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



 
   MILITARY CONSTRUCTION AND VETERANS AFFAIRS, AND RELATED AGENCIES 
                  APPROPRIATIONS FOR FISCAL YEAR 2008

                              ----------                              


                        THURSDAY, MARCH 22, 2007

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 10:08 a.m., in room SD-124, Dirksen 
Senate Office Building, Hon. Jack Reed (chairman) presiding.
    Present: Senators Reed, Hutchison, Craig, and Allard.

                         DEPARTMENT OF DEFENSE

STATEMENT OF HON. TINA W. JONAS, UNDER SECRETARY OF 
            DEFENSE
ACCOMPANIED BY PHILIP W. GRONE, DEPUTY UNDER SECRETARY OF DEFENSE 
            (INSTALLATIONS AND ENVIRONMENT)


                     statement of senator jack reed


    Senator Reed. Good morning and let me welcome witnesses 
Secretary Tina Jonas and Mr. Phil Grone to testify before our 
Subcommittee today. I want to thank you for appearing before 
the Subcommittee and thank you for your service to our country.
    We will be joined shortly by the Ranking Member, Senator 
Hutchison, and I know her leadership together with Senator 
Feinstein, has set a high standard for this Subcommittee that I 
hope and expect we can continue as we go forward.
    We are now embarking on fiscal year 2008 Military 
Construction budget review. The purpose of today's hearing is 
to receive testimony regarding this year's President's budget 
request for Military Construction, Military Family Housing, 
Base Realignment and Closure, Chemical Demilitarization and 
NATO Security Investment Program. This year's request comes 
among amid requests from the Department including a fiscal year 
2007 global war on terrorism supplemental request.
    The recently completed joint funding resolution that 
completed last year's unfinished Appropriations process and now 
is the largest request for military construction in recent 
history. This request exceeds $21 billion, which represents an 
increase for active component of military construction of 60 
percent over last year's request.
    The budget request for the Army and Marine Corps are nearly 
double last year's level, much of which will pay to grow the 
force by 65,000 soldiers and 27,000 marines. Funding for BRAC 
comprises another large chunk of this budget request. A total 
of $8.2 billion is being requested to implement the 2005 BRAC 
round, which is a 45 percent increase over last year's request 
of $5.6 billion.
    I recognize that there is still some concern in the 
Department about the level of last year's BRAC funding. The 
House Appropriations Committee last week included $3.1 billion 
in the 2007 supplemental funding bill to fully fund BRAC for 
fiscal year 2007 and I expect the Senate Appropriations 
Committee to follow suit later today. Hopefully, that issue 
will be put to rest in the very near future and we can all 
concentrate on the fiscal year 2008 budget.
    In all, there is a great deal of money on the table for 
military construction this year and it is incumbent on this 
subcommittee to closely review the Department's budget request 
to make sure that funding is both justified and properly 
allocated. We look forward to your help and cooperation as we 
tackle that task.
    Again, thank you for appearing before our committee and I 
look forward to your testimony today. At this time, I would 
like to recognize Senator Hutchison to make her opening 
remarks. Senator.


               statement of senator kay bailey hutchison


    Senator Hutchison. Yes, thank you, Mr. Chairman. Welcome to 
all of you. I look forward to working with the new chairman of 
the subcommittee, Chairman Reed, on the military construction 
and veteran's issues. Chairman Reed certainly has knowledge and 
experience as a former Army officer, and with this 
subcommittee's tradition of bipartisanship, I am confident that 
we can accomplish a lot together. I would also say that I look 
forward to Senator Tim Johnson's speedy recovery and return to 
the subcommittee.
    Today we are looking at the President's budget request for 
Military Construction and Family Housing for the Department of 
Defense, base realignment and closure actions, and the 
Department of the Air Force. As we begin the budget process for 
fiscal year 2008, there are several encouraging trends in the 
military construction budget. The overall request of $21.2 
billion is the largest ever for military construction and it 
includes over $8 billion to implement BRAC actions as that 
program continues to meet the 2011 statutory deadline. It 
includes funds to begin building toward the increased end 
strength of the active duty Army and Marine Corps, which I, 
along with Chairman Reed, have advocated for a number of years.
    I am very pleased to see this development and I am pleased 
to see the Army and Marines planning in a comprehensive way, 
not leaving facilities out of their calculations. At times in 
the past, they have left out housing considerations for our 
young single soldiers and marines, leaving us slightly behind. 
So I hope that we are going to move forward, and in a Senate 
Appropriations Committee meeting later today, we will mark up a 
bill to provide emergency funding, including military 
construction and veteran's funding, to support the global war 
on terror.
    My interest in military construction is not just the size 
of the budget however, but in providing a smooth transition for 
our fighting forces. The Defense Department is executing a 
global re-stationing plan, which will return over 70,000 
troops, mostly Army and Air Force, to the United States to 
places such as Fort Bliss, Texas, and Fort Riley, Kansas. The 
Army is also in the midst of a huge reorganization effort to 
make its brigades more combat ready. The marines are preparing 
to undertake a massive move, relocating 8,000 marines and their 
families from Japan to Guam. Many of these Marines will move 
onto Anderson Air Force Base in Guam.
    The Departments of Defense and State have done a good job 
in gaining Japanese funding to support this move. That makes it 
even more important that we have good coordination between the 
military services to get the move done well. These are all 
incredibly ambitious, and they will be enabled, in some cases 
determined, by the availability of facilities. We will not get 
a second chance to provide the right infrastructure for our 
soldiers, sailors, airmen and marines and our military 
families. That's why funding BRAC effectively is so important. 
The sooner we can get our service men and women out of 
dilapidated facilities and into the new facilities, the sooner 
we will live up to our commitment to provide for them in a way 
that is commensurate with their service to our Nation.
    As we just witnessed so tragically at Walter Reed, 
facilities matter a great deal in the lives of our troops and 
their families, and we must make sure we do this well. I am 
somewhat concerned by the downward trend in military 
construction for our Guard and Reserve components. These brave 
citizen soldiers are making huge contributions to the global 
war on terror, and yet their facilities are often in the worst 
shape. The overall funding level is down 19.1 percent from last 
year. I understand that there is funding for Guard and Reserve 
projects in the BRAC account, but I am still interested in 
seeing their normal MILCON funding improved. So I hope our 
witnesses will be able to speak to this issue.
    The Air Force will be here today. Air Force facilities have 
long had the reputation for outstanding quality, and while the 
Air Force military construction budget is down slightly this 
year, I know the Air Force will make effective use of the 
funding it is requesting. Its contribution to military family 
housing, though smaller than last year's request, is over $1 
billion and will eliminate 3,704 inadequate housing units 
through both traditional and privatized housing. I am eager to 
hear about the progress of build-to-lease and other creative 
housing solutions, like privatization and also the challenges 
with BRAC implementation, its activities in, as well as support 
of the global war on terror.


                           prepared statement


    So these are some of things we will be talking about today 
and I appreciate so much the increases where I think they are 
most needed in the marines and the Army so that we can prepare 
the future realignments. Thank you, Mr. Chairman.
    [The statement follows:]

           Prepared Statement of Senator Kay Bailey Hutchison

    Good afternoon, I would like to welcome our witnesses and guests. I 
would also like to welcome Chairman Reed to the subcommittee. I look 
forward to working with him on military construction and veterans' 
issues for as long as he is our acting chairman. With his knowledge and 
experience as a former Army officer, and with this subcommittee's 
tradition of bipartisanship, which I have previously experienced as 
both chairman and ranking member, I am confident we will accomplish 
much together. I would also like to say we look forward to Chairman Tim 
Johnson's speedy recovery and return to this subcommittee.
    Today, we will examine the President's budget request for military 
construction and family housing for the Department of Defense, 
including the defense agencies, Base Realignment and Closure actions, 
and the Department of the Air Force.
    As we begin the budget process for fiscal year 2008, there are 
several encouraging trends in the military construction budget. The 
overall request of $21.2 billion is the largest ever for military 
construction. This includes over $8 billion to implement BRAC actions, 
as that program continues its sprint to meet the 2011 statutory 
deadline. It also includes funds to begin building toward the increase 
in the end strength of the active duty Army and Marine Corps, which I, 
along with Chairman Reed, have advocated for a number of years. I am 
very pleased to see this development, and I am pleased to see the Army 
and Marines planning in a comprehensive way, not leaving facilities out 
of their calculations. At times in the past, they have left out the 
housing considerations for our young single soldiers and marines, 
leaving us slightly behind. So, this is a very welcome step forward. In 
addition, the Senate Appropriations Committee will meet later today to 
mark up a bill to provide emergency funding, including military 
construction and veterans funding, to support the Global War on Terror.
    Yet, my interest in military construction is not just the size of 
the budget, but in providing a smooth transition for our fighting 
forces. The Defense Department is executing a global restationing plan, 
which will return over 50,000 troops, mostly Army and Air Force, to the 
United States, to places such as Fort Bliss, Texas, and Fort Riley, 
Kansas. The Army is also in the midst of a huge reorganization effort 
to make its brigades more combat ready. The Marines are preparing to 
undertake a massive move, relocating 8,000 Marines and their families 
from Japan to Guam. Many of these Marines will move onto Anderson Air 
Force Base in Guam. The Departments of Defense and State have done a 
good job in gaining Japanese funding to support this move, but that 
makes it all the more important that we have good coordination between 
the military services to get this move right.
    These are all incredibly ambitious agendas within the Department of 
Defense, and they will be enabled, and in some cases determined, by the 
availability of facilities. We will not get a second chance to provide 
the right infrastructure for our soldiers, sailors, airmen and marines 
and our military families. This is why fully funding and effectively 
implementing BRAC is so important. The sooner we can get our servicemen 
and women out of old, dilapidated facilities and into new, state-of-
the-art facilities, the sooner we will live up to our commitment to 
provide for them in a way that is commensurate with their service to 
our Nation. As we just witnessed so tragically at Walter Reed, 
facilities matter a great deal in the lives of our troops and their 
families. We must get them out of bad facilities and into good ones as 
quickly as possible.
    It is against this backdrop that we begin to examine the budget 
request for military construction. The Army's $4.04 billion request is 
96.1 percent over last year's request and 100.7 percent over last 
year's enacted level. This increase will largely support the Army's 
end-strength increase. The Navy and Marine Corps have requested $2.1 
billion for fiscal year 2008, an 81.1 percent increase over the $1.16 
billion requested last year. The Air Force's budget has slowed this 
year, decreasing 21.1 percent to $912.1 million from last year's 
request of $1.156 billion. We owe our military families the best 
surroundings we can provide them, reflective of the sacrifices they 
make for our Nation, and I commend the Department for making quality of 
life a priority. All in all, the Department of Defense has requested 
$1.22 billion to house troops, $251.4 million to build hospitals and 
clinics, $139.4 million for community support facilities, such as child 
development centers, and over $2.9 billion to build, improve, and 
maintain family housing. The military services also continue to 
aggressively pursue privatized family housing, which has been a great 
success.
    I am somewhat concerned by the downward trend in military 
construction for our Guard and Reserve components. These brave citizen-
soldiers are making huge contributions to the Global War on Terror, yet 
their facilities are often in the worst shape, and the overall funding 
level is down 19.1 percent from last year's request. I understand there 
is funding for Guard and Reserve projects within the BRAC account, but 
I am still keenly interested in seeing their normal MILCON funding 
improve. I hope our witnesses will speak to this issue, and provide us 
with a plan for getting Guard and Reserve MILCON on the right track.
    The Air Force will also join us today. Air Force facilities have 
long had a reputation for outstanding quality. While the Air Force 
military construction budget is down slightly this year, I trust the 
Air Force will make very effective use of the funding it is requesting, 
and will keep its commitment to maintaining top-flight facilities. Its 
contribution to high-quality military family housing, though smaller 
than last year's request, is impressive again this year, as it is 
requesting over $1 billion to eliminate 3,704 inadequate units through 
both traditional and privatized housing. As everyone remembers, we on 
this subcommittee have worked very successfully with the Air Force in 
recent years to take advantage of creative housing solutions, such as 
build-to-lease and privatization. I am also eager to hear about its 
progress and challenges with both BRAC implementation and hurricane 
recovery, as well as its activities in support of the Global War on 
Terror.
    I look forward to discussing these and other issues with our 
witnesses. Thank you, Mr. Chairman.

    Senator Reed. Thank you, Senator Hutchison. If my 
colleagues want to make a comment--if not, we will go to the 
witnesses.
    Senator Allard. Mr. Chairman, I have a statement to just 
put in the record.
    [The statement follows:]

               Prepared Statement of Senator Wayne Allard

    Thank you, Mr. Chairman, for the opportunity to address our panel 
today. I appreciate that these individuals are willing to take the time 
to come and discuss the President's fiscal year 2008 budget request 
with us.
    I plan on raising an issue of much importance to southeastern 
Colorado, and that is the proposed expansion of the Pinon Canyon 
Maneuver Site.
    With its close location to Fort Carson, Pinon Canyon was perfectly 
suited for the Army's training needs 20 years ago. However, with the 
arrival of 10,000 new soldiers to Fort Carson, the Army has determined 
that the size of the site needs to be increased in order to meet Fort 
Carson's new operational training requirements.
    Army officials have told me repeatedly that the genesis of Fort 
Carson's expansion proposal occurred when several landowners approached 
Fort Carson and expressed their strong desire to sell. I also 
understand that sufficient numbers of willing sellers exist to support 
a significant expansion of the site. However, many in the community 
surrounding Pinon Canyon have major questions that they have been 
unable to get answers to.
    Until recently, Army leadership and officials at Fort Carson have 
been unable to answer questions regarding the proposal. While I 
understand the difficult position the Army has been on this issue, I 
believe it absolutely necessary that they begin providing the 
information to the community and to Congress prior to any acquisition 
of property.
    The leadership at Fort Carson has done a great job of reaching out 
and providing what information it could to the local communities. 
However, the Pentagon has not been as forthcoming. I believe the 
Congress and the local communities in Southeastern Colorado need more 
information before we can decide whether this proposed expansion is 
necessary and appropriate.
    Thank you again, Mr. Chairman, for the opportunity to share some of 
my priorities with the subcommittee today. I look forward to the 
testimony of our witnesses.

    Senator Reed. Thank you.
    Senator Craig. Mr. Chairman, I will do the same and include 
my comments.
    [The statement follows:]

               Prepared Statement of Senator Larry Craig

    Madam Chairman, thank you for holding this hearing today. Thanks 
also to the witnesses for testifying today regarding the President's 
fiscal year 2008 budget for Military Construction. During times of both 
war and peace, it is important for the Congress and the Administration 
to work closely together to ensure that our soldiers receive the very 
best we can provide them. The budget we are reviewing today attempts to 
address some of the military construction needs of our soldiers and our 
military bases.
    Although my State of Idaho has relatively few military 
installations, we have real military construction needs that must be 
met to ensure that those men and women based in Idaho are provided with 
the equipment and facilities they deserve for serving this great 
country. To that end, I have worked very hard in Congress to ensure 
that our military installation facilities are kept to high standards. 
Last year, I toured Mountain Home Air Force Base to look at the new 
family housing projects and other needs on base. The family housing is 
quite impressive, and I am pleased that we are able to provide such 
high quality accommodations for our servicemembers and their families. 
Unfortunately, there are other critical needs on base that are not 
being met. The dining facility is inadequate, outdated, and in need of 
improvements, but more important, the Logistics Readiness Center needs 
immediate attention.
    The Mountain Home Readiness Center continues to be housed in a 53-
year old condemned facility, in which the roof is being held up with 
temporary structural supports. Because it is in such bad shape, 60 
percent of the base's supplies are operating from temporary spaces 
across the base, causing significant delays for training and 
mobilization.
    To me, this is absolutely unacceptable. While our soldiers are 
training and living at home or abroad on military bases, we should do 
our utmost to limit the risks of injury by forcing them to continue to 
use old and condemned facilities. The Mountain Home Air Force Base 
Logistics Readiness Center does not meet adequate standards for a 
military base and I will be working with the Chairman and Ranking 
Member to address this critical funding need.
    With that, I look forward to hearing your testimony.
    Thank you.

    Senator Reed. Thank you very much.
    Ms. Jonas. Mr. Chairman could I also put my full statement 
in the record?
    Senator Reed. Without objection. The statements of the 
witnesses are also in the record, so feel free to summarize 
your comments. Ms. Jonas.
    Ms. Jonas. Mr. Chairman and members of the committee, thank 
you for giving us the opportunity to discuss the fiscal year 
2008 Military Construction budget. I want to start off by 
thanking the committee for their work and the work that you 
will do this afternoon on restoring the $3.1 billion that is 
going to be needed in fiscal year 2007 for base realignment and 
closure. We thank you for your work on that.
    I would like to provide a little bit of context and hit a 
few highlights and then, of course, as you stated Mr. Chairman 
I would like to have the statement in the record.
    As you may already know, the President's fiscal year 2008 
base budget is a total of $481.4 billion. This is a 11.4 
percent increase over the fiscal year 2007 budget and it is 
real growth of about $8.7 billion. We believe it maintains the 
President's commitment, our commitment, to have a high state of 
readiness, to increase our ground force strength, enhance the 
combat capabilities of the United States Armed Forces and 
continue the development and implementation of capabilities for 
the U.S. military's superiority against future threats and of 
course, most importantly, to provide strong support for our men 
and women in uniform and their family members. The military 
construction budget, as you know, is $21.1 billion and we look 
forward to working with the Committee as you mark up that 
legislation.

                           PREPARED STATEMENT

    As already noted in your statements, it does provide for 
the increase of 92,000 additional forces providing, another 
$2.9 billion for family housing, privatizing another 4,261 
housing units, renovating another 3,000 military owned houses 
and operating and maintaining a worldwide housing inventory of 
78,386 homes. So, I'll provide the rest of the statement for 
the record, sir, but we look forward to working with you on 
this request and we appreciate this Committee's strong support 
for our men and women in uniform.
    [The statement follows:]

                  Prepared Statement of Tina W. Jonas

    Mr. Chairman, members of the Committee, thank you for the 
opportunity to discuss the Military Construction component of President 
Bush's fiscal year 2008 budget request for the Department of Defense.
    On behalf of the men and women of the Department--both Service 
members and civilians--I thank the Committee for its continued support 
of America's Armed Forces. We look forward to working with you to 
ensure that our military men and women have everything they need to 
carry out their vital mission.
    As Mr. Grone's statement comprehensively describes the Military 
Construction component of the President's fiscal year 2008 budget 
request and related issues, I will simply add a few comments from the 
perspective of the Office of the Comptroller.
Fiscal Year 2008 Base Budget
    Mr. Chairman, the President's base budget requests $481.4 billion 
in discretionary authority for the fiscal year 2008. That is an 11.4 
percent increase over the fiscal year 2007 budget, with real growth of 
8.7 percent.
    The base budget sustains the President's commitment to:
  --Ensure a high state of readiness and ground force strength,
  --Enhance the combat capabilities of the U.S. Armed Forces,
  --Continue the development and implementation of capabilities to 
        maintain U.S. superiority against future threats,
  --And continue the Department's strong support for Service members 
        and their families.
    The Military Construction portion of that request, which supports 
those strategic objectives, is $21.1 billion. It funds the Department's 
most pressing facilities requirements--especially the strategic 
realignment of our forces being carried out under the Base Realignment 
and Closure Commission.
    This includes preparing facilities in the United States for troops 
returning from bases in Europe, and from Iraq and Afghanistan.
    In addition, funds are being sought for new construction and 
replacement of troop housing and for facilities to support the increase 
of 92,000 Service members recently approved by the President.
    The request also includes $2.9 billion for family housing. The 
funding for this vital ``quality of life'' program will enable the 
Department to:
  --Privatize 4,261 housing units,
  --Renovate another 3,000 military owned houses, and
  --Operate and maintain our world-wide housing inventory of 78,386 
        homes in order to provide high quality homes to our Service 
        members and their families.
Fiscal Year 2008 Global War on Terror Request
    In addition to the base budget, the President's request for fiscal 
year 2008 includes a separate request of $141.7 billion to continue the 
fight in the Global War on Terror.
    Included in the Request is $738.8 million for limited construction 
projects to support wartime operations and to enhance force protection.
    The funds will provide additional airfield facilities, operational 
facilities, support facilities, billeting, fuel handling and storage, 
utility systems, and roads in Iraq and Afghanistan, as well as military 
construction related to two accelerated Army Brigade Combat Teams and 
one Marine Corps Regimental Combat Team.
    The fiscal year 2007 Emergency Supplemental Request included $3.6 
billion to support the accelerated BCTs/RCT. An additional $1.6 billion 
is needed in fiscal year 2008 to continue that initiative, including 
$169.2 million for the construction of facilities to accommodate 
additional Marine Corps personnel at Camp Pendleton and Twenty-Nine 
Palms, California, and at Camp Lejeune, North Carolina.
    We need to make those investments now. With that in mind, we ask 
the Committee to support the Military Construction portions of the 
President's budget in full.
    Mr. Chairman, we are a Nation at war. The brave men and women who 
today wear the uniform--volunteers all--are fighting to defend our 
freedom and security. They are doing a magnificent job, and they need 
and deserve our support. I thank you, Mr. Chairman--and all the Members 
of the committee--for the support you have shown them in the past and, 
on their behalf, I ask for your continued support in the future.
    Mr. Chairman, thank you for the opportunity to participate in this 
hearing. I welcome your questions.

