    [Senate Hearing 111-124]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 111-124

       MILITARY CONSTRUCTION AND VETERANS AFFAIRS, AND RELATED AGENCIES
                      APPROPRIATIONS FOR FISCAL YEAR 2010

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

                                    HEARINGS

                                    before a

                              SUBCOMMITTEE OF THE

                COMMITTEE ON APPROPRIATIONS UNITED STATES SENATE

                         ONE HUNDRED ELEVENTH CONGRESS

                                 FIRST SESSION

                                       on

                               H.R. 3082/S. 1407

      MAKING APPROPRIATIONS FOR MILITARY CONSTRUCTION, THE DEPARTMENT OF
       VETERANS AFFAIRS, AND RELATED AGENCIES FOR THE FISCAL YEAR ENDING
                   SEPTEMBER 30, 2010, AND FOR OTHER PURPOSES

                                   __________

                             Department of Defense
                         Department of Veterans Affairs

                                   __________

             Printed for the use of the Committee on Appropriations

      Available via the World Wide Web: http://www.gpoaccess.gov/congress/
                                   index.html

                                   __________

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                          COMMITTEE ON APPROPRIATIONS

                       DANIEL K. INOUYE, Hawaii, Chairman
    ROBERT C. BYRD, West Virginia        THAD COCHRAN, Mississippi
    PATRICK J. LEAHY, Vermont            CHRISTOPHER S. BOND, Missouri
    TOM HARKIN, Iowa                     MITCH McCONNELL, Kentucky
    BARBARA A. MIKULSKI, Maryland        RICHARD C. SHELBY, Alabama
    HERB KOHL, Wisconsin                 JUDD GREGG, New Hampshire
    PATTY MURRAY, Washington             ROBERT F. BENNETT, Utah
    BYRON L. DORGAN, North Dakota        KAY BAILEY HUTCHISON, Texas
    DIANNE FEINSTEIN, California         SAM BROWNBACK, Kansas
    RICHARD J. DURBIN, Illinois          LAMAR ALEXANDER, Tennessee
    TIM JOHNSON, South Dakota            SUSAN COLLINS, Maine
    MARY L. LANDRIEU, Louisiana          GEORGE V. VOINOVICH, Ohio
    JACK REED, Rhode Island              LISA MURKOWSKI, Alaska
    FRANK R. LAUTENBERG, New Jersey
    BEN NELSON, Nebraska
    MARK PRYOR, Arkansas
    JON TESTER, Montana
    ARLEN SPECTER, Pennsylvania

                        Charles J. Houy, Staff Director
                      Bruce Evans, Minority Staff Director
                                     ------

    Subcommittee on Military Construction and Veterans Affairs, and Related
                                    Agencies

                      TIM JOHNSON, South Dakota, Chairman
    DANIEL K. INOUYE, Hawaii             KAY BAILEY HUTCHISON, Texas
    MARY L. LANDRIEU, Louisiana          SAM BROWNBACK, Kansas
    ROBERT C. BYRD, West Virginia        MITCH McCONNELL, Kentucky
    PATTY MURRAY, Washington             SUSAN COLLINS, Maine
    JACK REED, Rhode Island              LISA MURKOWSKI, Alaska
    BEN NELSON, Nebraska                 THAD COCHRAN, Mississippi
    MARK PRYOR, Arkansas                   (ex officio)

                               Professional Staff

                                Christina Evans
                                 Chad Schulken
                              Andrew Vanlandingham
                           Dennis Balkham (Minority)
                             Ben Hammond (Minority)

                             Administrative Support

                                 Renan Snowden
                             Katie Batte (Minority)

                                C O N T E N T S

                                  ----------

                             Tuesday, May 12, 2009

                                                                       Page

    Department of Defense:
        Department of the Army.......................................     1
        Department of the Air Force..................................    25

                             Tuesday, May 19, 2009

    Department of Defense............................................    47
        Department of the Navy.......................................    85

                            Thursday, June 11, 2009

    Department of Veterans Affairs...................................   107

       MILITARY CONSTRUCTION AND VETERANS AFFAIRS, AND RELATED AGENCIES
                      APPROPRIATIONS FOR FISCAL YEAR 2010

                                  ----------

                             TUESDAY, MAY 12, 2009

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 2:38 p.m., in room SD-124, Dirksen
    Senate Office Building, Hon. Tim Johnson (chairman) presiding.
        Present: Senators Johnson, Pryor, Hutchison, and Murkowski.

                             DEPARTMENT OF DEFENSE

                             Department of the Army

    STATEMENT OF LOUIS JEROME HANSEN, DEPUTY ASSISTANT,
                SECRETARY OF THE ARMY (STRATEGIC
                INFRASTRUCTURE) AND SENIOR OFFICIAL
                PERFORMING DUTIES OF ASSISTANT SECRETARY OF
                THE ARMY (INSTALLATIONS AND ENVIRONMENT)
    ACCOMPANIED BY:
            JOSEPH F. CALCARA, DEPUTY ASSISTANT, SECRETARY OF THE ARMY
                (INSTALLATIONS AND HOUSING)
            BRIGADIER GENERAL JAMES C. BOOZER, SR., DIRECTOR, OPERATIONS,
                OFFICE OF THE ASSISTANT CHIEF OF STAFF FOR INSTALLATION
                MANAGEMENT
            MAJOR GENERAL RAYMOND W. CARPENTER, ACTING DEPUTY DIRECTOR,
                ARMY NATIONAL GUARD
            BRIGADIER GENERAL JULIA A. KRAUS, DEPUTY CHIEF, U.S. ARMY
                RESERVE, DEPUTY COMMANDER FOR MANAGEMENT, RESOURCES, AND
                SUPPORT

                    opening statement of senator tim johnson

        Senator Johnson. Good afternoon. This hearing will come to
    order.
        I welcome everyone to today's hearing. We are here to
    discuss the President's fiscal year 2010 budget request for
    military construction and family housing.
        We will hear from two panels of witnesses representing the
    Army and the Air Force and the Reserve components. The first
    panel will be the Army.
        Our procedure is to have opening statements by the chairman
    and ranking member, followed by an opening statement from our
    witnesses. In addition to the oral statements, all prepared
    statements from our witnesses will be entered into the record.
        I request that our members limit their questions to 6-
    minute rounds.
        Secretary Hansen, Secretary Calcara, General Boozer,
    General Carpenter, and General Kraus, thank you for coming
    today. We look forward to your testimony.
        The Army's fiscal year 2010 budget request for active and
    Reserve military construction and family housing is $5.25
    billion, which is a 41 percent decrease from the fiscal year
    2009 enacted level. The active component is down 24 percent
    from the fiscal year 2009 enacted level, and the Army Guard is
    down 54 percent. Only the Army Reserve is showing an increase.
    I hope that you will address this trend and the reasons for it
    in your opening statement.
        I am also interested in what impact the decision to reduce
    the Army's brigade combat team structure from 48 to 45 BCTs
    will have on the military construction, in particular on the
    stationing of Army forces in Europe and the global posture
    structure overall.
        The Army continues to face a number of budget pressures due
    to wars in Iraq and Afghanistan, the execution of the BRAC
    program, and the ``grow the force'' initiative. It is very
    important that adequate resources are available for the
    military construction projects needed to support these efforts,
    and I look forward to your assessment of the fiscal year 2010
    budget request.
        I now turn to my ranking member, Senator Hutchison, for her
    opening remarks.

                   statement of senator kay bailey hutchison

        Senator Hutchison. Well, thank you. Thank you very much,
    Mr. Chairman.
        I appreciate your holding the hearing, and I thank all of
    the witnesses for coming and sharing the priorities that you
    have with us.
        The fiscal year 2010 budget request contains $7.5 billion
    for implementing BRAC construction. That is a 15 percent
    decrease from the fiscal year 2009 level. I understand that
    there is a request for $1.4 billion for overseas contingency
    operations that will be handled separately. So while we don't
    have all of your justifications yet for that, we will have to
    decide how that goes into this bill.
        But I hope today's discussions with the Army and the Air
    Force address how the Department intends to complete all of the
    BRAC-recommended actions before the statutory deadline of
    September 30, 2011. Since the largest portion of the BRAC
    request goes to the Army, I hope Mr. Calcara will be prepared
    to speak to that.
        Concerning the fiscal year 2010 budget request, I am
    concerned about the Army's investment in infrastructure in the
    United States. The active duty construction request is down 24
    percent from last year's enacted level, and the Guard request
    is down 46 percent. I am pleased to see that the Reserve
    component has requested an increase of 33 percent, but overall,
    the Army's $4 billion request is a 23 percent decrease. So I
    will look forward to Mr. Calcara discussing that.
        When we were considering the stimulus bill several months
    ago, I thought that we should be increasing our military
    construction and moving it up because, of course, we know that
    there is a FYDP, and if we push that up, it is money that we
    were going to spend anyway. We would just be creating jobs more
    quickly for Americans. That amendment did not see the light of
    day.
        Our U.S. installations at places like Fort Hood, Fort
    Bliss, and Fort Bragg offer large maneuver areas, automated
    ranges, modern simulator training, and few restrictions on
    nighttime flying and training. As a result, soldiers trained in
    the United States and deployed overseas are better prepared to
    fight on day one of a conflict than those stationed overseas,
    where our forces must contend with onerous training
    restrictions.
        Today, with our modern strategic deployment capabilities
    and the use of airlift and roll-on/roll-off ships, we can often
    project power from the United States faster than an overseas-
    based unit. The Overseas Basing Commission recommendations that
    our committee drafted and were enacted, in those, the BRAC
    recommendations and the global defense posture that focuses on
    expanded allied roles and partnerships dictate that it is in
    our national interest to relocate more of our soldiers back to
    the United States and fulfill overseas training and contingency
    missions by deploying U.S.-based troops where needed.
        Stationing our troops in the United States provides more
    operational freedom of action, better training, and better
    family support than would be possible otherwise.
        I must also point out that our current military has more
    citizen soldiers than we have seen in a great many years. I am
    very concerned about the overall trend in military construction
    for our Guard and Reserve components.
        I would like to mention again this year the Army's new
    modular force plan, which will reorganize units into brigade
    combat teams. I understand this is about 80 percent complete
    now. The new plan calls for five new BCTs to be stationed at
    Fort Bliss, Fort Stewart, and Fort Carson.
        Now we are told that a European commander wants to keep two
    BCTs in Europe for up to 2 years longer than the Army
    originally planned. I have discussed this with General Casey
    and Secretary Gates, and I hope that Assistant Secretary
    Calcara will tell us how the plans for moving the infantry
    divisions from Europe to the United States are going.
        On the Air Force side, I look forward to the discussion
    with Assistant Secretary Ferguson concerning the construction
    program there as well. The Air Force's active duty construction
    request is 10 percent below last year's enacted level. The
    Guard component is requesting 56 percent less than last year,
    and the Reserve component 26 percent less.
        I hope we don't lose sight of the fact that our airmen must
    have facilities and family support infrastructure from which to
    work and live that is commensurate with their dedication.
        The Secretary of Defense outlined the four pillars of the
    Air Force's budget strategy--people, readiness, infrastructure,
    and modernization. I look forward to Secretary Ferguson
    discussing these priorities and how the Air Force can achieve
    them while taking such a risk in infrastructure.
        I understand the Air Force intends to downsize its total
    infrastructure budget and physical plant by 20 percent, the 20/
    20 by 2020 plan, and I look forward to hearing more about this
    in an era of increased operational tempo.
        Joint basing is another subject I am interested in. As
    everyone knows, the BRAC provides--the former BRAC provided 12
    test joint bases. I hope the Air Force will speak today on how
    it proposes to operate a joint base and handle the real
    property issues on it since, in the present BRAC, the Air Force
    will be the lead in 6 of the 12 joint bases.

                               prepared statement

        I am particularly interested in how the Air Force will
    operate Joint Base San Antonio as it assumes the responsibility
    for Lackland, Randolph, and the Army base Fort Sam Houston.
        So thank you all for coming, and we look forward to your
    testimony.
        [The statement follows:]

               Prepared Statement of Senator Kay Bailey Hutchison

        Thank you, Mr. Chairman. I appreciate you holding this hearing
    today and am pleased to welcome representatives of the Army and the Air
    Force before the Subcommittee as we examine the President's fiscal year
    2010 budget request for military construction, family housing, and Base
    Realignment and Closure actions for the Department of the Army and the
    Department of the Air Force.
        The panel representing the Department of Defense will appear at our
    next hearing, and we'll discuss Department-Wide MILCON issues at that
    time. But for now I would just like to point out that the overall
    Department of Defense's military construction program, including
    military family housing and BRAC, is only $22.9 billion, an 18 percent
    decrease from the fiscal year 2009 enacted level. The fiscal year 2010
    budget request only contains $7.5 billion for implementing BRAC
    construction actions, a 15 percent decrease from the fiscal year 2009
    enacted level. Plus, I understand there is a request for $1.4 billion
    for overseas contingency operations that will be handled separately. We
    have not received all of the justification material yet and so the
    Committee will decide exactly how we will include this in our bill. I
    hope today's discussions with the Army and Air Force addresses how the
    Department intends to complete all of the BRAC recommended actions
    before the statutory deadline of September 30, 2011. Since the largest
    portion of the BRAC request will go to the Army, I hope Mr. Calcara
    will speak to it today.
        Concerning the fiscal year 2010 budget request before us today, for
    the base budget, I am concerned about the Army's investment in
    infrastructure in the United States. The active duty construction
    request is down 24 percent from last year's enacted level and the Guard
    request is down 46 percent. I am pleased to see that the Reserve
    component has requested an increase of 33 percent. But overall, the
    Army's $4 billion request is a 23 percent decrease. I look forward to
    Mr. Calcara's comments.
        As I said when we were considering the stimulus bill several months
    ago, we should be increasing our construction in the United States, not
    decreasing it. More military construction in the United States will
    enhance the quality of life for our soldiers, sailors and airmen, and
    it will provide much needed jobs for Americans. Our U.S. installations
    at places like Fort Hood, Fort Bliss and Fort Bragg offer large
    maneuver areas, automated ranges, modern simulator training and few
    restrictions on night time flying and training. As a result, soldiers
    trained in the United States and deployed overseas are better prepared
    to fight on Day One of a conflict than those stationed overseas where
    our forces must contend with onerous training restrictions. Today, with
    our modern strategic deployment capabilities and with the use of
    airlift and roll-on, roll-off ships, we can often project power from
    the United States faster than from overseas based units.
        For these reasons, and in order to provide military families with
    greater stability, the Pentagon made the decision several years ago
    that it is better to bring our troops home and station them in the
    United States whenever possible. In order to do that we must be
    committed to providing them with the quality infrastructure these brave
    men and women deserve.
        The Overseas Basing Commission recommendations, the BRAC
    recommendations and a Global Defense Posture that focuses on expanded
    Allied roles and partnerships dictate that it is in our national
    interest to relocate more of our soldiers back to the United States and
    fulfill overseas training and contingency missions by deploying U.S.
    based troops where needed. This is an admirable plan--one our service
    members, their families and our citizens are counting on. Stationing
    our troops in the United States will provide more operational freedom
    of action, better training, and better family support than would be
    possible otherwise. It will produce a stronger, more deployable, and
    more efficient Department of Defense.
        I must also point out that our current military has more citizen-
    soldiers than we have seen in a great many years. I am very concerned
    about the overall trend in military construction for our Guard and
    Reserve components. These brave citizen-soldiers are making huge
    contributions to the Global War on Terror and I am keenly interested in
    seeing Guard and Reserve MILCON funding improve. Congress has always
    provided excellent support to the Guard and Reserve, but that should
    not provide an excuse for DOD to shortchange them in the budget
    process.
        I would like to mention again this year the Army's new Modular
    Force Plan which will reorganize units into Brigade Combat Teams
    (BCTs). I understand this transformation is nearly 80 percent complete
    now. The new plan calls for 5 new BCTs to be stationed at Fort Bliss,
    Texas; Fort Stewart, Georgia; and Fort Carson, Colorado. Now I
    understand that the European Commander (EUCOM) wants to keep 2 BCTs in
    Europe for up to 2 years longer than the Army originally planned. I
    have discussed this issue with General Casey and Secretary Gates and I
    hope Assistant Secretary Calcara will tell us how the plans for moving
    the infantry divisions from Europe to the United States are going.
        My State of Texas is the home for a large part of the Army. I am
    very pleased with the operational and infrastructure improvements to
    Fort Bliss, Fort Hood, and Fort Sam Houston, three very important
    installations in our national military preparedness. I am encouraged by
    the Army's emphasis on family support facilities at these and other
    bases around the country. I have said before, we have to take care of
    the soldiers and their families in order to retain these highly trained
    men and women.
        I look forward to the discussion with Assistant Secretary Ferguson
    concerning the Department of the Air Force's construction program as
    well. The Air Force's active duty construction request is 10 percent
    below last year's enacted level. The Guard component is requesting 56
    percent less than last year and the Reserve component is requesting 26
    percent less. I know the Air Force has historically been willing to
    risk infrastructure in order to fund modernization, but I hope we don't
    lose sight of the fact that our airmen must have the facilities and
    family support infrastructure from which to work and live that is
    commensurate with their dedication to our country.
        The Secretary of Defense outlined the four pillars of the Air
    Force's budget strategy as People, Readiness, Infrastructure and
    Modernization, in that order. I look forward to Assistant Secretary
    Ferguson discussing these priorities and how the Air Force can achieve
    them while taking such a risk in infrastructure. I understand the Air
    Force intends to downsize its total infrastructure budget and physical
    plant size by 20 percent, the ``20/20 by 2020'' plan, and I look
    forward to hearing more about how this will work in an era of increased
    operational tempo.
        Again, I am proud to say my home state of Texas has always been
    home to more Air Force personnel than any other State, just as we have
    always been the largest Army state. Starting with Air Force basic
    training at Lackland AFB, technical and NATO pilot training at Sheppard
    AFB, NATO undergraduate pilot training at Laughlin AFB, and instructor
    pilot training at Randolph AFB; and continuing with operational bases
    at Dyess and Goodfellow AFBs; there is quite a lot of infrastructure
    needs in just those bases alone. In addition we are currently prepared
    in San Antonio with the initial secure infrastructure equipment should
    the Air Force announce the home of the new 24th Air Force cyber mission
    will be there.
        Joint Basing is another subject I am very interested in. As
    everyone knows I have been a very strong advocate of fully funding the
    BRAC process, and I know that the 12 test joint bases are a result of
    BRAC recommendations. I hope the Air Force will speak today on how it
    proposes to operate a joint base and handle the real property issues on
    it, since the Air Force will be the lead at 6 of the 12 joint bases. I
    am particularly interested in how the Air Force will operate Joint Base
    San Antonio as it assumes the responsibility for Lackland, Randolph and
    Fort Sam Houston.
        Mr. Chairman, again I want to express my appreciation to you for
    holding this hearing. We have a full slate of issues today and I look
    forward to discussing them as we begin this new appropriations cycle.

        Senator Johnson. Thank you, Senator Hutchison.
        General Boozer, proceed.
        General Boozer. Sir, I am more than prepared to go ahead
    and start with my opening comments.
        Senator Johnson. Secretary Hansen, please proceed.
        General Boozer. Okay. Thank you, sir.

                        STATEMENT OF LOUIS JEROME HANSEN

        Mr. Hansen. Thank you, Mr. Chairman.
        Mr. Chairman, Senator Hutchison, distinguished members of
    the subcommittee, I am Jerry Hansen, the designated senior
    official currently performing the duties of the Assistant
    Secretary of the Army for Installations and Environment. And it
    is my pleasure to appear before you today on behalf of the
    Secretary and the Army to discuss the Army's military
    construction, family housing, base realignment and closure
    budget request for fiscal year 2010.

      QUALITY OF LIFE FOR SOLDIERS AND THEIR FAMILIES AND THE ARMY BUDGET

        First, we thank you all for your continued support to our
    soldiers and families serving our Nation around the world. As
    you know, the Army's strength is its soldiers and the families
    and Army civilians who support them.
        We try, with your support, to ensure the quality of life we
    provide our soldiers and their families is on par with the
    quality of their service. Our budget requests represent minimum
    required levels which, if approved, will enable soldiers and
    their families to receive the facilities, care, and support
    they need to accomplish the monumental tasks we expect of them
    while preserving the all-volunteer force.
        Our Army continues its largest organizational change since
    World War II as we transform to brigade-centric modular force,
    grow our end strength, and restation one-third of the force
    through base realignment and closure and global defense posture
    realignment.
        The Army's fiscal year 2010 military construction and
    overseas contingency operations budget requests include $10.4
    billion for military construction, Army family housing, and
    BRAC, a combined amount.
        As stewards of our Nation's resources, the Army requires
    each military construction project to attain a LEED silver
    rating--LEED being leadership in energy and environment design
    rating of at least silver to reduce total lifecycle cost and
    improve the environment. The Army plans to spend a significant
    sum over the next 5 years to invest in green buildings, to use
    less water, and to achieve 30 percent more energy efficiency in
    the process.
        Fiscal year 2010 is our final year of BRAC construction.
    Full implementation of the BRAC 2005 recommendations will
    enable the Army to become a more capable expeditionary force as
    a member of the joint team, while enhancing the well being of
    our soldiers, civilians, and family members living and working
    and training in our installations.
        The Army's remaining BRAC 2005 construction projects are
    scheduled for award by no later than the first quarter of
    fiscal year 2010. This will enable the major movement of units
    and personnel planned for fiscal years 2010 and 2011, with
    expected completion by the mandated BRAC 2005 deadline.
        The Army remains committed to achieving BRAC 2005 law and
    is on track to do so. With full and timely funding, we
    anticipate no impacts to movement schedules, training, or
    readiness.
        However, we have moved into a period where our construction
    timeline flexibility is extremely limited. Cuts and delays in
    BRAC funding have caused significant difficulties as we have
    implemented BRAC projects in the past, and any significant
    delay in fiscal year 2010 MILCON funding would significantly
    challenge our ability to meet the September 2011 deadline.
        Finally, Mr. Chairman, on April 6, 2009, the Secretary of
    Defense issued guidance to stop the growth of Army BCTs,
    brigade combat teams, at 45 versus 48, as you have mentioned.
    We understand this decision has caused significant concern, and
    we recognize the impact to communities that have made proactive
    investments to accept new units and families.
        At this point, no decisions have been made as to which BCTs
    will be affected. But this decision and its associated impacts
    are being worked with urgency through an expedited Quadrennial
    Defense Review process, and we will work the details very
    closely with Congress as soon as the impacts to the military
    construction projects are known.
        I am accompanied today by Mr. Joe Calcara, the Deputy
    Assistant Secretary of the Army for Installations and Housing;
    Brigadier General Jim Boozer, Director of Operations,
    representing the Assistant Chief of Staff for Installation
    Management and the Installation Management Command; Major
    General Ray Carpenter, the Deputy Director of the Army National
    Guard; and Brigadier General Julia Kraus, Deputy Commander and
    Deputy Chief of the Army Reserve for Management, Resources, and
    Support.

