[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

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                      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.
      
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    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.
      
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    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.
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    \1\ Includes the following accounts: RDT&E,N; MC,N; OP,N. Excludes 
BRAC environmental.
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    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).
      
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    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.
      
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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\
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    \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.
      
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    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 [email protected].
    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.
      
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    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.
      
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    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.]

                                 
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