    [Senate Hearing 110-394]
    [From the U.S. Government Publishing Office]

                                                     S. Hrg. 110-394, Pt. 3

    DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR
                                      2009

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

                                    HEARINGS

                                   before the

                          COMMITTEE ON ARMED SERVICES
                              UNITED STATES SENATE

                           ONE HUNDRED TENTH CONGRESS

                                 SECOND SESSION

                                       ON

                                    S. 3001

         TO AUTHORIZE APPROPRIATIONS FOR FISCAL YEAR 2009 FOR MILITARY
    ACTIVITIES OF THE DEPARTMENT OF DEFENSE, FOR MILITARY CONSTRUCTION, AND
       FOR DEFENSE ACTIVITIES OF THE DEPARTMENT OF ENERGY, TO PRESCRIBE
        PERSONNEL STRENGTHS FOR SUCH FISCAL YEAR, AND FOR OTHER PURPOSES

                                   __________

                                     PART 3

                        READINESS AND MANAGEMENT SUPPORT

                                   __________

                           MARCH 12 AND APRIL 1, 2008

             Printed for the use of the Committee on Armed Services

                                   ----------
                             U.S. GOVERNMENT PRINTING OFFICE

    42-631 PDF                       WASHINGTON : 2008

    For sale by the Superintendent of Documents, U.S. Government Printing
    Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800;
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    Washington, DC 20402-0001

                          COMMITTEE ON ARMED SERVICES

                         CARL LEVIN, Michigan, Chairman

    EDWARD M. KENNEDY, Massachusetts     JOHN McCAIN, Arizona
    ROBERT C. BYRD, West Virginia        JOHN WARNER, Virginia,
    JOSEPH I. LIEBERMAN, Connecticut     JAMES M. INHOFE, Oklahoma
    JACK REED, Rhode Island              JEFF SESSIONS, Alabama
    DANIEL K. AKAKA, Hawaii              SUSAN M. COLLINS, Maine
    BILL NELSON, Florida                 SAXBY CHAMBLISS, Georgia
    E. BENJAMIN NELSON, Nebraska         LINDSEY O. GRAHAM, South Carolina
    EVAN BAYH, Indiana                   ELIZABETH DOLE, North Carolina
    HILLARY RODHAM CLINTON, New York     JOHN CORNYN, Texas
    MARK L. PRYOR, Arkansas              JOHN THUNE, South Dakota
    JIM WEBB, Virginia                   MEL MARTINEZ, Florida
    CLAIRE McCASKILL, Missouri           ROGER F. WICKER, Mississippi

                       Richard D. DeBobes, Staff Director

                  Michael V. Kostiw, Republican Staff Director

                                     ______

                Subcommittee on Readiness and Management Support

                       DANIEL K. AKAKA, Hawaii, Chairman

    ROBERT C. BYRD, West Virginia        JOHN THUNE, South Dakota
    EVAN BAYH, Indiana                   JAMES M. INHOFE, Oklahoma
    HILLARY RODHAM CLINTON, New York     SAXBY CHAMBLISS, Georgia
    MARK L. PRYOR, Arkansas              ELIZABETH DOLE, North Carolina
    CLAIRE McCASKILL, Missouri           ROGER F. WICKER, Mississippi

                                      (ii)

                                C O N T E N T S

                                  ----------

                        CHRONOLOGICAL LIST OF WITNESSES
        Military Installation, Environmental, and Base Closure Programs
                                 march 12, 2008

                                                                       Page
    Arny, Hon. L. Wayne, III, Deputy Under Secretary of Defense
      (Installations and Environment)................................     5
    Eastin, Hon. Keith E., Assistant Secretary of the Army
      (Installations and Environment)................................    22
    Penn, Hon. B.J., Assistant Secretary of the Navy (Installations
      and Environment)...............................................    33
    Anderson, Hon. William C., Assistant Secretary of the Air Force
      (Installations, Environment, and Logistics)....................    53

                   The Current Readiness of the Armed Forces
                                 april 1, 2008

    Cody, GEN Richard A., USA, Vice Chief of Staff, United States
      Army...........................................................   125
    Magnus, Gen. Robert, USMC, Assistant Commandant of the Marine
      Corps..........................................................   130
    Walsh, ADM Patrick M., USN, Vice Chief of Naval Operations.......   152
    McNabb, Gen. Duncan J., USAF, Vice Chief of Staff, United States
      Air Force......................................................   171

                                     (iii)

    DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR
                                      2009

                                  ----------

                           WEDNESDAY, MARCH 12, 2008

                               U.S. Senate,
                  Subcommittee on Readiness and
                                    Management Support,
                                   Committee on Armed Services,
                                                        Washington, DC.

        MILITARY INSTALLATION, ENVIRONMENTAL, AND BASE CLOSURE PROGRAMS

        The subcommittee met, pursuant to notice, at 2:35 p.m. in
    room SR-232A, Russell Senate Office Building, Senator Daniel K.
    Akaka (chairman of the subcommittee) presiding.
        Committee members present: Senators Akaka, Chambliss, and
    Thune.
        Majority staff members present: Peter K. Levine, general
    counsel; and Michael J. McCord, professional staff member.
        Minority staff members present: David M. Morriss, minority
    counsel; and Lucian L. Niemeyer, professional staff member.
        Staff assistants present: Ali Z. Pasha and Benjamin L.
    Rubin.
        Committee Members' assistants present: Bonni Berge,
    assistant to Senator Akaka; Christopher Caple, assistant to
    Senator Bill Nelson; M. Bradford Foley, assistant to Senator
    Pryor; Clyde A. Taylor IV, assistant to Senator Chambliss; and
    Jason Van Beek, assistant to Senator Thune.

         OPENING STATEMENT OF SENATOR DANIEL K. AKAKA, CHAIRMAN

        Senator Akaka. Good afternoon to our witnesses and to all
    of you here. Today the Readiness and Management Support
    Subcommittee meets to review the military installation programs
    of the Department of Defense (DOD) and the fiscal year 2009
    budget request for those programs.
        This will be the third year we have heard from the same
    team representing the three military departments. Secretary
    Eastin, Secretary Penn, and Secretary Anderson, it is good to
    have all of you back here with us again. We have one new
    witness and I want to personally welcome him.
        Wayne Arny recently left his position in the Navy to become
    the new Deputy Under Secretary of Defense for Installations and
    Environment. Mr. Arny is new in this position but he is already
    well known to this subcommittee. I congratulate you on your
    appointment to this important position and I look forward to
    continuing to work with you.
        Mr. Arny. Thank you, sir.
        Senator Akaka. We meet this afternoon to discuss DOD's
    military construction, housing, and environmental programs as
    well as the implementation of the 2005 Base Realignment and
    Closure (BRAC) round. We have many challenges to discuss today,
    as was the case last year. This year we have before us the
    largest funding request for military construction and base
    closure that any of us have ever seen. The fiscal year 2009
    budget request for military construction, base closure, and
    family housing programs is $24.4 billion. These funds represent
    primarily the new investment in our facilities.
        As our witnesses describe in their testimony, they are also
    responsible for billions of additional dollars requested for
    repair and maintenance, base operations, and environmental
    programs to keep those bases running. It is my understanding
    that additional construction funds will also be requested later
    this year as part of an emergency supplemental funding request
    for fiscal year 2009. Some of these funds will be requested for
    operations in Iraq.
        While that may well prove controversial, depending on
    whether a Status of Forces Agreement (SOFA) with Iraq is
    negotiated, what the terms of that agreement are, and the
    degree of consultation with Congress during the process, there
    is another aspect of this future emergency funding request that
    I wish to speak about now.
        I am concerned to hear that this forthcoming supplemental
    is expected to request additional funds to rebuild facilities
    to house wounded soldiers in so-called warrior transition units
    (WTUs) and to build additional soldier family assistance
    centers. I had hoped that we all learned a lesson last year
    that caring for our wounded warriors was of the highest
    priority. Yet there are no funds in the fiscal year 2009 budget
    request for this purpose.
        I am also troubled to hear that additional funds may show
    up later in a supplemental. Caring for our wounded warriors and
    their families is a core, long-term requirement of this
    government. As chairman of the Veterans Affairs' Committee as
    well as a member of the Armed Services Committee, it is
    certainly a top priority of mine.
        I do not understand why funding for an issue of this
    importance was not included in the base budget. I am concerned
    that this may indicate the leadership of the DOD does not fully
    understand how important this is. I hope that this is not the
    case.
        As was the case last year, the military construction budget
    is at record levels for two reasons. First, the proposal to
    increase the size of the Army and Marine Corps. Second,
    continued growth in the estimated costs to implement the 2005
    base closure round. With respect to the grow the force
    proposal, I wanted to express the subcommittee's continuing
    concern that growing the force should be done in a way that
    gives our military personnel, certainly a top priority of mine,
    and their families the quality of life they deserve.
        I understand that current plans still envision the use of
    temporary facilities. The use of temporary facilities should be
    held to a minimum for two reasons. First, because we want all
    our personnel to work in high quality, permanent facilities.
    Second, because whenever we are using temporary facilities it
    means the taxpayers are paying twice, once for the temporary
    facilities and a second time for the permanent ones that
    follow.
        With respect to base closing, another unfortunate parallel
    to last year is that the Department is sill waiting to receive
    the full funding of their base closure request. I hope our
    witnesses will discuss the impact of that funding shortfall
    today. I hope we will also discuss joint basing today.
        Deputy Secretary England recently signed out some guidance
    on this matter, but that is only a first step. It is crucial
    that the Services give their full cooperation to this effort so
    that the soldiers, sailors, airmen, and marines, who are
    assigned to joint bases such as Pearl Harbor-Hickam, a joint
    base that will be created in Hawaii, receive the benefits that
    greater jointness promises. If our leaders in the Pentagon fail
    to cooperate and joint basing is not done properly it will be
    our young men and women who will pay the price. We cannot allow
    that to happen.
        Turning to housing for our military families. We have all
    gotten used to hearing mostly good news about how well housing
    privatization is going. Without a doubt it has been a
    successful program. We are now dealing with, perhaps, the
    biggest failure this program has seen. That's a collapse of
    four Air Force projects due to the failure of one company,
    American Eagle, to meet its obligations.
        I know several members of this committee have constituents
    affected by this failure. Senator Nelson of Florida, who is not
    a member of this subcommittee, has asked to attend today's
    hearing specifically because of this issue. I share the concern
    of my colleagues.
        This problem must be corrected. But we must do so in a way
    that preserves the benefits of a housing privatization program
    that has done so much good at so many other bases. So we cannot
    let one bad apple spoil the whole bunch. Secretary Anderson, we
    will be looking to you to tell us today what steps the Air
    Force is taking to get these projects back on track.
        Finally, with respect to the environmental and energy
    aspect of your responsibilities, we certainly have challenges,
    but also, opportunities. I am pleased that the legal
    impediments to basing the Stryker brigade in Hawaii appear to
    be nearing an end. Yet legal challenges at other bases loom on
    the horizon.
        The Navy's use of sonar in its training exercises is also
    before the courts. Clearly it is imperative that the Department
    work as cooperatively as possible with the local communities to
    resolve as many issues as possible without litigation, and that
    you also do your homework in case litigation cannot be avoided.
        I'm also a member of the Energy and Natural Resources
    Committee. Like every American, I'm well aware that oil prices
    are at record levels, and we need to conserve energy, increase
    our use of renewable energy, and find other innovative ways to
    reduce our energy consumption and dependence. I look forward to
    discussing that with our witnesses as well.
        Senator Thune.

                    STATEMENT OF SENATOR JOHN THUNE

        Senator Thune. Thank you, Mr. Chairman. Thank you all very
    much for being with us today, and I thank you for calling this
    important hearing to review an unprecedented budget request for
    installation and environmental programs for 2009.
        I do want to thank our witnesses for their dedicated public
    service over the past 3 years. I hope for them this will be
    last opportunity to have to appear before this committee. As I
    review their testimony and this budget request I'm struck by
    the sheer magnitude of the range and difficulty of issues they
    wrestle with every single day. They deserve our gratitude and
    sincere appreciation for serving our Nation in this capacity.
        I also want to welcome Wayne Arny, who has recently assumed
    this solemn responsibility on behalf of the Secretary of
    Defense to clean out the extremely high inbox of his
    predecessor, Mr. Philip Grone. [Laughter.]
        Mr. Arny, who is appearing before us for the first time and
    most likely the last as well, is no stranger to these halls
    either. I see that you served on the staff of the Senate Armed
    Services Committee back when Ronald Reagan was President. I
    note that you are a former Navy pilot with a lifetime of public
    service to your credit. So I thank you for your commitment to
    taking on this daunting challenge.
        Mr. Chairman, we've many issues to discuss with our
    witnesses today as we review the largest President's budget
    request for military construction in recent memory. I look
    forward to a frank discussion about the progress of the 2005
    BRAC round. Costs continue to rise, there's pressure to cut the
    size of projects, communities are concerned that the Department
    will not meet the mandatory 2011 deadline, and there's still
    confusion about how many people and families will be moving. We
    need to know from the witnesses how we can address these issues
    for the benefit of our military personnel and the local
    communities that support them.
        I'd also like the witnesses to provide details on their
    efforts to support the President's initiative to Grow the Army
    and Marine Corps. I am concerned about the timing and intensity
    of the construction required to support the new forces. I'd
    also like to hear from Secretary Eastin and Secretary Penn
    their plans to ensure additional forces are not living and
    working in trailers for the next 10 years.
        I note that we may have a discussion today about the pros
    and cons of the privatization of military housing and barracks.
    I realize that among the more than 70 transactions conducted
    over the past 8 years to eliminate 92 percent of the DOD's
    inadequate housing, the Air Force has one company that is
    failing to perform. Unfortunately, this failure is causing a
    great deal of consternation and the Air Force has limited
    options to correct the problem. I look forward to working with
    my colleagues in ways to protect the government's interests
    while preserving the basic tenants of an outstanding program
    for military personnel and their families.
        Turning to environmental programs during 2007, the Army,
    Navy, and Marine Corps face significant challenges that cause
    delays in major service initiatives that could impact their
    ability to deploy and maintain readiness as a result of
    environmental litigation. The Army's plan to transform units of
    the 25th Infantry Division in Hawaii to a Stryker brigade
    combat team to support deployments in the Pacific region and to
    the Central Command for operations in Iraq and Afghanistan has
    been frustrated by a lawsuit challenging the adequacy of the
    Army Environmental Impact Statement (EIS) and whether the Army
    should have considered alternative sites outside of Hawaii.
        The Navy's struggled with multiple lawsuits and
    restrictions imposed by Federal courts on the Navy's ability to
    train using both mid-frequency active (MFA) and low-frequency
    active (LFA) sonar. In addition, public opposition and
    environmental litigation forced the Navy to abandon years of
    effort and planning to build an outlying landing field (OLF) in
    Washington County, NC. The Navy considers an OLF essential to
    preserve the ability to effectively train Navy and Marine Corps
    aviators in the most difficult task in military aviation, that
    of landing high performance jets on an aircraft carrier in the
    dark of night.
        Just last month a Federal court in San Francisco blocked
    efforts by the government of Japan and the U.S. Marine Corps to
    solve longstanding complaints about the impact of Marine Corps
    aviation on civilians living in Okinawa. The court halted
    development of a new offshore aviation facility because of
    potential impact on a native species of marine mammal, the
    Dugong, revered in Okinawa's culture. These are troubling
    developments.
        As a nation, we demand that our armed forces are ready to
    fight when needed. For the last 6\1/2\ years, we've put them to
    the test in combat. We need to understand how these impacts
    came about and what we can do to solve or mitigate their impact
    on readiness.
        I also look forward to a discussion about the Department's
    plans to relocate 8,000 marines from Okinawa, Japan, to Guam by
    2014 and the impact of these environmental rulings on those
    plans. I also have questions about enhanced use leases, family
    housing in Korea, and use of alternative energy sources, among
    others. I, too, have many issues to cover in today's session so
    I'll be submitting some questions for the record and would ask
    that the witnesses provide prompt replies.
        Again, I thank the witnesses for their service, and I thank
    the chairman for the opportunity of this hearing today.
        Senator Akaka. Thank you very much, Senator Thune. Now we
    will hear from our witnesses. May I call on Secretary Arny for
    your statement?

    STATEMENT OF HON. L. WAYNE ARNY III, DEPUTY UNDER SECRETARY OF
                DEFENSE (INSTALLATIONS AND ENVIRONMENT)

        Mr. Arny. Thank you, sir. Senator Thune's statement about
    my being here during the Reagan administration, I want to clear
    up some things. I was dropped on the doorstep as an infant, and
    raised by the committee, so I'm not quite that old. [Laughter.]
        I want to thank you, Chairman Akaka, Senator Thune, and
    distinguished members of the subcommittee. I'm honored to
    appear before you this afternoon in my new capacity to discuss
    the President's budget request for fiscal year 2009.
        I don't need to tell you that I believe installations are
    the foundation of America's security. They are critical assets
    that must be available when and where needed with the
    capabilities to support current and future mission
    requirements. Our installations are the core of U.S. combat
    capability. They are an inseparable element of the Nation's
    military readiness and wartime effectiveness. Our 2009 budget
    request supports a number of key elements of the Department's
    efforts to maintain and manage these assets.
        First, we continue to recalibrate our bases overseas and in
    the U.S. through global basing and BRAC. To ensure the
    flexibility we need to respond to our 21st century security
    challenges, the budget supports our global restationing
    efforts. We're continuing our efforts to transfer overseas
    legacy forces, Cold War basing structures, host-nation
    relationships, and forward capabilities.
        We're requesting $9.2 billion for BRAC 2005 implementation,
    and $393.4 million for prior BRAC clean-up to support the
    stateside portion of our reconfiguration efforts. These amounts
    are approximately $1.1 billion over the 2008 request. The $9.2
    billion represents full funding for BRAC 2005 implementation
    assuming the $939 million reduction to the 2008 appropriation
    is restored.
        Regarding that reduction, we greatly appreciate this
    committee's action to provide authorization of the full amount.
    We're still analyzing the consequences of the reduction. But we
    believe that if it is not restored, it will be extremely
    difficult, if not impossible, to meet the September 15, 2011,
    statutory deadline without extraordinary measures.
        We're working very hard to continue our execution at an
    efficient and effective pace. The point at which we find
    ourselves right now in the BRAC implementation period
    underscores that requirement because every delay makes it
    increasingly difficult to complete implementation by that
    deadline in a sane fashion.
        Second, we continue to renew and take care of our own. Our
    goal has been to achieve a recapitalization rate of 67 years,
    and the 2009 budget request, if enacted, exceeds that goal by
    funding recap at a rate of 56 years. This is an improvement
    over the 76-year rate achieved in the 2008 budget and is due in
    part to the impact of funding for BRAC and global basing
    implementation.
        It equates to an increase of $2.8 billion compared to the
    2008 budget request. We have however, understood for years the
    limitations of this metric, but it was better than what we had
    before, and we've been working with the Services to change it.
    Next year we will transition to a more comprehensive measure
    that we hope will provide a broader, more meaningful index to
    the Department and Congress and also less volatile.
        For sustainment, this budget request reflects an additional
    $796 million which results in the Department-wide funding rate
    increasing from last year's 88 percent to 90 percent this year.
    We'd like to hit 100 percent for obvious reasons, but we've had
    to make difficult trade-offs with our budget.
        Third, we continue to work to provide the best housing
    available for our military members and their families
    primarily, as you discussed, through privatization. We will
    continue, however, to operate housing overseas and in a few
    stateside locations on our own. 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 privatized installations. In military construction,
    the appropriation for a significant source of facilities
    investment funding totals $24.4 billion, which is an increase
    of $3.235 billion over last year's budget request.
        Bachelor quarters. The Department is also committed to
    improving housing for our unaccompanied servicemembers. DOD
    continues to encourage the modernization of all our bachelor
    quarters to improve privacy and provide greater amenities. In
    December 2007 the Navy executed its second unaccompanied
    housing privatization pilot in Hampton Roads following the
    success of the one in San Diego.
        This project alone will construct 1,187 new apartment units
    and privatizes 726 existing units at Naval Station Norfolk. The
    Navy pilot projects enabled by use of partial allowance have
    successfully improved the quality of life of our unaccompanied
    personnel. We're considering how to use this more in the
    future.
        In 2007, the Army added bachelor quarters and senior
    enlisted bachelor quarters to its existing privatization
    projects at a number of installations around the country.
        Energy Management. The Department continues to aggressively
    implement energy conservation measures and avoid associated
    costs while improving utility system reliability and safety.
    Our efforts are beginning to pay off.
        DOD is the single largest energy consumer in the Nation,
    although we don't exceed 2 percent, but we're the single
    largest. We consumed $3.4 billion in facility energy in 2007, a
    modest, but significant savings of $80 million from fiscal year
    2006. In our facility energy consumption intensity is down more
    than 10 percent from the 2003 base line.
        We've significantly increased our focus on purchasing
    renewable energy and developing resources on military
    installations. Renewable energy projects are consistently more
    expensive than similar, conventional energy projects, resulting
    in limited opportunities that are life cycle cost-effective. So
    we are employing innovative strategies.
        We are making continued progress in the area of geothermal
    energy. A 270-megawatt power plant in Naval Warfare Center,
    China Lake, CA, supplies enough electricity to serve 180,000
    homes annually. The base gets a reduction in its energy bill.
        The second geothermal plant is under construction in
    Fallon, NV. Three additional plants are being planned. We're
    doing the exploration for two in California, one at El Centro
    and one at Twentynine Palms, and a third one at the Chocolate
    Mountain Aerial Gunnery Range in Yuma.
        We are also examining ways with the Office of Management
    and Budget (OMB) to exploit other forms of traditional and
    renewable energy on our facilities. We have a number of
    existing solar arrays set up at bases throughout the country,
    and we're continuing that effort. The Air Force just brought a
    15-megawatt solar array online at Nellis Air Force Base. We're
    pushing into ocean thermal technology, ocean and tidal wave
    technology, and working to set up wind farms wherever they make
    sense for us.
        Environmental management is critical to our stewardship of
    what we own. Employing a strategy that goes beyond mere
    compliance with environmental laws and regulation, the
    Department's transforming its business practices by integrating
    environment into our acquisition process, maintaining a high
    level of environmental quality in all our defense activities,
    and preventing pollution at its source. We're also working to
    forecast the impact of emerging contaminants.
        Last, but not least, we continue to fulfill our commitment
    to work with communities and States affected by our closure and
    growth initiatives assisting them in collaboration with other
    Federal resources to respond to their needs.
        Mr. Chairman, the Department is working hard to reposition,
    to reshape, to take care of our installations for the future.
    We need the items we've requested in this budget, especially
    the $939 million for BRAC execution that was cut from last
    year's appropriation. We're going to do all that we can to make
    the Department successful.
        We deeply appreciate all this committee has done for us
    over the years. It has demonstrated repeatedly its support for
    our installations, and we look forward to continuing to work
    with you this year to advance our mutual interests. Thank you.
        [The prepared statement of Mr. Arny follows:]
                     Prepared Statement by Hon. Wayne Arny
        Chairman Akaka, Senator Thune, 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 (DOD)
    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 DOD.
        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-
    September 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 nontraditional 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 Congress. 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 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
    warfighting 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 warfighting 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.
        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 MILCON. 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 Office of
    the Secretary of Defense (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) MILCON project for the National
    Geo-Spatial Agency headquarters at Fort Belvoir, VA, and award of 17
    MILCON projects at Fort Bliss, TX, to support Army Global Rebasing,
    Transformation, and BRAC. At Fort Sill, OK, the MILCON 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, NC,
    two BRAC projects totaling $80 million were awarded and at Fort Riley,
    KS, there are 6 BRAC MILCON projects that support Global Rebasing
    currently ongoing. We continue to make great progress at Fort Lee, VA,
    with the award of the projects that will support the creation of a
    Combat Service Support Center of Excellence and at Fort Benning, GA,
    with the consolidation of the Armor and Infantry schools. The Navy's
    largest BRAC 2005 operational action is to close Naval Air Station
    Brunswick, ME, and consolidate the east coast maritime patrol
    operations in Jacksonville, FL. 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 05, Global Defense Posture Realignment, 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, and 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, health care, 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 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            1,193           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 MILCON
    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 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 servicemembers, 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 MILCON appropriation is a significant source of facilities
    investment funding. The Fiscal Year 2009 Defense MILCON 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 MILCON 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's budget in millions of dollars--Budget Authority]
    ------------------------------------------------------------------------
                                                Fiscal Year     Fiscal Year
                                               2008 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/Improvements           1,080           1,457
    Family Housing Operations and                      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 Silver as a goal for nearly 70 percent of the Fiscal Year 2009
    MILCON 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 servicemember recruitment, retention, morale, and
    readiness. Through privatization and increases in housing allowances,
    DOD has made great strides in increasing servicemembers 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
    servicemembers 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 MILCON 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 10-year development period.
        As of the end of 2007 through the privatization program, and some
    MILCON 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
    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 servicemembers, 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 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 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 servicemembers 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, MO, 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 MILCON 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 servicemembers. DOD continues to encourage the
    modernization of Unaccompanied Personnel Housing to improve privacy and
    provide greater amenities. In December 2007, the Navy executed its
    second Unaccompanied Housing privatization pilot project. The Hampton
    Roads, VA, 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, NC; Fort Stewart, GA; Fort Drum, NY; Fort
    Bliss, TX/White Sands Missile Range, NM, and Fort Irwin, CA. 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, NV.
    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 10 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 decisionmakers 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
    ongoing. 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, 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, NC; and buffer live-fire training ranges at Fort Carson, CO;
    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 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 DOd 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 DOD
    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 DOD are also of mutual concern
    to other Federal agencies and State governments. These issues cross
    administrative boundaries and occur at the regional scale. The DOD 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 DOD continues to work with
    State governments and other Federal agencies in the Southeast Regional
    Partnership for Planning and Sustainability (SERPPAS). The States of
    Alabama, Florida, Georgia, North Carolina, and South Carolina are
    engaged with the DOD 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 DOD 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 DOD 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 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 U.S. 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 decisionmakers 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 Akaka. Thank you very much, Mr. Arny. Now we will
    hear from Secretary Eastin.

     STATEMENT OF HON. KEITH E. EASTIN, ASSISTANT SECRETARY OF THE
                  ARMY (INSTALLATIONS AND ENVIRONMENT)

        Mr. Eastin. Good afternoon, Mr. Chairman. I can't speak for
    Secretary Anderson, but I'm feeling ganged up on by one Navy
    guy on my left and one on my right here. [Laughter.]
        Mr. Arny. But you used to be Navy too?
        Mr. Eastin. Well, we don't get into that. [Laughter.]
        I have a statement here and I have a more lengthy one for
    the record if you include that I will be brief. We have a very
    ambitious program this year, $11.4 billion in military
    construction which, as you alluded to before, with our Grow the
    Army Initiative, $4.2 billion of that is for directly related
    to Growing the Army. Another $4.5 of that is in the BRAC
    accounts and in putting those changes together and meeting that
    deadline.
        While we're on that and this will sound like a broken
    record up here, $560 million of that $900 million that Wayne
    Arny mentioned, was taken away from us, it is imperative that
    we get it back in supplemental funding so that we can meet our
    BRAC deadlines. I can't sit here and say we'll not meet them,
    but it is going to be exceptionally hard to do if we have $560
    million taken away that is not restored.
        We're looking at 35 projects, many of them are at Armed
    Forces Reserve Centers spread around the country. Those are the
    ones that are going to fall and break that deadline. So your
    help in getting that restored would be greatly appreciated.
        We have an ambitious program, we are very confident that we
    are going to be able to execute. We have a good record of
    executing. If that's of the committee's concern I'll be happy
    to discuss that later.
        Other than that, I'll turn it back to you, Mr. Chairman.
    Thank you.
        [The prepared statement of Mr. Eastin follows:]
                   Prepared Statement by Hon. Keith E. Eastin
                                  introduction
        Mr. Chairman and members of the subcommittee, it is a pleasure to
    appear before you to discuss the Army's Military Construction budget
    request for fiscal year 2009. Our request is crucial to the success of
    the Army's strategic imperatives to Sustain, Prepare, Reset, and
    Transform the force. We appreciate the opportunity to report on them
    and respond to your questions. We would like to start by thanking you
    for your support to our soldiers and their families serving our Nation
    around the world. They are and will continue to be the centerpiece of
    our Army, and their ability to successfully perform their missions
    depends upon congressional support.
        The Army's strength is its soldiers--and the families and Army
    civilians who support them. The quality of life we provide our soldiers
    and their families must be commensurate with their quality of service.
    Our budget request, if approved, will enable soldiers and their
    families to receive the facilities, care, and support they need to
    accomplish the tasks our national leaders ask them to perform.
                                    overview
    Rebalancing the Force in an Era of Persistent Conflict
        Installations are the home of combat power and a critical component
    of the Nation's force generating and force projecting capability. Your
    Army is working hard to deliver cost-effective, safe, and
    environmentally sound capabilities and capacities to support the
    national defense mission.
        The tremendous changes in our national security environment since
    the terrorist attacks on our Nation clearly underscore the need for a
    joint, integrated military force ready to defeat all threats to U.S.
    interests. In the 21st century, warfare is increasingly becoming a
    contest between America and its allies trying to build up human
    resources, authority, and physical infrastructure faster than the enemy
    can tear it down. People and the knowledge, experience, and skills they
    can bring to bear in this contest, will often be equally or more
    decisive to the outcome than sophisticated technology and massive
    firepower. This is a key difference from the industrial age warfare of
    the 20th century.
        To meet these security challenges, we require interrelated
    strategies centered on people, forces, quality of life, and
    infrastructure. Regarding infrastructure, we need a global framework of
    Army installations, facilities, ranges, airfields, and other critical
    assets that are properly distributed, efficient, and capable of
    ensuring we can successfully carry out Army roles, missions, and tasks
    to safeguard our security at home and abroad.
        Army infrastructure enables the force to successfully accomplish
    missions and generate and sustain combat power. As we transform our
    operational forces, so too must we transform the institutional Army and
    our installation infrastructure. We will accomplish these efforts by
    translating the Army's four major imperatives (Sustain, Prepare, Reset,
    Transform) into initiatives such as Base Realignment and Closure (BRAC)
    2005, Global Defense Posture Realignment (GDPR), Army Modular Force
    Transformation, the Army Medical Action Plan, the Soldier and Family
    Action Plan, and the President's Grow the Force initiative.
                    forging the pieces together: stationing
        The Army's stationing initiative is a massive undertaking,
    requiring the synchronization of base realignments and closures, unit
    activations and deactivations, and the flow of forces to and from
    current global commitments. Our decisions to synchronize activities
    associated with the aforementioned initiatives continue to be guided by
    the following key criteria:

             Meeting operational requirements
             Funding critical requirements to achieve unit mission
             Compliance with applicable laws
             Minimizing the use of temporary facilities
             Giving facility priority to ranges, barracks, housing,
            vehicle maintenance shops, headquarters and operations, dining
            and instruction facilities
             Providing economic benefits
             Using existing infrastructure to reduce cost and
            excess capacity

        Completion of this combined set of initiatives will result in an
    Army that is better positioned to respond to the needs and requirements
    of the 21st century security environment, with our soldiers and
    families living at installations that are truly the centerpiece of the
    Army.
    Infrastructure Quality
        In addition to mission support, our installations provide the base
    of support for soldiers and their families. The environment in which
    our soldiers train, our civilians work, and our families live plays a
    key role in recruiting and retaining the high quality people the Army
    needs. Through efforts such as Barracks Modernization and Residential
    Communities Initiative (RCI) for family housing privatization programs,
    the Army has made tremendous progress in improving the quality of life
    for soldiers and their families. These efforts will combine with the
    Army's stabilization of the force to strengthen the bonds between
    units, soldiers, families, and the communities in which they live.
        The quality of our installations is critical to support the Army's
    mission, its soldiers, and their families. Installations serve as the
    platforms to train, mobilize, and rapidly deploy military power. When
    forces return from deployments, installations enable us to efficiently
    reset and regenerate combat power for future missions. In the past
    year, the Army has made tremendous progress in enhancing training and
    improving its ability to generate and reset the force.
    Global Defense Posture Realignment
        The United States' global defense posture defines the size,
    location, types, and roles of military forces and capabilities. It
    represents our ability to project power and undertake military actions
    beyond our border. Together with our overall military force structure,
    our global defense posture enables the United States to assure allies,
    dissuade potential challengers, deter enemies, and, if necessary,
    defeat aggression. The new global defense posture will be adjusted to
    the new security environment in several key ways: (1) expand allied
    roles, build new partnerships, and encourage transformation; (2) create
    greater operational flexibility to contend with uncertainty; (3) focus
    and act both within and across various regions of the world; and (4)
    develop rapidly deployable capabilities. Lastly, the United States and
    its allies and partners will work from a different paradigm than in the
    past: GDPR will relocate over 41,000 soldiers and their families from
    Europe and Korea to the United States by 2011. These moves are critical
    to ensure Army forces are properly positioned worldwide to support our
    National Military Strategy. The new posture will yield significant
    gains in military effectiveness and efficiency in future conflicts and
    crises and will enable the U.S. military to fulfill its many global
    roles. The new posture will also have a positive effect on our military
    forces and families. While we will be moving toward a more rotational
    and unaccompanied forward presence, these rotations will be balanced by
    more stability at home with fewer overseas moves and less disruption in
    the lives of spouses and dependents.
    Army Modular Force
        The Army Modular Force initiative transforms the Army from units
    based on the division organization into a more powerful, adaptable
    force built on self-sufficient, brigade-based units that are rapidly
    deployable. These units, known as Brigade Combat Teams (BCTs), consist
    of approximately 3,500 to 4,000 soldiers. BCTs increase the Army's
    combat power while meeting the demands of global requirements without
    the overhead and support previously provided by higher commands. The
    main effort of Army transformation is the Army Modular Force, which
    reorganizes the Total Army: the Active component, Army National Guard,
    and Army Reserve into modular theater armies, theater support
    structure, corps and division headquarters, BCTs, and multi-functional
    and functional support brigades. The Army is reorganizing from a
    division-based to a modular brigade-based force to achieve three
    primary goals:
        First, to increase the number of available BCTs to meet operational
    requirements while maintaining combat effectiveness equal to or better
    than previous divisional brigades. Second, create brigade-size combat
    support and combat service support formations of common organizational
    designs that can be easily tailored to meet the varied demands of the
    geographic combatant commanders and reduce the complexities of joint
    planning and execution. Third, redesign organizations to perform as
    integral parts of the joint force, making them more effective across
    the range of military operations and enhancing their ability to
    contribute to joint, interagency, and multinational efforts. By
    implementing the Army Modular Force, the Army is better prepared to
    wage full-spectrum operations in a persistent conflict against an
    adapting enemy.
        The fiscal year 2009 budget includes projects to ensure that our
    facilities continue to meet the demands of force structure, weapons
    systems, and doctrinal requirements.
        New facility requirements for transforming units are being
    provided, where feasible, through the use of existing assets. Where
    existing assets are not available, the Army is programming high-
    priority projects to support soldiers where they live and work. The
    Army is requesting $321 million for fiscal year 2009 through the
    Military Construction, Army program to provide permanent facilities to
    support the conversion of existing BCTs to new, modular BCTs. In
    addition, all new Grow the Army BCTs will be modular.
    Grow the Army
        The President's Grow the Army initiative, announced last year, will
    increase the Army's end strength by 74,000 soldiers, bringing the
    inventory to 48 active duty BCTs. Given current operational
    requirements, the decision was made to accelerate Grow the Army. One
    BCT, previously budgeted to be cut from the force (the 43rd BCT), was
    retained at Fort Carson, and five new BCTs will be stationed at Fort
    Bliss, Fort Stewart, and Fort Carson. Additional stationing decisions
    for combat service and combat service support units have also been
    provided to Congress.
        At the same time these announcements were made, the Army notified
    Congress of the decision to temporarily keep two BCTs in Europe for up
    to 2 years longer than originally planned. In fiscal years 2012 and
    2013, these BCTs will be restationed at Fort Bliss and White Sands
    Missile Range.
        Part of this year's request Military Construction, $4.195 billion,
    supports the Grow the Army initiative. Grow the Army projects include
    essential facilities required to support the increase in end strength
    such as brigade complexes and associated combat support, combat service
    support, training, and quality of life facilities worldwide. Funding is
    requested for planning and design and military construction projects in
    the active Army, Army National Guard, Army Reserve, and Army Family
    Housing.
                                 the way ahead
        To improve the Army's facilities posture, we have undertaken
    specific initiatives or budget strategies to focus our resources on the
    most important areas--Range and Training Lands, Barracks, Family
    Housing, and Workplaces.
        Range and Training Lands
        Ranges and training lands enable our Army to train and develop its
    full capabilities to ensure our soldiers are fully prepared for the
    challenges they will face. Our Army Range and Training Land Strategy
    supports Army transformation and the Army's Sustainable Range Program.
    The Strategy identifies priorities for installations requiring
    resources to modernize ranges, mitigate encroachment, and acquire
    training land.
        Barracks
        Providing safe, quality housing is a crucial commitment the Army
    has made to its soldiers. We owe single soldiers the same quality of
    housing that is provided to married soldiers. Modern barracks are shown
    to significantly increase morale, which positively impacts readiness
    and quality of life. The importance of providing quality housing for
    single soldiers is paramount to success on the battlefield. The Army is
    in the 16th year of its campaign to modernize barracks to provide
    147,700 single enlisted permanent party soldiers with quality living
    environments. Because of Grow the Army, the requirements have
    increased, and for fiscal year 2009, a total of $1,003.6 million will
    be invested in new barracks complexes that will meet the Department of
    Defense's (DOD) ``1+1'' or equivalent standard. These units provide
    two-soldier suites, increased personal privacy, larger rooms with walk-
    in closets, new furnishings, adequate parking, landscaping, and unit
    administrative offices separated from the barracks. We are on track to
    fully fund this program by 2013.
        Family Housing
        This year's budget continues our significant investment in our
    soldiers and their families by supporting our goal to have contracts
    and funding in place to eliminate remaining inadequate housing at
    enduring overseas installations by the end of fiscal year 2009. The
    U.S. inadequate inventory was funded for elimination by the end of
    fiscal year 2007 through privatization, conventional military
    construction, demolition, divestiture of uneconomical or excess units
    and reliance on off-post housing. For families living off post, the
    budget for military personnel maintains the basic allowance for housing
    that eliminates out of pocket expenses.
        Workplaces
        Building on the successes of our Family housing and barracks
    programs, we are moving to improve the overall condition of Army
    infrastructure by focusing on revitalization of our workplaces.
    Projects in this year's budget will address requirements for
    operational, administration, instructional, and maintenance facilities.
    These projects support and improve our installations and facilities to
    ensure the Army is deployable, trained, and ready to respond to meet
    its national security mission.
    Leveraging Resources
        Complementary to these budget strategies, the Army also seeks to
    leverage scarce resources and reduce our requirements for facilities
    and real property assets. Privatization initiatives such as RCI and
    utilities privatization represent high-payoff programs which have
    substantially reduced our dependence on investment funding. We also
    benefit from agreements with Japan, Korea, and Germany where the Army
    receives host nation-funded construction.
        In addition, Congress has provided valuable authorities to utilize
    the value of our non-excess inventory under the Enhanced Use Leasing
    program and to exchange facilities in high-cost areas for new
    facilities in other locations under the Real Property Exchange program.
    In both cases, we can capitalize on the value of our existing assets to
    reduce unfinanced facilities requirements.
        The Army is transforming military construction by placing greater
    emphasis on installation master planning and standardization of
    facilities as well as planning, programming, designing, acquisition,
    and construction processes. Looking toward the immediate future, we are
    aggressively reviewing our construction standards and processes to
    align with industry innovations and best practices. In doing so, we
    expect to deliver quality facilities at lower costs while meeting our
    requirements more expeditiously. By encouraging the use of manufactured
    building solutions and other cost-effective, efficient processes, the
    Army will encourage nontraditional builders to compete. Small business
    opportunities and set-aside programs are being addressed. Work of a
    repetitive nature coupled with a continuous building program will
    provide the building blocks for gaining efficiencies in time and cost.
    Action Plans for Soldiers, Families, and Medical Programs
        In a persistent conflict, sustaining the All-Volunteer Force is a
    fundamental strategic objective for the Army. The most important
    element in sustaining our Army is the quality of life we provide to our
    soldiers and their families. At the core of the Army's strategy lie two
    programs the Army leadership has developed: the Soldier and Family
    Action Plan and an Army Medical Action Plan. Both initiatives will
    integrate programs spanning a range of Army budget accounts. At the
    core of the Soldier and Family Action Plan is the Army Family Covenant
    that conveys our commitment to support all members of the Army Family
    in five general areas: standardizing and funding existing family
    programs and services; increasing accessibility and quality of health
    care; improving soldier and family housing; ensuring excellence in our
    schools, youth services, and child care facilities; and expanding
    education and employment opportunities for family members.
        The budget includes $70.6 million for child development centers and
    youth centers. We will also be using the extended authority granted in
    the National Defense Authorization Act for Fiscal Year 2008 to fund
    child development centers using Operation and Maintenance, Army funds.
    Once Congress completes its deliberations for the fiscal year 2008
    supplemental, Army Medical Action Plan projects will proceed as
    planned.

                                                  MILITARY CONSTRUCTION
    ----------------------------------------------------------------------------------------------------------------
                                                                               Authorization of
             Military Construction Appropriation             Authorization      Appropriations       Appropriation
                                                                Request             Request             Request
    ----------------------------------------------------------------------------------------------------------------
    Military Construction Army (MCA)....................      $4,178,513,000      $4,615,920,000      $4,615,920,000
    Military Construction Army National Guard (MCNG)....                 N/A         539,296,000         539,296,000
    Military Construction Army Reserve (MCAR)...........                 N/A         281,687,000         281,687,000
    Army Family Housing Construction (AFHC).............         678,580,000         678,580,000         678,580.000
    Army Family Housinq Operations (AFHO)...............         716,110,000         716,110,000         716,110,000
    BRAC 95 (BCA).......................................          72,855,000          72,855,000          72,855,000
    BRAC 2005 (BCA).....................................       4,486,178,000       4,486,178,000       4,486,178,000
                                                         -----------------------------------------------------------
      TOTAL.............................................     $10,132,236,000     $11,390,626,000     $11,390,626,000
    ----------------------------------------------------------------------------------------------------------------

        The Army's fiscal year 2009 budget request includes $11.4 billion
    for Military Construction appropriations and associated new
    authorizations, Army Family Housing, and BRAC.
                          military construction, army
        The Active Army fiscal year 2009 Military Construction budget
    request is $4,178,513,000 for authorization and $4,615,920,000 for
    authorization of appropriations and appropriation, including
    $3,483,664,000 (including planning and design) for Grow the Army.
        Sustain (Barracks and Quality of Life Projects)
        The well-being of our soldiers, civilians, and families is
    inextricably linked to the Army's readiness. We are requesting $1.3
    billion of our Military Construction, Army budget for projects to
    improve soldier quality of life in significant ways.
        The Army continues to modernize and construct barracks to provide
    soldiers quality living environments. We will provide new permanent
    party barracks for 6,362 single soldiers. For soldiers in a training
    environment, this year's budget request includes 6,864 training
    barracks. With the approval of $503.6 million for these training
    barracks, 38 percent of our requirement will be funded at the standard.
        We are requesting the second increment of funding, $81.6 million,
    for the previously approved, incrementally funded, SOUTHCOM
    Headquarters at Miami-Doral, FL. In addition, we are requesting the
    third increment of funding, $102 million, for the Brigade Complex at
    Fort Lewis, WA. The budget also includes $15 million for a Brigade
    Complex-Operations support facility and $15 million for a Brigade
    Complex-Barracks/Community, both projects at Dal Molin, Italy.
        Overseas Construction
        Included in this budget request is $275 million in support of high-
    priority overseas projects. In Germany, a Command and Battle Center
    located at Wiesbaden and an Aircraft/Vehicle Maintenance Complex at
    Katterbach are included. In Korea, we are requesting funds to further
    our relocation of forces on the peninsula. This action is consistent
    with the Land Partnership Plan agreements entered into by the U.S. and
    Republic of Korea Ministry of Defense. A vehicle maintenance shop is
    included. Our request for funds in Italy funds continuing construction
    for a BCT, as described above. The bulk fuel storage and supply
    projects (phase 5 and 8), and the joint special operations forces
    headquarters facility in Afghanistan and the Sensitive Compartmented
    Information Facility and the Battle Command Training Center, both in
    Japan, are the remaining overseas projects.
        Mission and Training Projects
        Projects in our fiscal year 2009 budget will provide maintenance,
    infrastructure, utilities, operational and administration facilities,
    and training ranges. These projects support and improve our
    installations and facilities to ensure the Army is deployable, trained,
    and ready to respond to meet our national security mission.
        We will also construct a military operations urban terrain, tracked
    vehicle drivers course, automated anti-armor range, stationary tank
    range, modified record firing ranges, and digital multipurpose training
    ranges. These facilities will provide our soldiers realistic, state-of-
    the-art, live-fire training. We are requesting a total of $242 million
    for these high-priority projects. We are also requesting funding of
    $9.1 million for range access roads.
        Army Modular Force Projects
        Our budget continues support of the transformation of the Army to a
    modern, strategically responsive force and contains $321 million for
    four brigade complexes and other facilities. The new barracks will
    house 988 soldiers in support of the Army Modular Force.
        Other Support Programs
        The fiscal year 2009 budget includes $177 million for planning and
    design of future projects, including $69 million to Grow the Army. As
    executive agent, we also provide oversight of design and construction
    for projects funded by host nations. The fiscal year 2009 budget
    requests $24 million for oversight of host nation funded construction
    for all Services in Japan, Korea, and Europe.
        The budget request also contains $23 million for unspecified minor
    construction to address unforeseen critical needs or emergent mission
    requirements that cannot wait for the normal programming cycle.
                   military construction, army national guard
        The Army National Guard's fiscal year 2009 Military Construction
    request for $539,296,000 (for appropriation and authorization of
    appropriations) is focused on Mission and Training, Transformation,
    Growth of the Force/Army, and other support and unspecified programs.
        Mission and Training
        In fiscal year 2009, the Army National Guard has requested $192.5
    million for 12 projects to support preparing our forces. These funds
    will provide the facilities our soldiers require as they train,
    mobilize, and deploy. Included are two logistics facilities, two
    training institutes, four range projects and four Readiness/Armed
    Forces Reserve centers.
        Transformation
        This year, the Army National Guard is requesting $199 million for
    10 projects in support of our new missions. There is one Aviation
    Transformation project to provide facilities for modernized aircraft
    and change unit structure. Also in support of the Modular Force
    initiative we are asking for four readiness centers, three range
    projects, one aviation facility, and one headquarters building.
        Growth of the Force/Army
        Improving the Army National Guard's ability to deal with the
    continued high levels of Force Deployment, under the category of growth
    of the Force/Army, we are submitting a request of $87.2 million for
    seven readiness centers, and included within the total Planning and
    Design request of $4.5 million for Growth.
        Other Support Programs
        The fiscal year 2009 Army National Guard budget also contains $48.8
    million for planning and design of future projects and $11.8 million
    for unspecified minor military construction to address unforeseen
    critical needs or emergent mission requirements that cannot wait for
    the normal programming cycle.
                      military construction, army reserve
        The Army Reserve fiscal year 2009 Military Construction request for
    $281,687,000 (for appropriation and authorization of appropriations) is
    for Preparation, Transformation, other support, and unspecified
    programs.
        Preparation
        In fiscal year 2009, the Army Reserve will invest $72.2 million to
    build four Army Reserve Centers and modernize one Army Reserve center,
    in four States. The five Reserve centers will support over 1,200 Army
    Reserve soldiers and civilian personnel. In addition, the Army Reserve
    will invest $13.7 million to construct four training ranges, which will
    be available for joint use by all Army components and military
    Services.
        Transformation
        The Army Reserve plan to transform from a Strategic Reserve to an
    operation force includes converting 16,000 soldiers positions from
    generating force structure to operational forces. The Army Reserve will
    construct 10 Army Reserve centers in 10 States, with an investment of
    $178,731,000. The transformation projects will provide operational
    facilities for over 3,600 Combat Service and Combat Service Support
    units in support of Army BCTs.
        Other Unspecified Programs
        The fiscal year 2009 Army Reserve budget request includes $13.9
    million for planning and design for future year projects and $3.1
    million for unspecified minor military construction to address
    unforeseen critical needs or emergent mission requirements that cannot
    wait for the normal programming cycle.
                    army family housing construction (afhc)
        The Army's fiscal year 2009 family housing construction request is
    $678.6 million for authorization, authorization of appropriation, and
    appropriation, including $333.8 million for Grow the Army. It finalizes
    the successful Whole Neighborhood Revitalization initiative approved by
    Congress in fiscal year 1992 and our RCI program.
        The fiscal year 2009 new construction program provides a Whole
    Neighborhood Revitalization by replacement projects at Wiesbaden,
    Germany, in support of 326 Families for $133 million using traditional
    military construction. Also included for new construction is $125
    million for family housing at Camp Humphreys in Korea to support
    relocation of forces south of Seoul.
        The Construction Improvements Program is an integral part of our
    housing revitalization and privatization programs. In fiscal year 2009,
    we are requesting $333.8 million in support of Grow the Army, as well
    as $66.2 million for direct equity investment in support of the
    privatization of 3,936 homes at Forts Wainwright and Greely, AK, as
    well as Fort Carson, CO; Fort Stewart, GA; and Fort Bliss, TX, in
    support of Army Growth. The Improvements program also provides $20
    million for traditional revitalization of 97 homes in Wiesbaden,
    Germany.
        In fiscal year 2009, we are also requesting $579,000 for planning
    and design for final design on fiscal year 2009 and 2010 family housing
    construction projects as well as for housing studies and updating
    standards and criteria.
        Privatization
        RCI, the Army's housing privatization program, is providing quality
    housing that soldiers and their families can proudly call home. The
    Army is leveraging appropriated funds and existing housing by engaging
    in 50-year partnerships with nationally recognized private real estate
    development, property management, and home builder firms to construct,
    renovate, repair, maintain, and operate housing communities.
        The RCI program will include 45 locations, with a projected end
    state of over 89,000 homes--98 percent of the on-post family housing
    inventory in the U.S. At the end of fiscal year 2008, the Army will
    have privatized 38 locations, with an end state of over 83,000 homes.
    Initial construction and renovation at these 38 installations is
    estimated at $11.2 billion over a 3 to 10 year development period, of
    which the Army will contribute about $1.287 billion. Although most
    projects are in the early phases of their initial development, since
    2001 our partners have constructed 12,418 new homes, and renovated
    10,662 homes. In addition to the 2,225 additional homes that will be
    constructed to support Grow the Army, the fiscal year 2009 budget
    request provides funding for additional homes at Forts Wainwright and
    Greely, AK. In total, the Army will expand the portfolio of privatized
    Family housing, transferring six additional installations during fiscal
    year 2009.
                     army family housing operations (afho)
        The Army's fiscal year 2009 Family Housing Operations request is
    $716 million (for appropriation and authorization of appropriations).
    This account provides for annual operations, municipal-type services,
    furnishings, maintenance and repair, utilities, leased Family housing,
    demolition of surplus or uneconomical housing, and funds supporting
    management of the Military Housing Privatization Initiative.
        Operations ($126 million)
        The operations account includes four subaccounts: management,
    services, furnishings, and a small miscellaneous account. All
    operations sub-accounts are considered ``must pay accounts'' based on
    actual bills that must be paid to manage and operate family housing.
        Utilities ($113 million)
        The utilities account includes the costs of delivering heat, air
    conditioning, electricity, water, and wastewater support for Family
    housing units. The overall size of the utilities account is decreasing
    with the reduction in supported inventory.
        Maintenance and Repair ($252 million)
        The maintenance and repair account supports annual recurring
    projects to maintain and revitalize family housing real property
    assets. Since most family housing operational expenses are fixed,
    maintenance and repair is the account most affected by budget changes.
    Funding reductions result in slippage of maintenance projects that
    adversely impact soldier and family quality of life.
        Leasing ($193 million)
        The leasing program provides another way of adequately housing our
    military families. The fiscal year 2009 budget includes funding for
    9,119 housing units, including 1,080 existing section 2835 (``build-to-
    lease''--formerly known as 801 leases) project requirements, 2,017
    temporary domestic leases in the United States, and 6,022 foreign
    units.
        Privatization ($32 million)
        The privatization account provides operating funds for
    implementation and oversight of privatized military Family housing in
    the RCI program. RCI costs include selection of private sector
    partners, environmental studies, real estate surveys, and consultants.
    These funds support the preparation and execution of partnership
    agreements and development plans, and oversight to monitor compliance
    and performance of the privatized housing portfolio.
                      base realignment and closure (brac)
        The Army is requesting $4,486,178,000 for BRAC 2005 which is
    critical to the success of the Army's new initiatives, and $72,855,000
    for legacy BRAC to sustain vital, ongoing programs.
        BRAC 2005 is carefully integrated with the Defense and Army
    programs of GDPR, Army Modular Force, and Grow the Army. Collectively,
    these initiatives allow the Army to focus its resources on
    installations that provide the best military value, supporting improved
    responsiveness and readiness of units. The elimination of Cold War era
    infrastructure and the implementation of modern technology to
    consolidate activities frees up financial and human resources to allow
    the Army to better focus on its core warfighting mission. These
    initiatives are a massive undertaking, requiring the synchronization of
    base closures, realignments, military construction and renovation, unit
    activations and deactivations, and the flow of forces to and from
    current global commitments. If done efficiently, the end results will
    yield tremendous savings over time, while positioning forces, logistics
    activities, and power projection platforms to efficiently and
    effectively respond to the needs of the Nation.
        As an essential component of Army transformation, BRAC 2005
    decisions optimize infrastructure to support the Army's current and
    future force requirements. Under BRAC 2005, the Army will close 13
    Active component installations, 387 Reserve component installations and
    8 leased facilities. BRAC 2005 realigns 53 installations and/or
    functions and establishes training centers of excellence, joint bases,
    a Human Resources Center of Excellence, and Joint Technical and
    Research facilities. To accommodate the units relocating from the
    closing Reserve component installations, BRAC 2005 creates 125 multi-
    component Armed Forces Reserve centers and realigns the Army Reserve
    command and control structure. By implementing BRAC 2005 decisions, the
    Active Army will maintain sufficient surge capabilities to expand to 48
    maneuver brigades and handle increased production, training, and
    operational demands now and in the future. BRAC 2005 better postures
    the Army for an increase in end strength by facilitating the Army's
    transformation to a modular force and revitalizing and modernizing the
    institutional Army through consolidation of schools and centers.
        In total, over 150,000 soldiers and civilian employees will
    relocate as BRAC is implemented over the next 3-plus years. The over
    1,300 discrete actions required for the Army to successfully implement
    BRAC 2005 are far more extensive than all four previous BRAC rounds
    combined and are expected to create significant recurring annual
    savings. BRAC 2005 will enable the Army to become a more capable
    expeditionary force as a member of the Joint team while enhancing the
    well-being of our soldiers, civilians, and family members living,
    working, and training on our installations.
    BRAC 2005 Implementation Strategy
        The Army has an aggressive, carefully synchronized, fully
    resourced, BRAC fiscal years 2006-2011 implementation plan, designed to
    meet the September 2011 deadline, while supporting our national
    security priorities. National Environmental Policy Act (NEPA)
    requirements necessary to support our implementation plan were
    initiated in fiscal year 2006 to enable the early award of essential
    construction projects. Our BRAC construction plan is fully coordinated
    and carefully synchronized to support our overall strategy for re-
    stationing, realigning, and closing installations while continuing to
    fully support ongoing missions and transformation initiatives. This
    construction plan identifies requirements, defines scope, and considers
    existing installation capacity and infrastructure needs. It is an
    extremely complex plan that manages numerous construction projects, re-
    stationing actions, BRAC moves, and deployment timelines to allow the
    Army to implement the BRAC statute while supporting critical missions
    worldwide.
        Seventy-seven percent of all required construction projects are
    planned for award by the end of fiscal year 2009, and 100 percent by
    fiscal year 2010. This will enable the major movement of units and
    personnel in fiscal year 2010 and 2011, with expected completion by the
    mandated BRAC 2005 deadline.
        In fiscal year 2006 the Army awarded 11 BRAC military construction
    projects to support re-stationing and realignments, including: 3
    projects to support GDPR; 2 incremental projects for BCTs, and 5 Armed
    Forces Reserve Centers, totaling over $789.1 million. In fiscal year
    2007, the Army awarded 61 projects: 20 projects to support GDPR; 20
    Reserve component projects in 12 States; and 21 other Active component
    projects totaling over $3.3 billion, including planning and design for
    fiscal year 2009 and 2010 projects. This will lay the foundation for
    follow-on projects, and in earnest, start the implementation of our
    synchronized construction program.
        As signed into law, the Consolidated Appropriations Act for Fiscal
    Year 2008 (Public Law 110-161) contained a very significant reduction
    in BRAC funding of $938.7 million (of which $560 million is reduced
    from the Army's BRAC budget). I cannot overstate the difficulties that
    repeated cuts or delays in BRAC funding have, and will continue to pose
    to the Army as we implement BRAC construction projects. It directly
    threatens to derail our carefully integrated implementation plan. If
    the Army program is not fully funded, we will be significantly
    challenged to execute BRAC as intended. Construction of required
    facilities will be delayed and cause increased cost, uncertainty for
    mission commanders, and the resulting impact will cascade through our
    re-stationing, transformation, and growth plans for years to come. The
    net impact from shortfalls in BRAC funding will likely be felt by funds
    from the military construction programs as they are shifted to plug the
    gaps in BRAC.
    BRAC 2005 Fiscal Year 2009 Budget
        The Army's fiscal year 2009 budget request of $4,486,178,000 will
    continue to fund both BRAC and GDPR actions necessary to comply with
    BRAC 2005 Law. The Army plans to award and begin construction of 83
    military construction projects, plus planning and design for fiscal
    year 2009 and 2010 projects. This is estimated to cost $3,792 million
    and includes: 5 additional GDPR projects, 37 Army National Guard and
    Army Reserve projects, and an additional 41 Active component projects.
        A significant portion of the Army's BRAC request supports the
    transformation and re-stationing of the operational force. BRAC
    military construction projects support major realignments of forces
    returning to the United States from Europe, as well as several
    stateside relocations. The fiscal year 2009 budget request also funds
    projects supporting Reserve component transformation in 22 States and
    Puerto Rico.
        The BRAC budget request will also fund furnishings for BRAC
    projects awarded in fiscal year 2006 and 2007 as the buildings reach
    completion and occupancy. The request also funds movement of personnel,
    ammunition, and equipment associated with BRAC Commission
    Recommendations.
        The Army will continue to procure investment type equipment in
    fiscal year 2009 in support of our BRAC military construction program
    as part of the ``other procurement'' budget line. This equipment
    exceeds the investment and expense unit cost threshold of $250,000 each
    and includes information technology infrastructure and equipment for
    the previously awarded BRAC projects, which will be impacted if fiscal
    year 2008 funding is not fully restored.
        In fiscal year 2009, the Army will continue environmental closure
    and cleanup actions at BRAC properties. These activities will continue
    efforts previously ongoing under the Army Installation restoration
    program and will ultimately support future property transfer actions.
    The budget request for environmental programs is $54.8 million, which
    includes Munitions and Explosives of Concern and Hazardous and Toxic
    Waste restoration activities.
    Prior BRAC
        Since Congress established the Defense Base Closure and Realignment
    Commission in 1990, the DOD has successfully executed four rounds of
    base closures to reduce and align the military's infrastructure to the
    current security environment and force structure. As a result, the Army
    estimates approximately $12.6 billion in savings through 2008--nearly
    $1 billion in recurring, annual savings from prior BRAC rounds.
        The Army is requesting $72,855,000 million in fiscal year 2009 for
    prior BRAC rounds ($4.9 million to fund caretaking operations of
    remaining properties and $68 million for environmental restoration) to
    address environmental restoration efforts at 147 sites at 14 prior BRAC
    installations. To date, the Army has spent $2.8 billion on the BRAC
    environmental program for installations impacted by the previous four
    BRAC rounds. We disposed of 235,480 acres (93.5 percent of the total
    acreage disposal requirement of 259,674 acres), with 24,194 acres
    remaining.
    Homeowners Assistance Program
        The Army is the DOD Executive Agent for the Homeowners Assistance
    Program (HAP). This program provides assistance to eligible military
    and civilian employee homeowners by providing some financial relief
    when they are not able to sell their homes under reasonable terms and
    conditions as a result of DOD announced closures, realignments, or
    reduction in operations when this action adversely affects the real
    estate market. For fiscal year 2009, HAP will execute the approved
    program for Naval Air Station (NAS) Brunswick, ME, and complete a
    market impact study expected to result in an approved program at Naval
    Station (NS) Ingleside, TX. NAS Brunswick was approved 2 years earlier
    than anticipated due to the more rapid departure of personnel and a
    marked decline in areas markets.
        The numerous government employee and servicemember homeowners who
    are required to move with their transferred organizations, or to new
    jobs beyond the commuting distance from their present homes, will
    benefit from this program during periods of fluctuating home values. We
    are requesting an appropriation of $4.46 million for the Homeowners
    Assistance Program.
                           operation and maintenance
        The Army's fiscal year 2009 Operation and Maintenance budget
    includes $2.85 billion in funding for Sustainment, Restoration, and
    Modernization (S/RM) and $8.61 billion in funding for Base Operations
    Support (BOS). The S/RM and BOS accounts are inextricably linked with
    our military construction programs to successfully support our
    installations. The Army has centralized the management of its
    installations assets under the Installation Management Command to best
    utilize this funding.
        Sustainment, Restoration, and Modernization (S/RM)
        S/RM provides funding for the Active and Reserve components to
    prevent deterioration and obsolescence and restore the readiness of
    facilities on our installations.
        Sustainment is the primary account in installation base support
    funding responsible for maintaining the infrastructure to achieve a
    successful readiness posture for the Army's fighting force. It is the
    first step in our long-term facilities strategy. Installation
    facilities are the mobilization and deployment platforms of America's
    Army and must be properly maintained to be ready to support current
    missions and future deployments.
        The second step in our long-term facilities strategy is
    recapitalization by restoring and modernizing our existing facility
    assets. Restoration includes repair and restoration of facilities
    damaged by inadequate sustainment, excessive age, natural disaster,
    fire, accident, or other causes. Modernization includes alteration or
    modernization of facilities solely to implement new or higher
    standards, including regulatory changes to accommodate new functions,
    or to replace building components that typically last more than 50
    years, such as foundations and structural members.
        Base Operations Support
        This account funds programs to operate the bases, installations,
    camps, posts, and stations for the Army worldwide. The program includes
    municipal services, government civilian employee salaries, family
    programs, environmental programs, force protection, audio/visual, base
    communication services, and installation support contracts. Army
    Community Service and Reserve component family programs include a
    network of integrated support services that directly impact soldier
    readiness, retention, and spouse adaptability to military life during
    peacetime and through all phases of mobilization, deployment, and
    demobilization.
                                    summary
        Mr. Chairman, our fiscal year 2009 Military Construction and BRAC
    budget requests are balanced programs that support our soldiers and
    their families, the global war on terrorism, Army transformation,
    readiness, and DOD installation strategy goals. We are proud to present
    this budget for your consideration because of what this budget will
    provide for our Army:
    Military Construction:
             2,225 New homes for Grow the Army
             1,117 Additional homes privatized (230 require
            government contribution, 1,481 do not require government
            contribution)
             423 homes replaced or renovated
             30,845 government-owned and leased homes operated and
            sustained at the end of fiscal year 2009
             Portfolio management of 87,691 privatized homes
             13,962 soldiers get new barracks
             30 new training ranges/facilities
             $11 billion invested in soldier/family readiness
             $4.2 billion to Grow the Army
             Over 3,300 soldiers training in 16 new or improved
            Readiness Centers and Armed Forces Reserve Centers
             14 New Army Reserve Centers
             One Modernized Army Reserve Center
             4,954 soldiers get new Reserve Centers
    Base Realignment and Closure:
             Statutory compliance by 2011 for BRAC
             83 Military Construction projects
             Planning and Design for fiscal year 2009-2010 projects
             Remaining NEPA for BRAC 2005 actions
             Continued Environmental Restoration of 24,194 acres
    Base Operations Support:
             Goal is to meet essential needs for all BOS programs:
            Base Operations, Family, Environmental Quality, Force
            Protection, Base Communications, and Audio/Visual.
    Sustainment/Restoration and Modernization:
             Funds Sustainment at 90 percent of the OSD Facility
            Sustainment model requirement.

        Our long-term strategies for installations will be accomplished
    through sustained and balanced funding, and with your support, we will
    continue to improve soldier and family quality of life, while remaining
    focused on Army and Defense transformation goals.
        In closing, we would like to thank you again for the opportunity to
    appear before you today and for your continued support for America's
    Army.

        Senator Akaka. Thank you very much, Secretary Eastin.
        Secretary Penn?

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

        Mr. Penn. Chairman Akaka, Senator Thune, I'm pleased to
    come before you today to discuss the Department of Navy's
    installation and environmental efforts.
        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, 9.6 percent of
    the Department's Total Obligation Authority. Most apparent is
    our increased infrastructure investment, both in Facilities
    Sustainment, Restoration, and Modernization (SRM) and the
    construction accounts.
        With regard to SRM, the Navy acknowledges that years of
    underfunding have degraded the shore infrastructure to below
    industry standards, and that a substantial shot in the arm of
    41 percent this year is necessary to reverse course and
    maintain these systems so that we can maximize their full
    service life. The increase in construction, 45 percent for
    military construction (MILCON), 13 percent for family housing,
    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 the additional end strength.
        Our MILCON program also includes a number of projects to
    enhance the quality of life of our sailors and marines,
    including four fitness centers, six child development centers,
    and four enlisted dining facilities. Our fiscal year 2009
    budget also includes the second increment of our two MILCON
    projects that were proposed last year for full funding by the
    administration but selected by Congress for incremental
    funding. While we do not consider any of these 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 Congress to
    reestablish mutually acceptable and objective criteria in time
    for the next budget cycle.
        Fiscal year 2009 marks the first year since 2005 that we've
    asked for appropriated funds for prior BRAC. We've been able to
    finance all or part of our 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 $179 million for
    prior BRAC. We will need appropriated funds in future years to
    complete our clean-up work despite the prospects of some
    limited land sale revenue from Roosevelt Roads in Puerto Rico
    and some other small parcels. We've disposed of 91 percent of
    the prior BRAC properties so there is little left to sell. The
    real estate market is not as lucrative as it was a few 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. We've been able to hold down
    our cost increases to a modest 2 percent for the implementation
    period of fiscal year 2006 through 2011.
        However, our ability to meet the statutory deadline of
    September 15, 2011, hinges on the prompt 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, VA. We're almost finished evaluating our third pilot
    project in the Jacksonville area.
        Surveys of our residents, both in family and unaccompanied
    housing, show that satisfaction has increased significantly
    since privatization began. As a Department we emphasize and
    participate in communication at all levels of management from
    the installation level where focus groups bring together their
    residents, command representatives, and property managers to
    the annual meetings with partner CEOs, the Department remains
    engaged throughout all levels of management. The objective is
    to identify issues early and take prompt corrective action when
    required.
        In fiscal year 2009 the Department is investing over $900
    million in its various environmental programs. We were
    recognized last year for our efforts in several areas, winning
    six Ozone Protection Awards from the Environmental Protection
    Agency (EPA) and a White House Closing the Circle Award for
    progress in alternate fuels and fuel conservation.
        I am troubled though by the press coverage lately about how
    the Navy's training and sonar testing affects marine mammals.
    One of the most challenging threats that our naval forces face
    is a modern, quiet diesel submarine and the tactical use of MFA
    sonar that's the best means of detecting these potentially
    hostile vessels. The inability to train effectively with active
    sonar literally puts the lives of thousands of Americans at
    risk.
        The Navy is operating under an exemption to the Marine
    Mammal Protection Act (MMPA) through January 2009 to give the
    Department enough time to complete the required EIS and obtain
    letters of authorization for sonar use on our maritime ranges
    and operating areas. What gets less air time is that the Navy
    will invest $18 million or more in fiscal year 2008 for marine
    mammal research, more than any other single agency. This
    research aims to develop effective mitigation and monitoring
    methods to reduce any potential effects of sonar and other
    human induced sound on marine mammals.
        We have made significant progress in the past year in
    planning for the relocation of the marines from Okinawa to
    Guam. We established a joint program office, both the
    headquarters and forward elements. The EIS for Guam is underway
    with a target Record of Decision in January 2010 in time for
    the construction to begin in fiscal year 2010.
        We're 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 Interior, OMB, and other Federal agencies to
    ensure the island can meet the challenges of such a
    concentrated influx of people and workload.
        Finally, it has truly 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.
        [The prepared statement of Mr. Penn follows:]
                      Prepared Statement by Hon. B.J. Penn
        Chairman Akaka, Senator Thune, and members of the subcommittee, 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.

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        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.

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        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 U.S.
        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\ Includes 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 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 third
            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
            5th 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 Bachelor
            Enlisted Quarters (BEQs), five child development centers, and
            three 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 global war
    on terror 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 BEQs 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
            Twentynine 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 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 global war on terrorism 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 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 Congress and the Department of Defense (DOD).
        The DOD and OMB commit to work with 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 Congress in the National Defense Authorization Act for Fiscal Year
    2008 to rescind the authority to construct the OLF at Site C in
    Washington County, NC. 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).

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        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.

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    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, GA. 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, NJ, for NAEWC
    Lakehurst; and with the State of Florida and Santa Rosa County, FL, 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, CA.
        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:

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             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.

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        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.
    Unaccompanied Housing
        Our budget request includes $1.3 billion for 37 unaccompanied
    housing projects at 10 Navy and Marine Corps locations. The budget
    continues the emphasis on improving living conditions for our
    unaccompanied sailors and marines. There are three challenges:

              1. 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 unprogrammed. 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.
              2. 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 8 Marine Corps
            installations. The Marine Corps has programmed the necessary
            funding from fiscal year 2008 through fiscal year 2011 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.
              3. 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

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        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, FL, 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

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        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 1 February 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 2014. The cost-to-complete the
    installation restoration program continues a downward trend with
    efficiencies of $600 million over the past 10 years. Use of new
    technologies, land use controls, remedy optimizations, contract
    efficiencies, and a dedicated professional staff 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 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 by the end of
    fiscal year 2009 operational ranges in the United States by the end of
    fiscal year 2008. To date, neither the Navy nor the Marine Corps has
    had 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); establish criteria and thresholds to measure the
    effects of naval activities; develop effective mitigation and
    monitoring methods to lessen any potential effects; and continue to
    refine characteristics of the sound field.
    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
    was 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 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) 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, remains at risk due to legal challenges
    based on other environmental laws, specifically NEPA, the Coastal Zone
    Management Act (CZMA), and the Endangered Species Act (ESA). Litigation
    surrounding those issues continues, with two courts recently enjoining
    MFA sonar use during two U.S. Pacific Fleet major exercise series. The
    Navy is reviewing its options with the Department of Justice.
                         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 $42 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 DOD actions on Guam, such
    as plans to increase intelligence, surveillance, and reconnaissance
    capabilities and transient forces at Andersen Air Force Base, an
    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 U.S. 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 U.S. 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.

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    Property Disposal
        Last year we conveyed 3,363 acres in 6 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, 7 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 twenty-eight 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 6 ``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 05 are
    substantially less than in previous rounds of BRAC. We have spent $128
    million in cleanup at BRAC 05 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 05
    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 12 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, MD. 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 BEQs, 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 unawarded
    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
    Congress to promptly restore full funding.
        If funding is not restored, we will delay two BRAC construction
    projects ($97 million) 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 unawarded and fiscal year 2008 MILCON and BRACON
    projects.

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        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 resupply, 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.

        Senator Akaka. Thank you for your statement, Secretary
    Penn.
        Secretary Anderson?

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

        Mr. Anderson. Mr. Chairman, Senator Thune, good afternoon
    and to the members of the committee, and to the staff, I want
    to thank you on behalf of all airmen for your unwavering
    support of the U.S. Air Force, our families, as the team goes
    about doing the important work of security for this nation and
    also delivering humanitarian aid across the world.
        This afternoon, I'm going to make some brief introductory
    comments focusing on five different issues: Air Force
    installations transformation; joint basing; Federal facilities
    agreements; housing privatization; and energy. But before I
    jump into those five topics I hope you'll indulge me for just a
    moment to tell a little story about some airmen in my part of
    the Air Force world and the work that they are doing in harm's
    way.
        I know you all know that the Air Force has been in
    continuous combat operations for 17 years, defending America's
    interest from above in air space and cyberspace, anywhere and
    anytime. Although there are many inspiring stories of airmen
    doing great things, I'd like to talk a little bit about 30
    individuals on the Village of Hope team. These 30 individuals
    are members of the 557th Expeditionary Red Horse Squadron,
    Balad Air Force Base. It's a mix of Active Duty and Reserve
    individuals.
        Their mission is to work southern Baghdad doing
    construction trade, acting as construction trade instructors
    teaching building skills to local residents. Those are local
    hands sourcing local materials and rebuilding homes and shops
    that have been destroyed by extremists. In the words of one
    airman on that team, he's been deployed five times, but he said
    this is the first time in his military life he's had the chance
    to change someone else's life. This is a team of great
    ambassadors for the United States.
        Let me jump, if I could, into our transformation efforts on
    the installation team. While the country and the Air Force is
    at war, we're also at the same time facing significant
    transformation, constantly searching for ways to improve
    efficiencies, improving the quality of the output of the
    products that we deliver to our airmen in times that our
    continuing budget pressures put strains across the board.
        We started with a concept, what we call, Corps of
    Discovery. We went out to find the best of the best in
    industry. Companies like GM, GE, IBM, and Bank of America to
    benchmark, to determine where we can improve our systems to be
    efficient and more effective.
        We then realigned and restructured both our civil
    engineering organization and our real property agency. We are
    also in the process of transforming our information systems to
    make them better to measure how we're doing. All with the
    endgame of implementing breakthrough asset management
    techniques to reduce the risks that are associated with risks
    that we are taking to recapitalize the Air Force.
        Along with that organizational transformation, and Mr.
    Chairman, you mentioned this earlier in the hearing, we are
    committed as you say, to make the joint basing a raging
    success, which is the second issue that I want to discuss this
    afternoon. The Air Force has a long and successful history
    working towards common goals in a joint environment without
    compromising Air Force principles nor the well being of our
    people. Joint basing initiatives are no exception.
        To guarantee success each joint base should be required to
    provide a suitable setting for all of its assigned personnel,
    importantly their families and all the other customers within
    the local communities that our bases support. To accomplish
    this we're working with the other Services and with the Office
    of the Secretary of Defense (OSD) to establish a common base
    quality of life standard. Our soldiers, sailors, airmen, and
    marines along with DOD civilians and their families will
    benefit from efficient, consistent installation support
    services. Such standards will ensure the Air Force and our
    sister Services continue to provide all personnel with a level
    of installation support services they deserve. As we work with
    OSD and our sister Services, we will ensure all joint basing
    initiatives contribute to DOD's ability to perform its mission.
        The third issue I'd like to talk about a little bit is on
    the environmental front, the Federal Facility Agreement (FFA).
    The Air Force has an aggressive goal. We want to get all of our
    Active Duty bases to a remedy in place status by 2012. That's 2
    years ahead of the DOD challenge.
        To achieve that all parties need to break out of
    bureaucratic and administrative procedures and focus on
    streamlining result-based initiatives. The Air Force is
    currently working proactively with the EPA to break the
    paradigm of the inefficiencies of what is called FFAs. If
    regulation is a sign of design failure, then success over the
    years and years of working in remediation should put
    streamlined oversight and return land to productive use quicker
    and with less burden on the American taxpayer.
        The fourth issue I'd like to comment on is housing
    privatization. That program, housing privatization, has allowed
    all Services to dramatically and quickly upgrade tens of
    thousands of housing units, leveraging private equity, debt and
    private initiatives in industry competencies to provide better
    housing units for the men and women in uniform and their
    families. There are many housing privatization success stories.
        I've toured a number of these facilities as I know my
    colleagues have, talked to the residents and by and large they
    were all very happy. Occasionally, in the private sector, in
    the real estate environment, deals do go sour. We're currently
    working through, Mr. Chairman, as you mentioned earlier today,
    one vendor who impacts four Air Force bases, and who also by
    the way, had done some deals for one Army and one Navy facility
    as well, where the deal has gone sour.
        Air Force senior leadership is very upset, as I know you
    all are. We're working within the legal and regulatory system
    and with the bond holders to resolve these issues as quickly as
    possible. We're also constantly refining our internal processes
    to incorporate lessons learned to get better as we move
    forward. Primarily we are concerned with the airmen, their
    families, their quality of life in getting the mission done,
    and will work through these bumps in the road as we move
    forward.
        Finally, I'd like to take a moment just to talk about
    energy. As many of you know, the Air Force has stepped out
    aggressively to heed the President's call to wean this country
    off its addiction to foreign oil. We're not working policy.
    We're not working subsidies. But we're working from our
    position as the Federal Government's largest single user of
    energy and taking that major customer position to drive the
    market.
        Our first program out of the box was to commit ourselves to
    find a synthetic fuel that we can certify our fleet on and we
    will certify that fleet by 2011. By 2016, 50 percent of our
    continental United States (CONUS) aviation fuel buy will be via
    a synfuel blend. But we didn't stop there.
        We've determined our position again as a major consumer, a
    billion dollars a year consumer of installation electricity to
    take a leading role there. You heard earlier about Nellis Air
    Force Base where the largest solar array in the Americas at
    14.2 megawatts is installed and running effectively and
    efficiently. That is renewable energy that doesn't cost the
    taxpayer more, as a matter of fact it is costing the taxpayer
    $1 million less to deliver energy to the airmen at Nellis Air
    Force Base.
        Five other major projects are in the works, three solar
    projects, one each in California, New Mexico, and Arizona,
    which we expect to be significantly larger than Nellis. Our
    coal to liquids manufacturing plant at Malmstrom Air Force Base
    and several of your colleagues have asked the Air Force to look
    at whether Air Force Bases are appropriate citing locations for
    small package nuclear. In each of these cases we're talking
    about private finance, private development, private operation,
    not using taxpayer money to make this happen all in the
    commercial world.
        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 is committed to
    be a leader in establishing a global consortium to tackle the
    reduction, capture, and reuse of greenhouse gas emissions. The
    Air Force is calling for consortium of organizations to work
    together for carbon dioxide reduction, capture, and reuse,
    something we are calling CO2RCR.
        In conclusion, the current and future readiness and the
    capability of our Air Force to deter our enemies and when
    necessary fight and win this Nation's wars depends heavily on
    the state of our power projection platforms. Those are our
    installations. As the Air Force continues to modernize and
    recapitalize we'll wisely invest our precious funding
    allocations allocated to MILCON, operations and maintenance,
    BRAC, the environment, military family housing, and energy.
    This will enable us to win today's fight, care for our people,
    and prepare for tomorrow's challenges. Thank you, Mr. Chairman.
        [The prepared statement of Mr. Anderson follows:]
                 Prepared Statement by Hon. William C. Anderson
        Mr. Chairman, Senator Thune, and distinguished members of the
    subcommittee, 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.'' Over 22,000 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 area of responsibility
    (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 (CENTCOM) joint
    EOD capability in theatre and in calendar year 2007 they responded to
    more than 8,400 calls to destroy IEDs, 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 18 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 Department of
    Defense's (DOD) 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 (OSD) 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 Military Construction (MILCON), housing MILCON, and
    environmental restoration at the AFCEE in San Antonio. Base Realignment
    and Closure (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 2020, the funding required for sustaining
    and maintaining our $243 billion physical plant. Let me emphasize that
    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 that 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 AFRPA 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 Air Force
    Base (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 (P&D) 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 Future Years Defense
    Program. 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 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
    continental 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
    Occupational Health and Safety Administration (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 5 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 DOD 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 3 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, DE.
        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, MS. 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, VT, 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, AL, 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 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, Florida 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, TX. 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 and
    McChord AFBs 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 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, communications, and
    space systems play an ever-increasing role in what we do. The Total
    Force Initiative Information Operations Squadron Facility at New
    Castle, DE, 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, GA, and one at Tinker AFB, OK, 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, FL, 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 BRAC 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, 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 U.S. 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 11 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 warfighters. 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 DOD 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 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 AFB 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 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 EUL
    Program is active with 21 projects undergoing feasibility studies
    across the Nation. A 10 U.S.C. 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.
                             environmental 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 commitment to protection of
    human health and the environment 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
    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 P&D,
    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 EULs
        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 1 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 AFB.
    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 OSD'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 10 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.

        Senator Akaka. Thank you very much, Secretary Anderson.
        Secretary Anderson and Secretary Penn, as I said in my
    opening statement I see the concept of joint basing as
    something that holds promise as a way to not only save taxpayer
    money, but also to deepen the jointness that our forces already
    demonstrate so well in combat. My question to both of you is,
    are each of your departments fully committed to making joint
    basing work?
        Mr. Penn. The Navy definitely is. Yes, sir, and I mentioned
    that last year as the same thing.
        We have conducted several, well, three major table top
    exercises where we've gone through and we've found great
    success. We've found the quality of life for the sailors, the
    airmen, the marines very positive. We also found that there was
    no impact or the mission readiness with this. So we support it
    100 percent.
        Senator Akaka. Secretary Anderson?
        Mr. Anderson. Mr. Chairman, I'd like to mention a couple of
    different things. First, B.J. did mention the table top
    exercises. Those exercises were done as a joint Air Force, Navy
    effort and as the Secretary said it was a tremendous success.
    Not only to find out what works, but also to ferret out some of
    the issues early that we could address before we jumped with
    both feet into joint basing.
        I'd like to also highlight Guam if I could for a moment,
    and the tremendous work that the base commanders, the Navy
    local installation commander, the Air Force wing commander have
    done to make sure that joint basing will work effectively in
    Guam, which is, of course, a forward operating location that
    has implications to significant additional implications to
    national defense. I want to take my hat off to both of the
    commanders for working on a local solution that will work for
    both the Navy and the Air Force, has been signed off by both
    Services and is moving forward very efficiently at the same
    time that those 8,000 marines are on their way to Guam. We're
    working a myriad of different issues. So teams are working
    together closely.
        As I mentioned in my opening comments, the Air Force wants
    joint basing to be a raging success. We think the efficiencies
    are there. I think we can get more efficiency then we have even
    identified at this point.
        But we do have to make sure the mission capability, the
    ability for commanders to command their people. The Air Force
    does train and deploy a little bit different than the other
    Services do. We need to make sure that that capability
    continues to be available.
        We have a slightly different view on how to execute. But in
    terms of executing on joint basing we are absolutely in lock
    step that this is the right thing to do. We just want to make
    sure that we investigate it. Make sure that we do it the right
    way. It's not about the what. It's about the how.
        Senator Akaka. Let me follow up in the execution of this
    program. It is not clear to me who will be responsible for
    making sure joint bases get the appropriate level of
    investment. I know that Pearl Harbor and Hickam will be one of
    the first joint bases in this case with the Navy in the lead.
        So, who will be responsible in this case for making sure
    that future budgets fund the required investments such as
    electrical system upgrades needed at Hickam. Will that be the
    Navy's responsibility because the Navy will be in the lead for
    this joint base or will it be the Air Force's responsibility to
    fund their own projects?
        Mr. Arny. Mr. Chairman, if I could respond?
        Senator Akaka. Mr. Arny?
        Mr. Arny. With the concept, indeed, at Pearl Harbor--
    Hickam, the Navy would be responsible for all of the ongoing
    maintenance they will receive when the deal is finally signed,
    they will receive a transfer from the Air Force. We at DOD,
    with all the Services, we're working very carefully to
    establish joint standards that we all agreed to for all
    capabilities on the installation management. The Air Force will
    still maintain their own mission parts. But as far as the
    maintenance of the installation, it will be the Navy's
    responsibility to fund and maintain to the standards that we
    all agree, and that includes recap.
        If there's an Air Force hangar that needs to be rebuilt
    that will be put into the Navy budget. If there's a new hangar
    required for a new mission then that will be the responsibility
    of the Air Force to fund that facility. Let's call it a hangar,
    and then once it's done, it will be turned over and it will be
    maintained by the Navy.
        Now this is a two way street. There has to be
    communications both ways, but there are also several occasions
    where the Air Force is in charge and they'll have
    responsibilities. The Army will have responsibility in other
    places.
        Senator Akaka. Yes. The particular, the specific case that
    I mentioned was the electrical system upgrades which Hickam
    really needs. If this occurs then what you are telling me is
    that the Navy would certainly deal with that.
        Mr. Arny. Yes, sir.
        Mr. Penn. But it would be funded by the component. The
    intent is that a mission requirement is funded by the
    component.
        Mr. Arny. But the electrical system upgrades would probably
    be a military installation.
        Mr. Penn. Right.
        Mr. Arny. That probably would be funded by the Navy.
        Mr. Penn. Yes.
        Mr. Arny. Yes.
        Senator Akaka. Secretary Penn, last year the Navy took
    strong action to address a child care problem at Pearl Harbor.
    First by addressing a safety issue with a reprogramming and
    then by including funds in the 2009 budget request for a new
    child care center. I commend you for those actions.
        We need to have that same focus on our shipyard at Pearl
    Harbor because it is such a key readiness asset for the entire
    Pacific theater. Section 332 of the National Defense
    Authorization Act (NDAA) for Fiscal Year 2007 required a
    minimum level of investment in our military's maintenance
    depots, including Pearl Harbor Naval Shipyard. That minimum
    level will rise from 5 percent of workload funding in 2008 to 6
    percent beginning in 2009.
        Last year, Senator Inouye and I added funds to address
    problems at dry dock one and two because we felt the shipyard
    was not getting the funds it needed. Please provide for the
    record, what investment the Navy has planned for the Pearl
    Harbor Naval Shipyard over the next 5 years. All that compares
    with the 6 percent investment requirement for Navy depots.
        Mr. Penn. Yes, sir. We'll be glad to do that.
        [The information referred to follows:]

        The Navy manages the 6 percent reinvestment requirement at the
    Naval Shipyard Activity Group level as directed by section 332 of the
    National Defense Authorization Act for Fiscal Year 2007 vice by
    individual shipyards. This information is reported to Congress through
    the President Budget Exhibits for Naval Shipyard commonly referred to
    as the ``J-Book''. In fiscal year 2009, $198 million (6 percent of
    ``revenue'') was invested into the naval shipyards. To ensure both
    national strategic needs and individual shipyard requirements are met,
    the Navy follows a standard business process through which individual
    projects are developed and reviewed to ensure strong business case and
    economic justification for use of limited resources. The results of
    this process are provided annually as part of the President's budget.
        The last 3 fiscal years the funding profile for individual
    shipyards was as follows:

    ------------------------------------------------------------------------
                                            Fiscal      Fiscal      Fiscal
              (Numbers in 000)             Year 2007   Year 2008   Year 2009
    ------------------------------------------------------------------------
    Portsmouth Naval Shipyard:
      Military Construction.............           0       9,700           0
      SRM...............................      10,486      16,288       6,238
      Capital Investment (OPN)..........      12,755      12,710      11,007
    ------------------------------------------------------------------------
    Norfolk Naval Shipyard:
      Military Construction.............      65,891           0      42,830
      SRM...............................      21,747      28,578      15,233
      Capital Investment (OPN)..........       9,136      15,748      22,930
    ------------------------------------------------------------------------
    Puget Sound Naval Shipyard and IMF:
      Military Construction.............           0      97,200           0
      SRM...............................      38,323      43,729      38,405
      Capital Investment (OPN)..........      13,031      11,786      13,990
    ------------------------------------------------------------------------
    Pearl Harbor Naval Shipyard and IMF:
      Military Construction.............           0      30,200           0
      SRM...............................      30,407      28,789      44,409
      Capital Investment (OPN)..........       9,525       7,740       3,353
    ------------------------------------------------------------------------

        Reinvestment in the shipyards is key to keeping them fully mission
    capable. The Navy is committed to reinvesting at a minimum 6 percent
    per year across the shipyards. Due to the nature of the budget process,
    the exact level of funding at each individual yard will vary from year
    to year.