                      STATEMENT OF PHILIP W. GRONE

    Mr. Grone. Thank you, Mr. Chairman and Senator Hutchison 
and members of the subcommittee. I am pleased to appear before 
you this morning to discuss the budget request for the 
Department of Defense for fiscal year 2008, particularly those 
programs within the jurisdiction of this Subcommittee that 
support the management of our installation assets. As the 
chairman noted and several others have noted as well, the 
Military Construction budget for fiscal year 2008 is the 
largest request that we have made. I would make a point much 
broader than that in terms of support to installation assets 
and to support of mission, whether it's military construction, 
military family housing, base closure, environmental matters, 
installation support, base operating support, the total 
portfolio that supports our mission.
    We are requesting $56 billion from the Congress in 
appropriations for the coming fiscal year to support the 
business area of installation and their critical support to 
mission and to quality of life. It is also the largest request 
in this business portfolio that we have ever requested. A 
couple of key points about the budget request. The budget 
request currently supports a re-capitalization rate of 67 
years, achieving the goal of a 67-year recapitalization cycle 
for the Department's real property assets. In 2001 that rate 
stood at 192 years. Clearly, we are making progress. The budget 
request provides 88 percent of the need to sustain our 
facilities.
    As Senator Hutchison and others have noted, the budget 
request continues our efforts in the area of military family 
housing. Last year's budget provided the resources that would 
allow us to resolve the problem of inadequate family housing in 
the United States by our target of 2007 and we remain on track 
to achieve the elimination of such units overseas by fiscal 
year 2009.
    In the end state, we expect that 90 percent of the 
Department's then existing inventory of military and family 
housing will be privatized and the survey results that we are 
getting back from residents shows that this program is not just 
successful from an acquisition perspective but it is very 
successful from a customer perspective. People like the product 
that is being produced.
    We continue our efforts on energy conservation. In this 
past fiscal year 2006, military installations reduced energy 
consumption by 5\1/2\ percent, exceeding the energy 
conservation goal of 2 percent. So again, we are making 
progress in stewardship and sustainment of resources and 
assets.
    Certainly the largest part of the program we have before 
the subcommittee in terms of the proposal is our request to 
support base realignment and closure and we deeply appreciate, 
and I will second the comments of my colleague to my right, the 
support of the members in the effort to restore the $3.1 
billion necessary to carry out BRAC actions in this fiscal 
year. The $8.2 billion that has been requested for the coming 
fiscal year will enable us to keep to schedule, will enable us 
to successfully complete the round on time and as the members 
know, this round is the most comprehensive, most joint, most 
significant round that affects the total force, not just the 
active component, but the active Guard and Reserve that we have 
ever undertaken and it will show direct benefit to military 
readiness into the future.

                           PREPARED STATEMENT

    So, Mr. Chairman, we have always appreciated the support 
and continue to appreciate the support this subcommittee has 
provided to the Department. We look forward to continuing to 
improve military infrastructure installations in the United 
States and across the globe to support the mission. Thank you, 
sir.
    [The statement follows:]

                 Prepared Statement of Philip W. Grone

    Mr. Chairman, Senator Hutchison, and distinguished members of the 
Subcommittee, I appreciate the opportunity to appear before you today 
to address the President's Budget request for fiscal year 2008 and to 
provide an overview of the approach of the Department of Defense to the 
management of the Nation's military installation assets.
Overview
    As our Nation's security challenges become more complex, the 
military must become an increasingly agile joint force that is dominant 
across the full spectrum of operations. Installations are a critical 
component to this Nation's force capabilities. DOD is vigorously 
managing its facilities and infrastructure to ensure that it delivers 
cost effective, safe, and environmentally sound capabilities and 
capacities to support the National Defense Mission.
    Not only is the Department incorporating best business practices 
but it is also expanding these practices into new, previously 
unexplored areas. For example, DOD's infrastructure investment strategy 
uses key metrics to provide quality facilities that directly support 
mission and readiness and also developed advanced business processes 
that align more closely to warfighter mission area requirements. 
Implementation of the Real Property Inventory Requirements document 
provides the basis for a more accurate and current asset inventory 
database which will maximize asset management and provide senior 
leaders with an improved decision-making tool to measure performance. 
With the development of a net-centric data warehouse for the 
Department's real property infrastructure and utilization information, 
timely and accurate real property data will be readily available to 
support key facilities metrics. The rigor provided by these practices 
in planning, managing, and maintaining DOD installations improves 
overall efficiency while improving investment decision-making.
Global Defense Posture
    The Department continues its efforts to realign its permanent base 
structure at home and abroad to effectively enable military 
transformation and to better deal with 21st Century security 
challenges. The Department has begun the process of realigning or 
closing a number of large permanent bases overseas in favor of small 
and more scalable installations better suited for rapid deployments. 
The Global Defense Posture realignment effort identified an overall set 
of plans for returning overseas forces back to military installations 
in the U.S. These plans were integrated with the BRAC process regarding 
relocations from overseas to domestic bases during the prescribed BRAC 
time period. All Services factored requirements of returning forces 
into their domestic infrastructure requirements and this resulted in 
recommendations to accommodate forces at U.S. installations.
    Some overseas changes have already been implemented in accordance 
with ongoing Service transformation efforts and within the framework of 
negotiations with host nations. In many cases, the changes involve 
units that are inactivating or transforming with no significant BRAC 
impact. As we begin implementing the BRAC recommendations there are 
overseas posture changes still being developed or being phased to be 
implemented after the BRAC implementation period. DOD will continue to 
consult with Congress on its plan and will seek your support as we 
implement these far-reaching and enduring changes to strengthen 
America's global defense posture.
Implementing Base Realignment and Closure (BRAC) 2005
    The President approved and forwarded the Commission's 
recommendations to Congress on September 15, 2005. The Congress 
expressed its support of these recommendations by not enacting a joint 
resolution of disapproval and on November 9, 2005, the Department 
became legally obligated to close and realign all installations so 
recommended by the Commission in its report. BRAC 2005 affects over 800 
locations across the Nation through 25 major closures, 24 major 
realignments, and 765 lesser actions. The significant transformation to 
the Total Force and its operational capability, the Departments 
business operations, and to the savings ultimately derived from BRAC 
require resources to meet adequately the challenges of implementation.
    The Congress provided $1.5 billion to the Department in fiscal year 
2006 ($1.9 billion was requested in the fiscal year 2006 President's 
Budget) to begin implementing the BRAC recommendations. This initial 
funding was used to begin planning, design and construction, program 
management, and the environmental studies that serve as the foundation 
for constructing and renovating facilities to accommodate missions at 
receiving sites. Notable examples include the Brigade Combat Team (BCT) 
complexes at Fort Carson, Colorado, Fort Knox, Kentucky, and Fort 
Bliss, Texas, and a Division Headquarters and Sustainment Brigade 
Headquarters at Fort Riley, Kansas.
    The fiscal year 2007 President's Budget requested $5.6 billion to 
continue implementation. Previous continuing resolutions for fiscal 
year 2007 provided $542 million to the Department for this purpose. 
However, the recently passed Joint Resolution limits fiscal year 2007 
funding to $2.5 billion, a $3.1 billion (55 percent) reduction from the 
President's Budget. This seriously affects construction timelines 
because over 80 percent of the BRAC budget in fiscal year 2007 directly 
supports military construction. This 55 percent reduction will 
significantly jeopardize our ability to execute BRAC 2005 by the 
statutory deadline of September 15, 2011, thereby sacrificing savings 
that could have been achieved during the delayed timeframe, and delay 
achievement of operational mission requirements. The magnitude of the 
reduction requires careful evaluation to support allocating the reduced 
funding within the Department so that only those projects with the 
highest priority, determined by their operational and/or business case 
effects, go forward on the schedule previously provided to Congress. 
While operational impacts are self-explanatory, business case 
considerations are worthy of note. These include cases where 
incrementally funded projects started last year must continue, and/or 
where projects support follow-on actions, produce significant savings, 
or lead to expeditious asset disposal. This evaluation formed the basis 
for the BRAC portion of the expenditure report required by the Joint 
Resolution that was provided to the appropriations committees on March 
16, 2007. Implementing BRAC 2005 actions represents a significant 
financial commitment by the Department. In the fiscal year 2007 budget 
justification material provided to the Congress, the Department 
indicated that, in some cases, the out-year program did not fully 
reflect expected costs for the remainder of the BRAC implementation 
period (fiscal year 2008-2011). The Department of Army anticipated a 
shortfall as much as $5.7 billion and the Air Force estimated its 
shortfall at approximately $1.8 billion over the program.
    The fiscal year 2008 President's Budget request is approximately 
$3.0 billion more than the fiscal year 2007 President's Budget request 
and the $8.2 billion requested, as well as the outyear program, 
represents full funding for BRAC 2005 implementation assuming funding 
is restored for fiscal year 2007. In previous BRAC rounds, the third 
year of implementation was generally the peak of the ``bell shaped'' 
investment curve. For BRAC 2005, the fiscal year 2008 budget request 
represents the critical year of execution in the 6-year statutory 
implementation period and includes $6.4 billion for military 
construction, $1.2 billion for operations and maintenance to relocate 
personnel and equipment, $112 million for environmental studies and 
remediation, and $453 million for ``other'' costs primarily associated 
with installation communications, automation, and information 
management system equipment in support of construction projects.
    The Department has embarked on assessing the domino impact the $3.1 
billion reduction will have on the fiscal year 2008-2011 implementation 
program should it not be restored. The complexity and duration of many 
implementation actions required fiscal year 2007 funding. Military 
construction projects and other expenditures related to the movements 
of missions contained in the fiscal year 2008 President's Budget will 
need to be re-baselined.
Assisting Communities
    The Department, through the Office of Economic Adjustment (OEA) and 
the Defense Economic Adjustment Program (DEAP), continues to work with 
States and communities across the country as they respond to the 
effects of broad changes in Defense infrastructure, including efforts 
resulted from BRAC, Global Defense Posture Realignment, and modularity. 
In the context of BRAC, to date, the Department has recognized 121 
Local Redevelopment Authorities (LRAs) that are responsible for 
creating a redevelopment plan for property made available for civilian 
reuse as a result of BRAC and to directing implementation of the plan. 
The majority of these communities, with assistance from OEA, are 
presently working to develop a consensus for redevelopment that 
reflects the specific market forces, public facility and service needs, 
and private sector circumstances found at each location and to gauge 
local homeless and community economic development interests in these 
properties. At the same time, efforts are being made between these LRAs 
and the Military Departments to link local civilian redevelopment 
activities with the Department's environmental and property disposal 
efforts, including any necessary environmental remediation.
    At the same time, DOD is working with several communities where 
mission growth is projected to impact the surrounding region. Across 
these locations, resources are being applied to assist communities to 
understand and respond to anticipated impacts on local housing, 
schools, water and sewer, and transportation. Additionally, spousal 
employment, health care, public services, and child care are of some 
concern. A primary concern for all is how to develop and apply local, 
State, and private resources to address local need. Through this 
process, possible gaps in these civilian sources are also being 
recognized as opportunities for third party and Federal assistance. 
Presently, these communities are in close dialogue with the local 
installations to understand the timing and scope of these growth 
actions.
    The ability to capably assist these communities, regardless of 
whether there is downsizing or mission growth, must include our Federal 
agency partners. On behalf of the Secretary of Defense, I Chair the 
President's Economic Adjustment Committee (EAC) at the sub-cabinet 
level to coordinate efforts across 22 Federal agencies to assist these 
communities. Under the auspices of the EAC, team visits will likely be 
undertaken to locations to better understand the local adjustment 
challenge and more capably address potential needs for other Federal 
assistance. A report documenting the efforts of the EAC to date will be 
submitted shortly for your review.
Managing Infrastructure
    The President's budget request for fiscal year 2008 will permit the 
Department to continue its efforts to manage installation assets 
comprehensively and efficiently. Along with continued improvement in 
business practices and a focus on environmental sustainability, the 
Department is focused on improving the quality of military 
installations as evidenced by the emphasis on more accurate Quality 
Ratings that are currently being collected by the military Departments. 
Managing DOD real property assets is an integral part of comprehensive 
asset management. The Department currently manages over 533,000 
buildings and structures, which reside on over 51,400 square miles of 
real estate.
    The President's Management Agenda Real Property Asset Management 
initiative focuses on improved asset management planning, inventory and 
performance measure data, and the disposal of unneeded assets. DOD has 
implemented an asset management plan and provides inventory and 
performance data to the Federal Real Property Profile annually. DOD's 
Real Property Inventory Requirements implementation continues to refine 
the quality of data collected and reported to the government-wide 
database. We continue to improve our progress on the Real Property 
Scorecard.
    The quality of infrastructure directly affects training and 
readiness. To that end, the Department is incorporating installations 
assessments more fully into the Defense Readiness Reporting System. DOD 
has made significant progress in integrating its installations into 
this Department-wide program. There is currently an operational system 
in the Navy, Defense Readiness Reporting System-Navy, which is based on 
the contribution of installations to the achievement of mission 
essential tasks. To better manage infrastructure investments, the 
Department continues to develop models and metrics to predict funding 
needs. The Facilities Program Requirements Suite, a web-based suite of 
real property inventory data models and fact sheets, continues to be 
refined and further expanded to more accurately determine requirements, 
predict funding needs, and better manage infrastructure investments.
    Sustainment.--Facilities sustainment provides funds for maintenance 
and major repairs or replacement of facility components that are 
expected to occur periodically throughout the life cycle. Sustainment 
prevents deterioration, maintains safety, and preserves performance 
over the life of a facility. To forecast funding requirements, DOD 
developed the Facilities Sustainment Model using standard benchmarks 
for sustainment unit costs by facility type (such as cost per square 
foot of barracks) drawn from the private and public sectors. This model 
has been used to develop the Service budgets since fiscal year 2002 and 
for several Defense Agencies since fiscal year 2004. Full funding of 
facilities sustainment has been and continues to be the foundation and 
first element of the Department's long-term facilities strategy and 
goals. In fiscal year 2007, the Department-wide sustainment was 
budgeted at 90 percent. In balancing risk across the Department's 
program, the fiscal year 2008 budget request reflects a slight decrease 
in the department-wide sustainment funding rate to 88 percent, although 
the total amount of funds requested for the program represent an 
increase of $466 million. The Department-wide long term goal remains 
full funding for sustainment to optimize the investment in our 
facilities and ensure their readiness.

                SUSTAINMENT AND RECAPITALIZATION REQUEST
               [President's budget in million of dollars]
------------------------------------------------------------------------
                                            Fiscal year     Fiscal year
                                           2007 request    2008 request
------------------------------------------------------------------------
Sustainment (O&M-like) \1\..............           6,267           6,733
Restoration and Modernization (O&M-like              992           1,353
 plus) \1\..............................
Restoration and Modernization (MilCon)..           6,093           6,736
                                         -------------------------------
      TOTAL SRM.........................          13,352          14,822
------------------------------------------------------------------------
\1\ Includes O&M as well as related military personnel, host nation, and
  working capital funds and other appropriations such as RDT&E

    Recapitalization.--Recapitalization includes restoration and 
modernization, provides resources for improving facilities, and is the 
second element of our facilities strategy. Recapitalization is funded 
primarily with either operations and maintenance or military 
construction appropriations. Restoration includes repair and 
replacement work to restore facilities damaged by inadequate 
sustainment, excessive age, natural disaster, fire, accident, or other 
causes. Modernization includes alteration of facilities solely to 
implement new or higher standards, to accommodate new functions, or to 
replace building components that typically last more than 50 years.
    The current DOD goal remains a recapitalization rate of 67 years. 
In fiscal year 2001, the Department's recapitalization rate was 192 
years. This budget request supports a recapitalization rate of 67 
years, an improvement over last year's budgeted rate of 72 years. The 
improvement in the rate is largely due to investments associated with 
BRAC construction investments and the Global Defense Posture 
realignment. Currently, DOD is in the process of developing and 
fielding a new recapitalization model for assessing the replacement 
cycle that will improve upon the existing recapitalization metric 
through the inclusion of depreciation schedules and other benchmark 
improvements that are derived from private and public sector standards.
    The Department remains committed to maintaining a rate of 
investment in facilities recapitalization that will improve, modernize, 
and restore existing facilities while at the same time replacing 
facilities in support of efforts to reshape and realign infrastructure. 
However, as the Department consolidates and reshapes its 
infrastructure, it will also experience localized growth in the size of 
the facilities footprint. This is necessary to provide the quality and 
quantity of facilities and assets necessary to support military 
personnel and their families. These efforts include facilities to 
support Army Transformation, Navy and Marine Corps barracks, and 
facilities for the beddown of new weapons systems such as Predator, F-
22, and the Joint Strike Fighter.
    On January 24, 2006, DOD joined 16 other Federal agencies in 
signing a Memorandum of Understanding (MOU) for Federal Leadership in 
High Performance and Sustainable Buildings. The MOU indicates a 
commitment to incorporate sustainable design principles through a 
comprehensive approach to infrastructure management.
    The Department continues to emphasize the elimination of excess and 
obsolete facilities, and to encourage the aggressive pursuit of 
demolition to avoid unnecessary facilities sustainment and support 
costs. This effort to eliminate facilities that are no longer needed is 
separate and distinct from the BRAC process. With approximately 48 
million square feet of infrastructure identified for elimination, the 
military Services and selected Defense Agencies are in the process of 
refining their annual targets for disposal and consolidation of excess 
capacity.
    The Department established a common definition for Facilities 
Operation, formerly referred to as ``Real Property Services.'' The 
budget request includes $7.15 billion for this program, to address 
utilities, leases, custodial services, grounds maintenance, and other 
related functions. The Facilities Operation Model was fielded to 
develop standard requirements, and the Department is continuing to 
refine the model with particular emphasis on Fire and Emergency 
Services, and Real Property and Engineering Management.
    Installations Support.--The Defense Installations Strategic Plan 
articulates the need to define common standards and performance metrics 
for managing installation support, and the Department has made 
considerable progress in this area. DOD's objective is to introduce 
capabilities-based programming and budgeting within a framework for the 
Common Delivery of Installations Support which will link installation 
support capabilities to warfighter requirements. The Common Delivery of 
Installations Support also will play a large role in implementation of 
Joint Basing required by BRAC 2005. Guidance for implementing Joint 
Basing was developed in coordination with the Military Components and 
is currently in the review process.
    During the past year, DOD made significant progress toward 
developing Common Output Level Standards for all other functions of 
Installations Support to include Environment, Family Housing Operations 
and Services (formerly known as Base Operations Support). This effort 
is yielding common definitions and tiered performance output levels. 
These metrics are currently being further refined and a costing model 
initiative will soon be underway.
    The military construction appropriation is a significant source of 
facilities investment funding. The fiscal year 2008 Defense Military 
Construction and Family Housing Appropriation request totals $21.2 
billion. This funding will enable the Department to rapidly respond to 
warfighter requirements, enhance mission readiness, and provide for its 
people. This is done, in part, by restoring and modernizing enduring 
facilities, acquiring new facilities where needed, and eliminating 
those that are excess or obsolete.

