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



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

                              ----------                              


                        THURSDAY, APRIL 24, 2008

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

                         DEPARTMENT OF DEFENSE

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

                OPENING STATEMENT OF SENATOR TIM JOHNSON

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

               STATEMENT OF SENATOR KAY BAILEY HUTCHISON

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

                           PREPARED STATEMENT

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

           Prepared Statement of Senator Kay Bailey Hutchison

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

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

             Prepared Statement of Senator Mary L. Landrieu

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

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

                       STATEMENT OF TINA W. JONAS

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

                           PREPARED STATEMENT

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

                  Prepared Statement of Tina W. Jonas

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

    Senator Johnson. Will be received. Mr. Arny.

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

                           PREPARED STATEMENT

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

                    Prepared Statement of Wayne Arny

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

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

    Another key element of our stewardship is recapitalization. 
Recapitalization includes restoration and modernization, using the 
resources necessary for improving facilities. It is the second element 
of the Department's facilities strategy. Recapitalization is funded 
primarily with either Operations and Maintenance or Military 
Construction appropriations. Restoration includes repair and 
replacement work to restore facilities damaged by inadequate 
sustainment, excessive age, natural disaster, fire, accident, or other 
causes. Modernization includes alteration of facilities solely to 
implement new or higher standards, to accommodate new functions, or to 
replace building components that typically last more than 50 years. Our 
DOD goal has been to achieve a recapitalization rate of 67 years, and 
the fiscal year 2009 budget request exceeds that goal by funding 
recapitalization at a rate of 56 years. This is an improvement over the 
rate of 76 years achieved in the fiscal year 2008 budget, and is due, 
in part, to the impact of BRAC and Global Basing. The fiscal year 2009 
budget request increased by $2.781 billion from the fiscal year 2008 
budget request for recapitalization.
    We are in the process of refining the way that we measure our 
investment in recapitalization, and will no longer be measuring a rate 
in years. The new method, which will be implemented in fiscal year 
2010, will focus on the modernization of the inventory of existing 
facilities, and will be tailored to the actual inventory of facilities 
within each Military Department.
    The Department remains committed to maintaining a rate of 
investment in facilities recapitalization that will improve, modernize, 
and restore existing facilities while at the same time replacing 
facilities in support of efforts to reshape and realign infrastructure. 
However, as the Department consolidates and reshapes its 
infrastructure, it will also experience localized growth in the size of 
the facilities footprint. This is necessary to provide the quality and 
quantity of facilities and assets necessary to support military 
personnel and their families. These efforts include facilities to 
support Army Transformation, Army and Marine Corps Grow-The-Force 
initiatives, and bed-down of new weapons systems, such as F-22 and the 
Joint Strike Fighter.
    Elimination of excess and obsolete facilities in the inventory, an 
effort separate and distinct from the BRAC process, continues to be 
another key element of the Department's asset management plan. The 
Military Departments continue to maintain and execute robust disposal 
and demolition programs in order to reduce overall operating costs 
associated with facilities sustainment and installation support, 
improve the overall safety and aesthetics of our installations, and 
ensure that only essential infrastructure is retained in the inventory. 
In July 2007, the Military Services and selected Defense Agencies 
updated their disposal targets, and our goal now is to eliminate over 
60 million square feet of facilities and additional excess 
infrastructure by the year 2013. But there is much more work to be 
done.
    We are continuing our efforts to forecast our disposals more 
accurately, to capture that information in the real property inventory, 
and to assess the impact of disposals on the entire inventory of 
facilities more accurately. We are doing this by assessing the net 
result of a comparison of the value of infrastructure removed from the 
inventory with the value of infrastructure added to the inventory. This 
will contribute to a more accurate view of the level of 
recapitalization of our global inventory of facilities.
    The fiscal year 2009 budget request includes $7.72 billion for 
Facilities Operations, formerly referred to as ``Real Property 
Services.'' This program provides the municipal services on our 
installations, such as utilities, fire protection, custodial services, 
grounds maintenance, and other related functions. To forecast 
Facilities Operations requirements, DOD developed the Facilities 
Operations Model using commercial and public sector benchmarks to 
determine the funding requirements for the essential services at our 
installations.
    We continue to make progress in defining common standards and 
levels of support for a variety of services provided on our 
installations. We are in the process of realigning the manner in which 
we track individual services so that we can more effectively determine 
the budget requirements for those services that are essential to the 
health, welfare, and quality of life of the service members, families 
and civilian employees who live and work on our installations. The 
processes that are being developed are included in our implementation 
of the BRAC 2005 Joint Basing recommendation. We have made considerable 
progress in that area and are on track to meet the statutory deadline 
for the establishment of joint bases. The initial implementation 
guidance for the joint bases was recently issued, and the specific 
details for implementing this BRAC recommendation and achieving its 
benefits are well underway.
    The Military Construction appropriation is a significant source of 
facilities investment funding. The fiscal year 2009 Defense Military 
Construction and Family Housing Appropriation request totals $24.4 
billion, which is an increase of $3.235 billion from the fiscal year 
2008 budget request. This funding will enable the Department to respond 
to warfighter requirements rapidly, enhance mission readiness, and 
provide for its people. In addition to new construction needed to bed-
down forces returning from overseas bases, this funding is used to 
restore and modernize enduring facilities, while eliminating those that 
are excess or obsolete. A large part of the increase in the Military 
Construction requirements ($1.86 billion) supports the President's 
Grow-the-Force initiative, projects needed to support the realignment 
of forces, projects to improve and update facilities used by the Guard 
and Reserves forces, and facility projects needed to take care of our 
people and their families, such as family and bachelor housing, Wounded 
Warrior housing, and child development centers.

