritime Patrol aircraft.
      --$102 million to fund two weapons related projects: the 5 of 7
            increments of the Limited Area Production and Storage Complex
            at Naval Submarine Base, Bangor, WA; and the second increment
            of the Kilo Wharf Extension in Guam.
      --$91 million to construct four research and development facilities,
            including a new laboratory in the District of Columbia that
            will consolidate 17 separate labs conducting research in
            unmanned systems.
      --$60 million to support ship maintenance operations, including
            dredging the Norfolk Harbor Channel to enable carriers to
            navigate up the Elizabeth River to Norfolk Naval Shipyard
            without risk to the propulsion system.
      --$268 million to increase the quality of life for our Sailors and
            their family members, including two BEQs, five Child
            Development Centers, and 3 Fitness Centers.
      --$57 million for planning and design efforts.
        The active Marine Corps program totals $2 billion, a $989 million
    increase over the fiscal year 2008 Military Construction and GWOT
    requests. This program includes:
      --$1.3 billion for facilities to support the ``Grow the Force''
            initiative, which I will discuss in greater detail below;
      --$312 million for the Marine Corps BEQ Initiative to build over
            3,600 spaces and an additional $856 million in the Marine Corps
            Grow the Force to build over 8,700 permanent party/trainee
            spaces. The total funding devoted to Bachelor Enlisted Quarters
            is $1.2 billion.
      --$133 million in operations and training facilities and an
            additional $121 million in the Grow the Force initiative funds
            Military Operations in Urban Terrain facilities at 29 Palms,
            CA, and Ranges at Camp Pendleton, CA, and Camp Lejeune, NC;
            Academic training facilities for The Basic School at Marine
            Corps Base Quantico, VA, the School of Infantry at Camp
            Pendleton, CA, and the Marine Aviation Weapons and Tactics
            Squadron at Marine Corps Air Station Yuma, AZ; operational
            facilities for V-22 aircraft support at Marine Corp Air Station
            Miramar and Marine Corps Air Station New River, NC, and apron
            space at Marine Corps Air Facility Quantico, VA.
      --$36 million and an additional $73 million accelerated with the
            Marine Corps Grow the Force initiative funds Quality of Life
            facilities such as enlisted dining facilities at Marine Corps
            Air Station, New River, NC and Camp Lejeune, NC, and a Child
            Development Center at Camp Lejeune, NC;
      --$64 million and an additional $62 million from the Grow the Force
            initiative funds new recruit quarters at Marine Corps Recruit
            Depot Parris Island, SC and Marine Corps Recruit Depot San
            Diego, CA as well as Student Officer Quarters for The Basic
            School at Marine Corps Base Quantico, VA;
      --$53 million in Grow the Force funding will accelerate additional
            utility infrastructure improvements at Camp Pendleton, CA.
      --$67 million and an additional $10 million accelerated from our Grow
            the Force initiative funds aircraft maintenance facilities at
            Marine Corps Air Facility Quantico, VA, Ordnance Facility at
            Marine Corps Air Station Beaufort, SC and Communications and
            Electronics Maintenance Facilities and Regimental Maintenance
            Facilities at Camp Pendleton, CA.
      --$44 million supports other facilities such as the replacement of
            the 2nd Marine Air Wing Headquarters facility at Marine Corps
            Air Station Cherry Point, NC, destroyed by fire in 2007, a
            satellite fire station for Marine Corps Air Station Miramar,
            CA; and road improvements for entry into Marine Corps Base
            Quantico, VA.
      --$183 million for planning and design efforts.
        The Navy and Marine Corps Reserve Military Construction
    appropriation request is $57 million to construct a total of five
    reserve centers: two Navy; two Marine Corps; and one joint Armed Forces
    center.
    Marine Corps Grow the Force
        To meet the demands of the Global War on Terrorism (GWOT) as well
    as the uncertainty of our Nation's security environment, the Marine
    Corps must be sufficiently manned, well trained, and properly equipped.
    Like the Cold War, the GWOT is a generational struggle that will not be
    measured by the number of near-term deployments or rotations; it is
    this long-term view that informs our priorities and plan for growth.
        To fulfill its obligations to the Nation, the Marine Corps will
    grow its personnel end strength to 202,000 Active Component Marines.
    This increase will enable the Marine Corps to train to the full
    spectrum of military operations and improve the ability of the Marine
    Corps to address future challenges in an uncertain environment. This
    growth will enable the Marine Corps to recover its ability to respond
    in accordance with timelines outlined in Combatant Commander war
    plans--thereby reducing operational risk. It will also relieve strain
    on those superb Americans who have volunteered to fight the Nation's
    battles. This growth includes:
      --Adequate expansions of our infrastructure to provide for our
            Marines, their families, and their equipment; and
      --The right mix of equipment for the current and future fight.
        Exacerbating our requirements, the Marine Corps for many years
    funded only its most critical needs. As a result, Marine Corps
    installations are in a poor position to properly house and operate with
    additional Marines. Most of the efforts in fiscal years 2007, 2008 and
    proposed 2009 accelerate non-unit specific facilities which benefit all
    those aboard the installation--such as bachelor quarters, family
    housing, ranges, operational facilities, and landfills. This will
    assist in getting our installations ready to support our Grow the Force
    initiative. Beginning in fiscal year 2010, we are planning facility
    programs to support the final unit specific end-strength growth. Unit-
    specific construction will begin in fiscal year 2010 in concert with
    the expected completion of the National Environmental Policy Act
    review. Because Marines will begin to arrive before construction at
    many locations is complete, the Marine Corps is planning to lease, or
    purchase temporary support facilities.
        As a result of the rapid, but rigorous planning process, the Marine
    Corps submitted its end-strength growth stationing plan to Congress in
    October 2007. Our proposed fiscal year 2009 request is based on that
    stationing plan. This plan will ensure that adequate facilities are
    available to support the phase-in and Full Operating Capability of a
    202,000-Marine Corps while meeting our environmental stewardship
    requirements.
    Incrementally funded MILCON projects
        Our fiscal year 2009 budget request complies with Office of
    Management and Budget Policy and the DOD Financial Management
    Regulation that establishes criteria for the use of incremental
    funding. Furthermore, we do not consider any of the projects in our
    program to be viable candidates for incremental funding based on the
    mutual understanding between the Congress and the Department of
    Defense.
        The DOD and OMB commit to work with the Congress to reestablish
    mutually acceptable and objective criteria for the funding of DOD
    military construction projects.
    Meeting the Energy Challenge
        In August 2006, I directed that all new Department of Navy
    facilities and major renovations be built to U.S. Green Building
    Council ``LEED Silver'' standards starting in fiscal year 2009. In
    addition, the Energy Policy Act of 2005 set new standards for energy
    performance in Federal facilities, including a 30 percent energy
    reduction over current design standards and the specification of
    devices that measure and reduce energy consumption. A modest 3 percent
    investment will contribute to the reduction of life cycle costs of our
    facilities and will improve the quality of life of our personnel
    through better indoor environmental air quality and improved levels of
    comfort within the facilities.
    The Continued Need for a Mid-Atlantic Outlying Air Field
        The Navy has decided to terminate the draft Supplemental
    Environmental Impact Statement (SEIS) that conducted further court-
    directed analysis at five alternative sites for a new Outlying Landing
    Field (OLF) to support introduction of F/A-18 E/F (Super Hornet)
    aircraft on the east coast. The Navy will prepare a new Environmental
    Impact Statement (EIS) under the National Environmental Policy Act
    (NEPA) that analyzes five new potential OLF sites. This decision
    followed careful consideration of the public comments received on the
    draft SEIS, review of new information provided by the State of North
    Carolina and the Commonwealth of Virginia, and a reassessment of the
    Navy's operational requirements. It is consistent with the action taken
    by the Congress in the fiscal year 2008 National Defense Authorization
    Act to rescind the authority to construct the OLF at Site C in
    Washington County, North Carolina. The new EIS will analyze potential
    environmental impacts at three sites in Virginia, and two sites in
    North Carolina that were provided by the respective States. Based on
    our evaluation of available information, these new sites each have
    operational, environmental, and population characteristics that make
    them viable site alternatives. The EIS will further analyze potential
    environmental impacts at each location and will result in a future
    decision about a new preferred OLF site. We expect this process will
    take about 30 months, so we have not requested any construction funds
    in fiscal year 2009. The five sites analyzed in the draft SEIS,
    including the Washington County location, are no longer under
    consideration as potential OLF sites.
        The OLF is required to satisfy training capacity requirements under
    the Fleet Response Plan, and to reduce the impacts of encroachment on
    operations at existing facilities. While recent actions initiated by
    jurisdictions in the vicinity of Naval Air Station Oceana and Navy
    Auxiliary Landing Field Fentress in response to recommendations of a
    Joint Land Use Study may mitigate further encroachment, both capacity
    and encroachment continue to form the basis for the OLF requirement.
    Throughout this process the Navy will continue to work closely with the
    Commonwealth of Virginia and the State of North Carolina. The Navy
    believes that by working with State and local officials, we can
    understand their perspective on the issues and seek common ground on
    ways to mitigate impacts and identify potential benefits.

                             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 buildings 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).

                                                       SUSTAINMENT
                                                        [Percent]
    ----------------------------------------------------------------------------------------------------------------
                                                                                        Fiscal year
                                                                     -----------------------------------------------
                                                                           2007            2008            2009
    ----------------------------------------------------------------------------------------------------------------
    USN Budget......................................................              95              83              90
    USN Actual/Plan.................................................              91              83  ..............
    USMC Budget.....................................................              93              93              90
    USMC Actual/Plan................................................             113             111  ..............
    ----------------------------------------------------------------------------------------------------------------

        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
    recapitalization 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 continues to be a
    relatively coarse metric, as demonstrated by the effect of past
    Supplemental funds, BRAC construction projects, and recap projects to
    support Grow the Force. The Navy and Marine Corps continue to work 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 year
                                                                     -----------------------------------------------
                                                                           2007            2008            2009
    ----------------------------------------------------------------------------------------------------------------
    USN Budget......................................................              83              63              50
    USN Actual/Plan.................................................              62              60  ..............
    USMC Budget.....................................................             112             103              33
    USMC Actual/Plan................................................             117              61  ..............
    ----------------------------------------------------------------------------------------------------------------

    Naval Safety
        The Department of the Navy strives to be a world class safety
    organization. In fiscal year 2007 the we achieved our lowest rate ever
    recorded for total Class A Operational Mishaps.\2\
    ---------------------------------------------------------------------------
        \2\ A Class A mishap is one where the total cost of damages to
    Government and other property is $1 million or more, or a DOD aircraft
    is destroyed, or an injury and/or occupational illness results in a
    fatality or permanent total disability. An operational mishap excludes
    private motor vehicle and off duty recreational mishaps. Mishaps
    exclude losses from direct enemy action.
    ---------------------------------------------------------------------------
        The Department has embraced the Occupational Safety and Health
    Administration (OSHA) Voluntary Protection Program (VPP), which fosters
    a cooperative relationship between management, labor, and OSHA to
    improve workplace safety. DON has achieved ``Star'' status, OSHA's
    highest level of achievement, at five sites representing over half of
    the VPP star sites in DOD. The Navy activities include all four Naval
    Shipyards, our largest industrial facilities, and the Navy Submarine
    Base in Kings Bay Georgia. In 2007 DON was one of six Federal
    departments and independent agencies to meet all four of the goals
    specified by the President's Safety, Health and Return-to-Employment
    (SHARE) program.
        Noise is also a safety concern in the workplace. Hearing loss is
    not reversible, it's often not painful and it won't kill you, but it
    sure is a quality of life issue for our Sailors and Marines when they
    leave the Service. We are engineering systems to be quieter, improving
    our training, and making sure our people have the best personal
    protective equipment.
    Encroachment Partnering
        The Navy has established an encroachment management program to
    acquire real property interests in the vicinity of our installations.
    Long-term encroachment partnering agreements have been established with
    Churchill County, NV and a local land trust for NAS Fallon; with the
    City of Virginia Beach for NAS Oceana; with Ocean County, New Jersey
    for NAEWC Lakehurst; and with the State of Florida and Santa Rosa
    County, Florida for NAS Whiting Field. These long term agreements
    enable the Navy to join with others to acquire easements that preclude
    incompatible development around our installations. We are working to
    establish a long term encroachment agreement to protect lands under the
    supersonic operating corridor at NAWS China Lake and Edwards AFB,
    California.
        The Marine Corps secured easements on 2,715 acres at a cost of $6.9
    million in fiscal year 2007 while our partners contributed $6.8 million
    to prevent incompatible development and protect vital ecological
    resources. Marine Corps projects in progress and planned for fiscal
    year 2008 are expected to reach $30 million in DOD and partner funds to
    address encroachment at MCB Quantico, MCAS Cherry Point, MCB Camp
    Lejeune, MCAS Beaufort, and MCB Camp Pendleton.
    Energy
        The Department of Navy is committed to achieving the energy
    efficiency, water conservation, and renewable energy goals that
    Congress and the President have directed. DON last year reduced energy
    consumption by 10.8 percent compared to the 2003 baseline. DON is
    increasing use of renewable energy through evaluation of geothermal,
    solar, wind, biomass, and ocean energy technologies, as well as
    implementing highly efficient cogeneration systems, efficient lighting,
    motors, HVAC and other energy systems. Nearly 3 percent of the total
    energy consumed by the Department comes from renewable sources
    including wind, solar and thermal. The Navy plans to award $210 million
    per year in energy, water, and renewable projects. We continue to
    leverage new technologies including ocean thermal energy conversion,
    tidal energy, and fuel cells. Targeting energy systems at the ``per
    building'' level itself is promising, particularly with the use of
    photo-voltaic cells.

                                    HOUSING

        Our fiscal year 2009 budget continues to improve living conditions
    for Sailors, Marines, and their families. Thanks to the support of
    Congress, we met the goal to program the necessary funds and have
    contracts or agreements in place by the end of fiscal year 2007 to
    eliminate all inadequate family housing. Renovation or replacement of
    inadequate Navy housing will be complete by the end of fiscal year
    2011. Marine Corps families will be out of inadequate family housing by
    fiscal year 2014. This time has been extended from previous projections
    to maintain a supply of housing for additional Marines associated with
    Grow the Force until additional housing is constructed through
    privatization initiatives. 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. In our fiscal year 2009 budget, we
    are requesting the necessary funding to eliminate the remaining
    inadequate permanent party unaccompanied BEQs facility spaces still
    featuring ``gang heads.''

    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.
        As of the end of fiscal year 2007, we have awarded 30 privatization
    projects for over 61,000 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 approximately $8 billion in private sector
    investment from approximately $800 million of our funds, which
    represents a ratio of almost ten private sector dollars for each
    taxpayer dollar.
        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. This includes locations where
    increased requirements associated with the Grow the Force initiative
    will add to projected housing deficits. During fiscal year 2008, we
    plan to award three Marine Corps family housing privatization projects
    that would build an additional 1,100 homes.
        Our fiscal year 2009 budget includes $383 million for family
    housing construction and improvements. This amount includes $259
    million for the Government investment in family housing privatization
    projects planned for fiscal year 2009 award. It also includes the
    replacement or revitalization of housing in Cuba and Japan where
    privatization is not planned. Finally, the budget request includes $376
    million for the operation, maintenance, and leasing of remaining
    Government-owned or controlled inventory.

                          PLANNED PRIVATIZATION AWARDS
    ------------------------------------------------------------------------
                            Location                               Homes
    ------------------------------------------------------------------------
                        Fiscal Year 2008
    MCB Camp Pendleton (Phases 6, 6A, and 6B)...............             367
    MCB Camp Lejeune (Phase 4)..............................             451
    MCAGCC 29 Palms (Phases 2 and 2a).......................             285
                                                             ---------------
          Fiscal Year 2008 Total............................           1,103
                                                             ---------------
                        Fiscal Year 2009
    Navy Southeast (Gulfport)...............................              46
    MCB Camp Pendleton......................................             351
    MCAGCC 29 Palms.........................................             600
    MCB Hawaii..............................................             520
    MCB Camp Lejeune........................................             394
                                                             ---------------
          Fiscal Year 2009 Total............................           1,911
                                                             ---------------
          Total Fiscal Year 2008 to Fiscal Year 2009........           3,014
    ------------------------------------------------------------------------
    Fiscal year 2008 locations include GWOT-funded projects.

    Unaccompanied Housing
        Our budget request includes $1.3 billion for 37 unaccompanied
    housing projects at ten Navy and Marine Corps locations. The budget
    continues the emphasis on improving living conditions for our
    unaccompanied Sailors and Marines. There are three challenges:
      --Provide Homes Ashore for our Shipboard Sailors.--With its fiscal
            year 2008 request, the Navy completed programming for military
            construction associated with the Homeport Ashore initiative to
            provide ashore living accommodations for E1-E3 unaccompanied
            Sailors who otherwise would live aboard ship even while in
            homeport.
        In addition to the E1-E3 shipboard Sailors, there are approximately
            5,000 unaccompanied E-4 Sailors with less than 4 years service
            who are assigned to sea duty. In fiscal year 2001, Congress
            extended the BAH entitlement to all unaccompanied E-4 Sailors
            assigned to sea duty. Funding for the E-4s with less than 4
            years service remains un-programmed. The Navy is evaluating
            housing strategies for its unaccompanied Sailors including this
            segment of the population. In the interim, we will accommodate
            these junior Sailors to the greatest extent practible within
            our existing unaccompanied housing capacity.
      --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 2009 budget
            includes $1.2 billion in MILCON funding for the construction of
            approximately 13,000 permanent party spaces at eight Marine
            Corps installations. The Marine Corps has programmed the
            necessary funding from fiscal year 2008 through fiscal year 11
            to eliminate the BEQ deficit for the Marine Corps pre-Grow the
            Force end strength requirement by 2012. Additional funding for
            BEQ requirements specifically related to the ``Grow the Force''
            initiative is planned to begin in fiscal year 2010 after NEPA
            requirements are met in order to satisfy this requirement by
            2014. These barracks will be built to the 2 + 0 room
            configuration, as have all Marine Corps barracks since 1998.
            This is consistent with the core Marine Corps' tenets for unit
            cohesion and teambuilding.
      --Eliminate Gang Heads.--The fiscal year 2009 budget request includes
            funding to eliminate the last Navy permanent party BEQ with a
            gang head. The Marine Corps had already accomplished this goal
            in fiscal year 2005, but will continue to use these facilities
            on an interim basis to address short-term housing requirements
            resulting from the additional end-strength related to the Grow
            the Force Initiative.

    Unaccompanied Housing Privatization
        The Department 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 ``1+1E''
    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 expect the first building to be
    complete by the end of this year and overall project completion in
    2009. I am pleased to report the facility that was privatized, ``Palmer
    Hall,'' won an industry award for improved resident satisfaction based
    on resident surveys.
        In December 2007, we executed business agreements for our second
    pilot project at Hampton Roads, VA. This project will build more than
    1,100 new two-bedroom/two-bathroom apartments and privatize over 700
    existing unaccompanied housing modules for unaccompanied shipboard E1-
    E3 personnel.
        We are nearing completion of our evaluation of the Mayport/
    Jacksonville, Florida area as the candidate for third pilot project. We
    are also continuing to evaluate additional phases at San Diego and
    Hampton Roads using the public/private entities previously executed.
    Managing Our Privatization Portfolio
        We take seriously our responsibility to monitor the privatization
    agreements to ensure that the Government's long term 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. We conduct meetings
    with senior representatives of our partners and, where necessary,
    resolve issues of mutual interest. We use focus groups to obtain direct
    feedback from residents, property managers, and Command
    representatives. Customer surveys show overall improvement in member
    satisfaction after housing is privatized. Where our projects have
    encountered difficulties, appropriate corrective actions have been
    taken. For example, we had concerns regarding performance of the
    private partner in our Pacific Northwest project. The partner sold its
    interest as a general partner to another company which has a record of
    good performance with military housing privatization projects.

                                  ENVIRONMENT

    Shipboard Programs
        The Navy continues to convert its shipboard air conditioning and
    refrigeration plants from Ozone Depleting Substances (ODS) to non-ODS
    refrigerants. As of February 1, 2008, the Navy completed 552 of 690 air
    conditioning conversions and 595 of 611 refrigeration conversions. The
    Navy reached a major milestone in 2007 as conversions of the final
    aircraft carrier air-conditioning systems began. The Navy expects to
    complete its transition to non-ODS refrigerants by 2017.
        In addition to the shipboard air conditioning and refrigeration
    conversion program, the Navy has taken other ODS management efforts
    which have reduced our Class I ODS usage by over 95 percent. For
    example, the Navy is designing and building the first aircraft in the
    world without halon for fire suppression. In recognition of these many
    achievements, the Navy garnered six EPA Best of the Best Stratospheric
    Ozone Protection Awards at the 20th Anniversary Meeting of the Parties
    of the Montreal Protocol in September 2007.
        The Navy has also completed 168 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 upgraded PWPs
    reduce maintenance, improve reliability and throughput, and include a
    self-cleaning feature, giving our Sailors the best equipment available
    to meet no-plastics discharge requirements while at sea.
    Natural Resources Conservation
        The Department of the Navy's natural resources conservation
    programs rely on Integrated Natural Resources Management Plans (INRMP)
    to ensure our programs are effective in providing conservation benefits
    to species and their habitats while ensuring no net loss to the
    military mission. For example, in 2007, the United States Fish and
    Wildlife Service determined that the INRMPs for the Marine Corps'
    Townsend Bombing Range, GA, and Camp Pendleton, CA, provided a benefit
    to the protection of two species: the Flatwoods salamander (Ambystoma
    cingulatum) and tidewater goby (Eucyclogobius newberryi), respectively,
    and the range and base were excluded from Critical Habitat designation.
        Since the Endangered Species Act, Section 4(a)(3)(B)(i), was
    amended in the fiscal year 2004 NDAA, U.S. Fish & Wildlife Service and
    National Marine Fisheries Service determined that the effectiveness of
    DON INRMPs outweighed the necessity to make 41 Critical Habitat
    designations on DON installations.
    Environmental Compliance by Shore Installations
        Domestically, 93 percent of Navy and 95 percent Marine Corps
    permits are in full compliance with Clean Water Act standards, and 98
    percent of the Navy and 100 percent of Marine Corps population receives
    water that meets all Safe Drinking Water Act standards, both increases
    from recent years. The DON has made great strides in improving
    wastewater compliance through significant investments in infrastructure
    and improved management practices. For example, Marine Corps invested
    over $109 million in military construction funds at Camp Pendleton
    between fiscal year 2002 and fiscal year 2008 to meet wastewater
    requirements, including the construction of a new tertiary treatment
    system to serve the southern portion of the base. An additional $52.5
    million military construction project is budgeted in fiscal year 2009
    to reduce the total dissolved solids (TDS) in their drinking water.
    Installation Restoration Program (IRP)
        The DON has completed cleanup or has remedies in place at 83
    percent of our 3,716 contaminated sites at our active installations. 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 ten years. Use of new
    technologies, land use controls, remedy optimizations, contract
    efficiencies, and a dedicated professional staff has contributed to
    these efficiencies. Our fiscal year 2009 request of $293 million
    consists of $243 million for IRP, and $50.0 million for munitions
    response.
    Munitions Response Program (MRP)
        The DON is proceeding with cleanup of Munitions and Explosives of
    Concern and Munitions Constituents at all Navy and Marine Corps
    locations other than operational ranges. We completed the preliminary
    assessments in fiscal year 2007 at 99 percent of the 239 known sites on
    62 active installations and will complete site inspections and sampling
    by 2010. The data obtained from these inspections and samplings will
    provide the basis for developing estimates for environmental clean-up.
    Range Sustainability Environmental Program Assessment
        The Navy has completed environmental operational range assessments
    on 13 of 22 operational range complexes and is on track to complete the
    remaining nine operational range complex assessments in the United
    States and overseas by the end of fiscal year 2008. The Marine Corps
    has completed six range assessments and is on track to complete the
    remaining eight ranges in the United States by the end of fiscal year
    2008, and an overseas range in fiscal year 2009. To date, neither the
    Navy nor the Marine Corps have identified a release or threat of a
    release from an operational range to an off-range area that presents an
    unacceptable risk to human health and the environment.
    Alternative Fuel Vehicles
        The Department has many initiatives to reduce its reliance on
    imported oil and increase its fuel conservation efforts. Over the past
    5 years, the Navy initiatives have resulted in a 10-fold increase in
    the use of B-20 (i.e. 20 percent blend of biodiesel in petroleum
    diesel). The Navy has partnered with the Exchange Services to supply
    fuel for both government and commercial use at sites such as Naval
    Station Norfolk, VA. Biodiesel field testing and integration efforts
    are underway at several locations to address Executive Order 13423
    goals, reduce greenhouse gas emissions, and to increase environmental
    security.
        The Marine Corps has exceeded the Energy Policy Act (EPAct) of 1992
    for Alternative Fuel Vehicle (AFV) requirements for the past 5 years
    and is a leader in DOD and among other Federal agencies in the use of
    biodiesel and other alternative fuels. It has reduced its consumption
    of petroleum by 28 percent since 1999 due in part to increased use of
    alternative fuels (such as biodiesel, ethanol and compressed natural
    gas), neighborhood electric vehicles and conservation. For their
    aggressive pursuit of compliance with Federal mandates well beyond
    published goals, the Marine Corps received the White House Closing the
    Circle Award in 2005 and again in 2007.
    Navy Marine Mammals/Sonar R&D investments
        The Navy remains a good steward of the environment by taking steps
    to protect marine mammals from anthropogenic sound in the water. Navy
    has steadily increased annual marine mammal research from $12.5 million
    in fiscal year 2004 to $22 million in fiscal year 2009. This long-term
    investment will support more than thirty universities, institutions,
    and technology businesses worldwide and address critical issues in
    marine mammal demographics (the ``what, where, when, how many, and how
    much'' questions); support efforts to establish acoustic criteria and
    thresholds to more accurately measure the effects of naval activities;
    develop effective mitigation and monitoring methods to lessen and
    better understand any potential effects; and continue to refine
    characteristics of the sound field associated with naval activity.
    MMPA National Defense Exemption
        The Navy has been operating for the past year under a National
    Defense Exemption (NDE) issued in January 2007. Given recent court
    decisions in California and continuing litigation in California and
    Hawaii challenging the Navy's use of Mid-Frequency Active (MFA) sonar,
    the ability to rely on the NDE has been important to the Navy's ability
    to continue to test and train with MFA sonar. This limited-in-time NDE
    is necessary to allow the Navy sufficient time to complete the analysis
    and consultation necessary to support long-term compliance for Navy's
    MFA sonar testing and training. The Navy is preparing environmental
    planning and compliance documents in cooperation with the National
    Oceanic and Atmospheric Administration (NOAA). The process will be
    complete for the Southern California Range Complex, the Hawaii Range
    Complex and the East Coast (including the Gulf of Mexico) training
    areas by the time the NDE expires in January 2009. MFA sonar use as
    analyzed in these documents conservatively accounts for 75 percent of
    the Navy's testing and training with MFA sonar. The documentation for
    the remaining ranges will be completed later in 2009.
        The NDE requires the Navy to employ 29 specific mitigation measures
    developed with, and fully supported by, the National Marine Fisheries
    Service (NMFS) within NOAA. The NDE enables the Navy to employ MFA
    sonar in a manner that maintains testing and training fidelity while
    providing protection to marine mammals. By enabling critical MFA sonar
    testing and training to continue in an environmentally sound manner
    protective of marine mammals, the NDE serves as a bridge to future
    compliance with the authorization requirements of the MMPA. NMFS, in
    recently considering the effects of Navy MFA sonar training exercises
    on marine mammals in and adjacent to the Navy's Southern California
    Operating Area, noted that the mitigation measures employed as a result
    of the NDE will minimize the risk of injury to marine mammals, and
    concluded that it does not expect the exercises to result in adverse
    population level effects of any marine mammal populations.
        As part of the Council On Environmental Quality's (CEQ's)
    alternative arrangements for Navy compliance with the National
    Environmental Policy Act (NEPA) for the remaining exercises in the
    Southern California Operating Area through January of 2009, the Navy
    will use the NDE mitigation measures as modified by those alternative
    arrangements, as well as public involvement and best available
    scientific information to inform long-term range management decisions
    regarding continued testing and training with MFA sonar. However, while
    the MMPA has been removed as a basis for legal challenges, the Navy's
    ability to meet its statutory requirement to train and maintain a ready
    force, which includes training with MFA sonar, remains at risk due to
    legal challenges based on other environmental laws, specifically NEPA,
    the Endangered Species Act (ESA), and the Coastal Zone Management Act
    (CZMA), to the extent not addressed by Presidential exemption.
    Litigation surrounding those issues continues, with two courts recently
    enjoining MFA sonar use during two U.S. Pacific Fleet major exercise
    series. On March 31, 2008, the Department of Justice filed a petition
    with the U.S. Supreme Court for a writ of certiorari on the issues
    regarding MFA sonar training during the remaining exercises in the
    Southern California Operating Area through January of 2009.