     COMPARISON OF MILITARY CONSTRUCTION AND FAMILY HOUSING REQUESTS
      [President's Budget in millions of dollars--Budget Authority]
------------------------------------------------------------------------
                                          Fiscal year   Fiscal year 2008
                                         2007 request        request
------------------------------------------------------------------------
Military Construction.................           6,390           9,480
NATO Security Investment Program......             221             201
Base Realignment and Closure IV.......             191             220
Base Realignment and Closure 2005.....           5,626           8,174
Family Housing Construction/                     2,092           1,080
 Improvements.........................
Family Housing Operations &                      1,989           1,851
 Maintenance..........................
Chemical Demilitarization.............             131              86
Family Housing Improvement Fund.......               3               0.5
Energy Conservation Investment Program              55              70
                                       ---------------------------------
      TOTAL...........................          16,698          21,165
------------------------------------------------------------------------

Improving Quality of Life
    A principal priority of the Department is to support military 
personnel and their families and improve their quality of life by 
ensuring access to suitable, affordable housing. Service Members are 
engaged in the front lines of protecting our national security and they 
deserve the best possible living and working conditions. Sustaining the 
quality of life of our people is crucial to recruitment, retention, 
readiness and morale. At the outset of this Administration, the 
President and the Department's leadership identified revitalizing 
housing, largely through privatization, as a central priority for the 
Department. An aggressive target of 2007 was established to meet that 
goal. By late fiscal year 2007, DOD will effectively complete all 
procedures to eliminate nearly all inadequate domestic family housing. 
More than 90 percent of our inadequate housing will be turned over to 
the private sector for replacement or renovation and the remainder will 
be in the final stages of solicitation for award. As of February 2007, 
over 110,000 housing units determined to be inadequate have been 
privatized. Inadequate units are considered to be eliminated when they 
are conveyed to the private owner, who then revitalizes the housing.
    The Department continues to rely on three pillars to improve 
housing thereby, enhancing the quality of life for our Service members: 
(1) Provide the basic allowance for housing (BAH) at zero-out-of-pocket 
expense for the average Service member living in private sector housing 
(achieved in 2005, now maintaining); (2) Privatization of family 
housing, where feasible; and, (3) Military Construction funding for all 
other domestic and all overseas locations.
    The Department relies on a ``community first'' (private sector) 
approach to provide quality housing to its members and their families. 
Only when the private market demonstrates that it cannot supply 
sufficient levels of quality, affordable housing does the Department 
provide housing to our military families; first through the use of 
privatization, and where that is not feasible through government-owned 
and leased housing. For example, in the absence of privatization 
authorities overseas, we address our housing needs there through 
military construction and leasing.
    To ensure the Department is making the best investment decisions 
when determining the appropriate level of housing, the government 
provides a single and consistent methodology for calculating its 
housing requirement. This methodology was introduced in January 2003 
and is being utilized extensively by the Services. Currently, 75 
percent of military families living in the Continental United States 
(CONUS), Alaska, and Hawaii receive Basic Allowance for Housing (BAH) 
(with 60 percent living in the local community, and 15 percent in 
privatized housing). An additional 22 percent of our military families 
are provided government-owned housing and 3 percent live in leased 
housing. DOD projects that by the end of fiscal year 2008 over 90 
percent of military families will be receiving BAH, thus allowing 
families the opportunity to make housing choices according to their 
individual preferences.
    As of February 2007, the Department has awarded 71 privatization 
projects, which includes over 147,000 total military family housing 
units privatized. The private sector's cumulative contribution to the 
71 awarded deals awarded thus far totals over $20 billion (or 90 
percent) of total project development costs. The Services have 
contributed $1.5 billion in development costs primarily through equity 
investment or government direct loans.
    For fiscal year 2008, the Department requests $2.93 billion, a 
decrease of $1.2 billion from the fiscal year 2007 President's Budget 
request. The decrease reflects cost savings realized by the Department 
achieving its respective goal to eliminate inadequate housing and to 
privatize the inventory on a cost-effective basis. The Department's 
privatization plans in the fiscal year 2008 budget will ultimately 
result in the privatization of over 90 percent of its domestic family 
housing inventory, or roughly 194,000 units privatized by the end of 
fiscal year 2008.
  --Fiscal year 2008 funding provides for the continuation of the 
        privatization program to reduce costs to the government and 
        provide quality housing to service members and their families. 
        The fiscal year 2008 request will privatize 4,261 family 
        housing.
  --Fiscal year 2008 request provides $353 million for the Army and 
        Navy ``Grow the Force'' initiative, which will provide housing 
        support for end-strength increases.
  --$1.9 billion to operate and maintain approximately 80,000 
        government-owned family housing units, and lease 38,000 units 
        worldwide.
    In fiscal year 2008 and beyond, DOD will monitor the military 
housing privatization projects over the next 40+ years and conduct 
oversight of their financial performance. DOD will protect the 
government's interest while acknowledging that it is the responsibility 
of the private sector to take the lead on operating these projects. 
Current project highlights include:
  --The majority of the awarded privatization projects initial 
        development plans for renovation/construction are on schedule.
  --Thirteen projects have completed their construction/renovation 
        schedules
  --The privatization projects are achieving 90 percent occupancy 
        across all projects.
  --There have been no defaults for the awarded projects.
  --Awarded projects are receiving high tenant satisfaction ratings.
    Finally, in fiscal year 2008 DOD will continue to push expansion of 
the privatization authorities for unaccompanied housing and lodging. In 
fiscal year 2007, the Navy executed the first Unaccompanied Housing 
pilot project in San Diego in December 2006, with two additional 
projects planned--Hampton Roads, Virginia (award April 2007), and 
Mayport, Florida (future date TBD). The Army anticipates award of the 
first Lodging Privatization project in September 2007.
Competitive Sourcing
    The Department of Defense continues to strongly support the 
President's Management Agenda Initiative for Competitive Sourcing. 
Introducing private sector competition into commercial functions 
performed by the Department improves business efficiency and reduces 
cost to the taxpayer. Public/private competitions using the procedures 
of OMB Circular A-76 have demonstrated substantial savings whether the 
in-house or private sector wins the competition. During fiscal years 
2000 through 2006, the Department completed 870 such competitions 
encompassing about 91,000 positions. These competitions will have 
resulted in over $9 billion in savings (cost avoidance) over the life 
of the resulting performance periods, normally about 5 years. The 
Department has an additional 7,969 positions currently undergoing 
competitions, plans to compete 10,000 positions in fiscal year 2007, 
and expects to maintain the same level of competitions in fiscal year 
2008.
    These new competitions use the procedures of OMB Circular A-76 
which evaluate public and private proposals concurrently using the 
Federal Acquisition Regulations. As the Department's designated 
Competitive Sourcing Official (CSO), my office is working continuously 
to improve the competition process. For example, competitions that used 
to take up to 48 months to complete can now be completed in as little 
as 12 months. Such improvements will reduce stress on our workforce and 
will make savings available earlier to reinvest in the Department's 
operation.
Energy Management
    The Department continues to aggressively attempt to reduce its 
energy consumption and associated costs, while improving utility system 
reliability and safety. To that end, DOD developed a comprehensive 
energy strategy and issued updated policy guidance incorporating the 
provisions and goals of the Energy Policy Act (EPAct) of 2005 and is 
implementing the recent enactment of the new chapter 173 of title 10, 
U.S.C. The Department is also in the early stages of implementation of 
Executive Order 13423, recently issued by the President to strengthen 
Federal environmental, energy, and transportation management. This 
strategy will continue to optimize utility management by conserving 
energy and water usage, improving energy flexibility by taking 
advantage of restructured energy commodity markets when opportunities 
present themselves.
    DOD, as the largest single energy consumer in the Nation, consumed 
$3.5 billion of facility energy in fiscal year 2006. Though overall 
cost continues to increase due to commodity costs, consumption has 
decreased from the 2003 baseline. Our program includes investments in 
cost-effective renewable energy sources or energy efficient 
construction designs, and aggregating bargaining power among regions 
and the Services to achieve more effective buying power.
    The Department's efforts to conserve energy are paying off. In 
fiscal year 2006, military installations reduced consumption by 5.5 
percent, exceeding the energy conservation goal of 2 percent. Energy 
conservation projects accomplished through Energy Savings Performance 
Contracts (ESPC) typically account for more than half of all facility 
energy savings. Lapse of ESPC authority in 2004 negatively affected the 
Department's ability to reach the 30 percent reduction goal under 
Executive Order 13123. However, with ESPC authority reauthorized in the 
fiscal year 2005 National Defense Authorization Act and extended for an 
additional 10 years in the Energy Policy Act of 2005, DOD has launched 
an aggressive awareness campaign and is well on its way to meeting the 
new goals established in the Energy Policy Act of 2005. Use of ESPC for 
2006 increased 316 percent, reaching an award value over $586 million.
    DOD has significantly increased its focus on purchasing renewable 
energy and developing resources on military installations. Renewable 
energy projects are consistently more expensive than similar 
conventional energy sources, resulting in limited opportunities but 
that are life cycle cost effective. The Department has increased the 
use of Energy Conservation Investment Program (ECIP) funds for 
renewable energy projects from $5 million in fiscal year 2003 to $17 
million planned in fiscal year 2007, and to $24 million budgeted for 
fiscal year 2008 out of a $70 million ECIP request. The fiscal year 
2007 program for ECIP also contains $2.6 million in hydrogen fuel cell 
projects. The Department easily exceeded the EPAct 2005 renewable 
energy goal of 2.5 percent in fiscal year 2006. The Department's total 
renewable energy purchases and generation accounted for 9.5 percent of 
all electricity use. Also, while EPAct 2005 did not articulate a 
specific water reduction goal, the new Executive Order 13423 does have 
a goal of a 2 percent water reduction per year. The Department has 
reduced water usage by an impressive 29.6 percent from the fiscal year 
2003 baseline year.
Environmental Management
    Managing Cleanup.--The Department is committed to cleaning up 
property that, as the result of past military activities, is 
contaminated with hazardous substances and military munitions. DOD has 
achieved ``remedy in place'' or ``restoration complete'' status at 85 
percent (16,833 out of 19,796) of its environmental restoration sites 
on active installations. As of the end of fiscal year 2006, 85 percent 
(4,275 out of 5,010) of the environmental restoration sites at BRAC 
locations closed or realigned by the first four rounds of BRAC or 
closed in BRAC 2005 have a cleanup remedy constructed and in place and 
operating successfully, or have had all necessary cleanup actions 
completed in accordance with Comprehensive Environmental Response, 
Compensation, and Liability Act of 1980 (CERCLA) standards. Hazardous 
substance cleanup at Formerly Used Defense Sites (FUDS) has achieved 
``remedy in place'' or ``restoration complete'' status at 53 percent 
(2,487 out of the 4,654) of known sites.
    As of the end of fiscal year 2006, DOD fulfilled its cleanup 
obligations at over 122 of the approximately 373 identified Military 
Munitions Response Plan (MMRP) sites at BRAC installations, and has 
cleanup actions underway at 251 sites. A similar situation can be found 
at Formerly Used Defense Sites (FUDS), where 29 percent of the MMRP 
sites identified have had all cleanup actions completed. Over 473 of 
the 1,633 FUDS with currently identified Unexploded Ordnance (UXO) 
contamination have been addressed, and another 1,160 are undergoing 
cleanup actions or study.
    Environmental Management Systems.--DOD implemented environmental 
management systems (EMS) as required by Executive Order 13148 at all 
appropriate facilities. This transformation embeds environmental 
management as a systematic process, fully integrated with mission 
planning and sustainment and is essential for continued successful 
operations at home and abroad. Implementing EMS helps preserve range 
and operational capabilities by creating long-term, specific and 
measurable targets in comprehensive programs to sustain capability 
while maintaining healthy ecosystems. Benefits accrued to date are an 
increased awareness of environmental issues and how they can impact 
operations, increased communication and cooperation between 
departments, new initiatives to mitigate environmental impact and risk, 
and strengthened relationships with communities and regulators.
    Pollution Prevention.--Maintaining compliance with environmental 
laws is an integral part of sustaining DOD operations. From fiscal year 
2000 through fiscal year 2006 the Department reduced the number of new 
Federal and State enforcement actions received by 18 percent while the 
number of regulatory inspections increased by 6 percent during the same 
time period. In 2005, DOD installations reached a 95 percent compliance 
rate with wastewater treatment permits. For the 3.4 million customers 
served by DOD drinking water systems, in 2005, less than 7 percent of 
the population received notice that their water exceeded a drinking 
water standard (most ``exceedences'' were not immediate health concerns 
and both interim and long term solutions are either completed or 
underway). The Department continues to demonstrate a commitment to 
reduce solid and hazardous waste. From 2000 through 2005, the 
Department reduced hazardous waste over 15 percent by using various 
pollution prevention opportunities. In 2006, over 3.7 million tons of 
solid waste was diverted from landfills which avoided approximately 
$153 million in landfill costs. This 59 percent diversion rate exceeds 
the Department's diversion goal of 40 percent in 2005. Integrating a 
strong compliance program into installation environmental management 
systems will strengthen this program.
Sustaining the Warfighter
    Our Nation's warfighters require the best training and the best 
equipment available. This means sustaining our vital range and 
installation infrastructure, both here and abroad, where we test 
equipment and conduct training. Development in the vicinity of DOD 
installations and ranges continues to challenge sustainability. The 
unintended consequences of this encroachment upon our ranges and 
installations are varied, and include such issues as more noise 
complaints from new neighbors; diminished usable airspace due to new 
structures or increased civil aviation; a compromised ability to test 
and train with the frequency needed in time of war; and a loss of 
habitat for endangered species.
    History and experience gained over decades demonstrate that proper 
training of U.S. troops will result in victory. Assured access to 
operational ranges is the only way to continue that training. In 2001 
the Department undertook the Readiness and Range Preservation 
Initiative (RRPI) to achieve a balance between national defense and 
environmental policies. As a result, DOD has successfully balanced the 
statutory requirements of the Migratory Bird Treaty Act, the Marine 
Mammal Protection Act, and the Endangered Species Act with our national 
defense mission requirements. However, the Department continues to seek 
legislative clarification under the Clean Air Act, the Comprehensive 
Environmental Response, Compensation, and Liability Act, and the 
Resource Conservation and Recovery Act.
    The Congress provided statutory authority to use Operations and 
Maintenance (O&M) funds to create buffers around our ranges and 
installations. Using this authority the Department established the 
Readiness and Environmental Protection Initiative, or REPI, and has 
worked with willing partners to cost-share land conservation solutions 
that benefit military readiness and preserve natural habitat. In fiscal 
year 2005, REPI leveraged $12.5 million of O&M funding to secure $48.2 
million worth of buffer land and easements, encompassing 10,238 acres 
at seven installations. The 2006 and 2007 projects will continue to 
leverage REPI funds against partner contributions. REPI and partner 
funding has allowed DOD to protect the Navy's one-of-a-kind La Posta 
Mountain Warfare Training Facility in California; to keep training 
areas open at Marine Corps Base Camp Lejeune, North Carolina; and 
buffer live-fire training ranges at Fort Carson, Colorado. Overall in 
fiscal year 2006, REPI initiated 23 projects in 17 States, and for 
fiscal year 2007 an additional 32 projects have been identified for 
funding. The Department has requested $30 million dollars in the fiscal 
year 2008 budget to support REPI.
    Partnerships are essential to success and the Department continues 
to work with State governments and other Federal agencies in the 
Southeast Regional Partnership for Planning and Sustainability--or 
SERPPAS. In 2006, the State of Alabama joined North Carolina, Florida, 
Georgia, and South Carolina as SERPPAS State members. Through this 
process, the partners hope to promote better planning related to 
growth, preservation of open space and protection of the region's 
military installations. The regional approach to facilitate dialogue 
and to address issues of mutual concern is proving successful, and in 
2006, the Department took the initial steps to establish a regional 
partnership in the Western States.
    In 2006, DOD worked closely with other Federal agencies to sustain 
military readiness. At Fort Riley, Kansas, the Department of 
Agriculture's Natural Resource Conservation Service and the Department 
of Defense signed a Memorandum of Understanding (MoU) to work together 
on conservation efforts that sustain agricultural productivity on 
private lands that will buffer military lands. On energy issues, the 
Department of Defense is working with other Federal agencies to ensure 
that wind farm projects and energy transmission corridors are 
compatible with military readiness activities. The Department is also 
working with the Department of Homeland Security to ensure that our 
military readiness activities and infrastructure in border regions are 
not impacted by new security measures. Outreach to non-Federal and non-
governmental organizations continues to be a significant part of the 
Department's sustainability program, and today we are working with 
State, county, and local governments, Indian tribal, and environmental 
groups on issues of mutual concern to seek win-win solutions. Overseas, 
DOD is developing mission sustainment procedures to work with our host 
nations Global Defense Posture partners. To sustain today's 
warfighters, and our Nation's future warfighters, the Department of 
Defense will continue its engagement and partnering efforts.
Integrating Business Enterprises
    The Department as a whole has made significant strides in breaking 
down the cultural and information technology (IT) systems barriers that 
hinder business agility. There is an increased need for tighter 
alignment of end-to-end business functions, better management 
visibility into operations, and a definitive focus on execution 
excellence. The current climate of making measurable business 
improvements every 6 months, tied to releases of the DOD Business 
Enterprise Transition Plan, has succeeded in driving progress. Changing 
the cultural mindset has meant redefining Defense business in terms of 
functions performed and the customers served, rather than who performs 
them. Breaking down IT systems barriers has meant, among other things, 
using common standards to integrate the business data owned by the 
Components.
    The Real Property and Installation Lifecycle Management (RP&ILM) 
Core Business Mission area has had tremendous success with business 
transformation because it has been driven by the top leadership and 
supported across all Components and all levels. Over the past few 
years, RP&ILM has developed enterprise wide capabilities for real 
property accountability and visibility, environmental liability 
accountability and valuation, and hazardous materials operational 
controls. These capabilities are founded on requirements for standard 
business processes, data elements, and business rules. The Military 
Departments and Agencies, in coordination with the DUSD (I&E), have 
begun implementation efforts for these capabilities.
    I&E community leadership actively oversees IT system investments to 
ensure that IT systems are being modernized to support the new business 
enterprise capabilities. I&E has become a leader in implementing DOD's 
net-centric vision and has already stood up a site unique identifier 
registry, that will allow all IT systems (and communities) with a need 
for location information to easily get authoritative source 
information. All of this foundational and transformational work has 
been achieved because of the established RP&ILM governance processes. 
These governance processes support federated management because the 
business owners themselves drive business modernization and the 
associated support IT. This work has also been completely integrated 
into the activities of the Business Transformation Agency, ensuring 
that RP&ILM capabilities support the broader DOD enterprise business 
transformation efforts.
    During the past year, the Department expanded its efforts beyond 
defining transformation requirements to actual implementation of 
business transformation. Each Military Service has either completed and 
is implementing, or is developing implementation plans, to deliver 
these reengineered capabilities. Some of our recent successes include:
  --Ability to assign unique identifiers to all DOD's sites. For the 
        first time in our history, the warfighter and business mission 
        areas will have the ability to obtain access to real property 
        site information at the push-of-a-button, with assurance that 
        the data is authoritative and consistent from Service to 
        Service.
  --Development of Real Property Inventory Requirements (or RPIR) 
        compliance assessment tools and procedures. These tools assure 
        that the Services will implement and maintain consistent, 
        accurate, and complete information on our vast and 
        geographically diverse real property asset portfolio.
  --Update of antiquated policies. Policy change promotes behavioral 
        change. Building on this best practice, DOD is in the process 
        of updating policies to include modernized processes for 
        construction in progress, real property acceptance, and 
        workplace hazard communication.
  --Completion of standardized requirements for the management of 
        regulatory and chemical hazardous materials information. This 
        success allows the Defense Logistics Agency to serve the entire 
        Department with standardized regulatory information on 
        hazardous materials from a central repository of authoritative 
        data. As the Services use this information in their business 
        processes, DOD will realize cost savings, and more importantly, 
        improve operational control of mission activities involving 
        hazardous materials.
  --The funding of a pilot to utilize geospatial information systems 
        (GIS) and RPIR processes to determine official DOD boundaries 
        for land parcels. The pilot also supports mapping any known 
        environmental liabilities as outlined in the new Environmental 
        Liabilities requirements. This pilot will enable DOD to reap 
        many benefits as accurate geospatial information will be easily 
        available and no longer isolated in the real property 
        community.
  --The development of Spatial Data Standards for Facilities, 
        Infrastructure, and Environment (SDSFIE). Precision and speed 
        are no longer unique qualifiers of the operational community 
        alone. DOD is applying these drivers to core business mission 
        areas as well. Fundamental to total asset management is knowing 
        exactly where an asset is geographically located. The SDSFIE 
        will ensure a level of accuracy and consistency never before 
        seen as the Department geospatially enables its business areas.
                               conclusion
    In closing, Mr. Chairman, I sincerely thank you for this 
opportunity to highlight the Department's successes and outline its 
plans for the future. I appreciate your continued support of our 
installations and environment portfolio, and I look forward to working 
with you as we transform these plans into actions.