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

    In January 2006, the Department joined 16 other Federal agencies in 
signing a Memorandum of Understanding (MOU) for Federal Leadership in 
High Performance and Sustainable Buildings. The guiding principles of 
sustainable design defined in the MOU are to employ integrated design 
principles, optimize energy performance, protect and conserve water, 
enhance indoor environmental quality, and reduce environmental impact 
of materials. The Department is committed to incorporate sustainable 
design principles through a comprehensive approach to infrastructure 
management. We are pursuing Leadership in Energy and Environmental 
Design (LEED) Silver as a goal for nearly 70 percent of the fiscal year 
2009 Military Construction Program. In addition, the Department is 
working to assess and address existing facilities' sustainable 
practices.
Improving Quality of Life
    Access to quality, affordable housing is a key quality-of-life 
factor affecting service member recruitment, retention, morale, and 
readiness. Through privatization and increases in housing allowances, 
DOD has made great strides in increasing service members housing 
choices. Privatization allows for rapid demolition, replacement, or 
renovation of inadequate units and for the sale without replacement of 
inadequate units no longer needed. Privatization enables DOD to make 
use of a variety of private sector approaches to build and renovate 
military housing faster and at a lower cost to American taxpayers.
    To date, the military Services have leveraged DOD housing dollars 
by 12 to 1, with $2 billion in Federal investments generating $24 
billion in housing development at privatized installations. The fiscal 
year 2009 budget request includes $3.2 billion, an increase of $300 
million above the fiscal year 2008 enacted level, which will construct 
new family housing to accommodate Grow the Force, improve existing 
housing, eliminate inadequate housing overseas, operate and maintain 
government-owned housing, and fund the privatization of 12,324 
additional homes.
    The housing privatization program was created to address the 
oftentimes poor condition of DOD-owned housing and the shortage of 
affordable private housing of adequate quality for military service 
members and their families. Privatization allows the military services 
to partner with the private sector to generate housing built to market 
standards for less money and frequently better quality than through the 
military construction process. Additionally, and almost of greater 
importance, the projects include 50 years of maintenance and 
replacement where necessary. Although nearly all projects have been 
awarded, we are still in the early stages of the program since the 
housing will be privately owned for 50 years. With privatization deal 
structures and an income stream in place, full revitalization will be 
completed within a ten-year development period.
    As of the end of 2007 through the privatization program, and some 
military construction projects, we have privatized over 80 percent of 
the domestic inventory. Additionally, DOD has eliminated 92 percent of 
inadequate family housing units in the Continental United States and 
territories (CONUS) including all inadequate units for the Army, Navy, 
and Marine Corps. While there are some remaining inadequate Air Force 
units, these are being addressed in fiscal year 2008. Inadequate units 
are considered to be eliminated when they are conveyed to the private 
owner, who then revitalizes the housing.
    Tenant satisfaction is high, particularly for revitalized and newly 
constructed housing. Given DOD's objective of improving quality of life 
for its service members, the degree of satisfaction service personnel 
experience in privatized housing units is a critical indicator of 
overall program success. Since DOD provides military families with 
Basic Allowance for Housing (BAH) at privatized bases, a military 
family's decision to live in privatized housing is a significant 
measure of satisfaction. The occupancy rate of nearly 90 percent 
program-wide demonstrates the overall success of the program in 
providing suitable housing.
    A number of installations face changes and challenges as military 
family housing requirements expand and contract due to Base Realignment 
and Closure (BRAC) restructuring, global re-posturing, joint basing, or 
Grow the Force requirements. While some installations may find they 
have a surplus of housing as a result of these changes, others may 
experience a deficit. However, even as needs for military family 
housing may change, ensuring that our service members and their 
families have access to safe, desirable, and affordable housing will 
remain constant. The Services continue to evaluate installation housing 
requirements and the opportunities to meet additional housing needs 
through privatization continue to expand.
    Under the Military Housing Privatization Initiative (MHPI), private 
sector developers and lenders develop, maintain, and operate the 
privatized housing and resolve issues when they arise. Market forces 
drive contractor performance and the primary enforcement mechanism is 
the ability of the military members to choose where to live. If a 
housing project is not meeting performance expectations, lenders have 
the option, with the approval of the Department, to replace the owner 
with a more viable entity. One developer, American Eagle, currently 
owns five projects and is experiencing financial difficulties. American 
Eagle was the general partner or owner of six MHPI projects, including 
one Navy project, one Army project, and four Air Force projects. The 
company sold its Navy project in late 2007 and is in the process of 
selling its remaining five projects. The Army project, at Fort Leonard 
Wood, Missouri, is stable and in the process of being sold to another 
developer. American Eagle continues to fund maintenance of the existing 
inventory of homes for the four Air Force projects. The Air Force is 
maintaining constant dialogue with the projects' owner and bondholders 
while American Eagle pursues the transfer to another developer. The 
Department recently conducted an assessment of the overall financial 
condition of DOD housing privatization owners. This assessment shows 
that with the 87 awarded MHPI projects involving over 173,000 units, 
the likelihood of developers experiencing financial stress is low 
across the board.
    The fiscal year 2009 budget request includes funding to eliminate 
inadequate family housing outside the United States. The budget request 
reflects a military construction cost of $125 million for the Army to 
construct 216 family housing units in Korea as an alternative to the 
build-to-lease effort.
    The Department is also committed to improving housing for our 
unaccompanied Service members. DOD continues to encourage the 
modernization of Unaccompanied Personnel Housing (UPH) to improve 
privacy and provide greater amenities. In December 2007, the Navy 
executed its second Unaccompanied Housing privatization pilot project. 
The Hampton Roads, Virginia, unaccompanied housing project will 
construct 1,187 new apartment units and privatizes 726 existing 
unaccompanied housing units at Naval Station Norfolk. Navy pilot 
projects, enabled by use of partial allowance, have successfully 
improved the quality of life of unaccompanied personnel. The Department 
is now considering future uses of this methodology.
    In fiscal year 2007, the Army added bachelor officer quarters and 
senior enlisted bachelor quarters to its existing privatization 
projects at Fort Bragg, North Carolina; Fort Stewart, Georgia; Fort 
Drum, New York; Fort Bliss, Texas/White Sands Missile Range, New 
Mexico, and Fort Irwin, California. In fiscal year 2008, the Army will 
complete and begin implementing a Lodging Development Management Plan 
covering the 13 installations that are part of the Privatization of 
Army Lodging program Group A.
Energy Management
    The Department continues to aggressively implement energy 
conservation measures and avoid associated costs while improving 
utility system reliability and safety. To that end, the Department 
developed comprehensive policy guidance incorporating the provisions 
and goals of Executive Order 13423, Strengthening Federal 
Environmental, Energy, and Transportation Management which the 
President signed on January 24, 2007. This policy guidance will 
continue to optimize utility management by conserving energy and water 
usage, and improving energy flexibility by taking advantage of 
restructured energy commodity markets when opportunities present 
themselves. Requirements of the recently passed Energy Independence and 
Security Act of 2007 will be incorporated as Federal guidance is 
developed. The Department is in the process of developing 
implementation guidance.
    The Department's efforts to conserve energy are paying off. DOD is 