                         RELOCATING THE MARINES TO GUAM

        National interests and treaty commitments require the United States
    to strengthen its military capabilities in the Western Pacific. U.S.
    forces must be positioned to maintain stability, ensure flexibility to
    respond to regional threats, project power throughout the Pacific,
    defend our assets as well as those of our allies, and provide forces to
    respond to global contingencies.
        The relocation of Marine Corps forces from Okinawa to Guam under
    the October 2005 agreement, ``U.S.-Japan Alliance: Transformation and
    Realignment for the Future'' (ATARA) 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. This is essential for the defense of Japan
    and for peace and security in the Pacific.
        Plans for implementing the military realignment to Guam have
    progressed significantly. United States (USG) and Government of Japan
    (GOJ) representatives meet regularly to develop implementing
    instructions covering the programming, budgeting, and funding to
    construct operational facilities, utilities, and housing needed to
    realign 8,000 Marines and 9,000 dependents from Okinawa to Guam. The
    USG and GOJ have negotiated a GOJ contribution of $6.09 billion of the
    estimated $10.3 billion cost for infrastructure on Guam. We have
    budgeted an updated total of $62 million in various DoN accounts in
    fiscal year 2009 to continue planning efforts.
        We continue numerous studies necessary for preparing an EIS in
    compliance with the NEPA. The EIS addresses the movement of Marine
    Corps forces from Okinawa to Guam as well as Navy efforts to construct
    a transient nuclear aircraft carrier-capable pier at Apra Harbor and
    Army efforts to locate a ballistic missile defense battalion on the
    island. A draft EIS is expected in spring 2009, the final EIS in
    December 2009, and a Record of Decision (ROD) in January 2010.
        In parallel with the EIS efforts, we are developing a Guam Joint
    Military Master Plan (GJMMP). The GJMMP addresses the realignment of
    Marine Corps forces in the context of other ongoing DOD actions on
    Guam, such as increasing intelligence, surveillance, and reconnaissance
    capabilities and transient forces at Andersen Air Force Base, and the
    increased Navy submarine presence, and the Army effort noted above. A
    working level draft of the GJMMP will be complete this summer.
        We are working closely with the Government of Guam (GovGuam), the
    Guam community, and other Federal agencies to ensure that social,
    economic, cultural, and other direct and indirect consequences are
    considered. DOD officials meet regularly with representatives from
    local agencies as part of a Civilian-Military Task Force on the island.
    We regularly meet with key GovGuam officials to coordinate
    compatibility with Guam's own Master Plan. Several public scoping
    meetings have been held and future public outreach sessions will be
    scheduled to ensure the community's concerns and ideas regarding
    environmental, socioeconomic and cultural impacts are taken into
    account. Federal support is also provided through DOD's Office of
    Economic Adjustment (OEA), which has thus far provided nearly $1.7
    million in grants to GovGuam to support key planning and impact
    studies.
        The business community, including local industry, is updated semi-
    annually on the relocation and acquisition effort at the Guam Industry
    Forum. These gatherings, held on Guam, attract large and small scale
    businesses and serve to facilitate networking and partnering
    opportunities.
        DOD also ensures GovGuam's voice is heard by the rest of the
    Federal Government by co-chairing with the Department of Interior's
    Office of Insular Affairs a Federal Interagency Task Force. There are
    five working groups that bring together representatives from key
    Federal agencies such as Department of Labor, Health and Human
    Services, Department of State, Department of Agriculture, Environmental
    Protection Agency, Department of Homeland Security and others to
    address issues that will affect Guam during and after the military
    realignment. GovGuam representatives participate in each of the five
    working groups. I am pleased to note that GovGuam's Port Authority and
    the Department of Transportation's Maritime Administration are working
    together to achieve GovGuam's short-term vision of supporting the
    military realignment and its long-term goal of becoming a key
    intermodal transportation hub in the Pacific Rim region.
        A critical concern is the availability of an adequate, trained
    construction workforce. With the need for an estimated 12,000 to 15,000
    laborers, a small, but fully employed indigenous workforce on Guam, and
    a relatively low wage scale that will not attract significant numbers
    of workers from the continental United States or Hawaii, a significant
    amount of foreign workers will be required. Legislation is pending in
    Congress to relax the current cap on H2B visas for workers on Guam and
    the Marianas Islands. We will need a reliable supply of non-immigrant
    labor throughout the construction phase to complete the relocation of
    the Marines to Guam.
        An additional issue of concern is the State of Guam's off-base
    infrastructure and public services. Although Guam is a U.S. Territory,
    the condition of much of its infrastructure is inferior to that found
    in other parts of the United States. Without major improvements to its
    infrastructure, Guam may not be able to adequately support the
    projected increase to its population. We are working with other Federal
    agencies and the Government of Guam through the Interagency Task Force
    to identify specific requirements and opportunities within the U.S.
    Government to finance high priority upgrades to Guam's infrastructure
    that support the Department's realignment. Ongoing cooperation in this
    regard will be crucial to ensure a successful relocation effort.

                    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 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 and to complete environmental cleanup on 14
    installations that have been disposed.
    Property Disposal
        Last year we conveyed 3,363 acres in six separate real estate
    transactions at three prior BRAC bases. We also completed Findings of
    Suitability for Transfer (FOST) for 3,397 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) (42 U.S.C. Section 9620(h)).
    The Department of the Navy has disposed of 91 percent of the 170,000
    acres from prior BRAC actions.

        The DON has spent about $3.7 billion on environmental cleanup,
    environmental compliance, and program management costs at prior BRAC
    locations through fiscal year 2007. The current cost to complete
    cleanup at prior BRAC locations is $1.1 billion in fiscal year 2009
    through completion.
        DON completed 12 CERLCA Records of Decisions (RODs) and Action
    Memos in fiscal year 2007, seven of which were at Alameda, CA. We
    sampled over 3,500 monitoring wells, and treated over 350,000 cubic
    yards of contaminated soil and 4.4 billion gallons of contaminated
    groundwater. At Hunters Point we have completed the removal of all
    radiological impacted sewer and storm lines on Parcel B: we removed
    enough soil to cover a football field 28 feet high! We teamed with the
    Stanford University to treat PCB contamination in sediment with
    activated carbon. This innovative technology has proven to be quite
    successful and could lead to more efficient and faster cleanup across
    DON.
        In fiscal year 2008 we are continuing progress at Hunter's Point
    and Alameda, two of our Prior BRAC installations with remaining
    programs of considerable size. There has been a concerted effort to
    accelerate environmental and low-level radiological cleanups to support
    redevelopment initiatives. Admittedly, the radiological component has
    caused complications and delays not previously anticipated. In fiscal
    year 2008, DON will use the $50 million in additional appropriated
    fiscal year 2008 funds to further cleanup actions at Hunters Point,
    Adak, Alameda, and Treasure Island. Another $8 million appropriated in
    fiscal year 2008 for use on groundwater at Hunters Point will be used
    toward a zero valent iron treatability study. The additional funding
    allocated to Hunters Point will help expedite cleanup of what has
    proven to be one of the most unique and difficult BRAC sites for the
    Navy.
        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 DON 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. Beginning in fiscal year 2003,
    we have used these funds to accelerate environmental cleanup, and to
    finance the entire DON prior BRAC effort including caretaker costs
    since fiscal year 2005.
        One significant property sale remains for the Navy at the former
    Naval Station Roosevelt Roads, PR, which is planned for fiscal year
    2009. Revenue projections for 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 resuming the need for appropriated funds in the fiscal
    year 2009 budget.

                            BRAC 2005 IMPLEMENTATION

        The DON continues to move forward implementing closure and
    realignment plans that will eliminate excess capacity, improve
    operational readiness, capitalize on joint basing opportunities with
    our sister Services, maintain quality of service, and achieve cost
    savings. In contrast to prior BRAC commissions, the BRAC 2005
    recommendations have fewer closures and many more realignments,
    particularly realignments that involve more than one component. The DON
    has six ``fence line'' closures and 81 realignment recommendations
    involving 129 bases.
    Environmental Cost to Complete
        Given the relatively few number of closures, the absence of major
    industrial facilities, and the extensive site characterization,
    analysis, and cleanup that has occurred over the last several decades,
    the DON's remaining environmental liabilities for BRAC 2005 are
    substantially less than in previous rounds of BRAC. We have spent $128
    million in cleanup at BRAC 2005 locations through fiscal year 2007. Our
    remaining environmental cost to complete for fiscal year 2009 and
    beyond is $74 million and the majority of it will be spent at Naval Air
    Station Brunswick, ME and Naval Weapons Station Detachment, Concord,
    CA.
    Accomplishments
        Nearly all impacted communities have established a Local
    Redevelopment Authorities (LRAs) 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.
        One of the success stories of the past year was the establishment
    of Midcoast Regional Redevelopment Authority (MRRA) as the
    implementation LRA in Brunswick, ME. In December 2007, the reuse master
    plans for Brunswick Naval Air Station and Topsham Annex were adopted
    and MRRA began implementation of the plans in January 2008. Under the
    reuse plan, 51 percent of the total base property has been allocated
    for development (approximately 1,630 acres); and 49 percent
    (approximately 1,570 acres) of the base has been dedicated to
    recreation, open space, and natural areas.
        The former main base of Naval Station Pascagoula (known as Singing
    River Island) reverted to the State of Mississippi on June 1, 2007.
    This facility was homeport to 1,000 military members and 100 civilians.
    Established as an operational homeport in 1992, the Naval Station
    fulfilled its mission to support and maintain surface combatants in the
    Southeast Region. The installation closed on November 15, 2006; but
    severe damage sustained to several buildings and the pier from
    Hurricane Katrina delayed the reversion to allow repair of the
    facilities. Through the team efforts of the State of Mississippi, the
    LRA, and the Navy, the repairs were awarded in January 2007 and
    completed in May 2007. This reversion represents 528 acres of BRAC 2005
    property eliminated from the Navy's property account.
        Finally, with careful management--such as deploying tiger teams to
    conduct independent evaluations of site conditions and requirements--we
    have been able to keep our cost increases down to a modest 2 percent
    compared to our fiscal year 2008 budget request.
    Joint Basing
        There will be twelve joint bases, of which the DON has the lead on
    four: Joint Base Anacostia-Bolling, DC; Joint Base Pearl Harbor-Hickam,
    HI; Joint Base Little Creek-Fort Story, VA and Joint Region Marianas,
    Guam. DOD issued Joint Basing Implementation Guidance (JBIG) in January
    2008, stating that a memorandum of agreement for each joint base site
    will define the relationships between service components. Under the
    joint guidance, total obligation authority and real property will
    transfer to the lead service prior to full implementation. A number of
    ``table top'' exercises have been conducted to facilitate a smooth
    transition in implementing joint basing.
    Walter Reed National Naval Medical Center
        Naval Facilities Engineering Command is the construction agent for
    the Army-lead BRAC Recommendation to relocate all tertiary (sub-
    specialty and complex care) medical services from Walter Reed Military
    Medical Center (WRNMMC) to Bethesda, Maryland. The Draft EIS public
    comment period closed on January 28, 2008, and a Final EIS is being
    prepared that will address public comments, most of which concerned
    traffic/congestion and homeland security. The ROD is planned for May
    2008.
        Two construction contracts are being prepared to meet the full
    requirements of the BRAC recommendation:
      --Contract 1 includes design and construction of Medical Inpatient
            and Outpatient facilities, Medical renovations of Buildings 1-
            10, renovation of Building 17 to house administrative
            functions, and construction of parking structures. This
            contract is scheduled for award February 2008. Contract
            language precludes all construction activity until the ROD is
            signed so as to not prejudice the NEPA process. Award prior to
            ROD signature allows design to begin and gives the project
            better assurance of completion within the BRAC statutory
            deadline.
      --Contract 2 includes construction of non-clinical/WTU administrative
            facilities, WTU and Staff Bachelor Enlisted Quarters, and a
            gymnasium. Contract award is planned for September 2008.
    Fiscal Year 2007 Financial Execution
        The DON budget for fiscal year 2007 was $690 million. The OSD
    Comptroller will release $54 million of that amount once the business
    plan for Naval Integrated Weapons and Armaments RDT&E Centers at China
    Lake, Dahlgren, and Indian Head is approved. As of December 2007, the
    overall obligation rate was approximately 66 percent, which was
    impacted by the fact that over 90 percent of the funding was received
    past the midpoint of the fiscal year. Contract awards for 11 of 51
    fiscal year 2007 BRAC construction projects have been delayed pending
    resolution of issues related to business plans, resolution of
    congressional issues and refinement of project scope requirements. We
    anticipate having contracts in place for the remaining 11 un-awarded
    projects by the end of the third quarter fiscal year 2008.
        Impact of the DOD fiscal year 2008 Reduction
        Of the DOD fiscal year 2008 Congressional budget reduction of $939
    million, DON's share was determined to be $143 million. Lack of funding
    creates uncertainty with our civilian and military workforce, creates
    turmoil with the implementation of business plans and causes us to lose
    momentum. Finally, without full fiscal year 2008 funding the Navy's
    ability to fully support joint recommendations, where the business plan
    is led by another component, is severely degraded. We encourage the
    Congress to promptly restore full funding.
        If funding is not restored, we will delay two BRAC construction
    projects ($90 million to co-locate Investigative Agencies at Marine
    Corps Base Quantico, VA; $7 million to relocate Navy Reserve Cargo
    Handling Battalion to Fort Lewis, WA) and Operations and Maintenance
    ($46 million) spending from fiscal year 2008 to fiscal year 2009.
    Without prompt restoral of these funds, the Navy will jeopardize its
    ability to implement BRAC 2005 by the September 15, 2011 statutory
    deadline.

                  MEETING THE CONSTRUCTION EXECUTION CHALLENGE

        We have outlined how our facilities investment is at a record
    setting pace. Yet we are poised to accomplish this tremendous amount of
    work at hand. The Department's execution agent, the Naval Facilities
    Engineering Command (NAVFAC), has outlined an aggressive plan to
    accomplish the in increased volume of work.
        Due to market conditions exacerbated by world-wide natural
    disasters, NAVFAC's execution lagged during fiscal year 2006. At the
    end of fiscal year 2006, total NAVFAC carry-over was $1,139 million, of
    which $712 million was DON. In addition, there were seven pending
    reprogrammings. In the subsequent 16 months, we scrubbed these
    requirements and used innovative acquisition strategies to reduce this
    backlog. As of the end of January 2008, fiscal year 2007 and prior
    carry-over is down to $302 million of which $186 million is DON. NAVFAC
    acquisition plans for fiscal year 2008 are poised to award all
    remaining prior year un-awarded and fiscal year 2008 MILCON and BRACON
    projects.

        To execute the growing MILCON workload, we are utilizing successful
    past and innovations practices:
      --Use best value source selection procedures.
      --Stand-up additional, fully autonomous Officer-in-Charge of
            Construction offices at Bethesda, Camp Pendleton, and Camp
            Lejeune to focus on the concentrated workload at these
            locations
      --Package similar and nearby projects over multiple fiscal years to
            achieve economies of scale. We achieved great success at
            Recruit Training Command complex at Great Lakes, IL using this
            strategy. We will do this where it makes sense while continuing
            to find opportunities to meet small and disadvantaged business
            goals.
      --Incorporate ``best of breed'' features and standardize designs,
            particularly for Marine Corps BEQ projects.
      --Apply Common component sourcing to minimize differences in building
            systems that would otherwise require multiple vendors,
            maintenance routines, and a wide variety of repair parts.
      --Award program support contracts to augment NAVFAC's workforce,
            while maintaining the Governments acquisition and technical
            authority.

                                   CONCLUSION

        The Sea Services will operate in an increasingly dispersed
    environment to support the Maritime Strategy and ensure the freedom of
    the seas. This requires an ever strong foundation of installations from
    which to re-supply, re-equip, train, and shelter our forces. We must
    continue to make smart infrastructure investments to prepare for the
    future and secure the peace abroad. It has been an honor and privilege
    to serve this great Nation and the men and women of our Navy and Marine
    Corps team--the military and civilian personnel and their families.
        Thank you for your continued support and the opportunity to testify
    before you today.

                                      GUAM

        Senator Johnson. What is the Navy doing, Mr. Penn, to
    ensure that the massive amount of construction that will take
    place in Guam is being integrated with and can be absorbed by
    the island? When can we expect to see a master plan that will
    detail all the projects that are planned and how they fit with
    the rest of the island's infrastructure?
        Mr. Penn. A preliminary draft master plan for internal DOD
    review should be available the end of this month. This is the
    first iteration of the draft master plan. We intend to complete
    the final document in September.
        We are working with the Government of Guam, CMI, the
    Department of Labor, and the Department of State officials to
    identify the skilled workforce that we will need on Guam. We
    are supporting two companion bills in Congress today for the H2
    Visa, controlling immigration on Guam.
        General Payne. Sir, we have actively engaged in putting
    people forward to help work through the infrastructure
    requirements on Guam, to include not only the naval personnel,
    representatives from the Joint Guam Program Office and also
    Marine Corps personnel because it is going to be a daunting
    task and needs to be orchestrated very carefully with both the
    government and military efforts.
        Senator Johnson. The Government of Japan has agreed to fund
    a portion of that, but I understand we have yet to see actual
    dollars from them and the $6 billion they have promised is a
    ceiling and not a floor.
        What is the status of the Japanese contribution to Guam?
        Mr. Penn. Sir, this month, my Director of the Joint Program
    Office was in Japan and just yesterday the negotiation team,
    they've been in Washington all week and I had the opportunity
    to speak with them yesterday.
        At this time, the negotiations, as you can imagine, are
    very, very complex. We had anticipated about $500 million
    coming to us next year and right now we are in the vicinity, at
    least the planning vicinity, of about $475 million. So we're
    very close.
        We think we will get to the $500 million with further
    negotiations and that will put us on time to start of
    construction in the 2010 time, fiscal year 2010 timeframe as we
    had planned.

                                 GROW THE FORCE

        Senator Johnson. Secretary Penn, the Navy's 2009 military
    construction budget request is $3.15 billion. It's nearly $1
    billion larger than last year's spending level. Most of this
    increase is due to the ``grow the force'' initiative.
        According to a recent GAO report, the majority of the new
    Marine Corps units will be established before permanent
    facilities are complete.
        What is the Navy doing to bridge the gap between the time
    new units arrive and the completion date of the construction
    projects? Do you anticipate sending to Congress additional
    requests for temporary housing in the future?
        Mr. Penn. General, would you like to respond?
        General Payne. Thank you, Mr. Chairman. If I can take a
    stab at that for you. We are ahead of schedule, fortunately, in
    growing the force and, fortunately, there has been little to no
    impact, little to no negative impact on our facilities or on
    our MILCON Program because of being ahead of schedule.
        The reason for that is that we have exceeded our retention
    goals in the past and so the influx or the increase in our end
    strength is mostly from people staying in as opposed to new
    recruits that we would have to provide additional BEQ spaces or
    additional housing. Number one.
        Number two, we do have a very aggressive program for BEQs,
    to include 35 new BEQs that are going to be started in fiscal
    year 2009. We believe that we will have our BEQ rebuild program
    in place on schedule by 2012 and all of the facilities for
    ``grow the force'' completed by 2014.

                            NAVAL FACILITIES COMMAND

        Senator Johnson. The Navy's military construction programs
    cannot be executed without adequate support from Naval
    Facilities Command.
        Given the large increase in your request this year, what is
    the Navy doing to ensure effective management, coordination and
    execution of its construction programs? Does the Naval
    Facilities Command have enough personnel?
        Admiral Handley. Thank you, Mr. Chairman. To give you a
    perspective, they're looking--Naval Facilities Engineering
    Command obviously has been doing the construction for the Navy
    and the Marine Corps as a DOD construction agent for years, has
    been looking at several acquisition strategies to ramp up to
    meet this demand and that includes several things, such as the
    combining of like construction projects, looking at similar
    design of facilities to streamline that, but also looking at
    program support contracts, so that as they increase to meet
    this demand, they do that through a leverage contract
    perspective. So at the end of the surge of this construction
    period, they don't end up with an additional staff on board
    where they end up with a problem with workforce management.
        So kind of a combination of looking at combining some
    projects. One of the biggest ones that we're looking at
    obviously is Guam and as we do that, we're also looking at the
    ability to include the housing for the immigrant workforce that
    would come in, the support for that workforce that would come
    in, also not burden the island of Guam as they do that large
    influx of construction as well, sir.