         REGULAR BUDGET REQUEST VS. SUPPLEMENTAL BUDGET REQUEST

    Senator Reed. Thank you very much, Mr. Grone. Let's take 7-
minute rounds with the anticipation that we will do at least 
two rounds with this panel and I will begin.
    Secretary Jonas, the bundled three separate military budget 
requests together this year, the fiscal year 2008 regular 
request plus the emergency supplemental request for fiscal year 
2007/2008 and there appears to be a number of overlaps in these 
requests. There are CENTCOM projects in both the regular and 
supplemental requests. There is also a large amount of funding 
for the Army and the Marine Corp global force and related 
initiatives in both the regular and supplemental requests. How 
did OSD determine which projects qualify to the regular budget 
and which would deem to be emergencies?
    Ms. Jonas. As a general matter, Mr. Chairman, we try to 
make sure we are including funds in the supplemental that are 
urgent. We work with CENTCOM and with the military services to 
determine, specifically on supplementals, things that are 
operationally important, have a force protection component, or 
a safety concern. That is how we generally try to decide what 
is appropriate for a supplemental.
    With the respect to the growth of force provisions, the 
growing force and accelerating the additional brigade combat 
teams and the regimental combat team for the Marines is urgent 
for the rotational aspect of it. As you know, the combat 
commanders are requesting additional forces and so it was 
believed that we needed to get that done quickly. So, as a 
general matter, that's how we try to work that, sir.

                GLOBAL WAR ON TERROR AND GROW THE FORCE

    Senator Reed. OSD included military construction projects 
for both the global war on terror and the growth force 
initiative in the fiscal year 2008 regular budget. If that's 
the case, why do we need a fiscal year 2008 global war on 
terror emergency supplemental? Why couldn't normal projects be 
included in the regular 2008 budget?
    Ms. Jonas. Sir, the decision as to whether or not the 
request for the global war on terror expenses for 2008 would be 
designated emergency or non emergency was one that was made by 
the Office of Management and Budget.
    What we tried to do is provide the best estimate that we 
could and package it so that Congress could consider it well 
ahead of time. We don't know whether a supplemental will be 
required for fiscal year 2008. As the Deputy Secretary has said 
before, we know this number is an estimate and it's the best we 
could do at that time. It may have to be adjusted upward or 
downward and we would obviously have to work with the Congress 
to make those adjustments, sir.
    Senator Reed. So that you can't rule out a request for 
additional emergency supplemental funding for military 
construction projects in Iraq particularly after this 
supplemental?
    Ms. Jonas. As you know, Mr. Chairman, the conversation that 
goes on with combat commanders on request for forces and needs 
is a continual one. We try to work with them, so I don't know 
at this time. I can't tell you one way or the other whether or 
not they would require that and obviously there is a larger 
national debate that is going on that will affect it, sir.

                    WALTER REED ARMY MEDICAL CENTER

    Senator Reed. Mr. Grone, we are all aware of the tremendous 
firestorm that the Walter Reed situation has generated here and 
across the country. Last week, the House Appropriations 
Committee added that amendment to the supplemental that would 
prohibit any appropriated funds for the use to close Walter 
Reed. If that provision were to become law, what impact would 
it have on the BRAC 2005 process? Would DOD proceed with 
building Walter Reed replacement facilities at Bethesda, Fort 
Belvoir, etc etera, or would this language completely overturn 
the closing of Walter Reed?
    Mr. Grone. Mr. Chairman, certainly as I understand the 
intent of what's contained in the House bill is to prevent us 
from realigning Walter Reed and closing Walter Reed, 
repositioning that mission to Bethesda pursuant was to the 
recommendation of the Secretary ratified by the Commission and 
ultimately supported by the President and the Congress. We 
believe it would have a very significant effect, not just 
conduct of the round overall, but certainly on the immediate 
question of the delivery of military medical care in this 
entire region.
    The recommendation that was developed was carefully drawn 
up by the medical community and carefully assessed through 
multiple reviews. The issue there is maximizing the military 
value of the assets we have, the critical assets we have with 
the Services we need to provide to military personnel, their 
families, retirees, and certainly to our wounded warriors.
    Excess capacity, poor facilitation exist throughout this 
region. Currently we have four inpatient facilities: Walter 
Reed, Andrews, Bethesda, and Fort Belvoir. The notion of 
looking at the entire military medicine on a comprehensive 
basis rather than looking solely at single hospitals was one of 
the great innovations of this prior round and the ability of 
the Joint Cross Service group to do that. Walter Reed is an 
inpatient facility opened in 1977 with the current building, 
Building 2, and has not had any renovations since. The notion 
of combining that mission on a joint basis at Bethesda, where 
you also have synergy with the National Institutes of Health 
and with the Uniformed Services Health Science University was a 
critical part of this.
    We would also lose, if we were compelled to keep Walter 
Reed in its current condition open and operating, we would lose 
$170 million or so in annual recurring savings that would 
accrue from the implementation of the entirety of the 
recommendations affecting military medicine in this region. To 
then go forward if that was open and have to build out Fort 
Belvoir would exacerbate the capacity question, not resolve it, 
the result of which would likely be that we would be 
inefficiently using our resources over time and not effectively 
delivering medical care to our personnel.
    Senator Reed. One of the things that is obvious is that 
great attention has to be paid to this transition.
    Mr. Grone. Yes, sir.
    Senator Reed. If it is going to go forward.
    Mr. Grone. Yes, sir.
    Senator Reed. Which would imply, perhaps, acceleration of 
construction at Bethesda and Fort Belvoir and other facilities, 
attention to outpatient facilities, which may not have been 
included initially in the concept and consideration, frankly, 
for putting more resources into this whole plan, if it goes 
forward. Is that something that you are amenable to?
    Mr. Grone. Sir, we certainly are looking at all of those 
options, and currently the recommendation overall, all of the 
activities in this region--Walter Reed, Fort Belvoir, the other 
issues that are being worked, the many projects that go into a 
$1.6 billion program. Certainly, the question of acceleration 
is an important one. We are looking at that, and there have 
been many useful suggestions made by members of this 
Subcommittee and others for us to look at that.
    We continue to take lessons learned from the clinical work 
that's being done on a daily basis to support those brave 
Americans who are currently here as wounded warriors that we're 
taking care of. So we are trying to embed all of those lessons 
into the process to have the world-class facility of Bethesda 
that we require. So, yes, we are amenable.
    Senator Reed. Thank you very much, Senator Hutchison.
    Senator Hutchison. Thank you, Mr. Chairman. I am glad that 
you raised the point so effectively about what the impact would 
be of the House language because I think it is very important 
that you have a plan for acceleration rather than overturn what 
was hours, days, weeks, months of real in-depth coordination 
that BRAC took to make the decision that it did. I think it 
would be very unwise and I hope Congress will resist that. I 
think Walter Reed at Bethesda is the right joint operational 
strategy that we should continue to implement.
    I would also say that an appropriations bill only lasts for 
1 year. So, it is really only 1 year. It wouldn't have the 
permanent effect that BRAC does and yet it would delay further 
the implementation of BRAC and cause all of the wrong things to 
happen. So I hope you will have a plan that will accelerate it 
and come back to the committee at some point in this 
appropriations year to show us that.
    Secondly, the other policy issue is the jointness. I think 
that all of the medical training facilities research being much 
more joint in the Department of Defense is going to mean we 
have better state of the art facilities for all of our military 
personnel and I think that would be undercut if we just 
precipitously in an appropriations bill changed the BRAC.

                           GUARD AND RESERVE

    Let me just move to the Guard and Reserve issue. Obviously, 
you are putting the emphasis where I think it is a correct 
emphasis and I appreciate that and I applaud you for it. The 
only area that I think we have to watch is that we know Guard 
and Reserve are being very heavily utilized and we want their 
training facilities to be good enough that they have what they 
need to stay up to speed, state of the art, to the extent that 
we can and that means their facilities have to be upgraded as 
well. So, how are you addressing that with this year's slight 
diminishing of the budget?
    Mr. Grone. Well, Senator Hutchison, I think it is important 
that we can get the exact figure for the record, but it is 
important that we take a look at what was remarked earlier of 
the totality of what we are doing for the Guard and Reserve 
because it is important to look not just at what's requested in 
what I would call the regular program, the regular military 
construction programs, but also the important work that is 
being done in the context of the BRAC account itself.
    Total force requirements are critically important, and the 
notion of simply considering the Active on one side and the 
Guard and Reserve on the other is not the way we currently 
think of the use of forces. It is not the way we fight. The 
notion of having a total force package and total force 
integration is critically important and we recognize that. That 
is why what we did as a Department we did inside the BRAC 
account itself.
    So each year that we have brought a BRAC request forward, 
there are pieces that affect not just the Active side of the 
house, but the total forces represented in that account. We 
think that's the platform for transformation initiatives on a 
going-forward basis. And so I think when we look at--and 
certainly there are always going to be folks who think there 
should be more funding for given initiatives. But I think when 
one looks at the regular military construction program and what 
we're going through, BRAC, I think the record of the last 
couple of years will demonstrate an increasing emphasis on 
financing for Guard and Reserve requirements that we even had 
3, 4 or 5 years ago.
    So, I think it is a very positive development. It's a very 
important development, and we want to continue to refine our 
requirements so that we have dollars on the most important 
items, but I can assure you we do take the total force piece of 
this very seriously.
    Senator Hutchison. Okay, well, I appreciate that. I know 
you have to make choices and I don't want to say that you have 
made the wrong choices because I think you've made the right 
choices. I do think we need to always reassess just like we are 
now, looking at the medical facilities of the Armed Services in 
the wake of the Walter Reed situation. We need to also make 
sure that we don't have woefully inadequate Guard and Reserve 
facilities for those who are being called up especially. So, I 
appreciate what you have done.
    Mr. Grone. I absolutely concur.
    Senator Hutchison. Thank you, Mr. Chairman.
    Senator Reed. Thank you, Senator Hutchison.

                         PINON CANYON, COLORADO

    Senator Allard. Thank you, Mr. Chairman and thank you for 
this hearing. Secretary Grone, thank you. There has been a 
recent expansion proposal for Fort Carson. The Colorado Springs 
community is excited about it and as a result of that have 
about 10,000 or so new soldiers coming into Fort Carson.
    It's anticipated that there is a need to expand the 
training area, which is referred to as Pinon Canyon, which is 
out of the Colorado Springs community. It's a ways away and 
fairly isolated but there are some very small communities down 
there and they're real concerned about their tax base and 
they're concerned about how it is going to affect their 
communities and ranches.
    So I was glad to hear when the Secretary of Defense granted 
a waiver of the land acquisition moratorium placed on the Armed 
Services for the possible expansion of Pinon Canyon. Now prior 
to the waiver approval, the Army's hands, particularly those at 
Fort Carson, have been tied because they could not communicate. 
So, now that there is an opportunity for them to communicate 
and I understand the difficult position that they were in, and 
the Army in general is in, is on this issue.
    I believe the time is right for the Army and Department of 
Defense to get out in front on the issue and combat some of the 
misconceptions, I think, about the proposal that is floating 
around, particularly down in the southern part of the State.
    Now, many of these questions I'll ask today continue to be 
raised by the local communities down in southeastern Colorado 
and I am trying to provide a forum for them to be heard. It is 
my understanding that your superior, Under Secretary Ken Krieg, 
signed off on the Army's proposal. Have you seen the Army's 
waiver request?
    Mr. Grone. Yes sir, I forwarded it with recommendation for 
approval to Mr. Krieg.
    Senator Allard. Would you care to comment on it?
    Mr. Grone. We think that the waiver of the moratorium 
obviously was the right and proper decision. The Army brought 
forward a package requesting a waiver to the land acquisition 
moratorium for precisely the reasons you detailed. We don't yet 
know precisely what the size and scope, ultimately, of the 
expansion of Pinon Canyon maneuver site might be. That is part 
of the scoping process that we will need to go through. The 
important part about the approval of the waiver, as you noted, 
is that it allows the Army to begin the planning process, 
public scoping and more open engagement in dialogue with local 
ranchers, the communities, local mayors and the like. That's 
critically important and that process has formally begun. The 
formal NEPA process will begin this summer and fall.
    I met recently within the last few weeks with a couple of 
members of the Colorado House from that region of the State. 
They had the opportunity to give some of their perspectives on 
it as well.
    This is a very important potential expansion, but we want 
to do it carefully. We want to do it only calibrated to the 
requirements of the Army and we want to do it with enormous 
sensitivity to the needs of the local communities as well. So 
the dialogue in that process is very, very important to us.
    Senator Allard. Now, according to my information they've 
targeted about 1 million acres of what they are looking at and 
they are thinking of somewhere around 418,000 acres. Have any 
of those kinds of figures been made available to the public?
    Mr. Grone. I think it is fair to say that I believe the 
notion of the 418,000 acres of potential expansion has been 
made available and that will be part of what we go through the 
scoping process on.
    As I say, Senator, I don't know if at the end of the day, 
it will be 418,000 or some other smaller number. That will 
depend on a number of factors that we really won't be able to 
determine until we go through this extensive consultation and 
environmental impact process.
    Senator Allard. Is there any thought about a permanent 
party station at the site? I guess this brings up some 
questions about infrastructure to that particular area, which 
are pretty limited right now.
    Mr. Grone. It would, but Senator, if I might, I frankly 
would rather defer to the Army to answer the operational or 
stationing questions.
    Senator Allard. Good. From the very beginning, the Army has 
insisted they have identified willing sellers in the area, 
which is how this entire process started. Many in the local 
community there have stated matter of factly that there are no 
willing sellers in their proposal to the Secretary of Defense. 
Has the Army identified potential willing sellers?
    Mr. Grone. They did not identify specific willing sellers.
    Senator Allard. But they did indicate that there were 
willing sellers in general?
    Mr. Grone. The Army believes that there are willing sellers 
in the region and it is possible that we may have an ability 
for arrangements that are something short of fee-simple 
acquisition--licensing, leases, easements. I mean, all of those 
items will have to be a part of that scoping process. I won't 
say that there won't be a fee-simple acquisition because I 
think there likely will be and I do think that there will be 
willing sellers with which the Army will work.
    Senator Allard. Now, with their studies, are there going to 
be some economic evaluations for the area positive or negative 
or are we going to just go into the EIS, environmental impact 
statement and that's it, with no economic considerations?
    Mr. Grone. I think we would be prepared to work with you 
and others on assessing the implications of that. It might be 
appropriate. I would like to go back and take a look at it. The 
Office of Economic Adjustment might be able to help in this 
way.
    Senator Allard. I would like to look and see if we can have 
positive economic figures or negative economic figures for that 
area. I think that would be helpful.
    Mr. Grone. That is a reasonable request, Senator.
    Senator Allard. Now, you could be looking at some public 
land there too. There are some public lands in the area.
    Mr. Grone. There are.
    Senator Allard. I guess they would require, it is my 
understanding, they require an EIS, an environmental impact 
statement, as well as a private lands, is that correct?
    Mr. Grone. Yes.
    Senator Allard. If you do acquire those public lands, what 
happens to those agreements for public grazing permits that 
have already been issued?
    Mr. Grone. In the absence of specifics, I would prefer not 
to answer the hypothetical. Usually, as we go through something 
that involves the public land and if it is withdrawn for 
military purposes, I don't know the specific terms of the 
relationship on those particular parcels, but usually we have 
to come back to Congress and ask for legislation for that 
purpose. Not always, but it sort of depends on the 
circumstances.
    Senator Allard. Let us know about that, if you would, as we 
move along. Just one last question, Mr. Chairman. You had 
stated that in the past you saw no need for eminent domain. Is 
that still your position?
    Mr. Grone. I believe what I indicated earlier was that I 
was reluctant to take any available legal tool off the table.
    Senator Allard. Yes.
    Mr. Grone. But based on what we think we understand in the 
context of willing sellers' we always prefer to work with 
willing sellers but I would not desire to rule out any legally 
available tools.
    Senator Allard. But your thought right now is that you are 
not going to have to use eminent domain because there are 
willing sellers?
    Mr. Grone. My hope is that we will not have to use that. 
That is correct. It is always preferable not to.
    Senator Allard. Okay. Thank you. My time is expired.
    Senator Reed. Senator Craig.
    Senator Craig. Mr. Chairman, thank you very much and again 
I have not had the opportunity to congratulate you publicly on 
your chairmanship here. We look forward to working with you. It 
is a very important committee for a lot of reasons and let me 
thank both the Deputy Secretaries for being with us today. I 
submitted an opening statement and in that statement I am going 
to draw that into this question.

                    FACILITY FUNDING PRIORITIZATION

    When a military base is scheduled to receive funding in a 
future FYDP for new or upgraded facilities, but those 
facilities are currently condemned, as is the case at Mountain 
Home Air Force Base. What does the Department of Defense do to 
ensure that those facilities will receive a priority over other 
facilities outside of waiting for Congress to appropriate the 
funds?
    Essentially, is there a system within DOD to seek out these 
condemned facilities and bump them up in priority status as it 
relates to funding?
    Now, I am not talking about Building 18. I am talking about 
a facility that I visited at my airbase. It is important for 
the committee to know that we have basically one military 
installation in Idaho, Mountain Home Air Force Base, a world-
class airbase that came through BRAC with flying colors for a 
lot of reasons but I was out there visiting some time ago; well 
a couple of months ago. I try to get there several times a year 
and this large building, it is called Mountain Home Readiness 
Center, is 53 years old. The wind was blowing very hard that 
day and they recommended that I not go in it. And I said no. We 
put hard hats on and went in, Mr. Chairman and looked it over. 
It is propped up, it's braced up, it's old, it's dilapidated 
and it's critically necessary and so back to my question.
    When you've got something that's necessary but condemned 
and a good 30-mile per hour breeze puts people who might enter 
it at risk, how do we handle those things? Does anyone want to 
respond to that? None of you now? Well then, why don't both of 
you respond then?
    Mr. Grone. I have not had an opportunity, although I 
understand your interest, I have not had an opportunity to look 
at this specific project that you mention, but I will do that 
and get back to you on that.
    Each of the military departments have, and they vary by 
military department, each of them have different, for lack of a 
better word, scoring regimes for how they assess military 
construction requirements and how they build their budget. I 
frankly would prefer to defer to Mr. Anderson on the panel that 
follows me to speak more directly to the project itself but 
certainly, if we have a critical facility where there is an 
urgent mission need, there are things we can do in the 
programming process to accelerate those and if there is a 
mission currently in the facility, we can use our unspecified 
minor construction or other authorities to help stabilize or 
reduce the hazard to health and well being of military or 
civilian personnel who might need to enter the facility. So, 
I'd like to take a look at the specifics.
    [The information follows:]

    The Logistics Readiness Center, Facility 1325, was 
constructed in 1953. The facility is in inadequate condition 
and was recently assessed condition code 3, indicating required 
use only. However, since Facility 1325 is the only base 
facility capable of supporting large logistics functions, the 
base must continue to use the facility until it is replaced. 
Operations and Maintenance resources and manpower to maintain 
the facility has been limited to repair of the fire suppression 
system, the loading dock, and the armory. Until the facility is 
replaced, rules for use of the building that mitigate risk to 
personnel have been implemented, such as evacuation when snow 
loads exceed four inches or when equivalent dynamic/dead 
loading occurs. Structural condition of the facility is 
monitored to avoid injury to personnel and damage to war 
readiness supplies.
    Within the facility, physical separation and displacement 
of the organization's assets and resources creates ineffective 
administrative management, compromises security, and degrades 
the Wing's ability to meet mission sustainability. Workarounds 
and fragmented operating sites result in inefficient use of 
critical transportation and manpower resources on a daily 
basis. Excessive handling and deterioration of supplies and 
equipment increase the amount of assets being damaged or lost. 
Work areas are cramped, hampering morale and productivity.
    The planned replacement for this facility is an 8,500 SM 
facility costing $17.5 million. In balancing overall Air Force 
mission priorities, the project is planned for the fiscal year 
2011 military construction (MilCon) program and would provide 
adequate size and configuration for storage of bulk and bin 
items to support Wing and flying missions in a centralized 
location expediting deployment rate and capability. Other 
mission essential operations would also be located in this new 
facility.