        Senator Akaka. Thank you.
        Senator Thune.
        Senator Thune. Thank you, Mr. Chairman. Secretary Anderson,
    in your written testimony to the House last week on the subject
    of synthetic fuels you stated, ``The Air Force goal is to cost
    effectively acquire 50 percent of our CONUS aviation fuel via
    synthetic fuel blend utilizing domestic blend feed stocks and
    produced in the United States by 2016 with the intent to
    require the synthetic fuel purchases be sourced from suppliers
    with manufacturing facilities that engage in carbon dioxide
    capture and effective reuse.'' What is the biggest challenge
    you face in meeting the goal of purchasing 50 percent of that
    aviation fuel by 2016?
        Mr. Anderson. Essentially, Senator, the biggest challenge
    is a market developing in the United States. Our process of
    testing, certifying, and flying this fuel in the fleet at
    research quantities is ongoing. We have a time line, a map,
    that will take us through the early 2011. The fleet will be
    ready to receive the fuel.
        The commercial aviation industry is following along with us
    and working with us in the certification process of the entire
    aviation footprint in this country and by the way, around the
    world with some foreign interest as well. The problem though is
    the fact that we don't want to necessarily certify to a fuel
    that will be another foreign import. With the United States
    having the largest coal reserves in the world it makes sense to
    us that we ought to utilize those coal reserves in a very
    ecologically friendly way.
        We believe the new technology for making liquid fuel out of
    coal can achieve an environmental footprint that is very
    favorable for coal based, fossil based fuel. But yet at this
    point no ground breaking has been done on it on a commercial
    scale plant in the United States although a couple are under
    consideration. That's why we set the goal 5 years after the
    certification was done because we believe the industry wouldn't
    begin to kick off into this country and make commercial
    quantities of fuel at least until 2012 to 2014. So we set our
    goal beyond the time when there will be commercial level
    production in this country.
        Senator Thune. How do you define cost effective? Is the
    assumption going to be that it's going to be based strictly on
    lowest price?
        Mr. Anderson. Based on market for an equivalent type of
    comparable fuel, i.e. petroleum based jet fuel, yes, sir.
        Senator Thune. Ok. Will there be any other discriminators
    in how the Air Force would go about selecting suppliers of
    those synthetic fuels, price driven. Is there any other thing
    that you can think of that would----
        Mr. Anderson. No, sir. Price and performance. As I
    mentioned earlier, coal seems to be the most logical, near- to
    mid-term feed stock. But we don't care about the feed stock. We
    don't necessarily care about the technology used to refine the
    material.
        We look at the performance parameters that are necessary to
    fly jets on. We look at price against the market price for a
    similar product, and that would be the only discriminators.
        Senator Thune. Is 50 percent by 2016, is that, that's a
    cap. That's a ceiling. Is there any chance we get there sooner?
        Mr. Anderson. Actually, it's not a ceiling. It was just a
    vision, a pie in the sky. What we're talking about is 400
    million gallons a year and if we represent 10 percent of the
    domestic aviation market, that's a demand of 4 billion gallons
    coming out of factories if the commercial world follows us.
    That's a huge production capability.
        We just base it on what we thought would be possible. It
    can be accelerated. It can be expanded if the production
    capability is there. Yes, sir.
        Senator Thune. Ok. My hope would be that to see that sooner
    than 2016. Maybe not 50 percent but I'd like to see it be great
    if it were to achieve that goal even sooner.
        Mr. Anderson. I hope you're right. Yes, sir.
        Senator Thune. Let me ask the rest of the panel. Air Force
    obviously is the largest user when it comes to fuel and so the
    question, primarily directed at Secretary Anderson, are the
    other Services in DOD as a whole considering similar goals for
    the use of synthetic fuels?
        Mr. Anderson. Actually, sir, the Air Force has been the
    lead for the Department because they are the biggest user and
    we tend to split those efforts up. If it's successful we all
    benefit from it.
        Senator Thune. Navy? Army? Any thing to add to that?
        Mr. Eastin. We have some research programs, but they're no
    where near production.
        Senator Thune. Ok.
        Mr. Penn. Over the last 5 years we've had a 10-fold
    increase in the use of a 20 percent blend of biodiesel and
    petroleum diesel, so we're moving on this as well.
        Senator Thune. Ok. Good. I would just say to the Department
    and the other branches that they're to take a good hard look of
    the possibility of following the Air Force's lead on this
    knowing full well that they're the biggest user of the fuels.
    But nevertheless I think it's something Department-wide could
    achieve a significant savings if we're having to pay. Who knows
    what the price per barrel of oil is going to be sometime into
    the future.
        Mr. Arny. I think that's the key. If we can get synthetic,
    get it at a price that's comparable, then it obviously makes us
    far less dependent on overseas sources.
        Senator Thune. I don't think we can convert quickly enough
    to home grown energy because we continue to enrich petro-
    dictators who figure out ways to fund organizations that turn
    around and attack Americans. So I encourage you to pursue that
    as quickly as possible.
        Congress is looking at once again considering legislation
    in this year that would authorize a multiyear procurement of
    synthetic fuels by the Department. If Congress were to extend
    the existing multiyear procurement authority to synthetic fuels
    does that assist you in achieving your goals?
        Mr. Anderson. Yes, a qualified yes, Senator, is the answer.
    The Air Force and the other Services, of course, what we're
    concerned about is acquiring the fuel we need to do the
    mission. The supplier on the other side of the equation has to
    worry about the economics of the viability of investing up to
    $4 billion per plant for these synthetic fuel facilities.
        In numerous discussions on Wall Street with major bankers
    they have suggested that a long-term contract somewhere between
    10 to 25 years as opposed to the 5 years we have currently,
    would be a driver towards attracting debt and equity capital
    into this market, which then, of course, would trigger building
    of plants, which would allow us to have the supply that we
    need.
        So indirectly yes, it would help us in our process. I think
    the industry and Wall Street is the one who would be the best
    to answer what the right answer would be for this.
        Senator Thune. I'm sure you have discussions with them. We
    have too, those who are interested in developing that type of
    an energy source. One of the things that we hear is that we
    could lock in long-term contracts and the economics of this
    thing work so much better for us.
        Mr. Anderson. Right.
        Senator Thune. So it's the reason I asked the question.
    There was a Federal Times story Monday, March 10, earlier this
    week, where a special assistant working for you, Paul
    Bollinger, said in reference to a standard of manufacturing
    synthetic fuels, ``Industry experts producing this fuel say
    they can meet the standards, but there is not a standard. Until
    we get a standard we can't buy the fuel.'' Can you comment on
    that, or elaborate on that statement?
        Mr. Anderson. I wasn't privy to the conversation, but I
    would assume that the comment was made as a result in relation
    to section 526 of last year's Energy Act, which essentially
    mandates in legislation what the Air Force has said all along,
    that it would not buy any alternative fuel, synthetic fuel that
    didn't have a greener footprint than what is currently
    available.
        Now, when we talked about a greener footprint, we didn't
    talk only about CO2. Section 526 only talked about CO2. We
    talked about the entire array of contaminants. So we support
    the concept. The problem is that the devil is in the details.
        From our perspective the right answer is that we ought to,
    we, collective, the royal we, globally, go forward and do a
    Manhattan Project scale approach to taking a look at global
    greenhouse gas emissions across every fuel source from cradle
    to grave, if you will. From the mine or the oil well or the
    field, for example, if it's ethanol, all the way until it comes
    out the tailpipe, and determine where the greenhouse gas
    emissions are so that we can identify the most serious
    infractors, if you will figure out ways to economically address
    CO2, and on a per unit basis, reduce the CO2 output from every
    fuel source. But the first thing we have to do is inventory
    what the actual greenhouse gas footprint is of every fuel
    source. The comment is correct we are not in a position at this
    point to be able to do that with any rigor.
        Senator Thune. I guess in terms of adopting or coming up
    with a standard. The reason I asked that question is because
    the question is who would define what that is? To me it would
    be a function of what is a workable fuel in terms of
    performance in the fuels that you use and obviously a greener
    type of fuel.
        Ideally, you'd want to have that involved to incorporate
    into your standard in some fashion. But I don't know exactly
    who comes up with that standard. We could try and write a
    standard here, but we'd have to obviously get input from the
    industry.
        I could probably come up with one for ethanol. But I don't
    know how that works with regard to the needs that the Air Force
    has for aviation fuels. So I think that's something that I
    think I'd like to maybe hone in on a little bit more at some
    point.
        Secretary Penn, the Navy's currently involved in litigation
    challenging the Navy's compliance with environmental laws
    regarding the use of MFA sonar. MFA sonar is the most common
    form of active sonar used by surface ships, submarines, and
    helicopters. On January 23, 2007, DOD invoked the National
    Defense Exemption (NDE) under the MMPA to exempt all military
    readiness activities that use MFA sonar from compliance with
    the MMPA for a period of 2 years.
        Despite DOD's decision to invoke this NDE, in January of
    this year a Federal district judge issued an injunction and
    imposed significant restrictions on Navy sonar training in at-
    sea ranges off of southern California. What is the status of
    that litigation? Can you describe its impact on the Navy's
    ability to train effectively for deployment using active sonar?
        Mr. Penn. We're still in the process of litigation so I
    can't go into it too far. But as I said earlier, the ocean is
    the Navy's home. We take very good care of our home. For our
    other procedures we've been working with National Marine
    Fisheries Service (NMFS), Department of Interior, and, in fact,
    we have a memorandum of understanding with the National Oceanic
    and Atmospheric Administration talking about the permanent
    threshold shift which is the nonrecoverable damages to tissues
    of the auditory systems of the mammals.
        Direct injury to marine mammals from MFA sonar can only
    occur at very close distances to the sonar which is
    approximately 10 meters. We have to have a decibel level at
    about 215 to actually create that disturbance. We have
    implemented 29 NMFS-approved protection measures whenever we
    operate regarding the NDE under the MMPA including the posting
    of trained lookouts while underway in areas where marine
    mammals are present, power down sonar at specific ranges, and
    complete shut down if the mammal is within 200 yards.
        As I said we have 29 different mitigation measures and
    we're doing everything, in fact, one of the things we're doing,
    we're putting so much money into the program to get scientific
    data to show what the MFA is doing. On the LFA, we've been
    operating that since 2003, there apparently is no damage at all
    to using that.
        Senator Thune. That's what I was going to ask you about
    because you're facing similar litigation over your LFA sonar,
    which, it's my understanding, is the most effective means to
    detect super quiet diesel submarines at long range, which are
    the types that are operated by China and North Korea.
        Mr. Penn. Right.
        Senator Thune. Can you tell me how these limits impact the
    Navy's ability to train?
        Mr. Penn. It means if we're unable to train, it means we
    have to deploy people, the ships, the strike groups, without
    completing their specific training required to go into harm's
    way. That's what it does, and it isn't fair in my opinion to
    send our people out, especially on a carrier with 5,000 people,
    not being fully anti-submarine warfare qualified, which is why
    we're pushing so hard for this.
        We do the simulation. We have a simulation package which is
    basically ``switchology,'' but unless you're out there looking
    for a diesel submarine in 150 to 900 feet of water, it's very
    difficult to do.
        Senator Thune. I assume you're concerned about how these
    restrictions that are being imposed on Navy sonar training
    impact recent deployments of diesel submarines by China in the
    areas where U.S. carrier battle groups are operating.
        Mr. Penn. Yes, sir. There are 40 countries with
    approximately 400 diesel submarines and we consider it a major
    threat across the board. They can get off the coast, the west
    coast, and fire a missile basically wherever they want.
        We're working on the NDE at this time. We have to complete
    it by January 2009, and hopefully that will give us the
    clearance to continuing on.
        Most of the restrictions we have to date are for specific
    events and specific exercises. So we're able to work around
    them. In fact, we just had clearance recently to conduct two
    more exercises which we'll be doing. But it's absolutely
    essential that we train our crews to operate.
        Senator Thune. Thank you. I just have one final question. I
    see my time has expired, but it has to do, Secretary Arny, with
    the whole BRAC process. That process was concluded in 2005.
        At that time it was estimated, I think, that the cost for
    BRAC was going to be about $22.5 billion. Today, it's $33.2
    billion. That's basically 2, 3 years. We're into the 2009
    budget year. But that's a 50 percent increase in cost.
        Now I know that there's normal inflation, but that seems
    like an enormous increase in the cost of completing the BRAC
    process. Could you comment on that?
        Mr. Arny. Yes, sir. I'd be happy to. This round of BRAC had
    more relocation. It had a higher percentage of MILCON funding
    as a major element. It's like 70 percent as opposed to 30, 35
    percent before.
        As you and the committee members have seen we've been all
    hit hard by increases in construction. In the northwest, we're
    looking at 15 percent a year. Hurricane Katrina affected a lot
    of our estimates, once we actually had the projects in line.
        But before that we faced a problem in that the BRAC
    commission and the folks within the Navy who were analyzing
    bases used a model called the Cost of Base Realignment Actions
    (COBRA) model which was designed over the past 15 years to
    allow analysts to examine one base against another in terms of
    generalized construction kinds of buildings. That COBRA model
    was never designed to produce budget quality numbers for the
    buildings, but people unfortunately expected it to.
        So I got involved in BRAC execution on the Navy side and
    when we got the COBRA models we went out then went to the
    engineers. As they began to actually flush out what these real
    buildings were going to be different site locations, different
    circumstances, made them have to change their 1391s.
        We also--so consequently we got not only cost--once we
    designed the building we got cost growth that no one expected
    in certain parts of the country. We had cost growth before that
    because the buildings in the COBRA model were not design
    quality. Also we've had cost growth in terms of the Army
    decided to do a lot of moves back from Europe that were not
    really part of that initial analysis.
        We've also, in each of the Services, gone back. The Army's
    probably had the biggest growth because they've had growth in
    missions. We've had some growth in defense agencies because we
    had growth in missions. The Services have all gone back in and
    scrubbed their numbers and frankly, we found a lot of cases
    where we've lowered costs and lowered scope just because there
    were misunderstandings during the analysis process.
        So it goes both ways. You're right, the costs are higher.
    We have detailed explanations as to why. We have fully funded
    it because we believe those, that scope growth is necessary.
        Senator Thune. In trying to scale back on and to keep costs
    from rising any further, is it conceivable that some of these
    organizations that have to be moved could end up in new
    facilities that don't fully meet their requirements in due
    time?
        Mr. Arny. We are working very hard to make sure that
    doesn't happen. As anybody who's been around this, I've only
    been around for part time, but I've talked to people who have,
    and I fought it in my old job too.
        The engineers, they have ``x'' amount of money. As the cost
    begins to grow they won't come to you and say look, the costs
    have gone out of sight. We need more money. They'll try and
    make it fit.
        That's why we in DOD have developed a business plan process
    that was unique to BRAC 2005. So that if there's a change in
    scope that should be part of the business plan, we should be
    able to see it. We want to work with the Services to make sure
    that the proper scope is achieved for the facilities that we're
    putting in there. We don't want to hamper people before they
    even start in the door.
        Senator Thune. Right. Thank you. Thank you, Mr. Chairman.
        Senator Akaka. Thank you, Senator Thune.
        Secretary Penn, I have another concern with respect to
    Pearl Harbor shipyard. Pearl Harbor is historic because of the
    event of December 7, 1941. I understand the need for historic
    preservation to honor the memory of that tragic day. However we
    also need to recapitalize the facilities at the shipyard,
    including those in the waterfront.
        All workers deserve a safe and productive workplace and our
    Pacific fleet deserves the highest maintenance standards we can
    deliver there. My question to you is what steps can the Navy
    take to be more proactive on working with the historic
    preservation community? What do you think they can do to work
    more productively with you?
        Mr. Penn. Thank you, sir. Mr. Arny and I met with Sherman
    Nell last week.
        Mr. Arny. He sits on the Advisory Council on Historic
    Preservation and I think both Mr. Penn and I were very
    impressed with Mr. Nell's balanced approach to his dock
    preservation especially industrial facilities like the
    shipyard. He personally promised to take upon the challenge of
    going out to Hawaii himself with his staff to look at the
    facilities and work through that. Because you all have told us
    and we know that if we can't modernize that shipyard then
    productivity goes out the window.
        There are things that need to be done and unfortunately a
    lot of historic buildings. But Mr. Nell now understands that. I
    think working with the Navy will have a very positive impact on
    getting those improvements.
        Mr. Penn. This was our first meeting with him.
        Senator Akaka. Okay.
        Mr. Penn. We always try to work cooperatively with the
    State Historic Preservation Officer and other stakeholders in
    historic preservation concerning Pearl Harbor. In fact, the
    goals of the Historic Preservation and the needs of the
    Operational Fleet are not mutually exclusive. So we're working
    very hard. We're taking our role very seriously in this.
        Senator Akaka. Thank you very much. I'm glad to hear that.
        Secretary Eastin, I understand the Army is about to
    initiate an EIS for that portion of the so-called ``Grow the
    Army'' proposal that affects the U.S. Army Pacific. That's in
    the Army in Alaska and Hawaii. As you know all too well from
    the Stryker situation there are groups who are likely to
    initiate a lawsuit related to ongoing environmental and
    cultural preservation concerns. While I know that the decision
    to bring a lawsuit is not under your control, there are some
    things that the Army can do to help prevent future legal
    challenges. The first is ensuring the Army does its homework to
    defend itself from the possible legal challenges you can
    expect. I think the Army can do better than it did in the
    Stryker case.
        Second, and just as important it is to reach out to the
    local community throughout the EIS process to explain what
    you're doing and why you're doing it. There are some people you
    are never going to convince to agree with you. Believe me, as a
    public official I have that experience myself. But based on my
    experience, I do believe you can do yourself a lot of good by
    reaching out to the average person, not just to tell your side,
    but to listen to them.
        So I invite any response you wish to make about how the
    Army plans to proceed in this case, and what lessons may have
    been learned from the past experiences.
        Mr. Eastin. The Stryker litigation which you were referring
    to was basically the result of a failed EIS that was commenced,
    I don't want to say luckily, but before my term. This is a very
    technical law, but it's not a hard one to comply with. If you
    do your homework, as you suggested, you can get through this
    very nicely.
        That is why we're doing this particular EIS. I have
    occasion to look at my staff's travel budget. I noticed that my
    Deputy, Tad Davis, who handles environmental matters, seems to
    have taken up residence in the State of Hawaii, at least that's
    what it looks like. So he is involved in a lot of outreach with
    these people, and hopefully that will alleviate some of their
    concerns.
        I'm with you. Some of these people will never be convinced.
    But a lot of people want to feel they're part of the process
    and have a proper role in the process. So we want to make sure
    that happens.
        Senator Akaka. Mr. Arny and Secretary Eastin, as I
    mentioned in my opening statement, I'm concerned that there is
    no money in the fiscal year 2009 budget to follow up on the
    initiatives Congress and the administration took last year to
    improve our care of wounded warriors and their families. I
    understand that the Army has identified additional requirements
    for more facilities. But they are not in the budget nor did
    General Casey include them on his unfunded priorities list.
        Secretary Eastin, are there additional unfunded
    requirements for barracks or other facilities to care for
    wounded warriors and their families? If so, what is the scope
    of this unmet need? How many facilities? How much additional
    funding is needed?
        Mr. Eastin. We have put together medical centers for
    warriors in transition at 35 of our locations. Some of them
    have taken the path of renovating what has already been there.
    Many of them are going to be new construction. This has been
    funded out of basically, supplemental funding.
        In 2008, we have $138 million in that. In 2007, we put a
    lot of money in it. It was basically funded with operation and
    maintenance money. The 2009 supplemental request is up at the
    OSD for clearance, but I can assure you that it's in the
    neighborhood of $1 billion for these.
        I think what's implicit in your remarks, however, is that
    we are not keeping an eye on these soldiers who have given more
    for their country than most of us could ever have asked. We
    need to take care of them in their healing time. What we are
    finding in this is that if we treat them properly and take care
    of them, something in the neighborhood of 80 percent of them
    are returned back to the force. That amounts to two full
    brigade combat teams in a year's time returned back to the
    force.
        What we have done here is change our procedures which
    didn't cost us a whole lot, but it affected them a whole lot.
    In terms of making their duty assignment, getting well. Their
    duty assignment is not going back to the 3rd Infantry Division
    and getting deployed. Their duty assignment is getting well, so
    by changing that procedure and giving them a new duty station,
    if you will, in the WTU, that's helped a lot. We need to find
    now the infrastructure to back that up.
        Senator Akaka. Yes. I'd like to have another answer for
    both you and Mr. Arny on why is funding for such an important
    requirement not included in the budget request?
        Mr. Eastin. They thought the supplemental was a quicker way
    of getting this done, to be honest with you. They're there now,
    and they need help. Our budget process is such, it sometimes
    moves at glacial speed, whereas supplementals are a lot more
    nimble.
        Senator Akaka. Yes. Let me just ask, Secretary Eastin, I
    understand you recently held an industry forum in Korea to
    explore ways to provide new family housing for U.S. Army forces
    that are relocating from Seoul down to Camp Humphreys under the
    terms of our agreement with the Korean government. Based on the
    responses you got from industry, do you think you have found a
    potential solution? Can you please describe what you have in
    mind and how the Army intends to proceed on that?
        Mr. Eastin. We were up here a couple of times trying to get
    the lease cap raised for our normal build to lease operation.
    It was, quite frankly, I think a matter of sticker shock. Part
    of it was due to the fact that we would have to amortize the
    cost of these facilities over a 15-year period which just drove
    the cost basically out of anybody's reasonable range.
        The SOFA we have with the Republic of Korea is such that it
    is fairly wide. In the Yongsan relocation plan, moving our
    forces from the north basically down south of Seoul grants us
    use of the land for as long as we are there, also provides that
    we are to rent or lease housing units for our accompanied
    soldiers.
        Since we cannot do it, the normal build-to-lease way, we
    have put out a request for interest from the development
    community as to whether they would build the same sort of
    family apartment units on the same land where we would not
    involve the guarantees that are involved in coming up here and
    getting scoring or going to the OMB and getting scoring and
    putting dollars against it. Basically, would they build if we
    didn't guarantee it?
        We had a lot of skeptics, and so we thought we'd put
    together a forum to discuss this over in Korea with the
    development community, the facility management community, and
    the financing community over there. Quite frankly, I thought
    we'd get maybe 100, 150 people at this thing.
        We had registered 350 people from across Korean industry
    and 550 showed up. So we didn't have enough chairs for them. We
    didn't have enough materials. We had to mail it to them.
        So I think there's a lot of interest out there. We're
    talking about construction that is up in about the $1 billion
    range. So it was enough to get peoples' interest.
        What we've seen from that in the question and answer period
    afterward, there is a lot of interest in the development
    community over there. Parenthetically I think a lot of interest
    from the U.S.-based financing community which is probably where
    a dollar denominated financial instruments are going to come.
    So we had a couple dozen people over from the United States at
    the forum.
        So I am encouraged. As everything when you're dealing with
    foreign governments and MILCON and the Army we'll believe it
    when we see the dotted line or the key to the door. But at
    least this looks like an attractive alternative to things that
    seem to be very expensive.
        Senator Akaka. Thank you very much.
        Senator Chambliss.
        Senator Chambliss. Thank you very much, Mr. Chairman. Let
    me first of all say, gentlemen, we have four projects, four
    privatization housing projects in Georgia. We have five, four
    of which have been very successful.
        Mr. Anderson, the one at Moody Air Force Base has not been
    very successful. Tell me in your opinion where we are with
    respect to the disaster we have at Moody Air Force Base to
    date, please, sir.
        Mr. Anderson. Ok. Yes, sir. I think, Senator, you hit the
    nail right on the head that overall housing privatization has
    been extremely successful. Robins Air Force Base, we're on our
    second phase and everything is going extremely well. Our
    residents, our airmen and their families are very, very
    pleased.
        Where we are in Moody is that one contractor, American
    Eagle, which is the source of all of the issues we're facing
    today on the four Air Force projects that have gone sour, have
    not been able to live up to their expectations. The bid that
    they presented to the Federal Government, that was reviewed by
    the Air Force, by OMB, by OSD, met all the required parameters.
    It was a good bid.
        I think all of the folks that approved to go forward with
    American Eagle made an appropriate decision based on the facts
    that they had at the time. What has occurred since then?
    Occupancy rates are down at that project, as well as the other
    three, because of the great interest rates, the ability to buy
    homes in these areas, because the positive housing markets in
    the four areas we're talking about.
        Construction has ceased at Moody. The bond holders are
    finally engaged. We had actually raised a red flag earlier than
    the bond holders actually realized that there was an issue. But
    the bond holders have been engaged. They understand the
    seriousness of this. Of course, they and their customers have
    money risk in this project.
        Where we are currently is that we're seeking a buyer. When
    I say, we, the Air Force isn't in a position to directly do
    this work. But we're working closely with the bond holders to
    make this happen.
        The bond holders are working to find a purchaser for the
    four projects. With the hope that the four, or the purchaser of
    these projects will get them back on line, back under
    construction. The subcontractors will be paid. We'll move
    forward in getting the houses that were required at those bases
    under construction completed with Air Force families in those
    as soon as we possibly can.
        Senator Chambliss. What do you expect to do from an Air
    Force perspective about the subcontractors who are owed some $7
    million today?
        Mr. Anderson. From an Air Force perspective at the moment,
    sir, we're not directly involved in that process. That's going
    to be worked out through the process of finding a purchaser for
    these deals. We're obviously very concerned about the
    subcontractors. We're concerned about the airmen and their
    families that are impacted by this.
        We're keeping a very close eye on it. But because of our
    particular legal position at this point we are staying where we
    need to stay and allowing the legal process, the regulatory
    process, to move forward.
        Senator Chambliss. Obviously, I'm pretty concerned about
    that too. We have 2,000 new air men and women that are going to
    be coming to Moody within the next year. This housing project
    was supposed to house many of those, and it's not going to be
    ready.
        As I understand it in relation to this project the source
    selection was completed in September 2003.
        Mr. Anderson. That's right.
        Senator Chambliss. Financial closing occurred in March
    2004. Site work began in August 2005 and the first construction
    milestone was missed 7 months later in March 2006. Does that
    correspond to your information?
        Mr. Anderson. That's about right. Yes, sir.
        Senator Chambliss. I have been on the ground in Broxton and
    I've talked to the various subcontractors. I have talked to the
    people at Moody, as well as the people who were supposed to be
    in charge of this project. What they have told me is that
    within months of American Eagle, which is the contracting
    company, showing up in town which would have been March 2004,
    they really felt like something was not right.
        The reason they didn't feel like something was right was
    that each time they met with American Eagle, they were meeting
    with a different person. No one they met with had any
    experience with construction or construction management. They
    were property managers.
        Mr. Anderson. That's right.
        Senator Chambliss. Was your staff aware of the fact that
    American Eagle is a group of property managers and not a
    construction company?
        Mr. Anderson. Actually, sir, American Eagle is just a trade
    name, if you will. American Eagle Communities is actually two
    separate companies: Carabetta Enterprises, LLC, out of
    Connecticut, and the Shaw Group, out of Louisiana. So those
    were the two companies that were actually involved in doing the
    work, if you will.
        You are absolutely correct that one of the issues related
    to the American Eagle projects is a rapid turnover of project
    managers. To some degree a lack of a skill set. We did
    recognize that very quickly. As I mentioned to you with the
    first question, we began raising red flags with the bond
    holders very early.
        Senator Chambliss. Can you tell me when?
        Mr. Anderson. What I was able to find from the record, and
    this was before my time, but within several months, probably
    about the same timeframe that you're talking about, several
    months from when the project was--the bid was accepted and the
    deal was signed.
        Senator Chambliss. Here is my understanding of it.
    Beginning in March 2006, the project owner for the Moody
    project was in a state of technical default due to not meeting
    terms of the transaction documents. Those shortfalls continued
    to grow for the next year and a half, not only without any
    homes being delivered while the project accumulated a $30
    million shortfall and over $7 million in debt to subcontractors
    for the project, but that the Air Force never notified anybody
    with a cure notice of any sort until the later part of 2007
    which was some year and a half after the technical default
    occurred. Do your records indicate anything other than that?
        Mr. Anderson. Yes, sir. I will make sure we provide you
    with all of our information. I think, I thought we made, we
    already had. The indications that I have and again before my
    time, the indications that I had that red flags were being
    raised with the bond holders very early in this process in the
    2005 timeframe. But I will go back and check and make sure that
    I get that information directly to you.
        Senator Chambliss. If that is the case, we have not heard
    that despite our extensive inquiries to the Air Force. American
    Eagle was also heavily involved in Navy and Army projects,
    which also ran into trouble.
        But although they ran into trouble, the Navy and the Army
    contacted American Eagle and straightened their matters out
    within a matter of months. I understand their problems were
    resolved. However, for the project at Moody, the project owner
    was in a state of technical default for a year and a half.
    Never delivered a single home and accumulated millions of
    dollars of debt before any decisive action was taken by the Air
    Force.
        Can you tell me why you took no decisive action other than,
    as you say, you may have notified the bond holders? I want some
    verification of that; why didn't you do anything else for a
    year and a half?
        Mr. Anderson. I think, sir, that the comment that nothing
    else was done for a year and a half, I don't think is exactly
    accurate. Again, I will make sure that we provide you full
    details of everything that was done. My understanding is that
    the Army and the Navy projects started a little bit earlier
    than the Air Force projects. So I would assume that they would
    come through at the other side.
        If I have it right one of the two projects actually has
    been sold. The other one is still pending sale which is, of
    course, where ours are. But from what I've seen of the record
    the Air Force personnel involved in this process were following
    the procedures that they should have followed notifying the
    individuals that had the contractual responsibility and the
    contractual ability to take action against Carabetta and Shaw
    or American Eagle as it's called. It appears that the
    appropriate items were done at the appropriate times in my
    review of the process.
        Senator Chambliss. I'm going to have to respectfully
    disagree with you. But Moody was, as I understand it, was
    Carabetta only and not Shaw.
        Mr. Chairman, do you mind if I continue on for this? Thank
    you.
        I would say that if we can allow something like this to
    happen where a developer goes 3\1/2\ years without performing,
    accumulates $30 million in debt, owes $7 million to
    subcontractors, resulting in at least one of those
    subcontractors losing both his home and his business, but
    doesn't deliver a single home, it seems to me that either the
    process that we have on the part of the Air Force for managing
    these projects is defective or the process was not followed the
    way it should have been. We simply cannot blame the developer.
    But we need a better process if we are going to continue down
    this road of privatization.
        I visited Moody back in November, talked with numerous
    people about what happened and folks on the ground who had been
    there from day one who knew exactly what had happened. What I
    found was that there was not a single Air Force employee on
    site watching that project. The only Air Force representative
    on site was a contractor, and that person had no authority. The
    extent of their responsibility was to file reports and inspect
    the houses for code compliance.
        There was no one on site employed by the Air Force
    providing program management or providing any type of oversight
    of the project. Now I have to believe that this has something
    to do with why this project went on so long without serious
    attention at how that it was permitted to get so far behind
    schedule and get so far in debt. Now I hope you agree that
    better on site management is required to ensure that this never
    happens again.
        There is one thing I would like to add about what I
    observed while on the grounds. Someone who had been there at
    the base for 2 years while this project was ongoing commented
    to me that as best as they could tell the Air Force thought the
    project owner was overseeing the project. In turn, the project
    owner thought the Air Force was overseeing the project.
        Now someone might say that this person did not understand
    the process or was not informed. My response would be that this
    person was there. He was watching what was going on and what
    was happening. You and I and the folks at the Pentagon were
    not.
        So whether or not this person understood the official
    management, they observed what was happening on the ground at
    the site. I think the fact that they came away with this
    impression is very significant. It shows that there was clearly
    confusion on the ground about how this project was supposed to
    be managed. This should never have been the case.
        The two issues I have raised in relation to this project
    serve to illustrate the general feedback that I have received
    in relation to how DOD manages projects. That is that you
    failed to have anybody on the ground, first, overseeing the
    project to notify you about what was going on; second, you
    failed to give them any kind of official cure notice.
        I hope you find something where you gave notice to the bond
    holders, but I don't think you're going to find it. There was
    no cure notice given, and that is what the Air Force procedures
    call for.
        Over the past several months I have talked to every
    military Service as well as DOD staff on this issue, as well as
    to no less than three developers involved in housing
    privatization. Everyone has said the same thing, they have all
    commented that the Air Force has a less rigorous process for
    overseeing these projects than the other Services. I think that
    is what we are seeing now at Moody.
        Now to both Secretary Anderson and Mr. Arny, I would really
    like your assurances that you will reexamine the Air Force's
    process to make sure that they provide proper oversight and
    accountability. Because now, frankly, I am not convinced that
    the Air Force process is adequate to make sure that these
    housing projects are properly supervised; and that individuals
    that are required to be notified, are in fact being notified
    when defaults are taking place, when time schedules are not
    being met, and when it's obvious that the folks that are
    supposed to be building and providing these houses have gotten
    themselves way over their heads and in financial trouble.
        I'd like that assurance from both of you gentlemen.
        Mr. Anderson. Senator, absolutely, and I would like to add
    that I'm in violent agreement with you that the Moody project
    could have been managed better. Very early on my watch we've
    made a couple of changes. First, is the source selection
    authority for all privatized housing in the Air Force has been
    moved to one of my deputies, which I think will add
    considerable rigor to the process.
        Second, we now have people on the ground at our projects
    that report directly to the Air Force Center for Engineering
    and the Environment in San Antonio which is a headquarters
    function to do the oversight that you suggested.
        So, yes, sir, those things needed to be improved. They
    were. I'm not going to tell you we're perfect. We are going to
    continue to understand what the issues are and improve them as
    we find we need to do so. So, you have my assurance that we'll
    continue to look to improve this process.
        Senator Chambliss. Mr. Arny?
        Mr. Arny. Absolutely. I did housing with the Navy and I've
    watched Mr. Anderson's people change the procedures of the past
    couple of years. That I think again, as you pointed out, these
    were one bad apple in a huge group of housing areas, and the
    Navy was able to get their project bought out.
        These projects have to succeed. We'll make sure there's the
    right oversight.
        Senator Chambliss. We have four Air Force projects that are
    in trouble. The one at Moody happens to be in more trouble than
    the other three because we've already begun litigation in
    Valdosta relative to that project which is in deep jeopardy
    right now of ever being able to be completed. It is a shame to
    look at those half and three-quarters completed houses out
    there that are just now falling down.
        There is one other thing that I think you need to check and
    that is if Carabetta filed for bankruptcy several years ago. I
    do not know whether they left the Federal Government holding
    the bag on any of their projects or not. It is pretty obvious
    in looking back, Carabetta should never have been allowed to
    bid on this project.
        So as you are going back and reviewing Air Force projects
    or Air Force procedure, I'd ask you to look at the Navy and the
    Army together with the Air Force and make sure that we are
    doing everything we are supposed to do to make sure that these
    folks who ultimately are allowed to bid on these projects are
    folks who are going to complete them, not leave us holding the
    bag like this. The fact is that Carabetta ought to be
    responsible here, but managed to seal themselves off from any
    liability. They are the only one of these companies that have
    any financial wherewithal. American Eagle and the other
    companies that are involved are basically shell companies.
        At this point in time it looks that whatever money the
    contractors get, the only money guaranteed to them is going to
    come from the bonding company. That is unfortunate. That ought
    not to be the case.
        Companies like Carabetta ought to never be allowed to bid
    on a government project again because it has created a real
    disaster for the men and women of the Air Force at Moody. But
    it has also created disaster in the business community in a
    town that loves the Air Force and loves Moody Air Force Base.
    So, Mr. Anderson, I look forward to staying in touch with you.
    I am not blaming you. I am pretty emotional about this because
    it is a sad thing to see down there from an Air Force
    standpoint as well as the local community standpoint.
        I understand you were not there at the time all of this was
    done, but we have to make sure it never happens again. So I
    look forward to staying in touch with you. I look forward to
    getting your response back on your notification to the bond
    holders.
        Mr. Anderson. We'll get that to you quickly. Sir, as upset
    as you are, and you have every right to be, Secretary Wynne,
    Chief Moseley, and I share your frustration and your concern,
    and it is my responsibility. This occurred on my watch. It is
    my responsibility and I take it as such.
        Senator Chambliss. Mr. Chairman, thank you for letting me
    go over my time.
        Senator Akaka. Thank you.
        Senator Thune.
        Senator Thune. Mr. Chairman, I'd like to know what the
    Senator from Georgia really thinks on this subject. [Laughter.]
        But I just want to make a suggestion based on his comment
    at the end there about perhaps looking at how the Air Force and
    the lessons learned from this incident and taking some of those
    lessons and applying them, maybe syncing up the model that the
    Army and the Navy use, it seems like that model has worked more
    successfully and more effectively and that might be something
    that we could take a look at doing.
        Senator Akaka. Thank you for your comment. Let me ask my
    final question on this.
        Senator Chambliss, do you have any more questions?
        Senator Chambliss. I'm scared to start again, Mr. Chairman.
    [Laughter.]
        Senator Akaka. Secretary Arny, section 313 of the NDAA for
    Fiscal Year 2007 required the DOD to submit to Congress a
    comprehensive plan including goals, interim milestones, and
    schedules for cleanup of unexploded ordnance at current and
    former defense sites. Instead of submitting a comprehensive
    plan including the required goals, milestones, and schedules,
    the Department submitted a report which states that the
    Department has established a working group to develop goals,
    that: ``the speed of cleanup is largely dependent on funding
    levels.''
        So, Secretary Arny, when can we expect the Department to
    submit a plan that meets the requirements of section 313?
        Mr. Arny. We hope to have that report to you by the end of
    this month, sir.
        Senator Akaka. Thank you very much. I'm glad that you are
    in that position. [Laughter.]
        I want to thank my colleagues here on the committee. I
    think this has been a helpful hearing. I want to thank all of
    our witnesses for being here, and I look forward to working
    together with you to improve whatever we're doing and correct
    whatever needs to be corrected.
        With that, I want to say, again, thank you very much. This
    hearing is adjourned.
        [Questions for the record with answers supplied follow:]
                 Questions Submitted by Senator Daniel K. Akaka
                    counterintelligence field activity lease
        1. Senator Akaka. Mr. Arny, in January 2008, Under Secretary of
    Defense (Intelligence) Clapper submitted a report to the committee
    stating that, while the Counter Intelligence Field Activity (CIFA)
    entered into a lease using the Department of Interior's GovWorks
    program and that neither CIFA nor GovWorks had the authority to enter
    into such a lease, the use of funds to enter into this lease did not
    constitute an Anti-Deficiency Act (ADA) violation. Please explain why
    the Department of Defense (DOD) believes that the use of government
    funds for unauthorized activities is not an ADA violation.
        Mr. Arny. The DOD conducted a preliminary investigation and
    determined that there is no evidence to support an ADA violation. The
    CIFA had an appropriation that was otherwise available for the purpose
    of leasing office space--the Operation and Maintenance, Defense-wide
    appropriation. CIFA recorded these costs as obligations of this
    appropriation and transferred funds to GovWorks to pay for them. In
    addition, the Government Accountability Office (GAO) recently reviewed
    this situation and also concluded that no ADA violation occurred.

                                 africa command
        2. Senator Akaka. Mr. Arny, does the fiscal year 2009 budget
    request include any funds to construct or lease or otherwise provide
    facilities on the continent of Africa in support of the new Africa
    Command (AFRICOM)? If so, identify the account containing such funds,
    the specific line items where such funding is contained in those
    accounts, and the specific purposes, including proposed locations, for
    which such funds are proposed.
        Mr. Arny. There are three Military Construction (MILCON) projects
    at Camp Lemonier, Djibouti, in the fiscal year 2009 President's budget
    request. These projects are not related to the stand-up of AFRICOM but
    may become part of it at some point in the future.

                            [In millions of dollars]
    ------------------------------------------------------------------------
                                                                Fiscal Year
                             Project                           2009  Request
    ------------------------------------------------------------------------
    Aircraft Maintenance Hangar.............................            12.8
    Aircraft Parking Apron..................................            15.3
    Telecommunications Facility.............................             3.3
                                                             ---------------
      Total.................................................            31.4
    ------------------------------------------------------------------------

        The fiscal year 2009 budget request also includes $20.0 million
    (Operations & Maintenance, Army) to establish an AFRICOM initial
    presence in Africa, consisting of small teams reinforcing the current
    Offices of Security Cooperation, which is currently known as the Office
    of Defense Cooperation. This funding for AFRICOM would not construct
    facilities but lease required housing and office facilities directly or
    utilize existing government facilities on a reimbursement basis.
    Locations are being considered in several different African countries.

                   cost-effective renewable energy purchases
        3. Senator Akaka. Mr. Arny, section 828 of the National Defense
    Authorization Act (NDAA) for Fiscal Year 2008 (Public Law 110-181)
    authorized the DOD to enter into multiyear contracts for up to 10 years
    for the purchase of renewable energy, if such purchases would be ``cost
    effective''. What guidance has DOD developed to define cost-
    effectiveness for purposes of implementing this statute? For example,
    is DOD interpreting this statute to require that the current market
    price of renewable energy purchased under such an agreement be equal to
    or less than the price of energy derived from fossil fuels?
        Mr. Arny. The Defense Acquisition Regulations (DAR) Council
    recently opened a case to consider amending the Defense Federal
    Acquisition Regulation Supplement (DFARS) to set forth language
    authorizing the utilization of the authority provided under section 828
    of the NDAA for Fiscal Year 2008. Upon promulgation of such DFARS
    language, in accordance with the statute, DOD would give due
    consideration to the cost effectiveness of utilizing a multi-year
    contract in excess of 5 years in lieu of a contract or multi-year
    contract of 5 years or less. Such business case determinations would
    necessarily be made on a case-by-case basis.

        4. Senator Akaka. Mr. Arny, if a DOD Directive or Instruction has
    been approved, please include the text of such directive or instruction
    in your response. If guidance is under development, please describe the
    current status and parameters of that guidance.
        Mr. Arny. The case opened by the DAR Council has not yet resulted
    in any written documentation to include a directive or instruction.

                          home station training lanes
        5. Senator Akaka. Mr. Arny, DOD requested $269 million in
    supplemental funding for fiscal year 2008 for the Joint Improvised
    Explosive Device Defeat Organization to construct home station training
    lanes at installations across the various military departments to
    conduct training against improvised explosive devices. After these
    funds were requested and appropriated, it was discovered that the scope
    of activity for which much of these funds were requested meets the
    definition of MILCON. However, these funds were not requested,
    authorized, nor appropriated as MILCON funding. How does DOD plan to
    work with Congress to realign these funds to the proper MILCON
    accounts?
        Mr. Arny. The Department can provide additional information or
    briefings to assist in appropriately realigning these funds to the
    proper MILCON accounts.

        6. Senator Akaka. Mr. Arny, does DOD intend to submit a legislative
    proposal before Congress acts on the balance of the fiscal year 2008
    supplemental request?
        Mr. Arny. No, the Department has no intention of submitting a
    legislative proposal before Congress acts on the balance of the fiscal
    year 2008 supplemental request.

                   air force firefighter personnel reductions
        7. Senator Akaka. Secretary Anderson, as a result of a decision
    known as Program Budget Decision 720 (PBD 720) made inside DOD in
    developing the fiscal year 2008 budget, personnel reductions in excess
    of 30,000 positions in Air Force support functions such as base
    operations were required. The committee has received reports from
    numerous installations that these reductions will impact Air Force
    mission performance. Please provide the Air Force's assessment of the
    impact of these PBD 720 reductions on the effectiveness and safety of
    Air Force operations.
        Mr. Anderson. We could not quantify any increased risk at our
    installations or to our operations resulting from the reduction of
    firefighters. Air Force fire and emergency services experts conducted
    an extensive study of fire service capability beginning with the levels
    of service required. The study was reviewed at intervening command
    levels and approved by the Chief of Staff of the Air Force in Program
    Action Directive 07-02.
        During the study, we realized that our fire departments had more
    capacity than required due primarily to the unrealistic scenarios used
    as the basis for manpower. The scenarios included a catastrophic fire
    that involved the largest assigned aircraft or the most complex
    facility on the installation. Each of these scenarios required large
    numbers of firefighters to manage. In reality, catastrophic fires have
    rarely occurred on Air Force installations. Moreover, when such events
    did occur, the fire was catastrophic before firefighters arrived and
    regardless of the number of firefighters that responded, they could not
    prevent the damage and save the aircraft or facility.
        The study concluded that successful fire protection can only be
    achieved with effective fire prevention programs rather than
    maintaining large numbers of firefighters. Minimizing fire damage is
    only possible when firefighters arrive while the fire is small enough
    for direct attack and extinguishment. When firefighters arrive to find
    a catastrophic fire, their tactics involve defensive operations to
    prevent the fire from spreading.
        We are confident the focus on fire prevention and early
    intervention is in the best interest of the Air Force and constitutes
    the best use of scarce resources.

        8. Senator Akaka. Secretary Anderson, please provide a specific
    assessment of the number of firefighting positions reduced as a result
    of PBD 720, whether the Air Force has changed firefighting standards to
    comply with those personnel reductions, and, if not, how the Air Force
    is accomplishing the same mission with fewer people without changing
    safety or manning standards.
        Mr. Anderson. First of all, no standards were changed. Two primary
    standards continue to exist: (1) the amount of agent available to
    extinguish aircraft and structure fires; and (2) response time or time
    allowed for firefighters to reach the emergency. The Air Force and DOD
    do not prescribe a number of firefighters that must be available
    continuously, but a minimum for initial response.
        The reductions were carefully calculated to preserve manpower
    needed to perform the key tasks required during emergency operations.
    At many installations, more firefighters were being maintained
    continuously when fewer firefighters could perform all the tasks to
    manage the most probable fire event. Consequently, firefighters were
    identified for reduction without compromising the levels of service for
    any mission.
        With the reduction of firefighters, we could not quantify any
    increased risk. Nor could we identify any increased risk to the safety
    of firefighters since provisions that ensure firefighter safety are
    built into firefighting operational procedures, guidelines, and
    improvements in fire prevention.
        We are confident the reduction of capacity in our fire departments,
    while unpopular, will not increase the risk to our people, property,
    and missions.
                                     ______

                   Questions Submitted by Senator Bill Nelson
                             housing privatization
        9. Senator Bill Nelson. Secretary Anderson, unfortunately, I don't
    believe that the Air Force is pursuing all the options that are
    available to it as a service to resolve the housing privatization
    problem affecting so many of our bases. Some options are:

             Default on the deal and allow over 200 acres to revert
            back to the Air Force.
             Infuse cash into a new deal that would allow other
            bases to get their projects completed and Patrick Air Force
            Base (AFB) to receive the additional houses that it is owed.
             Default and pay bondholders their subsequent interests
            in the deal and then re-compete the project, allowing
            completion.

        If there is a way to resolve the housing privatization situation
    for all the affected bases (Little Rock, Moody, Hanscom, and Patrick),
    would you support that plan?
        Mr. Anderson. Yes, the Air Force will support a four-base plan. In
    fact, that is what the Air Force currently is doing through its
    participation in the ongoing negotiation of a consensual workout among
    the project owners, the bondholders, a prospective purchaser, and the
    Air Force.

        10. Senator Bill Nelson. Secretary Anderson, from meetings that
    I've had with Air Force Secretary Wynne and Chief of Staff General
    Moseley, it appears that the Air Force plan is to ``bundle'' the
    properties at Patrick, Hanscom, Moody, and Little Rock AFBs and take
    the equity from Patrick AFB property and those, yet unfinished, 400
    housing units, and spread that equity to the other bases for completion
    of their housing. I believe the Air Force is being fiscally
    conservative by not putting any money upfront on this deal, as opposed
    to the Army who puts upfront money to their privatization contracts.
    For their purposes, the Air Force has only offered equity in property.
    Isn't it true that the Air Force has bundled this project with Patrick,
    Hanscom, Moody, and Little Rock AFBs in order to take the equity from
    Patrick AFB, in land, and 400 unfinished housing units at Patrick AFB
    to salvage this deal?
        Mr. Anderson. There were many factors that contributed to the
    decision to bundle the four bases into a single project than just the
    potential financial contributions from Patrick AFB. The most
    expeditious solution to restarting the projects was a consensual sale
    of all projects to a single buyer. Buyer inputs clearly indicated a
    four-base deal was more attractive, given the sizes of each of the
    individual projects. Grouping enhances the long-term viability of the
    projects that are part of a group by increasing the resources available
    (across all the bases) to support the individual projects within the
    group, as needed, over the 50-year terms of these transactions. Since
    overhead and management costs are shared across the projects, each base
    benefits from the sale to a single buyer.

        11. Senator Bill Nelson. Secretary Anderson, in the case of an Air
    Force default on this project, the Air Force would get back its 200
    acres that were conveyed to American Eagle Communities. The Air Force
    has not exercised all its rights, so that they could recover damages
    they've already suffered. What other options, besides taking the
    equity, are available?
        Mr. Anderson. The additional rights that the Air Force may exercise
    at all bases include: (a) enforcement, in court, of its right to
    specific performance by the project owner of its obligations under the
    Use Agreement and Lease of Property; (b) its right to take possession
    of the project and operate it in accordance with the Use Agreement and
    Lease of Property; and (c) its right to secure appointment of a
    receiver to operate the project in accordance with the Use Agreement
    and Lease of Property.

        12. Senator Bill Nelson. Secretary Anderson, couldn't the Air Force
    use its own funding to rescue these projects?
        Mr. Anderson. The Air Force does not have the authority to use
    appropriated funds for purposes other than those for which such funds
    are appropriated. The Air Force has not received any appropriations
    that may be used to cure defaults by the American Eagle project owners
    under their contracts with local contractors or their written
    agreements with the Air Force.

        13. Senator Bill Nelson. Secretary Anderson, has the Air Force
    explored all options? If so, what are they? If not, why haven't you?
        Mr. Anderson. The Air Force has explored and is continuing to
    explore all viable options for resolution of the problems at the
    American Eagle projects. The options include consensual solutions,
    bankruptcy, and litigation. All parties believe that a consensual
    solution will result in the best outcome for everyone. Bankruptcy and
    litigation will be more costly, are likely to take years, and offer no
    certainty as to outcome.
                                     ______

                   Questions Submitted by Senator Mark Pryor
                          base realignment and closure
        14. Senator Pryor. Secretary Eastin, in past rounds of Base
    Realignment and Closure (BRAC), local redevelopment authorities (LRAs)
    were integral to disposal planning and BRAC implementation. I'm told
    that LRAs are no longer operating as a member of the Army Conveyance
    Teams and that all communication with LRAs is centralized and heavily
    controlled through your office. One of the lessons learned from past
    rounds of BRAC is that integrating the LRAs into the planning and
    decisionmaking process creates buy-in, fosters creative solutions, and
    accelerates transfers. Why is the Army apparently so reluctant to put
    the communities on the team this time around?
        Mr. Eastin. LRAs continue to play an integral role in the Army's
    disposal planning and BRAC implementation. During the initial planning
    phase, the Army immediately reached out to establish LRA relationships
    in order to open a line of communication and buy-in with the
    communities affected by BRAC recommendations. The LRAs are an integral
    component in the Army Conveyance Teams, whose purpose is to coordinate
    and expedite the processing of property transfer actions.

        15. Senator Pryor. Secretary Eastin, is the Army reprogramming BRAC
    environmental funds or will the dollars that were provided based on
    Department requests for each site be available for remediation activity
    at those sites?
        Mr. Eastin. The Army plans to spend BRAC environmental funds
    received in a manner consistent with justification materials submitted
    to Congress in support of the President's budget request. The Army does
    not currently plan to reprogram BRAC environmental funds.

        16. Senator Pryor. Secretary Eastin, 10 U.S.C. 2665 calls for 40
    percent of net forest products sales proceeds and forest land sales
    proceeds that occur on Army property to be distributed to the local
    county. Does this distribution apply to the sale of BRAC property, in
    your judgment?
        Mr. Eastin. When we sell forest products on land that is part of an
    active installation, we are required to distribute the net proceeds to
    local communities in accordance with the provisions of 10 U.S.C. 2665.
    When we dispose of surplus real property located at an installation
    that has been closed or realigned, we do so under the General Services
    Administration's authority under 40 U.S.C. 541, the Federal Property
    and Administrative Services Act of 1949, and in accordance with the 41
    CFR 102, the Federal Management Regulation. BRAC law delegates this
    authority to the Army for real property disposal at closed or realigned
    installations. BRAC law also requires that proceeds received from the
    lease, transfer, or disposal of any property at a closed or realigned
    installation shall be deposited into the BRAC account. Standing timber
    is considered real property, and in accordance with BRAC law, the Army
    will deposit all proceeds from the sale of surplus standing timber into
    the BRAC account. Once deposited into the BRAC account, these funds are
    then used to clean up and maintain BRAC property prior to its transfer
    for community reuse.

                             housing privatization
        17. Senator Pryor. Secretary Anderson, in early January the Air
    Force was fairly confident that a letter of intent for the renegotiated
    sale of the housing privatization projects at Little Rock, Moody,
    Hanscom, and Patrick AFBs would be signed by the current project's
    bondholders, Shaw/Carabetta, the Air Force, and a new developer. Why
    was this letter never signed? What were the issues that led to a
    failure to reach a deal?
        Mr. Anderson. The letter of intent was executed by a prospective
    purchaser of all of the assets of the American Eagle projects and the
    owners of the projects effective April 2, 2008.

        18. Senator Pryor. Secretary Anderson, Senator Chambliss and I
    introduced legislation earlier this year in an attempt to provide some
    oversight on this problem. Have you read it? One to the issues we were
    extremely concerned with was the fact that our local subcontractors and
    suppliers involved in the project were left unpaid for $2.6 million
    (Arkansas) and nearly $7 million (Georgia) worth of work and materials.
    Does the Air Force plan to conduct town hall meetings to communicate
    the nature of the project and current sale negotiations, contractual
    agreements, and potential liabilities to local construction management
    companies and subcontractors?
        Mr. Anderson. Yes, I have read your proposed legislation. I
    recently met with leaders in the communities where the American Eagle
    projects are located and with subcontractors adversely impacted by
    their business relationships with the American Eagle project owners. We
    are continuing to monitor the payment of liens and claims to the
    subcontractors on all these projects. We plan to conduct more town-hall
    meetings with the residents and leadership of these installations and
    local community leaders as we move forward with the consensual workout.

        19. Senator Pryor. Secretary Anderson, Carabetta Developers, the
    parent company for American Eagle Communities, has a 25-year record
    that includes business failures, bankruptcy, and unpaid subcontractors.
    What type of background checks does the Air Force complete before
    awarding contracts to developers, and how was Carabetta's history
    missed or disregarded?
        Mr. Anderson. The Air Force considers Federal exclusion lists,
    Federal past-performance databases, Dun and Bradstreet Reports,
    information provided by other government agencies, and information
    provided by or at the request of offerors. Carabetta's bankruptcy and
    problems with HUD were considered in the 2003 evaluations of the past
    performance of the American Eagle offerors and were not disregarded. At
    that time, Carabetta's Chapter 11 reorganization plan had been approved
    by the bankruptcy court and HUD had resolved its problems and was doing
    additional business with Carabetta. Another important factor in the
    evaluation of the American Eagle offerors for the Hanscom, Little Rock,
    and Patrick projects was the favorable performance record of Shaw
    Infrastructure, Inc., which owns 50 percent of the American Eagle
    projects at Hanscom and Little Rock and 30 percent of the American
    Eagle project at Patrick.

        20. Senator Pryor. Secretary Anderson, explain what a cure notice
    does.
        Mr. Anderson. A cure notice is sent by one of the parties to a
    written agreement to another party to that agreement to notify the
    second party of its default under the agreement. If the second party
    fails to cure the default within the cure period stated in the
    agreement and does not dispute the alleged default, then the party that
    sent the cure notice may exercise its remedies under the agreement.

        21. Senator Pryor. Secretary Anderson, how many cure notices were
    presented to American Eagle Communities before the project defaulted?
    Why?
        Mr. Anderson. In August 2007, formal cure notices were sent to the
    owners of the American Eagle projects to provide notice to each of them
    (a) of defaults under the Air Force documents and (b) that the Air
    Force intended to exercise its rights and remedies if the defaults were
    not cured within the cure periods stated in such documents. Prior to
    delivery of the formal cure notices, the parties had engaged in an
    ongoing dialogue about the alleged defaults.
                                     ______

                   Questions Submitted by Senator John Thune
                         relocation of marines to guam
        22. Senator Thune. Secretary Penn, I note in your prepared
    testimony concerning the 2005 agreement to relocate 8,000 marines from
    Okinawa to Guam that the United States and Government of Japan (GOJ)
    ``have negotiated a GOJ contribution of $6.09 billion of the estimated
    $10.3 billion cost for infrastructure on Guam.'' I understand that, of
    the $6.09 billion, $3.29 billion will be provided loans to special
    purpose entities (SPE) who will provide housing and utilities for the
    marines and their families. Am I correct that the GOJ will recoup their
    investment by collecting rent for housing units and charging utility
    fees to Marine Corps personnel?
        Mr. Penn. It is the intention of the GOJ to recover their
    investments of cash and financial instruments on the housing through
    payments made by the U.S. Government to the SPE for housing via the
    Overseas Housing Allowance (OHA). It is the intention of the GOJ to
    recover their investment in utilities through payments made by the
    facilities utilizing the services.

        23. Senator Thune. Secretary Penn, can you provide more details
    about the funding plan for military housing?
        Mr. Penn. The GOJ has committed to funding $2.1 billion of equity
    investments and loans to a SPE that would construct, operate, and
    maintain the military housing for the marines relocating from Okinawa.
    In May 2007, the GOJ passed a Special Measures Law Concerning Smooth
    Implementation of the Realignment of U.S. Forces in Japan and Related
    SDF Forces, as well as a Supplementary Resolution that authorized JBIC
    funding for the SPEs. We continue discussions with representatives of
    the GOJ on additional implementing details, funding priorities, and
    schedules.

        24. Senator Thune. Secretary Penn, does the Navy currently lease
    houses for the marines on Okinawa or pay for utilities? If so, what are
    the annual costs?
        Mr. Penn. The Navy does not currently lease any houses for the
    marines on Okinawa. The Air Force is the DOD ``Executive Agent'' for
    family housing in Okinawa and supports the Marine Corps requirement
    there through the provision of government quarters. Based on
    information provided by the Air Force, the total fiscal year 2007
    utility cost associated with the housing occupied by Marine families
    was $14.9 million, of which $11.3 million was reimbursed by the GOJ.

        25. Senator Thune. Secretary Penn, if the Navy will pay rent, has
    the Department determined what will be the additional impact to annual
    Navy budgets from this agreement?
        Mr. Penn. Impacts to Navy budgets from this agreement continue to
    be assessed. Until final agreement implementation details are
    determined, any additional impacts cannot be fully determined.

        26. Senator Thune. Secretary Penn, I am concerned that the Japanese
    annual contributions under the Japanese Facilities Improvement Program
    (JFIP) have steadily declined from a 2003 annual level of $800 million
    to under $300 million in 2007. These burdensharing funds construct and
    improve facilities supporting U.S. forces stationed in Japan. Will any
    funds annually negotiated as part of the JFIP be used to satisfy the
    GOJ commitment of $2.8 billion to fund construction for the Guam
    relocation?
        Mr. Penn. The JFIP is one element of Japan's total host nation
    support (HNS) to U.S. forces. The JFIP and GOJ funding for global
    posture realignment are separate and distinct categories of the GOJ
    budget. Although there have been cuts in the JFIP budget in recent
    years, there is at most an indirect relationship between JFIP cuts and
    increased funding for posture realignment.
        The JFIP is a voluntary GOJ HNS program that funds improvements to
    facilities that U.S. Forces in Japan use. Cuts in the JFIP began in the
    late 1990s, with annual JFIP spending declining from over $800 million
    to approximately $250 million. These cuts have accelerated,
    particularly in each of the past 3 years. As part of a fiscal restraint
    policy, Japan has also cut its own annual defense spending in recent
    years to approximately $41 billion or 0.95 percent of gross domestic
    product.
        Notwithstanding the voluntary nature of the JFIP, the U.S.
    Government raised concerns with the significant and continuing cuts in
    JFIP during recently-concluded successful negotiations on a 3-year
    extension of the separate Special Measures Agreement (SMA) covering
    Japan's HNS for labor, utilities, and training relocation. The
    administration secured a verbal GOJ commitment to maintain JFIP at
    ``sustainable levels,'' which we understand to be roughly equal to the
    current annual amount of at least $250 million. Additionally, the
    administration secured a GOJ commitment that, over the next 3 years,
    the United States and GOJ would conduct a comprehensive review of HNS.
    That review will evaluate JFIP, SMA, and other elements of HNS and
    defense spending within the larger context of ensuring balanced
    contributions to the alliance.

        27. Senator Thune. Secretary Penn, if the total construction cost
    estimates rise over the next 5 years beyond the current estimate of
    $10.3 billion, who will pay the additional costs?
        Mr. Penn. The U.S. Government will pay any additional costs. Japan
    contributions of $2.8 billion in direct payments and $3.29 billion of
    equity investments and loans to SPEs are estimates in terms of U.S.
    fiscal year 2008 dollars and represent the maximum contributions by the
    GOJ. If cost savings are realized in the execution of the project, the
    GOJ will share in those savings.

        28. Senator Thune. Secretary Penn, per the agreement, is the GOJ
    contribution for direct cash capped at $2.8 billion?
        Mr. Penn. Yes.

        29. Senator Thune. Secretary Penn, the DOD Inspector General (IG)
    noted in a March 2007 report that the Marine Corps had failed to budget
    for increased operation and maintenance costs on Guam, costs that are
    currently paid by the GOJ on Okinawa. Has the Department budgeted for
    these increase costs?
        Mr. Penn. Tentatively, yes. In a 9 January 2007 response to the DOD
    IG, the Marine Corps stated: ``. . . the Marine Corps received $2.5
    billion in funding from Program Decision Memorandum IV to execute this
    [relocation to Guam] initiative across the Program Objectives
    Memorandum 2008 Future Defense Program.'' A portion of these funds were
    allocated to operation and maintenance costs on Guam. Construction on
    Guam is not expected to begin until fiscal year 2010. Future budget
    cycles will refine operation and maintenance costs requirements
    consistent with the completion of construction projects and relocation
    of units from Okinawa to Guam.

        30. Senator Thune. Secretary Penn, is the Department aware of any
    other operation and maintenance costs to be incurred by the relocation?
    If so, can you elaborate?
        Mr. Penn. No. However, impacts to Navy budgets from this agreement
    continue to be assessed. Until final roadmap realignment details are
    determined, any additional impacts cannot be fully assessed.

                                synthetic fuels
        31. Senator Thune. Secretary Anderson, in your written testimony to
    the House last week on the subject of synthetic fuels, you stated,
    ``The Air Force goal is to cost-effectively acquire 50 percent of our
    continental United States (CONUS) aviation fuel via a synthetic fuel
    blend utilizing domestic feedstocks and produced in the United States
    by 2016, with the intent to require that the synthetic fuel purchases
    be sourced from suppliers with manufacturing facilities that engage in
    carbon dioxide capture and effective reuse.'' How will the Air Force
    assess whether the requirement is met for suppliers' manufacturing
    facilities to engage in carbon dioxide capture and effective re-use?
        Mr. Anderson. After the Air Force completes testing and certifying
    the 50/50 synthetic blend, solicitations for operational synthetic fuel
    procurements will be arranged through the Defense Energy Support Center
    (DESC). The Air Force Petroleum Agency, the Air Force's Service Control
    Point to DESC for all fuel related issues, will identify an operational
    fuel requirement that will include language to ensure the synthetic
    fuel is greener (engaging in carbon capture and reuse) than petroleum
    based fuel. DESC will then manage the procurement, ensuring the
    contract language required to support the carbon dioxide capture and
    effective reuse requirement is included in the solicitation, and
    requiring that the manufacturers that bid on the contracts show that
    they meet the requirements and standards.

        32. Senator Thune. Secretary Anderson, if Congress were to extend
    the existing multi-year procurement authority for electricity to
    include synthetic fuels, what impact would that have on your goals?
        Mr. Anderson. This could only help. A long-term contract would
    reduce the risks and uncertainties that dissuade industry from getting
    involved in the first place. With less risk, industry has a better
    chance to grow, thus helping the Air Force execute its strategic goals.

        33. Senator Thune. Secretary Anderson, in an article in the Federal
    Times on Monday, March 10, 2008, a special assistant working for you,
    Paul Bollinger, said in reference to a standard of manufacturing
    synthetic fuels, ``Industry experts producing this fuel say they can
    meet the standards, but there is not standard. Until we get a standard,
    we can't buy the fuel.'' Can you describe how the lack of a standard
    affects the Air Force's synthetic fuel acquisition goals?
        Mr. Anderson. Section 526 prohibits the Federal Government from
    purchasing unconventional and alternative fuels for commercial purposes
    that do not have green house gas (GHG) emissions on a life-cycle
    analysis (LCA) basis that are equal to or less than petroleum. At this
    time there are no standards that would quantify the GHG LCA emissions
    for petroleum or unconventional/alternative fuels. The standard and
    models used for the establishment of the standards are currently being
    discussed by EPA with the InterAgency Working Group on Alternative
    Fuels (which represents all Federal departments and agencies involved
    in alternative fuels).
        Mr. Bollinger's statement in Federal Times was in reference to
    plants that will be producing domestic, alternative fuels in the near
    future. If the GHG LCA emission standards are not developed by the time
    these plants start producing alternative fuel, the Federal Government
    would be prohibited from buying this new source of domestic,
    alternative fuel due to section 526 of the 2007 Energy Independence and
    Security Act. A consistent and fair baseline, and analytical framework,
    needs to be established in a transparent fashion that meets the spirit
    of the law without impeding the development of the alternative fuels in
    order to help wean America off its dependence on foreign oil.

        34. Senator Thune. Secretary Eastin, can you please describe the
    Army's goals and policies regarding the uses of synthetic fuels?
        Mr. Eastin. The use of synthetic fuels is specifically cited in the
    U.S. Army Energy and Water Campaign Plan for Installations and
    discusses reduction of fossil fuel usage in non-tactical vehicles. This
    policy references synthetic fuels (including coal-derived liquid fuels)
    as a fuel recognized by the Energy Policy Act of 2005 as an alternative
    fuel used to reduce government consumption of petroleum-based fuels.
        Research and testing of synthetic fuels for tactical vehicle use
    has been conducted by the U.S. Army Tank Automotive Research,
    Development and Engineering Center (TARDEC), primarily by their Fuels
    and Lubricants Laboratory. TARDEC conducts research and testing of
    alternative fuels to assess their potential for use in tactical
    vehicles and related fuel storage, distribution, and handling
    equipment. TARDEC has evaluated test fuel samples of synthetic fuel,
    including samples provided from a demonstration facility in Tulsa,
    Oklahoma, that was operated by Syntroleum Corporation to produce test
    fuel samples for research and testing purposes.
        At the present time, synthetic fuels are considered a subject of
    research and testing only and are not currently used to meet the fuel
    needs of tactical or non-tactical vehicles.

        35. Senator Thune. Secretary Penn, can you please describe the
    Navy's goals and policies regarding the uses of synthetic fuels?
        Mr. Penn. The Navy and Marine Corps Tactical Vehicle Alternate
    Fuels strategy is to allow market forces to determine commercially
    viable and environmentally compliant alternate fuels candidates. Navy
    and Marine Corps will focus their efforts and funding on the
    development and validation of Navy-specific evaluation and
    certification protocols necessary to allow alternate fuels use in
    tactical vehicles (ship, aviation and ground tactical vehicles) when
    they become available. Naval Fuels and Lubricants Cross Functional Team
    will lead the protocol development for Navy tactical vehicles by 2011
    and protocol validation and certification of the most promising
    synthetic fuel candidate(s) for potential use in Navy tactical vehicles
    by 2013. Environmental issues (i.e., impact on greenhouse gas emissions
    and land utilization), have emerged as a significant concern; section
    526 of the 2007 Energy Independence and Security Act legislation limits
    the U.S. Government to only purchasing alternate fuels if their
    greenhouse gas emissions are less than the standard for petroleum
    (except for test and evaluation purposes). Collaborative efforts are
    ongoing with the DOE and EPA to define these standards and
    methodologies for calculating greenhouse gas burdens. Limited effort on
    protocol development has been initiated using available funding.
    Funding to complete protocol development, validation, and testing will
    be considered in future budgets; this effort is in compliance with the
    current legislation.

           reduced funds for base realignment and closure activities
        36. Senator Thune. Mr. Arny, in the Fiscal Year 2008 Omnibus
    Appropriations Bill passed late last year, Congress cut $939 million
    from the 2005 BRAC account to pay for other projects. In your written
    testimony, you state: ``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.''
    Statements like this are causing much concern in communities around the
    country trying to recover from closures as well as planning schools,
    roads, and infrastructure for significant increases in military
    populations. Assuming full funding is restored in the second fiscal
    year 2008 emergency supplemental, which Congress will consider in
    April, is the Department currently on track to meet the 2011 deadline
    for all closures and realignments?
        Mr. Arny. Assuming full funding is restored in the second fiscal
    year 2008 emergency supplemental, the Department is still tracking to
    complete the Base Realignment and Closure 2005 process by September 15,
    2011.

        37. Senator Thune. Mr. Arny, which closure and realignment actions
    will be affected by a reduction in funds?
        Mr. Arny. The Department will experience disruptive delays in
    constructing much needed facilities unless Congress restores the full
    funding requested in the fiscal year 2008 President's budget in a
    timely manner so programmed actions can be executed in accordance with
    the planned schedule. MILCON and quality of life initiatives constitute
    large, crucial portions of a carefully synchronized plan. Without full
    funding, the Department's BRAC program will result in higher costs as
    projects are deferred.
        The Department allocated the $939 million cut against the Military
    Department's BRAC programs as follows: Army $560 million, Navy $143
    million, and Air Force $235 million.
        The Army's $560 million decrement in BRAC funding, absorbed
    completely by construction, places the Army at a very high risk for
    meeting every aspect of the BRAC law. It would have three major
    consequences: (1) Delay the facilities for the equivalent of one Grow
    the Army (GTA) Brigade Combat Team (BCT) or 4,000 soldiers; (2)
    Eliminate unit ``beddown,'' operational, and quality of life facilities
    in support of the Army Modular Force, Global Defense Posture
    Realignment (GDPR), and CS/CSS for GTA; (3) Impact Army Force
    Generation in support of global war on terrorism (increasing BCT
    ``Boots on the Ground'' time for deployed soldiers, and decreasing
    dwell time for soldiers at home station).
        The Department of Navy absorbed $97 million (68 percent) of its
    $143 million reduction in the BRAC construction program. The remaining
    $46 million reduction was absorbed in the Operation and Maintenance
    category. Until the funds are restored, the Navy will have to delay
    starting construction for facilities to accommodate the collocation of
    DOD's investigative agencies at Quantico, VA, and a smaller cargo
    handling facility in Fort Lewis, WA.
        The Air Force absorbed $129 million (55 percent) of its $235
    million reduction in the BRAC construction program. The remaining $106
    million reduction was absorbed in the Operations and Maintenance
    category. The unfunded construction projects are comprised of 20
    projects that would impact ``beddown'' of missions at Kulis Air Guard
    Station (AGS), AK; Moody AFB, GA; MacDill AFB, FL; Davis Monthan AFB,
    AZ; F.E. Warren AFB, WY; Great Falls IAP AGS, MT; Hill AFB, UT; and
    Rome Research Lab, NY; would impact establishing the initial Joint
    Strike Fighter training site at Eglin AFB, FL; and would impact quality
    of life projects at Shaw AFB, SC, which supports Army members and
    families arriving from the closure of Fort McPherson, GA.

             cost growth control for base closure and realignments
        38. Senator Thune. Mr. Arny, the cost to carry out the decisions of
    the 2005 BRAC round have risen 48 percent since 2006, from $22.5
    billion to $33.2 billion. At the same time, this committee is aware of
    numerous MILCON projects related to BRAC that are being scaled back to
    keep the costs from rising even further. Organizations that are being
    moved under BRAC may end up in new facilities that do not fully meet
    their requirements. This unfortunate trade-off affects both readiness
    and mission effectiveness. Can I get your assurance that each BRAC
    construction project is and will be awarded at their full scope as
    provided for in their approved business plans?
        Mr. Arny. I am not aware of facilities that do not fully meet
    mission requirements. Every project validated as a BRAC requirement has
    already been or will be funded through BRAC.
        DOD reviews each recommended implementation plan twice annually to
    ensure that it is in compliance with the BRAC law. Each of those
    reviews provides an opportunity to direct corrective action.
    Additionally, the Office of Secretary of Defense's Office of General
    Counsel is a key player in reviewing these plans to ensure that they
    are legally sufficient and to verify that the Department is meeting its
    legal obligations.

        39. Senator Thune. Mr. Arny, what is DOD doing to ensure that
    organizations do not end up with less than what they had before BRAC?
        Mr. Arny. DOD reviews each recommended implementation plan twice
    annually to ensure that it is in compliance with the BRAC law. Each of
    those reviews provides an opportunity to direct corrective action.
    Additionally, the Office of Secretary of Defense Office of General
    Counsel is a key player in reviewing these plans to ensure that they
    are legally sufficient and to verify that the Department is meeting its
    legal obligations.

        40. Senator Thune. Mr. Arny, what is DOD doing to ensure the
    quality of construction, such as the designed life of a building, is
    not reduced in order to keep costs lower?
        Mr. Arny. DOD's design and construction agents have not reduced
    facility design life parameters in order to reduce costs. For example,
    the Army has preserved a design life of 50 years for life cycle cost
    analysis and they value engineering considerations during the facility
    design process. Construction budgets for projects in the President's
    budget request for fiscal year 2009 reflect performance standards and
    requirements of DOD Unified Facility Criteria, the Energy Policy Act of
    2005, and Executive Order 13423 (which addresses facility
    sustainability). DOD is committed to leverage industry strengths and
    best practices to ensure the delivery of sustainably-designed and
    constructed facilities that will perform efficiently over a complete
    expected service life.

                    housing privatization for the air force
        41. Senator Thune. Secretary Anderson, concerning the Air Force
    housing privatization program, I realize the Air Force has a problem
    with one developer, who has stopped work at four AFBs. While working
    through these problems, what lessons has the Air Force learned that
    will be applied to future housing privatization endeavors?
        Mr. Anderson. Lessons learned from problems with the American Eagle
    projects have led to improvements in the Air Force housing
    privatization program. Among the changes we have made is the
    centralization of the Air Force source-selection process for housing
    privatization projects with the Deputy Assistant Secretary of the Air
    Force (Installations). Additionally, Air Force oversight of
    construction during the initial development of privatization projects
    is now centralized at the Air Force Center for Engineering and the
    Environment.

        42. Senator Thune. Mr. Arny, what would the impact be to the DOD
    housing privatization program if Congress mandated an increase in
    government control and a Federal guarantee of private sector loans in
    the transactions?
        Mr. Arny. Additional government control over military housing
    privatization projects would be undesirable, unnecessary, and contrary
    to the very nature of privatization. Military housing privatization
    initiative (MHPI) projects are structured as private sector
    transactions to facilitate private sector financing and to reduce the
    amount of appropriated funding required for budget scoring. Legislation
    prescribing requirements and procedures that substantially conflict
    with how privately financed housing projects are executed could
    undermine private sector financing and execution of MHPI projects, as
    well as substantially increase the government contribution required to
    support MHPI projects. Any such legislation could return the military
    Services to a reliance on MILCON funding for new housing construction
    to meet requirements generated by force restructuring requirements.
    Specifically, legislation to require a Federal guarantee of private
    loan funds in transactions involving privatized military housing would
    likely result in total project funding being scored for budgetary
    purposes, because the Department would be required to obligate funds
    equal to the full amount of the loan at the time the guarantee is made.
        Legislation increasing government control is unnecessary. The
    Department has an effective oversight program for housing privatization
    project performance, to include detailed upward reporting by the
    military departments. In addition, Congress currently monitors housing
    privatization program performance based on the Department's submission
    of a program evaluation plan (PEP). DOD is willing to work with
    Congress to further enhance DOD's monitoring efforts for earliest
    identification of project issues.

             military construction for missile defense requirements
        43. Senator Thune. Mr. Arny, the fiscal year 2009 budget request
    includes MILCON authorization of $661 million to construct a Ballistic
    Missile Defense (BMD) interceptor site in Poland and $176.2 million to
    construct a BMD midcourse radar site in the Czech Republic. The U.S.
    Government is currently negotiating a memorandum of agreement with each
    host nation for siting and support. What is the current status of these
    negotiations?
        Mr. Arny. Host nation agreements are expected no later than the
    fourth quarter of fiscal year 2008 to support award and execution of
    fiscal year 2009 MILCON projects.

        44. Senator Thune. Mr. Arny, when are the agreements planned to be
    completed and signed?
        Mr. Arny. Agreements are expected to be completed no later than the
    fourth quarter of fiscal year 2008.

        45. Senator Thune. Mr. Arny, the Missile Defense Agency (MDA) plans
    to use the Boeing Company, the prime contractor for delivery of the
    missiles, to also solicit and award contracts for the construction of
    the interceptor site through a series of task orders. This is a highly
    unusual arrangement as the DOD usually relies on the United States Army
    Corps of Engineers (USACE) to carry out major construction efforts. It
    also raises a whole host of questions about proper stewardship for
    taxpayer funds. What are the pros and cons of using hardware
    contractors to act on the Government's behalf to solicit and manage
    MILCON activities?
        Mr. Arny. DOD does not see clear advantages to using only hardware
    vendors to manage MILCON activities, and does not plan to execute
    MILCON in support of the Europe interceptor site and radar site without
    the involvement of the USACE. However, the nature of this complex
    project presents a compelling need for a close working relationship
    between the hardware vendor and the MILCON agent to achieve the project
    milestones. USACE and MDA are in the process of developing an
    acquisition strategy intended to accomplish that goal that my office
    will review and approve.

        46. Senator Thune. Mr. Arny, does DOD have any directives or
    guidance for the use of a contractor in lieu of the USACE for this type
    of activity?
        Mr. Arny. Consistent with 10 U.S.C. Sec. 2851, DOD policy
    prescribes geographically-assigned construction agents for MILCON
    activities outside of the United States. For the missile defense sites
    in Europe, the Department of the Army is the designated DOD
    construction agent.

        47. Senator Thune. Mr. Arny, how will DOD ensure that the Federal
    Government receives a quality product?
        Mr. Arny. DOD plans to use a partnership between the MDA and the
    U.S. Army Corps of Engineers (USACE) to exercise contractual control
    over Boeing and other construction contractors to be determined. While
    specific partnering arrangements are still being developed, DOD
    anticipates each organization will leverage its unique expertise and
    responsibilities to provide the required level of quality and
    performance.

        48. Senator Thune. Mr. Arny, do you see this type of contract as a
    precedent for future construction efforts in support of the beddown of
    major weapon systems?
        Mr. Arny. The contractual arrangements resulting from the
    partnership between the MDA and the USACE are a function of the
    characteristics of the missile defense program: fast-track, evolving
    technology, and highly infrastructure-dependent. These arrangements
    could well serve as a template for future programs that share similar
    characteristics, but not necessarily for all major weapons systems.

        49. Senator Thune. Mr. Arny, the fiscal year 2009 budget request
    for construction of the interceptor site and radar is not accompanied
    by a request to construct any installation facilities such as barracks,
    dining facilities, emergency response stations, and other base support
    facilities which are absolutely essential to the operation of these
    sites. Should DOD be building these facilities concurrently with the
    construction of the operational sites?
        Mr. Arny. The Services are reviewing requirements for non-mission
    support facilities and plan to include projects in the Future Years
    Defense Program after the facility requirements have been determined.

        50. Senator Thune. Mr. Arny, what is the investment and
    construction plan for these support facilities and infrastructure?
        Mr. Arny. The investment and construction plan for these support
    facilities and infrastructure will be developed after the facility
    requirements are determined.

      costs for milcon to support growth in the army and the marine corps
        51. Senator Thune. Secretary Eastin, in January 2007, the President
    announced plans to grow the Army by 74,000 and the Marine Corps by
    27,000 over the next 5 years. On December 19, 2007, the Army announced
    basing decisions for six brigade combat teams that form the majority of
    the new combat forces. To support this initiative, the Army is
    requesting $4.2 billion in fiscal year 2009 alone for new barracks,
    company operations facilities, and community support building. Does the
    Army have an estimate of the total MILCON and family housing costs to
    support the growth of the Army?
        Mr. Eastin. The current estimated cost for facilities which support
    Army growth is $11.2 billion, from fiscal year 2007 through fiscal year
    2013. This includes MILCON, Army; MILCON, Army Reserve; MILCON,
    National Guard; and Army Family Housing dollars to directly fund
    facility projects. It also includes Other Procurement, Army and
    Operation and Maintenance funds for furniture, information technology,
    and other requirements which support MILCON projects. The total also
    encompasses three medical projects which were programmed by the Army
    and transferred to the TRICARE Management Agency for execution. As
    future budget submissions are developed using refined budget estimates
    based on more fully developed project designs, costs may fluctuate.
    This cost estimate represents all known Grow the Army requirements for
    the Active and Reserve components at this time.

        52. Senator Thune. Secretary Eastin, can you provide by fiscal year
    an estimate of the amount to be invested?
        Mr. Eastin. Congress has provided a total of $2.8 billion to date
    to meet facility requirements supporting Army growth, including $402
    million in the fiscal year 2007 supplemental budget and $2.4 billion in
    the fiscal year 2008 base budget. The Army requested $4.2 billion for
    fiscal year 2009. It currently projects requirements of $2.4 billion
    for fiscal year 2010, $456 million for fiscal year 2011, $289 million
    for fiscal year 2012, and $124 million for fiscal year 2013. These
    figures include only the MILCON appropriations; the Other Procurement,
    Army and Operation and Maintenance funding requirements for fiscal year
    2009 through 2013 total $923 million. The Army is currently reviewing
    all requirements during the fiscal year 2010 through 2015 programming
    process.

        53. Senator Thune. Secretary Eastin, will the funding plan allow
    the Army to ensure permanent facilities are in place for the additional
    forces?
        Mr. Eastin. The Army's fiscal year 2009 MILCON budget request and
    fiscal year 2010 through 2013 MILCON program have been carefully
    synchronized to deliver facilities on a timeline which supports the
    effective dates for activation of six growth Brigade Combat Teams,
    Combat Support units, and Combat Service Support units across all Army
    components. The construction program includes permanent operational
    facilities, barracks and dining facilities, training ranges, medical
    facilities, child development centers, Army family housing, and other
    quality of life facilities. It also includes infrastructure projects,
    such as roadways and utility lines, to support the increased number of
    soldiers on installations, training base projects to enable the Army to
    instruct additional soldiers, and industrial base projects to increase
    the Army's depot-level maintenance capacity. Successful implementation
    of Army growth will require full and timely MILCON funding.

        54. Senator Thune. Secretary Eastin, within the plan to grow the
    Army, is the Army planning to enlarge or expand training ranges? If so,
    how much funding is planned for this requirement?
        Mr. Eastin. As the Army has reported to Congress in the annual 366
    report and in previous testimony, the Army operates at an overall
    training land deficit (2 million acres in CONUS; the shortfall will
    more than double by 2011). The Army is always working to mitigate this
    shortfall through a variety of means. However, all of these mitigation
    measures, including training on other federally owned lands, cannot
    eliminate the training land deficit. Therefore, one of the options that
    must remain available to the Army is the acquisition of land where it
    is feasible and fiscally prudent.
        Of the Army IBCT-growth locations; Fort Bliss, Fort Carson, Fort
    Stewart, and White Sands Missile Range, the Army is only reviewing a
    possible land acquisition at a sub-installation of Fort Carson called
    the Pinon Canyon Maneuver Site (PCMS). This potential acquisition was
    proposed before the Army growth plan was developed. The Army's interest
    in land acquisition at PCMS is based on a long-term review of all Army
    land assets. The decision to station a growth IBCT at Fort Carson was
    based on many factors and the Fort Carson growth is not the basis for
    the Army's interest in buying land at PCMS.
        Fort Carson and PCMS, like most other Army installations, do not
    have sufficient training lands according to the requirements
    established by Army Doctrine. The additional IBCT at Fort Carson will
    increase that deficit. Without buying land at PCMS, the Army will have
    to adapt from doctrinal standards, which address multiple contingencies
    that our forces may face both now and in the future. There will be
    costs and implications associated with working around the doctrinal
    standards.
        In terms of expanding Army firing ranges within the current
    boundaries of PCMS to accommodate Army transformation and growth, the
    Army has identified a requirement to construct several ranges and
    support facilities. These facilities would require approximately 30
    full time positions that would benefit the local community around PCMS.
        It is important to reiterate that any land purchases at PCMS will
    use MILCON appropriations and would have to be specifically approved by
    Congress. The current estimate is that the Army would request about $52
    million to purchase approximately 130,000 acres.

        55. Senator Thune. Secretary Penn, the Marine Corps will grow their
    force by 27,000 in the next 5 years. Your statement for this hearing
    describes a $1.3 billion budget request for barracks to support growth
    in the force, but in reality, the funds will be used to address
    existing deficits in dormitory space and ancillary facilities required
    for the bases' force of 185,000 marines. The construction investment
    for the additional marines starts in fiscal year 2010. Your testimony
    states, ``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.'' Does the Navy have an estimate
    of the total MILCON and family housing costs to support the growth of
    the Marine Corps?
        Mr. Penn. The Marine Corps' 2+0 Barracks Initiative was originally
    programmed to eliminate space deficiencies in support of our fiscal
    year 2008 baseline end strength. While it is true that some of our $1.3
    billion in barracks funding in our fiscal year 2009 budget was
    partially programmed to support this baseline end strength, it is
    nevertheless a critical enabler to our ability to expeditiously
    eliminate all of our total force space deficiencies, including those
    associated with an end strength of 202,000. As stated in our Grow the
    Force Initiative report to Congress in October 2007, our total MILCON,
    family housing, and temporary facility estimate is still currently $7.1
    billion.

        56. Senator Thune. Secretary Penn, can you provide an estimate of
    the amount to be invested by fiscal year?
        Mr. Penn. Please refer to the table pasted below. Funding
    requirements beyond fiscal year 2009 may change due to programming or
    pricing adjustments.
        The Grow the Force MILCON and family housing investment by fiscal
    year included in the President's budget fiscal year 2009 Future Years
    Defense Program (FYDP) is as follows:

    ----------------------------------------------------------------------------------------------------------------
                                                                 Fiscal Year
                                          --------------------------------------------------------    Total Fiscal
                                            2007    2008    2009    2010    2011    2012    2013    Years 2007-2013
    ----------------------------------------------------------------------------------------------------------------
    MCON.................................     324     540   1,300   1,887   1,346     939       0              6,336
    Family Housing.......................       0      87     126      84     127     148       0                571
                                          --------------------------------------------------------------------------
      Total..............................     324     627   1,425   1,971   1,472   1,087       0              6,907
    ----------------------------------------------------------------------------------------------------------------

        57. Senator Thune. Secretary Penn, does the funding plan include
    replacing temporary facilities with permanent ones?
        Mr. Penn. Yes, the Marine Corps intends to replace all temporary
    facilities with permanent facilities.

        58. Senator Thune. Secretary Penn, how long will marines live and
    work in trailers and temporary facilities?
        Mr. Penn. Due to the long lead time for permanent facilities, units
    may be in temporary facility solutions for 2-4 years after unit
    standup. Temporary facility solutions include: doubling up in existing
    facilities, slowing planned building demolition for use in the short
    term, and relocatable facilities (trailers, sprung shelters, and pre-
    engineered buildings).

        59. Senator Thune. Secretary Penn, within the plan, is the Marine
    Corps planning to enlarge or expand training ranges? If so, how much
    funding is planned for this requirement?
        Mr. Penn. The Marine Corps will continue to modernize our existing
    ranges in order to provide the most efficient and effective training
    environment for our marines. Many of these modernization efforts pre-
    date the Grow the Force initiative.
        Currently, we are studying the requirement to expand MCAGCC
    Twentynine Palms in order to advance warfighting skills at the Marine
    Air Ground Task Force level by allowing training of three battalions of
    marines simultaneously. An environmental review of this proposed
    action, and any attendant training airspace requirements to support it,
    will be undertaken as required by the National Environmental Policy Act
    (NEPA). The President's fiscal year 2009 FYDP includes a total of $39.9
    million in fiscal years 2012/2013 for this acquisition. This estimate
    will be refined once the study and environmental analysis is completed.

                              enhanced use leases
        60. Senator Thune. Mr. Arny, enhanced use leases in the DOD have
    proliferated in the past 3 years as the military Services learn to
    market under-utilized Federal property to the private sector for
    commercial use in exchange for ground lease proceeds and/or in-kind
    consideration. While Congress originally intended this authority to be
    an innovative way to generate funds for chronically depleted facility
    repairs accounts, like many authorities, it has had unintended
    consequences. Many local communities have raised concerns that local
    developers prefer the use of Federal land as a way to avoid State and
    local taxes. Private land owners are at a disadvantage competing
    against the Federal Government for development. Also, local communities
    have little or no control over development and are saddled with
    increased costs for traffic, schools, and infrastructure with no
    accompanying increase in local tax revenue. How can the DOD work with
    local communities to compensate for impacts to local conditions arising
    from enhanced use lease transactions?
        Mr. Arny. DOD will continue to ensure that the military departments
    fully coordinate with local and State governments regarding potential
    enhanced use leases (EULs) under section 2667 of title 10, U.S.C., to
    ensure that potential projects comply with zoning for adjacent parcels
    and are generally supported by the local government. However, in all
    cases, compensation for any impacts to local conditions arising from
    EUL transactions is the sole responsibility of the lessee, to include
    resultant property taxes or impact fees.
        Property taxes and impact fees assessed to EULs depend upon State
    and local tax authorities and the nature of the development. The
    military departments will continue to advise potential lessees that in
    the absence of clear written direction from State and local tax
    authorities that property taxes are not applicable, or are reduced, the
    lessee should assume that property taxes will be assessed on the
    project and include such costs in their financial projections.