                               PREPARED STATEMENT

        We thank you again for the opportunity to appear before you
    today and for your continued support for America's Army, and we
    look forward to hearing your questions following brief remarks
    by the other panel members.
        I will be followed by General Boozer, sir.
        [The statement follows:]

                   Prepared Statement of Louis Jerome Hansen

                                  introduction
        Mr. Chairman and members of the Subcommittee, it is a pleasure to
    appear before you to discuss the Army's Military Construction, Family
    Housing, and Base Realignment and Closure budget requests for fiscal
    year 2010. Our requests are crucial to the success of the Army's
    strategic imperatives to Sustain, Prepare, Reset, and Transform the
    force. We appreciate the opportunity to report on them and respond to
    your questions. We would like to start by thanking you for your support
    to our Soldiers and their Families serving our Nation around the world.
    They are and will continue to be the centerpiece of our Army, and their
    ability to perform their missions successfully depends upon the staunch
    support of the Congress.
        The Army's strength is its Soldiers--and the Families and Army
    Civilians who support them. With your continuing support, we will
    assure that the quality of life we afford our Soldiers and Families is
    commensurate with the quality of their service. Our budget requests
    have been vetted to ensure they reflect the minimum requirement to
    maintain the All-Volunteer Force and ensure Soldiers and their Families
    receive the facilities, care, and support they need to accomplish their
    missions.
                                    overview
             rebalancing the force in an era of persistent conflict
        Installations are the home of combat power and a critical component
    of the Nation's force generating and force projecting capability. Your
    Army is working hard to deliver cost-effective, safe, and
    environmentally sound capabilities and capacities to support the
    national defense mission.
        Our Nation has been at war for over 7 years. Our Army continues to
    lead the war efforts in Afghanistan and Iraq, as well as in defense of
    the homeland and in support of civil authorities in responding to
    domestic emergencies. Over time, these operations have expanded in
    scope and duration, stressing our All-Volunteer Force and straining our
    ability to maintain strategic depth. During this period, the Congress
    has responded to the Army's requests for resources, and that commitment
    to our Soldiers, their Families, and Civilians is deeply appreciated.
    Continued timely and predictable funding is critical as the Army
    continues to fight the wars in Iraq and Afghanistan, meet other
    operational demands, sustain our All-Volunteer Force, and prepare for
    future threats to the Nation.
        Our Army continues its largest organizational change since World
    War II, as it transforms to a Brigade centric modular force and grows
    the force to achieve an the Active Component of 547,400, a National
    Guard of 358,200, and an Army Reserve of 206,000 men and women. At the
    same time, we are restationing about one-third of the force through a
    combination of Base Closure and Realignment and Global Defense Posture
    Realignment actions. All of these initiatives have corresponding
    military construction requirements.
        The details of the Army's fiscal year 2010 request follow:

    ----------------------------------------------------------------------------------------------------------------
                                                                                 Authorization of
              Military Construction Appropriation              Authorization      Appropriations     Appropriation
                                                                  Request            Request            Request
    ----------------------------------------------------------------------------------------------------------------
    Military Construction Army (MCA).......................     $3,116,350,000     $3,660,779,000     $3,660,779,000
    Military Construction Army National Guard (MCNG).......            ( \1\ )        426,491,000        426,491,000
    Military Construction Army Reserve (MCAR)..............            ( \1\ )        374,862,000        374,862,000
    Army Family Housing Construction (AFHC)................        241,236,000        273,236,000        273,236,000
    Army Family Housing Operations (AFHO)..................        523,418,000        523,418,000        523,418,000
    BRAC 95 (BCA)..........................................         98,723,000         98,723,000         98,723,000
    BRAC 2005 (BCA)........................................      4,081,037,000      4,081,037,000      4,081,037,000
    Overseas Contingency Operations........................        923,900,000        923,900,000        923,900,000
                                                            --------------------------------------------------------
          TOTAL............................................      8,984,664,000     10,362,446,000     10,362,446,000
    ----------------------------------------------------------------------------------------------------------------
    \1\ Not available.

        The Army's fiscal year 2010 Military Construction and Overseas
    Contingency Operations budget requests include $10.4 billion for
    Military Construction, Army Family Housing, and BRAC appropriations and
    associated new authorizations.
                            army modular force (amf)
        The Army continues to reorganize the Active and Reserve components
    into standardized modular organizations, increasing the number of
    Brigade Combat Teams (BCTs) and support Brigades to meet operational
    requirements and create a more deployable, versatile and tailorable
    force. The Army strategy is to use existing facility assets where
    feasible and program projects when not. The fiscal year 2010 request of
    $589 million will provide permanent facilities construction to support
    conversion of existing BCTs to new modern BCTs at Forts Wainwright,
    Carson, Lewis, and Bragg.
                              grow the army (gta)
        On April 6, 2009, the Secretary of Defense issued guidance to stop
    growth of Army BCTs at 45 versus 48. We understand this decision has
    caused some understandable concern in places that expected to receive
    the three additional BCTs, and we recognize the impact this decision
    could have on communities that have made significant investments to
    accept new units. We are working the details with urgency, but at this
    point, no final decisions have been made as to which BCTs will be
    affected. The Army is conducting a thorough analysis with the goal of
    balancing our force mix for the current fight while setting conditions
    to meet the future strategic environment. We are leveraging the ongoing
    Quadrennial Defense Review process and our force mix analysis to
    determine the proper balance. We will keep the Congress advised of our
    progress.
        In the meantime, it is crucial that the Army maintain currently
    planned fiscal year 2009 construction projects and fiscal year 2010
    construction, pending the analysis and decision by Army Senior Leaders,
    and recognizing that the vast majority of the facilities at Army
    installations are legacy systems still requiring modernization or
    replacement. Construction projects play an essential role in supporting
    our end strength growth to 547,400 as well as transforming our
    installations to support organizational changes. The fiscal year 2010
    requirement for BCTs is $404 million. Other Grow the Army facility
    support requirements, such as projects to support the combat support/
    combat service support units, training base, quality of life, and
    support to the Army National Guard and Army Reserve growth, in fiscal
    year 2010 total $1.07 billion.
                   global defense posture realignment (gdpr)
        The Global Defense Posture Realignment initiative ensures Army
    forces are properly positioned worldwide to support out National
    Military Strategy and to support the mission in Afghanistan. GDPR will
    relocate over 41,000 Soldiers and their Families from Europe and Korea
    to the United States by 2013. Over time, it will build a BCT Complex
    and support facilities at White Sands Missile Range, New Mexico, and
    operational, training, and support facilities at Fort Benning, Fort
    Bliss, Fort Riley, Schofield Barracks, and Camp Humphreys. As part of
    the fiscal year 2010 program, the Army requires $252 million to
    construct facilities in Bagram, Afghanistan and a warehouse in Kuwait.
    The total GDPR request is $524 million.
                      base realignment and closure (brac)
        The Army is requesting $4,081,037,000 for BRAC 2005, which is
    critical to the success of the Army's BRAC 2005 initiatives, and
    $98,723,000 for legacy BRAC to sustain vital, ongoing programs. BRAC
    2005 is carefully integrated with the Defense and Army programs of Grow
    the Army, GDPR, and Army Modular Force. Collectively, these initiatives
    allow the Army to focus its resources on installations that provide the
    best military value, supporting improved responsiveness and readiness
    of units. The elimination of Cold War-era infrastructure and the
    implementation of modern technology to consolidate activities allow the
    Army to better focus on its core warfighting mission. These initiatives
    are a massive undertaking, requiring the synchronization of base
    closures, realignments, military construction and renovation, unit
    activations and deactivations, and the flow of forces to and from
    current global commitments. Results will yield substantial savings over
    time, while positioning forces, logistics activities, and power
    projection platforms to respond efficiently and effectively to the
    needs of the Nation.
        Under BRAC 2005, the Army will close 12 Active Component
    installations, 1 Army Reserve installation, 387 National Guard
    Readiness and Army Reserve Centers, and 8 leased facilities. BRAC 2005
    realigns 53 installations and/or functions and establishes Training
    Centers of Excellence, Joint Bases, a Human Resources Center of
    Excellence, and Joint Technical and Research facilities. To accommodate
    the units relocating from the closing National Guard Readiness and Army
    Reserve Centers, BRAC 2005 creates 125 multi-component Armed Forces
    Reserve Centers and realigns U.S. Army Reserve command and control
    structure.
        The over 1,100 discrete actions required for the Army to
    successfully implement BRAC 2005 are far more extensive than all four
    previous BRAC rounds combined and are expected to create significant
    recurring annual savings. BRAC 2005 will enable the Army to become a
    more capable expeditionary force as a member of the Joint team while
    enhancing the well-being of our Soldiers, Civilians, and Family members
    living, working, and training on our installations.
                       brac 2005 implementation strategy
        All of our BRAC 2005 construction projects are planned to be
    awarded by the first quarter of fiscal year 2010. This will enable the
    major movement of units and personnel in fiscal years 2010 and 2011,
    with expected completion by the mandated BRAC 2005 deadline. The Army
    remains committed to achieving BRAC 2005 Law and is on track do so.
    With full and timely funding, there will be no impacts to movement
    schedules, training, or readiness. Fiscal year 2010 is our fifth and
    final year of BRAC construction. We have moved into a period where our
    construction timeline flexibility is exhausted. We cannot overstate the
    difficulties that cuts or delays in BRAC funding pose to the Army as we
    implement BRAC construction projects. If the Army program is not fully
    funded by October 2009, we will be significantly challenged to execute
    BRAC as intended.
                       brac 2005 fiscal year 2010 budget
        The Army's fiscal year 2010 budget request will continue to fund
    both BRAC and GDPR actions necessary to comply with BRAC 2005 Law. The
    Army plans to award and begin construction of 80 military construction
    projects, plus planning and design for fiscal year 2010 projects. This
    is estimated to cost $2.5 billion and includes five additional GDPR
    projects, 37 Army National Guard and Army Reserve projects, and an
    additional 38 Active Component projects.
        The BRAC budget request will also fund furnishings for BRAC
    projects awarded in fiscal year 2006, 2007, 2008, and 2009 as the
    buildings reach completion and occupancy. The request also funds
    movement of personnel, ammunition, and equipment associated with BRAC
    Commission Recommendations.
        In fiscal year 2010, the Army will continue environmental closure
    and cleanup actions at BRAC properties. These activities will continue
    efforts previously ongoing under the Army Installation restoration
    program and will ultimately support future property transfer actions.
    The budget request for environmental programs is $147.7 million, which
    includes munitions and explosives of concern and hazardous and toxic
    waste restoration activities.
                                   prior brac
        Since Congress established the first Defense Base Closure and
    Realignment Commission in 1988 and then authorized the subsequent
    rounds in 1990, DOD has successfully executed four rounds of base
    closures to reduce and align the military's infrastructure to the
    current security environment and force structure. As a result, the Army
    estimates approximately $12.6 billion in savings through 2008--nearly
    $1 billion in recurring, annual savings from prior BRAC rounds.
        The Army is requesting $98.7 million in fiscal year 2010 for prior
    BRAC rounds ($5.3 million to fund caretaking operations and program
    management of remaining properties and $93.4 million for environmental
    restoration) to address environmental restoration efforts at 147 sites
    at 14 prior BRAC installations. To date, the Army has spent $2.95
    billion on the BRAC environmental program for installations impacted by
    the previous four BRAC rounds. We disposed of 181,345 acres (86 percent
    of the total acreage disposal requirement of 209,834 acres), with
    28,489 acres remaining.
             fiscal year 2010 overseas contingency operations (oco)
        This request supports the National Strategy for OCO. The request
    funds projects critical to the support of deployed war fighters,
    operational requirements for airfields, operational facilities,
    supplies, troop housing and infrastructure to ensure safe and efficient
    military operations in Afghanistan. A total of 74 projects that will
    fulfill the Department's immediate mission needs and urgent
    infrastructure requirements in theater are planned for a total of $828
    million.
                                army initiatives
        To improve the Army's facilities posture, we have undertaken
    specific initiatives or budget strategies to focus our resources on the
    most important areas--Range and Training Lands, Barracks, Family
    Housing, and Warrior in Transition Complexes.
        Range and Training Lands.--Ranges and training lands enable our
    Army to train and develop its full capabilities to ensure our Soldiers
    are fully prepared for the challenges they will face. Our Army Range
    and Training Land Strategy supports Army transformation and the Army's
    Sustainable Range Program. The Strategy identifies priorities for
    installations requiring resources to modernize ranges, mitigate
    encroachment, and acquire training land. The fiscal year 2010 request
    supports 25 projects, $178 million for Active Component training
    ranges.
        Barracks.--Providing safe, quality housing is a crucial commitment
    the Army has made to all of our Soldiers. We owe single Soldiers the
    same quality of housing that we provide married Soldiers. Modern
    barracks are shown to significantly increase morale, which positively
    impacts readiness and quality of life. The importance of providing
    quality housing for single Soldiers is paramount to success on the
    battlefield. The Army is in the 17th year of modernizing barracks to
    provide about 148,000 single enlisted permanent party Soldiers with
    quality living environments. Because of increased authorized strength,
    the requirements for barracks have increased in several locations, and
    for fiscal year 2010, a total of $711.5 million will be invested in
    3,592 new permanent party barracks spaces that will meet DOD's ``1+1''
    or equivalent standard. These units provide two-Soldier suites,
    increased personal privacy, larger rooms with walk-in closets, new
    furnishings, adequate parking, landscaping, and unit administrative
    offices separated from the barracks. We are on track to fully fund this
    program by fiscal year 2013. The last inadequate permanent party spaces
    will be removed after the new barracks are occupied in fiscal year
    2015. For trainee barracks, the Army is requesting $535.9 million to
    build or upgrade 2,278 new spaces to standard. We are requesting funds
    to keep this program on schedule so we can eliminate all inadequate
    trainee barracks spaces, finishing funding with fiscal year 2015 and
    occupying the barracks in fiscal year 2017.
        Family Housing.--This year's budget continues our significant
    investment in our Soldiers and their Families by supporting our goal to
    continue funding to eliminate remaining inadequate housing and sustain
    housing at enduring overseas installations. The U.S. inadequate
    inventory has been funded to be eliminated by the end of fiscal year
    2007 through privatization, conventional military construction,
    demolition, divestiture of uneconomical or excess units, and reliance
    on off-post housing. For Families living off post, the budget for
    military personnel maintains the Basic Allowance for Housing that
    eliminates out-of-pocket expenses.
        Warrior In Transition.--The Army $1 billion budget for its Warrior
    in Transition (WT) Program funds military construction to facilitate
    command and control, primary care, and case management to establish a
    healing environment that promotes the timely return to the force or
    transition to civilian life. The fiscal year 2009 Overseas Contingency
    Operations requests $425 million in funding. The fiscal year 2009
    American Recovery and Reinvestment Act (ARRA) provided $100 million for
    two complexes and the fiscal year 2010 budget request will provide 13
    complexes for $503.5 million.
        Overseas Construction.--Included in this budget request is $437
    million in support of high-priority overseas projects. In Germany, we
    are requesting funds for barracks at Ansbach and Kleber Kaserne. In
    Korea, we are requesting funds to further our relocation of forces on
    the peninsula. This action is consistent with the Land Partnership Plan
    agreements entered into by the United States and Republic of Korea
    Ministry of Defense. Two vehicle maintenance shops and a Fire Station
    are included. Our request for funds in Italy continues construction for
    a BCT. We are also including Training Aids Facilities in Japan at Camp
    Zama and Okinawa. Additionally, approximately $678 million of our
    fiscal year 2009 Overseas Contingency Operations request will support
    military construction projects in Afghanistan for troop housing,
    airfield and operational facilities, infrastructure and utility
    systems, fuel handling and storage, and roads.
        Other Support Programs.--The fiscal year 2010 budget includes $153
    million for planning and design. As executive agent, the Army also
    provides oversight of design and construction for projects funded by
    host nations. The fiscal year 2010 budget requests $25 million for
    oversight of host nation funded construction for all Services in Japan,
    Korea, and Europe.
        Incremental Funding.--We are requesting the third increment of
    funding, $55.4 million, for the previously approved, incrementally
    funded, SOUTHCOM Headquarters at Miami-Doral, Florida. In addition, we
    are requesting the fourth and final increment of funding, $102 million,
    for the Brigade Complex at Fort Lewis, Washington. The budget also
    includes $23.5 million for a Brigade Complex-Operations support
    facility and $22.5 million for a Brigade Complex-Barracks/Community,
    both projects at Dal Molin, Italy. Finally, we are requesting the
    second increments for the Brigade Complexes at Fort Carson $60 million
    and Fort Stewart $80 million.
        The budget request also contains $23 million for unspecified minor
    construction to address unforeseen critical needs or emergent mission
    requirements that cannot wait for the normal programming cycle.
                   military construction, army national guard
        The Army National Guard's fiscal year 2010 Military Construction
    request for $426,491,000 (for appropriation and authorization of
    appropriations) is focused on Transformation/Army Modular Force,
    Mission and Training, Grow the Army, planning and design, and
    unspecified minor military construction
        Transformation.--In fiscal year 2010, the Army National Guard is
    requesting $158.2 million for six projects in support of our modern
    missions. There are three aviation projects to provide facilities for
    modernized aircraft and changed unit structure. Also in support of the
    Modular Force initiative, we are asking for two Readiness Centers and
    one maintenance facility.
        Mission and Training.--Our budget request also includes $154
    million for 10 projects, which will support the preparation of our
    forces. These funds will provide the facilities our Soldiers require as
    they train, mobilize, and deploy. Included are two training facilities,
    six Range projects, and two Readiness/Armed Forces Reserve Centers.
        Grow the Army.--Under the category of Grow the Army, we are
    requesting $80 million for five Readiness Centers to improve the Army
    National Guard's ability to deal with the continued high levels of
    deployment.
        Other Support Programs.--The fiscal year 2010 Army National Guard
    budget also contains $24 million for planning and design of future
    projects and $10.3 million for unspecified minor military construction
    to address unforeseen critical needs or emergent mission requirements
    that cannot wait for the normal programming cycle.
                      military construction, army reserve
        The Army Reserve fiscal year 2010 Military Construction request for
    $374,862,000 (for appropriation and authorization of appropriations) is
    for Preparation, Transformation, other support, and unspecified
    programs.
        Mission and Training Projects. In fiscal year 2010, the Army
    Reserve will invest $45 million to prepare our Soldiers for success in
    current operations. Included in the mission and training projects is an
    Armed Forces Reserve Center and a Combined Arms Collective Training
    facility, which will be available for joint use by all Army components
    and military services.
        Grow The Army Projects.--The Army Reserve transformation from a
    strategic reserve to an operational force includes converting 16,000
    authorizations from generating force structure to operational force
    structure from fiscal years 2009 through 2013. In fiscal year 2010, the
    Army Reserve will construct 19 Reserve Operations Complexes in eleven
    states and the Commonwealth of Puerto Rico, with an investment of $304
    million to support the transformation. These projects will provide
    operations, maintenance, and storage facilities for over 6,000 Soldiers
    in 56 newly activating combat support and combat service support units
    and detachments.
        Other Unspecified Programs.--The fiscal year 2010 Army Reserve
    budget request includes $22.3 million for planning and design for
    future year projects and $3.6 million for unspecified minor military
    construction to address unforeseen critical needs or emergent mission
    requirements that cannot wait for the normal programming cycle.
                    army family housing construction (afhc)
        The Army's fiscal year 2010 Family housing construction request is
    $273,236,000 for authorization, authorization of appropriation, and
    appropriation.
        The fiscal year 2010 new construction program uses traditional
    military construction to provide 38 new houses for Families with an $18
    million replacement project at Baumholder, Germany. The Army also
    requests $32 million to fund the final increment for three projects at
    Wiesbaden, Germany, to finish replacement housing that was fully
    authorized in fiscal year 2009. These projects will result in
    completing 250 homes for Army Families.
        The Construction Improvements Program is an integral part of our
    Family housing revitalization and privatization programs. In fiscal
    year 2010, we are requesting $161.4 million to increase scope of these
    existing privatization projects: 334 homes at Fort Knox, Kentucky; 176
    homes at Fort Wainwright, Alaska; 144 homes at Fort Polk, Louisiana; 90
    homes at Fort Irwin, California; and, 78 homes at Fort Sill, Oklahoma.
    The Improvements program also provides $11.9 million for equity
    contributions for 11 homes at Fort Bragg, North Carolina, and 8 homes
    at Fort Eustis, Virginia, that were required due to Base Realignment
    and Closure. Also, the fiscal year 2010 request supports $46 million
    for direct equity investment in support of the privatization of 1,242
    homes at Fort Richardson, Alaska, as part of the Joint Basing effort
    with Elmendorf Air Force Base.
        In fiscal year 2010, we are also requesting $3.9 million for
    planning and design for final design of fiscal year 2010 and 2011
    Family housing construction projects, as well as for housing studies
    and updating standards and criteria.
        Privatization.--Residential Communities Initiative (RCI), the
    Army's housing privatization program, continues to provide quality
    housing that Soldiers and their Families can proudly call home. The
    Army is leveraging appropriated funds and existing housing by engaging
    in 50-year partnerships with nationally recognized private real estate
    development, property management, and home builder firms to construct,
    renovate, repair, maintain, and operate housing communities.
        The RCI program will include 45 locations, with a projected end
    state of almost 88,000 homes--98 percent of the on-post Family housing
    inventory in the United States. At the end of fiscal year 2009, the
    Army will have privatized 44 locations, with an end state of over
    85,000 homes. Initial construction and renovation at these 44
    installations is estimated at $12 billion over a three to ten year
    development period, of which the Army will contribute about $2.0
    billion. Although most projects are in the early phases of their
    initial development, since 1999 through March 2009, our partners have
    constructed 18,769 new homes, and renovated 13,697 homes.
                     army family housing operations (afho)
        The Army's fiscal year 2010 Family Housing Operations request is
    $523,418,000 (for appropriation and authorization of appropriations).
    This account provides for annual operations, municipal-type services,
    furnishings, maintenance and repair, utilities, leased Family housing,
    demolition of surplus or uneconomical housing, and funds supporting
    management of the Military Housing Privatization Initiative. This
    request will support almost 17,000 Army-owned homes, both at home and
    in foreign areas. More than 9,000 residences will be leased and more
    than 80,000 privatized homes will be managed.
        Operations ($88.4 million).--The operations account includes four
    sub-accounts: management, services, furnishings, and a small
    miscellaneous account. All operations sub-accounts are considered
    ``must pay accounts'' based on actual bills that must be paid to manage
    and operate Family housing.
        Utilities ($81.6 million).--The utilities account includes the
    costs of delivering heat, air conditioning, electricity, water, and
    wastewater support for Family housing units. The overall size of the
    utilities account is decreasing with the reduction in supported
    inventory.
        Maintenance and Repair ($115.9 million). The maintenance and repair
    account supports annual recurring projects to maintain and revitalize
    Family housing real property assets. Since most Family housing
    operational expenses are fixed, maintenance and repair is the account
    most affected by budget changes. Funding reductions result in slippage
    of maintenance projects that adversely impact Soldier and Family
    quality of life.
        Leasing ($205.7 million).--The leasing program provides another way
    of adequately housing our military Families. The fiscal year 2010
    budget includes funding for 9,036 housing units, including project
    requirements for 1,080 existing Section 2835 (``build-to-lease''--
    formerly known as 801 leases), 1,828 temporary domestic leases in the
    U.S., and 6,128 leased Family housing units in foreign areas.
        Privatization ($31.8 million).--The privatization account provides
    operating funds for implementation and oversight of privatized military
    Family housing in the RCI program. RCI costs include selection of
    private sector partners, preparation of environmental studies and real
    estate surveys, and contracting of consultants. These funds support the
    preparation and execution of partnership agreements and development
    plans, and oversight to monitor compliance and performance of the
    privatized housing portfolio.
                         homeowners assistance program
        The Army is the DOD Executive Agent for the Homeowners Assistance
    Program (HAP); that is, the Army requests in its budget the funds
    needed by the DOD-wide program supporting all of the Services. In
    normal times, this program assists eligible military and civilian
    employee homeowners by providing some financial relief when they are
    not able to sell their homes under reasonable terms and conditions
    because of DOD announced closures, realignments, or reduction in
    operations when this action adversely affects the real estate market.
        The 2009 ARRA expanded HAP to provide benefits to: (1) seriously
    wounded Warriors in Transition (to include Coast Guard and DOD civilian
    employees) who relocate for medical treatment or medical retirement,
    from September 11, 2001 (No expiration date); (2) surviving spouses of
    fallen warriors and DOD and Coast Guard civilians killed while deployed
    in support of the Armed Forces, from September 11, 2001 (No expiration
    date); (3) BRAC 2005 impacted personnel assigned to relocating or
    closing organizations or installations, without proof that the DOD
    announcement caused markets to decline (Expires 2012, or an earlier
    date designated by the Secretary); (4) Service members with permanent
    change of station orders required to relocate during the home mortgage
    crisis (Expires 2012, or an earlier date designated by the Secretary).
    The ARRA expanded HAP is funded at $555 million.
        Excluding the ARRA expanded HAP, the fiscal year 2010 budget
    requests authorization of appropriations in the amount of $28.71
    million. Total program estimate for fiscal year 2010, excluding ARRA
    expansion, is $41.98M and will be funded with requested budget
    authority, revenue from sales of acquired properties, and prior year
    unobligated balances.
                           operation and maintenance
        The Army's fiscal year 2010 Operation and Maintenance budget
    includes $2.85 billion in funding for Sustainment, Restoration, and
    Modernization (S/RM) and $8.61 billion in funding for Base Operations
    Support (BOS). The S/RM and BOS accounts are inextricably linked with
    our military construction programs to successfully support our
    installations. The Army has centralized the management of its
    installations assets under the Installation Management Command to best
    utilize this funding. Centralized barracks management, also known as
    the First Sergeant's Barracks Initiative (FSBI), will standardize
    barracks management Army-wide, enhance single Soldier quality of life,
    reduce overall un-programmed single Soldier Basic Allowance for
    Housing, maximize barracks utilization, and reallocate Soldier time
    away from non-war fighting tasks. The FSBI provides top-quality
    oversight and management of daily barracks operations. The FSBI review
    committee completed review and validation of funding requirements for
    12 Installations. Implementing FSBI at these installations brings in
    about 55 percent of the Army barracks inventory.
                                    summary
        Mr. Chairman, our fiscal year 2010 Military Construction and BRAC
    budget requests are balanced programs that support our Soldiers and
    their Families, Overseas Contingency Operations, Army transformation,
    readiness, and DOD installation strategy goals. We are proud to present
    this budget for your consideration because of what this budget will
    provide for our Army:
        Military Construction:
      --26 new Training Ranges/Facilities
      --$11 billion invested in Soldier/Family Readiness
      --$1.8 billion to Grow the Army
      --$524 million support the mission in Afghanistan
      --$828 million funds projects for Overseas Contingency Operations
            mission in Afghanistan
      --Over 3,300 Soldiers training in 16 new or improved Readiness
            Centers and Armed Forces Reserve Centers
      --20 New Army Reserve Operations Complexes
      --6,054 Soldiers get new Reserve Operations Complexes
      --Over 7,800 Soldiers training in nine new or improved Readiness
            Centers and Armed Forces Reserve Centers
      --Six Ranges serving 166,000 men and women in our Armed Forces
        Base Realignment and Closure:
      --Statutory compliance by 2011 for BRAC
      --80 Military Construction projects
      --Planning & Design for fiscal year 2010--2010 Projects
      --Remaining NEPA for BRAC 2005 actions
      --Continued Environmental Restoration of 31,844 acres
        Base Operations Support:
      --Goal is to meet essential needs for all BOS programs: Base
            Operations, Family, Environmental Quality, Force Protection,
            Base Communications, and Audio/Visual.
        Sustainment/Restoration and Modernization:
      --Funds Sustainment at 90 percent of the OSD Facility Sustainment
            model requirement.
        Our long-term strategies for installations will be accomplished
    through sustained and balanced funding, and with your support, we will
    continue to improve Soldier and Family quality of life, while remaining
    focused on Army and Defense transformation goals.
        In closing, we would like to thank you again for the opportunity to
    appear before you today and for your continued support for America's
    Army.