                                 NNMC AND WRAMC

        Senator Johnson. Secretary Penn, the supplemental budget
    request includes $218.9 million in BRAC funding to accelerate
    construction of the Walter Reed National Military Medical
    Center at Bethesda by 7 months.
        What is the total projected cost of the Walter Reed Center
    at Bethesda, and is the Navy or the Tricare Management Activity
    requesting additional funding for this project in the 2009 BRAC
    request?
        Mr. Penn. Sir, I think that's going to be a question for
    the record for us. I've had not had visibility on this in maybe
    4 months, 5 months. So I'd be afraid to commit.
        [The information follows:]
        The cost to complete the Walter Reed National Military Medical
    Center at Bethesda is $1,112.5 million. This amount includes $936
    million in Military construction funds and $3.5 million in planning and
    design funds as well as $173 million in operations and maintenance
    funds. The fiscal year 2009 President's Budget request included $234.8
    million for efforts at Bethesda; an additional $208.3 million in fiscal
    year 2009 is also required to fund the enhancement and acceleration of
    the project. This requirement, along with an additional $55 million
    requirement for Fort Belvoir (for a total fiscal year 2009 additional
    amount of $263.3 million) was annotated on page 198 of the fiscal year
    2009 Defense-Wide Agencies and Activities DOD Base Realignment and
    Closure 2005 Commission Budget Justification Material. DOD intends to
    seek this additional $263.3 million as these expansions are necessary
    for the acceleration and enhancement effort within the NCR in direct
    support of wartime casualties. The funds are requested for the BRAC
    appropriation and will be allocated to TMA to execute.

                                     VH-71

        Senator Johnson. Secretary Penn, the plan to replace the
    Marine One helicopter fleet with new VH-71 helicopters has run
    into significant cost overruns with the program currently on
    hold while the Pentagon decides how to move forward.
        The Navy has recently informed the committee of large cost
    increases for the hangars to house these helicopters relative
    to changing requirements since the money was originally
    appropriated.
        Given the uncertainty of the program, why doesn't the Navy
    pause the Navy Hangar Construction Program until the
    requirements are clarified?
        Mr. Penn. Sir, we continue the construction of the hangar,
    the program. We have found that the cost to cancel the program,
    plus pay all the penalties and so forth, increases the cost
    significantly. So we will go ahead and continue the
    construction of the program.
        Admiral Handley. Sir, from a practical matter, depending on
    where each project is in the process, the termination costs
    often exceed the cost to complete that project and then looking
    at the total cost of the program which would be the restart.
        So on a case by case basis, I think we take an evaluation
    of those, but depending on where you are in the construction
    process, you need to take a look at those total costs as you go
    forward, sir.
        Mr. Penn. I think we're going to the white side now.
        Admiral Handley. The reprogramming package, I believe, that
    we've got for the Presidential helicopter has gone through some
    modification based on those requirements and so we'll continue
    to evaluate that, given these new requirements, sir.

                         ADDITIONAL COMMITTEE QUESTIONS

        Senator Johnson. I would like to thank all of our witnesses
    for appearing before the subcommittee today. We look forward to
    working with you this year as the 2009 budget request process
    continues.
        For the information of subcommittee members, if you have
    questions for the record that you would like to submit, please
    do so by the close of business on April 30, 2008.
        [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

                WALTER REED/BETHESDA NAVAL HOSPITAL--TOTAL COST

        Question. Secretary Penn, the supplemental budget request includes
    $218.9 million in BRAC funding to accelerate construction of the Walter
    Reed National Military Medical Center at Bethesda by 7 months.
        What is the total projected cost of the Walter Reed Center at
    Bethesda?
        Answer. The cost to complete the Walter Reed National Military
    Medical Center at Bethesda is $1,112.5 million. This amount includes
    $936 million in Military Construction funds and $3.5 million in
    planning and design funds as well as $173 million in operations and
    maintenance funds. The fiscal year 2009 President's Budget request
    included $234.8 million for efforts at Bethesda; an additional $208.3
    million in fiscal year 2009 is also required to fund the enhancement
    and acceleration of the project. This requirement, along with an
    additional $55 million requirement for Ft. Belvoir (for a total fiscal
    year 2009 additional amount of $263.3 million) was annotated on page
    198 of the fiscal year 2009 Defense-Wide Agencies and Activities DOD
    Base Realignment and Closure 2005 Commission Budget Justification
    Material. DOD intends to seek this additional $263.3 million as these
    expansions are necessary for the acceleration and enhancement effort
    within the NCR in direct support of wartime casualties.

       WALTER REED/BETHESDA NAVAL HOSPITAL--FISCAL YEAR 2009 BRAC REQUEST

        Question. Is the Navy or the TRICARE Management Activity requesting
    additional funding for this project in the fiscal year 2009 BRAC
    request?
        Answer. The funds are requested for the BRAC appropriation and will
    be allocated to TMA to execute.

              WALTER REED/BETHESDA NAVAL HOSPITAL--COMPLETION DATE

        Question. If this supplemental funding is approved, what is the
    projected completion date for construction?
        Answer. We would expect to be able to complete construction of the
    new inpatient and ambulatory care buildings by October 2010.
    Construction of the new wounded warrior care wing will not be complete
    until summer 2011 due primarily to the need to phase certain portions
    of the project. The supplemental funding will also allow us to complete
    support buildings in time to meet the needs of the various medical
    functions as they realign from Walter Reed Army Medical Center to the
    new National Military Medical Center at Bethesda.

             WALTER REED/BETHESDA NAVAL HOSPITAL--ROAD IMPROVEMENTS

        Question. I understand that the Navy is considering asking the
    Defense Department to pay for some of the road and metro improvements
    around Bethesda to accommodate the additional traffic expected when
    this hospital opens. What is the status of the Navy's recommendation?
    What is the cost estimate for these improvements?
        Answer. The Navy submitted a request on May 3, 2008 to the Defense
    Access Road (DAR) project office to certify two off-campus projects as
    eligible for DOD financing. One project would add a high-speed elevator
    from the Medical Center Metro Station to the western side of Rockville
    Pike. This would facilitate the movement of commuters from the Metro
    Station to the Medical Center side of Rockville Pike and thereby
    eliminate the need for increased capacity at the existing cross walk
    and ease the flow of traffic through a already heavily congested
    intersection. The second project would lengthen the left turn lane into
    the north gate of the Campus and thus reduce impact on the thru traffic
    proceeding south on Rockville Pike. The total cost of these two
    projects is estimated to be approximately $21 million. These projects
    are not yet programmed or funded, but if certified as eligible for DOD
    financing, they will be considered for inclusion in a future budget.

                 WALTER REED/BETHESDA NAVAL HOSPITAL--BARRACKS

        Question. Given the personnel increases that the new hospital will
    require, has the Navy programmed for additional barracks or housing at
    the Bethesda Campus that will accommodate additional staff there?
        Answer. The BRAC project includes the addition of a new bachelor
    enlisted quarters that will provide 300 new rooms. These rooms will be
    designed and built to Warrior-In-Transition standards. As a result, the
    new rooms will be able to accommodate Wounded Warriors and may also be
    used for staff personnel when not otherwise occupied. There are no
    plans to add officer housing to the Bethesda Campus.
                                     ______

                Questions Submitted by Senator Mary L. Landrieu

                      FEDERAL CITY--REAL ESTATE AGREEMENT

        Question. Does the Department of the Navy anticipate any problems
    that will delay reaching a real estate agreement with the New Orleans
    Federal Alliance in time to meet the BRAC Commission's September 2008
    deadline, and if so, what is the nature of these problem areas and how
    can they be solved?
        Answer. There are still many details to be negotiated before a
    formal lease agreement can be signed. We are currently working with
    NOFA to develop a simple and straightforward lease agreement that will
    meet our needs as well as the needs of the State within the confines of
    the legislation. Assuming the success of these negotiations, the
    Department of the Navy does not anticipate any problems that will delay
    reaching a real estate agreement with the New Orleans Federal Alliance
    (NOFA) in time to meet the BRAC Commission's September 2008 deadline.

                           FEDERAL CITY--LEGAL ISSUES

        Question. Do you foresee any legal issues and if so what is the
    solution for those problems?
        Answer. The current NOFA proposal does raise some legal issues that
    will need to be resolved in order for the Federal City project to move
    forward. To solve these issues, we continue to work with NOFA to
    develop a mutually acceptable proposal.

                             FEDERAL CITY--FUNDING

        Question. Are there any funding issues with the implementation of
    Federal City?
        Answer. NOFA has advised the Department that the State of Louisiana
    will commit up to $150 million for the development of Federal City.
    Governor Jindal reaffirmed a commitment of funding in his April 16,
    2008 letter to DON. Navy is working with NOFA to ensure that all
    necessary funds will be obtained by the State as of September 30, 2008
    and will be available to complete all work to meet the BRAC
    requirements. The $100 million ($75 million + $25 million) may not
    cover all the Marine Corps' facilities needs and there may be
    challenges in addressing any shortfall.

                          FEDERAL CITY--IMPLEMENTATION

        Question. What assistance can this committee provide to help ensure
    that the BRAC Commission's recommendations are implemented and the
    Federal City project becomes a reality?
        Answer. Given Governor Jindal's assurance that funding for the
    realignment will be obtained as required by the BRAC Commission's
    conditional recommendation, at present, no assistance from this
    committee is needed as we are continuing to work with NOFA to make
    Federal City a reality.

                              SUBCOMMITTEE RECESS

        Senator Johnson. This hearing is recessed.
        Mr. Penn. Thank you, Mr. Chairman.
        [Whereupon, at 11:30 a.m., Thursday April 24, 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 2009

                                  ----------

                             THURSDAY, MAY 8, 2008

                                           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. Tim Johnson (chairman) presiding.
        Present: Senators Johnson, Murray, Reed, Nelson, Hutchison,
    Craig, and Brownback.

                             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, U.S. ARMY CHIEF OF STAFF,
                INSTALLATION MANAGEMENT
            MAJOR GENERAL RAYMOND CARPENTER, SPECIAL ASSISTANT TO THE
                DIRECTOR, ARMY NATIONAL GUARD
            BRIGADIER GENERAL JULIA ANN KRAUS, DEPUTY CHIEF, ARMY RESERVE

                    OPENING STATEMENT OF SENATOR TIM JOHNSON

        Senator Johnson. This hearing will come to order. I welcome
    everyone to this morning's hearing to discuss the President's
    2009 budget request for military construction for the Army and
    Air Force. We will hear from two panels of witnesses today,
    beginning with representatives from the Army. Secretary Eastin,
    General Wilson, General Carpenter--who is from South Dakota, by
    the way--and General Kraus, thank you for coming today. We look
    forward to your testimony.
        The military construction budget request for the Army this
    year is larger than ever. After nearly doubling last year from
    $2 billion to $4 billion, the active duty Army's 2009 request
    is a record $4.6 billion, an increase of 17 percent over the
    2008 enacted level. Most of this increase can be attributed to
    the ``grow the Army'' initiative to add 74,000 soldiers by
    2013. This initiative, combined with the severe stresses of two
    wars and the long-term strategic realignment, has required
    unprecedented investments in Army construction.
        In light of this large request, it is all the more
    imperative that we closely examine how well the Army is
    executing its military construction program and whether its
    requests are appropriately prioritized to meet our military
    future. One area of particular concern to the committee is the
    deplorable conditions at some permanent party Army barracks,
    including those housing soldiers returning from the war, which
    have recently come to light. The situations that have been
    uncovered are, quite simply, unacceptable and I look forward to
    hearing from our Army witnesses how they intend to address the
    problem.
        Senator Hutchison, would you care to make some opening
    remarks?

                   STATEMENT OF SENATOR KAY BAILEY HUTCHISON

        Senator Hutchison. Thank you, Mr. Chairman.
        It is nice to have the representatives of the Army and the
    Air Force for the second part of our round of hearings on our
    military construction appropriations for this year. I think the
    chairman has mentioned some of the points that I would make,
    but let me just say that I think the emphasis on the Army is
    certainly essential, given that the Army is going to grow its
    end strength by 65,000 active duty, 8,200 National Guard
    soldiers, and 1,000 reservists over the next 5 years, along
    with the consolidation of troops in the United States from
    overseas.
        I do support this increase in end strength. It is the right
    thing to do. So it means that we do have to have the increases
    in military construction to assure the quality of life, which I
    also think is well covered in this appropriations request. You
    have $1.3 billion, an 85 percent increase over last year, on
    quality of life facilities, which I think is absolutely well
    placed.
        The Overseas Basing Commission, as I have said many times,
    is a product of this committee. After traveling through some of
    our bases overseas and seeing the lack of training space, the
    separation, and the costs in foreign bases, we recommended that
    the foreign bases be looked at. In fact, the Department of
    Defense did jump right in and made good solid recommendations
    about moving many of our scattered facilities in Germany and
    Korea, consolidating the ones that did have the need and the
    capability. It will be much more efficient to have our overseas
    bases run more consolidated, as we are doing in the United
    States.
        So the overseas basing issues, the BRAC recommendations,
    and the new global defense posture that focuses on expanded
    allied roles and new partnerships, will allow us to relocate
    our soldiers back to the United States. When the new emphasis
    on global restationing plan for the Army is completed by the
    end of 2011, we should see 90 percent of our U.S. Army forces
    based in the United States. This is a good plan and one our
    service members are counting on. It will provide more
    operational freedom of action, better training, and better
    family support than would be possible otherwise.
        Along with BRAC, it will produce a stronger, more
    deployable, more efficient Army in which vast, but constantly
    stretched, resources of our Army can be used in the most
    efficient manner.
        I want to mention the Army's new modular force plan, which
    will reorganize units into brigade combat teams. The new plan
    calls for five new brigade combat teams that would be stationed
    at Fort Bliss, Fort Stewart, and Fort Carson. I am told that
    the European commander wants to keep two of those BCTs in
    Europe for up to 2 years longer than the Army had originally
    planned. I would like not to see the delay at all. But I hope
    there is a commitment not to make that into a more permanent
    decision, I think the decision to move as many of our Army
    personnel as possible back to the United States, where there is
    a continuity of service and training capabilities, is the right
    decision. I hope that we're not backing off from that in any
    way, despite any European pressure on that account,
    particularly when we have not yet gotten very much cooperation
    from the Europeans in Afghanistan. I would hope that the
    original decision is not in any way being questioned.
        Another area that I want to focus on is joint basing. We
    have the Air Force taking the lead in 6 of the first 12 joint
    basing pilot projects. I don't mean that it would be temporary,
    but the Air Force will be the lead in many of these bases. I
    think that's a good decision because the Air Force is known for
    taking care of its property well and operating well.
        I do want to make sure that certain Army bases like Fort
    Sam Houston, which have quite a history and quite a cultural
    uniqueness, are maintained as what they are, a very historic
    and important part of the Army throughout the years. I think
    the joint base in San Antonio that will be operated by the Air
    Force, putting together Lackland, Randolph, and Fort Sam, is
    probably a good decision, as I said, because the Air Force does
    so well in operating. I'm sure it will be more efficient. But I
    don't want to lose any of the unique history of Fort Sam
    Houston. If somebody suggests that we modernize the old basic
    Fort Sam Houston structures, they're going to have trouble from
    me if I'm still around. So I hope that that would not be
    anything that would be in the offing.
        So with that having been said, I thank you, Mr. Chairman,
    and look forward to hearing the witnesses.
        Senator Johnson. Senator Reed.
        Senator Reed. Go ahead, Mr. Chairman.
        Senator Johnson. I suggest 7-minute rounds for questions.
        Senator Hutchison. Okay.
        Senator Johnson. To our witnesses, thank you again for
    appearing before our committee. Your full prepared statement
    will be entered in the record. Secretary Eastin, please
    proceed.
        Mr. Eastin. Thank you, Mr. Chairman. I'll be brief in my
    opening remarks. I'm sure you'd like to get on with questioning
    of us on some of our matters.
        A couple points I would like to make. We are, of course,
    very heavily involved in the BRAC process and we are committed
    to completing the BRAC process on time in September of 2011. To
    do that, however, we would appeal to you to restore about $560
    million to the BRAC account which was decremented last year.
    Without this, it will be nearly impossible to complete many of
    the actions that would take place.
        We've got--and most of these 59 separate actions involved,
    most of them of a reserve nature, reserve centers, National
    Guard activities, are not going to be able to be completed if
    we don't get some restoration of that sort of thing. So we
    appreciate your help in doing that if you can.
        A topic on many people's minds, of course, is what we're
    doing with our barracks situation. General Wilson will discuss
    this in further detail himself, but let me assure the committee
    we take this very seriously. Our military construction budget
    alone this year, about 25 percent of it will be for the
    replacement of old Korean war era and earlier barracks, which
    are the subject of certain controversy here in the last several
    weeks.
        So we are committed in replacing these barracks and
    otherwise taking care of our soldiers so that their home away
    from their original home is something they can be proud of.
        With that, I'll turn this over, if you don't mind, to
    General Wilson, who can further enlighten us on where we are on
    the barracks matters.
        General Wilson. Mr. Chairman, Senator Hutchison, Senator
    Reed, Senator Nelson: On behalf of the Army's senior leaders
    and more than 1 million soldiers that comprise our Army, thank
    you for the opportunity to discuss our fiscal year 2009
    military construction budget.
        Our MILCON request is crucial to the success of the Army's
    strategic imperatives, to sustain, prepare, and transform our
    Army, and military construction plays a key role in each of
    these imperatives. We must sustain our soldiers and families
    with programs such as the Soldier-Family Action Plan, which
    will standardize soldier and family programs and services,
    increase accessibility and quality of health care, improve
    soldier and family housing, ensure excellence in schools, youth
    services, and child care, and expand education and employment
    opportunities for family members.
        We are establishing superb training facilities with $850
    million in this year's budget for new ranges and training
    facilities to support our training readiness. The Army's
    medical action plan will integrate care and services for
    wounded warriors and their families and provide world-class
    care to our warriors in transition for reintegration into the
    force or transition to civilian life. We thank you for your
    support in this vital program.
        The creation of the Installation Management Command in
    October 2006 continues our progress in centralized installation
    management and fosters more consistent, cost effective and
    predictable delivery of installation funding and services, and
    to improve these efficiencies and effectiveness we are
    achieving and reshaping our installations through BRAC, GDPR,
    Global Defense Posture Realignment, while simultaneously
    converting to the Army modular force, growing the Army, and
    assisting the Army Reserve in becoming an operational force,
    all of this while at war for 6 years.
        Our military construction request supports this integrally
    woven, tightly synchronized stationing plan. In the last few
    years, as a result of our continuing resolutions we have lost 4
    to 6 months of building time, basically delay in awarding
    projects. There is a provision in this year's budget, section
    121, that would give us additional flexibility and I ask for
    your support in that new provision in this military
    construction bill.
        Finally, I want to address the barracks situation at Fort
    Bragg. The recent video images are alarming and are not
    indicative of the standards for how we want our soldiers
    housed. We were not able to get the barracks to the quality of
    life the soldiers expected nor deserved prior to their return.
    This should have been prevented.
        We have fixed all life, health and safety issues in
    Building Charlie 4122 and reprogrammed $2.9 million to Fort
    Bragg to inspect and correct all of the like buildings, which
    are 22, unlike the ones you saw on the video, and improve the
    condition of these barracks.
        Since this incident surfaced, I ordered a sweeping
    inspection of over 3,300 barracks worldwide, 146,500 rooms, to
    ascertain the extent of the problem. All identified barracks
    deficiencies were ordered corrected throughout the Installation
    Management Command and any soldier found living in a
    substandard room has been relocated.
        We have made changes to the way we manage our barracks by
    standing up maintenance teams at each installation to focus on
    barracks quality of life. We are placing sergeants major at
    directorates of public works, beginning with our 16 largest
    installations, to assist in barracks readiness, and we have
    transferred barracks ownership from deploying units to the
    garrison in order to better maintain them at an acceptable
    standard. We are now centrally managing our barracks and our
    training and tracking our barracks quality of life monthly.
        Additionally, we have reprioritized $248 million to address
    our most urgent priorities, representing 48 projects across 8
    installations. Mold is our largest problem, most prevalent in
    the Southeast, but across all of our installations. Each
    installation has the capability to test mold and take immediate
    corrective measures, including soldier reassignment. We are
    applying several initiatives to reduce mold growth.
        I'm confident we can improve the quality of life for our
    soldiers serving our Nation so proudly. The Army has invested
    $13 billion since 1994 to modernize our barracks, get soldiers
    out of the old barracks and build new, modern barracks with
    more space and amenities. We are proud of this effort, but
    still have 9 years and $10 billion to go before our barracks
    will be brought to standard.
        About 79.4 percent of our barracks were built in 1979 or
    earlier. Thirty-five percent are 50 to 60 years old, just like
    the barracks you saw at Fort Bragg. We must continually triage
    these old barracks to keep them livable. To cope with this
    challenge, the Army has invested $975 million since 2005 to
    sustain our barracks awaiting replacement. We will require a
    continual investment and leadership focus to maintain these
    barracks until we complete our buyout plan in 2015.
        In closing, our $11.4 billion request for MILCON, BRAC, and
    family housing plays a critical role in allowing us to put the
    Army back in balance and sustain the current fight and
    restation our force. We thank the Congress for its unwavering
    support of the Army's military construction program over the
    years and we ask for your continued support. Our goal is to
    have premier installations across the globe. Our soldiers and
    families deserve nothing less.
        Thank you. I look forward to your questions.

                              BARRACKS INSPECTIONS

        Senator Johnson. Secretary Eastin or General Wilson, as you
    note in your testimony, the Army is now in its 16 year of a
    campaign to modernize its permanent party barracks. It is
    deeply troubling, after 16 years of this effort, that many of
    our soldiers are still forced to live in conditions like what
    recently came to light at Fort Bragg.
        General Wilson, you noted the barracks inspections you
    recently ordered. How many soldiers were relocated as a result
    and can we see the results of that inspection?
        General Wilson. Mr. Chairman, 13 soldiers were relocated, 8
    in CONUS and 5 overseas. Eleven of these rooms were in regard
    to mold. This is not the black mold, but the mold that I talked
    about earlier. That inspection was done throughout the world,
    overseas and CONUS, as I related to. And yes, sir, we'll make
    that available to you.
        [The information follows:]

                              Barracks Inspections

        When the Fort Bragg video surfaced, the Army conducted a world-wide
    barracks inspection to ensure all rooms met life, health, and safety
    standards, or relocate Soldiers within 72 hours. As a result, 13
    Soldiers were moved out of rooms due to mold or other unacceptable
    conditions. To address the immediate issue, $2.9 million in Sustainment
    funding was diverted so Fort Bragg could correct Building C-4122
    deficiencies and other barracks on post in similar condition. Army-
    wide, $248 million was reprioritized, to address ``worst needs''
    barracks at eight installations.
        To avoid a repetition of the Fort Bragg scenario, the Installation
    Management Command is changing the way barracks are managed by
    transferring responsibility from deploying units to the installation
    garrison staff; providing senior noncommissioned officer facility
    oversight, in conjunction with the emerging First Sergeants Barracks
    Initiative; establishing and maintaining a quality of life standard
    focusing on living space, latrines, lounges, and lobbies; and
    programming funds to eliminate conditions conducive to mold growth.

        Senator Johnson. Which barracks are in the most urgent need
    of repair and have you requested accelerated funding for them?
    How do you plan to accelerate the Army's barracks construction
    program to address these problems?
        General Wilson. Sir, we noted 48 projects in eight of our
    installations in most urgent need. The method we can deal with
    that is to reprogram some of our sustainment dollars from other
    projects to these most urgent ones and that's how we plan on
    dealing with it.
        Senator Johnson. How will the reduction in deployment tours
    from 15 to 12 months affect this situation? You will have more
    soldiers coming home at a faster rate. How are you going to
    ensure that all of them are adequately housed?
        General Wilson. Mr. Chairman, you're precisely correct. As
    we begin to bring soldiers home from the surge, it's going to
    necessitate us to get in front of the problem so we avoid
    anything that happened at Fort Bragg. We think by the actions
    that we've directed, by standing up maintenance teams, placing
    the barracks under the garrison and public works for
    management, and also having monthly assessment reports to
    report through the operations channels and command sergeant
    major channels where they stand at each installation in
    preparation for returning soldiers, that we will be able to
    address these urgent needs in the future redeployments.