        61. Senator Thune. Mr. Arny, certain States are considering
    legislation that would tax any improvements made to Federal land, which
    are subsequently occupied by non-Federal tenants. What would be the
    impact of this type of legislation on the Department's enhanced use
    leasing program?
        Mr. Arny. Legislation that would tax improvements made to Federal
    land, which are subsequently occupied by non-Federal tenants, would
    likely lower the fair market value of the property and reduce the
    potential lease consideration (ground rent) paid to the military
    departments.
        Section 2667(e) of title 10, U.S.C., specifies that State or local
    governments may tax the lessee's interest in the property leased to it.
    It further provides that any leases under 2667 include a provision that
    if and to the extent that the leased property is later made taxable by
    State or local governments under an Act of Congress, the lease shall be
    renegotiated. In all cases, the tax consequences of the enhanced use
    lease development are the sole responsibility of the lessee. When
    entering into enhanced use leases, DOD advises the lessee that in the
    absence of clear written direction from State and local tax authorities
    that property taxes are not applicable, or are reduced, the lessee
    should assume that property taxes will be assessed on the project and
    include such costs in its financial projections. These lessees can seek
    agreement from the local authorities to limit their fees to the actual
    services provided by the State or locality.

                        military family housing in korea
        62. Senator Thune. Secretary Eastin, in a Senate Armed Services
    Committee hearing on March 11, 2008, General Bell, Commander of U.S.
    Forces in Korea, testified about the construction of military housing
    in Korea that ``Right now we are dead in the water.'' I note that, in
    the President's budget request for fiscal year 2009, $125 million is
    requested for the construction 216 units in the first phase of family
    housing in Korea. What is the total number of units currently planned
    to be constructed and the estimated total cost for the housing?
        Mr. Eastin. Including the fiscal year 2009 request, the total
    number of units planned for construction is 2,376. The total estimated
    cost of construction using Army Family Housing Construction funds is
    $1.3 billion.

        63. Senator Thune. Secretary Eastin, are these costs currently
    included in the Department's future budgets?
        Mr. Eastin. No. These costs are under consideration for funding and
    will compete against other Army priorities.

        64. Senator Thune. Secretary Eastin, in addition to MILCON plans, I
    believe the Army conducted an industry forum in Seoul, Korea, on
    February 26, 2008, to assess the interest of the private sector in
    entering into partnership with the Army to construct military housing.
    Does the Army have any plans to pursue a request for proposals from the
    private sector for construction of family housing? If so, what is the
    timeline for these actions?
        Mr. Eastin. The purpose of the February 26 industry forum was to
    gauge private sector interest to provide family housing for U.S. Forces
    in Korea. Over 500 participants representing 200 development,
    construction, property management, and financial institutions were in
    attendance. The event confirmed there is sufficient interest to proceed
    with a Request for Qualification and Request for Proposal. The
    feasibility report from the forum will be published on or about April
    30. The report will provide a basis to draft the Request for
    Qualification, which will be released in the summer of 2008. We
    anticipate a final selection by the end of 2008.

        65. Senator Thune. Secretary Eastin, if the Department successfully
    negotiates for the construction of housing with funds provided by the
    private sector, will the funds currently planned for MILCON be needed?
        Mr. Eastin. Yes. The Army believes that the housing will comprise
    of a mix of Army constructed housing and private sector funded housing.
    It is not known at this time how many units can be provided by the
    proposed Humphreys Housing Initiative, and the Army will continue to
    plan for Army Family Housing Construction to provide the balance of the
    housing requirement at Camp Humphreys.

    electrical infrastructure at fort meade, md, for the national security
                                     agency
        66. Senator Thune. Mr. Arny, about a year ago, the National
    Security Agency (NSA) reported that, due to a lack of adequate
    electrical distribution infrastructure, it expected its power demands
    to exceed its supply within 2 years. The Baltimore Sun reported on
    January 31, 2007, that ``The National Security Agency's impending
    electricity shortfall is ``sort of a national catastrophe,'' Sen. John
    D. Rockefeller IV, the chairman of the Senate Intelligence Committee,
    said yesterday.'' What are the Department's actions and future plans to
    correct this problem?
        Mr. Arny. The NSA brought on additional data center capacity during
    fiscal year 2007 and fiscal year 2008, and has managed and
    redistributed its power on its footprint using funds appropriated in
    those years. NSA's Power, Space, and Cooling (PSC) plan was briefed to
    all committees. NSA's phased approach to addressing the power issue is
    funded and on track.

        67. Senator Thune. Mr. Arny, in a briefing my staff received from
    the NSA last week, it was revealed that a project is planned for fiscal
    year 2010 to replace a critical electrical substation supplying power
    to NSA at a cost of $184 million. Since this project is of vital
    importance to national security, why didn't DOD ask for authorization
    to construct this project in the budget request for fiscal year 2009?
        Mr. Arny. The NSA's PSC plan implements a systems engineered
    solution. Funds are sequenced in accordance with our immediate need for
    capacity and integrated with upgrades to the distribution system so
    power can be delivered to the point of need in order to maximize the
    return on investment. The substation is key to the final solution and
    is appropriately sequenced in fiscal year 2010 based on dependencies,
    construction realities, and the systems-engineered solution.

        recapitalization master plans for ammunition plants and arsenals
        68. Senator Thune. Secretary Eastin, the Army's inventory of
    arsenals and ammunition plants across the country are absolutely
    essential to the readiness of the Army's combat forces. In many cases,
    one arsenal is the sole supplier to the Army for essential materials
    like gunpowder, artillery shells, and certain types of ammunition. Any
    type of accident or failure at one of these plants represents a single
    point of failure and would be catastrophic not only for the personnel
    working at the plant, but for the entire Army. Many of these plants are
    currently operated by a contractor who has the task of maintaining some
    of the most deteriorated facilities and ancient equipment in the Army.
    Does the Army currently have a plan and investment strategy for each
    arsenal or ammunition plant to recapitalize the facilities and
    modernize the equipment? If so, are these plans funded in the budget
    request for fiscal year 2009?
        Mr. Eastin. Yes and yes. The U.S. Army's government-owned
    ammunition industrial base is critical for meeting the current and
    future needs of the Joint Warfighter. To ensure its readiness, the Army
    is addressing the critical needs of the ammunition industrial base to
    sustain operations, modernize capabilities, and mitigate supply chain
    disruption risks. The Army has a plan for each arsenal and ammunition
    plant.
        The Army's investment to modernize the ammunition plants and
    arsenal are reflected in the fiscal year 2009 President's budget
    submission under Procurement of Ammunition, Army Production Base
    Support; Army Working Capital Fund Capital Investment Program; and
    MILCON, Army. The Army's priorities for the ammunition industrial base
    are focused on recapitalization of legacy systems to comply with ever-
    increasing environmental requirements; replacement of aging and beyond-
    useful life production capabilities and infrastructure; mitigation of
    critical single points of failure; and modernization of key electrical
    systems, production control, and computer systems. Accordingly,
    significant investments are being made to address the immediate needs
    at Radford Army Ammunition Plant (AAP), Holston AAP, and Lake City AAP
    for propellants, explosives, and small caliber ammunition,
    respectively, and the near-term needs at the other remaining
    government-owned production facilities.
        For fiscal year 2009, the Army's Ammunition Plant and Arsenal
    recapitalization budget request is reflected in three accounts: (1)
    Procurement of Ammunition, Army Production Base Support ($187.4 million
    in fiscal year 2009), (2) Army Working Capital Fund Capital Investment
    Program ($22.3 million combined in fiscal year 2009). An extended
    summary of fiscal year 2005-2008 investments and planned investments
    for 2009 is available upon request.

        69. Senator Thune. Mr. Arny, are the MILCON projects contained in
    these plans incorporated into the Army FYDP? If not, why?
        Mr. Arny. The Army funds MILCON differently at ammunition plants
    and arsenals.
        Ammunition plants, which are contractor operated, are funded from
    Procurement Army (PA) appropriations. The contractor identifies
    construction projects that are vetted through the Army staff. Projects
    are submitted in two categories, critical and other (essential). The
    critical projects have been successfully programmed in the FYDP. The
    Army continues to champion future funding for the rest of the
    construction requirements.
        Arsenals compete with the rest of the Army for MILCON Army (MCA)
    funding. In the near-term (fiscal years 2010-2013) MCA funding is
    scarce, as the Army funded multiple BRAC construction requirements.
    Arsenals typically review their supporting infrastructure on an annual
    basis and will have many more projects identified for possible funding
    then will end up programmed in the FYDP.

        70. Senator Thune. Mr. Arny, would an investment in the
    recapitalization of the plants and modernization of the equipment lead
    to efficiencies that can be recouped from the contractors operating
    these plants, to include additional marketing advantages under
    authorities provided by Congress in the Arsenal Support Program
    Initiative (ASPI)?
        Mr. Arny. From the perspective of AAPs, when the ASPI funds go to
    the 10 government-owned, contractor-operated AAPs the investments in
    the recapitalization of the plants and modernization of the equipment
    lead to efficiencies that can be recouped from the contractors
    operating these plants. The useful life of the investment must consider
    contract terms and equitable adjustments. However, many of the current
    investments are to avoid supply disruptions or catastrophic failures,
    with no expected increase in efficiencies.
        To address the question from the arsenal perspective, authorities
    provided by Congress in the NDAA for Fiscal Year 2001 (Public Law 106-
    398) pertaining to the ASPI only apply to manufacturing arsenals
    (Watervliet, Rock Island, and Pine Bluff). There are efficiencies
    gained with investments in equipment and facilities at the
    manufacturing arsenals. Investments that are based on both process
    improvements and efficiencies (savings) are economically justified. As
    the manufacturing arsenals become more efficient, they become more
    attractive to potential partners and to industry. ASPI is in place to
    provide a vehicle to take advantage of these opportunities including
    marketing of these improvements and efficiencies.

                          unexploded ordnance clean-up
        71. Senator Thune. Mr. Arny, section 313 of the John Warner NDAA
    for Fiscal Year 2007 required a comprehensive plan for clean-up of
    unexploded ordnance (UXO) at the Department's active bases, formerly-
    used defense sites (FUDS), and facilities closed by BRAC to be
    submitted to Congress by March 1, 2007, with annual updates by March
    15, 2008, 2009, and 2010. What is the status of the annual report that
    is due to Congress on March 15?
        Mr. Arny. The initial section 313 report for the NDAA for Fiscal
    Year 2007 was provided as a ``stand alone'' report to Congress on March
    16, 2007. The first required update was signed on March 19, 2008, and
    received by Congress on March 21, 2008, as Appendix M of the Defense
    Environmental Programs Fiscal Year 2007 Annual Report to Congress.

        72. Senator Thune. Mr. Arny, have the preliminary assessments been
    completed at all active installations and FUDS properties consistent
    with section 313's requirement to accomplish that task by the end of
    fiscal year 2007?
        Mr. Arny. No. However, DOD completed 96 percent of the preliminary
    assessments at active installations by September 30, 2007. DOD
    completed 99 percent of the preliminary assessments at FUDS properties
    by September 30, 2007. We expect to complete the assessments on active
    installations by December 31, 2009, and on FUDS installations by
    September 30, 2013.

        73. Senator Thune. Mr. Arny, last year's DOD report indicated that
    DOD would complete site inspections at 78 percent of active
    installations and 71 percent of FUDS properties by 2010, falling short
    of the requirement set by section 313 that those site inspections be
    completed by the end of fiscal year 2010. What is the projection now?
        Mr. Arny. For active installations, the DOD projects to have 98
    percent of all site inspections complete by September 30, 2010. This
    far exceeds last year's prediction of 78 percent. For FUDS properties,
    the Department projects to have over 70 percent of all site inspections
    complete by September 30, 2010. This is consistent with last year's
    prediction.

        74. Senator Thune. Mr. Arny, to address UXO clean-up at bases and
    installations closed by BRAC before the 2005 round, section 313
    required that DOD achieve a remedy in place or response complete for
    clean-up actions for UXO and related constituents on property closed by
    the first four rounds of BRAC by the end of fiscal year 2009. That
    means the fiscal year 2009 President's budget request must be
    sufficient to complete UXO clean-up for BRAC rounds I-IV in this budget
    cycle. Last year's DOD report did not provide an estimated date for the
    completion of these actions. Will DOD achieve a remedy in place or
    response complete for UXO clean-up at installations and bases closed
    prior to the 2005 round of BRAC by the end of fiscal year 2009 as
    required by section 313?
        Mr. Arny. No. However, the Department currently has a remedy-in-
    place or response-complete (RIP/RC) for 63 percent of all military
    installations closed or realigned as part of a round of defense base
    closure and realignment occurring prior to the 2005 round. The
    Department projects to have a RIP/RC for 78 percent by September 30,
    2009. Munitions response sites not meeting the goal are the most
    challenging in terms of scope and complexity in the Department's
    inventory, and we expect them to achieve RIP/RC by January 31, 2028.

        75. Senator Thune. Mr. Arny, section 313 also required the
    Secretary of Defense to achieve clean-up of UXO on bases and
    installations closed during the 2005 round of BRAC by a firm date that
    the Secretary was left free to establish. In last year's report, DOD
    said that a working group had been established to accomplish that
    requirement and that the goals would be in place during fiscal year
    2007. What firm date has been established for clean-up of property
    closed by the 2005 round of BRAC?
        Mr. Arny. For all military installations realigned or closed under
    the 2005 round of BRAC, the Department has established the goal of
    September 30, 2010, for a RIP/RC for UXO, discarded military munitions,
    and munitions constituents at munitions response sites.

        76. Senator Thune. Mr. Arny, last year's section 313 report
    estimated that the cost to clean up UXO at all active installations and
    FUDS properties was $17.8 billion and that another $902 million would
    be required to clean up UXO at bases and installations closed by all
    five rounds of BRAC. Last year's report provided no estimated date when
    all active installations, FUDS properties, and BRAC sites would be
    completed. What are the cost-to-completion estimates this year?
        Mr. Arny. The cost-to-complete estimate for active installations
    and FUDS is $18.278 billion. The cost-to-complete estimate for BRAC
    installations is $947.3 million.

        77. Senator Thune. Mr. Arny, what is the projected date by which
    all UXO clean-up will be completed?
        Mr. Arny. We believe we can achieve RIP/RC for all UXO clean-up
    sites at active installations by September 30, 2018. However, the
    complexity and the number of UXO sites at FUDS makes adopting a date
    for completion of clean-up impossible at this time.

        78. Senator Thune. Mr. Arny, could Congress accelerate the time it
    will take to complete these clean-ups by increasing funding? If so,
    where could increased funding be best used?
        Mr. Arny. The Department believes that it has sufficiently budgeted
    for the execution of the Defense Environmental Restoration Program in a
    timely manner commensurate with established program goals. However,
    additional funding will shorten the time line for completion.

                    clean-up of formerly used defense sites
        79. Senator Thune. Mr. Arny, for the last several years, Congress
    has increased the funding for clean-up of FUDS. For example, the
    President's budget for fiscal year 2008 was $250 million--an amount
    lower than the $254 million appropriated by Congress for fiscal year
    2007. Congress increased the amount for FUDS in fiscal year 2008 to
    $270 million, an increase of $20 million over the President's budget.
    How much has the Department requested for FUDS clean-up for fiscal year
    2009?
        Mr. Arny. The Department requested $257.8 million for the clean-up
    of FUDS in fiscal year 2009.

        80. Senator Thune. Mr. Arny, how long will it take to clean up FUDS
    at the level of funding in the President's budget?
        Mr. Arny. There are 4,684 FUDS within the United States and its
    territories that require response actions for clean-up of either
    hazardous waste or UXO. The Army, as executive agent for the program,
    has completed clean-up of 67 percent of the FUDS hazardous waste sites,
    and expects to complete clean-up at 90 percent of all remaining FUDS
    hazardous waste sites by 2020. The Army has completed clean-up at 30
    percent of FUDS munitions response sites. Once the Army completes
    investigations at the remainder of the munitions response sites, the
    Department will have a better understanding of the hazards associated
    with these sites. This in turn will guide decisions on additional
    funding requirements needed to reduce or eliminate those hazards within
    a reasonable timeframe.

        81. Senator Thune. Mr. Arny, if Congress increased the funding
    level for FUDS clean-up, could the Department effectively use the money
    to increase the level of effort and shorten the time line for
    completion?
        Mr. Arny. Yes. Any additional funding will shorten the time line
    for completion.

                   buffer zone funding to limit encroachment
        82. Senator Thune. Mr. Arny, over the last 3 years, Congress added
    legislative flexibility and increased funding to support the
    Department's Readiness and Environmental Protection Initiative (REPI)
    to address environmental encroachment concerns by partnering with State
    and local governments and non-governmental groups to acquire buffer
    zones around military installations. This program is widely
    acknowledged as a success by DOD, State and local governments, and
    environmental groups. What level of funding is proposed for this
    program in the fiscal year 2009 President's budget?
        Mr. Arny. Considering the importance of maintaining readiness by
    buffering our installations from encroachment, the President's budget
    for fiscal year 2009 requests $40 million for the REPI program.

        83. Senator Thune. Mr. Arny, how does that compare with the fiscal
    year 2008 President's request and the fiscal year 2008 appropriated
    levels?
        Mr. Arny. The fiscal year 2009 President's budget request of $40
    million is a $10 million increase over the fiscal year 2008 request of
    $30 million, and it is $6 million below the fiscal year 2008
    appropriated level of $46 million.

        84. Senator Thune. Mr. Arny, if Congress were to increase funding
    for this program to meet or exceed the levels appropriated in fiscal
    year 2008, how would DOD use the additional funds?
        Mr. Arny. Any increased funding for the REPI program would continue
    to support new buffer projects. The Services have projected an
    estimated 250 additional REPI projects for fiscal years 2009-2013,
    including estimated requests totaling over $150 million in fiscal year
    2009. As we continue to emphasize project effectiveness and return on
    investment, we are encouraging joint project proposals at multiple
    installations, such as the Midlands Area Joint Installation Consortium,
    which serves Air Force, Army, Navy, and National Guard installations in
    South Carolina. The DOD is also seeking investment leverage on a
    regional scale through efforts like the Southeast Regional Partnership
    for Planning and Sustainability (SERPPAS) and the Western Regional
    Partnership.

         army litigation over stryker brigade transformation in hawaii
        85. Senator Thune. Secretary Eastin, the Army has faced challenges
    to the transformation of units of the 25th Infantry Division in Hawaii
    to a Stryker brigade configuration as a result of a lawsuit challenging
    the Army's Environmental Impact Statement (EIS) supporting that action.
    In February, the Army completed a new Supplemental EIS and again
    reached the conclusion that the preferred alternative is a Stryker
    brigade based in Hawaii at Schofield Barracks. A formal Record of
    Decision making the final determination has not yet been announced.
    Despite the Army's efforts, the Supplemental EIS has already been
    criticized by environmental groups for not including Fort Lewis, WA,
    among the possible basing sites studied. Is the Army confident that its
    Supplemental EIS for transforming elements of the 25th Infantry
    Division to a Stryker brigade configuration will withstand further
    scrutiny by the courts?
        Mr. Eastin. The Army is confident that the Supplemental EIS meets
    all legal requirements. The EIS has a lengthy discussion about why Fort
    Lewis would not be a reasonable alternative for stationing of the 2/
    25th Stryker Brigade Combat Team (SBCT). Fort Lewis does not have the
    garrison infrastructure to support the SBCT, and there are significant
    constraints that would make construction of the necessary facilities
    very difficult. In any event, the necessary infrastructure could not be
    built at Fort Lewis in time to support the proposed action. Finally,
    Fort Lewis is already the home to three other SBCTs. SBCTs must have
    some geographic dispersion to achieve rapid-deployment capability. Only
    one SBCT would be able to deploy at a time from Fort Lewis.

        86. Senator Thune. Secretary Eastin, when will the Army announce
    its Record of Decision?
        Mr. Eastin. The Army announced its Record of Decision on April 15,
    2008.

        87. Senator Thune. Secretary Eastin, the committee is concerned
    about the delays that impact operations and readiness for deployment
    and the increased costs related to environmental litigation. This is
    not just an Army problem. For example, the Navy faced significant
    public opposition, litigation, and delays related to its environmental
    studies supporting the Navy's plan to build an outlying landing field
    (OLF) in Washington County, NC. As a result, the Navy abandoned its
    original plan and is now studying other alternatives. What has the Army
    learned from its experience in this litigation?
        Mr. Eastin. The Army learned that it must clearly articulate its
    consideration of the full range of reasonable alternatives in documents
    prepared pursuant to the NEPA. The Army recently prepared an EIS for
    Army Growth and Force Structure Realignment. The Record of Decision for
    this action was published on January 7, 2008. On March 13, 2008, the
    Army published a Notice of Intent for a supplement to the Growth EIS,
    designed to look at changes in the Pacific Theater, including Alaska
    and Hawaii. These documents will enable installations to perform NEPA
    analyses for growth at their locations without having to consider
    alternative destinations for incoming soldiers. In NEPA terms, we have
    engaged in a process called ``tiering.'' I believe that the Army has
    done excellent planning, to include preparation of studies under NEPA
    or its future stationing actions.

        88. Senator Thune. Secretary Eastin, the Army is engaged in an
    enormous effort to re-station its forces as a result of BRAC and
    changes to the global basing of U.S. forces overseas. Are you confident
    that the other environmental studies the Army is conducting are
    sufficiently thorough so that they can withstand scrutiny by the
    courts?
        Mr. Eastin. Yes. We prepare each NEPA document carefully, fully
    involve the public, and review the analysis thoroughly before making
    final decisions.

                 study of historic at-sea dumping of munitions
        89. Senator Thune. Secretary Eastin, section 314 of the John Warner
    NDAA for Fiscal Year 2007 required the Secretary of Defense to conduct
    a historical review of available records to determine the number, size,
    and locations of sites where the Armed Forces disposed of military
    munitions in coastal waters and to assess the potential public health
    hazard and any remedial measures that may be necessary to address such
    risks. The Department will make its final section 314 report in the
    Department's fiscal year 2009 Environmental Report to Congress. What
    has the Department learned so far about the number of such sites and
    does the Department assess that any of them present a potential danger
    to the public?
        Mr. Eastin. The Office of the Secretary of Defense (OSD) has been
    working closely with the Services to comply with section 314. To date,
    the Army has completed and reported to OSD the results of its archival
    search of sea disposal operations in U.S. coastal waters that involved
    chemical munitions and containers of bulk chemical agent (referred to
    as chemical warfare material or CWM). As DOD reported in its Defense
    Environmental Program Fiscal Year 2007 Annual Report to Congress,
    Appendix S (see attached), we have identified 19 sites in coastal
    waters where CWM was sea disposed, and 10 sites where conventional
    munitions or related material were sea disposed. OSD initially reported
    this information in its Annual Report to Congress for fiscal year 2006,
    and updated it in its Annual Report to Congress for fiscal year 2007
    report. The Army and Navy continue their research of operations that
    involve sea disposal of conventional munitions.
        Based on research conducted to date, undisturbed sea-disposed
    munitions, including any munitions constituents released to the
    environment, do not pose an imminent or substantial endangerment to the
    public. However, as you may be aware, when sea disposed munitions are
    inadvertently recovered during maritime activities, there may be an
    explosive hazard. To address this risk, the Department has taken
    several actions. First, to work with the National Oceanic and
    Atmospheric Administration (NOAA) to ensure NOAA mapsheets clearly
    depict both the chemical and conventional munitions sites. Second, the
    Department has implemented an aggressive explosives safety education
    program. This program is based on learning and following an easy to
    remember message--the 3Rs: Recognize--when you may have encountered a
    munition; Retreat--leave it alone, that is do not touch or disturb it;
    and Report--call 911. The Department immediately responds to calls from
    local law enforcement to address recovered military munitions.

        90. Senator Thune. Secretary Eastin, do you commit to keep this
    subcommittee informed of the Army's actions and any needs that may
    arise from this situation?
        Mr. Eastin. Yes.

                           navy litigation over sonar
        91. Senator Thune. Secretary Penn, the Navy is currently involved
    in litigation challenging the Navy's compliance with environmental laws
    regarding use of mid-frequency active (MFA) sonar. MFA sonar is the
    most common form of active sonar used by surface ships, submarines, and
    helicopters. On January 23, 2007, the DOD invoked the National Defense
    Exemption under the Marine Mammal Protection Act (MMPA) to exempt all
    military readiness activities that use MFA sonar from compliance with
    the MMPA for a period of 2 years. Despite the DOD's decision to invoke
    this National Defense Exemption in early January 2008, a Federal
    District Judge in San Francisco issued an injunction and imposed
    significant restrictions on Navy sonar training in at-sea ranges off
    southern California. What is the status of the litigation and describe
    its impact on the Navy's ability to train effectively for deployment
    using active sonar?
        Mr. Penn. The injunction, issued by the U.S. District Court for the
    Central District of California on January 3 and modified on January 10,
    is a very serious matter because of the impact it could have on
    readiness of our deploying naval forces. In the opinion of the Chief of
    Naval Operations, the injunction unacceptably risks naval training, the
    timely deployment of strike groups, and national security. The
    injunction, therefore, prompted a series of urgent actions within the
    Executive Branch. On January 15, 2008, the President exercised his
    statutory authority under the Coastal Zone Management Act (CZMA) to
    exempt the Navy's activities at issue in this case from CZMA
    compliance, 16 U.S.C. 1456(c)(1)(B). The President determined that
    ``the [exercises], including the use of MFA sonar in these exercises,
    are in the paramount interest of the United States'' and that, in light
    of the District Court's injunction, an exemption was necessary ``to
    ensure effective and timely training of the United States naval
    forces'' because compliance would ``undermine the Navy's ability to
    conduct realistic training exercises that are necessary to ensure the
    combat effectiveness.'' The President accordingly issued the exemption
    to ``enable the Navy to train effectively and to certify * * * strike
    groups for deployment'' in support of operational and combat activities
    ``essential to national security.''
        Contemporaneous with the President's action, the Council on
    Environmental Quality (CEQ) authorized alternative arrangements for
    NEPA compliance for ``emergency circumstances'' pursuant to 40 C.F.R.
    1506.11. CEQ acted only after extensive consultation with the Navy and
    the National Marine Fisheries Service (NMFS), the agency within the
    Department of Commerce responsible for protecting marine mammals, and
    reviewing relevant documentary materials. Noting that NMFS had
    determined that the Navy's southern California exercises were not
    expected to cause any ``adverse population level effects for any * * *
    marine mammal populations'' and that the next southern California
    exercise was imminent, CEQ concluded that ``emergency circumstances''
    warranted ``alternative arrangements for compliance with NEPA''
    involving enhanced environmental assessment and public participation
    measures until the Navy's ongoing southern California EIS is completed.
        The Navy then filed a motion to vacate the injunction, which the
    District Court denied. The court opined that the President's exemption
    under the CZMA was of questionable constitutionality. Rather than
    decide that question, however, the court held that its preliminary
    injunction remained an appropriate remedy for a NEPA violation and that
    CEQ's approval of alternative NEPA arrangements under 40 C.F.R. 1506.11
    was invalid.
        The Navy appealed to the Ninth Circuit Court of Appeals, which
    affirmed the District Court. In view of the ``importance of the Navy's
    mission'' and ``the representation by the Chief of Naval Operations
    that the District Court's preliminary injunction in its current form
    will `unacceptably risk' effective training and strike group
    certification,'' however, the Ninth Circuit granted a temporary partial
    stay from the injunction's more onerous provisions (2,200-yard
    mandatory shutdown and surface-ducting power-down requirements). That
    stay will expire, however, upon the Supreme Court's final disposition
    of the case.
        On Monday, March 31, 2008, the Solicitor General of the United
    States filed a petition for writ of certiorari with the United States
    Supreme Court.

        92. Senator Thune. Secretary Penn, the Navy faces similar
    litigation over its use of low-frequency active (LFA) sonar, which is
    the Navy's most effective means to detect super-quiet diesel submarines
    at long range, such as those operated by China and North Korea. What
    additional limits on the Navy's use of LFA sonar have been imposed by
    the courts and what is the Navy doing in response to this litigation?
        Mr. Penn. The Navy's use of Surveillance Towed Array Sensor System
    Low Frequency Active (SURTASS LFA) sonar was restricted to areas of the
    western Pacific Ocean from 2002 until August 2007 as a result of a
    preliminary and later a permanent injunction issued by the U.S.
    District Court for the Northern District of California in response to a
    lawsuit brought by the Natural Resources Defense Council and others.
    The terms of those injunctions resulted from court-ordered mediation.
    As part of the formal regulatory process administered by the NMFS, the
    agency within the Department of Commerce responsible for administering
    the MMPA, the Navy had already agreed to and was required to comply
    with extensive mitigation measures for the use of SURTASS LFA sonar,
    including visual, passive, and active acoustic monitoring (using a
    special sonar adapted for the purpose) and limiting the sound-received
    levels near coastlines and in certain sensitive areas designated as
    Offshore Biologically Important Areas (OBIAs). During those 5 years,
    there was no evidence that SURTASS LFA harmed any marine mammals. The
    permanent injunction expired in August 2007 with the expiration of the
    2002 SURTASS Final Rule issued by NMFS. NMFS issued a new regulation
    (Final Rule) in August 2007 to replace the expiring rule. The new Final
    Rule was supported in part by a Supplemental EIS, which the Navy
    prepared to correct deficiencies that the Court had identified
    concerning the Navy's efforts to comply with the NEPA in 2002. Despite
    the new analysis, the results of additional research on the effects of
    SURTASS LFA, and the lack of any documented harm from 5 years of LFA
    sonar use, NRDC and others brought a new lawsuit in September 2007
    challenging the new Final Rule issued by NMFS. The Navy agreed to abide
    by the previous permanent injunction with some modifications while
    NRDC's request for a preliminary injunction on the new rule was heard.
    On February 6, 2008, the Court issued a new preliminary injunction that
    temporarily extended the same restrictions that had been in effect
    since the new lawsuit began. The Court was concerned about NMFS's
    decision not to designate a number of new OBIAs, including areas such
    as the Galapagos Islands and the Great Barrier Reef. The Court directed
    the parties into meditation to negotiate the details of the new
    injunction. That mediation is ongoing.

        93. Senator Thune. Secretary Penn, how do these limits impact the
    Navy's ability to train?
        Mr. Penn. Over the last 5 years, the Navy's use of SURTASS LFA
    sonar has not only resulted in no documented harm to marine mammals,
    but has also confirmed the promise of SURTASS LFA sonar as a very
    effective long range sensor, uniquely able to detect and track very
    quiet submarines before they get close enough to launch an attack.
    Information gained by the use of SURTASS LFA sonar also can make other
    anti-submarine warfare (ASW) sensors more effective. The Navy is
    troubled that, despite these extensive efforts and careful study,
    additional restrictions could again be imposed on use of this
    critically-needed system that could prevent the Navy from effectively
    using SURTASS LFA sonar for its assigned mission. The SURTASS LFA sonar
    restrictions under the current injunction limit the Navy's ability to
    train, test, and conduct military operations closer to shore than would
    be permitted under the current MMPA final rule. Until mediation is
    concluded and the full details of the preliminary injunction are known,
    however, it is impossible to say what additional limits may be imposed.

        94. Senator Thune. Secretary Penn, are you concerned about the
    restrictions imposed on Navy sonar training in light of recent
    deployments of diesel submarines by China into areas in which U.S.
    carrier battlegroups are operating?
        Mr. Penn. Navy is extremely concerned by court imposed restrictions
    on training with MFA and LFA sonar systems. The continued deployment of
    increasingly capable, quiet diesel-electric submarines that could be a
    threat to our Carrier and Expeditionary Strike Groups. LFA and MFA
    sonar are the Navy's primary sensors for detecting these submarines and
    critical to our ability to properly address this serious threat. Given
    the complexity of the marine environment and associated difficulty in
    mastering the art of detecting and tracking submarines, training
    sailors in sonar use under realistic conditions is critical to
    countering and defeating this threat. These realistic conditions can
    only be found at sea. Consequently, at-sea training using MFA and LFA
    sonar is essential to the Navy's efforts to train and certify deploying
    Strike Groups and forward deployed LFA-equipped ships. Therefore,
    restrictions that interrupt the flexibility, quality, continuity, and
    consistency of this training threaten our national security and are
    viewed with grave concern.

                      eis for navy sonar on the east coast
        95. Senator Thune. Secretary Penn, last year, the Navy began the
    process of conducting an EIS to support its plan to develop an at-sea
    sonar training range on the east coast of the United States. Where is
    the Navy in this process and when do you expect it to be complete?
        Mr. Penn. The Department of Navy is revising the Draft EIS (DEIS)
    based on the new marine mammal affects methodology developed by NMFS.
    The DEIS is projected to be released for public review in July 2008,
    and a Record of Decision projected for July 2009. We anticipate
    initiating construction in 2013.

        96. Senator Thune. Secretary Penn, why is this range so important
    to the Navy?
        Mr. Penn. The range is important for the following reasons:

             1. Worldwide Deployment Involving Littoral Conditions.
            Atlantic Fleet units deploy worldwide, and shifts in the
            military strategic landscape require increased naval capability
            in the world's shallow, or littoral seas, such as the Arabian
            Sea, the South China Sea, and the Korean Sea. Training
            effectively for these littoral environments requires the
            availability of realistic conditions in which actual potential
            combat situations can be adequately simulated.
             2. Threat of Modern Diesel Submarines. Global proliferation of
            extremely quiet submarines poses critical threats to maritime
            interests of the United States. These silent diesel submarines
            are capable of operating extremely effectively in confined,
            congested littoral regions where acoustic conditions make
            detection significantly more challenging than in deep water and
            can get well within torpedo striking range of U.S. forces
            before being detected by passive sonar.
             3. U.S. World Role. The role of the United States on the world
            stage makes it imperative that U.S. military forces are the
            best trained, prepared, and equipped in the world. ASW is a
            Navy core capability and is a critical part of that mission.
            The Navy is the only DOD Service with ASW responsibility, and
            must be trained and capable in littoral water operations.
             4. Mission Readiness and Fulfillment. The Navy's primary
            mission is to maintain, train, equip, and operate combat-ready
            naval forces capable of winning wars, deterring aggression, and
            maintaining freedom of the seas. Training with the actual
            sensors and weapons systems aboard their own ships, submarines,
            or aircraft in a complex operational setting with a realistic
            scenario is key to maintaining Fleet combat readiness and to
            survival in actual wartime conditions. Timely and accurate
            feedback of training performance to exercise participants and
            the ability to rapidly reconstruct the training event
            contribute significantly to the quality of this complex
            training. These capabilities may only be realized through the
            use of an instrumented, at-sea training range. At present, the
            only operational Atlantic instrumented training range is
            located in a deep-water environment, requiring that results be
            extrapolated to apply to the critically different conditions of
            shallow water.
             5. Benefit to All DOD Forces. The training value of the
            proposed action ultimately benefits all DOD forces whose
            missions are in any way tied to maritime operations, homeland
            security, or access to strategic littoral areas of the world.
            The threat from silent submarines to U.S. forces, civilians,
            and materiel and potentially to national security and the
            increasing focus of combat in shallow, littoral areas mandate
            appropriate training. Such training can only be accomplished
            with an instrumented undersea warfare training range
            appropriately located in a shallow water environment.

                        camp lejeune water contamination
        97. Senator Thune. Secretary Penn, section 315 of the NDAA for
    Fiscal Year 2008 required, not later than a year after the law was
    enacted, that the Secretary of the Navy make reasonable efforts to
    identify and notify directly all civilian employees and former military
    and civilian residents of Camp Lejeune, NC, who may have been served by
    the Camp Lejeune water system from 1958 through 1987 that they may have
    been exposed to water contaminated with tetrachloroethylene (PCE) or
    trichloroethylene (TCE) that may be related to birth defects, diseases,
    or other adverse health effects. Those individuals contacted will be
    provided a health survey in which they may voluntarily provide personal
    health information that may be helpful in establishing scientific links
    between exposure to PCE or TCE and adverse health impacts. This direct
    outreach is in addition to ongoing studies by the Agency for Toxic
    Substances and Disease Registry (ATSDR) on the potential adverse health
    impacts of exposure to contaminated drinking water at Camp Lejeune.
    What have the Navy and Marine Corps done so far to implement the direct
    outreach to former residents and civilian employees at Camp Lejeune
    required by section 315?
        Mr. Penn. The Marine Corps has made it a top priority to identify
    and directly contact the potentially impacted population (individuals
    who lived or worked at Camp Lejeune between 1957 and 1987) so that they
    can be notified of their potential exposure and updated as additional
    information becomes available.
        To this end, in September 2007 the Marine Corps established a Toll-
    Free Call Center and Notification Registry to inform former Camp
    Lejeune residents that they may have been exposed to impacted drinking
    water and receive additional information when ongoing studies are
    complete. The registry can be accessed at www.usmc.mil/clsurvey or via
    the toll-free line at 1-877-261-9782. Interested parties can also email
    questions to clwater@usmc.mil.
        To reach former marines whose contact information is not contained
    in our records, the Marine Corps has placed advertisements in local
    command and other military publications, articles in local newspapers
    (nationwide), and radio announcements (nationwide). The Marine Corps
    has funded paid advertisements in national publications such as ``USA
    Today''. These public outreach efforts, in conjunction with mailing
    addresses from our surviving records, have enabled the Marine Corps to
    identify thousands of former base residents and employees and mail over
    55,000 letters notifying them of their potential exposure, informing
    them of the issue, and providing contact information so they can learn
    more. Updates will be mailed as additional information becomes
    available (e.g. the completion of the ATSDR health survey, Hadnot Point
    Water Model, ATSDR ongoing epidemiological study, and the National
    Academy of Sciences (NAS) study).

        98. Senator Thune. Secretary Penn, has appropriate funding been
    identified and is it available to conduct the outreach?
        Mr. Penn. Yes. The Marine Corps allocated approximately $1 million
    in 2007 and $3.5 million in 2008 for outreach activities associated
    with the Camp Lejeune Water Study. The following activities are
    examples of outreach activities in progress or planned. As additional
    resources are identified, they will be implemented as appropriate.
    Outreach Activities Planned or In Progress

             Communication Plan
             Stakeholder analysis study
             Dedicated Call-Center with toll free line (877-261-9782)
             Remodeled website dedicated to Camp Lejeune Water Study
            (www.marines.mil/clsurvey)
             Notification Registry integrated with website
             Advertisements in Marine Corps publications (e.g.
            Leatherneck, Gazette, Semper Fidelis)
             Paid advertisements in local newspapers (nationwide)
             Paid radio announcements (nationwide)
             Paid advertisements in national publications (e.g. USA Today
            and USATODAY.com)
             Letter mailing costs (address verification, paper products,
            stamps, copying, labor)
             Internal Revenue Service (IRS) costs associated with using
            IRS database to mail letters to individuals with name and
            social security numbers, but without current known addresses
             Contractor support to develop databases and website,
            implement call center, and assist with outreach activities

        99. Senator Thune. Secretary Penn, are the Navy and Marine Corps
    continuing to provide timely and sufficient funding for the ongoing
    study being conducted by ATSDR?
        Mr. Penn. The Navy and Marine Corps continue to support the ATSDR
    ongoing study. Each year, the ATSDR submits an Annual Plan of Work to
    the Navy in accordance with a mutually agreed-upon Memorandum of
    Understanding. The Navy and Marine Corps then work with the ATSDR to
    reach agreement on the particular projects to be funded and completed
    during that year.

        100. Senator Thune. Secretary Penn, what is the current status of
    the ATSDR study? When is it expected to be complete?
        Mr. Penn. Questions regarding the ATSDR study should be directed to
    ATSDR. The original completion date provided by ATSDR was 2005. ATSDR's
    latest study completion date was December 2007. However, according to
    the ATSDR, the complicated nature of the water modeling has delayed
    their study completion date once again. At this point, ATSDR has not
    formally indicated when their ongoing study will be complete; however,
    through informal discussion with staff, the second water model for the
    Hadnot Point Water Distribution System should be complete in June 2009.
    ATSDR believes that completion of this water model is necessary to
    complete the associated epidemiological study.

        101. Senator Thune. Secretary Penn, please describe what the Navy
    and the Marine Corps have done to address this issue and the concerns
    of marines and their families who believe they have health-related
    impacts due to contaminated drinking water at Camp Lejeune.
        Mr. Penn. The Marine Corps remains committed to finding answers to
    the many questions surrounding historic water quality at Camp Lejeune
    and providing this information to our marines and their family members
    who may have been impacted.
        Exposure to the chemicals in the drinking water at Camp Lejeune has
    not yet been linked to any illnesses. The Marine Corps has worked
    closely with the ATSDR, the Environmental Protection Agency (EPA), GAO,
    and NAS to study and address the issue. Since 2003, the Marine Corps
    has spent over $10 million supporting the efforts of these agencies to
    determine whether our marines, families, and civilian workforce may
    have been adversely affected by the water. To date, we are unable to
    answer this question definitively.
        Presently, the ATSDR is attempting to project when the drinking
    water was first impacted, who may have consumed the impacted water, and
    whether there is any association between exposure to the chemicals in
    the drinking water and certain adverse health conditions in children
    born to mothers who lived at Camp Lejeune between 1968 through 1985
    (thought to be the most sensitive population). ATSDR estimates that
    this study will be completed in mid-2009. In April 2007, the Marine
    Corps contracted with the NAS to conduct a comprehensive review of
    available scientific literature in order to recommend future actions
    that could be taken (estimated completion October 2008). Other
    completed studies include a review by the GAO, a Department of Justice
    investigation, an EPA Criminal Investigation Division investigation, as
    well as a panel review commissioned by the Commandant of the Marine
    Corps.
        The Marine Corps fully supports the efforts of these agencies and
    is providing data, access, and logistical assistance to them; upon
    completion of their studies, the Marine Corps will publicize the
    results.

           environmental litigation and local opposition force change
        102. Senator Thune. Secretary Penn, the Navy has now abandoned it
    efforts to build a new OLF in Washington County, NC, to support Navy
    aircraft stationed on the east coast due to public opposition to the
    plan and related environmental litigation. The Navy is conducting a new
    EIS to consider other alternative sites. When does the Navy expect to
    complete this new EIS?
        Mr. Penn. The Navy is working to complete and publish the Notice of
    Intent to conduct an EIS in the Federal Register in the second week of
    April 2008. Following that publication, the Navy will conduct public
    scoping meetings in seven counties in Virginia and North Carolina
    potentially impacted by a decision on a site for the proposed OLF.
    These hearings are tentatively scheduled to begin April 28, 2008, and
    continue through May 7, 2008. The environmental analysis will follow
    these public scoping meetings. Our goal is to publish a draft EIS in
    June 2009 to be followed by public hearings in each potentially
    affected county. The Final EIS is scheduled for April 2010, followed by
    a Record of Decision in July 2010.

        103. Senator Thune. Secretary Penn, the committee is concerned
    about the delays that impact operations and readiness for deployment
    and increased costs related to environmental litigation. This is not
    specifically a Navy problem. The Army has faced similar delays as a
    result of environmental litigation over the transformation of Army
    units in Hawaii to a Stryker brigade. What has the Navy learned from
    its experience in this litigation?
        Mr. Penn. Many environmental statutes require completion of a
    formal process to inform a decision before an activity can begin. These
    processes typically take several months or years to complete. We are
    fully in favor of informed decisions, but when these statutes are
    applied to dynamic scientific, military, and international situations,
    military readiness can be the first casualty. Because these statutes
    were not drafted in a way that facilitates their application to dynamic
    situations, an assessment process can be almost complete when a new
    development or changed circumstance arises that requires the process to
    start all over again. If a required action, such as a training
    exercise, has to proceed before completion of the process, it does so
    at risk of litigation, has to rely on another form of compliance, or be
    altered to reduce the risk of litigation. Even after completion of the
    process, litigation often ensues, and this litigation ensues even if,
    in the end, the conclusion of the analysis is that there is little or
    manageable risk to the environment. The requirement to be ready to
    fight and win cannot be suspended for a period of years while
    procedural steps are completed, all the while subject to litigation.
        The Navy is committed to responsible environmental stewardship
    while executing its national defense mission and is working very hard
    to anticipate and get out in front of the requirements for
    environmental compliance. The Navy must comply with a number of
    Federal, State, and local environmental laws and regulations that apply
    to terrestrial and aquatic environments. In furtherance of that
    responsibility, in 2004, the Navy established the Tactical Training
    Theater Assessment and Planning (TAP) Program to ensure comprehensive,
    long-term environmental compliance for critical maritime ranges and
    operational areas. This program integrates environmental, operational,
    and facilities management and provides the framework for range
    management initiatives.
        As a result of the TAP program, the Navy submitted Notices of
    Intent to prepare EISs for 12 maritime ranges and operating areas and
    recently released 2 Draft EISs, the Hawaii Range Complex Draft
    Environment Impact Statement (DEIS) and the Atlantic Fleet Active Sonar
    Training DEIS, for public comment. All 12 EISs and all applicable
    environmental compliance requirements including, but not limited to,
    Letters of Authorization under the MMPA and Biological Opinions under
    the Endangered Species Act, are expected to be completed by the end of
    calendar year 2009. In the interim, Navy has been preparing
    environmental assessments for all major training exercises, including
    but not limited to, obtaining Biological Opinions when appropriate and
    complying with the provisions of the National Defense Exemption under
    the MMPA.
        Nevertheless, court-imposed restrictions resulting from litigation
    threaten the efficacy of vital training exercises and, therefore,
    threaten to negatively impact national security.

        104. Senator Thune. Secretary Penn, does the Navy continue to have
    a compelling operational need for an OLF?
        Mr. Penn. Yes. Training requirements for aircraft based at NAS
    Oceana and Naval Station Norfolk currently exceed capacity at the
    existing OLF facility at Fentress up to 63 percent of the time during
    summertime when hours of darkness are limited. Capacity problems are
    exacerbated when operational demands require surging additional carrier
    strike groups under the Fleet Response Plan, which requires that 6 of
    the Navy's 11 aircraft carriers be available for deployment within 30
    days and another one be available in 90 days. A new OLF will provide
    the required capacity to support the training necessary to respond to
    national defense requirements.
        The Navy operates on the open ocean, away from visible landmarks
    and man-made lighting, and with darkened ship conditions. Immediately
    prior to a deployment, pilots need to hone their skills in an
    environment that simulates conditions they will experience at sea. We
    must have a place where our pilots can fly that best replicates the
    environment they will experience when they come aboard a ship in the
    middle of the night in darkness without visual reference. Due to
    residential encroachment, Field Carrier Landing Practice (FCLP)
    training at both NALF Fentress and NAS Oceana does not provide
    realistic aircraft carrier landing conditions, especially at night. To
    account for the encroachment near NALF Fentress, landing pattern
    altitudes have been raised above those used for aircraft carrier
    landings at sea, and the standard race track shape of the landing
    pattern has been modified. Additionally, light pollution from
    residential housing and other structures results in conditions that
    significantly reduce the quality of training.
        While NALF Fentress will continue to provide support for FCLP and
    other training requirements, it alone cannot fully support the training
    requirements of aircraft based at NAS Oceana and cannot provide optimal
    landing conditions for FCLP training, especially night time FCLP. The
    addition of a new OLF ensures that year round capacity exists for
    planned and surge training requirements and optimizes FCLP training.

        105. Senator Thune. Secretary Penn, where are the current
    alternative sites located?
        Mr. Penn. There are three sites in southeastern Virginia and two
    sites in northeastern North Carolina. The Virginia sites are located in
    Surry County (Cabin Point), Southampton County (Dory), and Sussex
    County (Mason). The North Carolina sites are located in Gates County
    (Sandbanks) and Camden County (Hale's Lake).

        106. Senator Thune. Secretary Penn, does the decision to consider
    other sites in Virginia impact the Navy's decision to base two
    squadrons of F/A-18 aircraft in North Carolina?
        Mr. Penn. The Navy decision to terminate the Draft SEIS and
    initiate a new EIS to analyze five different OLF site alternatives has
    no effect on the previous Super Hornet basing decision.

                            barracks upgrades plans
        107. Senator Thune. Secretary Eastin, both Secretary Penn and
    Secretary Anderson include in their written statements an update on
    their Department's efforts to eliminate inadequate barracks. In
    particular, with the fiscal year 2009 budget enacted, both Services
    will have eliminated the use of permanent party unaccompanied barracks
    which have central, also known as gang latrines. Can you update the
    committee with the Army's plans to eliminate inadequate barracks?
        Mr. Eastin. The Army is on track to fund the replacement of central
    or common area latrines with 1+1 or equivalent barracks by fiscal year
    2013. The fiscal year 2009 budget will provide new barracks for 6,362
    soldiers and fund the program at 83 percent of the total requirement.

        108. Senator Thune. Secretary Eastin, does the Army still have
    single soldiers living in barracks with central latrines? If so, what
    is the Army's plan to upgrade these barracks to Army standards? In what
    year will they be eliminated?
        Mr. Eastin. The Army does have single permanent party soldiers
    living in barracks with common area latrines. The Army is on track to
    fund the replacement or modernization of these barracks by fiscal year
    2013.

        109. Senator Thune. Secretary Eastin, how will the Army's plans to
    grow the force affect plans to eliminate inadequate barracks?
        Mr. Eastin. Grow the Army will not affect the Army's buyout goal to
    fund inadequate barracks by fiscal year 2013.

        110. Senator Thune. Secretary Eastin, to respond to the needs for
    bachelor officers and senior enlisted personnel, the Army has initiated
    unaccompanied housing privatization initiatives at Fort Bragg, NC; Fort
    Stewart, GA; Fort Drum, NY; Fort Bliss, TX; White Sands Missile Range,
    NM; and Fort Irwin, CA. Can you provide a status of each of these
    initiatives?
        Mr. Eastin. Four of the five pilot projects are closed and the
    fifth will close during 2008. All five provide quality apartment
    communities for bachelor officers and senior enlisted single soldiers
    with all of the amenities found in quality, off-post apartment
    complexes. Below is the status of the Army's five unaccompanied housing
    privatization initiatives:

              1. The Fort Irwin project closed in March 2004 and 125
            accommodations were transferred to the project. These
            accommodations will be replaced by 200 one-bedroom apartments.
            Construction started in 2006 and is expected to be completed in
            2011 as part of a town center.
              2. The Fort Drum project closed in July 2007 and will build
            192 one- and two-bedroom apartments. Construction will be
            completed in 2009.
              3. The Fort Bragg project closed in December 2007 and will
            build 312 one- and two-bedroom apartments. Construction will be
            completed in 2010.
              4. The Fort Stewart project closed in January 2008 and will
            build 334 one- and two-bedroom apartments. Construction will be
            completed in 2010.
              5. The Fort Bliss project is in transition and will close in
            2008. It will include 358 one- and two-bedroom apartments.
            Construction will be completed in 2010. Fort Bliss and White
            Sands Missile Range make up the combined Residential
            Communities Initiative Family Housing Privatization Project;
            however unaccompanied personnel housing privatization was only
            planned for Fort Bliss, not White Sands Missile Range.

        111. Senator Thune. Secretary Eastin, with the significant barracks
    requirements required by plans for the Army to grow the force, will the
    Army be using this method for the acquisition of unaccompanied housing
    at other locations? If so, how many units and at what locations?
        Mr. Eastin. At this time the Army supports five unaccompanied
    personnel housing projects for senior single soldiers, staff sergeants,
    and above, and officers who cannot find adequate affordable rentals
    off-post. Soldiers volunteer to rent these accommodations. The Army
    currently has no plans to use the unaccompanied housing privatization
    initiative method to satisfy barracks requirements for sergeants (E-5)
    and below who are required to live on post. The Army has programmed for
    unaccompanied personnel housing to account for grow the force
    requirements.

                management of housing privatization transactions
        112. Senator Thune. Secretary Eastin and Secretary Penn, I have a
    question about the management of housing privatization transactions
    involving partnerships. In 2005, the GAO reported that the military
    Services did not have management practices in place to provide adequate
    oversight for the use of funds accumulating in reserve and escrow funds
    within each transaction. The overwhelming majority of each of your
    Department's housing inventories are now privatized and under
    management of the partnership. The DOD's efforts over the past 10 years
    to increase a servicemember's base allowance for housing has resulted
    in sizeable reserves growing in housing privatization reserve accounts,
    which can be used to accelerate renovation and recapitalization
    activities. Eventually though, the housing inventory for each
    transaction will reach a point of optimal performance as measured by
    occupancy rates, and reserve funds will still be growing. What is your
    assessment of the current management practices used by your Department
    for reserve accounts?
        Mr. Eastin. The GAO conducted a study of military housing oversight
    programs in 2005 and had no concerns regarding the oversight it
    observed by the Army in the Army Projects. The Army's Portfolio and
    Asset Management (PAM) program was developed from private sector
    investment management best practices to ensure proper oversight of the
    financial, operational, and development performance. This allows the
    Army to comprehensively review project performance and assess the
    health of the portfolio as a whole.
        The Army reviews project reserve accounts through the Portfolio and
    Asset Management quarterly reporting process and during annual site
    visit meetings. These reviews include the monitoring of project reserve
    accounts, balances, deposits, disbursements, and other activities of
    each lockbox account. Significant variances from projected lockbox
    account balances are assessed relative to the requirements and
    performance of the individual project. Unplanned variances may require
    an adjustment to the development or renovation plan to reduce or
    enhance the use of funds from the accounts through the reduction or
    enhancement of the development scope.
        All of the Army's privatization projects, except Fort Carson, CO,
    and Fort Hood, TX, are currently in their initial development period.
    Accordingly, the funds held in reserve or escrow accounts for each
    project are committed to funding agreed upon development scope.
    Further, the lenders/bondholders have received assurances through the
    legal documents that the use of those funds will be the renovation,
    replacement, and construction of housing units and amenities for the
    project, which will ensure that the housing is marketable and future
    income streams upon which the financing was based will be realized. The
    Fort Carson and Fort Hood projects have completed their initial
    development period and begun out-year development renovation and
    replacement programs, funded through a combination of reinvestment
    account funds and additional loan proceeds. Since these installations
    were part of the initial pilot projects, they were conservatively
    underwritten and significant loan capacity existed prior to the take
    down of additional debt.
        Reserve funds for each project are the sole source of funding for
    future replacement/construction and renovation of housing. A home that
    is renovated during the first 10 years of the project will require a
    major renovation or replacement in 20 to 30 years to remain marketable.
    The goal of the Army's Residential Communities Initiative is to create
    a self-sustaining source of funding for the management, development,
    replacement, renovation, and operation of family housing. However, the
    economies of scale that are realized by renovating or replacing a
    critical mass of housing during a defined period of time dictate that
    funds will need to accumulate before being used for development
    activities. Accordingly, a project may build up funds in reserve
    accounts, but those funds are required for out-year development and are
    not excess to the requirements.
        The previous historical failure by the Service departments to
    adequately prioritize the recapitalization of the housing stock is the
    very reason why the Residential Communities Initiative was created.
    Without a slow and steady build-up of funds in reserve accounts after
    the initial development period, the Army could be at risk of repeating
    the mistakes of the past, allowing the housing stock to deteriorate and
    be undercapitalized once again.
        Mr. Penn. Our assessment is that the management practices for
    reserve accounts used are strong. Under the terms of our business
    agreements, the private partner is obligated to provide: independently-
    audited annual financial statements; quarterly financial statements;
    and monthly summary reports (which include reserve account balances).
    Correspondingly, the Department of the Navy has the contractual right
    to review annually or, as warranted, on a more frequent periodic basis,
    all elements of the privatization project's finances. In addition, the
    Navy military housing privatization projects also include an
    independent, third-party trustee or ``lockbox agent'' who is
    responsible for the management of these accounts in accordance with the
    governing project agreements. The Navy's approval is required for any
    expenditures out of project reserve accounts.
        The performance of each of the Navy's privatization projects is
    assessed through the Department's receipt, review, analysis, and
    validation of these various monthly, quarterly, and annual reports in
    order to confirm compliance with the project business agreements.

        113. Senator Thune. Secretary Eastin and Secretary Penn, can you
    provide a list of the transactions in your inventory that are
    accumulating a significant reserve or escrow?
        Mr. Eastin. As stated previously, all except two of the Army's
    privatization projects are in their initial development period, and
    accordingly, funds within the lockbox accounts are committed to funding
    the initial and out-year development scope. The Fort Carson and Fort
    Hood projects have completed their initial development period and begun
    out-year development renovation and replacement programs, funded
    through a combination of reinvestment account funds and additional loan
    proceeds. Since these projects were structured early in the Residential
    Communities Initiative program, they were conservatively underwritten
    and significant loan capacity existed prior to the take down of
    additional debt.
        Residential Communities Initiative projects, in general, have
    accumulated reserve and escrow balances at a rate necessary to meet
    future development scope.
        Mr. Penn. All of the projects have had some escrow amounts and
    many, in fact, still do have significant escrow balances in their
    respective construction escrow accounts. These escrow accounts are used
    for the purpose of completing construction during the initial
    development period.
        The project reserve accounts, much like the construction escrow
    accounts during the initial development period, are used to complete
    construction requirements after the initial development period and over
    the term of the projects. The reserve accounts for Department of the
    Navy military housing privatization projects are generally funded from
    the net project cash flow (after expenses and debt service). Most Navy
    projects are still in the initial development period and will not
    distribute net cash flow into these reserve accounts until after
    construction completion. It is anticipated that all of the projects
    will accumulate significant reserve accounts over their duration which
    will be used to fund sustainment and recapitalization over the life of
    the project.
        To date, the following family housing projects have accumulated
    reserve account balances in excess of $1 million: San Diego; Pacific
    Northwest Region; Northeast Region; and Hawaii. As stated above, these
    reserves will be used to fund sustainment and recapitalization over the
    life of the project.

        114. Senator Thune. Secretary Eastin and Secretary Penn, what
    flexibility do you have to manage and control the uses of reserve
    accounts?
        Mr. Eastin. The management and control of reserve account funds are
    consistent with the management of funds in a private sector real estate
    transaction. The Army participates in the management and control of the
    uses of reserve accounts through the Major Decision process outlined in
    the Operating or Partnership Agreement, subject to the terms and
    conditions of the loan documents. The legal documents include limits on
    the ability of the Army, the Managing Member (private sector partner),
    or the lenders/bondholders to make unilateral decisions regarding the
    use of funds. These limits safeguard the funds in the reserve accounts
    and ensure that decisionmaking regarding their use is in the best
    interest of the overall project and, ultimately, soldiers and their
    families. Without these safeguards, there would be temptations to
    divert the reserve funds for other purposes, and when the time came to
    recapitalize or renovate the housing stock, the funds would no longer
    be available to do that. This would once again put the Army in a
    position of not being able to provide quality sustainable housing for
    soldiers and their families.
        The collection and disbursement of project funds is governed by the
    lockbox agreement, which is administered by the lockbox agent. The
    lockbox agreement also outlines the permitted investments of the funds.
        Mr. Penn. The reserve accounts are established for the sustainment
    and maintenance of project assets over the long term. Under terms of
    the business agreements, the Navy must approve any proposed
    expenditures from the project reserve accounts. The Managing Member of
    the housing privatization business entity analyzes the assets, and
    prepares and submits budgets for such proposed expenditures.
    Furthermore, the Department of the Navy reviews annually (or more
    frequently, if warranted) all elements of the privatization project's
    finances including project reserve accounts.

         use of military installations and training ranges for energy
                                  initiatives
        115. Senator Thune. Secretary Anderson, within the past few months,
    this committee has heard about a series of initiatives to use under-
    utilized land on AFBs and training ranges to install or construct
    various energy production facilities, ranging from a photovoltaic array
    at Nellis AFB, NV, solar powered electrical plants in New Mexico and
    Arizona, to coal-to-liquid refineries in Montana, windmill farms in
    Nevada, and even the possibility of a small modular nuclear reactor at
    a location yet to be determined. Your written statement today refers to
    an energy strategy where ``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.'' Other than the fact that the Air Force can
    offer up under-utilized Federal land, what advantages does the Air
    Force offer a commercial venture in this regard?
        Mr. Anderson. The private sector is best suited to determine the
    viability of any energy venture. It would be the responsibility of a
    potential developer to evaluate whether or not an energy project on one
    of our installations makes sound business sense. The Air Force's
    primary contribution is providing a location in the form of under-
    utilized land. Depending upon circumstances, geography and transmission
    capability may make Air Force bases attractive locations for industry.
    In certain instances, the Air Force may consider the purchase of the
    energy produced by the project.

        116. Senator Thune. Secretary Anderson, what are the benefits to be
    gained for Air Force mission and operations?
        Mr. Anderson. The housing privatization program accelerates our
    ability to provide Air Force families with access to safe, quality,
    affordable, well-maintained housing and requires a much lower
    investment than MILCON by the Air Force to achieve this goal. Through
    housing privatization we have received almost $6 billion in
    construction with only $357 million in Air Force investment.
    Translated, that means the private sector has invested more than $16
    for every $1 invested by the Air Force in housing privatization
    projects. The Air Force currently is evaluating the feasibility of
    privatizing the remaining housing that it owns at Air Force
    installations in the United States.

        117. Senator Thune. Secretary Anderson, is there a potential for a
    private company to avoid State and local regulations by establishing an
    energy plant on Federal land? If so, how will the potential negative
    impact from these exemptions be mitigated?
        Mr. Anderson. For any energy project constructed on Air Force
    property, the developer will be required to follow all applicable
    Federal, State, and local laws and regulations.

        118. Senator Thune. Secretary Anderson, what guidelines and
    directives has the Air Force instituted to assess the impact of these
    initiatives upon the installation's missions and daily operations?
        Mr. Anderson. On our installations, each proposed project is
    evaluated through a rigorous planning process using, for example, Air
    Force Instruction (AFI) 10-503, Base Unit Beddown Program, and the
    Environmental Impact Analysis Process (EIAP) (32 CFR Sec. 989) prior to
    approval. Making environmentally informed decisions and ensuring
    compatibility are keys to successfully meeting our energy needs.

        119. Senator Thune. Secretary Anderson, in the case of installing
    windmill farms installed on training ranges, can you provide a
    description of the concerns raised by the Air Force regarding impacts
    to military training and range management from the installation of
    windmills?
        Mr. Anderson. The Air Force does not install windmills on training
    ranges, due to the incompatibility of tall structures in areas used for
    air-to-ground training.
        For proposed development near ranges, we review every proposal on a
    case-by-case basis for operational impacts. The primary areas of
    interest in the evaluation are flight safety and security of the
    mission. These two areas of evaluation are not specific to windmills
    and are performed for any proposed tall structure near operations. We
    also review for potential electromagnetic impacts to radar and other
    systems. As we strive to train as we fight, we work to mitigate impacts
    and adapt to development near training missions whenever possible.

        120. Senator Thune. Secretary Anderson, exactly how does the
    installation of a windmill affect the operation of radar systems?
        Mr. Anderson. The Air Force is working to increase our
    understanding of the impacts of windmills on radar. While much of our
    available data focuses on long-range (air defense) radar systems, we
    also operate air traffic control, weather, airborne, and other types of
    radar systems. Tests have demonstrated that the large radar cross
    section of a windmill combined with the Doppler frequency shift
    produced by its rotating blades can impact the ability of radar to
    discriminate the windmill from an aircraft. Those tests also
    demonstrated that the wind farms have the potential to degrade target
    tracking capabilities as a result of shadowing and clutter effects.
        Although windmills located in radar line of sight of air defense
    radars can adversely impact the ability of those units to detect and
    track, by primary radar return, any aircraft or other aerial object,
    the magnitude of the impact will depend upon the number and locations
    of the windmills.

                future of willow grove air station, pennsylvania
        121. Senator Thune. Secretary Anderson, I have a question about an
    unprecedented land transfer which occurred last year at Willow Grove
    Naval Air Station/Joint Reserve Base, PA. The 2005 BRAC round closed
    Willow Grove, with the exception of certain Air Force Reserve and
    Pennsylvania National Guard units, which would remain minus the runway.
    As with other closures, the local community started planning for the
    reuse and economic redevelopment of the installation. In May 2007,
    legislation was enacted by Congress which directed the Navy to transfer
    to the Air Force all lands and facilities at Willow Grove in order to
    facilitate the establishment of a joint interagency installation. The
    real effect was to keep the majority of the installation, including the
    runway, open and operating. Did the Air Force concur with this
    legislation? If so, why?
        Mr. Anderson. The Air Force concurs with this legislation as it
    supports the Secretary of the Air Force's commitment to assist the
    Commonwealth of Pennsylvania with transforming Willow Grove into a
    joint interagency installation to support national defense, homeland
    security, and emergency preparedness missions.

        122. Senator Thune. Secretary Anderson, other than the enclave for
    the Air Force Reserves, does the Air Force have a military requirement
    for the land, runway, and facilities?
        Mr. Anderson. The BRAC recommendations call for the establishment
    of an enclave for Air National Guard use and to have a new Armed Forces
    Reserve Center encompassed in that enclave. Beyond those requirements
    there are no known requirements for future military missions.

        123. Senator Thune. Secretary Anderson, what is the Air Force long-
    term plan for the installation?
        Mr. Anderson. The Air Force will meet the BRAC recommendations to
    establish an enclave for Air National Guard use and to have a new Armed
    Forces Reserve Center encompassed in that enclave. There are no known
    requirements for future military missions beyond these. To support the
    Commonwealth of Pennsylvania with transforming Willow Grove into a
    joint interagency installation to support national defense, homeland
    security, and emergency preparedness missions, the Navy will transfer
    Naval Air Station Willow Grove property to the Air Force, who in turn
    will work to transfer property to the Commonwealth of Pennsylvania.

        124. Senator Thune. Secretary Anderson, will the Air Force lease
    any portion of the property to the Commonwealth of Pennsylvania or
    other entities? If so, can you provide details?
        Mr. Anderson. The military enclave being discussed at this time
    envisions a core Air National Guard presence (111th/240th EIS) with a
    7-acre license to the Army National Guard for the 56th Stryker Brigade
    Headquarters and a soon to be determined 20-acre area for the BRAC
    recommended Armed Forces Reserve Center. This enclave would total about
    110 acres including all stated users. Any Air Force land beyond this
    will be available for the Commonwealth of Pennsylvania to use.

        125. Senator Thune. Secretary Anderson, how much funding will the
    Air Force need to spend annually to maintain the installation?
        Mr. Anderson. That figure would not be able to be determined at
    this time while the exact size of the enclave is still being
    determined.

        126. Senator Thune. Mr. Arny, from the perspective of DOD, how does
    the outcome at Willow Grove affect the BRAC process?
        Mr. Arny. The BRAC Act requires DOD to close and realign all
    installations as recommended by the BRAC Commission, as is the case for
    Naval Air Station Joint-Reserve Base (NASJRB) Willow Grove. The
    Department will continue to cooperate with the Commonwealth of
    Pennsylvania regarding establishment of a Joint Interagency
    Installation (JII) on property made available as a result of the
    closure of NASJRB Willow Grove. We have reviewed and commented on the
    Commonwealth's JII implementation plan.
        The Air Force controls approximately 162 acres at Willow Grove; the
    Navy controls approximately 880 acres. While the precise acreage could
    change as details are developed, approximately 88 acres of Air Force
    property and 25 acres of Navy property will be used for a secure
    enclave separate and apart from the JII. The enclave will contain an
    Air National Guard mission, the 56th Stryker Brigade Headquarters, and
    the Army Reserve Armed Forces Training Center. The remaining Federal
    property (approximately 929 acres) will be available to the
    Commonwealth of Pennsylvania for its JII.
                                     ______

                   Questions Submitted by Senator John Warner
                          defense access road program
        127. Senator Warner. Secretary Eastin and Mr. Arny, I have a
    question about the Defense Access Road (DAR) program used by DOD to pay
    for public highway improvements required as a result of sudden/unusual
    DOD-generated traffic impacts. One of the criteria to determine
    eligibility for the program is DOD must assess whether the required
    improvements to public roadways are the result of doubling of traffic
    over a short duration (2 years) due to the establishment of a new
    installation, installation expansion, or establishment of a new gate/
    entrance. This criteria, which is the only one that applies to
    installations receiving large population increases, is a result of the
    2005 BRAC round. Yet, there is no way to certify ahead of time whether
    traffic will at least double due to the increase, whether drivers will
    adjust their routes to find the gate with the least delay, or account
    for the current saturation on roads prior to the assessment of
    doubling.
        For example, at Marine Corps Base (MCB) Quantico in Virginia, the
    combination of increased traffic onto the base and more stringent
    security at main entry points has resulted in morning traffic being
    stopped all the way out to I-95, the busiest high-speed corridor on the
    east coast. This is the current situation before more than 3,000
    marines, civilians, and their families come to MCB Quantico as part of
    BRAC. We all know the potential for disaster when two lanes of vehicles
    and trucks on I-95 are speeding by stopped traffic at 70 miles an hour.
    Someone will eventually get hurt. Yet, the improvement to the off-ramp
    from I-95 to the main gate to get these marines and their families off
    I-95 does not meet the DAR ``doubling'' criteria even though the
    Department has caused the back-up, and the back-up will get worse.
        With these problems in mind, will you review the criteria and get
    back to this committee with your assessment whether the criteria allows
    decisionmakers in the Department to make responsible decisions about
    road work critical to the safety and security of DOD personnel?
        Mr. Eastin and Mr. Arny. The DAR program criteria have been
    established for many years and have been used consistently to help
    address public highway issues incident to increased DOD activity or
    mission growth. DOD considers the DAR criteria to be adequate and they
    have been used successfully to address concerns. We are committed to
    working with the owning highway authorities to address safety and
    security situations as they arise.
        In the case of MCB Quantico, the Department is taking action to
    alleviate the traffic congestion at the I-95 ramps, and along Russell
    Road, accessing both the east and west sides of the Base.
        Because Russell Road and the I-95 ramps are on the property of MCB
    Quantico, DOD can use BRAC funds for road projects to address these
    concerns. Although the I-95 ramps meet the DAR criteria for doubling of
    traffic, MCB Quantico, with Virginia Department of Transportation
    approval, plans to complete the I-95 ramp work as part of the BRAC
    MILCON vice through the DAR program, to ensure the road work is
    completed as a concurrent BRAC project.
        In addition to the I-95 ramp work, the MCB Quantico BRAC MILCON
    includes projects to improve access to locations where BRAC-related
    facilities will be sited on the west side of the Base. The actions
    include widening Russell Road from two lanes to four lanes from the I-
    95 ramps to the BRAC site approximately 1 mile west of I-95, improving
    the west gate on Russell Road, and building a turn-off from Russell
    Road to the BRAC site.
        The existing MCB Quantico traffic congestion on Russell Road to the
    gate access to the east side of Base is being addressed through
    temporary traffic control measures to improve the access through the
    Russell Road gate. Additionally, a MILCON project slated for fiscal
    year 2009 will widen Russell Road at the gate to permanently improve
    access to the Base.
        Once these improvements are made, traffic is projected to clear the
    I-95 through-lanes.

        128. Senator Warner. Secretary Eastin and Mr. Arny, how exactly
    does the Department determine whether traffic will be doubled without
    having to wait until installation expansions are completed?
        Mr. Eastin and Mr. Arny. As part of installation development, the
    installation will both update its master plan and conduct an
    environmental assessment as required by the NEPA. For both actions, the
    responsible DOD components and installations assess transportation
    impacts of proposed growth. The transportation analysis is completed by
    qualified transportation engineering professionals, and the scope and
    content of the analysis are developed using procedures that involve the
    general public and local, State, and Federal agencies and officials.
    These procedures allow us to project future traffic impacts from
    installation expansion and will take into consideration appropriate
    measures to mitigate those impacts, such as the redirection of traffic.

        129. Senator Warner. Secretary Eastin and Mr. Arny, if the
    Department relies on models, how do these models account for subjective
    driver decisions to find the routes of least resistance?
        Mr. Eastin and Mr. Arny. Qualified transportation engineering
    professionals follow the Institute for Transportation Engineers
    guidelines and use their expertise or models during the master planning
    or environmental planning. When projecting traffic, the transportation
    engineering professionals use transportation planning best practices to
    determine paths of least resistance.

        130. Senator Warner. Secretary Eastin and Mr. Arny, in your
    opinion, are the criteria adequate or should they be changed?
        Mr. Eastin and Mr. Arny. The DAR program criteria are effective and
    do not need to be changed.

        131. Senator Warner. Secretary Eastin and Mr. Arny, I am also
    concerned that military installation commanders around the country do
    not understand the DAR program as a way to address critical traffic
    problems affecting their personnel. How does the Department get the
    word out to installations about the program?
        Mr. Eastin and Mr. Arny. The DAR program is a longstanding program
    that is referred to in regulations (Army Regulation (AR) 420-1, Army
    Facilities Management, February 12, 2008, and Joint Regulation AR 55-
    80, DOD Transportation Engineering Program, November 17, 2003), as well
    as in numerous facility management instructions and operating plans.
    Additionally, presentations on the DAR program were given at two major
    conferences organized by the DOD Office of Economic Adjustment
    targeting communities and installations that will be gaining DOD
    populations. Also, the report requested in the 2007 NDAA regarding the
    DAR program, submitted to Congress last May facilitating an increased
    awareness of the program within the Service BRAC offices and at the
    installations. Moreover, in the summer of 2006 the Military Surface
    Deployment and Distribution Command Transportation Engineering Agency
    (SDDCTEA) sent out information about the DAR program and requested
    information from the Service BRAC offices and installations that were
    gaining significant personnel. Information about the DAR program is
    available to anyone from the Department of Transportation website at
    http://www.fhwa.dot.gov/flh/defense.htm and from the SDDCTEA website at
    http://www.tea.army.mil/DODProg/HND/DAR.htm.

          anti-terrorism/force protection standards for dod facilities
        132. Senator Warner. Mr Arny, in 2002, the DOD developed and
    implemented new anti-terrorism/force protection (AT/FP) standards for
    DOD installations and any facility that houses more than 11 DOD
    employees. The standards include mandatory stand-off distances,
    perimeter security measures, and reinforced structures. Given the
    recent bombing of an Armed Forces recruiting station in New York City,
    these standards are vitally important as the first line of defense
    against a terrorist incident. Can you provide an assessment of the
    Department's progress in the implementation of these standards?
        Mr. Arny. The Department issued interim AT/FP standards on December
    16, 1999. Standards were then updated and converted to UFC 4-010-01,
    DOD Minimum Antiterrorism Standards for Buildings and published on July
    31, 2002, and was published on January 22, 2007. To ensure we maintain
    technical currency, a comprehensive review of standards is ongoing.
    Upon completion of the technical review, any changes to the Unified
    Facilities Criteria will then be disseminated and subsequently
    implemented. All new construction projects, major renovations, and new
    leases that meet the criteria currently incorporate existing AT/FP
    standards.

        133. Senator Warner. Mr. Arny, does the Department have a deadline
    for all DOD installations and facilities to comply with the standards?
        Mr. Arny. There is no deadline for all facilities to comply with
    the standards. The intent is for new construction of inhabited
    facilities to comply and to bring existing facilities into compliance
    over time as major investments are made or as leases are renewed. The
    Unified Facilities Criteria specified that the AT/FP standards will
    apply to MILCON projects starting with the fiscal year 2002 program.
    All projects, regardless of funding source, will comply starting with
    the fiscal year 2004 program. Since the fiscal year 2004 program, all
    MILCON projects have been reviewed to incorporate AT/FP standards.
    Since publication of the Unified Facilities Criteria in October 2003,
    whenever repairs to a DOD facility are programmed and the repair cost
    is at least 50 percent of the facility replacement cost, it is required
    that the entire facility be brought into compliance with AT/FP
    standards. Also, in any instance in which windows are to be replaced,
    the replacement windows must comply with AT/FP standards. While these
    are not deadlines, these stipulations ensure that AT/FP design
    standards will be incorporated into DOD facilities as these facilities
    are recapitalized.

        134. Senator Warner. Mr. Arny, will the deadlines be met?
        Mr. Arny. In compliance with the Unified Facilities Criteria, the
    Department is already reviewing all leases, new construction, and
    renovation projects to incorporate AT/FP standards.

        135. Senator Warner. Mr. Arny, what will be the process for
    granting waivers to the installations and facilities that do not meet
    the standards?
        Mr. Arny. The Department is not granting any waivers to the AT/FP
    standards. However, the AT/FP standards are structured as performance
    standards that can be met through different means. An installation
    commander may obtain prior approval consistent with Service or Agency
    guidance if any new construction project, renovation project, or leased
    facility will utilize an alternative means. In many cases where there
    are minimum prescriptive requirements such as standoff distance or
    glazing thickness, those requirements are based on performance
    standards and there are generally provisions to allow those
    performances to be provided through alternate means where those means
    will result in equivalent levels of protection. The intent of these
    standards is to minimize the possibility of mass casualties in
    buildings or portions of buildings owned, leased, privatized, or
    otherwise occupied, managed, or controlled by or for DOD. These
    standards provide appropriate, implementable, and enforceable measures
    to establish a level of protection against terrorist attacks for all
    inhabited DOD buildings where no known threat of terrorist activity
    currently exists. While complete protection against all potential
    threats for every inhabited building is cost prohibitive, the intent of
    these standards can be achieved through prudent master planning, real
    estate acquisition, and design and construction practices. Where the
    conventional construction standoff distances detailed in these
    standards are met, most conventional construction techniques can be
    used with only marginal impact on the total construction or renovation
    cost. The financial impact of these standards will be significantly
    less than the economic and intangible costs of a mass casualty event.
    While it is feasible to apply these standards to new construction as of
    the effective dates established herein, applying them to all existing
    construction and to all leased facilities as of those dates would not
    be feasible. The intent, therefore, is to bring existing buildings into
    compliance with these standards over time, as major investments are
    made in them or as leases are renewed, such that eventually all
    inhabited DOD buildings comply with these standards.

        136. Senator Warner. Mr. Arny, I notice that many projects to
    upgrade security at the main gates and entry points at installations
    are contained in the FYDP accompanying the budget request for fiscal
    year 2009. Given the Department's emphasis on AT/FP, why haven't the
    critical upgrades been treated as a higher priority?
        Mr. Arny. The Department is constantly reviewing priorities to
    ensure resources available are used to accomplish warfighting
    objectives. During the planning and programming process, the Services
    diligently review their programs to manage assets effectively by
    optimizing resources to deliver operational infrastructure for the
    warfighters at our installations. AT/FP projects are given the same
    rigor of consideration and scrutiny as other construction projects in
    determining funding priorities.

        137. Senator Warner. Mr. Arny, what percent of the installations in
    the Department's inventory have operating gates and entry points that
    do not meet current AT/FP standards?
        Mr. Arny. Installation commanders are responsible for applying
    protective measures consistent with the identified or perceived risk of
    people getting hurt or killed, and with the implementing guidance
    established by their Services and the geographic combatant commander
    for the area of responsibility within which the installation is
    located. They must protect their people on their installations by
    managing and mitigating the risk to those people in the event of a
    terrorist attack. In the case of operating gates and entry points,
    protective measures may vary depending on the force protection
    condition and threat-specific requirements. We do not currently monitor
    the requested percentage due to its propensity to change relative to
    threat assessments.

      marine corps helicopter facility requirements at marine corps base
                                  quantico, va
        138. Senator Warner. Secretary Penn, I notice that the National
    Defense Authorization budget request for fiscal year 2009 includes
    $64.1 million to construct a helicopter maintenance hangar and ramp at
    MCB Quantico. On a related note, I am also aware that the Navy program
    to acquire the next presidential support helicopter, which will be
    stationed at Quantico, is over budget and behind schedule. What current
    operations will the two MILCON projects support?
        Mr. Penn. The primary mission supported by the two referenced
    MILCON projects at the Marine Corps Air Facility, Quantico is that of
    HMX-1, which performs presidential support with aircraft to be
    maintained at the proposed facilities. HMX-1 also performs operational
    test activity for new helicopter systems and products  destined  for
    use  by  the  Fleet  Marine  Force. In  support  of  this  mission,
    HMX-1 is required to fly and maintain the CH-46E, VH-3, VH-60, VH-71,
    and the CH-53E helicopters. Additionally, HMX-1 provides helicopter
    lift support to Marine Corps Combat Development Center, Quantico
    schools such as Officer Candidate School, The Basic School, and various
    VIPs in the Washington, DC area. The existing hangars and apron space
    cannot meet current nor planned aircraft requirements.

        139. Senator Warner. Secretary Penn, is the MILCON for the hangar
    and ramp that the Navy has requested for fiscal year 2009 still a
    critical requirement if the new presidential helicopter is not
    delivered to the Navy as currently scheduled?
        Mr. Penn. The hangar and ramp requested for fiscal year 2009
    primarily supports HMX-1 operational test activity for new helicopter
    systems and products. HMX-1 flies and maintains the CH46E, VH-3, VH-60,
    VH-71, and CH-53 helicopters, along with presidential support. These
    projects are needed even if the new presidential helicopter is
    delivered later than scheduled.

        [Whereupon, at 4:19 p.m., the subcommittee adjourned.]

    DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR
                                      2009

                                  ----------

                             TUESDAY, APRIL 1, 2008

                               U.S. Senate,
                  Subcommittee on Readiness and
                                    Management Support,
                                   Committee on Armed Services,
                                                        Washington, DC.

                   THE CURRENT READINESS OF THE ARMED FORCES

        The subcommittee met, pursuant to notice, at 2:52 p.m. in
    room SR-222, Russell Senate Office Building, Senator Daniel K.
    Akaka (chairman of the subcommittee) presiding.
        Committee members present: Senators Akaka and Thune.
        Majority staff members present: Michael J. McCord,
    professional staff member; and William K. Sutey, professional
    staff member.
        Minority staff members present: William M. Caniano,
    professional staff member; David G. Collins, research
    assistant; Gregory T. Kiley, professional staff member; David
    M. Morriss, minority counsel; Lucian L. Niemeyer, professional
    staff member; and Sean G. Stackley, professional staff member.
        Staff assistants present: Benjamin L. Rubin and Brian F.
    Sebold.
        Committee members' assistants present: Bonni Berge,
    assistant to Senator Akaka; Andrew Shapiro, assistant to
    Senator Clinton; Sandra Luff, assistant to Senator Warner; and
    Jason Van Beek, assistant to Senator Thune.

         OPENING STATEMENT OF SENATOR DANIEL K. AKAKA, CHAIRMAN

        Senator Akaka. Aloha and good afternoon to all of you.
    Senator Thune and I are happy to be here, after that vote on
    the floor of the Senate, and to commence our hearing on the
    second subcommittee meeting to discuss the current readiness of
    our military forces.
        On March 12, we received a briefing, from each of the
    Services, on the readiness status of our Armed Forces. That
    session was a very useful initial discussion for today's
    hearing. Our committee, and indeed the entire Congress, shares
    the Nation's concern that our land, sea, and air forces are
    under tremendous stress. We have watched with apprehension as
    the current scope and pace of combat opportunities in Iraq and
    Afghanistan have stressed our military personnel and equipment
    over the last 6 years.
        Military readiness does not just happen. It must be
    continuously measured, aggressively managed, and fully funded.
    We share the responsibility to ensure that this Nation has the
    land, sea, and air forces necessary to protect us and our
    interests at any time and anywhere in the world.
        Each of our witnesses has the demanding responsibility for
    the measurement and management of their Service's readiness to
    meet the requirements of military operations today and in the
    future.
        This afternoon, we welcome General Richard A. Cody, Vice
    Chief of Staff of the United States Army; General Robert
    Magnus, Assistant Commandant of the Marine Corps; Admiral
    Patrick M. Walsh, Vice Chief of Naval Operations; and General
    Duncan J. McNabb, Vice Chief of Staff, United States Air Force.
        As this may well be the last time that General Cody and
    General Magnus testify before this subcommittee prior to their
    retirement later this year, I want to take this opportunity to
    thank you for your dedicated service to the Army, the Marine
    Corps, and this Nation. It has been my great pleasure and
    privilege to work with you both. Your commitment to this
    Nation's soldiers and marines is a model to all of us. So,
    please accept my warmest mahalo, which is thank you, and also
    aloha, for your support and service to our great Nation.
        Gentlemen, again, we look forward to your testimony. So,
    let me call on Senator Thune for his statement.
        Senator Thune.

                    STATEMENT OF SENATOR JOHN THUNE

        Senator Thune. Thank you, Mr. Chairman. I want to thank you
    for scheduling this hearing to discuss the critical issue of
    the current readiness of our Armed Forces.
        I also want to thank our witnesses for their commitment and
    service to our country. Your experience and leadership ensures
    that, regardless of how much we have asked of our
    servicemembers, morale remains high, recruiting remains strong,
    and our units continue to accomplish their missions.
        I also do want to take a moment, Mr. Chairman, as you did,
    to recognize the honorable service of two of our witnesses, who
    both will be retiring this year, after distinguished careers in
    their respective services.
        General Cody, in addition to being the Army's Vice Chief of
    Staff since 2004, you have 36 years of experience, including
    command of the Screaming Eagles of the 101st Airborne Division
    and service in Albania, Korea, and the Middle East. I know you
    also have two sons who are serving in the Army, with a combined
    seven combat tours between them. So, the legacy of dedicated
    service continues for your family.
        General Magnus, after 39 years, you're about to transition
    from active to inactive status, knowing that marines never
    really retire. You've had an amazing career, also, as a
    helicopter pilot, in assignments ranging from Thailand to the
    commanding general at Marine Corps Air Station Miramar, in
    California.
        I want to thank both of you, and your families, for your
    leadership and commitment to your respective Service and to our
    Nation.
        Mr. Chairman, last week, the President met with the Joint
    Chiefs of Staff at the Pentagon to review the same issue we
    will discuss today: the impact of sustained combat operations
    in Iraq and Afghanistan on the readiness of our forces. There's
    no doubt these issues are of the utmost importance to the
    national security interests of this Nation.
        This month, Congress faces critical decisions about
    emergency supplemental funding for both current military
    operations and the readiness of our forces. In the debate to
    come, we must remember that our military forces are, indeed,
    showing the signs of stress and strain. General Cody has
    included, in his written testimony, that the Army is out of
    balance after 6 years of sustained combat operations against a
    ruthless and relentless enemy. This is to be expected. Any
    skilled and persistent enemy dedicated to the destruction of
    our national interests will seek to knock our formidable
    military forces out of balance; they will find ways to counter
    our strengths, through insurgency tactics, fomentation of civil
    war, and callous disregard for innocent lives. They seek any
    means possible to weaken our forces and to defeat us through
    attrition and dissolution of national will. We cannot let this
    happen.
        In September 2001, the Department of the Army assessed that
    only about 50 percent of its combat units were fully ready to
    carry out their assigned missions. In the aftermath of the
    terrorist attacks, our Armed Forces on Active Duty and our
    citizen soldiers in the Reserve component responded to the call
    to duty with selfless sacrifice and a commitment to succeed in
    every mission, no matter how difficult. Regardless of their
    level of readiness, they've responded to every task with
    innovation, sweat equity, and the can-do attitude that is a
    hallmark of the best traditions of America's military.
        The written testimony today describes the same candid
    responses of our forces. Airmen and sailors perform unfamiliar
    missions alongside their comrades in the ground forces. The
    Army is transforming the way it is organized to meet emerging
    threats, deploying units trained in innovative ways, and
    quickly modified doctrine for the mission at hand, in order to
    ensure absolute success. We provide these deploying units a
    full array of resources at the expense of nondeploying units,
    while we ship the newest equipment forward to the fight.
        While these correct decisions ensure success in the war at
    hand, they have a detrimental effect on the strength and depth
    of our Reserves and our ground forces. These effects are
    understandable and, in some cases, unavoidable, but they impact
    our residual strength, our strategic depth. Our Nation has a
    vast array of national security interests. These interests
    require military forces prepared for the full spectrum of
    potential missions overseas and at home. Against this standard,
    many military commanders of ground forces rate their units as
    not fully prepared. I look forward to hearing from our
    witnesses of the actions being taken to improve the readiness
    of our nondeployed forces.
        An assessment of unit readiness depends upon four factors
    in relation to assigned missions: personnel who are ready,
    adequate training, available equipment, and the working order
    of that equipment. I asked the witnesses to describe exactly
    which factors affect current unit readiness. Given this level
    of detail, the Department of Defense (DOD) leadership and
    Congress can focus resources, prioritize efforts, and
    ultimately reverse negative readiness trends to restore balance
    to our Armed Forces.
        Many fixes are already in place for many of the issues
    affecting readiness. The President's January 2007 announcement
    of an increase in the number of combat ground forces in the
    Army and the Marine Corps is a vital part of the readiness
    remedy. I would prefer that we grow the forces more quickly and
    with the assurance that we can maintain the same high-quality
    recruits we presently have in the force. I'm hopeful our
    witnesses will be able to tell us when this growth will
    translate into positive effects for readiness.
        The witnesses described concerns with training. In the next
    3 years, the availability of additional forces will add time
    between deployments to allow for full-spectrum training for
    mission-essential tasks. The Army has also transformed units to
    task-organized, modular brigades, reorganizing its Reserve
    Forces and growing new support units to address the need for
    high-demand and low-density skill sets. These efforts will
    reduce reliance on the other Services for augmentation and
    allow them to concentrate on their own training.
        I also look forward to hearing what plans are in place to
    maximize the dwell time between deployments to ensure adequate
    preparation for a full range of missions.
        In the written statements, the witnesses also emphasized
    the readiness impacts of equipment that is available, operable,
    and represents the best technology. Both the budget request for
    fiscal year 2009 and the second part of fiscal year 2008
    emergency supplemental appropriations request pending before
    Congress contain funding requests to procure equipment in
    response to current shortages. I firmly believe the timely
    delivery of funds for the reset and reconstitution of equipment
    directly enhances the readiness of nondeployed forces. I hope
    our witnesses will be able to discuss their Service's
    investment strategy to re-equip forces and to restore
    prepositioned stocks for levels required by operational plans.
        As a final note, I want to emphasize one readiness trend.
    This country is in a period of the longest sustained combat
    with an enemy since Vietnam. We're fighting a war with Armed
    Forces comprised completely of volunteers. Every person
    entering a recruiting station knows that he or she will
    eventually see combat. Additionally, servicemembers faced with
    the decision about whether to stay in the military know that
    they will continue to be deployed to combat zones, and know
    their families will continue to sacrifice. Yet, as this
    committee continues to watch recruiting and retention
    statistics closely, the numbers remain consistent with historic
    trends, morale remains high, young men and women continue to
    volunteer to serve. I'm not sure whether this is more a credit
    to their character or the result of outstanding efforts by
    military leaders to emphasize the tangible benefits and the
    noble endeavor of service to our country. Either way, I'm
    grateful for the decisions of our servicemembers, and I am
    determined to ensure that they and their families have
    everything that they need to be successful.
        Thank you, Mr. Chairman. I look forward to the testimony
    from our witnesses.
        Senator Akaka. Thank you very much, Senator Thune.
        Each of you have submitted a written statement. So, without
    objection, they will all be included in the record.
        We would appreciate it if you would keep your comments
    short, to allow time for Senators' questions.
        General Cody, will you please begin with your testimony?