the largest single energy consumer in the Nation and consumed $3.4 
billion in facility energy in fiscal year 2007, a modest but 
significant savings of $80 million from fiscal year 2006. DOD facility 
energy consumption intensity is down more than 10 percent from the 2003 
baseline, and non-tactical vehicle petroleum consumption has dropped 
5.4 percent since fiscal year 2005. Our program includes investments in 
cost-effective renewable energy sources or energy efficient 
construction designs and aggregating bargaining power among regions and 
the Services to achieve more effective buying power.
    DOD has significantly increased its focus on purchasing renewable 
energy and developing resources on military installations. Renewable 
energy projects are consistently more expensive than similar 
conventional energy sources, resulting in limited opportunities that 
are life cycle cost effective, so innovative strategies have been 
employed, such as the power purchase agreement resulting in 14 
megawatts of solar electrical production at Nellis Air Force Base, 
Nevada. The Department has increased the use of Energy Conservation 
Investment Program (ECIP) funds for renewable energy projects from $5 
million in fiscal year 2003 to $28.2 million planned in fiscal year 
2008, and plans call for ECIP to increase $10 million per year, up to 
$120 million in fiscal year 2013, and renewable energy projects will 
continue to be a high priority. The Department exceeded the Energy 
Policy Act (EPAct) 2005 renewable energy goal of 2.5 percent in fiscal 
year 2007, reaching 5.5 percent of facilities electrical consumption 
under the Department of Energy accounting guidelines. In 2005, DOD set 
a goal to reach 25 percent renewable energy procured or produced by 
fiscal year 2025 and Congress placed this goal in the National Defense 
Authorization Act 2007. I am pleased to say that the Department reached 
11.9 percent renewable energy procured and produced for fiscal year 
2007, placing it well on track to achieve the goal. While EPAct 2005 
did not articulate a specific water reduction goal, Executive Order 
13423 includes a goal of a 2 percent water reduction per year. The 
Department began tracking water consumption in fiscal year 2002. By 
fiscal year 2007, DOD has reduced water consumption intensity by an 
impressive 25 percent and total water consumption by 27 percent or 43.8 
million gallons per year. While we will continue to strive to exceed 
the requirements, our prior achievement has served to set the baseline 
low, so continuing the trend will be a challenge.
Environmental Management
    The Department continues to demonstrate leadership in protecting 
and conserving the natural resources on the approximately 30 million 
acres entrusted to it. Through our environmental management programs we 
are integrating environmental sustainability into all aspects of the 
day-to-day operations of the Department, helping us to achieve our 
goals for pollution prevention, cleanup, and conservation. Over the 
last ten years, the Department has invested almost $42 billion to 
ensure the success of our environmental programs, and the fiscal year 
2009 budget request of $4.3 billion will sustain our environmental 
progress in support of the warfighter.
    Executive Order 13423, ``Strengthening Federal Environmental, 
Energy, and Transportation Management'', directed Federal agencies to 
``lead by example in advancing our Nation's energy security and 
environmental performance.'' Since signature of the Executive Order 
last January, the Department has established an Executive Steering 
Committee of senior officials from across the Department to develop the 
long-term strategic goals necessary to implement this order. These 
goals and supporting policies will integrate and strengthen our 
existing environmental, energy, and transportation programs to improve 
our management of toxic and hazardous chemicals, further enhance 
management of our natural resources, encourage sustainable development, 
and improve the management of energy use.
    Our ability to link the natural and built infrastructure with 
national security and readiness enables the Department to integrate 
environmental sustainability into all aspects of military operations--
from design to disposal. Our Natural Infrastructure Management (NIM) 
initiative provides a framework for identifying and managing the 
Department's natural assets--air, land and water--together with 
operational or mission requirements, so that the Department can predict 
current and future natural infrastructure needs and investment needed 
to sustain those assets. The Department piloted a NIM prototype at 
representative installations in 2005 and 2006, and is now developing 
policy and guidance to ensure that natural infrastructure assets are 
recognized and leveraged effectively to support current and future 
mission capability.
    The Department uses Integrated Natural Resource Management Plans 
(INRMPs), critical habitat designations have been avoided at 35 
installations. That, coupled with our conservation efforts to protect 
species at risk and common species before they become rare, provides 
the Department more flexibility in its mission activities.
    The Department conducts environmental cleanup or restoration in 
cooperation with Federal and State agencies due to past use of 
hazardous substances, pollutants, contaminants, and military munitions 
on areas of active and former installations. The Department prioritizes 
resources for Installation Restoration Program (IRP) sites to address 
past releases of hazardous substances, pollutants, and contaminants, 
and Military Munitions Response Program (MMRP) sites to address hazards 
associated with unexploded ordnance and discarded military munitions on 
a ``worst first'' basis. By the end of fiscal year 2007, the Department 
had completed cleanup at 69 percent or 21,600 of the 31,500 IRP and 
MMRP sites. For IRP, the Department achieved a remedy in place (RIP) or 
response complete (RC) at 89 percent of active installation sites, 68 
percent of sites at Formerly Used Defense Sites (FUDS), and 85 percent 
of sites on installations closed or realigned in the first four rounds 
of BRAC and BRAC 2005. For MMRP, the Department has fulfilled its 
cleanup obligations at over 53 percent of BRAC installation sites, and 
24 percent of the sites at FUDS, with the remaining MMRP, as well as 
IRP, sites either undergoing cleanup actions or investigations.
    Employing a strategy that goes beyond mere compliance with 
environmental laws and regulations, the Department is transforming our 
business practices by integrating environment into our acquisition 
process, maintaining a high level of environmental quality in defense 
activities, and preventing pollution at its source. From fiscal year 
2000 through 2007 there was a 23 percent reduction in the number of new 
Federal and State enforcement actions received despite an 8 percent 
increase in the number of regulatory inspections. For January through 
June 2007, the latest information available, installations achieved a 
95 percent compliance rate with wastewater treatment permits, and 98 
percent of the 3.6 million customers served by DOD drinking water 
systems received drinking water that met or exceeded Safe Drinking 
Water Act standards, which compares favorably with the Environmental 
Protection Agency's goal of 95 percent. Using an integrated approach 
that enhances waste reduction and optimizes solid waste reduction, in 
2007 the Department diverted almost 3.5 million tons or 60 percent of 
our solid waste from landfills avoiding approximately $180 million in 
landfill costs, and reducing hazardous waste disposal by 20 percent 
compared to 1999. The Department is also effectively managing air 
quality, reducing hazardous air pollutant emissions at our 
installations by 728 tons in 2006. To further reduce waste and resource 
consumption, in 2004 the Department established a Green Procurement 
Program (GPP), which encourages Components to buy recycled, recovered, 
and bio-based products whenever feasible. Through the GPP, the 
Department has become the leader in green procurement, and we continue 
to make further improvements to GPP, most recently issuing policy 
direction in December 2007 requiring DOD contracting officers to use a 
contract provision giving preference to biobased products. Through GPP 
and all other environmental programs we will ensure a more secure and 
sustainable future for the environment and our Armed Forces.
Emerging Contaminants
    Our experiences with the mission and environmental consequences 
associated with perchlorate, ozone depleting substances, and other 
chemicals with evolving regulatory standards indicate a need to 
establish a proactive program to make earlier, better-informed, 
enterprise-wide risk management decisions regarding these emerging 
contaminants (EC). This new program is already helping us better 
protect human health and the environment, and enhance military 