                      STATEMENT OF GENERAL JAMES C. BOOZER

        Senator Johnson. Thank you.
        General Boozer.
        General Boozer. Thank you, Mr. Chairman, Senator Hutchison,
    and distinguished members of the subcommittee.
        On behalf of the Army's senior leaders and the more than 1
    million soldiers that comprise our Army, I want to thank you
    for the opportunity to discuss the Army's fiscal year 2010
    military construction budget request. It is truly an honor to
    be here with you today to do that.
        I would like to extend our gratitude for this committee's
    support for our soldiers and programs over the years. Our brave
    men and women are performing their mission superbly, thanks to
    your continued support.
        Our $10.4 billion military construction request is crucial
    to the success of the Army's strategic imperatives to sustain,
    prepare, reset, and transform the force. Military construction
    plays a key role in each of these imperatives and is a key
    enabler in restoring balance and strategic flexibility in your
    Army.
        We are on track to achieve balance but need your continued
    support so we can sustain soldiers and their families, prepare
    soldiers for success in the current conflict, reset them when
    they return from combat, and transform them for an uncertain
    future.
        To do this, we must first sustain our soldiers and families
    by investing in quality housing and support programs, such as
    the Soldier-Family Action Plan. We have programs in place that
    will improve soldier and family programs and services, quality
    of healthcare, excellence in schools, youth services, and
    childcare, and expand education and employment opportunities
    for family members.
        We are committed to continuing to improve soldier and
    family quality of life to a level commensurate with their level
    of service and sacrifice to the Nation.
        We must also prepare our soldiers for success in the
    current contingency conflicts. To help achieve this goal, our
    fiscal year 2010 request includes $178 million for 25 new range
    projects, as well as $539 million for training barracks and
    $1.5 billion for Grow the Army military construction projects.
        The third imperative, reset, is about returning soldiers
    and equipment to conditions where they can unwind to prepare
    for future missions. The Army Medical Action Plan is one such
    program that incorporates care and services for wounded
    warriors and their families and provides world-class care to
    our warriors in transition for reintegration into the force or
    back to civilian life. We thank you for your support for this
    vital program as well.
        As part of the fourth imperative, transform, the creation
    of the Installation Management Command in October 2006
    continues our progress in centralized installation management
    and fosters more consistent, cost-effective, and accountable
    delivery of installation funding and services. We are well on
    our way to completing the largest transformation of the Army
    since World War II, and it is all being accomplished while in a
    conflict and with your committed support.
        To improve efficiency and effectiveness, we are reshaping
    installations through BRAC and global defense posture
    realignment while simultaneously converting to a modular force,
    growing the Army, and converting the Army Reserve components to
    an operational force. Our military construction request
    supports this intricately woven, tightly synchronized
    stationing plan.

                         MILITARY CONSTRUCTION PROJECTS

        I would like to reiterate Mr. Hansen's comments that we
    must receive full and timely BRAC funding in order to achieve
    the mandates of BRAC 2005 law. A delay in funding our $4
    billion BRAC request beyond October 2009 could place making the
    BRAC mandated September 15, 2011 deadline in jeopardy. Our
    flexibility over the years executing this program are all but
    gone.
        Finally, as Mr. Hansen has already stated, the Secretary of
    Defense's guidance to stop growth of Army BCTs at 45 versus 48
    is being thoroughly, deliberately, and expeditiously analyzed
    by the senior Army leadership. We will work this closely with
    this committee and your staffs. In fact, we meet with your
    staffs next week.
        The fiscal year 2009 and 2010 construction projects play an
    essential role in supporting our end strength of 547,000, as
    well as transforming our installations and facilities to
    support our modular design units. These ongoing investments
    will ensure soldiers and families have the modern facilities
    they deserve.
        In closing, our request for military construction, BRAC,
    family housing, and overseas contingency operations plays a
    critical role in allowing us to put the Army back in balance to
    sustain the current fight and confront the future.
        We thank Congress for its unwavering support of the Army's
    military construction programs over the years and ask for your
    continued support. Our goal is to have premier installations
    across the globe. Our soldiers and families deserve nothing
    less.
        Thank you. It is an absolute honor to be here with you
    today, and I look forward to your questions.

                   STATEMENT OF GENERAL RAYMOND W. CARPENTER

        Senator Johnson. Thank you.
        Next is General Carpenter, a fellow South Dakotan. Please
    proceed.
        General Carpenter. Thank you, Mr. Chairman. It is great to
    see a fellow South Dakotan.
        And again, thank you for the opportunity to appear before
    you today to discuss the Army National Guard military
    construction budget request for fiscal year 2010.
        First, I must say thanks to this committee for its strong
    support of the National Guard in the past. Last year, the
    budget request for fiscal year 2009 asked for $539 million in
    Army National Guard military construction, which appropriated
    for 29 projects. The Congress provided that and more, actually
    appropriating for us an additional $197 million for 25 more
    projects. And we are profoundly grateful to this committee for
    that added support last year.
        Today, you have before you a budget request for fiscal year
    2010, which asks for $426 million to fund 21 projects in 18
    States. Those projects consist of readiness centers, ranges,
    Army aviation, fort facilities, training institutes, and
    maintenance shops. And we ask you to provide full funding for
    that request.

                   ARMY NATIONAL GUARD MILITARY CONSTRUCTION

        The average age of Army National Guard Readiness Centers
    across our Nation is 41 years old, and 24 percent of those are
    over 70 years old. So the need for your continuing strong
    support is vital to the continued success of our Army National
    Guard.
        Moreover, in this time of economic trouble for our Nation,
    I would point out that the National Guard military construction
    funding is a uniquely effective means of stimulating local
    economies. Army National Guard facilities are not concentrated
    on large installations but are widely dispersed across America
    in more than 3,000 locations and communities.
        Finally, I would note that the Army National Guard
    Readiness Centers are very important parts of the community in
    which they are located and provide a day-to-day connection
    between the United States military and hometown America.
        Mr. Chairman, the Army National Guard is proud of its
    history, accomplishments, and service to our Nation. For the
    past 2 years, we have averaged in excess of 50,000 soldiers
    mobilized at any given time. And today, we are at 60,000
    soldiers mobilized, and those great citizen soldiers are a part
    of our Army National Guard and are on point for our Nation as
    we speak.
        The 21 projects that we have submitted are about people and
    readiness--training our soldiers, providing for their well
    being, and maintaining and sustaining our facilities and
    equipment to be ready for our Nation's call for State and local
    emergencies.
        I am grateful to be here today to represent those 366,000
    citizen soldiers, and I welcome your questions.
        I will be followed by General Kraus.

                      STATEMENT OF GENERAL JULIA A. KRAUS

        Senator Johnson. General Kraus.
        Chairman Johnson, Senator Hutchinson, distinguished members
    of the subcommittee; thank you for the invitation to appear
    before you today to discuss Army Reserve military construction.
    It is an honor to testify before you on behalf of Army Reserve
    soldiers, family members and civilians.
        In the midst of two ongoing wars and transformation efforts
    to grow, restation and modernize the Army, the Army Reserve is
    building new capability. In fiscal year 2010, we are requesting
    twenty one MCAR projects and will be involved in thirty five
    base realignment and closure (BRAC) projects.
        The Army Reserve fiscal year 2010 military construction
    request of $374,862,000 (for appropriation and authorization of
    appropriations) is for mission and training, grow the Army,
    other support, and unspecified programs.

                         MISSION AND TRAINING PROJECTS

        In fiscal year 2010, the Army Reserve will invest $45
    million to prepare our soldiers for success in current
    operations. Included in the mission and training projects is an
    Armed Forces Reserve Center and a Combined Arms Collective
    Training facility, which will be available for joint use by all
    Army components and military services.

                             GROW THE ARMY PROJECTS

        The fiscal year 2010 Army Reserve military construction
    request represents the second year of a 3 year plan to
    implement the transformation from a strategic reserve to an
    operational force. Nineteen Reserve operations complexes in 11
    States and the Commonwealth of Puerto Rico will be constructed,
    with an investment of $304 million, to support the
    transformation. This $304 million is 81 percent of the MILCON
    budget request. These projects will provide operations,
    maintenance, and storage facilities for over 6,000 Soldiers in
    56 newly activating combat service and combat service Support
    units and detachments.
        While the pace of construction is hectic and the resources
    committed are remarkable the Army Reserve has significant
    facility and infrastructure needs. We are working aggressively
    to address all our facilities and infrastructure requirements
    to ensure soldiers receive the best training and support
    possible and that we adequately support and maintain on-hand
    and inbound modular force equipment to ensure unit readiness.
        Thank you for your continued support for the men and women
    who serve in your Army Reserve and for the opportunity to brief
    the subcommittee on the state of Army Reserve military
    construction projects.
        This concludes my statement and I look forward to your
    questions. Thank you.

           HOMEOWNERS' ASSISTANCE PROGRAM (HAP) FOR MILITARY FAMILIES

        Senator Johnson. Thank you.
        Mr. Hansen, I am very interested in the Homeowners
    Assistance Program, or HAP. As you know, I added $555 million
    to the stimulus bill to extend homeowners' assistance to
    military families caught up in the mortgage crisis.
        Can you tell me about the status of implementing the
    expanded program, and what does the Army estimate that the
    total requirement will be to ensure that this assistance will
    be available to all qualified Army families?
        Mr. Calcara. Mr. Chairman, I will take that question. And I
    would like to thank you first for your leadership on that
    important program. I know you worked very hard, your staff,
    along with Ms. Evans, to help us get that in the ARRA program,
    and it is going to make a big difference for a lot of all
    members of the armed forces--not just the Army, but the Navy,
    the Marine Corps, the Air Force, and members of the Coast Guard
    as well.
        The Army is the executive agent for it, as you know. When
    we came in with plans to expand that authority, which goes back
    40 years, we had to scale the program to work within available
    resources. Over the last several weeks, we have had a cross-
    functional team comprised of representatives of all the
    services shaping the program's entitlement structure. And we
    have finished that process and have drafted the final policy.
        Where we are now is because some of the benefits will be
    paid to nonmilitary members, such as surviving spouses and
    people who have retired, we need to get into the OMB rulemaking
    process. We are implementing that as we speak. We have had a
    meeting on it, I think, this week. We expect to get through
    rulemaking and start paying benefits in the latter part of
    June.
        We anticipate a tremendous response to this program and a
    lot of success, with at least 10,000 to 12,000 claims
    forecasted in the immediate future.
        Again, I thank you for your leadership on helping us get
    that program in place.

                ARMY NATIONAL GUARD MILITARY CONSTRUCTION BUDGET

        Senator Johnson. General Carpenter, the South Dakota Guard
    is in the process of constructing a joint forces headquarters
    in Rapid City. The Guard leadership in South Dakota has
    indicated a need for an additional $7.9 million to complete the
    project in this fiscal year.
        Could you give me an update on this project and the
    required funding? And did you need additional funding for
    fiscal year 2010?
        General Carpenter. Mr. Chairman, as you are well aware, the
    project was validated and initially funded in the military
    construction budget for the Army National Guard. We do have an
    additional request for $7 million based upon some additional
    requirements to that joint force headquarters project, which
    includes some additional units and some additional requirements
    that were not in the original 1390/91.
        We have reviewed that requirement and that request, and we
    found them to be valid and a requirement in terms of making
    that a complete project. So we expect that there would be some
    sort of funding to accommodate that.
        Senator Johnson. Mr. Hansen, over the past several years,
    Congress has provided funding to support the Army's Grow the
    Force initiative, including 48 brigade combat teams, or BCTs.
    Last month, the Secretary of Defense announced that the number
    of BCTs were to be stopped at 45.
        What impact will this have on the Army's military
    construction program, and will it have any impact in fiscal
    year 2010? What is the status of the Army's stationing plan in
    Europe, and when do you expect the Secretary to make a final
    decision on how many brigades will remain in Europe?
        Mr. Hansen. Yes, sir. With your permission, sir, General
    Boozer is geared to answer that one.
        General Boozer. Yes, thank you, Mr. Chairman.
        So, as you indicated, we all are aware of the Secretary of
    Defense's guidance on April 6 to stop growth of Army BCTs at 45
    versus 48, and we will reach the 45th brigade combat team in
    fiscal year 2010 when we stand up, activate 2d Brigade 1st
    Armored Division at Fort Bliss, Texas. That will get us to the
    45th brigade combat team.
        The Army's position concerning the Secretary's guidance is
    we currently want to maintain our construction projects for
    2009 and 2010 because it is both projects in 2009 and 2010 that
    construct facilities for those six Grow the Army brigades at
    Fort Carson, Fort Stewart, and Fort Bliss.
        As Mr. Hansen indicated in his opening comments, we are
    currently going through a very, very detailed analysis, a very
    deliberate analysis of the impacts and courses of action to how
    we would stop at 45 versus 48.
        We also know that in fiscal years 2012 and fiscal years
    2013, Mr. Chairman, as you mentioned, we are to bring those two
    brigades back from Germany--one in fiscal year 2012 to Fort
    Bliss, Texas, and one in fiscal year 2013 to White Sands
    Missile Range. Those two brigades, we are going to get informed
    by this accelerated Quadrennial Defense Review that is
    currently ongoing.
        The construction projects that we have planned in 2009 and
    fiscal year 2010 are critical, essential in supporting us in
    getting to our--and we have reached our end strength of 547,400
    soldiers that we are slightly above and have to bring that down
    to get back to our TAA.
        So these construction projects are critical in, one,
    providing facilities for our end strength. And so, our intent
    is to continue with those programs, maintain those programs,
    get informed by the QDR, get informed by the courses of action
    that we are working through now, and work this through.
        So we would ask for your patience and hope to be able to do
    this as quickly as possible. I wish I could give you a time. I
    know the Chief of Staff of the Army was engaged with Mr.
    Edwards in the HAC hearings, MILCON hearings last week.
    Certainly, we would have to have something done before the
    budget goes to the September conferences at the latest.

                                ARMY BCI GROWTH

        Senator Johnson. Thank you, General.
        Senator Hutchison.
        Senator Hutchison. I am not sure that I totally understood
    your answer, and I wanted to follow up on Senator Johnson's
    question. What effect will the stopping at 45 have on the
    statement of the commander at EUCOM--he is recommending that
    two of the brigades stay in Germany for 2 years longer.
        Are you saying that will not impact, that decision hasn't
    been made or that the stopping at 45 does not necessarily mean
    that the decision has been made that some would stay, that two
    would stay in Europe? If you could clarify for me?
        General Boozer. Yes, ma'am. And I am sorry for the
    confusion.
        The Army's position, one, is those two brigades will
    return, as I indicated, fiscal year 2012 and fiscal year 2013.
        Senator Hutchison. So the two----
        General Boozer. They are almost two separate issues.
        Senator Hutchison. Okay.
        General Boozer. The decision for the 45 is completely
    independent of the two brigades coming back from Germany. That
    issue, it will be reviewed during the QDR.
        Senator Hutchison. I understand. That is exactly the
    clarification I was looking for.
        So you are moving on schedule, as long as the MILCON stays
    on schedule, to move those troops as originally determined
    earlier in BRAC?
        General Boozer. Yes, ma'am.
        Senator Hutchison. Okay. And let me ask you also in the
    general BRAC arena if the budget that you have this year, plus
    last year, if you feel that you are on schedule for having all
    of the BRAC construction done within the September 2011
    timeframe?
        General Boozer. Yes, ma'am. I believe we are on schedule.
    We are on track. We are essentially halfway through the
    program. Over 180 projects of 326 are either complete or being
    constructed. That leaves us 146 projects remaining to execute.
        And our intent, with timely funding, is to advertise for
    projects during the fourth quarter of this year so that we can
    award them right at the start of first quarter 2010. But BRAC
    timeline we are on track now.
        Senator Hutchison. And do you feel like more money would
    help move anything further toward that deadline, or are you
    comfortable that we are on time and on budget?
        General Boozer. No, ma'am. I don't think additional funds
    would help at this point. It all has to do with capacity, and
    so I think we have maxed out capacity and maxed out funding for
    BRAC.
        Senator Hutchison. Thank you.