                            GUARD/RESERVE COMPONENT

        Senator Johnson. General Carpenter and General Kraus, a
    major concern for this committee has been the chronic
    underfunding of the infrastructure needs of our Guard and
    Reserve components. Last year, for example, U.S. Army Reserve
    and Army Guard MILCON funding saw major decreases. I'm pleased
    that this year's military construction request for the Army
    Guard and Reserve has increased, but the request still only
    meets about 40 percent of the requirements.
        Understanding the need to prioritize in a time of
    tightening budgets, are the Guard and Reserve getting what they
    need?
        General Carpenter. Sir, Mr. Chairman, it's nice to see a
    fellow South Dakotan, by the way.
        From the Guard perspective, we are working diligently with
    the Army to make sure that the Army National Guard projects are
    incorporated into the Army priorities. We have an adjutant
    general military construction GOSC that is engaged in that
    process.
        We see the challenge for us in the Army Guard is to
    incorporate our needs into first of all the validated
    requirements for the Army and then the critical funding
    requirements. We are working with the Army in that process and,
    quite honestly, we are seeing some success.
        Senator Johnson. General Kraus.
        General Kraus. Yes, sir. We have an aggressive program,
    which is 41 percent of the budget to be funded in the next,
    fiscal year 2009, and it takes us out with the prioritized list
    to 2013. What's critical for us at this point in time is that
    that 560 be re-added in, because it was 10 Army Reserve centers
    that had been shelved that we need to bring forward, and we're
    working on it.

                    FISCAL YEAR 2009 MILCON BUDGET EXECUTION

        Senator Johnson. Secretary Eastin, your 2009 budget request
    for military construction is the largest ever submitted by the
    Army. Will you be able to execute it?
        Mr. Eastin. You're right, it is very large and it's very
    challenging. At Bliss alone we have $1 billion worth of
    military construction going on in the current year.
        We've had to take a look at how we build things very
    carefully and basically transform that. We're proud at Bliss,
    for example, we are turning out one new building per week and
    we'll be doing that for the next several years. But it's
    required a complete relook of how we do construction,
    standardized designs, centers of excellence across the Corps,
    where not every region will be developing both, say, barracks
    and maintenance facilities and dining facilities, but we have
    centers that do each of those and try to standardize the design
    for each.
        Also, much of the construction is actually manufactured in
    a factory and brought in and set up, so you're not doing sticks
    and bricks out on the posts themselves. But we're bringing them
    in state of the art construction methods now, and things that
    can be brought in from the outside and constructed even in
    other States and brought in and put in place.
        So we have a real organization set up there to do it. We
    are confident this will--in fact be done this year, and we're
    also confident that our BRAC time deadlines are going to be
    met.
        Senator Johnson. With all the initiatives the Army has
    currently undertaken--Grow the Force, Global Realignment,
    etcetera--what is your top construction priority?

                                    BARRACKS

        General Wilson. Sir, I think it's clear our top
    construction priority on our installations and what we would
    call our pacing item would be barracks. We've got to address
    those 35 percent of our barracks that are 50 to 60 years old
    and our urgent requirement is to try to replace all of them as
    soon as possible.
        Senator Johnson. Senator Hutchison.
        Senator Hutchison. Thank you, Mr. Chairman.

                                      BRAC

        Mr. Eastin, we are working in the supplemental for the full
    restoration of the BRAC funding. Right now it's $780 million,
    $787 million, that would go into the BRAC account. If that
    stays all the way through the process, then are you on course
    to finish the BRAC requirements by 2011?
        Mr. Eastin. Senator, I sat up here last year and I said:
    Don't ask me tomorrow, but today we are on track everywhere to
    meet the September 2011 deadline. I'm happy to report that I
    will respond with the same--make the same response this year,
    that: Don't ask me tomorrow, but I know of no BRAC single
    action that is not going to be on track.
        Some of these are going to be real challenges, but I know
    of none that will not be met by the 2011 deadline.

                                 OVERSEAS BASES

        Senator Hutchison. General Wilson, I mentioned in my
    opening statement that part of the global restationing
    initiative was spurred by the Overseas Basing Commission that
    this committee on a bipartisan basis put forward. I want to ask
    you, because of this potential delay of two combat brigade
    units, are we going to bring our forces back as originally
    proposed by the Department of Defense, and will you be able to
    complete the permanent facilities that you need for the Grow
    the Army timelines in military construction? And is there going
    to be more than a 2-year delay in those two units that are
    scheduled to come back as part of the five?
        General Wilson. Senator, there is a 2-year delay on those
    last two brigades and that's what we're planning. Even with
    that, that last brigade is coming back to Fort Bliss, the
    permanent construction will not be completed when they return.
    Our current plan will be to use the relocatables that are
    available until the permanent construction is completed.
        Senator Hutchison. Do you see any lessening of the
    commitment to bring those troops home from Germany after the 2
    years?
        General Wilson. The only thing that I'm aware about was the
    Secretary of Defense and the President's decision to do a 2-
    year delay and keep them within the FYDP, and that's what we're
    planning for our military construction quality of life efforts
    based on that decision. That would be 2012 and 2013.
        Senator Hutchison. Do you sense that there is a negotiation
    going on with the Europeans using the troops and the Europeans'
    desire to keep them there at the same time that we're trying to
    move them back?
        General Wilson. Ma'am, I don't have any knowledge of that.
    I'm sure that the COCOM commander and the Joint Staff may be
    able to address that, but I'm not aware of it.
        Senator Hutchison. Well, it's my fear that we are going to
    succumb to political pressure from local governments and the
    Government of Germany, and I think that would be a real
    mistake. I think you made the decision based on the needs of
    the United States and our military personnel. The Germans have
    been difficult to deal with in military construction, requiring
    more expensive construction standards, and have not been
    willing to help in paying for those even if they are going to
    be left in Germany.
        So I would just say that from my vantage point, I will be
    looking to the Army to negotiate with the Germans in the best
    interests of America and not allow them to not help pay for
    these added standards that they are requiring and not to leave
    more troops there than are in the best interests of the United
    States and our training and our quality of life for our
    military.
        Thank you, Mr. Chairman.
        Senator Johnson. Senator Nelson.
        Senator Nelson. Thank you, Mr. Chairman.
        With the returning soldiers from the surge and with the
    Army growing the force 95,000 troops and facilities already
    behind the funding curve, as you look at this what kind of
    planning can you take within the budget that was presented to
    be able to meet all those needs? I guess Mr. Secretary.

                                 EXECUTION PLAN

        Mr. Eastin. Perhaps General Wilson can shed a little more
    detail on this. But we have a very carefully laid out
    integrated, interdependent plan to take care of all of the
    construction, both for the Grow the Army, the BRAC process, the
    global defense repositioning activity. All of that has been
    taken care of, all laid out, and, as I said to Senator
    Hutchison, I believe all currently on time.
        I know it sounds incredible that we can kind of put this
    kind of money in there and have this kind of activity, but
    right now it's all working and it's all going according to the
    plans that basically the Corps of Engineers, our construction
    agent, has put together.
        Senator Nelson. General.
        General Wilson. Senator, I might just add to Secretary
    Eastin it's challenging. It's challenging at best to coordinate
    and synchronize all the things that have just been said: the
    restationing of one-third of our Army in the United States, the
    BRAC, return of soldiers from overseas, Grow the Army,
    converting and modernizing, the Army modular force.
        But we work that through what we call the Army campaign
    plan and we synchronize that very carefully. And we meet weekly
    to synchronize our Army staff elements to ensure that we are
    able to provide support for the war, as well as support our
    soldiers and families. We feel confident that we're on track to
    do that. It's a challenge that we have to face every day.

                                    BARRACKS

        Senator Nelson. Well, the daunting challenge of dealing
    with the increased requirements because of Grow the Army,
    returning the military from overseas, including Germany, would
    be sufficient to keep you busy. But is it because of all the
    requirements that you currently have to build and to be
    prepared for the additional capacity, is that the reason why
    maybe the eyes were taken off current facilities that fell into
    disrepair, that have fallen into disrepair?
        General Wilson. Well, I think--it's difficult to answer
    that. I will tell you, we're moving soldiers and families and
    units and redeploying and resetting them as quickly as we can
    so they can get some rest, and then they have to train up for
    the fight. It's just in time equipping, just in time manning,
    and it's very taxing and very difficult for the soldiers to
    tend to their soldiers and to tend to the barracks management.
        It makes it doubly difficult when you have 50- to 60-year-
    old barracks, and we just have to pay more attention to it. We
    fumbled on that, that one at Fort Bragg, and we put things in
    place so we won't do that again. It's too important to our
    soldiers and they deserve to come back to better billets and
    better barracks than they left. So we're taking extraordinary
    measures to try to preclude that from happening again.
        Senator Nelson. Well, sir, and I applaud you for doing
    that, because one of the best reasons to do it, in addition to
    quality of life, is if you're looking to recruit and retain you
    certainly don't want to fumble the ball that often or you might
    expect that it would affect at least retention.
        In terms of the barracks issue, is it appropriate for any
    disciplinary action to be taken that would be appropriate based
    on the fact that somebody at some level knew that these
    facilities were in disrepair and either they didn't report it
    or they reported it up and someone didn't act on it, if that
    was the case? So do you know whether any disciplinary action is
    appropriate in this situation?
        General Wilson. Senator, I was at Fort Bragg yesterday
    morning and I walked through the barracks that are at question
    here and I talked to the division commander of the 82nd
    Airborne, I talked to the brigade, the chief of staff, the
    garrison commander and the acting corps commander. And I asked
    that specific question and the senior commander determined that
    there was a breakdown in procedures and to return the barracks
    to standard before the soldiers redeployed. Leaders should have
    prevented this avoidance.
        He determined, however, there was no purposeful neglect on
    anyone's part. And I asked him that specifically. I talked to
    the first sergeant that was back trying his level best to get
    that, and his people, to get that together. There was a
    breakdown. There was not a good handoff of this unit's coming
    back 3 weeks earlier than planned and they didn't reset the
    barracks in time. But it wasn't because they didn't care or it
    wasn't because they failed in their leadership.
        Senator Nelson. Well, even if it's not purposeful, the
    breakdown would appear to be at least negligent in the process.
    It would seem that someone at some level was responsible who
    didn't through as they should have or that that responsibility
    wasn't assigned. Is there a question of whether the
    responsibility was properly assigned to the appropriate
    personnel?
        General Wilson. I think the procedures are in place and
    yes, the rear detachment and the advance party that came back
    to get the billets ready knew that that was their mission
    clearly, to ready those billets for the incoming battalion.
    They were part of that battalion. The problem was they thought
    they had 3 weeks to get that particular billets ready and they
    were focusing on the other billets that had less time, and
    that's what caused the error.
        Once they had 72 hours notice, they found out they are
    coming back, they did everything in their power to get it done.
    They didn't raise it to the right level that we could have
    said, wait, stop----
        Senator Nelson. That's what I'm trying to get to.
        General Wilson. They didn't sound the alarm. But it wasn't
    because that they failed, in the commander's eyes here, in the
    division commander's eyes. It's because they just did not think
    to call in the cavalry.
        Now, what we've done, we've made changes to preclude that.
        Senator Nelson. Now, which is the more important question,
    which was my next one: What is being done, not just in the case
    of Fort Bragg, but in the case of other facilities which might
    involve the same kind of circumstances? So what is being done
    so that that doesn't occur again?
        General Wilson. We made several changes. One, we did a mass
    inspection of all barracks across the Army, in CONUS and
    overseas, and determined there was no--where there was life,
    safety, or health instances, we fixed it right away.
        Then we looked at our priorities, our worst barracks, and
    we then put money against fixing those. We've also increased
    our manning at the installations, where we're standing up
    maintenance teams to work for the DPWs to be able to deal
    directly with barracks, and that's their priority of mission,
    is barracks.
        Senator Nelson. This will be an ongoing----
        General Wilson. Yes, sir.
        Senator Nelson [continuing]. Requirement, an ongoing
    mission? Because this isn't something that you can just have
    one-time full inspection and expect that things will not change
    over the next 5 or 10 years or over the next year. So are you
    going to have this be more like an audit inspection or is it
    going to be across the board continuously over the next several
    years?
        General Wilson. It's going to be continuous, Senator. We're
    funding it as a sustaining requirement at each installation and
    we're adding 16 command sergeant majors at our largest
    installations to work in the DPWs to focus on barracks. And
    we're turning over the barracks management, not put that on the
    rear detachments; we put it on the garrison and DPWs to handle
    in the future.
        Senator Nelson. So you're reasonably hopeful, at least, if
    not certain, that you'll be able to catch these situations
    before somebody with a camera comes by and takes a picture of
    it?
        General Wilson. Well, our effort is to preclude it from
    happening again and to raise the quality of life where we don't
    see that again. We know we have barracks like that and we know
    we have to reset them, and we've got to get--and yes, I'm
    confident we're going to get in front of it so we can reset
    them before the soldiers come back home.
        I'm not confident that I'm going to preclude any more
    pictures. I just hope they give us a chance first and call us
    and say we've got a problem.
        Senator Nelson. Thank you.
        Thank you, Mr. Chairman.
        Senator Johnson. Senator Craig.
        Senator Craig. Mr. Chairman, thank you very much.
        Mr. Secretary, thank you for being here. To all of you, I
    appreciate your presence. I have no questions of you other than
    to say we're extremely proud of our efforts at Gowan Field in
    Boise with our National Army Guard and our Army Reserve and the
    efforts that go on there. Actually, I'm waiting for the Air
    Force to land and I think they're in the next panel.
        With that, thank you all so very much for your presence
    today and your candidness. We appreciate it.
        Thank you, Mr. Chairman.
        Senator Johnson. To Secretary Eastin and the rest of our
    witnesses: Thank you again for your testimony and for appearing
    before this committee. Thank you. You may be excused.

                          Department of the Air Force

    STATEMENT OF HON. KATHLEEN I. FERGUSON, DEPUTY
                ASSISTANT SECRETARY OF THE AIR FORCE FOR
                INSTALLATIONS
    ACCOMPANIED BY:
            BRIGADIER GENERAL JAMES RUBEOR, DEPUTY TO THE CHIEF OF THE AIR
                FORCE RESERVE
            BRIGADIER GENERAL STANLEY CLARKE III, DEPUTY DIRECTOR, AIR
                NATIONAL GUARD
        Senator Johnson. Thank you, Mr. Chairman.
        We welcome our second panel of witnesses, the Honorable
    Kathleen I. Ferguson, Deputy Assistant Secretary of the Air
    Force for Installations; Brigadier General James Rubeor, Deputy
    to the Chief of the Air Force Reserve; and Brigadier General
    Stanley Clarke III, Deputy Director of the Air National Guard.
        Ms. Ferguson, I understand that Secretary Anderson was
    unable to join us today, but we look forward to your testimony.
    Thank you for coming today. You may proceed.

                     STATEMENT OF HON. KATHLEEN I. FERGUSON

        Ms. Ferguson. Thank you, Mr. Chairman and distinguished
    members of the committee. On behalf of America's airmen, it's a
    pleasure to be here and I appreciate the committee accepting me
    as a substitute on such short notice. 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 finds itself in both a time of war and a time
    of transition, the Air Force continues to evolve to ensure we
    stand ready to protect America and our interests. Beginning
    with Operations Desert Shield and Desert Storm, the Air Force
    has been in continuous combat operations for more than 17
    years. We currently have over 22,000 airmen deployed in direct
    support of Operations Enduring Freedom and Iraqi Freedom. Our
    team is firmly committed to supporting the Air Force priorities
    of winning today's fight, taking care of our people, and
    preparing for tomorrow's challenges.
        We are changing on a scale not seen since the post-cold war
    drawdown and for us to support these priorities we must be
    transformational in all we do. In order to provide global
    vigilance, global reach, and global power, we need high-quality
    warfighting platforms for our installations.
        I would like to highlight just a few of the significant
    initiatives we are implementing to ensure installation quality
    and superior warfighting support well into the future. Under
    our Corps of Discovery effort, we are benchmarking Fortune 500
    companies such as General Electric, General Motors, IBM, and
    Bank of America. We are learning from industry leaders and are
    capturing best practices in all aspects of infrastructure, from
    adopting an asset management philosophy to transforming our
    informational technology systems.
        With our organizational transformation, we are committed to
    making joint basing a raging success. The Air Force fully
    supports the spirit and intended results of the joint basing
    provisions of BRAC 2005. The Air Force has worked diligently
    with the other services and OSD to ensure that the maximum
    financial, facility, and personnel effectiveness can be
    achieved via joint basing without impacting command and control
    of base or mission commanders.
        The Air Force has expressed concern related to the
    execution strategy of joint basing, which may impact mission.
    However, the Air Force is not advocating any position that
    would inhibit carrying out any BRAC recommendation.
        Let me take a moment to talk about energy. The increasing
    cost of energy and the Nation's commitment to reducing its
    dependence on foreign oil had led to the development of the Air
    Force energy strategy, to reduce demand, increase supply, and
    change the culture within the Air Force so that energy is a
    consideration in everything we do.
        The Air Force is investing in its facility energy future
    with $14 million in 2008 and $229 million across the Future
    Years Defense Program (FYDP). We've been recognized as the
    number one Federal purchaser of renewable energy 4 years in a
    row.
        The Air Force is DOD's leading consumer of jet fuel and 10
    percent of the total U.S. jet fuel market. To meet our jet fuel
    needs of the future, the Air Force is evaluating domestically
    sourced synthetic fuel alternatives. We've certified the B-52
    to fly on a synthetic fuel blend and we're on track to test and
    certify the C-17, B-1, and F-22 in this fiscal year, with the
    entire fleet certified by early 2011.
        At Nellis Air Force Base, Nevada, through a public-private
    partnership we installed the largest solar array in the
    Americas, providing over 14.2 megawatts of clean renewable
    power, while delivering a savings of nearly $1 million a year
    for the installation and the American taxpayer.
        On under utilized land at Malmstrom Air Force Base,
    Montana, the Air Force is exploring the potential for a
    privately financed and operated coal-to-liquid fuels plant. We
    are pursuing solar energy enhanced use lease projects at
    Edwards Air Force Base, California, Luke Air Force Base,
    Arizona, and Kirtland Air Force Base, New Mexico. We are also
    looking into the merits of hosting a small package nuclear
    facility on an Air Force installation at the request of some
    members of the Senate.
        At the same time, the Air Force recognizes that energy and
    the environment are tightly linked. Not only have we committed
    to purchase only alternative energy sources with a greener
    footprint than current options, the Air Force has committed to
    be a leader in establishing a global consortium to tackle the
    reduction, capture, and reuse of greenhouse gas emissions.
        Being a driving force is not risk-free. Our installations
    are warfighting platforms which must continually perform to
    support the warfighter. The fiscal year 2009 President's budget
    request for Air Force military construction is more than $2.1
    billion, comprised of traditional MILCON, BRAC, and housing
    investments. Unfortunately, we face demands on our resources
    that require tough choices. Our challenging budgetary
    environment includes the increased operations, maintenance, and
    personnel costs, the cost of the war against terrorism, and
    inflation factors that reduce our overall buying power.
        Those demands have forced us to self-finance the
    centerpiece of future dominance, a massive and critical
    recapitalization and modernization effort over our aging air
    and space force. To accomplish this, we are accepting
    manageable risks in facilities and infrastructure funding. The
    current and future readiness and capability of our Air Force to
    deter enemies and, when necessary, fight and win our Nation's
    wars depends heavily upon the state of our power projection
    platforms--our installations.

                               PREPARED STATEMENT

        As the Air Force continues to modernize and recapitalize,
    we will wisely invest our precious funding allocated to
    military construction, operations and maintenance, BRAC, the
    environment, military family housing, and energy. This will
    enable us to win today's fight, take care of our people, and
    prepare for tomorrow's challenges.
        Thank you, Mr. Chairman.
        [The statement follows:]

     Prepared Statement of William C. Anderson, Assistant Secretary of the
              Air Force (Installations, Environment and Logistics)

        Mr. Chairman, Senator Hutchison, and distinguished members of the
    Committee, as our Nation and Department finds itself in both a time of
    war and a time of transition; the Air Force continues to evolve to
    ensure we stand ready to protect America and its interests. The Air
    Force is the preeminent force for operations beyond the bounds of
    earth, and is vital to the success of ground operations as well, which
    is being proven daily in Iraq and Afghanistan. Beginning with
    Operations DESERT SHIELD and DESERT STORM, the Air Force has been at
    continuous combat operations for more than 17 years. We cannot provide
    Global Vigilance, Global Reach, or Global Power without our warfighting
    platforms--our installations--and the airmen that construct, operate
    and maintain those installations. I would like to highlight just a few
    of the significant ways our Total Force Airmen are serving this great
    Nation in this capacity.
        We are firmly committed to supporting the Air Force's number one
    priority, ``winning today's fight.'' Approximately 25,000 airmen are
    currently deployed in direct support of Operations ENDURING FREEDOM and
    IRAQI FREEDOM. More than 2,500 are engineers. Forty percent of the
    engineers are serving side-by-side with our Army comrades-in-arms by
    filling ``Joint Sourced,'' ``in lieu of'' or ``individual augmentee''
    positions, often sharing the same level of risk while operating
    ``outside the wire.'' Our heavy construction RED HORSE engineers and
    our Prime BEEF engineers are well-known in the AOR for their ability to
    build and maintain expeditionary installation weapons platforms,
    whether bedding down Air Force, joint, or multinational forces. Our Air
    Force explosive ordnance disposal (EOD) airmen make up 37 percent of
    Central Command's joint EOD capability in theatre and in calendar year
    2007 they responded to more than 8,400 calls to destroy improvised
    explosive devices, unexploded ordnance, or weapons caches. Sixty-six
    percent of these EOD warriors are operating ``outside the wire''
    alongside their joint peers. Our ``customers,'' whether joint, other
    Federal agency, or multinational, continually let us know how impressed
    they are by the capabilities our combat support personnel bring to the
    fight. While twenty of our logistics and installation airmen have made
    the ultimate sacrifice in this war, we are proud to be part of the
    joint effort serving our Nation's call to arms.
        The reconstruction effort stands alongside the operational mission
    in Iraq and Afghanistan. Our Air Force Center for Engineering and the
    Environment (AFCEE) is successfully executing a robust program to win
    the hearts and minds of Iraqi and Afghan citizens and help set the
    conditions for more free societies. Thus far, their efforts have
    included the execution of more than 576 projects, worth more than $4.6
    billion, to construct or repair more than 4,000 facilities, to include
    government and military facilities, airports, roads, schools, medical
    clinics, police stations, utilities systems, and more. Much of this
    work is being done by Iraqi and Afghan citizens making up more than 90
    percent of the construction workforce and 70 percent of the project
    engineers. External audits have validated AFCEE's efficiency: low
    overhead costs in manpower and financial resources, minimized in-
    country presence, and successful leveraging of the latest in efficient
    and effective business processes.
        Our capabilities are vital to the Global War on Terror and other
    American interests overseas. We are also leading the way in many
    initiatives on the home front. Let me briefly highlight a few. The Air
    Force is a great example of leadership in energy, facilities
    management, and the environment. We have been recognized as the number
    one Federal purchaser of renewable energy 4 years running, and we are
    overall number three in the Nation. We will achieve the DOD's 2014 goal
    for environmental restoration 2 years early. Our housing privatization
    efforts have leveraged more than $350 million taxpayer dollars,
    bringing in $6 billion in private sector investment, speeding the
    delivery of adequate housing to our airmen. The Air Force is solidly on
    track to eliminate inadequate housing overseas, having already received
    support from this Congress through 2007 to completely fund the
    elimination of inadequate stateside family housing. Our emergency
    responders implemented the cross-functional Air Force Incident
    Management System in December 2007, making us the first Federal agency
    to meet the Executive Order and the Department of Homeland Security
    directive for implementing the National Incident Management System,
    assuring seamless and coordinated emergency response among agencies at
    or near our installations. The Air Force wants to ensure that
    appropriate conditions exist to make Joint Basing a raging success. We
    have a long and successful history of working toward common goals in a
    Joint environment, without compromising Air Force principles and the
    well-being of our people. Joint Basing initiatives are no exception.
    Therefore, to guarantee success, each Joint Base will provide an
    appropriate setting to all of its assigned personnel to facilitate
    mission success and provide improved quality of life through consistent
    installation standards, currently being developed. Our Soldiers,
    Sailors, Airmen, Marines, DOD Civilians and their families will benefit
    from efficient, consistent Installation Support Services. These
    standards will ensure the Air Force and our sister Services continue to
    provide all personnel with the level of Installation Support Services
    they deserve. Our base commanders and their local service providers
    are, of course, on the front lines of our efforts to maintain and
    improve services. As we work with the Office of the Secretary of
    Defense and our sister Services, we will ensure all Joint Basing
    initiatives contribute to DOD's ability to perform its mission. Joint
    Basing allows us to build closer relationships and forge stronger ties
    among the Services.
        While we are proud of these successes, we have much work to do. Our
    Air Force's biggest challenge is to modernize our air, space, and
    cyberspace capabilities to ensure we continue to provide our Nation
    with its decisive military advantage. While not optimal, we must take
    manageable risk in our facilities and infrastructure to free up funding
    for weapons modernization. We also, however, have a vision to transform
    and overcome these challenges.