readiness. Simply put, the EC program identifies risks early in the 
process, before regulatory actions take place or materials become 
unavailable, thus protecting our people, assets, and mission.
    Within the EC program we have established a three-tiered process to 
(1) identify and inform DOD decision-makers early, (2) assess the 
impacts of evolving science and the potential risks to human health and 
DOD's mission implied by that science, and (3) develop appropriate risk 
management options for DOD program managers. Twenty EC impact 
assessments have been completed in the past 18 months for chemicals 
that include explosives, fuel constituents, corrosion preventatives, 
fire-fighting foams, and industrial degreasers. Examples of risk 
management options resulting from these assessments include conducting 
research to fill basic science gaps, improving material handling and 
personal protection practices, developing new or improved remediation 
technologies, and developing less toxic substitute materials or 
processes. One of the major thrusts of the program is to work closely 
with the DOD industrial base to conduct life-cycle analyses regarding 
less toxic alternative chemicals for use in weapons platforms, systems 
and equipment.
    Because of the many national policy issues related to ECs, we are 
working with a variety of external stakeholders, including a number of 
Federal and State regulatory agencies, industry, academia, and 
professional organizations. As an example, we formed an EC working 
group with the Environmental Protection Agency and the Environmental 
Council of States. That working group has four consensus work products 
aimed at resolving issues and clarifying policies and practices 
involving ECs--all in various stages of completion.
    Our experience with Perchlorate is particularly instructive. 
Perchlorate has been used by DOD since the 1940s as an oxidizer in 
explosives, pyrotechnics, rocket fuel, and missiles. Its high ignition 
temperature, controllable burn rate, and stable chemical 
characteristics reduce handling and storage risks and the likelihood of 
unexpected detonations which makes it among the safest and least 
expensive explosive we use. DOD was quickly blamed for perchlorate 
found in drinking water supplies in over 34 States.
    DOD has acted responsibly as the science and understanding of 
perchlorate has evolved--including sampling, cleanup activities, and 
$114 million in research focused on perchlorate treatment technologies, 
substitutions, and analytical techniques. To ascertain our 
responsibility for perchlorate releases and public exposure, DOD issued 
clear policy in 2006 requiring sampling and compliance with applicable 
Federal and State standards. The latest round of DOD-wide sampling data 
shows that we are taking appropriate response actions and that DOD 
installations, overall, do not appear to be a significant source of 
perchlorate contamination in the Nation's drinking water. In 
California, where perchlorate has been a particular concern, our joint 
review with the State has found that of the 924 current and formerly 
used Defense sites, 99 percent do not appear to pose a current threat 
to drinking water. The remaining 1 percent has some confirmation 
sampling underway or the assessments are still being reviewed by 
Californian regulatory agencies.
    DOD also demonstrated that the sources of widespread, low levels of 
perchlorate exposure are complex. For example, we now know that annual 
imports of perchlorate in fireworks alone exceed the amount of 
perchlorate annually purchased by DOD. Road flares may also be a 
significant source of groundwater contamination. Other DOD investments 
are paying dividends--we have found suitable substitutes for a number 
of military pyrotechnics and research for other applications is on-
going. DOD can now differentiate natural from manmade sources of 
perchlorate and is working on refining this technique to distinguish 
the different manmade sources to ensure that DOD only pays for clean up 
for which it is responsible.
Sustaining the Warfighter
    Our Nation's warfighters require the best training and the best 
equipment available. This means sustaining our vital range and 
installation infrastructure where we test equipment and conduct 
training. Incompatible land use in the vicinity of DOD installations 
and ranges continues to challenge sustainability. The unintended 
consequences of this encroachment upon our ranges and installations are 
varied and include such challenges as more noise complaints from new 
neighbors, complaints about smoke and dust, diminished usable airspace 
due to new structures or increased civil aviation, a loss of habitat 
for endangered species, and a compromised ability to test and train 
with the frequency needed in time of war.
    History and experience gained over decades demonstrate that 
realistic and proper training of U.S. troops will result in victory. 
Assured access to operational ranges is the only way to continue that 
training. In 2001 the Department undertook the Readiness and Range 
Preservation Initiative to achieve a balance between national defense 
and environmental policies. As a result, DOD is successfully balancing 
environmental statutory and regulatory requirements with our national 
defense mission requirements.
    In 2002, the Congress provided statutory authority to use 
Operations and Maintenance (O&M) funds to create buffers around our 
ranges and installations. Using this authority the Department 
established the Readiness and Environmental Protection Initiative, or 
REPI, and has worked with willing partners to cost-share land 
conservation solutions that benefit military readiness and preserve 
natural habitat. In fiscal year 2005, REPI leveraged $12.5 million of 
O&M funding to secure $58 million worth of buffer land and easements, 
encompassing 14,688 acres at seven installations. In fiscal year 2006, 
REPI leveraged $37 million of O&M funding to secure $71 million worth 
of buffer land and easements, encompassing 18,833 acres. The fiscal 
year 2006 acreage will increase pending the completion of some 
unfinished projects. The 2007 and 2008 projects will continue to 
leverage REPI funds against partner contributions. REPI and partner 
funding has allowed DOD to protect the Navy's one-of-a-kind La Posta 
Mountain Warfare Training Facility in California; to keep training 
areas open at Marine Corps Base Camp Lejeune, North Carolina; and 
buffer live-fire training ranges at Fort Carson, Colorado; just to name 
a few projects. Overall in fiscal year 2007, REPI initiated 26 projects 
in 17 States, and for fiscal year 2008 an additional 46 projects have 
been identified for funding. For fiscal year 2008 the Congress 
appropriated $46 million for REPI. The President's Budget request for 
fiscal year 2009 for REPI is $40 million.
    After several years of implementing REPI projects, the Department 
of Defense asked the RAND Corporation to assess the program's 
effectiveness. In 2007, RAND issued its report, titled The Thin Green 
Line: An Assessment of DOD's Readiness and Environmental Protection 
Initiative to Buffer Installation Encroachment. The report found that 
REPI projects were beneficial to the military, to the environment, and 
they improved the quality of life in communities where the projects 
were located. REPI projects are providing land buffers around military 
installations and ranges, and have been proven effective in relieving 
military training and testing activities from encroachment pressures.
    The RAND report shows that REPI projects have had a wide range of 
environmental benefits; including helping to preserve habitat, 
biodiversity and threatened and endangered species; protecting wildlife 
corridors; and helping with water quality and supply concerns. REPI's 
benefits not only help buffer military activities and enhance 
Department of Defense environmental programs; they also improve the 
military installation's reputation with surrounding communities. For 
example, according to the RAND report, REPI has also affected the 
quality of life around Fort Carson by protecting large open spaces. 
Similarly, REPI projects such as the ones near Naval Air Station Fallon 
in Nevada can also help preserve the local agricultural way of life.
    Many of the issues that concern the Department of Defense are also 
of mutual concern to other Federal agencies and State governments. 
These issues cross administrative boundaries and occur at the regional 
scale. The Department of Defense is working in partnership at the 
regional level with State governments and Federal agencies to 
facilitate dialogue and to address issues of mutual concern. These 
partnerships are proving essential to sustaining our ranges and 
installations. For example, the Department of Defense continues to work 
with State governments and other Federal agencies in the Southeast 
Regional Partnership for Planning and Sustainability--or SERPPAS. The 
