[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]



 
             DEPARTMENT OF DEFENSE FISCAL YEAR 2010 BUDGET

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



                                HEARING

                               before the

                        COMMITTEE ON THE BUDGET
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

             HEARING HELD IN WASHINGTON, DC, MARCH 18, 2009

                               __________

                            Serial No. 111-9

                               __________

           Printed for the use of the Committee on the Budget


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                        COMMITTEE ON THE BUDGET

             JOHN M. SPRATT, Jr., South Carolina, Chairman
ALLYSON Y. SCHWARTZ, Pennsylvania    PAUL RYAN, Wisconsin,
MARCY KAPTUR, Ohio                     Ranking Minority Member
XAVIER BECERRA, California           JEB HENSARLING, Texas
LLOYD DOGGETT, Texas                 SCOTT GARRETT, New Jersey
EARL BLUMENAUER, Oregon              MARIO DIAZ-BALART, Florida
MARION BERRY, Arkansas               MICHAEL K. SIMPSON, Idaho
ALLEN BOYD, Florida                  PATRICK T. McHENRY, North Carolina
JAMES P. McGOVERN, Massachusetts     CONNIE MACK, Florida
NIKI TSONGAS, Massachusetts          JOHN CAMPBELL, California
BOB ETHERIDGE, North Carolina        JIM JORDAN, Ohio
BETTY McCOLLUM, Minnesota            CYNTHIA M. LUMMIS, Wyoming
CHARLIE MELANCON, Louisiana          STEVE AUSTRIA, Ohio
JOHN A. YARMUTH, Kentucky            ROBERT B. ADERHOLT, Alabama
ROBERT E. ANDREWS, New Jersey        DEVIN NUNES, California
ROSA L. DeLAURO, Connecticut,        GREGG HARPER, Mississippi
CHET EDWARDS, Texas                  [Vacant]
ROBERT C. ``BOBBY'' SCOTT, Virginia
JAMES R. LANGEVIN, Rhode Island
RICK LARSEN, Washington
TIMOTHY H. BISHOP, New York
GWEN MOORE, Wisconsin
GERALD E. CONNOLLY, Virginia
KURT SCHRADER, Oregon

                           Professional Staff

            Thomas S. Kahn, Staff Director and Chief Counsel
                 Austin Smythe, Minority Staff Director



                            C O N T E N T S

                                                                   Page
Hearing held in Washington, DC, March 18, 2009...................     1

Statement of:
    Hon. John M. Spratt, Jr., Chairman, House Committee on the 
      Budget.....................................................     1
        Questions submitted for the record.......................    59
    Hon. Paul Ryan, ranking minority member, House Committee on 
      the Budget.................................................     2
    Hon. Robert F. Hale, Under Secretary of Defense 
      (Comptroller), U.S. Department of Defense..................     4
        Prepared statement of....................................     5
    Michael Sullivan, Director, Acquisition and Sourcing 
      Management, Government Accountability Office...............    35
        Prepared statement of....................................    37
        Responses to questions submitted.........................    59
    Hon. Gerald E. Connolly, a Representative in Congress from 
      the State of Virginia, prepared statement of...............    55
    Hon. Robert P. Aderholt, a Representative in Congress from 
      the State of Alabama, questions for the record.............    59
    Hon. Lloyd Doggett, a Representative in Congress from the 
      State of Texas, questions for the record...................    60


                         DEPARTMENT OF DEFENSE
                        FISCAL YEAR 2010 BUDGET

                              ----------                              


                       WEDNESDAY, MARCH 18, 2009

                          House of Representatives,
                                   Committee on the Budget,
                                                    Washington, DC.
    The committee met, pursuant to call, at 10:10 a.m. in room 
210, Cannon House Office Building, Hon. John Spratt [chairman 
of the committee] presiding.
    Present: Representatives Spratt, Schwartz, Kaptur, Doggett, 
Blumenauer, Boyd, Tsongas, Etheridge, Yarmuth, DeLauro, 
Edwards, Scott, Langevin, Larsen, Bishop, Connolly, Schrader, 
Ryan, Hensarling, Diaz-Balart, Jordan, Lummis, Aderholt, and 
Harper.
    Chairman Spratt. I call the hearing this morning to order 
and first apologize to our witnesses for the fact that we are 
late, but we just came from a meeting with the Speaker and had 
to leave it early. I welcome everybody here today and thank you 
for your participation.
    The purpose of this hearing is to gain a better 
understanding of the Department of Defense budget and to review 
the factors that are responsible for cost growth in defense 
programs, particularly cost overruns in major weapon systems. 
The Obama administration has inherited a defense plan that is 
considered by many to be difficult to sustain over time, a 
weapons acquisition process that is badly flawed if not broken 
altogether.
    Over the last 8 years, funding for national defense has 
more than doubled, reaching nearly $700 billion for 2008. And 
if unchanged, defense plans could cost even more, tens of 
billions more per year than the Bush administration has 
budgeted in its so-called FYDP, or Future Years Defense Plan, 
according to CBO.
    Military personnel and O&M costs, which account for about 
two-thirds of DOD's budget, have increased steadily at a rate 
above inflation. After adjusting for inflation, the cost of an 
average military service member is roughly 45 percent more than 
the average cost 10 years ago. O&M funding for active duty 
service members has steadily increased by 2.5 percentage points 
above inflation each year going back to the 1950s. War costs 
have increased, not decreased, but increased every year since 
2001, peaking at $186 billion in 2008.
    Cost growth of major weapon systems has worsened over the 
last 8 years. According to the GAO, the cost of major weapon 
systems on DOD's books as of 2007 increased nearly $300 billion 
above their baseline estimates. After years of large annual 
increases in the defense budget and runaway cost growth in 
major weapons systems, the President has put forward a more 
sustainable budget that tracks with inflation and calls for 
sweeping acquisition reform at DOD.
    For overseas contingency operations, the budget includes 
$130 billion for 2010 and placeholder estimates of $50 billion 
per year thereafter throughout a 10-year budget window. This 
marks the first time that the budget includes both a full year 
estimate for overseas operations for the budget year and 
placeholders for future costs. So it provides a more realistic 
look at the likely costs and their effect on the budget's 
bottom-line over time.
    In the midst of these challenging times, it is important to 
mention the importance of our strong economy to our national 
security. Our economy indeed is the first instrument of 
national security. Getting the economy moving forward again and 
putting our budget back on a sustainable course is absolutely 
vital to ensuring the country's future ability to provide for a 
strong national defense.
    As we face these challenges, we must now more than ever 
gain the best value for every dollar we spend, including 
dollars spent at the Department of Defense.
    Today we have two panels. On the first panel, the Honorable 
Robert Hale, Under Secretary of Defense (Comptroller). On the 
second panel, Mr. Michael Sullivan, Director of Acquisition and 
Sourcing Management at the Government Accountability Office. 
Mr. Sullivan will give us testimony on the work GAO has 
performed on a number of areas at the Department of Defense.
    Again, I welcome our witnesses. I appreciate your 
participation. But before we turn the floor over to you, I 
wanted to recognize the ranking member for any statement he 
cares to make. Mr. Ryan.
    Mr. Ryan. Thank you very much, Chairman Spratt. I would 
also like to welcome our witnesses, Mr. Hale and Mr. Sullivan. 
Mr. Hale, you have had a long and distinguished career working 
with the defense budget both at CBO and as the Comptroller of 
the Air Force, and I look forward to your testimony. I have 
enjoyed your work over the years.
    The Defense Department is our largest discretionary 
expenditure, and it has seen robust growth over the last 
decade. This growth is understandable, and in my opinion 
justified by the fact that we were attacked on September 11th.
    If you could bring up Chart 1, please.
    But I am concerned that the President's budget uses the 
fiscal year 2008 levels, the year of the surge and the most 
expensive year of the war, as this chart shows, the red bar 
graph, to create the illusion of savings. It does this by 
inflating its baseline to assume the surge level of spending 
continues every year for the next decade and then claims $1.5 
trillion in savings by not funding DOD at surge levels for the 
duration of this budget.
    The Chairman of the Joint Chiefs, Admiral Mullen, has 
clearly stated that he had no plans of spending at surge levels 
over the next decade. And, Mr. Hale, as DOD's chief numbers 
cruncher, your assumptions on this matter are also of great 
interest to this committee.
    As the President's budget provides no detail below the 
topline, it is difficult to understand its plans for DOD over 
the next decade. But the one thing we do know is that the 
budget assumes an average annual growth rate of national 
defense of 2.4 percent. This compares to an average annual 
growth rate of nondefense discretionary spending of 3.3 
percent.
    Now I can appreciate an attempt at fiscal restraint in the 
President's budget, but I find it incredibly troubling that 
defense spending is seemingly the only place in which this 
effort was made.
    Providing for our Nation's defense is the primary 
responsibility of the Federal Government, and the President's 
budget raises the question of whether defense will be provided 
sufficient resources, and that is the debate we are going to 
have throughout the year.
    That said, I don't mean to imply that there is not a great 
deal of work to do to improve efficiency at DOD. To the 
contrary, the Defense Department's financial management 
systems, while improving, are still nowhere near where they 
need to be to assure the American taxpayer that their money is 
being well spent. You have an acquisition process that is an 
abject failure at procuring weapons systems on time and on 
budget.
    I will note that I was encouraged that the President's 
budget calls for acquisition reform as a priority, but the 
devil is in the details, and Congress is also the source of the 
problem through its intervention in the DOD procurement process 
as well.
    The bottom line is that we need to make absolutely certain 
that we provide the necessary resources for the defense of our 
Nation, in particular for the men and women in uniform in 
Afghanistan and in Iraq, who are in harm's way. I look forward 
to your testimony, Mr. Hale.
    Thank you, Chairman.
    Chairman Spratt. Thank you, Mr. Ryan. Before turning to Mr. 
Hale, let me acknowledge that the timing of this hearing is 
just a bit unusual because we don't anticipate getting the 
detailed budget from the Department until April. Right now we 
have only an outline that gives us some topline numbers and 
some broad policy objectives. And for that reason we understand 
that you may be limited in the level of detail you can provide 
us at this point in time. We do hope that you can help us get a 
better understanding and overview of the President's budget at 
your level and the challenges that we all face in getting more 
bang for the buck out of the defense budget.
    Mr. Doggett. Mr. Chairman, on that point, is it correct 
that this is not unique to the Obama administration, that every 
time there has been a transition from one administration to 
another, the outline comes first because they have only been in 
office for a few weeks and don't have time to provide a full 
budget at the time that a President would usually do?
    Mr. Hale. That is correct.
    Chairman Spratt. The gentleman is absolutely correct. Mr. 
Ryan agrees with me. It takes a certain amount of time to 
compile all of this information in a presentable form, and it 
takes at least until April if not later to get that done.
    Two housekeeping details. First of all, I ask unanimous 
consent that all members be allowed to submit an opening 
statement for the record at this point. Without objection, so 
ordered.
    And secondly, to our witnesses, both witnesses, you may 
submit and we will copy your statement in its entirety so that 
you can summarize it as you see fit.
    With that said, Mr. Hale, the floor is yours, we thank you 
again for coming, and we look forward to your testimony.

   STATEMENT OF THE HON. ROBERT F. HALE, UNDER SECRETARY OF 
       DEFENSE (COMPTROLLER), U.S. DEPARTMENT OF DEFENSE

    Mr. Hale. Well, thank you, Mr. Chairman and members of the 
committee. I appreciate the opportunity to be here to talk 
about the fiscal year 2010 defense topline request. I have 
submitted a statement for the record. I will summarize it for 
you.
    As announced on February 26th, the President's topline 
budget request will include $663.7 billion of discretionary 
budget authority for DOD in fiscal year 2010. That includes 
$533.7 billion for our base program that funds ongoing defense 
programming and $130 billion for what we were terming overseas 
contingency operations in Iraq and Afghanistan.
    Let me go first to the base budget request. The $533.7 
billion topline for the base budget reflects an increase of 
more than $20 billion, or about 4 percent, above what the 
Congress enacted for fiscal year 2009 and provides us about 2 
percent real growth. We are now conducting a budget review to 
craft a detailed request that will meet the Department's needs. 
We want this budget review to do more than simply accommodate 
this new topline.
    Secretary Gates views the budget review as an opportunity 
first to seek efficiencies in the Department's operations, 
including improvements in contracting and acquisition, to 
reassess weapons programs, especially those that are 
experiencing execution problems, and to continue reshaping the 
Department of Defense to focus more on a regular and 
unconventional war while maintaining a balance of programs that 
offer capabilities in conventional warfare.
    Now, some decisions have already been made. The budget will 
support increases in the size of the Army and the Marine Corps. 
It will provide strong support for service members and their 
families, including a 2.9 percent pay raise for military 
personnel. It will fund improvements to facilities and for the 
base realignment and closure, improve medical care for the 
wounded, and it will incorporate some items previously funded 
through emergency supplementals such as medical services, 
family support initiatives, and end strength increases.
    Other decisions, though, will involve tough choices because 
even though the budget is growing, funds are migrating from 
these supplementals into the base and there are some growth--we 
call them fact of life changes that tend to occur, such as 
health care that we need to accommodate. Secretary Gates has 
said that he intends to wait until this review process is done 
before making any of these tough decisions. So as the chairman 
indicated, I won't be able to provide the committee with any 
details today about those decisions.
    Let me turn now to funds for the overseas contingency 
operations, OCO, Washington's, I think, newest acronym. That is 
funds for wars in Iraq and Afghanistan. DOD's highest priority 
is to provide everything our troops in the field need to 
succeed, including resources.
    As I mentioned, the fiscal year 2010 budget request 
includes $130 billion for overseas contingency operations. This 
funding will support the drawdown of forces in Iraq and the 
buildup of forces in Afghanistan. It reflects the President's 
recent announcements in both of those theaters. The number is 
consistent with, as I said, policies about the drawdown 
announced by the President. And our submission will reflect 
some tighter guidelines about what qualifies for funding in 
wartime budgets. This request for $130 billion includes all the 
monies we expect to require in fiscal year 2010. Our goal is 
not to seek additional supplemental funding in fiscal year 
2010.
    That said, we recognize that things may change. Wartime 
operations could change, strategy could change in ways that 
would require additional resources. And in that case, we would 
submit a supplemental funding request to ensure full support of 
our troops.
    Also, I would point out that the President said that he 
would submit a supplemental budget request of $75.5 billion to 
cover remaining war costs for fiscal year 2009. We are working 
with OMB to prepare that request as I speak, and I hope it will 
be submitted very soon to the Congress. We ask that Congress 
act on it before the Memorial Day recess in order to avoid 
funding shortages that hamper our operations and adversely 
affect our troops.
    And lastly, I want to mention DOD received $7.4 billion of 
funds in the American Recovery and Reinvestment Act, better 
known as the Stimulus Act. These funds will pay for increases 
in military construction, facilities sustainment, restoration 
and modernization, housing assistance and some other uses. We 
are grateful for this funding, and we hope to spend the money 
quickly on projects that meet critical DOD needs. At the 
direction of the President, we will also seek a very high level 
of transparency and accountability for this spending.
    Mr. Chairman, that concludes my opening statement. I thank 
you again for the opportunity to appear, and I look forward to 
working with you and all the members of the committee and 
Members of Congress to support our men and women in the 
Department of Defense, and I now welcome your questions.
    [The prepared statement of Robert F. Hale follows:]

 Prepared Statement of Hon. Robert F. Hale, Under Secretary of Defense 
               (Comptroller), U.S. Department of Defense