      STATEMENT OF GEN RICHARD A. CODY, USA, VICE CHIEF OF STAFF,
                           UNITED STATES ARMY

        General Cody. Thank you, Mr. Chairman and Senator Thune.
        I'm honored to represent the Nation's 1 million soldiers,
    nearly 600,000 of whom are serving on Active Duty today, and
    over 250,000 of whom are deployed worldwide, doing the Nation's
    bidding, as I testify on these issues critical to the readiness
    of the United States Army.
        As the Secretary of the Army and the Chief of Staff of the
    Army have testified, the coming decades are likely to be ones
    of persistent conflict. I agree with that assessment. To defend
    this Nation in a dangerous and unpredictable world, the Army,
    as part of the Joint Force, must be fully prepared to conduct
    prompt and sustained operations across the full spectrum of
    conflict, worldwide.
        But, today our Army is out of balance. The current demand
    for forces in Iraq and Afghanistan exceeds our sustainable
    supply of soldiers, of units and equipment, and limits our
    ability to provide ready forces for other contingencies. Our
    readiness, quite frankly, is being consumed as fast as we can
    build it. Lengthy and repeated deployments, with insufficient
    recovery time at home station, have placed incredible stress on
    our soldiers and on their families, testing the resolve of the
    All-Volunteer Force like never before. While we should be
    extremely proud that our men and women in uniform have proven
    incredibly resilient so far, we must never take their selfless
    service for granted.
        The senior leaders of the Army are committed to preserving
    the All-Volunteer Force, building strategic depth, and
    improving the capabilities of our soldiers, all the while
    providing the necessary combat forces for Iraq and Afghanistan.
    I know you are, too.
        Our plan to restore balance by 2011 has four fundamental
    imperatives: sustain the force, prepare the force, reset the
    force, and transform the force.
        Critical to these imperatives is our plan to grow the Army
    by 74,000 soldiers, which will provide a total of 76 brigade
    combat teams and approximately 227 support brigades across all
    three components of the Army by 2013. Following a reduction in
    operational demand, our rotational goals for a steady-state
    security posture of the Army is 1 year in combat or deployed, 3
    years back, for the Active Force; and 1 year mobilized and 5
    years back, for the Reserve component. Continued deployments
    below these goals put the All-Volunteer Force at risk in a time
    of persistent conflict.
        At the same time, we must continue to modernize, so that
    our soldiers will always have tactical and technical overmatch
    against every enemy. The Future Combat System (FSC) will
    provide our soldiers an unparalleled understanding of the
    operational environment they're in, increased precision in
    lethality, and enhanced force protection in both irregular and
    conventional campaigns. In essence, the FCS will provide that
    overmatch. Soldiers need the FCS. They need it now, in the
    current fight, and they need it to defeat future enemies.
        The FCS is this Nation's promise to the men and women on
    the ground who face the greatest danger, that we remain
    committed to provide the best equipment to help them accomplish
    their mission and return safely to their families.
        To be ready to meet the needs of this Nation, our soldiers
    in this Army need full and timely funding. We need the
    remaining $66.5 billion from the fiscal year 2008 global war on
    terror funding, the $140.7 billion requested in the fiscal year
    2009 base budget, and the fiscal year 2009 global war on terror
    supplemental request. A delay in the fiscal year 2008 global
    war on terror funding, the remaining piece of that supplemental
    request by the end of May, would create substantial impacts and
    unneeded stress on our people and our readiness.
        The Nation and your Army have been at war for over 6 years.
    Our soldiers have borne the burden of this war with
    unparalleled strength and determination. Every day, they
    accomplish the mission. Every day, they do so with valor and
    incredible personal courage. For 15 months, 455 days, and what
    seems like an eternity of minutes when you are in combat, they
    and their families endure immeasurable hardships and personal
    sacrifices in defense of this Nation, and they do so with
    little complaint, because they believe this Nation is worth
    defending.
        Those of us in leadership positions must be the vanguard to
    our soldiers' well-being. Our soldiers and their families must
    continue to be our utmost priority as we properly fund, man,
    train, and equip this All-Volunteer Force.
        Congress has provided tremendous support to our Army these
    past 6 years, and we are grateful for all that you have
    provided. With the continued support of the Secretary of
    Defense, the President, and Congress, the Army will restore
    itself to balance and build the readiness and the strategic
    depth we need to meet the uncertainties of this world.
        I await your questions.
        [The prepared statement of General Cody follows:]
                 Prepared Statement by GEN Richard A. Cody, USA
        For over 6 years our Nation has been at war. Our Army--Active,
    Guard, and Reserve--has been a leader in this war. We have been fully
    engaged in Iraq, Afghanistan, and defending the homeland. Today, I am
    honored to represent the Nation's nearly 1 million soldiers--nearly
    600,000 of whom serving on active duty and over 250,000 of whom are
    deployed worldwide--as I testify on issues critical to the readiness of
    the United States Army.
        To understand the need for an Army that is fully prepared to
    conduct operations across the spectrum of conflict, one must clearly
    understand that the world in which we live is exceedingly dangerous.
    Global terrorism and extremist ideologies threaten our safety and our
    free way of life.
        We believe that the coming decades are likely to be ones of
    persistent conflict among state, non-state, and individual actors who
    use violence to achieve their political and ideological ends. Soldiers
    will continue to confront highly adaptive and intelligent adversaries
    in complex terrain. They will exploit technology, information, and
    cultural differences to threaten U.S. interests. Soldiers must be ready
    to conduct full-spectrum operations in campaigns that include peace
    engagement, counterinsurgency, and major combat operations. Because
    these missions require us to operate among the people, Army forces will
    continue to have a central role conducting Joint operations to
    implement our national security strategy and defend our Nation.
                             an army out of balance
        Today's Army is out of balance. The current demand for our forces
    in Iraq and Afghanistan exceeds the sustainable supply and limits our
    ability to provide ready forces for other contingencies. While our
    Reserve component are performing magnificently, many Reserve component
    units have been assigned missions as an operational force, when they
    had been resourced as a Strategic Reserve for decades. Current
    operational requirements for forces and insufficient time between
    deployments require a focus on counterinsurgency training and equipping
    to the detriment of preparedness for the full range of military
    missions.
        Given the current theater demand for Army forces, we are unable to
    provide a sustainable tempo of deployments for our soldiers and
    families. Soldiers, families, support systems, and equipment are
    stretched and stressed by the demands of lengthy and repeated
    deployments, with insufficient recovery time. Equipment used repeatedly
    in harsh environments is wearing out more rapidly than programmed. Army
    support systems, designed for the pre-September 11 peacetime Army, are
    straining under the accumulation of stress from 6 years at war.
    Overall, our readiness is being consumed as fast as we build it. If
    unaddressed, this lack of balance poses a significant risk to the All-
    Volunteer Force and degrades the Army's ability to make a timely
    response to other contingencies.
                               restoring balance
        We are committed to restoring balance to preserve our All-Volunteer
    Force, restore necessary depth and breadth to Army capabilities, and
    build essential capacity for the uncertain future. Our plan will
    mitigate near-term risk and restore balance by 2011 through four
    imperatives: Sustain, Prepare, Reset, and Transform.
                                    sustain
        To sustain our soldiers, families, and Army civilians in an era of
    persistent conflict we must maintain the quality and viability of the
    All-Volunteer Force and the many capabilities it provides to the
    Nation. By sustaining our soldiers and their families we will ensure
    that they have the quality of life they deserve, and that we will
    continue to recruit and retain a high quality force. In order to
    sustain our force we must offer dynamic incentives that attract quality
    recruits to meet our recruiting objectives for 2008 and beyond; provide
    improved quality of life and enhanced incentives to meet our retention
    objectives; continue to improve the quality of life for Army families;
    continue to improve care for Wounded Warriors and Warriors in
    Transition through a patient-centered health care system, Soldier and
    Family Assistance Centers, and improved Warrior Transition Unit
    facilities; and continue to support families of our fallen with
    sustained assistance that honors the service of their soldiers.
                                    prepare
        To prepare our solders, units, and equipment we must maintain a
    high level of readiness for the current operational environments,
    especially in Iraq and Afghanistan. To fully prepare our Army, we must
    continue to adapt and enhance the rigor and realism of institutional,
    individual, and operational training to enable soldiers to succeed in
    complex 21st century security environments; train soldiers and units to
    conduct full spectrum operations with improved training ranges to
    operate as part of a joint, interagency, or multi-national force;
    provide soldiers the best equipment through the Rapid Fielding
    Initiative, the Rapid Equipping Force, and base budget-funded
    modernization efforts; partner with private industry to rapidly develop
    and field equipment needed on today's battlefield; and continue to
    improve the Army Force Generation process which increases the readiness
    of the operating force over time by generating recurring periods of
    availability of trained, ready, and cohesive units
                                     reset
        To reset our force we must prepare our soldiers, units, and
    equipment for future deployments and other contingencies. The objective
    of Reset is to undo the accumulated effects of more than 6 years of
    combat operations.
        There are three broad components of Reset: resetting equipment,
    retraining soldiers and reconstituting units by revitalizing soldiers
    and families. Each of these components must be sufficiently resourced
    to set the conditions for units to prepare for their next deployment
    and future contingencies.
        The Army must repair, replace, and recapitalize its equipment. As
    we reset equipment, we must not only return units to pre-deployment
    levels of equipment readiness, but also equip them at the standards
    required either as part of the modular Army or posture them to return
    to combat.
        Retraining soldiers is another important component of Reset.
    Soldiers must be retrained to accomplish the full range of missions.
    Units back from deployments face the challenge of retraining soldiers
    for missions that may be different from those they just completed,
    especially in the Reserve component. Some units face a transformation
    process that includes a new mission and organizational structure. These
    requirements are in addition to professional education requirements for
    soldiers and leaders.
        The Army must also revitalize soldiers and families. Repeated
    deployments of longer length combined with shorter dwell time at home
    have stressed soldiers and their families. Soldiers and their families
    must be given the time and resources they need to reintegrate and
    reverse the effects of the sustained operational tempo. The Army is
    providing a number of programs and services to assist the soldiers and
    families during this time. Properly resourced, these programs will
    contribute to revitalizing our soldiers and families.
                                   transform
        To transform our force, we must continuously improve our ability to
    meet the needs of the combatant commanders in a changing security
    environment. In order to transform we must help balance our force and
    increase capacity to provide sufficient forces for the full range and
    duration of current operations and future contingencies by growing as
    quickly as possible; upgrade and modernize to remain an agile and
    globally responsive force with Future Combat Systems (FCS) as the core
    of our modernization effort; continue organizational change through
    modularity and rebalancing to become more deployable, tailorable, and
    versatile; complete the transition of the Reserve component to an
    Operational Reserve and change the way we train, equip, resource, and
    mobilize Reserve component units; and integrate the Grow the Army
    initiative, Base Realignment and Closure (BRAC), Global Defense Posture
    Realignment, and the operation of installations and facilities.
    Achieving these goals will increase our readiness, improve our
    efficiency, and improve the quality of life for our soldiers, families,
    and Army civilians.
        I want to highlight three critical aspects of readiness:
    Modernization; Growth of the Army; and Full and Timely Funding.
                                 modernization
        FCS are the core of our modernization effort and will provide our
    soldiers an unparalleled understanding of their operational
    environment, increased precision and lethality, and enhanced
    survivability in both irregular warfare and conventional campaigns.
    These improved capabilities cannot be achieved by upgrading current
    vehicles and systems. FCS will use a combination of new manned and
    unmanned air and ground vehicles, connected by robust networks, to
    allow soldiers to operate more effectively in the persistent and
    complex threat environments of the 21st century. Maintaining our
    technological edge over potential adversaries, providing better
    protection, and giving our soldiers significantly improved capabilities
    to accomplish their mission are the reasons for FCS. FCS capabilities
    currently are being tested at Fort Bliss, TX, and they are proving
    themselves valuable in the current fight and are being fielded to our
    soldiers in combat operations today.
        Soldiers have always had to fight for information. Since World War
    II, 52 percent of casualties resulted from ``finding the enemy.'' In
    irregular warfare, when the enemy hides among the people, soldiers need
    the Reconnaissance, Surveillance, and Target Acquisition (RSTA)
    capability to identify threats before the point man enters the building
    or the convoy hits an IED. Our goal is to develop the situation before
    making contact, so when soldiers engage the enemy, it is from a
    position of advantage instead of the ambush zone. FCS provides over 830
    RSTA sensors--four times the number in the old brigade design and twice
    the number in the modular Brigade Combat Team (BCT). Plus, every
    soldier truly becomes an effective sensor when he's on the network. The
    FCS-equipped BCT also provides more Infantry to secure the population,
    build local contacts and gain more human intelligence. By combining
    timely and precise RSTA with the power of a robust network, soldiers
    can discern insurgent threats before they emerge instead of after they
    act. This combination of RSTA and the network gives commanders what
    they need to see the environment, build shared situational awareness,
    act first and react swiftly to take the initiative away from the
    insurgent.
        Given the risk to soldiers in close combat with irregular threats,
    soldiers need increased survivability in complex urban and human
    terrain. We are reaching the limits of what armored protection can
    provide in this kind of fight. FCS provides a new combination of
    networked and physical systems that help soldiers avoid detection,
    avoid the initial hit and survive to eliminate the exposed threat.
        Task Force Observe, Detect, Identify, and Neutralize (ODIN)
    provides a current example in Iraq that reveals how FCS-like RSTA
    improves situational understanding and survivability by leveraging the
    power of the manned and unmanned team. Since we established Task Force
    ODIN to employ Unmanned Aircraft Systems, linked to commanders in the
    air and on the ground through the Common Ground Station, we have killed
    over several hundred IED emplacers, attacked the IED network, and
    captured 141 High-Value Targets. This manned/unmanned teaming has
    resulted in far more survivable manned aircraft. That's powerful.
    That's FCS capabilities working today--in combat.
        FCS is the our highest priority program, and the Army's only major
    defense acquisition program on the Department of Defense's list of its
    10 largest programs. Over the past three legislative cycles, funding
    for FCS has been cut by $790 million. These direct reductions have
    resulted in an indirect programmatic cost increases of $403 million,
    resulting in total impacts to the FCS program of over $1.2 billion.
    This impact has resulted in significant delays to System Development
    and Demonstration work, and have caused slippage in key FCS program
    milestones by up to 8 months. We cannot sustain these continued cuts to
    our #1 modernization program, and we ask for full funding of this
    year's request in the President's budget.
        Another critical enabler for the success of our future force are
    the capabilities that manned and unmanned Army Aviation bring to the
    battlefield. Aviation forces continue to prove each day their
    versatility to rapidly reinforce and sustain the commander on the
    ground and overcome land-bound intervisibility lines and obstacles with
    responsiveness and unmatched timely and integrated reconnaissance,
    surveillance, and target acquisition. Army Aviation's vital role is
    enduring and therefore, the Army seeks your continued support to the
    efforts to modernize Army Aviation as we fight the Global War on Terror
    and transform, simultaneously. I ask your continued support for the
    production of the UH-60M, CH-47F, AH64D, UH-72A (LUH), AH-70 (ARH) and
    Joint Cargo Aircraft (JCA). Additionally, we seek your continued
    support in the development and procurement of Aviation Survivability
    Equipment, the Armed Reconnaissance Helicopter, and our Unmanned
    Aircraft Systems, Sky Warrior, Shadow, and Raven. Each of these systems
    provide required capabilities in direct support to the commander on the
    ground and their roles are assured for the next 20+ years.
                              growth of the force
        Our Grow the Force initiative is a critical component of reducing
    stress on the force, improving readiness, and building strategic depth.
    In January 2007, the President approved a growth in Army End Strength
    by 74.2K (65K in the Active component, 8.2K growth in the Army National
    Guard, and 1,000 growth in the U.S. Army Reserve). This plan will build
    six additional Active component BCTs, 15 Support Brigades, and
    associated Combat Support and Combat Service Support units. We will
    culminate in a total of 76 BCTs and approximately 227 Support Brigades
    across all 3 components by 2013.
        Under surge conditions the Army goal is to deploy the Active
    component at a 1:2 deployed to dwell ratio and the Reserve component at
    a 1:4 mobilized to demobilized ratio. At these ratios, the Army can
    supply 21-22 BCTs annually. Currently, meeting global demand requires
    dwell times well below this surge goal. Some units deploy for 15 months
    with only 12 months training at home station prior to their next
    deployment. To meet the joint demand for Army forces, some Reserve
    component units must also deploy sooner than the goal of 1 year
    mobilized and 4 years demobilized. Continued deployment rates below the
    surge goal put the All-Volunteer Force at risk in this era of
    persistent conflict.
        The Army is executing a tightly-woven plan to support this growth,
    and we are executing this plan concurrently with the 2005 round of BRAC
    and the Global Defense Posture Realignment. This requires an investment
    in military construction that is unprecedented--over $66 billion from
    fiscal year 2006-2013. In order for the plan to have its intended
    affect on readiness, we must have full, predictable and timely funding
    for BRAC and military construction. An interruption of our planned
    sequence of basing actions, and associated construction projects, will
    have profound impacts on readiness, and the quality of life of soldiers
    and their families.
                            full and timely funding
        Our soldiers need full and timely funding of the Army's fiscal year
    2009 request of $140.7 billion to be ready to meet the needs of the
    Nation. For their sake and the safety of our Nation, we must remain
    dedicated to put the Army back in balance. Over the last 6 years, the
    Army has received increasing proportions of its funding through
    supplemental and global war on terrorism appropriations. Because of
    this recurring reliance on global war on terrorism funds and a natural
    overlap between base and global war on terrorism programs, the Army's
    base budget does not fully cover the cost of both current and future
    readiness requirements. Because the global war on terrorism planning
    horizon is compressed and the timing and amount of funding is
    unpredictable, some base programs would be at risk if supplemental
    funding is precipitously reduced or delayed.
        The Army appreciates the $70 billion ``global war on terrorism
    bridge fund'' that Congress provided in December 2007. However, $66.5
    billion from the fiscal year 2008 global war on terrorism request has
    not yet been provided to the Army. Congressional action on the balance
    of the global war on terrorism request prior to the end of May will
    provide funds in time to prevent any disruption in operations or
    programs. A delay beyond the end of May will create substantial impacts
    on readiness. Anticipated impacts include:

             The Army runs out of pay for Active Duty and National
            Guard soldiers in June 2008;
             The Army runs out of O&M for the Active component in
            early July and for the Guard in late June;
             Two Stryker BCTs may not receive hull protection kits
            before they deploy;
             Armored Security Vehicles could face a break in
            production;
             Army National Guard will not receive 10 CH-47 F model
            helicopters;
             Converting and existing BCTs will not receive the
            Bridge to Future Networks communication systems; and
             The Army will be unable to upgrade and construct
            facilities for returning Wounded Warriors at Forts Drum,
            Campbell, Stewart, Carson, Hood, Riley and Polk

        There are clear implications on the Army's readiness to each and
    every one of these projected impacts. I ask for your full and timely
    support of the balance of the fiscal year 2008 global war on terrorism
    request, and the fiscal year 2009 base budget. They are absolutely
    vital to supporting our soldiers, sustaining their families, and
    restoring balance to our Army.
                     preserving the strength of the nation
        The Nation and your Army has been at war for over 6 years. Our
    soldiers have demonstrated valor, endured countless hardships, and made
    great sacrifices. Over 3,000 soldiers have died and many more have been
    wounded. The awards our soldiers have earned reflect their
    accomplishments and bravery on the battlefield. But their valor is not
    enough to restore balance and readiness to our Army. We must continue
    to invest in our centerpiece--soldiers--and the families that support
    them.
        Congress has provided tremendous support to our Army these past 6
    years, and we are grateful for all you have provided. You have extended
    our recruiting incentives, provided for our Wounded Warriors, grown the
    Army, made significant improvements in the quality of life of our
    soldiers and their families, and since September 11 you have authorized
    and funded 94 new programs worth over $100 billion. With the continued
    support from the Secretary of Defense, the President, and Congress, the
    Army will restore balance, build the readiness necessary in an era of
    persistent conflict, and remain the strength of the Nation.

        Senator Akaka. Thank you very much.
        General Magnus?

    STATEMENT OF GEN. ROBERT MAGNUS, USMC, ASSISTANT COMMANDANT OF
                            THE MARINE CORPS

        General Magnus. Chairman Akaka, Senator Thune, thank you
    for this opportunity to report to you today on the readiness of
    your Marine Corps.
        On behalf of our marines, sailors, and their families, I
    would like to extend my appreciation for the sustained support
    that Congress provides your Marine Corps.
        Your marines are fully engaged in the long war. Today, with
    over 33,000 marines deployed, from Iraq to Afghanistan, the
    Horn of Africa to West Africa, from Korea to the Philippines,
    and here in our Homeland hemisphere, your marines and sailors
    are performing magnificently under challenging and often
    dangerous conditions. I want to assure you that our warriors in
    combat are our number one priority. They are well-trained,
    well-led, and well-equipped for their assigned missions.
        Although we are currently meeting our operational
    requirements with ready, mission-capable forces, the net
    effects of sustained combat operations and our high operational
    tempo are taking a toll on our marines, their families, our
    equipment, and the full-spectrum-training readiness.
    Contributing to the stress on our force is the short dwell time
    between deployments and our intense focus on counterinsurgency
    operations. The short dwell time at home does not allow our
    units the time to train on the full-spectrum missions needed to
    be ready for other contingencies. This most directly affects
    your marines' proficiency in core competencies, such as
    combined arms and amphibious operations.
        To ensure our forward-deployed forces maintain high
    readiness, we have been required to source personnel and
    equipment from nondeployed units and pre-positioning programs.
    This cross-leveling of personnel and equipment has reduced the
    nondeployed units' ability to train for those other contingency
    operations.
        First, to sustain the demands of the long war while we
    correct the effects of stress, the Marine Corps is growing its
    Active component end strength to 202,000 marines. This increase
    will provide the combatant commanders with ready marines for
    the current counterinsurgency mission. It will also improve our
    Active component deployment-to-dwell ration to 1-to-2, reducing
    the stress on marines and families, and ensuring that marines
    have the necessary full-spectrum training. The increased Active
    end strength will create three balanced Marine Expeditionary
    Forces and also reduce the need to mobilize our Reserve Forces,
    improving their dwell ratio to 1-to-5.
        Second, we are resetting our forces to ensure our equipment
    remains ready for tomorrow's missions. For over 5 years,
    intensive combat operations have resulted in the heavy use and
    loss of our ground and aviation equipment. Operational demands
    have also increased our equipment maintenance and replacement
    costs far beyond what was planned in our baseline budgets. With
    Congress's help over the past 3 years, we have begun to make
    progress in meeting reset requirements. To date, Congress has
    provided $10.9 billion in supplemental funding towards our
    estimated current total reset requirement of $15.6 billion. We
    look forward to continuing to reset our forces with the
    remaining fiscal year 2008 global war on terror request.
        Third, to ensure that your Marine Corps will remain ready
    for future challenges, we will continue to modernize our
    warfighting equipment, including new ships and aircraft, and
    our infrastructure. I am proud to report that your support has
    helped ensure the continuing success of marines and sailors.
    The morale and resiliency of your marines have never been
    higher. They volunteer to serve their Nation at war, have been
    sent to do that mission, and know that they are succeeding,
    despite very demanding conditions and a ruthless enemy. We will
    continue to keep our primary focus on supporting marines and
    sailors in combat and on taking care of their families at home.
    We will continue to reset and modernize your Marine Corps,
    ensuring that it remains ready today, ready tomorrow, and ready
    for the uncertain challenges of the future.
        Congress's support has enabled us to succeed. That
    continuing support will ensure that we will always, as Congress
    has directed, ``be the most ready when the Nation is least
    ready.''
        I look forward to your questions.
        [The prepared statement of General Magnus follows:]
                 Prepared Statement by Gen. Robert Magnus, USMC
                                i. introduction
        Chairman Akaka, Senator Thune, and distinguished members of the
    subcommittee; on behalf of your Marine Corps, I would like to thank you
    for your generous and sustained support and look forward to this
    opportunity to discuss the readiness of your Marine Corps. Your marines
    know that the people of the United States and their Government are
    behind them, and your support has been exceptional.
        America's Marine Corps is fully engaged in the Long War. Around the
    globe, they are performing magnificently under challenging and
    dangerous conditions, and despite a high operational tempo, the morale
    and resiliency of your marines have never been higher. They believe in
    what they are doing, and know that their sacrifices are making a
    positive difference everyday. We are currently meeting all operational
    requirements with ready, mission-capable forces, but sustained combat
    operations and our high operational tempo are taking a toll on our
    warriors, equipment, and full spectrum training readiness, as well as
    their families. To address these challenges we need your continued
    support to maintain current capabilities, reset the force, and
    modernize to prepare for future national security challenges. With your
    continuing support, we will remain the Nations' premiere expeditionary
    force in readiness--most ready when the Nation is least ready.
           ii. stress on the force--usmc commitments in the long war
        Our operational tempo and the global demand for Marine forces in
    support of the Long War remain high. Today, nearly 32,000 marines are
    deployed worldwide. Over 25,000 marines continue to support operations
    in Iraq, where we are having extraordinary success in transitioning
    responsibility to Iraqi security forces and disrupting insurgent
    activities--resulting in dramatically improved security throughout al
    Anbar province.
        Elements of Marine Corps Forces Special Operation Command continue
    to serve afloat with our Marine Expeditionary Units, and provide
    foreign military training teams to partner-nation Special Operations
    Forces--most recently in Mauritania. Also serving ashore, Marine Corps
    Forces Special Operations Command continues to conduct combat
    operations with Afghan, U.S., and allied Special Forces units in
    Afghanistan. Additionally, this month the Marine Corps will deploy
    approximately 3,400 additional marines to Afghanistan to conduct combat
    operations against resurgent Taliban forces, and to help build capacity
    within the Afghan National Security Forces.
        This past year, Marine forces participated in over 60 Theater
    Security Cooperation events, ranging from small Mobile Training Teams
    in Central America to Marine Expeditionary Unit exercises in Africa,
    the Middle East, and the Pacific. Additionally, the Marine Corps
    conducted civil-military and humanitarian assistance operations
    including New Horizons events in Nicaragua, land mine removal training
    in Azerbaijan, fire fighting support in Southern California, and
    cyclone disaster relief in Bangladesh.
        Across the globe, Marine Security Guard forces provide crucial
    support at U.S. embassies from Amman to Zagreb. They perform their
    duties superbly, as demonstrated in Belgrade. Our Fleet Anti-terrorism
    Security Teams provide a forward deployed expeditionary capability in
    support of the combatant commanders and their naval component
    commanders by protecting our personnel and key infrastructure. They
    recently provided a quick reaction force in support of President Bush's
    trip to Africa.
        Due to the continued high demand for Marine forces, our non-
    deployed units are consistently stressed by the requirement to send
    their leadership personnel as individual augmentees for transition
    teams, joint headquarters, and other requirements in support of
    Operations Iraqi Freedom (OIF) and Enduring Freedom (OEF). While these
    Marine leaders are enhancing the capabilities of Iraqi and Afghan
    security forces, and performing needed functions with our deployed
    joint headquarters, their extended absence from our nondeployed forces
    leave their units short of the key personnel needed to effectively
    train, develop unit cohesion, and lead.
        Contributing to the stress on our force is the short dwell time
    between deployments and a necessarily intense focus on
    counterinsurgency operations. Deploying units conduct a rigorous pre-
    deployment training program focused heavily on the Iraq and Afghanistan
    counterinsurgency missions. The short dwell time available at home does
    not allow our units the time to train to the full spectrum of missions
    needed to be expeditiously responsive for other contingencies. This
    short dwell time and heavy training focus on counterinsurgency limit
    the ability to develop and maintain proficiency in core competencies
    such as combined arms and amphibious operations. Additionally, the need
    for units such as artillery, mechanized maneuver and air defense units
    to train and conduct ``in lieu of missions'' (such as security,
    military policing, and civil affairs) degrades the readiness of those
    units to conduct their regular primary mission. While the result is a
    Marine Corps well trained for ongoing operations in Afghanistan and
    Iraq, there is significant risk in our degraded ability to support
    other operations, including major combat operations where those primary
    mission, full spectrum capabilities would be required.
        The sustained, high operational tempo of the past several years
    continues to take its toll on our equipment readiness. In order to
    ensure that our forward deployed forces are sufficiently equipped, we
    have cross-leveled equipment from our nondeployed units, strategic
    programs, and in-stores assets. This cross leveling has degraded our
    nondeployed units' ability to train for and conduct additional
    contingency operations.
        The net effect of focusing our equipment and personnel priorities
    on forward deployed units, coupled with a heavy training focus on
    counterinsurgency operations, is that our ability is very limited to
    rapidly provide ready forces to conduct other small or large scale
    operations as well as Theater Engagement, Theater Security Cooperation,
    and Humanitarian Assistance, missions. Currently, units require
    additional time to form, train, and equip their forces before deploying
    in support of contingency operations. Such delay limits effective early
    options for the Commander in Chief and increases the likelihood of U.S.
    casualties.
        As we continue the Long War, we must maintain current capabilities
    while we simultaneously prepare for the challenges of the future. The
    Marine Corps will do this by: right-sizing the force; resetting the
    force; taking care of our warriors and their families; and modernizing
    the Marine Corps for the future.
                       iii. right-sizing the marine corps
        Today, your Active component Marine Corps end strength is
    approximately 188,000 marines. As the first step towards minimizing
    stress on our force and meeting the demands of the Long War, the Marine
    Corps will grow its Active component personnel end strength to 202,000
    marines by 2011. This increase in structure will provide the
    capabilities for three balanced Marine Expeditionary Forces--each
    possessing significant ground, aviation, combat logistics, and command
    and control capability--capable of executing full spectrum operations
    anywhere in the world. Our end strength growth is designed to move the
    unit deployment-to-dwell time ratio, currently near 1:1 for most units,
    to a more acceptable ratio of 1:2. This increased dwell time will
    provide units with additional time to conduct full spectrum training,
    and significantly reduce the strain on marines and their families. Our
    increase in training capacity will be gradual, as we stand up new
    units, add end strength, and grow our mid-grade enlisted and officer
    leadership. These are all vital parts of our growth that cannot be
    developed overnight.
        Although growing our force structure presents challenges, we are
    progressing well. Last year we stood up two infantry battalions and
    added capacity to our combat engineer battalions and air naval gunfire
    liaison companies. This year we will add a third infantry battalion,
    and increase capacity in much needed skill sets including intelligence,
    communication, civil affairs, military police, unmanned aerial vehicle,
    helicopter, air command and control, combat service support, and
    explosive ordnance disposal. Additionally, our growth in fiscal year
    2008 will add 200 marines to the Marine Corps Recruiting Command, and
    nearly 500 to our Training and Education Command.
    a. Growing the Force: 202,000 Marines
        The Marine Corps surpassed its fiscal year 2007 authorized end
    strength goal of 184,000, and is well on track to meet both the fiscal
    year 2008 goal of 189,000 marines and our targeted end strength of
    202,000 marines by fiscal year 2011.
        Recruiting
        A vital factor in sustaining our force and meeting end strength
    goals is the recruitment of qualified young men and women with the
    right character, commitment, and drive to become marines. With over 70
    percent of our end strength increase comprised of marines on their
    first enlistment, our recruiting efforts are a critical part of our
    overall growth. We continue to recruit the best of America's young men
    and women into our ranks. In fiscal year 2007, the Marine Corps added
    5,000 marines to our total authorized end strength, and achieved over
    100 percent of the Active component accession goal necessary to grow
    the force. We also met 100 percent of our Reserve recruiting goals. We
    met these goals while maintaining the high quality standards the
    American people expect of their marines. Over 95 percent of our
    accessions were high school graduates (Department of Defense (DOD)
    standard is 90 percent), and over 66 percent were in the upper mental
    group testing categories (DOD standard is 60 percent). In fact, we
    believe these high standards make the Marine Corps more attractive to
    those considering service in the Armed Forces in a time of war.
    Furthermore, there is a direct correlation between the quality of youth
    today and the long term effects it has on reducing attrition at the
    recruit depots, increasing retention, and improving readiness in the
    operating forces.
        We know that active and Reserve recruiting will remain challenging
    particularly given the increased accession requirements needed to meet
    our end strength growth. To succeed, we need the continuing support of
    Congress to sustain our existing programs and the incentives essential
    to achieving our recruiting mission.
        Retention
        Retention is the other important part of building and sustaining
    the Marine Corps. The Marine Corps achieved unprecedented numbers of
    reenlistments in both the first term and career force in fiscal year
    2007; a strong indicator of our force's high morale. The expanded
    reenlistment goals, in which we sought to reenlist over 3,700
    additional marines, resulted in the reenlistment of 31 percent of our
    eligible first term force and 70 percent of our eligible career force.
    This achievement enabled us to reach the first end strength increase
    milestone of 184,000 while maintaining our high quality standards. In
    fact, a recent Center for Naval Analysis study showed that the quality
    of our first term force has improved steadily since fiscal year 2000.
    The percentage of marines that were high school graduates, scored in
    the top 50th percentile of the Armed Forces Qualification Test (AFQT),
    and achieved a first class physical fitness test score, increased from
    40 percent in fiscal year 2000 to 51 percent in fiscal year 2007.
        For fiscal year 2008, our retention goals are even more
    aggressive--17,631 compared to 16,098 in fiscal year 2007--but we fully
    expect to meet them. Our continuing success will be attributable to two
    important enduring themes. First, marines are motivated to ``stay
    marine'' because they are doing what they signed up to do--fighting for
    and protecting our Nation . . . and they know they are winning. Second,
    they understand our culture is one that rewards proven performance--our
    Selective Reenlistment Bonuses (SRB) are designed to retain top quality
    marines that possess the most relevant skill sets.
        Our Marines' leadership and technical skills make them
    extraordinarily marketable to lucrative civilian employment
    opportunities. To retain our outstanding marines, we need Congress'
    support for SRB funding. In fiscal year 2007, the Marine Corps spent
    approximately $460 million in SRB and Assignment Incentive Pay (AIP) to
    help reach our end strength goal. With a reenlistment requirement of
    17,631 in fiscal year 2008, the Marine Corps expects to spend $536
    million in reenlistment incentives. This aggressive SRB plan will allow
    us to retain the right grade and skill sets for our growing force,
    particularly among key military occupational specialties.
        Reserve Component End Strength
        Our operations in Iraq and Afghanistan are a Total Force effort,
    which includes the superb performance by Marine Reserve Forces. The
    Marine Corps goal is to obtain a 1:5 deployment-to-dwell ratio within
    our Reserve component. As our Active Force increases in size, the
    current, necessary reliance on our Reserve Forces will decrease--
    helping us achieve the desired deployment-to-dwell ratio within our
    current authorized end strength of 39,600 Selected Marine Corps
    Reserves. As with every organization within the Marine Corps, we
    consistently review the make-up and structure of our Reserve component
    to ensure the right capabilities reside within the Marine Forces
    Reserve units and the Individual Mobilization Augmentee program.
        Military-to-Civilian Conversions
        Military-to-civilian conversions replace marines in non-military-
    specific billets with qualified civilians, enabling the Corps to return
    those marines to the operating forces. Since 2004, the Marine Corps
    returned 3,096 marines to the operating force through military-to-
    civilian conversions. We have only 27 new conversions scheduled for
    fiscal year 2008, but plans are underway to convert approximately 900
    military police billets to civilian security personnel over the next 4
    years. We will continue to pursue sensible conversions that will help
    improve unit personnel readiness and aid in our deployment-to-dwell
    ratio goals for the force.
    b. Growing the Force: Warfighting Investment
        Close cooperation between the Marine Corps and our industry
    partners enabled an accurate assessment of the materiel requirements to
    grow our force. This cooperation was fundamental to providing the units
    created in fiscal year 2007 with the equipment they needed to enter
    their predeployment training cycle and to be prepared to deploy in this
    fiscal year. Prioritization of equipment levels and the redistribution
    of our strategic stocks also played a large role in the preparation of
    these units. With Congress' continued support, the numerous equipment
    contracts required to support our growth to 202,000 marines were met
    during fiscal year 2007 and will be met through fiscal year 2008 and
    beyond.
        The Commandant recently directed a comprehensive Marine Corps-wide
    Tables of Equipment (T/E) review. The changing security environment and
    lessons learned by operations  in  Iraq  and  Afghanistan  have  made
    it  clear  that  many  of  our  units  T/E do not necessarily reflect
    the way we fight today, or will fight in the future. It will take 3 to
    4 years to work through these equipping challenges and return our total
    force equipment readiness to the levels which preceded OIF/OEF, but it
    is a necessary step. The new T/E will support enhanced mobility,
    lethality, and command and control across a dispersed battlefield for
    the entire operating force--Active and Reserve components--and will
    ensure that our marines remain capable of meeting both the traditional
    and irregular warfighting requirements of future conflicts.
    c. Growing the Force: Infrastructure Investment
        Military construction is an essential component supporting the
    Marine Corps growth to 202,000 marines by fiscal year 2011. Because our
    end strength will increase before final construction is complete, we
    are providing interim support facilities that will include lease,
    rental, and purchase of temporary facilities. Our plan will ensure
    adequate facilities are available to support the phase-in and final
    operating capability of a 202,000 Marine Corps, while meeting our
    environmental stewardship responsibilities.
        Military Construction--Bachelor Enlisted Quarters Initiative.
        For single marines, housing is our top military construction focus.
    Barracks are a significant quality of life element for our single
    marines, but funding shortages and competing priorities over the past
    several decades forestalled new construction projects. We are now
    committed to providing adequate billeting for all of our unmarried,
    junior enlisted and noncommissioned officers by 2012--and for our
    increased end strength by 2014. To do that, we doubled our bachelor
    housing funding request from fiscal year 2007 to 2008; with more than
    triple the 2008 amount in fiscal year 2009. We are also committed to
    funding the replacement of barracks furnishings on a 7-year cycle and
    prioritizing barracks repair projects to preempt repair backlogs.
        Public Private Venture (PPV) Housing
        For married marines, the housing privatization authorities are
    integral to our efforts to accommodate both current housing
    requirements and those resulting from our planned force structure
    increases. Thanks to congressional support, the Marine Corps had
    business agreements in place at the end of fiscal year 2007 to
    eliminate all of our inadequate family housing. However, we intend to
    continue our PPV efforts to address current inventory deficiencies in
    adequate housing units, as well as the housing deficit being created by
    the increase in end strength to 202,000. Presently, 99.2 percent of our
    U.S. inventory is privatized and we will have 99.7 percent of the
    inventory privatized by the end of fiscal year 2013. 96 percent of our
    worldwide inventory is privatized and we will have privatized 97
    percent of this inventory by this time next year. We don't expect to
    privatize more than 97 percent of the worldwide inventory.
        Training Capacity
        As part of our holistic growth plan, we are increasing training
    capacity and reinvigorating our predeployment training program to
    provide support to all elements of the MAGTF across the full spectrum
    of potential missions. In order to accomplish this we are conducting
    planning studies into an expansion of our range complex at the Marine
    Corps Air Ground Combat Center in Twentynine Palms, CA, in order to
    support large-scale MAGTF live-fire and maneuver training.
    Additionally, in accordance with the Secretary of Defense's Security
    Cooperation guidance, we are developing training and education programs
    to build the capacity of allied and partner nations. We are also
    developing the capability to conduct large-scale MAGTF exercises within
    a joint, coalition, and interagency context to maintain proficiency in
    core warfighting functions such as combined arms maneuver, amphibious
    operations, and maritime prepositioning operations. Finally, our budget
    request supports our training and education programs and training
    ranges to accommodate the 27,000 Marine Corps end strength increase.
        Infrastructure Energy Considerations
        While we continue to concentrate on the many aforementioned
    programs, we have not lost our focus on efforts to reduce energy
    consumption at our installations. We have embraced recent legislative
    and Presidential mandates to reduce energy consumption and set into
    place several programs to meet the new energy reduction requirements.
    Since the new baseline year of 2003, the Marine Corps has reduced its
    annual energy consumption rate from an overall level of 98.7 Million
    British Thermal Units (MBTUs) per Thousand Square Feet (KSF) to a
    present level of 93.22 MBTU per KSF, equating to an estimated utilities
    cost avoidance of $10.7 million in fiscal year 2007. For energy
    projects awarded since 2003, the average project payback period is 9.9
    years.
        We are focusing on our mandate to reduce consumption by a minimum
    of 3 percent per year through 2015. To achieve this, $4 million in
    fiscal year 2008 and $29 million in fiscal year 2009 are programmed to
    support energy projects that have payback periods of less than 15 years
    (such as solar roofs, replacement of older heating and air conditioning
    units with higher efficiency models, and hiring supplemental energy
    contractor staff whose employment is dependant on lowering installation
    energy consumption and costs). We also continue to focus on contractor
    financed energy programs that have been made available through the
    renewed Energy Savings Performance Contract legislation. Any additional
    congressional funding support for the DOD Military Construction Energy
    Conservation Improvement Program would also directly add to our energy
    reduction efforts. Noteworthy projects which the Marine Corps recently
    completed or awarded are: the installation of one of DOD's largest
    solar array field (1 megawatt, payback of 9.9 years with an annual cost
    avoidance of $392,518) at MCAGCC Twentynine Palms; contract award of a
    1.25 megawatt wind turbine (payback of approximately 11 years and an
    annual cost avoidance of $493,727) at MCLB Barstow; and lighting and
    air conditioning upgrades at MCB Hawaii (payback of 11.8 years with an
    annual cost avoidance of $1,089,600).
                            iv. resetting the force
        For over 5 years now, the Marine Corps has been involved in intense
    combat operations resulting in the heavy use and the loss of our combat
    equipment. The demands of the conflict in Iraq and the greater global
    war on terror increased our equipment maintenance and replacement costs
    far beyond what was made available in our baseline budget. We are very
    thankful that Congress has been extremely supportive in providing
    required global war on terror funding to continue our reset efforts.
    a. Reset Funding
        Reset funds replenish the equipment needed to keep the Marine Corps
    responsive to today's threats. Costs categorized as ``reset'' meet one
    of the following criteria: maintenance and supply activities to restore
    and enhance combat capability to unit and pre-positioned equipment;
    replace or repair equipment destroyed, damaged, stressed, or worn out
    beyond economic repair; and enhance capabilities with the most up-to-
    date technology. With Congress' help over the last 3 years, we have
    begun to make significant progress in drawing down our reset
    requirements. To date, Congress provided $10.9 billion in supplemental
    funding towards our estimated current total reset the force requirement
    of $15.6 billion. The timely appropriation of procurement funds in the
    title IX funds in fiscal year 2007 allowed us an early start on this
    year's procurement actions that will ultimately provide new and
    improved equipment to our marines. We also look forward to receiving
    the $1.3 billion reset funding remaining in the fiscal year 2008 global
    war on terror. This funding is critical to our continued progress with
    resetting the force. As the Long War evolves, we will continue to
    refine and assess our reset costs.
    b. Ground Equipment Readiness
        Due to Congress' continuing support our deployed forces have the
    equipment they need and deserve. Our deployed warfighters are our
    number one priority and receive our highest equipping priority.
    Deployed units are reporting the highest readiness levels of equipment
    supply and condition. Sustaining high deployed equipment readiness has
    been a total force effort and is not without long term ramifications
    and consequences. Approximately 26 percent of all Marine Corps ground
    equipment and nearly 25 percent of our active duty aviation ground
    equipment are engaged overseas. Most of this equipment is not rotating
    out of theater at the conclusion of each force rotation; it remains in
    combat, often used on a near-continuous basis, at a pace that far
    exceeds normal peacetime usage. While the vast majority of our
    equipment passed the test of sustained combat operations, it is being
    subjected to more than a lifetime's worth of wear and tear stemming
    from increased vehicle mileage, operating hours, and exposure to harsh
    environmental conditions--accelerating both equipment age and
    maintenance requirements.
        For example, in OIF, crews are driving Light Armored Vehicles in
    excess of 8,700 miles per year--3.5 times more than the programmed
    annual usage rates of 2,480 miles per year. Our tactical vehicle fleet
    is experiencing some of the most dramatic effects of excessive wear,
    operating at five to six times the programmed rates. Additionally, the
    improvised explosive device (IED) threat forced us to modify vehicles
    with heavy armor plating, which further accelerated the wear and tear
    on these assets. These factors, coupled with the operational
    requirement to keep equipment in theater without major depot repair,
    significantly decreased the projected lifespan of this equipment. As a
    result, we can expect higher than anticipated reset costs due to the
    need to replace assets that are not economically repairable. Depot
    level maintenance requirements for the repairable equipment will
    continue beyond the conclusion of hostilities in Iraq and Afghanistan.
        Equipment aging adds to the readiness challenge as well. As
    equipment ages, more time, dollars, and effort are expended repairing
    legacy equipment. Maintaining optimal readiness, while continuing to
    support OIF, OEF, and other contingencies, will require additional
    resources for maintenance as well as for the replacement of equipment.
        To support deployed marines, we drew additional equipment from our
    Maritime Prepositioning Ships, prepositioned stores in Norway, and also
    retained equipment in theater from units that rotate back to the United
    States. The operational materiel impacts of these efforts have been
    outstanding. The average mission capable rates of our deployed forces'
    ground equipment remain above 90 percent--but achieving this
    operational availability was not without cost.
        The cost has been a decrease in nondeployed unit readiness. Because
    of funding lags and long lead times for production, the fielding of new
    equipment for the operating forces has lagged needs. As a result,
    equipment across the Marine Corps is continuously cross-leveled to
    ensure units preparing to deploy have sufficient equipment to conduct
    our rigorous predeployment training programs. This focus on ``next-to-
    deploy'' units for the distribution of equipment has left many
    nondeployed units with insufficient equipment to effectively train for
    the full breadth of possible contingencies. The timely delivery of
    replacement equipment is crucial to sustaining the high readiness rates
    for the marines in theater and improving readiness of the forces here
    at home. While Congress provided the funding requested to maintain our
    equipment readiness and grow the force, much of this equipment is still
    many months away from delivery.
    c. Aviation Equipment Readiness
        Similar to our ground equipment, the operational demands and harsh
    environments of Iraq, Afghanistan, and the Horn of Africa taxed our
    aging fleet of aircraft. Our aircraft are flying at two to three times
    their designed utilization rates (Figure 1) to support our marines,
    sister Services, and coalition partners.

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Despite this unprecedented use, our maintenance and support
    personnel sustained a 79 percent aviation mission-capable rate for
    deployed Marine aircraft over the past 12 months.
        Maintaining the readiness of these aviation assets, while preparing
    aircrews for their next deployment, is and will continue to be an
    enormous effort and constant challenge for our marines. To maintain
    sufficient numbers of aircraft in deployed squadrons, our home
    squadrons took significant cuts in aircraft and spare parts--resulting
    in a 30 percent decrease in the number of nondeployed units that are
    deployment capable over the last 5 years. Reset programs have helped us
    mitigate degradation of our aircraft materiel readiness through
    aircraft modifications, proactive inspections, and additional
    maintenance actions. These efforts successfully bolstered aircraft
    reliability, sustainability, and survivability. Again, similar to our
    ground equipment, additional requirements for depot level maintenance
    for airframes, engines, weapons, and support equipment will continue
    well beyond the conclusion of hostilities. Because we are simply
    running short of aircraft on our flight lines due to age, peacetime
    attrition, and wartime losses, continued funding support for our
    essential programs to modernize our aircraft fleet is critically
    needed.
    d. Prepositioning Equipment and Stores
        Comprised of three Maritime Prepositioning Squadrons and other
    strategic equipment stocks in Norway, the Marine Corps prepositioning
    programs are a critical part of our ability to respond to contingency
    operations and mitigate risk for the Nation. Targeted withdrawal of
    equipment from our strategic stocks, along with cross-leveling of
    equipment in nondeployed units, has been a key element in supporting
    combat operations. Prepositioned equipment withdrawals have provided
    the necessary equipment in the near term, while we follow with the
    contracting and acquisition of new equipment. Congress has generously
    supported our need to reset shortfalls within our strategic programs.
        Maritime Prepositioning Force (MPF)
        We used our MPF assets heavily in support of global war on terror
    requirements. Eleven vessels supported the initial introduction of
    forces in Iraq in 2003. In February 2004, MPSRON-2 supported the
    reintroduction of Marine Forces into Iraq. The bulk of that equipment
    remains in Iraq supporting your marines. Equipment was removed from
    MPSRON-1 in fiscal year 2007 to support the end strength growth of the
    Marine Corps to 202,000 marines. This decision reduced readiness of the
    MPF, but it was the best solution to meet our demand in advance of new
    equipment deliveries from industry. MPSRON-1 will deploy with 80
    percent of its prepositioned equipment and 100 percent of its stocks in
    June 2008, and will begin full reconstitution in June 2010 during its
    next scheduled maintenance cycle. MPSRON-2 was reconstituted to the
    greatest extent possible and returned to service with roughly 50
    percent of its prepositioned equipment set. Equipment is being staged
    at Blount Island Command to support the reconstitution of MPSRON-2
    during maintenance cycle 9 (occurring May 2008 through June 2009).
    While industry is responding to our funded demand for equipment, the
    window of opportunity when we can influence a ship's load during
    maintenance cycles is very short. Of course, we continue to balance the
    demands to reconstitute our MPF with the requirements to equip our
    growing force and deploying marines.
        Prepositioning readiness was impacted by changing the equipment
    needed to react to an adaptive enemy. To better protect our forward
    deployed marines and sailors, we are integrating protected vehicles
    into our prepositioning programs. The integrated armor on our trucks
    and engineer equipment is impacting the amount of equipment our ships
    can carry, due to their increased size and weight. To offset the loss
    in equipment stowage, we are working with the Navy to incorporate
    newer, more flexible ship platforms from the existing Military Sealift
    Command fleet to replace aging legacy Maritime Prepositioning Ships
    (MPS).
        We seek to incorporate 3 of the Military Sealift Command's 19,
    large, medium-speed, roll-on/roll-off ships (LMSR) as replacements for
    5 of our older leased platforms. The LMSRs are U.S. owned and
    significantly expand MPF flexibility. These vessels provide a stability
    that new leasing laws preclude, while allowing the Marine Corps to
    reconstitute and optimize MPF to meet combatant commander requirements.
        Marine Corps Prepositioning Program-Norway
        In addition to our afloat prepositioning program, equipment from
    Marine Corps Prepositioning Program-Norway (MCPP-N) is used in support
    of Long War operations. Attainment for major end items within MCPP-N is
    46 percent, an increase from 38 percent in our last report. The Marine
    Corps will reset MCPP-N in concert with our other operational
    priorities.
    e. Depot Maintenance
        Depot maintenance is key to sustaining equipment readiness. The
    Marine Corps aggressively works to improve equipment readiness and
    availability by managing the conditions that affect our depot
    maintenance rework plans. These conditions include: the uncertainty of
    the timing of reset, asset availability, timing of funding, equipment
    condition, and evolving skill requirements. The in-theater
    identification of equipment and scope of work to be performed enables
    better planning for parts, manpower resources, funding requirements,
    and depot capacity. Triage assessments made in theater and relayed back
    to the sources of repair help to reduce the repair cycle time, return
    mission capable equipment to the warfighter quicker, and improve
    materiel readiness.
        The only factor limiting our two depots is asset (carcass)
    availability, not funding or their workload capacity. When required, we
    can increase capacity to support surge requirements through: overtime,
    additional shifts, and additional personnel. Our depot workforce has
    multiple trade skills ranging from laborers to engineers, enabling work
    to be performed on over 260 product lines. However, much of the
    equipment in theater includes items not previously repaired by any
    depot facility, and as a result, the existing work force may require
    additional training. Ultimately, new personnel, as well as continued
    augmentation through contractor support, may be required. We are
    leveraging State and local institutions, such as technical colleges and
    universities, to provide valuable assistance in training our workforce
    in skills such as welding, environmental science, and engineering.
        The Marine Corps Maintenance Centers have implemented Continuous
    Process Improvement (CPI) methodologies through the use of modernized
    business practices to enhance depot operations. Those tools include
    Manufacturing Resource Planning II (MRP II), Lean Six Sigma, Theory of
    Constraints, and International Standard Office (ISO) certified quality
    systems. This CPI approach, coupled with key engineering projects,
    significantly enhances depot maintenance processes and operations.
        Additionally, Maintenance Centers collaborate with private industry
    and other Services to identify process improvements designed to enhance
    materiel readiness. We also coordinate with the other Services to
    reduce redundancy in our efforts. Examples of the excellent
    coordination between the Marine Corps and other Services include: the
    repair of Marine Corps M1A1 tanks at the Anniston Army Depot; the
    repair of various Marine Corps electronic equipment at Tobyhanna Army
    Depot; and Marine Corps maintenance on Navy/Coast Guard Paxman engines.
    The Marine Corps also contracts or out sources work which allows us to
    purchase repairs through: a Depot Maintenance Interservice Agreement
    with another service, a contract with a private vendor, or a Public/
    Private Partnership. In all cases, the repair source is evaluated for
    the best return on the investment for the Marine Corps.
    f. Equipment Retrograde Operations from CENTCOM AOR
        Marine Corps Logistics Command took the lead as the Service
    Executive Agent for the retrograde of equipment in the CENTCOM theater
    in 2006. In addition to receiving, preparing, and shipping equipment no
    longer required within theater, Marine Corps Logistics Command
    (Forward) coordinates strategic lift requirements and manages the
    redistribution of principle end items. Since June 2006, over 15,731
    principle end items were processed at the retrograde lot in Al
    Taqaddum, Iraq, and approximately 11,799 items were shipped back to
    Blount Island Command for disposition. Once disposition is received,
    assets are sent to Marine Corps Logistics Command to be repaired,
    stored, or used to fill requisitions. If deemed uneconomical to repair,
    assets are sent to the Defense Reutilization Marketing Office. These
    actions will enable us to better manage the demand for equipment and to
    influence readiness rates across the enterprise.
        In order to enhance our preparedness to retrograde a greater volume
    of equipment from the CENTCOM AOR, we are seeking facilities project
    improvements that will increase throughput operations at Blount Island
    Command. Naval Facilities Engineering Command is prepared to support us
    in this endeavor.
                    v. taking care of warriors and families
        Taking care of our marines, sailors, and their family members is a
    fundamental commitment and critical to our current and long-term
    readiness. Throughout our proud history, our successes have been
    through the cumulative efforts and sacrifices of individual marines and
    sailors. We have a moral obligation to ensure their well being during
    their time in the Marine Corps and their transition back to civilian
    life. When marines are wounded, ill, or injured, we will take care of
    them--they are marines for life. When marines die, we will honor our
    fallen angels, and assist their families. This enduring obligation also
    includes the well being of their families--who are essential to the
    resilience and effectiveness of our marines and sailors who serve
    alongside them. Because of the demands of the Long War and the need to
    improve support and services for our warriors and families, we are
    putting our family readiness programs on a wartime footing.
    a. Casualty Assistance
        Marines selflessly serve, assuming the often dangerous work of
    defending our Nation. Whenever marines pay the ultimate price, we will
    continue to honor them as selfless patriots who gave their last full
    measure of devotion to the Nation. Our casualty assistance program will
    ensure the families of our fallen marines are always treated with
    compassion, dignity, and honor.
        Trained Casualty Assistance Calls Officers provide the families of
    fallen marines assistance with their transition through the stages of
    grief. Last year during congressional hearings and inquiries into
    casualty next-of-kin notification processes, we testified about
    deficiencies that we discovered in three key and interrelated casualty
    processes: command casualty reporting, command casualty inquiry and
    investigation, and next of kin notification. Reacting quickly to
    understand and fix these deficiencies, we ordered an investigation by
    the Inspector General of the Marine Corps. Without waiting for a final
    investigative report, the Commandant of the Marine Corps directed
    actions, which included issuing new guidance to commanders--
    reemphasizing investigation and reporting requirements, and the
    importance of tight links between these two systems, and with next of
    kin notification. We will continue to monitor our processes to ensure
    families receive timely and accurate information relating to their
    marine's death or injury.
    b. Putting Family Readiness on a Wartime Footing
        Last year, we conducted self-imposed, rigorous assessments of our
    family support programs. We gained reliable data to build upon our
    strengths and to execute needed improvements. Actions are underway to
    refresh, enhance, or improve: our family readiness programs at the unit
    and installation levels, including our Exceptional Family Member
    Program and the School Liaison Officer Program.
        Through our assessments, we determined that major enhancements are
    needed to the Marine Corps Family Team Building Program and Unit Family
    Readiness Program. These programs form the centerpiece of our family
    support and are based on a peacetime model with an 18-month deployment
    cycle. They are also largely supported on the backs of our dedicated
    volunteers. While our volunteers are performing magnificently, they
    need substantial increases in program support. Reacting quickly to the
    assessments, the Commandant directed a sustained funding increase for
    Marine Corps family readiness program reforms in fiscal year 2008 which
    include:

             Formalizing the role and relationship of process
            owners to ensure accountability;
             Expanding programs to support the extended family of a
            marine (spouse, child, and parents);
             Establishing primary duty billets for Family Readiness
            Officers at regiment, group, battalion, and squadron levels;
             Improving the quality of life at remote and isolated
            installations;
             Increasing Marine Corps Family Team Building
            installation personnel;
             Refocusing and applying technological improvements to
            our communication network between commanders and families;
             Dedicating appropriate baseline funding to command
            level Family Readiness Programs; and
             Developing a standardized, high-quality volunteer
            management and recognition program.

        We request Congress' continued support so we may continue to
    advance these reforms and address the evolving requirements of our
    warfighters and their families.
    c. Wounded Warrior Regiment
        In April 2007, the Wounded Warrior Regiment was activated to
    develop a comprehensive, integrated approach to Wounded Warrior care
    and to continue to ensure that ``marines take care of their own.'' The
    Regiment reflects our deep commitment to the welfare of our marines,
    sailors, and families throughout all phases of recovery. The Regiment
    provides non-medical case management, benefit information and
    assistance, and transition support. We use ``a single process'' that
    supports Active Duty, Reserve, and separated personnel, and is all
    inclusive for resources, referrals, and information.
        There are two Wounded Warrior Battalions, headquartered at Camp
    Lejeune, NC, and Camp Pendleton, CA. The Battalions have liaison teams
    at major military medical treatment facilities, Department of Veteran's
    Affairs Poly-trauma Centers (VAPTC), and Naval Hospitals. Additionally,
    the Battalions provide local support in regions without military
    treatment facilities or VAPTCs through Marine For Life Home Town Links
    (M4L HTL), or Wounded Warrior Regiment District Injury Support Cells.
        The Regiment constantly assesses how to improve the services it
    provides. One of the major initiatives is a Job Transition Cell manned
    by marines and representatives of the Departments of Labor and Veteran
    Affairs. The Regiment also established a Wounded Warrior Call Center
    for 24 hour a day/7 days a week support. The Call Center receives
    incoming calls from marines and family members with questions, and
    makes outreach calls to the almost 9,000 wounded marines who left
    active service. A Charitable Organization Cell was created to
    facilitate linking wounded warrior needs with charitable organizations
    that can provide the needed support. Additionally, the Regiment
    maintains a liaison presence at the Department of Veterans Affairs (VA)
    Headquarters, and liaisons from the VA and the Department of Labor are
    located within our Wounded Warrior Regiment headquarters at Marine
    Corps Base, Quantico.
        I deeply thank you for your support on behalf of our wounded
    warriors and their families. The numerous visits from Members of
    Congress and their own families, are deeply appreciated by them and
    their families. Your new Wounded Warrior Hiring Initiative to employ
    our injured in the House and Senate demonstrates your commitment and
    support to their future well-being. We are grateful to Congress for the
    support for wounded warriors in the 2008 National Defense Authorization
    Act. This landmark legislation will significantly improve the quality
    of their lives and demonstrates the Nation's enduring gratitude for
    their selfless sacrifices.
    d. Traumatic Brain Injuries
        The IEDs used by our enemies cause blast and penetrating traumatic
    brain injuries (TBIs). TBI awareness and education is part of our pre-
    deployment, routine, and post-deployment training. All marines are
    being screened for TBI exposure during the post-deployment phase and
    those identified with it receive comprehensive evaluation and
    treatment.
        Concussive blast injuries to the brain are currently classified as
    mild, moderate, or severe traumatic brain injuries. Physical
    examinations performed by medical personnel, aided by screening tools
    such as the Military Acute Concussion Evaluation (MACE) and the Glascow
    Coma Scale (GCS), assist in the diagnosis and categorization of TBI.
    Despite this, Mild TBI (mTBI) can be difficult to detect with the
    current screening techniques available in the theater of operations.
    The Marine Corps is seeking a means to use the Automated
    Neuropsychological Assessment Metrics (ANAM), developed by the Army, to
    evaluate an individual's neuro-cognitive functioning (i.e. brain
    operations that are responsible for all aspects of perceiving,
    thinking, and remembering) following exposure to concussive blast. To
    be maximally effective, pre-exposure testing with the ANAM is required
    to establish the baseline functioning of each marine and sailor prior
    to deployment. The Marine Corps is working closely with the Center of
    Excellence for Psychological Health and Traumatic Brain Injury to
    advance our understanding of TBI and improve the care of all marines.
    e. Post-Traumatic Stress Disorder
        The Marine Corps has partnered with Veterans Affairs and its
    National Center for Post-Traumatic Stress Disorder (NCPTSD) to improve
    the psychological health of our marines, sailors, and families through
    research and effective new training and early intervention programs.
    Our premiere PTSD research project is the ``Marine Resilience Study,''
    a collaboration with the VA at San Diego and Boston, as well as the
    Naval Health Research Center, to prospectively study the biological,
    psychological, and social factors that predict resilience in two
    battalions of ground combat marines bound for Iraq or Afghanistan.
    Initial phases of this ground-breaking study are under way at MCAGCC
    Twentynine Palms. Through collaborations with the NCPTSD and both Navy
    Medicine and the Navy Chaplaincy, we have also developed new Combat and
    Operational Stress First Aid tools for early intervention for acute
    traumatic stress and loss in operational environments. We have also
    partnered with UCLA and the National Child Traumatic Stress Network to
    establish over the next 6 months a family resilience training program
    known as Families Overcoming Under Stress at our four largest
    mobilization and demobilization sites. We are determined to reduce the
    frequency and severity of PTSD in our marines, sailors, and family
    members through effective, evidence-based primary and secondary
    prevention programs.
        The Marine Corps is thankful to Congress for their leadership and
    support of research as well as treatment for TBI, PTSD, and other
    combat-related mental disorders. We will continue to place a high
    priority on improving our knowledge and treatment of these disorders
    and providing non-clinical assistance to marines and their families.
    f. Combat and Operational Stress Control
        Marine Corps commanders are fully engaged in promoting
    psychological health among our marines, sailors, and their family
    members. Small unit leaders have the greatest potential for detecting
    stress occurrences and assessing their impacts on warfighters and
    family members. Marine leadership fosters an environment at all levels
    where our warriors learn it is proper to ask for help, because taking
    care of marines and ensuring their readiness means caring for physical
    and psychological health. We stress this to marines repeatedly during
    pre-deployment training, deployment, and post-deployment periods, as
    well as through the training continuum. The Navy is supporting
    expansion of embedding Navy mental health professionals in operational
    units--the Operational Stress Control and Readiness program. The goal
    by fiscal year 2010 is for 161 Navy personnel (62 medical officers, 16
    chaplains, and 83 sailors) embedded at all levels of the MEF. We are
    also collaborating with the other Services, the Department of Veterans
    Affairs' NCPTSD, and external agencies to determine best practices for
    marines and their families.
    g. Exceptional Family Member Program (Respite Care)
        Parental stress can be heightened for families who are not only
    impacted by operational tempo, but have the challenges of children with
    special needs. To focus on this issue, we offer active duty families
    enrolled in the Exceptional Family Member Program (EFMP) up to 40 hours
    of free respite care per month for each exceptional family member. Many
    of our families rely on TRICARE's Enhanced Care Health Option (ECHO)
    program which offers limited respite care, but provides other important
    benefits such as medical equipment, mental behavior therapy,
    rehabilitation, special education, and transportation. Unfortunately,
    in many cases, the monthly ECHO cap of $2,500 does not enable families
    to cover all of these services, forcing them to choose between respite
    care and other benefits. The Marine Corps EFMP now underwrites the
    respite care, enabling families to apply ECHO resources to these other
    treatment services. We also seek to provide a ``continuum of care'' for
    our exceptional family members through: our assignment process; working
    with TRICARE and the Department of the Navy Bureau of Medicine and
    Surgery to expand access and availability to care; and providing family
    support programs to ease relocations and ensure quality care
    transitions.
    h. Family Member Pervasive Developmental Disorders
        The sustained readiness and effectiveness of marines and sailors
    during deployment requires that they know family members are supported
    at home. Currently, the TRICARE ECHO program is not able to provide
    sufficient support to children of servicemembers with special needs, to
    include Pervasive Developmental Disorders such as: Autistic Spectrum
    Disorder, Asperger's Disorder, Rett's Disorder, Childhood
    Disintegrative Disorder, and Pervasive Developmental Disorder Not
    Otherwise Specified. The Marine Corps is working closely with the DOD
    Office of Family Policy Work Group on examining options to expand its
    Educational & Developmental Intervention Services (EDIS). EDIS is the
    DOD response to the Individuals with Disabilities Education Act, a
    Federal mandate that provides Developmental Services for children 0 to
    3 years old, and Special Education Services for children 3 to 21. EDIS
    delivers early intervention services to eligible infants and toddlers
    in domestic and overseas areas, and medically related service programs
    for school age children in DOD schools overseas.
    i. Water Contamination at Camp Lejeune
        Past water contamination at Camp Lejeune continues to be a very
    important issue for the Marine Corps. Our goal is to use good science
    to determine whether exposure to the contaminated water at Camp Lejeune
    resulted in any adverse health effects for our marines, their families,
    and our civilian workers. The Marine Corps supports the Agency for
    Toxic Substances and Disease Registry in their health study, which is
    planned to be completed in March 2009. With the help of Congress, the
    National Academy of Sciences is also helping us by studying this
    difficult issue. Their study is expected to be completed in the fall of
    2008.
        The Marine Corps is making progress notifying former residents and
    workers of this issue and we established a call center and notification
    registry, where the public can provide contact information, so we can
    keep them apprised of the completion of these health studies.
    Additionally, 50,000 letters will be mailed by 31 March 2008 to
    individuals who were identified in a DOD personnel database that were
    former residents and/or workers at Camp Lejeune.
                  vi. preparing marines for current operations
        The Training and Education Continuum for deploying marines begins
    with entry level training, ascends through formal schools, home station
    training, Professional Military Education, and culminates with a final
    unit Pre-Deployment Training Program (PTP) assessment. This ascending-
    levels-of-competency approach allows marines of all ranks to be trained
    at the right level, at the right time, and the right place. Mojave
    Viper (MV), Desert Talon (DT), and Mountain Warrior (MW) are
    established as the primary OIF/OEF Pre-Deployment Training Mission
    Rehearsal Exercises. The Marine Corps PTP is both realistic and
    adaptive. Utilizing role players and live fires, PTP prepares marines
    mentally, physically, and culturally as to what they can expect in the
    combat environment. Training is constantly updated based on lessons
    learned. PTP is conducted in five nested blocks in ascending levels of
    competency and culminates in a full-scale, intelligence-driven,
    controlled, and evaluated exercise conducted at Twentynine Palms,
    Bridgeport, Yuma, or an approved alternate venue. During fiscal years
    2006 and 2007, the PTP resulted in over 42,000 marines receiving
    combined arms and urban operations training at MV in Twentynine Palms,
    CA; over 2,800 marines receiving mountain operations training at the
    Mountain Warfare Training Center in Bridgeport, CA; and over 12,000
    marines participating in aviation-focused DT exercises in Yuma, AZ.
        Core Values and Ethics Training
        As part of our ethos, we continually seek ways to improve ethical
    decisionmaking at all levels. In 2007, we implemented the following
    initiatives to strengthen our Core Values training and prepare marines
    for the mental rigors and challenges of combat:

             Tripled the amount of time Drill Instructor and
            recruits conduct ``foot locker talks'' on values (increasing
            instruction time from 14 to 41.5 hours);
             Institutionalizing habits of thought for all marines
            operating in counterinsurgencies, the message of the importance
            of ethical conduct in battle, and how to be an ethical warrior
            in all operating environments and locations;
             Re-emphasized the Values component of our Marine Corps
            Martial Arts Program, which teaches Core Values and presents
            ethical scenarios pertaining to restraint and proper escalation
            of force as the foundation of its curriculum;
             Educated junior marines on the ``strategic corporal''
            and the positive or negative influence they can have;
             Published pocket-sized Law of War, Rules of
            Engagement, and Escalation of Force guides;
             Increased instruction at our Commander's Course on
            command climate and the commander's role in cultivating
            battlefield ethics, accountability, and responsibility.

        Marine Corps Center for Lessons Learned
        Our Marine Corps Center for Lessons Learned applies lessons from
    operational experiences as well as those of the Joint Staff, other
    Services, and Joint Forces Command to guide efforts for ``fine tuning''
    and transforming our force. This rapid, continuous process ensures the
    latest enemy and friendly tactics, techniques, and procedures are
    incorporated in our training programs. In 2007, as result of these
    lessons learned, the Marine Corps implemented changes in pre-deployment
    training in such areas as detention operations; transition teams;
    interagency coordination of stability, support, transition, and
    reconstruction operations; irregular warfare; and the role of forensics
    in counterinsurgency operations.
        Experimentation
        Research, development, and experimentation are key factors to
    adapting our force, enhancing training, and providing the foundation
    for our own future warfighting capabilities. We continuously work with
    the Office of Naval Research, the Defense Advanced Research Projects
    Agency and other Services Science and Technology and Research and
    Development (R&D) activities, leveraging their special, significant
    efforts. The Marine Corps Warfighting Laboratory conducts experiments
    to support operating force requirements and combat development with
    improved capabilities. Some examples of current projects include:

             ``Combat Hunter,'' a project aimed at enhancing
            observation and hunting skills of individual marines operating
            in a combat environment;
             Company Level Intelligence Cell experiment, designed
            to provide us with a ``best practices'' model and to
            standardize infantry battalion intelligence processes;
             Squad Fires experiment, enhancing close air support to
            squad-level units;
             Combat Conditioning project, examining advances in
            physical fitness training to best prepare marines for the
            demands of combat; and
             Lighten the Load initiative, an effort to decrease the
            amount of weight carried by marines in the field.
                       vii. modernizing the marine corps
        In addition to recruiting and retaining high quality marines and
    ensuring their individual readiness, we are also committed to providing
    our warriors with the very best warfighting equipment and capabilities.
    Our equipment modernization has high priority, so that we can ensure
    ready, relevant and capable Marine Air Ground Task Forces now and in
    the future. As careful stewards of our Nation's resources, we must
    decide the most effective ways to modernize our Total Force. With this
    in mind, we continue to sustain the readiness of our aging legacy
    equipment by resetting it and also fielding next generation
    capabilities. Because we are at war, we must do both, modernizing on
    the march. Thankfully, Congress has consistently supported our efforts
    to achieve long-term modernization, while maintaining our current
    readiness to prosecute the Long War.
    a. Urgent Warfighting Requirements
        Designed to procure equipment for commanders more expediently than
    if submitted through the traditional acquisition process, our Urgent
    Universal Needs Statement (UUNS) process uses a secure, web-based
    system that provides full stakeholder visibility from submission
    through resolution. We have studied and continue to review our overall
    capabilities-based Joint Capabilities Integration and Development
    System (JCIDS) requirements generation process, including the wartime
    UUNS process, to ensure we meet valid warfighter needs for timely
    effective and efficient material solutions. One example of our efforts
    to provide timely responses is that, through continuous process
    improvement, and a Lean Six Sigma review, we have reduced average UUNS
    processing time from 142 to 83.2 days and transitioned over 50 emerging
    capabilities into programs of record. Typically, UUNS are either funded
    by reprogramming funds from approved programs or through congressional
    supplemental funding until we can transition them through the next
    budgeting cycle. We are committed to rapidly and properly equipping our
    warriors, continuously reviewing our system for opportunities to
    increase efficiency and responsiveness in order to provide marines the
    best combat equipment and protection as swiftly as we can identify and
    test material solutions and field them.
    b. Enhancing Individual Force Protection and Survivability
        The Marine Corps is pursuing technological advancements in personal
    protective equipment because marines in combat deserve the best gear
    for their mission. Fully recognizing the factors associated with
    weight, fatigue, and movement restriction, we are committed to provide
    our marines with the latest in personal protective equipment--such as
    the Modular Tactical Vest, QuadGard, Lightweight Helmet, and Flame
    Resistant Organizational Gear.
        Body Armor
        Combat operations in Iraq and Afghanistan highlight the need to
    evolve our personal protective vest system. In February 2007, we began
    transitioning to a newly-designed Modular Tactical Vest (MTV) which
    integrates more easily with our other personal protection systems and
    provides greater comfort by incorporating state-of-the-art load
    carriage techniques. The MTV also incorporates our combat-proven
    Enhanced Small Arms Protective Inserts (E-SAPI) and Side SAPI plates.
    These plates are provided to every marine in the central command
    theater of operations to render the best protection available against a
    wide variety of small arms threats. The initial acquisition objective
    for the MTV was 60,000 vests in response to a UUNS, with deliveries
    completed in October 2007. The Marine Corps placed a final order for
    24,000 additional MTVs and deliveries began in Nov 07 with
    approximately 17,000 vests received to date. With this initial
    capability fielded to all deployed forces we are now using feedback
    from our marines and sailors to refine the vest into a system that can
    further enhance the performance and safety of the warfighter.
        QuadGard.
        The QuadGard system provides ballistic protection for a marine's
    arms and legs when they are serving as a turret gunner on convoy duty.
    This system, which integrates with other personal ballistic protection
    equipment, provides additional protection against ballistic threats--
    particularly improvised explosive device fragmentation.
        Lightweight Helmet
        Similar to body armor, we continue to rapidly evolve the best head
    protection. The Lightweight Helmet (LWH) weighs less than its
    predecessor and provides a high level of protection against
    fragmentation threats and 9mm bullets. Because of tests, including
    studies by the University of Virginia on the effects of ballistics and
    blunt impacts, we now have replaced the sling suspension with a
    superior protection pad system inside the helmet. We are retrofitting
    more than 150,000 helmets with the pad system and have already fielded
    enough helmet pads for every deployed marine. Since January 2007, all
    LWHs produced by the manufacturer were delivered with the approved pad
    system installed. In October 2007, we began fielding an initial buy of
    69,300 of the Nape Protection Pad (NAPP), which provides additional
    ballistic protection to the occipital region of the head (where
    critical nervous system components are located), with final deliveries
    scheduled for April 2008. The NAPP is attached to the back of the LWH
    or the Modular Integrated Communications Helmet (MICH), which is worn
    by our reconnaissance marines, to include MARSOC personnel. The Marine
    Corps currently has 1,800 MICHs in its inventory. We continue to work
    with the U.S. Army and to challenge industry to build a lightweight
    helmet that provides greater ballistic protection by defeating the 7.62
    mm round fired from widely used AK-47s.
        Flame Resistant Organizational Gear (FROG)
        In February 2007, we began fielding FROG to all deployed and
    deploying marines. This lifesaving ensemble of flame resistant clothing
    items--gloves, balaclava, long-sleeved under shirt, combat shirt, and
    combat trouser--will reduce exposure to flame injuries. We also began
    providing flame resistant fleece pullovers to marines for use in cooler
    conditions, and are developing flame resistant varieties of cool/cold
    weather outer garments with planned fielding in late fiscal year 2008.
    With the mix of body armor, undergarments, and outerwear, operational
    commanders can determine what equipment their marines will employ based
    on mission requirements and environmental conditions. As with
    individual and unit equipment, we continue ongoing development and
    partnerships with other Services, seeking the best available flame
    resistant protection for our marines.
        Counterimprovised Explosive Devices
        The incorporation of lessons learned is integral to the Marine
    Corps Counterimprovised Explosive Devices (CIED) effort. We are mindful
    that our enemies are constantly evolving to offset our military
    capabilities and technology superiority; therefore, our ability to
    support the warfighter and maintain optimum readiness levels is
    accomplished through multiple complementary efforts within the Marine
    Corps and the larger Joint and Interagency CIED communities of
    interest. The following is a sampling of some of these efforts:

             Upgrading our Counter Radio-controlled IED Electronic
            Warfare systems to meet rapidly evolving threats, while
            remaining engaged with the Navy's Joint Program Office to
            develop a joint solution.
             Modernizing our Family of Explosive Ordnance Disposal
            Equipment through enhancement of technician tool kits and
            greater robotics capabilities.
             Evaluation of new technologies to enhance our Family
            of Imaging Systems portfolio and protect against both vehicle
            and personnel-borne IEDs.
             Continuing to field our point, route and area
            Persistent Intelligence, Surveillance and Reconnaissance
            capabilities--Ground Based Operational Surveillance System,
            Unmanned Aerial Systems, and Angel Fire.
             Explosives odor detection, infantry-based, off-leash
            IED Detector Dogs have proven very effective in their first
            deployment and the Marine Requirements Oversight Counsel has
            approved an effort to eventually provide dogs to every deployed
            maneuver battalion.
             Specific to CIED, Training and Education Command's
            Marine Corps Engineer School has created Master Lesson Files,
            established Mobile Training Teams in support of home station
            training, incorporated CIED education into existing
            institutional and virtual training platforms, and is
            coordinating CIED upgrades to our training facilities.
             Lastly, we continue to develop CIED and counter
            insurgency capabilities normally associated with law
            enforcement through the fielding of Biometrics tool kits and
            embedded law enforcement officers.
    c. Marine Aviation
        Just like our ground combat and support elements, Marine Aviation
    must sustain current operations, reset the force and modernize.
    Execution of any one of these is a formidable challenge. Today, Marine
    Aviation is executing all three concurrently in order to win today's
    battles, while preserving our warfighting capabilities to be ready to
    respond to other contingencies. Your marines rely on aging aircraft to
    execute a wide array of missions including casualty evacuation for our
    wounded and timely close air support for troops in contact with the
    enemy. Legacy aircraft production lines are no longer active--
    exacerbating the impact of combat losses and increasing the urgency for
    the Marine Aviation Plan (AvPlan) to remain fully funded and on
    schedule. The AvPlan incorporates individual program changes,
    synchronizes support of our end strength growth to 202,000 marines, and
    provides the way ahead for Marine Aviation as it transitions 39 of 71
    squadrons. By 2017, Marine Aviation will transition from 13 legacy
    aircraft to 7 new aircraft.
        F-35B: Joint Strike Fighter (JSF)
        The Marine Corps has not received a new tactical aircraft in a
    decade, with our last delivery an F/A-18D in 1998. In fiscal year 2009
    we plan to procure the first of 420 F-35B aircraft, with IOC beginning
    in fiscal year 2012. We will complete the transition from the F/A-18
    and AV-8B by fiscal year 2024. The Marine Corps literally skipped a
    generation of strike fighters in order to field an all Short Take-Off/
    Vertical Landing (STOVL) fifth generation aircraft force. The F-35B
    STOVL will provide a quantum leap in capability, basing flexibility,
    and mission execution across the full spectrum of warfare. The JSF will
    act as a networked, integrated combat system in support of ground
    forces and will be the centerpiece of Marine Aviation. F-35B Lightning
    II development is on track with the first flight of the BF-1 STOVL
    variant scheduled for spring 2008. The fiscal year 2009 budget requests
    eight aircraft for delivery in fiscal year 2010. These aircraft will
    support pilot transition training and are essential to the Initial
    Operational Capability (IOC) of fiscal year 2012. The manufacture of
    the first 19 test aircraft is on schedule and underway.
        MV-22 Osprey
        The 360 MV-22 aircraft planned for procurement by the Marine Corps
    are already bringing revolutionary assault support capability to our
    forces in harm's way. The MV-22 has begun to replace the CH-46E
    aircraft which are over 40 years old, and which have very limited
    performance to support the MAGTF. In September 2005, the V-22 Defense
    Acquisition Board approved full rate production. MV-22 IOC was declared
    on 1 June 2007. The current inventory of 57 operational MV-22 aircraft
    that have been delivered are based at Marine Corps Air Station New
    River, NC; NAS Patuxent River, MD; and Al Asad Air Base, Iraq. Even
    though we are at war, modernization on the march means we must
    transition 2 squadrons per year, with 30 aircraft per year requested in
    the budget. With current rate of production, the transition will be
    complete (FOC) in 2018.
        VMM-263 is presently deployed to Al Asad Air Base in Iraq, and has
    already proven the significant capabilities of the Osprey in combat.
    The rapidly evolving use of MV-22s in Iraq tells a compelling story: on
    a daily basis MV-22s carry twice the load, twice as far, at twice the
    speed. The aircraft's operational reach rapidly ranges the entire area
    of operations at altitudes above the reach of our enemy's weapons.
    Congress answered our request for an aircraft that could carry more,
    fly farther, faster, and safer.
        KC-130J
        KC-130J Hercules aircraft are continuously deployed in support of
    Operation Iraqi Freedom providing multi-mission, tactical aerial
    refueling, and fixed-wing assault support. Its theater logistical
    support reduces the requirement for resupply via ground, limiting the
    exposure of our convoys to IEDs and other surface-borne attacks. The
    recent introduction of the aerial refuelable MV-22, combined with the
    retirement of the legacy KC-130F/R aircraft due to fatigue life and
    parts obsolescence, requires an accelerated procurement of the KC-130J.
        The Marine Corps is programmed to procure a total of 46 aircraft by
    the end of fiscal year 2013. To date, 29 new aircraft have been
    delivered, 7 more are on contract and 2 aircraft are requested in the
    fiscal year 2009 budget for a total of 38. This is still 13 aircraft
    short of our inventory objective of 51 KC-130Js for the Active Force.
    Ultimately, the Marine Corps will also seek to replace our 28 Reserve
    component KC-130T aircraft with KC-130Js, thus necking down our aerial
    refueling force to a single T/M/S.
        UH-1/AH-1
        The H-1 Upgrades Program will replace AH-1W and UH-1N helicopters
    with state-of-the-art AH-1Z and UH-1Y models. The H-1 Upgrades Program,
    through a combination of remanufacture and new procurement, modernize
    our fleet to 100 UH-1Ys and 180 AH-1Zs. With approval to increase the
    size of the Marine Corps Active component to 202,000, procurement must
    increase to 123 UH-1Ys and 227 AH-1Zs. To date, seven UH-1Y and four
    AH-1Z have been delivered. The first UH-1Y scheduled deployment is on
    track for the third quarter of fiscal year 2009. To support this effort
    and continue H-1 modernization, the fiscal year 2009 budget requests
    $496.9 million for aircraft procurement and spares with $3.9 million
    for continued R&D.
        CH-53K
        In operation since 1981, the CH-53E is becoming increasingly
    expensive to operate and faces reliability issues. Its replacement, the
    CH-53K, will be capable of externally transporting 27,000 lbs to a
    range of 110 nautical miles, more than doubling the current CH-53E lift
    capability. Maintainability and reliability enhancements of the CH-53K
    will significantly decrease recurring operating costs and will
    radically improve aircraft efficiency and operational effectiveness
    over the current CH-53E. The program passed Milestone B in December
    2005 with a subsequent contract awarded to Sikorsky Aircraft
    Corporation in April 2006. IOC is scheduled for fiscal year 2015. The
    program is proceeding through its developmental stages and will begin
    to procure airframes in the fiscal year 2013 budget request. The
    transition to the CH-53K will culminate in fiscal year 2021, with a
    total procurement of 156 aircraft for our seven Active and one Reserve
    squadrons.
    d. Tactical Wheeled Vehicle Protection (Armoring)
        Our vehicle armoring efforts are absolutely critical to protecting
    our marines against IEDs and other weapons. Our goal is to provide the
    best level of available protection to 100 percent of in-theater
    vehicles that go ``outside the wire.'' Our tactical wheeled vehicle
    strategy pursues this goal through the coordination of product
    improvement, technology insertion, and new procurement in partnership
    with industry. The Marine Corps, working with the Army and other
    Services, is fielding armored vehicles such as: the Mine Resistant
    Ambush Protected Vehicle (MRAP), the Medium Tactical Vehicle
    Replacement Armor System, the Logistics Vehicle System (LVS) Marine
    Armor Kit, and the Uparmored High Mobility Multi-Wheeled Vehicle
    (HMMWV).
        Medium Tactical Vehicle Replacement (MTVR) Armor System (MAS)
        The MAS provides an integrated, armor enclosed, climate-controlled
    cab compartment and an armored troop carrier for our MTVR variants.
    These vehicles are also being upgraded with an improved blast
    protection package consisting of fuel tank fire protection kits, blast
    attenuating seats, five-point restraint harnesses, improved belly and
    fender-well blast deflectors, and 300 AMP alternators. Basic MAS was
    installed in all of the Marine Corps MTVRs in the Central Command's
    theater of operation. The target for completing installation of MAS
    blast protection retrofits on in-theater vehicles is fourth quarter
    fiscal year 2008.
        Logistics Vehicle System Marine Armor Kit (MAK) II
        The LVS MAK II provides improved blast, improvised explosive
    device, and small arms protection over the current LVS MAK. It has a
    completely redesigned cab assembly that consists of a new frame with
    armor attachment points and integrated 360-degree protection and an
    integrated air conditioning system. Additional protection provided by
    the LVS MAK II includes overhead and underbody armor using high, hard
    steel, rolled homogenous armor, and 2.75" ballistic windows. The
    suspension system will also be upgraded to accommodate the extra weight
    of the cab armor. We estimate the LVS MAK II armoring effort will
    complete fielding by February 2009.
        Uparmored High Mobility Multi-Wheeled Vehicle (HMMWV) Upgrade-
            Fragmentation Kit 2 and Kit 5
        ``Fragmentation Kit 2,'' enhances ballistic protection in the front
    driver and assistant driver wheel-well of HMMWVs, and ``Fragmentation
    Kit 5,'' reduces injuries from improvised explosive devices, as well as
    armor debris and fragmentation. Installation of both fragmentation kits
    was completed in fiscal year 2007. In addition, new Uparmored Expanded
    Capacity Vehicle (ECV) HMMWVs were fielded to theater in fiscal year
    2007 to support the ``surge.'' The Marine Corps has adopted a strategy
    of armoring 60 percent of the current 25,385 HMMWV Authorized
    Acquisition Objective (15,231 vehicles). All newly acquired Expanded
    Capacity Vehicle (ECV) HMMWVs will have an Integrated Armor Package. Of
    those, 60 percent will be fully uparmored during production to include
    the appropriate ``B'' kit and fragmentation kits. The Marine Corps will
    continue to work with the Army to pursue the development of true bolt-
    on/bolt-off ``B'' kits and fragmentation kits to apply in a retrofit
    approach (as needed) to vehicles delivered with Integrated Armor
    Package only. We are also evaluating the Army's objective kit
    development and collaborating with the Army and Office of Naval
    Research to assess new protection-level capabilities.
        Mine Resistant Ambush Protected Vehicles
        Over the past 2 years industry has designed MRAP vehicles with a V-
    shaped armored hull and protect against the three primary kill
    mechanisms of mines and IED: fragmentation, blast overpressure, and
    acceleration. While designs are improving, these vehicles provide the
    best available protection against IEDs, just as the enemy is trying to
    improve these crude but potentially lethal weapons. Experience in
    theater shows that a marine is four to five times less likely to be
    killed or injured in a MRAP vehicle than in an uparmored HMMWV. To
    date, no marines have been killed or seriously injured from IED attacks
    while traveling in the MRAP vehicles.
        The total DOD requirement for MRAP vehicles is 15,374--of which
    3,700 were originally allocated for the Marine Corps. However, the
    Joint Requirements Oversight Council (JROC) recently approved the
    Marine Corps refined requirement for 2,225 MRAP vehicles (the JROC
    Memorandum is pending final signature this month). This decision
    supports the Marine Corps operational assessment of the vehicles, which
    reviewed changes in mission tasking and existing Tactics, Techniques
    and Procedures.
        As another example of our adaptation to evolving threats, the Joint
    MRAP Vehicle Program Office has recently selected qualified producers
    of a new MRAP II vehicle for the Marine Corps and other forces.
    Vehicles procured through this second solicitation will meet enhanced
    survivability and performance capability required by field commanders.
    The Marine Corps is very pleased and thankful for the overwhelming
    support of Congress on the MRAP program. We request Congress' continued
    support for these lifesaving vehicles as we transition to the
    sustainment of these vehicles into fiscal year 2009.
    e. Ground Mobility
        The Army and Marine Corps are leading the Services in developing
    tactical wheeled vehicle requirements for the joint force to provide an
    appropriate balance of survivability, mobility, payload, networking,
    transportability, and sustainability. The Army/Marine Corps Board is a
    proven valuable forum for; the coordination of development and fielding
    strategies; production of armoring kits and uparmored HMMWVs; and
    responding to requests for Mine Resistant Ambush Protected vehicles.
    The Ground Mobility Suite includes the following systems:
        Expeditionary Fighting Vehicle (EFV)
        The EFV represents the heavy weight capability in our Ground Combat
    Tactical Mobility portfolio. The EFV is designed for maneuver
    operations conducted from the sea and sustained operations in the
    world's littoral regions, but its inherent capabilities provide utility
    across the spectrum of conflict. As the Corps largest ground combat
    system acquisition program, the EFV is the Nation's only sea-based,
    surface-oriented vehicle that projects combat power from a seabase to
    an objective. A fighting vehicle designed to strike fast and deep, it
    will replace the aging Assault Amphibious Vehicle--in service since
    1972. The EFV's amphibious mobility, speed of maneuver, day and night
    lethality, enhanced force protection capabilities, and robust
    communications will substantially improve joint force capabilities. Its
    over-the-horizon capability will enable amphibious ships to increase
    their standoff distance from the shore--protecting them from enemy
    anti-access weapons. An EFV mine protection feasibility study was
    completed last October, which assessed external V-Hull, internal V-
    Hull, and applique configurations for survivability and performance
    impacts. The study concluded that the applique configuration provides
    increased mine blast protection with minimum performance impacts. A
    final EFV feasibility report from The Center for Naval Analyses
    concerning this enhanced armor configuration is pending. System
    development and demonstration has been extended to allow design for
    reliability through 2008, and fabrication and test of seven new EFV
    prototypes, with Milestone C in 2011. Delivery of 573 vehicles will
    begin in 2013, with the program scheduled to achieve IOC in 2015 and
    FOC in 2025.
        Joint Light Tactical Vehicle (JLTV)
        The JLTV represents the light weight capability in our Ground
    Combat Tactical Mobility portfolio and will be the centerpiece of our
    Tactical Wheeled Vehicle Fleet. This fleet will also include the HMMWV
    Expanded Capacity Vehicle series, the MRAP Vehicle, and the Internally
    Transported Vehicle (ITV). The Army/Marine Corps Board has been the
    starting point for vetting of joint requirements for JLTV--which will
    provide protected, sustained, networked, and expeditionary mobility in
    the light tactical vehicle weight class. Throughout 2007, Army and
    Marine Corps combat and materiel developers coordinated with the Joint
    Staff, defining requirements and acquisition planning for the
    replacement for the HMMWV. In December, JLTV was approved for entry
    into the acquisition process at Milestone A with the Army as the lead
    Service. A Request for Proposal was released this month, initiating
    competitive prototyping for the fabrication of a family of vehicles and
    companion trailers. After prototype evaluation, we expect at least
    three competitors to be selected for the technology development phase.
    We must continue to sustain HMMWVs in our forces until their
    replacement with JLTVs. We are committed to full funding of 5,500 JLTVs
    in Increment one. IOC is scheduled for 2012.
        Marine Personnel Carrier (MPC)
        The MPC represents the medium weight capability in the Ground
    Combat Tactical Mobility portfolio. It is not a replacement vehicle,
    but will complement the capabilities offered by the EFV and the JLTV
    across the range of military operations. Increasing armor-protected
    mobility for infantry battalion task forces, the MPC program balances
    vehicle performance, protection and payload attributes. Joint staffing
    of an Initial Capabilities Document and a draft concept of employment
    were completed in 2007. The MPC program is currently preparing for a
    Milestone A decision in the second quarter of fiscal year 2008 and is
    on track for a Milestone B decision in the first quarter of fiscal year
    2010. The MPC requirement is for 558 vehicles, with an IOC date in the
    2015 timeframe.
        Internally Transported Vehicle (ITV)
        The ITV is a family of vehicles that will provide deployed MAGTFs
    with MV-22/CH-53 internally and externally-transportable ground
    vehicles. The ITV program will field an expeditionary vehicle that
    provides units equal to or greater mobility than the maneuver elements
    they support. The ITV includes powered prime movers and towed trailers
    which will provide deep maneuver and rough terrain mobility for the
    Expeditionary Fire Support System (120 mm mortar) and other payloads.
    The fiscal year 2009 budget contains $8 million for 44 ITVs. ITV
    recently successfully completed a Government Accounting Office audit
    and is currently undergoing a DOD Inspector General audit. IOC is
    planned during fiscal year 2008 and FOC is planned for fiscal year
    2011.
    f. MAGTF Fires
        Our Triad of Ground Indirect Fires provides organic complementary,
    precision fire capabilities that facilitate maneuver during combat
    operations. The Triad requires a medium-caliber cannon artillery
    capability; an extended range, ground-based rocket capability; and a
    mortar capability with greater lethality and greater tactical mobility
    than current artillery systems. The concept validates the capabilities
    provided by the M777 lightweight 155mm towed howitzer, the High
    Mobility Artillery Rocket System, and the Expeditionary Fire Support
    System.
        M777A2 Lightweight Howitzer
        The Lightweight 155 (M777A2) is a Joint USMC/Army program in Full
    Rate Production which replaces all legacy, aging heavier weight M198
    howitzers. It can be lifted by the MV-22 Osprey and the CH-53E
    helicopter and is paired with the MTVR for improved cross-country
    mobility. Through design innovation, navigation, positioning aides, and
    digital fire control, the M777A2 offers significant improvements in
    lethality (with the Excalibur precision munition capability),
    survivability, and mobility. We began fielding the first new howitzers
    to the operating forces in April 2005 and expect to complete fielding
    511 howitzers in fiscal year 2011. The M777A2 was first used in OIF in
    October 2007.
        High Mobility Artillery Rocket System (HIMARS)
        HIMARS fills a critical range and volume gap in Marine Corps fire
    support assets by providing 24 hour, all weather, ground-based,
    indirect precision and volume fires throughout all phases of combat
    operations ashore. When paired with Guided Multiple Launch Rocket
    System rockets, HIMARS will provide a highly responsive, precision fire
    capability to our forces. There is $109 million budgeted in fiscal year
    2009 to procure USMC HIMARS tactical and training rockets. To date, we
    have fielded and trained one Reserve Battery and two Active-Duty
    batteries. Battery F, 2/14 completed the first operational deployment
    of a Marine Corps HIMARS unit, firing 24 tactical rockets in support of
    Operation Iraqi Freedom (OIF). The requirement for HIMARS is 46 and we
    expect to achieve FOC by fiscal year 2010.
        Expeditionary Fire Support System (EFSS)
        The EFSS will be the principal indirect fire support system for the
    vertical assault element of the Ship-to-Objective Maneuver as part of a
    Marine Expeditionary Force (MEF) assault element. EFSS consists of two
    ITV prime movers, a 120mm rifled towed mortar, an ammunition trailer,
    and ammunition. In conjunction with the MV-22 Osprey and the CH-53
    helicopter, EFSS provides a 110 nautical mile radius, internal lift
    capability. Supported units will have immediately responsive, organic
    indirect fires at ranges and lethality well beyond their current
    battalion mortars. Fiscal year 2009 provides $22.1 million for
    accelerated procurement of 41 EFSS systems. The requirement for EFSS is
    66 systems and will be manned and supported by artillery regiments.
    EFSS recently completed successful operational testing. IOC is planned
    for fiscal year 2008, and FOC is planned for fiscal year 2010.
    g. Unmanned Aerial Systems (UAS)
        The Marine Corps is taking aggressive action to modernize and
    improve organic UAS capabilities. The Marine Corps UAS are organized
    into three tiers, tailored to the mission and requirements of the
    supported command. Tier III UAS serve at the Marine Expeditionary Force
    (MEF) level. Tier II UAS support Regimental Combat Team and Marine
    Expeditionary Unit operations, and Tier I UAS support battalion and
    below operations. At the Tier III level, we have transitioned Unmanned
    Aerial Vehicle Squadrons (VMU) from our legacy Pioneers to the Army
    developed RQ-7B Shadow. We are also initiating a reorganization of the
    squadrons' force structure to better task-organize for mission
    requirements and began the stand up of a third Active component VMU
    squadron. The addition of a third VMU squadron is critical to
    sustaining current operations and will help in decreasing the
    operational tempo from our current deployment-to-dwell ratio of less
    than 1:1--to a more sustainable 1:2 ratio. This rapid transition and
    reorganization, initiated in January 2007, will be complete by the
    fourth quarter fiscal year 2009, significantly improves organic Marine
    Corps UAS capability while increasing joint interoperability and
    commonality.
        For our Tier II needs, using supplemental appropriations provided
    by Congress, the Marine Corps is using an ISR services contract to
    provide Scan Eagle systems to Multi-National Forces-West, Iraq.
    Contracted Scan Eagles are expected to fill the Tier II void until
    future fielding of the Tier II/Small Tactical UAS (STUAS), a combined
    Marine Corps and Navy program which began in fiscal year 2008 and is
    planned for fielding in 2011.
        At the Tier I level, the Marine Corps is transitioning from the
    Dragon Eye to the Joint Raven-B program, used by the US Army. When
    fully fielded, the Marine Corps UAS family of systems will be networked
    through a robust and interoperable command and control system that will
    provide commanders an enhanced capability to use across the spectrum of
    military operations.
    h. Logistics Modernization
        Logistics challenges during Operation Iraqi Freedom and subsequent
    operations accelerated the requirement to modernize Marine Corps
    logistics. The Marine Corps Logistics Modernization (LogMod) program is
    a three-pronged, enterprise-wide, logistics improvement and integration
    effort designed to increase the operational reach and lethality of the
    Marine Air Ground Task Force (MAGTF). LogMod is focused on enhancing
    the readiness of deployed forces, increasing the operational
    availability of equipment, and decreasing the logistics burden of
    Marine units. It constitutes the most comprehensive, end to end
    approach ever taken to improve MAGTF logistics. Once fully implemented,
    the LogMod program and its initiatives will drive improvements in
    technologies, processes, and people through modernization of doctrine,
    training, and organizations. As a roadmap for more effective
    expeditionary logistics, logistics modernization will greatly enhance
    our ability to operate in all environments and in all theaters. A key
    initiative was the implementation of the Marine Logistics Group
    reorganization.
        The 2006-2007 reorganization of the garrison-focused Force Service
    Support Groups (FSSGs) into expeditionary Marine Logistics Groups
    (MLGs) created a more adaptable, capable, and rapidly deployable
    logistics organization. The MLG allows for the rapid formation of
    deployable, task-organized logistics forces, providing experienced
    logistics command and control for planning and operations while
    fostering strong habitual working relationships between supported and
    supporting units. Significant process change and adoption of new
    technologies will increase the effectiveness of logistics on the
    battlefield. By decreasing process steps and levels, supply and
    maintenance chains are being streamlined to increase velocity of
    support and services. Visibility of assets and requests for support,
    enhanced by new IT enablers and technologies such as Radio Frequency
    Identification (RFID), will allow deployed forces to decrease their
    support footprint on the battlefield, trading inventory volume for
    accurate and timely information. Enhanced transportation and
    distribution processes and organizations provide dedicated assets to
    prioritize cargo, optimize routing, and reduce uncertainty. Deployed
    forces are using recently-developed technologies such as the
    Battlefield Command Sustainment Support System (BCS3) and Warehouse-to-
    Warfighter (W2) to gain visibility of assets as they move across the
    ``last tactical mile'' from sustainment areas to combat forces. In
    total, Marine Corps Logistics Modernization will ensure the readiness
    and sustainment of combat forces in any operational environment. Of
    critical importance is the development and fielding of the Global
    Combat Support System-Marine Corps (GCSS-MC).
        Global Combat Support System-Marine Corps
        GCSS-MC will deliver a modernized information technology system
    that will enhance logistics support to the warfighter. As the primary
    information technology enabler for the Marine Corps Logistics
    Modernization efforts, the system's primary design focus is to enable
    the warfighter to operate while deployed and provide reach back
    capability from the battlefield. GCSS-MC is designed with modern,
    commercial off-the-shelf enterprise resource planning software that
    will replace our aging legacy systems. The GCSS-MC Block 1 focuses on
    providing the operating forces with an integrated supply/maintenance
    capability and enhanced logistics-chain-management planning tools.
    Field user evaluations and initial operational test and evaluations are
    scheduled for second quarter fiscal year 2009, followed by fielding of
    the system and Initial Operating Capability during fiscal year 2009.
    Future blocks will focus on enhancing capabilities in the areas of
    warehousing, distribution, logistics planning, decision support, depot
    maintenance, and integration with emerging technologies to improve
    asset visibility.
                                viii. conclusion
        Since 2001, the austere expeditionary environment, high operational
    tempo, and effects of combat have tested the flexibility and
    exceptional abilities of your marines. They have repeatedly succeeded.
    This sustained effort has come at substantial cost in terms of personal
    sacrifice on the part of individual marines and their families, as well
    as the cumulative wear and tear on our equipment. Your marine's
    remarkable resilience and professionalism vindicates the Nation's trust
    and confidence in them. In this Long War, it is imperative that we keep
    primary focus on support for our marines in combat, while resetting and
    modernizing a multi-capable force ready for our Nation's future
    challenges. Congress' continued and consistent support has enabled us
    to prevail in today's battles and will ensure that we always remain the
    Nation's premier expeditionary force in readiness!