States of Alabama, Florida, Georgia, North Carolina, and South Carolina 
are engaged with the Department of Defense and other Federal agencies 
in this important regional scale initiative. Through the SERPPAS 
process, the partners are promoting better planning related to growth, 
the preservation of open space, and the protection of the region's 
military installations.
    In 2007, DOD continued to work closely with other Federal agencies 
to sustain military readiness. On energy issues, the Department of 
Defense continues to work with other Federal agencies to ensure that 
wind farm projects and energy transmission corridors are compatible 
with military readiness activities. The Department also continues to 
work with the Department of Homeland Security to ensure that our 
military readiness activities and infrastructure in border regions are 
not impacted by new security measures. Outreach to non-Federal and non-
governmental organizations continues to be a significant part of the 
Department's sustainability program, and today we are working with 
State, county, and local governments, Tribal, and environmental groups 
on issues of mutual concern to seek win-win solutions. Overseas, DOD 
continues to develop mission sustainment procedures to work with our 
host nations Global Defense Posture partners. To sustain today's 
warfighters, and our Nation's future warfighters, the Department of 
Defense will continue its engagement and partnering efforts.
Safety and Health Risk Management
    A significant responsibility of Installations and Environment is 
oversight of occupational safety and health. Secretary Gates has 
challenged us to reduce preventable accidents and this has driven real 
improvements. Over the last year, the Department experienced an overall 
improvement in its safety and health performance.
    For civilian employees, we are meeting the President's goals in the 
Safety, Health and Return-to-Employment (SHARE) initiative by 
decreasing our lost time injury rate by 5 percent. We plan to continue 
to improve by increasing the number of installations participating in 
OSHA's Voluntary Protection Program. This program engages every person-
commanders, middle managers, employees, and military members--in 
changing attitudes toward accident prevention.
    For motor vehicle safety, motor vehicle crashes--both in military 
operations and on U.S. highways--continue to be the number one cause of 
military fatalities outside of direct combat. We continue to work with 
tactical vehicle developers to provide safer vehicles for combat 
operations, and work with the Services and Combatant Commands to 
improve operating doctrine for using the vehicles in a manner that 
minimizes crashes. The greatest risk to our soldiers returning from 
Iraq is being the victim of a crash on U.S. highways. The Military 
Services recognize this challenge, and have aggressive programs to 
reorient soldiers back to safe driving habits in the United States. 
While our highway crash experiences are very similar to the general 
public, we still work to prevent each of these losses. Every fatality 
still means that one of our Nation's sons or daughters has been 
needlessly lost.
    For aviation safety, we have made long-term progress in reducing 
aviation accidents, reducing the overall rate of Class A accidents by 
20 percent since fiscal year 2002. The Military Services continue to 
improve aircraft technology to provide our pilots with more capable and 
safer aircraft, and to improve training and information needed for 
improved pilot performance. Strategic improvements in aviation safety 
will be supported through our partnership on the Next Generation Air 
Transport System (NextGen) Joint Planning and Development Office.
    Future improvements in DOD Safety and Health performance will be 
guided by our principles of applying management systems for continuous 
improvement, and engaging all of the risk decision makers in improve 
awareness and attitudes toward reducing risk.
Integrating Business Enterprises
    We have made significant and tangible progress implementing the 
core capabilities of the Real Property Accountability (RPA) business 
enterprise priority. This effort spans all Components, applying best 
business practices and modern asset management techniques to provide 
the warfighter access to secure, reliable information on real property 
assets and environment, safety, and occupational health sustainability. 
RPA is one of the six overall DOD business enterprise priorities 
articulated in the DOD Enterprise Transition Plan, which is the 
Department's roadmap for the improvement of critical business 
operations. As DUSD(I&E), I am the lead in the Department for ensuring 
that RPA stays on schedule.
    RPA is aligning end-to-end business processes and enhancing 
management visibility into operations by establishing and integrating 
common processes and data standards, redefining defense business in 
terms of functions managed and customers served rather than who 
performs the task.
    RPA correlates directly to the Under Secretary of Defense 
(Acquisition, Technology, and Logistics) goal of ``Capable, Efficient, 
and Cost Effective Installations'' and will help us to improve 
installation planning and operations by embracing best business 
practices and modern asset management techniques. The RPA initiatives 
have already improved awareness of the importance of accurate 
inventories, optimized resources, and enhanced access to real property 
information.
    The groundwork for RPA is nearly complete. Over the past few years, 
the Department has developed enterprise-wide capabilities for real 
property accountability and visibility, environmental liabilities 
accountability and valuation, and hazardous materials operational 
controls. These capabilities are founded on requirements for a common 
business process model, standard data elements and data definitions, 
business rules, and recommendations for policy changes. The Components 
are fine-tuning and implementing plans to fully integrate these 
requirements into their operating environments.
    Another key accomplishment in this area was the establishment of 
the Real Property Unique Identifier Registry which reached full 
operational capability for assigning real property unique asset 
identifiers in December 2007. An initial step forward into a federated 
location construct, the registry will provide authoritative physical 
location information for DOD real property to communities outside of 
the real property and installations management core business mission. 
Other successes over the past year include:
  --Assignment of unique identifiers to all DOD's real property assets 
        to provide more granular physical location data for DOD's legal 
        interests in all user communities. Current accurate location 
        information provides enhanced access to essential data for 
        strategic decisions, increasing accountability, and reducing 
        costs.
  --Incorporation of fundamental geospatial standards in the Business 
        Enterprise Architecture, the Department's business information 
        infrastructure. Utilization of these standards provide a common 
        set of mapping information and tools which enhance geospatial 
        visualization capabilities while avoiding redundant acquisition 
        of geospatial resources across the Department.
  --Real property inventory tools and procedures have been developed, 
        and we have made progress towards implementing and maintaining 
        consistent, accurate, and complete information on the real 
        property portfolio across the Department.
  --Initial operating capability for the Hazardous Material Master Data 
        Capability, a year ahead of schedule, which placed the chemical 
        and regulatory data essential for safe and effective handling 
        of hazardous materials in a production environment. In 
        partnership with the Defense Logistics Agency, we will improve 
        the availability of accurate, authoritative hazard data while 
        eliminating redundant data purchases, entry, and maintenance 
        burden across the Department.
    Over the past few years, the Department has developed enterprise 
wide capabilities for real property accountability and visibility, 
environmental liabilities accountability and valuation, and hazardous 
materials operational controls. Accurate and timely data is fundamental 
to effective management of assets, and ultimately to military success.
Conclusion
    In closing, Mr. Chairman, I sincerely thank you for this 
opportunity to highlight the Department's successes and outline its 
plans for the future. To meet the ever changing warfighting landscape 
our military must be flexible and responsive and our installations must 
adapt, reconfigured, and be managed to maximize that flexibility and 
responsiveness. I appreciate your continued support and I look forward 
to working with you as we transform these plans into actions.