    Thank you Mr. Chairman. I appreciate the opportunity to represent 
the Department of Defense (DoD) this morning regarding the topline of 
the President's fiscal year (FY) 2010 budget request.
    The Committee's hearing is an important part of the budget process. 
It helps to ensure that the process is open and transparent. As 
President Obama has said, ``Those of us who manage the public's dollars 
will be held accountable to spend wisely, reform bad habits, and do our 
best in the light of day.'' Accountability and transparency are 
hallmarks of the President's budgetary policy and are especially 
important during this period of economic crisis.
                   president's fy 2010 budget request
    As announced on February 26, the President's topline budget request 
to Congress will include $663.7 billion for DoD in FY 2010.
    I recognize that this Committee marks up a figure for the National 
Defense budget function (Function 050). However, we in DoD do not have 
visibility at this time into the budgets of the Department of Energy or 
some of the other agencies that also have funding in the National 
Defense function. So I will focus on the DoD budget (also known as 
Subfunction 051) during the remainder of my testimony today.
    The $663.7 billion in the DoD topline includes $533.7 billion of 
discretionary budget authority in the base budget that funds ongoing 
Defense programs. It also includes $130 billion for overseas 
contingency operations--that is, the wars in Iraq and Afghanistan.
                          fy 2010 base budget
    The $533.7 billion topline for the base budget reflects an increase 
of more than $20 billion or about 4 percent over the $513.3 billion 
appropriated by Congress for the FY 2009 Defense base budget. The base 
budget request represents real growth of approximately 2 percent, which 
is below the average real growth of about 4 percent during the 2001-
2009 period.
    Secretary Gates has said that he is pleased with this topline 
figure, which will enable us to meet our essential defense 
requirements.
                     what the base budget will buy
    Armed with this topline figure, we are now engaged in a budget 
review to craft a detailed FY 2010 Defense budget that best meets the 
Department's needs. We want this budget review to do more than adjust 
the FY 2010 Defense program to accommodate the new topline. It also 
provides DoD's senior leaders with the opportunity to:
     Seek efficiencies within the DoD program;
     Reassess all weapons programs, especially those that have 
experienced execution problems; and, most importantly,
     Continue reshaping the Defense program to focus more on 
unconventional warfare, while maintaining a balance of programs that 
provide conventional capability.
    In a few cases, we have already made decisions about the programs 
that will be included within our base budget for FY 2010:
     The budget supports increases in the size of the Army and 
Marine Corps to meet warfighting requirements while increasing time 
spent at home station.
     We will use our funding to ensure strong support of our 
military people and their families, including improved medical 
treatment for wounded Service Members.
     Our budget will include a 2.9 percent pay raise for men 
and women in uniform.
     The budget will provide funds for improvements to 
facilities and for the implementation of Base Realignment and Closure 
recommendations.
     The base budget for FY 2010 will also incorporate some 
budgetary items that were previously funded through emergency 
supplementals, including certain medical services, family support 
initiatives, security assistance to foreign governments, and 
enhancements to ISR (Intelligence, Surveillance, and Reconnaissance) 
capabilities. Consistent with the President's goal of transparency, we 
are striving to ensure that the base budget incorporates all permanent 
programs and those that apply to the entire force.
    We also recognize the need to improve business practices, 
especially those that are related to acquisition. While detailed plans 
have not yet been formulated, we must find ways to reduce cost growth, 
minimize scheduling delays, and improve performance in our weapons 
acquisition process--while still meeting key warfighter needs. In 
addition, as the President has said, we need to improve government 
contracting. Such initiatives are especially important because of the 
economic crisis that the country is facing.
                             tough choices
    Even though there is some real growth in the FY 2010 defense budget 
request, we know that we must still make a number of tough choices. 
Choices will be necessary because shifts from supplemental to base 
funding will consume funding and because the topline must accommodate 
some growing programs such as health care.
    These difficult decisions have not yet been announced, and so I 
cannot comment on their status. Secretary Gates has said that he 
intends to wait until the end of our review process before making any 
decisions. In his words, ``putting together a budget package this 
large, complex and interrelated requires a coherent and holistic 
process--a process that would be undermined if decisions about 
particular programs are made piecemeal or before the assessment is 
complete.''
    We expect that the President will send the detailed DoD budget, 
along with budgets for the rest of government, to the Congress sometime 
in April.
    In the interest of long-term budget transparency, the President's 
budget not only shows figures for FY 2010 but also includes base budget 
estimates for the next decade. Those figures anticipate zero real 
growth in the Defense budget. However, we believe that budget decisions 
beyond FY 2010 should await completion of the Quadrennial Defense 
Review (QDR) that is just getting underway. After the QDR is completed, 
it is possible that DoD will propose some adjustments.
           fy 2010 costs for overseas contingency operations
    DoD's highest priority is to provide troops in the field everything 
they need to be successful, including adequate resources.
    The FY 2010 budget request includes a request for $130 billion of 
funding for overseas contingency operations--that is, funds for the 
wars in Afghanistan and Iraq. This funding request will support the 
drawdown of forces in Iraq, including costs of getting troops home, and 
the buildup of forces in Afghanistan, including costs to operate in 
this austere and challenging security environment. The estimate is 
consistent with the decisions about troop levels recently announced by 
the President including the drawdown of 35,000 to 50,000 troops in Iraq 
by August 2010.
    This request for war funds includes all the monies we expect to 
require in FY 2010. Our goal is not to seek additional supplemental 
funding for FY 2010.
    However, there may be significant unforeseen developments or 
changes in wartime strategy or tactics that cannot be addressed with 
existing resources. In that case, we would submit a supplemental 
funding request in FY 2010 to ensure full resource support for our 
troops.
    The use of supplemental funding for Defense operations has grown 
over time. The President wants to reverse that trend and move more of 
our predictable costs into the base budget, and we are seeking to make 
that change in this budget. The transition to narrower and stricter 
criteria governing what expenses can be counted as a cost of war is 
difficult. We inside the Department are experiencing that difficulty 
now as we build these two budget requests using more stringent rules. 
As we work toward putting all predictable costs into the base budget, 
we will need to work with this Committee and others in the Congress to 
enforce these changed rules.
    Consistent with the goal of long-term budget transparency, the 
President's requested topline projects funding of $50 billion per year 
for overseas contingency operations costs beyond FY 2010. These 
projections do not represent a policy projection based on an exact 
force structure or operating tempo in those two operations. We cannot 
predict these key factors with certainty this far in advance. Therefore 
the figures are placeholders that may change depending on events.
                      remaining fy 2009 war costs
    In his February 26 budget overview, the President said he would 
submit a supplemental budget request of $75.5 billion to cover 
remaining war costs for fiscal year 2009.
    I want to thank the Congress for providing the much needed ``bridge 
funding'' of $66 billion last year. The troops in the field saw 
immediate benefit from that funding. The second funding request would 
provide the remaining funds necessary in FY 2009 for the wars in Iraq 
and Afghanistan and will likewise benefit the troops in the field.
    This funding request is also consistent with the decisions recently 
announced by the President about the buildup in Afghanistan and the 
drawdown in Iraq.
    Working with OMB, we are preparing the FY 2009 supplemental and 
hope to submit it soon. In order to avoid funding problems and to 
maintain continuity of operations for the troops, we hope that Congress 
will enact this remaining supplemental prior to the Memorial Day 
recess.
             american recovery and reinvestment act (arra)
    DoD received $7.4 billion of funds in the ARRA, better known as the 
Recovery Act. DoD funds include:
     $4.2 billion for facilities sustainability, restoration, 
and modernization;
     $2.2 billion for hospitals, child care centers, and other 
military construction needs;\1\
---------------------------------------------------------------------------
    \1\ This is largely limited to troop (including wounded warrior 
transition) and family housing.
---------------------------------------------------------------------------
     $555 million for housing aid to certain DoD employees who 
must move;
     $300 million for research on energy efficiency 
technologies; and
     $120 million for the Energy Conservation Investment 
Program.\2\
---------------------------------------------------------------------------
    \2\ This is provided in the MilCon Defense-Wide account, but is 
being treated as a separate program.
---------------------------------------------------------------------------
    We are grateful for these funds. We hope to spend the money quickly 
on projects that meet critical DoD needs. We also recognize the 
President's strong commitment to accountability for these funds. I 
pledge to the Committee that we are committed to transparency and 
accountability for the stimulus funds provided to the Department.
                                closing
    Again, I want to thank the Committee for the opportunity to testify 
about the Department's topline budget. We are satisfied that the FY 
2010 funds and other funds provided to the Department will allow us to 
meet the essential needs of the troops and their families and to 
continue efforts to reshape the force for unconventional war while 
maintaining a balance of conventional capability.
    We also pledge that the FY 2010 budget will reflect hard choices 
that the Department of Defense will make to stay within the President's 
topline while maximizing our defense capability. Making such choices is 
especially important during this period of economic crisis.
    Along with other DoD leaders, I look forward to working with 
Members of Congress to explain those hard choices and to gain support 
for them.
    Mr. Chairman, that concludes my opening statement. I welcome the 
Committee's questions.