                                 TRANSFORMATION

        Our Air Force is transforming around new concepts of operations,
    organizational change, and advanced technologies. Accordingly, we are
    on a difficult but promising journey to transform our installations
    support enterprise. We are changing on a scale not seen since the post-
    Cold War draw down. As part of our Air Force strategy to internally
    fund weapon systems recapitalization and modernization, we needed to
    reduce manpower. We took this as an opportunity to restructure our
    Civil Engineer and Air Force Real Property Agency (AFRPA) organizations
    and improve support to the warfighter. The first major initiatives to
    transform how we effectively manage support for our installations are
    largely complete. We've reorganized Civil Engineering at all levels;
    rebalanced the force to include manpower increases in our high-demand
    RED HORSE and EOD combat engineer capabilities; and centralized the
    execution of all MILCON, housing MILCON, and environmental restoration
    at the AFCEE in San Antonio, Texas. BRAC 2005 directed the relocation
    of AFRPA to San Antonio and we took advantage of this to restructure
    AFRPA at the same time, to attract new skills and ideas to preserve and
    improve our focus on unlocking value in our underutilized real
    property.
        We are also transforming our business processes, infrastructure,
    and technology to enable us to operate our installations within reduced
    funding levels and thereby continue to support our weapons
    modernization and recapitalization initiatives. Our approach includes
    producing efficiencies in enterprise-wide business processes while
    reducing by 20 percent, by the year 2020, the funding required for
    sustaining and maintaining our $243 billion physical plant. Let me
    emphasize installation support funding has already been reduced by 14
    percent in the last 3 years; now we are figuring out ways to live
    within this funding level for the long haul and not impact our
    standards. Not only are we elevating internal best practices to the
    strategic level and using the Air Force Smart Operations for the 21st
    Century toolkit of ``LEAN'' and ``Six Sigma'' process improvement
    methods, we are also incorporating best practices from our strategic
    partnership with leading private sector companies, called the ``Corps
    of Discovery.''
        Our installations organization established ``Corps of Discovery''
    teams to visit companies such as GM, IBM, GE, Bank of America,
    ExxonMobil, CB Richard Ellis, Jones Lang LaSalle, Archibus, and others.
    We found we share many of the same challenges in maintaining our
    operational or primary mission edge while effectively balancing
    investment in infrastructure. Through this mutually-beneficial
    relationship, these patriotic companies are sharing their invaluable
    transformation ``lessons learned.'' We are centering our transformation
    strategy on these key ``lessons learned,'' such as strategic sourcing
    and real estate management from a portfolio perspective. Leading edge
    companies manage their real estate and physical plant with a holistic
    and integrated asset management approach that enables them to better
    articulate and manage risk while supporting their company's mission. We
    recently reorganized our installations organizational structure and
    people around Asset Management. True transformation, takes years, and
    these companies have proven the value of this long-term investment.
    Their knowledge and experience is proving invaluable to us as we
    transition to the asset management approach, which is also playing a
    key role in installations transformation.
        Maintaining our installations within current funding levels
    requires an aggressive approach to efficiently utilize our physical
    assets and target limited funding on the most critical portions of our
    physical plant. An asset management-based operation allows us to attach
    value to our built and natural environment. This business case analysis
    approach will provide better decision making in a resource constrained
    environment. Our asset management initiatives to reach this goal
    include utilities privatization; energy conservation; redesigned
    incentive-based consolidation, demolition, and demolition in situ
    programs; housing privatization; and others. Finally, we have initiated
    a focused effort to identify opportunities where Enhanced Use Lease
    (EUL) authority can help us find ways to leverage our physical plant
    value while providing a mechanism to offset facilities and utilities
    operations and maintenance costs, especially energy costs. As a force
    multiplier, we are leveraging our Air Force Real Property Agency to be
    our center of excellence for identifying and acting upon EUL
    opportunities across the Air Force. Following on the tremendous success
    of the construction of the largest photovoltaic solar installation in
    the Americas at Nellis AFB, NV, we are pursuing five major energy-
    related EUL projects: solar energy at Edwards AFB, CA; Luke AFB, AZ;
    and Kirtland AFB, NM; and a prospective nuclear energy project at a
    location yet to be identified.
        Successful implementation of transformed business processes that
    will drive these physical plant utilization initiatives requires an
    enabling information technology (IT) system. We are transforming IT
    systems to support reengineered business processes and maximize the
    efficiency of our work force. Our benchmarking found integrated
    workplace management systems commonly used at these Fortune 500
    companies, and we are examining how these IT systems could enable our
    own transformation. Launched the first part of this year, our IT
    acquisition strategy is leveraging key insights from the ``Corps of
    Discovery'' partnerships, and will also leverage capable commercial-
    off-the-shelf systems. While meeting executive, department and Air
    Force requirements for real property accountability systems and data
    transparency, the new Agile Installation Management IT system will
    enable enterprise-wide reengineered business processes centered on the
    complete lifecycle of asset management.
        As you can see, we are transforming enterprise-wide, from core
    business processes to organizational structure and IT systems. We are
    also providing leadership to our government and even the private
    sector, from purchasing and producing alternative energy, to housing
    privatization and asset management. We are making process changes at
    every level, resulting in resource savings and more efficient
    operations. At the heart of all of our efforts are of course our
    customers. Exceeding the expectations of our warfighters, their
    families and the communities that support our installations, in terms
    of cost, quality of service and delivery, stands as the centerpiece of
    our installations business model.
        These efforts are the means by which we are meeting the enormous
    challenges of today and the foreseeable future, and they ultimately
    enable us to sustain and modernize the world's best air, space, and
    cyberspace force. These transformational changes will help us maintain
    our focus on our Air Force's three overarching priorities: winning
    today's fight, taking care of our people, and preparing for tomorrow's
    challenges.

    FISCAL YEAR 2009 AIR FORCE MILCON, BRAC, ENVIRONMENTAL, OPERATIONS AND
                    MAINTENANCE AND FAMILY HOUSING PROGRAMS

        Air Force facilities, housing, environmental, 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 installations
    provide force projection platforms to support Combatant Commanders
    (COCOMs), from homeland defense sorties over New York, to strike
    missions in Iraq. Our installations 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 COCOMs to win today's fight, take care of our people, prepare
    for tomorrow's challenges, implement BRAC, protect and restore our
    natural environment, drive energy efficiency and independence, sustain
    our infrastructure, and strive to recapitalize our aging
    infrastructure. We are the DOD's leader in expeditionary combat support
    and continue that role with pride. Our total force military
    construction, family housing, environmental, energy, and sustainment,
    restoration, and modernization programs are paramount to successful
    operations and maintaining the quality of life that our men and women
    in uniform and their families deserve.
        The fiscal year 2009 President's Budget (PB) request for Air Force
    military construction is more than $2.1 billion, comprised of
    traditional MILCON ($988 million), BRAC 2005 ($734 million) and housing
    investments ($396 million). Unfortunately, we face demands on our
    resources that require tough choices. Our challenging budgetary
    environment includes: increased operations, maintenance, and personnel
    costs; the cost of the war against terrorism; and absorbing inflation
    factors that reduce overall buying power. These factors have forced us
    to self-finance the centerpiece of future dominance--a massive and
    critical recapitalization and modernization effort of our aging air and
    space force. To accomplish this, we are accepting manageable risk in
    facilities and infrastructure funding. The Total Force MILCON portion
    ($988 million) of the Air Force fiscal year 2009 PB military
    construction request reflects our highest construction priorities. This
    request includes $935 million for active military construction, just
    over $34 million for the Air National Guard, and $19 million for the
    Air Force Reserve. In addition, this budget carefully balances our
    facility operations and maintenance accounts for sustainment,
    restoration, and modernization with military construction programs to
    make the most effective use of available funding in support of the Air
    Force mission, while keeping ``good facilities good.'' The Air Force
    Total Force sustainment funding in fiscal year 2009 is $2 billion, 90
    percent of the amount called for by the Facility Sustainment Model. The
    fiscal year 2009 Total Force restoration and modernization (R&M)
    funding is $514 million--an increase of approximately $168 million over
    last year's request.
        The Air Force fiscal year 2009 PB request of $396 million for the
    Military Family Housing investment program balances new construction,
    improvements, and planning and design work, and completes the funding
    to eliminate inadequate housing overseas. We cannot allow our current
    housing stock to fall into disrepair. Therefore, in addition to the
    $396 million requested for housing investment, we request nearly $599
    million for operations and maintenance, for a total housing investment
    of just under $1 billion.
        To continue our proactive and responsive environmental quality and
    restoration programs, the fiscal year 2009 PB request includes $1,015
    million for direct-funded non-BRAC environmental programs. In addition
    to the $435 million we requested for traditional environmental
    restoration activities, the fiscal year 2009 PB request includes $367
    million for environmental compliance activities and projects, $82
    million for pollution prevention initiatives, $53 million for funding
    environmental conservation activities, $61 million for munitions
    response activities, and $17 million in investments in promising
    environmental technologies.
        The Air Force is investing in its facility energy future, with $14
    million in 2008 and $229 million more across the FYDP. These monies are
    lead-turning important initiatives such as establishing Resource
    Efficiency Managers Air Force-wide and enhancing our aggressive utility
    rate and Energy Savings Performance Contract management teams to ensure
    we are getting the best value for every tax-payer dollar. We also are
    investing in the highest payback energy conservation initiatives such
    as upgrading our energy-intensive aircraft paint hangars;
    decentralizing heat plants; recommissioning facility heating,
    ventilating and air conditioning systems; and installing ground-source
    heat pumps. We expect the return on investment on these initiatives to
    be 2.5 to 1 or, a savings of approximately $550 million by 2015.
        To continue our aggressive BRAC implementation schedule, the fiscal
    year 2009 PB request includes $1.2 billion for BRAC-related activities,
    of which $734 million is construction. The Air Force is lead for 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 the requirement for compliance by 2011.
        Sound investment in our installations postures the Air Force to
    support our priorities of winning today's fight, taking care of our
    people, and preparing for tomorrow's challenges. We believe the fiscal
    year 2009 PB proposal will provide the funds to ensure our
    installations continue to serve as effective power projection platforms
    that enable the continued success of our core Air Force missions.

                             WINNING TODAY'S FIGHT

        The Air Force's first priority is to win today's fight. We plan to
    invest $222 million on 14 projects that support and enhance the Air
    Force's ability to deliver intelligence, maintenance, and operational
    capabilities to our COCOMs. The Air Force is executing five projects
    directly contributing to winning today's war within the CENTCOM area of
    responsibility (AOR). CENTCOM's AOR is the geographic and ideological
    heart of today's fight. A war without borders, it spans 27 countries in
    the Central Asian region of the world. The five projects in CENTCOM's
    AOR provide much-needed in-theater aircraft maintenance as well as
    appropriate parking, fueling, and cargo handling space. An additional
    eight projects in the contiguous United States (CONUS) provide critical
    infrastructure necessary to continue to deliver, grow, and improve the
    high demand for an Unmanned Aircraft System presence in current and
    future operations. The Air Force will also construct a large vehicle
    inspection station to greatly improve the force protection and
    operational capability of the forces at RAF Lakenheath in the United
    Kingdom.

                           TAKING CARE OF OUR PEOPLE

        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, train, reside, and recreate. Our Total Force Airmen are
    the most valuable assets we have in winning today's fight and ensuring
    our air, space and cyberspace dominance. We must continue to recruit,
    train, develop, and retain the best America has to offer. 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
    realistic training and operational facilities.
    Workplace
        The Air Force is fully committed to the ensuring the safety and
    protection of human health for all of our personnel, both on and off
    duty. The Air Force evaluated its current injury and illness rates for
    airmen and determined implementation of the Occupational Safety and
    Health Adminstration's Voluntary Protection Program (VPP) would improve
    upon that commitment. VPP implementation historically results in a
    major reduction in illness/injury compared with non-VPP sites in like
    industries, and reductions on the order of 50 percent are not uncommon.
    The Air Force formalized this commitment to VPP last August through
    signing of a partnership agreement between the Air Force and OSHA. The
    agreement included a commitment to reduce civilian and military
    workforce injuries and illness by at least 3 percent per year and to
    expand participation in VPP and increase awareness of the value of
    effective safety and health management. Currently, 20 Air Force
    installations have begun work toward implementing the elements of VPP,
    and five will be ready to apply for formal OSHA evaluation and
    designation in 2008--Altus AFB, OK; Hanscom AFB, MA; Tinker AFB, OK;
    Robins AFB, GA; and Eielson AFB, AK. Eventually all Air Force
    installations both in the continental United States and overseas will
    use this tool. To make sure the Air Force is gaining from others who
    have improved workplace safety, we are working closely with civilian
    companies who have proven their commitment to the highest level of
    health and safety performance. We have already learned from these
    companies and have used their experiences to improve our safety
    processes, and also have found VPP implementation a common element at
    these high-performing organizations. Our ultimate goal is to make VPP a
    way of thinking both on duty and off duty for our airmen. VPP is one
    way to give our airmen the safest possible environment in which to work
    and live.
    Energy
        The Air Force Model Energy Base Initiative is testing the breadth
    of initiatives and best practices in facility management, aviation fuel
    reduction, and ground vehicle management. McGuire AFB, NJ and Barksdale
    AFB, LA are the two bases selected to demonstrate the effectiveness of
    comprehensive efforts by the Air Force to implement its energy
    strategy. McGuire AFB was selected because it represented for the Air
    Force a base with an Air Mobility mission in a region with a large
    heating load in the winter. Barksdale AFB represents an air combat
    mission with a large cooling load in the summer. The Air Force will be
    disseminating lessons learned and best practices throughout the
    organization as they become available, and will share with our sister
    services and other energy partners.
        Under the Air Force Smart Operations for the 21st Century
    processes, we have established the HQ Air Force Energy Senior Focus
    Group and Provide Infrastructure Working Group which look at four
    strategic pillars to maximize our energy efficiencies: Improve current
    infrastructure, improve future infrastructure, expand renewables, and
    manage cost. We have established metrics to track compliance with
    executive orders and Air Force guidance.
        We are continuing our aggressive stance with five major energy-
    related EUL projects: solar energy at Edwards AFB, CA; Luke AFB, AZ;
    and Kirtland AFB, NM; and a prospective nuclear energy project at a
    location yet to be identified.
    Family Housing
        The Air Force Family Housing Master Plan details our Housing
    military construction, operations and maintenance, and privatization
    efforts. To implement the plan, our fiscal year 2009 budget request for
    family housing is just under $1 billion. Consistent with Department of
    Defense Strategic Planning Guidance, the Air Force is on track to fund
    projects through 2009 that will eliminate inadequate overseas housing.
        For fiscal year 2009, the requested $396 million for our housing
    investment program will replace and improve more than 2,100 housing
    units at eight overseas bases. An additional $599 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 fiscal year 2009,
    the Air Force will privatize 41,500 housing units, and with the funding
    of the fiscal year 2009 PB the Air Force plans to privatize an
    additional 4,300 housing units. The Air Force projects it will have
    strategically leveraged more than $350 million in government investment
    to bring almost $6 billion in private sector total housing development.
    That is $16 of private investment for each public tax dollar. The Air
    Force is evaluating the privatization of remaining CONUS installations
    where feasible.
    Unaccompanied Housing (Dormitories)
        The fiscal year 2009 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 (DMP). Phase
    I, now construction complete, eliminated central latrine dormitories.
    With the fiscal year 2007-2009 MILCON programs we have the necessary
    funding to complete Phase II of our DMP, which is our permanent party
    and pipeline 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 2009 Program reflects this strategy. The $104
    million request for dormitory investment will replace or construct more
    than 1,400 rooms for unaccompanied personnel at three CONUS 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. Fitness and exercise is a regular part of airmen's
    lives as they prepare to meet the rigors of the expeditionary
    environment. 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 Dover AFB, Delaware.
        We also remain committed to our Air Force families and we are
    dedicated to providing them with adequate and nurturing child care
    facilities. The most urgent need in 2009 is at Columbus AFB,
    Mississippi. Its current facility only meets half of the childcare
    requirement and is being supplemented by a leased trailer. Our $8
    million fiscal year 2009 MILCON project will construct a Child
    Development Center to provide supervised care for 128 infants and
    preschool children.
    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.
    New Security Forces Operations and Communications facilities in
    Burlington, Vermont will provide the men and women of the Air National
    Guard in one of our most stressed career fields with functional, up-to-
    date facilities to meet necessary training and day-to-day operational
    requirements. This year's program also includes a 56-position Combat
    Arms Training and Marksmanship facility at Maxwell AFB, Alabama to
    supplement the existing, undersized, high-demand range. The range
    enables the continuing improvement of our Air and Space Basic Course by
    providing combat-focused training to our junior officers. Finally, a
    recapitalization project at the Air Force Academy concludes the phased
    upgrade of the Fairchild Hall academic building.
    Environmental Management Programs
        Our environmental management programs continue to ensure our most
    basic quality of life needs are being met for our airmen and
    surrounding communities: clean air, clean drinking water, and healthy
    working and living conditions for our workforce and base residents. We
    are also implementing refinements to our environmental management
    approach to incorporate best practices where we find opportunities. All
    Air Force installations have put in place and continue to utilize their
    Environmental Management Systems to identify environmental aspects of
    base operations, assess their impacts, and allow commanders to make
    informed decisions and investments to reduce environmental risks and
    compliance costs. Also, last year, I challenged our installation
    commanders to significantly reduce new environmental enforcement
    actions, and I'm proud to tell you we cut our new enforcement actions
    by 39 percent from fiscal year 2005 to fiscal year 2007--a major
    success story. We intend to cut enforcement actions by another 14
    percent in fiscal year 2008.

                      PREPARING FOR TOMORROW'S CHALLENGES

        Our third priority is to prepare for tomorrow's challenges. Our
    2009 MILCON program is a direct reflection of our strong commitment to
    the current and future success of our Air Force and is heavily weighted
    toward preparing for tomorrow's challenges by addressing our most
    critical modernization and recapitalization needs. The $493 million
    fiscal year 2009 Total Force military construction program consists of
    32 projects that are essential to modernization and recapitalization,
        The F-22 Raptor is the Air Force's primary air superiority fighter
    and key enabler, providing operational access, homeland and 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, AK will be the second operational
    Raptor base, and Holloman AFB, NM will be the third. We are
    constructing 13 projects to continue to beddown the world's premier
    fighter at a cost of $197 million. The F-35 Lightning II Joint Strike
    Fighter is our 5th generation multi-role strike fighter aircraft
    optimized for air-to-ground attack. The F-35 will recapitalize combat
    capabilities currently provided by the F-16 and A-10, and will
    complement the capabilities of the F-22. A student dormitory project at
    Eglin AFB, FL continues the beddown for joint F-35 training squadrons.
    To provide the best possible training to our aircrews by using a
    professional adversary force of pilots and controllers, the Air Force
    is pressing forward with its vision for a more robust Aggressor
    program. Constructing a squadron operations facility and aircraft
    maintenance unit at Nellis AFB, NV supports the beddown of a full 24-
    aircraft F-16 Aggressor squadron.
        Our Tactical Air Controllers are embedded with ground forces,
    directing Air Power in support of ground operations. This year's MILCON
    program provides the 3rd Air Support Operations Group with a Joint Air
    Ground Center at the unit's host Army installation, Fort Hood Texas.
    This facility supports the U.S. Army's brigade transformation and
    provides Air Force Tactical Air Controllers with 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. The
    addition and alteration of simulator facilities at Charleston, AFB, SC
    and McChord AFB, WA will greatly improve the program's training
    efficiency. A MILCON project at Cheyenne, WY constructs a C-130
    squadron operations facility to support daily 24-hour operations for
    airborne firefighting, aeromedical evacuation, and homeland defense
    missions. Tinker AFB, OK is also receiving a hangar to satisfy
    scheduled maintenance requirements for Air Force Reserve and Air
    National Guard associate KC-135 units.
        Intelligence, Surveillance, and Reconnaissance (ISR),
    communications, and space systems play an ever-increasing role in what
    we do. The Total Force Initiative (TFI) Information Operations Squadron
    Facility at New Castle, Delaware will provide real-time information
    operations mission support, analysis, and feedback of reconnaissance
    missions around the world supporting commanders in the field.
        Depot Maintenance Reengineering and Transformation (DMRT) 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 more effectively support warfighter requirements.
    The 2009 program supports the DMRT initiative with two projects, one at
    Robins AFB, Georgia and one at Tinker AFB, Oklahoma, together totaling
    $73 million.
        The 2009 military construction program has five other
    infrastructure modernization projects worth $109 million. These
    projects cover the spectrum from a SOCCENT headquarters facility at
    MacDill AFB, Florida and personnel moves in the National Capitol
    Region, to an infrastructure project on Guam that enables the
    relocation of a Combat Communications unit from Kadena AB, Japan to
    Andersen AFB, Guam. These projects recapitalize our aging
    infrastructure and enable us to support our vision for a modernized
    force.

                          BASE REALIGNMENT AND CLOSURE

        The ongoing implementation of Base Realignment and Closure
    recommendations is among the Air Force's efforts to transform the Total
    Force. In this round of BRAC, 78 percent of our required actions
    involve the Air Reserve Component while in past rounds; fewer than 20
    percent involved the Air National Guard and Air Force Reserve. This
    transformational effort across the force will ensure the Air Force is
    more lethal, agile, and capable of maintaining total dominance in air,
    space, and cyberspace domains.
    Joint Basing
        We have a long and successful history of working toward common
    goals in a Joint environment, without compromising Air Force principles
    and the well-being of our people. Joint Basing initiatives are no
    exception. Therefore, to guarantee success, each Joint Base will
    provide an appropriate setting to all of its assigned personnel to
    facilitate mission success and provide improved quality of life through
    common standards, currently being developed. Our Soldiers, Sailors,
    Airmen, Marines, DOD Civilians and their families will benefit from
    efficient, consistent Installation Support Services standards. These
    standards will ensure the Air Force and our sister Services continue to
    provide all personnel with the level of Installation Support Services
    they deserve. Our base commanders and their local service providers
    are, of course, on the front lines of our efforts to maintain and
    improve services. A Senior Joint Base Working Group, led by the Deputy
    Under Secretary of Defense (Installations & Environment), is developing
    policy to implement joint bases by September 15, 2011, in accordance
    with BRAC law. The group is in the process of defining common standards
    for delivery of service of installation support functions before they
    are transferred. Once standards and corresponding performance metrics
    are established, the bases will develop formal support agreements and
    implementation plans in order to proceed with the joint base construct.
    San Antonio Medical Merger
        In San Antonio, TX, the Air Force is the lead for implementing one
    of the most complex sets of BRAC recommendations in history. Along with
    our sister Services, and the TRICARE Management Activity, we continue
    to make significant strides to change the way military health care is
    delivered, and to consolidate all Services' enlisted medical education
    and training from across the United States onto a single campus at Fort
    Sam Houston, and to centralize a significant part of military medical
    research.
        Execution of BRAC recommendations in San Antonio is fully funded
    and on-schedule. On January eleventh of this year, the Corps of
    Engineers broke ground on a $92 million Battlefield Health and Trauma
    Research facility which will be integral to developing life saving
    medical care for our war-fighters. Additionally, beginning this year,
    we will begin constructing instructional facilities, dining facilities,
    and dormitories in direct support of world-class training for our Joint
    medics. Just this month, two dormitory contracts have been let in
    support of this effort.
    BRAC 2005 Execution Report Card
        Managing and executing the multi-million dollar program, with
    diverse interests, locations, and economic influencers involved, is a
    major endeavor. As a result the Air Force underwent an effort to
    identify, analyze and define its requirements and the assets needed to
    implement its program.
        The Air Force has executed 80 percent of our fiscal year 2007 BRAC
    MILCON projects, with the total contract awards staying within 99
    percent of the original programmed amount. I am content with the
    current working estimates for our unexecuted fiscal year 2007 projects
    and confident we will award the projects and stay within budget.
    Current working estimates for the Air Force's fiscal year 2008 BRAC
    MILCON projects again show we should execute within our overall
    programmed amount.
        The $939 million Omnibus reduction to the Department of Defense
    BRAC 2005 account must be restored. If left unfunded, the reduction
    will result in the Air Force receiving $235 million less than required
    in fiscal year 2008. The Air Force will experience delays and
    disruptions in construction and the movement of our people and assets.
    Delays will impact our ability to meet mandated completion deadlines
    and could ultimately result in a failure to complete mandated actions.
    Prompt action and restoration of full funding will permit us to stay on
    course in executing our obligations for timely completion of the BRAC
    recommendations as approved by the Congress. We solicit your support in
    advocating that action occur.