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

            MILITARY CONSTRUCTION PROJECT EVALUATION IN IRAQ

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

                 INCREMENTAL FUNDING OF MILCON PROJECTS

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

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

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

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

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

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

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

                              ACWA PROGRAM

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

                     ADDITIONAL COMMITTEE QUESTIONS

    Senator Allard. And do you see any change in department 
policy as a result of the housing and construction market?
    Mr. Arny. Not today, no, I don't.
    Senator Allard. Thank you.
    Senator Johnson. Secretary Jonas and Mr. Arny, you are 
excused.
    Ms. Jonas. Thank you, Mr. Chairman.
    Mr. Arny. Thank you.
    [The following questions were not asked at the hearing, but 
were submitted to the Department for response subsequent to the 
hearing:]

                  Questions Submitted to Tina W. Jonas

               Questions Submitted by Senator Tim Johnson

                           BUDGET MANAGEMENT

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

                 SUPPLEMENTAL--WARRIOR TRANSITION UNITS

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

          Questions Submitted by Senator Kay Bailey Hutchison

                              JOINT BASING

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

                          INCREMENTAL FUNDING

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

             USE OF THE COMMANDER CONTINGENCY ACCOUNT (CCA)

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

             Question Submitted by Senator Mitch McConnell

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

                   Questions Submitted to Wayne Arny

            Questions Submitted by Senator Mary L. Landrieu

                           FORT POLK BARRACKS

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

             Questions Submitted by Senator Robert C. Byrd

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

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

                         DEPARTMENT OF THE NAVY

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

                           PREPARED STATEMENT

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

                  Prepared Statement of Hon. B.J. Penn

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

                  THE NAVY'S INVESTMENT IN FACILITIES

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



    The Base Operating Support (BOS) request of $6.5 billion, excluding 
environmental, comprises the largest portion of the Department's 
facilities budget request. This account funds the daily operations of a 
shore facility, e.g., utilities; fire and emergency services; air and 
port operations; community support services; custodial and grounds 
maintenance costs.
    Our fiscal year 2009 request of $6.5 billion for BOS reflects a 9.4 
percent increase from the fiscal year 2008 request. The Navy request of 
$4.3 billion includes an increase of $348 million over last year's 
request and matches the budget request with recent execution 
performance. The Marine Corps request is $2.1 billion, an increase of 
$207 million over last year's request, and is consistent with their 
execution experience.



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

                         MILITARY CONSTRUCTION

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

                         FACILITIES MANAGEMENT

Facilities Sustainment, Restoration and Modernization (SRM)
    The Department of Defense uses a Sustainment model to calculate 
life cycle facility maintenance and repair costs. These models use 
industry-wide standard costs for various types of buildings and 
geographic areas and are updated annually. Sustainment funds in the 
Operation and Maintenance accounts are used to maintain facilities in 
their current condition. The funds also pay for preventative 
maintenance, emergency responses for minor repairs, and major repairs 
or replacement of facility components (e.g. roofs, heating and cooling 
systems).

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

    Restoration and modernization provides major upgrades of our 
facilities using Military Construction, Operation and Maintenance, Navy 
Working Capital Fund, and Military Personnel funds. The DOD uses a 
recapitalization metric to gauge investment levels. The ``recap'' 
metric is calculated by dividing the plant replacement value by the 
annual investment of funds and is expressed in years. The DOD goal is 
to attain a 67-year rate by fiscal year 2008. This continues to be a 
relatively coarse metric, as demonstrated by the effect of past 
Supplemental funds, BRAC construction projects, and recap projects to 
support Grow the Force. The Navy and Marine Corps continue to work with 
the Office of the Secretary of Defense and the other Components to 
develop a recap model similar to the Sustainment model, planned for 
release in the next budget cycle.

                                                   RECAP YEARS
----------------------------------------------------------------------------------------------------------------
                                                                                    Fiscal year
                                                                 -----------------------------------------------
                                                                       2007            2008            2009
----------------------------------------------------------------------------------------------------------------
USN Budget......................................................              83              63              50
USN Actual/Plan.................................................              62              60  ..............
USMC Budget.....................................................             112             103              33
USMC Actual/Plan................................................             117              61  ..............
----------------------------------------------------------------------------------------------------------------

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

                                HOUSING

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



Family Housing
    As in past years, our family housing strategy consists of a 
prioritized triad:
  --Reliance on the Private Sector.--In accordance with longstanding 
        DOD and DON policy, we rely first on the local community to 
        provide housing for our Sailors, Marines, and their families. 
        Approximately three out of four Navy and Marine Corps families 
        receive a Basic Allowance for Housing (BAH) and own or rent 
        homes in the community.
  --Public/Private Ventures (PPVs).--With the strong support from this 
        Committee and others, we have successfully used PPV authorities 
        enacted in 1996 to partner with the private sector to help meet 
        our housing needs through the use of private sector capital. 
        These authorities allow us to leverage our own resources and 
        provide better housing faster to our families. Maintaining the 
        purchasing power of BAH is critical to the success of both 
        privatized and private sector housing.
  --Military Construction.--Military construction will continue to be 
        used where PPV authorities don't apply (such as overseas), or 
        where a business case analysis shows that a PPV project is not 
        financially sound.
    As of the end of fiscal year 2007, we have awarded 30 privatization 
projects for over 61,000 homes. As a result of these projects, over 
30,000 homes will be replaced or renovated, about 5,000 new homes will 
be built, and the remaining 15,000 were privatized in good condition 
and did not require any improvements. Through the use of these 
authorities we have secured approximately $8 billion in private sector 
investment from approximately $800 million of our funds, which 
represents a ratio of almost ten private sector dollars for each 
taxpayer dollar.
    Our fiscal year 2008 and outyear family housing privatization 
projects are targeted at reducing family housing deficits by 
constructing additional housing for our families where the private 
sector cannot accommodate their needs. This includes locations where 
increased requirements associated with the Grow the Force initiative 
will add to projected housing deficits. During fiscal year 2008, we 
plan to award three Marine Corps family housing privatization projects 
that would build an additional 1,100 homes.
    Our fiscal year 2009 budget includes $383 million for family 
housing construction and improvements. This amount includes $259 
million for the Government investment in family housing privatization 
projects planned for fiscal year 2009 award. It also includes the 
replacement or revitalization of housing in Cuba and Japan where 
privatization is not planned. Finally, the budget request includes $376 
million for the operation, maintenance, and leasing of remaining 
Government-owned or controlled inventory.