                 EXPANSION OF RANGERS IN PINON CANYON, COLORADO

        Pinon Canyon, Mr. Hansen, as you know the Army has been
    trying to expand the ranges at Pinon Canyon, Colorado, for at
    least 2, maybe 3 years now but has been held up by
    environmental issues. And last year, this committee prohibited
    the Army from even advancing the environmental impact study to
    expand the ranges there. Actually, it was the full Senate that
    enacted that.
        So what is the option that the Army is looking at? Are you
    still going to push Pinon Canyon, or are you looking to expand
    ranges at other installations, seeing that the likelihood of
    expanding at Pinon Canyon is probably pretty slim?
        Mr. Hansen. Thank you, ma'am.
        The Army does not have the luxury of excess or surplus
    maneuver training land capacity at any of its installations, as
    you know. And we have legitimate needs for expanded training
    land to support the concentration of units in the United
    States, modular conversion to BCTs, training for operating
    environment, and continued environmental challenges to the
    Army's ability to fully access the land that it does currently
    own.
        And we do hope to continue to work in a cooperative fashion
    with the State of Colorado and local landowners, and it is
    hopeful we can arrive on a way ahead that meets the Army's need
    and also works for the landowners. We are seeking a win-win
    there, and we are certainly looking at other installations,
    too, and the decision on which three BCTs would be eliminated
    certainly is a big factor in all of these decisions.
        Senator Hutchison. When will you pull the plug on Pinon
    Canyon if you don't see a possibility? I mean, it seems pretty
    clear from the outside that is very remote right now. And I
    have tried to help on this, but it is not going anywhere. So
    when do you say, ``Here is plan B?''
        Mr. Hansen. We do not have a date on that yet, ma'am. But
    we certainly are----
        Senator Hutchison. Are you pursuing other options? Are you
    beginning to look for other places where you can expand other
    than Pinon Canyon?
        Mr. Hansen. Within Colorado, there are insufficient Federal
    lands within about a 200-mile radius of Fort Carson that are
    capable of supporting the required maneuver training, and
    Federal lands outside this area would entail additional
    transportation costs, increase convoy travel time, and increase
    the possibility of safety issues and unnecessary hazard to the
    force.
        So, and it would also have significant environmental
    restrictions. So we certainly are looking at expansion at all
    our facilities since we have----
        Senator Hutchison. Other places besides Colorado?
        Mr. Hansen. Yes, ma'am, as part of the decision on the
    three BCTs that we previously discussed, as well as the needs
    at Fort Carson.
        Senator Hutchison. Thank you.
        Mr. Hansen. Yes, ma'am.
        Senator Hutchison. Thank you, Mr. Chairman.
        Senator Johnson. Senator Pryor.
        Senator Pryor. Thank you, Mr. Chairman. I appreciate your
    time on this.
        Let me start with you, if I can, Mr. Calcara, and that is
    we have some legislation here that we are working. It is S.
    590, Defense Communities Assistance Act of 2009. And let me
    start with a success story in a post BRAC environment. It is
    actually not in my State. It is in the ranking member's State
    of Texas.
        The Red River Commerce Park is 765 acres that was once part
    of the Red River Army Depot, and it was transferred via a no-
    cost EDC 10 years ago. We have that same legislation this time
    to do no-cost EDCs. It now boasts nearly a million square feet
    of industrial commercial space, including a biodiesel
    production facility, 25 private housing units, a golf course,
    and over a dozen tenant companies employing nearly 1,000
    people.
        And from my standpoint, it is probably a lot cheaper in the
    long run on everybody to do a no-cost EDC than it is to try to
    convey the property some other way. I would like to hear your
    thoughts on the Army's position on trying to do some of the
    property that has been BRAC'd, so to speak, through no-cost
    EDCs.
        Mr. Calcara. Yes, sir. Our BRAC disposal strategy is
    contingent upon a number of factors, not to mention the reuse
    plan and the environmental issues on the site. We would prefer
    to keep all the tools available in the BRAC toolbox, including
    no-cost EDCs, cost EDCs, public benefit conveyances, and look
    at the entire suite of options before we unilaterally decide
    that all EDCs would be no cost.
        The Army believes the imperative here is to get the
    property back in productive reuse as quickly as possible. And
    in many cases, that requires investment of dollars for
    environmental cleanup that are otherwise not programmed.

            ENVIRONMENTAL CLEANUP OF LONE STAR ARMY AMMUNITION PLANT

        One of the strategies that we believe works best for that
    is to go to public market, bring private dollars to the table,
    and have cleanup done incidental to redevelopment. This reduces
    the cost of the cleanup in terms of funding it up front, gets
    the property redeveloped quicker, and also brings in private
    capital to supplement precious dollars that we would have to
    program for cleanup.
        So, in the end, the speed is one aspect of it. But it
    really becomes speed and productive reuse as quickly as
    possible--not just speed and transfer, but speed in getting the
    cleanup done.
        Senator Pryor. Let me ask this as a follow-up to that. The
    Lone Star Army ammunition plant, which is basically more or
    less adjacent property, as Senator Hutchison knows, was, again,
    BRAC'd in 2005. Do you know--do you have a sense of how much it
    has cost the Army to maintain that property since 2005?
        Mr. Calcara. I don't have the numbers available. The issue,
    of course, with Lone Star for us would not necessarily be a
    cost avoidance for caretaker. It is more where are we going to
    get the environmental dollars to clean it up and program it?
        What we would like to do with Lone Star is leverage the
    timber to reinvest back in the property for cleanup, to help
    not only expedite transfer, but clean up at a cost-effective
    basis.
        Senator Pryor. Do you remember, I thought we appropriated
    some money to do the cleanup?
        Mr. Calcara. We do have some dollars appropriated, but we
    do not believe those will be sufficient to get the property
    cleaned and back into reuse as quickly as if we did go to a
    public sale process to tap private markets.
        Senator Pryor. Do you know what your current timeline is on
    making the decisions around Lone Star?
        Mr. Calcara. We just received the reuse plan in here about
    30 days ago. We are studying it. We are looking to make some
    broad-based decisions later this summer.
        Senator Pryor. Mr. Hansen, do you have any comments on Lone
    Star and the approach that Army is taking with regard to the
    no-cost economic development conveyance?
        Mr. Hansen. Not beyond what Mr. Calcara said, sir.
        Senator Pryor. Let me ask, if I may, General Carpenter,
    about some training facilities available to National Guards
    around the country. I know that one of the things that we see
    that has obviously become more and more important in the last
    few years is the so-called ``live fire experience,'' where it
    may be urban warfare, and they need to simulate that as part of
    their training. For example, the Arkansas National Guard has to
    travel to Camp Shelby, Alabama, to do that.
        Have you looked at whether it is more cost effective to do
    the travel and to keep all the folks moving and take them
    offsite and out of State, in many cases hundreds and hundreds
    of miles away, and do that training versus just building
    training facilities in the home State? Have you all looked at
    that?
        General Carpenter. Sir, as an overall project in that
    arena, what we have seen in the last several years because of
    the increased number of brigade combat teams in the active
    Army, we have seen places where the Army National Guard has
    traditionally gone to train not being available because of the
    mobilization process and also because of the other tenants on
    the installation. For instance, the 256 Brigade out of
    Louisiana----
        Senator Pryor. Right.
        General Carpenter [continuing]. Struggles to get on Fort
    Polk now because of the training in the OPTEMPO in that
    particular arena. We have worked with 1st Army and are
    currently doing a study on those kinds of things that you have
    just outlined, sir. And the issue is where do we train the Army
    National Guard, and what is the proximity to that unit's home
    station?
        And so, between simulation and the live fire piece, we have
    that under study right now, and we would expect to have that
    study completed some time in the next year.
        Senator Pryor. Great.
        Thank you, Mr. Chairman.

                 FISCAL YEAR 2010 BUDGET REQUEST FOR ARMY GUARD

        Senator Johnson. I will use my discretion to ask one more
    question. Mr. Calcara, the committee is concerned about the
    level of funding requested for the Army Guard and Reserve
    forces. The Guard and Reserves have been a critical component
    in our operations in Iraq and Afghanistan.
        Recently, Secretary Gates indicated that more Reserve
    components may be tapped for service in Afghanistan, and yet we
    see a 54 percent reduction in the fiscal year 2010 budget
    request for the Army Guard. Can you explain this reduction in
    funding, and what impact is it having on the backlog of needed
    Guard and Reserve construction projects?
        Mr. Calcara. Yes, Mr. Chairman.
        I think you need to look at the two sets of numbers in the
    request for each year, as opposed to the difference between
    what was enacted last year and this year's request. I don't
    believe the difference is that great. And as it tiers into the
    greater Army program of Grow the Army and global positioning,
    along with the increases in the Reserves, I think we are
    meeting all the current requirements that the Guard has for
    fiscal year 2010.
        We do have additional requirements that we are looking to
    rack and stack from 2011 through the FYDP, and we are working
    on that now. But I think if you compare the fiscal year 2009
    request to the 2010 request, there is about a 10 or 15 percent
    difference between the two numbers.
        Senator Johnson. Senator Hutchison.
        Senator Hutchison. I am through. Thank you.
        Senator Johnson. You may be excused.
        Senator Hutchison. Thank you all very much.
        Senator Johnson. Thank you.
                          Department of the Air Force

    STATEMENT OF KATHLEEN I. FERGUSON, DEPUTY ASSISTANT
                SECRETARY FOR INSTALLATIONS
    ACCOMPANIED BY:
            GENERAL JOSEPH LENGYEL, COMMANDER, AIR NATIONAL GUARD READINESS
                CENTER
            GENERAL HOWARD THOMPSON, DEPUTY TO THE CHIEF OF STAFF, AIR
                FORCE RESERVE
        Senator Johnson. I am pleased now to welcome our second
    panel of witnesses, Ms. Kathleen Ferguson, Deputy Assistant
    Secretary of the Air Force for Installations; General Joseph
    Lengyel, Commander, Air National Guard Readiness Center; and
    General Howard Thompson, Deputy to the Chief of Staff for the
    Air Force Reserve.
        Thank you all for coming. We look forward to your
    testimony. And again, your full statements will be entered into
    the record.
        Ms. Ferguson, please proceed.
        Ms. Ferguson. Thank you, Mr. Chairman. On behalf of
    America's airmen----
        Senator Hutchison. Is your microphone on?
        Ms. Ferguson. That would be better, I guess.
        It is my pleasure to be here today, along with Generals
    Lengyel and Thompson from the Air National Guard and the Air
    Force Reserve.
        We would like to begin today by thanking the committee for
    its continued support of your Air Force and the many dedicated
    and brave airmen and their families serving around the globe.
        Today, more than 27,000 airmen are currently deployed in
    support of ongoing operations in Iraq, Afghanistan, the Horn of
    Africa, and many others, daily demonstrating their importance
    in support of joint combat operations. Within the Secretariat
    for Installations, Environment, and Logistics, we fully
    appreciate the impacts our efforts have in support of these
    airmen and how it affects their ability to positively influence
    our Air Force's warfighting capabilities and capacity to
    counter hostile threats.
        But before we begin, I want to tell you that we heard your
    concerns last year that the Air Force did not have enough funds
    in the future years defense plan (FYDP) and the Air Reserve
    components were not receiving enough of a share. The Air Force
    has increased funding across the FYDP by nearly $2 billion, and
    we have changed the way we allocate between the active Air
    Force, Air National Guard, and Air Force Reserve to give the
    Reserve components a larger share.
        MILCON, family housing, and BRAC programs form the
    foundation of our installation structure. Our installations
    serve as key platforms for the delivery of global vigilance,
    reach and power for our Nation, and our fiscal year 2010
    investments reflect a direct connection to this vital work.
        As we continue to focus on modernizing our aging weapon
    systems, we recognize we cannot lose focus on Air Force
    infrastructure programs. Our fiscal year 2010 President's
    budget request of $4.9 billion for MILCON, military family
    housing, BRAC, and facility maintenance is a reduction from our
    2009 request of $5.2 billion.
        This reflects an increase in MILCON and fact-of-life
    reductions due to the anticipated completion of the
    privatization of military family housing and BRAC 2005 round
    implementation.
        Using an enterprise portfolio perspective, we intend to
    focus our limited resources on the most critical physical plant
    components by applying demolition and space utilization
    strategies to reduce our footprint, aggressively pursue energy
    initiatives, continue to prioritize family housing, and
    modernizing dormitories to improve quality of life for our
    airmen.
        In regards to military family housing, our master plan
    details our housing MILCON operations, maintenance, and
    privatization efforts. Since last spring, we have completed new
    construction or major improvements on more than 2,000 units in
    the United States and overseas, with another 2,286 units under
    construction in the United States and 2,783 units under
    construction overseas.
        Our 2010 budget request for military family housing is just
    over $567 million. The request for housing investment is $67
    million to ensure the continual improvement of our overseas
    homes. Our request also includes an additional $500 million to
    pay for operations, maintenance, utilities, and leases for the
    family housing program.
        Now I would like to address our efforts in support of base
    realignment and closure. BRAC 2005 impacts more than 120 Air
    Force installations. Unlike the last round of BRAC, where 82
    percent of the implementation actions affected the active Air
    Force, in BRAC 2005, 78 percent of implementation actions
    affect the Air National Guard and the Air Force Reserve.
        In fact, the Air Force will spend more than $478 million on
    Air National Guard and Air Force Reserve BRAC MILCON projects.
    The Air Force's total BRAC budget is approximately $3.8
    billion, which the Air Force has fully funded. Our fiscal year
    2010 BRAC 2005 budget request is approximately $418 million, of
    which less than 20 percent is for BRAC MILCON projects. I would
    like to emphasize the BRAC program is on track to meet the
    September 2011 deadline.
        Air Force MILCON, military family housing, and BRAC
    initiatives will continue to directly support Air Force
    priorities. It is imperative we continue to manage our
    installations by leveraging industry best practices and state-
    of-the-art technology.
        Our civil engineering transformation efforts, now entering
    the third year, continue to produce efficiencies and cost
    savings that enhance support for the warfighter, reduce the
    cost of installation ownership, and free resources for the
    recapitalization of our aging Air Force weapon systems.
        More importantly, these investments reflect effective
    stewardship of funding designed to serve our airmen in the
    field, their families, and the taxpayer at home.

                               PREPARED STATEMENT

        Mr. Chairman and Senator Hutchison, this concludes my
    remarks. Thank you and the committee again for your continued
    support of our airmen and their families, and we look forward
    to your questions.
        [The statement follows:]