    Senator Craig. I am not worried about risk to personnel 
because the airbase is handling it appropriately and they keep 
propping it up and double-checking it and doing all that but 
when 60 percent of the base's supplies have to operate out of 
temporary spaces spread out all over the base, it does not lend 
for great efficiency.
    Mr. Grone. I agree.
    Senator Craig. And it creates significant delays sometimes 
in training and mobilization. As you know, Mountain Home Air 
Force Base and what we do there, we do very well, we drop bombs 
on targets and we have been used very heavily and our people 
have been deployed all over the world on a very regular basis. 
And now, that base is a base of desirability for the Israeli's 
to come and train, the Germans were there, the Singaporean Air 
Force is coming. Why? Because we have the best electronic range 
in the system that likens itself to the Middle East like no 
other range almost in the world and so it becomes a very 
desirable place to come and train. We expect it to not only be 
an appropriate place but a world-class place and a 53-year-old 
wooden building doesn't muster up.
    Mr. Grone. Senator, one of the initiatives that we have 
underway; we had an initiative several years ago on the 
demolition of unneeded facilities. This is separate from BRAC 
and to some degree separate from demolition we would undertake 
with the regular military construction projects. A couple of 
years ago, after successfully completing that initial round of 
initiatives where we targeted something like 80 million square 
feet and took down 83 million, we began a second initiative to 
get at, and encouraged military departments to remove from the 
inventory, precisely the kinds of facilities that you're 
describing today. We are in the middle of building that 
program. So we are, from a policy perspective, in the Office of 
the Secretary of Defense, very interested and desirous of 
moving facilities just like that, that no longer serve a useful 
purpose and that are a hazard, off the inventory and replacing 
them if there remains a mission need with adequately and re-
capitalizable assets. So it is part of our overall portfolio 
management approach.
    Again, it is something that I take very seriously because I 
do not desire to have the taxpayer paying caretaker costs for 
facilities like that. They are simply not necessary or needed. 
But we also have to recognize that there is a requirement for 
the mission and we will work with you, and sort of with the 
components, to make sure that issues like that are adequately 
addressed.
    Senator Craig. Mr. Chairman, there are a lot of other 
issues that I am concerned about and I certainly one want to be 
associated with both you and the ranking member's remarks in a 
much broader area. It is not my intent to sound totally 
parochial today because the airbase is handling the facilities. 
They are not investing in it. Although the wind is slowly but 
surely taking it down and maybe that's the least expensive way 
to have it come down. But it is simply inappropriate and 
unnecessary and it creates complications in a facility that got 
extremely high marks during BRAC and is considered one of our 
premier bases because of air space and flight times and clear 
days and ranges and all of that that are extremely important to 
us. Thank you, Mr. Chairman.
    Senator Reed. Thank you, Senator Craig. We will begin a 
second round of 7 minutes.

                       BRAC 2005 COST ESCALLATION

    Mr. Grone, you have said in your prepared testimony that 
the BRAC 2005 round now is fully funded through the out-years 
at $31.2 billion. A CRS memorandum has compared the BRAC cost 
estimates in the 2008 budget with those included in the 2007 
budget. The 2008 budget shows a 70 percent increase over the 
cost of the BRAC round that DOD projected last year. Why are 
the original projections so far off base and can we have 
reasonable assurances that these new projections are accurate?
    Mr. Grone. Mr. Chairman, that is a question that a number 
of your colleagues have raised with me and I am pleased that 
you raised it with me because there is an important series of 
points that needs to be made about that difference.
    When the original suite of recommendations were beginning 
to be implemented, we did a re-assessment of the COBRA's cost 
estimates. We determined that there was about a $22.3 billion 
baseline. Based on our COBRA analysis and as you know, that is 
the way we compare varying recommendations against each other 
in the BRAC process itself.
    In all prior rounds of BRAC combined--and this is an 
important point--we spent approximately $24 billion. About one-
third of that amount was due to military construction, about $8 
billion. In this round of BRAC, given the extensive 
repositioning of assets and missions being undertaken at 800 
separate locations across the country, this round is nearly 
three-quarters military construction. Military construction and 
the construction industry will have, certainly, site adaptation 
issues, cost issues. So built into simply the raw ratio of how 
much MILCON is in the program, I frankly expected that there 
would be some cost increases.
    Now, when we took that $22.3 billion program from COBRA, 
and then moved to implementation, and you spread that 
requirement over the 6-year implementation period, we then 
began to inflate and put appropriate cost parameters around, 
instead of them being fiscal year 2005 dollars, the then year 
dollars for implementation. So applying all of the standard 
inflation factors that we would need to apply, $2 billion of 
the $8 billion difference is solely a factor of inflation.
    A key additional factor was as the Army looked at their 
implementation requirements they made a strategic choice to 
enhance facilities for, particularly, quality of life for 
military personnel and their families and additional training 
ranges in addition to some other items. That package 
represented about a $4 billion add to the program, which the 
Army self-financed. The other remaining $2 billion is caught up 
in a suite of changes that occur when you go from parametric 
analysis to actual site adaptation and sending engineers out 
into the field determining that renovation of a facility would 
be inefficient. New construction would be better. So there is a 
pattern for that $8 billion. Because, the current number is 
based on more rigorous field assessments and more rigorous 
design parameters, will we see marginal adjustments in cost 
over time either to the downside or to the upside? Certainly we 
could see that. But do I expect we are going to see the kind of 
swing we see here? No. I think that this is a very good 
estimate.
    Senator Reed. Have you recalculated the projected savings 
now, given the fact that costs are going up?
    Mr. Grone. Well, the annual recurring savings that will 
accrue are savings that will accrue from changes to military 
and civilian personnel and other items that are not affected by 
the implementation costs, per se. We are tracking annual 
recurring savings much more aggressively than we did in prior 
rounds of BRAC, given the interest to the Congress, the 
Government Accountability Office, and our own management 
principles including financial accountability that my 
colleague, Ms. Jonas, has led in the Department.
    We still believe that the annual recurring savings figure 
of $4 billion after implementation--that is $4 billion every 
year after implementation to the far horizon--remains a 
reasonably accurate and very good estimate of what those 
savings will be.
    Senator Reed. Let me ask you, is the current estimate of 
cost to complete the environmental remediation associated--has 
that cost estimate changed, given there are construction 
aspects there.
    Mr. Grone. The dollar amount for environmental remediation 
inside the implementation period that I believe we provided in 
the budget justification was, I want to say, was nearly $900 
million, so it has gone up a bit since the COBRA analysis. Some 
of that is due to additional understanding of remediation 
matters that may need to be taken, if there is a cost to 
complete beyond that. I am not sure that it is very large, but 
frankly I'd like get back to you for the record on that.
    [The information follows:]

    The cost to complete (program years fiscal year 2007 to 
completion) for BRAC 2005, which includes environmental 
restoration sites and compliance, is estimated to cost $892 
million. The environmental cost estimate has not changed due to 
the construction requirements for BRAC 2005.

                   U.S. SOUTHERN COMMAND HEADQUARTERS

    Senator Reed. I had some additional questions but my time 
is dwindling quickly. One question I do want to address is that 
this year's request includes $237 million for the Consolidated 
Headquarters Facilities for Southern Command in Miami.
    Mr. Grone. Yes, sir.
    Senator Reed. This is a very large expenditure and involves 
a very complicated land lease to execute. It seems that this 
headquarters has been built on rather expensive real estate in 
a metropolitan area when there are perhaps alternatives. For 
example, CENTCOM is located in Tampa at MacDill Air Force Base 
on an existing military facility. There are other areas in 
Florida like Homestead Air Force Base where they might be 
readily available. Why aren't we trying to build this 
headquarters in a less expensive neighborhood?
    Mr. Grone. Mr. Chairman, during the BRAC process itself we 
actually looked at the question of whether the headquarters 
ought to move from Miami and came to the determination, both 
for cost reasons as well military efficiency and the judgment 
of the combatant commander, that Miami remains the appropriate 
location. The reason why the headquarters is fully financed, 
proposed to be fully financed, in the fiscal year 2008 budget 
request is due to OMB policy on full financing of large 
projects such as this one. It is something that is long 
overdue. It is a bit complex as you suggest, but we believe it 
is the right answer for the combatant commander for that 
headquarters.
    Senator Reed. Thank you. Senator Hutchison.
    Senator Hutchison. Yes, I relate to the question where I 
think we have bases that can be more efficient than expensive 
urban land. I certainly think it is wise. We are just moving a 
Reserve facility outside of the interior part of Houston to 
Ellington as one example of a way to be more efficient and also 
realize the value of that real estate. So, if there were any 
opportunities to look at that I would certainly support the 
Chairman's line of questioning. I would just like to ask Mr. 
Grone--given the decision to increase the Army's end strength 
on a permanent basis, or a longer-term basis, is the Department 
of Defense still committed to reducing our footprint in Europe, 
which is something that this subcommittee was very instrumental 
with, and suggested and encouraged because of training 
constraints in European bases and also inefficiencies in a 
number of small bases that didn't have the troop support 
capabilities. So, I wanted to ask if there has been any 
decision to change, as we are increasing our end strength, in 
the bringing home of these 70,000 troops from Europe and Korea?
    Mr. Grone. Senator, we remain committed to the plan as you 
and the subcommittee has been previously briefed. I have, 
currently pending on my desk, the overseas master plans of the 
combatant commanders. We're reviewing those now. I expect to be 
submitting those to the Committee in the coming days and I 
believe from a EUCOM perspective, certainly, when you have an 
opportunity to review the plan you'll see that it is very 
consistent with the prior briefings you have received on the 
subject.
    Senator Hutchison. Good, thank you. I am very pleased to 
hear that. Thank you, Mr. Chairman.
    Senator Reed. Thank you Senator Hutchison. Senator Craig.
    Senator Craig. Nothing further.
    Senator Reed. Senator Allard.
    Senator Allard. No further questions.
    Senator Reed. Thank you for your testimony and for your 
dedicated service to the Nation.
    Ms. Jonas. Thank you, sir.
    Mr. Grone. Thank you, Mr. Chairman.
                      Department of the Air Force

STATEMENTS OF:
        HON. WILLIAM C. ANDERSON, ASSISTANT SECRETARY OF THE AIR FORCE, 
            INSTALLATIONS, ENVIRONMENT AND LOGISTICS
        MAJOR GENERAL CHARLES V. ICKES, DEPUTY DIRECTOR, AIR NATIONAL 
            GUARD
        BRIGADIER GENERAL CHARLES D. ETHREDGE, DEPUTY TO THE CHIEF, AIR 
            FORCE RESERVE
    Senator Reed. Now, let me call up the next panel. Well, let 
me welcome our second panel and I'm pleased to introduce the 
Honorable William C. Anderson, Assistant Secretary of the Air 
Force for Installations, Environment, and Logistics; Major 
General Charles V. Ickes II, Deputy Director of the Air 
National Guard; and Brigadier General Rick Ethredge, Deputy to 
the Chief of the Air Force Reserve.
    Gentlemen, thank you very much for your presence here today 
and we look forward to your testimony. Secretary Anderson.

                   STATEMENT OF HON. WILLIAM ANDERSON

    Mr. Anderson. Well, good morning. Mr. Chairman and 
distinguished members of the committee, on behalf of American's 
airmen, it is a pleasure to join my colleagues, Generals Ickes 
and Ethredge before you here today. As the Air Force continues 
to train and fight as a total force, it is great that we are 
together as a total force to testify.
    Before I begin, I want to offer the best wishes of the Air 
Force to your chairman, may his recovery be fast and complete.
    I'll keep my opening remarks brief and begin by thanking 
the committee for its continued support of America's Air Force 
and the many brave and dedicated airmen who serve around the 
globe to keep this country safe. As our Nation and department 
finds itself engaged in hostilities and war for the 16 
consecutive year, we're also in a transition period where the 
Air Force continues to evolve and remain indispensable as 
threats to our Nation emerge and change.
    The Air Force is getting smaller, but our commitments have 
not. Airmen perform critical installations, environmental and 
logistics tasks that are intrinsic to every facet in the 
success of our missions. We are making process changes at every 
level of the Air Force, which result in resource savings and 
more efficient operations. In these tumultuous times, our 
priorities remain consistent. Winning the war on terror, 
developing and caring for our airmen, and re-capitalizing and 
modernizing our air and space systems. Air Force facilities, 
housing, and BRAC programs are key in supporting, these 
priorities. At home, our installations provide stable training 
environments as we equip and reconstitute our force.
    Both our stateside and overseas bases provide force 
projection platforms to support combatant commanders. Our bases 
are weapon systems and in order to support our base centric 
concept of operations, the Air Force has developed an 
infrastructure investment strategy that focuses on enabling 
combatant commanders to fight and win the war on terror, 
provide quality facilities, implement BRAC, sustain and re-
capitalize our aging infrastructure, all the while proactively 
supporting the operational environment.
    The fiscal year 2008 President's budget request for 
traditional MILCON is $1 billion. This budget carefully 
balances our facilities operations and maintenance accounts for 
sustainment, restoration and modernization with military 
construction to make the most effective use of available 
funding to support the Air Force mission.
    The 2008 budget request also includes $363 million for 
housing investment, which balances new construction, 
improvements, and planning and design work. Housing is a good 
news story for airmen. Privatization continues to be a success 
bringing quality homes to airmen and their families in less 
time than would be the case with traditional MILCON. To 
continue our aggressive BRAC implementation schedule, the 
fiscal year 2008 budget request includes an additional $1.2 
billion for BRAC related activities, of which $910 million is 
construction. The Air Force is the lead on 64 BRAC business 
plans and has equity in 16 additional business plans.
    Full support of this funding request is critical to ensure 
we remain on track to meet our required compliance by 2011. We 
are committed to making BRAC and joint basing a raging a 
success. However, several BRAC basing policy elements run 
counter to the spirit of efficiency and cost savings in the 
joint basing construct.
    The Air Force believes total obligational authority (TOA) 
and real property transfer would serve as a disincentive to 
cost savings, efficiency and effective execution of customer 
expectations. These customers, our operational commanders if 
you will, should define requirements necessary to execute the 
mission and manage the funds to meet those needs.

                           PREPARED STATEMENT

    This year, we commemorate the 60 anniversary of our proud 
service, a service born of revolutionary ideas, forged in 
combat and proven through decades of progress and achievement. 
The readiness and capability of our force to fight and win our 
Nation's wars now and in the future depends heavily upon the 
state of our operational infrastructure. We look forward to 
your questions. Thank you.
    [The statement follows:]