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

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

        
        
Unaccompanied Housing Privatization
    The Department awarded our first pilot unaccompanied housing 
privatization project to Pacific Beacon LLC in December 2006. When 
complete in 2009, this project will provide 941 new two-bedroom/two-
bathroom apartments for E-4 and above enlisted personnel in San Diego, 
CA who are unsuitably housed in the private sector or who are living in 
Government quarters that could be used by shipboard Sailors. An 
existing unaccompanied housing building, containing 258 ``1+1E'' 
modules, was also privatized as part of this agreement. Our partner 
will provide additional quality of life amenities to existing 
buildings, such as a swimming pool. We expect the first building to be 
complete by the end of this year and overall project completion in 
2009. I am pleased to report the facility that was privatized, ``Palmer 
Hall,'' won an industry award for improved resident satisfaction based 
on resident surveys.
    In December 2007, we executed business agreements for our second 
pilot project at Hampton Roads, VA. This project will build more than 
1,100 new two-bedroom/two-bathroom apartments and privatize over 700 
existing unaccompanied housing modules for unaccompanied shipboard E1-
E3 personnel.
    We are nearing completion of our evaluation of the Mayport/
Jacksonville, Florida area as the candidate for third pilot project. We 
are also continuing to evaluate additional phases at San Diego and 
Hampton Roads using the public/private entities previously executed.
Managing Our Privatization Portfolio
    We take seriously our responsibility to monitor the privatization 
agreements to ensure that the Government's long term interests are 
adequately protected. We have instituted a portfolio management 
approach that collects and analyzes financial, occupancy, construction, 
and resident satisfaction data to ensure that the projects remain sound 
and that the partners are performing as expected. We conduct meetings 
with senior representatives of our partners and, where necessary, 
resolve issues of mutual interest. We use focus groups to obtain direct 
feedback from residents, property managers, and Command 
representatives. Customer surveys show overall improvement in member 
satisfaction after housing is privatized. Where our projects have 
encountered difficulties, appropriate corrective actions have been 
taken. For example, we had concerns regarding performance of the 
private partner in our Pacific Northwest project. The partner sold its 
interest as a general partner to another company which has a record of 
good performance with military housing privatization projects. 



                              ENVIRONMENT

Shipboard Programs
    The Navy continues to convert its shipboard air conditioning and 
refrigeration plants from Ozone Depleting Substances (ODS) to non-ODS 
refrigerants. As of February 1, 2008, the Navy completed 552 of 690 air 
conditioning conversions and 595 of 611 refrigeration conversions. The 
Navy reached a major milestone in 2007 as conversions of the final 
aircraft carrier air-conditioning systems began. The Navy expects to 
complete its transition to non-ODS refrigerants by 2017.
    In addition to the shipboard air conditioning and refrigeration 
conversion program, the Navy has taken other ODS management efforts 
which have reduced our Class I ODS usage by over 95 percent. For 
example, the Navy is designing and building the first aircraft in the 
world without halon for fire suppression. In recognition of these many 
achievements, the Navy garnered six EPA Best of the Best Stratospheric 
Ozone Protection Awards at the 20th Anniversary Meeting of the Parties 
of the Montreal Protocol in September 2007.
    The Navy has also completed 168 of 334 upgrades to its plastic 
waste processors (PWPs), which allow ships at sea to compress plastics 
into a solid disk for disposal or recycling ashore. The upgraded PWPs 
reduce maintenance, improve reliability and throughput, and include a 
self-cleaning feature, giving our Sailors the best equipment available 
to meet no-plastics discharge requirements while at sea.
Natural Resources Conservation
    The Department of the Navy's natural resources conservation 
programs rely on Integrated Natural Resources Management Plans (INRMP) 
to ensure our programs are effective in providing conservation benefits 
to species and their habitats while ensuring no net loss to the 
military mission. For example, in 2007, the United States Fish and 
Wildlife Service determined that the INRMPs for the Marine Corps' 
Townsend Bombing Range, GA, and Camp Pendleton, CA, provided a benefit 
to the protection of two species: the Flatwoods salamander (Ambystoma 
cingulatum) and tidewater goby (Eucyclogobius newberryi), respectively, 
and the range and base were excluded from Critical Habitat designation.
    Since the Endangered Species Act, Section 4(a)(3)(B)(i), was 
amended in the fiscal year 2004 NDAA, U.S. Fish & Wildlife Service and 
National Marine Fisheries Service determined that the effectiveness of 
DON INRMPs outweighed the necessity to make 41 Critical Habitat 
designations on DON installations.
Environmental Compliance by Shore Installations
    Domestically, 93 percent of Navy and 95 percent Marine Corps 
permits are in full compliance with Clean Water Act standards, and 98 
percent of the Navy and 100 percent of Marine Corps population receives 
water that meets all Safe Drinking Water Act standards, both increases 
from recent years. The DON has made great strides in improving 
wastewater compliance through significant investments in infrastructure 
and improved management practices. For example, Marine Corps invested 
over $109 million in military construction funds at Camp Pendleton 
between fiscal year 2002 and fiscal year 2008 to meet wastewater 
requirements, including the construction of a new tertiary treatment 
system to serve the southern portion of the base. An additional $52.5 
million military construction project is budgeted in fiscal year 2009 
to reduce the total dissolved solids (TDS) in their drinking water.
Installation Restoration Program (IRP)
    The DON has completed cleanup or has remedies in place at 83 
percent of our 3,716 contaminated sites at our active installations. We 
plan to complete the program by the year 2014. The cost-to-complete the 
installation restoration program continues a downward trend with 
efficiencies of $600 million over the past ten years. Use of new 
technologies, land use controls, remedy optimizations, contract 
efficiencies, and a dedicated professional staff has contributed to 
these efficiencies. Our fiscal year 2009 request of $293 million 
consists of $243 million for IRP, and $50.0 million for munitions 
response.
Munitions Response Program (MRP)
    The DON is proceeding with cleanup of Munitions and Explosives of 
Concern and Munitions Constituents at all Navy and Marine Corps 
locations other than operational ranges. We completed the preliminary 
assessments in fiscal year 2007 at 99 percent of the 239 known sites on 
62 active installations and will complete site inspections and sampling 
by 2010. The data obtained from these inspections and samplings will 
provide the basis for developing estimates for environmental clean-up.
Range Sustainability Environmental Program Assessment
    The Navy has completed environmental operational range assessments 
on 13 of 22 operational range complexes and is on track to complete the 
remaining nine operational range complex assessments in the United 
States and overseas by the end of fiscal year 2008. The Marine Corps 
has completed six range assessments and is on track to complete the 
remaining eight ranges in the United States by the end of fiscal year 
2008, and an overseas range in fiscal year 2009. To date, neither the 
Navy nor the Marine Corps have identified a release or threat of a 
release from an operational range to an off-range area that presents an 
unacceptable risk to human health and the environment.
Alternative Fuel Vehicles
    The Department has many initiatives to reduce its reliance on 
imported oil and increase its fuel conservation efforts. Over the past 
5 years, the Navy initiatives have resulted in a 10-fold increase in 
the use of B-20 (i.e. 20 percent blend of biodiesel in petroleum 
diesel). The Navy has partnered with the Exchange Services to supply 
fuel for both government and commercial use at sites such as Naval 
Station Norfolk, VA. Biodiesel field testing and integration efforts 
are underway at several locations to address Executive Order 13423 
goals, reduce greenhouse gas emissions, and to increase environmental 
security.
    The Marine Corps has exceeded the Energy Policy Act (EPAct) of 1992 
for Alternative Fuel Vehicle (AFV) requirements for the past 5 years 
and is a leader in DOD and among other Federal agencies in the use of 
biodiesel and other alternative fuels. It has reduced its consumption 
of petroleum by 28 percent since 1999 due in part to increased use of 
alternative fuels (such as biodiesel, ethanol and compressed natural 
gas), neighborhood electric vehicles and conservation. For their 
aggressive pursuit of compliance with Federal mandates well beyond 
published goals, the Marine Corps received the White House Closing the 
Circle Award in 2005 and again in 2007.
Navy Marine Mammals/Sonar R&D investments
    The Navy remains a good steward of the environment by taking steps 
to protect marine mammals from anthropogenic sound in the water. Navy 
has steadily increased annual marine mammal research from $12.5 million 
in fiscal year 2004 to $22 million in fiscal year 2009. This long-term 
investment will support more than thirty universities, institutions, 
and technology businesses worldwide and address critical issues in 
marine mammal demographics (the ``what, where, when, how many, and how 
much'' questions); support efforts to establish acoustic criteria and 
thresholds to more accurately measure the effects of naval activities; 
develop effective mitigation and monitoring methods to lessen and 
better understand any potential effects; and continue to refine 
characteristics of the sound field associated with naval activity.
MMPA National Defense Exemption
    The Navy has been operating for the past year under a National 
Defense Exemption (NDE) issued in January 2007. Given recent court 
decisions in California and continuing litigation in California and 
Hawaii challenging the Navy's use of Mid-Frequency Active (MFA) sonar, 
the ability to rely on the NDE has been important to the Navy's ability 
to continue to test and train with MFA sonar. This limited-in-time NDE 
is necessary to allow the Navy sufficient time to complete the analysis 
and consultation necessary to support long-term compliance for Navy's 
MFA sonar testing and training. The Navy is preparing environmental 
planning and compliance documents in cooperation with the National 
Oceanic and Atmospheric Administration (NOAA). The process will be 
complete for the Southern California Range Complex, the Hawaii Range 
Complex and the East Coast (including the Gulf of Mexico) training 
areas by the time the NDE expires in January 2009. MFA sonar use as 
analyzed in these documents conservatively accounts for 75 percent of 
the Navy's testing and training with MFA sonar. The documentation for 
the remaining ranges will be completed later in 2009.
    The NDE requires the Navy to employ 29 specific mitigation measures 
developed with, and fully supported by, the National Marine Fisheries 
Service (NMFS) within NOAA. The NDE enables the Navy to employ MFA 
sonar in a manner that maintains testing and training fidelity while 
providing protection to marine mammals. By enabling critical MFA sonar 
testing and training to continue in an environmentally sound manner 
protective of marine mammals, the NDE serves as a bridge to future 
compliance with the authorization requirements of the MMPA. NMFS, in 
recently considering the effects of Navy MFA sonar training exercises 
on marine mammals in and adjacent to the Navy's Southern California 
Operating Area, noted that the mitigation measures employed as a result 
of the NDE will minimize the risk of injury to marine mammals, and 
concluded that it does not expect the exercises to result in adverse 
population level effects of any marine mammal populations.
    As part of the Council On Environmental Quality's (CEQ's) 
alternative arrangements for Navy compliance with the National 
Environmental Policy Act (NEPA) for the remaining exercises in the 
Southern California Operating Area through January of 2009, the Navy 
will use the NDE mitigation measures as modified by those alternative 
arrangements, as well as public involvement and best available 
scientific information to inform long-term range management decisions 
regarding continued testing and training with MFA sonar. However, while 
the MMPA has been removed as a basis for legal challenges, the Navy's 
ability to meet its statutory requirement to train and maintain a ready 
force, which includes training with MFA sonar, remains at risk due to 
legal challenges based on other environmental laws, specifically NEPA, 
the Endangered Species Act (ESA), and the Coastal Zone Management Act 
(CZMA), to the extent not addressed by Presidential exemption. 
Litigation surrounding those issues continues, with two courts recently 
enjoining MFA sonar use during two U.S. Pacific Fleet major exercise 
series. On March 31, 2008, the Department of Justice filed a petition 
with the U.S. Supreme Court for a writ of certiorari on the issues 
regarding MFA sonar training during the remaining exercises in the 
Southern California Operating Area through January of 2009.