                   Prepared Statement of Kathleen I. Ferguson

                                  introduction
        More than 27,000 Airmen are currently deployed in support of
    ongoing operations, daily demonstrating their importance in support of
    Joint combat operations. Within the Secretariat for Installations,
    Environment and Logistics (SAF/IE), we fully appreciate the impact our
    efforts have in support of these Airman and how it affects their
    ability to positively influence our Air Force's warfighting abilities
    and capacity to counter hostile threats.
        To that end, the men and women of SAF/IE are committed to ensuring
    our Air Force installations are right sized to support our forces, our
    combat systems have a robust logistics infrastructure for sustainment,
    and our forces have the necessary accessibility to the full spectrum of
    our environment to ensure combat readiness. In addition to our Airmen's
    combat readiness, we also appreciate how these same efforts support our
    Airmen and their families and ensure a Quality of Service commensurate
    with the contribution they provide to the defense of our Nation.
        Air Force Military Construction (MILCON), Military Family Housing
    (MFH), and Base Realignment and Closure (BRAC) programs form the
    foundation of our installation structure. Our Air Force installations
    serve as key platforms for the delivery of Global Vigilance, Reach and
    Power for our Nation, and our fiscal year 2010 investments reflect a
    direct connection to this vital work.
        As the Air Force continues to focus on modernizing our aging weapon
    systems, we recognize that we cannot lose focus on critical Air Force
    infrastructure programs. In order to maintain effective stewardship of
    the resources given to us, our fiscal year 2010 President's Budget of
    $4.9 billion for MILCON, BRAC, MFH, and facility maintenance is a
    reduction from our fiscal year 2009 request of $5.2 billion. We intend
    to mitigate potential shortfalls in MILCON and facility maintenance
    funding by bolstering our restoration and modernization programs as
    much as possible. Using an enterprise portfolio perspective, we intend
    to focus our limited resources only on the most critical physical plant
    components, by applying demolition and space utilization strategies to
    reduce our footprint, aggressively pursuing energy initiatives,
    continuing to privatize family housing and modernizing dormitories to
    improve quality of life for our Airmen.
        Our efforts are in direct support of and consistent with the Air
    Forces' five priorities, (1) Reinvigorate the Air Force Nuclear
    Enterprise, (2) Partner with the Joint and Coalition Team to Win
    Today's Fight, (3) Develop and Care for Airmen and Their Families, (4)
    Modernize our Air and Space Inventories, Organizations and Training,
    and (5) Recapture Acquisition Excellence. It is with these priorities
    in mind that I will outline our MILCON, Military Family Housing and
    BRAC efforts and the individual priorities they support.
                 reinvigorate the air force nuclear enterprise
        The Air Force has a solemn responsibility and obligation to operate
    and maintain its portion of America's nuclear deterrent posture, which
    consists of land-based intercontinental ballistic missiles, nuclear-
    capable bombers and dual capable fighters. Over the past several months
    the Air Force senior leadership team, along with the Office of the
    Secretary of Defense (OSD) and Interagency partners, have closely
    examined the Air Force nuclear enterprise and identified several areas
    for improvement.
        The results of these internal assessments reinforced the need to
    continually focus on nuclear sustainment and operations as well as the
    management of the weapons and their delivery platforms. A critical
    aspect of this effort includes the infrastructure and facilities
    providing the necessary life-cycle installation support of this vital
    mission. Air Force Civil Engineers and field experts are currently
    conducting Facility Condition Assessments of all nuclear-related
    facilities, which will provide detailed information on our
    infrastructure deficiencies directly supporting the nuclear mission.
    Projects will be developed, programmed, and prioritized appropriately
    to obtain the necessary funding required to correct any deficiencies.
        Additionally, the fiscal year 2010 President's Budget request
    includes an investment of $45 million in four infrastructure projects
    at Minot Air Force Base, North Dakota, FE Warren Air Force Base,
    Wyoming and Clear Air Station, Alaska. These projects include missile
    procedures, training operations and missile service complex facilities.
                 develop and care for airmen and their families
        Airmen are the Air Force's most valuable resource and we remain
    committed to recruiting and retaining the world's highest quality
    force. As part of the American Recovery and Reinvestment Act of 2009,
    monies allotted to the Air Force support that effort. Over $260 million
    in MILCON will improve the lives of our Airmen and their families
    through MFH improvements, dormitory construction, and providing Child
    Development Center facilities and services.
    Developing Airmen
        The Air Force must continue to ensure we are preparing Airmen for
    the challenges of today and tomorrow by providing quality facilities in
    which to train and operate. Our fiscal year 2010 budget request
    includes $39 million for three projects. We will construct a new
    recruit dormitory and basic military training facility giving incoming
    Airmen quality training facilities to start a career of service.
    Another highlight includes a C-5 Ground Training Schoolhouse addition
    for the Air Force Reserve Command.
    Military Family Housing Program
        The MFH Master Plan details our Housing MILCON, operations and
    maintenance, and privatization efforts. Since last spring, the Air
    Force completed new construction or major improvements on over 2,000
    units in the United States and overseas, with another 2,286 units under
    construction in the United States and 2,783 units under construction
    overseas.
        Our fiscal year 2010 budget request for MFH is just over $567
    million. The Air Force request for housing investment is $67 million to
    ensure the continual improvement of our overseas homes. Investments
    will provide whole-house renovations for 365 units at two overseas
    bases and extend their useful life. Our request also includes an
    additional $500 million to pay for operations, maintenance, utilities
    and leases for the family housing program.
    Housing Privatization
        Housing privatization continues to improve quality of life for our
    Airmen and their families. To date we have privatized approximately
    38,900 housing units at 44 bases. We have seen the delivery of over
    10,000 new or renovated homes and are currently bringing more than 200
    homes a month online. We will have leveraged more than $402 million in
    government investment to garner almost $6.3 billion in private sector
    total housing development, or $16 of private investment for each public
    tax dollar. With the support of Congress, we will continue to work
    toward our goal to privatize 100 percent of Military Family Housing in
    the Continental United States, Hawaii, Alaska and Guam by the end of
    fiscal year 2010.
    Unaccompanied Housing (Dormitories)
        The Air Force Dormitory Master Plan is the cornerstone for
    developing requirements for unaccompanied housing. The budget request
    includes five dormitories worth $138 million. We will continue to
    replace existing dormitories at the end of their useful life with a
    standard Air Force-designed private room configuration under the
    ``Dorms-4-Airmen'' concept. Simultaneously, our implementation of a
    ``bridging strategy'' ensures we are investing Facility Sustainment and
    Restoration and Modernization funds into aging facilities to extend
    their useful life until MILCON replacements can be executed and to
    ensure we keep ``good dormitories good.''
    Fitness and Child Development Centers
        Elevated operations tempo and increased home-station demands makes
    physical fitness an imperative for Airmen. Our fiscal year 2010 request
    includes two Fitness Centers worth $41 million. We also remain focused
    on providing our families with appropriate and nurturing child care
    facilities. We will continue to invest in these facilities which we
    believe are key to caring for Airmen and their families. This year's
    budget request includes two child development centers worth $20
    million.
    Environmental Quality and Management Systems
        Our environmental management programs continue to ensure the most
    basic quality of life needs are met for our Airmen and surrounding
    communities: clean air, clean drinking water and healthy working and
    living conditions for our workforce and base residents. We have
    implemented a new environmental management approach at Air Force
    installations. Installations are now utilizing the Environmental
    Management System to identify environmental aspects of base operations,
    assess their impacts, and help commanders make informed decisions and
    investments to reduce environmental risks and compliance costs. Our
    installation commanders significantly reduced new environmental
    enforcement actions by 44 percent from fiscal year 2005 to fiscal year
    2008.
        We are also continuing our existing environmental quality and
    restoration programs. The fiscal year 2010 request includes just under
    $1 billion for direct-funded non-BRAC environmental programs such as:
    traditional environmental restoration activities, environmental
    compliance activities and projects, pollution prevention initiatives,
    environmental conservation activities, munitions response activities,
    and investment in promising environmental technologies. Our
    environmental restoration program is proceeding aggressively to clean-
    up sites contaminated by past practices. The Air Force closed or has
    remedies in place at 89 percent of the contaminated sites and expects
    to have remedies in place at all sites by fiscal year 2012, 2 years
    ahead of the Department of Defense fiscal year 2014 environmental
    restoration goal.
      modernize our air and space inventories, organizations and training
        Modernizing our aging air and space inventories, organizations and
    training to prepare for tomorrow's challenges requires significant
    investment of $353 million for 34 projects. We will complete the
    planned F-22 beddown, including the two Air National Guard projects at
    Hickam Air Force Base, Hawaii. The beddown of the F-35 also continues
    to be a priority, with eight projects supporting actions at Nellis Air
    Force Base, Nevada and Eglin Air Force Base, Florida.
        We also continue to modernize our facilities in support of our
    larger aircraft by constructing seven new facilities supporting C-130
    operations and training. Other projects in this program include a
    consolidated communication facility at Cannon Air Force Base, New
    Mexico, two research facilities at Wright Patterson Air Force Base,
    Ohio and upgrading electrical infrastructure at Hurlburt Field,
    Florida. As part of our work to achieve balance across our portfolios,
    we continue to transform the enterprise by developing new concepts of
    operations, implementing organizational change, and integrating
    advanced technologies in installation support.
    Energy Stewardship
        The Air Force has launched an aggressive program to invest in
    facility energy conservation and renewable energy alternatives.
    Recently, the Secretary of the Air Force signed a Mission Directive
    institutionalizing energy policy within the Air Force and driving more
    efficient energy management practices. Together, these policies will
    direct specific actions in the areas of operational processes,
    training, and installation management geared toward reducing our
    ``energy footprint,'' and increasing our use of cleaner energy
    alternatives.
        Over the past year, we've stood up the Air Force Facility Energy
    Center (FEC) at the Air Force Civil Engineer Support Agency at Tyndall
    Air Force Base, Florida. The new FEC consolidates energy technical
    expertise and project management capabilities in order to leverage best
    practices across the force. The goal of this office is to develop and
    implement innovative energy solutions reducing our energy ``footprint''
    at Air Force installations. In 2008, the Air Force Infrastructure
    Energy Strategic Plan was issued to guide the strategic and tactical
    direction of our energy program, a plan designed to balance supply-side
    energy assurance and demand-side energy efficiency. It incorporates the
    energy strategy of the 21st Century designed to meet the energy
    mandates outlined in the Energy Policy Act 2005 (EPAct 05), Executive
    Order (EO) 13423 and Energy Independence and Security Act of 2007 (EISA
    2007). The strategy maps the way ahead for meeting energy mandates
    through fiscal year 2015 and covers facilities infrastructure as well
    as fuel efficiency in our ground transportation fleet.
        The new infrastructure energy strategy is founded on Four Pillars
    that are designed to (1) Improve Current Infrastructure, (2) Improve
    future infrastructure, (3) Expand renewables, and (4) manage cost. We
    intend to achieve the Four Pillars by incorporating best business
    practices into our education and training programs, pursuing cultural
    change in our organizations, and improving our asset management. We see
    potential indicators that our efficiency strategy is providing return-
    on-investment. In 2008, the Air Force energy intensity decreased by
    17.8 percent from the fiscal year 2003 baseline. The Air Force also
    developed a life-cycle cost-effective metering strategy to meet EPAct
    05, which mandates the installation of electric meters on required
    facilities by 2012. We recognize the value of metering and are already
    74 percent complete toward the goal. The Air Force is also making great
    strides in our water conservation program. In fiscal year 2008, we
    consumed 1.3 billion gallons less water than our fiscal year 2007 water
    usage.
        In the area of renewable energy, our strategy expands public and
    private partnerships by leveraging private sector capital to bring
    renewable power production to our bases at competitive prices. For
    example, in a partnership with state and local government and private
    industry, the photovoltaic (PV) solar array at Nellis Air Force Base,
    Nevada, the largest PV array in North America, generated 57,139
    megawatt-hours in fiscal year 2008. Through a Congressional
    appropriation, F.E. Warren Air Force Base, Wyoming, installed a 2,000
    kilowatt wind turbine in January 2009, adding to the two turbines
    already operational. Together the three wind turbines are capable of
    generating 6.7 million kilowatt-hours per year, enough to power 836
    homes. These and other renewable energy and conservation initiatives
    provide examples of how the Air Force is committed to not only meeting,
    but exceeding the goals of the new Executive Order with initiatives
    that provide long-term return-on-investment.
    Sustainability
        With an eye toward improving future infrastructure, our traditional
    project goals of delivering high quality facility projects on schedule
    and within budget is expanding to include creation of functional,
    maintainable, and high performance facilities. Under EO 13423 and EISA
    2007, the Air Force employs the Federal Leadership in High Performance
    and Sustainable Building Guiding Principles to reduce total cost of
    ownership and improve energy efficiency and water conservation to
    provide safe, healthy, and productivity-enhancing facility
    environments. We also employ the U.S. Green Building Council's
    Leadership in Energy & Environmental Design (LEED) criteria in our
    designs. The LEED Green Building Rating System is the nationally
    accepted benchmark for the design, construction, and operation of high
    performance green buildings. In 2008, the Air Force certified its first
    LEED gold building at Offutt Air Force Base, Nebraska. This year, 100
    percent of Air Force-eligible MILCON projects will be capable of
    certification in LEED.
        The Air Force understands that it is not just new construction that
    needs this focus and attention. We have already begun the task of
    greening our existing building inventory and installation support
    platforms. Sustainability cannot just be about facilities, it has to be
    a holistic approach to include how we develop and sustain our
    installations. The vision is to build and shape sustainable communities
    using innovative solutions to lower the cost of installation support
    and provide more eco-friendly installations.
    BRAC 2005 Execution Report Card
        BRAC 2005 impacts more than 120 Air Force installations. Whether
    establishing the F-35 Joint Strike Fighter Initial Training Site at
    Eglin Air Force Base, Florida, closing Kulis Air Guard Station in
    Alaska, or transferring Pope Air Force Base, North Carolina to the
    Army, the Air Force community as a whole--active, Guard, Reserve--will
    benefit from changes BRAC achieves.
        Unlike the last round of BRAC where 82 percent of the
    implementation actions affected the active Air Force, in BRAC 2005, 78
    percent of implementation actions affect the Air National Guard and Air
    Force Reserve. In fact, the Air Force will spend more than $486 million
    on Air National Guard and Air Force Reserve BRAC MILCON projects. In
    addition, many of the BRAC MILCON projects on active Air Force
    installations, like the C-130 facilities built or renovated at
    Elmendorf Air Force Base, or KC-135 facilities built or renovated at
    Seymour-Johnson and MacDill Air Force Bases, will benefit Air Reserve
    Component forces stationed there.
        The Air Force's total BRAC budget is approximately $3.8 billion,
    which the Air Force has fully funded.
        The Air Force's largest BRAC costs are for military construction
    projects; approximately $2.6 billion. Operations and Maintenance
    expenditures closely follow at $926 million. This includes expenditures
    for civilian pay and moving expenses, supplies, equipment, travel, etc.
    There are other BRAC expenses, as well. Other requirements include
    expenses for information technology, equipment procurement, and Air
    Force Reserve and Air National Guard training, to name a few, at $142
    million.
        Other BRAC programmed amounts include $132 million for military
    personnel expenses and environmental planning and cleanup.
        The Air Force's fiscal year 2010 BRAC 2005 Budget Request is
    approximately $418 million, of which less than 20 percent is for BRAC
    MILCON projects.
        The Air Force's primary focus in the fiscal year 2010 program is in
    budget areas other than BRAC MILCON because we are now more focused on
    personnel-related issues, relocating assets and functions, outfitting
    new and renovated facilities, procuring end-state necessities, and
    continuing environmental actions to realign and integrate the total
    force.
    Joint Basing
        The Air Force has a long and successful history of working toward
    common goals in the Joint environment. The Air Force remains committed
    to ensuring all bases, Joint or otherwise, maintain their capability as
    weapon system platforms and meet our quality of life standards. To
    accomplish this we worked with our sister Services and OSD to establish
    common quality of life standards that ensure our personnel receive
    efficient installation support services.
        The Services are addressing many complex issues such as information
    technology integration, human resources planning, manpower and fiscal
    resources, and new organizational structures. A Senior Joint Base
    Working Group, led by the Deputy Undersecretary of Defense
    (Installations and the Environment) developed implementation policy to
    guide the transition of installation management functions and meet the
    BRAC timeline. The group is in the process of reviewing and
    coordinating the numerous details in the formal support agreements and
    implementation plans to establish each Joint Base. The five Joint Bases
    aligned in the first phase of implementation have developed
    comprehensive Memoranda of Agreement (MOA) establishing the
    relationships between the Services, and are now shifting their focus to
    the orderly transition of installation management functions by October
    2009. The seven Phase II installations are developing their MOAs now
    and will begin the transition of functions next year, and will complete
    the process by October 2010.
    Legacy BRAC--Real Property Transformation
        The Air Force remains a Federal leader in the implementation of the
    management principles outlined in Presidential Executive Order 13327,
    Federal Real Property Asset Management. We continue to aggressively
    manage our real property assets to deliver maximum value for the
    taxpayer, improve the quality of life for our Airmen and their
    families, and ensure the protection and sustainment of the environment
    to provide the highest level of support to Air Force missions. The Air
    Force is achieving these goals through an enterprise-wide Asset
    Management transformation that seeks to optimize asset value and to
    balance performance, risk, and cost over the full asset life cycle. Our
    approach is fundamentally about enhancing our built and natural asset
    inventories and linking these inventories to our decision-making
    processes and the appropriate property acquisition, management and
    disposal tools.
        Even though the BRAC 2005 round did not reduce the Air Force's real
    property footprint, our current transformation efforts seek to ``shrink
    from within'' and to leverage the value of real property assets in
    order to meet our ``20/20 by 2020'' goal of offsetting a 20 percent
    reduction in funds available for installation support activities by
    achieving efficiencies and reducing by 20 percent the Air Force
    physical plant that requires funds by the year 2020.
    Base Realignment and Closure Property Management
        To date, the Air Force has successfully conveyed by deed nearly 90
    percent of the 87,000 acres of Air Force BRAC 88, 91, 93 and 95, which
    we refer to as legacy BRAC, with the remainder under lease for
    redevelopment and reuse. The highly successful reuse of Air Force Base
    closure property led to the creation of tens-of-thousands of jobs in
    the affected communities. To complete the clean up and transfer by deed
    of remaining property, the Air Force is partnering with industry
    leaders on innovative business practices for its ``way ahead''
    strategy. These include an emphasis on performance-based environmental
    remediation contracts, using such performance-based contracts on
    regional clusters of BRAC bases, and innovative tools such as early
    property transfer and privatization of environmental cleanup so that
    the cleanup efforts complement, rather than impede, the property
    redevelopment plans and schedules. Our objectives remain constant and
    clear: (1) provide reuse opportunities that best meet the needs of the
    Air Force and local communities, (2) move the process along smartly in
    each situation to get property back into commerce as soon as practical,
    and (3) provide transparency throughout the process. Of the 32 legacy
    BRAC bases slated for closure, the Air Force completed 20 whole-base
    transfers. Ten of the remaining 12 bases are targeted for transfer by
    the end of fiscal year 2010, while the last two (former George and
    McClellan Air Force Bases) will be transferred no later than the end of
    fiscal year 2012.
        As the Air Force transfers BRAC property for civic and private
    reuse, it is paramount we ensure any past environmental contamination
    on the property does not endanger public health or the environment. The
    Air Force will continue to fulfill this most solemn responsibility, as
    reflected in our fiscal year 2010 request of $116 million for legacy
    BRAC cleanup activities and another $20 million for BRAC 2005 cleanup
    activities. Recent progress at the former McClellan Air Force Base in
    Sacramento, once the most environmentally contaminated closure base
    within DOD, is a sterling example of the effective approach taken by
    the Air Force and the local community in fostering redevelopment of
    closure base property. As a result of previously unprecedented
    collaboration between the local community, the Environmental Protection
    Agency, State environmental regulators, the primary developer, and the
    Air Force on the privatization of cleanup of the base, the former base
    is quickly becoming the ``greenest'' business park in California. It is
    home to what will be the most energy-efficient computer data center in
    the Nation. The former base is also now home to North America's largest
    photo-voltaic solar panel manufacturing plant, a 1-million square foot
    joint venture facility called Opti-Solar. The plant will create 1,000
    green jobs producing 2,000 solar panels per day beginning in 2009.
        In summary, the Air Force's real property asset management
    framework involves an understanding and balancing of our mission needs
    and risks with market dynamics, the Federal budget, the condition and
    performance of our assets and the need to protect the environment.
         partner with the joint and coalition team to win today's fight
        America's Airmen are ``All In'' supporting the Joint and Coalition
    team to win today's fight with precision and reliability. Our fiscal
    year 2010 program includes $544 million for 28 projects directly
    connected to today's fight. Four projects valued at $198 million
    directly support U.S. Central Command by providing much needed in-
    theater airlift ramp and fuel facilities, a war-reserve material
    compound, and a passenger terminal. Other projects include an aerospace
    ground equipment maintenance complex at Ramstein Air Base in Germany, a
    Global Hawk maintenance and operations complex at Naval Air Station
    Sigonella in Italy, and beddown facilities for Air Force air support
    and operations personnel with Army units. These investments provide
    direct returns by reducing backlog and waste in our logistics trail,
    and increase the capacity and efficiency of our fighting forces at
    downrange locations.
        Approximately 30,000 Airmen are currently deployed as part of
    Operations ENDURING FREEDOM and IRAQI FREEDOM. More than 3,000 of these
    Airmen are civil engineers, with over 40 percent of our deployed
    engineers filling Joint Expeditionary Tasking billets, serving side-by-
    side with our sister Services. Our heavy construction Rapid Engineer
    Deployable Heavy Operational and Repair Squadron Engineers (RED HORSE)
    and our Prime Base Engineer Emergency Force (BEEF) engineers are well-
    known in-theater for their ability to build and maintain expeditionary
    installations. Airmen continue to assist both Iraq and Afghanistan in
    building the capacity to provide self-governance. Since 2004, the Air
    Force has completed over $5.6 billion in major renovation or
    construction projects, giving the governments of Iraq and Afghanistan
    the capacity to provide basic services for its people. Whether it is
    serving on Provincial Reconstruction Teams, mitigating the threat of
    improvised explosive devices, standing up host nation Field Engineering
    Teams, or teaching aspiring engineers at the Afghan Service Academies,
    Airmen continue to demonstrate courage, commitment, and dedication in
    contingency operations. We are honored to serve with our Joint and
    Coalition team partners and will continue to support the Nation's call-
    to-arms by providing unique engineering capabilities and the most
    talented installation support personnel available.
                        recapture acquisition excellence
        The Air Force remains committed to recapturing acquisition
    excellence and developing innovative solutions that enable smart
    business decisions. Through the Air Force Civil Engineer Strategic
    Sourcing Program Management Office at the Air Force Civil Engineer
    Support Agency at Tyndall Air Force Base, Florida, we are working to
    select and prioritize sourcing opportunities and oversee the efforts of
    other Major Command-initiated CE strategic sourcing efforts. The
    Program Management Office will capitalize on industry-best practices to
    reduce the cost of building systems and commodities while improving the
    delivery of support to our customers. Five strategic sourcing
    opportunities and a commodity cost review are currently in progress to
    identify sourcing strategies leading to regional or enterprise-level
    acquisitions. We organized a staff comprised of civil engineers,
    contracting officers and financial specialists to ensure we implement a
    well-integrated, cross functional approach aimed at determining the
    right investments for our enterprise.
                                   conclusion
        Air Force MILCON, MFH and BRAC initiatives will continue to connect
    directly to Air Force priorities. It is imperative we continue to
    manage our installations by leveraging industry-best practices and
    state-of the-art technology. Our CE transformation effort, now entering
    its third year, continues to produce efficiencies and cost savings that
    enhance support for the warfighter, reduce the cost of installation
    ownership, and free resources for the recapitalization of our aging Air
    Force weapon systems. More importantly, these investments reflect
    effective stewardship of funding designed to serve our Airmen in the
    field, their families, and the taxpayer at home.

        Senator Johnson. Thank you, Ms. Ferguson.
        The fiscal 2010 Air Force budget request for military
    construction is about 10 percent lower than the 2009 request.
    Last year, the Air Force acknowledged that it was assuming a
    greater risk in construction funding to steer more funds into
    air and space assets.
        Is this year's budget request a continuation of that
    policy? Could you outline that risk that the Air Force is
    leveraging with the drop-off in funding for military
    construction?

            AIR FORCE RESERVE AND AIR NATIONAL GUARD MILCON FUNDING

        Ms. Ferguson. Yes, thank you.
        Overall, the Air Force has reduced our fiscal year 2010
    President's budget request from our fiscal year 2009 President
    budget request. In fiscal year 2009, our request for
    infrastructure programs was $5.2 billion. And this year, when
    you add MILCON, family housing, BRAC, and facility maintenance,
    we are right about $4.9 billion.
        We have increased in some areas and have decreased in
    others. In military construction, from one President's budget
    to the other President's budget, we have increased about $300
    million. We have increased our family housing maintenance count
    by about $200 million, predominantly in the energy area and to
    improve dormitories.
        And we have reduced funding in both family housing and
    BRAC, directly related to reduced requirements in both of those
    accounts. And that is good news because that reflects success
    in the program, and we do not need any additional funding
    beyond what we have asked for in this budget for either BRAC or
    family housing.
        Overall, if you look to see how we allocated the funds
    between the active and Air National Guard--and each the active,
    Air National Guard, and Air Force Reserve have seen increases
    from last year--our active request went up about 22 percent,
    the Air Force Reserve about 45 percent, and the Air National
    Guard went up about 273 percent. But as you do point out, it is
    lower than the appropriated amount, but the Air Force did
    increase--continues to take risk in infrastructure, but did
    increase our President's budget request above what we did have
    last year.
        Senator Johnson. Could you give me an update on the housing
    privatization efforts at Ellsworth Air Force Base?
        Ms. Ferguson. The Ellsworth Air Force Base project is part
    of a grouped project. It is in the concept development stage
    right now, and we anticipate coming over to the Hill to give a
    briefing within the next few months. But I will be happy to
    come over and give you more details on that.
        [The information follows:]
                      Ellsworth AFB Housing Privatization
        The Air Force will provide the Military Construction-Veterans
    Affairs Subcommittee, Senate Appropriations Committee a briefing on the
    housing privatization efforts at Ellsworth Air Force Base, South Dakota
    in July 2009.

        Senator Johnson. As a result of an OSD decision, the Air
    Force budget request does not include an updated FYDP. Last
    year, the Air Force Guard and Reserve FYDPs were very thin.
    What impact will the new FYDP policy have on the ability of
    Congress to provide additional funds for key Air Guard and
    Reserve priorities?

         FUTURE YEARS DEFENSE PROGRAM AND AIR RESERVE COMPONENT FUNDING

        Ms. Ferguson. At this time, OMB has asked the Department
    not to present any funding beyond fiscal year 2010 in our
    budget. Pending the additional guidance from the President and
    OMB beyond what is in our justification books, we are
    continuing to work with OSD on the development and release of
    anything beyond what we have provided in fiscal year 2010.
        Senator Johnson. General Lengyel and General Thompson,
    would you please give the subcommittee your assessment of this
    situation?
        General Lengyel. Yes, Mr. Chairman. Thank you for the
    question and the opportunity to comment.
        It is a concern to the National Guard bureau that
    potentially there are projects in the FYDP to accelerate. As
    you are well aware, the Air National Guard has been able to
    gain an average of $150 million or more in accelerations
    yearly. So the inability to do that could, in fact, hinder our
    ability to recapitalize our $14 billion plant.
        We hope perhaps that there is some way that we find a way
    to fund those projects into the FYDP so that they can be
    accelerated. But currently, we are playing as partners with the
    Air Force with the funds available in the program.
        Senator Johnson. General Thompson.
        General Thompson. Sir, we are just a microcosm of the
    overall Air Force, the same as the Air National Guard. Much
    smaller program, but we have the same concerns.
        We have a backlog that we would like to be able to
    accelerate. As with the Army that spoke earlier, our request
    last year of $19 million ended up an appropriation of $37
    million. Our request this year is $27 million. So we are--like
    the regular Air Force, our appropriation did exceed our
    request. So we thank you very much for that.
        So just as Joe mentioned, we will be in the same boat, all
    three components of the Air Force, if we cannot work some
    accelerations with you.
        Senator Johnson. General Lengyel and General Thompson, I am
    deeply concerned over the level of funding in the fiscal year
    2010 request for the Air Guard and Reserve. The Air Guard
    request is 60 percent below the fiscal year 2009 enacted level,
    and the Air Force Reserve request is nearly 26 percent below
    fiscal year 2009 enacted.
        This is not the first decrease we have seen in funding
    requests from the Air Guard and Reserve. What impact is this
    trend having on the Air Guard and Reserve MILCON program?
        General Lengyel. Well, sir, Mr. Chairman, once again I
    would comment that I see this budget as actually an improvement
    over the previous 2 year budgets for sure. Last year, I believe
    we had somewhere just over $34 million in current mission
    projects in the budget. This year, we are in excess of $120
    million.
        We are pleased and working again in concert with the other
    components in the Air Force to play by the same rules. I can
    tell you that like every other part in the Air Force, the Air
    National Guard received its top three priorities in MILCON
    projects, no different than anyone else.
        Competition for funding in the budget process is a
    challenge, but we are happy to say that with the Air Force, we
    are playing pretty much as one team. And we are treated no
    different, I would say, than any other part of the Air Force.
        Senator Johnson. General Thompson.
        General Thompson. Sir, I concur with General Lengyel. And
    the thing that I think is the difference this year than perhaps
    last year is we, as the Air Force, changed the business rules
    whereby the Reserve components received their percentages of
    the overall MILCON budget, which resulted in a more fair
    application of those percentages across our portfolio. So it is
    better than last year.
        Now, frankly, it is the difference between last year and
    this year was the wisdom of the Congress in accelerating some
    additions to the budget. But our requests are in line. We feel
    fairly treated. We are equal partners with the Air Force, and
    especially with the change in business rules, we are very
    satisfied with the way that we are treated as part of the Air
    Force team.
        Senator Johnson. Thank you.
        Senator Hutchison.
        Senator Hutchison. Well, I want to thank the chairman for
    asking about the Reserve issue because that has been a concern
    of mine as well.