    Chairman Spratt. Thank you very much, Mr. Hale. I 
understand that one factor that is driving some cost growth is 
the fact that several years ago we decided to increase the 
level of ground troops, the end strength of ground troops, both 
in the Marine Corps and in the Army, by 92,000, and we had a 
time frame estimated for how long it would take to fill that 
requirement. It appears now that partially due to the economy 
apparently that requirement is going to be filled 2 or 3 years 
ahead of what was originally anticipated. How does that affect 
your budget?
    Mr. Hale. Well, it increases budget needs. On the other 
hand, it provides us more capability at a time when we can make 
good use of it, and both the Army and Marine Corps are close to 
the goals right now. For fiscal year 2009, we will need to work 
some reprogramming actions to handle the budgetary needs and we 
are working to address them in the fiscal year 2010 request. 
So, yes, it will add funding requirements, but it does also add 
some capability. As I said, we will make good use of it.
    Chairman Spratt. Rule of thumb, what is the anticipated 
cost of an additional division?
    Mr. Hale. I don't know about a division. Crudely at 
$100,000 a troop, plus some O&M costs----
    Chairman Spratt. $80,000 per accession?
    Mr. Hale. That is probably about right. I was looking at an 
average troop, not just an accession. Say around 100,000. And 
then there is an O&M, or operation and maintenance, tail that 
goes with that. So we are talking a sizeable amount of money, 
given that the Army and Marine Corps have gotten there so 
quickly.
    Chairman Spratt. Could you give us a rough analysis of a 
savings of what 92,000 additional ground troops will cost?
    Mr. Hale. Could I do that for the record or do you want me 
to try the math right now?
    Chairman Spratt. I will take it back of the envelope right 
now and then you can refine it for the record.
    Mr. Hale. John, help me out here. I am adding the zeros. 
Maybe around a billion dollars. Is that right? Say again? I got 
a wrong zero. That is not a good start. About $10 billion.
    Chairman Spratt. About $10 billion for 92,000 troops.
    While deficits have increased to record levels, the cost of 
the DOD have grown above inflation almost across the board. 
Military personnel costs have grown 45 percent above inflation 
over the last 10 years; O&M costs have consistently increased 
at 2.5 percentage points above inflation. Going way back to the 
1950s, apparently this has been a steady trend.
    Can you give the committee a summary of the causes of these 
cost pressures and why the basics are going up so much, not 
just the high power, high performance weapons systems, but the 
basic manning and equipping of our Armed Forces?
    Mr. Hale. Well, let me take a shot at that. And I will 
separate the two accounts because they are quite different. The 
military personnel growth, especially in the last 10 years or 
so, reflects part of what you just mentioned, a growth in 
numbers of personnel, particularly in the Army and the Marine 
Corps. We have also added recruiting and retention bonuses to 
maintain an all-volunteer force in the midst of fighting 2 
wars. And the employment--we base pay raises on the employment 
cost index, which often typically exceeds the rate of 
inflation.
    If we look toward the future in terms of military 
personnel, I agree we need to shine a spotlight on what is 
going on. The costs are up sharply. We also need to recognize 
that we have got to pay these men and women who are serving our 
country so well. I don't have an easy set of answers, but I can 
tell you I am mindful of the cost growth and concerned about 
it.
    Maybe I can be a bit more helpful in the operation and 
maintenance account. I often call it the ``all other'' account 
in the Department of Defense. It is very diverse. It includes 
civilian pay. It includes small spare parts. It includes fuel. 
It includes headquarters costs, a wide variety of types of 
spending. So you won't be surprised to hear me say that there 
is not one cause of why O&M has gone up. And you are right, 
even adjusted crudely for force structure it has been going up 
for the last decade, several decades.
    Part of it is aging weapons that push up all of our 
maintenance costs and our overall operating costs. We have done 
a fair amount of outsourcing in the last 10 years, and some of 
the costs of contractor personnel have been more than what we 
were paying for federal workers. Health care costs have been an 
important cause of growth in O&M. As with every company, I 
think, in the United States, the Department of Defense has seen 
health care costs rise significantly faster than the rate of 
inflation.
    As we look toward the future of O&M, I think there are 
several initiatives suggested by my words. We need to look at 
health care costs. It is a tough one, but hopefully the overall 
plans of the administration for health care reform will help 
slow the growth in costs and we would benefit from that, and we 
may also need to look at other factors like cost sharing among 
our retirees and other factors that influence health care cost 
growth.
    And we also need to look carefully at how many contractors 
we are using and whether there are cost effective ways that we 
could bring back in house some more contractor personnel.
    All of those factors are being considered in the budget 
review. No decisions have been made, as I indicated in my 
statement, but there are factors we are going to have to look 
at in this budget review and in future ones.
    Chairman Spratt. Weapons systems have been notorious at the 
Department of Defense for attaining cost, schedule and 
performance requirements. This administration has indicated 
that it is going to make sweeping reform of our procurement 
system--our R&D, as well as procurement system.
    Could you give us some idea of what the administration has 
in mind for procurement reform? I know that you are only recent 
on the job and this has only begun to be putting this together. 
But in broad outlines, what do you have in mind with respect to 
procurement reform?
    Mr. Hale. Let me try to answer that. I add here that we 
have only been recently on the job. It is not my primary area 
of responsibility. But I think if you are going to get at cost 
growth in weapons, you need to go back to the early parts of a 
weapon's life, because once it gets certainly into production 
you have determined most of the costs. And early in that 
weapon's life, you need to make those hard cost and performance 
tradeoffs. And they are difficult to do because I think we are 
looking to ensure against future conflicts and we are often 
looking at a weapon system that will be in the inventory for 20 
or 30 years. So you are looking over a very long time. But I 
think those are key, cost and performance tradeoffs and 
schedule, but particularly cost and performance. As we get 
further into a weapon's life--and here I would have more 
control as the Comptroller, we need to try to achieve stability 
in the production rates. Again, hard to do. Budgets change and 
force structure changes only slowly. So we historically have 
looked to the investment accounts to accommodate budget 
changes. But we need to do that in a way that doesn't adversely 
affect economic order quantities.
    I know that is not a definite answer and the administration 
doesn't have a definite plan yet. We are hoping, perhaps even 
today, to see the formal nomination of our Under Secretary for 
Acquisition, Technology and Logistics, Mr. Carter. Once he is 
confirmed, I think that will be one of his high priorities, 
working with other senior leaders.
    Chairman Spratt. Does PA&E report to you?
    Mr. Hale. No.
    Chairman Spratt. In the past, was that not the case?
    Mr. Hale. It has been that way and it has not. It depends 
on when you look. In the 1990s, they did report to the 
Comptroller. That was changed in the early part of the previous 
administration and now our Director reports to the Secretary, 
but we work very closely together. We worked hand in hand 
during the ongoing budget review, meet quite regularly. So I 
think there is good coordination.
    Chairman Spratt. Mr. Hale, thank you very much, good luck 
to you and we look forward to working with you. Mr. Ryan.
    Mr. Ryan. Thank you, Chairman.
    Mr. Hale, let me ask you about your 2009 supplemental 
request. Number one, when do you expect to send it to the Hill? 
And will it have funds to send an additional 17,000 troops to 
Afghanistan? And how much is going to be included for that 
purpose, if so?
    Mr. Hale. I hope it gets to the Hill next week. We are 
working closely with the Office of Management and Budget--I 
called them this morning and I don't have a firm timetable, but 
I certainly hope it does. And as I said in my statement, we 
hope that the Congress will be able to enact it by Memorial 
Day. The fiscal year 2009 supplemental will include funds to 
cover the President's announced changes in both Iraq and 
Afghanistan, to include those extra troops.
    I can't give you offhand an indication of the dollar figure 
associated with the 17,000. If I could provide that for the 
record.
    Mr. Ryan. Okay. Firewalls, we used to have them; we don't 
now. If Congress does not fully fund your fiscal year 2010 
request for the war--and I do want to compliment the 
administration for putting the funding of the war into the 
budget. That is something that we think is good budgeting. And 
the baseline is another issue. But that is something that we in 
our substitute budgets the last few years did. So we are 
pleased to see that. But here is my question. If we are putting 
this in the budget and Congress uses that money to fund other 
needs, other domestic programs, will you then give us another 
supplemental on top of it?
    Mr. Hale. Well, Mr. Ryan, first, we are trying to 
discipline ourselves and it is hard at times. We hope that 
Congress will follow suit and appropriate these funds.
    Mr. Ryan. I wanted to----
    Mr. Hale. The Secretary has said, I certainly agree, that 
our highest priority is to provide our troops in the field 
everything they need to succeed, including resources. So if we 
need funds that we don't have to support them, yes, we will 
come back and ask for those. I hope we don't have to. Our goal 
is to avoid that.
    Mr. Ryan. That is our concern here on this side of the 
aisle, because we do not have firewalls; that if we just pass a 
budget resolution that includes theoretically the 2010 war 
spending, that money gets plowed into something else, then we 
are really not budgeting for the war. You are going to end up 
giving us a supplemental. So that is something we are going to 
be very mindful of as the year continues.
    Last March, your Inspector General reported that Congress 
included 2,656 earmarks in the 2007 DOD appropriations act 
conference report totaling $12 billion. The Comptroller of the 
Air Force stated in response to that report, ``when higher 
priority requirements are cut from the President's budget to 
source earmarks, the primary goals and missions of the DOD are 
not being optimally resourced.'' The results are, in some 
cases, a force less capable than the one submitted by the 
President. Both parties do this. I am not suggesting that one 
party has cornered the market on virtue on this.
    But my question is, do you agree with this assessment of 
earmarks and how do you think they affect the Department's 
ability to perform its primary mission?
    Mr. Hale. Well, I am going to copy the words of the 
President on this, although you are speaking in connection with 
a nondefense omnibus bill that recently passed, that there were 
too many earmarks and he wants fewer and is looking toward a 
statement of principles on earmarks. By the same token, I am 
mindful of the prerogatives of the Congress, constitutional 
prerogatives of the Congress, to appropriate money. So I think 
I would like to leave it at that in terms of we will certainly 
follow the direction of the President with regard to his 
statement of principles and we will keep in mind Article I, 
Section 8 of the Constitution with regards to the prerogatives 
of the Congress.
    Mr. Ryan. A fair point. I wish we could get to some kind of 
rating system so we could judge these things on their merits 
based upon the needs of DOD.
    Last question. We have talked about shovel ready projects 
pretty much all year long. And the stimulus bill, the whole 
notion of that was to shovel ready project spending out the 
door. This didn't occur with DOD. Are there shovel ready 
projects that the Department has identified that keep 
production lines open and preserve domestic jobs in your 
estimation? And if so, give us a sense of how much and what 
kind.
    Mr. Hale. Well, of that $7.4 billion, about $4 billion of 
it was for facility sustainment, restoration and modernization, 
And there we will come closest to shovel ready projects.
    Mr. Ryan. That is brick and mortar on bases?
    Mr. Hale. Yes. It is fixing roofs; it is adding air 
conditioning systems, buildings and facilities. It still will 
take us a few weeks. I mean, I hope we will--we were given 60 
days after signing the bill to get the sustainment facilities--
sustainment, restoration and modernization up here. I think we 
will beat that. We have identified most of the projects now and 
a number of them will get started in the April time frame, May. 
Military construction takes longer because we have got to plan 
it and we don't want to do it without. After all transparency 
and accountability was one of the goals here, too.
    Mr. Ryan. What about outside the MILCON purview?
    Mr. Hale. Well, there were several categories of spending. 
The two biggest ones by far, facilities sustainment restoration 
and modernization, and MILCON.
    Mr. Ryan. I am not asking what was in the stimulus. I am 
saying are there others----
    Mr. Hale. Yes, there are. There was some money for housing 
assistance, essentially allowing us to pay troops and in some 
cases civilians if they lose money because of a move they had 
to make. That one we are working on. Regulations. And I can't 
give you a firm date. And there was alternative energy.
    Mr. Ryan. So there is none outside of the stimulus package 
that--is that what you are saying? There are no shovel ready 
projects----
    Mr. Hale. Well, in our fiscal year 2009 budget, we are 
going forward with a variety of projects there. I mean, 
certainly some of our investment programs and many of our 
sustainment projects are shovel ready. They were planned 
before. But they are ongoing now. I mean, we are bending metal 
and hiring people as I speak. I don't know if I answered your 
question.
    Mr. Ryan. Not really. It is okay.
    Mr. Hale. Well, I tried.
    Mr. Ryan. Yeah, I am not trying to be combative here. I 
guess the question is, some of us believe because this is the 
primary responsibility of the Federal Government and if we are 
going to go down the path of sort of a Keynesian stimulus with 
shovel ready projects, are there some opportunities that were 
missed such as in the area of procurement, areas that we need 
to procure anyway, that we didn't, that we could have? That is 
the question.
    Mr. Hale. You know, in general, procurement, if it is new, 
if it is starting from today or when that bill was signed, 
isn't going to be shovel ready. There may be some small ones. I 
will go back to my statement. The way we can help quickly--and 
I think Congress gave us money to do it and we are trying to do 
it--are these facilities, repair and maintenance kinds of 
project. Those, I think, are our best shot and we are pushing 
as fast as we can, consistent with doing a good job and making 
sure that we get benefit for the taxpayer out of these dollars.
    Mr. Ryan. All right. Thank you.
    Chairman Spratt. Mr. Doggett.
    Mr. Doggett. Thank you. And thank you very much for your 
testimony. I know you are very new to the Pentagon. And I think 
your comment just now, that the Pentagon is trying to 
discipline itself under new leadership is a very new approach 
at the Pentagon, one that is long overdue.
    We have had a shovel ready approach to the Pentagon in the 
past from Congress. We shoveled out hundreds of billions of 
dollars as quickly as President Bush asked for it time and time 
again. When his Office of Management and Budget initially did a 
ratings system on fiscal management at Federal agencies, the 
Pentagon got an F. It kept getting an F until they stopped 
rating it. And I don't think that the taxpayers have been 
getting their money's worth.
    I am also encouraged that while not brand new to the 
Pentagon, Secretary Gates has been telling all who would listen 
that American taxpayers cannot continue to pay for an unlimited 
Pentagon budget just because Members of Congress are fearful 
that they will be attacked as weak on security if they don't 
approve every mismanaged dollar that goes there. And I hope 
that despite the many political pressures that come from the 
Congress and the lobbying teams for every major weapons system 
that are usually larger than the number of Members in Congress, 
that he and you will stick to that approach of making the tough 
decisions and seeing whether some of these Cold War weapon 
systems really serve any purpose in assuring our national 
security.
    And I applaud you in the tough job that you have ahead. But 
you will find at least a few allies here in Congress who want 
to apply the same fiscal standards to the Pentagon that apply 
to the rest of the government and have not applied there in the 
past.
    I want to ask you about one specific project. And again, I 
am not asking you for your policy advice because I have strong 
feelings about this, but on the dollars. And that is the 
question of missile defense. As it relates to other major 
weapons systems, how does the missile defense money compare to 
other major weapons systems going forward there?
    Mr. Hale. Do you mean looking forward to our future plans 
or----
    Mr. Doggett. I am not asking you what those future plans 
might be. Let us just look at this past year about how does the 
missile defense----
    Mr. Hale. I think around $9 billion, if my memory serves me 
right----
    Mr. Doggett. How does it compare with other major----
    Mr. Hale. Missile Defense Agency. A substantial amount of 
funding. And of course it incorporates a wide variety of 
projects, as you are well aware.
    Mr. Doggett. It is one of the largest weapon systems 
programs there is.
    Mr. Hale. I can tell you that it, along with all other 
major weapons, but certainly missile defense, is being looked 
at carefully with regard to whether we want to make some of 
those difficult choices in that area.
    Mr. Doggett. And I understand you are not here to say what 
the result would be. I will tell you my feeling is that missile 
defense has relied much more heavily in the last 8 years on 
ideology than on science. And it has, as the General 
Accountability Office report of this Monday pointed out in more 
diplomatic and delicate terms, often taken the approach of 
``build it and it will work''. An unusual approach, but one 
that GAO I think documented again, as so many others have this 
week, that this is happening. But the amount of fiscal 
mismanagement in that program that is documented there is the 
type of thing that taxpayers don't get to see. It is not only 
money that is poorly spent, but just reading from the report 
that came out on Monday and asking you for your reaction, an 
indication that the Missile Defense Agency has not yet 
established baselines for total cost or unit costs. For the 
sixth year, the GAO has not been able to assess Missile Defense 
Agency's actual cost against a baseline. But what they were 
able to calculate was a 2 to $3 billion cost overrun. And in 
one case, the cost increased by approximately five times the 
original value. At the same time, they note overall testing 
achieved less than was planned. And they criticized the fact of 
what I call the ``build it and it will work'' approach.
    How do you tackle something that has had so much money 
poured on it, so many years of mismanagement, which appears to 
be continuing right through this week? I know you will be 
assessing whether this is a--or Secretary Gates and others at 
the Pentagon--whether there is a wise use of any taxpayer 
dollars. But how do you assure, if we are going to pour so much 
money into it, that those dollars are being spent more 
effectively than they are being spent?
    Mr. Hale. That is a good question and a hard one. I think 
that the basic notion of instilling discipline in the Pentagon 
needs to extend to MDA. We need baselines. That is a standard 
way of assessing how well we are doing both in terms of cost 
and schedule.
    I have looked at the GAO report. I understand we haven't 
done as well as we should have there. That is a first step. I 
think there also needs to be a review of each of the many 
programs that are embedded under that overall rubric of missile 
defense, to decide whether--the priority they should have. Let 
me put it that way. And there may be--the Secretary has said 
that he is going to be willing, if he thinks it is the right 
thing to do, to terminate some programs. There is areas, 
missile defense and others, where it may be appropriate to 
consider just that.
    I think that both the process, establishing baselines, and 
