[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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