                24TH AIR FORCE HEADQUARTERS MILCON REQUIREMENTS

        We are all waiting for the decision on the Cyber Command,
    as you can imagine, and I wondered what the MILCON requirements
    might be for the new 24th Air Force headquarters that will come
    with that Cyber Command?
        Ms. Ferguson. Ma'am, it would be premature for me to
    speculate at this time because the Air Force has not yet made
    an announcement on the basing location. But certainly, as soon
    as that is made, we can provide you and your staff an update on
    that.
        Senator Hutchison. Regardless of where it goes, have you
    done planning or is there nothing contingent in your budget
    request for any added building for that?
        Ms. Ferguson. There is nothing in our building request for
    Cyber Command right now. What I can describe is the process
    that we have gone through so far. As you know, the Air Force
    announced in January six locations that were going to be
    visited for possible beddown locations for Air Force Cyber
    Command.
        Space Command took the lead. They performed the site
    surveys at each of those six locations. And as they performed
    those six site surveys, they looked at what it would take to
    reach initial operating capability at that installation, and
    they looked at what it would take to get to final operating
    capability at that location.
        They also evaluated the installation based on six criteria
    that had been provided by the Secretary of the Air Force, and
    they included things like mission synergy, communications,
    bandwidth, availability of facilities, transportation,
    security, and off the top of my head, I can't remember the last
    one.
        But that has been ongoing, and right now, we are just
    waiting to make the announcement for the preferred location and
    the other reasonable alternatives. And at that time, the Air
    Force will begin to accomplish the environmental assessment for
    the beddown of Cyber Command.
        Senator Hutchison. So what then would be the timetable? If
    there is nothing in this year's budget request for generic
    military construction for that headquarters, what would then be
    the timetable for putting it into the FYDP or into a future
    budget?
        It just seems like you would want to stand it up as early
    as possible. And I would have thought you might have something
    set aside for that for whenever the announcement was made so it
    could be started immediately.
        Ms. Ferguson. Our anticipation is that it will be in the
    fiscal year 2011 budget request. If any MILCON is required to
    stand up Cyber Command or Cyber Numbered Air Force (NAF), that
    will be done in the fiscal year 2011 budget. And we will work
    an interim operations and maintenance (O&M) fix, O&M solution
    if required for the interim stand-up.

                JOINT BASING AND BRAC 2005 ROUND IMPLEMENTATION

        Senator Hutchison. Okay. Let me ask you the other issue
    that I had mentioned earlier, and that is the Air Force will be
    the lead on 6 of the 12 joint bases in BRAC. What are your
    preparations for that, and what is your thought of the way you
    will be putting those operations headquarters together for all
    the different services?
        Ms. Ferguson. Sure. And as you point out, they are through
    BRAC 2005, joint basing was directed at 12 installations, 12
    joint basing installations. The Air Force has lead at six of
    those installations, and we are follow at four. And we have
    been working very closely with OSD and our partners in the Army
    and the Navy to execute joint basing as directed by BRAC 2005.
        And OSD and the other services have basically broken down
    joint basing implementation into two phases, and Phase ones are
    underway right now. The memorandums of agreement have all been
    signed for the first five joint bases. In the first five, it is
    Naval Air Base Little Creek/Fort Story, Fort Myer/Henderson
    Hall, Andrews/Naval Air Station Washington, McGuire/Fort Dix/
    Lakehurst, and then installations at Guam, both Andersen Air
    Force Base and Navy Region Guam.
        All the rest of the joint bases are in Phase II, and that
    does include Lackland Air Force Base, Fort Sam Houston, and
    Randolph Air Force Base. And I can tell you briefly, all of the
    Phase I bases have reached their initial operational capability
    today, and they will reach full operational capability, will be
    fully stood up on 1 October of this year.
        The Phase II MOAs--and I can talk to you specifically about
    Lackland/Fort Sam in just a second. All the Phase II MOAs are
    under development right now with an initial operational
    capability (IOC) for the follow-on for the Phase II bases in
    January 2010 with full operating capability in October 2010.
        Lackland Air Force Base, Fort Sam Houston, and Randolph Air
    Force Base are one of the last seven bases to go through this
    process I will describe for you. But there is a combination of
    folks here in Washington, DC helping to make this work, along
    with each of the major commands helping to make this work.
        And the next major milestone for Lackland Air Force Base/
    Fort Sam Houston on May 22, the command structure at the major
    commands for both the Army and the Air Force will submit a
    draft memorandum of agreement to the Department of Defense for
    us to start looking at. And there will be a workshop that is
    held in San Antonio from the 9th to 12th of June.
        The anticipation for an MOA signature for Fort Sam Houston,
    Lackland Air Force Base, and Randolph Air Force Base will be
    the 22nd of September.
        Senator Hutchison. Could I just follow up with a quick
    question, and that is who will make the MILCON requests where
    there are joint bases? Will it be the lead, or will it be the
    service?
        Ms. Ferguson. It will be the lead for installation support
    functions. If there is a mission change, then it will be the
    requiring. So if there is an Army mission change on Fort Sam
    Houston, the Army would make that request. If it was for a
    regular mission support facility, like a gym or an
    administrative facility to replace something existing, the Air
    Force would do that as the lead for that joint base.
        Senator Hutchison. Thank you.
        Senator Johnson. Senator Pryor.
        Senator Pryor. Thank you, Mr. Chairman.

                      AMERICAN EAGLE HOUSING PRIVATIZATION

        Ms. Ferguson, let me ask, as you are very well aware
    because you have dealt with this for a long time, the Little
    Rock Air Force Base, along with bases in Georgia,
    Massachusetts, and Florida, was able recently to resolve a very
    complicated housing privatization issue. And the first question
    is could you give us just--give the subcommittee here a status
    report on all the bases, if you could, just kind of where that
    stands now and particularly where we started in terms of what
    our original goals were versus how many houses and how many
    refurbished houses we end up with now?
        Ms. Ferguson. Sure. And first, I want to thank you and your
    staff for all the work you helped us with as we did the work
    out of the American Eagle project. As you know, the American
    Eagle projects, the four projects were very difficult for us,
    and we appreciate the support of yourself and the other members
    as we worked through that.
        Specifically for Little Rock Air Force Base, the scope was
    reduced from 1,200 to 1,000 as we worked the restructured deal.
    And there was less new construction than what was in the
    original American Eagle project.
        The feedback we have got so far is the Hunt-Pinnacle team,
    the new project owner that is in there, has done a great job of
    bringing in new branding to the installation. They have done a
    tremendous job of taking care of some of the backlogs of
    maintenance, roof repair, storm damage repairs that were both
    at Little Rock and Moody Air Force Bases.
        And we have got great feedback from the installations on
    the work that they have done since they have gone in there in
    November. The Air Force has issued notice to proceed for
    demolition and construction, and Hunt-Pinnacle has begun work
    on the 10 partially completed houses that American Eagle
    started. And those houses should be complete in June. We should
    be able to start moving families into those 10 houses in June.
        The other things they are doing is they are demolishing
    some of that partial work that American Eagle had done that
    wasn't recoverable, and that should be done also. And starting
    in June, they should begin working on 131 new houses at Little
    Rock Air Force Base with work to be done in March 2011.
        Senator Pryor. If I recall, Little Rock has their set of
    issues, and Georgia, Massachusetts, and Florida, they are all a
    little different. But are they generally following on that same
    track that, in effect, the taxpayer is getting a little less
    than what we had originally bargained for? But the work is back
    on track and things are moving to, under the circumstances, a
    conclusion that is relatively satisfactory?
        Ms. Ferguson. Absolutely. Each one of them is similar. Each
    project is different in some respects. Some--at Patrick Air
    Force Base, we added some additional homes to the deal.
    Originally, it was all the houses were off base. We did roll in
    some houses that were on base to the deal.
        Part of the difficulty with the work out of American Eagle
    is there was some collapsed bonds. There wasn't enough money
    available to do what was done originally. And because of the
    financial crisis and the economy, we were unable to go out and
    get additional financing. So we had to live within the dollars
    that were available at the time.
        Work is progressing at all four bases. At Patrick Air Force
    Base, they are demolishing 111 houses right now, and those
    should be complete shortly. They have begun renovation of 435
    homes that were brought into the deal in the north and central
    housing.
        At Moody Air Force Base, they are completing 50 of the
    homes that American Eagle had started. And at Hanscom Air Force
    Base, I actually just came back from a trip to Hanscom Air
    Force Base and visited up there, and they are completing 26
    houses that American Eagle started. And they have done a great
    job.
        On the 1st and 2nd of June, I am traveling to Little Rock,
    Patrick, and Moody Air Force Bases to do another touch with the
    other three bases----
        Senator Pryor. Great.
        Ms. Ferguson [continuing]. To get hands on in how they are
    doing.
        Senator Pryor. Great. Thank you for doing that.
        Now let me ask, from this point moving forward, have you
    prepared a set of lessons learned, things that if you could go
    back, you would do them differently and a better game plan as
    we move forward? Do you have that?

                        AMERICAN EAGLE--LESSONS LEARNED

        Ms. Ferguson. Absolutely. We have learned a lot of lessons
    from American Eagle and not just the Air Force, but the Navy
    and the Army also did as well. And I will go through just a
    couple of things the Air Force has done and how we have changed
    our processes as we have taken lessons learned from American
    Eagle.
        The first thing we did is we centralized source selection
    authority, and actually, that authority resides with me and my
    office. Before, when we awarded the four American Eagle
    projects, there were different source selection authorities for
    each one of the four. They were all awarded within a 1-year
    time period. And so, we weren't able to see those things that
    were occurring across the Air Force.
        We have centralized construction management reporting to
    the Air Force Center for Engineering and the Environment down
    in San Antonio, and they have got standard construction
    reporting, and they have got financial and construction
    reviews. We monitor almost on a daily basis some key
    performance indicators. We monitor the construction schedules,
    the budgets, the financial indicators, the debt covenants, and
    the operating expenses.
        We do, along with our partners, do customer service and
    satisfaction surveys. We do a monthly in-depth review at my
    level of the execution of these projects. We have initiated
    also pretty robust development review visits where we send a
    team out from Air Force Center for Engineering and the
    Environment to go out and actually touch on the ground on a
    pretty frequent basis the issues that are happening there.
        Senator Pryor. I think all of that is good because I think
    actually privatization for housing does make a lot of sense,
    but we just have to make sure that we manage it properly.
        One last question on that specific deal, again, I think
    there were four bases involved in four different States. Is
    there anything right now that the Air Force is doing with
    regard to American Eagle? Any recourse, any lawsuit, trying to
    recover some of the lost money, or have we blacklisted them for
    future projects? What, if any, actions has the Air Force taken
    with regard to American Eagle?
        Ms. Ferguson. I will have to get you an update on that.
    They were working through--our general counsel is working
    through their review of the potential debarment, and we will
    get you an update on that. I just don't have a current status.
        [The information follows:]
                                 American Eagle
        An ongoing investigation into American Eagle's conduct continues.
    As information is developed and made available through the
    investigation, the Air Force Suspension and Debarment Official will
    continue to monitor whether there exists a sufficient basis to require
    a suspension or debarment action to protect the Government's interests
    in accordance with 48 C.P.R. Subpart 9.4. In the meantime, as it
    relates to American Eagle's responsibility to be a contractor to the
    U.S. Government, before awarding a contract to American Eagle or any of
    the major corporate entities making up American Eagle, in accordance
    with 48 C.P.R. Subpart 9.1, contracting officers throughout the Federal
    Government will be required to make an affirmative determination of
    responsibility. The affirmative responsibility determination requires
    contracting officers to verify that prospective awardees (a) have
    adequate financial resources to perform a given contract; (b) be able
    to comply with the contract requirements; (c) have a satisfactory
    performance record; (d) have a satisfactory record of integrity and
    business ethics; (e) have the necessary capabilities to perform the
    contract; (f) have the necessary facilities to perform the contract;
    and (g) otherwise be qualified and eligible to receive an award. Apart
    from removing American Eagle from the housing privatization projects,
    at this time the Air Force has not initiated any other action against
    American Eagle.

        Senator Pryor. Thank you.
        Mr. Chairman, just so you will know, my thought is, if you
    have a company like American Eagle that just doesn't honor its
    obligations, its contracts it has made, my sense is they ought
    to be--there ought to be some sort of so-called ``death
    penalty'' for them or some sort of blacklist where for a period
    of years they just can't bid on these contracts.
        But anyway, we can talk about that in another context.
        Thank you.
        Senator Johnson. I will take that under advisement.
        Senator Murkowski.
        Senator Murkowski. Thank you, Mr. Chairman.

          COAL TO LIQUID FACILITY NEAR EIELSON AIR FORCE BASE, ALASKA

        Ms. Ferguson, I want to ask about a situation up north as
    it relates to Eielson and Fairbanks, the community that is the
    largest community in relation to that base there.
        Recognizing that the Air Force has embarked on this
    strategy to promote the development of synthetic fuels, one
    that I heartily endorse, last year in the fiscal year 2009
    Defense Appropriations Act, there were $5 million in O&M funds
    that was set aside, another $5 million in research and
    development funds that was set aside to study the feasibility
    of a coal-to-liquids facility near Eielson.
        And the Fairbanks North Star Borough, which is the local
    government there, has been working on this project for quite
    some time. They have defined several issues that they believe
    are very important to resolve in order to decide how to move
    this forward and whether to go forward with the project.
        The Air Force is now in the process of commissioning two
    studies now, and it is my understanding that the Fairbanks
    North Star Borough believes that these studies will not answer
    the questions about this project, which really do need to be
    answered now. And apparently, it wasn't up until just about a
    week ago that the Air Force actually met with the community
    leaders about the problem.
        The community leaders don't feel that the Air Force has
    been listening to their concerns, and the concern is that they
    will go forward, spend $10 million on studies that may have
    very little value.
        So the question that I have of you this afternoon is
    whether the Air Force is prepared to work with the leadership
    of the Fairbanks North Star Borough to address the concerns
    about how this $10 million is going to be spent?
        Ms. Ferguson. That is a great question. Absolutely, the Air
    Force is committed to work with the community of Fairbanks and
    the Fairbanks Economic Development Council (FEDC) up there as
    we work through how we spend this $10 million and how do we
    best support the community as we move forward.
        As you point out, there was a meeting just recently with
    the community that was on the 3rd of May, and the feedback I
    got out of the meeting is there was a lot of issues that were
    raised. And I think it helped to alleviate some of the concerns
    of the community at that time.
        And the purpose of the meeting was really to provide them
    an update as to where the Air Force was, and to be quite
    honest, it was hard for the Air Force to get started on this.
    It was an unusual earmark. We weren't quite sure how to work
    it, how to work it with the community. So I think that is why
    there was some delay in beginning to talk to the community.
        The folks at the local level were concerned, as you point
    out, on how the Air Force was going to go forward, what were
    the studies that we are going to do, how we were going to
    integrate the community in that. And I can tell you just a
    couple of things.
        The Air Force is really doing three studies. One is the
    research on the feasibility of a coal-to-liquid plant. Can it
    work up there? How will it work? What are the things that need
    to be done to make that work?
        And then the second thing is an environmental baseline
    study, which you have to do for any project. And then the third
    thing, and this may be one of the things the community is
    concerned about, is the mission compatibility study. How would
    a coal-to-liquid plant work alongside the existing missions or
    potential future missions at Eielson Air Force Base?
        So there are kind of three parallel studies all going on.
    Those will all come together mid to late summer, July-August
    timeframe. There is actually another meeting up there today
    with General Chandler, the Pacific Air Forces (PACAF)
    commander. And he is meeting with Mayor Whitaker and the FEDC
    folks today.
        And then there will be another follow-on meeting in late
    July, early August that talks about, the results of the
    preliminary studies and helps to map out a way forward.
        Senator Murkowski. Well, I am pleased to see that there is
    a greater level of communication. I think the community's
    concerns about how these dollars are going to be spent are good
    and fair and legitimate. And in order for this to work, there
    has got to be a full understanding as to how the project truly
    does play forward.
        And I appreciate--I have had an opportunity myself to sit
    in on the initial meeting, and you had all the stakeholders in
    the same room. And there was a great deal of energy and a great
    attitude about the feasibility of how we can really make this
    work. Since then, everything has kind of fallen by the wayside,
    and the level of communication has not been what it needs to
    be.
        So I would just encourage that there be that level of
    coordination and collaboration between the leadership within
    the Fairbanks community and the Air Force. So I appreciate
    that.

           BRAC 2005 CLOSURE OF KULIS AIR NATIONAL GUARD BASE, ALASKA

        And then one final question, and this relates to the 2005
    BRAC and Kulis Air National Guard Base there in Anchorage. We
    think, within the community, that this has been a win in terms
    of closures--a win for the Air Force and a win for the
    community. Because once Kulis moves then over to Elmendorf, the
    land that Kulis currently occupies can be put to economic
    development.
        So the question quickly to you is whether or not Kulis is
    on track and whether or not there is adequate funding to
    complete that BRAC process there at Kulis?
        Ms. Ferguson. Absolutely. Kulis Air National Guard Base is
    on track for September 15, 2011. And we do not need any
    additional funding. The Air Force has fully funded BRAC not
    just at Kulis, but across the Air Force.
        And we monitor the execution of that very closely. We do
    quarterly program management reviews. The last one was just
    under a month ago, and so far everything is on track and on
    budget.
        Senator Murkowski. Good. I always like good news like that.
        Thank you, Mr. Chairman.

                         ADDITIONAL COMMITTEE QUESTIONS

        Senator Johnson. Thank you, Senator.
        I would like to thank all of our witnesses for appearing
    before the subcommittee today. We look forward to working with
    you this year on what is likely to be a very compressed
    schedule.
        For the information of members, questions for the record
    should be submitted by the close of business on May 15.
        [The following questions were not asked at the hearing, but
    were submitted to the Department for response subsequent to the
    hearing:]

                Questions Submitted by Senator Daniel K. Inouye

                              f-22 for hawaii ang
        Question. Hawaii's Air National Guard will receive its allocation
    of twenty F-22 fighters in February 2011.
        Do you believe that the two projects requested in fiscal year 2010
    will be completed, or near completion, when the planes arrive?
        Answer. Given the above information that F-22 fighters will begin
    arriving at Hickam Air Force Base, Hawaii in February 2011, it is
    likely that the two projects requested in fiscal year 2010 will be
    underway, assuming the current President's Budget request is passed to
    provide funding at/near the start of the fiscal year in October 2010.
    However, it is unlikely that the two projects will be nearing
    completion when the fighters arrive.
        Question. Hawaii's Air National Guard will receive its allocation
    of twenty F-22 fighters in February 2011.
        Could you please explain the process by which priority was given to
    the F-22 military construction projects required at Hickam AFB?
        Answer. The Air Force prioritized basing locations through an
    integrated process that considered mission requirements, available
    space/facilities, timing of aircraft arrivals, and available military
    construction funding. Within this prioritization methodology, the
    Hickam Air Force Base, Hawaii projects were aligned against fiscal
    years 2010-2013. The Air National Guard conducted site surveys and Site
    Activation Task Forces at Hickam Air Force Base which were attended by
    representatives from the Headquarters Pacific Air Forces staff and the
    F-22 Systems Program Office as well as the host unit scheduled to
    operate the aircraft. Based on operational requirements, sequencing of
    construction, constructability of the available sites, and funds
    available through the military construction program, the first two
    projects were aligned against fiscal year 2010. These projects provide
    critical aircraft parking apron/taxiway pavements ($7 million) and the
    dedicated Low Observable/Composite Repair Facility ($26 million) needed
    to begin operating the aircraft from Hickam Air Force Base, Hawaii.
        Question. The Department of Defense recently announced its
    intention to halt production of the F-22 in fiscal year 2010. Plans to
    construct additional infrastructure at Hickam AFB for the F-22s, bed
    down and other support facilities, is scheduled to occur in the next 4
    years.
        What, if any, impact does the plan to discontinue production of the
    F-22, and changes to the F-22 allocations or scheduled delivery, factor
    into the prioritization of future F-22 projects at Hickam?
        Answer. The fiscal year 2010 President's Budget request shows
    aircraft arriving at the 154th Wing, Hickam Air Force Base, Hawaii
    beginning in the first quarter of fiscal year 2011. The total delivery
    is programmed to be completed with 18 primary aircraft authorized by
    the end of the first quarter of fiscal year 2012. Currently, there is
    no programmed impact to the prioritization of future F-22 projects at
    Hickam Air Force Base, Hawaii based on the Department of Defense's
    intent to halt production of further F-22 aircraft.
                    short auxiliary fields (saaf) in hawaii
        Question. Hawaii's location in the Asia-Pacific region provides
    many opportunities and challenges to our military. Strategically
    located in the Pacific, Hawaii presents many unique challenges that
    include the ability to respond to threats in a vast geographic area,
    and when called upon, provide humanitarian assistance during times of
    disasters. Our military is engaged in Overseas Contingency Operations
    in Afghanistan and Iraq, which increased the pace of deployments for
    our men and women in uniform. These deployments require our service
    members to maintain a high level of training and readiness. One of the
    training requirements is proficiency to land on Short Auxiliary
    Airfields (SAAF). Hawaii does not have a SAAF runway for C-17 crews to
    complete their qualifications requirements, and must fly to the
    continental United States. This increases costs for the Air Force,
    results in a loss of valuable man-hours are lost, and increases the
    strain on the C-17s.
        Does the Air Force plan to budget for the construction of an SAAF
    in the State of Hawaii in the near future, and what annual costs are
    incurred by the Air Force in its current arrangement to maintain C-17
    crews' qualification requirements versus the cost of construction an
    SAAF?
        Answer. The Air Force is addressing the C-17 Short Auxiliary
    Airfield (SAAF) training requirements through our standard military
    construction program. The project proposed in support of this
    requirement competes against other existing requirements on an annual
    basis.
        The Air Force is minimizing costs associated with annual SAAF
    training requirements for Hickam Air Force Base, Hawaii C-17 aircrews
    by using simulated SAAFs on Kaneohe Bay Marine Corps Air Station or
    Kalealoa (John Rogers/Barbers Point Airfield). The use of these
    simulated SAAFs, such as a painted SAAF on the runway at Kaneohe Bay
    Marine Corps Air Station, requires a temporary 15th Operations Group
    Commander waiver to the Air Force C-17 SAAF training standard. Any
    initial or requalification C-17 aircrew training must be completed on
    an actual SAAF runway.
                                     ______