a careful review is a good first step toward meeting your goal, 
and it is ours, to having a more disciplined program.
    Mr. Doggett. Thank you.
    Chairman Spratt. Mr. Aderholt.
    Mr. Aderholt. Thank you, Mr. Chairman. Thank you for being 
here today, and I appreciate your testimony before the 
committee.
    Just to follow up a little bit from my colleague from 
Texas--and I think he makes some good points about baseline and 
careful consideration of the budget of MDA. Of course the 
President's budget did state that the military must vigilantly 
anticipate and meet threats from asymmetrical and 
nonconventional attacks. And certainly, as you know, the 
current MDA Director, General O'Reilly, has followed up on a 
lot of the great work that General Obering did by revamping the 
testing process to meet these current needs. And certainly 
baseline and careful study is needed. But I know we will not 
see the final budget number until April 20th. But as you know, 
the rumors are out there that the Missile Defense Agency could 
be cut by $12 to $10 billion. And looking at the budget outline 
from the administration overall, there is not a lot across-the-
board cuts of 15 percent or more like we are seeing here. And, 
of course, I think to many Americans, the developments in Iran 
and North Korea indicate that there is very much a large 
concern and it may not be the time to cut back on missile 
defense. We need both protection as a protection that is a 
deterrent.
    I know the final numbers are not out and you alluded to 
this a little bit ago, but just if you could talk a little bit 
about if there is any truth to the rumor that those type of 
major cuts will be implemented in what the DOD is looking at?
    Mr. Hale. Let me repeat Secretary Gates' words, that 
anything you read right now about specific cuts is wrong 
because he hasn't made the decisions. I think that is honestly 
true. He is certainly in the midst of the review, but I don't 
believe he has made any final decisions, including those on 
missile defense.
    And I think the previous question and yours capture the 
difficulty in defense. It is an insurance policy. It is 
weighing risks against costs. There is no simple formula. But I 
can assure you these same sort of arguments, although in a good 
deal more detail, are played out as the assessments are made of 
all of these programs, including MDA. And when you see the 
budget, then we will be able to go through the specifics and 
indicate the decisions the Secretary and the President have 
made on programs like this. I am sorry I can't be more 
helpful--I can be. I am being quite difficult. I can't be more 
definite. But as I said earlier, I think if I were to give you 
details, I could just go straight on home because I wouldn't be 
very welcome back in the Pentagon. And he is anxious, the 
Secretary, that it be packaged together, he be able to see it 
and announce it as a package when the budget goes forward.
    Mr. Aderholt. Thank you, Mr. Chairman. That is all I have.
    Chairman Spratt. Mr. Blumenauer.
    Mr. Blumenauer. Thank you. Thank you, Mr. Chairman.
    Mr. Hale, I don't envy you your job. You are inheriting a 
military that is strained. You have a broken acquisition 
system. You mentioned a moment ago the problems with 
outsourcing. We have a huge number of private contractors, 
which actually outnumber our soldiers in Iraq and have, I 
think, since the outset. But notwithstanding all of these 
moving pieces, we appreciate the direction that is being 
undertaken and the candor with which you and the administration 
have outlined some of the challenges in trying to have a more 
honest budgeting.
    I have two specific areas that I would like to explore that 
may not be the most important, but I would like for the record 
for you to go back and provide for the committee some 
information about the cost, the extraordinary cost of 
outsourcing, so much of that military tail that you referenced, 
that not only is more expensive on a per person basis than our 
own soldiers or civilian personnel, but because it hasn't, we 
are finding out, been adequately supervised, they didn't have 
the oversight built up to be able to administer the contracts, 
we find that performance has been shoddy far too often. And if 
you could help us detail some of that so we understand the 
challenges that are being faced in terms of the extra cost and 
the problems associated with it, I would deeply appreciate it.
    My two questions refer in part to the hard work that 
Chairman Edwards, who has had the MILCON Subcommittee and 
working with the quality of life of our troops--one of the 
areas that I have been deeply concerned with for years is the 
situation with unexploded ordnance, military toxins that are 
all across the country, thousands of locations, every State in 
the Union. And Congress and I think the Pentagon has not put a 
priority on cleaning up after itself. It is not just that it 
has resulted in the death of civilians over the years. Toxic 
cleanups, even up at American University--I think we are on the 
third round of cleanup from the chemical weapons testing and 
manufacturing that we had during World War I. For a while they 
had to close down the child care center there. But this is 
something that goes across the country, and it rears its head 
when we are talking about closing out military bases. I think 
the people in Sacramento are going to wait until 2077 to clean 
up after a base that was closed in the first round of base 
closings. I mean, this is outrageous. And it is one of the 
reasons why I think you are getting resistance to people who--
because you need a larger training footprint and people are 
saying no, you are not a good neighbor, you leave shells out 
there that explode when we have got wildfires. We have 
subdivisions that won't actually have fire protection because 
people won't come because of the danger of unexploded ordnance.
    And I will get to a question here in a moment. But I want 
to set the stage, because this has serious consequences for 
military readiness. And if you would put a priority on 
technology that can accelerate the cleanup, not only will it 
make money for the Pentagon over the years, because ultimately 
you are going to be responsible for cleaning up, but it will 
develop technology that will save our troops in the field from 
improvised explosive devices, for instance.
    Now, can you help me understand how we work with you to get 
an appropriate priority attached so that we protect our troops, 
we develop the technology, we save money, and the military is a 
better neighbor with these thousands of locations that pose 
risks to the environment and to their neighbors?
    Mr. Hale. Well, I admire your passion and I understand your 
point. I mean, we have an obligation to clean up things we did 
maybe inadvertently, but we did them or DOD did in the past. 
There is an environmental restoration budget and I clearly 
sense you think it is too low. It competes with all others in 
the Department of Defense. But it is, as I recall, substantial. 
And I would urge that we work with you to be sure that it meets 
as well as we can the needs that you suggest.
    Mr. Blumenauer. Well, I invite your review to see if you 
think it is substantial. In terms of the amount of money that 
has been allocated over the years, the magnitude of the 
problem, most of it bubbles up when you have got a problem with 
the Massachusetts Military Reservation there in Martha's 
Vineyard where you have got a trophy problem that is going to 
infect the water supply and then you rush and spend hundreds of 
millions of dollars or the third time when there is a problem 
at American University that any member of this committee could 
ride to in 30 minutes and then we rush tens of millions of 
dollars. But having a systematic, sustained effort at cleanup, 
I think you will find that it is a pittance compared to the 
potential liability and what is happening to long-term costs 
that are going up and the benefit of returning this land to 
public use in the future. And last but not least, why people 
don't want to give you more land to train on because you didn't 
clean up after yourself last time, it is posing serious 
problems.
    I will stop.
    Mr. Hale. May I go back--I take your point. May I go back 
to the preamble to your question and then we have heard it 
several times today. Yes, we need better discipline in the 
Department of Defense and we are working to instill that. 
However, I do want to say, I think we have got a great group of 
people and generally they are well-equipped and they are 
working hard, both on the uniform and the civilian side. I have 
great respect for them. Some of them are with me here today. So 
I don't want to leave any sense that I don't respect what the 
Department has done and what its people are doing. Yes, more 
discipline, but the troops are doing a great job and the 
civilians who are supporting them.
    Mr. Blumenauer. And I started by saying Congress hadn't 
done its job giving the resources.
    Chairman Spratt. Mr. Harper.
    Mr. Harper. Thank you, Mr. Chairman. Mr. Hale, thank you. I 
have the great privilege--my father was a gunner on a B-17 in 
the latter part of World War II and a brother was a B-52 pilot. 
A concern I have is we have got a lot of these young pilots 
flying planes older than their daddies. And I understand that 
we are going to delay the procurement of airborne tankers for 
another 5 years perhaps and cancel future bomber programs.
    Is that what you are anticipating to happen in this 
unwritten budget?
    Mr. Hale. Well, as I said before--and I apologize for being 
difficult--but anything you read in here is wrong because those 
decisions have not been made. Those programs, the tanker and 
the bomber, are certainly being looked at. But decisions have 
not been made, notwithstanding, as I said, what you may have 
read.
    Mr. Harper. It is my understanding that the President 
indeed said that he had plans to cancel the future bomber 
program. Am I incorrect on that?
    Mr. Hale. I am not aware of that statement.
    Mr. Harper. All right.
    Mr. Hale. I am not.
    Mr. Harper. Then I hope I am wrong on that.
    I know we have had some discussion on missile defense, and 
it is my understanding there have been statements by the 
administration on looking at those systems and at those 
programs.
    Do you consider any of the missile defense systems that 
have been in place to have been successful and ones that you 
say are off the table as far as cuts or scaling back?
    Mr. Hale. Well, I don't think anything is off the table, 
but they are certainly having some testing success, perhaps not 
as much as they would like. These things are hard to develop. 
So, absolutely, there have been some successes. But I will 
stick with my mantra, that nothing is off the table in this 
review in missile defense or other areas, but no final 
decisions have been made.
    Mr. Harper. Well, we have had some successes obviously with 
these systems, and it would seem to me at a time when we are 
seeing around the world potential threats from other countries, 
some friendly, some not so friendly, that this would be a 
system that needs to be not only continued but looking at the 
best technology we can to protect not only our allies, but our 
own country. And, you know, I know we break that down into 
different segments. But is this something that you are saying 
nothing is decided at this point?
    Mr. Hale. That is correct.
    Mr. Harper. No other questions.
    Chairman Spratt. Mr. Scott of Virginia.
    Mr. Scott. Thank you, Mr. Chairman. Mr. Hale, good morning.
    Mr. Hale. Good morning.
    Mr. Scott. I have many ship repair yards in my district, 
all of whom have suggested to me that the Department of Defense 
has already appropriated money for ship repair. But they 
haven't awarded the contracts for that work in a timely basis 
and in fact have been holding back. We recently passed a 
stimulus bill to try to create and save jobs. These jobs are 
being lost. People are being laid off because the work hasn't 
been assigned. This is work that has to be done.
    And so my question is, what does Congress need to do to 
make sure that these contracts are awarded as soon as possible?
    Mr. Hale. Well, the Navy manages the shipbuilding repair, 
as you are well aware, Mr. Scott. I will certainly take it for 
the record to check. I think they phase the obligations over 
time depending on their requirement and the availability of the 
ships. I am not aware of any across-the-board delays in Navy 
ship repair work. But I will be glad to respond for the record 
and ask and respond for the record.
    Mr. Scott. Thank you very much. A relatively few years ago, 
we were talking about a 60-ship Navy. Today we are down to 283, 
and the rumors are that it is not going to get much better. 
What are the plans of this administration in terms of ship 
repair and ship construction?
    Mr. Hale. Well, again, I can't give you any specifics. I 
think we are mindful of the need for a Navy both with some blue 
water and littoral capability. And it will be the size of the 
Navy and how it is used, a major issue I think in the 
Quadrennial Defense Review that is just getting underway now. I 
think you will see this administration support a substantial 
Navy, but I can't tell you exactly the size.
    Mr. Scott. And that will be part--that report will be part 
of the quadrennial review?
    Mr. Hale. It will be considered as part of the overall 
force structure, not just the Navy, but all aspects of the 
military is an important part of the so-called QDR. I believe 
the report is due to the Congress--I think it is due formally 
next January or February. So the review is just getting 
underway now.
    Mr. Scott. Private contractors have had their ups and downs 
over in Iraq. Can you tell me what your views are on the 
relative cost, oversight, and effectiveness of doing what are 
essentially military functions with private contractors?
    Mr. Hale. Well, first, I don't want to damn contractors 
with a broad brush. They serve us well and we could not run the 
Department of Defense without them, and I think in a number of 
cases they provide----
    Mr. Scott. When I was in the National Guard a long time 
ago, we didn't have that many contractors. But when you talked 
about contractors, people were thinking along the lines of 
getting troops out of doing KP and that was about it. What is 
happening now is these are essential military functions being 
performed, and that seems to be quite a different thing, 
particularly in terms of oversight, if not cost and 
effectiveness.
    Mr. Hale. I understand that. And I think you have done a 
good job of anticipating my answer, which is there are some 
areas where we need to continue to rely on contractors, 
especially to perform some administrative kinds of functions, 
perhaps are quite cost effective. We also need to look to be 
sure they are not doing inherently governmental functions and 
that it is cost effective, and I think there are probably some 
areas where the answer is we need to move away from contracting 
out that and some more in-sourcing.
    But once again, the degree of that or even the amount of it 
is although it is part of this review--I feel like a stuck 
record here--but decisions have not been made. So I am not 
going to be in a position to say here is what we are going to 
do.
    Mr. Scott. Thank you, Mr. Chairman.
    Chairman Spratt. Mr. Diaz-Balart.
    Mr. Diaz-Balart. Thank you, Mr. Chairman. And thank you for 
being here, sir. And I am sure you would agree that you have 
inherited, even though maybe partially strained, the strongest 
and most effective military force ever that not only does a 
fine job in waging war, but also on humanitarian areas, whether 
it is domestically like Katrina or internationally, and I am 
sure that is something that you are very proud of.
    Mr. Hale. I am. I hope I said that clearly, but I would 
like to take the chance to repeat it.
    Mr. Diaz-Balart. Absolutely. I just want to make sure that 
is not misunderstood.
    It is obvious that some rogue nations are trying and 
continuing to develop better missile technology, whether it is 
North Korea, whether it is Iran. I think all of us are 
concerned about what seems to be a more aggressive attitude by 
Communist China. We saw the recent incident. It is not the 
first and it probably will not be the last. And even though 
today we heard that historically those that support missile 
defense have done it for ideological grounds, I would further 
state that probably the opposite may be said, which is even 
before it was in its infancy with research there were many that 
for ideological grounds said it could never work and it would 
never work and that it was impossible, whatever. Obviously that 
has been proven to be wrong.
    My question is this, though. Obviously you mentioned that 
decisions have to be made still and you are reviewing that, 
which is the way it has to be done. I am a little concerned, 
though, because we all read about the letter that the President 
sent to the Russians where there is clear reference to missile 
defense, and clearly many interpreted it as a first step of 
saying we are willing to negotiate that away if certain things 
were done which obviously a lot of us felt was a rather 
interesting way to start negotiations, when you tip your hand 
at the starting point. But that is not why I bring it up. The 
reason I bring it up is that--and obviously by the way, some of 
our allies were rather shocked. Some of our strongest allies, 
whether it is the Czechs or the Poles, by the reference to the 
letter.
    My question is this. Where are we in the deployment of that 
system with the Czechs and the Poles? Is it in your budget? Is 
there more money to deploy it, to further deploy it or are you 
looking at phasing that part out?
    Mr. Hale. I can tell you that issue is under intense review 
and we have a Secretary who is quite knowledgeable about the 
systems, but also very knowledgeable about the politics and 
history. What I can't tell you is his decisions because I don't 
believe he has made them. And again, I feel somewhat apologetic 
to keep repeating this statement. But it is true and he has not 
made them. And I would not take--I think that is just the case. 
They will be made and released in that case along with the rest 
of the budget decisions.
    Mr. Diaz-Balart. And I for one think that--I understand 
your answer. I think it is a legitimate answer. Obviously there 
has to be a review process, but you do not disagree with me 
that there are rogue nations that are continuing to develop 
their missile capabilities, correct?
    Mr. Hale. That is the case.
    Mr. Diaz-Balart. All right. Thank you very much. I 
appreciate your service. Thank you, sir.
    Chairman Spratt. Mr. Schrader.
    Mr. Schrader. Thank you, Mr. Chairman. While I understand 
you are not able to be very specific for obvious reasons, but I 
would assume that with less than a month to go with the budget 
and the specifics to be coming out, that we would have some 
methodologies in place already by which you are evaluating 
various programs that have been discussed here.
    With regard to private contracting for various systems, 
whether they be missile defense or weapons procurement, what 
are the criteria that are being considered by the Secretary and 
yourself by which you judge some of the effectiveness and 
should we get involved in these particular systems? And in 
particular I would like you to comment on--especially with 
regard to private contracting, whether or not we could just put 
the onus of additional cost overruns on the private company 
themselves to foot that tab. Of course we would have to exert 
some discipline with our own military establishment and 
Congress in terms of add-ons to make that real.
    Mr. Hale. Well, to your last question, firm fixed price 
contracts at least tend to do that. And as the President has 
said, we want to move more in the direction of that kind of 
contracting. It does put the onus on the private contractor. 
And you put it well. We have to then discipline ourselves and 
they will probably insist that we discipline ourselves not to 
do add-ons or there will be additions required to the contract.
    So I think you will see us move more towards fixed price 
away from cost-plus kinds of contracting.
    I think your earlier question regarded criteria for, say, 
the in-sourcing/outsourcing kinds of decisions. Did I 
understand it correctly.
    Mr. Schrader. Yes.
    Mr. Hale. I mean, first off I think the first criterion has 
to be the inherently governmental one. It is not always black 
and white. Sometimes it is clear. Sometimes there are gray 
areas, but it is one that we need to look at. If it is an 
inherently governmental function, then the law requires that we 
do it with Federal employees. If it is not, then I think it is 
a cost and performance issue.
    In some cases, contractors will be more expensive. I think 
particularly if you are more or less saying I am going to 
replace 10 civil servants with 10 contractors doing similar 
things, they will tend to be more expensive. In other cases, a 
contractor will have often more flexibility than the government 
can have to move quickly to perhaps harness labor saving 
technology. And if they are doing a function for us, they may 
be able to do it for less cost. But the criteria, first 
inherently governmental and then a cost and performance 