        Senator Akaka. Thank you very much, General Magnus.
        Admiral Walsh?

      STATEMENT OF ADM PATRICK M. WALSH, USN, VICE CHIEF OF NAVAL
                               OPERATIONS

        Admiral Walsh. Chairman Akaka, Senator Thune, a little over
    a year ago, I departed Bahrain as the Naval Component Commander
    to U.S. Central Command, and I was the Commander of U.S. Fifth
    Fleet. In many respects, I was the beneficiary of the support
    of this committee, as well as the investments made to the
    readiness account. I was a customer, and I witnessed many of
    the values that we talk about when it comes to forward
    presence, power projection, and deterrence. So, it's a real
    honor to be here today and to thank you and to testify, on
    behalf of sailors around the world, here, on the readiness of
    our Navy.
        Today, 51 percent of the Navy is underway. Our sailors are
    operating with maritime coalition partners and the U.S. Coast
    Guard. Additionally, 15,000 serve on the ground in the Central
    Command (CENTCOM) area of responsibility.
        On any given day, their service is impressive and
    noteworthy. Just for example: In the past year, strike groups
    provided persistant forward presence in trouble spots around
    the globe; Carrier air wings supported joint operations in
    Afghanistan and Iraq; riverine squadrons patrolled internal
    waterways of Iraq; a guided-missile destroyer destroyed a
    malfunctioning satellite; SEABEES, explosive ordnance disposal
    teams, SEALs, and Individual Augmentees served alongside
    marines, soldiers, and airmen; the fleet provided disaster
    relief in Central American, humanitarian assistance in the
    Pacific Rim, and worked to promote economic prosperity with
    African partners; helicopters provided support to firefighters
    in San Diego; and our divers provided support to civil
    authorities after the collapse of a bridge in Minneapolis.
        While our maritime forces respond to contingencies,
    sustained wartime operations have placed acute demand on our
    people, our readiness, and our force structure. The fiscal year
    2009 budget delivers the capabilities needed to these focus
    areas.
        So, thanks to your support, the current risk in these
    areas, in our view, is moderate. However, we need to highlight
    for you, today, specific concerns that we have about future
    operations that elevate our risk-assessment trend lines to
    significant, in three areas. Beginning with people: Attracting,
    developing, and retaining the best and the brightest remains a
    top priority, especially in our naval special warfare and our
    special operations field, in our nuclear power field, our
    medical community and chaplain communities.
        The Navy needs your continued strong support for accession
    bonuses, as well as special and incentive pays. You've given us
    the necessary tools to attract and retain talent in these
    critical skill sets.
        In the area of readiness: To provide a ready, responsive
    expeditionary, full-spectrum force, we must train the way we
    conduct our national security missions. Your support for the
    readiness accounts has allowed us to train uninterrupted in
    time of war. Additionally, we need your continued support and
    partnership for the training required for full-spectrum
    operations as local groups, and in some cases, local
    governments, challenge our ability to conduct active sonar and
    carrier landing training.
        In the area of force structure: Our immediate challenge is
    in managing the impact of high operating rates in harsh
    conditions on equipment. Specifically, the demand for select
    forces exceeds our ability to sustain the supply of these
    assets. The high tempo of operations has consumed service life
    faster than programmed. This is why early in the Chief of Naval
    Operation's (CNO) tenure, he made it a priority to examine our
    industrial base, personally walk the shipyard, and take a hard
    look at the procurement accounts for aviation and surface
    combatants. Our immediate concern is for wing-fatigue repair on
    our P-3 aircraft.
        Last fall, we published a new Maritime Strategy that
    reflects what we have learned about the evolving security
    environment. We see a direct connection, and draw a direct
    correlation, between the stability of the global commons and
    the security and the prosperity of the Nation. No matter what
    advancements futurists predict for the movement of energy and
    goods, the bulk of the world market will continue to move by
    sea in an environment where the security challenge has become
    increasingly transnational.
        We recognize how quickly conflict can escalate, how
    ideological movements can become destabilizing and disrupt the
    international economic system. The potential for conflict based
    on grievance, resentment, and state interests, fueled by
    weapons proliferation, characterized by terrorism, insurgency,
    and disorder, now seems more likely in areas of vulnerability,
    poor governance, and demographic stress. In this environment,
    we understand why we must position forces forward, to move
    promptly and interrupt the symptoms and conflict before local
    problems become regional or international.
        The character of today's challenge cuts across boundaries
    and borders and therefore it demands solutions that are rapid,
    credible, joint, interagency, combined, and cooperative. This
    is why the Navy, the Marine Corps, and the Coast Guard took the
    unprecedented step and signed the first Unified Maritime
    Strategy, which acknowledges the traditional role of the
    Services, as well as recognizes that security challenge
    requires us to move seamlessly across the maritime domain,
    prepared for the full spectrum of military operations.
        Because you have invested in recruiting, we have a high-
    quality force. Because you invested in education, we have a
    skilled and technically competent force. Because you invested
    in the quality of life for our families, we retain a senior,
    seasoned, and experienced force. Because you've invested in
    full-spectrum training, we are a force prepared for the full
    range of military operations, from irregular warfare to major
    combat, which gives us the opportunity to describe where we can
    go and what we can do, rather than where we cannot go and what
    we cannot do. Because you've invested in readiness, we can
    sustain our posture forward. It means that, on any day in the
    Navy, we knock down the door or serve as the force in Strategic
    Reserve. It means that when we are on station, we don't reach a
    tipping point, we move in any direction, any time, and any
    place, for as long as the Nation needs us. Your investment
    presents true military options for national leadership. The
    value of what we do is that we're in a position to lead, to
    play an enduring leadership role, to assert national interests
    on the world stage in operations that range from combat to
    disaster relief and humanitarian assistance.
        The American people have given us a skilled, experienced,
    credible, agile Navy, with sailors who reflect the commitment
    of the country and reveal the soul of the Nation. Our readiness
    story is about strength, but it's also about generosity and
    humanity. It's about what we must defeat in war, and what we
    can build in peace as a force of last resort and guarantor of
    freedom. Your support for the 2009 budget will help us meet the
    challenge of this security environment that we describe.
        So on behalf of a ready, responsive, and relevant Navy, I'd
    like to thank you again for your enduring support for our
    sailors, our civilians, and our families.
        [The prepared statement of Admiral Walsh follows:]
                Prepared Statement by ADM Patrick M. Walsh, USN
                                 navy readiness
        Chairman Akaka, Senator Thune, and distinguished members of this
    subcommittee, I am privileged to appear before you today along with my
    Service counterparts, to testify on the readiness of our military
    forces. The brave men and women, sailors and civilians, of the United
    States Navy continue to perform exceptionally well under demanding
    conditions and congressional support remains fundamental to their
    success. Your Navy will remain the preeminent maritime power, providing
    our country a global naval expeditionary force committed to global
    security and prosperity.
                                  introduction
        We remain a maritime nation that relies heavily on the security of
    the vast maritime commons. This is the setting in which our country and
    its allies compete for global influence; a setting that is typically
    characterized neither by absolute warfare nor absolute peace. While
    defending our citizenry and defeating our adversaries in war remains
    the undeniable ends of seapower, it must also be applied more broadly
    if it is to serve our national interests through promoting greater
    collective security, stability, and trust.
        Before I address our current budget submission and continuing
    readiness challenges, I will review the many successes achieved against
    a challenging backdrop this past year.
                                2007 assessment
        Throughout 2007, your Navy repeatedly demonstrated its global
    maritime dominance and influence, the essence of our maritime strategy.
    Our sailors performed superbly, combating terrorism across a broad
    spectrum of missions including Operation Iraqi Freedom (OIF) and
    Operation Enduring Freedom (OEF) as well as fighting for the hearts and
    minds through international disaster relief, humanitarian missions, and
    providing defense capabilities in support of civil authorities.
        In January, when Iran's provocations led the President to call for
    the presence of two carriers in the Central Command area of operation,
    Navy responded by surging U.S.S. Ronald Reagan (CVN 76). With our Fleet
    Response Plan (FRP) operational availability construct as the enabler,
    within weeks Navy had two CSGs on station and had deployed a third CSG
    during our Japan-based carrier's scheduled maintenance.
        Navy continued its significant contribution to the Joint Force
    supporting OIF and OEF in 2007. In addition to maintaining the elevated
    operational tempo (OPTEMPO) of our SEABEES, Explosive Ordnance Disposal
    teams, and SEALs, the Navy Expeditionary Combat Command (NECC) deployed
    Navy's first two Riverine Patrol Squadrons, aligning seams in maritime
    security operations as Navy returns to the brown-water environment.
    Navy F/A-18 Hornets, operating from the U.S.S. Enterprise supported Air
    Force-apportioned missions in Afghanistan after the Air Force grounded
    its F-15 aircraft. Other equally important contributions to stabilizing
    the security posture in the Middle East were provided by Navy port
    operations support units, maritime patrol aircraft, medical teams, and
    leadership and support for Joint Task Forces at Guantanamo Bay and the
    Horn of Africa, Provincial Reconstruction Teams, the detention center
    at Camp Bucca, and the Counter Radio-Controlled Electronic Warfare
    group. On any given day, Navy forces contributed more than 25 ships and
    submarines, 440 aircraft, and 22,000 sailors serving both afloat and
    ashore to the Central Command joint effort.
        Navy continues to increase the capacity of our allies through our
    Theater Security Cooperation and Foreign Military Sales (FMS) programs.
    Our persistent global presence using distributed forces that are
    mission tailored, increase the effectiveness of our coalition partners
    through bi-lateral and multi-lateral naval exercises. Some of the
    notable engagements include exercise Malabar with the Indian, Japanese,
    Australian, and Singapore navies, FRUKUS with the French, Russians, and
    British, and Phoenix Express with European and Northern African navies.
    Meanwhile, exercise Valiant Shield brought together three Carrier
    Strike Groups, six submarines, and a wide array of Navy and joint
    capabilities. Likewise, FMS is an important aspect of our security
    cooperation programs that is designed to improve interoperability,
    military-to-military relations, and global security. The sale of U.S.S.
    Trenton to the Indian Navy, U.S.S. Heron and U.S.S. Pelican to Greece,
    and U.S.S. Cardinal and U.S.S. Raven to Egypt are recent examples of
    our FMS program in action.
        This past year, the Navy-Marine Corps team worked closely with the
    State Department and relief agencies as first responders to three
    natural disasters showcasing Navy's operational agility and logistics
    expertise. The U.S.N.S. Gysgt Fred W. Stockham provided relief to
    tsunami victims in the Solomon Islands by delivering almost 8 tons of
    relief supplies; providing more than 140 aid workers; and flying 30
    sorties and 20 medical evacuations (MEDEVACs). The U.S.S. Wasp, U.S.S.
    Samuel B Roberts, and U.S.N.S. Comfort participated in Hurricane Felix
    relief efforts in Central America. During a period of 1 week, they
    provided more than 500 aid workers, flew more than 150 sorties and 70
    MEDEVACs, and delivered more than 23 tons of food, 11 tons of water,
    and 1 ton of medical and infant supplies. Most recently, U.S.S.
    Kearsarge/22nd Marine Expeditionary Unit (MEU) and the U.S.S. Tarawa/
    11th MEU responded to the cyclone that hit Bangladesh in November 2007
    by delivering nearly 60 tons of drinking water and 127 tons of
    supplies; flying 115 sorties; and treating more than 2,300 patients.
        Navy humanitarian assistance (HA) efforts continue to have a
    positive impact on America's image abroad, influencing perceptions
    across the spectrum from the personal level to the political and
    national levels. Navy's 2007 outreach was provided by U.S.N.S. Comfort
    and U.S.S. Peleliu who, combined, visited 20 countries, treated more
    than 130,000 medical, 29,000 dental, and 20,000 veterinarian patients,
    conducted more than 1,400 surgeries, performed more than 60 engineering
    projects, and invested 3,000 man-days in community relations projects.
        Navy also proudly demonstrated its ability to provide defense
    support to civilian authorities as part of several Northern Command led
    unified missions. In August, Mobile Dive and Salvage Unit Two (MDSU 2)
    assisted the Department of Transportation and the State of Minnesota in
    response to the tragic collapse of a bridge along I-35 in Minneapolis.
    MDSU 2 divers conducted hand over hand search in the Mississippi River
    locating remains and assisting in debris removal efforts. Two months
    later, Navy provided fixed and rotary wing aircraft assistance in
    battling the wildfires ravaging the San Diego countryside. Navy
    civilian firefighters worked shoulder to shoulder with State and local
    organizations fighting the Harris Ranch and Witch Creek fires while
    sailors, including medical personnel provided relief to civilian
    evacuees. Our mission of support, compassion, and commitment is
    enduring and codified in our maritime strategy.
        On the manpower front in 2007, more than seventeen thousand
    Individual Augmentees (IA) were specially trained in support of the
    global war on terror, OIF, and OEF, in assignments far removed from the
    sea. Our Active component IAs now receive notification an average of 46
    days prior to execution of orders. Our Reserve component receives
    notification an average of 54 days in advance. Navy is committed to
    remaining responsive to COCOM requirements as it works towards its goal
    of 60 days advance notification. A new Global War on Terror Support
    Assignment (GSA) detailing process incorporates current IA assignments.
    The short-term goal of GSA detailing is to create an environment where
    GSA assignments are the normal business practice and IAs are the
    exception.
        Navy also recently opened the Comprehensive Combat and Complex
    Casualty Care facility, a 30,000 square foot, $4.4 million Prosthetic
    and Rehabilitation Service in San Diego, as it expanded screening and
    caring for all its wounded, ill, or injured sailors including those at
    risk for Post Traumatic Stress Disorder and Traumatic Brain Injury.
        In 2007, Navy continued to meet the majority of its recruiting and
    retention goals. We exceeded our enlisted accession goals for the ninth
    consecutive year but were only able to achieve 98 percent of our Active
    officer goal and 52 percent of our Reserve officer goal resulting in
    shortfalls in medical students and chaplains. Likewise, Navy achieved
    all of its enlisted retention and attrition targets while facing
    increasing challenges to retaining its captains (O-6).
        Last year, Navy commenced execution of its third phase of its
    diversity campaign. This phase is dedicated to holding navy leadership
    accountable at the highest levels in our enterprises and challenging
    them to ensure that our top talent is provided the opportunity to
    compete for timely, competitive, and meaningful key assignments.
    Additionally, we have moved to systematic engagements with our affinity
    groups, historically black colleges and universities, and Hispanic
    institutions working at the national, regional, and local levels to
    ensure a coordinated and focused approach in reaching minority
    students. Accordingly, we have increased our opportunity to attract
    diverse talent by actively engaging in our outreach to younger minority
    students and their influencers in order to raise awareness and provide
    substantive information on the importance of the science, technology,
    engineering, and math disciplines. Finally, we have revamped diversity
    training throughout the learning pipeline from enlisted boot camp to
    the Senior Enlisted Academy, as well as from the most junior officer to
    our new flag officers, in order to communicate a coherent, compelling,
    and consistent message at all levels of the chain of command.
        National Security Personnel System (NSPS) implementation for our
    Navy civilian employees remains on track as well. Since its Navy
    inception, 28,000 employees have been successfully converted to NSPS
    with 32,000 more targeted for conversion through November 2008.
    Developing better tools to attract and retain quality civilian
    employees remain key human resource elements of NSPS and are vital to
    the system's success and the Department's ability to complete
    implementation by the end of 2009.
        Navy remains committed to good stewardship of the taxpayers'
    dollars. We have heightened our review and understanding of output
    metrics and their relationship to warfighter needs. We are looking at
    the cost of readiness and driving out inefficiencies through
    application of LEAN thinking while seeking to generate increased
    readiness at reduced cost. Additionally, Navy continues its
    transformation from a vertically oriented, administrative/business
    structure into a more responsive and transparent matrixed model known
    as the Navy Enterprise Framework. Though still maturing, the Navy
    Enterprise Framework will better leverage the value streams of people,
    dollars, and materiel needed to deliver warfighting readiness to Navy
    component and combatant commanders. This transformation extends down to
    the unit level, shifting from a force structure focus to one that is
    capability centered.
        Last fall, the Chief of Naval Operations (CNO), along with the
    Commandants of the Marine Corps and Coast Guard, unveiled the
    Cooperative Strategy for 21st Century Seapower. This unprecedented,
    collaborative strategy incorporates input from the American public,
    obtained through a series of ``Conversations with the Country'',
    business leaders, and the academic community. The strategy identifies
    expanded core capabilities of the Maritime Services: forward presence,
    deterrence, sea control, power projection, maritime security, and
    humanitarian assistance and disaster response. This template for
    maritime capability and capacity is designed to protect our homeland,
    secure strategic access, and preserve global freedom of action. It
    guides our enduring cooperation with existing and emerging partners and
    builds bridges of trust with the international community.
        The maritime strategy will guide our investment decisions and for
    the development and execution of policies, plans, and programs for
    current and future operations. It informs our Navy Strategic Plan
    (NSP), which aligns budgetary decisions with future operations and risk
    assessments, and our Naval Operating Concept (NOC), which delineates
    the objectives and missions of the Navy and underscores our warfighting
    interdependence.
                      current readiness (fiscal year 2008)
        Navy's current readiness remains moderately strong. Congressional
    support has been critical in this regard and, as a result, Navy units
    and individual augmentees deploy combat ready--properly trained and
    properly equipped. We continue to be the most dominant and influential
    naval force, globally, and across all maritime missions.
        On February 20, the Navy succeeded in intercepting a non-
    functioning National Reconnaissance Office satellite in its final
    orbits using a single modified tactical Standard Missile-3 (SM-3) fired
    from U.S.S. Lake Erie (CG 70). The one-time modifications made to a
    finite number of missiles will be reconfigured back to the anti-
    ballistic missile configuration. Further, the Aegis Ballistic Missile
    Defense (BMD) system which was deployed does not have the capability to
    shoot satellites with the one exception of this unique mission. The
    interception of this satellite does, however, demonstrate the
    adaptability of our forces and systems to the BMD mission.
        A further example of the flexibility of our forces and the
    relevance of our Maritime Strategy is the first ever Africa Partnership
    Station (APS) which is currently deployed to West and Central Africa
    through May 2008. Part of the Global Fleet Station concept, APS seeks
    to support regionally sustained, focused training and multinational/
    interagency collaboration. To date the U.S.S. Fort McHenry, U.S.S.
    Annapolis, and H.S.V. Swift have participated with 12 nations,
    bolstering maritime security by increasing African maritime capability
    and promoting economic prosperity and stability through trust.
        On 25 March 2008, we had 104 ships on deployment (37 percent of the
    Fleet) and 143 ships underway (51 percent of the Fleet) in every
    theater of operation. This includes seven aircraft carriers and four
    big deck amphibious ships (LHA/LHD) (Figure 1).

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        That same day, 2,746 Active and Reserve Seabees, and 4,065 members
    of our Active and Reserve medical corps were serving overseas, many in
    combat support roles. Additionally, 831 members of the Navy Special
    Warfare community were deployed overseas (of 3,616 deployable), as were
    288 Explosive Ordnance Disposal personnel (of 552 available to deploy),
    and 862 Naval Coastal Warfare/Expeditionary Security Force personnel
    (of 3,057 deployable).
        The Navy's Individual Augmentation (IA) program is central to
    Navy's ability to support the global war on terror, and is a near-
    seamless integration of our Active and Reserve components. Since 11
    September 2001, over 48,000 Navy reservists have been mobilized in
    support of the global war on terror. On any given day, over 20,000
    citizen-sailors (or 29 percent of the Reserve Force) are on some type
    of Active Duty (AD) or Inactive Duty (ID) orders at their supported
    commands meeting global COCOM requirements. This number includes about
    5,000 Reserve component sailors mobilized in support of OIF and OEF.
    Additionally, we maintain the capacity to rapidly increase contingency
    support with more than 28,000 Reserve component sailors yet to be
    mobilized.
        Navy continues to refine its process for identifying, assigning,
    and training its IAs. This year, we expect to more than double the
    number of sailors assigned to IA orders via the global war on terror
    Support Assignment (GSA) order process. This process seeks to eliminate
    uncertainty, improve sailor and family support, enable and reward
    volunteerism, and ensure detailers involvement in sailors' professional
    development and career progression. Begun in 2007, this process will be
    used for 73 percent of the IA assignments by the end of fiscal year
    2009. Once a sailor has been assigned a global war on terror mission
    they are supported by various initiatives under the direction of the
    Expeditionary Combat Readiness Center (ECRC). Significant improvements
    in 2007 included: 1) Established permanent Navy Liaison Officer support
    at all major Army training sites with a significant IA sailor training
    population, 2) Coordinated Army issue of Operational Clothing and
    Individual Equipment, ensuring all IA sailors are fully equipped with
    the same top line combat gear as U.S. Army soldiers to perform their
    mission, 3) Implemented Warrior Transition Program (WTP) in Kuwait for
    returning IA sailors incorporating various aspects of post-deployment
    medical and Combat Operational Stress Control screening and counseling
    to ensure returning sailors receive the appropriate post-deployment
    care, and 4) Coordinated with CNIC's Fleet and Family Service Centers
    and OMBUDSMAN to host various IA Family Forums, Family Readiness
    Briefs, and Family Support ``Webinars.'' Because Operational Stress is
    an everyday fact of life for all sailors, Navy has embarked on an
    initiative to de-stigmatize how stress management is viewed. This
    effort will foster a culture of resiliency and mutual support that
    equips our sailors and families to better function in a high-OPTEMPO
    global war on terror environment.
        Navy also continues to emphasize family support and compassionate
    medical care for our wounded sailors. Our focus on our sailors and
    their families has resulted in achieving a lower than national average
    suicide rate, a reduction in disciplinary incidents, and a significant
    decline in the number of divorces in the first quarter of fiscal year
    2008. Additionally, Navy medicine is adapting its care to ensure the
    medical and psychological well-being of all deployed and returning
    personnel. Navy's continuum of care includes extended monitoring of
    physical and psychological health from pre-deployment to beyond post-
    deployment, redesigned expeditionary medical facilities, and access to
    the Safe Harbor Program for severely wounded, ill, and injured sailors.
    Safe Harbor provides: personalized assistance and contact after
    reaching a continental United States hospital, resources to meet
    identified non-medical needs of the member and family members,
    establishing and maintaining contact with the sailor's command,
    proactive outreach and visitation services, and support for sailors to
    return to the service or transition to civilian life. Recently, Safe
    Harbor's mission expanded to become the focal point for case tracking,
    policy oversight, and individualized case management (on an as-needed
    basis) for Navy wounded, ill, and injured. We are enacting this concept
    as a logical evolution from our existing processes, to an enhanced,
    more comprehensive care capability.
        Navy is postured to continue generating ready forces for the
    current fight while maintaining the capability and capacity to surge
    assets in response to national tasking. FRP has been extraordinarily
    effective for the last 5 years because it has prepared Navy well to
    respond to global events. Because of the FRP operational availability
    construct, Navy remains poised to provide our Nation the capability to
    open doors whenever and wherever needed and hold them open for the
    follow-on forces.
                        fiscal year 2009 budget request
        The fiscal year 2009 Navy budget reflects a commitment to deliver
    worldwide presence, credible deterrence and dissuasion capability, the
    ability to project power from Navy platforms anywhere on the globe, and
    the ability to prevail at sea. This budget reflects the best balance of
    resources to achieve this priority across the triad that produces
    readiness now and in the future; acquisition of key platforms and
    weapons systems, personnel, and the operations and maintenance that
    sustains and trains our forces. The fiscal year 2009 budget and its
    associated force structure plans represent the capabilities needed to
    meet current and future strategic challenges with a moderate, trending
    towards a significant, degree of risk.
                  acquisition--building a fleet for the future
    Ship Programs
        The fiscal year 2009 budget continues to shift to next generation
    warships, providing an increase of three ships from fiscal year 2008
    (Figure 2). The fiscal year 2009 shipbuilding budget funds 7 ships,
    including the 11th Virginia class fast attack submarine, the third DDG
    1000, 2 Littoral Combat Ships (LCS), 2 T-AKE Dry Cargo and Ammunition
    Ships, and the first Joint High Speed Vessel (JHSV) for the Navy.

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        The budget provides the second increment of funding for the
    construction of the lead CVN-21 aircraft carrier, the U.S.S. Gerald R
    Ford (CVN 78), and advance procurement funding for CVN 79. Likewise the
    budget provides funding for DDG 1002, the third ship of the class, and
    advance procurement funding for DDG 1003. Consistent with the National
    Defense Authorization Act for Fiscal Year 2008, directing a cost cap of
    $460 million for future LCS procurements, Navy budgeted for two more
    LCSs in fiscal year 2009 as well as Mine Countermeasures Warfare, Anti-
    Submarine Warfare, and Anti-Surface Warfare mission module packages.
    The fiscal year 2009 budget includes funds for the second and third
    Guided Missile Cruiser (CG) mods designed to extend the service life of
    these platforms to 35 years. To pace the 2020 threat environment, the
    fiscal year 2009 budget includes funding for the long lead time
    elements of the backfit modernizations of three Guided Missile
    Destroyers (DDG) in fiscal year 2011. Additionally, the fiscal year
    2009 budget continues the Landing Craft Air Cushion (LCAC)
    modernization program by funding service life extensions for six
    crafts.
        The fiscal year 2009 budget continues full rate production of the
    Tactical Tomahawk missile which provides a premier attack capability
    against long range, medium range, and tactical targets on land and can
    be launched from both surface ships and submarines. Acquisition of
    major ship weapons systems are outlined in Figure 3.

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    Aviation Programs
        Navy Aviation acquisition continues to be at the forefront of our
    Nation's defense and accordingly, this budget continues to decrease the
    average age of our aircraft inventory from a high above 20 years in the
    1990s to 18 years in 2006 and to 17 years in 2009. The recently
    approved Navy Aviation Plan (NAvPlan) 2030 is based on fiscally
    informed, rigorous analysis providing a long range recapitalization and
    modernization plan to support the Maritime Strategy. NAvPlan 2030
    demonstrates continued commitment to the Joint Strike Fighter, Navy
    Unmanned Combat Aircraft System, and a robust Airborne Electronic
    Attack capability. Multi-year procurement contracts for F/A-18E/F, EA-
    18G, and MH-60R/S have enabled Navy to realize significant savings and
    stretch available procurement funds. The budget reflects procurement of
    206 aircraft in fiscal year 2009, an increase of 23 aircraft over
    fiscal year 2008 levels as Navy continues planned growth towards Full
    Rate Production profiles of JSF, EA-18G, and MH-60R (Figure 4).

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        Acquisition of the Lightning II Joint Strike Fighter (F-35C)
    Carrier Variant continues in fiscal year 2009. The fiscal year 2009
    budget accelerates the procurement of F/A-18E/F/G aircraft to meet the
    demand for our current lead fighter/attack aircraft. The budget
    supports the multi-year procurement of both the Seahawk MH-60R and
    Knighthawk MH-60S helicopters, which are part of a joint contract with
    the Army's UH-60M Blackhawk. Three E-2D Advanced Hawkeye LRIP aircraft
    are funded in fiscal year 2009, signaling a shift of effort from RDT&E
    to procurement. The fiscal year 2009 budget funds the advance
    procurement of the first P-8A aircraft slated to replace the aging P-3
    fleet. The P-8A Multi-mission Maritime Aircraft (MMA), based on the
    Boeing 737 platform, will achieve Initial Operational Capability (IOC)
    in fiscal year 2013. The fiscal year 2009 budget supports CONPLAN 7500
    and the QDR by providing a persistent ISR capability through
    developing, acquiring, and fielding transformational Unmanned Aerial
    Vehicle (UAV) technologies.
        Aircraft weapons arm the warfighter with lethal, interoperable, and
    cost-effective weapons systems. Fiscal year 2009 marks the final year
    of JDAM procurement while continuing critical acquisition of JSOW, AIM-
    9X (Sidewinder), AMRAAM, and the AGM-88E Advanced Anti-Radiation Guided
    Missile (AARGM). Development also continues, with Army as the lead
    service, on the Joint Air-to-Ground Missile (JAGM), an extended range,
    precision-guided weapon for fixed wing, rotary wing, and UAV aircraft
    (Figure 5).

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                          sustaining combat readiness
        Operational readiness enables our forces to respond to persistent
    and emerging threats. The top readiness priority is ensuring that
    forces are fully trained and ready to deploy and remain supported while
    deployed. This budget request includes resources in the operating and
    maintenance accounts to deliver a ``6+1'' FRP posture for fiscal year
    2009. We continue to monitor the trade space to execute the right
    readiness for the right cost. Navy seeks to achieve this balance by
    continually evaluating threat assessments, the capabilities and
    capacities of the Fleet, our mandate to sustain these forces, and the
    risk our combatant commanders and Navy component commanders face.
    Ship Operations
        The budget provides for a deployable battle force of 286 ships in
    fiscal year 2009 including 11 aircraft carriers and 31 amphibious ships
    (Figure 6). Fiscal year 2009 marks a significant milestone as Navy is
    scheduled to retire its last conventionally powered aircraft carrier,
    U.S.S. Kitty Hawk, as it welcomes the last Nimitz class aircraft
    carrier, George HW Bush, to the fleet. In fiscal year 2009, ten battle
    force ships will be commissioned: one Nuclear Aircraft Carrier (CVN),
    three Guided Missile Destroyers (DDG), one Nuclear Attack Submarine
    (SSN), one Amphibious Assault Ship (LHD), one Amphibious Transport Dock
    Ship (LPD), and three Dry-Cargo Ammunition Ships (T-AKE).
        The fiscal year 2009 budget provides sufficient funding to steam
    these ships an average of 45 days per quarter while deployed and 22
    days per quarter while nondeployed. This underway Operational Tempo
    (OPTEMPO) reflects an executable baseline with acceptable risk with
    elevated OPTEMPO in support of global war on terror requirements.

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        Navy's Strategic Sealift forces are resourced to provide a rapid
    response in delivering the initial military equipment and supplies
    required for a contingency. These forces, layered in depth, include
    forward deployed pre-positioned ship squadrons as well as surge ships
    maintained in a Reduced Operating Status (ROS) from 4 to 30 days. The
    number of days indicates the time from ship activation until the ship
    is available for tasking. Only ROS-4 and ROS-5 ships are included in
    the surge capacity in Figure 7.

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        Starting in fiscal year 2008, the Army no longer has a requirement
    for four of its ten Prepositioned Large Medium Speed RO/RO (LMSR)
    ships. These ships were returned to Navy, are being maintained in a
    ROS-30 status, and will be leveraged in our termination of the capital
    lease on five Maersk class (foreign-built) vessels. Navy will also
    purchase two MPS ships currently under long-term capital lease in
    fiscal year 2009 and two in fiscal year 2010. Additionally, one
    container ship and one tanker ship will be procured in fiscal year 2009
    as elements of the restructured USMC Afloat Prepositioning program.
    Navy will continue to maintain its two hospital ships, the U.S.N.S.
    Mercy and the U.S.N.S. Comfort, in a ROS-5 status to support
    warfighting, humanitarian and disaster assistance efforts, and
    operations other than war.
                                ship maintenance
        Navy's fiscal year 2009 ship maintenance budget funds 100 percent
    of the projected work on refueling overhauls and 97 percent of the
    remaining notional requirement (Figure 8). Navy continues to mature its
    ship maintenance strategy using the SHIPMAIN process to generate
    continuous process improvements and prioritization of maintenance. The
    One Shipyard for the Nation approach seeks to optimize the Nation's
    public and private nuclear shipyards and contractor support to ensure
    the ability to mobilize fleet support infrastructure across the board
    and rise to meet fleet demands in time of war. Multi-Ship/Multi-Option
    contracts establish long-term vendor relationships and reduced life
    cycle maintenance costs achieved through improved advanced planning.
    The Nation's ship repair base, both public and private sectors, has the
    capacity to execute the fiscal year 2008 and fiscal year 2009 ship
    maintenance plans as well as the deferred maintenance amounts reflected
    in Figure 8.

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                              aviation operations
        The fiscal year 2009 budget provides for the operation,
    maintenance, and training of 10 active Navy carrier air wings. Figure 9
    depicts the Aviation inventory. Naval aviation is divided into three
    primary mission areas: Tactical Air/Anti-Submarine Warfare (TACAIR/
    ASW), Fleet Air Support (FAS), and Fleet Air Training (FAT). The fiscal
    year 2009 budget supports an average T-rating of T-2.5 across the
    Inter-Deployment Training Cycle enabling Navy to achieve its ``6+1''
    FRP Carrier Strike Group goal.

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        Fleet Replacement Squadron (FRS) operations are budgeted at 89
    percent in fiscal year 2009, which is slightly below the goal of 94
    percent of student level training requirements enabling pilots to
    complete the training syllabus. In fiscal year 2009, Fleet Air Support
    (FAS) is funded to provide sufficient hours to meet 98 percent of the
    total notional hours required. Navy Reserve component aviation will
    provide 100 percent of the adversary and logistics air support, make
    central contributions to the counter-narcotics efforts, conduct mine
    warfare, and augment Maritime Patrol, Electronic Warfare, and Special
    Operations Support global war on terror missions. In fiscal year 2009,
    Reserve component aviation is budgeted at 94 percent of their required
    hours, the minimum level to allow aircrews to maintain readiness in all
    mission areas. Figure 10 displays Active and Reserve flying hour
    readiness indicators.

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                              aviation maintenance
        The Aviation Depot Maintenance program funds repairs required to
    ensure operational units have sufficient numbers of airframes, engines,
    and repairables to support achieving the quantity of aircraft ready for
    tasking to execute assigned missions. The fiscal year 2009 budget funds
    this readiness-based program to ensure deployed squadrons have 100
    percent of their Primary Authorized Aircraft (PAA) prior to and for the
    duration of their deployment. Likewise the budget supports achieving
    the zero bare firewall engine goal, aided by engineering improvements
    increasing engine ``time on wing''. Non-deployed squadrons assume
    minimal risk in both airframes and engines as depicted in Figure 11.
    The Navy Aviation Enterprise (NAE) AIRSpeed strategy continues to
    deliver cost-wise readiness by focusing efforts on reducing the cost of
    business, increasing productivity, and improving customer satisfaction.

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                            expeditionary operations
        Navy continues to place significant emphasis on its existing and
    emerging expeditionary warfare capabilities as it seeks to strengthen
    available forces for Phase O and Phase V operations. Established in
    January 2006, the NECC was formed as the functional commander for
    Explosive Ordnance Disposal (EOD)/Mobile Diving and Salvage (MDS),
    Maritime Expeditionary Security Forces (MESF), Naval Construction
    Forces (NCF), Riverine Forces, Navy Expeditionary Logistics Support
    Group (NAVELSG), ECRC, Maritime Civil Affairs Group (MCAG), and Combat
    Camera. NECC combines the Navy's existing and new expeditionary forces
    under a single commander to provide the Joint Force Maritime Component
    Commander (JFMCC)/Navy Component Commander (NCC) with the capability to
    conduct operations across the full spectrum of expeditionary
    operations, including maritime security operations; combat service
    support; theater security cooperation support; disaster relief;
    security assistance; shaping operations; and stability, security,
    transition, and reconstruction (SSTR) operations.
        Based on operational requirements, NECC will deploy mission-
    specific units or multi-mission integrated adaptive force packages to
    fulfill JFMCC/NCC demands by using both the existing solid foundation
    of core capabilities in the Navy Expeditionary Force and emerging new
    mission capabilities. Combining these forces under a unified command
    structure increases the overall readiness and responsiveness of the
    Navy to support existing and evolving irregular warfare missions in
    major combat operations (MCO), Maritime Security Operations (MSO) (also
    referred to as Global War on Terrorism or global war on terror), or
    maritime homeland security/defense (M-HLS/D).
                   expeditionary maintenance and procurement
        The fiscal year 2009 budget also provides funds for critical
    construction and force protection equipment for the NECC. Predictably,
    the equipment used by NECC units, such as the Seabees, EOD, and MESF,
    is wearing out at accelerated rates due to operations in Iraq, Kuwait,
    Horn of Africa and Afghanistan. Moreover, Seabee and EOD units deployed
    to Iraq and Afghanistan require improved self-protection against
    improvised explosive devices (IED). Ongoing operations in Iraq have
    demanded new vehicles to protect troops against the array of explosive
    devices they encounter. Mine Resistant, Armor Protected (MRAP) vehicles
    have been developed to better withstand these threats, and are being
    delivered to the force.
                       expeditionary weapons and sensors
        Significant weapons shortages existed in Expeditionary Forces in
    the years following September 11, 2001. These shortfalls have been
    nearly eliminated. Weapons accessories, vital to expeditionary sailors,
    also require replacement. These accessories include aim point mounts,
    scopes, grips, rail assemblies, as well as an assortment of laser
    aiming devices and night vision equipment.
        Preparing Expeditionary Forces to fight the global war on terror
    requires significantly more ammunition than was previously identified.
    In fact, both the increased mission and expanding force structure have
    led to a greater than 400 percent increase in the requirement for small
    arms and crew-served weapon ammunition compared to fiscal year 2005.
                  manpower, personnel, training, and education
        Navy forces stand ready to execute our Maritime Strategy largely
    due to the dedication and motivation of individual sailors (Active and
    Reserve), Navy civilians, and their families, as well as our contracted
    support staffs. Just as they have devoted themselves to serving our
    Nation, we, as leaders, must devote resources and shape policies to
    ensure that they are personally and professionally fulfilled by that
    service. Recruiting, developing, and retaining diverse and highly
    capable men and women is central to our continued success and remains
    one of the CNO's top priorities. This push is the backdrop to our
    Strategy for our People that will level our end strength following
    several years of personnel reductions resulting from increased
    efficiencies ashore and a reduction in manpower intensive force
    structure (Figure 12).

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        Manpower readiness begins with properly sizing and shaping our
    requirement. Extensive capability-based analysis of current and future
    force structure and warfighting requirements associated with a 313-
    ship, 2,813-aircraft Navy has validated a steady-state Active component
    end strength requirement of 322,000 and Reserve component end strength
    requirement of 68,000. Our goal is to position Navy as a top employer,
    in order to gain a competitive position in the market and provide our
    people an appropriate life work balance, not only to recruit them, but
    also to retain the best and brightest.
        Navy Recruiting Command is relentless in its pursuit of hiring
    young talent to serve in our Navy. For 77 consecutive months, active
    Navy has met its monthly shipping goals while sustaining the high
    quality of sailors being sent to the fleet. However, the Medical Corps,
    Chaplain Corps, Nuclear Power Officers, and Enlisted Special Operations
    communities pose the greatest risk and challenge our ability to sustain
    the All-Volunteer Force.
        Our medical program initiatives illustrate how we are working to
    overcome the challenge of recruiting in a highly competitive market due
    to a national shortage of health care professionals which is projected
    to worsen in the future. While the recruiting of medical professionals
    continues to improve, Navy only attained 82 percent of the Active
    component medical specialty mission and 57 percent of the Reserve
    component mission in 2007. Navy has since implemented a number of
    monetary and special programs including: 1) the Medical Leads
    Assistance Program where our own officers are generating interest in
    Navy Medicine, 2) participating in the Department of Defense Medical
    Examination Review Board program where busy students and professional
    medical community applicants can go to more convenient civilian and
    military medical treatment facilities rather than spending an entire
    day processing through a military entrance processing station, and 3)
    increasing accession bonuses and student stipends for targeted medical
    specialty applicants.
        For fiscal year 2009, Navy has increased its accession goals to
    prepare for the leveling off of Navy manpower reductions. The authority
    to pay enlisted bonuses up to $40,000 made a significant contribution
    last year and will continue to help the services combat a declining
    propensity to serve among our Nation's youth.
        Despite a weakening economy, there will be increased competition
    for our Nation's best talent. Our sailors expect innovative and
    flexible compensation policies, a commitment to continuing education,
    and professional development opportunities. Retaining our sailors will
    continue to be challenging due to comparable compensation and benefits
    offered by industry balanced with the sacrifices and commitments we ask
    our sailors and their families to make. To address these challenges we
    are aggressively pursuing the use of tools that allow us to manage our
    people across the continuum of service, from Active and Reserve uniform
    service through civil service, promoting a ``Stay Navy'' message.
    Accordingly, we are providing our sailors with professional
    credentialing opportunities, considering alternative manning
    constructs, expanding sailor and family support, and exploring
    initiatives that support the life/work balance our people desire.
        There has been significant growth in demand for control grade
    officers. At the same time, we are experiencing a shortage of inventory
    of these senior officers. We have taken aggressive steps to understand
    the considerations behind officers' decisions to stay on active duty
    past the 26 year point. Recent surveys indicate that retention among
    Unrestricted Line (URL) captains is largely driven by 3 factors: family
    stability, financial concerns (a leveling off or reduction of pay and
    retirement benefits compared to civilian opportunities), and job
    satisfaction. I am exploring a variety of monetary and non-monetary
    incentives to encourage more senior officers to make the choice to
    ``stay Navy'' past the 26 year point.
        Navy Reserve Forces are a key element of Navy's goal to better
    align its total Force to provide fully integrated operational support
    to the joint force. Under the Navy Enterprise Framework, the Navy
    continues to validate new mission requirements and an associated billet
    structure for its Reserve Force to meet the capability requirements of
    the future. The ongoing Active Reserve Integration (ARI) process
    continues to align Reserve Forces under Active Force oversight, through
    initiatives such as: the divestiture of MCMs to the AC and the
    transformation of Naval Coastal Warfare to the MESF.
        Navy civilians are also an integral part of our Total Force. From
    forklift operators to nuclear physicists, civilians work alongside
    servicemembers to ensure the adequacy of our logistics chains and
    progress new weapons systems from an idea to reality. The National
    Defense Authorization Act for Fiscal Year 2008 restricts military to
    civilian conversions for the medical community through September 30,
    2012. Due to the enactment date of this legislation, its provisions are
    not reflected in the fiscal year 2009 President's budget request, but
    the plan is now being readdressed. We are working closely with the
    Office of the Secretary of Defense on this matter. The Navy is
    leveraging the NSPS in making strides towards identifying key
    competencies to ensure the right mix of people and skills are recruited
    and retained.
        Our pays and benefits continue to keep pace with the civilian
    sector and in concert with accession bonuses and special pays
    significantly contribute to our ability to attract new talent and
    retain our best. The manpower, personnel, training and education
    policies and programs we have in place today and our ongoing
    initiatives in diversity, life/work balance, family readiness, and the
    continuum of medical care, are expected to position Navy among the best
    organizations--a ``Top 50 Employer'' known for valuing its people.
                                   facilities
        Our shore installations are extensions of our warfighting
    capabilities and are among our most complex systems. Our installations
    must be ready to deliver scalable, agile, and adaptive capabilities to
    meet the requirements of our Fleet and families. In the past, we have
    accepted significant risk in our shore establishment to adequately fund
    Fleet readiness, our people accounts, weapons systems, and future force
    structure. As a result the condition, capability, and readiness of our
    shore installations have degraded to an unacceptable level by industry
    standards. We must reverse this trend. Navy Ashore Vision 2035 will
    provide the guiding principles for our shore establishment, take
    advantage of leveraging the joint capabilities we share with other
    services, and will ensure that the shore establishment is properly
    sized, configured, located, and networked to deliver our required
    operational requirements and quality of service to our people. This
    strategy is fully aligned with the congressionally-mandated Base
    Realignment and Closure (BRAC) process.
        The Navy's fiscal year 2009 military construction investment
    strategy focuses on:

             Recapitalizing inadequate and inefficient facilities
            that directly support the warfighter
             Constructing new facilities to improve quality of life
            for our sailors and their families
             Supporting new mission and R&D facility requirements
             Enhancing anti-terrorism and force protection
             Correcting critical deficiencies

        The fiscal year 2009 Military Construction-Navy (MCN) budget
    requests appropriations of $1,116 million that includes 32 projects for
    the Active Navy and 3 projects for the Reserve Navy.
        Navy continues to leverage the capabilities of the supporting
    communities where we work and live. In fact, Navy continues its
    reliance on the private sector as the primary source of housing for
    sailors and their families. The power of leveraging the local community
    is highlighted in our new Public-Private Venture Bachelor Quarters at
    San Diego and Norfolk. With the help of your Special Legislation and
    our progressive private partners, Navy is providing quarters that will
    positively impact their decision to ``Stay Navy''. Other specific
    housing projects in the fiscal year 2009 budget include $62.6 million
    for the replacement of 146 units at Naval Station Guantanamo Bay, Cuba
    and $50 million in post-acquisition construction for the improvement
    and repair of 342 units in Guam and Japan. Additionally, $8.4 million
    is included to support the construction of 46 homes at Naval
    Construction Battalion Center Gulfport, MS, through the use of military
    housing privatization authorities.
        Appropriate investments of facility sustainment, recapitalization,
    and demolition are necessary to maintain Navy's inventory of facilities
    in good working order and preclude premature degradation. Navy uses an
    industry-based facility investment model to keep the inventory at an
    acceptable quality level through life cycle maintenance, repair, and
    disposal. Navy has increased sustainment funding in fiscal year 2009 to
    90 percent across the Future Years Defense Program funding for
    recapitalization. The fiscal year 2009 budget exceeds the DOD 67 year
    recapitalization rate goal primarily due to BRAC investments. Figure 13
    recaps Navy's facility sustainment, restoration, and modernization
    submission.

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                        congressional support requested
    Marine Mammals and Sonar
        The most critical readiness issue relates to Navy's ability to
    train using active sonar and not endanger marine mammal populations.
    Submarines with improving stealth and attack capability--particularly
    modern diesel attack submarines with air independent propulsion--are
    proliferating worldwide at an alarming rate. Locating these relatively
    inexpensive but extremely quiet boats presents our Navy with a
    formidable challenge and requires the use of active sonar. Ongoing
    litigation that threatens to limit our ability to conduct medium
    frequency active sonar training and thus become combat certified
    atrophies the skills required to employ this vital technology.
        The Navy is engaged in a comprehensive effort to achieve full
    compliance with the National Environmental Policy Act, Marine Mammal
    Protection Act, Endangered Species Act, Coastal Zone Management Act,
    and Executive Order 12114. Navy continues to increase funding for
    marine mammal research and provides more than one half the world wide
    funding for marine mammal research. We must, however, continue to
    prepare our Navy for deployment and the possibility of combat
    operations.
    Aviation Transitions
        Navy's aging ``legacy'' aircraft are showing significant wear from
    the increased OPTEMPO directly associated with OIF and OEF. The
    expected service life (ESL) of an aircraft is a function of the
    designed flight hours and the actual fatigue life expended through
    operational missions (launches, recoveries, extreme operational
    environment, etc.). This increased OPTEMPO has accelerated airframe
    attrition due to their reaching ESL sooner than designed and
    pressurized retirement dates for legacy aircraft.
        Navy's aging P-3 and EP-3 fleets are particularly challenged as we
    continue to provide valuable airborne intelligence, surveillance, and
    reconnaissance capability to the combatant commanders. The average age
    of our P-3 fleet is more than 28 years and the average age of an EP-3
    fleet is more than 34 years. Both aircraft were expected to serve 30
    years. In December, we grounded 39 P-3C aircraft where projected
    fatigue wing cracks exceeded an acceptable level of risk. Navy
    appreciates your consideration of its Supplemental funding request that
    will support the immediate purchase of wing material for outer wing
    replacement on 42 P-3C aircraft. Additionally, Navy will add Anti-
    Surface Warfare (ASuW) systems to some 19 training non Anti-Submarine
    Warfare capable airframes to mitigate ASuW risk to current plan
    response. Navy also seeks to mitigate portions of this capability gap
    by accelerating delivery of the P-8A Multi-Mission Aircraft by 15
    months.
        A future concern, one third of the Navy's legacy TACAIR fleet, F/A-
    18 A-D series aircraft, is currently operating beyond design limits,
    and the bulk of the fleet, F/A-18 C/D series aircraft, are operating at
    an average flight hour expenditure rate 30 percent greater per year
    than planned.
    Encroachment
        Another readiness issue impacting our ability to train to meet the
    full spectrum of operations is the increasing encroachment of our
    installations and ranges. Our ability to use installations for their
    intended purposes and the ability to augment then when necessary to
    respond to changing national defense requirements is being pressurized
    by State and local citizen interest groups. Navy's continuing
    difficulty to establish an Outlying Landing Field on the east coast is
    illustrative of this challenge. An OLF is required to enable Navy to
    train aviators for Carrier Air Wing operations at sea. This training is
    an integral element of the FRP operational availability construct. In
    consideration of the concerns of local citizens and environmental
    groups Navy has terminated the Environmental Impact Study (EIS) on the
    originally selected five North Carolina sites and subsequently plans to
    issue a new EIS on five different sites in North Carolina and Virginia.
    Navy continues its outreach program seeking a win-win situation for all
    parties. We are grateful for your continued support as we work with
    Congress and the States of Virginia and North Carolina to ensure that
    we can fully train our young men and women.
    United Nations Law of the Sea Convention
        To interact more effectively with our maritime partners to ensure
    that the seas of the world remain safe and open for all nations, the
    Navy strongly supports U.S. accession to the Law of the Sea Convention
    joining 154 party nations. Robust operational and navigational rights
    codified in the Law of the Sea Convention must be preserved for the
    Navy to continue to maximize its ability to execute the Maritime
    Strategy. Our current non-party status constrains our efforts to
    develop enduring maritime partnerships. It inhibits us in our efforts
    to expand the Proliferation Security Initiative and elevates the level
    of risk for our sailors as they undertake operations to preserve
    navigation rights and freedoms, particularly in areas such as the
    Strait of Hormuz and Arabian Gulf, and the East and South China Seas.
    Accession to the Convention is of critical importance to global naval
    maritime and over flight mobility.
                                reset the force
        We remain a Nation at war--a long war against violent extremists in
    which naval forces provide a significant part of the worldwide
    rotational military presence and an increasing portion of the required
    support for ground units in Operations Enduring Freedom/Iraqi Freedom
    (OEF/OIF). An ongoing challenge we face today is to sustain our present
    capability and enhance our ability to conduct nontraditional missions
    in order to ensure continuity in the projection of naval power and
    influence.
        Navy's support of OIF, OEF, and the global war on terror continue
    to require a higher OPTEMPO than was planned during peace-time
    operations. In the near term this translates to greater operational
    cost (maintenance, parts, and fuel). Longer-term impacts are under
    close evaluation, but ships, aircraft and ground equipment returning
    from the war will require depot-level attention to remain responsive to
    emerging threats.
        Past supplemental funding has mitigated some of the Navy's costs
    but Navy's outstanding reset requirement is nearly $11 billion. The
    fiscal year 2008 Reset requests totaled $3.6 billion of which $500
    million has been received via the bridge supplemental. The funds
    received to date have been aligned to fleet depot maintenance ($410
    million), Explosive Ordnance Disposal (EOD) Systems ($80 million OPN),
    and ammunition accounts ($10 million PANMC).
        Navy's outstanding Reset requirement is currently estimated at
    $10.9 billion. Of this remaining requirement, the fiscal year 2009
    supplemental request will include maintenance funds for Ship, Aviation,
    and Ground Forces as well as procurement funding for aircraft and
    aviation spares and repairables, Expeditionary Combat and Physical
    Security equipment, and ordnance.
        Navy continues to evaluate its reset requirements as our high
    OPTEMPO operations continue and the equipment is used more extensively
    than originally planned. Replacement equipment and aircraft are
    essential to preclude near- to mid-term capability gaps in these areas.
    Deferring reset requirements will equate to increased risks in the
    future.
                                   conclusion
        The security challenges of the 21st century are complex and varied.
    They range from the irregular, asymmetric threats of terrorists, self-
    proclaimed Jihadist organizations, and rogue states and belligerent
    nations, to the conventional and highly sophisticated military
    technologies of China, North Korea, and Iran. Navy is out and about,
    doing the essential missions for the Nation, but that level of security
    comes at a cost to our people, our current readiness, and the future
    fleet. Our Navy's capabilities and capacity must be balanced with the
    resources we are provided to address these diverse strategic
    challenges.
        Our Navy provides a high rate of return on your investment, costing
    the taxpayers less than 1 percent of the GDP. We strive to sustain
    combat readiness, build a fleet for the future and develop 21st century
    leaders. The Navy readiness story is one of military might but it is
    also has chapters about generosity and humanity. Your U.S. Navy is
    ready for further tasking.

        Senator Akaka. Thank you, Admiral Walsh.
        General McNabb?

    STATEMENT OF GEN. DUNCAN J. McNABB, USAF, VICE CHIEF OF STAFF,
                        UNITED STATES AIR FORCE

        General McNabb. Chairman Akaka, Senator Thune, and
    distinguished committee members, it's a pleasure to be here
    this afternoon.
        I thank the committee for your tremendous support of our
    soldiers, sailors, marines, airmen, and coast guardsmen in
    ensuring that we have what we need, to win. On behalf of the
    over 600,000 total force airmen, thank you for the opportunity
    today to talk about the very important subject of readiness.
        Our airmen have been vital to the success of the joint team
    to win this critical global war on terror while constantly
    providing the global deterrence that keeps our enemies at bay
    and our friends assured. We stand ready to go to the most
    dangerous places on the planet tonight to protect our country,
    and if the Nation needs us to go, tomorrow or 20 years from
    now, we will go. Our airmen, like our fellow warriors, have
    been tested in the crucible of war, and been found worthy. As
    part of the Joint Force, our airmen have pushed our combat
    capability to new heights, and have forever changed the way we
    fight.
        We have compressed the kill chain. With our ground combat
    teams, we have developed the tactics and technology that allows
    the joint team to find the enemy and strike where needed and
    when needed. Airmen have evolved the battlespace vigilance. We
    keep an unblinking eye on rooftops and over ridgelines so our
    ground forces are not surprised by the enemy and are always
    prepared to engage them.
        Our airmen have revolutionized the concept of air mobility.
    We have moved our mobility forces forward with innovative ideas
    and equipment to precisely resupply forces on the ground and
    reduce the number of ground convoys in harm's way. Airmen have
    extended our aeromedical evacuation bridge. We move our wounded
    warriors to higher levels of care faster than ever, saving the
    remarkable Americans who have risked their lives in defense of
    this great Nation.
        Our airmen are absolutely honored to do their part, but we
    have sustained this increased tempo for over 17 years, with the
    last 6 being the highest in over 40 years. Senator Thune, you
    mentioned that. This pace has had its effect on our people and
    our equipment. Our overall readiness is down, across the board.
    The average age of our aircraft is over 24 years, and we're
    flying this equipment harder than ever, accelerating the wear
    and tear on our inventory. We have witnessed an 11 percent
    decline in our fully-mission-capable rate, and this rate would
    have decreased even further, were it not for the superb work in
    our depots and our superb maintainers.
        The high tempo has also affected our airmen and their
    families. Just like my counterparts here today, many elements
    of our force are stressed with deployment-to-dwell ratios of 1-
    to-1. Notably, we've seen declining reenlistment rates among
    our mid-level NCOs. We're watching all these indicators closely
    and doing everything that we can to maintain the quality of
    life for our airmen and their families.
        Despite these challenges, we are committed to the defense
    of this great Nation and this great cause of freedom. We know
    our Nation and our joint team absolutely depends on us, and,
    when called again, we will go. However, we cannot rest on the
    laurels of our current dominance in air. We must also be able
    to dominate airspace and cyberspace tomorrow. We ask the
    committee for your continued help to recapitalize and modernize
    our aging equipment, to improve our readiness, and to provide
    future generations of airmen with equipment that is worthy of
    the challenges that they will face.
        Mr. Chairman, I thank you for this subcommittee's continued
    help, and I look forward to your questions.
        [The prepared statement of General McNabb follows:]
               Prepared Statement by Gen. Duncan J. McNabb, USAF
                                i. introduction
        Your Air Force is engaged around the world, fighting terrorists and
    insurgents in the Long War. We appreciate the Senate Armed Services
    Committee's continued support of our air, space, and cyberspace forces
    as they fly and fight across the globe promoting and defending the
    Nation's interests. Since the Long War began, congressional
    supplemental funding each year, including the $5.5 billion provided for
    fiscal year 2008, has helped ensure that our airmen deployed in combat
    overseas are trained, equipped, and ready day-to-day to perform their
    mission. As we prepare for the next year of global operations, the Air
    Force is grateful for the support the committee provided through the
    National Defense Authorization Act for Fiscal Year 2008, and as always,
    we appreciate the great lengths to which the committee has gone to
    support our airmen, their families, and their quality of life.
        In the Long War, we continue to fulfill our indispensable roles as
    airmen for the Joint team working with our sister Services to enhance
    and capitalize on joint synergies--taking the entire team to higher
    levels. Simultaneously, as the Nation's sword and shield, we stand
    prepared to assure allies and dissuade, deter and, if necessary, defeat
    enemies on a global scale. For over 17 years, the United States Air
    Force has been engaged in continuous combat providing the Nation and
    its partners unparalleled advantage in three warfighting domains--air,
    space, and cyberspace. Our airmen have maintained constant watch,
    deployed continuously, engaged America's adversaries directly,
    responded to humanitarian crises around the world, and provided the
    Global Vigilance, Global Reach, and Global Power to secure our Nation.
    The hallmark of our success has been the truly seamless manner in which
    our Reserve, Guard, and Regular components operate. We have leveraged
    our Total Force to the greatest extent ever, and have provided the
    Nation with a highly cohesive team that maximizes the Air Force's
    overall joint combat capability.
        Our Air Force has been tested in the crucible of battle and is the
    most combat-proven in its history. Every day our airmen find innovative
    ways to accomplish their mission more efficiently and effectively.
    Airmen are dedicated to the defense of this Nation. We have committed
    ourselves to go to the ends of the Earth, to the most dangerous or
    austere locations, in our Nation's hour of need or in the world's
    moment of despair. If tonight, tomorrow, or in 20 years from now
    America calls--we will go--because it is our sacred duty to provide the
    Nation and its joint team, wherever it might be engaged, the full might
    of air, space, and cyberspace power.
        To ensure success, your Air Force is organizing, training, and
    equipping our airmen for both the current and future fights, building
    in the flexibility to operate across the entire spectrum of conflict.
    It is no accident that America's Air Force has unprecedented Global
    Vigilance, Global Reach, and Global Power. We learned our lessons from
    our own history as well as from others', and we invested vast resources
    and effort to establish and maintain dominance in our three warfighting
    domains: air, space, and cyberspace. Even after our victory in
    Operation Desert Storm, we upgraded, modernized, and transformed our
    training mindset and programs. The result was a more flexible,
    responsive, and lethal force that contributed greatly to the joint
    successes in Operations Allied Force, and saved lives in ensuing
    operations--from the Balkans, through tsunami-ravaged Indonesia, to
    Afghanistan and Iraq. Even with these advances, we continue to find
    innovative ways to improve the combat power we provide the joint team.
    Our forces engaged in combat today are fully ready to perform their
    missions, but our future dominance is at risk.
        We face a dangerous and uncertain future and our enemies do not sit
    idly by. Instead, adversaries--both declared and potential--are
    developing and fielding new and better means to threaten our Nation,
    our interests, and stability around the world. At the same time, the
    average age of our air and space craft continues to rise, and their
    ability to confront emerging threats declines. We also face increased
    operations, maintenance, and personnel costs that cut into our ability
    to finance future dominant capabilities. We are doing all we can to
    increase efficiency and effectiveness to defray these rising costs.
    Despite our best efforts, we face declining readiness and soaring
    recapitalization rates. Therefore, we have taken significant steps to
    self-finance a massive and vital recapitalization and modernization
    effort for our aging air and space force. We must ensure the Air Force
    is capable of setting the conditions for America's success against
    emerging threats in the uncertain years that lie ahead.
        With this necessity in mind, let's examine Air Force ``readiness''
    with respect to each of our three main priorities: winning today's
    fight, taking care of our people, and preparing for tomorrow's
    challenges.
                             ii. win today's fight
        Our first priority is to win today's fight. Air Force Long War
    missions are only the latest in a string of over 17 continuous years of
    combat since Operation Desert Storm began. Throughout this period, our
    strategic forces have remained on constant alert. In fact, the United
    States Air Force has underwritten the national strategy for over 60
    years by providing a credible deterrent force, and we continue to serve
    as America's ultimate strategic backstop, reassuring allies, dissuading
    competitors, and deterring adversaries by maintaining an always-ready
    nuclear arm. The Air Force is committed to continuously improving its
    ability to fulfill the Nation's nuclear mission. As with everything we
    do in the Air Force, our approach to nuclear surety is grounded on our
    core values of integrity, service, and excellence. We have initiated
    multiple levels of review of Air Force policies and procedures in order
    to improve the Air Force's nuclear surety. The Air Force portion of the
    Nation's nuclear deterrent is sound, and we will take every measure
    necessary to continue to provide safe, secure, reliable, nuclear forces
    to the American public.
        Today, Air Force operations are ongoing in Iraq, Afghanistan and
    the Horn of Africa. Every day, your Air Force flies approximately 250
    sorties in Iraq and Afghanistan directly integrated with and enhancing
    ground operations. Since Long War operations began, your Air Force has
    flown over 80 percent of the coalition's combat sorties in support of
    Operation Iraqi Freedom and Operation Enduring Freedom. These missions
    provide the Joint and Coalition team airlift, aero-medical evacuation,
    air-refueling, command and control, close air support to ground
    operations, strike, Intelligence, Surveillance, and Reconnaissance
    (ISR), and electronic warfare. We have flown over 385,000 mobility
    sorties moving equipment and troops to and from the Central Command
    (CENTCOM) Area of Responsibility (AOR). Our intra-theater airlift
    missions shift convoys to the air reducing the need to place troops and
    vehicles in harms way. Our aero-medical evacuation missions move
    wounded soldiers, sailors, marines, and airmen to higher levels of
    medical care at hospitals as far away as the continental United States.
    In 2007, America's airmen conducted nearly 1,600 precision strikes in
    Iraq and Afghanistan. In Iraq alone, Air Force strikes increased by 171
    percent over the previous year. Added to those numbers, your Air Force
    has flown over 50,000 sorties protecting the homeland for Operation
    Noble Eagle.
        Air Force engagement in CENTCOM is only the tip of the iceberg.
    Airmen operate around-the-clock and around-the-globe to provide all
    Combatant Commanders (COCOMs) with critical capabilities. Over 40
    percent of the total force and 53 percent of the Active-Duty Force are
    directly engaged in or supporting COCOM operations everyday. On any
    given day, the Air Force has approximately 206,000 airmen (175,000
    regular plus an additional 31,000 Guard and Reserve) fulfilling COCOM
    tasks. This includes approximately 127,000 airmen conducting activities
    such as operating and controlling satellites, standing alert in our
    Intercontinental Ballistic Missile facilities, operating unmanned
    aerial vehicles, launching airlift and tanker sorties, providing
    intelligence assessments, and many other functions critical to each of
    the COCOMs. There are a further 57,000 airmen stationed outside the
    continental United States in direct support of the Pacific Command and
    European Command missions. Finally, a portion of the above forces plus
    an additional 22,000 airman from the current AEF rotation are made
    available for deployments in support of other COCOM requirements. At
    any given time, 34,000 of these airmen are deployed with 25,000 of them
    deployed to the CENTCOM AOR including approximately 6,600 fulfilling
    in-lieu-of (ILO) taskings. Since 2004, we have deployed approximately
    30,000 airmen to perform ILO taskings.
    Impacts on Readiness
        While our airmen engaged in the Long War are trained, equipped, and
    ready to perform their mission, Air Force readiness for full spectrum
    operations has diminished. This is due to a high operations tempo
    (OPTEMPO) that compounds the effects of aging on our inventory.
    Additionally, the demands of winning Today's Fight erode skills
    necessary for success against Tomorrow's Challenges.
        The persistent nature of the Long War demands an increasing
    percentage of our training resources. Aircraft are deployed in greater
    numbers and when they are stateside, they are subject to extensive
    upgrades and maintenance. This impacts our ability to train and upgrade
    our aviators. Home station flying hours are under pressure and more of
    those hours are dedicated to deployment preparation training. However,
    Long War missions represent a subset of the mission requirements our
    personnel must be prepared for.
        Since 1996, readiness among the Air Force's major operational units
    declined nearly 39 percent. Additionally, the readiness of some
    Expeditionary Combat Support units (Civil Engineer, Communications,
    Intelligence, Logistics Readiness, Medical, Security Forces and
    Services) and Limited Supply/High Demand units (Command and Control,
    Rescue, ISR, and Special Operations) units has declined notably.
        The high OPTEMPO combined with an aging fleet of aircraft and
    spacecraft continues to impact your Air Force. We fly and maintain the
    oldest aircraft inventory in Air Force history. Since Operation Desert
    Storm, the Air Force has flown 2.2 million hours per year on average
    with an inventory that numbers 31 percent fewer aircraft that are 42
    percent older. The November 2007 in-flight break up of an F-15C and the
    subsequent grounding of our F-15 inventory is merely a symptom of the
    many challenges and dangers we face. Aircraft restrictions are one of
    the most visible results of aging, with nearly 14 percent of the Air
    Force aircraft inventory operating under some level of flight
    restrictions.
        Our aircraft require more maintenance as they age. The number of
    maintenance man-hours required for each hour of flight has increased 74
    percent over the last 17 years (fiscal year 1991 to fiscal year 2007)
    for our fighter fleet. Our legacy fighters (A-10s, F-15s, F-16s) have
    already flown on average 21 percent more hours than their original
    design life, with the majority of these aircraft projected to remain in
    service for at least 15 more years. As a result, each of our legacy
    fighter platforms has undergone costly repairs and structural upgrades
    to safely extend its service life, and still more will be required in
    the future. Despite these efforts, fighter aircraft availability
    decreased 15 percent over the last 17 years (fiscal year 1991 to fiscal
    year 2007).
        As an example, our average F-15C/D aircraft has been in service for
    25 years and has flown 66 percent more than its original service life
    of 4,000 hours. Our dedicated F-15 maintainers have fought to keep
    aircraft availability rates high, but at a cost. F-15s now require over
    28 maintenance man-hours for each flight hour compared to only 13 man-
    hours 17 years ago. That's a 115 percent increase, paid in sweat
    equity, additional time away from home and family, and weekend duty by
    a greatly reduced labor force. This level of effort will likely
    increase as we continue to fly legacy fighters.
        Our older fleet is also more expensive to operate and maintain.
    Ballooning sustainment requirements were clearly evidenced by a 24
    percent increase in annual operational cost per flying hour over the
    last decade and a 40 percent increase in maintenance man-hours per
    flying hour from fiscal year 1991 to fiscal year 2007. Mean-time-
    between-maintenance-actions (a measure of aircraft reliability) also
    decreased, reducing the percentage of the inventory available for
    operations at any given time. Using a constant total active inventory
    formula that allows for comparative analysis, there were on average 346
    less mission capable aircraft per day in fiscal year 2007 as compared
    to fiscal year 1991. Despite this decline, the equipment dimension of
    readiness appears to have stabilized due to increased spares funding
    and outstanding improvement in efficiency gained by our depots and
    field units. However, an OPTEMPO increase or a funding decrease could
    drive readiness lower.
        The Air Force has addressed aging aircraft issues by developing an
    overarching vision for the future state of proactive fleet management.
    We have chartered the Air Force Fleet Viability Board to assess the
    viability of our inventories so that we posture ourselves to make more
    informed modification, sustainment, and retirement decisions.
        Despite these efforts, many of our aging platforms remain in the
    inventory, are past their useful life, with many unable to fly.
    Legislative restrictions on aircraft retirements remain an obstacle to
    efficient divestiture of our oldest, least capable, and most costly to
    maintain aircraft. Lifting these restrictions will alleviate
    considerable pressure on our already constrained resources that
    continue to erode our overall capabilities. We appreciate the great
    support from the Senate Armed Services Committee in granting the Air
    Force more authority in its fleet management allowing the retirement of
    more KC-135Es and C-130s.
        Operations over the past 17 years have also impacted personnel
    readiness due to the increased rate of deployments since the attacks on
    September 11. However, our force is battle-tested and duty in the
    combat environment, alongside our joint and coalition partners, has led
    to the employment of our force in previously unimagined ways. Whether
    integrating our ISR with ground operations to find the enemy, precisely
    delivering critical supplies or personnel to our Joint partners, or
    increasing the number of air strikes against enemy positions, our
    airmen have continued to find ways to improve the effectiveness of the
    joint team.
        Nevertheless, our success has created some trade-offs, especially
    in terms of stressed career fields impacted by a continuing high
    OPTEMPO. We actively track our stressed career fields and use this data
    to focus on the specialties that require the most management
    intervention. To help mitigate stress, the Air Force is looking at
    skills retention bonuses, promotions, force shaping exemptions, and
    process improvements. We diligently watch for those career fields whose
    dwell ratios worsen and look for avenues to relieve this strain. We
    have identified over 70 career fields that have low dwell times and
    placed them on the ``Career Fields to Watch'' list. For example, our
    Security Forces professionals have a 1:1 dwell and are on the Air
    Force's Top 5 Stressed Career Fields for officers and enlisted.
        ILO taskings also stretch us in ways we could not have foreseen.
    Within the Joint Team, airmen provide the Joint Force Commander
    distinctive skills. While complementary, these skills are not
    interchangeable amongst the team, thus airmen require ground-centric
    combat training to accomplish ILO taskings. This extensive out-of-core-
    competency training also drives down deployment-to-dwell time.
    Additionally, ILO taskings stress an already high personnel tempo
    (PERSTEMPO) for many career fields such as security forces,
    transportation, air traffic control, civil engineering, and explosive
    ordnance disposal. Due to the dwell ratio nearing 1:1 for some stressed
    career fields, we are unable to support additional ILO taskings.
        The more than 2,700 Air Reserve component (ARC) members currently
    mobilized to support the Long War assist in reducing the PERSTEMPO of
    our Regular component. But ARC personnel equipment may be showing signs
    of the increased demands of the Long War. Mirroring the Regular
    component, the accumulated hours on ARC aircraft increased by Long War
    operations are much greater than programmed. Like the regular
    component, Air National Guard (ANG) readiness continues to decline as
    we reset the force. The high OPTEMPO of simultaneously engaging as full
    participants in State and Federal missions drive some of the
    challenges. Current funding is insufficient to sustain--much less
    increase--readiness.
                          iii. take care of our people
        Developing and caring for our airmen and their families is another
    Air Force priority. Airmen are our most precious resource and enable
    the Air Force to be a valuable contributor to the military instrument
    of national power. They must be well-trained and ready for
    expeditionary warfighting responsibilities. Spanning six decades of Air
    Force history, particularly over the past 17 years, our airmen have
    proven themselves as the global first responders in time of crisis--
    taking action anytime, anywhere. The foundations for our well-deserved
    reputation are the quality and frequency of the training and education
    we provide and our commitment to the highest possible safety and
    quality of life standards.
        Yet increased OPTEMPO and deployment demands have taken a toll on
    the way our airmen and their families perceive quality of life. We are
    building strategies to maintain Air Force quality of life standards in
    the face of fiscal challenges. A universal theme Air Force leaders
    understand is ``we recruit the member but we retain the family.'' The
    quality of life we provide our airmen and their families is a distinct
    determining factor in how long many of our warriors will serve. Quality
    of life is not something we fund with dollars that are left over from
    the mission. Rather, we fund quality of life initiatives to accomplish
    the mission.
        We pride ourselves on maintaining high standards across the
    spectrum of critical support for both airmen and their families, at Air
    Force installations today and expanding to Joint Base environments for
    the future. Our programs must continue to meet each airman's
    fundamental needs, enabling them to experience personal growth and
    creativity and to perform at their peak or to their potential. Knowing
    their families are in good hands back home allows airmen to focus more
    on the mission. We continue to emphasize excellence in food service,
    fitness, lodging, recreation, educational opportunities, and training.
    We are dedicated to quality, affordability and availability in our
    child and youth programs and to full-spectrum individual warfighter and
    family readiness. Our dual challenge demands a combination of combat
    support and community service, and we have stepped up to provide both
    to our airmen and their families.
        We are diligently working to put alternative manning support in
    place at home station to reduce stress, and we are pressing ahead to
    maintain and update education and training that targets the skill sets
    our airmen use when deployed. Our military families sacrifice too, and
    we are aware that increased OPTEMPO affects them. We have implemented
    several programs to address the challenges associated with increased
    OPTEMPO.
        Our airman and Family Readiness Centers provide mandatory pre-
    deployment briefings to all airmen on orders to deploy, and follow up
    with reintegration briefings after deployments to both airmen and their
    families to help make the transition back to daily home and work
    situations as smooth as possible. Our Extended Duty Child Care Program
    enables airmen and their families to obtain quality child care when
    parental workloads increase due to longer duty hours and exceed the
    typical 50-hour per week child care arrangements. We've partnered with
    the Air Force Aid Society to fund our Air Force Give Parents a Break
    initiative, which offers eligible parents a few hours break each month
    from the stresses of parenting and is provided at no cost to parents
    experiencing unique stresses due to deployments, remote tours of duty,
    and extended working hours.
        Complementing these Air Force-wide initiatives, the Air Force major
    commands are fielding programs to compensate for deployment challenges
    faced by their military families. For example, Air Mobility Command's
    Phoenix Spouse program provides a supportive network that informally
    links spouses with unit leadership and their supporting airman and
    Family Readiness Center to enhance individual, family and unit
    readiness.
        In fiscal year 2007, we continued to manage and shape the force. We
    met short-term end strength targets while preserving the right airmen
    skills for the future. In a time when fewer people are qualified to
    serve, the Air Force continues to bring in the brightest candidates
    possible. Despite the demands associated with increased OPTEMPO, we
    have not lowered our recruiting standards. In fact, for the eighth
    consecutive year the Air Force has exceeded recruiting goals. Over 99
    percent of our recruits have a high school diploma or better and we are
    extremely proud of the quality of the airmen who join our ranks.
        Despite an increased OPTEMPO and high deployment rate, the Air
    Force continues to achieve acceptable retention rates across both the
    officer and enlisted force. For fiscal year 2007, active duty Air Force
    officer retention finished 11 percent above goal, while enlisted
    retention fell 7 percent below goal. To address this shortfall, we have
    targeted our fiscal year 2008 Selective Reenlistment Bonus program
    towards the mid-career year groups focusing on critical warfighting
    skills. The ANG met its overall officer and enlisted retention goals
    for fiscal year 2007 and the Air Force Reserve fell less than 1 percent
    below its officer and 3 percent below its enlisted retention goal.
        Our most critical warfighting skills require a special retention
    focus to maintain combat capability. Budgetary support for retention
    programs is critical to effectively manage the force and retain needed
    warfighting capability. These programs are judiciously and effectively
    targeted to provide the most return-on-investment in both dollars and
    capability. To that end, I would like to offer our thanks to the Senate
    Armed Services Committee for the broad authorities the committee has
    provided for special incentive pays and bonuses that ensure we can
    continue to recruit and retain those airmen with the skill sets
    necessary for Air Force success now and in the future.
        With fiscal year 2007 Program Budget Decision (PBD) 720, the Air
    Force planned to reduce by 40,000 Regular Air Force, Guard, Reserve,
    and civilian Full-time Equivalents in order to submit a balanced budget
    and self-finance the critical re-capitalization and modernization of
    our aircraft, missile and space inventories. Because our airmen are so
    important, this self-financing decision was difficult, but it was our
    only viable recapitalization option in the tight budgetary climate. But
    we are not just reducing numbers to generate investment money. We are
    moving and retraining airmen to have the proper skill sets to shape the
    Air Force into the proper force structure.
        Our force drawdown efforts will meet our PBD 720 end strength
    targets of 328,600 in fiscal year 2008 and 316,600 in fiscal year 2009.
    But personnel changes of this magnitude come with a degree of
    uncertainty and difficulty for our airmen and their families. We are
    using voluntary measures to shape the force with the right skill sets,
    increase manning in stressed career fields, leverage new technologies,
    and improve our internal processes to reduce workload and reduce or
    eliminate unnecessary work through Air Force Smart Operations 21.
    Ultimately, our goal is to ensure the Air Force maintains the right
    size and mix of forces to meet the global challenges of today and
    tomorrow.
        The Air Force remains committed to the programmed fiscal year 2009
    PB active duty end strength level of 316,600, a figure we reached after
    a careful review of our force structure and continuing requirements. We
    continuously review our requirements and may need to increase end
    strength to fully support the growth of the ground forces and
    programmed force structure increases in CSAR-X, Predator and Global
    Hawk, KC-45A, Distributed Common Ground Systems, and Battlefield
    Airmen.
                     iv. prepare for tomorrow's challenges
        Your Air Force is working to prepare for tomorrow's challenges. We
    are committed to meeting the near-term needs of our Nation, while
    simultaneously ensuring future generations of airmen inherit an Air
    Force that is relevant, capable, and sustainable.
    Strategic Context
        We must not confuse the present lack of large-scale, overt, state-
    on-state violence with an absence of serious conflict in our world.
    Disputed territories and resource competition are very real problems
    around the globe, as is the risk that these stress points could grow in
    the future. Ascendant powers, flush with new wealth and hungry for
    resources and status, are posturing themselves to contest U.S.
    interests, allies, and friends. These countries are translating lessons
    from recent conflicts into new warfighting concepts, capabilities, and
    doctrines specifically designed to counter U.S. strengths and exploit
    vulnerabilities. Taken as a whole, these developments represent a clear
    effort to deny access to U.S. air, space, and cyber power, thereby
    drastically increasing the cost and the risk of a U.S. military
    response. These developments also reduce U.S. credibility and deterrent
    effectiveness. Those who would challenge the U.S. avoid the asymmetric
    advantage the Air Force provides. We neglect that advantage to our
    future peril.
        We owe the Nation the ability to provide a full range of options,
    lethal and nonlethal, kinetic and nonkinetic, at the speed of sound and
    soon at the speed of light, any time, anywhere the Nation needs us to
    deliver effects across the spectrum of conflict. In order to protect
    the interests of the United States, we must continue to modernize our
    legacy systems to maintain their relevance against current and emerging
    threats. In addition, we must replace aging aircraft with more capable
    and cost-efficient platforms to strengthen the Air Force's capabilities
    to detect, deter, and dissuade all potential enemies. The fiscal year
    2009 President's budget continues the Air Force on this flight path.
    Recapitalization and Modernization
        Global Vigilance
        A crucial element of deterrent capability is the demonstrated
    ability to detect an adversary's actions and behaviors. The Air Force
    will continue to provide the entire Joint team with decision-quality
    intelligence, persistent surveillance, and timely reconnaissance in
    air, space, and cyberspace. Our recapitalization and modernization plan
    aims to dramatically increase the quantity and quality of ISR
    capabilities, products, and services available to the Joint Team and
    the Nation. Our recapitalization efforts are focused on extending the
    lifespans and capability sets of our workhorse platforms, such as the
    RC-135 Rivet Joint and several space-based assets. We are also working
    to find and leverage previously untapped ISR capabilities such as those
    on fighters carrying targeting pods. Finally, we have made a concerted
    effort to ensure the viability of Air Force space communications,
    position, navigation and timing, early warning missions, and space
    situational awareness capabilities to provide uninterrupted mission
    continuity for America and our allies.
        We must continue to develop and field systems that are both
    network-centric and knowledge-centric. Emerging military powers will
    increasingly challenge U.S. access to space, so the U.S. needs an
    affordable pathway to increase space situational awareness and secure
    space, striking the right balance among hardening, countermeasures, and
    reconstitution. The U.S. also needs complementary high-altitude, air-
    breathing systems to mitigate risks to space operations. Finally, we
    continue to develop new concepts that merge sensors and shooters into a
    seamless, ubiquitous force that can penetrate any adversary's defenses.
        Global Reach
        Rapid global mobility lies at the heart of U.S. strategy and no
    other nation has our ability to project power strategically. America's
    airmen provide the long legs and lift for Joint warfighters and supply
    the air refueling lifeline that makes possible global strike and high
    endurance for global persistence and presence. The Air Force extends
    airlift, tanker, and aeromedical evacuation bridges that enable the
    deployment and employment of Joint combat power and humanitarian relief
    globally preserving the interests of our Nation and extending a helping
    hand across the globe. Our mobility aircraft average a departure and
    arrival somewhere on the globe every 90 seconds, 24 hours a day, 365
    days a year.
        Yet the increased demand for their capabilities and their decreased
    availability underscore the critical need for tanker and airlift
    recapitalization and investment to ensure the long-term viability of
    this vital national capability. Air refueling allows the United States
    to rapidly deploy combat aircraft around the world within a matter of
    hours to respond to crises worldwide. The acquisition of the KC-45A
    will revolutionize how we conduct mobility operations much like the C-
    17 revolutionized our airlift operations, extending the range,
    payloads, and flexibility of the full range of U.S. and coalition
    aircraft.
        Modernizing and recapitalizing our airlift fleet is equally
    important for the Joint team. This critical capability reduces the need
    for vulnerable ground convoys to travel on dangerous roads by shifting
    demand from a lateral, to a vertical supply chain. By coupling modern
    airlift capabilities with the Joint Precision Airdrop System, we can
    drop supplies from high altitude, day and night, in all weather, with
    pinpoint accuracy to soldiers, marines, and Special Forces so they can
    maintain cover--or continue their advance--while accepting delivery on
    beans, blood, and bullets. This transformational capability not only
    takes convoys off the roads, but allows aircrews to stay above or
    beyond the threat of anti-aircraft weapons. Aided by our global air
    refueling capability, our airlift platforms also bring wounded
    Americans from the Air Force Field Hospital in Balad, Iraq, direct to
    Walter Reed, Bethesda, or Brooke Army Medical Center in less than 18
    hours. That's non-stop, same-day service, from Balad to ``back home,''
    for America's warriors. Doing everything we can to save the lives of
    Americans who have risked their lives in defense of the Nation is a
    promise we make to everyone who serves; it's a promise we intend to
    keep.
        Global Power
        The Air Force's formidable combination of air, space, and cyber
    power is an effective deterrent that enables us to strike quickly and
    decisively throughout the depth and breadth of any enemy's territory.
    Even as our nuclear arsenal continues to serve as the ultimate backstop
    of U.S. national security, we must continuously modernize our
    conventional air, space, and cyber power as essential, complementary
    deterrents.
        Cyberspace in particular is emerging as a warfighting domain
    critical to future operations. Today, state and non-state actors
    exploit cyberspace to gain asymmetric advantage, and attacks through
    cyberspace create tactical, operational, and strategic effects at low
    cost and with relative impunity. In September 2007, the Air Force stood
    up a Cyber Command to provide combat-ready forces, trained and equipped
    to conduct sustained operations in and through cyberspace, that are
    fully integrated with air and space operations. The Air Force will
    continue to develop and implement plans for maturing cyber operations
    as one of its core competencies. Dominance in this area will contribute
    to freedom from attack and freedom to attack on land, and the sea, and
    in the air, space, and cyberspace, and will guarantee the joint team
    the freedom to maneuver.
        The Global Vigilance, Global Reach, and Global Power advantages the
    Air Force provides our Nation ensure freedom of maneuver, freedom from
    attack, and freedom to attack for the Joint team. However, failure to
    invest in sufficient quantities of modern capabilities seriously
    jeopardizes these advantages and risks the lives of our soldiers,
    sailors, airmen, and marines. Our top five acquisition priorities--the
    new tanker (KC-45A), new combat search and rescue helicopter (CSAR-X),
    space systems, F-35A, and next generation bomber--will gain and
    maintain militarily important advantages for our Nation for the coming
    decades and improve our readiness for the challenges that lie ahead.
                                 v. conclusion
        We have learned lessons from history. We cannot repeat the mistakes
    of the past nor can we rest on the laurels of our current dominance.
    The United States of America depends on air, space, and cyberspace
    power to an extent unprecedented in history. We are ready and engaged
    today, and looking toward securing the future. Our Nation must invest
    today to ensure tomorrow's air, space, and cyberspace dominance.
        On behalf of all of our Total Force airmen, I wish to thank
    Congress and the committee for their steadfast support of America's Air
    Force as we seek to defend this Nation and its interests across the
    globe.