              AIR FORCE REAL PROPERTY AGENCY BRAC AND REAL ESTATE

        The Air Force is a Federal leader in the implementation of the real
    property management principles outlined in Presidential Executive Order
    13327, Federal Real Property Asset Management. We aggressively manage
    our property assets to deliver maximum value for the taxpayer, support
    to the Air Force warfighter, and improved quality of life for our
    airmen and their families. The Air Force is achieving these priorities
    through two fundamental efforts: (1) completion of our BRAC property
    disposal mission; and (2) leveraging the value of our non-BRAC property
    assets using a suite of property management and disposal tools.
        The Air Force has successfully deeded 85 percent of the 87,000
    acres of legacy Air Force BRAC property to date. The highly successful
    reuse of Air Force base closure property led to the creation of tens-
    of-thousands of jobs in the affected communities. To complete the clean
    up and transfer of remaining property, the Air Force is partnering with
    industry leaders on innovative business practices for its ``way ahead''
    strategy. These include an emphasis on performance-based environmental
    remediation contracts, using such performance-based contracts on
    regional clusters of BRAC bases, and innovative tools such as early
    property transfer and privatization of environmental cleanup. Our
    objectives remain constant and 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
    throughout the process. Of the 32 legacy BRAC bases slated for closure,
    the Air Force has completed 19 whole-base transfers. The remaining 13
    are targeted for transfer by 2010.
        As the Air Force transfers BRAC property for civic and private
    reuse, it is paramount that we ensure any past environmental
    contamination on the property does not endanger public health or the
    environment. The Air Force will continue to fulfill this most solemn
    responsibility, as reflected in our fiscal year 2009 request of $120
    million for legacy BRAC clean up activities.
        At our non-BRAC Air Force installations, we continue to reshape our
    infrastructure to meet the demands of the 21st century. The Air Force
    seeks fair market value for disposal or outgrants of property, and uses
    new tools, such as Enhanced Use Leasing, or EUL, authority, to optimize
    our resources and obtain value from our underutilized or excess
    capacity--value we can return to the warfighter.
        EUL constitutes a rapidly growing segment of our efforts to
    leverage the value of our property assets. EUL allows the Air Force to
    lease military property that is currently underutilized, but that is
    still needed for future mission needs, to private industry and public
    entities in exchange for cash or in-kind consideration that will
    provide certain services, facilities, or property repair and
    renovations to the Air Force. EULs are win-win scenarios for all
    involved. Through EUL projects, developers can establish long-term
    relationships with private and government partners who are potential
    tenants with specific real estate needs. Additionally, developers can
    receive market rates of return on design, construction, maintenance,
    tenant leases and property management activities. The Air Force
    Enhanced Use Lease Program is active with 21 projects undergoing
    feasibility studies across the Nation. A 10 USC 2869 exchange is
    another asset management tool, allowing the Air Force to work with
    communities to find effective win-win solutions to the disposal of BRAC
    and non-BRAC property. Communities benefit from receipt of real
    property, in exchange for which, value is returned to the Air Force in
    the form of approved MILCON projects. The Air Force is actively engaged
    in 2869 exchanges at Lynn Haven, FL and Norwalk, CA.

                    FEDERAL FACILITY AGREEMENTS FOR CLEANUP

        The Air Force is fully committed to the protection of human health
    and the environment, to be good steward of taxpayer dollars and to full
    compliance with applicable law at all of its facilities and for all
    programs, including cleanup The Air Force has committed to protection
    of human health and the environment and the Air Force has established
    an aggressive, internal goal to have cleanup remedies in place at all
    active installations by the end of fiscal year 2012. That is 2 years
    ahead of the current DOD goal.

           MAINTAINING OUR FACILITIES AND OPERATIONAL INFRASTRUCTURE

        The Air Force remains focused on sustaining, restoring, and
    modernizing our operational infrastructure. Through our ``Corps of
    Discovery'' partnerships, 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 effectively manage assets by optimizing
    resources to deliver operational infrastructure for the warfighter at
    our installations and ranges. In 2009, 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 rapidly wear out. Additionally, commanders in the field
    are driven to use other 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 request in fiscal
    year 2009 is $2 billion, 90 percent of the amount called for by the
    Facility Sustainment Model (FSM). The fiscal year 2009 Total Force R&M
    funding request is $514 million, a much needed improvement over our
    fiscal year 2008 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 10 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 2007, we
    demolished 27.3 million square feet of non-housing facilities and
    infrastructure at a cost of $303 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. As part of its
    transformation vision, 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 $88 million for
    planning and design, of which $8 million is for military family
    housing. The request includes $71 million for active duty, $5 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
    2010 construction programs and to start the designs for fiscal year
    2011 projects, allowing us to award contracts in the year of
    authorization and appropriation.
        This year's request also includes $28 million for the Total Force
    unspecified minor construction program, which is our primary means for
    funding smaller projects.

                                ENERGY STRATEGY

        The increasing costs of energy and our commitment to reducing our
    dependence on foreign oil have led to the development of the Air Force
    energy strategy--to reduce demand, increase supply, and change the
    culture within the Air Force so that energy is a consideration in
    everything we do.
        In view of this commitment, the Air Force is implementing
    aggressive demand side fuel optimization and energy efficiency
    initiatives on each of our three energy sectors: aviation operations,
    ground transportation and support equipment, and installations. We are
    also assuring energy supply side availability of fuel for our aircraft,
    ground vehicles and equipment, and our facilities through initiatives
    such as testing and certifying our aircraft to use synthetic fuel and
    exploring public-private partnerships so that renewable sources of
    energy are available. Third, and perhaps the most important element of
    our energy strategy, we are ensuring that our strategy transcends the
    present to create a lasting culture of change in all airmen so that
    energy becomes a consideration in all we do through the strong
    involvement of our senior leadership, changes to our training and
    curricula at all levels throughout the Air Force and communication
    efforts so that every Airman knows the importance of what they are
    doing to conserve energy.
    Synthetic Fuel
        Taking the lead to reduce dependence on foreign oil, the Air Force
    is evaluating a broad range of energy alternatives and the Air Force
    Synthetic Fuels Initiative is a key part to our energy strategy. As the
    DOD's leading consumer of jet fuel, we are currently engaged in
    evaluating alternative fuels and engine technologies leading to greater
    fuel efficiency. We've certified the B-52 to fly on a synthetic fuel
    blend, and are on track to test and certify the C-17, B-1 and F-22 in
    the near future, with the entire Air Force fleet certified by early
    2011.
    Reduction of Facility Energy Usage
        The Air Force has an aggressive facility energy conservation
    program that achieved an impressive 30 percent reduction in energy use
    over the past 20 years. Your Air Force is the Federal Government's
    largest purchaser of ``green power'' and the third largest in the
    Nation overall. Thirty-seven of our bases purchase green power--at
    Dyess AFB, TX, Fairchild AFB, WA, and Minot AFB, ND, 100 percent of the
    electrical energy purchased came from renewable sources.
    Public-Private Partnerships and Energy Enhanced Use Leases
        The Air Force continues to look for opportunities at our
    installations for installing and developing renewable energy projects
    for wind, solar, biomass, waste-to-energy, landfill gas and geothermal
    power as well as commercial-scale ethanol and biodiesel fuel plants.
        At Nellis AFB, NV, through a public-private partnership with
    Powerlight, a subsidiary of Sun Power Corporation, we installed the
    largest solar photovoltaic array in the Americas. It became operational
    in November and produces over 14.2 megawatts of clean, renewable,
    power. Overall, this renewable source of power results in a cost
    savings of nearly $1 million a year for the installation and the
    American taxpayer. Similar solar energy EUL projects we are pursuing at
    Edwards AFB, CA; Luke AFB, AZ; and Kirtland AFB, NM; would utilize a
    private-public partnership where private industry would utilize Air
    Force property in return for in-kind considerations.
    Nuclear Energy
        Given the energy requirements of our air bases, as well as the
    unique demands of some of our remote installations, small modular
    nuclear reactors seem to provide a viable option to meet our future
    energy demands. We believe that the market is best suited to identify
    technological and economic winners. We expect the nuclear power project
    to be commercially funded and financially viable with normal commercial
    risk. In all cases, the Air Force would not develop, design, own,
    operate, or be the licensee for the nuclear power plant. We are in the
    process of gathering and assessing responses to a Request for
    Information from industry. The current estimate is that any plant built
    and operated pursuant to this initiative could be operational in latter
    half of next decade. Under ideal circumstances the Air Force intends to
    sign one or more letters of intent with viable consortiums by October
    2008.
    Alternative Vehicles and Fuels
        We currently have over 5,200 FlexFuel vehicles in our fleet and
    nearly 8 percent of our diesel fuel is B20, which is a blend of 80
    percent conventional diesel and 20 percent renewable bio-fuels. We
    spent approximately $10 million on alternative fuels alone for ground
    vehicles and equipment in fiscal year 2007 and have budgeted over $100
    million over the next 5 years for alternative fuel and low-speed
    vehicles.
    Greenhouse Gas Emissions
        The Air Force recognizes that energy and environmental management
    decisions are essentially two sides of the same coin; the
    interdependence between the two areas is clear. While our overall
    energy strategy is driven by the imperative to ensure the security and
    sustainability of mission critical energy resources, likewise, our
    environmental management strategy is looking beyond the regulatory
    paradigm to ensure mission needs are supported by sustainable
    environmental practices.
        As an Air Force with global reach and alliances, we are well aware
    of the international concern regarding greenhouse gas emissions, and
    recognize the importance placed on greenhouse gas emissions management
    by our allies, global partners, and here in the homeland. In order to
    make proactive, informed decisions about greenhouse gas emissions
    management with respect to energy use, alternate energy options, as
    well as chemical use, land management and process improvement
    opportunities, the Air Force has initiated a comprehensive greenhouse
    gas inventory to identify overall greenhouse gas emission sources from
    a ``top down'' aggregate energy use perspective, as well as from a
    detailed ``bottom up'' perspective, identifying greenhouse gas
    emissions from material usage and process activities. Further, we are
    identifying and quantifying biological carbon sequestration on our Air
    Force properties so that biological sequestration opportunities are
    understood as we manage over 9.8 million acres of Air Force
    installations and military range lands. We intend to complete our first
    comprehensive inventory by September 1st of this year.
        The Air Force is positioned to be a significant player in solving
    the global carbon dioxide issue. We are reaching out to others to
    partner in establishing a ``man on the moon'' scope project to address
    the reduction, capture, and reuse of greenhouse gases. We need to push
    for a holistic look at emissions from all energy sources. This will
    allow for the examination of all emissions across the lifecycle and
    then we can prioritize opportunities to drive true, measurable
    emissions reductions.

                             UTILITY PRIVATIZATION

        Turning to utilities 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 installations are key to our
    operational capabilities, our network of bases provide 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 an important tool in the toolbox for simultaneously meeting both
    these requirements.
        To date, under Office of the Secretary of Defense's utilities
    privatization program, the Air Force has conveyed 14 systems under 10
    U.S.C. 2688 and six additional systems using standard FAR clauses, for
    a total of 20 privatized systems with a plant replacement value in
    excess of $300 million. We are currently evaluating an additional 335
    systems for privatization. Additionally, where market conditions may
    have changed, we plan to re-solicit 145 systems previously determined
    ``uneconomic.'' We anticipate possibly privatizing another ten systems
    in fiscal year 2008. By the time the program concludes, we now
    anticipate more than half of about 500 systems could be privatized.
    During the course of this process, we further expect many competitive
    solicitations will end up as sole source procurements from local
    utility companies.

                                   CONCLUSION

        The current and future readiness and capability of our Air Force to
    deter our enemies and, when necessary, fight and win our Nation's wars,
    depends heavily upon the state of our power projection platforms--our
    installations. As the Air Force continues to modernize and
    recapitalize, we will continue to wisely invest our precious funding
    allocated to military construction, the environment, operations and
    maintenance, BRAC, military family housing, and energy. This will
    enable us to win today's fight, take care of our people, and prepare
    for tomorrow's challenges. Thank you Mr. Chairman and distinguished
    members of the Committee for you support of the Air Force.

        Senator Johnson. Secretary Ferguson, the active duty Air
    Force's military construction request for 2009 is 19 percent
    below last year's enacted level. I fear that the Air Force may
    be charging up a bill that is going to come due in future years
    by neglecting infrastructure needs in favor of other things.
    According to your testimony, the Air Force has been self-
    financing the effort to modernize its air and space force by
    accepting manageable risk in facilities and infrastructure
    funding. That sounds like to me the Air Force has made a
    decision to cannibalize its military construction funds to buy
    airplanes. Is that the case?
        Ms. Ferguson. No, Mr. Chairman, I don't believe it's the
    case that we are cannibalizing our MILCON. Our fiscal year 2009
    budget request is about the same level as our fiscal year 2008
    budget request. What we have also done is we have funded our
    sustainment to a 90 percent level, which funds our facilities
    to keep good facilities in good condition. We've also increased
    our funding by $168 million over our fiscal year 2008 budget
    request in modernization and restoration, which takes care of
    the major infrastructure upgrades that need to occur on an
    installation such as roofs and pavements.
        Senator Johnson. In 2006 the request for Air Guard MILCON
    was $165 million, almost five times larger than this year's
    Guard request of only $35 million. The Air Guard's budget
    request for military construction has fallen by 80 percent in
    only 3 years. How do you justify that?
        General Clarke. Thank you, Mr. Chairman and committee
    members. The Air National Guard is serving overseas as well as
    at home, accomplishing missions, everything from defense
    support of civil authorities to the overseas missions, and we
    appreciate the support that we've had in the past and the
    Congressional adds we've gotten to ensure that these world-
    class airmen in the Air National Guard can continue to do those
    missions at home and abroad.
        The funding levels, obviously we're in the total strategy
    of recapitalizing our force as well. We have aging airplanes in
    the Air National Guard. So when we look at the future--and I
    talk to my fellow guardsmen and we hear loud and clear from the
    State TAGS and in the National Guard Bureau that there is a
    need to accomplish MILCON projects, but also we're very
    concerned about the recapitalization.
        I heard this quote from one of my guardsmen out in the
    field, that said: Would you rather be in a 50-year-old building
    or would you rather fly a 50-year-old airplane? So we
    understand the recapitalization and the need to be a part of
    that. So we've taken the risk in the MILCON area as well. We
    think that's prudent.
        However, we also realize that there are MILCON needs out
    there that we need to have addressed, particularly with regard
    to the new missions under the total force initiative concept,
    that we'd like to see funded in the future, and we look forward
    to your help on that, please.
        Senator Johnson. The Air Force Reserve has seen even more
    drastic cuts. Its entire budget request this year is for three
    projects, for a total of $19 million, a decline of 76 percent
    in the last 3 years. Is your justification similar to that of
    the Air Guard?
        General Rubeor. Yes, Mr. Chairman, it is. Like the Air
    National Guard, we're very proud of the contributions of our
    Air Force Reserve members, very much committed to the fight
    along with our active duty and Guard partners. I will tell you
    that we have been looking at this issue hard. We've had some
    very constructive negotiations with the active duty. We've made
    some changes on how we're going to allocate Air Force Reserve
    and Air National Guard MILCON projects. That's going to be a
    change not only in the upcoming fiscal year, but also in the
    out years. It's going to provide us more opportunities to take
    a look at additional projects and increase the number of
    projects that are in the FYDP.
        So I think we've recognized the fact that there were some
    problems that led us to this year's very small MILCON, but
    we've taken steps to address that and I'm very satisfied, the
    Air Force Reserve is very satisfied with the changes that we're
    proposing.
        Senator Johnson. Secretary Ferguson, in January the Deputy
    Secretary of Defense issued an initial guidance to the services
    to begin joint basing implementation. Is the Air Force
    committed to the joint basing concept?
        Ms. Ferguson. Mr. Chairman, the Air Force fully supports
    joint basing and is committed to making it a success. Major
    General Eulberg and myself have participated in all meetings
    that Mr. Arny has chaired since he has come on board. We have
    worked with the other services developing the common operating
    level standards, and we are fully behind joint basing.
        There was a kickoff video telecommunications conference
    that Mr. Arny hosted that we all participated in about 4 weeks
    ago with all 26 installations that make up the 12 joint bases.
    We will also travel out to Washington State in just a few weeks
    at the end of June to have a kickoff meeting, a further kickoff
    meeting, in person with all the services, OSD, senior staff
    from each one of the services here in the Pentagon, the major
    commands, and each one of the 26 installations, to further the
    joint basing implementation efforts.
        Senator Johnson. What is your understanding of how the
    joint basing process will work?
        Ms. Ferguson. OSD has issued the joint basing
    implementation guidance, has issued the templates for the MOAs
    and the supplemental guidance. There's basically two phases of
    implementation for the bases. The first phase, the MOAs, are
    scheduled to be signed later this year, in September of this
    year, with an initial operating capability (IOC) of January
    2009 and full operating capability (FOC) in October 2009.
        The phase two bases will start at the same time, but will
    have MOAs signed in September 2009, with IOC, in January 2009--
    I'm sorry, January 2010, and FOC in October 2010.
        Senator Johnson. Senator Hutchison.
        Senator Hutchison. Mr. Chairman, I'm going to pass for now
    and I will submit my questions for the record. I'm sorry, I
    missed your testimony, so I hate to jump in here if you've
    answered my questions already. Thank you very much.
        Senator Johnson. Senator Nelson.
        Senator Nelson. Thank you, Mr. Chairman.
        Madam Secretary, as we all know, Cyber Command is critical
    to our Nation's defense and some of the asymmetrical threats
    that we're going to encounter in the future will involve
    countering threats in this virtual domain. General McCaffrey
    recently said: ``There is no such thing as a secure computer
    system. Attacks could negate current U.S. military supremacy in
    the field and cripple the Nation's transportation, water,
    electrical, financial, and trading systems.''
        One of the greatest threats we currently face is an attack
    on our computer systems. General Pace recently said: ``I know
    what we can do to other people, which means that eventually
    they can do it to us.''
        While we support a very thorough process to select the
    location, which is a facilities question, the location of the
    headquarters for Cyber Command, why does it appear that the
    process keeps being pushed to the right as opposed to
    continuing to have pressure to establish that location as soon
    as possible, given the need to protect against cyber space
    attacks that we're most certainly going to have, if we're not
    having them already? There is a general belief that we're
    already experiencing some of this, at least testing us to see
    whether or not we're prepared to deal with it.
        So I guess the question is: Why do we wait for a final
    decision to 2009 as opposed to moving it forward, particularly
    with respect to facilities?
        Ms. Ferguson. Thank you for the question. We are following
    the National Environmental Policy Act for the selection of the
    beddown location for Cyber Command. We're taking a little bit
    different approach also, in that we're incorporating a lot of
    community involvement in the basing decision as we go through
    this.
        My boss, Secretary Anderson, sent initial letters out to 18
    States for 17 locations, to the governors and also information
    letters to each one of the congressional delegations (CODELs,)
    announcing what we would be doing and how we would be doing
    that. The initial letter went out. We're anticipating sending
    another letter out the middle of next week providing additional
    guidance to the local communities on the information that we
    will be considering as the Air Force works through our base
    selection process.
        Later this year, Air Force Cyber Command Provisional, with
    support from major commands, will be going out and doing site
    visits at the locations. It is anticipated that site surveys,
    the NEPA process, the data, and the final basing decision will
    take about 6 to 9 months to complete.
        Senator Nelson. Well, I understand the process and I guess
    I support it. But it seems that the process is delaying as
    opposed to accelerating the determination of a location. It
    would seem that the Air Force could have winnowed down the
    location to fewer than 18 sites. By adding more sites it just
    has extended the whole process because of the complications
    that you get with having more things to review. An egalitarian
    approach makes some sense, but in this situation it seems to me
    that the primary objective is to find a facility, find a
    location, establish a facility, and have the command fully
    operational as soon as possible.
        Ms. Ferguson. What I can do is I can take that back for the
    record.
        [The information follows:]

                            Cyber Command Locations

        Initial efforts by the AFCYBER planning and basing team were
    focused on the urgency of standing up the new command. For this reason,
    the initial basing criteria focused on utilizing existing facilities.
    Then, SECAF asked us to consider ``virtual'' and ``distributed''
    operations based on corps of discovery with industry leaders. So we
    developed an interim location basing strategy--focused on quickly
    activating the command, in a distributed ops fashion (supporting the
    AFCYBER mission in the near-term). This interim solution will provide
    more operational capability in the near-term and enabled the
    development of the non-traditional basing approach to solicit State and
    local feedback on potential permanent location basing alternatives.
        Listed below are the potential candidate bases identified by 18
    States for further information gathering and analysis for the proposed
    permanent basing of Air Force Cyber Command:
      --Barksdale, LA
      --Beale, CA
      --Hanscom, MA
      --Hill, UT
      --Iowa (on behalf of Offutt)
      --Keesler, MS
      --Kirtland, NM
      --Lackland, TX
      --Langley, VA
      --Little Rock, AR
      --NORAD (Colorado Springs), CO
      --Offutt, NE
      --Pennsylvania ANG bases
      --Maxwell, AL
      --McGuire, NJ
      --Michigan ANG bases
      --Whiteman, MO
      --Wright-Patterson, OH

        Senator Nelson. I think I've already extended it to the
    record back there, too. But I thought maybe you might have some
    enlightenment as to why we would expand the process at a time
    when it's critically important to get the location established
    and put in place as soon as possible.
        Ms. Ferguson. I think we're looking at all potential
    opportunities for where we might bed down this and following
    the NEPA and the environmental impact assessment (EIA) process
    to ensure that we do the right thing as we make the selection
    for this key mission.
        Senator Nelson. The facility will be a driving factor, I
    hope, as well as just a location of the command.
        Thank you.
        Senator Johnson. Senator Craig.
        Senator Craig. Mr. Chairman, thank you very much.
        Deputy Secretary Ferguson, Generals, thank you for being
    with us. I'm going to be very specific on a very specific
    project today at Mountain Home Air Force Base, and I brought
    along pictures, because pictures in this instance are worth a
    thousand words.
        So, Mr. Chairman, I'll be specific because I'm talking
    about an air base that our Commander in Chief awarded as the
    top air base in the world last year, and we're very proud of
    Mountain Home for a lot of reasons. The men and women that make
    it up are the first reason. But secondarily, we have a
    uniqueness there that is one of the top training ranges in the
    world now, that the world wants to come and play on; and not
    just our Air Force, but other air forces, Singapore and
    Israeli, German, because of its uniqueness.
        But inside that base is a problem and it's a problem I've
    talked about with all of you for a long time and it's now time
    to get it fixed. It's a building, a building that has been
    literally condemned since the 1990s, with risk of roof falling
    in. It's the Logistics Readiness Center.
        Bring on the pictures, please. For the last 5 years, the
    Idaho Congressional delegation has suggested that this become a
    top priority for this facility. You know, Ms. Ferguson, I
    talked about efficiencies of energy. This used to house, at
    least co-locate, at least seven different activities on the
    base. We've had to take them out of there and spread them all
    over the base, and we use lots of energy moving people around.
    The reason is that people who work in this building now have to
    wear hard hats for fear of something falling on them. I've been
    in the building and I was required to wear a hard hat while I
    was there.
        Yet this building is still operable until it gets four
    inches of snow on it, and then we evacuate everybody for risk
    of the roof falling in.
        Now, I know that we send our soldiers on very dangerous
    missions. The greatest danger to some of Mountain Home airmen
    and women is entering this building on base.
        I don't know how to make my point other than to suggest
    this. Last year Congressman Mike Simpson of the Second
    District, working on the other side of the Rotunda in the
    Appropriations Committee, put $1.593 million in to start the
    process. And yet the Air Force said, no, you can only have 35
    percent of the funding because Congress hasn't funded the
    whole. We wanted to start the process, get the logistics, the
    design and all of that ready, and yet we were handicapped in
    doing that.
        I don't know any other way to impress upon the Air Force
    the reality of this problem. It is a significant problem at a
    world class air base and it's a significant problem that now
    we've had to go in and shore up with wood because they need to
    continue to use it. We have an armory in there for firearms and
    all of that kind of thing, and a housing, encasement, if you
    will, for them that we're not going to move anywhere else for
    that matter.
        We're not talking about a huge ticket item. We're talking
    about a reality and a risk in a world-class base that is a
    factor now of human life.
        I finally said to the base folks: Okay, I'm going to drop
    the anchor on this one and I'll do everything I can with this
    committee to get it solved. But I'm pleading with you to adjust
    a very minor amount of priorities here when it comes to dollars
    and cents to replace this facility, because we now have spread
    out all over the base when it needs to be co-located there for
    efficiency, for energy savings, and I applaud you for what
    you've said on energy.
        Secretary Anderson and I visited about small nuclear and
    their future can give our bases anywhere in the world that
    potential in time, and that technology is now moving toward
    development, small modular reactors. That will play in time and
    I'm glad the Air Force is doing what it's doing.
        But efficient as we might want to become, this is the
    most--this is the most egregious example of inefficiency I've
    seen to date. Your reaction?
        Ms. Ferguson. Senator Craig, we have funded the design and
    have begun the design for the replacement facility at Mountain
    Home. It is undergoing right now--it will be 35 percent
    designed in October. The cost for the replacement facility, as
    you pointed out, is right about $20 million and we anticipate
    it will be in our fiscal year 2010 submission to the Congress.
        Senator Craig. You plan to submit it in fiscal year 2010?
        Ms. Ferguson. Right now, we have not got the fiscal year
    2010 program from the major command yet. But what we have heard
    is that it's Air Combat Command's number one priority within
    the command for this year. So given that, we would anticipate
    that would be in our fiscal year 2010 submittal to the
    Congress.
        Senator Craig. How do we nudge you along?
        Ms. Ferguson. I think you just did.
        Senator Craig. Oh, oh, is that what I just did?
        Ms. Ferguson. But we still have a long way to go. I have to
    caveat that it's still a long way to go between now and when
    the President's Budget (PB) comes over here. But what I am
    hearing now that is what Air Combat Command will come in with.
    As the committee well knows, we've continued to take risks in
    infrastructure, but we will be going into budget deliberations
    shortly as we go through the next 6 months or so.
        But what we're hearing from Air Combat Command is they have
    made that their number one priority in the command, and so we
    should see that when it comes up. We should see that at our
    level in the District of Columbia when it comes up from Air
    Combat Command.
        Senator Craig. Well, I've been focused on this for a long
    while. I waited until after BRAC 2005 to see how we survived
    and we survived with obvious flying colors, and immediately
    within a short time after that recognized as one of the top air
    bases in the world and certainly in the country.
        Like I say, it's a lot more about people than it is about
    facility, but at the same time facilities are critical.
        Well, I'll take that as more than a maybe and I'll follow
    you very closely to make sure that happens. And if we can nudge
    it along here, I'll make every effort to do that.
        Thank you.
        Thank you, Mr. Chairman.
        Senator Johnson. Senator Murray.