assessment. And it has to be done at a fairly detailed level. 
We will consider some options, some policy, I guess, about the 
direction of change with regard to in-sourcing/outsourcing. The 
details are going to have to be done contract by contract, 
function by function.
    Mr. Schrader. Thank you. And I hope you make that clear as 
you bring differences forward.
    The last question is regarding our involvement in 
Afghanistan. I have some concerns about what our strategy is or 
is not there. There has never been a nation yet that has ever 
been able to win a land war in that particular country. The 
Russians, albeit not as great as our military obviously, tried 
most recently and failed. So is the administration considering 
a different approach to warfare given the 21st century where we 
are more doing a war on terror rather than fighting World War 
II type of conflicts, and being more surgical in our deployment 
of our great men and women that defend this country and defend 
us against terrorism around the world? Is there a new strategy 
here, a new thought process about how to train our troops and 
use them more effectively.
    Mr. Hale. I think I am probably not the best person to 
answer that question. In general, I think the answer is yes. 
The Pentagon is always engaged in, certainly in Afghanistan, 
thinking how we best counter, and they are well aware of the 
history and, as you suggest, the daunting challenge that we 
face. I am not going to be the right guy to tell you whether 
there is a new strategy in Afghanistan. I guess I would invite, 
you can either try that one for the record, or even better, 
perhaps, if you are interested, get you together with some of 
our policy folks.
    Mr. Schrader. Thank you.
    Thank you, Mr. Chairman.
    Chairman Spratt. Thank you, Mr. Schrader.
    Mr. Larsen is not here.
    Ms. Tsongas.
    Mr. Etheridge.
    Mr. Edwards of Texas.
    Mr. Edwards. Thank you, Mr. Chairman.
    Secretary Hale, thank you for your present service to our 
troops and their families and for your distinguished past 
service as well. It is great to have you here today. I would 
like to address briefly the issue of earmarks which came up.
    For the record, as a Democrat, I am proud that after 12 
years of a Republican majority in the U.S. House, when 
Democrats took control of the House 2 years ago, we, one, 
dropped the total number of earmarks dramatically; two, 
provided more transparency for those earmarks so the public and 
press can be involved in the necessary oversight to be sure we 
weed out the earmarks that don't belong in a new bill.
    But when it comes to the Department of Defense, I would 
like to make the observation that a lot of members of the press 
and the public assume all DOD earmarks coming from Congress are 
somehow frivolous and unneeded. Let me say that the Predator, 
the very effective Unmanned Aerial Vehicle that is saving lives 
and helping our troops in Iraq and Afghanistan and carry out 
their mission today as we speak from the comfort and safety of 
this room, was a congressional earmark.
    Let me say that the MRAPs program, that has saved a 
dramatic number of lives by deflecting the power of IEDs in 
Iraq and Afghanistan, was either a congressional earmark or a 
program that was strongly pushed by Congress at a time it was 
really getting nowhere.
    Let me say, as chairman of the Military Construction 
Committee, the modernization of our DOD hospital system was 
shamefully ignored for many, many years through Democratic and 
Republican administrations. That new modernization program is 
now moving forward because of congressional earmarks.
    Some have even made fun of our subcommittee's earmarks for 
daycare centers for the Department of Defense. Let me say for 
the record, it is no laughing matter to troops from Fort Hood 
near my district in Texas who are on their third or fourth tour 
of duty in Iraq and have small children back home and a spouse 
working. It is no laughing matter to have quality affordable 
safe daycare centers so they can focus on their mission in Iraq 
and Afghanistan and then come home safely.
    What I would like to ask you, Mr. Hale, based on your past 
experience on Defense budget issues, is it a fact that OMB 
doesn't always approve the level of funding requests, whether 
it is coming from the Air Force, the Army, the Navy, the 
Marines or from the Department of Defense in general.
    Mr. Hale. There is a negotiation, Mr. Edwards, as you know, 
with OMB and the President. I mean, they are representing the 
President as to the right level. I think the Department's voice 
is heard strongly in that debate, but that is my impression----
    Mr. Edwards. I understand.
    Mr. Hale. By and large, the Department, if it can make a 
reasonable case that the needs are based on national security, 
will get the funding, but yes, there is a debate.
    Mr. Edwards. The answer is, yes, there is a debate. What 
that means in lay terms, and I respect the carefulness of your 
answer, what that means in lay terms is, sometimes your 
military base commander, sometimes your Secretary of the Army, 
your Chief of Staff of the Army, Chief of Naval Operations, 
asks for a priority program, and some bureaucrat at OMB says 
no. That bureaucrat might be knowledgeable; that person might 
not have ever served our Nation in the military.
    So many congressional earmarks, Mr. Chairman, coming from 
Congress are actually Defense requests made from our commanders 
in theater or our base commanders whose requests were turned 
down by OMB, sometimes for good reasons, sometimes for bad 
reasons. So I just want to set the record straight when 
reporters write that because it was a congressional earmark, 
this was a project or program the Department of Defense didn't 
ask for; it is simply not a correct observation to make.
    Let me ask you, finally, with a little less than a minute 
that we have, since I do oversee Military Construction, we have 
seen inflation costs go up dramatically during the BRAC process 
over the last few years. It was not the fault of the Bush 
administration or the Pentagon, but it certainly has impacted 
our construction costs. Are we starting to see those costs come 
down?
    Mr. Hale. We certainly hope so. We are planning on 
significantly lower levels of inflation. I think, with the 
economy in the situation it is in, that is a reasonable 
projection. Those two are based on indices that OMB puts 
together, but I think are consistent with what we are seeing. 
It is at least a slowdown, a significant slowdown in the rate 
of growth.
    Mr. Edwards. And I will conclude, Mr. Chairman, by saying 
that, given that slowdown in construction and in some parts of 
the country, reductions in the natural cost of construction, 
this might be a good time to make the investments in 
modernizing our DOD hospital system, improving our barracks, 
and other construction needs that could create jobs for 
Americans, but most importantly take care of our troops and our 
families.
    Thank you, Mr. Secretary, for your service.
    Chairman Spratt. Mrs. Lummis.
    Mrs. Lummis. Thank you very much Mr. Chairman.
    Mr. Under Secretary, thank you for being here. Could you 
tell me, are there any planned reductions in our nuclear 
arsenal that are going to be reflected in the President's 
budget when we receive more detail? We see all these news 
reports. I am curious about your response.
    Mr. Hale. Well, I am afraid it is going to be the same 
response that I have given before, which is, any detailed 
decisions haven't been made and won't be announced until we 
actually send the budget probably in late April. Again, I 
apologize for not being able to be more helpful, but it is the 
nature of the time.
    Mrs. Lummis. Thanks.
    I would like to say, of course, with the emergence of the 
nuclear wild cards like Iran and North Korea, I hope any 
modifications to our nuclear force structure will go through a 
thorough assessment by your Department and others. How will 
that process occur?
    Mr. Hale. Well, I can answer that in general terms. The 
services all have, and I was head of it or deeply involved in 
it for a number of years in the Air Force, an extensive review 
process that starts with their commands, and both analytic work 
and military judgment is applied. That funnels up through major 
commands and eventually the Pentagon, at each point being 
assessed both based upon the analytic results and also based on 
the judgments of commanders.
    So, at the Pentagon, at the level I am at, we are down to 
usually a fairly small set of large issues that have been 
fairly well vetted. And the pros and cons are well known. That 
doesn't mean the decisions are easy, because usually, at that 
point, there is a fair amount of, it is the risk-cost tradeoff; 
it is always hard in Defense. So it is kind of an academic 
answer, but it is the way it works. A series of both analytic 
and judgmental decisions are made at various levels.
    Mrs. Lummis. Well, Mr. Chairman, a number of us are 
concerned about the nuclear potential of Iran, and its low-
grade capabilities seem to be there now. And the concern about 
a low-grade nuclear weapon being deployed into the atmosphere 
that could interfere with the transmission of electricity and 
disrupting to the point of bringing nations to their knees, we 
believe, is a real threat.
    And so I want to stress the importance, I believe, in the 
Iran and North Korean issues, and I appreciate your indulgence 
of that comment.
    Now I would like to switch over to let you know that my 
home Air Force base, FE Warren Air Force Base in Cheyenne, 
Wyoming, is almost self-sustainable with the wind energy 
development. And the wind turbines there at FE Warren are 
providing the lion's share of the power there now. And with the 
addition of some additional turbines, it will be a base that 
becomes energy efficient. Of course, there are redundant 
sources, and so when the wind is not blowing in Cheyenne, which 
I can assure you happens occasionally, the base load will be 
there to serve the base. But we are proud of FE Warren's 
efforts in becoming energy sustainable and doing it in a 
renewable fashion. Do you know how many other shovel-ready type 
projects of that kind are out there?
    Mr. Hale. I don't have a number. I can tell you that there 
are, on the current response that I think will be up here in a 
few days for the stimulus bill, there are hundreds of projects 
that we think, at least dozens of projects, that we can 
probably get on contract within a month or two. So if that is 
the definition of shovel ready, I think that we will be able to 
succeed with the number of--and again, these are the Facilities 
Sustainment, Restoration, and Modernization kinds of projects 
where we can move quickly.
    Mrs. Lummis. And Mr. Chairman, I would like to also 
acknowledge and applaud military efforts to work with clean 
coal technologies. It is important to stretch our coal 
resources so they don't become a stranded asset. And the 
efforts that the military has made towards clean coal 
technologies are appreciated, are important and I hope will be 
part of the budget we see.
    Mr. Chairman, thank you kindly. Under Secretary, thank you 
kindly for being here.
    I yield back the remainder of my time.
    Chairman Spratt. Mr. Etheridge.
    Mr. Etheridge. Thank you, Mr. Chairman.
    Under Secretary Hale, thank you, and thank you for being 
with us today. I, like some of my colleagues who have already 
spoken, I want to return to one of them, have some concerns 
about the readiness of our Army as well as our other services.
    I have the privilege of, in my district, having Fort Bragg 
and Polk Air Force Base. And as you well know, all those 
threats that we talk about to America and Americans really 
don't come from Iran and Iraq or Afghanistan, I should say, 
from Iraq and Afghanistan. Because our military men have been 
stretched pretty thin. And I see that every time I talk with 
people from Fort Bragg, because we talk of the long engagements 
and the multiple deployments that we have had and others are 
headed back either to Iraq or Afghanistan. And our military 
families have really shouldered that burden for generations but 
in the last several years in a disproportionate way.
    And so I know that the 2010 budget details are not 
available at this time. So I respect that. But I guess my 
question to you is, if you have a ballpark on how much of the 
funding would be devoted to, number one, rebuilding here at 
home, because we do have to do some backfilling on a lot of 
equipment? And how much will be devoted to supporting our 
military families, their health care, including mental health 
and counseling? That is really an issue that I have a great 
deal of concern about, and I think others do. And as my 
colleague, Chet Edwards, raised a while ago on the support for 
children with the issues of families because it goes beyond 
child care.
    A lot of these bases are in communities where, depending on 
deployment and the level numbers, you have substantial need for 
education. And a lot of these counties and local units have 
really been stressed with the buildup or movement of folks. And 
they really provide the backbone, our families do, of our men 
and women in uniform, when they are away on missions.
    And finally, if not, if you don't have the details today 
and you can't share them, I would really appreciate you at the 
appropriate time providing it to me and to the committee in 
writing. I think this is a core piece of the issues. I know you 
haven't been in the military, I understand that, probably more 
so today than ever with an all-military service, that for our 
warriors to be totally committed to the job at hand, they need 
to feel good about what is happening at home, and I would be 
interested in your comments on that.
    Mr. Hale. Well, I certainly agree with you. I mean we 
depend on our troops obviously to defend us and our families to 
support those troops. And I think you will see in this budget 
extensive efforts to aid families with child care centers, 
family support initiatives, wounded warrior transition 
complexes, to help our troops who have been wounded in these 
wars, come back, and reassimilate into society.
    I don't have a firm number for you, as you can imagine. I 
will be glad to try to provide it if the record is open long 
enough after the budget has been submitted. But I think, I know 
I can speak for the Secretary of Defense. This is a very high 
priority with him; it is a high priority with the 
administration.
    Mr. Etheridge. And one final point in the time left along 
that line. As we do that in your report when we get it, I would 
be very interested in the impact at certainly a number of these 
bases where tremendous pressure is being put on the local 
communities to provide the educational opportunities for these 
young men and women who are children of our men and women 
deployed or are here at home, the effort we are making on that. 
Because I think in the future, that is an area where we are 
going to have to pay a lot of attention to. We haven't done as 
much as we should have in the past.
    Mr. Hale. I take your point.
    Mr. Etheridge. Thank you, Mr. Chairman. I yield back.
    Chairman Spratt. Thank you, Mr. Etheridge.
    Ms. Schwartz.
    Ms. Schwartz. Thank you, Mr. Chairman.
    And thank you, Secretary Hale.
    A couple of questions. I don't think this has been 
addressed yet, although there has been reference to it. I want 
to ask about health care. And obviously, the Department of 
Defense provides a lot of health care for our military, both 
active and of course for our veterans. As I understand it, 
there is an effort, and if not a requirement for DOD and the VA 
to implement electronic medical records.
    Now, we actually have done that, we have put in the 
recovery act a substantial sum of money, $19 billion spent over 
the next 2 years, under Medicare, to implement health IT. The 
VA has been a leader in this, electronic medical records. They 
have done an extraordinary job, as I understand it. And I 
visited a facility in my district, the Horsham Clinic, that 
does a great job, and of course, we have the VA Hospital in 
Philadelphia.
    But the fact that, if you are in the active military, their 
records can't talk to the veterans. And as more and more of our 
young men and women come back from Iraq and Afghanistan serving 
overseas in whatever capacity and move from active service to 
the VA, linking those two systems can ease some of the issues 
for any of our military and help provide better services. That 
is what we would like to see happen, ease the burden for them. 
I know the military is notorious at paper work, and the idea 
that this going to be electronic is potentially very, very 
helpful.
    But it also could save real dollars. We expect it to happen 
under Medicare. And the CBO, which doesn't like to score 
savings, as they say has scored $10 billion in Medicare for 
this investment.
    So two questions. I understand that this joint, this 
interoperability between the active military and veterans is 
supposed to be operational by September 30, 2009. It is not far 
off. What I have understood, there is an article, a GAO report 
in January of this year that said that there is now 
compatibility for pharmacy and drug allergy data for 21,000 
shared patients. I assume that is a pretty small group of 
people we are talking about, so we have a long way to go. Could 
you speak to whether you are going to be able to meet that 
expectation of completing this work? And secondly, whether you 
have actually also looked at what kind of savings we might see 
as we proceed, and of course, DOD's medical spending has 
continued to grow quite a bit, and if we could actually see 
some savings in efficiencies and lack of duplication would be 
great as well, of course easing the burden of the men and women 
who have served our country so well. So if you could speak to 
both those issues, and I may have another question if we have 
time.
    Mr. Hale. I know these issues are active, and there's 
active consideration. I don't have the details. I think it is 
quite reasonable to assume there will be some savings and, more 
importantly, improvements in care. Let me just ask if we have 
any details. I am afraid we don't. I am going to have to answer 
that one for the record. I apologize not having it, but I don't 
want to give you information that isn't right.
    Ms. Schwartz. Well, thank you. I wasn't sure you would have 
it readily available. But I would ask you could seek the 
answers and give us some update on where you stand on that and 
how we might proceed because we are--anyway, more information 
for the record would be very, very helpful.
    Mr. Hale. I will add, there is a lot of, and at very senior 
levels, including Mr. Shinseki and the Secretary of Defense at 
Veterans Affairs, a lot of high level dialogue with the Veteran 
Affairs, much more frankly than I noticed 10 years ago when I 
was in the Department. So I think we are moving toward better 
cooperation, and I will try to get you the specifics.
    Ms. Schwartz. That would be great. And again, the VA has 
done a remarkable job on this and is a model for the private 
sector as well.
    The other question I wanted to ask was about TRICARE fees. 
As I understand it, they are not explicitly in the budget 
document that we are looking at. But there have been rumors 
that there might be an increase, as proposed in the past, or 
enrollees having--military retirees having to pay some fee. We 
have typically been opposed to those, and I wonder if you could 
give us some anticipation whether we are going to see any kind 
of recommendation for a fee increase under TRICARE.
    Mr. Hale. Well, I can't give you anything specific. I can 
tell you that is one of the many issues under active 
consideration. It was called Sustain the Benefits. You are 
probably aware of it. And the administration, I think the last 
2 years, has submitted it--there is a cost-sharing now, as I am 
sure you know--recommending an increase to essentially to bring 
you back to some levels that were there when TRICARE was 
established. We are actively looking at that now, as to what, 
if any, portion we will submit.
    Ms. Schwartz. There may be a little pushback on that, what 
I might suggest to you.
    Mr. Hale. I fully understand. We are well aware of the 
concerns here. I mean, it is part of a broader issue that we 
need to look at as ways to hold down growth in health care 
costs. But I think we need to look at more than just fees for 
retirees. We need to look at other aspects as well.
    Ms. Schwartz. Thank you.
    And on a very different subject, and I don't intend to do 
this, but this is a very local issue at the Willow Grove Navy 
Base that has been BRACed. There is an issue about the 111th 
Fighter Wing and keeping some airplanes, the A-10s. And so I 
sent a letter to your boss, and I would ask if you could see 
whether Secretary Gates would respond to me. It would be very 
helpful in getting an answer. It was a little bit of 
uncertainty, mixed messages in the BRAC documents, and we would 
like to protect those planes, and we would just ask for an 
answer. You might see him before I do, so that would be 
helpful. Thank you very much.
    Chairman Spratt. Ms. DeLauro.
    Ms. DeLauro. Thank you very much, Mr. Chairman.
    Mr. Under Secretary, these are probably two parochial 
interests, but they have, I think, national security 