                Questions Submitted by Senator Mary L. Landrieu

              weapons load training facility at barksdale afb, la
        Question. With the delivery of the full President's Budget on
    Friday, my staff has completed an initial review of the military
    construction projects for the State of Louisiana. Our quick review has
    indicated just one Department of Defense project: A new ``Warrior in
    Transition Complex'', at Fort Polk, for our Wounded Warriors. My first
    question is for the Air Force. ``Reinvigorate the Nuclear Enterprise''
    is currently, your number one service priority. The stand-up of Global
    Strike Command is a clear message of that stated priority. However,
    adequate training facilities are critical to sustaining this mission
    area. The 2nd Bomb Wing, located at Barksdale Air Force Base, has an
    urgent need for a new Weapons Load Training Facility. This facility
    will directly support training of our crews in the proper processes and
    procedures for nuclear and conventional munitions loading of the B-52.
    This facility, which directly supports the Air Force's number one
    priority, is currently not funded for fiscal year 2010.
        Can you explain why?
        Answer. Projects identified by the New Discovery review were
    prioritized and the most critical projects were funded first (two Minot
    Air Force Base, North Dakota facility projects in fiscal year 2010).
    The Weapons Load Training Facility is a solid Air Force military
    construction requirement. Currently, there are existing workarounds
    that temporarily allow mission accomplishment. This requirement will
    continue to be evaluated during the upcoming budget cycle and the
    Quadrennial Defense Review.
          milcon in the american recovery and reinvestment act of 2009
        Question. Just a few short months ago, The American Recovery and
    Reinvestment Act of 2009 provided the Department of Defense nearly $2.2
    billion in military construction funding. I'm disappointed that the
    State of Louisiana received none of this funding.
        For the Air Force.can you explain the process you followed to
    prioritize and submit military construction projects for this funding,
    to include your Guard and Reserve components?
        Answer. The Air Force received $310.1 million in military
    construction funds through the American Recovery and Reinvestment Act
    of 2009. The Military Construction funds were provided in the following
    categories: Air National Guard ($50 million), Child Development Centers
    ($80 million), Troop Housing ($100 million), and Military Family
    Housing ($80.1 million). There were no funds provided for Air Force
    Reserve military construction activities.
        Air National Guard projects were selected from projects previously
    validated by the States and Air National Guard leadership. Several
    considerations were taken into account in project selection including:
    ability to award quickly, design complete projects ready for
    solicitation, State workload (including Wing Deployment status), and
    maximizing available funding at multiple locations.
        The Child Development Center (CDC) projects represent the top seven
    priorities in the Air Force's CDC construction program. Projects were
    previously prioritized by the major commands and Air Force Services
    during the fiscal year 2009 budget process.
        In selection of the troop housing, or dormitory projects, the Air
    Force followed the Air Force Dormitory Master Plan in selecting
    military construction projects. Additional consideration was applied
    with regard to the ability to execute projects quickly and maximizing
    the available ARRA funds.
        Lastly, two Military Family Housing military construction projects
    were selected based on the ability to execute the projects quickly. In
    the case of Malmstrom AFB, MT the project corrected structural safety
    deficiencies posing a threat to our Airmen and their families.
                             global strike command
        Question. Ms Ferguson, you played a lead role in the site selection
    process for Global Strike Command. In April 2009, the Air Force
    announced that Barksdale Air Force Base was the chosen location to bed
    down this new command. I understand that the Environmental Impact Study
    is still in progress. We're anxiously awaiting the final results. As
    we've previously discussed with both Secretary Donley and General
    Schwartz, the cyber innovation center, located just outside Barksdale
    Air Force Base, is a world-class facility, designed to house and
    support cyber technology development. Yet, it was constructed to
    support the Air Force. I'd encourage the Air Force and this committee,
    to consider this facility in both the short and long-term plans, as a
    realistic, cost-effective method of standing up Global Strike Command
    at Barksdale Air Force Base.
        What fiscal year 2010 funding has been requested to prepare for
    this transition, and to achieve the initial operating capability of
    Global Strike Command at Barksdale AFB, pending the EIS results? What
    is the Air Force's latest estimate for completing and announcing the
    Environmental Impact Study results?
        Answer. $20 million has been requested in the fiscal year 2010
    President's Budget to fund the provisional command's operations and
    transition of Global Strike Command to its final location. Currently,
    we estimate that the environmental assessment will be complete the
    final week of June with an announcement shortly thereafter.
              military command locations off military reservations
        Question. Military commands are traditionally located on a military
    base or post, with force protection being one of the driving
    requirements and benefits of doing so. However, one exception that
    comes to mind is the United States Southern Command, located in Doral,
    Florida. In fact, the new consolidated headquarters, authorized by the
    2008 National Defense Authorization Act, has paved the way for
    construction of their new headquarters on 55 acres of Florida-owned
    land immediately adjacent to the command's current facility. Both the
    current and the future headquarter buildings are located outside the
    confines of a military facility.
        What would prohibit a major command from being located off-base,
    even in an interim fashion?
        Answer. There are no regulatory requirements which would prohibit a
    military command (e.g., headquarters) from being located off-base;
    however, the exacting force protection requirements mandated by the
    Department of Defense would make an off-base location very costly.
    Department of Defense guidance, contained in various DOD instructions
    and Unified Facility Criteria, requiring stand-off distances from roads
    and other buildings, controlled perimeters, positive identification of
    persons accessing the facility and other stringent anti-terrorism and
    security measures are expensive to attain. When the U.S. Southern
    Command Headquarters relocated to Miami, Florida in 1997, the extensive
    array of anti-terrorism protective requirements were not yet
    established. We note that, due to the current anti-terrorism guidance
    and BRAC decisions, efforts are currently underway to re-locate
    significant Washington, DC-area headquarters staff elements from off-
    base facilities to various military installations within the National
    Capitol Region for similar reasons.

                              SUBCOMMITTEE RECESS

        Senator Johnson. This hearing is recessed.
        [Whereupon, at 4 p.m., Tuesday, May 12, the subcommittee
    was recessed, to reconvene subject to the call of the Chair.]

       MILITARY CONSTRUCTION AND VETERANS AFFAIRS, AND RELATED AGENCIES
                      APPROPRIATIONS FOR FISCAL YEAR 2010

                                  ----------

                             TUESDAY, MAY 19, 2009

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 2:38 p.m., in room SD-138, Dirksen
    Senate Office Building, Hon. Tim Johnson (chairman) presiding.
        Present: Senators Johnson, Pryor, and Hutchison.

                             DEPARTMENT OF DEFENSE

    STATEMENT OF HON. ROBERT F. HALE, UNDER SECRETARY OF
                DEFENSE (COMPTROLLER)

                    OPENING STATEMENT OF SENATOR TIM JOHNSON

        Senator Johnson. Good afternoon. This hearing will come to
    order.
        I welcome everyone to today's hearing to discuss the
    President's fiscal year 2010 budget request for military
    construction and family housing. Today, we will hear from the
    Defense Department comptroller and from the Navy.
        Welcome to the students and faculty of my alma mater, the
    University of South Dakota.
        Our procedure is to have opening statements by the chairman
    and ranking member, followed by an opening statement from our
    witnesses. In addition to the oral statement, all prepared
    statements from our witnesses will be entered into the record.
        I request that our members limit their questions to 6-
    minute rounds.
        Our first panel today will be the DOD comptroller, Mr.
    Robert Hale, and Mr. Wayne Arny, the Deputy Under Secretary of
    Defense for Installations and Environment. Mr. Hale, Mr. Arny,
    thank you for coming. We look forward to your testimony.
        The President's military construction budget request for
    2010 totals $22.9 billion, $2.1 billion below last year's
    request. I understand that the primary reasons for this
    decrease are decreasing requirements for base realignment and
    closure (BRAC) 2005 construction funding and for military
    family housing funding due to the progress made on
    privatization.
        However, this committee carefully watches funding for the
    Guard and the Reserves, and I notice that funding for the
    Guard, Army Guard is 26 percent below last year's request and
    54 percent below last year's enacted level.
        I am pleased to see funding increases for the other Reserve
    components, but I believe we can and should do more for our
    Guard and Reserve forces.
        Today, I would like to focus on several issues in the
    budget request, including the status of the services' Future
    Years Defense Plans, incremental funding, global basing, and
    the Homeowners Assistance Program. When we get to Navy issues
    with the second panel, I am very interested in the status of
    the marine buildup on Guam.
        We have a lot of ground to cover today. So I will limit my
    opening remarks.
        Senator Hutchison, would you care to make an opening
    statement?

                   STATEMENT OF SENATOR KAY BAILEY HUTCHISON

        Senator Hutchison. Yes, Mr. Chairman. Thank you very much.
        I appreciate having this hearing, of course, and I look
    forward to discussing the overall construction needs that will
    be presented here today.
        It was just a year ago, Mr. Arny, that you and Mr. Penn and
    General Payne were here to discuss the fiscal year 2009
    request. As we begin the budget process for fiscal year 2010,
    there are several significant issues with the military
    construction budget.
        As the chairman mentioned, the overall request of $23
    billion is an 18 percent decrease from the 2009 level. This
    includes $7.5 billion to implement BRAC actions as that program
    continues to race to meet the 2011 statutory deadline.
        I understand we are coming to the end of the BRAC process,
    but this amount is nearly 15 percent below the 2009 enacted
    level and does not give the services much leeway in completing
    the immense program on time. I am anxious to hear from Mr. Arny
    on this program and how we are going to meet the 2011 deadline.
        Full funding of BRAC has been a priority of mine because it
    is the easiest target that we have had through the years. And
    people have borrowed from it, but we have assured that it was
    always paid back. So we want it to be used for making that 2011
    deadline.
        I also understand that the administration has a policy
    prohibiting the Office of the Secretary of Defense and the
    services from sharing the current FYDP with Congress. To go a
    step further, I know that the Guard and Reserve is required by
    law to present a FYDP to Congress but have been directed not
    to.
        In essence, you are asking Congress and this subcommittee
    to invest in a MILCON program without the knowledge of how
    these programs will fit into the larger defense posture. I know
    you have a Quadrennial Defense Review taking place that will
    not be completed until the fall, but I think it is the
    responsibility of the department to work with Congress on these
    plans.
        I don't see the wisdom of this policy, and especially since
    the subcommittee has a history of not allowing congressional
    inserts unless the project is a validated DOD requirement in a
    FYDP. We have been very disciplined about that.
        So I will ask both of you to speak to that, and I also want
    to talk about the brigade combat teams being lowered to 45,
    which we learned--well, we have learned in the news, but also
    we discussed at our last hearing with the Army. But I want to
    know how it is going to affect the overall DOD defense posture
    and the MILCON master plan.
        Last week, when we talked about the Army budget request, I
    brought up the subject of the lowering of the number of brigade
    combat teams. I received assurances at that time that the Army
    MILCON plan for the brigade combat teams at Fort Bliss has not
    changed and is proceeding accordingly. I was pleased to receive
    this assurance.
        I have discussed this issue with the Secretary of Defense
    and the Chief of Staff of the Army because I am concerned that
    we have the construction already in progress at Fort Bliss for
    the teams, as has been provided by the Department of Defense
    and BRAC. The Secretary of Defense and the Chief of Staff of
    the Army--and if either of you can discuss these decisions, I
    hope that you will.
        Also, the Army's desire to expand Pinon Canyon range at
    Fort Carson has been held up for over 3 years. Yet the Army
    told this subcommittee that they have not begun working on a
    plan B. In addition, I have to ask would it make sense to put
    another brigade combat team at Fort Carson if they don't have
    this training capacity?
        Also, relocating marines to Guam. We are moving 8,000
    marines from Okinawa to Guam and establishing a Joint Base
    Guam, combining the Navy base and Andersen Air Force Base, with
    the Navy as the lead. This will bring an additional 17,000
    people to the island. The Government of Japan is contributing
    $6 billion to the move and the United States $4 billion.
        After 3 years, we have yet to see a master plan to spend
    the $10 billion and have been told that the cost could be much
    higher. So I think it is time for us to see if there is a
    master plan and that this committee be able to know what it is
    so that we can appropriately plan for that.
        Also, it is against this backdrop that we begin to examine
    the budget request for military construction in the Department
    of the Navy. $3.8 billion is in the Navy request and the Marine
    Corps, and the Marine Corps, of course, has now--it
    successfully completed its increase to its end strength, and we
    need to talk about that with the second panel.
        I am anxious to hear from Secretary Penn, General Payne,
    and Admiral Handley about their needs and priorities for 2010.
    I support the Navy's emphasis on quality of life facilities,
    and I am sure that they remember that we talked about this last
    year and encouraged the Navy to do exactly that.

                               PREPARED STATEMENT

        The Marine Corps' growth to 202,000, as a result of the
    Grow the Force initiative, certainly is well planned, and I am
    pleased to see that the MILCON and housing request to train and
    house these additional personnel and their families is going
    forward in an expeditious manner.
        So, Mr. Chairman, I thank you for the hearing. I think that
    we have several items to discuss, and I look forward to hearing
    from the witnesses.
        [The statement follows:]

               Prepared Statement of Senator Kay Bailey Hutchison

        Good morning, Mr. Chairman. I would also like to welcome our
    witnesses and guests. Thank you for holding this hearing today as we
    examine the President's budget request for military construction and
    family housing for the Department of Defense, Base Realignment and
    Closure actions, and the Department of the Navy, including the United
    States Marine Corps. I look forward to discussing the overall
    construction needs of our soldiers, sailors and airmen with Mr. Hale
    and Mr. Arny, and the needs of the Navy and Marine Corps with Assistant
    Secretary Penn and General Payne. It was just a year ago when Mr. Arny,
    Mr. Penn and General Payne were here to discuss the fiscal year 2009
    request. Welcome back gentlemen, it is good to see you again.
        As we begin the budget process for fiscal year 2010, there are
    several significant issues with the military construction budget.
    First, the overall request of $23 billion is nearly an 18 percent
    decrease from the fiscal year 2009 enacted level. This includes $7.5
    billion to implement BRAC actions, as that program continues its race
    to meet the 2011 statutory deadline. I understand we are coming to the
    end of the BRAC process, but this requested amount is nearly 15 percent
    below the fiscal year 2009 enacted level and does not give the Services
    much leeway in completing this immense program on time. I am anxious to
    hear from Mr. Arny as to how this program is doing. We have to provide
    the right infrastructure for our soldiers, sailors, airmen and marines
    and their families. This is why fully funding and effectively
    implementing BRAC is so important. The sooner we can get our servicemen
    and women home and into new, state-of-the-art facilities, the sooner we
    will live up to our commitment to provide for them in a way that is
    commensurate with their service to our Nation.
    Future Years Defense Program (FYDP)
        I understand that the Secretary of Defense has a policy that
    prohibits OSD and the Services from sharing the current FYDP with
    Congress. To go a step further, I know the Guard and Reserve is
    required by law to present the FYDP to Congress and the Secretary has
    directed them not to. In essence, you are asking Congress and this
    subcommittee to invest in a MILCON program without the knowledge of how
    these proposed projects will fit into the larger defense posture. I
    know you have a Quadrennial Defense Review (QDR) taking place that will
    not be completed until the fall, but I think it is the responsibility
    of the Department to work with Congress on these plans. I really don't
    see the wisdom of this policy, and frankly I am surprised at it,
    especially since this subcommittee has a history of NOT allowing
    Congressional inserts unless the project is a validated DOD requirement
    in the FYDP. I will ask you both to speak to this policy later in the
    hearing. When combined with new policy assertions, such as Secretary
    Gates' decision to cap the number of Brigade Combat Teams at 45,
    Congress needs to know how this will affect the DOD defense posture and
    the MILCON master plan.
    Brigade Combat Teams (BCTs)
        Last week at the hearing on the Army budget request, I brought up
    the subject of the Army's Brigade Combat Team stationing plan, and I
    received assurances at that time that the Army MILCON plan for the
    Brigade Combat Teams at Fort Bliss has not changed and is proceeding
    accordingly. I was very pleased to receive that assurance. I have
    discussed this issue with the Secretary of Defense and the Chief of
    Staff of the Army because I am concerned that we do not disrupt the
    extensive construction already in progress at Fort Bliss.
    Relocating Marines to Guam
        We are moving 8,000 Marines from Okinawa to Guam and establishing a
    Joint Base Guam, combining the Navy base and Anderson AFB, with the
    Navy as the lead. This will bring an additional 17,000 people to the
    island. The government of Japan is contributing $6 billion to make the
    move and the U.S. government has promised $4 billion.
        After 3 years of asking, we have yet to see a master plan to spend
    the $10 billion, and in fact, we understand the cost will be much
    higher. Before we commit the U.S. taxpayer to such a large move we
    would like to see a comprehensive master plan in order that Congress
    can provide the Department with the proper oversight. We were told by
    the Navy and the Marine Corps that they cannot speak to the out years
    or show us yearly project plans because of the FYDP restriction.
        A major issue holding up this planned move is the condition of the
    infrastructure on the island. Assistant Secretary Penn will speak to
    this in more detail, I'm sure, but since Mr. Arny is very familiar with
    the Island of Guam I look forward to his perspective.
        The electrical grid, water distribution system, and solid waste
    disposal capability are in serious need of repair and will not support
    the additional troops and their families. As such, will DOD pay the
    bill for upgrading the infrastructure for these utilities as part of
    the move? I think this question needs to be addressed, and without a
    master plan I think it will be difficult for all of us.
    Navy and Marine Corps
        It is against this backdrop that we begin to examine the budget
    request for military construction. The Department of the Navy's $3.8
    billion budget request and the Marine Corps' successful efforts to
    increase its end strength is quite significant and I look forward to
    the discussion with the second panel.
        I am anxious to hear from Secretary Penn, Major General Payne and
    Rear Admiral Handley about their needs and priorities for fiscal year
    2010. I fully support the Department of the Navy's emphasis on quality
    of life facilities, which I'm sure they remember this subcommittee
    requested they keep in their plans. The Marine Corps' growth to 202,000
    as a result of the Grow the Force initiative certainly is well planned,
    and I am pleased to see the MILCON and housing request to train and
    house these additional personnel and their families.
        Every member of this subcommittee has worked on a bipartisan basis
    to support our troops and their families by providing the best
    facilities possible so they can work and live in the quality
    environment they deserve. I commend the Department for making quality
    of life a top priority.
        Thank you again Mr. Chairman for holding this hearing and I thank
    your staff for their assistance as well. I look forward to discussing
    these and other issues with our witnesses.

        Senator Johnson. Thank you.
        Secretary Hale, Mr. Arny, thank you again for appearing
    before our committee. Your prepared statement will be placed in
    the record. So I encourage you to summarize your remarks to
    allow for more time for questions.
        Secretary Hale.