               Prepared Statement of William C. Anderson

    Mr. Chairman, Senator Hutchison and distinguished members of the 
committee, as our Nation, and Department, finds itself in a transition 
period, the Air Force continues to evolve and remain indispensable as 
threats emerge and change. The Air Force is the preeminent force for 
operations beyond the bounds of earth, and is vital and relevant in the 
conduct of ground operations as well. The Air Force has been 
continually engaged in War for the past 16 years. The Quadrennial 
Defense Review guides the Air Force and enables us to deliver sovereign 
options for the defense of the United States of America and its global 
interests. The Air Force is getting smaller, but our commitments have 
not. Airmen performing critical installations, environment and 
logistics tasks are intrinsic to every facet in the success of our 
missions. Our civil engineers are critical to every facet in the 
success of our missions. We currently have over 2,500 engineers in the 
theater of operations directly supporting Operations Enduring Freedom 
and Iraqi Freedom. In order to fulfill our mission, we are making 
process changes at every level of the Air Force with results in 
resource savings and more efficient operations. We have more work to 
do, but by institutionalizing Air Force Smart Operations 21 concepts 
into our daily operations we are leaning our internal processes to 
reduce workload and reduce or eliminate unnecessary work. These efforts 
allow us to meet the enormous challenges of today, the foreseeable 
future, and ultimately, sustain and modernize the world's best air, 
space, and cyberspace force. In these tumultuous times our priorities 
remain consistent: fighting and winning the war on terror, developing 
and caring for our Airmen and their families, and recapitalizing and 
modernizing aging aircraft and spacecraft.
    Air Force facilities, housing and BRAC programs are key components 
of our support infrastructure. At home, our installations provide 
stable training environments as we equip and reconstitute our force. 
Both our stateside and overseas bases provide force projection 
platforms to support Combatant Commanders. Our bases are weapons 
systems and in order to support our base-centric concept of operations, 
the Air Force has developed an infrastructure investment strategy that 
focuses on enabling Combatant Commanders to fight and win the war on 
terror, providing quality of life facilities, implementing BRAC, 
sustaining our infrastructure and striving to recapitalize our aging 
infrastructure, while proactively supporting the operational 
environment. We are the DOD's leader in expeditionary combat support 
and continue that role with pride. Our total force military 
construction, family housing, and sustainment, restoration, and 
modernization programs are paramount to successful operations and 
maintaining a reasonable quality of life for our men and women in 
uniform and their families.
    The fiscal year 2008 President's Budget request for Air Force 
construction is over $2.3 billion, comprised of traditional MILCON 
($1.0B), BRAC 2005 ($910 million) and housing investments ($363 
million). The Total Force MILCON portion ($1 billion) of Air Force 
fiscal year 2008 President's Budget (PB) construction request reflects 
our highest construction priorities. This request includes $912 million 
for active military construction, $86 million for the Air National 
Guard, and just over $27 million for the Air Force Reserve. While the 
2008 traditional MILCON budget request is approximately $300 million 
lower than last year's, it reflects our highest priorities and most 
urgent needs. Unfortunately, we face demands on our resources that 
require some very tough choices. This budget carefully balances our 
facility operations and maintenance accounts for sustainment, 
restoration, modernization with military construction programs to make 
the most effective use of available funding in support of the Air Force 
mission. The Air Force Total Force sustainment funding in fiscal year 
2008 is $2 billion, 92 percent of the amount called for by the Facility 
Sustainment Model (FSM). The fiscal year 2008 Total Force restoration 
and modernization (R&M) funding is $346 million.
    The Air Force fiscal year 2008 PB request of $363 million for the 
Military Family Housing investment program balances new construction, 
improvements, and planning and design work. While we continue to strive 
to eliminate inadequate housing, we cannot allow more housing to fall 
into disrepair. In addition to the $363 million requested for housing 
investment, we request nearly $688 million for operations and 
maintenance, for a total housing investment of more than $1 billion.
    To continue our aggressive BRAC implementation schedule, the fiscal 
year 2008 PB request includes $1.2 billion for BRAC related activities 
of which $910 million is construction. The Air Force is lead for 64 
BRAC business plans and has financial equity in an additional 16 
business plans. Full support of this funding request is critical to 
ensure we remain on track to meet the requirement for compliance by 
2011.
    Sound investment in our installations postures the Air Force to 
support our priorities of winning the Global War on Terror, support our 
Airmen and their families, and recapitalize and modernize our force. We 
believe the fiscal year 2008 President's Budget proposal will provide 
the construction bedrock for continued success of our mission.
             fighting and winning fhe global war on terror
    The Air Force's first priority is to fight and win the Global War 
on Terror (GWOT). We plan to invest $192 million on GWOT-related 
projects that support and enhance the Air Force's ability to deliver 
intelligence, maintenance, and operational capabilities to our 
Combatant Commanders. At MacDill AFB, Florida the Air Force is 
executing two projects at U.S. Central Command (USCENTCOM) by 
completing the Joint Intelligence facility and altering the USCENTCOM 
headquarters facility. The USCENTCOM's area of responsibility is the 
geographic and ideological heart of the GWOT. A war without borders, it 
spans 27 countries in the Central Asian region of the world. The Joint 
Intelligence Center provides the USCENTCOM Commander with the 
situational awareness and long range analyses needed to defeat 
adversaries within the AOR, promote regional stability, support allies, 
and protect U.S. national interests, all aimed toward victory in the 
GWOT. Two projects at RAF Menwith Hill Station, United Kingdom and one 
at Offutt AFB, Nebraska enhance intelligence gathering and analysis 
capabilities for the United States and our allies. The Basic 
Expeditionary Airman Skills Training at Lackland AFB, Texas provides 
facilities for expanded field training that will equip our Airmen as 
they enter the Air Force with the warfighting skills and mindset vital 
in today's operational environment.
             develop and care for airmen and their families
    The Air Force sees a direct link between readiness and quality of 
life. The Air Force is committed to creating and maintaining a 
consistent, high quality, and safe environment in locations where 
Airmen work, reside, and recreate. Our Total Force Airmen are the most 
valuable assets we have in fighting the GWOT and ensuring our air, 
space and cyberspace dominance. We have to continue to recruit, train, 
equip, and retain the Airmen of tomorrow. As our Air Force becomes more 
capable, more efficient and more lethal, so will our Airmen. The 
quality of life we provide for our Airmen and their families is a 
distinct determining factor in how long they remain in our service. The 
sacrifices our Airmen and their families make are enormous. We are 
deeply committed to providing every Airman and their family with the 
best possible quality of life as they serve our Nation. In this year's 
budget we strive to promote a wide spectrum of projects that take care 
of our Airmen and their families; from quality family housing for our 
families, quality dormitories for unaccompanied Airmen, functional 
fitness centers, and safe child development centers, to exceptional 
training and operational facilities.
Workplace
    Work-related injuries cost the Air Force over $130 million annually 
and have a significant impact on operational capability. Most 
importantly, workplace injuries negatively impact the quality of life 
for our Airmen and their families. One program being used to achieve a 
reduction in workplace injuries is OSHA's Voluntary Protection Program. 
The SECAF and CSAF have directed ``launching the Voluntary Protection 
Program throughout the Air Force . . . for service wide 
implementation.'' Through the Voluntary Protection Program, every 
Airman and his Wingman are empowered to actively identify and take 
action to eliminate safety and health hazards in the workplace. Our 
goal is to offer an accident-free work environment for each and every 
Airman.
At Home
    When Airmen deploy, time spent worrying whether their families are 
safe and secure is time not spent focusing on the mission. Quality of 
life initiatives are critical to our overall combat readiness and to 
recruiting and retaining our country's best and brightest. Our quality 
of life initiatives reflect our commitment to our Airmen.
Family Housing
    The Air Force Family Housing Master Plan details our Housing 
military construction, operations and maintenance, and privatization 
efforts. It is designed to ensure safe, affordable, and adequate 
housing for our members. To implement the plan, our fiscal year 2008 
budget request for family housing is over $1 billion. Consistent with 
Department of Defense Strategic Planning Guidance, the Air Force is on 
track to fund projects through fiscal year 2009 which will eliminate 
inadequate overseas housing.
    For fiscal year 2008, the requested $363 million for our housing 
investment program will replace and improve approximately 2,100 housing 
units at eight overseas bases. An additional $688 million will pay for 
operations, maintenance, utilities and leases to support the family 
housing program.
    We have used the privatization authorities granted by Congress to 
accelerate our family housing improvement program. By the beginning of 
fiscal year 2008, we will have privatized over 44,000 housing units, or 
72 percent of our U.S. housing inventory, far exceeding the DOD goal of 
60 percent. The Air Force is strategically leveraging its $596 million 
investment to bring in $7.37 billion in equivalent MILCON investment 
from the private sector; that is nearly fifteen dollars of private 
investment for each public tax dollar. The Air Force is aggressively 
researching privatization at remaining U.S. MILCON installations where 
feasible.
Unaccompanied Housing (Dormitories)
    The fiscal year 2008 total Air Force requirement for dormitory 
rooms is 60,200. We have made great progress using the three-phased 
investment strategy outlined in our Dormitory Master Plan. Phase I, now 
construction complete, eliminated central latrine dormitories. With the 
fiscal year 2007 MILCON we have funding necessary to complete phase II 
of our Dormitory Master Plan, our dorm room shortage (deficit), by 
building new dormitories. In Phase III, now underway, we will replace 
existing dormitories at the end of their useful life with a standard 
Air Force designed private room configuration under the ``Dorms-4-
Airmen'' concept. Our ``Dorms-4-Airmen'' concept capitalizes on our 
wingman strategy and keeps our dorm residents socially and emotionally 
fit.
    Our fiscal year 2008 Program reflects this strategy. The $47 
million request for dormitory investment will replace 368 rooms for 
unaccompanied personnel at both stateside and overseas bases. We are 
equally committed to providing adequate housing and improving the 
quality of life for our unaccompanied junior enlisted personnel as we 
are to our families.
Fitness and Child Development Centers
    The Air Force maintains its strong commitment to the ``Fit-to-
Fight'' program. Our goal is for Airmen to make fitness and exercise a 
regular part of their lives and prepare them to meet the rigors of a 
deployed environment, not simply to pass an annual fitness test. Our 
goal is to replace at least one fitness center per year until we have 
the resources to do more. This year we will construct a new fitness 
center at Tyndall AFB, Florida.
    We also remain committed to the children of our Airmen and are 
dedicated to provide them with adequate and nurturing day care 
facilities. In fiscal year 2008 the most urgent need is at Patrick AFB, 
Florida. Our $12 million effort at Patrick AFB will provide supervised 
care for 266 infants and preschool children, replacing a child 
development center that was established in a warehouse built in 1958.
Operations and Training
    Our MILCON program supports our expanded view of quality of life 
for Airmen by providing facilities from which to train in and operate. 
A new Security Forces Operations Facility at Scott AFB, Illinois will 
provide the men and women of the active duty and National Guard in one 
of our most stressed career fields a functional, consolidated facility. 
The Fire Training Facility at Ramstein AB is jointly funded by NATO and 
provides military critical live-fire and structural fire/crash rescue 
training. Finally, a recapitalization project at the Air Force Academy 
continues the phased upgrade of Fairchild Hall academic building. The 
final renovation and upgrade of Fairchild Hall will be complete with a 
$15 million effort programmed in our fiscal year 2009 MILCON program.
                   recapitalization and modernization
    Our third priority is to modernize and recapitalize the Air Force. 
Air forces succeed when they anticipate and are allowed to shape the 
future strategic environment, and ultimately develop the capabilities 
required for the next fight. Air forces succeed when they are able to 
organize, train, and equip themselves properly for both the current and 
future fights and purposefully build in the flexibility to operate 
across the spectrum of conflict and deliver effects at all levels of 
war--tactical, operational and strategic. Air forces succeed when they 
remain focused on their primary mission of providing asymmetric range 
and payload as an independent force that is part of an interdependent 
joint team. Our MILCON program is a direct reflection of our strong 
commitment to the success of our Air Force and is heavily weighted 
toward modernization and recapitalization support. The fiscal year 2008 
Total Force military construction program consists of 43 projects that 
are essential to modernization and recapitalization, totaling $544 
million.
    The F-22A Raptor is the Air Force's primary air superiority fighter 
and key enabler, providing operational access, homeland defense, cruise 
missile defense and force protection for joint forces. Combat-capable 
Raptors are in full rate production on the world's only 5th generation 
production line. Elmendorf AFB, Alaska will be the second operational 
Raptor base. We are constructing five active duty and reserve projects 
to beddown the world's premier fighter at a cost of $75 million. The F-
35A Lightning II Joint Strike Fighter (JSF) is our 5th generation 
multi-role strike fighter aircraft optimized for air-to-ground attack. 
The F-35A will recapitalize combat capabilities currently provided by 
the F-16 and A-10 and will complement the capabilities of the F-22A. 
Projects at Eglin AFB, Florida begin the beddown for joint F-35 
training squadrons and combines Air Force and Navy funding totaling $74 
million. Our legacy aircraft remain a vital part of our national 
defense. We are constructing much needed facilities for the Reserve F-
16 Wing at Hill AFB, Utah and the active duty F-15 Wing at RAF 
Lakenheath, United Kingdom.
    We are also modernizing the weapons these 5th generation aircraft 
and legacy stalwarts will carry. The Small Diameter Bomb (SDB) enhances 
our payload and strike capability while increasing the standoff 
distance for our pilots. We are constructing munitions storage igloos 
at RAF Lakenheath, United Kingdom and Ramstein AB, Germany to provide 
this capability to the warfighter where storage capacity does not 
exist. Our Tactical Air Controllers are embedded with ground forces, 
directing air power, like the SDB, in support of ground operations. 
This year's MILCON program provides active duty and Guard Air Support 
Operations Squadrons the facilities needed on Army Installations like 
Fort Carson, Colorado; Fort Riley, Kansas; Camp Beauregard, Louisiana; 
and Fort Indiantown Gap, Pennsylvania. These facilities support U.S. 
Army brigade transformation and provide the Air Force Tactical Air 
Controllers the training space required to support the critical Close 
Air Support mission.
    We are modernizing and recapitalizing our facilities in support of 
large-frame aircraft as well. The C-17 continues its outstanding 
support for humanitarian operations and the Joint warfighter. MILCON 
projects at Altus AFB, Oklahoma; Hickam AFB, Hawaii; and Travis AFB, 
California nearly completes the beddown of our inter-theater mobility 
workhorse. The C5 provides the strategic span in our air bridge and we 
are investing in six projects worth $50 million at Memphis, Tennessee 
and Martinsburg, West Virginia. Hangar projects at Davis-Monthan AFB, 
Arizona and Cannon AFB, New Mexico increase maintenance capabilities 
for Combat Search and Rescue EC-130s and AC-130s, respectively.
    Intelligence, Surveillance, and Reconnaissance (ISR), 
communications, and space systems play an ever-increasing role in what 
we do. The Distributed Common Ground System (DCGS) provides real-time, 
net-centric, decision-quality information to commanders. Projects that 
enable the DCGS operations will be constructed at Hickam AFB, Hawaii; 
Hulman RAP Terre Haute, Indiana; and Otis ANGB, Massachusetts. MILSTAR 
is a joint service communications system that provides secure, jam-
resistant, worldwide communications to meet essential wartime 
requirements for high priority military users. Investments at McGhee 
Tyson IAP, Tennessee support this vital communications beddown. The 
lethal combination of air and space assets the United States possesses 
gives us capabilities that are unmatched. The Air and Space Integration 
facility at Schiever, AFB, Colorado enables us to continue this 
dominance and widen the gap on our adversaries. Finally, the 
Communications Frame facility at Bolling AFB will modernize this 
critical node for communications in the National Capital Region.
    Depot Maintenance Reengineering and Transformation remains 
essential to revitalizing depots using LEAN principles to increase 
aircraft availability by reducing depot cycle time, defects, and costs. 
This program has played a significant role in transforming our 
industrial base to support warfighter requirements more effectively. 
The 2008 program continues with four projects at Hill AFB, Utah; Robins 
AFB, Georgia; and Tinker AFB, Oklahoma totaling $66 million.
    The 2008 military construction program has six other modernization 
infrastructure projects worth $178 million. These projects span the 
globe; from a Mobility Processing Center in Germany and storm damage 
repair in the Gulf of Mexico, to an infrastructure project on Guam that 
provides increased force protection for the entrance to Anderson AFB. 
These projects recapitalize our aging infrastructure and enable us to 
support our vision for a modernized force.
                      base realignment and closure
    As we continue supporting our three main priorities, implementing 
the Base Realignment and Closure (BRAC) recommendations is an important 
vehicle for the Air Force to ensure we are more lethal, agile, and 
capable of maintaining total dominance in air, space, and cyberspace 
domains. While the Commission's final decisions fell short of the Air 
Force's overall goals for BRAC, particularly in eliminating excess 
physical capacity, they did help the Air Force take a major step 
towards reshaping its Total Force structure. The Joint Cross Service 
Group recommendations which make up the vast majority of the fiscal 
year 2008 PB request are pivotal to transforming the way the Air Force 
and our sister services train and fight together.
    The Air Force developed and is implementing an aggressive schedule 
for its BRAC 2005 recommendations, and we are working in close 
partnership with our Joint partners and with the Air National Guard, 
the Air Force Reserve, and our major commands to further develop and 
refine this schedule.
    The Air Force is lead military service for 64 BRAC Business Plans, 
and has equity in an additional 16. Our fiscal year 2008 BRAC program 
is comprised of $910 million in MILCON, $223 million in O&M, and the 
balance in the personnel and environmental accounts. Of the $910 
million in MILCON projects, $749 million is driven by Joint Cross 
Service Group recommendations. Joint interdependence adds complexity to 
the execution of this BRAC funding. Business Plans developed to assist 
in execution of BRAC actions have been coordinated and approved by OSD 
and also coordinated with other Service agencies. Coordinating, 
completing, and implementing these plans will ensure the Air Force is 
successful in effectively and efficiently implementing the BRAC 2005 
recommendations. We are confident the Air Force is heading in the right 
direction. We believe if we stay on course we can meet all expectations 
and objectives of the BRAC 2005 round, while minimizing disruptions to 
the mission, our warfighters, their families, and the communities that 
support our Air Force.
    Given the many external influences, and as good stewards of 
taxpayer dollars, we cannot look at BRAC implementation as an isolated 
activity. To be successful, we must orchestrate BRAC implementation 
activities in concert with new Air Force mission beddowns, legacy 
weapons systems and force drawdowns, emerging missions, Total Force 
Integration (TFI), and cross Service initiatives. An example of our 
attainment of this objective from BRAC 2005 recommendations is at Kulis 
Air National Guard Base, Alaska. The 2005 BRAC Commission recommended 
that, contingent on the availability of adequate military construction 
funds to provide the necessary replacement facilities at Elmendorf AFB, 
Kulis ANGB be closed. After an in depth analysis of detailed concepts 
of operations and available infrastructure, the Air Force, the Air 
National Guard, Pacific Air Forces, and my staff, collectively 
concluded on January 30, 2007, that operations at Kulis ANG Base could 
and would be relocated to Elmendorf.
    When this move is complete, the 176th Wing, Kulis ANGB and the 3rd 
Wing, Elmendorf AFB will form one, in a growing number of, Air National 
Guard and active duty associate units in the Air Force. This 
association will facilitate a unique opportunity for the Air Force to 
merge all our Total Force elements--Air National Guard, Air Force 
Reserve and active duty operations--across multiple mission areas, 
including airlift, Combat Search and Rescue, Airborne Warning and 
Control Systems and 5th generation fighters, all in one location and in 
a theater key to our global activities.
Environmental Cleanup and Property Transfer
    As stewards of public assets the Air Force must manage them to 
achieve maximum value for the taxpayer while at the same time 
overseeing those assets with the utmost regard for environmental 
issues.
    Environmental clean up and transfer of BRAC real property is often 
technically challenging and has involved extended timeframes to 
complete. Nevertheless, the Air Force has deeded 82 percent of 87,000 
acres of BRAC property from previous BRAC rounds. Our real property 
disposal efforts have led to the creation of more than 54,000 reuse 
jobs in the affected communities. To complete the clean up and transfer 
of the remaining property, the Air Force is attempting to leverage 
private sector experience in redeveloping former industrial property 
similar to Air Force facilities. Our way ahead for legacy BRAC property 
includes an emphasis on performance-based contracting including 
guaranteed fixed price terms, regionalized contracts, and innovative 
tools such as early transfer, negotiated sales, and privatization. Our 
objectives remain clear: (1) provide reuse opportunities that best meet 
the needs of the Air Force and local communities, (2) move the process 
along smartly in each situation to get property back into commerce as 
soon as practical and (3) provide transparency in the process.
    The Air Force takes serious its responsibility to protect human 
health and the environment. Since 1991 we have spent $2.6 billion on 
environmental clean up at our BRAC installations--an investment that 
protects human health and the environment for our Airmen, our 
communities, and future generations.
Way Ahead
    As you are well aware the House and Senate recently approved a 
Continuing Resolution Authority which approved $2.5 billion in BRAC 
funding for the Department of Defense, which is $3.1 billion less than 
requested for fiscal year 2007. If left unchanged, the reduction will 
result in the Air Force receiving far less than expected in fiscal year 
2007 funding. If not corrected, the Air Force, and our sister services 
will have to re-evaluate our plans and will likely experience delays 
and disruptions in construction and the movements of our people and 
assets. Delays could impact mission readiness and the ability to meet 
mandated completion deadlines.
    Prompt action and restoration of full funding will permit the Air 
Force to stay on course in executing our obligation for timely 
completion of the BRAC recommendations approved by the Congress.
    We solicit your support in advocating that action.
                          enhanced use leasing
    At remaining non-BRAC facilities, the Air Force is reshaping our 
infrastructure to meet the demands of the 21st century. The Air Force 
seeks fair market value and utilizes new tools such as Enhanced Use 
Leasing to optimize our resources and obtain value from our excess 
capacity--value we can return to the warfighter. Enhanced Use Leasing 
allows undeveloped and unused military facilities to be used by private 
industry, by leasing them to private entities. For example, an Enhanced 
Use Lease of a vacant 8.33-acre parcel on Kirtland AFB in New Mexico, 
allows the New Mexico Institute of Mining and Technology to construct a 
20,000 square feet commercial office building lab research facility and 
secondary educational facility, which provides rent to the Air Force 
and will improve scientific and educational opportunities for Kirtland 
AFB, the Air Force Research Laboratory, New Mexico Tech and the public 
in general. The Air Force has six current and pending Enhanced Use 
Lease projects and twenty potential Enhanced Use Leases across the 
country.
       maintaining our facilities and operational infrastructure
    The Air Force remains focused on sustaining, restoring, and 
modernizing our operational infrastructure. We have been benchmarking 
the ``best of the best'' asset managers that our country has to offer. 
We are finding and implementing ways to manage better, utilize 
resources more wisely, leverage private sector investment potential, 
and use smart information technology. Our aim is to manage assets by 
optimizing resources to deliver operational infrastructure for the 
warfighter at our installations and ranges. For 2008, we have focused 
sustainment funding on keeping our ``good facilities good'' and 
targeted limited Restoration and Modernization (R&M) funding to fix 
critical facility and infrastructure deficiencies to maintain 
readiness.
    Our sustainment program is aimed at maximizing the life of our 
facilities and infrastructure in order to preserve our existing 
investment. Without proper sustainment, our facilities and 
infrastructure wear out more rapidly. In addition, commanders in the 
field use operations and maintenance (O&M) accounts to address facility 
requirements that impact their mission capabilities.
    When facilities require restoration or modernization, we use a 
balanced program of O&M and military construction funding to make them 
``mission ready.'' Unfortunately, restoration and modernization 
requirements in past years exceeded available O&M funding, causing us 
to defer much-needed work. It is important for us to steadily increase 
the investment in restoration and modernization in order to halt the 
growth of this backlog, while fully funding sustainment to maximize the 
life of our facilities and infrastructure.
    The Air Force Total Force sustainment funding in fiscal year 2008 
is $1.99 billion, 92 percent of the amount called for by the Facility 
Sustainment Model (FSM). The fiscal year 2008 Total Force R&M funding 
is $346 million, a slight improvement over our fiscal year 2007 PB 
request. This is an area where the Air Force is taking manageable risk 
given our other budgetary priorities.
               demolition of excess, obsolete facilities
    In addition to modernizing and restoring worn out facilities, we 
also demolish excess and obsolete facilities. This ensures funds are 
focused on facilities we need, not on sustaining those we do not. For 
the past 9 years, the Air Force has aggressively demolished or disposed 
of facilities that were unneeded or no longer economically viable to 
maintain. From fiscal year 1998 through fiscal year 2006, we demolished 
21.9 million square feet of non-housing facilities and infrastructure 
at a cost of $260 million in O&M funding. This is equivalent to 
demolishing more than three average size Air Force installations and 
has allowed us to target our O&M funding on facilities we need for the 
long-term mission. For fiscal year 2008 and beyond, the Air Force will 
continue to aggressively identify opportunities to eliminate excess and 
obsolete facilities.
           planning and design/unspecified minor construction
    This year's Air Force MILCON request includes $75 million for 
planning and design (P&D), of which $12 million is for military family 
housing. The request includes $52 million for active duty, $8 million 
for the Air National Guard and $4 million for the Air Force Reserve. 
These funds will allow us to complete the design work for fiscal year 
2009 construction programs and to start the designs for fiscal year 10 
projects, allowing us to award contracts in the year of authorization 
and appropriation.
    This year's request also includes $26 million for the Total Force 
unspecified minor construction program which is our primary means for 
funding small, unforeseen projects that cannot wait for the normal 
military construction process. Because these projects emerge over the 
course of the year, it is not possible to program the total funding 
requirement.
                         utility privatization
    Similar to our efforts in privatizing housing, the Air Force is 
privatizing utilities where it makes economic sense and does not 
adversely affect readiness, security, or mission accomplishment. 
Because our installations are key to our operational capabilities, our 
network of bases provides necessary infrastructure for deploying, 
employing, and sustaining air and space operations and re-deploying and 
reconstituting the force afterwards. Reliable utility systems are 
critical infrastructure components and essential to air operations and 
quality of life at every Air Force base. Additionally, these systems 
must be consistent with modern technology to optimize energy 
conservation. We believe privatization offers the best solution for 
simultaneously meeting both these requirements.
    To date, under DOD's utilities privatization program, the Air Force 
has conveyed 11 systems under 10 U.S.C. 2688 and 6 additional systems 
using standard FAR clauses, for a total of 17 privatized systems with a 
plant replacement value in excess of $300 million. We are currently 
evaluating an additional 338 systems for privatization. We anticipate 
that we will more than double the number of our privatized utility 
systems in fiscal year 2008. By the time the program concludes, we 
anticipate more than 120 of about 500 systems could be privatized. 
During the course of this process, we expect many competitive 
solicitations will end up as sole source procurements from local 
utility companies.
                                 energy
    The Air Force is serious about being a global leader in facility 
energy conservation and renewable energy. In the last year the Air 
Force chartered a Senior Focus Group and set its strategic vision of 
making energy a consideration in all we do. Our strategy is built 
around a balance of supply side energy assurance and demand side energy 
efficiency. Our new energy strategy for the 21st Century is focused on 
meeting the President's new energy mandates outlined in Executive Order 
13423. Our strategy covers not only our facilities infrastructure, but 
also fuel optimization in our aviation operations and ground 
transportation fleet.
    The Air Force facilities infrastructure strategy is to eliminate 
waste in energy use as the major conservation priority. Conducting 
effective energy audits to identify energy waste streams is the first 
step. Optimizing the efficiency of heating and cooling systems, and 
eliminating over-lighting are just two of the initiatives in our energy 
toolbox.
    Our traditional project goals of delivering high quality facility 
projects on schedule and within budget is expanding the term 
``quality'' so that our goal becomes the creation of functional, 
maintainable, and high performance facilities. Under Executive Order 
13423 the Air Force will employ the Federal Leadership in High 
Performance and Sustainable Building Guiding Principles to reduce total 
cost of ownership, improve energy efficiency and water conservation, to 
provide safe, healthy, and productivity enhancing environments. We 
currently employ Leadership in Energy & Environmental Design (LEED) 
criteria created by the U.S. Green Building Council as design 
guidelines. The LEED Green Building Rating System is the nationally 
accepted benchmark for the design, construction, and operation of high 
performance green buildings. We are incorporating day-lighting and 
improved building envelop designs to reduce heating, ventilation, and 
air conditioning loads and power use. By fiscal year 2009, 100 percent 
of Air Force eligible MILCON projects will be ``capable of 
certification'' in LEED registration. High quality energy-efficient 
facilities is our goal.
    The Air Force is responding to the effectively doubling of the 
energy conservation mandate of E.O. 13423 by strengthening management 
of our energy programs from base level Energy Management Steering 
Groups, and technically competent energy managers through Major Command 
and Headquarters United States Air Force governance groups. 
Additionally, we are building an investment program based on high value 
initiatives that save energy and help the Air Force mitigate the impact 
of rising utility costs. We are hiring energy professionals to assist 
our Major Commands and installations target the right initiatives. We 
are also partnering with the Office of the Secretary of Defense, the 
Department of Energy, the Environmental Protection Agency (EPA), and 
others to implement best practices across our enterprise.
    In the area of renewable energy, this year we awarded a contract 
that will result in an 18 megawatt (MW) peak power photovoltaic (PV) 
solar array at Nellis AFB, NV--projected to be the largest PV array in 
the world once on line in late 2008. The Air Force is building on a 
long history of facility energy conservation success. Our new energy 
initiatives will enhance our campaign to meet or exceed the goals of 
the new Executive Order.
    Our efforts were recognized in fiscal year 2006 when we received 
the EPA Climate Protection Award as the number one purchaser of 
renewable energy in the Nation. The Air Force continues to be the 
largest user of renewable energy as defined by the Energy Policy Act of 
2005 with the purchase of 990,319 MW of green power representing 9.6 
percentof our total electrical consumption last year. Also, for the 
third year in a row, the Air Force heads the EPA's list of top ten 
Federal Government green power purchasers in the Green Power 
Partnership.
                     civil engineer transformation
    The Air Force Civil Engineers have a long history of supporting all 
the critical Air Force programs mentioned earlier. The engineers are 
also benchmarking with the private sector and aggressively transforming 
their business processes to be more effective and efficient. The Air 
Force civil engineers developed several initiatives to minimize the 
impact of Air Force-wide personnel reductions on their ability to 
provide combat capability and home-station installation support. Rather 
than settle for a fair share distribution across specialties and Major 
Commands, these transformational initiatives targeted specific process 
improvements which resulted in realignments for military and civilian 
authorizations to balance workload and increase combat capability. The 
Civil Engineers are transforming civil engineer functions at all 
organizational levels to centralize the core engineering capabilities 
and streamline their processes. This includes centralizing the 
execution of new and current mission MILCON, housing, and environmental 
restoration construction projects at the Air Force Center for 
Environmental Excellence in San Antonio, Texas. The Civil Engineers 
also applied Operational Risk Management concepts to the way we 
accomplish the fire emergency services support mission. By accepting 
capability-based risks, civil engineers can provide the same level of 
fire and crash rescue service for the airfield and installation, while 
reducing the numbers of fire fighters required on duty during times 
when events are less likely to occur. The transformational initiatives 
mentioned above will allow us to execute our civil engineer mission 
more effectively and increase our combat capability for Explosive 
Ordnance Disposal and Air Force heavy construction units, known as RED 
HORSE Squadrons. As a whole, these initiatives ensure civil engineer 
support to the warfighter remains steadfast and our garrison 
installation support remains at an acceptable level.
                               conclusion
    September 18 2007, marks the 60 anniversary of the creation of our 
independent United States Air Force. This year we commemorate this 
anniversary of our proud Service--a service born of revolutionary 
ideas, forged in combat, and proven through decades of progress and 
achievement. The readiness and capability of our fighting force to 
fight and win our Nation's wars, now and in the future, depends heavily 
upon the state of our operational infrastructure. As the Air Force 
continues to modernize and recapitalize, we will continue to wisely 
invest our precious military construction funding to fight and win the 
war on terror, develop and care for our Airmen and their families, 
while recapitalizing and modernizing our air and space systems.