        Senator Akaka. Thank you very much, General McNabb.
        I have a question for all of our witnesses. In General
    Petraeus's report to Congress next week, he is expected to make
    a recommendation with regard to the size of the force required
    to continue operations in Iraq. He may say that a force of
    about 140,000 troops is still required, or he may indicate that
    the force may be reduced. But, we expect to hear from him next
    week. Very briefly, what are the nondeployed forces' readiness
    implications, for each of you, if the force stays about the
    same or if the force begins to drawdown? Also, if General
    Petraeus recommends that forces may be reduced, what readiness
    objectives and actions have your Services planned that will
    take immediate advantage of the lower operational tempo?
        General Cody?
        General Cody. Thank you, Senator, for that question.
        I'm not sure what General Petraeus is going to come back
    and say, but I'll try to put it in a strategic context for you,
    in terms of the United States Army, where we are.
        When this surge went--and, by the way, this is about the
    fifth surge we've had during this war; we surged several times
    for elections in both Afghanistan and Iraq--when the five-
    brigade surge went in, last year, that took all the stroke out
    of the shock absorber for the United States Army. That put 23
    brigade combat teams into combat, as well as into Kosovo, and
    we had 17 brigades back that were in reset, that had already
    served 12-month tours. That is why, when we put the five
    brigades in, we had to extend the other brigades to an
    additional 3-months-per to give General Petraeus the amount of
    forces he needed to provide a safe and secure environment for
    the Iraqis and to give time, as he stated, to the Iraqi
    Government and to the Iraqi army.
        So, if he comes back and says a certain number will not
    have to be replaced, it will not be instantaneous, in terms of
    how we will be able to reduce; one, the 15-month boots-on-the-
    ground deployment time, as well as those units that are coming
    back that have already served 15 months; we have to give them
    at least 12 months reset time. At the same time, it--I say it
    took all the stroke out of the shock absorbers, in terms of our
    brigade combat teams--it also forced us to issue the last of
    our prepositioned stocks in that area, so that we could get
    those five brigades in there. So, over time, in 2006 and 2007,
    we rebuilt two brigade-combat-teams worth of equipment. We had
    to use that equipment to provide for the surge. So, on the back
    side of how many brigades come out and don't have to be
    replaced, we also have to turn around and reset quite a bit of
    equipment.
        The brigades that we have today, that are getting ready to
    deploy, are all going back to either Afghanistan or Iraq. They
    will all have 12 months dwell time. Many of them are at a
    readiness rate, in terms of equipment, in an unclassified
    setting, of not what they need to be.
        In the training area, as Senator Thune had mentioned, they
    are training solely for counterinsurgency operations and
    focusing on the mission of the brigade they're replacing in
    either Iraq or Afghanistan, and they're not training to full
    spectrum for other operations. In terms of their equipment, in
    many cases we will not be able to get them fully up for
    equipment just prior to their major training exercise before
    they deploy.
        That is the status, at this time. When these five brigades
    come out, we'll have to provide all those 15-month-deployed
    units 12 months dwell time, minimum, which means it would still
    be short, as we continue to rotate, and it may take us 15
    months to get ourselves to a 12 month boots-on-the-ground and
    an 18 month dwell time. Quite frankly, where we need to be with
    this force at this time is no more than 12 months boots-on-the-
    ground and 24 months back at home.
        Senator Akaka. General Magnus?
        General Magnus. Mr. Chairman, thank you for the question.
        Again, I agree with General Cody. While I cannot foresee
    what is in General Petraeus's report, your questions regarding;
    what would be the effect on us, if, in fact, there were
    reductions in the forces assigned to Operation Iraqi Freedom
    (OIF)? In fact, as we come out of the increased support that
    took place over the past year, we have reduced by two infantry
    battalions and a Marine Expeditionary Unit (MEU) out of Iraq,
    and, at the same time, today, we are currently deploying 2nd
    Battalion, 7th Marines to Afghanistan and the 24th MEU is fully
    on deck in Afghanistan. We have also added the equivalent of
    another infantry battalion in Iraq to provide security forces.
    Effectively, there has been little, if any, change in the
    stress or the tempo on our forces, so I see that the stress
    right now over the balance of this summer, pending what the
    President decides after he receives General Petraeus's report,
    remains the same as it was over the past year.
        What would we do if there was a reduction in force from
    OIF? Sir, marines move to the sound of guns. As we achieve
    stability in the successful transition to the Iraqi security
    forces, the marines, as they are today, will move to the sound
    of the guns in Afghanistan to achieve the same thing under our
    Joint Force Commander. Currently, as with the Army, our Active
    component forces are operating at a 1-to-1 dwell. For that
    battalions and squadrons, that means 7 months in combat, 7
    months home, most of which is getting ready to go back, and
    then 7 months back again. We also have Reserve battalions that
    are, again, in combat in Iraq. The units, I can guarantee you,
    the ones that are forward and the ones that are preparing to go
    forward, are at their highest readiness levels, both personnel,
    equipment on hand, and materiel readiness of that equipment.
    The ones that are in the deployment cycle, either forward or
    preparing to go forward, they have given up personnel in order
    to be able to flesh out the battalions--and, in particular, the
    transition teams and other augment personnel that are required
    in both Iraq and Afghanistan--and we have cross-leveled
    equipment. So, the readiness of the nondeploying units has been
    at a significantly lower level than the forward-deployed
    forces. We can provide the details, of course, in a classified
    hearing. But, it's clear that we are supporting the units and
    the troops forward in the fight.
        Likewise, the readiness of our three Maritime Prepositioned
    Squadrons and of the equipment stored in the caves in Norway
    have been degraded even more than of the units that remain
    behind. So, for the units that remain behind that are not in
    the predeployment training cycle, their ability to conduct
    necessary training, particularly in the event that other
    contingencies arise, is significantly degraded.
        Senator Akaka. Admiral Walsh?
        Admiral Walsh. We would anticipate continued requirements
    for combat support and combat service support. We would expect
    similar sorts of manning levels as we have today. That has a
    direct impact on very specific ratings for us, sir--SEABEES,
    the Special Warfare Supply, information professionals and
    medical communities, as well as the chaplain corps, as we
    mentioned. We would anticipate greater requirements for
    intelligence, surveillance, and reconnaissance as we reduce the
    footprint in theater to provide the timely information
    necessary for those who remain. We would also anticipate that,
    as the footprint reduces over land, that there would be a
    greater requirement for presence at sea. So we're prepared to
    redeploy with marines when they're ready to come back aboard
    ship and support operations in Afghanistan, if that's where the
    focus of effort turns to.
        Senator Akaka. General McNabb?
        General McNabb. Sir, very much like Admiral Walsh, as we
    don't know exactly what General Petraeus will recommend. I will
    say that there's no question that we are getting increasing
    demands on what air can provide, and we don't see that
    changing. That is, strike. We tripled the amount of ordnance
    that we deliver, between 2005 and 2006, and we've done that
    again between 2006 and 2007, as we figure out ways to support
    the ground forces even better than we do today. Your
    committee's help on that has been superb.
        I would say the same thing on mobility, they are looking
    for ways that we can resupply them in different ways than we've
    done before. We don't think that will change. The surveillance
    and reconnaissance, that we provide so that nobody's surprised,
    becomes even more important, and those demands continue.
        What that means for us is that if we look at the number of
    flying hours that we do, it has stayed about the same since
    1992. However, we are 31 percent smaller in the number of
    aircraft that we have, and we're 41 percent older. So, what
    does this demand mean? It means that we are going to age out
    our equipment even more rapidly, so recapitalization of our
    assets becomes even more important to us.
        We know, and we continue to do everything that we can to
    make sure that we fully support this global war on terrorism,
    but it is at the expense of tomorrow if we don't recapitalize,
    and that is probably our biggest concern.
        Senator Akaka. Thank you very much for your responses.
        This question is for General Cody, General Magnus, and
    General McNabb. The Services have requested, and Congress has
    provided, billions of dollars to reset the equipment that has
    been lost or worn out in operations. Our briefers last month
    told us that we cannot expect to see real readiness improvement
    until demand for forces goes down or the size of the forces
    goes up. This question is, as I said, to the three of you on
    the panel. How do you plan to manage the eventual reduction of
    demand for forces in support of Iraq and Afghanistan, and
    rebuild basic readiness? What major changes in funding
    requirements do you anticipate will be necessary? How long will
    it take to rebuild basic readiness?
        General Cody. Thank you, Mr. Chairman. I'll take the first
    swing at it.
        We have five depots in the Army that are doing what I would
    consider unbelievable work. All five of them are national
    treasures. They have been the reasons why we've been able to
    sustain the equipment as we start buying new equipment, but
    also to reset that equipment we have. Today, we have about five
    brigades worth of equipment across those five depots. We've
    increased the manpower direct-labor hours--that's how they
    measure, in the depots. When we started the war, it was about 7
    million direct-labor hours in those five depots. They're now
    operating at 25 million direct-labor hours. With the funding
    from Congress in 2007 that gave us the $17.1 billion to start
    resetting our equipment, we were able to use all that money in
    2007, and that's what gave us the ability to reset those two
    Army prepositioned brigades I talked about, as well as start
    flowing critical items to the National Guard and Reserves.
        This year, we have almost $18 billion in the fiscal year
    2008 global war on terror supplemental. We've received over $10
    billion of that. We have another $7.6 billion that is in
    procurement dollars to buy the long-lead items as these five
    brigades come out, get that equipment retrograded to those
    depots so that we can start building back the readiness. The
    readiness I'm talking about is in things that shoot, move, and
    communicate--hundreds of thousands of rifles, machine guns that
    we do at Anniston, the reset of thousands of our up-armored
    Humvees, our medium tactical vehicles, our radios, our Blue
    Force tracking, the devices that you've seen when you've
    traveled over there that give the situational awareness. All of
    those are being done at our depots. I anticipate, because of
    the surge, it'll probably take 3 years, and maybe 4, to be able
    to reset that equipment, as well as the new procurement, to
    continue to fill the holes of the Army, that we testified to in
    2006.
        Senator Akaka. General Magnus?
        General Magnus. Mr. Chairman, Senator Thune, we are doing
    several things, which makes this a more challenging problem--
    not only the level of current combat operations, but the fact
    that we are growing the force. We're increasing the force to
    202,000. That's a net increase of about 27,000 marines, the
    majority of which is going into operational forces. Because of
    that, we have to field equipment back to the units that were
    either short of equipment or who have had equipment attrited or
    equipment that is in the depots, as well as provide new
    equipment to the new battalions and squadrons that we're
    standing up.
        Congress has funded approximately two-thirds of our
    requests for reset, and we look forward to receiving the
    remainder that is in the fiscal year 2008 global war on terror
    request.
        You asked the question, how long would it take to reset the
    force? Of course, due to the often long lead times for
    industrial production and the fielding of equipment, we are
    just now, within the last several months, seeing an uptick, an
    increase, in the on-hand equipment readiness to reset the
    force. Now, that's essentially an uptick that you're seeing in
    the forces that are not deployed forward, because I indicated
    earlier that the forces that are forward are at their highest
    level of readiness reporting.
        Depot maintenance, particularly of equipment in the
    Maritime Prepositioned Squadrons and our aircraft, which are
    maintained in Navy depots, will take up to 4 to 6 years,
    depending upon the cycles of the ships going through Blount
    Island and the massive flows of equipment that will go through
    not only our depots, but the Army depots and the Navy depots.
    For our prepositioned stocks, Maritime Prepositioned Squadron 1
    is at 80 percent of its on-hand equipment. We believe that
    those ships will go through their normal maintenance cycle at
    Blount Island for the ships, and, at that time, will be
    restocked and will be at 100 percent in 2011. Maritime
    Prepositions 2, which was the main source of equipment for the
    CENTCOM operational area, is down to 54 percent of its on-hand
    equipment. Those ships will go through their cycle, and we will
    be back up to 100 percent in 2012. Maritime Prepositioned
    Squadron 3, which is in the Pacific, is at 100 percent of its
    on-hand equipment and ready for other contingency operations.
    We will restock the equipment in the Norwegian caves with
    security cooperation equipment as we follow the restocking of
    the equipment that are in the ships.
        We will grow the force by 2011. That is, the marines and
    the battalions and squadrons will be grown by 2011. The trail
    will not only be depot maintenance, but it'll be the necessary
    military construction to provide the troops bachelor enlisted
    quarters and the working spaces for the new units.
        Thank you, sir.
        Senator Akaka. Thank you.
        General McNabb?
        General McNabb. Yes, sir, like General Cody, the first
    thing that jumps to my mind is, I'd like to talk a little bit
    about our depots. When you think about the investment that this
    committee helped us make in our depots, we end up having depots
    that are world-class.
        In 2001, when you looked at a depot, we had about 64
    percent on-time deliveries, meaning that 36 percent were not on
    time. We had almost 290 airplanes that were delivered late;
    they were actually sitting in depots as we went through and had
    additional work done on them. In 2007, that number was 17. So,
    we had a 98 percent--98 percent on time, and I would say that
    was because of investment in depots. So that 9 percent decline
    that I was mentioning, when I said that the depots have
    completely changed that, in a couple of the weapons systems,
    the difference is 10 percent; they've increased the
    availability of our airplanes by 10 percent. So, instead of 9
    percent, it would be 19 percent if they had not done that.
        The other portion this committee really helped us on was
    spare funding, and continuing that with reimbursing us in the
    supplemental to make sure that our spares accounts are up. We
    put almost a billion dollars in the 2000, 2001, 2002 timeframe,
    and have sustained that to make sure that we kept the supplies
    up. Again, those are things that created serious decline in the
    1990s, that this committee has helped us. Again, the 9 percent
    masks that we've had that kind of a decline, but it would be so
    much worse if we had not jumped in there.
        What I worry about is, when you take an airplane like a C-
    17 or a C-130 or a fighter, it is the cycles--it's not
    necessarily the flying hours, it's the cycles. The C-17 that is
    deployed into Al Udeid, Incirlik, or Manas, and is flying what
    would have typically gone by ground, because we're using C-17s
    to do that, the wear and tear is three times the amount that
    you would have on a typical airplane that's coming from the
    States, going across to Ramstein, going into theater, and
    coming back out. It doesn't mean that you have to replace the
    airplane this year, but your fleet just aged by 3 or 4 years
    because of the way you've used it.
        We have taken risks in recapitalization over the years,
    because we had to make sure the near-term readiness was done.
    We now are at that point where, if you look at our aging fleet,
    we have almost 688 airplanes that are restricted from our
    ability to use them. We have about 95 airplanes that we've had
    to take off the flying schedule because they're broken. Those
    are the things that absolutely concern us, so that when you
    talk about, ``What is our overall readiness of our overall
    fleet?'' when we talk about C-1 and C-2 from 2000, 2001, down
    to today, it is a decrease of about 19 percent, from 70 percent
    to 51 percent. That is the part that really concerns me. When
    you talk about what it will take, I would say it's a sustained
    investment. You asked us for, and we've provided, our unfunded
    requirements list. It is consistent, what we say, within the
    required force. This is the kind of sustained amount of
    investment that we need.
        We know that this is all based on risk. We don't know where
    the next dollar should be spent. There are needs across all the
    forces; there is no question about that. We don't know where
    that will be. Given the money that we have, we are investing it
    the very best way that we can.
        Senator Akaka. Thank you very much, General.
        Senator Thune.
        Senator Thune. Thank you, Mr. Chairman.
        General Cody, in your written testimony, you advocate for
    full and timely funding of the Army's budget request for fiscal
    year 2009 and $66.5 billion for the Army continuing the
    remaining fiscal year 2008 emergency supplemental
    appropriations request that's pending before Congress. You also
    list specific impacts to certain programs if the supplemental
    funding is delayed beyond the end of the month. Will these
    impacts affect the readiness of units deploying to Iraq and
    Afghanistan?
        General Cody. If we get the timely funding, Senator, for
    the $66.5 billion, of which--it's broken out--and military pay
    is a large part of it, with the numbers of national guardsmen
    we have, and reservists, on Active Duty, as well as the
    operational dollars, and then, there's about $7.6 billion of it
    for reset--if that money is not on time, we will not put any
    soldier in harm's way without equipment. What we'll have to do
    is fall in on equipment that's there and use it in theater
    longer than we wanted to. But, it would have a cascading impact
    in readiness over time.
        A couple of times during the last 2 or 3 years we have sent
    brigades, and left their equipment back, that they trained on,
    and flown them over, and had them fall in on equipment that was
    there, and left there for 2 years. That's the beauty of the
    Army modular force, because all the brigades look alike now,
    and we were able to send the 1st Cav falling in on 4th Infantry
    Division's equipment, and vice versa, with helicopters and with
    tanks and Bradleys. We don't want to do that too much, because
    when you leave that equipment over there for 2 to 3 or 4 years,
    the recapitalization dollars really creep up on you and you're
    deferring the maintenance.
        But, the short answer is, it will have an impact, but it
    will not impact the equipping of the soldier. We will not let
    that happen.
        Senator Thune. What will be the impact to your current
    readiness C rating if Congress delays the remainder of the
    emergency funds?
        General Cody. The readiness of the next-to-deploy units,
    especially our Stryker brigades--two of our Stryker brigades
    and two of our heavy brigades and our ability to build the next
    infantry brigades--will be degraded in both equipping and then
    the training, because they won't have the equipment to train
    on.
        Senator Thune. How does the delivery of partial
    supplemental appropriations inhibit or affect the Army's plan
    to improve readiness rates by funding reset activities?
        General Cody. The two things that--with the reset piece--in
    2007, Congress was very good about giving us all $17.1 billion
    up front and we committed almost all of those dollars by
    January 2008. That was where we were able to energize our five
    depots and build back the Army prepositioned stocks that
    enabled, quite frankly, the surge. If we do not get these
    dollars on time, the $7.6 billion I talked about--most of that
    is procurement dollars for long-lead items--we will not be able
    to rebuild our heavy brigade combat team and our light brigade
    combat team and our light battalion for Afghanistan on time,
    and then, if something happens and General Petraeus needs more
    forces to roll back in with, we will have to fly equipment over
    from the States and take it away from units training.
        Senator Thune. I want to direct this to the rest of the
    panel, but, what do impact your Service's readiness may occur
    from a delay in the passage of the second part of the fiscal
    year 2008 emergency supplemental appropriation request?
        General Magnus. I agree completely with General Cody, but
    let me put this in three categories:
        The delays in military pay, not only present us with a
    financial problem, depending upon--as we run out of the fiscal
    year appropriations for military pay, but they send a strong,
    unmistakable signal to our seasoned warriors, who have been
    willing, and their families have been willing, to sign them up
    to reenlist. Whenever we see a significant delay in
    deliberations regarding appropriations to support the pay for
    our marines--and I'm sure it's the same for the other
    Services--you have a very intelligent, very professional force,
    and they also pause to be able to see what this means for them
    and their future. So, my concern is the effect that it does
    have, with a significant delay; and, therefore, we strongly
    encourage Congress to appropriate the balance of those global
    war on terror request funds that affect military pays.
        Second, delays in readiness and reset funding that are
    directed--that we need for contracting for warfighting
    equipment and stocks, it simply means that--of course we will
    continue to support the marines and the sailors, soldiers, and
    airmen and the units that are forward, and the ones that are
    preparing to deploy, but those that would be next, those that
    will go late this year and early next year, there will be lead-
    time lags for some of the equipment that would be under
    contract this spring and this summer.
        Lastly, perhaps, it's a longer-term effect; delays in the
    operation maintenance fund and the procurements necessary to
    effect depot maintenance will affect us in future years.
        Thank you, sir.
        Admiral Walsh. Sir, if I could add to the previous
    comments.
        We shouldn't presume that just because the Services are on
    spending plans that will run out of money at different times
    during the year, that we're not all affected by this. So for
    example, the bridge in January got us through August of this
    year, as far as Navy funding is concerned. But, if the Army
    runs out of money first, the Pentagon looks at this as a
    national effort, which requires everybody helping out. So, what
    we would anticipate now is a reprogramming effort inside the
    Pentagon that would then shift resources from various Services,
    and now we have a different set of issues than I could describe
    to you in my earlier remarks. We would have significant issues
    with regard to depot-level maintenance, which right now, under
    the current funding plan, is at 100 percent in terms of
    programmed overhauls. Aviation maintenance is at 100 percent.
    All of those calculations, now, present themselves in a
    different light.
        One of the reasons why the Navy can come to you today and
    present the picture that we present is a reflection of where we
    were, more so than where we are. If this was in the mid-1990s,
    we would have a much different story to tell, and it had a lot
    to do with the way we prioritize funding for readiness, as well
    as the pricing for people. If we expect those kind of cuts to
    take place during the summer, what that does is, number one,
    introduce uncertainty for people who don't deserve uncertainty
    at this point, in terms of their level of commitment to us,
    because they don't know when the next check is coming, in some
    cases, as far as our civilian workforce is concerned.
        Second, it introduces a new range of variables here, in
    terms of a force that's whole and a force that's serving as a
    Strategic Reserve, a hedge, that's helping out with combat
    support and combat service support. Now we introduce a range of
    problems here that we haven't anticipated.
        So, sir, I would strongly endorse the comments made by my
    peers here.
        Senator Thune. All right.
        General McNabb?
        General McNabb. As I listened to my fellow Vices, I would
    just tell you that I echo what they mentioned. We also see
    that, given the bridge, we're thinking about August as when we
    would end up having to have real problems. Starting in June, we
    start making adjustments. Just as Admiral Walsh mentioned, if
    we needed to move money to help the Army and the Marines,
    obviously that will be worked out in the Department. So, we'd
    anticipate that we'd have to move that up. We would start
    looking at additional training, looking at the full-spectrum
    kinds of work that we have to do, and be ready to do tonight,
    as I was mentioning. Then, the depot and the spares is one of
    those things that--it is this committee and Congress's ability
    to give us those supplementals to make sure that those spares
    and the depot are fully funded, which has allowed us to
    maintain the readiness that we have, especially over in OIF and
    Operation Enduring Freedom.
        When I look at the maintenance man-hours per flying hour
    that is required today, versus where we were, say, back in
    1992, the increase in our fighter forces has gone up 74
    percent. I'll give you an example: the F-15 has gone from 13 to
    28 maintenance man-hours per flying hours. Your spares and the
    depot funding that you've done has allowed us to keep that
    readiness high, even though you've gone up that dramatically.
    Our overall force has gone up 40 percent. Those are the things
    that you're making up for, and we really appreciate that. But,
    that's what starts being at risk if we delay the supplemental.
        Senator Thune. Also an argument for more, newer planes.
        General McNabb. Yes, sir, absolutely.
        Senator Thune. General Magnus, 3,400 marines of the 24th
    MEU, 2nd Battalion, 7th Marines, are currently deploying to
    Afghanistan. This deployment was not anticipated during the
    planning for Grow the Force. What is the impact on the Corps,
    in terms of readiness and deployment-to-dwell measures, of this
    added deployment requirement?
        General Magnus. Thank you, Senator Thune.
        The 3,400 marines that are deploying, which is the 24th MEU
    and its battalion, and, separately, the 2nd Battalion, 7th
    Marines, which is deploying out of Twentynine Palms, CA, adds
    to the approximately 350 marines that are already in
    Afghanistan; therefore, nearly 4,000 marines in Afghanistan.
        Essentially, from last year, when we had added two
    additional battalions, for a total of eight infantry
    battalions, and we had moved a MEU ashore into OIF, totaling
    over 25,000 marines. We reduced the number of infantry
    battalions by two. We reduced the MEU out of OIF. But, as I
    said earlier, we simply extended one MEU that was at sea, we
    accelerated a second MEU that was going to go to sea later, and
    we took one and put a third MEU in Afghanistan, adding to it
    another battalion, 2nd Battalion, 7th Marines, and also adding
    an additional battalion in Iraq, to provide security forces for
    our installations, and a line of communication.
        Effectively, there has not been a diminution of stress and
    tempo on the force. Having said that, we trained these marines
    for the mission. We trained the marines that are going to
    Afghanistan for mountain operations and operations in an Afghan
    cultural and language environment, and they're working
    underneath General Dan McNeill and with our International
    Security Assistance Force partners, and they are ready for
    their mission. But, the effect is to prolong what we believe,
    similar to what our soldiers in the Army believe, is, over the
    long-term, an unsustainable tempo for the force. To mitigate
    that, of course, we're growing the force, but growing the force
    lags the demands of current combat operations. Your marines
    will move to the sound of the guns when the Nation calls.
        Senator Thune. Is this deployment an indicator of long-term
    changes in the Marine's role in Afghanistan? How are you
    postured, in terms of manpower, equipment, and training, to
    support that role?
        General Magnus. The shift of forces from Iraq to
    Afghanistan has us basically having our feet, if you will, in
    two boats at the same time. From a command and control
    perspective and from a logistics support ability perspective,
    this becomes very difficult, over the long-term, to sustain.
    It's not just the number of battalions and squadrons, and the
    number of marines whose boots are on the ground; it's those
    critical enablers, as well as command and control and
    communications assets. So, as the Secretary of Defense and the
    President consider what force levels are necessary in Iraq, on
    receipt of General Petraeus's report, there's consideration
    going on, this week, and discussions over in Europe, about our
    strategy in Afghanistan--we need to consider, not just for the
    Marine Corps, but for the Joint Force, because the Army picks
    up a tremendous load, supporting Marines with logistics in
    theater, the Navy picks up a tremendous burden; there are more
    sailors on the ground in Iraq, Afghanistan, and Kuwait, than
    there are at sea. Of course, our Air Force supports what the
    Marines can't support with our own air, particularly, of
    course, strategic lift. But, over the short-term, we can
    support this, as the Commandant has said. We do this because of
    America's team that we're supporting. Over the long-term, there
    has to be a posture reassessment, not only for the Marine
    forces in Iraq and Afghanistan, but for the overall force
    commitment.
        Senator Thune. Have you begun planning to provide
    replacement force to relieve the marines when their deployment
    completes, later this year?
        General Magnus. Senator, we are always planning for
    contingencies. Our preference is to recover the ability to
    bring down our overall dwell time, to be able to let these
    marines and their families get the rest, get the proper full-
    spectrum training, in case something else unpredicted happens,
    and, of course, to be able to refit them with the new gear.
    But, as I said earlier, we will do what the Nation requires.
    The Nation asked the Marine Corps to be ready, and we will move
    to the sound of the guns, when told.
        Senator Thune. Thank you.
        Thank you, Mr. Chairman.
        Senator Akaka. Thank you, Senator Thune.
        General Cody and General Magnus, this has to do with
    increasing Army and Marine end strength. Readiness improvements
    in nondeployed forces for the Army and Marines depend
    significantly on increases in end strength--74,200 for the Army
    and 27,000 for the Marines.
        General Cody and General Magnus, how and when will you know
    if this level of growth is sufficient to meet demands for
    trained and ready forces available for deployed commitments and
    to restore our ground forces' strategic depth?
        General Cody. Thank you, Chairman, for that question.
        First, I'd like to put this in a strategic context, if I
    could, because it really speaks to what your Army's going
    through right now, which is the largest organizational change
    since World War II as we transform while we're fighting--with
    176,000 soldiers in combat today, we're transforming our units
    to the Army modular force. At the same time, we're
    restationing, as part of the global defense posture, 50,000
    soldiers out of Europe and out of Korea. That impacts about
    380,000 soldiers as we do all these moves. At the same time,
    we're executing the Base Realignment and Closure (BRAC) 2005
    moves, which affect about 304 posts, camps, and stations. We're
    doing all that while we're rotating, in and out of combat every
    year, about 176,000 soldiers. So, growing the Army by 65,000 in
    the Active Force, and the Reserve Force by 9,000, is critical
    if we're going to be at this level of commitment downrange
    while, at the same time, executing BRAC, global defense
    posture, and rebuilding our infrastructure. So, it's a very
    tightly woven plan.
        When we build our six infantry brigade combat teams and our
    eight additional combat support teams as part of the Active
    Force, that'll give us 48 brigade combat teams in the Active,
    and, in the National Guard, 28 brigade combat teams, by fiscal
    year 2011. That means the Army can sustain about 15 to 16
    brigade combat teams deployed on the Active side, and about
    three to four deployed on the National Guard side, with a 1-
    year-in/2-years-out for the Active, a 1-year-in/4-years-out for
    the National Guard. Now, that is not our objective; our
    objective goal would be 1-year-in/3-years-out for the Active;
    1-year-in/5-years-out for the National Guard. But, once we get
    to 76 brigade combat teams, as well as the supporting brigades,
    we can sustain that level.
        Right now, we're at a higher level, and that is why we're
    at a deployment ratio of 1-to-1, and, in many cases, on our
    aviation units, our civil affairs and Single Integrated
    Operational Plan units, our military police (MP) units, it's
    less than 1-to-1. We are fully funded for the equipment, and we
    have a very tightly woven plan to build these brigade combat
    teams. The first one, we built at Fort Hood, TX. That puts a
    strategic context in what I was talking about. We built it at
    Fort Hood, TX, because the units were deployed. We didn't have
    the barracks for them. Their home is at Fort Knox, KY. So, we
    built them at Fort Hood, TX, moved their families there, built
    that unit up. It will deploy in the next 3 months. We
    established it last year. It takes us about 15 months to build
    it. It'll be fully trained, ready to go. My nephew is in that
    unit, by the way. They'll go to Afghanistan to relieve the
    brigade out of Italy. When it redeploys, it'll come back to
    Fort Hood for about 90 days, and then move to Fort Knox, KY,
    because, by that time, the military construction will be
    completed.
        So, as we talk about growing the Army, you have to look at
    it in the complexity of BRAC, global defense posture, the
    resetting of our force, and the in-and-out transition of
    supplying trained and ready forces in Iraq and Afghanistan.
        Senator Akaka. General Magnus?
        General Magnus. Chairman Akaka, thank you very much for the
    question.
        We're building a force that will give the Nation three
    balanced Marine Expeditionary Forces. That force will also have
    the time to be able to do the full-spectrum training that
    allows them to be ready for the unplanned and foreseen
    contingencies. Those forces will be ready, they will be
    equipped. This will allow us to achieve a level of forces that
    future commanders and chiefs will be able to draw on, that will
    assure sustained tempos of operation, and still give us the 1-
    to-2 dwell for our Active component forces, and a 1-to-5 dwell
    for our Reserve Forces. Of course, in crises, the Commander in
    Chief may elect to draw down even further on the tempo, but
    those are looking at spikes. We're looking at a sustained level
    of operations, where we build the force in the Marine Corps,
    just as the Army is building, so that we don't see the
    sustained operations themselves become the crisis, that--which
    is, of course, the problem right now, where the level of
    deployments we have right now, even as we build the force, are
    becoming a tremendous challenge for our troops, as well as for
    the institutions.
        Building this force will give us Marine Air/Ground Task
    Forces of combined arms, not only the 27 infantry battalions
    that we're building--and we've already built 26 of the 27
    battalions; the last battalion is 3rd Battalion, 9th Marines,
    which we built in the next year--but, along with that, our--
    large numbers of marines that wrap around the infantry forces
    that are core of the Marine Corps: artillery forces, tactical
    mobility on the ground, tactical mobility in the air,
    engineers, MP, 1,000 new marines trained in intelligence,
    command and control marines, fires--we have a battalion of High
    Mobility Artillery Rocket System (HIMARS) rockets that's going
    into 14th Marines in the Reserves, and a battalion of HIMARS
    rockets going into our Active component--those new HIMARS are
    already on the ground at Al Taqaddum Air Base in Iraq right
    now, at the battery level--and new aviation squadrons.
        When will we be complete? It's very difficult to predict
    the future, but the plan, right now, which has been well
    resourced by Congress, has us on track to grow the force of
    marines to 202,000 well before 2011. It is the equipment, both
    the new equipment that is being procured as part of reset, as
    well as the depot-level maintenance of the remainder of the
    equipment, and, of course, the military construction, that will
    slightly lag behind the Grow the Force. We're looking for the
    stocks to be reset by around 2012, and the last of the new
    construction will follow shortly thereafter. But, our focus is
    on making sure that the marines are ready to be able to
    continue operations throughout this time, sir.
        Senator Akaka. General Magnus, about the Marine Corps
    nondeployed C ratings, last month's readiness briefing to the
    subcommittee made out the historically low levels of reported
    readiness in our Army and Marine Corps. The percentage of
    nondeployed units in the Marine Corps rated C-1 and C-2, or
    generally ready for full-spectrum, worldwide deployment, was
    significantly higher than in the Army. However, the Marine
    Corps has emphasized that it is not conducting any full-
    spectrum training; focusing, instead, in on counterinsurgency
    for Iraq or Afghanistan. How can such a significantly higher
    share of marine units be rated C-1 or C-2 if full-spectrum
    training is not currently underway?
        General Magnus. Chairman Akaka, thank you for the question.
        Of course, the exact details of that readiness reporting, I
    would be pleased to share with the committee or with any of the
    staff in a closed session. But, let me answer your question
    directly.
        The readiness ratings, the so-called C ratings, of our
    forces--and that's just not the Marine Corps, but our forces
    that are forward in Iraq and Afghanistan and other contingency
    operations--are based upon the mission that they are assigned.
    So, if we take an artillery unit, and make it into a
    provisional MP unit, or we assign it a road security unit,
    which is not in its mission as an artillery unit, then we rate
    it against the mission that is assigned. It's called percent
    effective. So, they may be 100--and they should be 90 to 100
    percent effective, depending upon the grade, the skills of
    their personnel, and the kinds of equipment. They will have the
    highest ratings, as I told you earlier, for their assigned
    missions in Iraq, Afghanistan, and wherever else we have
    contingency operations. So, their ratings go higher because of
    the mission that they are assigned at war today.
        The units that are back home, they are being rated against
    the global mission, the ``what if'' mission if something were
    to break out tomorrow.
        So, as they deploy forward, they get assigned as their
    percent effectiveness against the mission that the combatant
    commander has assigned them; the remainder of the units are
    graded against the mission that they may be assigned, the full-
    spectrum mission, I said before.
        So, our ratings--I can't compare our ratings to the Army--
    and we certainly could discuss this in a closed session--but we
    have increasingly pushed the equipment, as well as the marines,
    to those forward to fight, and our units that are forward, and
    those that are going forward, are at the highest levels of
    readiness. As I said earlier, we are beginning to see the
    uptick in the last couple of months of the equipment readiness,
    the equipment-on-hand ratings for those that are not in the
    deployment cycle, sir.
        Senator Akaka. Thank you, General.
        Senator Thune.
        Senator Thune. Gentlemen, if I could get each of you to
    comment. You've all provided Congress recently with a list of
    unfunded priorities to be considered in review of the
    President's budget request for fiscal year 2009. Could you
    designate, from that list, the items that will affect current
    unit readiness, and a description of how that item will have a
    direct impact on the readiness of your Service, and, in your
    opinion, what items from the unfunded list are most critical to
    unit readiness?
        General Cody. Thank you, Senator, for that question.
        I'd like to circle back to your question you asked me on
    readiness, after I listened to my comrades, here. On the reset,
    if it's late--you asked about readiness and how would it
    affect--what I should have told you, with a follow-on to that,
    was, if we don't get that money, the residual money for fiscal
    year 2008 global war on terror, we run out of military pay in
    June for the Army. That's what the Admiral was talking about,
    in terms of the Department; we'll have to look at how we shift.
    In July, we run out of operational dollars. So I was talking
    directly to the $7.6 billion of reset, but the total $66.5, if
    we go through what we did in July or June 2006, where we had to
    almost shut down all the operations in our Army, it would be a
    devastating blow, as General Magnus said, to the morale of our
    soldiers, that 176,000 of them are serving 15-month tours right
    now--if we don't get that money on time, it affects military
    pay, and then it certainly affects our ability to provide
    operational dollars. So, it has more impact than what I stated.
    I was just dealing with the reset.
        Having to deal with the money that we need, we're short
    light, medium, and heavy tactical vehicles in the Army.
    Congress has been very good about the $56 billion that General
    Schoomaker, our previous Chief, and I briefed to you in 2006.
    We're $17-some-odd-billion short of equipment across the
    Active, Guard, and Reserve, most  of  it  in  the  National
    Guard.  But,  we  do  need  light-,  medium-, and heavy-wheeled
    vehicles, and the money we requested in the supplemental and in
    the fiscal year 2009 base budget, we need. We need the
    trailers, we need the night-vision devices, and the aviation
    support equipment and avionics, our radios. Those are the key
    items that will enable us to reset our force faster and to
    provide the National Guard with the equipment that they need
    for their dual use.
        Senator Thune. General Magnus?
        General Magnus. Senator, thank you, again, for the
    question.
        We submitted an unfunded programs list to Congress, as
    requested, earlier this year. That total request was $3
    billion. We didn't prioritize that request, but let me tell you
    the basis for the request.
        We are already, today, 98 tactical aircraft short in our
    inventory, in the midst of a war. Most of those aircraft lines
    have closed, so the few aircraft lines that are open, both the
    fixed wing and the rotary wing, are the ones for which we
    submit a request where we have inventory shortfalls. As a
    result of that, we requested approximately $600 million for new
    aircraft procurement, both to replace aircraft that were lost
    due to combat action, those that are lost to other attrition,
    and pre-existing inventory shortfalls when we started this war.
    That includes three UH-1 utility helicopters, two Cobra attack
    helicopters. Additionally, we were short on aerial refuelers,
    and we are modernizing a force where the KC-130F and KC-130R
    tankers are two generations old and aging, and their
    reliability and maintenance man-hours per flight hour are
    rising rapidly, in a war where tactical airlift and tactical
    aerial refueling is important to us. So, we have requested, on
    the unfunded program list, an additional two KC-130Js off of
    that Air Force production line.
        Separate from the aircraft, we're concerned about our
    ability to do our core competency missions, which is forward
    presence in peacetime from the sea, as well as amphibious
    forcible entry operations. The Navy is doing yeoman's work in
    increasing the amount of ship construction that it can, to be
    able to provide ships to support marines at sea. We have
    requested, now, for the second year running, the Navy and the
    Marine Corps, support from Congress for a 10th LPD-17. Our
    concern about that is really a near- to long-term problem. The
    Gulf shipyards which are capable of producing these ships are
    about ready to lose 1,000 skilled workers, and the line is
    about ready to close, and the amount of amphibious ships that
    are necessary to carry marines in peacetime, as well as in
    combat operations, is not at the level that the CNO and the
    Commandant want, and, unfortunately, our constrained budgets
    did not allow that to be funded.
        Lastly, perhaps not the same kind of visibility that's
    normally associated, but is our 20 military construction
    projects, for about $300 million. That is probably the longest
    lead time to be able to provide something for our troops and
    for their families, is proper bachelor enlisted quarters,
    proper working spaces. We have requested that because we are
    accelerating the Grow the Force that we have asked for an
    acceleration of these military construction projects.
        Thank you, sir.
        Senator Thune. My time's about out, and there's one other
    question I want to ask you, Admiral and General, if you could
    submit for the record the response to that question, it would
    be very helpful.
        [The information referred to follows:]

        The Army's most critical unfunded requirements (UFRs) for fiscal
    year 2009 focus on Army National Guard (ARNG) equipment shortages for
    dual-use items. This UFR list was approximately $3.94 billion.
        The original ARNG equipment UFR list has been modified by the Army
    to account for substitutions for seven unexecutable lines on the
    original list. The result is a slight decrease in the UFR, which is now
    identified to be $3.93 billion.
        All lines on the current UFR list will have a positive impact on
    ARNG readiness. The acquisition of this equipment will enable the ARNG
    to train to a higher level of proficiency to meet both State and
    Federal missions while simultaneously supporting current overseas
    missions. The most critical of the dual-use items are trucks (HMMWVs
    and HEMTTs). The ARNG's on-hand quantity of trucks is at a critical all
    time low. The receipt of trucks will have an immediate impact on
    readiness and mission effectiveness.

        Senator Thune. General Cody, General Casey's been very
    candid about the impact of the deployments on Army readiness.
    In testimony before this committee in November of last year, he
    said that, ``Our readiness is being consumed as fast as we can
    build it. We will act quickly to restore balance to preserve
    our All-Volunteer Force, restore necessary depth and breadth to
    Army capabilities, and build essential capacity for the
    future.'' In testimony before the House Armed Services
    Committee last September, he said that the Army is--and again
    ``unable to provide ready forces as rapidly as necessary for
    other potential contingencies.'' Which potential contingencies
    do you think are at greatest risk?
        Second followup question would be, where does Congress need
    to focus resources, in the short-term, to mitigate those risks?
        General Cody. I've been doing this for 6 years; I was a G-3
    of the Army, and a Vice Chief now for almost 4 years--and I've
    never seen a lack of strategic depth be at where it is today.
    As I told you and the Chairman, we're rotating these 23 brigade
    combat teams, but that's what you see; you see those flags.
    What you don't see is the 300-plus training teams, the aviation
    brigades, the MP units, the 86 security-force companies that
    are also a part of that 176,000 force that have to be
    retrained, artillerymen doing infantry jobs. So, when we talk
    about restoring strategic depth, it will go quicker with our
    brigade combat teams, because they are doing some of their
    combat work in counterinsurgency force, and they will come back
    up quicker. It is our artillery forces and our other forces
    that are doing nontraditional jobs that we worry about the
    most. Right now, all the units that are back at home station
    are training for--as I said before, to replace the next units
    in Afghanistan and Iraq. If the surge comes down the way we
    predict, and we get so many troops back, and brigade combat
    teams back, and we can get the dwell time right, we will start
    getting those units trained to full-spectrum readiness for
    future contingencies. I don't know where those future
    contingencies are, but I do know that this Nation and this
    Joint Force need to have a division-ready brigade, an airborne
    brigade ready for full-spectrum operations, a heavy brigade
    combat team ready for full-spectrum operations, and a Stryker
    brigade combat team ready for full-spectrum operations. We
    don't have that today.
        [The information referred to follows:]

        Contingencies that require forces to operate over the full range of
    military missions are at the greatest risk. For example, a large
    conventional ground war. The Army is consumed with meeting the demands
    of the current fight and is unable to rapidly provide full-spectrum
    ready forces necessary for other contingencies. Current operational
    requirements for forces and limited periods between deployments
    necessitate a focus on counterinsurgency to the detriment of
    preparedness for the full range of military missions.
        To ensure strategic plans are coordinated and executed accordingly,
    it is imperative that we rebuild readiness, achieve balance, restore
    strategic depth for future challenges, and get continuous and timely
    congressional support.
        Thanks to the support and assistance that Congress has already
    provided to the Army, it has enabled us to address critical resource
    requirements during existing persistent conflict. The support and
    assistance to cover costs of reset, modernize equipment, and maintain
    quality of life for our soldiers are the key to keep our Army running.
    Our operational demand continues and it is not decreasing. We need
    timely resources to continue the training, equipping, and stationing
    for our soldiers to properly conduct operations in time of war and to
    meet current demand.

        Senator Thune. Thank you, General.
        Thank you, Mr. Chairman.
        Senator Akaka. Thank you very much, Senator Thune.
        General Cody, you just stated that the Army is short of
    vehicles--light, heavy, and medium. My question to you is, why
    then has the DOD just reduced your 2008 supplemental request
    for medium tactical vehicles by $2 million, which would mean
    buying only about 12,575 fewer medium-tactical vehicles this
    year?
        General Cody. Yes, sir. That speaks to timely funding. We
    put that money in for the fiscal year 2008 global war on terror
    supplemental. That was for the family of medium tactical
    vehicles. Because we did not get all the money up front, and
    now we're looking into the later fiscal year 2008, we cannot
    execute those dollars. So, when we looked at what was remaining
    of the $66.5 million, if you remember, for a short time, it was
    also a foreign metals problem with parts of the transmission
    and other things that--I'm not as up to speed as I should be--
    we looked at it, and we said, ``We can't execute those
    dollars.'' So we offered that back up to DOD, and said, ``We'd
    like to use those dollars on joint urgent operational need
    statements that have come into the field since we submitted the
    2008 supplemental.'' In January and February, we got some more
    operational need statements that we can execute with that
    money, with the caveat that we need to put that money into the
    2008-2009 supplemental when we can execute it. It was a timing
    issue. Had we had the money in October/November 2007, we would
    have put them on order.
        Senator Akaka. Thank you, General Cody.
        This question is for all the witnesses, having to do with
    depot maintenance baseline and backlogs. Each of the Services'
    base requests underfund their annual depot maintenance
    requirements, and, as they have done so for many years, pushes
    significant parts of it into the war supplemental
    appropriations. I'm very concerned that the Services will
    become trapped in an enduring inaccurate and inadequate depot
    maintenance baseline well beyond the war, and beyond reset. The
    question is, what are your views of the practice of pushing
    large portions of annual maintenance requirements into
    supplemental requests? What are you doing to ensure that your
    Service will know its true maintenance requirements and funding
    baselines after Iraq and reset?
        General Cody?
        General Cody. Mr. Chairman, as I stated, this country is
    blessed that we have these five depots. They truly are a
    national treasure. We need to reevaluate how we sustain their
    funding in the base. Much of the direct labor hours I
    discussed, the increase of almost 18 million direct labor hours
    across those five depots, almost all of that labor is being
    paid for out of supplemental dollars. As we build the 2010-2015
    Program Objective Memorandum, part of getting in balance of our
    Army is not just in balance, in terms of supply and demand for
    brigade combat teams, is getting in balance our depots and
    putting into the base funding the requisite amount of OMA
    dollars and procurement dollars to be able to sustain an Army
    that we believe is going to be in this level of conflict for
    some time.
        So you'll see, as we build our programs, that we've looked
    at the last 5 years, at each one of our depots--and I have my
    charts that I can give to your committee--and you can see the
    steady rise of the direct labor hours and the steady rise of
    procurement dollars that's required for resetting our
    equipment. We're using that data to build the new base for our
    base budget for 2010 to 2015.
        [The information referred to follows:]

        I have enclosed charts on each of the Army's depots.

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Senator Akaka. Thank you.
        General Magnus?
        General Magnus. Yes, sir. Mr. Chairman, thank you for the
    question.
        Quite frankly, sir, the fiscal guidance always defines our
    problem every year. Of course, there's always more needs than
    there are funds for the needs. But, in a time of war, the
    baseline budgets, which I know have grown significantly over
    the past 6 years, are still inadequate to meet not only the
    needs of the incremental costs of war but the effects on the
    baseline planning, which, of course, could not foresee the
    impacts on our equipment and on our installations.
        For the United States Marine Corps, similar to my sister
    Services and my fellow Vices here, about 65 percent of the
    Marine Corps' budget, about 65 cents on the dollar, is the
    military pay that supports the Marines. That includes the
    Defense Health Program, the retirement accruals. But, of course
    that's a must-pay bill. The Marine Corps' premier weapons
    system is the United States marine.
        When I account for the necessary operating and maintenance
    funds to make sure the battalions and squadrons can do what
    they have to do, to make sure that the installations can
    support them, what I'm left with is, how much money does the
    Commandant have left every year to do essential warfighting
    investment, essential infrastructure investments, such as those
    bachelor enlisted quarters--and we have literally doubled, and
    then tripled again, the amount of funds we're putting in
    bachelor enlisted quarters, in the baseline, to make sure that
    we can house the marines that we're growing--and then, what's
    left are the long-term costs about equipment sustainment, and
    that includes depot maintenance, and the long-term costs of
    facilities sustainment. When there aren't enough dollars, we
    end up making some very, very difficult choices about what
    things cannot be funded.
        So, I would simply say that our intent, as General Cody has
    indicated, as we are working through what our fiscal guidance
    will be for what will be the President's budget for fiscal year
    2010, the program objective memorandum 2010 through 2015, the
    Marine Corps wants to fully fund one depot maintenance shift,
    because, if we are working in excess of one shift--and, of
    course, we are, today--that will be a direct result of the
    effects of combat operations.
        Thank you, sir.
        Senator Akaka. Admiral Walsh?
        Admiral Walsh. Mr. Chairman, I'd like to add to the
    comments of my colleagues by just saying that the effort here
    on our part, is number one, to recognize the importance of
    depot-level maintenance, for the points that you raised and
    mentioned earlier. We've gone through this before, where we
    haven't fully funded maintenance. We've lived with the outcome.
    We had poor availability. It resulted in poor morale, poor
    quality of life. So, as I look at our numbers of maintenance
    that's actually done by supplemental, it's relatively small, by
    comparison to the overall aviation and ship maintenance
    accounts, but it is something that we're continuing to try and
    migrate back into the baseline.
        Senator Akaka. Thank you, Admiral.
        General McNabb?
        General McNabb. Yes, sir. Just like everything else, you
    have to deal with risk. Obviously, if we look across our
    accounts, and we look at people, we look at readiness, we look
    at facilities, and we look at modernization and
    recapitalization, that's the part that we have to do the
    balancing, just as General Magnus had mentioned. So, as we look
    across those accounts, and we say--depending on how much money
    we have, we will figure out how we balance that risk across all
    of our accounts. We understand that the Office of the Secretary
    of Defense and then Congress will look across all of this and
    say, ``Okay, you're too risky here,'' and we'll balance that
    across the force to make sure that we have the very best force
    that every dollar can buy, and this is part of that.
        We did take risk in our facilities. We did take risk in our
    people. Our Chief and Secretary testified a couple of weeks ago
    to that effect, and said that we simply cannot take any more
    risk in recapitalization and modernization, nor in the
    readiness of being able to do the kinds of things that this
    committee is so interested in doing.
        So, those are the two places that we went, okay, how much
    can we take, and what could we end up being able to manage in
    execution year? We are not happy--I'm not comfortable, as the
    Vice Chief, that we're about 77 percent funded in our Depot
    Programmed Equipment Maintenance (DPEM) account. You will see
    in our unfunded requirement list that we do have about $600-
    plus million for the DPEM. That is the risk that we're
    assuming, that we know that we'll have to figure out how to
    make up an execution year by figuring out better ways to do
    things.
        That is not a comfortable position. It is exactly where we
    are on--pretty much across--which I know the other Services are
    in exactly the same place, as we try to manage the risk across
    all accounts.
        Senator Akaka. I'd like to ask that question you just
    raised, about the risk. My question would be, what kind of
    risks to your readiness is created by depot maintenance
    backlogs? The question to you, then, to all of you, is, what
    are you doing to control it?
        General Cody?
        General Cody. As we have gone through the last 5 years of
    ramping up our depots--when you talk about backlog, it's a
    function of how quickly you can get the equipment back from the
    combat zone, how quickly you can order the long-lead parts, and
    how quickly can you mobilize more workforce to be able to do
    this type of work? We're doing 12,000 recapitalizations a year,
    just on Humvees. We're recapping all our Heavy Expanded
    Mobility Tactical Trucks (HEMTTs). We're recapitalizing our
    entire tank force of our Abrams tanks, at Anniston. On any
    given day, we will have almost 100,000 radios, between
    Tobyhanna and Letterkenny; over 125,000 machine guns and--50-
    cal machine guns--we'll do at Anniston. That's the level that
    we're talking about.
        So, when you don't have timely funding, you push a bow wave
    of either having to make a choice of having workers--right now,
    we're not doing that, our workers are--at the depots, are
    working every day, and, in some cases, like at Red River,
    they're working 7 days a week on our track pads and our road
    wheels to keep these tanks and Bradleys with their tracks--the
    bow wave is really in the long-lead items--the engines, the
    transmissions, and the long-lead items that we have to go back
    to the vendor to order and that's what creates our backlog.
        I go back to my theme: full and timely funding. We have
    Lean Six Sigma in our depots today. As Admiral Walsh talked
    about how fast the depots are doing things, it used to take us
    120-some-odd days to recap a turbine engine down at Corpus
    Christi; they're doing it in less than 45 days today. We have
    Lean Six Sigma efficiencies, teaming with industry, to take
    care of that backlog. But, what creates the backlog is not
    having timely procurement dollars to buy the repair parts so
    you can keep that workforce going. Then, if you don't have the
    OMA dollars, and you have to start laying them off, or threaten
    to have to lay them off because you don't get the money in
    time, that causes backlogs, as you have to regenerate your
    force.
        Senator Akaka. Thank you.
        General Magnus?
        General Magnus. Mr. Chairman, thank you.
        Currently, in terms of backlogs, our only depot throughput
    problem is the availability of what I'll call ``carcasses,''
    when we have out-of-production major end items of equipment,
    such as our light armored vehicles, we're literally having to
    go, not only to the bone yards, but go up to the Canadians,
    which are making them for foreign military sales, and be able
    to see if we can get carcasses. Because we have plenty of
    capacity. The truth is, of course, as you indicated Mr.
    Chairman, that this is all being funded by a combination of
    baseline and supplemental, but we have no problem with our own
    industrial capacity, and I've read many stories about
    backlogs--we have been working hand-in-glove with the United
    States Army; we have no problem with the prioritization of work
    by the Army's depots, which do a lot of Marine Corps equipment,
    especially our Abrams tanks.
        We have had great success, and are continuing to work to
    increase the efficiency at our Marine Corps Logistics Depot at
    Albany and in Bartow, in California. Again, as General Cody
    said, Congress has continued to provide us the funds that are
    necessary to keep the depot capacity working, and it's working
    well above its peacetime rate. We simply request that Congress
    continue to appropriate the funds that are necessary to keep
    the depots working at a wartime rate.
        Senator Akaka. Thank you, General.
        Admiral Walsh?
        Admiral Walsh. Mr. Chairman, what I would add to what my
    colleagues have already mentioned is that, in the case of Navy,
    when we developed our Fleet Response Plan, we recognized that,
    in order to provide for more availability of our ships, that we
    were going to have to manage very closely the workload inside
    the depot and the shipyard. So, when we looked at this, we
    realized that we were going to need to work very closely with
    the manpower in the depot leadership, as well as the shipyard
    leadership, in order that we could provide an even loading and
    not change requirements on them, so they could anticipate and
    be ready. What we've found in the case over the last four
    carriers that have gone into overhaul or extended periods of
    maintenance in that the four of them have come out on time and
    on budget. In the case of Stennis, she came out a day early and
    underbudget. So, we continue to apply the lessons that we've
    learned here, and we value the funding that goes into this
    account, because it gives us the kind of predictability and
    readiness levels that we need for our forces.
        Senator Akaka. Thank you.
        General McNabb?
        General McNabb. Yes, sir. Primarily, how we deal with this
    is, we prioritize our assets of what's going in. If we don't
    have full funding, if we end up saying that the depots--just
    like the Army, I had already mentioned how much more efficient
    our depots have gotten, and we're seeing that. Again, with the
    great help of the committee and Congress, we've been able to
    continue that kind of funding. But, when we don't have enough
    money is, we prioritize all our assets, and we say, ``Which
    ones are the most important, and which ones have to go first,
    which ones can we take, again, risk on?'' But, we look across
    the fleet and say, ``Which is the least capable of our assets,
    or which ones are not pertinent to the war or our strategic
    deterrence?'' that I mentioned before. So, we will then do
    that.
        Right now, our depots are doing superb, and they're stayed
    up--like I said, 98 percent on time, which is unbelievable, and
    we will continue to push that.
        The other portion that I would like to mention is that
    we're also looking for ways that we can share our best assets,
    our most capable assets, with the total force. We used to have
    16 associate wings in which Active and Reserve or Guard shared
    airplanes. We are now extending that, under total force
    integration, to say, ``If you have a new asset that is really
    capable, if we've invested those kind of dollars, we need to
    make sure that we share those.'' We have sharing relationships
    now, between the Guard, Reserve, and Active Duty, that are
    actually unprecedented, and it is really making a difference,
    to make sure we bring the most capability to bear that we can.
        Senator Akaka. Thank you very much.
        Senator Thune.
        Senator Thune [presiding]. Gentlemen, the Commission on the
    National Guard and Reserves just released a report that drew
    attention to the high operational tempo and deployment schedule
    for our personnel in the Reserve components. The Commission
    went on to question whether a Guard unit, in particular, were
    adequately trained and ready for State and home defense
    missions. In your opinion, does the current readiness reporting
    system accurately assess the readiness of Guard units to
    respond to Homeland defense tasking and emergency requests by
    the Governors?
        General Cody. Senator, I'll take that, because I have most
    of the Reserve components.
        First off, there's no requirement that I know of for
    readiness reporting to the Governor as to what he would use his
    forces under State control. What we do have is Northern
    Command, and the Army's component of Northern Command is Army
    North, where we're establishing the consequence management
    response force of which National Guard units are part of that.
    I believe that we have to go back and take a look at the
    mission sets that we would need for what we call the Chemical,
    Biological, Radiological/Nuclear, and Explosive (CBRNE)
    Consequence Management Response Force, to ensure that we have
    the right mission essential task lists and the right pieces of
    equipment for dual use in response for Homeland security. But,
    the National Guard units and the United States Army Reserve
    units report their C readiness, their combat ratings, for the
    mission that they're designed to do, which is a wartime
    mission.
        Senator Thune. Does anyone want to comment? I know, General
    Magnus, you do have most of the components, as you mentioned,
    under your bailiwick.
        General McNabb. Senator, probably our total force is one of
    the things we're the proudest of, is the way we've done that,
    and how we've integrated the total force across the board. When
    we set up our air expeditionary forces, we took into mind that
    we will not have tiered readiness, and there will be no
    difference between our Guard, Reserve, and Active Duty.
        Fifty-five percent of our Active Duty and 20 percent of our
    Guard and Reserve are on call right now in support of a
    combatant commander. That can very quickly surge to 80 percent,
    if required. If the balloon goes up, we mobilize, and we do the
    whole thing.
        By not having tiered readiness and having the same
    standards across the force, what a difference that makes, so
    that we can very quickly bring that to bear.
        So, that's the part that I think that has really paid some
    dividends for us, and we're trying to take that to the next
    level, again, with these total force initiatives. How could we
    share--how can we even take this to a different level, sharing
    airplanes at Guard and Reserve bases, having Active Duty people
    stationed there, be able to take full advantage of that? We
    think that's really paid some big dividends for the country.
        General Magnus. Senator, for the Marine Corps--clearly, of
    course--and General Cody's right America's Army and America--
    the Army total force bears the balance of the Reserve component
    and its National Guard. The Marine Corps Reserve, of course, is
    not part of America's National Guard, but, as I indicated
    earlier, we're building the 27th of our Active component
    infantry battalions, which is the centerpiece of our combined
    arms force. In addition, there are already existing nine
    Reserve component battalions. Those 9 Reserve component
    infantry battalions are just part of the 36,000 marines that
    are in selected Marine Corps Reserve units.
        All of the selected Marine Corps Reserve units are measured
    against their wartime mission. The Marine Reserve units that
    deploy to operations in Iraq and Afghanistan, and wherever else
    they may be deployed in the global war on terrorism, will be
    measured in their effectiveness of the assigned mission. So, as
    I said before, if we have an artillery unit that becomes a
    provisional infantry unit, they will be measured against their
    infantry mission. We will train them to it. We will equip them
    to it. They will be at the highest levels of readiness before
    they deploy.
        General Cody. Senator, part of the Army's rebalancing--not
    to get in balance by 2011, but the rebalance that we've been
    doing since 2003--was to take a look at the Active component
    and the Reserve component. If you remember, back before the war
    started, there was a lot of combat forces inside the National
    Guard, a lot of heavy brigades. What we did as part of the
    rebalance, we said what we needed to do was take a lot of that
    structure out, because it's not dual-purpose. Quite frankly, it
    was too hard to keep full-spectrum-trained. So part of the
    rebalancing of the force to help the Governors, especially in
    the hurricane States--it doesn't help a Governor down in the
    Gulf to have a heavy brigade combat team in his State. It is
    much better, though, if he had truck companies, engineer
    companies, engineer brigades, medical units. So as we rebalance
    the Army--Active, Guard, and Reserve--we've built 28 brigade
    combat teams to give depth to the total Army for combat. Then,
    the rest of the force, we took, in the National Guard, with the
    help of the Governors--and we had most of the Adjutants
    General, as part of our General Officer Steering Committee, to
    take a look at it--and we balanced out and created what we
    called the engineer brigades, the maneuver enhancement
    brigades. So most of the States will be supported by that and a
    lot of combat service support.
        The real issue for their readiness that the Governors are
    concerned with, as we are, is their equipping. They were short
    equipment when this war started, and what we have done is, we
    monitor their equipment every year before the hurricane
    crisis--or the hurricane season comes in. I review with every
    Adjutant General--the 10 hurricane States--we review their
    equipment. We have programmed, for fiscal year 2008, 1,000
    trucks, 441 trailers, and hundreds of generators. But, in 2006
    and 2007, we were able to procure and push out 3,900 trucks,
    352 different type of engineered brand-new equipment. 2008 to
    2009, the distribution for the National Guard will be about
    400,000 items. Most of it is in the combat support, combat
    service support that is dual-use for some type of natural
    disaster that would help the Governors.
        Senator Thune. You answered my question, but I was going to
    get at that point of when it comes to distribution of
    equipment, do you take into consideration the Guard's State and
    homeland security missions and whatnot?
        General Cody. Yes, we have fenced that money--since I've
    been the G-3 and the Vice Chief, we have fenced all the Guard
    equipping dollars, especially what we call dual-use equipment,
    so that we can build back that for the Governors.
        Senator Thune. Okay.
        I think that's all we have, gentlemen. Thank you, again,
    for your service. Clearly, these are issues which my takeaway
    from all this is, we need timely supplemental funding, for one;
    and, obviously, my view, increase in the top line to deal with
    a lot of the competing demands. You're trying to do more and
    more with less, and robbing from Peter to pay Paul, and I just
    don't think we can continue to run the military that way.
        But, thanks again for your testimony, thanks for your
    service. Make sure that you let those who serve with you and
    under your command--let them know how much we appreciate their
    service.
        Thank you all.
        The hearing is adjourned.
        [Questions for the record with answers supplied follow:]
                 Questions Submitted by Senator Daniel K. Akaka
                                cash management
        1. Senator Akaka. General Cody, General Magnus, Admiral Walsh, and
    General McNabb, the practice of using supplemental appropriations to
    meet annual maintenance and reset requirements disconnects reliable and
    timely resources from the sometimes long lead demands of managing
    industrial operations to satisfy readiness requirements. This also
    compounds each Service's annual cash flow problems. This is most
    apparent in the Army, but also affects the other Services. Would you
    characterize how cash management impacts your nondeployed force
    readiness and what you are doing to deal with that challenge now and
    into the future?
        General Cody. The Army's extensive cash management maneuvering
    caused by delays in receipt of supplemental funding does create some
    risk in readiness for nondeployed forces. As funding priorities force
    the shift of resources from nondeployed forces to theater operational
    needs, the elements of unit readiness begin to degrade. Institutional
    training, collective training, and unit level maintenance could be
    curtailed or halted all together if global war on terror funds are
    delayed. At the depot maintenance level, equipment for nondeployed
    units may not be inducted into the depot system, but could sit idle in
    a storage lot. This predicament can perpetuate long-term affects as
    some depots may fall behind on planned production and may not order
    enough spare parts to catch up after the supplemental is received. The
    nondeployed units incurring resource restrictions on their readiness
    efforts are likely the same units that will be preparing for deployment
    within months. Depot and unit level maintenance delays can challenge a
    unit's ability to train for their directed mission essential tasks
    (METs) within the desired Army Force Generation timeline.
        The Army is currently working with the Office of the Secretary of
    Defense (OSD) to overcome these challenges in fiscal year 2009. For
    example, the Army, through OSD, will request a bridge supplemental
    focused primarily on the military personnel and Operation and
    Maintenance, Army (OMA) appropriations to alleviate these challenges.
    This solution, however, still requires the timely passage of the fiscal
    year 2009 main global war on terror supplemental to ensure continuity
    of operations.
        General Magnus. Readiness remains one of the top priorities for the
    Marine Corps. Our number one priority is ensuring that deployed units
    are properly equipped. As a result, nondeployed units tend to have the
    lowest readiness. The Marine Corps continues to ensure its budget
    requests contain the proper amount and allocation of executable
    resources. Currently the issue is not funding, but industrial capacity
    and asset availability for the depots to restore. We continue to work
    on these problems to maintain optimal readiness given our external
    constraints.
        Admiral Walsh. Bridge funding has been instrumental in cash
    management; avoiding substantial cash flowing of war costs from our
    baseline readiness accounts. However, these bridge funds do not satisfy
    the full-year request. Significant delay in the enactment of either the
    bridge or the full-year supplemental request results in disruption of
    program execution plans and precipitates higher future costs. If
    supplemental funds for bridge (or full year) funding are not received
    in a timely manner, Navy will reduce non-war related flying and
    steaming hours, defer weapons systems and depot maintenance; actions
    which would degrade nondeployed force readiness.
        To lessen this degradation in readiness, Navy will also look at
    eliminating non-global war on terror readiness training and
    infrastructure support. Examples of the latter include scaling back or
    curtailing contracted services for base operations and deferring FSRM
    projects. These delays, deferments, and cancellations will force the
    Department to accept more risk for future deployed forces. In addition,
    to the extent that investment accounts are needed to finance current
    operations, the resulting cancellations will increase costs and delay
    delivery of much needed weapon systems.
        General McNabb. Overall, the Air Force has been successful in
    minimizing the cash-flow impact on our nondeployed forces. We're able
    to work cash-flow issues with the help of the bridge funding Congress
    provides and by shifting funds within Air Force accounts pending
    enactment of supplemental appropriations. However, there is an
    opportunity cost incurred when supplemental funds are delayed too long.
    For example, lost training time cannot be bought back at the end of the
    fiscal year. The Air Force has cash-flowed the global war on terror as
    required and will continue to do so to support our deployed
    warfighters.

                                troop readiness
        2. Senator Akaka. General Cody, General Magnus, Admiral Walsh, and
    General McNabb, there is consensus that the Army is stretched extremely
    thin. Some argue that if we are not careful, the Army is in danger of
    breaking. However, there does not appear to be the same ``broken or
    breaking'' question with regard to the Marine Corps, Navy, or Air
    Force. What readiness monitoring system does your Service rely upon
    most to provide adequate warning before the danger of breaking becomes
    acute?
        General Cody. The stress on the Army, while significant, must be
    taken into consideration when assessing the broader ability of
    Department of Defense (DOD) as a whole to execute the National Military
    Strategy in support of the President's National Security Strategy. The
    Army uses a combination of systems to closely monitor readiness. Since
    the Army is first and foremost a unit-centric service, our primary
    readiness monitoring system is the Defense Readiness Reporting System
    (DRRS)-Army. This system is unit focused and combines the resource
    reporting strategy from the Joint Staff with MET evaluations. All of
    these assessments are provided by the most critical participant in this
    system--the unit commander. Other systems include equipping and manning
    applications that measure serviceability of and availability of items
    in an aggregate. Our personnel systems provide us aggregate manning
    levels, critical skills, and retention rates of our most precious
    resource--soldiers.
        General Magnus. The Global Status of Resources and Training System
    (GSORTS) remains the joint readiness reporting system of record. GSORTS
    is a Joint Staff resource and unit monitoring system that provides
    visibility to determine if units possess the required resources and
    training to perform their designed or assigned missions. GSORTS is also
    designed to support crisis response and contingency planning
    information requirements. The system allows the Marine Corps to assess
    its ability to organize, train, maintain, and equip its operating
    forces for employment by combatant commanders. In addition to analyzing
    and monitoring unit readiness through GSORTS reporting, the Marine
    Corps solicits and collects input from Marine Forces Command (FORSCOM),
    Marine Forces Pacific, Marine Forces Special Operations Command
    (SOCOM), and Marine Forces Reserve, for the Marine Corps quarterly
    Joint Forces Readiness Report (JFRR). Input from the Marine Forces
    includes a subjective assessment of METs, as well as the identification
    of top readiness concerns and deficiencies that impact their ability to
    meet existing and future requirements. GSORTS data helps form the basis
    of the JFRR assessment and the readiness status of deployed and
    nondeployed forces. Finally, the Deputy Commandant for Plans, Policies,
    and Operations sponsors a Quarterly Readiness Board (QRB) process that
    identifies existing and emerging readiness concerns and then develops
    courses of action to address them.
        Admiral Walsh. Navy's current readiness reporting system, the TYCOM
    Readiness Management System (TRMS), is based on DOD's Status of
    Resources and Training System (SORTS) construct. As such, TRMS/SORTS is
    used to monitor the available resources and training conducted by all
    reporting units. The resultant readiness assessment is an element of
    managing the production of ready for tasking units in accordance with
    the Fleet Response Plan (FRP), Navy's force generation model. TRMS/
    SORTS addresses overall, resource area, and aggregate mission area
    readiness, but not specific capabilities inside a mission area. Navy is
    transforming its readiness reporting to a resource-informed,
    capability-based reporting system aligned to the OSD's DRRS.
        General McNabb. The Air Force uses a combination of readiness
    monitoring systems. The GSORTS is the readiness system of record.
    GSORTS provides the Air Force the ability to assess readiness of Title
    10 responsibilities--organize, train, and equip. In addition to GSORTS,
    the Air Force uses a wide range of readiness indicators including
    individual personnel readiness, equipment readiness, deployment
    indicators, and aircraft readiness to watch overall Air Force
    readiness.

        3. Senator Akaka. General Cody, General Magnus, Admiral Walsh, and
    General McNabb, what critical indicators do you watch constantly to
    avoid being surprised by a sudden or difficult to repair loss of
    readiness?
        General Cody. There are several indicators. Since the Army is a
    unit-centric Service with a focus on people, we closely monitor the
    aggregate filling of critical skill sets. Each month, the U.S. Army
    Human Resources Command provides updates to the current and projected
    fill rates for critical enlisted, warrant officer, and commissioned
    officer skills. A sudden drop or a forecasted shortfall in any area
    immediately triggers an action and prompts a review during the Army
    Synchronization Meeting to examine courses of action. Next, we monitor
    very closely the quantities and size of the request for forces (RFF)
    from the combatant commanders. The Army tracks usage of units and
    capabilities to ensure that we are either building new capabilities
    and/or transforming units to meet an asymmetric threat.
        General Magnus. The Marine Corps continuously monitors stress on
    the force indicators for our individual marines and their families to
    include, but not limited to: recruiting/retention rates, suicide and
    divorce rates, unauthorized absence/desertion rates, substance abuse,
    domestic abuse, Post-Traumatic Stress Disorder (PTSD) rates among our
    returning warriors, and unit deployment to dwell ratios. To monitor
    operational unit readiness, we use the GSORTS. GSORTS reports serve as
    the Marine Corps ``alarm system'' for operational readiness shortfalls
    and are reviewed daily. GSORTS data is analyzed for trends, and briefed
    to leadership monthly to highlight emerging readiness concerns.
    Quarterly, the Deputy Commandant for Plans, Policies, and Operations
    convenes a Readiness Board that assembles the Marine Corps readiness
    community of interest (consisting of operational, support, and
    headquarters organizations) that focus on identifying existing and
    emerging readiness concerns, in order to develop solutions and courses
    of action to address them. The Marine Corps also participates in the
    DOD Global Force Management (GFM) process where we assess and
    articulate Service risk and future challenges associated with the
    apportionment, allocation, and assignment of forces available to meet
    Combatant Commander requirements.
        Admiral Walsh. Navy's current readiness reporting system, the TRMS,
    is based on DOD's SORTS construct. This construct includes assessments
    in the resource readiness areas of Personnel, Equipment, Supply,
    Training, and Ordnance are closely monitored for issues or trends.
    Additionally, Navy unit commanders use this system to evaluate the
    resources and training available to conduct their designed primary
    mission areas. Moreover, the Commander, United States Fleet Forces,
    presides over the Fleet Readiness Enterprise Executive Committee (FRE
    EXCOM). This forum, which includes the heads of our Warfighting
    Enterprises, monitors TRMS/SORTS and additional metrics for each
    enterprise.
        General McNabb. The GSORTS is the readiness system of record and is
    used by the Air Force to assess/monitor overall unit readiness based on
    a resource perspective. In addition, the Air Force uses a wide range of
    readiness indicators including personnel, equipment, deployment, and
    aircraft monitoring systems to watch overall Air Force readiness.

                 global status of resources and training system
        4. Senator Akaka. General Cody, General Magnus, Admiral Walsh, and
    General McNabb, the current readiness reporting system--GSORTS--is
    clearly inadequate to managing risk in both the deployment of forces
    for contingencies and our strategic depth. This seems particularly the
    case when the force is largely deployed already. What, in your view,
    are the strengths and weaknesses of this current system and how are you
    adapting to ensure that current unit readiness is clearly measured and
    understood in a timely and reliable way?
        General Cody. The Army complies with the current readiness
    reporting requirements from both the OSD and the Joint Staff.
    Additionally, the Army has developed supporting metrics to support our
    readiness oversight requirements--these metrics include METs, squad
    crew manning, and Army Force Generation data elements.
        The current system does provide insight into the management of risk
    and shows the strain of resourcing our Army in the personnel and
    equipment arenas as well as the risk to execute core functions at the
    tactical and operational levels for our nondeployed forces.
        The Army is working closely with the Joint Staff and OSD to improve
    the readiness reporting system. For instance, the Army was the first
    Service to institute a web-based reporting system utilizing MET
    assessments developed from Army doctrine. Our system also provided real
    time linkages into authoritative data bases for personnel and equipment
    to provide a more accurate resource assessment.
        The Army's readiness policy is a dynamic and changing document--
    since fiscal year 2008, we have updated the regulation 10 times to
    accommodate new and emerging readiness requirements.
        General Magnus. GSORTS remains the readiness reporting system of
    record. GSORTS reports serve as the Marine Corps alarm system for
    operational resource, training, and capability shortfalls. The strength
    of GSORTS is that it allows the Marine Corps to assess its ability to
    organize, train, maintain, and equip its operating force for use by
    combatant commanders. GSORTS data enables an assessment of resource
    (personnel, equipment supply, equipment repair, and training) levels,
    at a selected point in time that can be used to evaluate the unit's
    current capability against its designed mission. GSORTS also includes
    the capability for a commander to assess his/her unit's ability to
    execute its assigned mission through a subjective assessment and
    commanders' comments. The commanders' comments enable the commander to
    articulate anything that he or she feels important relative to unit
    capabilities or shortfalls. Another advantage of GSORTS is that it is
    an established system, with volumes of historical data for trend
    analyses.
        A shortcoming of GSORTS is its inability to assess a unit's ability
    to perform individual METs (although this information can be provided
    through commanders' comments in the training portion of the report).
    Another weakness of GSORTS is the fact that it requires the manual
    input of data from separate personnel, materiel, and maintenance
    systems. Additionally, GSORTS has limitations associated with
    classified network connectivity from some deployed locations and
    somewhat antiquated user interface.
        In addition to analyzing GSORTS reports daily, and briefing trends
    to leadership monthly, the Marine Corps ensures that current unit
    readiness is clearly measured and understood by soliciting and
    collecting inputs from its force providing commands (Marine FORSCOM,
    Marine Forces Pacific, Marine Forces SOCOM, and Marine Forces Reserve).
    This input is included in the Marine Corps quarterly JFRR. Input from
    the Marine Forces includes a subjective assessment of METs, as well as
    the identification of top readiness concerns and deficiencies that
    impact their ability to meet existing and future requirements. GSORTS
    data helps form the basis of the JFRR assessment of Service warfighting
    functions, and the readiness status of deployed and nondeployed forces.
    The Deputy Commandant for Plans, Policies, and Operations also sponsors
    a QRB that includes representation from each of the Marine FORSCOMs and
    Headquarters Marine Corps organizations. The focus of the QRB is to
    identify existing and emerging readiness concerns, and then develop
    appropriate courses of action to address them.
        Admiral Walsh. The GSORTS has been in use for some time. Its
    strengths include the ability to provide a relatively objective
    assessment of resource areas (Personnel, Supply, Repair, and Training),
    which combine for a sufficient examination of a literal interpretation
    of Services' Title X responsibilities to man, train, and equip combat
    forces. Its significant weakness is that it fails to explicitly codify
    what those combat forces can do with the resources and training they
    have been given.
        Navy is transforming its readiness reporting to a resource-
    informed, capability-based reporting system aligned to the OSD's DRRS.
    The DRRS will address these shortfalls.
        General McNabb. The GSORTS is the readiness reporting system of
    record. GSORTS has been a reliable readiness reporting system, and it
    provides a significant amount of historical data for the Air Force to
    analyze readiness trends. The Air Force has tools other than GSORTS
    that we use to manage mission risk for deployment of forces.
    Modifications to the method in which the Air Force presents and
    schedules forces are improving Air Force ability to monitor strategic
    depth, and provide an enterprise view of risk across functional
    capabilities.

                       defense readiness reporting system
        5. Senator Akaka. General Cody, General Magnus, Admiral Walsh, and
    General McNabb, the DOD is developing and plans to deploy a new
    system--DRRS--in the near future. What are your views of this new
    system and how will it solve the problems we have now with GSORTS?
        General Cody. The Army supports the DRRS concept of integrating
    task and mission capability assessments into readiness reporting via a
    web-enabled, net-centric reporting system. However, these capability
    assessments must also include commander-validated resource level
    determinations. The original DRRS construct only linked authoritative
    data bases and provided no rule set governing resource levels for
    units. The Army, upon implementation of our own capability assessments,
    retained the longstanding and well understood resource metrics from
    GSORTS and added capability assessments that are linked to the specific
    resources required to execute the missions and tasks assessed. This is
    accomplished through our system known as DRRS-Army.
        For instance, before a commander can assess a task or overall
    proficiency as a ``yes'' or ``qualified yes,'' he or she must validate
    that the unit has the resources on hand to execute the task immediately
    (i.e. ``fight tonight''). Any capability assessment that does not have
    established rules to link resource availability would be overly
    subjective. The Army does not support replacing a quantitative system
    that informs the Department of resourcing shortfalls with a subjective
    system that excludes resource metrics validated by the unit commander.
    Furthermore, the DRRS Title 10 utility remains unresolved until an
    authoritative policy is developed that is synchronized with the
    existing Chairman's Readiness System and supported by software and
    architecture that has been fully tested, formally approved, and fielded
    DOD-wide.
        General Magnus. The Marine Corps supports the development of DRRS
    and its goal to build upon the current readiness reporting system,
    GSORTS. When fully developed and accepted as the single integrated
    readiness reporting system of record, it will enhance readiness
    reporting through a capabilities-based, adaptive, near real-time
    readiness reporting system that includes the resource reporting we now
    have with GSORTS. One enhancement that DRRS will provide that is not
    resident within GSORTS will be the ability to automatically pull data
    from Service authoritative data sources and make automatic resource
    level calculations. However, this feature is planned to be provided at
    some future date. An additional enhancement of DRRS over GSORTS is that
    it will include installations readiness reporting.
        Admiral Walsh. The capability-based DRRS is a significant
    improvement to the current GSORTS. GSORTS' greatest weakness is that it
    fails to explicitly codify what missions that forces can perform with
    the resources and training they have been given. DRRS allows
    commanders, having been objectively informed of the status of resources
    available to them, to subjectively assess their ability to perform
    tasks under specified conditions to explicit standards. Navy is
    transforming its readiness reporting to a resource-informed,
    capability-based reporting system aligned to the DOD's DRRS.
        General McNabb. The GSORTS is the readiness reporting system of
    record. GSORTS has been a reliable readiness reporting system, and it
    provides a significant amount of historical data for the Air Force to
    analyze readiness trends. The Air Force has tools other than GSORTS
    that we use to manage mission risk for deployment of forces.
    Modifications to the method in which the Air Force presents and
    schedules forces are improving Air Force ability to monitor strategic
    depth, and provide an enterprise view of risk across functional
    capabilities.

                           pre-deployment preparation
        6. Senator Akaka. General Cody and General Magnus, what is your
    system of after-action reports or trend analysis that connects the
    quantity and quality of pre-deployment preparation and the consequences
    of that preparation in combat?
        General Cody. The U.S. Army Training and Doctrine Command (TRADOC)
    validates the relevance and effectiveness of pre-deployment training
    based on operational experiences employed by various organizations
    within TRADOC. These mechanisms are not redundant but address multiple
    levels of soldiers and leaders. The Army Center for Lessons Learned
    (CALL) gathers relevant observations insights, and lessons and tactics,
    techniques, and procedures in order to analyze and disseminate
    information gleaned from both deployed units, and units returning from
    deployment, to provide to units preparing for deployment. CALL collects
    after-action reviews from units returning from deployment, conducts
    post-deployment collections on Army Corps returning from theater, and
    gathers information via the Lessons Learned Integration Analysts
    Network (L2I) which is located throughout the institutional Army,
    operational Army, and forward deployed forces, and the request for
    information system. CALL analyzes and disseminates the resulting
    information rapidly through Army Knowledge Online, Battle Command
    Knowledge System, CALL publications and handbooks, Initial Impressions
    Reports, and L2I to accelerate adaptation, learning, and lessons/
    knowledge sharing from pre-deployment through combat operations and
    reset. The result is a significant increase in the Army's ability to
    adapt faster, improving vertical and horizontal information sharing,
    and increasing real time information sharing that aids unit training,
    institutional training, and doctrinal updates based on current
    operations.
        The Battle Command Training Program remains both effective and
    relevant in pre-deployment training through a variety of means. The
    most effective method of obtaining operational feedback is through
    staff assistance visits composed of observer trainers, senior retired
    officers, and scenario designers. The purpose of these visits is to
    build realistic exercise scenarios that accurately replicate the
    operational environment. Additionally, in-theater subject matter
    experts take part in battle command seminars and mission rehearsal
    exercises. This approach has been especially effective in preparing the
    10th Mountain Division to assume control of 3rd Infantry Division's
    (3ID) operating environment following their transfer of authority with
    3ID.
        General Magnus. The Marine Corps is a learning organization. The
    Marine Corps CLL (MCCLL), as part of their primary mission focus, has
    an ongoing, aggressive information collection program to assist in the
    assessment of unit pre-deployment training effectiveness. MCCLL is a
    part of the Training and Education Command (TECOM) for just this
    purpose. MCCLL conducts surveys and one-on-one interviews with
    operational unit personnel before, during, or after deployment, to get
    first hand feedback on the effectiveness of our training programs and
    ways to make them better. The MCCLL then analyzes trends, produces
    reports and products based on their collection initiatives, and
    forwards identified issues to the appropriate agencies, advocates, and
    proponents throughout the Marine Corps for consideration and action.
        MCCLL has developed a web-based Lessons Management System that
    receives observations, recommendations, and supporting documentation
    from operating forces deployed around the world. Within MCCLL these
    records, in conjunction with in-theater interviews, post deployment
    commanders' conferences and unit After Action Reports, are reviewed by
    senior analysts to identify both positive and negative trends or
    patterns. MCCLL then forwards identified issues to those Marine Corps
    agencies tasked with improving how we organize, train, and equip
    marines.
        In the current, rapidly changing counterinsurgency fight, our enemy
    has their own relatively effective lessons learned processes, by which
    they continuously try to adapt and overcome our tactics. It is critical
    that hard won lessons and observations gained from ongoing operations
    be analyzed and disseminated rapidly throughout the Marine Corps. To
    assist in the quality and timeliness of the information feedback loop
    from the operational forces back to the training and support
    establishment, MCCLL fielded teams of liaison officers who are embedded
    in each of our three Marine Expeditionary Forces (MEF), to include the
    Iraq-deployed MEF. These liaison officers facilitate the two-way flow
    of lessons learned and observations between the operational forces and
    Training and Education Command's MCCLL. Liasion officers are also
    placed at the Marine Corps' two primary pre-deployment training
    exercise sites at Twentynine Palms, CA, and Yuma, AZ, for dissemination
    of current, relevant information from CENTCOM operations to the
    exercise training staff. This permits rapid update of course content
    relating to friendly and enemy tactics, techniques, and procedures.