ramifications to both of them. The first is about the F-22, 
which in my view is critical to the security of the Nation and 
our ability to respond to all kinds of air combat capabilities. 
I was in Aviano not too long ago, and the airmen there talked 
about their interest in the F-22. So I am not speaking about 
myself, but what they view as in their best interest in terms 
of carrying out their mission, and that if you close production 
on this, it will be difficult to ramp up.
    I am going to try to get to the questions here quickly 
because I also want to ask a question about Marine One. If we 
deal with the cutting the production of the F-22, we will in 
fact lead to more job losses. That is critical. We have got--
and I am just going to use my State of Connecticut. We could 
lose between 2,000 and 3,000 jobs if we cut production there. 
And to date, we funded 184 F-22s. It is below the minimum level 
of 381 the Air Force maintains is needed. So my questions with 
regard to this, will the complete fiscal year 2010 budget 
include a final decision on whether we are going to purchase 
more, perhaps continue the production of 20 aircraft a year 
until the Quadrennial Defense Review is completed? Will the 
supplemental request in 2009 include the four additional F-22 
purchases as has been reported? And more generally, are the 
economic benefits of increasing Defense spending and dealing 
with the economy and jobs part of the debate in the discussion 
with regard to this project?
    And then I am going to get to my Marine One questions.
    Mr. Hale. Okay. I will try to be quick.
    On fiscal year 2010, you will see a recommendation to 
either buy or not buy F-22s. I guess that is a tautology. But 
we are actively reviewing that program. The Secretary of 
Defense wrote a letter, I believe in December, about the 
supplemental indicating four F-22s would be there. We have not 
completed an OMB assessment and released it, but I think that 
should give you some guidance.
    Ms. DeLauro. We believe the four will be there, but we are 
not sure about the 20.
    Mr. Hale. I am not in a position to formally confirm the 
fiscal year 2009 supplemental either. It is not here, although 
I hope it will be next week. But I would direct you to the 
letter as some indication of thinking and try to be at least 
helpful.
    In terms of jobs, I think we are all mindful that anything 
we do in Defense up or down affects jobs. And in this kind of 
an economic climate, there is great concern. But that said, our 
job in the Department of Defense is to recommend what the 
country needs or what we think the country needs for national 
defense. And that is the basis on which we try to make these 
decisions, not jobs per se.
    Ms. DeLauro. I understand that is why.
    Mr. Hale. I don't want to be unsympathetic.
    Ms. DeLauro. I understand. I anticipated the answer which 
is why I began my comments with talking about the airmen in 
Aviano. And when they talked about down range, and maybe it was 
something that, you know, I learned down range was Iraq and 
Afghanistan and what they do. And that is the issue here, is 
about national security and Defense and their well being in a 
weapon.
    Let me move to the Marine One helicopter. I am not going to 
regale you with all the past on that, of which a number of us 
have spoken up clearly then and now where we believed that, 
since Lockheed-Martin does not build helicopters from the 
ground up, that this consortium of AgustaWestland and 
Finmeccanica would produce delays, cost overruns and in fact 
put us behind the time in which we needed to do this.
    Now I understand Lockheed-Martin is suggesting that it 
complete increment one. Quite frankly, it was increment two 
that we were looking forward to in terms of the new technology, 
the new security efforts as well. Increment one is way over 
budget and delayed. It has breached Nunn-McCurdy; 50 percent 
over estimate.
    Lockheed now is essentially saying they cannot do the job, 
which is no surprise, as I said. What can we expect from the 
Defense Department for this program in its Nunn-McCurdy report 
for the fiscal year 2010 budget? And assuming there is still a 
requirement for production of increment two helicopters, will 
your Department look at alternatives, as is suggested by Nunn-
McCurdy, and rebid the contract?
    Mr. Hale. Well, I think you can expect a decision or a 
recommendation on that for sure. I mean, the President has 
commented on this helicopter. It is a, we are well aware, a 
program that is having execution programs, and we are committed 
to reviewing all weapons, but particularly that are having 
them. I am just not in a position to tell you what the 
recommendation will be at the moment, but I can tell you that 
that one is a program that is under review.
    Ms. DeLauro. I will make one final comment, and beg the 
indulgence of the Chair, is that in fact Sikorsky, again 
parochial, when Stratford, Connecticut, built this helicopter 
since the 1950s, whenever there were changes required, they 
built it on budget on time. There was no need to shift this 
contract when it was, and we now would have the product, and it 
would have come in on budget and on time. That is a national 
security issue. That is an issue of security of the President 
of the United States, with the requirements I don't make. I am 
not in the business. You all are with what you need for the 
security of the President of the United States. And in fact, we 
wouldn't have off-shored jobs, and we would not have off-shored 
the technology, which truly is one of the big issues with 
regard to the Marine One helicopter.
    Thank you, Mr. Chairman.
    Chairman Spratt. Thank you Ms. DeLauro. Mr. Boyd.
    Mr. Boyd. Thank you, Mr. Chairman.
    Mr. Under Secretary, welcome. You have quite an impressive 
resume. And thank you for your service to this country, both in 
uniform and out.
    Mr. Hale. Thank you.
    Mr. Boyd. Mr. Secretary, I think everybody in this room 
knows that there are some, and even GAO has written there are 
some very glaring and pervasive weaknesses in the DOD financial 
management systems, even to the point that it creates a very 
high-risk situation for waste, fraud, mismanagement, and 
general waste of the taxpayers' dollars. And those problems are 
inside the Pentagon financial systems itself. My question is 
sort of a 20,000-foot question. Do you consider the DOD's books 
auditable today?
    Mr. Hale. No. That is the easiest question I have ever had 
to answer. No, they are not. We have had a disclaimer of 
opinion for years, and it will continue.
    Mr. Boyd. Can you briefly talk to us then, what we might do 
to help you?
    Mr. Hale. First of all, let me say a little more about that 
other than what I said is true; they are not auditable. First 
off, I think you need to understand DOD systems were designed 
to keep track of the money that Congress appropriated and how 
we spent it. They do that and they do that well. We can tell 
you whether we have spent the money in accordance with the 
guidance that you gave us. They are not designed to meet audit 
standards, which require that you have a transaction be able to 
trace back to an original transaction, for example, and there 
are some more detailed requirements about when moneys are 
expensed that auditors require.
    Our systems weren't designed to do that. They don't do it, 
and for that and other reasons, evaluation for example, we 
can't value our weapon systems based on historical costs 
because we just don't have those kinds of records. We are 
looking at both improving our financial information and 
becoming more audit ready. And progress has been made in the 8 
years or so since I have been in the Pentagon, some substantial 
progress. For example, the Army Corps of Engineers was able to 
obtain a cleaner unqualified audit opinion on its last 
statement. I think we are getting close with certain aspects of 
the Marine Corps to have auditable statements. But I am also 
mindful we have put off some of the hardest challenges to the 
end, especially for the large military services evaluation of 
equipment, for example.
    And what I am doing right now is looking at priorities, 
realizing there is only so much time and money that we are 
going to be able to devote to this as to how we should proceed. 
I don't have a plan, but I hope I will within a few months.
    In terms of what Congress can do, I think their oversight 
role here is appropriate. I may not enjoy it, but it is 
appropriate that you continue to ask us questions about what 
our plan is and how we will get there. And I think Congress has 
done a good job at that.
    Mr. Boyd. In light of the new administration, new 
leadership team and in light of the fact that I think everybody 
here knows that what you have just said leads to the fact that 
you can tell what you have spent the money on, but what 
happened beyond that, in many cases, we do not have a good way 
of tracking the use of the taxpayers' money, that leads to a 
lot of--I mean, certainly what you have just described is not 
acceptable to this current administration, is that a fair 
statement?
    Mr. Hale. It is fair. The law requires auditable financial 
statements, and we are moving toward them. And as I say, we 
have made, the Department has made some progress over the last 
10 years or so. It is a challenge, and it is how much resources 
you want to spend on it.
    Again, I will repeat, we can keep track. You appropriate 
money. We can tell you whether we have spent that money for 
what you have told us in terms of the appropriations. What we 
can't do is go back to transaction-based requirements, every 
voucher, et cetera, that auditors require in order to give you 
a clean financial opinion. We can't value our equipment in ways 
that the auditors would require. But I think some fundamental 
things the financial system does reasonably well, fundamental 
things that should be of concern to this Congress in terms of 
your statutory responsibilities, but we need to do better, and 
we will continue.
    And I am looking at priorities. Again, there is only so 
much time and money I am going to be able to devote to this, or 
the Department should, because we need to not take away from 
our war fighting commitments. And we need a set of priorities, 
in my view, that go after, first, the most important management 
information in terms of achieving auditability.
    Mr. Boyd. Thank you, Mr. Chairman. I know my time is out. 
This is a subject which is near and dear to the hearts of many 
of us who feel like that for us to ever be accountable for the 
dollars that we collect, taken voluntarily from our citizens, 
and we have a responsibility to make sure they are spent well. 
I hope that, as time goes on, we will spend, as a Budget 
Committee, we can spend some more time on this kind of issue.
    Chairman Spratt. Thank you, Mr. Boyd.
    Mr. Yarmuth.
    Mr. Yarmuth. Thank you, Mr. Chairman.
    We have votes, so I am not going to ask too many questions. 
I just have one point to make, and I would just like to, I 
guess, reinforce the comments made by Congresswoman Schwartz 
regarding increased fees for TRICARE. That is something that is 
out there. That is something that many of my constituents have 
already made comments to me on. I know that I am no different 
than any other Member in that regard. So I would express my 
deep concern that that is something that would not be looked 
upon favorably by my constituents, and I doubt if the Congress 
would as well. But I thank you for your testimony, and I yield 
back Mr. Chairman.
    Chairman Spratt. That concludes your questioning, Mr. 
Yarmuth?
    Mr. Yarmuth. Yes.
    Chairman Spratt. Mr. Langevin, I believe.
    Mr. Langevin. Thank you, Mr. Chairman.
    Secretary Hale, thank you for your testimony here today. I 
have a couple of questions. I will only ask one, though, in the 
interest of time. Perhaps we can get another member in.
    As a member of the House Armed Services Committee and a 
former member of the Homeland Security Committee, I have been 
long concerned about the tendency of agencies with national and 
homeland security responsibilities to focus exclusively on 
strengthening their own programs and initiatives while losing 
some of the larger strategic goals to which their programs are 
contributing. Therefore, I propose creating what is called a 
Quadrennial National Security Review, QNSR, similar to DOD's 
quadrennial national security review, though at an interagency 
level.
    In your opinion, how do you think an effort like that would 
help us better coordinate our assets of national power, and 
what, if anything, legislative recommendations would you make 
to help increase such a strategic cooperation between the 
Department of State and Defense?
    Mr. Hale. Well, I would like to think more about the answer 
to that rather than answer it off the cuff. It is an important 
question. I can tell you that there is interagency involvement 
in a quadrennial defense review, the one that the Department 
does. It does focus on the Department's resources, but I think, 
increasingly, we are aware, the Secretary of Defense has said, 
it is very important that we make use of the full range of 
resources, State and Homeland Security, in terms of maintaining 
our overall national security. So I would like to think about 
and inquire of others rather than give you an off-the-cuff 
answer to a Quadrennial National Security Review, so I will 
take that one for the record. But I would assure you, I think 
there is increasing cooperation going on among the Departments, 
something I noticed as having increased over the last 10 years 
since I have been in the Department.
    Mr. Langevin. But it needs to be vitally important as we go 
forward, particularly in the global war on terrorism. This is 
not a war that we are going to win just by military might 
alone----
    Mr. Hale. I think we would agree with you, the Secretary 
would agree with you.
    Mr. Langevin. The hearts and minds and getting at those 
people that may be on the fence as opposed to seeing it go in 
the direction of al Qaeda, that we move them more in the line 
of more of a civilized society. Anyway, I will stop there, and 
perhaps one of the other members might want to ask a question. 
I have some other questions for the record which I will submit.
    Chairman Spratt. Okay. Without objection.
    Ms. Kaptur.
    Ms. Kaptur. Thank you, Mr. Chairman.
    And welcome, Secretary Hale. I am sorry, I was at a hearing 
of the Army in my other committee so I couldn't be here 
earlier. My question relates to contracting out. And it is my 
understanding that, currently in theater, take Iraq, that there 
are actually more contracted personnel than regular force 
personnel; is that correct?
    Mr. Hale. I think that may be.
    Can you help me out here? Do we have numbers, John?
    We don't have specific numbers, but I think your facts are 
basically right.
    Ms. Kaptur. I am very interested in the impact of that 
enormous amount of contracting out, which is at historic 
proportion in its relationship to the budget. For example, the 
other day, in a hearing on the Marine Corps, one of the issues 
that came up was the availability of mechanics and trained 
mechanics to handle armored Humvees in theater. A lot of the 
vehicles were being brought back to base to be repaired by 
contracted personnel. I am very interested if your Department 
has a summary, an understandable summary, that they could 
provide to us on the nature of contracting out overall within 
the Department, and then its budgetary impact. Because this is 
not cheap, whether we are talking security personnel, whether 
we are talking service personnel. And one of my greatest 
interests is in sourcing those services back into the 
Department. And I am wondering, can you help us in that regard? 
Then we can make good budget decisions when we see how much a 
contracted worker is costing us versus a regular force 
individual.
    Mr. Hale. I will do my best to provide some additional 
details for the record. But let me say, to really get down to 
the cost-benefit analysis, you have got to go well below the 
level of the aggregate number of people or jobs we are 
contracting. You actually have to get to the function. There 
are functions where contractors can be more efficient. They 
have often more flexibility than we do in the civil service. 
They may be able to import technology in ways that we can't 
readily do in the civil service of the government. So I think 
there are cases where they will be more cost-effective.
    If it is simply doing a particular job, a one-for-one 
transformation of a contractor or a Federal civil servant, the 
contractor, they are probably more expensive because of the 
overhead associated. So I will do my best to give you an 
overview. And this issue is under active discussion in the 
Department of Defense, and you may see some proposals in our 
next budget. But we are going to actually have to get well down 
below that aggregate level to answer the cost-effective 
questions or cost-effectiveness questions that you are asking.
    Ms. Kaptur. Well, at least you are talking about aggregate 
level, because we haven't even had any good presentations on 
the overall impact of contracting out, the increase of it over 
the last decade or so, and how atypical that has been of our 
history as a country. When I was actually being flown into Iraq 
by a regular force guard, actually, who had been deployed, we 
were talking about some of the contractors that they were 
flying over. And the morale among our troops, knowing how much 
those folks were making versus what our folks in regular force 
were making, it has consequences inside. And I, obviously, am a 
very strong supporter of regular force. And I want to take a 
look in some understandable way, if it can be made 
understandable, of the impact of this exponential growth in 
contracting on so many levels.
    Frankly, one base we were at, there were so many 
contractors, they were falling over themselves. And there 
became a real question of who was in charge. And what shocked 
me was that some of the logistics on the ground were being 
handled by contractors. I have to tell you, that was not a 
comfortable moment for me as a citizen of our country. So they 
are not just doing incidental activities; they were embedded 
right into the war-making function. So I am very interested to 
see how the Department perceives that architecture of 
contracting and now sort of an overlay in all of the 
Departments, and particularly Army and support functions. Has 
there ever been a report commissioned that really looked at 
this?
    Mr. Hale. I am not aware of an overview report. I can tell 
you that there is active consideration now.
    Does anybody know of an overview report?
    I am not aware of any. But the issue is being looked at. I 
think your words and words from others have gotten through to 
the Department and to the Secretary. As I say, an active review 
of this issue is under way.
    Ms. Kaptur. Thank you.
    And finally, Mr. Chairman, let me ask, Blackwater's 
contract with the State Department was terminated, but they 
changed their name to I think Xe or some name like that. Are 
they under contract to the Department of Defense in any way now 
as renamed?
    Mr. Hale. I do not know. That is something I will also have 
to check for the record.
    Ms. Kaptur. All right. Thank you very much.
    Chairman Spratt. Thank you very much, Mr. Hale, for your 
excellent answers and responses. In the list of things that you 
answer for the record, it would be useful if we could have also 
your sort of back-of-the-envelope analysis of what it costs to 
move one brigade combat team from the theater to the stateside 
post.
    Mr. Hale. I am not going to be able to give you a good 
number there, Mr. Chairman, just because it varies so widely. 
Is it heavy? Is it light? Where is it located? But we can 
certainly lay out the factors that will drive it. We cost this 
out on a detailed basis when we know a particular unit, but we 
can certainly lay out the factors for you that influence it.
    Chairman Spratt. Mr. Sullivan, we shall return.
    I beg your forbearance. We have two votes, but we will be 
right back as soon as these are over.
    [Recess.]
    Chairman Spratt. We will now proceed with our hearing with 
the second panel.
    We have Michael Sullivan. Mr. Sullivan is director of 
acquisition and sourcing management, a group which has 
responsibility for examining the effectiveness of DOD's 
acquisition and procurement practices and in meeting its 
mission, performance objectives and requirements.
    Most recently Mr. Sullivan has directed the Government 
Accountability Office in assessing major weapons system 
programs and providing Congress with visibility over 
acquisition costs and the causes of unwarranted cost growth. 
This team also provides Congress with early warning on 
technical and management challenges facing these investments. 
Mr. Sullivan has been with the GAO for 23 years.
    He received his bachelors degree in political science from 
Indiana University and a masters degree in public 
administration from the School of Public Affairs at Indiana 
University.
    Mr. Sullivan, thank you for appearing here today. We look 
forward to your testimony. We will file your testimony in its 
entirety as part of the record, so you may summarize it as you 
see fit.
    The floor is yours, sir.