    Senator Reed. General Ickes.

              STATEMENT OF MAJOR GENERAL CHARLES V. ICKES

    General Ickes. Thank you, Mr. Chairman, members of the 
Committee. This is a great opportunity for the Air National 
Guard to be here as part of the total force team. Our story in 
the Air Guard is one of cost effectiveness. We have 177 Air 
National Guard facilities. As a great value, we have 
approximately 1,100 personnel across America that steward a 
remarkable $12 billion plant value facilities program. We have 
more than 60 nominal fee leases where we operate organizations 
on commercial airports for $1 per year, a remarkable, effective 
way to manage the Air Guard.
    We are aggressively managing our inventory, disposing of 
obsolete or unwanted facilities and we are pursuing energy 
effectiveness end efficiencies in everyway we can. However, 
we've got some challenges facing us also. We need to meet the 
requirements of BRAC and that is critical for us because we 
played such a large piece in BRAC. Unique, under what occurred 
during BRAC, we gained almost 2.2 million square feet of 
property in BRAC in the Air National Guard and now will have to 
manage those facilities and decide how we balance that out with 
current inventory. We definitely need to take advantage of the 
next upcoming weapon systems and be able to provide combat 
capability that the Air Force expects out of us. We need to 
ensure our facilities are flexible, efficient, sustainable, 
maintainable and durable.
    This year, our request focus on re-capitalization and 
modernization and also to bed down critical weapon systems that 
are part our effort to reset the Air National Guard, the 
largest reset in the history of the Air National Guard. This 
reset initiatives to implement BRAC, total force integration or 
TFI and other problematic challenges. These initiatives, some 
of which have MILCON costs need to occur in sequence. It is 
very important for us as we build on and off ramps with these 
units were involved in BRAC and reset.
    Fiscal year 2007's joint resolution left us with some 
challenges for this year. We hope we can work together so we 
don't jeopardize our ability to meet our mission requirements 
while we are transforming our force. Installations are 
essential to mission accomplishment and keeping us relevant 
into the future. Thank you very much for our opportunity this 
morning.
    Senator Reed. Thank you, sir. General Ethredge.

           STATEMENT OF BRIGADIER GENERAL CHARLES D. ETHREDGE

    General Ethredge. Mr. Chairman and distinguished members, 
thank you for the opportunity to be here today. The Air Force 
Reserve is a component of the total force and provides certain 
valuable support to the active duty component. We reflect in 
this our motto, One Air Force, Same Fight, Unrivaled Wingman. 
We demonstrate our motto in many ways and one of these ways is 
through our military construction (MILCON) program.
    To support the Air Force mission as effectively as 
possible, the total force aligned its fiscal year 2008 and 2009 
MILCON program to support the Air Force Chiefs top three 
priorities. Number one, fighting and winning the global war on 
terrorism. Number two, developing and caring for our airmen and 
their families. And, number three, re-capitalizing and 
modernizing the force.
    The total force, including the Air Force Reserve, has 
deliberately taken risks in facilities to support the Air Force 
Chief's third priority of re-capitalizing our aging aircraft 
fleet. As a result, all components of the Air Force, including 
the Air Force Reserve, have lower MILCON TOA's. However, with 
the distribution of the total TOA among the components is 
equitable based on the value of facilities and infrastructure.
    We understand there are not enough resources to support 
every need. The alignment of MILCON projects towards the 
Chief's priorities differs from our past practice of allotting 
MILCON projects as current mission or new mission. By doing 
this, we are providing the most effective use of limited MILCON 
resources to best meet the Reserve's needs while supporting the 
Air Force's mission.
    The Air Force Reserve MILCON program in fiscal year 2008 
and 2009 support the Chief's priority of re-capitalizing and 
modernizing the force by supporting our associate units. The 
Air Force Reserve MILCON TOA for 2008 is $27 million. One-third 
of this is dedicated to planning, design and minor construction 
and two-thirds is dedicated to three construction projects 
supporting the F-22 associated unit at Elmendorf Air Force 
Base, Alaska and the F-16 associate unit at Hill Air Force 
Base, Utah.
    Our fiscal year 2009 program is similar with only $28 
million of TOA. We are applying one-third to planning, design, 
and minor construction and two-thirds for construction projects 
supporting an associate unit for a space wing at Schriever Air 
Force Base in Colorado and an associate KC-135 unit at Tinker 
Air Force Base, Oklahoma. We believe the model we are using to 
align our MILCON efforts with the Air Force Chief's three 
priorities provides coherency between the components, supports 
the Reserve mission, and significantly strengthens us as a 
total force. However, with the smaller amounts that we are 
receiving in TOA for the MILCON, we do see us falling further 
behind as we try to modernize our facilities and look towards 
the future. Thank you, sir.
    Senator Reed. Thank you very much, General. Secretary 
Anderson, we just had an interesting discussion with your 
colleagues about the increases in funding for MILCON, Marine 
Corps and Army and everybody else. The Air Force is asking for 
a 21 percent decrease. At the risk of looking a gift horse in 
the mouth, what is going on here? Is DOD essentially diverting 
resources to other services or has the Air Force reached a 
position where you don't need more MILCON, you need less?
    Mr. Anderson. Well Senator, I think it is maybe a little 
bit of a couple of different things. First of all, as Senator 
Hutchison so kindly brought up earlier today, the Air Force is 
very proud of its reputation over the last 60 years of 
investing very heavily in bricks and mortar and infrastructure 
and it does show at our bases.
    As my colleagues have pointed out, we realize that there is 
a significant need within the Air Force to re-capitalize iron, 
aircraft. We are making a conscious effort to take some degree 
of risk in our MILCON line item for the next couple of years. 
This is not a permanent ratchet down of that level of funding, 
but it is being done for a couple of years to help us re-
capitalize the aircraft fleet. Now, as we are reducing to some 
degree our MILCON budget, that as you well know, is not the 
only pot of money that we use to manage and maintain our 
infrastructure. We have restoration, sustainment, 
modernization, and operating and maintenance funds. We are 
actually increasing our sustainment, I mean, our restoration 
and modernization accounts over the next couple of years, our 
sustainment account over the next couple of years, to take 
those good assets that we already have across the Air Force and 
continue to keep them good as we work on re-capitalizing the 
fleet.
    It is risk; we all understand its risk. We've all three 
components have determined that this is the appropriate thing 
to do and we are going to work very, very hard to maintain 
quality of life. Our Chief and Secretary have said we are not 
going to in any way impact quality of life for our airmen, the 
quality of life that they've all come to deserve and expect as 
being members of the United States Air Force.
    Senator Reed. So we can anticipate a request next year of a 
decrease in MILCON request, that is within your purview.
    Mr. Anderson. It will be lower next year and then beginning 
after that to start ratcheting up again.
    Senator Reed. There is another issue here that came up 
several years ago. All the services committed to devote more 
resources to the Reserve components and looking at the numbers 
for the Air Guard, that in terms of MILCON, there seems to be a 
steady decline, not an increase. In 2006 Air Guard MILCON was 
$165 million, in 2007 fell to $126 million. This year, the 
request has dropped to $85 million and that is about a 49 
percent decrease in just 2 years and then as you talk about 
projecting cuts going forward that probably, likely we would 
see more cuts.
    The Air Force Reserve budget has fallen from $79 million in 
2006 to $44 million to this year $26 million. Those are steep 
cuts and the Air Guard has 177 locations around the Nation and 
there is a great 143rd Air Wing up in Quonset Point, Rhode 
Island and frankly, you know, I think their needs are 
increasing rather than decreasing, certainly not commensurate 
with this level of support. So can you--how do you respond to 
these significant decreases?
    Mr. Anderson. Again, sir, I think obviously the MILCON 
bucket is an important bucket but there are other buckets of 
funding that are used to maintain and keep current our assets. 
We have increases in some of those other buckets of funds, 
actually offsetting the decrease in MILCON.
    The other piece, as Mr. Grone pointed out in the first 
panel, is the BRAC funding, which is not the same as current 
mission MILCON but it is a huge infusion of capital into Air 
Force assets. As an example, the Kulis Elmendorf movement of 
Kulis Air National Guard into Elmendorf, which also helps 
facilitate Air Force Reserve, Air National Guard and Active 
Duty, are working very closely together--a huge infusion of 
capital and new facilities for all three of the components.
    So when you combine it all together and again, I will 
admit, we are taking risks. There is no question about that. 
When you combine it all together, I believe that in the short 
to medium term, the risks that we're taking are manageable and 
reasonable with an expectation that the Air Force will come 
back to its historical levels of funding within another couple 
of years.
    Senator Reed. You talked about re-capitalization rates, Mr. 
Secretary. What are the rates for the Active Air Force versus 
the Reserve components? Are they equal?
    Mr. Anderson. If you look strictly at MILCON, the Active 
Duty is slightly more favorable than the other two components. 
If you look at all the buckets of funding against the plant 
replacement value, of each of the various components, actually 
the Air National Guard and the Air Force Reserve are slightly 
better than the Active Duty, when you put all the buckets 
together, all of which, though again, I will admit, are really 
level funding amounts.
    Senator Reed. Now, the Air Force has been promoting the 
total force initiative as the centerpiece of its 
transformation. Does the Air Guard have the TFI initiatives, 
which have MILCON requirements that are not in the fiscal year 
2008/2009 budget request?
    Mr. Anderson. If there are needs in that time period that 
you suggested, they are in the budget request. There are 
obviously plans for activities beyond that time period, which 
would be dealt with later but if they are needs for that time 
period, they are fully included in those numbers, yes sir.
    Senator Reed. And that is your understanding, General 
Ickes.
    General Ickes. I think our concern would be are all the TFI 
projects fully funded? Some of that is still to be discussed. 
There are a bunch of projects that had to slide out, based on 
OSD guidance in some directives, so we are a little concerned 
about will TFI be fully funded through the process in a timely 
manner.
    Senator Reed. And General Ethredge, your reaction to that?
    General Ethredge. Some of the TFI initiatives are presently 
funded and for example, in the 2008 budget, the project we have 
at Hill Air Force Base, Utah is a TFI initiative, where we are 
associating changing the structure there from a UE-equipped F-
16 unit to an Associate Unit and we're building a wing 
headquarters for that wing so we do have some of the TFI 
initiatives included but you know, looking out into the future, 
there are a significant number of TFI initiatives we are still 
investigating that will probably require some further funding.
    Senator Reed. Let me, Senator Allard, by the time I take 
one more question and turn it over to you. The Air Guard noted 
here in the submissions, has no current mission MILCON project 
initiative request while Active Duty Air Force has 27 projects 
totaling $542 million. How does this situation evolve where one 
component, Air Guard, has nothing and Active has 27 projects, 
if there is a total force emphasis?
    Mr. Anderson. Well, Senator, based on a couple of things. 
One is, when you look at a snapshot of a year, the balance, 
obviously, can change. The balance of each of the particular 
funding buckets can change. I would submit that we ought to 
look at a longer term time period to see how it all flows 
together. In its current mission MILCON, new mission MILCON, 
BRAC funding, all needs to be kind of pulled in together. The 
other thing I would submit is, there are a number of Air 
National Guard and Air Force Reserve bases or Guard and Reserve 
operations that actually reside on Active Duty bases. A lot of 
the current mission MILCON is for quality of life items like 
fitness centers and dining halls and what have you. They are 
maybe on the Active Duty list but would be used by all.
    So you've got to kind of look at the whole mix and we need 
to continue to work with the other components to make sure that 
that balance is fair and I think at this point, with the level 
of risk that we're taking, appears to be fair. But we've got to 
continue to look at that and make sure that it is, in fact, 
giving us what we need for the total force.
    Senator Reed. Well, thank you, Mr. Secretary. I think you 
really have to look between the lines to get that fairness. It 
may exist but it seems like it's starkly one-sided and I will 
continue to pay attention to that. Senator Allard.
    Senator Allard. Thank you, Mr. Chairman. I just have a 
couple of questions. It shouldn't take long and I understand 
we've got some votes coming up here in the next five minutes or 
so.
    Secretary Anderson, on February 26, had received a 
delegation letter from the Colorado Delegation in support of 
acquisition of 23 acres immediately adjacent to Peterson Air 
Force Base in Colorado and it's--the base hosts Northern 
Command and Air Force Space Command and it is my understanding 
that this acquisition is for force protection of Peterson and 
that there is a willing seller. Has a determination been made 
if fiscal year 2007 funds will be expended on this effort?
    Mr. Anderson. Well, sir, let me first start talking about 
encroachment kind of in general. The Air Force approach has 
always been that we acquire land as a last resort, if you will. 
Obviously taking land off of the tax rolls and not allowing it 
to be developed can be actually a pretty significant negative 
to a community and we don't want to do that unless we really 
have to, with a willing seller or not.
    The one thing that has really impressed me, quite frankly, 
about what's been going on in Colorado is that there is a 
unique partnership that all of the bases in Colorado have been 
working and it's a very long title and I'll try to give it to 
you here. The Front Range Combined Military Comprehensive 
Planning Committee, which each of the bases in Colorado is 
working with the local communities in a regional way to 
determine, number one, whether there are true encroachment 
issues or not and of course, total force protection is one of 
those particular issues and if there are, how do we work with 
the communities to resolve that issue best?
    At this point, we're still looking at it but it is not 
evident yet whether there is truly a force protection issue 
related to that bit of ground or not but we're still looking at 
it and if it is an appropriate action to take to acquire that 
land, certainly we would go down that route. We're not quite at 
this point to suggest that that is necessary yet. We're going 
to continue to look at it.
    Senator Allard. Yeah, my understanding is that there is 
good community support on it and the Colorado Springs area is 
known for their support of the bases that are posted there. So 
whatever you could do to move that along would be appreciated.
    Mr. Anderson. If necessary, sir, we will absolutely do 
that. Yes, sir.
    Senator Allard. Thank you. Now, last year this committee 
noted in a report, some issues surrounding aging facilities at 
the United States Air Force Academy there, just close by. It is 
my understanding that more than $700 million in military 
construction and operation maintenance dollars were needed to 
be invested in the Academy and have been invested since fiscal 
year 2000. Now, a significant portion of the Academy still has 
an infrastructure concern, is what I'm told. Can you update me 
on the progress of the infrastructure re-capitalization plan 
and what challenges there are to re-capitalize the aging 
facilities at the Air Force Academy?
    Mr. Anderson. Yes, sir. A couple of items that we had a 
deliverable to you or to the committee, I should say, about a 
report, a Master Infrastructure Re-capitalization Plan, which 
is currently in the hands of our civil engineers and our 
finance people and will be delivered to the committee shortly, 
to meet that requirement.
    Senator Allard. Can you make sure we get a copy of that in 
our office? Is that possible?
    Mr. Anderson. Absolutely, yes sir.
    Senator Allard. If not, we'll get it from the committee. 
Just let us know.
    Mr. Anderson. In addition, the findings from 1 year ago, 
we're taking very seriously. A couple of items we're going to 
embark on are the average annual funding rate of about $49 
million a year in operation and maintenance for the Academy and 
an average annual investment of $11.7 million in MILCON through 
2013. Beyond that, we have committed to an annual investment of 
2\1/2\ to three times the normal, the average investment across 
all Air Force bases, for the Academy beyond the year 2014 in 
what we call Fix USAFA.
    For 2007, we're looking at $19 million of operation and 
maintenance funds that had been earmarked or allocated at this 
point, an additional $15 million in 2008 for facility upgrades. 
There is a comprehensive plan, which you will all see that 
takes us out through 2013 to help bring the Academy back to the 
standard it should have.