                       STATEMENT OF SENATOR PATTY MURRAY

        Senator Murray. Thank you very much, Mr. Chairman.
        Thank you all for being here this morning. During the BRAC
    process the Army National Guard and the Army Reserves had
    projects that were joint-funded projects. However, in the
    regular MILCON world it's very difficult to have a joint
    project for the Army National Guard and the Air National Guard.
    As I understand it, each service would have to include their
    portion of the funding in their own budget at the same time,
    and that just is not easy to do and there's no real process to
    efficiently pay for joint projects.
        What is the possibility of creating a joint 5-year budget
    to manage joint MILCON projects?
        Ms. Ferguson. That's really a question I can't answer. It's
    really a question that the comptroller and Mr. Arny would need
    to answer. That's something that's beyond Air Force control. I
    can take that and bring that back.
        [The information follows:]

                  Joint Five-Year Military Construction Budget

        The organization best suited to respond to this question is the
    Office of the Under Secretary Defense Comptroller (OUSD-C). The OUSD-C
    has the visibility into all of the Service Components MILCON project
    requirements and capabilities to determine whether creating a joint 5-
    year budget would be possible or in the best interests of the
    Department of Defense.

        Senator Murray. I would very much appreciate it. I think we
    have to look at it. I assume you think it's a problem?
        Ms. Ferguson. It's easier to work within service. It's
    harder to work combined across the services for joint MILCON.
        Senator Murray. Well, I am curious how----
        Ms. Ferguson. It's not impossible.
        Senator Murray. Okay. Well, I'm curious how each of the
    services decides what MILCON requests go forward in a given
    year. Is a percentage of each one of these MILCON requests set
    apart for reserve component requests?
        Ms. Ferguson. What the Air Force does is we look overall at
    the requirements, at the new mission beddown requirements, and
    those are--I don't want to say they're funded off the top, but
    those get a fairly high priority as they go through, those
    projects to bed down the F-22, Joint Strike Fighter, C-17.
    Those are needed to bed down the weapons systems at the
    installations.
        The current mission dollars--and General Rubeor mentioned
    this a little while ago. We've changed our process within the
    Air Force to allocate more dollars to the Guard and Reserve,
    particularly in the out-years, so that they compete for
    Congressional adds.
        Senator Murray. Given the utilization of the Guard and
    Reserve at this time, doesn't it make sense to put some
    percentage in place or make sure that they have a higher
    priority?
        General Rubeor. The answer to your question, ma'am, is yes,
    there is a formula. It's based on plant replacement value.
        I want to go back just a second, though. For the Air Force
    Reserve, our most efficient model is what we call the Associate
    model. A lot of folks have heard about TFI, Total Force
    Integration, and that's kind of what I'm talking about. We are
    at our most effective when we are on an active duty base and
    the active duty owns the equipment and the infrastructure and
    we just provide manpower. It is a very cost-effective model for
    the U.S. taxpayer.
        The vast majority of our force is in that model and it is
    growing. We used to have it primarily restricted to the
    mobility assets, C-5s and C-141s. We're growing it now into the
    tanker business. We're growing it into the bomber business,
    growing it into the fighter business. We're doing a lot of
    innovative stuff.
        For instance, we are now associating with the Air National
    Guard. At Tinker Air Force Base, Oklahoma, we own the airplanes
    and the Air National Guard is associating with us. They are
    providing the crews and training on that platform.
        So that particular model, I don't think it receives enough
    attention. Again, it's the big part of our business. Whenever
    the active duty gets infrastructure and gets MILCONs and gets
    all of those things, we benefit because we use those facilities
    as part of this TFI.
        So the very small part of our business is when we own the
    base, and we have about 10 of those. There are five air reserve
    stations and five air reserve bases. When you talk about
    MILCON, that's where we're at and that's where we probably need
    some attention. And we've already addressed that with the
    active duty Air Force.
        That formula, which again to your point is basically a
    thing called plant replacement value. You take a look--and
    there's a lot of ways to do this, but this is the way we've
    chosen to do it. And oh, by the way, we're looking at that, and
    it is the right model.
        But for today, for this budget submission, we have 4
    percent of the active duty plant replacement value. So you take
    your budget and multiply it and that's how we get it.
        Senator Murray. Okay, great. I want to move on because I
    don't have that much time.
        Ms. Ferguson. If I could just add just one comment to what
    General Rubeor said. When you look at what the active component
    has put in as part of Total Force Integration and what it
    benefits to the Guard and Reserve components, it's been about
    $1.3 billion between fiscal year 2006 and 2009, and that is
    kind of buried in what the committee sees. But that number was
    just verified and documented by GAO, about 70 projects totaling
    over a billion dollars that support both.
        Senator Murray. Thank you.
        Let me go to another topic. In Secretary Anderson's written
    testimony that the committee has been provided, he mentioned
    that his third priority is preparing for tomorrow's challenges.
    I wanted to ask you about that because the Air Force has stated
    that MILCON for the KC-X tanker will include modification and
    new construction of buildings, new hangars, new ramps, and
    moving fuel hydrants. What preparation have you done for
    meeting that challenge?
        Ms. Ferguson. It might be better to take that for the
    record, but I can tell you we have not--within the
    installations community, we have not worked that yet.
        [The information follows:]

                         Military Construction for KC-X

        With respect to Military Construction (MILCON), the Air Force
    evaluates MILCON requirements and estimates the funding through an
    iterative process. As the program progresses through System Development
    and Demonstration (SDD) and aircraft basing decisions are finalized,
    the initial MILCON estimates will be updated to reflect specific MILCON
    projects. This refinement is a normal part of the process.
        The Air Force calculated and took into consideration MILCON cost
    estimates for active duty bases, overseas locations, guard, and reserve
    components. Since a basing strategy has not been finalized, the Air
    Force conducted site surveys of several existing tanker bases. These
    surveys were used as a basis for estimating MILCON costs for 10 bases,
    which included four Air National Guard/Air Force Reserve bases and two
    overseas locations. The Air Force is confident in this initial MILCON
    estimate and will continue to refine it based on specific requirements
    as basing decisions are made. It's important to note that MILCON cost
    estimates were not considered in isolation by the source selection
    team, but were included as a component of the Most Probable Life Cycle
    Cost, accounting for approximately 2 percent of the total costs.

        Senator Murray. So there's been no preparation for that?
        Ms. Ferguson. For individual bases, that is correct.
        Senator Murray. Did you or your office or anybody have a
    role in setting the requirements or the scope of the MILCON
    need for the KC-X?
        Ms. Ferguson. No.
        Senator Murray. So you were not involved in that at all. So
    we've got really tight budgets here. We've got to plan for
    costs on the horizon. We need to know what the costs are for
    that, and it's surprising to me that no one asked any of you
    ever what the costs for the MILCON would be.
        Ms. Ferguson. The source selection team that made the
    selection for the KC-X, did consider that as a factor. I do not
    have that, but we can get that from the acquisition community.
        Senator Murray. Well, let me ask, did the active duty and
    Reserve component provide any cost estimates for their side of
    this?
        Ms. Ferguson. I don't know the answer to that.
        Senator Murray. You don't know. Well, Secretary Wynne
    responded to some written questions and said that one member of
    the National Guard Bureau participated in the development of
    the requirements and supported the KC-X source selection as a
    subject matter expert. Do you know what expertise that member
    of the National Guard Bureau has regarding military
    construction? Do any of you know who that was or what their
    expertise was?
        General Rubeor. No, ma'am.
        Ms. Ferguson. We'll have to go back and find that out.
        Senator Murray. No idea? Well, okay. Well, there's going to
    be costs associated either with the 767 or the Airbus plane,
    and I want to how the difference in size and weight of the two
    tankers was considered when this was evaluated. There's
    construction costs for hangars, for ramps, for taxiways. How
    was that input given? Does anybody know?
        Ms. Ferguson. We'll have to take that for the record. None
    of the members on this panel are aware of that.
        Senator Murray. Well, Mr. Chairman, I do find that very
    troubling. This is a major MILCON request. It has major MILCON
    impacts. We were told that the costs of all of this were taken
    into account and it's troubling to me that this is going to
    have a huge impact on this committee and our future
    responsibilities, and certainly we need to know that.
        So I will submit some other questions for all of you
    regarding that, that I think this committee needs to understand
    in our future obligations. Construction as I understand it
    would need to begin in 2009 or 2010 in order to be ready for
    the first delivery of this tanker if it goes forward. That's
    going to have a huge impact on this committee, Mr. Chairman.
        I realize my time's out. I have some questions I will
    submit for the record on this and I hope we can get timely
    responses.
        Senator Johnson. Senator Brownback.
        Senator Brownback. Thank you very much, Mr. Chairman.
        My questions are along the same line, that I would like to
    know about as well, the bid on this. The Air Force said they
    took the bigger Airbus plane because, one of the primary
    factors being, okay, it carries a bigger payload. That was the
    Air Force's--in the Air Force's announcement as I understand
    it. But that bigger plane requires bigger hangar space that's
    going to have to be adjusted. If it's going to carry the bigger
    load, it may well require strengthening of runways and aprons
    to hold it up. Is that correct?
        Ms. Ferguson. Since I did not participate in this, I would
    be guessing to answer the question. But what I will do is I
    will go back and get the folks that were on the acquisition
    selection team to go forward and provide the responses to that.
        [The information follows:]

                         Military Construction for KC-X

        The KC-30 and KC-767 aircraft are larger than the KC-135 and will
    require a similar degree of MILCON. The estimated MILCON costs are
    source selection sensitive and cannot be disclosed here but the costs
    are higher for the KC-30 when compared to the KC-767. MILCON costs were
    similar for fuel hydrant relocations, training devices, and simulators.
    The majority of cost differences were in hangar modifications and ramp
    upgrades. It's important to note that MILCON cost estimates were not
    considered in isolation by the source selection team, but were included
    as a component of the Most Probable Life Cycle Cost, accounting for
    approximately 2 percent of the total costs.

        Senator Brownback. Isn't this something you prepare for all
    the time? I mean, it seems like if you're going to buy a new
    weapon system--you were talking about bedding down other
    weapons systems--that you would be preparing for that now.
        Ms. Ferguson. Quite honestly, our installations offices
    don't get involved until after the selection of the aircraft.
    We don't normally get involved at the beginning. Not to say
    that there was engineers that were involved in the acquisition.
    It's just not those of us that are sitting here at the table
    today.
        So I apologize. We'll have to get back to you on the
    questions specifically to the KC-X and the selection process
    and the engineering criteria, analysis, and assumptions that
    were used going into the selection process.
        Senator Brownback. Let me ask General Clarke because it's
    active duty, it's Guard and Reserve that fly a lot of these
    tankers. Have you done, has your group done, an assessment of
    what you're going to have to change spacewise, either landing
    or hangars for the new aircraft?
        General Clarke. No, sir, not at the National Guard Bureau
    level. But the States themselves obviously once they heard
    about the selection started looking at their facilities and
    started determining where they might fit in the source
    selection after the announcement. To my knowledge, the National
    Guard Bureau itself has not done any type of analysis like
    that.
        Senator Brownback. What have you heard back from the
    States, though? If they are doing this assessment, then they
    must have something that they've assessed.
        General Clarke. I would say that most of them would tell
    you that either tanker probably would not fit in their existing
    facility. They're all built for KC-135 size or smaller type
    aircraft. So I don't think that they would tell you that the
    existing facilities would accommodate either tanker.
        Senator Brownback. Have they said anything about the
    bigger, the Airbus plane, since it is a bigger plane that it
    will require more space or reinforcing of runways?
        General Clarke. Yes, sir, in some locations that may be
    true. I don't have any analysis, though, to back that up.
        Senator Brownback. Have they told you that?
        General Clarke. Only anecdotally. They have not come
    forward with any metrics per se to say this is what we've
    measured and looked at as far as weight on the ramp, taxiways
    and things that you brought up, sir.
        Senator Brownback. They have done no official assessment?
        General Clarke. To my knowledge, no, sir.
        Senator Brownback. General, this seems kind of odd to me.
    This is a $40 billion contract and it's not been hidden from
    the public. So it's kind of known. And it's a bigger plane, and
    your guys know how to handle planes.
        General Clarke. Yes, sir.
        Senator Brownback. I've got a group of them in my State who
    do a fabulous job. So I've got to think they've been all over
    this thing about now, where are we going to put this thing? And
    you've got no assessment?
        General Clarke. To my knowledge, no, sir, we don't. No,
    sir.
        Senator Brownback. Now, that seems to be intentional, that
    you have no assessment.
        General Clarke. Intentional on the part of the National
    Guard Bureau, sir?
        Senator Brownback. Yes.
        General Clarke. Oh, no, sir, not at all.
        Senator Brownback. Does that make sense to you, that you're
    going to have a big new plane and you haven't assessed where
    you're going to put it?
        General Clarke. To my knowledge, sir, we were never given
    any direction to go look at this. We don't have any funding to
    go out and send teams to analyze it. We don't have any way to
    do this at the base level other than maybe just to do an
    overprint of the size of the aircraft against existing
    facilities.
        Senator Brownback. Have you made a request for that
    assessment to be done?
        General Clarke. No, sir. No, sir.
        Senator Brownback. Why not?
        General Clarke. Sir, we're going to work with the Air Force
    and the Air Mobility Command when they finally make the
    selection of where we're going to put these aircraft in their
    road map. But at this time it would be speculative to say where
    these airplanes are actually going to go at this time. We have
    no idea where they might be bedded down.
        Senator Brownback. Well, I guess I would--I'm sitting here
    on a MILCON committee thinking there's going to be a big price
    tag on this and you guys are going to submit it. And it seems
    like we ought to have it as part of the overall estimate,
    because either plane is going to be different than your current
    one. So that you would think you would do an assessment, here's
    what it would be for the Boeing, the 767, and here's what it's
    going to be for the Airbus A-330; and that you would have that
    so you would know, because these are going to be in a lot of
    bases in this country and a lot of bases around the world. My
    guys, they're going all the time.
        So I'd kind of think you would do that now.
        Ms. Ferguson. My understanding is that was done as part of
    the source selection evaluation. It just was done by a
    different group than the three of us up here, and MILCON cost
    were considered as one of the factors in their evaluation. But
    we will have to get the level that that was provided and the
    information, whatever the acquisition selection team can
    provide, and get that back to you.
        Senator Brownback. But none of you were involved in this?
        Ms. Ferguson. None of the three of us were involved.
        Senator Brownback. Why weren't you involved? I mean, you
    would be the ones to be in charge of doing it, right?
        Ms. Ferguson. We work the execution piece. We typically
    don't get involved in the selection of the new weapons systems.
    We work the beddown piece, but we don't get involved in the up-
    front end.
        Senator Brownback. When you come back for all the upgrades
    on this, I may have some real questions for you then, too, of
    why we weren't preparing for the billions on this.
        Thank you, Mr. Chairman.

                         ADDITIONAL COMMITTEE QUESTIONS

        Senator Johnson. I would like to thank all our witnesses
    for their appearances before the subcommittee today. We look
    forward to working with you this year as the 2009 budget
    process continues.
        For the information of subcommittee members, if you have
    questions for the record that you would like to submit please
    do so by the close of business on May 15, 2008.
        [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

                                 FYDP CUTBACKS

        Question. As I noted at the hearing, I am deeply concerned over the
    declining level of military construction funding requested for the Air
    Guard and Air Force Reserve. The Future Years Defense Plans (FYDPs),
    for the Guard and Reserve have been severely cut; over the next 5
    years, the Air Guard has proposed only 40 projects, or an average of 8
    per year. The Air Force Reserve has proposed only 13 projects, an
    average of less than 3 per year. By the Senate's rules, we cannot
    appropriate money for projects that are not in the Services' FYDPs.
    Thus, even if Congress wants to increase funding for the Guard and
    Reserve above the request, there are very few eligible projects to put
    money toward.
        Why have the FYDPs for the Air Guard and Air Force Reserve been cut
    back so drastically? Whose decision was that?
        Answer. Air Force leadership corporately decided to take risk in
    infrastructure in order to fund higher priority requirements, such as
    modernizing and recapitalizing our aging aircraft fleet. This decision
    reduced the total Air Force Military Construction program greatly over
    the fiscal year 2009-2013 FYDP. Corporately we are taking steps to
    change how Air National Guard and Air Force Reserve Military
    Construction projects are allocated which will increase the number of
    Guard and Reserve Military Construction projects in the FYDP.

                  GUARD AND RESERVE CONSTRUCTION REQUIREMENTS

        Question. Please provide the Committee with a list of Guard and
    Reserve military construction (MILCON) requirements that have been left
    out of the FYDP.
        Answer. In order to recapitalize and modernize the fleet, the Air
    Force started ``taking risk in infrastructure'' in the fiscal year 2008
    President's Budget (PB), which resulted in a reduced MILCON FYDP. With
    a larger FYDP, all components would have been able to list more MILCON
    projects. Using the fiscal year 2006 PB as a representative size FYDP,
    the additional Air National Guard and Air Force Reserve projects may
    have included the projects below in the current FYDP.
        The Air National Guard MILCON projects highlighted below represent
    those projects that may have been included in a larger FYDP ($350.6
    million). The other projects listed below are additional Air National
    Guard MILCON requirements (part of the overall MILCON backlog).