   STATEMENT OF MICHAEL SULLIVAN, DIRECTOR, ACQUISITION AND 
     SOURCING MANAGEMENT, GOVERNMENT ACCOUNTABILITY OFFICE

    Mr. Sullivan. Thank you, Mr. Chairman.
    I am pleased to be here today to discuss the Department of 
Defense's Fiscal Year 2010 budget and its major acquisition 
programs.
    Over the next 5 years, the Department plans to spend more 
than $357 billion specifically on its major weapons system 
programs. While the details of the President's budget have not 
been released as of yet, its emphasis on reforming DOD weapon 
system acquisitions is notable, as it may bring new momentum 
from the administration and key congressional committees such 
as yours to address this issue.
    Today I want to focus on our efforts to achieve the 
efficiencies through our high-risk series and other products, 
the systemic problems that have contributed to poor cost and 
schedule outcomes on weapon system acquisitions and further 
steps that might be needed to improve performance. In January 
2009, we released our high-risk update for the 111th Congress. 
Of the 30 high-risk areas we identified, the Department bears 
sole responsibility for 8, including weapon system acquisition, 
and shares responsibility for 7 others.
    During fiscal year 2001 through 2007, we issued 637 reports 
to the Department of Defense that included a total of 2,726 
recommendations. In responding to those recommendations, as of 
October 2008, about 62 percent had been implemented; 28 percent 
remained open; and the Department was still working on closing 
those and about 10 percent were closed, but for one reason or 
another, they were not implemented for a variety of reasons. We 
recorded over $89 billion in financial benefits associated with 
those recommendations at the Department. A significant amount 
of this benefit was due to our recommendations related to 
improving the Department's major acquisition programs and its 
acquisition process. For example, in Fiscal Year 2007, 74 of 
our 313 recommendations were related to improving those 
programs, and we reported $2.6 billion in financial benefits as 
a result of the actions taken by the Department to close them.
    In 2008, we reported about $5.7 billion in benefits. We 
have been reporting for years on poor cost and schedule 
outcomes on the Department's major weapon system acquisitions, 
and most recently, in March of 2008, we reported that there 
were 95 major weapon system acquisition programs in the 
Department's current portfolio, and they had grown in cost by a 
total of $295 billion and, on average, were delivered about 21 
months late.
    We believe there are problems at both the strategic and 
program level that cause these outcomes. At the strategic 
level, the Department's three systemic processes for building 
its investment strategy are fragmented and broken. The 
requirements-setting process is stovepiped. It takes too long 
to approve needs. It does not consider resources, and it 
approves nearly every proposal for a capability that it 
reviews. The funding process accepts and funds programs with 
unrealistic cost estimates and does not fully fund their 
development costs. These two processes, which are very 
important to the acquisition process, are poorly integrated, 
and this poor communication leads to unhealthy competition 
where too many programs are chasing too few dollars.
    Finally, at the program level, the acquisition process 
initiates programs with unreliable cost estimates and without 
knowledge from proper systems engineering analysis to 
understand each weapons system program's requirements and the 
resources that will be needed to achieve them. With the Federal 
budget under increasing strain from the economic crisis now 
facing the Nation, the time for change is now.
    In testimony last month, the Secretary of Defense 
identified many of these systemic problems associated with 
acquisitions, recognized that the acquisition process was a 
chief institutional challenge at the Department and indicated 
that efforts are underway to address it.
    The Congress is also proposing legislation that focuses on 
improving the acquisition environment. It targets key problem 
areas, provides much needed oversight and provides increased 
authority and independence to critical functions, such as cost 
estimating and development testing, that has been lacking in 
recent years. Its provision for requiring a full inventory of 
the Department systems engineering capabilities as an excellent 
beginning to rebuilding that sorely needed capability in the 
acquisition workforce. It also sends a strong signal to the 
Department to prioritize its needs better and to make sure it 
has requisite knowledge about costs and other resources about 
each program before it begins the program.
    It is important to state that there is a need for changes 
to the overall acquisition culture and the incentives it 
provides as well. These changes should be begin with resisting 
the urge to achieve the revolutionary but unachievable 
capability in one step, allowing technologies to mature in the 
tech base before bringing them on to product development 
programs, ensuring that urgent requirements are well-defined 
and doable and instituting shorter, more predictable 
development cycles. These changes will not be easy to make. 
Tough decisions will be needed about the Department's overall 
portfolio of weapons programs and about specific weapons 
systems, and stakeholders, from the military services to 
industry to the Congress, will have to play a constructive role 
in this process.
    Mr. Chairman, this concludes my prepared statement. I will 
be happy to answer my questions.
    [The prepared statement of Michael Sullivan follows:]
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Chairman Spratt. Mr. Sullivan, just to clarify for the 
record, do you have authority to undertake--the concurrent 
resolution of the budget for fiscal year 2009 asks or requires 
GAO to report to the appropriate congressional committee by the 
end of that Congress regarding DOD's progress in implementing 
your recommendations over a 7-year period of time. Over a 7-
year period of time, what authority did you rely upon to 
require DOD to give you access to their financial records and 
other data so that you could make these examinations?
    Mr. Sullivan. In terms of the recommendations that we made?
    Chairman Spratt. So that you could undertake the 
examination that supported the recommendations you made?
    Mr. Sullivan. The law for one thing. There was 
legislation----
    Chairman Spratt. The general authority of the Government 
Accountability Office?
    Mr. Sullivan. Yes.
    Chairman Spratt. You have the authority to initiate an 
examination and audit or some sort of oversight?
    Mr. Sullivan. Yes, we do. You know, it stems from a 
congressional mandate or from requests from committees such as 
yours.
    Chairman Spratt. But what I am building at, is there any 
deficiency in your authority that needs to be bolstered or 
filled out more completely so that you would have the authority 
to do this on a continual basis?
    Mr. Sullivan. Not to my knowledge, sir. I think we are okay 
there.
    Chairman Spratt. Good. Would it help you if we renewed 
Section 402 in this year's concurrent resolution? I ask you to 
give--you have given us a 6-year report. I ask you to maintain 
the same level of effort to do it on a fiscal-year-by-fiscal-
year basis.
    Mr. Sullivan. From here on out you mean?
    Chairman Spratt. Yes, sir. Is that a problem or is that 
useful?
    Mr. Sullivan. I think that we responded to the mandate 
here. It takes resources for us to do that. If it is useful to 
the Congress, of course. It is something that we would do. If 
you mandated it, we would take care of it.
    Chairman Spratt. You just gave a pretty astounding number, 
$89 billion in savings?
    Mr. Sullivan. Yes, sir. Well, I guess, to get into that a 
little bit more, we have--the authorities that we are given 
right now from the law and from the authorities that you 
mandate to us as you write laws or as you request work, we 
gather the information that we are able to claim these 
accomplishments from in that way. We do a lot of budget 
analysis. We are in communication with the cognizant committees 
on a regular basis. We have access to the things we need to 
look at in terms of the budget. So our budget analysis, the 
recommendations we make in our reports, you know, when we do a 
drill-down of a weapons system, for example, like the Joint 
Strike Fighter or the C-17 or whatever, and we say--we see an 
area where we might gain efficiency by taking money--you know, 
just a quick example would be, if we know there is some testing 
that is supposed to take place in fiscal year 2010, but the 
program is behind, and the money that they were appropriated to 
do that testing is not going to be used; we have the ability to 
report that to Congress, and Congress can claim that money as 
an efficiency. So I think we do that pretty well now, and we 
are able to document our accomplishments the way we did in this 
report that we gave to you.
    Chairman Spratt. All of the testimony today and 
particularly the questions from members indicated a widespread 
belief that the procurement system is badly flawed, if not 
broken, at the Pentagon, and the Department of Defense. First 
of all, if you make that overall assessment, how would you 
describe the system overall?
    Mr. Sullivan. First, I would describe the system for 
developing and procuring most things that the Pentagon 
procures, in particular major weapons systems, as three major 
processes. And it is requirements; it is the comptroller's 
shop; and it is the acquisition process itself.
    And I would say that there are a lot of problems at a 
strategic level getting those three processes to talk to each 
other properly and to prioritize properly, and there are 
problems once you get down to the acquisition process in 
building a proper business case for each weapons system and 
then seeing it through. There are problems with accountability. 
There are problems with a lack of knowledge to make good cost 
estimates. And there are a lot of problems with setting 
requirements properly.
    Chairman Spratt. Let us start with requirements. You noted 
that in your testimony, but in particular, I think GAO had made 
some significant contributions to a study that Senator Levin 
had done that led to a piece of legislation that is being filed 
indicating that, amongst other things, we had far too few 
systems engineers.
    Mr. Sullivan. Yes, sir.
    Chairman Spratt. The sort of engineers who could assess a 
particular proposal and decide where the pressure points and 
likely vulnerabilities were and things that could be foregone 
in order to achieve significant savings at a minor penalty for 
performance. Could you describe in your view, from your 
experience, the deficiency of especially types like system 
engineers in the procurement workforce?
    Mr. Sullivan. In the acquisition workforce right now, I 
don't have the exact numbers right now, Mr. Chairman, but it is 
certainly something we are working on all the time. And I can 
get that for the record if it is available.
    But we know for a fact that, in the past several years, 
acquisition dollars have doubled and the acquisition workforce 
has remained constant. So, number one, the acquisition 
workforce at large, not just systems engineering, but program 
management, contract management, all of those functions is 
probably way down from where it was 10 years ago.
    Chairman Spratt. Quantitatively?
    Mr. Sullivan. Quantitatively, by numbers, yes. I mean, we 
have been growing--the dollars have been growing that we 
purchase things with. The workforce has actually been 
declining. A lot of that was discussed in the last panel. There 
are a lot of contractors that are doing a lot of that work now, 
and we rely heavily on them. Systems engineering, in 
particular, is down, and as I said, I can get probably more 
specific numbers for you. But it is down significantly I can 
tell you right now.
    Chairman Spratt. What about management reporting systems, 
have you made a particular study of them, the selected 
acquisition report for example?
    Mr. Sullivan. We have not--actually, the last time we 
probably looked at the selected acquisition reports as a 
management reporting system is probably 5 or 6 years ago, and 
we found them to be lacking in some specifics, but probably 
more importantly, there were two things that came out of the 
study. One is that they are not timely, that the Department 
should do something to make that information available much 
sooner than they do. It should come out with the budget is, I 
think, the suggestion we made.
    And the other thing at the time, and I am going back 
probably to 2004 here; the other thing that we focused on was 
the rebaselining of weapons systems programs. At that time, the 
selected acquisition reports were not putting down a permanent 
baseline for a weapons system program and having that in every 
one of the reports. It was in the first report, but on an 
annual basis, you could lose the baseline, the cost and 
schedule baseline, of an acquisition program because the 
reports would slip as programs.
    Chairman Spratt. We tried to stop that in the Armed 
Services Committee because I offered one of the amendments for 
that purpose. What is your judgment as to the reliability of 
the baseline today? Do we still have a problem with a rubber 
baseline?
    Mr. Sullivan. I think it is a lot better today. I would say 
that it is probably acceptable today. The report we made back 
then, we recommended that they put a permanent baseline in and 
have that in each report. I believe the committee supported it.
    Chairman Spratt. When do you think that baseline should be 
determined? At what stage in the acquisition process?
    Mr. Sullivan. We believe it should be determined at 
Milestone B, which is the initiation of a weapons system 
acquisition. That is when the big dollars get turned on.
    Chairman Spratt. Engineering development or beyond that?
    Mr. Sullivan. It would be, Milestone B is the beginning of 
system development and demonstration. So it would be when the 
design effort begins; product development is what we call it, 
engineering and manufacturing development.
    Chairman Spratt. Would you give us your recommendations 
based on years of experience, particularly the close-up 
experience you have had, as to what should be done with respect 
to personnel, with respect to a process to really make our 
acquisition system far more efficient and effective?
    Mr. Sullivan. Would you like it right now and then get 
something for the record?
    Chairman Spratt. Just for the record and off the top of 
your head.
    Mr. Sullivan. Okay. Well, off the top of my--we will get 
something for the record, but we do need a lot more people, and 
we need more knowledge in the process, basically. They begin 
programs when they don't know what they are building, 
basically.
    Chairman Spratt. How does DOD go about soliciting these 
people, encouraging them to work on program management, work on 
source selection, work on engineering development, things of 
this nature? It has always seemed to me that DOD had something 
to sell to energetic young engineers and MBA types and that 
kind and wasn't really marketing the opportunities they had to 
offer young college graduates and, for that matter, older more 
experienced engineers.
    Mr. Sullivan. I think that is an excellent point. And a lot 
of that is probably at the service level as well. They probably 
would want to look at the program management tracks and the 
acquisition communities of the services. But I think they could 
do a lot better job of that. Of course, more money always 
helps, and government jobs are probably not as attractive as 
private sector. However, in times like today, you would think 
that they would be a lot more attractive.
    They do have a lot of programs that drive towards 
acquisition excellence through recruiting. They have taken note 
of that. They know that their workforce is down, so they have 
got some programs in place. I believe the legislation that the 
Senate Armed Services Committee put forward and that I think 
that you are probably a part of has some sections in it that 
will----
    Chairman Spratt. A lot of effort went into the background 
of that.
    Thank you very much for your testimony.
    And we have members here who would like to ask you 
questions.
    We will begin with Mr. Doggett of Texas.
    Mr. Doggett. Mr. Chairman, I believe Mr. Connolly has the--
I yield to him.
    Chairman Spratt. I beg your pardon, Mr. Connolly.
    Thank you.
    Mr. Connolly. Thank you, Mr. Chairman.
    I have a markup right now of another committee, so I 
appreciate the accommodation. And I would ask unanimous consent 
to enter my opening statement into the record.
    Chairman Spratt. Without objection.
    [The statement of Mr. Connolly follows:]

  Prepared Statement of Hon. Gerald E. Connolly, a Representative in 
                  Congress From the State of Virginia

    Mr. Chairman, I would like to thank you for holding this hearing 
today with respect to the defense component of the Fiscal Year 2010 
budget. I have always been a staunch advocate for a strong national 
defense. As the former Chairman of the National Capital Region's 
Emergency Preparedness Council, I know the risks this country faces and 
the benefits of a proper defensive capability. Our men and women in 
uniform represent the best that America has to offer and are the 
premier military force in the world.
    I would like to commend the President for his Fiscal Year 2010 
defense spending proposal. The budget presents an honest look at the 
true costs of defense and overseas operations spending. As the base 
request for defense funding has gradually risen over the past five 
years, it is important to ensure that the funds are spent in support of 
our troops and in an efficient manner to preserve our national 
security.
    I look forward to the Quadrennial Defense Review and its 
comprehensive look at the entirety of our defense requirements. In its 
overview, I hope that the Review, while ensuring that we provide our 
military with the proper resources and support, also recognizes that 
there is never a military-only solution to every potential conflict. 
There are circumstances when military action becomes unavoidable and 
justified; however, it would be unwise for us to ignore the roll of 
diplomacy in the necessity for defense operational spending.
    Defense Secretary Robert Gates said in July, ``We cannot kill or 
capture our way to victory * * * It has become clear that America's 
civilian institutions of diplomacy and development have been 
chronically undermanned and underfunded for far too long.'' Secretary 
Gates understands the value of diplomacy as a defensive tool. 
Therefore, I believe it is important that as a component of our 
national defense strategy, we support and protect President Obama's 
request of a $4.5 billion increase in next year's international affairs 
budget. The international affairs budget, which funds two of the three 
pillars of our national security strategy, development and diplomacy, 
represents only 1.4% of the FY 2010 Budget, and represents an extremely 
cost effective compliment to the third pillar of defense.
    In closing, I would like to bring up an issue that has an impact on 
the ability of our military personnel to properly function and 
accomplish their duties--that of the Base Realignment and Closure 
process. As a former local government official, I know the benefits and 
burdens that BRAC can impose on localities losing and gaining military 
personnel and facilities. I hope that the Administration and this 
Congress continue to look at the impacts of the most recent BRAC 
decisions and pledges the proper support to the affected localities.
    I look forward to Undersecretary Hale and Mr. Sullivan's testimony 
today.