                     ADDITIONAL COMMITTEE QUESTIONS

    Senator Allard. Yeah, one of the problems we have at the 
Academy is that it was built all at once so everything is aging 
out all at once and we have to figure out a plan and how we're 
going to take care of this stuff so it doesn't happen all at 
once. It creates budget problems, I think. We need to kind of 
stagger it through somehow or the other. But apparently, one of 
the more pressing things right now is the infrastructure, which 
we all understand.
    Mr. Anderson. We agree and we appreciate your leadership 
and helping us through this issue.
    Senator Allard. You bet. Thank you.
    [The following questions were not asked at the hearing, but 
were submitted to the Department for response subsequent to the 
hearing:]

               Questions Submitted to William C. Anderson

               Questions Submitted by Senator Tim Johnson

             ellsworth afb--funding mobility center upgrade
    Question. Over the past decade, the facilities at Ellsworth Air 
Force Base have been substantially upgraded. A primary reason the Base 
Realignment and Closure Commission rejected the Department of Defense's 
recommendation to close Ellsworth was because it is a top-notch 
military installation. Continued upgrades at the base are essential. 
One project integral for mission readiness at the base, which is not in 
the FYDP, is the Mobility Center. Currently, deployment operations are 
housed in three separate buildings that are approximately 50 years old.
    In light of the fact that both active duty service members 
stationed at Ellsworth, as well as South Dakota National Guard units, 
have used the facility repeatedly to deploy in support of the Global 
War on Terror, it is important that these facilities be upgraded as 
soon as possible.
    Can you please provide to me a detailed explanation why the Air 
Force has not supported including this project in the Future Years 
Defense Program?
    Answer. With limited military construction (MILCON) funding 
available in the out years for MILCON requirements, we can only fund 
MILCON projects in the Future Years Defense Program (FYDP) which have 
been vetted through a facility analysis and planning process which 
determine and validate its need. This process is necessary to determine 
if renovation or new construction is the most economical way to meet 
the facility requirements. Prior to the submission of the fiscal year 
2008 President's Budget FYDP, the necessary facility analysis was not 
completed for this project. We are working to complete the facility 
analysis prior to finalizing the fiscal year 2009 President's Budget.
                ellsworth afb--funding for gate upgrades
    Question. Currently, all three entry gates at Ellsworth Air Force 
Base need significant upgrade to ensure they comply with current anti-
terrorism requirements. To date, construction for the base gates is 
funded through O&M funds allocated from Air Combat Command. 
Unfortunately, with the rising costs of construction, it has become 
increasingly difficult to finish these upgrades in a timely fashion.
    Can you please comment on whether or not the Air Force would 
support funding these upgrades through the regular MILCON process? 
Doing so may eliminate funding these upgrades incrementally and allow 
the base to comply with current antiterrorism requirements.
    Answer. Military construction (MILCON) funding is one avenue to 
upgrade the gates, in lieu of incrementally funding these upgrades with 
Operation and Maintenance (O&M) funds. However, with reduced MILCON 
funding and other critical mission essential requirements we are unable 
to absorb these upgrade requirements in our MILCON funding line. We 
understand the urgency of these upgrades and because of this the 
decision was made to execute these upgrades incrementally with O&M 
funding.
                                 ______
                                 

             Questions Submitted by Senator Robert C. Byrd

                 criteria for worst performing aircraft
    Question. Mr. Anderson, I understand that the Air Force Chief of 
Staff appeared before the Senate Armed Services Committee earlier this 
week and responded to several questions about C-5 and C-17 aircraft. In 
particular, I note that the Air Force Chief of Staff stated that the 
Air Force would like to retire 25-30 of the worst performing aircraft.
    What criteria is the Air Force using to determine ``worst 
performing'' aircraft?
    Answer. The Chief was referring to retirement of a portion of the 
C-5 fleet. When determining the worst performing C-5 aircraft in order 
to establish retirement order, we take into account maintenance metrics 
such as mission capability rates and maintenance man hours per flying 
hour as well as cost-to-repair factors to determine the specific tail 
number retirement sequence. We also weigh other factors such as the 
accumulated usage of each airframe, and the cost and time to conduct 
required maintenance actions to determine retirement order. Finally, we 
work closely with the C-5 system program office and airframe user to 
ensure a coordinated fleet management process.
                     backfill for retired aircraft
    Question. Mr. Anderson, I understand that the Air Force Chief of 
Staff appeared before the Senate Armed Services Committee earlier this 
week and responded to several questions about C-5 and C-17 aircraft. In 
particular, I note that the Air Force Chief of Staff stated that the 
Air Force would like to retire 25-30 of the worst performing aircraft.
    Does the Air Force plan to fully backfill aircraft that are retired 
at the impacted bases?
    Answer. Under options currently being studied by the Air Force, 
units presently flying C-5A aircraft would retain a strategic airlift 
mission. There are no current plans to close existing units or stand up 
new units at this time. No decision has been made to retire any C-5A 
aircraft.
                               c-5 fleet
    Question. Mr. Anderson, I understand that the Air Force Chief of 
Staff appeared before the Senate Armed Services Committee earlier this 
week and responded to several questions about C-5 and C-17 aircraft. In 
particular, I note that the Air Force Chief of Staff stated that the 
Air Force would like to retire 25-30 of the worst performing aircraft.
    Under what timeline is the Air Force planning to act and to inform 
Congress and the impacted bases of such retirements?
    Answer. There is no current plan to retire specific aircraft or 
from specific bases. The proper fleet mix of strategic airlift aircraft 
is currently under review. Current legislation does not allow the Air 
Force to retire any C-5 aircraft until the Operational Test and 
Evaluation report of the C-5A aircraft, currently in flight test, is 
delivered. The report will not be delivered until fiscal year 2010, two 
full years after the shutdown of the C-17 production line has begun. If 
relieved of legislative restrictions, the Air Force would be able to 
effectively manage the mix of various aircraft fleets. Preliminary 
options under review include replacing retiring strategic airlift 
aircraft with new C-17s or backfilling with newer C-5Bs from within the 
Air Force. No new units are anticipated. Likewise, closures of existing 
units are not planned. The Air Force will be open and transparent with 
regard to basing plans.
    Question. Mr. Anderson, I understand that the Air Force Chief of 
Staff appeared before the Senate Armed Services Committee earlier this 
week and responded to several questions about C-5 and C-17 aircraft. In 
particular, I note that the Air Force Chief of Staff stated that the 
Air Force would like to retire 25-30 of the worst performing aircraft.
    Are any of the C-5As that are scheduled to arrive at the 167th 
Airlift Wing over the next 2 years among the worst performers noted by 
the Air Force Chief of Staff?
    Answer. The Air Force has not determined which specific C-5A 
aircraft will go to Martinsburg, West Virginia. The Air Force must 
conduct further analysis to finalize the specific aircraft involved and 
when they will be available for transfer to the 167th Airlift Wing.
    Question. Mr. Anderson, I understand that the Air Force Chief of 
Staff appeared before the Senate Armed Services Committee earlier this 
week and responded to several questions about C-5 and C-17 aircraft. In 
particular, I note that the Air Force Chief of Staff stated that the 
Air Force would like to retire 25-30 of the worst performing aircraft.
    Is it true that the Air Force's Fleet Viability Board found the C-
5A fleet to be healthy and with decades of service life remaining? Is 
it also true that the C-5s have about 70 percent service life remaining 
and can serve through 2040?
    Answer. The Fleet Viability Board found the C-5A fleet could be 
kept viable at least until 2029 (25 years from 2004 assessment) with 
the addition of the Avionics Modernization Program and Reliability 
Enhancement and Re-engine Program modifications. In addition, the Board 
projected the C-5A will likely need an avionics upgrade on the scale of 
today's Avionics Modernization Program around fiscal year 2020 to deal 
with technology obsolescence and future operational requirements. 
According to testing and analyses, from a structural fatigue 
standpoint, it is true the C-5A has at least 70 percent service life 
remaining. The Board has not performed any further analysis projecting 
beyond 2029.
    Question. Is it true that during IRAQI FREEDOM operations, the C-5 
flew 23 percent of the missions and delivered nearly 47 percent of the 
cargo; carried 63 percent more cargo per mission than the C-17; and 
delivered more cargo than any other aircraft?
    Answer. The following mission data collected by Air Mobility 
Command shows the most current figures:
  --The C-5 flew 16 percent of the missions (C-17 flew 29.8 percent)
  --The C-5 delivered 25.3 percent of the cargo (C-17 delivered 36.4 
        percent)
  --The C-5 carried 25 percent more cargo per mission than the C-17 
        (Average of 50 short tons per mission for C-5; 38 short tons 
        per mission for C-17)
  --The C-5 ranked third in delivered cargo amongst aircraft types (#1. 
        Commercial: 427,769 short tons, #2. C-17: 433,421 short tons, 
        #3. C-5: 301,202 short tons)
    Excluding commercial aircraft from the analysis, and only counting 
military aircraft, the percentages are:
  --The C-5 flew 26.4 percent of the missions (C-17 flew 50.5 percent)
  --The C-5 delivered 39.5 percent of the cargo (C-17 delivered 56.8 
        percent)
  --The C-5 carried 25 percent more cargo per mission than the C-17 
        (Average of 50 short tons per mission for C-5; 38 short tons 
        per mission for C-17)
  --The C-5 ranked second in delivered cargo amongst aircraft types 
        (#1. C-17: 433,421 short tons,#2. C-5: 301,202 short tons)

                                                                   OPERATION IRAQI FREEDOM DEPLOY/SUSTAINMENT/REDEPLOY TOTALS
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                      Percent         Percent
          Aircraft Type              Missions         Sorties           Pax            STons         Offloads      Flying Hours      Missions         Sorties      Percent STons   STons/Mission
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
C-5.............................           6,016          32,277         156,526         301,202          13,395         172,481            15.6            19.6            25.3           50.07
C-17............................          11,514          54,056         232,812         433,421          25,044         216,697            29.8            32.8            36.4           37.64
C-130...........................           1,440           7,432           6,002           2,253             779          36,811             3.7             4.5             0.2            1.56
C-141...........................           1,426           8,317          33,356          16,780           3,553          40,042             3.7             5.1             1.4           11.77
Commercial......................          15,856          56,084       2,127,858         427,769          24,649         299,686            41.0            34.1            35.9           26.98
KC-10...........................             521           2,283          10,403           7,699           1,115          13,609             1.3             1.4             0.6           14.78
KC-135..........................           1,690           3,560          16,986           1,491           1,477          27,939             4.4             2.2             0.1            0.88
OTHER...........................             185             567             185               2              60             912             0.5             0.3             0.0            0.01
                                 ---------------------------------------------------------------------------------------------------------------------------------------------------------------
      Total.....................          38,648         164,576       2,584,128       1,190,617          70,072         808,177  ..............  ..............  ..............  ..............
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------


                                                         OPERATION IRAQI FREEDOM DEPLOY/SUSTAINMENT/REDEPLOY TOTALS EXCLUDING COMMERICAL
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                      Percent         Percent
          Aircraft Type              Missions         Sorties           Pax            STons         Offloads      Flying Hours      Missions         Sorties      Percent STons   STons/Mission
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
C-5.............................           6,016          32,277         156,526         301,202          13,395         172,481            26.4            29.8            39.5           50.07
C-17............................          11,514          54,056         232,812         433,421          25,044         216,697            50.5            49.8            56.8           37.64
C-130...........................           1,440           7,432           6,002           2,253             779          36,811             6.3             6.9             0.3            1.56
C-141...........................           1,426           8,317          33,356          16,780           3,553          40,042             6.3             7.7             2.2           11.77
KC-10...........................             521           2,283          10,403           7,699           1,115          13,609             2.3             2.1             1.0           14.78
KC-135..........................           1,690           3,560          16,986           1,491           1,477          27,939             7.4             3.3             0.2            0.88
OTHER...........................             185             567             185               2              60             912             0.8             0.5  ..............            0.01
                                 ---------------------------------------------------------------------------------------------------------------------------------------------------------------
      Total.....................          22,792         108,492         456,270         762,848          45,423         508,491  ..............  ..............  ..............  ..............
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

    Question. Please explain why a modernized fleet of 111 C-5s and 190 
C-17s, a ratio that has been validated by the U.S. Air Force and other 
military organizations and studies, is now no longer an adequate 
solution to meet the Nation's strategic airlift requirements.
    Answer. The current programs of record and the resulting 301 
strategic airlift aircraft meet current and projected requirements at 
the ``bare minimum'' of acceptable risk. The question at hand is the 
future viability of the Air Force strategic airlift fleet. As the C-5A 
fleet continues to age beyond an average of 35 years, the increased 
investment required to modernize and replace portions of the airframe 
facing stress cracks and corrosion makes this the opportune time to 
shape the future fleet.
    Question. Are there other aircraft in the U.S. inventory, beyond 
the C-5, that are capable of moving 100 percent of the Department of 
Defense airlift requirements?
    Answer. The Air Transportability Test Loading Agency (ATTLA) is the 
Department of Defense agency responsible for the approval of airlift 
cargo. The C-5 is the only aircraft capable of moving 100 percent of 
the ATTLA approved items. Air Mobility Command identified seven 
critical, time-sensitive items or National Security Sensitive items 
that are only airlifted via the C-5. This being said, a robust, 
modernized C-5 fleet is a force multiplier, carrying roughly twice the 
palletized payload of a C-17. This enables the C-17 fleet to fully 
exploit its unique multi-role, aeromedical, airdrop, special-operations 
and austere airfield capabilities (short/unimproved airfields, direct 
delivery). The programmed strategic airlift fleet, when fully mobilized 
and augmented by the Civil Reserve Airlift Fleet, provides sufficient 
airlift capability to support U.S. strategic and operational objectives 
during large-scale deployments, while concurrently supporting other 
high priority operations and sustainment of forward deployed forces.
    Question. Mr. Anderson, I also understand that at the Armed 
Services, the Air Force Chief of Staff made comments about the 
extensive maintenance requirements associated with the C-5 aircraft. As 
you are aware, the Air Force is launching a new regionalized approach 
to standardizing and reducing the time of Isochronal (ISO) Inspection 
for C-5 Aircraft. In fact, 167th Airlift Wing at the Martinsburg Air 
National Guard Base has recently been selected as one of three regional 
sites that will conduct these inspections. ISO inspections are 
conducted on C-5 aircraft every 420 days in accordance with Air Force 
Regulations, and include hundreds of inspections covering the airframe, 
propulsion, and all systems of the C-5 aircraft. Under regionalized 
ISOs on the 420 day schedule, inspections will only require 15 days per 
inspection, rather than the current 40-day endeavor.
    Do you believe that this new streamlined process developed by the 
Air Force, which will be in place next year, will help with the C-5 
reliability issues that have been raised by the Air Force?
    Answer. The primary benefit of regionalized ISO will be increased 
aircraft availability through reduced inspection and repair time, but 
it would not address the reliability issues plaguing the C-5A.
    Question. Mr. Anderson, I have also heard the Air Force is 
concerned about possible cost overruns associated with the Reliability 
Enhancement and Re-Engining Program (RERP) for the C-5 fleet, which is 
leading the Air Force to consider the premature retirement of the C-5A 
aircraft. In reviewing the planned modification schedules for RERP, it 
appears that the Air Force has stretched this program out to the point 
where the Air Force itself has contributed much to the overall program 
cost growth that is currently under discussion.
    (a) Is it possible that the Air Force's desire to slow down the 
program drives inefficiencies, which drives up costs? (b) What would it 
take to accelerate the C-5 RERP program and create greater efficiencies 
in production? (c) Does the C-5 RERP pay for itself and generate 
substantial additional savings over the projected service life of this 
aircraft?
    Answer. The Air Force does not desire to slow down C-5 RERP. 
Rather, the delays and ``stretch'' to the RERP schedule are due 
primarily to upward cost pressures for RERP production associated with 
GE engines, Goodrich pylons and Lockheed Martin touch labor. A detailed 
Air Force cost estimating effort is underway (projected to be complete 
by July 2007) that will determine the extent of the cost growth and 
result in a service cost position for the C-5 RERP. Given a constrained 
program budget across the Future Years Defense Program (FYDP), any RERP 
production cost growth will translate into reductions to the planned 
annual kit quantities and delay the RERP schedule and projected 
completion dates.
    To keep RERP on its previous schedule (and limit the inefficiencies 
due to reduced production quantities), it would likely take significant 
RERP funding increases across the FYDP and beyond. The exact amount 
will not be known until the ongoing cost estimating effort is completed 
in July 2007. Adding significant funding within the FYDP above what has 
been previously programmed for RERP will be extremely challenging given 
the current fiscally constrained environment.
    Ongoing evaluation of C-5 RERP has brought previous estimates of 
cost savings into question. The assumptions that led to predictions of 
substantial cost savings through 2040 did not account for the recently 
identified cost pressures associated with engines, pylons, and touch 
labor. Analysis of overall RERP cost savings is part of the cost 
estimating effort projected to complete in July 2007.
    Question. What is the interpretation of the Air Force with regard 
to Section 132 of fiscal year 2004 Defense Authorization Act?
    Answer. The language of Section 132, fiscal year 2004 Defense 
Authorization Act, Limitation on Retiring C-5 Aircraft, provides: ``The 
Air Force may not proceed with a decision to retire C-5A aircraft from 
the active Air Force inventory that will reduce the active C-5 fleet 
below 112 aircraft until two conditions are satisfied: (1) the Air 
Force has modified a C-5A aircraft to the RERP configuration as planned 
under the program as of May 1, 2003, and (2) the DOD Director of 
Operational Test and Evaluation conducts an operational evaluation of 
the RERPed aircraft and provides an operational assessment to the 
Secretary of Defense and Congressional Defense Committees.''
    The operational evaluation referred to above requires an evaluation 
conducted during operational testing and evaluation of the RERPed 
aircraft that addresses the performance of the aircraft concerning 
reliability, maintainability, and availability with respect to critical 
operational issues. The operational assessment referred to above is a 
operational assessment of the C-5 RERP program to determine the overall 
strengths and weaknesses of the program to improve performance of the 
RERPed C-5 aircraft relative to requirements and specifications in 
effect May, 1, 2003, for reliability, maintainability, and availability 
of the RERPed C-5 aircraft.
    Question. I am advised the USAF Program of Record supports 
modernization of the entire C-5 fleet. Likewise, I understand the 2006 
Quadrennial Defense Review and the 2005 Mobility Capabilities Study 
validated the requirement and support modernization of the entire C-5 
fleet. Further, the President's fiscal year 2008 budget request for the 
Air Force supports C-5 aircraft modernization through the Avionics 
Modernization and the Reliability Enhancement and Re-Engining Programs.
    With all of these official milestone C-5 modernization decisions in 
place, what has changed and why is the Air Force publicly discussing 
the retirement of C-5As at this time, conflicting with its own studies 
and analysis?
    Answer. C-5 modernization, specifically the Reliability and Re-
Engining Program (RERP), is facing increasing cost pressures bringing 
into question the cost effectiveness of the program for a fleet of 111 
aircraft. It is also our desire to continue the recapitalization of Air 
Force aircraft. Additionally, the C-5A fleet is showing some 
significant metal corrosion and stress cracking adding to the 
investment required to maintain viability of this fleet. The average 
age of the current Air Force fleet is 26 years per aircraft. The C-5A 
portion of the fleet is, on average, over 35 years old. Continuing the 
retirement of legacy aircraft facilitates the equipping of an Air Force 
able to maintain the required airlift capability for combatant 
commanders in both peacetime and contingency operations.
    Question. Mr. Anderson, I understand the Air Force Chief of Staff 
appeared before the Senate Armed Services Committee earlier this week 
and responded to several questions about C-5 and C-17 aircraft. In 
particular, I note that the air Force Chief of Staff stated the Air 
Force would like to retire 25-30 of the worst performing C-5 aircraft.
    Is this the official position of the Air Force on the matter?
    Answer. The Air Force official position is that we would like the 
ability, with the Chief of Staff of the Air Force, to manage the Air 
Force fleet without congressional restriction and mandate. Air Force 
professionals have the right experience and knowledge to make the best 
force structure decisions with regard to air and space power. With that 
being said, we are exploring every option to find the most effective 
and fiscally responsible answer to meet the strategic airlift needs of 
the Air Force of today and tomorrow.
    If the decision is made to retire some number of C-5A aircraft, the 
Air Force would use mission capable rate, maintenance man-hour/flying 
hour, cumulative flight hours, total outstanding structural repair and 
modification costs, total landings, and next programmed depot 
maintenance input dates as factors to stratify the fleet.

                          SUBCOMMITTEE RECESS

    Senator Reed. Thank you, Senator Allard. Gentlemen, thank 
you very much for your testimony.
    This subcommittee is recessed.
    [Whereupon, at 11:30 a.m., Thursday, March 22, the subcom
mittee was recessed, to reconvene subject to the call of the 
Chair.]
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