                               equipment failures
        7. Senator Akaka. General Cody and General Magnus, what trends have
    emerged with respect to casualty rates or equipment failures that have
    resulted in changes in personnel, equipment, or training policies,
    programs, or timelines?
        General Cody. The Army has consistently incorporated lessons
    learned into its equipping strategy. As the enemy has adapted, so has
    our equipping strategy. Examples of this include the rapid improvements
    in, and fielding of, Uparmored HMMWVs, Interceptor Body Armor,
    Counterimprovised Explosive Device (IED) equipment, and Mine Resistant
    Ambush Protected (MRAP) vehicle. The Rapid Equipping Force has proven
    to be invaluable in providing state-of-the-art equipment to our
    deployed force in record time.

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        General Magnus. The Marine Corps is a learning organization. We
    continue to face an adaptive enemy and evolving threats. As we analyze
    trends, we change our tactics, techniques, and procedures (TTPs) to
    counter the new threats. These TTPs are incorporated into both home
    station and Mojave Viper pre-deployment training and are further
    refined based on the latest information available. Each Marine Corps
    unit completes the required pre-deployment training program before they
    are deployed to Iraq or Afghanistan. Additionally, enhanced training
    and simulation packages are provided to operate and maintain the
    modified and newly procured equipment to increase survivability.
        Force protection measures that reduce casualties are included in
    both training and equipping our marines and sailors. As we identify new
    force protection equipment needs, potential material solutions are
    subjected to rigorous evaluations to ensure they are safe and
    effective. For instance, the Marine Corps has evolved personal
    protective equipment (PPE) items over time. In 2003, marines deployed
    with the Outer Tactical Vest with integrated Small Arms Protective
    Insert (SAPI) plates providing ballistic protection to the front and
    back of the Marines' torso. Later, the SAPI plate coverage was expanded
    to include both sides of the torso. Additional PPE armor was added to
    cover the shoulders and legs. Helmets were lightened, and additional
    padding and an improved chinstrap were added.
        The Marine Corps' IED mitigation efforts have similarly evolved.
    Soon after the initial invasion of Iraq, we recognized the need for
    hardened vehicles. Armoring efforts and strategies evolved from a basic
    Level 1 armor system designed to mitigate side IED blasts, through the
    Marine Armor Kit, to the fully integrated uparmored High Mobility
    Multipurpose Wheeled Vehicles (HMMWV) and the MRAP vehicle that
    provides protection from side and underbelly IED attacks.
        With respect to ground equipment failures, the Marine Corps has not
    noted specific equipment failures in Iraq. We conduct continuous rapid
    modifications, prototyping and proofing of Marine Corps equipment in
    theater, and at home station. Specific examples include follow on
    upgrades to motor transport and engineering equipment, mine roller
    modifications, the Marine Corps transparent armored gun shield, and the
    HMMWV egress assistance trainer.

                        readiness of personnel and units
        8. Senator Akaka. Admiral Walsh and General McNabb, the Navy and
    the Air Force have provided large numbers of personnel to perform
    missions ordinarily assigned to ground forces. These sailors and airmen
    perform tasks in-lieu-of soldiers and marines needed to fill other
    units. What is your system to measure and evaluate the impact of these
    assignments on the readiness of your personnel and units?
        Admiral Walsh. The Navy uses several means to measure the impact of
    non-traditional assignments. The Navy's operational readiness SORTS
    reporting system currently lists all deployable commands at readiness
    C2 or above. Additionally, Navy Personnel Command has undertaken a
    series of regular surveys and assessments to monitor potential
    indications that the increased deployment/workload demands may be
    adversely impacting retention or ``health of the Force''. In order to
    balance the increased joint global war on terror demand signal with
    traditional maritime roles, Navy established manning redlines to
    control and manage Fleet readiness (90 percent manned for sea commands/
    75 percent manned for shore commands). Adhering to these redlines, Navy
    can continue to meet deployment standards as well as all maritime
    commitments and operational requirements. Fleet manning projections and
    continuous monthly analysis show that Navy can sustain adequate manning
    for sea/deployable commands.
        Currently, augmentation numbers represent approximately 3 percent
    of the Total Force and 2 percent of the Active component force.
        General McNabb. In-lieu-of taskings require extensive training and
    drive down deployment-to-dwell time. The training impact measured in
    terms of man-years consumed is significant (7,739 man-years) and
    current data breaks down as follow: validated taskings consume 5,073
    man-years; time in the training pipeline consumes 1,785 man-years;
    travel time (which averages 10 duty days per member) consumes 406 man-
    years; reconstitution consumes 406 man-years; and investment from two
    Air Force consumes 69 man-years.
        In addition, in-lieu-of tasks remove our airmen from their assigned
    AEF rotation cycle, which in effect requires them to exceed the
    rotation policy as defined in OSD Force Deployment Rules for Operation
    Iraqi Freedom (OIF)/Operation Enduring Freedom (OEF) (USD P&R memo
    dated 30 Jul 04 and OSD Memo, ``Utilization of Total Force,'' dated 19
    Jan 07). Ultimately, some Active Duty airmen are exceeding the 1:2
    deployment-to-dwell ratio, while some Reserve component airmen have
    exceeded the 1:5 mobilization-to-dwell ratio.
        In-lieu-of tasks exacerbate an already high personnel tempo for
    many career fields, and are driving down dwell time ratios toward 1:1.
    Career fields primarily impacted by low dwell time ratios are security
    forces, transportation, air traffic controllers, civil engineering, and
    explosive ordinance disposal which comprise the majority of in-lieu-of
    forces.

        9. Senator Akaka. Admiral Walsh and General McNabb, what are the
    observed and predicted impacts of this in-lieu-of requirement on Navy
    and Air Force readiness?
        Admiral Walsh. To date, Navy continues to meet all validated
    missions at sea and ashore and stands ready to respond to security and
    humanitarian contingencies, while continuing its present support to the
    global war on terror. Although the requirements span a broad spectrum
    of capabilities, they largely focus on Low Supply/High Demand (LS/HD)
    skill sets that are mostly expeditionary in nature. Communities that
    possess those LS/HD skill sets include: SEABEEs, Navy Coastal Warfare
    units, Explosive Ordnance Detachments, Intelligence, Maritime Security,
    Cargo Handling, Corpsmen with field qualifications, and Supply Officers
    with contracting expertise. While Navy has been able to meet combatant
    command demand to date, further demand in LS/HD capabilities may
    challenge established readiness and/or personnel tempo redlines.
        General McNabb. The Air Force has been in continuous combat for the
    last 17+ years and it has resulted in a more combat-experienced force
    than ever before. Although more frequent deployments along with
    extensive, combat-focused training has produced more combat-experienced
    airmen, these taskings have impacted our Operations Tempo, Personnel
    Tempo, Training, and Deploy-to-Dwell ratios. The AEF construct was
    designed to sustain a 12-month surge, however, the global war on terror
    has presented a constant surge since late 2001. All of these factors
    have stressed some skills at or near deploy:dwell ratios of 1:1 and
    many others are nearing 1:2. Consequently, the Air Force is unable to
    support additional taskings in some areas (Intel, Security Forces,
    Explosive Ordinance Disposal, Engineering, etc). Currently over 49
    percent of airmen are deployed in excess of the AEF construct of 120
    days every 20 months, and we are implementing a plan to more accurately
    reflect our current surge environment. While anecdotal evidence
    suggests that in-lieu-of, along with other factors (global war on
    terror, Stop Loss, downsizing, emerging missions, etc.), may have had
    an impact on retention, it is very difficult to accurately quantify and
    isolate in-lieu-of mission support's impact given the dynamic
    environment and the lack of exit survey data.

                               aircraft readiness
        10. Senator Akaka. Admiral Walsh, the most recent Quarterly
    Readiness Report to Congress indicates that the Navy's deployed
    aircraft readiness rates have been steadily just below goals for
    several quarters. What is the principal problem for the Navy in meeting
    its deployed aircraft readiness goals and what are you doing to get
    back above goal?
        Admiral Walsh. Several years ago, the Navy changed its metrics for
    tracking aircraft readiness. The previous goals of Full Mission Capable
    (FMC) and Mission Capable (MC) rates, which remain the readiness
    criteria reported to Congress, do not vary over the course of a
    deployment cycle, and might drive a squadron commander to buy material
    readiness that is not needed for that phase of the deployment cycle.
        The Navy's FRP now tracks aircraft readiness by the Ready for
    Tasking (RFT) metric, which has the goal of ``the right readiness at
    the right time at the right cost.'' RFT measures readiness at the
    squadron and system level and enables Navy leadership to manage that
    readiness to achieve the appropriate level of readiness for each given
    phase within the FRP cycle. RFT supports cost-wise readiness and
    incentivizes commanders to achieve the appropriate amount of material
    readiness at each phase of the FRP.
        Managing to this new metric, the Navy has met all of its tasking
    with the appropriate level of readiness.

        11. Senator Akaka. Admiral Walsh, in your prepared statement you
    say that the Navy's fiscal year 2009 request funds 97 percent of your
    ship maintenance needs. However, you also say that the Navy is short an
    additional $10.9 billion to meet its reset requirements, including ship
    and aircraft depot repair. Of the total ship and aviation depot
    maintenance requirement, annual and reset, what percentage is funded by
    the fiscal year 2009 base request and what are the readiness
    consequences of this shortfall?
        Admiral Walsh. The fiscal year 2009 annual baseline Ship and Air
    Depot Maintenance requirement is $5,451 million. The budgeted fiscal
    year 2009 baseline request is $5,268 million, which funds 97 percent of
    the annual baseline requirement.
        Included in the fiscal year 2009 Ship Depot Maintenance baseline
    shortfall is funding for 31 surface ship availabilities and 1 submarine
    availability. Without this funding the surface ships will experience
    degraded material condition, and the submarine will not be able to
    deploy. The fiscal year 2009 baseline request includes the full
    Continuous Maintenance and Emergent Restricted/Technical Availability
    funding the Navy needs to maintain adequate material condition to meet
    Fleet requirements.
        The fiscal year 2009 Aviation Depot Maintenance funding request
    provides deployed squadrons with 100 percent of their primary
    authorized aircraft, while 82 percent of nondeployed squadrons are
    projected to possess the CNO's goal of 90 percent of their primary
    authorized aircraft.
        Of the Navy's $10.9 billion reset requirement, $2.6 billion is for
    Operations and Maintenance, Navy, for ship, air, and other maintenance.
    $0.7 billion of this $2.6 billion is requested in the fiscal year 2008
    supplemental. The $2.6 billion requirement includes funds necessary for
    ongoing global war on terror operations and the funds necessary to
    restore the required level of combat capability to meet the Global
    Naval Force Presence Policy upon the cessation of global war on terror
    operations.

        12. Senator Akaka. Admiral Walsh, does the additional $120 million
    for ship maintenance identified as an unfunded priority by the Chief of
    Naval Operations fully fund the Navy's annual and reset requirements?
        Admiral Walsh. The $120 million for ship maintenance identified as
    an unfunded priority fully funds the Navy's annual baseline fiscal year
    2009 requirement but it does not fund global war on terror related or
    reset requirements.

                              mission requirements
        13. Senator Akaka. General McNabb, this year's budget request
    proposes an Air Force end strength of 316,600 airmen; down more than
    43,000 airmen from fiscal year 2005. A recent Air Force study says that
    86 combat wings require between 330,000 and 335,000 Active airmen, and
    this year's Air Force unfunded priority list includes $385 million
    necessary to add back that drawdown to meet mission requirements. In
    what mission areas are you accepting greater risk with only 316,600
    airmen?
        General McNabb. The Air Force's Required Force--``what's needed per
    the 2006 QDR''--is 86 modern Combat Wings with 330,000 Active Duty
    airmen in fiscal year 2009 growing to 335,000 by fiscal year 2015.
    However, without additional resources, the Air Force has no choice but
    to program a portfolio that increases risk in CSAR-X, Intelligence,
    Surveillance, Reconnaissance (ISR), KC-X, and Battlefield Airmen
    capabilities and missions.
        Risks and thus the requested growth is primarily associated with
    new or emerging missions. Without the growth and associated budget and
    end strength for emerging mission sets, we have little to no capacity
    to internally offset new mission demands with a lean Air Force that has
    already sustained significant reductions, primarily in support and
    logistical functions. Necessary growth is focused on operating,
    maintaining, and supporting an 86 Combat Wing force as envisioned in
    the last QDR and combatant command requirements today and for tomorrow.
    In order to provide Global Vigilance, Global Reach, Global Power,
    Space, Cyber, and Agile Combat Support capabilities that will dominate
    in all spectrums of the battle space, the Air Force seeks manpower for
    an increase in Predator (MQ-1/9) and Global Hawk capability, together
    with the Distributed Common Ground System capability required for full
    intelligence exploitation. The transformation of the Army into brigade
    combat teams and their associated programmed end strength growth of
    65,000 drives a requirement for the Air Force to provide additional
    combat weather and Tactical Air Control Party capability imbedded
    within a Battlefield Airman Wing. Long-overdue purchases of vital
    future systems such as CSAR-X, KC-X Tanker, and latest-generation
    strike aircraft, along with the operations and maintenance capability
    to employ them, demand investment in human capital as well. Total Force
    Initiatives, creating synergies through integrated, collaborative
    relationships established between Regular and Air Reserve component
    forces, require some investment as they transform and prepare our force
    for demanding missions.

        14. Senator Akaka. General McNabb, what is the Air Force doing to
    mitigate this shortfall and reduce the stress and workload on its
    people?
        General McNabb. There are two dynamics involved in the manpower end
    strength shortfalls. One dynamic involves transitioning the force to a
    much leaner and very different Air Force through the targeted
    reductions of the past several years, which significantly impact
    support and logistical manpower line. The second dynamic involves
    properly resourcing an Air Force to meet emerging missions that
    combatant commanders and our Nation require.
        To stay within budget, yet provide vital dollars to recapitalize
    the fleet, we have undertaken an array of transformational approaches
    that help mitigate end strength shortfalls. The Air Force continues to
    implement functional reengineering, reachback, warfighting
    headquarters, and continuous process improvement strategies that
    transform our Service to meet present and future missions. Our
    functional communities and major commands are using a combination of
    these techniques to fundamentally reshape the way in which they perform
    the mission. Simultaneous with recent reductions efforts, Air Force
    senior leaders launched transformational organizational efforts to
    reduce Major Command (MAJCOM) headquarters functional footprints and
    centralize management support for activities previously spread across
    the Service. In addition, future Air Force base operating support
    management in MAJCOMs is increasingly supported by reach back in FOAs;
    MAJCOMs remain responsible for operational readiness of all assigned
    units.
        Air Force Smart Operations 21 activities, being systematically led
    and implemented across the Service, employ continuous process
    improvement techniques and encourages a new way of thinking. This
    strategy is already producing process efficiencies, enhanced
    productivity, and measurably improved support to the warfighter.
        As for the dynamic caused by evolving and emerging missions,
    combatant commands already demand more capability, such as that
    congruent with growing our force to an 86 combat wing strength, than
    our force structure can reasonably sustain without the added resources,
    both ``iron'' and people. Commander demands for more ISR, more cyber,
    more support for Army missions and more irregular warfare compel us to
    stretch existing systems and people to the limits. With the reductions
    already introduced to the force elsewhere, mitigated by deliberate
    actions described earlier, there is no capability to offset without
    incurring serious impacts and risk to other ongoing missions. The only
    way to meet these ever increasing demands and create the force to meet
    an uncertain future is to both recapitalize the fleet and provide the
    human capital to meet the missions. Proper top-line resourcing will
    ensure our Air Force can continue to fly, fight, and win for our Nation
    in the air, space, and cyberspace.

        15. Senator Akaka. General McNabb, in your prepared statement you
    acknowledge that the Air Force fell 7 percent below its enlisted
    retention goal for fiscal year 2007. Does this shortfall have a greater
    impact on particular or critical enlisted skills and what are the
    specific readiness implications?
        General McNabb. Ending fiscal year 2007 at 7 percent below
    retention goal did not present itself as a problem with regards to
    strength because the Air Force is already in a downsizing phase.
    However, the Air Force did lose more enlisted airmen than desired in
    Zones B (6 to 10 years of service) and C (10 to 14 years of service) as
    a byproduct of slightly downward trends in retention. Critical skills
    did not contribute more to this phenomenon than did non-critical
    skills.
        In terms of readiness implications, the Air Force has been in
    continuous combat for the last 17 years and it has resulted in a more
    combat-experienced force than ever before. Although more frequent
    deployments combined with extensive, combat-focused training has
    produced more combat-experienced airmen, these taskings have impacted
    our Operations Tempo, Personnel Tempo, Training, and Deploy to Dwell
    ratios. The AEF construct was designed to sustain a 12-month surge,
    however, the global war on terror has presented a constant surge since
    late 2001. All of these factors have stressed some skills at or near
    deploy to dwell ratios of 1:1 and many others are nearing 1:2.
    Consequently, the Air Force is unable to support additional taskings in
    some areas (Intel, Security Forces, Explosive Ordinance Disposal,
    Engineering, etc.) and currently, over 44 percent of airmen are
    deployed in excess of the AEF construct of 120 days every 20 months.
        In a normal scenario, the retention we experienced in fiscal year
    2007 would create some concern. However, since the Air Force Active
    Duty strength is programmed to drop from 334,200 in fiscal year 2007 to
    328,600 in fiscal year 2008 and 316,600 in fiscal year 2009, the
    retention trend is not as disturbing. Further, our fiscal year 2009
    budget submission includes an increase in the Selective Reenlistment
    Bonus (SRB) of $61.4 million which will allow us to target retention
    incentives where most needed in the enlisted force.

                                   retention
        16. Senator Akaka. General McNabb, how has the Air Force responded
    to this shortfall and what are the projections for enlisted retention
    for fiscal year 2008?
        General McNabb. The Air Force has secured an additional $61.4
    million in SRB initial-pay funding for fiscal year 2009. Retention
    trends by zone and overall have been and are projected to remain level
    in fiscal year 2008. However, since retention trends are short of our
    fiscal year 2008 goal, we're highlighting the need for increased SRB
    funding projections for fiscal year 2009.
                                     ______

                   Questions Submitted by Senator John Thune
                                   body armor
        17. Senator Thune. General Cody, I have a question about the
    purchase of the next generation of body armor for the Army. I have been
    briefed that the Army is in the process of soliciting vendors for the
    next generation of personal armor known as X Small Arms Protective
    Insert (XSAPI) offering better protection than the current Enhanced
    SAPI. The Army has the funds to procure 966,000 sets of the new armor,
    the full requirement, which it plans to do in fiscal year 2008. Please
    provide me the status and timelines for this acquisition.
        General Cody. The Army posted a solicitation for the next
    generation of body armor on May 27, 2007. The original closing date of
    the solicitation was June 25, 2007. However, on June 6, 2007, the Army
    agreed to extend the solicitation to allow flexible body armor systems
    to compete and to conduct testing of Preliminary Design Models (PDMs)
    at the Aberdeen Test Center with Director, Test and Evaluation
    oversight. Multiple vendors requested extensions in order to build the
    required PDMs, without disrupting Enhanced Small Arms Protective Insert
    (ESAPI) deliveries to deploying soldiers.
        The next generation body armor solicitation subsequently closed on
    February 7, 2008, and the source selection process is ongoing. The Army
    expects to award the contract in August 2008. The first deliveries of
    next generation ballistic plates will begin third quarter 2009. The
    Army requested funding in the fiscal year 2008 supplemental for 270,000
    sets of next generation ballistic plates for deployed and deploying
    soldiers. Additionally, the Army submitted a budget request in the
    fiscal year 2009 supplemental to continue the production of next
    generation ballistic plates contingent upon validation of the
    capability requirement.

        18. Senator Thune. General Cody, will the timeline for the Army's
    procurement of XSAPI in any way cause a temporary lapse in the ready
    availability of body armor to soldiers in the field?
        General Cody. The timeline for the Army's procurement of XSAPI will
    have no effect on the availability of body armor to deployed soldiers.
    The ESAPI worn with the Outer Tactical Vest or Improved Outer Tactical
    Vest is in use with deployed soldiers and provides protection against
    the current threat. The Army completed the procurement of the
    acquisition objective of 966,000 sets of ESAPI and the Defense
    Logistics Agency has contracts in place to sustain ESAPI.

        19. Senator Thune. General Magnus, this committee recently received
    testimony from the Commandant of the Marine Corps, General Conway,
    about his decision to halt the procurement of the new generation
    Modular Tactical Vest (MTV), due to complaints from marines about its
    weight and restrictiveness. Will this decision affect the readiness of
    Marine Corps forces or prevent them from having proper body armor?
        General Magnus. The Marine Corps is procuring sufficient quantities
    of MTVs to outfit marines deployed in support of OIF and OEF. The
    Marine Corps will complete the purchase of the last 24,000 vests in
    order to ensure that there are enough vests to rotate through units
    deploying in and out of theater.
        With this initial capability fielded to all deployed forces we are
    now using feedback from our marines and sailors to refine the vest into
    a system that can further enhance the performance and safety of the
    warfighter.

        20. Senator Thune. General Magnus, could you please describe the
    nature of the concerns with the existing design for the MTV, and your
    understanding of whether the Marine Corps intends to redesign the vest,
    proceed with this current design, or revert to a vest design similar to
    the Army's?
        General Magnus. The MTV was developed in response to an urgent need
    in theater for increased coverage based on data derived from wound
    analysis as well as other desired attributes that include an emergency
    quick release, multiple medical access points, and improved weight
    distribution. The MTV was chosen as a result of a deliberate
    procurement process that ensured warfighter participation and ultimate
    acceptance. The MTV was planned to be an interim step toward a longer-
    term ballistic vest solution. During the third quarter fiscal year 2008
    we have scheduled a series of focus groups with our returning units who
    operated in OIF with the MTV. We will collect focus group input in
    order to determine the extent of a redesigned vest. Thus far, the
    majority of feedback we have received relates to the weight of the
    vest. With the current design of the MTV, we are able to mitigate a
    portion of this weight through weight distribution using the
    cummerbund. This takes the weight directly off of the shoulders and
    distributes it throughout the torso. We continue to challenge industry
    to develop a lighter solution for the current level of ballistic
    protection.

        21. Senator Thune. General Magnus, will this pause in procurement
    jeopardize, in any way, your requirement to fully outfit future
    deploying forces with body armor?
        General Magnus. The recent pause in procurement allows the
    collection of data that will aid in determining the extent of redesign
    to the MTV; this will not affect our ability to outfit future
    deployments. The Marine Corps is procuring sufficient quantities of
    MTVs to fully outfit current and planned force requirements in Iraq and
    Afghanistan.

     fiscal year 2009 unfunded requirements list for the military services
        22. Senator Thune. General Cody, General Magnus, Admiral Walsh, and
    General McNabb, each Service Chief recently provided Congress with a
    list of unfunded priorities to be considered in review of the
    President's budget request for fiscal year 2009. Please designate from
    that list the items that will affect current unit readiness and a
    description how that item will have a direct impact on the readiness of
    your Service.
        General Cody. The Army's most critical unfunded requirements (UFRs)
    for fiscal year 2009 focus on Army National Guard (ARNG) equipment
    shortages for dual-use items. This UFR list was approximately $3.94
    billion.
        The original ARNG equipment UFR list has been modified by the Army
    to account for substitutions for seven unexecutable lines on the
    original list. The result is a slight decrease in the UFR, which is now
    identified to be $3.93 billion.
        All lines on the current UFR list will have a positive impact on
    ARNG readiness. The acquisition of this equipment will enable the ARNG
    to train to a higher level of proficiency to meet both State and
    Federal missions while simultaneously supporting current overseas
    missions. The most critical of the dual-use items are trucks (HMMWVs
    and HEMTTs). The receipt of trucks will have an immediate impact on
    readiness and mission effectiveness.
        General Magnus. The attached spreadsheet provides a list of items
    that will impact Marine Corps readiness.

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Admiral Walsh. Items that will impact current unit readiness are:

             Item #1 - Critical Maritime Patrol Improvements $548.3 million
            (recently refined to $585.2 million) - Funds required to
            address critical deficit of P-3C aircraft resulting from recent
            Red Stripe of 39 airframes.
             Item #9 - Ship Maintenance $120 million - Funds required
            maintenance in fiscal year 2009 for 31 surface ship
            availabilities and 1 submarine availability. Without this
            funding the surface ships will have degraded material
            condition, and the submarine will not be able to deploy.
             Item #18 - Weapons Enhancements $181.8 million - Funds
            required for enhancements to include maintenance of in-service
            weapons, and recertification of 105 backlogged surface launched
            missiles to decrease the gap in the current inventory.

        General McNabb. The Air Force provides the following spreadsheet
    with unfunded requirements and their impact on Air Force readiness. The
    spreadsheet is not in priority order.

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        23. Senator Thune. General Cody, General Magnus, Admiral Walsh, and
    General McNabb, in your opinion, what items from that unfunded list are
    most critical to unit readiness?
        General Cody. All lines on the current unfunded requirements list
    will have a positive impact on ARNG readiness. The acquisition of this
    equipment will enable the ARNG to train to a higher level of
    proficiency to meet both State and Federal missions while
    simultaneously supporting current overseas missions. The most critical
    of the dual-use items are trucks (HMMWVs and HEMTTs). The ARNG's on-
    hand quantity of trucks is at a critical all time low. The receipt of
    trucks will have an immediate impact on readiness and mission
    effectiveness.
        General Magnus. The 10 Blount Island construction projects provided
    in question 22 are most critical to Marine Corps readiness. If these
    projects are not authorized, readiness will suffer significantly in the
    near future during the retrograde process.
        Admiral Walsh. Items that are critical to current unit readiness
    are:

             Item #1 - Critical Maritime Patrol Improvements (P-3)
             Item #9 - Ship Maintenance,
             Item #18 - Tomahawk Missiles

        General McNabb. The Air Force provides the following spreadsheets
    with the most critical unfunded requirements, not in priority order, as
    they pertain to unit readiness.

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                       defense readiness reporting system
        24. Senator Thune. General Cody, General Magnus, Admiral Walsh, and
    General McNabb, the current system for reporting unit readiness, known
    as GSORTS, is in the process of being updated to be able to assess with
    a greater degree of efficiency whether military forces are prepared to
    conduct assigned or emergency missions. In June 2002, DOD issued a
    directive establishing a new DRRS. Since then, DOD and the Services
    have struggled to fully implement the system and each Service has a
    different implementation plan. Please provide me a status within your
    Service of the use of DRRS.
        General Cody. The Army supports DRRS, however, rather than
    implement the DRRS software system currently under development by OSD,
    the Army chose to refine and improve its existing reporting system into
    an advanced web-enabled reporting system designed to meet the reporting
    requirements outlined in DOD Directive 7730.65 DRRS. This system is
    called DRRS-Army. The development and implementation of the Army's new
    system was accomplished through internal program management and
    funding. DRRS-Army ensures the Army preserves the capability to
    effectively measure and manage unique Army readiness equities.
        This readiness reporting system is an indispensible tool in the
    Army's command management system and it was considered critically
    important to the complete visibility and management of Army
    organizations and units. This includes all the measured resource areas
    such as: personnel, equipment, maintenance and training as mandated by
    the Joint Staff, as well as many unique Army metrics measured in the
    Army's readiness reporting system. Moreover, the Army has incorporated
    and embraced the concept of reporting METs as outlined in DOD Directive
    7730.65. Army units report their resource metrics based on requirements
    outlined in their MTOE as well as their METs into the Army readiness
    reporting system DRRS-A. That information is shared with DRRS. To
    assist with integration, the Army has established a functional
    management team and a program management office for the express purpose
    of working with the OSD DRRS.
        General Magnus. The Marine Corps supports the development and
    implementation of DRRS, but has not accepted it as the single readiness
    reporting system of record. The GSORTS is still the readiness reporting
    system of record for the Joint Staff and the Services, because of the
    present limitations of DRRS. DRRS has not yet met its requirements to
    provide:

              (1) A functional and tested input tool that allows units to
            input SORTS information directly into DRRS to prevent dual
            reporting in GSORTS and DRRS
              (2) Business tools for DRRS data analysis that integrates
            unit readiness information for both resources and METs
              (3) Aggregated DRRS readiness data and easy access to
            archived readiness information which is retrievable (real-time)
            via the business tools identified above
              (4) Near real-time information data feeds from Service
            authoritative data sources that have been tested and validated

        A Marine Corps Task List and procedures for regular reviews and
    update of this list have been developed. Approved Mission Essential
    Task Lists (METLs) were loaded in DRRS for most Marine Corps units and
    workshops are planned for remaining unit METL development.
        Some Marine units and installations, per their Marine Force
    (MARFOR) Commanders' direction, are assessing their METs in DRRS to
    comply with combatant commanders' requests. These units are serving as
    a useful test bed for DRRS reporting. However, those commanders are
    dual reporting their readiness via GSORTS and DRRS. To help facilitate
    training and education for units that are reporting their METs in DRRS,
    the DRRS Implementation Office has helped the Services fund DRRS
    Specialist personnel located at the Operating Forces headquarters to
    conduct this training and education.
        HQMC (POR) published DRRS implementation responsibility guidance in
    MARADMIN 390/07 to set the conditions for the implementation of DRRS.
    Subsequently, in February 2008, HQMC published amplifying guidance in
    an Interim DRRS Policy & Procedures for Marine Corps Units and
    Installations document which will be the basis for a Marine Corps Order
    on DRRS once it is accepted as the single readiness reporting system of
    record.
        The Marine Corps is in compliance with OSD Implementation Guidance
    for DRRS, with one exception. The USMC has not required units to report
    in DRRS, because it would impose a dual reporting requirement (GSORTS/
    DRRS). The DRRS Implementation Office (DIO) has stated that it is a
    Service decision when the Services will switch readiness reporting to
    DRRS. During the interim, the Marine Corps works closely with the
    Deputy Under Secretary of Defense for Readiness (DUSD(R)) DIO, the
    Joint Staff (J-39), and other Services to develop the remaining
    functionality, tools, and policy to implement DRRS as the single
    readiness reporting system of record.
        Admiral Walsh. Under the direction of United States Fleet Forces,
    Navy intends to formally implement its DRRS-Navy (DRRS-N) this calendar
    year. The to-do list contains two software builds, hardware
    installations that will continue into fiscal year 2009, and policy
    documentation. DRRS-N achieved Initial Operating Capability (IOC) in
    the fall of 2006 and is in operation at more than 65 shore
    installations and onboard more than 35 Fleet units.
        In order to preclude dual reporting, DRRS-N has the ability to
    generate and transmit legacy resource-based SORTS reports to both the
    DRRS and the GSORTS systems. Further, warfighting enterprises and
    capability portfolio managers are beginning to explore force
    generation, force sourcing, adaptive planning, and strategic resourcing
    uses for the authoritative data contained within this system and the
    larger Navy Readiness Reporting Enterprise portfolio of applications.
    This transformation will continue for several more years but is
    progressing as planned.
        General McNabb. The Air Force is implementing DRRS in accordance
    with published OSD guidance. Currently, some Air Force units report
    monthly in both DRRS and SORTS. The Air Force implementation plan for
    DRRS includes a user interface being developed by the OSD. Air Force
    users of DRRS will be able to input both their SORTS and DRRS
    information through the OSD provided tool once it has been fully tested
    and fielded. The Air Force is providing training to our units to
    facilitate the cultural change to a capabilities-based reporting
    system.

        25. Senator Thune. General Cody, General Magnus, Admiral Walsh, and
    General McNabb, if your Service is not using DRRS, please explain why.
        General Cody. The Army supports DRRS, however, the Army chose to
    refine and improve its existing reporting system into an advanced web-
    enabled reporting system called DRRS-Army (DRRS-A). The development and
    implementation of the Army's new system was accomplished through
    internal program management and funding. Using DRRS-A ensures the Army
    preserves the capability to effectively measure and manage unique Army
    readiness equities.
        General Magnus. The position of the Commandant of the Marine Corps
    is that: ``The Marine Corps supports the development and implementation
    of DRRS, but will not direct units to report (MET assessments) in DRRS
    until it meets its stated requirements and is accepted as the single
    readiness reporting system of record.''
        In spite of this, some Marine units and installations, per their
    Marine Force Commanders' direction, are assessing their METs in DRRS to
    comply with combatant commanders' requests. These units are serving as
    a useful test bed for DRRS reporting. However, those commanders are
    dual reporting their readiness via GSORTS and DRRS.
        DRRS provides unit and installation commanders with the ability to
    assess their METs and missions. However, DRRS has not yet met its
    requirements to provide:

              (1) A functional and tested input tool that allows units to
            input SORTS information directly into DRRS to prevent dual
            reporting in GSORTS and DRRS
              (2) Business tools for DRRS data analysis that integrates
            unit readiness information for both resources and METs
              (3) Aggregated DRRS readiness data and easy access to
            archived readiness information which is retrievable (real-time)
            via the business tools identified above
              (4) Near real-time information data feeds from Service
            authoritative data sources that have been tested and validated

        The input tool for SORTS reporting is under development but is not
    ready for full functionality testing and validation. A final, detailed,
    USMC/DIO test plan has not been agreed upon. Data from some Marine
    Corps authoritative data sources (ADSs) are populating DRRS, but
    automatic, ``near-real time'' data feeds have not been developed. ADS
    inputs to DRRS require accuracy validation and testing prior to Service
    acceptance. Formal System Interface Agreements between the Marine Corps
    and OSD/DIO have not been signed and
        Data analysis tools and access to aggregated, historical DRRS data
    are necessary to respond to requests for readiness information from
    Marine Corps leadership, Joint Staff, OSD, and congressional inquiries.
    These DRRS data analysis business support tools are still being
    acquired and developed by DIO.
        HQMC (POR) published DRRS implementation responsibility guidance in
    Maradmin 390/07 to set the conditions for the implementation of DRRS.
    Subsequently, in February 2008, HQMC published amplifying guidance in
    an Interim DRRS Policy & Procedures for Marine Corps Units and
    Installations document which will be the basis for a Marine Corps Order
    on DRRS once it is accepted as the single readiness reporting system of
    record.
        Admiral Walsh. Not applicable. Navy is transforming its readiness
    reporting to a resource-informed, capability-based reporting system
    aligned to the OSD's DRRS.
        General McNabb. The Air Force is implementing DRRS in accordance
    with published OSD guidance.

        26. Senator Thune. General Cody, General Magnus, Admiral Walsh, and
    General McNabb, in your opinion, when do you believe DRRS will achieve
    full operational capability in your Service?
        General Cody. The DRRS is currently under development. The Army's
    readiness reporting system DRRS-A achieved full operational capability
    in October 2006. The Army established DRRS-A to support reporting
    requirements for OSD, the Chairman's Readiness System and unique Army
    information requirements.
        General Magnus. Spiral development of the DRRS does not lend itself
    to a natural developmental progression timeframe and setting specific
    dates for full operational capability is difficult. To date, full
    operational capability (FOC) for DRRS is yet to be defined. The OSD's
    DIO and/or the J39 can best predict a FOC date. Progress on, and
    successful development of DRRS ought to be event driven. That said, the
    Marine Corps supports the implementation of DRRS and we work closely
    with the DIO and the Joint Staff (J-39) to develop the functionality,
    tools, and policy to fully implement DRRS. We will accept it once it
    fully meets its stated requirements and is accepted as the DOD's single
    readiness reporting system of record. Testing, validations, and system
    certifications are necessary before that happens.
        Admiral Walsh. Navy, working in conjunction with OSD and the Joint
    Staff, is awaiting OSD FOC definition before fully defining Navy FOC to
    ensure that the Navy DRRS based system maintains alignment with the
    larger DRRS effort. DRRS-N is expected to replace SORTS by mid-fiscal
    year 2009.
        General McNabb. The OSD, DIO is implementing DRRS throughout the
    Department. OSD declared FOC for the MET Module in October 2007.
    Continuous and additional capability will be fielded as those
    capabilities come online.

        27. Senator Thune. General Cody, General Magnus, Admiral Walsh, and
    General McNabb, if your Service currently has difficulties implementing
    DRRS, please provide details and a description of the corrective
    measures.
        General Cody. Currently DRRS system is in development has not
    achieved its stated functional or operational capabilities. DRRS is
    currently not capable of providing visibility necessary for the Army to
    accomplish its Title 10 mission to train, equip, and resource the Army.
    The Army retained this capability to view and assess all registered
    operational Army forces in the DRRS-Army Readiness Reporting System.
    The Army does not anticipate significant corrective action required as
    the Army is not dependant on DRRS to fulfill its Title 10 mission.
        The Army is actively engaged with the Joint Staff and the DIO, as
    well as the recently established three-star level DRRS Executive
    Committee (DEXCOM) governance process. The DEXCOM governance process
    will help prioritize and integrate policy, processes, and IT systems
    requirements for DRRS.
        General Magnus. The difficulty implementing DRRS is that it is
    still a system in development. There are some significant system
    development issues, yet to be resolved, that preclude Marine Corps
    acceptance of DRRS as the single readiness reporting system of record.
    DRRS has not yet met its requirements to provide:

              (1) A functional and tested input tool that allows units to
            input SORTS information directly into DRRS to prevent dual
            reporting in GSORTS and DRRS
              (2) Business tools for DRRS data analysis that integrates
            unit readiness information for both resources and METs
              (3) Aggregated DRRS readiness data and easy access to
            archived readiness information which is retrievable (real-time)
            via the business tools identified above
              (4) Near real-time information data feeds from Service ADSs
            that have been tested and validated

        The input tool for SORTS reporting is under development but is not
    ready for full functionality testing and validation. A final, detailed,
    USMC/DIO test plan has not been agreed upon. Data from some Marine
    Corps ADSs are populating DRRS, but automatic, ``near-real time'' data
    feeds have not been developed. ADS inputs to DRRS require accuracy
    validation and testing prior to Service acceptance. Formal System
    Interface Agreements between the Marine Corps and OSD/DIO have not been
    signed and are still being worked.
        Data analysis tools and access to aggregated, historical DRRS data
    are necessary to respond to requests for readiness information from
    USMC leadership, Joint Staff, OSD, and congressional inquiries. These
    DRRS data analysis business support tools are still being acquired/
    developed by the DIO.
        The Marine Corps has been actively engaged with the Joint Staff,
    and the DIO, as well as an active participant in the various forums of
    the recently established 3-star level DRRS Executive Committee (DEXCOM)
    governance process. The DEXCOM was established (Dec 07) to oversee and
    expedite the full implementation of DRRS. The DEXCOM governance
    process, once finalized, will help prioritize and integrate policy,
    processes, and IT systems requirements for DRRS.
        Admiral Walsh. Navy is not experiencing any specific difficulties
    implementing its version of the capabilities-based DRRS. The most
    significant remaining challenges to implementation surround publishing
    policy guidance at all levels and training our commanders and their
    staffs on the system. Navy intends to implement DRRS-N fleet-wide this
    calendar year.
        General McNabb. DRRS implementation continues with no significant
    problems.

                       marine corps amphibious operations
        28. Senator Thune. General Magnus, the Marine Corps' role in Iraq
    and Afghanistan has necessarily drawn away from the ability to train
    and develop in expeditionary warfare. How do you propose to rebuild
    this fundamental expertise throughout the ranks of the Corps in order
    to retain the full skills and capabilities required to project power
    ashore from the sea?
        General Magnus. In order to fully train to the requirements of
    expeditionary warfare, the Marine Corps will have to increase dwell
    time for combat units. Our end strength growth to 202,000 marines is
    based on three main goals:

              1. Creation of three balanced MEFs capable of responding
            equally to combatant commander requirements
              2. Reduction of the strain on individual marines and their
            families, and prevention of a decrease in readiness
              3. Reduction of strain on the institution by strengthening
            our capacity to train to the range of skills necessary for
            combined-arms maneuver, amphibious, mountain, and jungle
            operations

        Goal number 3 will allow us to maintain the skills required for the
    full range of military operations while allowing us to continue to
    train to those skills currently required in Iraq and Afghanistan.
        The Marine Corps' Professional Military Education System maintains
    the skills necessary for expeditionary warfare through the various
    formal schools. For instance, all new second lieutenants participate in
    a 3-day Amphibious Familiarization Exercise aboard naval shipping. The
    career-level school for Marine Captains, Expeditionary Warfare School
    (EWS), provides 176 hours of instruction, practical application, and
    shipboard instruction on amphibious operations. Students are taught to
    employ amphibious and Maritime Preposition Force doctrine to examine
    the deployment and employment of a Marine Air Ground Task Force (MAGTF)
    in an expeditionary environment. Additionally, our Command and Staff
    College (CSC) provides nearly 300 hours of instruction in the
    ``Warfighting from the Sea'' section of the curriculum. Students learn
    to integrate the unique amphibious and expeditionary warfighting
    capabilities of the MAGTF into a larger joint environment.
        Lastly, we are developing a standards-based MAGTF Exercise program
    to maintain proficiency in core warfighting functions. This program
    will culminate in a MAGTF Combined Arms Exercise for, up to, brigade-
    sized unit levels. It will provide a robust evaluation capability and
    will support employment of combined arms maneuver, amphibious
    operations, and maritime prepositioning operations in current and
    future operational environments.

                   marine corps warfighting systems in combat
        29. Senator Thune. General Magnus, the Marine Corps has fielded
    numerous new weapon systems in Iraq and Afghanistan, including the MV-
    22 aircraft, the MRAP vehicle, upgraded body armor, and counter-IED and
    anti-sniper systems. What is your assessment of the impact that these
    newly fielded weapon systems are having on reshaping the battlefield in
    the war on terrorism?
        General Magnus. From the beginning of the global war on terrorism,
    through today, the threat to our forces has continued to develop and
    change. The variety of newly fielded force protection equipment and
    weapons systems has allowed us to aggressively match our training and
    equipment to the changing threat, thereby enabling our continued
    success.
        Supporting marines in combat, the transformational tilt-rotor MV-22
    Osprey has performed beyond expectations. As an example, a flight of
    just two MV-22s can accomplish its assigned missions in half the time
    it would take four CH-46s to carry out the same tasks. Additionally,
    the Osprey's operational reach spans the entire range of the area of
    operations assigned to Multi-National Force-West while flying a
    majority of its mission profile outside the typical assault support
    threat envelope. The V-22 is not merely the next step in helicopter
    design, but a leap forward in vertical lift. The MV-22 can fly over or
    around threats, thereby reducing the exposure to the enemy to minutes
    instead of hours. Tilt-rotor technology has expanded the reach of the
    operational commander to a theater-wide scale as it provides the range
    and speed of a fixed wing aircraft with the flexibility of a
    helicopter. The MV-22 is not merely a new aircraft but a critical
    enabler for the future of Marine Air Ground Task Force operations.
        The newly-fielded force protection systems, such as electronic
    jammers and mechanical road clearing devices, have significantly
    reduced the effectiveness of improvised explosive devices (IED).
    Today's body armor, with integrated ESAPIs, has proven to save lives.
    Today's generation of PPE is far more advanced than that of even 10
    years ago. Not only does body armor protect against shrapnel from
    indirect fire and IEDs, but also against small arms rounds, including
    7.62 x 39mm, the AK-47 round.
        The MRAP vehicle has also brought critical force protection
    capability to the battlefield, providing commanders on the ground with
    a highly survivable platform from which to conduct motorized operations
    including route clearance and ground casualty evacuation. The MRAP,
    operating in combination with other vehicle systems, enables commanders
    to execute flexible and ever evolving counter insurgency tactics that
    have been highly successful in the Al Anbar Province of Iraq. MRAP
    vehicle use in Afghanistan is limited due to the vehicle's weight and
    that country's mountainous terrain. While the MRAP vehicle has proven
    to be exceptionally successful in protecting troops conducting
    motorized operations, it should be noted that its weight and size do
    not make it an ideal platform for all environments or operations.

        30. Senator Thune. General Magnus, what impact are heavier systems
    and increased armor having on Marine Corps' mobility and
    maneuverability?
        General Magnus. As the Marine Corps continues to armor existing
    vehicles and buy heavily armored vehicles, such as MRAP, there is a
    trade-off between protection, payload, and performance. As we increase
    protection through armoring, we risk losing some payload and/or
    performance, thus decreasing mobility and maneuverability.
        Sacrificing performance and payload for protection is a necessary
    concession in places like Iraq where the MRAP has proven to save lives.
    Much of Iraq's existing road infrastructure supports heavy vehicles
    like the MRAP; unfortunately, they do not perform as well in off-road
    situations. Further, their weight and size make them unsuitable for
    alleyways and many unimproved surface roads and bridges. To mitigate
    these tactical considerations, we have maintained an inventory of
    uparmored HMMWVs (UAH); however the additional armor on UAH increases
    their weight, degrades their service life, and increases maintenance
    requirements. We are mitigating some of these impacts in the near-to-
    mid-term by procuring a new family of HMMWVs, Expanded Capacity
    Vehicles, which are better designed to carry armor and come with the
    ability to add degrees of armor protection through armor kits, without
    having to armor all vehicles.
        In the future, the Marine Corps' light vehicle fleet, the family of
    Joint Light Tactical Vehicles (JLTV), will be purpose-built with
    scalable armor and a better capability to operate on and off-road while
    under increased armor loads. The JLTV will be heavier, even when
    unarmored, than HMMWVs and that concerns us due to increased weight's
    impact on ship transportability. We will continue to conduct informed
    design trades to ensure we field the best expeditionary vehicle
    possible. In the medium category of vehicles, represented by the Marine
    Personnel Carrier we are seeking a vehicle that gives us protection
    flexibility while balancing performance requirements and
    transportability constraints.
        There is no question that our future vehicle fleet will be larger
    and heavier but it is not growing unconstrained. The Marine Corps is at
    its core a naval expeditionary force; we must view all combat
    development efforts through an expeditionary lens ensuring we are light
    enough to get to the fight quickly, but then have sufficient firepower
    and force protection to complete the mission. We must retain our
    ability to operate on and from amphibious shipping and must always
    remember that there are more places in the world, with more challenging
    terrain, than where we are now. Our vehicles must be designed to
    support the requirements of the marine in the field.

        31. Senator Thune. General Magnus, what is your assessment of the
    effectiveness of the urgent needs process in balancing the need to
    rapidly field new warfare systems with the need to validate
    requirements and ensure safe and effective operation of these systems?
        General Magnus. I believe that we are effectively balancing the
    need to rapidly fill the critical operational requests of our deployed
    marines with the necessity to validate requirements and ensure fielding
    of safe and effective solutions. Today, this is done as rapidly as is
    possible through our Urgent Universal Needs Statement (UNS) process.
        The Marine Corps has already reduced the average time to process an
    Urgent UNS from 142 days to roughly 83.2 days--a better than 40 percent
    increase in efficiency. In conjunction with this efficiency increase,
    the Urgent UNS process subjects each request to a full Doctrine,
    Organization, Training, Materiel, Leadership and Education, Personnel,
    and Facilities review. This review is designed and has proven the
    necessity to identify potential integration or safety issues, validate
    the requirement, and ensure proposed solutions satisfy the need.

        32. Senator Thune. General Magnus, what efforts are you considering
    to improve upon this process in order to better support the warfighter?
        General Magnus. We are meeting the critical operational needs of
    our deployed marines and their commanders as rapidly as is possible
    today; however, we are continuously working to meet these critical
    needs even more quickly tomorrow. Two years ago, simultaneous to a
    requested Naval Audit Service report, the Deputy Commandant for Combat
    Development and Integration implemented a series of industry-best
    practices, such as Lean Six Sigma, to evaluate and rapidly improve the
    existing process. Our acquisition professionals at Marine Corps Systems
    Command also recently began the Lean Six Sigma method to provide even
    greater efficiency within the acquisitions process.
        We have created and launched a collaborative on-line Virtual Urgent
    UNS (vUUNS) tool to enable simultaneous efforts and to ensure complete
    visibility of each submission across the Marine Corps. Based on
    Microsoft SharePoint applications, this vUUNS system provides
    additional visibility, transparency, accountability, and oversight
    needed to better support forces. Our General Officers are personally
    involved to provide oversight and expertise. Already the Marine Corps
    has trimmed the average time to process an Urgent UNS from 142 days to
    roughly 83.2 days--a better than 40 percent increase in efficiency--and
    we are continuously improving the process.
        In the near future, we will expand this Virtual Urgent UNS system
    to include the Marine Requirements Oversight Council (MROC). The MROC
    approves reprioritization of available resources or a request for
    supplemental funding, and directs further action across Headquarters
    Marine Corps. Additionally, we will publish a Marine Corps Bulletin to
    provide updated procedural instructions to the operating forces. We
    will continue to look for opportunities to speed the process all the
    while ensuring it remains a flexible, but disciplined, process so that
    the warfighter gets effective and quality solutions.

                 grow the force initiative for the marine corps
        33. Senator Thune. General Magnus, the Marine Corps has embarked on
    an ambitious plan to grow the number of assigned personnel by 27,000
    marines by 2011 in order to provide some relief to the high rate of
    deployment. When do you anticipate this initiative to grow the force
    will have a direct impact on the Marine Corps' unit readiness ratings?
        General Magnus. The impact on readiness ratings of growing the
    Marine Corps Active component personnel end strength to 202,000 will be
    gradual, but this initiative is a necessary step towards minimizing
    stress on our force and meeting the demands of the long war. The
    increase in structure will provide the capabilities for three balanced
    MEFs ``each possessing significant ground, aviation, combat logistics,
    and command and control capability'' available for global sourcing and
    capable of executing full spectrum operations. Our end-strength growth
    is designed to move the unit deployment-to-dwell time ratio, currently
    near 1:1 for most units, to a more acceptable ratio of 1:2. This
    increased dwell time will provide units with additional time to conduct
    multi-capable training, and significantly reduce the strain on marines
    and their families. Our increase in training capacity will be gradual,
    as we stand up new units, add end strength, and grow our mid-grade
    enlisted and officer leadership. These are all vital parts of our
    growth that cannot be developed overnight.
        Although growing our force structure presents challenges, we are
    progressing well. Last year we stood up two infantry battalions and
    added capacity to our combat engineer battalions and air naval gunfire
    liaison companies. One of these infantry battalions is deployed in
    support of OIF, and a second is scheduled to deploy in the next Iraq
    rotation. This year, we will add a third infantry battalion, and
    increase capacity in much needed skill sets including: intelligence,
    communication, civil affairs, military police, unmanned aerial vehicle,
    helicopter, air command and control, combat service support, and
    explosive ordnance disposal. Additionally, our growth in fiscal year
    2008 will add 200 marines to the Marine Corps Recruiting Command, and
    nearly 500 to our Training and Education Command to manage the
    increased accessions and training requirements.

        34. Senator Thune. General Magnus, in your written statement, you
    state that the goal for growing the force is to increase the dwell time
    ratio from 1-year deployed/1-year off to 1-year deployed/2-years off.
    Will you be able to achieve this goal assuming current operations tempo
    in Iraq and Afghanistan?
        General Magnus. The overall goal for the Marine Corps growth of the
    force, also known as the 202k Plan, is to provide force structure to
    build a balanced Marine Air Ground Task Force (MAGTF) capability for
    the long war, while simultaneously balancing the current operational
    demand in Iraq and Afghanistan. The Commandant's intent is to achieve a
    1:2 deployment-to-dwell ratio in the short-term in order to accomplish
    more comprehensive training that will enable MAGTFs to achieve success
    in all types of military operations. The initial growth has provided
    some dwell relief for many units across the Marine Corps, and we
    continue to strive for a 1:2 deployment-to-dwell ratio as our growth
    continues. However, even at the completion of our growth to 202k, the
    Marine Corps will not be able to provide 1:2 deployment-to-dwell ratio
    across the total force, assuming the current operations tempo in Iraq
    and Afghanistan. Additionally, individual requirements to fill
    transition and training team, non-standard units and joint individual
    augment requirements continue to increase, with resultant stress.

                              fleet response plan
        35. Senator Thune. Admiral Walsh, the Navy has been deploying its
    ships and air wings under the construct of the FRP for several years
    now, with the intent of generating greater availability from its forces
    despite declining numbers. How would you assess the readiness of
    today's forces under the FRP, as compared to the former deployment
    cycle?
        Admiral Walsh. On September 11, 2001, Navy could only muster 2 of
    its 12 carriers for a surge response. Today, the FRP force generation
    model and the readiness resources Congress provides combine to enable
    Navy leadership to provide our National Command Authority with a robust
    response capability. With 11 carriers, Navy now maintains, on average,
    almost 3 deployed carrier strike groups (CSGs) plus an additional 3
    CSGs in a 30-day readiness posture and a 7th CSG in a 90-day readiness
    posture. The value of this force posture is not easily depicted in our
    current resource-based readiness reporting system, however, it is
    required by the Secretary of Defense approved Global Response Force
    EXORD, which tasks Navy CSGs and ESGs to maintain a high state of
    readiness for potential contingencies. In the FRP construct, increases
    in the operational element of a unit's operations and maintenance cycle
    coupled with our commitment to full operational spectrum training are
    providing a force that is more disciplined, more focused, more ready,
    more often.

        36. Senator Thune. Admiral Walsh, what metrics are being employed
    to measure the effectiveness of deploying forces under the FRP, and
    what are the current trends with these metrics?
        Admiral Walsh. Navy's current readiness reporting system is the
    TRMS. TRMS addresses overall, resource area, and aggregate mission area
    readiness, but not specific capabilities inside a mission area. Navy
    units, including deploying units, are measured by both their available
    resources and the proficiency they have achieved to certify their
    progress through the various gradations of FRP readiness. Capability
    measures have remained somewhat stable over the past 5 years, due in
    large part to the continuing maturation of the FRP construct and
    relative stability over this period of our available funding.

        37. Senator Thune. Admiral Walsh, how will Navy air wings be able
    to sustain their readiness under the FRP with the approaching shortfall
    in strike fighter aircraft--a shortfall that may stretch from two to
    four air wings at its peak?
        Admiral Walsh. Peak Department of the Navy strike fighter shortfall
    is projected at 125 aircraft in 2017 for the Navy and Marine Corps. The
    Navy shortfall predicted by the F/A-18 inventory model is 69 aircraft
    in 2017. The impact on air wings is manageable at this level, with
    assumption of operational risk. The Navy will be able to fully field 7
    CVWs at desired strength, or 10 CVWs at a reduced number of strike-
    fighters per carrier.
        Should the shortfall increase above current projections due to
    delays in JSF, budget cuts reducing F18E/F procurement, or early Hornet
    retirement, there will be a more significant negative impact on CVWs
    with resultant smaller and less effective airwings.

        38. Senator Thune. Admiral Walsh, do you anticipate amphibious
    ships to be inducted into the FRP, and what demands will this place on
    the Marine Corps to stay lock-stepped with Navy surge force planning?
        Admiral Walsh. The amphibious ships have been incorporated into the
    FRP, and the associated metrics were developed to reflect the
    rotational presence and contingency demands for that force. As such,
    there is a requirement for Expeditionary Strike Groups, which include
    the Marine Expeditionary Units and amphibious lift capacity. The goal
    is two Expeditionary Strike Groups on deployment at all times with a
    third in surge as a rotational relief. The goal for amphibious lift is
    21 amphibious ships capable of delivering forces and equipment in a
    non-forcible entry manner. Additionally, the Secretary of Defense
    approved Global Response Force EXORD tasks amphibious ships to be ready
    to respond to worldwide contingencies.

                        air force reduction in personnel
        39. Senator Thune. General McNabb, we've heard today that the Army
    and the Marine Corps are adding personnel in order to meet emerging
    threats. In contrast, the Air Force has chosen to cut end strength over
    the past 2 years in order to pay for equipment modernization. This is
    occurring at a time of extremely high operational tempo (OPTEMPO) for
    the Air Force. I notice from a review of your latest quarterly
    readiness report, many units are coded C-4 due to personnel shortages.
    Is there a correlation?
        General McNabb. There is not a correlation between C-4 units and
    the Air Forces' end strength reduction. To maintain a balanced budget,
    the Air Force had to make difficult choices in order to transform a
    Cold War legacy to a modern force capable of meeting the challenges of
    the 21st century. As the Air Force cuts end strength, we are
    continually monitoring stressed career fields impacted by a continuing
    high OPTEMPO. We actively track our stressed career fields and use this
    data to focus on the specialties that require the most management
    intervention. To help mitigate stress, the Air Force is looking at
    skills retention bonuses, promotions, force shaping exemptions, and
    process improvements. We diligently watch for those career fields whose
    dwell ratios worsen and look for avenues to relieve this strain.

        40. Senator Thune. General McNabb, what metrics does the Air Force
    have in place to measure the effects on readiness from a reduction in
    the end strength?
        General McNabb. As the Air Force cuts end strength, we are
    continually monitoring stressed career fields impacted by a continuing
    high OPTEMPO. We actively track our stressed career fields and use this
    data to focus on the specialties that require the most management
    intervention. To help mitigate stress, the Air Force is looking at
    skills retention bonuses, promotions, force shaping exemptions, and
    process improvements. We diligently watch for those career fields whose
    dwell ratios worsen and look for avenues to relieve this strain. We
    have identified over 70 career fields that have low dwell times and
    placed them on the ``Career Fields to Watch'' list. In fiscal year
    2007, we continued to manage and shape the force. We met short-term end
    strength targets while preserving the right airmen skills for the
    future. In a time when fewer people are qualified to serve, the Air
    Force continues to bring in the brightest candidates possible. Despite
    the demands associated with increased OPTEMPO, we have not lowered our
    recruiting standards. In fact, for the eighth consecutive year the Air
    Force has exceeded recruiting goals.

        41. Senator Thune. General McNabb, if you had to determine the most
    pressing problem with Air Force current unit readiness today in terms
    of people, training, or equipment, which would it be?
        General McNabb. The Air Force has been in combat ops consistently
    for 17+ years. It has taken a toll, and our overall readiness is in
    decline across the board. The aging fleet of aircraft and spacecraft
    combined with a high OPTEMPO (people) are the most pressing readiness
    concerns for the Air Force. The Air Force flies and maintains the
    oldest aircraft inventory in Air Force history. The average age of our
    aircraft is over 24 years, and we're flying this equipment harder than
    ever, accelerating the wear and tear on our inventory. Since Operation
    Desert Storm the Air Force has flown 2.2 million hours per year on
    average with an inventory that numbers 31 percent fewer aircraft that
    are 42 percent older. We have witnessed an 11 percent decline in our
    Fully Mission Capable rate, and this rate would have decreased even
    further were it not for the superb work of our depots and our
    maintainers. The high OPTEMPO has also affected our airmen and their
    families. Some elements of our force are stressed with deployment to
    dwell ratios at 1 to 1. Notably, we've seen declining reenlistment
    rates among our mid-level NCOs. We are watching all indicators closely
    and doing everything we can to maintain the quality of life for our
    airmen and their families.

            support for homeland security/homeland defense missions
        42. Senator Thune. General Cody, General Magnus, Admiral Walsh, and
    General McNabb, the Commission on the National Guard and Reserves
    recently released a report that drew attention to the high operations
    tempo and deployment schedule for our personnel in the Reserve
    components. The Commission went on to question whether Guard units in
    particular were adequately trained and ready for State and Homeland
    defense missions. In your opinion, does the current readiness reporting
    system accurately assess the readiness of Guard units to respond to
    Homeland defense tasking and emergency requests by the Governors?
        General Cody. Yes, the current readiness reporting system will
    accommodate these assessments. Currently, the readiness reporting
    system is designed to reflect the ability of a unit to execute the
    mission for which the unit was designed and organized. Army units are
    organized and designed to operate across the spectrum of military
    operations--which would include operations in support of civil
    authorities.
        In 2006, the Army adapted its reporting system to capture METs
    along with the mission or plans that those tasks were supporting (core
    functions, directed mission, or contingency mission). This enables the
    chain of command--both Federal and State--to provide specific mission
    guidance for units to prepare to operate across the range of military
    operations--including military support to civil authorities.
        Finally, the Joint Capabilities Database (JCD) is being developed,
    which illustrates the Adjutant General's assessment of his/her State's
    joint force capabilities to respond to State missions. It highlights
    the State's most critical functional capability shortfalls and provides
    an indicator of any potential mobilization impacts. It is centered on
    the Essential 10 Capabilities (command and control; transportation;
    communication; aviation; logistics; security; engineering; medical;
    maintenance; and chemical, biological, radiological, nuclear, and
    explosive). It also reflects the States' internal assets that the Army
    would not otherwise have visibility of, such as States' Departments of
    Transportation and Public Safety.
        General Magnus. This question is not applicable to the Marine Corps
    because its Reserve component is not part of the National Guard.
        Admiral Walsh. While Navy does not have a Guard element, we have
    made significant strides in creating global visibility of our shore
    establishment capabilities and have established tasks in support of
    NORTHCOM for their Homeland defense role.
        General McNabb. The current authoritative DOD Readiness Reporting
    System, the GSORTS, does not presently assess Homeland defense missions
    or emergency requests by the governors. The Services, likewise, do not
    easily lend themselves to providing an accurate assessment of a
    military units' ability to fight forest fires, or respond to a
    hurricane in support of a domestic response for example either. These
    legacy systems are designed to measure a unit's full wartime
    requirement for which it was organized or designed.
        However, the new DOD DRRS, with its MET building capability, will
    be able to track multiple mission sets, which will include domestic
    support type missions. As we transition to DRRS, NGB is working closely
    with OSD-PR to ensure the functionality of our JCD is incorporated.
        The JCD is a complimentary, unclassified, separate, and unique
    system of evaluating every State's preparedness for National Guard
    Domestic Operations (NGDO). This unclassified data can easily be shared
    with our stakeholders who do not have access to classified DOD systems.
    Whereas DRRS tracks assessments of METs, the JCD captures the status of
    capabilities of the National Guard of every State and territory at two
    levels: (1) to respond to the most frequent NGDO missions experienced
    over the last 10 years, and (2) to respond to major catastrophic
    incidents as articulated in the National Planning Scenarios. In all of
    these events, we discovered that for these non-wartime requirements,
    the Essential 10 Capabilities provide the common denominator best
    suited to assess preparedness. DRRS will track our unit's ability to
    perform any assigned tasks, and the JCD is tracking Essential 10
    Capabilities across the States, regions, or nationally.

        43. Senator Thune. General Cody, General Magnus, Admiral Walsh, and
    General McNabb, when making resource and funding decisions for the
    procurement and distribution of equipment in the headquarters for each
    of your Services, how do the Guard's additional State and Homeland
    security missions affect the risk assessment and priority of delivery?
        General Cody. The Army's resource and funding strategy for
    equipment procurement and subsequent distribution is designed to
    support the Army's Force Generation (ARFORGEN) model. ARFORGEN, which
    is used for both Active and Reserve components, creates a framework for
    the structured progression of increased unit readiness over time,
    resulting in recurring periods of availability of trained, ready, and
    cohesive units. For ARNG BCTs, as an example, ARFORGEN accounts for the
    preparation and readiness of both operational deployments in support of
    combatant commander requirements and for domestic response in support
    of the Homeland defense/Homeland security (HLD/S) missions.
        Army senior leaders examine the ability of ARNG units to accomplish
    assigned missions at various ARFORGEN stages during monthly strategic
    readiness updates where equipment levels of selected ARNG units are
    measured in accordance with standard Army metrics. Because ARNG units
    have dual responsibilities, additional senior leader review sessions
    are held on a periodic basis that monitor overarching ARNG equipment
    fill, with a special emphasis on the 342 dual use items that have been
    identified by the ARNG as being of critical importance to the 10
    critical HLD/S capability areas. The Army senior leadership also
    conducts periodic reviews of equipment fills for selected States and
    islands that are subject to hurricanes.
        Army critical requirements for the next 24 months are reviewed
    semi-annually during the Army Equipping and ReUse Conference (AERC) and
    distributions are adjusted and synchronized to ensure that the most
    critical requirements are addressed across all components. As a result
    of the latest AERC conducted in January 2008, the Army was able to
    schedule the delivery of about $17.5 billion of equipment for the ARNG
    in the next 24 months. Final AERC decisions are approved by the Vice
    Chief of Staff of the Army, typically within 30 days of the conference
    and involve all senior leaders to include the Director of the ARNG and
    OCAR.
        The composition of the critical dual use list and the Army's
    ability to adequately fund, procure, and distribute those items
    continues to be a major focus area as the Army builds its 2010-2015
    program. As part of that process, the ARNG, as well as the Army
    Reserve, are active participants in the programming and distribution
    process. The Army also works closely with the Joint Staff in
    maintaining adequate visibility regarding equipment requirements and
    resourcing.
        General Magnus. The Marine Corps takes a holistic approach to
    equipping its forces. When equipment is ready for delivery at the unit
    level, the unit with the highest priority receives the equipment. All
    factors including mission are evaluated to determine priorities. The
    Marine Corps does not discriminate between Reserve and Active Forces
    when determining equipment delivery.
        Admiral Walsh. The Navy Reserve does not have a State or Homeland
    security mission.
        General McNabb. In the process of creating the Air Force's budget
    submission we evaluate all requirements--Active Duty, Air National
    Guard, and Air Force Reserve--from a total force perspective in order
    to provide resources for existing and emerging requirements. Final
    decisions are based on a careful review of capabilities provided by
    funding these missions along with all other Air Force requirements.
        The National Defense Authorization Act for Fiscal Year 2008
    directed DOD to identify and plan for Homeland security requirements.
    Once identified, these requirements will be prioritized within the
    Total Air Force. Resources and risks will then be balanced based upon
    inputs from the Regular Air Force, Air National Guard, and Air Force
    Reserve. As part of the Total Force Integration process, Headquarters
    Air Force is working hand-in-hand with the National Guard to embed
    emerging dual-use capabilities within the Air National Guard.

                                 aging aircraft
        44. Senator Thune. Admiral Walsh, the Navy has been forced to
    ground one-third (39 of 135) of its P-3 maritime patrol aircraft due to
    fatigue cracking of critical structural members, related to the Navy's
    efforts to maintain and operate the aircraft well beyond its original
    expected service life. What impact is this grounding having on the
    Navy's ability to meet its maritime patrol and reconnaissance
    requirements?
        Admiral Walsh. The grounding of the 39 aircraft, including 10
    deployed aircraft, had significant operational impact. The precise
    details of the impact are classified, and can be briefed separately as
    desired. The Navy will continue to work with the Joint Staff and
    component commanders to use the GFM Allocation Plan to optimize P-3
    allocation as inventory constraints permit.
        Note: The ratio of grounded aircraft, 39 of 135, as expressed in
    the question is incorrect. When the Red Stripe occurred in December
    2007, the total inventory of P-3Cs was 160 (now 157). Thus,
    approximately 25 percent of the total inventory of aircraft was
    affected by the Red Stripe.

        45. Senator Thune. Admiral Walsh, what is the current status of
    correcting this deficiency, and when do you expect to have the fleet
    restored to full operation?
        Admiral Walsh. The long-term recovery plan has been established,
    but will be refined based on actual depot performance and continued
    engineering analysis. The short-term mitigation plan for recovering the
    39 grounded P-3Cs is already underway. As of 31 March 2008, five
    aircraft have been inducted into depot. While the P-3 Recovery Plan
    projects that the number of mission capable aircraft will continue to
    decline until approximately fiscal year 2010, the number of mission
    capable P-3s should reach pre-Red Stripe levels in fiscal year 2013.

        46. Senator Thune. Admiral Walsh, since this deficiency was
    identified too late to correct in the fiscal year 2009 budget, what is
    the Navy's financing strategy to complete these repairs in a timely
    manner?
        Admiral Walsh. An Above Threshold Reprogramming (ATR) of $228
    million for procurement for P-3C wing panels and outer wing box
    assemblies is awaiting congressional approval. Additional fiscal year
    2008 and fiscal year 2009 funding is being separately requested through
    supplementals for supporting hardware and installation, and
    acceleration of the Fatigue Life Management Program (FLMP). The Navy's
    fiscal year 2009 Unfunded Programs List contains $548.3 million for
    Critical Maritime Patrol Improvements which specifically addresses the
    critical deficit of P-3C aircraft. Refinements in installation cost
    estimates after submission have revised this amount to $585.2 million.
    It is estimated that the cost of addressing this critical deficit is
    $585.2 million. Materials and installations planned for procurement in
    fiscal year 2010 and later will be submitted as part of POM-10.

                             individual augmentees
        47. Senator Thune. General Cody, General Magnus, Admiral Walsh, and
    General McNabb, demand in theater for specialized ground forces has
    resulted in the deployment of thousands of military personnel as
    individual augmentees, or in-lieu-of assignments to CENTCOM. We've also
    heard the term ``designer forces'' to describe ad hoc units culled
    together at the last moment to meet an urgent demand. Are the demands
    being placed on individual augmentees proving excessive or difficult to
    meet?
        General Cody. Individual augmentee requirements are increasingly
    difficult to meet. Mid-grade officers and non-commissioned officers are
    being assigned from across the Army to meet individual augmentee
    requirements which results in significant shortages across the
    remainder of the force. This directly affects Army's ability to meet
    requirements and also provide a ready force. Every additional
    individual requirement adds additional stress to the Army personnel
    system and creates shortfalls in the force.
        General Magnus. The Marine Corps uses individual augments to fill
    Joint Manning Document (JMD), Transition Training Team (TT), and
    Service Augment (SA) billets. Currently there are approximately 480
    JMD, 876 TT, and 737 SA requirements. These billets are non-T/O
    structure, uncompensated billets, which means that they must be filled
    by pulling marines from Active Duty units or Reserve component
    volunteers. Again, because of the uncompensated nature of these
    requirements, the Marine Corps cannot build additional structure to
    meet these demands. The purpose of the 202K build is to increase the
    warfighting capabilities of the Marine Corps, to reduce unit deployment
    to dwell ratio, and to allow the Marine Corps to train in its
    traditional warfighting missions; its purpose is not to fill individual
    augmentee requirements. The Marine Corps can continue to support the
    current level of individual augmentee requirements; however, any
    sustained increase in individual augment or unit operational
    commitments will reduce the Marine Corps' ability to meet individual
    augment requirements.
        Admiral Walsh. Navy is able to provide the Joint Staff with a broad
    range of sourcing solutions, including assignments that are
    traditionally filled by ground forces. Significant numbers of combat
    support and combat service support personnel relieve the Army and
    Marine Corps in mission areas where we can expand Navy skills, with
    mission specific training, to provide required support. Responsibility
    to win the global war on terror falls on the military as a whole, and
    by building on traditional maritime skills, our sailors continue to
    make a significant contribution ashore. Our Navy will continue to
    support the global war on terror on the ground, in addition to
    performing its maritime mission afloat.
        The demands being placed on sailors performing as individual
    augmentees are being closely monitored by our Service. With feedback
    through our Navy Component Commander Detachments in theater, we are
    able to address the training and proper employment of our sailors.
    Continuous feedback from theater to U.S. Fleet FORSCOM and Navy staff
    refine expectations of sailors with respect to the level of training
    received to their assign billet. Where inconsistencies exist, Navy
    engages with theater for resolution to ensure proper employment.
        To ensure continued support without exceeding stress on the force,
    the officer and enlisted communities are in the process of assessing
    the impact of Individual Augmentation (IA) assignments on community
    health and retention across the force. Inherent stress is placed on
    certain Limited Supply/High Demand (LS/HD) communities due to the small
    pool of available personnel and high demand for specific Navy skill
    sets. Several Navy mission communities have been or are being stressed
    to capacity by the global war on terror. Examples include Explosive
    Ordnance Disposal, Medical, Supply, Chaplain, Intelligence, Information
    Warfare, Information Professionals, Engineering Duty, and Naval
    Construction Battalions (SEABEEs).
        As Navy continues to drawdown in end strength, we will continue to
    assess the impacts of enduring IA requirements on the operational
    force.
        General McNabb. IAs have a large impact on operations. CENTCOM
    relies heavily on IAs and their requirement for IAs continues to
    increase. Currently the Air Force supports 2,256 IA requirements
    supporting all combatant commands. This is an increase of 11 percent
    for all the IA requirements from fiscal year 2007. The Air Force
    continues to successfully exceed combatant command sourcing
    requirements by fair sharing all career fields to include low supply
    and high demand fields across the Service by carefully monitoring each
    dwell rate.

        48. Senator Thune. General Cody, General Magnus, Admiral Walsh, and
    General McNabb, do you see a negative impact on morale and retention as
    a result of the ongoing operations in Iraq and Afghanistan?
        General Cody. The pace of deployments to Afghanistan and Iraq has
    not had an adverse impact on overall retention or morale. In fiscal
    year 2007, retention of officers was slightly better than the overall
    10-year average and recent incentives have garnered over 9,000
    additional man-years of obligated service among year group 2006 and
    2007 officers. Units currently deployed to Afghanistan and Iraq have
    reenlistment rates averaging between 110-120 percent of their yearly
    goals. This is a significant indication of the quality of leadership
    within our ranks, shows that soldiers believe in what they are doing,
    and that soldiers value the tradition of service to the Nation.
    Currently, all Army components are on track to achieve or exceed the
    2008 enlisted retention mission. The Active Army retained almost 70,000
    soldiers in fiscal year 2007, finishing the year at 112 percent of the
    retention mission. The Army Reserve finished the year achieving 119
    percent of the retention mission and the ARNG finished at 100 percent
    of their retention mission.
        General Magnus. No, I do not see a negative impact on retention as
    a result of ongoing operations in Iraq and Afghanistan. Marine Corps
    enlisted retention remains strong. The Marine Corps has achieved over
    15,300 total reenlistments including 7,330 First Term and 7,977 Career
    or Subsequent Term reenlistments to date in fiscal year 2008. This
    level of retention is unprecedented. The Marine Corps is also currently
    meeting its retention goals for officers.
        In addition, I do not see a negative impact on morale, which
    remains strong in our ranks despite our ongoing operations.
        Admiral Walsh. Ongoing operations in Iraq and Afghanistan appear to
    have minimal, if any, adverse impact on retention or morale as
    retention remains strong, overall attrition is trending downward and
    sailor morale remains positive.
        The war on terrorism, IA assignments, and an increased sea/shore
    ratio create challenging retention and morale environments, which we
    continue to monitor very closely.
        Navy's enlisted retention posture remains strong and supports end
    strength requirements. Navy attained 98 percent of fiscal year 2007
    numeric reenlistment goal for Zone A (0-6 years of service) and
    exceeded numeric goals in both Zone B (6-10 years) and Zone C (10-14
    years). We have also attained at least 96 percent of numeric aggregate
    reenlistment goals in each of the three zones during the first 5 months
    of fiscal year 2008.
        Navy's aggregate officer retention posture for fiscal year 2008
    also remains strong and supports end strength requirements. Some
    officer communities are experiencing retention shortfalls at specific
    pay grades, to include:

             Surface Warfare (O3)
             Submarine (O3)
             Explosive Ordnance Disposal (O4)
             Special Warfare (O4)
             Civil Engineer Corps (O4)

        Preliminary survey data indicate O3 retention in the Surface and
    Submarine communities are negatively affected by the unpredictable
    nature of IA assignments. Global war on terror support assignment
    detailing was recently developed to ameliorate this concern. Sailors of
    all ranks will now be detailed to most IA assignments during
    predictable career windows. This should result in less uncertainty
    within the force.
        The O4 shortfalls identified above are largely as a result in
    expanding the size of these communities in order to meet QDR/global war
    on terror demand signals. The year groups filling these O4 billets were
    assessed to meet the demands of smaller communities.
        Morale, welfare, and quality of life for sailors and their families
    remain a top priority as we continue to focus on providing adequate
    pay, health care, housing, proper work environments, and continuum of
    training and education for sailors. Targeted special and incentive pays
    are also essential to successful retention of sailors in critical
    skills.
        General McNabb. There is no substantial evidence to indicate that
    the global war on terror has had a negative impact on morale. During
    the last several years our airmen have dealt with a host of events to
    include stop loss, downsizing, increased deployments, in-lieu-of
    taskings, emerging missions, declining reenlistment bonuses, and
    economic recovery. Although anecdotal evidence suggests that each of
    these events has had an impact on retention, it is extremely difficult
    to accurately quantify and isolate any single factor given the dynamic
    environment.
        We believe our airmen's perception of quality of life has a direct
    bearing on morale and retention. In October 2007, a survey of 1,000
    Active Duty airmen and civilians assessed the effectiveness with which
    we communicate our emphasis on quality of life and 96 percent of
    respondents agreed that quality of life is an important enabler for an
    airman's success in combat. Part of the perception of quality of life
    is related to predictability in deployments and the workload shouldered
    by those who do not deploy but continue with home station missions.
        Since the onset of operations in Afghanistan and Iraq, our units
    have consistently had some portion of their military deployed at any
    given time. Our military members are typically ready to deploy, and
    find those deployments personally and professional fulfilling. In that
    respect, morale is good and retention is steady. However, the
    additional workload left behind at home station when those military
    members deploy does stress morale. We've anecdotally recognized the
    departure of military members who were simply tired from carrying the
    additional workload. If there is a negative impact on morale and
    retention as a result of ongoing operations in Afghanistan and Iraq, we
    see that impact focused more on those who remain behind than on those
    who deploy.

        49. Senator Thune. General Cody, General Magnus, Admiral Walsh, and
    General McNabb, have the Navy or Air Force evaluated the impact to
    parent commands' readiness caused by the fairly significant number of
    gapped billets associated with individual augmentees?
        General Cody. Unfortunately, the Army cannot address whether the
    Navy or Air Force have evaluated this issue.
        General Magnus. The Marine Corps nondeployed units are often
    critically short officers and senior enlisted (unit leaders, trainers,
    and planners), due to the continuing requirement to provide individual
    augmentees for transition teams, joint headquarters, and other
    requirements in support of OIF and OEF. While these Marine leaders are
    enhancing the capabilities of Iraqi and Afghan security forces, and
    performing needed functions with our deployed joint headquarters, their
    extended absence from their parent units does negatively impact
    readiness and adds to the stress on the force. Specifically, this
    leadership drain degrades the parent unit's ability to effectively
    train and lead their marines as well as develop unit cohesion.
    Additionally, the absence of senior leadership has created deficiencies
    in staff expertise, command and control capability, and the ability to
    proficiently conduct operational planning. The negative impact of
    providing individual augments on nondeployed units has been highlighted
    in Marine Corps testimony and joint readiness reporting venues, such as
    the JFRR.
        Admiral Walsh. To date, Navy continues to meet all validated
    missions at sea and ashore and stands ready to respond to security and
    humanitarian contingencies, while continuing its present support to the
    global war on terror. Should Fleet or IA demands increase, we will
    eventually see a decline in readiness. Readiness is currently being
    maintained at the cost of reduced manning levels in shore staff
    assignments. As a consequence, we have observed sailors and government
    service civilians working longer hours, having reduced leave
    opportunities and postponing some scheduled professional development
    courses.
        Currently, augmentation numbers represent approximately 3 percent
    of the Total Force and 2 percent of the Active component force. All
    deployable commands are at SORTS readiness C2 or above. The Fleet
    centric nature of Navy's readiness reporting systems, however, makes
    assessing readiness impacts ashore more difficult. Fleet manning
    projections and readiness indicators are continuously assessed to
    ensure proper levels of manning are maintained.
        At current sustainment levels, a growing strain on our force is
    especially evident in the following communities supporting global war
    on terror: Explosive Ordnance Disposal, Medical, Chaplain,
    Intelligence, Information Warfare, Information Professionals,
    Engineering Duty, Supply Community, Civil Engineer Corps, and Naval
    Construction Battalions (SEABEES). These communities have experienced
    constant and increasing demand from combatant commands requiring
    multiple tours. Because these are unfunded requirements tasked to our
    Service to source, Navy believes there is a mismatch between Navy's
    planned manpower/fiscal reduction strategy and the impact of the
    enduring IA mission on sustaining our operational force, specifically
    in nontraditional combat service support and combat service roles and
    missions to our Service. As Army builds up to its new end strength
    total and Navy continues to draw down to predicted Service levels we
    anticipate these combat service support missions will transition back
    to Army support.
        General McNabb. Currently the Air Force supports 2,256 IA
    requirements across all combatant commands. This is an increase of 11
    percent for all the IA requirements from fiscal year 2007. Most CENTCOM
    sourced individual augmentees, for example, are in grades E-6 through
    O-5 and, support 284 1-year tour lengths and 1,469 6-month tour
    lengths. This is an increase of 30 percent for these tour lengths over
    fiscal year 2007. The CENTCOM requirement for IAs continues to
    increase. The Air Force evaluates command readiness through a process
    known as SORTS. This process assists units in determining their mission
    readiness/capability.

                    airmen on the ground in iraq/afghanistan
        50. Senator Thune. General McNabb, the Air Force has provided
    significant in-lieu-of forces on the ground to support operations in
    Iraq. My concern is that we are reacting to taskings from the other
    Services by using personnel not ideally trained for the mission. Are
    you comfortable that they are getting the needed training before
    deploying?
        General McNabb. We are confident in-lieu-of airmen are receiving
    the required training to perform their assigned in-lieu-of mission. The
    enemy, however, continues to change their tactics, techniques, and
    procedures; therefore, we continue to transform our training to address
    and counter the developing enemy threat. We take a dual approach to
    ensure our airmen are prepared to meet and execute these non-standard
    missions: select the right airmen to fill in-lieu-of taskings; and
    ensure in-lieu-of airmen receive the required training to operate and
    survive outside-the-wire.
        Second Air Force established a Training and Equipment Requirements
    Board (TERB) to monitor and modify training to meet the gaining
    commander's needs and ensure in-lieu-of airmen can operate and survive
    in their deployed environment. The TERB is a formal process to review
    current in-lieu-of training and determine redundancies and shortfalls
    and implement fix actions for any disconnects. When the Air Force
    discovers training shortfalls outside the TERB window, second Air Force
    and Air Force Central Command (AFCENT) work with CENTCOM and FORSCOM to
    immediately resolve training disconnects.
        By selecting airmen with core skill sets similar to missions they
    will be performing and continually assessing and modifying in-lieu-of
    training to meet the ever-changing threat, we ensure airmen have the
    most current skill sets necessary to perform their assigned mission.

        51. Senator Thune. General McNabb, are they getting the right
    equipment necessary to operate in that environment, particularly force
    protection equipment?
        General McNabb. This question specifically references the
    approximately 12,000 airmen who deploy annually in the in-lieu-of
    category. Yes, personnel are receiving the necessary force protection
    equipment to include the Advanced Combat Helmet and the Interceptor
    Outer Tactical Vest with Level IV ESAPIs.

        52. Senator Thune. General McNabb, has this training changed as a
    result of lessons learned, and if so, how?
        General McNabb. Yes--ensuring airmen are properly trained to
    perform their assigned mission is our top priority. Given the changing
    enemy tactics, techniques, and procedures, it's essential that we
    continue to transform training to counter evolving threats. Three
    different organizations working together utilize lessons learned and
    validated feedback to modify training: 1) CENTCOM is continually
    monitoring and changing minimum training requirements for in-lieu-of
    soldiers, sailors, and airmen; 2) FORSCOM and First Army also tailor
    blocks of training based upon feedback received from their down-range
    Liaison Officers; 3) Second Air Force, working closely with AFCENT and
    Air Force functional managers, modifies training based upon lessons
    learned and airmen skill sets. As an example, all airmen receive
    training on Blue Force Tracker based on feedback from the Area of
    Responsibility (AOR).

        53. Senator Thune. General McNabb, how has the integration worked
    with the Army?
        General McNabb. The integration process between Army and Air Force
    personnel has evolved over the last 2 years and is going very well. The
    Air Force has worked long and hard with the Army to solidify the
    training curriculum and equipment requirements, to include the
    appropriate timeline for training. These efforts ensure our airmen
    receive timely training as well as meeting the training and equipping
    requirements established by our deployed combatant commanders. In
    addition, we utilize the Training and Equipping Requirements Board
    (TERB), co-hosted by 2nd Air Force and AFCENT, to update training and
    equipment requirements for our airmen. The TERB also includes active
    participation from Headquarters Air Force, Air Combat Command, Air
    Mobility Command, Air Force Security Forces Center, Air Force Civil
    Engineering Support Agency, U.S. Navy, U.S. Army FORSCOM, Air Force
    functional area managers, as well as deployed Air Expeditionary Group
    leaders.

        54. Senator Thune. General McNabb, do you see anything that needs
    to be improved in this process?
        General McNabb. No, we believe we have addressed all known training
    and equipment issues at this time. We are currently working with the
    Army to improve training processes as well as increased training
    standardization. To achieve this goal, we're working with FORSCOM and
    first Army to decrease the overall number of combat skills training
    sites as well as actively working to ensure our airmen receive the same
    high standard of training across the board.

                  unfunded requirements list for the air force
        55. Senator Thune. General McNabb, this year, the Air Force
    submitted an $18.7 billion unfunded requirements list. This is 4 times
    as large as the Navy's, 5 times as large as the Army's, and 10 times
    larger than the Marine Corps'. Why do you have such a large unfunded
    requirements list?
        General McNabb. Global trends over the last decade have presented
    significant challenges to our organization, systems, concepts, and
    doctrine. Would-be adversaries are developing asymmetric approaches to
    attack vital levers of U.S. power and ascendant powers are posturing to
    contest U.S. superiority with ``Generation 4-plus'' fighter aircraft,
    increasingly lethal air defense systems, proliferation of surface-to-
    surface missiles, and a resurgence of counterspace capabilities.
    Demands for ISR and space capabilities, that simply did not exist a
    decade ago, as well as a renewed emphasis on modernization and emerging
    cyberspace threats to meet existing and expected challenges, have
    placed significant stress on our baseline budgets.
        The Air Force fully supports the fiscal year 2009 President's
    budget and is appreciative of the increased funding over the last
    decade. These funds have given us the resources to win today's fight,
    take care of our people, and slowly modernize for tomorrow's
    challenges. While the fiscal year 2009 budget provides a moderate
    increase over the fiscal year 2008 budget and enables us to meet
    today's global commitments, additional funding is necessary to ensure
    air, space, and cyberspace dominance for the 21st century. The fiscal
    year 2009 unfunded requirements list identifies our most critical needs
    should additional funding be made available. The majority of the list
    is tied to the weapon systems, personnel, and support necessary to
    equip our required force of 86 modernized combat wings.

        56. Senator Thune. General McNabb, what top items on this list will
    improve readiness rates?
        General McNabb. The Air Force provides the following spreadsheet
    with unfunded requirements and their impact on Air Force readiness, not
    in priority order.

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                  readiness for other potential contingencies
        57. Senator Thune. General Cody, I would like to clarify an answer
    provided during today's hearing. General Casey has been very candid
    about the impact of the deployments on Army readiness. In testimony
    before this committee on November 15, 2007, he said ``our readiness is
    being consumed as fast as we can build it.'' In testimony before the
    House Armed Services Committee last September, he said that the Army is
    ``unable to provide ready forces as rapidly as necessary for other
    potential contingencies.'' Which potential contingencies do you believe
    are at greatest risk?
        General Cody. Contingencies that require forces to operate over the
    full range of military missions are at the greatest risk. For example,
    a large conventional ground war. The Army is consumed with meeting the
    demands of the current fight and is unable to rapidly provide full-
    spectrum ready forces necessary for other contingencies. Current
    operational requirements for forces and limited periods between
    deployments necessitate a focus on counterinsurgency to the detriment
    of preparedness for the full range of military missions.
        To ensure strategic plans are coordinated and executed accordingly,
    it is imperative that we rebuild readiness, achieve balance, restore
    strategic depth for future challenges, and get continuous and timely
    congressional support.
        Thanks to the support and assistance that Congress has already
    provided to the Army, it has enabled us to address critical resource
    requirements during existing persistent conflict. The support and
    assistance to cover costs of reset, modernize equipment, and maintain
    quality of life for our soldiers are the key to keep our Army running.
    Our operational demand continues and it is not decreasing. We need
    timely resources to continue the training, equipping, and stationing
    for our soldiers to properly conduct operations in time of war and to
    meet current demand.