                     RELOCATING THE MARINES TO GUAM

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

                PRIOR BRAC CLEANUP AND PROPERTY DISPOSAL

    The BRAC rounds of 1988, 1991, 1993, and 1995 were a major tool in 
reducing our domestic base structure and generating savings. The 
Department has achieved a steady state savings of approximately $2.7 
billion per year since fiscal year 2002. All that remains is to 
complete the environmental cleanup and property disposal on portions of 
17 of the original 91 bases and to complete environmental cleanup on 14 
installations that have been disposed.
Property Disposal
    Last year we conveyed 3,363 acres in six separate real estate 
transactions at three prior BRAC bases. We also completed Findings of 
Suitability for Transfer (FOST) for 3,397 acres. The FOST certifies 
that DOD real estate is environmentally suitable for transfer by deed 
under Section 120(h) of the Comprehensive Environmental Response, 
Compensation, and Liability Act (CERCLA) (42 U.S.C. Section 9620(h)). 
The Department of the Navy has disposed of 91 percent of the 170,000 
acres from prior BRAC actions.



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

                        BRAC 2005 IMPLEMENTATION

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

              MEETING THE CONSTRUCTION EXECUTION CHALLENGE

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


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

                               CONCLUSION

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

                                  GUAM

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

                             GROW THE FORCE

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

                        NAVAL FACILITIES COMMAND

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

                             NNMC AND WRAMC

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

                                 VH-71

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

                     ADDITIONAL COMMITTEE QUESTIONS

    Senator Johnson. I would like to thank all of our witnesses 
for appearing before the subcommittee today. We look forward to 
working with you this year as the 2009 budget request process 
continues.
    For the information of subcommittee members, if you have 
questions for the record that you would like to submit, please 
do so by the close of business on April 30, 2008.
    [The following questions were not asked at the hearing, but 
were submitted to the Department for response subsequent to the 
hearing:]

               Questions Submitted by Senator Tim Johnson

            WALTER REED/BETHESDA NAVAL HOSPITAL--TOTAL COST

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

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

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

          WALTER REED/BETHESDA NAVAL HOSPITAL--COMPLETION DATE

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

         WALTER REED/BETHESDA NAVAL HOSPITAL--ROAD IMPROVEMENTS

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

             WALTER REED/BETHESDA NAVAL HOSPITAL--BARRACKS

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

            Questions Submitted by Senator Mary L. Landrieu

                  FEDERAL CITY--REAL ESTATE AGREEMENT

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

                       FEDERAL CITY--LEGAL ISSUES

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

                         FEDERAL CITY--FUNDING

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

                      FEDERAL CITY--IMPLEMENTATION

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

                          SUBCOMMITTEE RECESS

    Senator Johnson. This hearing is recessed.
    Mr. Penn. Thank you, Mr. Chairman.
    [Whereupon, at 11:30 a.m., Thursday April 24, the 
subcommittee was recessed, to reconvene subject to the call of 
the Chair.]
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