    Mr. Connolly. Thank you, Mr. Chairman.
    If I could, Mr. Sullivan, just hone in on acquisition for a 
minute. One of my observations, having been sort of on the 
other side of the desk, if you will, in the contracting world, 
is that the Federal Government as such and the Department of 
Defense perhaps in particular are not very well organized for 
large complex acquisitions. You can have multiple project 
managers during the course of the contract, the procurement 
contract, acquisition contract. Many of them don't have the 
requisite technical skills or technological know-how to always 
be able to fully manage or grasp or even write up the scope of 
the acquisition to be made. Combined with shortages in 
acquisition personnel to begin with and the extended burdens, 
the Federal Government is just not very well equipped to manage 
complex acquisition.
    And then you ask yourself, what could go wrong with that? 
And of course, we know. We have documented in the GAO report 72 
programs assessed, not one of them had proceeded to the system 
development meeting or the best practices standards. Weapons 
systems increasingly have cost overruns. The requirements 
process does not even take cost into account, which is amazing 
and would come, I am sure, as news to most citizens who pay the 
bills. What is your observation about whether the whole 
acquisition process is maybe broken and needs to be addressed?
    Mr. Sullivan. I think excellent points, and we have been 
talking about that for quite some time. In fact, I believe that 
the Department is actually beginning to listen to some of that. 
There has been some initiatives recently that respond to that.
    But if I could take them kind of one by one. The first one 
is the workforce issue, program managers, for example, in the 
Department of Defense. If we are talking about major weapons 
systems, those acquisition programs can take as long as 15 
years just in development before they get into procurement. And 
in that period of time, you might have as many as six to eight 
program managers. They tend to spend about--we did a study on 
that not too long ago I believe--maybe 18 months is the average 
that the program managers are there. We believe that is a very 
good indicator that you are going to have trouble on a program. 
When you have that many managers, there is no continuity, and 
it is very difficult to manage something that way.
    Mr. Connolly. If I could interrupt just one second. Again, 
my experience on the other side of the table on this issue, 
each one of them has his or her own special needs that further 
refine the project at hand often, so that by the end of the 
project, if you have had multiple program managers, the scope 
of the project may actually look differently than the beginning 
of the process.
    Mr. Sullivan. The scope of the project probably will look 
differently, and that is not just because of the program 
manager; that is a lot of the other pressures, the users, 
industry itself.
    There are a lot of requirements created by these programs. 
That is a second thing that I would say is very undisciplined 
and poorly organized that they need to work on. They need to 
have shorter programs. They need to have requirements that are 
understood. That is where the systems engineering, this 
workforce that they need to be able to look at requirements 
more and analyze those requirements in a systems engineering 
way so they can determine if they have the technologies and the 
knowledge and the money and the time to be able to build what 
it is that is coming before them as a requirement. And we have 
suggested many times that, when you are doing product 
development, you should probably limit yourself to no more than 
a 5-year effort and do it in an evolutionary way.
    We view the F-16 as an example of a program that probably 
was done pretty well. They delivered the initial capability 
within 5 years, continued to deliver block upgrades to that for 
the next 30 years. And that is a pretty good fighter jet and 
has been for a long time.
    Mr. Connolly. One quick question, could the SAR, the 
selected acquisition reports program, be better utilized? It 
really hasn't changed much in 40 years.
    Mr. Sullivan. Yes. The chairman was alluding to that a 
little bit, and as I mentioned there, timeliness could be 
improved. I think they have done a lot for getting the 
baselines more permanent. But we think that there are other 
elements that you could put into a selected acquisition report 
that kind of records the knowledge we are talking about, like 
technology maturity for instance. They could have an element in 
that report that records the technology maturity level at the 
time that the SAR begins and track that. You could have an 
element to check design maturity, which is another knowledge 
point that we talk about.
    And they could do a lot more with manufacturing processes. 
As a program begins to move towards production, it is 
designed--there are indicators of design maturity that could be 
in there, and there are indicators of having control over your 
critical processes that could be in there as well. That is a 
lot of knowledge that would help people getting oversight of 
the programs.
    Mr. Connolly. Thank you.
    Thank you, Mr. Chairman, so much, and I thank my colleague.
    Chairman Spratt. Thank you, Mr. Connolly.
    Mr. Doggett.
    Mr. Doggett. Thank you, Mr. Chairman.
    I appreciate your efforts here and in the Armed Services 
Committee as well to literally get us more bang for our buck 
when it comes to this matter. And certainly, Mr. Sullivan, the 
important work that you and your team does has given us, if not 
more accountability at the Pentagon, at least kept us aware of 
how little accountability we have had over the huge amount of 
money. It seems we have shoveled out almost all of the money 
requested by the hundreds of billions of dollars to the 
Pentagon and a little bit more on top of that without assuring 
taxpayer protection.
    I agree fully with one of my Republican colleagues earlier 
who said that President Obama has received the strongest 
military in the world from President Bush. Unfortunately, I 
think it is a much weaker military than he got from President 
Clinton, but nevertheless, it is and always should be the 
strongest military in the world. The other thing that was 
missing from that statement is that President Obama also 
received a civilian military bureaucracy at the Pentagon that 
has given us more waste than any military in the history of the 
world. And I know you have worked to put in place systems to 
try to get at that waste because I think that our taxpayers 
ought to be getting more money--more benefit from the dollars 
being spent there than we have.
    I want to direct your attention to the report that I 
questioned earlier. Was this new report on missile defense 
components that came from GAO this week prepared under your 
office?
    Mr. Sullivan. Yes, it was. In fact, under our team. I 
wasn't the director involved on it, but I worked closely with 
those who did.
    Mr. Doggett. Are the programs under the missile defense 
agencies, are they among the most expensive in the weapons 
systems at the Pentagon?
    Mr. Sullivan. If you take the programs as a whole, I think 
the MDA is in the top three.
    Mr. Doggett. And is this experience of having gone there, 
from GAO, 6 years in a row and trying to get them to give you 
the information you need to evaluate the programs and not get 
it even yet, has that been pretty typical of what you found 
with the weapons systems there?
    Mr. Sullivan. I think it has been a lot more difficult for 
the teams that we have had going to MDA to get that kind of 
information, specifically because of the way it is structured, 
I think.
    Mr. Doggett. Again, referring to earlier discussion, I 
think there is a feeling here that if Members of Congress or 
ideologues outside of Congress say this system works enough, 
that it will work, but when I look through the details of the 
report that your team there produced, I believe that, of the 10 
components or 10 elements of the Missile Defense Agency, which 
vary significantly, that not a single one of them was on time 
and fulfilled. Only one out of nine could be said to fulfill 
all of its objectives, is that right?
    Mr. Sullivan. I believe that is correct, sir. And I think 
one of the reasons for all of that is the way the MDA has been 
allowed to operate. And the MDA is really not even an 
acquisition program. It doesn't fall under--it has been exempt, 
if you will, from the acquisition policies at the Department, 
which we call the 5,000 series.
    Mr. Doggett. So it has not even had to meet the standards 
that applied to other weapons systems?
    Mr. Sullivan. That is right.
    Mr. Doggett. Well, neither acquisition standards nor good 
science seems to apply there. I noticed in reading the report 
that, as it relates to the land-based system, the suggestion or 
the indication is that they, I think, they did about half the 
tests that they said they would do for last year and that you, 
your team concluded that they didn't have the information 
necessary because of the deficiencies in the sensory data to 
tell you whether the system would work or not. Is that about 
the bottom line of that?
    Mr. Sullivan. That is, you know, as I said, I didn't work 
on that. But if our team said it, it is correct.
    Mr. Doggett. Do you know if your team explored what the 
Congressional Budget Office reported again within the last few 
weeks concerning alternatives for missile defense in Europe?
    Mr. Sullivan. Pardon me?
    Mr. Doggett. The Congressional Budget Office, which also 
attempts to get a little accountability, has issued a report 
that there is an alternative to placing a permanent U.S. bases 
in the Czech Republic and Poland. If there is any protection to 
be offered at all from this missile defense system, can be done 
using existing U.S. bases; has that been an area of study by 
your office?
    Mr. Sullivan. That is something I could get for the record 
if you want. We could go and ask the team that is doing that 
work.
    Mr. Doggett. Thank you for the time, Mr. Chairman.
    Thank you so much for your service. It sounds like we have 
hope now that there will be a little more cooperation at the 
Pentagon, and when you are there, and maybe we will have a 
happier report this time next year. I certainly hope so, and I 
think American taxpayers would hope so.
    Chairman Spratt. Thank you.
    Let me echo what Mr. Doggett just said. Thank you for your 
very excellent testimony and for the fine work that the General 
Accounting Office, now the Government Accountability Office, 
has done for us. I think there will probably be a counterpart 
to Section 402 in this year's budget resolution to ask you to 
do this, so we can make it an annual affair. I think that would 
be healthy for us to know and not a bad thing for the Pentagon 
to have to respond to.
    We thank you very much indeed for your efforts and for your 
testimony here today. Thank you for your participation.
    I ask unanimous consent that any members having statements 
they would like to enter for the record or questions they would 
like to propose to the witness, you will have 7 days in order 
submit those for the record. Thank you very much. The hearing 
is adjourned.
    [Questions for the record submitted by Mr. Aderholt 
follow:]

           Questions for the Record Submitted by Mr. Aderholt

    1. President Obama has made many comments about the creation of 
jobs. It seems to me that a glaring omission in this Administration's 
actions thus far is that the defense industry not only protects our 
nation, but also supports hundreds of thousands of jobs. Can you 
comment on how the forthcoming budget will take that into account, and 
how the budget will maintain some continuity in the procurement and 
manufacturing process?
    2. As you are aware, the President and Congressional leadership do 
not want sole source contracts, especially on earmarked projects. As 
you know, any company currently can challenge such a contract and apply 
to do the work. If the President follows through on the denial of sole 
source contracts, is the Pentagon prepared to hire the extra personnel 
required to review all the contract applications, in order to ensure 
that programs and products are not dramatically delayed?
    3. One of the Air Force's key war-fighting needs has been 
identified as updating America's fleet of aging refueling tankers. Yet 
in the past few weeks we have heard about a delay of up to five years 
to begin replacing the fleet. How can such a delay be justified given 
the fleet's importance to our nation's security?
    4. If the decision were made to invest in dual-use defense research 
as an investment in future innovation and as an economic stimulus in 
what technologies should we invest to get the biggest benefits for both 
national security and for the commercial marketplace?

    [Responses to questions for the record from Mr. Sullivan 
follow:]

        Responses to Questions for the Record From Mr. Sullivan

Chairman Spratt
    1. Could you describe in your view, the systems engineering 
deficiencies in the acquisition workforce?

    The number of military and civilian personnel in DOD's systems 
engineering workforce has not kept up with the growth in the number of 
major defense acquisition programs. According to DOD's Selected 
Acquisition Reports, the number of major defense acquisition programs 
grew from 71 to 89 from fiscal year 2001 to fiscal year 2007. We 
recently reported that over the same time, the number of systems 
engineers in the acquisition workforce declined from 34,899 to 34,710.
    It is difficult to assess the extent of DOD's systems engineering 
deficiencies because DOD lacks critical departmentwide information in 
several areas necessary to assess, manage, and oversee its acquisition 
workforce. Specifically, the Office of the Undersecretary of Defense 
for Acquisition, Technology and Logistics does not have key pieces of 
information regarding its in-house acquisition workforce, such as 
complete data on skill sets, which are needed to accurately identify 
its workforce gaps. In addition, it lacks information on the use and 
skill sets of contractor personnel performing acquisition-related 
functions. To address these issues we have recommended that DOD 
identify and update on an ongoing basis the number and skill sets of 
the total acquisition workforce--including civilian, military, and 
contractor personnel--that the department needs to fulfill its mission.

    2. Would you give us your recommendations as to what should be done 
with respect to process and with respect to personnel to really make 
our acquisition system far more efficient and effective?

    With respect to process, DOD will need a comprehensive approach 
that not only addresses problems in the acquisition process, but the 
requirements and funding processes as well. For example, at the 
strategic level, DOD's processes for identifying warfighter needs, 
allocating resources, and developing and procuring weapon systems--
which together define DOD's overall weapon system investment strategy--
are fragmented and broken. At the program level, the military services 
propose and DOD approves programs without adequate knowledge about 
requirements and the resources needed to execute the program within 
cost, schedule, and performance targets. While DOD has made some 
progress in addressing these challenges, DOD must take the following 
additional actions to improve its overall acquisition outcomes: (1) 
make better decisions about which programs should be pursued or not 
pursued given existing and expected funding; (2) develop an analytical 
approach to better prioritize capability needs; (3) require new 
programs to have manageable development cycles; (4) require programs to 
establish knowledge-based cost and schedule estimates; and (5) 
requiring contractors to perform detailed systems engineering analysis 
before proceeding to system development.
    With respect to personnel, DOD must sure it has an acquisition 
workforce that is the right size and has the right skills to execute 
its major defense acquisition programs. In our March 2009 report on 
DOD's acquisition workforce, we recommended that DOD take four actions 
to address this issue. First, DOD should collect and track data on 
contractor personnel who supplement the acquisition workforce--
including their functions performed, skill sets, and length of 
service--and conduct analyses using these data to inform acquisition 
workforce decisions regarding the appropriate number and mix of 
civilian, military, and contractor personnel the department needs. 
Second, DOD should identify and update on an ongoing basis the number 
and skill sets of the total acquisition workforce--including civilian, 
military, and contractor personnel--that the department needs to 
fulfill its mission. DOD should use this information to better inform 
its resource allocation decisions. Third, DOD should review and revise 
the criteria and guidance for using contractor personnel to clarify 
under what circumstances and the extent to which it is appropriate to 
use contractor personnel to perform acquisition-related functions. 
Fourth, DOD should develop a tracking mechanism to determine whether 
the guidance has been appropriately implemented across the department. 
The tracking mechanism should collect information on the reasons 
contractor personnel are being used, such as whether they were used 
because of civilian staffing limits, civilian hiring time frames, a 
lack of in-house expertise, budgetary provisions, cost, or other 
reasons. DOD concurred with the last three of the recommendations and 
noted that implementing the first will require careful consideration 
before making it a contract requirement.
Representative Doggett
    1. The Congressional Budget Office has issued a report that there 
is an alternative to placing permanent U.S. bases in the Czech Republic 
in Poland for missile defense. If there is any protection to be offered 
at all from the missile defense system, can it be done using existing 
U.S. bases? Has this been an area of study for GAO?

    We have not evaluated the Congressional Budget Office study on 
missile defense alternatives and did not address this issue in our 
recent reports.

    [Whereupon, at 1:12 p.m., the committee was adjourned.]

                                  
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