        58. Senator Thune. General Cody, in what readiness accounts does
    Congress need to focus resources in the short-term to mitigate these
    risks?
        General Cody. Thanks to the support and assistance that Congress
    has already provided to the Army, it has enabled us to address critical
    resource requirements during existing persistent conflict. The support
    and assistance to cover costs of reset, modernize equipment, and
    maintain quality of life for our soldiers are the key to keep our Army
    running. Our operational demand continues and it is not decreasing. We
    need timely resources to continue the training, equipping, and
    stationing for our soldiers to properly conduct operations in time of
    war and to meet current demand.

        59. Senator Thune. General Cody, can the Army respond to a domestic
    emergency on the scale of Hurricane Katrina?
        General Cody. Yes, since Hurricane Katrina, the Army has taken
    numerous steps to improve our readiness in response to a large scale
    domestic emergency. Even though the Army is heavily committed with
    Iraq, Afghanistan, and global war on terror, it still has capabilities
    to respond to natural disasters with the National Guard, U.S. Army
    Reserve, and the Active component. In the event of a major disaster or
    emergency, and in support of a Federal response, the Army will respond
    rapidly to the affected area. Our primary mission is to save and
    sustain lives and relieve suffering in the affected region. The Army
    plays an important role in disaster response; however, all our efforts
    are in support of FEMA working closely with State and local officials.
    The Army is aggressively planning to anticipate the needs of our
    Federal, State, and local partners to speed our response to those
    affected by disaster.
        The Army has a comprehensive equipping strategy to source hurricane
    State shortfalls, including materiel and operational solutions.
    Headquarters, Department of the Army, in coordination with FORSCOM,
    Army Materiel Command, ARNG, U.S. Army Reserve Command, and U.S. Army
    Pacific Command developed an equipping plan which supports the Army's
    response to defense support to civil authorities (DSCA) missions and
    provides assistance to the ARNG's response to a governor's request for
    support when needed.
        Defense support to a domestic emergency is a very complex
    functional operation and requires broad cooperation with Federal,
    State, and local elements. The Army is ready to assist civil
    authorities in lifesaving and life-sustaining actions, in mitigating
    damage and recovery.

                           army prepositioned stocks
        60. Senator Thune. General Cody, prepositioned stocks are critical
    enablers to the DOD's military strategy and they help ensure that the
    military has material and equipment available for rapid deployment
    should future conflicts occur. However, the Army has depended upon
    equipment from Army prepositioned stocks (APS) for operations in Iraq
    and Afghanistan and, according to the Government Accountability Office,
    to accelerate creation of two additional BCTs. How important are the
    APS to the Army's ability to meet other potential contingencies, like
    Korea?
        General Cody. APS are a proven enabler of the Army's ability to
    rapidly project forces into an area of operations. APS provides the
    strategic depth and responsiveness to deploy globally to any
    contingency operation. The almost 7 years of fighting the global war on
    terror have demonstrated that the APS program is flexible, responsive,
    and critical to the Army's ability to deploy forces in support of the
    combatant commander requirements and adapt to changing strategic
    requirements. APS is used to support OIF and OEF. In addition, APS
    supported the BCT acceleration effort. The Army evaluates the strategic
    risk and implements mitigation factors, whenever APS equipment is
    required. The Army remains committed to maintaining an APS pool of
    equipment in order to meet current and future contingency planning
    requirements. All APS equipment sets will be reconstituted at a
    readiness posture of 95-100 percent of fill by fiscal year 2015. This
    is contingent on available resources, operational requirements, and the
    continued support of Congress to fully resource the administration's
    budget requests for Army equipment.
        APS-4 equipment in Korea and Japan remains in a high state of
    readiness and is available to repond to potential contingencies. APS-4
    comprised of an Heavy BCT (over 90 percent of fill) and a tailored
    Sustainment Brigade (over 85 percent of fill). APS-4 will be completed
    by fourth quarter fiscal year 2008. In addition, APS-3 afloat has a
    port opening package capability in Guam over 89 percent of fill. This
    set consists of a temporary afloat set of 20 units on the U.S. Naval
    Ship Pomeroy. The total sustainment brigade set will be completed in
    fiscal year 2011.

        61. Senator Thune. General Cody, what is the current state of the
    APS required to support war plans in Korea?
        General Cody. The heavy BCT is currently filled with 96 percent
    equipment and over 95 percent equipment readiness. The sustainment BCT
    is currently filled with 88 percent of its equipment and above 90
    percent equipment readiness. The largest shortage in the sustainment
    brigade is uparmored HMMWVs set to arrive from July-September 2008.
    Several low-density items are scheduled for arrival through 2010.
    Watercraft fill rate is currently 97 percent. However, watercraft
    readiness continues to below the standard. Readiness is hindered
    because the Army is currently installing new navigation systems on
    landing craft and utility vessels over the next year. Operational
    projects fill rates are being increased using funds received in the
    fiscal year 2008 supplemental.

        62. Senator Thune. General Cody, how much funding is provided for
    APS in the fiscal year 2008 budget and how much is requested in the
    fiscal year 2009 budget?
        General Cody. Based on the current budget position, the Army has
    funded a total of $375.3 million for APS in fiscal year 2008. The
    fiscal year 2008 request includes $340.2 million for maintenance and
    operations of all APS set equipment and $35.1 million for procurement.
    For fiscal year 2009, the Army requested $5.3 million for procurement
    and $928.6 million for operations and maintenance of critical APS
    requirements. In addition, the Army requested $3.2 billion in the
    fiscal year 2008 supplemental (of which $1.3 billion has been received)
    for reconstitution of APS stocks. The fiscal year 2009 supplemental
    request is currently under development.

        63. Senator Thune. General Cody, do you anticipate change, either
    in a positive way or a negative way, in the readiness of APS by the end
    of this calendar year? If so, can you quantify that change in
    readiness?
        General Cody. Yes. APS sets in Kuwait will see a significant
    increase in readiness this calendar year. The Army is in the process of
    reconstituting the infantry BCT set in Kuwait and it will be fully
    mission capable by the end of the calendar year. APS-4 will see a
    slight increase. Currently, equipment fill for the APS-4 heavy BCT is
    96 percent and is not anticipated to change by the end of calendar year
    2008. The equipment fill of the sustainment brigade is currently 88
    percent and is anticipated to increase to 90 percent by end of fiscal
    year 2008. HMMWVs are the key shortages and are scheduled for delivery
    between July-September 2008. APS-4 watercraft readiness will increase
    following the fielding of critical new navigation systems. The
    remaining APS sets are not being reconstituted during the current
    calendar year.

        64. Senator Thune. General Cody, can you describe the Army's
    strategy to replenish each of its APS sets?
        General Cody. The Army has approved APS Strategy 2015 to replenish
    all APS equipment sets by 2015. APS-2 is a land-based heavy BCT
    equipment set and will be completed by fiscal year 2015. APS-3 consists
    of two infantry BCTs with two complementary sustainment brigades. One
    infantry BCT, with uparmored wheeled augmentation, and one sustainment
    brigade pairing will be completed by fiscal year 2011. The other
    pairing of an infantry BCT, with uparmored wheeled augmentation, and a
    sustainment brigade will be completed in fiscal year 2013 and fiscal
    year 2015 respectively. APS-4, the Korean-based Heavy BCT and
    sustainment brigade sets will be completed in fiscal year 2008.
    Finally, APS-5 consists of several components. The Heavy BCT equipment
    set, with uparmored wheeled augmentation, is expected to be complete by
    fiscal year 2010. An infantry battalion set, with uparmored wheeled
    augmentation and a forward support company, will be completed by fiscal
    year 2011. APS-5 fires brigade and two sustainment brigades will be
    started in fiscal year 2013 and completed in fiscal year 2015.

        65. Senator Thune. General Cody, when does the Army estimate it can
    replenish APS and what will the cost be?
        General Cody. Except for APS 4 equipment, all other APS sets were
    issued to support OEF/OIF and must be reconstituted. Given the Army's
    current overall equipping priorities and requested funding through
    2015, the Army plans to reconstitute all worldwide APS equipment sets
    in accordance with the approved APS Strategy 2015 incrementally from
    2009 through 2015. The Army's cost estimate to implement APS Strategy
    2015 is $10 billion which is spread across both supplemental requests
    and the Army budget. This estimate includes: $1.5 billion received from
    the fiscal year 2007 supplemental and $1.3 billion from the fiscal year
    2008 supplemental to support initial APS rebuild efforts. The Army will
    track the reconstitution of APS in accordance with the approved
    strategy and timeline. We plan to have all APS sets reconstituted by
    the end of fiscal year 2015. Reconfiguration of APS will be along the
    modular construct to support future contingencies with rapid response.

                       deploying medically unfit soldiers
        66. Senator Thune. General Cody, recent reports from the 4th
    Infantry Division allege that soldiers who are medically unfit have
    been deployed to Iraq. Understanding the Army is still investigating
    these allegations, I would like to ask a few questions about the
    underlying Army policy. What are the standards of medical and dental
    readiness of soldiers for overseas deployment?
        General Cody. The standards of medical readiness for overseas
    deployment are provided in the Department of the Army Personnel Policy
    Guidance (PPG), CENTCOM Modification 8 to the PPG, and Army Regulation
    (AR) 40-501, Standards of Medical Fitness. All soldiers undergo Soldier
    Readiness Processing (SRP) prior to deployment to identify any medical
    problems that might preclude deployment. Each soldier is evaluated by a
    healthcare and dental provider for clearance or to address any
    conditions identified. Soldiers may deploy if their condition can be
    rectified prior to deployment. Medically or dentally unfit soldiers
    will not deploy.
        Some soldiers have physical limitations from previously identified
    medical conditions. These limitations are detailed on a form known as a
    Physical Profile. Profiles provide medical guidance from the health
    care provider to the commander for use in determining a soldier's
    fitness to deploy. If the commander can meet the soldier's physical
    limitations during the deployment, the soldier may deploy. AR 40-501
    provides guidance on soldiers possessing Physical Profiles.
        For certain medical and dental conditions, the theater medical and
    dental standards may be stricter than those in AR 40-501, and these
    conditions require a waiver from the theater surgeon, the top medical
    authority in theater, to deploy. The surgeon's decision is based on the
    environmental conditions and medical capabilities available at the
    soldier's particular deployment location.
        If a soldier has significant physical limitations that impact on
    his/her medical readiness, the soldier is evaluated by an Military
    Occupational Specialty Medical Retention Board or a Medical Evaluation
    Board to determine if the soldier meets the qualifications of his/her
    duties and meets the medical retention standards for military service.
    This process determines if the soldier may remain in military service,
    and if so, provides the limitations for a permanent Physical Profile.
        Dental readiness standards are found in DOD policy (OSD (HA) Policy
    Memos 06-001, 02-011, and 98-021). There are standard dental
    classifications for all the military Services. Servicemembers in dental
    fitness class (DFC) 3 or 4 cannot deploy unless the DFC is corrected to
    Class 1 or 2.

        67. Senator Thune. General Cody, have any changes in the policy
    been implemented since the wars in Iraq and Afghanistan began? If so,
    what are they?
        General Cody. Yes, the Army Personnel Policy Guidance, the theater
    CENTCOM policy, and Army Regulation (AR) 40-501 have changed over the
    last 7 years. As theater medical resources improved and changes in
    medical practice allowed, soldiers with some medical conditions that
    were restricted from deployment at the beginning of the war are now
    allowed to deploy to certain areas. The campaign in Iraq initially
    involved maneuvering Army units covering large areas, with uncertain
    camps and rest stops. The Army began the process of establishing the
    initial supply lines and support services in the theater. Over time,
    the Army has continued to develop operating bases with routine sources
    of water and electricity. The predictability of support services
    available to the soldier is now much more consistent and enduring.
    These developments in theater provide conditions capable of supporting
    soldiers with some specific medical needs or limitations. For example,
    a change to AR 40-501 allows soldiers with less severe sleep apnea to
    deploy to areas where electricity is available to allow use of a
    continuous positive airway pressure device used for treatment. The
    Army's initial role in Afghanistan was more unconventional, but
    continuing operations have resulted in similar development of operating
    bases with dependable support supplies and services. The policies
    affecting dental conditions that limit deployment have not changed.

        68. Senator Thune. General Cody, is it possible that commanders are
    overriding professional medical judgments in order to deploy soldiers
    because of shortages within units?
        General Cody. It is a common misperception that a soldier with a
    limiting physical profile is nondeployable and yes, ultimately the
    commander decides whether or not a soldier deploys. However, physical
    profiles that state ``nondeployable,'' ``do not deploy,'' or ``no field
    duty'' are invalid. Profiles delineate physical limitations of the
    soldier, not whether or not the soldier is deployable.
        Deploying a soldier that is not capable of supporting the mission
    decreases mission accomplishment. It would be counterproductive to the
    command to deploy soldiers that cannot contribute to mission
    accomplishment.

        69. Senator Thune. General Cody, do you have any information on the
    number of soldiers that are being returned from theater because of an
    underlying medical condition which should have prevented their
    deployment?
        General Cody. No, there is currently no method to distinguish
    servicemembers evacuated from theater for underlying conditions that
    should have prevented deployment from those who developed new
    conditions in theater or unexpected exacerbation of a pre-existing
    condition which necessitated evacuation from theater.

        70. Senator Thune. General Cody, do you think there is a stigma to
    seeking medical attention for PTSD? If so, could we inadvertently be
    deploying soldiers overseas with PTSD?
        General Cody. The Army continues to take steps to reduce the stigma
    that accompanies seeking help for behavioral health issues. The most
    recent Mental Health Advisory Team (MHAT) findings indicate that the
    stigma associated with seeking behavioral health intervention has been
    reduced in comparison to the previous MHAT surveys. We are encouraged
    by this reduction, and we will continue efforts to reduce stigma by
    implementing programs such as the Army's Chain Teaching Program that
    trains soldiers to identify the symptoms of PTSD and Traumatic Brain
    Injury, and educates them on how to obtain the needed care in a
    supportive and nonjudgmental manner. Regarding the overseas deployment
    of soldiers with PTSD, all soldiers receive a predeployment medical
    review, and if a soldier has PTSD symptoms, we follow established DOD
    guidelines. Not all soldiers with PTSD symptoms are precluded from
    deployment. Each soldier's case is looked at on an individual basis.
    The Army continues to pursue ``best practices'' in the medical care of
    our soldiers. Newly instituted programs such as RESPECT-mil and Academy
    for Excellence exemplify this point. These programs provide advanced
    training to primary care providers to identify the signs and symptoms
    of PTSD.

      recommendations of the commission on the national guard and reserve
        71. Senator Thune. General Cody, the Army Reserve and the National
    Guard have contributed enormously and indispensably to operations in
    Iraq and Afghanistan and to homeland security since September 11. The
    Commission on the National Guard and Reserves submitted its report on
    January 31. Among other requirements, the Commission called for formal
    recognition of the establishment of an Operational--vice Strategic--
    Reserve. This would require maintaining the Army Reserve and National
    Guard at a higher level of readiness. This recommendation would require
    additional resources and new constructs for employing the Reserve
    components for assessing readiness. The Commission found that the level
    of full-time support relates to the readiness of Reserve and National
    Guard to deploy. The Commission found that Army funding for full-time
    support has not been sufficient. The report includes a detailed
    recommendation on how the Army could restructure its full-time support
    program to improve readiness and effectiveness. Can you describe the
    Army's program for full-time support to Reserve component units?
        General Cody. The Army's full-time support program is a concept
    developed as a result of DOD Directive 1205.18, ``Full-Time Support
    (FTS) to Reserve Components,'' which requires the Reserve components
    (RCs) to maintain a cadre of full-time support personnel who are
    responsible for assisting in the organization, administration,
    recruitment, instruction, training, maintenance, and supply support.
    The Army's RC full-time support personnel are predominantly comprised
    of career-oriented Active Guard Reserve (AGR) soldiers and dual status
    military technicians (MTs).
        Full-time support soldiers fill critical positions in Reserve
    units, most notably positions related to personnel, training and
    operations, and supply and maintenance. Other functions critical to
    unit function are performed by FTS staff such as facilities management,
    fiscal operations, information technology support, and medical support.
    The combined efforts of the FTS personnel ensure that the soldiers are
    properly trained, equipped, and ready to deploy.
        The fiscal year 2008 ARNG and U.S. Army Reserve (USAR) full-time
    support requirements are funded at 69 percent for a combined total of
    82,020 AGRs and MTs. The validated full-time support requirement is
    119,241 FTS personnel. At the end state of the current increase in
    fiscal year 2013, funding supports 77 percent of the AGR requirements
    and 69 percent of the MT validated requirements.
        The emerging operational demands caused by pre-mobilization
    requirements, the surge, OSD's January 2007 12-month mobilization
    policy, and suspended stop loss policy have resulted in the Army
    augmenting deploying units with Full Time Equivalent (FTE) and Active
    Duty for Operational Support (ADOS) manpower. FTE and ADOS designated
    personnel fill the career FTS void for a short duration as determined
    by mission requirements. The Army expects to continue reviewing full-
    time support requirements, resourcing, and readiness issues.

        72. Senator Thune. General Cody, are you familiar with that
    specific recommendation and would you comment on it?
        General Cody. The Army, like OSD and the other Services, is
    currently conducting a comprehensive review of the Commission's 95
    recommendations, including a full evaluation, their relationship to
    each other, their relationship to other Army programs and initiatives,
    their cost if approved, and how they will be funded if approved.
        For this reason, it is premature for the Army to take definitive
    positions on specific recommendations. Additional time is required to
    collect and analyze input from throughout the Army's organization to
    render valid and feasible positions. However, the Army acknowledges
    that a new model may need to be adapted to provide improved full-time
    support to the Army's Reserve components, especially as the Army
    transitions its Reserve components from a Strategic Reserve to an
    operational force. Some implementation of FTS changes have already
    begun to satisfy Homeland defense requirements and civil support
    responsibilities.
        The Army agrees that a manpower review is warranted and has
    commissioned Rand Arroyo to conduct a Full Time Support Requirements
    Analysis, scheduled for completion in fiscal year 2009. The study will
    consider the changes in force structure, deployment frequency, and the
    overall projected Army requirements for the National Military Strategy.
        Since September 11, the men and women who serve in the Army's
    Reserve components as citizen-soldiers have mobilized and deployed in
    support of the global war on terror in unprecedented numbers. Their
    dedication to duty and sacrifice, as well as that of their families and
    employers, is unsurpassed. I am encouraged that the Commission and
    Congress agree on the need to assess, and possibly change, some of the
    institutions, laws, and policies that support our Reserve components.

        73. Senator Thune. General Cody, can you explain what is being done
    to improve equipment fielding to both the Guard and Reserve?
        General Cody. First and most importantly to our soldiers, no unit--
    including Reserve component units--deploy without a full complement of
    combat capable equipment. Second, in the case of Homeland defense and
    security missions, the Army is committed to ensuring that the ARNG has
    all the equipment necessary to execute these missions successfully.
        The Reserve component is being equipped at an unprecedented rate.
    Since September 11 (fiscal years 2001-2007), the Army has resourced
    over $15.3 billion in ARNG procurement and $4.5 billion in Army Reserve
    procurement. Between January of 2008 and December 2009, the Army will
    field over 400,000 items to the ARNG, worth $17.4 billion, and over
    118,000 items to the Army Reserve, worth $4 billion.
        We agree that equipment fill for nondeployed units is at an
    unacceptable level and requires significant modernization. The Army is
    committed to an investment strategy across its program to fill
    shortages, including replacing older trucks, radios, night vision
    devices, aviation assets, and engineer equipment. For fiscal years
    2008-2013, the Army has resourced $29.3 billion for ARNG equipment and
    $11 billion for Army Reserve equipment.

                 army operation and maintenance--family support
        74. Senator Thune. General Cody, the budget request for fiscal year
    2009 increases funding for family and community support, child care,
    community activities, and youth programs in excess of $742.0 million.
    Please explain how family support programs will reach those who do not
    live on or near an Army base--especially families of deployed members
    of the Guard and Reserve--who are themselves experiencing significant
    deployment-related challenges.
        General Cody. The Army Integrated Family Support Network (AIFSN)
    offers soldiers and families the support they deserve, especially, the
    geographically dispersed. This web-based resource ``connects'' the
    geographically separated Army and families, and provides access to
    family programs and services. The idea is to harness the resources that
    are already in place, and use personal contact and technology to
    improve on the delivery of service so families get support closest to
    where they live. AIFSN reached initial operational capability in March
    2008, and FOC will occur in September 2008.
        From mobilized soldiers, to recruiters, to families located outside
    reasonable driving distances to military facilities--AIFSN provides
    standardized baseline services, information, tools, and resources. It
    is made up of Army Community Service, Child and Youth Services, Guard
    Family Assistance Centers, Reserve Readiness Centers, and civilian
    community agencies. By combining and linking resources, AIFSN gives
    Army families a choice. Army families are able to access services by
    phone, the internet, and when situations dictate, travel to the nearest
    facility to receive personalized support. AIFSN's support services
    network increases overall family readiness, improves quality of life,
    and helps prepare families for anything that might come their way.
        AIFSN has incorporated a ``Yellow Ribbon'' program into the
    delivery of services to all soldiers and families. This delivery system
    provides information, services, referral, and proactive outreach to
    soldiers, spouses, employers, children, and youth throughout the entire
    mobilization process. When fully operational in September 2008, it will
    provide a single, holistic, institutional network of standardized
    services.
        Army-sponsored child care is available in all 50 States for both
    Active and deployed Reserve component families. Working with a
    centrally contracted national vendor, families receive assistance
    locating and enrolling in local child care programs. Fee assistance is
    provided and assures that child care fees paid by the soldier are
    comparable to those paid in Army installation child care programs.
    Programs for geographically dispersed Army youth are available in all
    50 States through partnerships with the Boys and Girls Clubs and
    National 4-H programs. Additionally, Operation: Military Kids,
    available in 42 States, is a collaborative effort with America's
    communities to support military children impacted by the global war on
    terror.
        We have completed two Army-wide training sessions for Family
    Program and Child and Youth Services staff to focus on the baseline
    services soldiers and families need. Additionally, localized community-
    based training will ensure geographically dispersed families receive
    the support they need where they live. The first ``Building Community
    Partnerships'' training will be conducted in Chapel Hill, NC, by the
    University of North Carolina Citizen Soldier Project. Additional
    training will be conducted at various locations throughout the United
    States.

        75. Senator Thune. General Cody, how many additional families do
    you expect to reach in fiscal year 2009?
        General Cody. Sixty percent of Army families live off post. AIFSN
    expands family services to the Active and Reserve component to help
    families respond to transitions, separations, and deployments, and to
    alleviate the everyday stress associated with military life.
        Army Child and Youth Services will serve an additional 62,000
    families in the Active and Reserve components in fiscal year 2009 in
    programs and services provided on post and in local communities. This
    is a 31 percent increase from fiscal year 2008.

        76. Senator Thune. General Cody, do you anticipate further requests
    coming in the supplemental, and if so, what are the additional
    requirements for families that are not included in the base budget
    request?
        General Cody. The AIFSN and our other existing family programs will
    be fully funded in fiscal year 2010.
        However, we may require additional supplemental funding for an
    emerging requirement under development for a Survivor Outreach Services
    program for families of our fallen military heroes. This program will
    help families cope with their loss, stabilize their present situation,
    secure their future, and provide a full spectrum of life skills,
    education, and continuing support.

                             new army field manual
        77. Senator Thune. General Cody, last month, the Army released an
    updated version of Field Manual (FM) 3.0 ``Operations'' to reflect an
    increasing emphasis on stability and civil support. This is the first
    update since September 11 and is a departure from past doctrine. The
    revised FM describes an operational concept where commanders employ
    offensive, defensive, and stability and civil support operations
    simultaneously as part of interdependent joint force. In this manual
    the importance of stability operations is elevated to co-equal with
    combat operations. Do you think the changes in the FM will generate any
    changes in readiness reporting?
        General Cody. The shift to full spectrum operations and smaller,
    more versatile units affects how Army forces manage training and
    readiness. Some readiness reporting policies and procedures will change
    to align with the new doctrine; however, the basic principles
    underpinning the Army readiness reporting process will remain constant.
    These basic principles include maintaining a unit focused, commander
    centric readiness reporting system and measuring current unit status
    against the specific mission requirements. It is important to
    understand that readiness reporting provides the yardstick for
    measuring the current mission capability of units and identifies stress
    on the force. While this measuring tool does not fundamentally change
    with doctrinal changes, new doctrine may warrant new or revised
    measurements or metrics.

        78. Senator Thune. General Cody, will a BCT have to assess how it
    performs information operations?
        General Cody. Yes. With all operations, not just information
    operations (IO), we conduct combat assessments to determine the
    relative success in achieving our objectives. The BCT utilizes all
    available organic and supporting collection assets that affect its area
    of operations, to collect data, and produce intelligence to aid
    assessments.
        The collected data is employed by the BCT's Non-Lethal Effects cell
    to assess the effectiveness of the BCT's IO actions. The cell has
    subject matter experts assigned to it from the following areas; IO,
    electronic warfare, targeting, civil affairs, psychological operations,
    and the Judge Advocates General corps.
        The efforts, methods, means, and assessments of nonlethal effects,
    such as the influence of the indigenous population and the enemy, are
    integrated with lethal effects through the BCT targeting process
    (decide, detect, deliver, and assess).

        79. Senator Thune. General Cody, will the new FM have any immediate
    impact on ongoing procurement and modernization programs?
        General Cody. We are looking at the impacts of the new doctrine
    across all areas (organization, training, materiel, leadership,
    personnel, and facilities). We believe that the primary impacts will be
    on leader development, training and developing, and maintaining the
    operational context, with minor equipment and formation changes. The
    Army will assess the impact of this new doctrine on its procurement and
    modernization programs as it develops.

        80. Senator Thune. General Cody, will the new FM generate changes
    to the requirements documents for the Future Combat Systems?
        General Cody. It is too early to tell. However, the Army will make
    the necessary changes, if any, as required.

                 impact of growth in special operations forces
        81. Senator Thune. General Cody, General Magnus, Admiral Walsh, and
    General McNabb, as results of the 2005 Quadrennial Defense Review
    (QDR), the DOD announced plans to grow Special Operations Forces (SOFs)
    by 13,000 personnel by 2010. This entailed training more Army, Navy,
    and Air Force personnel for Special Operations missions as well as
    establishing a Marine Corps component. Has this initiative affected the
    current unit readiness levels for the Services?
        General Cody. Due to the ongoing establishment of new
    organizations, unit readiness appears to drop significantly in the Army
    SOFs community. This is misleading because the numbers from the new
    organization(s) negatively impact overall C-rating results. These units
    have begun reporting well before their interim operational capability
    in order to fill requirements for personnel and equipping.
    Historically, Army Special Operations units have generally maintained
    steady-state readiness, with normal post-deployment dips during dwell
    and have not been significantly impacted by the growth of new units.
        The Army plans to add a fourth battalion for each Active component
    Special Forces Group, a fourth company for each Ranger battalion, a
    fourth battalion to the 160th Special Operations Aviation Regiment, as
    well as an Active component Civil Affairs brigade headquarters and
    three additional Civil Affairs battalions.
        General Magnus. The creation of Marine Forces, Special Operations
    Command (MARFORSOC) did not affect current readiness levels for the
    Marine Corps. Although MARFORSOC and the reconnaissance community have
    competing requirements for some occupational specialties, the
    appropriate long-term planning and growth initiatives have been
    implemented to ensure that both the conventional Marine Corps and
    MARFORSOC have a steady flow of marines to fill their respective
    structures.
        Additional manpower requirements levied on the reconnaissance
    community have been appropriately planned for by the Reconnaissance
    Occupational Field Managers and USMC Manpower and Reserve Affairs. The
    growth plan for additional reconnaissance capabilities within the
    Marine Corps has been programmed for manning increased over several
    years, and has not had a significant impact on readiness.
        MARFORSOC Special Operations Battalions (MSOBs) were created
    initially from the reflagging of Marine Corps Force Reconnaissance
    Companies. This included structure, inventory, and equipment. Marine
    Special Operations Advisor Group (MSOAG) was created from the pre-
    existing USMC Foreign Military Training Unit (FMTU). This included
    structure, inventory, and equipment. Elements of the MARSOC
    headquarters were established by redesignating preexisting USMC
    structure. Other elements of MARSOC were created through the
    redesignation of structure from the Special Operations Training Group
    (SOTG) from I and II MEF. Equipment programs were shifted from the
    former Force Reconnaissance and FMTU elements as the primary means of
    equipping MARFORSOC. Funding to offset the additional costs of
    equipping MARFORSOC were requested through the fiscal year 2006
    supplemental process. Subsequent funding was budgeted through the
    Program Objective Memorandum (POM) process. The majority of required
    facilities came from existing base structures. Additional funding was
    budgeted through SOCOM to support required MILCON.
        Admiral Walsh. This has not affected current unit readiness for
    Navy. Naval Special Warfare (NSW) enlisted Special Operator billets are
    programmed to grow by about 14 percent from fiscal year 2005 to fiscal
    year 2010. As of March 2008, NSW enlisted community manning is at 80
    percent (1,747/2,174) of fiscal year 2008 programmed authorizations.
        To meet increasing requirements, we have steadily increased
    enlisted accessions since 2005. Through the second quarter of fiscal
    year 2008 we have already accessed, or contracted into our Delayed
    Entry Program, 100 percent (1,089/1,089) of this year's Enlisted SEAL
    recruiting goal. In contrast, we recruited just 59 percent (829/1,400)
    and 91 percent (1,274/1,397) through all of fiscal year 2006 and fiscal
    year 2007, respectively.
        General McNabb. The Air Force is meeting personnel and training
    requirements of the SOCOM, and while we are experiencing some
    challenges in a few critical skill sets (e.g., Combat Controllers
    (CCT), Para-rescue Jumpers (PJ), Intel, Career Enlisted Aviators
    (CEAs)), overall AFSOC is 101 percent manned (11,235 assigned/11,089
    authorized--Active Duty officer and enlisted only).
        As a result of the 2006 QDR; Air Force Special Operations Command
    (AFSOC) has/will add an additional 771 Active Duty officer/enlisted
    authorizations across fiscal year 2007-2011; these areas include:

            -  Combat Aviation Advisors (6 SOS - +120)
            -  UAS (3 SOS - +275)
            -  Processing, Exploitation and Dissemination (11 IS - +124)
            -  U-28 (319 SOS - +98)
            -  Special Mission Unit (24 STS - +102)
            -  Data Masked (DM - +52)

        However, we expect AFSOC to continue to grow as their SOF sister
    Service counterparts have grown by over 13,000 positions without a
    commensurate increase in AFSOC airlift capability that these forces
    rely on for mobility on and off the battlefield.
        Rapid growth brings inevitable challenges with recruiting,
    assessing, and training personnel for the SOF mission. Still, the Air
    Force has continued to man AFSOC at levels equal to or greater than the
    rest of the service. Some of our chronic critical skills include:

              PJs (1T2)--AFSOC at 67 percent, Worldwide Air Force (WWA) at
            58 percent
              CCT (1C2)--AFSOC at 64 percent, WWA at 49 percent
              General Intel (1N0)--AFSOC at 94 percent, WWA at 83 percent
              Sensor/Imagery Analysis (1N1)--AFSOC at 84 percent, WWA at 77
            percent
              Flight Engineer (1A1)--AFSOC at 92 percent, WWA at 99 percent
              Loadmaster (1A2)--AFSOC at 93 percent, WWA at 91 percent

        82. Senator Thune. General Cody, General Magnus, Admiral Walsh, and
    General McNabb, are the Services meeting the personnel and training
    requirements of SOCOM?
        General Cody. In response to the realities of the post-September 11
    environment, the Army will grow approximately 12,000 additional SOFs
    related authorizations by the end of fiscal year 2013. This growth
    includes: adding an additional battalion to each Special Forces Group,
    growing an additional special operations aviation battalion, bringing
    the 75th Ranger Regiment's structure into line with the Army's modular
    construct, and adding additional civil affairs and psychological
    operations structure to both Active and Reserve components. The Army
    fully understands the need to resource these critical requirements and
    has initiated various incentive programs to ensure the retention of
    high caliber SOF and SOF support personnel.
        In response to concerns expressed from both SOCOM and the U.S. Army
    Special Operations Command (USASOC) regarding the need for support
    personnel, the Army instituted retention bonuses to encourage quality
    support soldiers to relocate to USASOC organizations, ensuring that
    USASOC has the requisite skills necessary to support operations. Many
    of these skill sets are in high demand for overall Army transformation,
    and this teamwork with USASOC and SOCOM illustrates the Army's
    commitment to resourcing all SOF requirements. Additionally, in
    recognition of the significant missions performed by both SOCOM and
    USASOC the Army seeks to fill all deploying SOCOM organizations at 100
    percent in the aggregate. Additionally, the Army is projecting to fill
    SOCOM's headquarters at 100 percent by the end of fiscal year 2008.
        The SOF community fully meets their training requirements and only
    seeks limited training assistance from the general-purpose Army. For
    those limited instances, (e.g., for intermediate level professional
    military education) SOF personnel share proportionally in any training
    capacity shortfall. Furthermore, the Army works closely with the SOF
    community to achieve training efficiencies, where possible, and to
    integrate SOF forces into the training of Army expeditionary forces,
    when appropriate.
        General Magnus. The Marine Corps is working towards meeting the
    training requirements of SOCOM. The Individual Training Course (ITC)
    under the Marine Special Operations School will be implemented no later
    than first quarter fiscal year 2009 and will provide MARSOC Commands
    with Special Operations marines trained to perform the basic individual
    skills associated with foreign internal defense, direct action, special
    reconnaissance, and unconventional warfare. Additionally, Special
    Operations marines attend mission appropriate specialized courses such
    as Basic Airborne, Basic Reconnaissance, Military Free-fall
    Parachutist, Marine Combatant Diver, Scout Sniper, Urban Sniper,
    Mountain Sniper, SERE, Joint Tactical Air Controller, Joint Service
    Training Program, Jump Master, Ranger, Pathfinder and other appropriate
    schools to ensure that Marine Special Operators are trained with the
    required skills to accomplish their SOCOM assigned missions. Unit
    driven pre-deployment specific training ensures each deploying Marine
    Special Operations Team (MSOT) or Company (MSOC) has trained to
    accomplish the full spectrum of missions assigned and each MSOC
    completes a SOCOM Deployment Certification Exercise (DCE) prior to
    deploying with their associated MEU (SOC).
        The Service continues to meet the vast majority of SOCOM's
    personnel requirements, which has placed great demands on the Marine
    Corps' High Demand/Low Density Military Occupation Specialties,
    particularly in the 0321 Reconnaissance field, 0211 Counter
    Intelligence/HUMINT Specialists, as well as the rest of the
    intelligence and signals intelligence fields. The Marine Corps has just
    approved an internal reorganization of MARSOC to ensure that the right
    numbers and mix of grades and MOSs are available to MARSOC in order to
    accomplish its assigned missions. The Commandant has made the manning
    of MARSOC a top priority. SOCOM's requirements for marines in the SOCOM
    Headquarters, the various Theater Special Operations Commands (TSOCs),
    Joint SOCOM, and other SOCOM units remain high priorities for manning
    as the Marine Corps seeks to balance the competing demands of its own
    forces.
        Admiral Walsh. Naval Special Warfare (NSW) enlisted SEALs are in
    extremely high demand to meet global war on terror mission requirements
    in Iraq, Afghanistan, and locations around the world, and that demand
    is increasing. NSW enlisted Special Operator billets are programmed to
    grow by about 14 percent from fiscal year 2005 to fiscal year 2010. As
    of March 2008, NSW enlisted community manning is at 80 percent (1,747/
    2,174) of fiscal year 2008 programmed authorizations.
        Meeting DOD-directed growth requirements, while maintaining the
    highest quality standards among Navy SEALs, continues to be a top
    priority. In order to accomplish this, we have established an
    aggressive, two-pronged approach to increase production while
    decreasing attrition.
        To meet increasing requirements, we have steadily increased
    enlisted accessions since 2005. Through the second quarter of fiscal
    year 2008 we have already accessed, or contracted into our Delayed
    Entry Program, 100 percent (1,089/1,089) of this year's Enlisted SEAL
    recruiting goal. In contrast, we recruited just 59 percent (829/1,400)
    and 91 percent (1,274/1,397) through all of fiscal year 2006 and fiscal
    year 2007, respectively.
        Attrition among NSW candidates has declined at boot camp as
    evidenced by the significantly increased rate at which candidates
    remain in the program between fiscal year 2006 (30 percent) and thus
    far in fiscal year 2008 (nearly 90 percent). In addition to developing
    the capacity to recruit and train additional SEALs, Navy has dedicated
    considerable resources to maintaining the senior enlisted leadership
    necessary to lead and mentor increased numbers of new SEALs. The
    holistic approach to managing the complex NSW pipeline will take time
    to fully realize; however, the overall trend is positive and we will
    continue refining best practices until future growth requirements are
    met.
        Through enhanced special and incentive pays for recruiting and
    retaining enlisted SEALs, we are making great strides toward meeting
    fiscal year 2011 growth requirements. For instance, we have:

             Increased enlistment bonuses for SEAL recruits to $40,000.
             Established a $90,000 reenlistment bonus which has yielded
            much success in reenlistment rates in fiscal year 2008-to-date
            in Zones A--97 percent; B--86 percent; and C--90 percent.
             Established a Critical Skills Reenlistment Bonus in fiscal
            year 2005 for senior enlisted SEALs and Special Warfare Combat
            Craft Crewmen with 19-25 YOS.
             Extended Assignment Incentive Pay eligibility to NSW
            personnel over 25 YOS.
             Added SEAL commanders (O5) to those eligible for the
            prestigious Stockdale award.
             Expanded Naval Special Warfare Officer Continuation bonus to
            SEAL Limited Duty Officers.
             Established NSW recruiting directorate, led by a SEAL O6, to
            assist CNRC in recruiting young men with the determination and
            ability to succeed as SEALs.

        Naval Special Warfare is meeting recruiting goals for SEAL line
    officers in training (118X) through all recruiting sources. Limited
    SEAL officer quotas for all accession sources continue to make SEAL
    line officers qualified in Special Warfare (113X) an extremely
    competitive warfare specialty. Based on trends over the past 10 years,
    we expect to achieve SEAL officer recruiting goals beginning in fiscal
    year 2009 and beyond.
        We are currently examining future resourcing requirements for a
    number of areas to further support SOCOM/Naval Special Warfare Command
    initiatives, including:

             Travel and support for targeted recruiting events to be
            conducted by NSW Recruiting Directorate (RD). Established with
            military and civilian manpower authorizations provided by NSW,
            the NSW RD augments Navy Recruiting efforts by targeting high
            quality candidates for NSW.
             Continued improvements at Basic Underwater Demolition/SEAL
            Training to enhance SEAL candidate success.
             Continuation of a Navy Parachute Course which provides an
            economic alternative for SEAL pipeline Parachute training,
            reduces lost training time, and releases senior SEALs from
            instructor duty requirements.
             Development and distribution of rate training materials in
            support of recently established Special Operator (SO) and
            Special Boat (SB) ratings.
             Completing a 3-year Alternative Final Multiple Score Pilot
            program to develop and assess an improved methodology for
            selection for advancement of SO/SB personnel.
             Rectifying historical underfunding the Student IA of SEAL and
            SB student pipeline training requirements.
             Expanding non-SEAL personnel support in logistics,
            intelligence, and other combat support and combat service
            support functions.

        General McNabb. AFSOC is experiencing tremendous growth into new
    mission areas (ISR via manned and unmanned aircraft, Unconventional
    Warfare and Foreign Internal Defense, and light aviation for mobility
    throughout the globe). As should be expected with such rapid growth,
    inevitable challenges occur with recruiting, assessing, and training
    personnel. Still, the Air Force has continued to man AFSOC at levels
    equal to or greater than the rest of the Service. The new growth areas
    are receiving the full allotment of students, and in some cases, above
    the required levels. AFSOC continues to receive highly-trained,
    qualified personnel into all their weapons systems. The current level
    of expertise required to fight the war on terror is extraordinary, and
    Air Force training continues to be superb. The caliber of pilot, combat
    systems officer, enlisted aviator, or battlefield airman is testimony
    to the Air Force's commitment to providing the very best training.

                     capability-based readiness assessments
        83. Senator Thune. General Cody, General Magnus, Admiral Walsh, and
    General McNabb, during the past 10 years, DOD has advocated for
    doctrinal changes in force management. Combatant commanders used to
    plan for and request specific units to meet operational plans. Now,
    combatant commanders are being asked to request and plan for a specific
    capability or an effect in warfare. The goal is to provide the Services
    more flexibility in tailoring forces to meet the specific requirements
    of a mission. This should result in a higher rate of readiness by
    deploying only those forces that were absolutely necessary, while
    freeing up non-essential personnel for other tasks. How far along are
    the Services in transitioning to capabilities-based force management?
        General Cody. The Army fully supports the DOD transformation to
    capabilities-based force management under the GFM umbrella. To assist
    combatant commanders' capabilities planning, the Army has been actively
    involved in development of policy and Concept of Operations for the GFM
    Adaptive Planning initiative. To enhance combatant commanders
    capabilities requests for current operations in the future, the Army
    supports the GFM initiative to integrate global requirements and force
    readiness information. The Army leads the Services in providing
    availability and readiness data for global force visibility.
        The Army supports combatant commander capabilities-based requests
    in the existing process by mapping army units to RFF unit type codes.
    In this way, the Army quickly identifies all force units with abilities
    to support any capabilities-based request. As a part of GFM, the Army
    proactively supports capabilities-based force management through the
    use of processes and systems such as ARFORGEN to manage cyclical
    deployment preparation, Army Global Outlook System (ARGOS) for theater
    security capability requirements, Joint Training Integrated Management
    System (JTIMS) to manage operational exercise demands, and the DRRS-A
    to handle readiness status of capabilities Army wide.
        General Magnus. In 2005, the GFM construct was implemented to
    transform the previously reactive force management process into a near
    real-time, proactive process that streamlines and integrates
    assignment, apportionment, and allocation of forces. Since GFM's
    inception, the Marine Corps has continued to refine internal processes,
    including implementation of biannual force synchronization conferences,
    that reconcile rotational, emergent, and future force generation across
    all aspects of the Marine Corps. The internal processes result in a
    holistic understanding of demands upon the Marine Corps and provide
    senior leadership with more informed sourcing recommendations that
    account for operational and institutional risk, modernization,
    transformation, training, and readiness.
        Additionally, the DOD GFM Board (GFMB) provides a collaborative
    joint forum in which sourcing solutions are recommended to meet
    combatant commander demands. As requirements are identified by
    combatant commanders (CCDRs), Joint Force Providers (JFP), and the
    Services, are able to validate those requirements and provide solutions
    that match required capabilities to the maximum extent possible. When a
    requested capability cannot be met, the GFM process incorporates risk
    analysis from the CCDRs and JFPs in order to provide the Chairman and
    SECDEF a fully vetted, prioritized sourcing recommendation for final
    decision.
        The Marine Corps is also involved with the Force Management
    Integration Project (FMIP) sponsored by the Deputy Under Secretary for
    Readiness (DUSDR), Joint Forces Command (JFCOM) and the Joint Staff.
    The FMIP mission is to develop and execute a plan to integrate and
    synchronize policy, processes, authoritative databases, and technology
    affecting force sourcing and GFM to enable more coherent, effective,
    and efficient adaptive planning and execution.
        Admiral Walsh. Navy unit readiness is reported through the SORTS,
    and provides a measure of a unit's capabilities. The measure, however,
    is defined in terms of Major Combat Operations capability and may not
    accurately address unit performance below Major Combat Operations. Navy
    has instituted Fleet Response Program (FRP) SORTS reporting which
    captures the assessment of a unit's ability to perform specific tasks
    of war, known as Naval Warfare Mission Areas, and is most accurately
    reflected in the Unit Status Assessment. Unit status is the critical
    measure of a unit's ability to meet the required capabilities, as
    specified by the CCDR, within the FRP cycle.
        DRRS is a readiness Program of Record that will provide
    capabilities-based readiness assessments. METs will be the basis for
    readiness reporting and will serve as the building blocks for CCDR
    Request for Capability (RFC) and Joint Capability Areas. DRRS will
    capture, aggregate, and provide unit, group, or force readiness and is
    intended to support Joint Task Force training, readiness, and
    certification processes. Navy's version of DRRS (i.e., DRRS-N) will
    provide readiness information to the joint and interagency communities
    in a DOD-common format.
        DRRS-N achieved Initial Operating Capability (IOC) in the fall of
    2006 and is in operation at more than 65 shore installations and
    onboard more than 35 Fleet units. DRRS-N is expected to replace SORTS
    by mid-fiscal year 2009.
        General McNabb. Air Force tailored capabilities are Unit Type Codes
    (UTCs) which are managed as subsets of units. The Air Force executes
    capability-based planning and employment utilizing Unit Type Codes and
    the Air and Space Expeditionary Force (AEF) force generation construct
    to present Air and Space Expeditionary Task Forces (AETF). Per Air
    Force Doctrine Document (AFDD) 2, commanders are advised to ``begin
    developing a force structure by outlining the necessary air and space
    power capabilities needed for an operation and then follow up by
    deploying the appropriate tailored force required.'' Per AFDD 1, ``The
    AETF will be tailored to the mission. It should draw first from in-
    theater resources, if available. If augmentation is needed, or if in-
    theater forces are not available, the AETF will draw as needed from the
    AEF currently on rotation.'' The AEF and AETF constructs enable the Air
    Force to sustain readiness by deploying only those forces necessary to
    successfully accomplish the mission.

        84. Senator Thune. General Cody, General Magnus, Admiral Walsh, and
    General McNabb, what are the pros and cons to this type of force
    management?
        General Cody. Capabilities-based force management increases
    visibility across the DOD and within the Services. Increased visibility
    allows the Army to better understand the capability quantities
    available and better evaluate its force structure sufficiency for
    current operations. This allows the Army to best manage its force
    inventory and provide capabilities effectively and efficiently.
        There is a holistic benefit to unit deployments. Command and
    control, maneuver, sustainment, and the ability to deploy and redeploy
    as a cohesive unit are not always considered when supporting a
    capabilities-based request. It is best to correlate requests with
    current force structure, perhaps requiring augmentation or other
    temporary actions to meet the requirement.
        Generally, when CCDRs request capabilities, the Army is able to
    capture which capabilities are most needed, and to provide the best
    trained, equipped, and led unit to match the request. Capabilities-
    based requests enable the Army to effectively modify its force mix and
    inventory over time to best support CCDRs' actual needs.
        General Magnus. The formalization of risk assessment is a distinct
    pro under the GFM construct. While continually under refinement, the
    capabilities-based GFM construct has facilitated the global
    prioritization of requirements matched to strategic end-states. GFM
    established common business rules that CCDRs, Joint Force Providers
    (JFP), and Services understand and operate under. It applies strategic
    risk assessment based upon real time demands and resource availability.
    Service ``red-lines'' establish institutional risk tied to readiness,
    capabilities, and health of the force that further articulate potential
    risk for future force generation. Lastly, the collaborative process
    enhances joint cooperation leading to a joint solution with formal
    validated risk assessments to realize informed, effective decisions.
        Conversely, structured Service organizations will not always match
    required capabilities in size or scope. Thus, capabilities-based
    sourcing often leads to ``ad-hoc'' and ``in-lieu-of'' solutions that
    entail atypical, uncompensated organization of units with non-doctrinal
    command relationships. Additionally, capabilities-based sourcing tends
    to force myopic specialization to meet single capability demands that
    degrade the core competencies of a truly multi-capable force over the
    long-term.
        Admiral Walsh.
    Pros:
        In 2005, GFM was created to transform a previously reactive force
    management process into a near real-time, proactive process.
    Historically, the DOD conducted strategic force management through a
    decentralized, ad hoc process that framed decision opportunities for
    the Secretary of Defense. For OEF and OIF, the Secretary made crisis
    action planning force management decisions in response to a combatant
    command RFF or RFC. To support these decisions, the Chairman of the
    Joint Chiefs of Staff hosted ad hoc ``wargames'' to identify forces to
    support those OEF/OIF requests and determine risk mitigation options.
        GFM enables the Secretary to make more proactive, risk-informed
    force management decisions integrating the three processes of
    assignment, apportionment, and allocation. This process facilitates
    alignment of operational forces against known apportionment and
    allocation requirements in advance of planning and preparation
    timelines. The end result is timely allocation of forces/capabilities
    necessary to execute combatant command missions (to include theater
    security operation tasks), timely alignment of forces against future
    requirements, and informed Secretary of Defense decisions on the risk
    associated with allocation decisions.
        The relationship among the assignment, allocation, and
    apportionment processes will transition over time to a single,
    integrated, capabilities-based process that supports the National
    Defense Strategy. Aligning the three processes under GFM was an interim
    step. As the GFM Data Initiative, Adaptive Planning Initiative, and
    DRRS field usable tools and capabilities, GFM will enable the military
    departments and the Joint Chiefs of Staff to manage force availability.
    GFM will also enable the designated Joint Force Providers to monitor
    force availability over time, identify risks to execute CCDR missions,
    forecast sourcing challenges to execute contingencies, and project
    Reserve component unit mobilization/availability.
    Cons:
        DRRS has highlighted the need for reporting readiness measured
    against specific mission capabilities vice broad design capabilities.
    Services are tasked to break down designed capabilities in Core METs
    and develop Employment METs that map to Unified Joint Task Lists
    (UJTLs).
        MET data is being defined to a level of detail that may become
    onerous for the Services to capture.
        The shelf-life of Employment MET data is a function of changes to
    the CCDRs mission requirements.
        Progress of employment MET development across the Services has been
    mixed. GFM's full potential will not be realized until the complete MET
    library is defined and documented.
        General McNabb.
    Pros:
        Provides the Service the ability to present tailored forces with
    the appropriate capabilities to the CCDR; ability to present forces in
    their vulnerability period who are right, ready and trained; leverage
    Service expertise to choose the ``best'' force vice the most
    ``familiar'' force (a function of system upgrades, software, weapons,
    and equipment).
    Cons:
        Increased workload required to manage ``tailored'' capabilities.
    The Air Force tailored capabilities are Unit Type Codes (UTCs) which
    are managed as subsets of units; possibility to initially receive an
    inadequate force based on an ill-informed request (this may effect
    either capabilities or unit based decisions).

        85. Senator Thune. General Cody, General Magnus, Admiral Walsh, and
    General McNabb, has there been a demonstrative impact on current unit
    readiness as a result of this method of force management?
        General Cody. The Army's efforts to grow, transform, and modularize
    the force have resulted in the development of forces that can be
    tailored by the force provider to meet CCDR's requirements. However the
    current demand challenges the supply that we can maintain through the
    Army Force Generation process. In turn, the high demand relegates the
    Army to ``just in time'' readiness, creating counterinsurgency-focused
    forces that attain required readiness just prior to deployment. Until
    the demand decreases below the level of our sustainable supply, we will
    continue to consume Army readiness as fast as we build it. Thus, it is
    the demand for forces which has most significantly depleted Army
    readiness, rather than the method by which the force is managed.
        General Magnus. One area where there has been a demonstrative
    impact on readiness as a result of capability-based force management is
    ``in-lieu-of'' sourcing. In-lieu-of sourcing is an overarching sourcing
    methodology that provides alternative force sourcing solutions when
    preferred force sourcing options are not available. An in-lieu-of
    force/capability is a standard force, including associated table of
    organization and equipment that is deployed/employed to execute
    missions and tasks outside its core competencies. An example of this is
    an existing artillery battalion, provided with a complete training and
    equipment package, deployed to fill a security force battalion
    requirement. The positive effect of in-lieu-of sourcing is that it
    mitigates the stress on specific high demand capabilities. In the
    example given above, the in-lieu-of sourcing of an artillery battalion
    to fill a security force role alleviated the need to fill the
    requirement with an infantry battalion. The negative effect of in-lieu-
    of sourcing is that the designated unit requires time to train, and
    equip to perform the assigned in-lieu-of mission requirement, which
    negatively impacts their ability to train and maintain proficiency with
    their core competencies.
        Admiral Walsh. Since the CCDRs continue to submit RFF vice RFC it
    is not possible to provide an objective assessment of the impact on
    current readiness as a result of this method of force management. Navy
    expects to see improvements in the alignment of the readiness of its
    forces to anticipated presence and surge demand as those requirements
    become better defined. Strategic documents and the upcoming QDR will
    further mature this process as transformational policy and lexicon is
    injected into these events.
        General McNabb. The Air Force executes capability-based planning
    and employment utilizing the Air and Space Expeditionary Force (AEF)
    and Air and Space Expeditionary Task Forces (AETF). The AEF/AETF
    construct provides the Air Force the ability to present tailored forces
    with the appropriate capabilities to the CCDR and the ability to
    present forces in their vulnerability period that are right, ready, and
    trained. Deploying the appropriate tailored forces enables the Air
    Force to sustain readiness by deploying only those forces (tailored
    forces) necessary to successfully accomplish the mission.

        86. Senator Thune. General Cody, General Magnus, Admiral Walsh, and
    General McNabb, in your opinion, does the current system used to assess
    the readiness of combat units support capability-based force
    management?
        General Cody. Yes, it does. Other Services tend to view
    capabilities in a platform-centric manner while the Army views
    capabilities through units executing tasks. Since we measure the
    ability to perform tasks in our readiness reporting, our process
    supports this type of force management quite well. As our forces and
    missions have evolved, so too has our readiness reporting. We have
    worked diligently to keep our readiness reporting relevant and
    accessible to those who utilize this information.
        Examples of our efforts include:

             The Army has achieved a Web-enabled readiness system for all
            reporting units worldwide, to include those in the Reserve
            components. This makes it easier for commanders to submit their
            reports on time regardless of their location.
             The Army has the ability for unit readiness reports to
            automatically populate four key authoritative databases, giving
            leaders at all echelons real time visibility of critical
            information in the personnel, logistics, and force management
            arenas.
             The Army Readiness Management System, a readiness information
            management application, gives commanders and staffs
            capabilities for analyzing the vast amount of information that
            populates the DRRS-A database.

        General Magnus. The current readiness reporting system of record is
    GSORTS. GSORTS is a Joint Staff resource and unit monitoring system
    designed to support crisis response and contingency planning
    information requirements. GSORTS allows the Marine Corps to measure its
    ability to organize, train, maintain, and equip our operating force for
    employment by CCDRs. GSORTS data indicates, at a selected point in
    time, an assessment of resource levels, coupled with a training
    assessment, evaluated against the unit's designed mission. Within GFM,
    GSORTS data informs readiness assessments for force allocation
    decisions and associated risk mitigation. One shortfall of GSORTS is
    its inability to assess a unit's ability to perform individual METs.
        To support capability-based force management, OSD has been
    developing the DRRS. DRRS is intended to be a mission-focused,
    capability-based system to assess the ability of units and
    installations to execute their missions and METs. It is also intended
    to support the GFM process. The Marine Corps continues to work closely
    with the DOD in the development of DRRS. When fully operational, DRRS
    will replace GSORTS as the single readiness reporting system of record.
        Admiral Walsh. No. Navy's current readiness reporting system, the
    TRMS, is based on DOD's SORTS construct. This construct provides a
    relatively objective assessment of resource areas (Personnel, Supply,
    Repair, and Training), which combine for a sufficient examination of a
    literal interpretation of Services' Title X responsibilities to man,
    train, and equip combat forces. However, it fails to explicitly codify
    what those combat forces can do with the resources and training they
    have been given. Navy is transforming its readiness reporting to a
    resource-informed, capability-based reporting system aligned to the
    OSD's DRRS.
        General McNabb. The GSORTS is the readiness system of record.
    GSORTS provides resource based readiness information and supports
    capabilities-based force management from a resource perspective. The
    Air Force is working with OSD to implement the DRRS which is a
    capabilities-based readiness system.

                military equipment--attrition and battle losses
        87. Senator Thune. General Cody, General Magnus, Admiral Walsh, and
    General McNabb, on the issue of the procurement of equipment as it
    affects readiness, its seems with each annual budget request and
    emergency supplemental request, we are buying the world's supply of
    humvees, M-RAPS, generators, personal armor, and other critical
    equipment for use in theater. Yet the Army is testifying that we are
    consuming at the rate we are creating readiness. Specific to equipment,
    we will still need 2 to 3 years of funding at the current level to
    restore equipment shortfalls. We keep hearing the terms ``battle
    losses'' and ``useful life attrition'' as the reasons we need to
    purchase tremendous amounts of new equipment each cycle. But at the
    same time, the intensity of the attacks on American forces in Iraq has
    reduced over the past year, which would seem to reduce battle losses.
    Do each of the Services actually track on a monthly or quarterly basis
    the numbers and types of equipment noted as battle losses or at the end
    of their useful life?
        General Cody. The Army receives weekly or bi-weekly battle loss
    reports from Aviation and Missile Command, Tank and Automotive Command,
    and Communications and Electronics Command. These reports are collected
    and consolidated by the Army Deputy Chief of Staff for Logistics.
    Equipment which reaches the end of its useful life as a result of
    higher OPTEMPO in support of the global war on terror is also captured
    in these reports.
        General Magnus. Yes, since the commencement of OIF, the Marine
    Corps tracked and continues to track the attrition of selected
    Principal End Items attributed to global war on terror. The attached
    USMC Ground Equipment Attrition report is developed monthly and
    disseminated to Marine Corps leadership. The report uses output from
    automated systems to track equipment status. The Marine Corps uses the
    term destroyed vice lost to classify equipment that has been destroyed
    by enemy involvement and lost due to the end of useful life.

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Admiral Walsh. Equipment noted as battle losses or at the end of
    their useful life are tracked on a continuous basis instead of on a
    monthly or quarterly basis. Aircraft and expeditionary equipment
    inventories are continuously updated and evaluated through OPNAV, Naval
    Air Systems Command, and Naval Facilities Engineering Command. The
    program managers track and analyze all data for associated equipment
    including battle loss and useful life attrition. Data for global war on
    terror stress and battle losses are tracked for purposes of readiness,
    life cycle expectancies, and resetting of the forces.
        General McNabb. The Vehicle Management Section of every
    Expeditionary Logistics Readiness Squadron performs analysis and
    produces monthly and quarterly maintenance reports of all vehicles and
    equipment that are assigned to and/or maintained by the squadron
    (including tenant units). These reports reflect the state of the
    vehicle fleet by vehicle type, assigned organization, and year group.
    These reports show data such as the cost of operating and maintenance,
    accidents/abuses/ battle damage, man hours expended, labor and parts
    cost, and vehicle life expectancy remaining (based on type). By
    utilizing these reports, the Vehicle Management Section can program and
    request, from higher headquarters, new vehicles to replace ones that
    are worn out, obsolete, or destroyed.

        88. Senator Thune. General Cody, General Magnus, Admiral Walsh, and
    General McNabb, please provide a trend of battle losses over the past 6
    years by numbers of major pieces of equipment in your inventories.
        General Cody. The following table provides battle loss trends of
    major air and ground combat systems from fiscal year 2002-2007.

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        General Magnus. The attached Marine Corps Ground Equipment
    Attrition report depicts the trends of battle losses of major end items
    over the past 6 years. Attached also is USMC global war on terror
    Aircraft Losses (strikes) since 11 Sept 01.
        [The report referred to is retained in committee files.]
        Admiral Walsh. Navy does track cumulative replacement requirement
    due to global war on terror loss, global war on terror stress, and
    projections based on accelerated wear rates.
        The Type/Model/Series (T/M/S) listed below represents current
    aircraft type procurements. These aircraft are replacing older T/M/S
    aircraft which are no longer being procured. For example, EA-6Bs are no
    longer in production so these assets are being replaced by EA-18Gs.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Below represents the expeditionary equipment destroyed and lost due
    to combat stress.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        General McNabb. Monthly battle damage reports are collected from
    the bases in the AOR and forwarded to Air Force Central. To date, the
    Air Force has lost 13 vehicles to battle damage. In addition, a few
    radios and various other sundry assets have been classified as battle
    losses. Due to the small numbers of losses there are no specific trends
    noted. Combat aircraft losses in the AOR since September 11 are: 1-A10,
    1 MH-53M, 1 F-16CG, 2 RQ-1s, and 2 MQ-1s.

        89. Senator Thune. General Cody, General Magnus, Admiral Walsh, and
    General McNabb, do the Services position equipment depots forward into
    the theater of operations?
        General Cody. The Army has established equipment maintenance
    operations in Qatar, Kuwait, Iraq, and Afghanistan. These operations
    are resourced by people from our Army depots, commercial contractors,
    and foreign nationals at some sites. They maintain all types of
    equipment: combat vehicles, wheeled vehicles, communication-electronics
    equipment, helicopters, construction equipment, et cetera. These
    operations perform primarily below depot level tasks to keep equipment
    in theater fully mission capable.
        General Magnus. The Marine Corps does position a variety of
    equipment management programs in theater: Forward In Stores (FIS)
    Program, Marine Expeditionary Unit (MEU) Augmentation Program (MAP),
    and the Principal End Item (PEI) Retrograde Program. Each program
    provides a unique service to the Commander, United States Marine
    Forces, Central Command (MARCENT).
        These include:

              1. Forward In Stores (FIS): Located at Camp Taqaddum, Iraq.
            Established to quickly receive, store, and issue critical PEI
            combat replacement requirements in support of COMUSMARCENT.
              2. Marine Expeditionary Unit (MEU) Augmentation Program
            (MAP): Located at Camp Arifjan, Kuwait. Established to enhance
            the combat readiness and responsiveness of the MEU(SOC) as they
            conduct operations in the CENTCOM AOR and reduce the MEU(SOC)
            call forward equipment that is shipped from the continental
            United States (CONUS).
              3. PEI Rotation Program: The objective is to improve,
            prolong, and enhance sustainment of the warfighter in-theater
            with the best possible equipment. The program includes
            retrograde of damaged/fatigued principal end items to CONUS for
            repair and replenishment with serviceable equipment.

        Admiral Walsh. The Navy provides forward deployed depot support in
    the theater of operations through the following means:

              1. Ship's Repair Facility located in Yokosuka with a
            detachment in Sasebo provides organic depot-level repairs for
            ships forwarded deployed to Japan.
              2. Two submarine tenders that can deploy in theater and
            provide limited depot-level capability for ships and
            submarines.
              3. Emergent in-theater depot ship repairs can be executed at
            multiple overseas private shipyards, NATO allied shipyards, or
            by fly-away teams from public or private sector shipyards
            (located in CONUS or Hawaii), and the submarine tenders. These
            repairs are normally coordinated through permanently forward
            located maintenance support organizations such as Mid-Atlantic
            Regional Maintenance Center detachment, Naples, Mid-Atlantic
            Regional Maintenance Center detachment Bahrain, and Commander
            Naval Logistics Western Pacific in Singapore.
              4. Emergent in-theater depot aircraft repairs are coordinated
            through the Naval Air Planning and Repair Activity (NAPRA) in
            Atsugi, Japan. NAPRA and all the Fleet Readiness Centers (FRCs)
            provide planning and estimating services, and fly-away teams
            for depot-level aircraft repair.

        General McNabb. No, the Air Force does not position traditional
    depots in the theater of operations. However, the Air Force does
    perform depot-level type overhaul and repairs to three categories of
    major end items in the theater of operations. These categories include
    deployable electrical generators which power bare base infrastructures,
    portable fighter aircraft arresting systems, and uparmored HMMWVs.
    These items are maintained under the War Reserve Materiel program
    administered by Air Forces Central.

        90. Senator Thune. General Cody, General Magnus, Admiral Walsh, and
    General McNabb, how does this positioning affect the readiness rates of
    units?
        General Cody. This forward repair capability is essential to
    sustaining the near-term equipment readiness rates of deployed units.
    Our forward repair capability in Afghanistan and Iraq is distributed to
    several regional locations to better support readiness, shorten
    maintenance turnaround times, and reduce risks associated with
    transporting all maintenance items to a centralized Logistics Support
    Area. Army Fleet Readiness for all essential systems meeting or
    exceeding the Army's goals is the direct results of maintenance
    planning and adequate supplemental funding.
        General Magnus. Marine Forces in theater have a high sustained rate
    of readiness across all classes of equipment. Positioning ready for
    issue equipment forward maintains this high readiness rate. The Forward
    In Stores program provides an in-theater exchange for combat damaged
    equipment. The damaged item is simply turned in and the unit is issued
    a ready replacement. The PEI Rotation program promotes higher readiness
    by exchanging high use equipment from theater with either new or
    rebuilt equipment.
        Admiral Walsh. The Navy's positioning of depot capability enables
    the Navy to support CCDR requirements and the Maritime Strategy. This
    positioning specifically helps support forward deployed ships and
    aircraft in the Fleets.
        General McNabb. Performing depot-level type overhaul and repairs to
    these major end items in the theater of operations enables the Air
    Force to return these vital items to the warfighter much faster and
    much more economically.

             training for mine resistant ambush protected vehicles
        91. Senator Thune. General Cody, a Defense News article on March
    31, 2008, on the procurement of MRAP vehicles reported that the Army is
    considering raising the ceiling on purchases from 10,000 to 12,000
    vehicles. The report indicates that the increase responds to requests
    by leadership in Iraq in the wake of a surge of attacks using
    explosively formed penetrators, a deadly form of an IED. In the same
    report, an Army spokesman states that MRAP officials are crafting a
    long-term plan to be presented to you in the next 2 weeks to propose
    where the MRAP fits into the future Army. I realize that this vehicle
    has been introduced into the Army inventory only recently, and that
    every vehicle is being shipped forward to protect combat forces as soon
    as it is produced. When are Army personnel trained on the safe use and
    capabilities of the vehicle?
        General Cody. Currently we have a three-phased process to train
    soldiers on the operation and maintenance of MRAP vehicles:

              a. 40-hour Operators New Equipment Training (NET) and 40-hour
            Field Level Maintenance (FLM) NET as we field vehicles in
            theater, consisting of all driver and FLM tasks required for
            operators and unit maintainers. This training is conducted at
            seven Regional Support Areas (RSAs) in Iraq and at Bagram Air
            Base in Afghanistan.
              b. When a unit deploys to the theater and assumes operational
            control over battle space where MRAPs have already been
            fielded, operators and maintainers receive the same 40 hour
            training in Kuwait prior to forward movement into theater.
              c. MRAP University at Red River Army Depot ``trains the
            trainers'' of deploying units, both maintainers and operators.
            The Army has provided 25 vehicles to MRAP University to train
            deploying support personnel and rotating units (8 BAE-TVS/
            Caiman, 8 BAE/RG33, and 12 IMG/MaxxPro).

        92. Senator Thune. General Cody and General Magnus, is there a plan
    at some point to incorporate the vehicle into home station and maneuver
    training for units back in the States getting ready to deploy?
        General Cody. Training, while essential, cannot be at expense of
    protecting soldiers. The longer-term MRAP training requirement plan
    allots 604 MRAPs to support CONUS/outside CONUS training of incoming
    units. These vehicles are fully funded as part of our approved MRAP
    fielding strategy. Once the theater demand for MRAPs is met, vehicles
    will be fielded to the training base. The timing of this is dependent
    on theater demand, but we currently project that we will begin fielding
    MRAP to the training base in late 2008.
        Currently we have a three-phased process to train soldiers on the
    operation and maintenance of MRAP vehicles:

              a. 40-hour Operators New Equipment Training (NET) and 40-hour
            Field Level Maintenance (FLM) NET as we field vehicles in
            theater, consisting of all driver and FLM tasks required for
            operators and unit maintainers. This training is conducted at
            seven Regional Support Areas (RSAs) in Iraq and at Bagram Air
            Base in Afghanistan.
              b. When a unit deploys to the theater and assumes operational
            control over battle space where MRAPs have already been
            fielded, operators and maintainers receive the same 40 hour
            training in Kuwait prior to forward movement into theater.
              c. MRAP University at Red River Army Depot ``trains the
            trainers'' of deploying units, both maintainers and operators.
            The Army has provided 25 vehicles to MRAP University to train
            deploying support personnel and rotating units (8 BAE-TVS/
            Caiman, 8 BAE/RG33, and 12 IMG/MaxxPro).

        General Magnus. Yes, the Marine Corps already incorporates MRAP
    vehicle training into pre-deployment training. To date, there are 29
    MRAP vehicles at various places throughout the Marine Corps. In the
    coming months, 336 MRAP vehicles will be fielded for CONUS training.

        93. Senator Thune. General Magnus, does the Marine Corps have a
    long-term plan to incorporate the MRAP into its equipment inventory and
    training activities?
        General Magnus. Yes, we do have a long-term plan to incorporate the
    MRAP vehicles into our equipment inventory. Thus far, we have
    identified an enduring requirement for use of some of the 2,225 MRAP
    vehicles by Explosive Ordnance Disposal and combat engineers units
    responsible for route clearance-type missions. We are considering
    several options for the remaining vehicles such as placing them forward
    in stores, embarked aboard Maritime Prepositioning Ships, or a mix of
    both options. The DOD Combat Tactical Wheeled Vehicle strategy, to be
    completed this summer, will provide additional details.

        94. Senator Thune. General Magnus, when are marines trained on the
    safe use and capabilities of the vehicle?
        General Magnus. Home station training and Mojave Viper training
    specifically address the capabilities and limitations of the MRAP
    vehicles. Student MRAP operators are thoroughly familiarized on safe
    vehicle operation procedures throughout all phases of pre-deployment
    training.
        Based on the compelling need for vehicles in theater there are
    approximately 29 MRAP vehicles currently available for home station or
    Mojave Viper training. In the coming months, 336 MRAPs will be provided
    for training at various places throughout the Marine Corps. Additional
    licensing and in depth training continue to take place when units
    arrive in theater.

                             air force flying hours
        95. Senator Thune. General McNabb, in fiscal year 2008, the Air
    Force took a 10 percent reduction in funding for its flying hour
    program. At the time, the Chief of Staff of the Air Force, General
    Moseley, stated his concerns over the risk that level of funding
    represented to readiness. The committee is encouraged in the fiscal
    year 2009 budget request that the Air Force has reportedly ``bought
    back'' some of that risk, restoring $340 million to its primary combat
    forces flying hour program. How do you assess the risk associated with
    the amount of funding contained in the current flying hour program for
    fiscal year 2008 and fiscal year 2009, respectively?
        General McNabb. To clarify, the $340 million flying hour program
    (FHP) growth referenced in the question for record pertains to
    Subactivity Group (SAG) 11A, Primary Combat Aircraft. The increase
    results from an action Congress took during the fiscal year 2008
    President's budget. In fiscal year 2008, Congress reduced the peacetime
    flying hour program $400 million and provided a corresponding fiscal
    year 2008 ``global war on terror Bridge Appropriation,'' providing $400
    million to offset the impact of the peacetime mark.
        In terms of risk assessment, there is a reduction of approximately
    11,000 flying hours from fiscal year 2008 to fiscal year 2009 within
    SAG 11A, Primary Combat Aircraft. To clarify, the SAG 11A reduction is
    part of a total reduction across all sub-activity groups of 26,968
    flying hours. However, it should be noted that this reduction is
    primarily driven by pilot production decreases and force structure
    changes and drives no additional risk to operational readiness.
        The Air Force fully funded the fiscal year 2008 and fiscal year
    2009 FHP at the fuel rates in effect at the time the President's
    budgets were produced. However, rapidly increasing fuel prices continue
    to place significant pressures on our operating accounts. As oil market
    prices climb unabatedly after submission of the President's budget, we
    continue to need your support in the execution year to mitigate its
    operational impact.

        96. Senator Thune. General McNabb, do you feel the fiscal year 2009
    budget contains the right balance between recapitalizing the fleet and
    maintaining aviator proficiency?
        General McNabb. In the fiscal year 2009 budget, the Air Force fully
    funded the flying hour requirement necessary to keep our crews
    proficient, but Air Force Total Obligation Authority (TOA) remains
    short of the required resources necessary to fully recapitalize our
    aging fleet.

        97. Senator Thune. General McNabb, in your opening statement, you
    stress at the outset the total force concept of integrating the Active,
    Guard, and Reserve Forces into one cohesive fighting unit. If the total
    force is seamless, why did the corporate Air Force only buy back active
    flying hour program risk and not also that of the Guard and Reserves?
        General McNabb. In the Air Force fiscal year 2009 President's
    budget submission, the Active Air Force O&M flying hour program
    decreases between fiscal year 2008 and fiscal year 2009 by 26,968 FHs
    (2.5 percent reduction). This reduction is primarily driven by pilot
    production decreases and force structure changes.
        In the Air Force fiscal year 2009 President's budget submission,
    the Air Force President's budget justification narrative displayed the
    fiscal year 2008 flying hour program funding that includes a
    congressional global war on terror peacetime flying hour reduction of
    $400 million. However, the fiscal year 2009 program funding did not
    include a reduction for a global war on terror adjustment since the
    program had not yet been marked by Congress. Because of the fiscal year
    2008 congressional mark, the display of the flying hour program funding
    between fiscal year 2008 and fiscal year 2009 gave the impression that
    the Active Air Force had a significant program increase in fiscal year
    2009.

        98. Senator Thune. General McNabb, are the approaches to funding
    aviator proficiency and readiness so different that more risk can be
    assumed in the Guard and Reserves?
        General McNabb. The Air Force Planning, Programming, and Execution
    process is our single approach to funding all activities. The Air Force
    continues to search for solutions for funding aviator proficiency and
    readiness across the full spectrum of missions as we seek to achieve
    total force victory in the global war on terror. The Air Force strives
    to optimize expenditures across the total force. To that end, the Air
    Force has instituted an annual capabilities review and risk assessment
    to meld requirements for several mission areas into an integrated
    program objective memorandum recommendation. As a result, the Air Force
    optimizes its limited resources across the total force.

               nuclear surety and the nuclear shipment incidents
        99. Senator Thune. General McNabb, in former Air Force Chief of
    Staff General Larry Welch's report on the inadvertent shipment of
    nuclear weapons incident, he mentions several reports over the past
    decade that called for a refocus on the nuclear mission. Despite the
    numerous studies, few, if any, inspections showed any concerns. If the
    state of the nuclear mission force were in decline for the past 2
    decades, yet current inspection processes failed to demonstrate that
    decline, is not that an indictment of the current inspection regime?
        General McNabb. I don't believe that to be true. Nuclear Surety
    Inspections (NSIs) assess a specific unit's compliance with nuclear
    surety standards, and the unit's ability to produce reliable nuclear
    weapons in a safe and secure manner. The focus of NSIs is not on the
    overall nuclear mission force, nor do they assess Air Force cultural
    change. I would submit though, that despite the end of the Cold War,
    and the change from a nuclear-centered Air Force to a conventionally-
    centered Air Force, our inspection system has been a primary
    contributor toward keeping airmen focused on nuclear surety and nuclear
    operations. Our nuclear-capable units are inspected on an 18-month
    cycle, which is more frequent than our conventional operations. NSIs
    have identified deficiencies in the past and led to changes in policy
    and procedures to enhance safety and security. While no inspection
    regime can prevent all potential outcomes, there is room for
    continuously improving our processes and we, as a Service, are
    undertaking those changes now.

        100. Senator Thune. General McNabb, General Welch stated, ``The
    process and systemic problems that allowed such an incident have
    developed over more than a decade and have the potential for much more
    serious consequences.'' However, both installations involved were
    certified through the current inspection processes as being capable of
    fulfilling their stated mission without reservation. Given the lack of
    ability of the inspection processes to uncover the systemic problems,
    how can we have confidence in the readiness inspection processes?
        General McNabb. We have complete confidence in our readiness
    inspection processes. We believe our nuclear surety and nuclear
    operational readiness inspections have been very valuable in assessing
    compliance with all nuclear surety standards as well as in evaluating
    our capability to meet our nuclear wartime operational mission
    requirements (i.e., operational employment of nuclear weapons). Our
    inspection programs not only assess what is required by DOD but inspect
    a number of additional areas that the Air Force has identified as being
    important to nuclear surety. As a result of the incident at Minot, we
    have identified one additional area that we believe is important to
    validate nuclear surety and we've initiated that change. Over the years
    our inspection system has identified deficiencies and analyzed trends
    and briefed these to the Air Force's most senior leadership within the
    nuclear community, the Air Force Nuclear General Officer Steering Group
    (AFNGOSG), as well as the MAJCOM Inspectors General responsible for
    conducting the inspections. We will continue to evaluate our nuclear
    inspection processes as we believe they are an extremely important part
    of maintaining nuclear surety and readiness.

        101. Senator Thune. General McNabb, you mention in your statement
    about multiple levels of review currently underway on nuclear surety.
    Why did it take a major incident to shed light on all those past
    studies?
        General McNabb. The Air Force nuclear focus shifted with the post-
    Cold War draw-down of nuclear units and weapons. During the past 17
    years, the Air Force has supported non-nuclear deployments in support
    of global commitments and has engaged in continuous combat supporting
    conventional demands such as the global war on terrorism. All of this,
    while simultaneously operating, maintaining, and sustaining 450
    Minuteman III intercontinental ballistic missiles available at a
    moments notice to protect the Nation. Additionally, since September 1,
    2007, the Air Force has moved or assisted in the movement of over 750
    nuclear weapons without a single incident. The Air Force and commanders
    understand there are inherent risks which we cannot totally eliminate;
    however, we take actions to access and reduce those risks. Although
    this incident has challenged the Service, the Air Force remains
    absolutely committed to the nuclear mission, is considering all of the
    recommendations from recent reviews, and recognizes nuclear stewardship
    is a sacred trust with the Nation.

        102. Senator Thune. General McNabb, what specifically are we doing
    to ensure our inspection regimes catch degradation in readiness before
    we have an incident such as happened at Minot Air Force Base?
        General McNabb. The Air Force is continuing to conduct NSIs in
    accordance with DOD directives. Through NSIs, the Air Force MAJCOM
    Inspector General (IG) teams evaluate a unit's ability to manage their
    nuclear resources and comply with all nuclear surety standards. NSIs
    are conducted at intervals not to exceed 18 months. In addition to
    evaluating the 10 nuclear surety functions required by DOD directives,
    the Air Force MAJCOM IG teams evaluate four additional areas that the
    Air Force believes are critical to nuclear surety. Based on a
    recommendation from the Commander Directed Investigation (CDI), the Air
    Force is also in the process of adding the requirement to inspect
    Munitions Control and Plans and Scheduling during each NSI. We are also
    exploring the option to conduct NSIs on limited or no-notice basis
    within the 18-month inspection requirement.

                              cyberspace readiness
        103. Senator Thune. General McNabb, I'm interested in the Air Force
    stand-up of Cyber Command in October 2007 to provide combat-ready
    forces trained and equipped to conduct operations in cyberspace. In
    your written statement, you state that ``the Air Force will continue to
    develop and implement plans for maturing cyber operations as one of its
    core competencies.'' Has the Air Force developed a METL for these
    forces? If so, can you provide a description of it? If so, has the Air
    Force developed minimum readiness standards to determine mission
    capability and effectiveness?
        General McNabb. The Air Force has units and airmen who have clearly
    been executing military operations in cyberspace for some time. We have
    METLs for individual missions such as electronic attack, network attack
    and defense, and space control negation. Today, those METLs and our
    related measurement of readiness are codified as portions of different
    mission areas such as information operations and space control.
        There are minimum readiness standards for individual units' ability
    to execute their missions in cyberspace. A unit's minimum readiness
    standard is described in its Description of Capability (DOC) Statement.
    What will be new with AFCYBER Command is the consolidation of those
    forces into one command whose prime focus will be on our readiness to
    fight in the cyberspace domain. As those forces are consolidated into a
    focused command and synergies are realized, the Air Force's definition
    and measurement of overall readiness to fight in cyberspace will be
    refined. We will in fact transition to measuring the whole rather than
    a sum of the parts.

        104. Senator Thune. General McNabb, how will the Air Force assess
    the readiness of its cyber forces?
        General McNabb. The Air Force will continue to assess of our
    forces' readiness to execute operations in cyberspace through the
    SORTS. When AFCYBER Command is operational, it will become the single
    command responsible for assessing and addressing those units' readiness
    to accomplish the missions assigned in their DOC Statements.

                 army is out of balance and ``thin red lines''
        105. Senator Thune. General Cody, General Casey has said: ``While
    the Army remains the best led, best trained, and best equipped Army in
    the world, it is out of balance.'' In a speech before the Brookings
    Institution in December 2007 he said he had a discussion with General
    Meyer, a former Army Chief of Staff, who told Congress in 1980 that he
    led ``a hollow Army.'' About that discussion with General Meyer he
    said: ``One of the things he left with me is there's a thin red line
    out there that you don't know when you cross it until after you've
    crossed it.'' I have to believe that sometimes these ``thin red lines''
    take years to materialize, but often the indicators of problems to come
    emerge sooner. Would you agree with General Meyer that there are thin
    red lines?
        General Cody. While the concept of a thin red line may exist, the
    cumulative effects of the last 6-plus years at war have left our Army
    out of balance, but not hollow. The Army continues to exceed recruiting
    and retention goals. The impacts on soldiers and units of increasing
    time deployed and decreasing time between deployments are visible in
    several different areas: training, readiness, and other indicators.
    With Congress' continued support, we can mitigate these effects.

        106. Senator Thune. General Cody, what indicators about the health
    of the Army today worry you the most and what are the thin red lines
    you are watching for now?
        General Cody. The cumulative effects of the last 6-plus years at
    war have left our Army out of balance. Current operational requirements
    for forces and limited periods between deployments necessitate a focus
    on counterinsurgency to the detriment of preparing for the full range
    of military missions. The Army is consumed with meeting the demands of
    the current fight and is unable to rapidly provide full-spectrum ready
    forces.
        Other indicators are worrisome: the competitive recruiting
    environment with a declining number of qualified potential recruits,
    the increase in the number of soldiers with PTSD, and an increasing
    number of suicides. Additionally, many soldiers have not attended
    Professional Military Education commensurate with their rank.
        However, we assess that we will continue to recruit and retain
    enough soldiers to preserve the All-Volunteer Force. We are also
    continually improving our medical and mental health programs designed
    to identify and treat soldiers suffering from the impacts of multiple
    combat deployments. In this era of persistent conflict, the Nation
    deserves a fully prepared and resourced force. With your support we
    will continue to rebuild readiness, achieve balance, and restore
    strategic depth for future challenges.

        107. Senator Thune. General Cody, in your opinion, what readiness
    indicators are most critical in determining whether the stress of
    current operations on the force has become too much?
        General Cody. The most basic indicator is the health of the All-
    Volunteer Force. Specifically, our ability to retain the quality and
    quantity of soldiers we need to man our units. Our ability to do this
    is a reflection of our soldiers' and their family's attitude towards
    the Army. So far, the response has been outstanding. We are meeting or
    exceeding our retention goals consistently. The tremendous support for
    reenlistment bonuses we have received from Congress has enabled the
    Army to provide incentives. However, it is the commitment of the
    soldier and his or her family to selfless service that motivates them
    to reenlist.
        In terms of the readiness of the Army to respond to contingencies,
    the best indicator is the readiness rate for our nondeployed forces.
    Low personnel and equipment readiness are the most significant
    indicators of a unit's readiness and stress on the force. Those forces
    that are not deployed are the primary forces available to respond to
    other contingencies. The low readiness level of those forces is the
    most visible example of stress on the force--notwithstanding that upon
    notification of deployment to OIF or OEF; they are issued theater-
    specific resources to perform their assigned mission.
        Currently, the Army is implementing ARFORGEN. ARFORGEN is a cyclic
    training and readiness process that synchronizes strategic planning,
    prioritizing, and resourcing to generate trained and ready modular
    expeditionary forces tailored to joint mission requirements. This
    process is designed to build unit readiness by allocating resources in
    reference to a deployment timeline and by providing predictable periods
    of availability and deployment for soldiers, families, and employers
    (in the case of Reserve component soldiers).
        In an unstressed environment, some of the nondeployed force would
    be expected to be at the lowest level of readiness during a reset and
    train period while others would be at the highest level of readiness as
    they cycle through the ARFORGEN process to support employment for other
    contingency operations. Unfortunately, the current operational demand
    associated with OIF, OEF, multinational force observers, Kosovo force
    observers, forward stationing, Homeland defense, and other requirements
    has not diminished to levels that support the desired reset, training,
    and ready periods prior to deployment. Because of this, we have
    concentrated our readiness in the deployed and deploying units to
    support the CCDRs.

        108. Senator Thune. General Cody, do you believe the Army is
    adequately acquiring resources to stave off the thin red lines? If not,
    where are the gaps?
        General Cody. Thanks to the support and assistance that Congress
    has already provided to the Army, it has enabled us to address critical
    resource requirements during existing persistent conflict. The support
    and assistance to cover costs of reset, modernize equipment, and
    maintain quality of life for our soldiers are the key to keep our Army
    running. Our operational demand continues and it is not decreasing. We
    need timely resources to continue the training, equipping, and
    stationing for our soldiers to properly conduct operations in time of
    war and to meet current demand.

        109. Senator Thune. General Cody, assuming the current tempo of
    operations, how does the Army get itself back in balance to meet the
    requirements of the Commander in Chief?
        General Cody. We have a plan that will, with congressional help,
    restore balance to our force. We assess that we will continue to
    recruit and retain enough soldiers to meet our end strength
    requirements. We are also continually improving our programs designed
    to identify and treat soldiers suffering from the impacts of combat
    deployments. We have identified four imperatives that we must
    accomplish to put ourselves back in balance: sustain, prepare, reset,
    and transform. To support these imperatives, the Army has taken steps
    to reduce ``boots on the ground'' time at the conclusion of the surge
    and increase dwell time as the Army grows. The Army will continue to
    evaluate requirements, manage resources, and communicate resourcing
    needs with Congress to ensure we can continue to field fully prepared
    and resourced forces wherever required.

       growing the army: the rate of progress and the affect on readiness
        110. Senator Thune. General Cody, last October, Secretary Gates
    approved the Army's plan to accelerate attainment of its Active Duty
    end strength of 547,000 by 2010 instead of 2012, as originally planned.
    Secretary Gates conditioned his approval on reduced use of Stop Loss
    and maintaining of the quality of recruits. In the proposed budget for
    fiscal year 2009, the Army would be authorized, if it is approved, to
    532,400 soldiers by October 2009. Why is growing the Army critical to
    future readiness?
        General Cody. The current operational demand for Army forces
    exceeds the sustainable supply--and as a result, the Army is out of
    balance. Growing the Army, along with ongoing rebalance and
    transformation efforts, will begin the process of restoring the Army's
    balance and build strategic depth in order to meet CCDR requirements.
    This increase in capabilities will enable implementation of the supply-
    based ARFORGEN process and the structured progression of increased unit
    readiness over time. Accelerating Active Duty end strength will help
    provide trained, ready, and cohesive units prepared for current and
    future operational deployments in support of CCDR requirements.

        111. Senator Thune. General Cody, assuming the current tempo of
    deployments and operations, when will the growth in the Army get us to
    a 24-month dwell time that you mentioned in earlier testimony?
        General Cody. Even with the approved growth, the Army cannot
    achieve 24-month dwell time at the current tempo of deployments and
    operations. The interim Army deployment policy allows for deployments
    of not more than 15 months with at least 12 months of dwell before
    deploying again. The most significant impetus for this deployment
    policy was the continued high demand for forces in theater,
    particularly with the increase of forces in OIF necessary to support
    increased security operations. The President recently announced that
    Army units would return to 12-month deployments starting with units
    that deploy on August 1, 2008, allowing all Army units to return to a
    deployment to dwell ratio of 1:1 (12 months deployed, 12 months home).
    The continued goal of the Army is a sustainable unit deployment to
    dwell ratio of 1:3 in a steady state security environment (for example,
    9 months deployed, 27 months home), or 1:2 in a sustainable surge
    environment (for example, 12 months deployed, 24 months home).

        112. Senator Thune. General Cody, how much funding for personal and
    unit equipment does it take to fully outfit a modular BCT?
        General Cody. Costs to stand up an Army BCT average from
    approximately $950 million for an Infantry BCT to approximately $2.7
    billion for a Heavy BCT. The average cost to build a new Striker BCT is
    approximately $2.3 billion. These estimates only include manpower and
    equipment costs; additive infrastructure costs would depend on
    suitability of any existing facilities and future stationing decisions.

        113. Senator Thune. General Cody, do you have any concerns about
    the quality of the recruits? Are we recruiting individuals we would not
    otherwise recruit?
        General Cody. I have no concerns about the quality of the young men
    and women who volunteer to serve our Nation through military service in
    the Army. Every soldier who enlists in the Army is fully qualified for
    their military occupational specialty. Recruit quality is a metric
    consisting of more than a high school diploma or a standardized test
    score, it is a holistic view of every young man and woman volunteering
    to serve their country. Once a recruit enters Active Duty, they benefit
    from an excellent training and education system designed to strengthen
    soldiers physically, mentally, and emotionally. The performance of
    young soldiers in combat and reports from their leaders in the field
    attest to the fact that the quality of the young men and women serving
    in America's Army remains of the highest caliber.

        114. Senator Thune. General Cody, what is the rate of completion
    for first term enlistees? Is it acceptable? Is this an area of concern?
        General Cody. The current first term attrition rate is 12.9
    percent. The first term attrition rate has been below the Army's
    historic average of 15 percent since June 2005. We continue to monitor
    attrition and are concerned when we see increases above the historical
    average.

        [Whereupon, at 4:43 p.m., the subcommittee adjourned.]