                                                [In millions of dollars]
    ----------------------------------------------------------------------------------------------------------------
                      State                            Location                  Project Title             Cost
    ----------------------------------------------------------------------------------------------------------------
    AL......................................  MONTGOMERY................  TFI-Replace Squadron Ops               8.9
                                                                           Facility.
    AL......................................  MONTGOMERY................  Replace Fuel Cell/                     7.8
                                                                           Corrosion Control.
    AR......................................  FORT SMITH................  Repl Civil Engineer                    9.0
                                                                           Complex.
    AZ......................................  DAVIS MONTHAN.............  TFI-Predator Beddown--FOC.             6.7
    AZ......................................  FORT HUACHUCA.............  TFI-Predator LRE Beddown..            11.0
    CA......................................  SCLA......................  TFI-Predator FTU LRE                   8.4
                                                                           Beddown.
    CO......................................  BUCKLEY...................  ADALWpn Rel Shp, Bldg 805.             3.3
    CT......................................  BRADLEY...................  TFI-cNAF Beddown..........             9.2
    DE......................................  NEW CASTLE................  Replace Fuel Cell Hangar..            11.2
    DE......................................  NEW CASTLE................  Replace Acft Maintenance              11.6
                                                                           Shops.
    DE......................................  NEW CASTLE................  Joint Forces Ops--ANG                  1.5
                                                                           Share.
    DE......................................  NEW CASTLE................  Replace Maintenance Shops.            11.2
    FL......................................  MACDILL...................  Construct Vehicle                      2.6
                                                                           Maintenance Facility.
    GA......................................  SAVANNAH..................  Relocate ASOS.............             7.7
    HI......................................  HICKAM....................  TFI-F-22 Hangar, Squad Ops            48.0
                                                                           and AMU.
    HI......................................  HICKAM....................  TFI09F0922 Weapons Load                7.0
                                                                           Crew.
    HI......................................  HICKAM....................  TFI09F0922 Upgrade                    18.0
                                                                           Munitions.
    HI......................................  HICKAM....................  TFI09F0922 Infrastructure              6.7
                                                                           Support.
    HI......................................  HICKAM....................  TFI09F0922 Flight Sim                 19.0
                                                                           Facility.
    HI......................................  HICKAM....................  TFI09F22-Aircraft Parking             12.0
                                                                           Apron.
    IA......................................  DES MOINES................  Replace Comm Facility.....             5.9
    IA......................................  DES MOINES................  ADAL Security Forces......             4.6
    IL......................................  CAPITAL...................  Relocate Base Entrance....             6.1
    IL......................................  CAPITAL...................  TFI09cNAF Beddown.........            12.4
    IN......................................  FORT WAYNE................  ASE and GP Shop Addn......             4.2
    IN......................................  FORT WAYNE................  Add To Fire/Crash/Rescue..             2.0
    IN......................................  HULMAN....................  TFI09ASOS beddown.........             4.4
    KS......................................  FORBES....................  Replace Squad Ops Facility             9.5
    KS......................................  MCCONNELL.................  TFI-Expand DCGS Facilities             8.9
    KY......................................  LOUISVILLE................  TFI09CRG Facility.........             7.1
    LA......................................  HAMMOND...................  Upgrade Comm and Supp Fac.             5.0
    LA......................................  NEW ORLEANS...............  Replace Security Forces                5.2
                                                                           Fac.
    MA......................................  BARNES....................  ADAL Aircraft Maintenance             10.6
                                                                           Hangar.
    MA......................................  OTIS......................  TFI09cNAF Beddown.........             4.7
    MA......................................  MILFORD...................  Joint Forces Headquarters--            1.5
                                                                           ANG Share.
    MD......................................  MARTIN STATE..............  Composite Trng Facility...             6.5
    MD......................................  ANDREWS...................  Replace Munitions Storage             14.0
                                                                           complex.
    ME......................................  BANGOR....................  Add/Alter Fire Crash/                  5.1
                                                                           Rescue.
    ME......................................  BANGOR....................  Replace KC09135 Hangar and            28.0
                                                                           Shops.
    MI......................................  SELFRIDGE.................  ADAL Squad Ops............             9.3
    MI......................................  W K KELLOGG...............  TFI09cNAF Beddown.........             9.2
    MN......................................  DULUTH....................  Load Crew Trng/Weapons                 8.0
                                                                           Release.
    MN......................................  MINN ST PAUL..............  Aircraft De-icing Apron...             1.5
    MO......................................  WHITEMAN..................  TFI09B092 Ops and Trng....             6.4
    MO......................................  LAMBERT...................  TFI09cNAF Beddown.........             8.4
    MS......................................  JACKSON...................  Security Forces/med                    7.7
                                                                           training.
    MS......................................  KEY FIELD.................  TFI09cNAF Beddown and                 17.0
                                                                           AFFOR.
    NC......................................  STANLY....................  Upgrade ASOS Complex......             2.4
    NE......................................  LINCOLN...................  Joint Forces Headquarters--            1.5
                                                                           ANG Share.
    NH......................................  PEASE.....................  Replace Squadron                       9.8
                                                                           Operations.
    NJ......................................  MCGUIRE...................  Replace Base Civil                     9.5
                                                                           Engineer.
    NJ......................................  MCGUIRE...................  TFI--Upgrade CRG Facility.             4.2
    NJ......................................  ATLANTIC CITY.............  Dining Hall and Services               8.4
                                                                           Facility.
    NM......................................  KIRTLAND..................  ADAL Security Forces Bldg              1.7
                                                                           1062.
    NV......................................  CREECH....................  TFI09UAS Squad Ops........             2.2
    NY......................................  GABRESKI..................  Communications Facility...             5.8
    NY......................................  STEWART...................  Security Forces/Mobility               9.5
                                                                           Fac.
    NY......................................  FT DRUM...................  TFI-Reaper LRE Beddown....             2.0
    OH......................................  TOLEDO....................  Small Arms Range..........             4.0
    OH......................................  TOLEDO....................  Construct Band Facility...             2.0
    OH......................................  TOLEDO....................  Repl Sec Forces Complex...             8.5
    OH......................................  TOLEDO....................  Replace Fire/Crash/Rescue              5.4
                                                                           Station.
    OH......................................  TOLEDO....................  Munitions Storage Complex.            11.6
    OR......................................  KLAMATH...................  Security Forces Facility..             5.0
    OR......................................  KLAMATH...................  Add to Fire/Crash/Rescue               1.5
                                                                           Station.
    PA......................................  WILLOW....................  TFI09cNAF Beddown.........             9.2
    RI......................................  QUONSET...................  Medical Training/Dining                9.9
                                                                           Hall.
    SC......................................  MCENTIRE..................  Joint Forces HQ-ANG Share.             1.3
    SC......................................  MCENTIRE..................  Wastewater Treatment                   1.5
                                                                           Facility.
    SC......................................  MCENTIRE..................  Expand Arm/Dearm Pad......             3.0
    SC......................................  MCENTIRE..................  Construct CATS and CATM...             1.3
    TN......................................  MEMPHIS...................  BCE Maintenance/Training               7.4
                                                                           Complex.
    TN......................................  NASHVILLE.................  TFI-Intel Squadron                     6.0
                                                                           Facility.
    TN......................................  NASHVILLE.................  TFI-Establish C-130 FTU...             6.3
    TX......................................  ELLINGTON.................  Security Forces Facility..             5.5
    TX......................................  ELLINGTON.................  TFI09ASOS Beddown.........             6.8
    TX......................................  TBD.......................  TFI-Predator LRE beddown..             7.0
    TX......................................  FORT WORTH NAS JRB........  ECM Shop Addition, B1675..             1.1
    UT......................................  SALT LAKE.................  Upgrade ESC Complex.......             8.8
    UT......................................  SALT LAKE.................  Replace Composite Fire                12.0
                                                                           Station.
    VA......................................  LANGLEY...................  TFI09F0922 Ops and Trng                6.5
                                                                           Fac.
    VT......................................  BURLINGTON................  ADAL Fire Crash/Rescue                 5.8
                                                                           Station.
    WI......................................  GEN MITCHELL..............  Upgrade Corrosion Control              4.7
                                                                           Hangar.
    WI......................................  VOLK FLD..................  Replace Troop Trng                     9.8
                                                                           Quarters.
    WV......................................  SHEPHERD FLD..............  C095 Aircraft Upgrade                 10.0
                                                                           Taxiways.
    WV......................................  SHEPHERD FLD..............  C095 Avionics Shop........             4.3
    WV......................................  YEAGER....................  AGE and Security Complex..            11.0
    WV......................................  YEAGER....................  Replace Communications                 5.4
                                                                           Training Facility.
    WY......................................  CHEYENNE..................  Vehicle Maint & Deploy                 7.5
                                                                           Process.
                                                                                                     ---------------
          TOTAL.............................  ..........................  ..........................           681.1
    ----------------------------------------------------------------------------------------------------------------

        The Air Force Reserve MILCON projects highlighted below represent
    those projects that may have been included in a larger FYDP ($153.6
    million). The other projects listed below are additional Air Force
    Reserve MILCON requirements (part of the overall MILCON backlog).

                                                [In millions of dollars]
    ----------------------------------------------------------------------------------------------------------------
                      State                            Location                  Project Title             Cost
    ----------------------------------------------------------------------------------------------------------------
    AL......................................  Maxwell...................  AERIAL PORT SQUADRON                   4.9
                                                                           FACILITY.
    AL......................................  Maxwell...................  AIRCRAFT PARKING RAMP.....            15.7
    AL......................................  Maxwell...................  LOGISTICS/AGE/AVIONICS                 4.3
                                                                           FACILITY.
    AL......................................  Maxwell...................  SHORTFIELD RUNWAY.........            12.9
    AL......................................  Maxwell...................  SQUADRON OPERATIONS/OG/OSF             7.0
                                                                           FACILITY.
    AZ......................................  Luke......................  AEROMEDICAL STAGING                    4.7
                                                                           SQUADRON FACILITY.
    CA......................................  Travis....................  C17 & C5 ALTER FOR RESERVE             5.0
                                                                           TRAINING FACILITY.
    CA......................................  March.....................  INDOOR SMALL ARMS FIRING               5.9
                                                                           RANGE.
    CA......................................  March.....................  JOINT REGIONAL DEPLOYMENT              7.0
                                                                           CARGO CENTER.
    CA......................................  Beale.....................  940 ARW CONSOLIDATED                   4.2
                                                                           TRAINING FACILITY.
    CA......................................  Travis....................  COMMUNICATIONS TRAINING                2.3
                                                                           FACILITY.
    CA......................................  Travis....................  AIRLIFT CONTROL FLIGHT                 2.4
                                                                           TRAINING FACILITY.
    CA......................................  March.....................  RESERVE LODGING FACILITY..            10.9
    CA......................................  Travis....................  RESERVE RECRUITING                     2.2
                                                                           SQUADRON.
    CA......................................  March.....................  WIDEN TAXIWAY A...........             9.1
    CA......................................  March.....................  CONTROL TOWER.............            10.3
    CA......................................  March.....................  C-17 ASSAULT STRIP........             7.9
    CA......................................  March.....................  CLEAR ZONE DRAINAGE.......            10.1
    CA......................................  March.....................  UNDERWING HIGH EXPANSION               3.1
                                                                           FOAM (HEF)  SYSTEM.
    CO......................................  Peterson..................  SECURITY FORCES FACILITY..             5.0
    FL......................................  Homestead ARB.............  DINING FACILITY...........             6.0
    FL......................................  Patrick...................  MAINTENANCE WORKSHOP                  10.0
                                                                           COMPLEX.
    FL......................................  Patrick...................  WING HEADQUARTERS FACILITY            10.5
    FL......................................  Homestead ARB.............  ENTRY CONTROL COMPLEX.....             9.5
    FL......................................  Homestead ARB.............  ADD/ALTER COMMAND POST                 2.1
                                                                           BUILDING 360.
    FL......................................  Homestead ARB.............  EXPLOSIVE ORDNANCE                     3.2
                                                                           DISPOSAL FACILITY.
    FL......................................  Homestead ARB.............  AERIAL PORT SQUADRON                   6.7
                                                                           FACILITY.
    FL......................................  Homestead ARB.............  ADD VISITING QUARTERS                  3.9
                                                                           BUILDING 410.
    FL......................................  Homestead ARB.............  STORAGE FACILITY OPS/MX...             2.3
    FL......................................  Homestead ARB.............  RESERVE LODGING FACILITY..            11.0
    FL......................................  Homestead ARB.............  RESERVE LODGING FACILITY..            11.0
    FL......................................  Homestead ARB.............  RESERVE LODGING FACILITY..            11.0
    GA......................................  Dobbins...................  FIRE STATION AND SECURITY             10.2
                                                                           COMPLEX.
    GA......................................  Dobbins...................  WING HEADQUARTERS FACILITY             4.3
    GA......................................  Dobbins...................  FITNESS CENTER............             4.0
    GA......................................  Dobbins...................  RESERVE LODGING FACILITY--            16.5
                                                                           PHASE 1.
    GA......................................  Dobbins...................  RESERVE LODGING FACILITY--            16.5
                                                                           PHASE 2.
    GA......................................  Dobbins...................  RESERVE LODGING FACILITY--            15.5
                                                                           PHASE 3.
    GA......................................  Dobbins...................  PURCHASE AICUZ CLEAR ZONES            34.0
    GA......................................  Dobbins...................  EXPLOSIVE ORDNANCE                     3.1
                                                                           DISPOSAL FACILITY.
    GA......................................  Robins....................  HQ AFRC COMPLEX PHASE 1...           100.0
    GA......................................  Robins....................  HQ AFRC COMPLEX PHASE 2...            50.0
    HI......................................  Hickam....................  624 RSG HQ FACILITY.......            12.2
    IN......................................  Grissom...................  ADD/ALTER AIRCRAFT                     9.8
                                                                           MAINTENANCE HANGAR.
    IN......................................  Grissom...................  SECURITY FORCES SQUADRON               7.4
                                                                           FACILITY.
    KS......................................  McConnell.................  RESERVE TRAINING FACILITY              1.6
                                                                           931 ARG.
    LA......................................  Barksdale.................  B-52 FUEL CELL MAINTENANCE            12.8
                                                                           DOCK.
    LA......................................  Barksdale.................  WING TRAINING FACILITY....             2.8
    MA......................................  Westover..................  SQUADRON OPERATIONS                   10.0
                                                                           FACILITY.
    MA......................................  Westover..................  RESERVE LODGING FACILITY..            10.5
    MA......................................  Westover..................  WING HEADQUARTERS FACILITY             8.4
    MA......................................  Westover..................  INDOOR SMALL ARMS FIRING               6.7
                                                                           RANGE.
    MA......................................  Westover..................  DINING FACILITY...........             7.7
    MA......................................  Westover..................  RESERVE LODGING FACILITY..            10.8
    MA......................................  Westover..................  AEROMEDICAL STAGING                    5.2
                                                                           SQUADRON FACILITY.
    MA......................................  Westover..................  RESERVE LODGING FACILITY..             7.7
    MA......................................  Westover..................  RESERVE LODGING FACILITY..            10.0
    MA......................................  Westover..................  PAVEMENTS AND GROUNDS                  3.7
                                                                           FACILITY.
    MA......................................  Westover..................  OVERRUNS AND SHOULDERS                 4.7
                                                                           RUNWAY 15/33.
    MA......................................  Westover..................  VEHICLE MAINTENANCE                    6.3
                                                                           FACILITY.
    MA......................................  Westover..................  LAND ACQUISITION BASE                  4.0
                                                                           PERIMETER.
    MN......................................  Minn-St Paul..............  AERIAL PORT SQUADRON                   7.5
                                                                           FACILITY.
    MN......................................  Minn-St Paul..............  PARKING RAMP--VEHICLE.....            11.0
    MO......................................  Whiteman..................  MUNITIONS MAINTENANCE                  2.2
                                                                           FACILITY.
    NC......................................  Seymour Johnson...........  OPERATIONS GROUP FACILITY.             6.3
    NC......................................  Seymour Johnson...........  COMMUNICATIONS SQUADRON                5.6
                                                                           FACILITY.
    NJ......................................  McGuire...................  AIRLIFT CONTROL FLIGHT                 3.9
                                                                           FACILITY.
    NJ......................................  McGuire...................  ADD/ALTER WING                         5.7
                                                                           HEADQUARTERS BLDG 2217.
    NJ......................................  McGuire...................  CIVIL ENGINEER TRAINING                6.4
                                                                           FACILITY.
    NY......................................  Niagara Falls.............  RESERVE APRON.............            13.3
    NY......................................  Niagara Falls.............  AFRC/ANG BASE OPERATIONS               3.3
                                                                           FACILITY.
    OH......................................  Youngstown................  RESERVE LODGING FACILITY--             9.4
                                                                           PHASE 3.
    OH......................................  Youngstown................  INDOOR SMALL ARMS FIRING               9.4
                                                                           RANGE.
    OH......................................  Youngstown................  MISSION SUPPORT COMPLEX...             4.4
    OH......................................  Youngstown................  SECURITY FORCES SQUADRON               4.0
                                                                           FACILITY.
    PA......................................  Pittsburgh................  RESERVE LODGING FACILITY--             9.2
                                                                           PHASE 1.
    PA......................................  Pittsburgh................  WING HEADQUARTERS FACILITY             9.8
    PA......................................  Pittsburgh................  RESERVE LODGING FACILITY--             8.6
                                                                           PHASE 2.
    PA......................................  Pittsburgh................  MODIFIED SMALL FITNESS                 6.1
                                                                           CENTER.
    PA......................................  Pittsburgh................  ADD/ALTER WEST APRON                   9.1
                                                                           REPLACEMENT.
    PA......................................  Pittsburgh................  DINING FACILITY,                      17.5
                                                                           RECREATION CENTER AND
                                                                           RESERVE LODGING--PHASE 3.
    PA......................................  Pittsburgh................  RESERVE LODGING FACILITY--            13.0
                                                                           PHASE 4.
    SC......................................  Charleston................  ADD/ALTER AEROMEDICAL                  2.5
                                                                           FACILITY.
    SC......................................  Charleston................  RED HORSE HQ AND                       3.5
                                                                           ENGINEERING FACILITY.
    SC......................................  Charleston................  ADD/ALTER 315TH SQUADRON               4.3
                                                                           OPERATIONS FACILITY.
    SC......................................  Charleston................  RED HORSE AIR FIELDS AND               8.6
                                                                           VEHICLE MAINT.
    TX......................................  Lackland..................  433 AW HQ FACILITY........             5.8
    TX......................................  Lackland..................  CONSOLIDATED MAINTENANCE              15.2
                                                                           FACILITY.
    UT......................................  Hill......................  RESERVE TRAINING COMPLEX..             5.5
    UT......................................  Hill......................  AERIAL PORT SQUADRON                   3.0
                                                                           FACILITY.
    WA......................................  McChord...................  AEROMEDICAL STAGING                    2.8
                                                                           SQUADRON FACILITY.
                                                                                                     ---------------
          TOTAL.............................  ..........................  ..........................           834.9
    ----------------------------------------------------------------------------------------------------------------

                                     ______

                   Question Submitted by Senator Wayne Allard

             TRANSITION FROM CHEYENNE MOUNTAIN TO PETERSON AFB, CO

        Question. Mr. Anderson, as you continue to transition from Cheyenne
    Mountain to Building 2 at Peterson AFB, I'm concerned about force
    protection. In the FYDP for fiscal year 2010, the Air Force has
    included a plan to acquire 23 acres surrounding Building 2 specifically
    for force protection. I have requested that the funding be made
    available in fiscal year 2009, as I believe it to be a vital project
    for Peterson. If this funding is not included for fiscal year 2009,
    what are your plans to move forward with protecting the area
    surrounding Building 2?
        Answer. We are aware of the security concerns around building
    number two at Peterson Air Force Base, CO. The 23-acre land acquisition
    military construction (MILCON) project is part of the solution to
    provide force protection. We are currently in the process of building
    our fiscal year 2010-2015 Program Objective Memorandum. The Air Force
    Corporate Structure will make every attempt to place its most urgent
    MILCON requirements in the fiscal year 2010 MILCON program as part of
    fiscal year 2010-2015 Program Objective Memorandum build and will
    consider this project during its deliberations of the Air Force fiscal
    year 2010-2015 MILCON program build.

                             CONCLUSION OF HEARINGS

        Senator Johnson. This hearing is recessed.
        [Whereupon, at 11:35 a.m., Thursday, May 8, 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:
        Question Submitted by........................................   164
        Statement of.................................................     8
    Anderson, William C., Assistant Secretary of the Air Force
      (Installations, Environment and Logistics), Department of the
      Air Force, Department of Defense, Prepared Statement of........   137
    Arny, Wayne, Deputy Under Secretary of Defense, Installations and
      Environment, Department of Defense:
        Prepared Statement of........................................    64
        Questions Submitted to.......................................    93
        Statement of.................................................    62

    Bennett, Senator Robert F., U.S. Senator From Utah, Question
      Submitted by...................................................    53
    Byrd, Senator Robert C., U.S. Senator From West Virginia,
      Questions Submitted by.........................................    94

    Carpenter, Major General Raymond, Special Assistant to the
      Director, Army National Guard, Department of the Army,
      Department of Defense..........................................   123
    Cesler, Richard, Letter From.....................................     7
    Clarke, Brigadier General Stanley, III, Deputy Director, Air
      National Guard, Department of the Air Force, Department of
      Defense........................................................   135
    Craig, Senator Larry, U.S. Senator From Idaho, Statement of......     6

    Dunne, Admiral Pat, Acting Assistant Secretary for Benefits,
      Department of Veterans Affairs.................................     1

    Eastin, Hon. Keith E., Assistant Secretary of the Army,
      Installations and Environment, Department of the Army,
      Department of Defense..........................................   123

    Ferguson, Hon. Kathleen I., Deputy Assistant Secretary of the Air
      Force for Installations, Department of the Air Force,
      Department of Defense, Statement of............................   135

    Handley, Rear Admiral Mark A., Deputy Commander, Navy
      Installations Command, Department of the Navy, Department of
      Defense........................................................    97
    Henke, Bob, Assistant Secretary for Management, Department of
      Veterans Affairs...............................................     1
    Howard, Bob, Assistant Secretary for Information Technology,
      Department of Veterans Affairs.................................     1
    Hutchison, Senator Kay Bailey, U.S. Senator From Texas:
        Prepared Statements of....................................... 3, 57
        Questions Submitted by.......................................44, 92
        Statements of............................................2, 56, 124
    Hutter, Paul, General Counsel, Department of Veterans Affairs....     1

    Inouye, Senator Daniel K., U.S. Senator From Hawaii, Questions
      Submitted by...................................................    34

    Johnson, Senator Tim, U.S. Senator From South Dakota:
        Opening Statements of....................................1, 55, 123
        Questions Submitted by..................................33, 91, 120
    Jonas, Hon. Tina W., Under Secretary of Defense (Comptroller),
      Department of Defense..........................................    55
        Prepared Statement of........................................    61
        Questions Submitted to.......................................    91
        Statement of.................................................    60

    Kraus, Brigadier General Julia Ann, Deputy Chief, Army Reserve,
      Department of the Army, Department of Defense..................   123
    Kussman, Dr. Mike, Under Secretary for Health, Department of
      Veterans Affairs...............................................     1

    Landrieu, Senator Mary L., U.S. Senator From Louisiana:
        Prepared Statement of........................................    59
        Questions Submitted by......................................93, 121

    McConnell, Senator Mitch, U.S. Senator From Kentucky, Questions
      Submitted by...................................................51, 93
    Murray, Senator Patty, U.S. Senator From Washington:
        Prepared Statement of........................................     5
        Questions Submitted by.......................................    36

    Payne, Major General Eugene G., Jr., Assistant Deputy Commandant
      for Installations and Logistics (Facilities), Department of the
      Navy, Department of Defense....................................    97
    Peake, Hon. James B., M.D., Secretary, Department of Veterans
      Affairs:
        Prepared Statement of........................................    13
        Statements of................................................  1, 9
    Penn, Hon. B.J., Assistant Secretary of the Navy, Installations
      and Environment, Department of the Navy, Department of Defense.    97
        Prepared Statement of........................................    99

    Rubeor, Brigadier General James, Deputy to the Chief of the Air
      Force Reserve, Department of the Air Force, Department of
      Defense........................................................   135

    Tuerk, William, Under Secretary for Memorial Affairs, Department
      of Veterans Affairs............................................     1

    Wilson, Lieutenant General Robert, U.S. Army Chief of Staff,
      Installation Management, Department of the Army, Department of
      Defense, Statement of..........................................   123

                                 SUBJECT INDEX

                                  ----------

                             DEPARTMENT OF DEFENSE

                                                                       Page
    ACWA Program.....................................................    88
    Additional Committee Questions...................................    91
    Budget Management................................................    91
    Formerly Utilized Defense Site--American University Experiment
      Station/Spring Valley project..................................    94
    Fort Polk Barracks...............................................    93
    Incremental Funding..............................................    92
        Of Milcon Projects...........................................    81
    Joint Basing.....................................................    92
    Military Construction Project Evaluation in Iraq.................    78
    Supplemental--Warrior Transition Units...........................    92
    Use of the Commander Contingency Account (CCA)...................    93

                          Department of the Air Force

    Additional Committee Questions...................................   160
    Air Force Real Property Agency BRAC and Real Estate..............   145
    Base Realignment and Closure.....................................   144
    Cyber Command Locations..........................................   152
    Demolition of Excess, Obsolete Facilities........................   146
    Energy Strategy..................................................   147
    FYDP Cutbacks....................................................   160
    Federal Facility Agreements For Cleanup..........................   146
    Fiscal Year 2009 Air Force Milcon, BRAC, Environmental,
      Operations and Maintenance and Family Housing Programs.........   140
    Guard and Reserve Construction Requirements......................   161
    Joint Five-Year Military Construction Budget.....................   155
    Maintaining Our Facilities and Operational Infrastructure........   146
    Military Construction for KC-X.................................156, 158
    Planning and Design/Unspecified Minor Construction...............   147
    Preparing For Tomorrow's Challenges..............................   143
    Taking Care of Our People........................................   141
    Transformation...................................................   138
    Transition from Cheyenne Mountain to Peterson AFB, CO............   164
    Utility Privatization............................................   148
    Winning Today's Fight............................................   141

                             Department of the Army

    BRAC.............................................................   130
    Barracks.......................................................130, 132
        Inspections..................................................   128
    Execution Plan...................................................   131
    Fiscal Year 2009 Milcon Budget Execution.........................   129
    Guard/Reserve Component..........................................   129
    Overseas Bases...................................................   130

                             Department of the Navy

    Additional Committee Questions...................................   119
    BRAC 2005 Implementation.........................................   114
    Environment......................................................   109
    Facilities Management............................................   103
    Federal City:
        Funding......................................................   121
        Implementation...............................................   121
        Legal Issues.................................................   121
        Real Estate Agreement........................................   121
    Grow the Force...................................................   117
    Guam.............................................................   116
    Housing..........................................................   105
    Meeting the Construction Execution Challenge.....................   115
    Military Construction............................................   101
    NNMC and WRAMC...................................................   118
    Naval Facilities Command.........................................   118
    Prior BRAC Cleanup and Property Disposal.........................   112
    Relocating the Marines to Guam...................................   111
    The Navy's Investment in Facilities..............................    99
    VH-71............................................................   119
    Walter Reed/Bethesda Naval Hospital:
        Barracks.....................................................   120
        Completion Date..............................................   120
        Fiscal Year 2009 BRAC Request................................   120
        Road Improvements............................................   120
        Total Cost...................................................   120

                         DEPARTMENT OF VETERANS AFFAIRS

    Additional Committee Questions...................................    33
    Capital Programs (Construction and Grants to States).............    20
    Ensuring a Seamless Transition from Active Military Service to
      Civilian Life..................................................    13
    Excerpt from May 21, 2008 Senate Committee on Veterans' Affairs..    38
    General Operating Expenses.......................................    18
    Information Technology...........................................    21
    Medical:
        Care.........................................................    14
        Research.....................................................    17
    National Cemetery Administration.................................    19
    Recommendation:
        4--Significantly Strengthen Support for Families.............    51
        2--Completely Restructure the Disability and Compensation
          Systems....................................................    51

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