                          STATEMENT OF ROBERT F. HALE

        Mr. Hale. Well, thank you, Mr. Chairman and Senator
    Hutchison, and thank the committee for all the support to our
    armed forces. We depend on the Congress for the resources we
    need to meet national security needs, and we appreciate your
    help.
        I will provide a brief overview of the budget with a focus
    on military construction and then ask Mr. Arny to provide the
    details.
        As you know, the President's base budget asks for $533.8
    billion of discretionary budget authority, up $20.5 billion, or
    about a 4 percent increase which amounts to a 2.1 percent
    increase after adjustment for inflation.
        This is a reform budget. I have worked in and around the
    defense budget for several decades now. We use that term
    loosely sometimes, but I do believe this is one of a handful of
    budgets that qualifies as a reform budget. If it is approved, I
    think it will change the way the department does business.
        The base budget lays out and the Secretary has described it
    in terms of some themes, and let me just mention them briefly
    because I think they are a good context for the discussion of
    MILCON.
        First, this budget affirms our commitment to take care of
    our people. For example, it fully funds all the personnel in
    the budget in the base portion rather than the more volatile
    wartime budget.
        Second, the budget tries to reshape the Department of
    Defense to focus more on the wars we are fighting today, while
    maintaining a balance of conventional capability. So, for
    example, we have added special operations personnel, to
    intelligence, surveillance, and reconnaissance, and we have to
    pay for these. We have completed the program of record for the
    F-22 and C-17 aircraft and do not propose additional
    procurement.
        And third, the budget reforms what we buy and how we buy
    it. There is a people side to this--for example, beefing up,
    reinvigorating our acquisition corps--but also a hardware side,
    as we looked at troubled programs in terms of cost, schedule,
    performance. As a result of our review, we recommended
    terminating or restructuring a number of programs, including
    the Future Combat System and missile defense.
        Turning to military construction, we have asked for $23
    billion for military construction and family housing. I think
    it meets all three of these themes or at least supports them,
    specifically taking care of our people and reshaping and
    modernization of the force.
        Overall, it is an 8.4 percent decline, as was mentioned in
    your opening statements. That sounds ominous, but it reflects
    our successful achievements, actually, in base realignment and
    closure and family housing privatization.
        BRAC is down 14.8 percent, but we have fully funded BRAC,
    and we expect to meet the September 2011 deadline. Family
    housing is down 38 percent, but that is because, as again you
    know, we have moved aggressively to privatize our family
    housing therefore, we don't need as much family housing
    inventory; construction funds in our own budget.
        We factor out these two categories, BRAC and family housing
    prioritization, MILCON is up by about 3 percent between fiscal
    2009 and fiscal 2010.
        The Department's base budget meets our key goals for
    military construction. We continue to invest in facilities that
    support Grow the Force, such as barracks, and brigade
    complexes. The base budget also provides facilities that keep
    pace with the fielding of new systems and capabilities as well
    as necessary training.
        The request includes a significant investment in
    recapitalizing aging medical facilities and schools, such as
    Warrior in Transition complexes. It also contains a substantial
    investment in the global defense posture, including 8,000
    marines moving from Okinawa to Guam.
        Before I leave the base budget, let me talk about the issue
    of the out-year plan. We are currently conducting the
    Quadrennial Defense Review and the program budget review. We
    will develop a 5-year plan as part of the fall budget review
    and submit it next year. For the moment, we don't have a plan
    beyond fiscal 2010 consistent with administration policy.
        It is not our desire to tell anyone they can't submit it.
    We don't have one to submit. So, for the moment, the only thing
    we can do is answer your fiscal 2010 questions in detail, and
    we can talk later about how we will work with you in regard to
    other issues. Because I understand that there are issues for
    this committee and others.
        Let me just mention briefly our wartime portion of the
    budget, which we now call the overseas contingency operations,
    or OCO. I like to call it Washington's newest acronym. We are
    asking for $130 billion for overseas contingency operations.
    This represents our best estimate of the full cost of funding
    our efforts in Iraq and Afghanistan in fiscal year 2010.
        I hope we do not have to submit a supplemental. But if the
    wartime situation changes or the President were to change his
    deployment plans, then we need to retain the right to request
    supplemental funding if necessary.
        The $130 billion for OCO includes $1.4 billion for military
    construction, all in Afghanistan. Given the limited pre-
    existing infrastructure there, we need to build roads, runways,
    and parking aprons. There are a lot of things we need to build
    in support of our wartime effort.
        I also want to express my gratitude to the Congress for the
    $7.4 billion in defense-related funding that we received in the
    American Recovery and Reinvestment Act, ARRA, or it is easier
    to call it the stimulus bill. It is $4.3 billion for facility
    sustainment, restoration, and modernization, another $2.2
    billion for military construction, as well as the Homeowners
    Assistance Program and some energy investments and RDT&E.
        This additional funding will allow us to improve
    facilities, to reduce our backlog in a way we couldn't have
    otherwise done, and to help our people. For example, we are
    able to replace two hospitals and to construct child
    development centers, Wounded Warrior complexes and troop
    housing facilities.
        I am happy to report that there are more than 4,200
    projects funded by the stimulus bill in all 50 States, 2
    territories, and the District of Columbia. All the projects
    have been identified, and we are working as hard as we can to
    implement them. These projects will not only stimulate the
    economy, they will help improve the quality of life for our
    service members and their families.
        And lastly, Mr. Chairman, I would like to remind the
    committee that we recently submitted a supplemental request.
    The SAC has acted on it, and we very much appreciate the timely
    action. It includes $0.9 billion for military construction in
    Afghanistan, as well as another $1.4 billion for military
    construction in other critical areas, including Warrior in
    Transition complexes.
        We stand by to assist you, both of you or any other
    members, on both the fiscal 2009 supplemental request and the
    fiscal year 2010 request. To help our troops, we ask that you
    enact this remaining supplemental. We would like it by Memorial
    Day or as soon thereafter as possible. We really appreciate the
    speed with which both the Senate and the House are moving on
    the supplemental request.

                               PREPARED STATEMENT

        Again, on behalf of the men and women of the Department of
    Defense who are faithfully serving our Nation, thank you for
    your strong support.
        Thank you for the opportunity to testify. And after Mr.
    Arny completes his statement, I would be glad to try to answer
    your questions.
        [The statement follows:]

                 Prepared Statement of the Hon. Robert F. Hale

        Mr. Chairman, members of the Committee, thank you for the
    opportunity to discuss the Military Construction component of the
    fiscal year 2010 budget request for the Department of Defense.
        On behalf of the men and women of the Department, I would like to
    begin by thanking the Committee for your continued support of America's
    Armed Forces. We depend on you and other Members of the Congress for
    the resources we need to meet our Nation's national security
    requirements.
        To start, I would like to provide a brief overview of our budget
    request and the amount we are asking for Military Construction. I will
    then ask Mr. Arny to speak in detail about the MilCon portion of the
    proposed budget.
    Base Budget
        Mr. Chairman, the President's base budget requests $533.8 billion
    in discretionary authority for fiscal year 2010. That is an increase of
    $20.5 billion or 4 percent over the enacted level in fiscal year 2009.
    Taking inflation into account, the real growth in this request is 2.1
    percent.
        The base budget puts into action the overriding priorities laid
    down by Secretary Gates for the Department:
      --First, it reaffirms our commitment to take care of the all-
            volunteer force.
      --Second, it rebalances the Department's programs in order to
            institutionalize and enhance our capabilities to fight the wars
            we are in today and to defend against the scenarios we are most
            likely to face in the years ahead, while at the same time
            providing a hedge against other risks and contingencies.
      --And third, it reforms how and what we buy, by promoting a
            fundamental overhaul of our approach to procurement,
            acquisition, and contracting.
        The $23.0 billion Military Construction and Family Housing portion
    of our request supports those strategic objectives. This request
    represents a decline of 8.4 percent compared with the enacted level for
    fiscal year 2009.
        This decline can be attributed to our achievements on Base
    Realignment and Closure (BRAC) and housing privatization. Funding for
    BRAC 2005 declines by 14.8 percent, to $7.5 billion, as we move toward
    completing requirements. Family housing construction declines by 38
    percent, to $2.0 billion, reflecting the transition toward housing
    privatization.
        If we factor out those two categories--BRAC and housing
    privatization--we find a pattern of growth in Military Construction.
    The fiscal year 2010 request for this portion of Military Construction
    grows by 3.1 percent compared to fiscal year 2009 funding, to a level
    of $13.5 billion.
        The Department's base budget request meets our key goals for
    Military Construction. We continue to invest in facilities that support
    Grow the Force, such as barracks, brigade complexes, and quality of
    life projects. The base budget will provide facilities that keep pace
    with fielding of new systems and capabilities, as well as necessary
    training.
        The request includes a significant investment in recapitalizing
    aging medical facilities and schools and constructing Warrior in
    Transition complexes. It also contains a substantial investment in our
    Global Defense Posture, including the relocation of 8,000 Marines from
    Okinawa to Guam and investments at enduring locations in the CENTCOM
    and AFRICOM areas of responsibility.
    Fiscal Year 2010 Overseas Contingency Operations
        As you are undoubtedly aware, the Department's fiscal year 2010
    request also includes a separate request for $130 billion to fund
    overseas contingency operations (OCO). This represents our best current
    estimate of war funding requirements, including funding for all forces
    currently approved by President Obama both for Iraq and Afghanistan. We
    do not plan on submitting a supplemental request. However, should
    policies or the wartime situation change significantly, the Department
    may need to seek supplemental funding.
        The $130 billion for the OCO budget includes $1.4 billion for
    Military Construction, all of which is to be spent in Afghanistan.
    Given the limited pre-existing infrastructure for our troops to occupy
    in that country, it is necessary to construct facilities to sustain,
    protect, and house them. Accordingly, this request includes operational
    facilities, such as runways and parking aprons, as well as associated
    support facilities, such as utilities, roads, housing, environmental
    projects, and dining facilities.
    American Recovery and Reinvestment Act
        I want to express my gratitude for the $7.4 billion in Defense-
    related funding that was included in the American Recovery and
    Reinvestment Act (ARRA). The ARRA includes nearly $4.3 billion for
    Facility Infrastructure Investments, $2.2 billion for military
    construction, $0.1 billion for the Energy Conservation Investment
    Program (ECIP), $0.3 billion for Research, Development, Test, and
    Evaluation (RDT&E), and nearly $0.6 billion for the Homeowners
    Assistance Program.
        This additional funding will allow us to improve the facilities
    where our military and civilian personnel work and live, to enhance
    energy efficiency in the recapitalization and construction of
    facilities, and to generate needed jobs to help stimulate the Nation's
    economy. For example, the construction funds will enable the Department
    to replace two hospitals and to construct child development centers,
    Wounded Warrior complexes, and troop housing facilities. I am happy to
    report that over 4,200 projects will be executed throughout all 50
    States, two territories, and the District of Columbia. Many of those
    projects are expected to be awarded in the near future.
        These projects will not only stimulate the economy; they will also
    improve the quality of life of our Service members and their families.
    And, as Secretary Gates has said, the all-volunteer force is America's
    greatest strategic asset. Caring for them must be our first priority.
    Fiscal Year 2009 Supplemental
        Lastly, Mr. Chairman, I would remind the committee that we recently
    submitted a supplemental request to cover the remaining expenses of the
    war effort in fiscal year 2009, which includes $0.9 billion for
    Military Construction in Afghanistan. This request also includes $1.4
    billion for other critical construction improvements, such as Warrior
    in Transition complexes.
        We stand by to assist Members however we can on that request and on
    the entire fiscal year 2010 budget request, and we ask that you enact
    this remaining supplemental by the Memorial Day recess, or as soon
    thereafter as possible.
        Again, on behalf of the men and women of the Department of Defense
    who are faithfully serving our Nation, thank you for your strong
    support. And thank you for the opportunity to testify here today. After
    Mr. Arny completes his statement, I would welcome your questions.

        Senator Johnson. Thank you, Secretary Hale.
        Mr. Arny.
    STATEMENT OF WAYNE ARNY, DEPUTY UNDER SECRETARY OF
                DEFENSE (INSTALLATIONS AND ENVIRONMENT)
        Mr. Arny. Thank you, Chairman Johnson, Senator Hutchison.
        Thank you for your introduction. I am honored to appear
    before you today.
        In the last 10 to 20 years, the Department has come a long
    way in improving the facilities and infrastructure in which our
    military and civilian workforce and families work and live. We
    could not have progressed so far as we have without the
    continuing support of Congress and, in particular, the
    subcommittee.
        Today, we manage over 500,000 facilities, worth over $700
    billion, located on approximately 29 million acres. In
    comparison, about 10 years ago, we had 115,000 more facilities
    in our inventory, which is, in part, a testimony to our
    continuing efforts to right-size the Department's
    infrastructure to match our operational needs.
        A principal program that has helped us balance the
    infrastructure is the BRAC authority, and using that, we have
    been able to close over 121 major installations and realign 79
    major bases after 5 rounds. The 2005 decisions alone affect
    over 800 locations and include 24 major closures, 24 major
    realignments, and 765 lesser actions.
        As of the fiscal year 2010 President's budget, BRAC
    represents a $35.2 billion investment over 2006 to 2011 and $4
    billion in annual savings after full implementation.
        However, it is not enough to have closed bases and moved
    functions. At the same time, we have tried to focus on how we
    conduct our business so as to become more efficient caretakers
    of the taxpayers' resource.
        An excellent example of that is joint basing. As part of
    the BRAC 2005, we are required to form 12 new joint bases from
    26 separate existing bases so that installation management
    functions will be provided by one component and not two or
    three as it is currently.
        The joint basing implementation process is complicated.
    Almost 50 different areas of responsibility on these bases have
    been identified for consolidation, including food services,
    environmental management, child and youth programs, facility
    maintenance, and many others. But I can report that it is well
    on the way to achieving success.
        In January 2008, we began issuing a series of joint base
    implementation guidance documents and, for the first time,
    established a set of common definitions and standards for the
    installation support to be provided by each joint base. We
    established a schedule that divided the 12 planned joint bases
    into 2 implementation phases. Each joint base will develop a
    detailed implementation plan, including the personnel and
    financial arrangements for the combined base.
        Five joint bases involving 11 installations were placed
    into Phase I. They had an October 2008 milestone for initial
    operational capability (IOC), and this includes--I am sorry, an
    October 2009 date for full operating capability, or fall
    operational capability (FOC). This includes the transfer of
    personnel and funds.
        The remaining 7 bases involving 15 installations were
    placed into Phase II with an October 2010 FOC. The services
    have signed all the right agreements for the first five
    installations, and we have reached IOC on them. And we expect
    FOC for the second phase in October 2010, which is well ahead
    of our BRAC statutory deadline.
        And this is just the beginning of where I see the
    Department going in the application of full funding of common
    levels of service across all our bases.
        As for housing, a decade ago, we were maintaining over
    300,000 family housing units, two-thirds of which were deemed
    inadequate by the military departments. With this year's
    request, over 98 percent of DOD's housing inventory in the
    United States will be funded for privatization.
        With regard to barracks, it was about 17 years ago that we
    began an ambitious modernization program to increase the
    privacy and amenities in permanent party bachelor housing.
    Using military construction funding and a Government-owned
    business model, we have made a lot of progress, but there is
    still $15 billion to go. So we are looking at other ways to do
    it.
        We have begun--we are looking at ways to take off on our
    privatization of housing to do privatization of barracks. We
    have seen innovative concepts where the Army has added bachelor
    housing quarters and senior enlisted bachelor quarters to its
    existing family housing units at Fort Bragg, Fort Stewart, Fort
    Drum, Fort Irwin, and a fifth project is planned for Fort
    Bliss.
        In contrast, the Navy is mainly focused on unaccompanied
    housing privatization to bring shipboard junior enlisted
    sailors ashore using a special pilot project. Their first
    project was begun in December 2006 in San Diego, with a second
    in Hampton Roads in 2007, and a third project underway for
    Jacksonville/Mayport.
        Both of the first two have demonstrated that with the
    authority to pay junior enlisted members less than full
    housing, we can privatize single junior enlisted on a less
    costly basis--I would say less costly on a lifecycle basis than
    traditional Government-owned model. I view this as just a
    starting point and ask for the subcommittee's support in the
    department's continued progress to shift the mindset in which
    the Federal Government has to build and maintain to one where
    we only need to build and maintain what we can't privatize.
        This year's--in answer to one of the questions, this year's
    budget does signal a banner year for MILCON with about $23
    billion in military construction, $8 billion in facilities
    sustainment, restoration, and modernization. That level of
    military construction is very robust, especially compared to
    the $8 billion to $9 billion we were receiving only 10 years
    ago.
        Similarly, our sustainment budget this year is also more
    robust. Ten years ago, we used a percentage of unsubstantiated
    maintenance and repair backlog to come up with our budget
    request, and it didn't work. Although much remains to be done,
    we have made steady headway over the last decade to improve the
    overall conditions of our facilities by using a programmatic
    model.
        The development and use of the facilities sustainment model
    has given us a sound target to measure our sustainment budgets,
    and more importantly, we have been able to defend those budgets
    and defend those requirements in the budget process.
        Recap has been another problem. We tried to use 67 years on
    a recap model that didn't work. When I was with the Navy
    Secretariat, we saw that when we put a large amount of money
    into one place, as we did after Hurricane Ivan hit Pensacola,
    all of a sudden, with the sudden infusion of funds, our recap
    rate went way below the 67 years that we all knew we had only
    invested money in one base. It didn't take account for the
    other priorities we had.
        As I was dissatisfied with that model, I asked my staff to
    work with the services, go back to the basics, and we have
    reopened a dialogue using what are called ``quality ratings.''
    We are required to report these under the Federal Real Property
    Advisory Group, which has mandated that all Federal agencies
    report these in our property records. We are going to--it gives
    you a Q rating for every building we own.
        We are looking at a method to go in, and we will start
    tracking those Q ratings and planning our budgets to keep those
    Q rating--will plan our budgets to make the Q ratings to the
    point where we believe they are satisfactory for all our
    services.
        In the summer, my staff will work closely with military
    departments to set up the program guidelines for determining
    which facilities require priority funding, assessing how those
    Q ratings are conducted and their frequency, and, most
    importantly, reestablishing how the Department views and uses
    master planning at the installation level.
        Also, in cooperation with our policy secretariat, the joint
    staff, the combatant commands, and the services, we hope to
    initiate joint installation master plans in each overseas
    combatant commander's region.

                               PREPARED STATEMENT

        In closing, I would like to thank you sincerely for the
    opportunity to testify on our installations. We believe we are
    working on the right issues now. And while we cannot fix them
    overnight, we appreciate your continued support and look
    forward to working with you and the subcommittee to provide the
    quality installations that our forces and their families need
    and deserve.
        Thank you, sir.
        [The statement follows:]

                        Prepared Statement of Wayne Arny

        Introduction.--Chairman Johnson, Senator Hutchinson, distinguished
    members of the subcommittee: I appreciate the opportunity to appear
    before you today to address the President's Budget request for fiscal
    year 2010 and to present an update on the status of our Nation's
    military installations.
        Overview.--Our installations are the platforms from which America's
    military capability is generated, deployed, and sustained. They play an
    essential part in addressing two principal objectives of the
    Department. First, they take care of our military forces, our most
    important asset. Secondly, they support and enhance our capability to
    meet the military challenges that we face today, and those that we may
    face in the coming years. Our installations provide training facilities
    for new recruits and career service members, maintenance shops and
    depots to repair and refit their equipment, and quality work and living
    spaces that warfighters and their families deserve. Our primary focus
    is to ensure that our military installations are capable of supporting
    the missions of our forces, today and in the future. To successfully
    provide this support, we focus our resources on programs and
    initiatives that will provide the necessary infrastructure in the most
    effective and efficient manner.
        America's military installations, including both their built and
    natural environments, must be managed in a comprehensive and integrated
    manner to optimize our investment in the assets needed to accomplish
    the mission. In the United States and overseas, the Department
    currently manages over 539,000 facilities, with a plant replacement
    value exceeding $700 billion, located on approximately 29 million acres
    of land. These assets must provide modern and safe work and training
    areas for our military forces, as well as quality housing.
        Before updating you on our fiscal year 2010 Installations and
    Environment programs, I'd like to talk briefly about the impact on our
    military infrastructure of two extremely important challenges facing
    our Nation. The first of these is Overseas Contingency Operations
    (OCO).
        Overseas Contingency Operations.--Military construction is a key
    enabler of OCO, directly supporting wartime operations by providing
    operational and support facilities at key locations. In April, the
    Department submitted its fiscal year 2009 OCO funding request for $2.3
    billion. This investment will help the Department execute realignment
    of forces into and within Afghanistan, by enabling strategic and
    operational flexibility and increasing Intelligence, Surveillance, and
    Reconnaissance (ISR) capabilities. The fiscal year 2009 request will
    also facilitate access to child care and improve support facilities for
    wounded warriors and their families.
        The fiscal year 2010 OCO request of $1.4 billion continues the
    important objective to increase the U.S. presence in Afghanistan,
    specifically the Regional Commands South and East. The facilities
    required to sustain, protect, and house these personnel include
    utilities, roads, housing, and dining facilities as well as
    environmental projects. The fiscal year 2010 OCO request will increase
    the capacity of air lines of communication, broaden logistics and
    intelligence capabilities, and provide the ability to reposition forces
    as the situation dictates.
        American Recovery and Reinvestment Act (ARRA) of 2009.--The other
    challenge is the downturn in the economy, and in response, the ARRA of
    February 2009. This effort will have a significant impact on DOD's
    facilities. The Department is applying the funding to enhance our
    ability to provide high quality installations and facilities and to
    improve our energy efficiency.
        The ARRA includes approximately $7.4 billion in Defense-related
    appropriations. The Military Construction (MilCon) and Operation and
    Maintenance (O&M) funds provided by the Act are available for
    obligation through the end of fiscal year 2013 and fiscal year 2010,
    respectively. The Department has identified over 4,200 projects in the
    following categories:
      --$4.2 billion in O&M accounts to improve, repair, and modernize DOD
            facilities, including energy-related improvements
      --$1.3 billion in MilCon for hospitals
      --$240 million in MilCon for child development centers
      --$100 million in MilCon for warrior transition complexes
      --$535 million for other MilCon projects, such as housing for Service
            members and their families, energy conservation, and National
            Guard facilities
      --$300 million to develop energy-efficient technologies
      --$120 million for the Energy Conservation Investment Program (ECIP)
      --$555 million for a temporary expansion of the Homeowner's
            Assistance Program (HAP) benefits for private home sale losses
            of DOD military and civilian personnel
      --$15 million for DOD Inspector General oversight and audit of ARRA
            execution
        In addition to providing much needed facility improvements and
    funding for important energy research programs in support of the
    national effort to achieve greater energy independence, the ARRA will
    also contribute to our ongoing efforts to ``green'' DOD's built
    infrastructure. In their baseline MilCon programs, the Military
    Services have taken the lead in ensuring a sustainable future for the
    Department by directing that new construction meets both the U.S. Green
    Building Council's Leadership in Energy and Environmental Design (LEED)
    Silver Certification standard and the Federal Leadership in High
    Performance and Sustainable Buildings Memorandum of Understanding. In
    executing ARRA projects, this type of forward thinking directly
    translates to 115 projects and $2.3 billion in the MilCon and military
    family housing construction programs designed and built to LEED Silver
    Certification standards.
        DOD is committed to ensuring that ARRA funds are expended
    responsibly and in a transparent manner that will further job creation,
    economic recovery, and the overall improvement of our military
    infrastructure. Over the coming months, we'll be keeping the Congress
    and the public apprised of our progress in executing these funds.
        Facilities Investment.--Now I would like present an overview of our
    Installations and Environment programs beginning with MilCon and
    related facilities investments. The fiscal year 2010 MilCon and Family
    Housing Appropriation request totals $23 billion, which is a decrease
    of $1.9 billion from the fiscal year 2009 budget request, but still
    compares very favorably with historic trends. The decreased funding is
    primarily in the Base Realignment and Closure (BRAC) and Family Housing
    programs, which I will discuss in more detail shortly. The budget
    request will enable the Department to respond rapidly to warfighter
    requirements, enhance mission readiness, and provide essential services
    for its personnel and their families. In addition to new construction,
    this funding will restore and modernize enduring facilities, while
    eliminating those that are excess or obsolete. A large part of the
    funding is targeted for initiatives to support the realignment and
    increase in endstrength of forces, projects to improve and update
    facilities, and projects needed to take care of our people and their
    families, such as family and bachelor housing, Warrior in Transition
    housing, and child development centers.

         COMPARISON OF MILITARY CONSTRUCTION AND FAMILY HOUSING REQUESTS
          [President's Budget in Millions of Dollars--Budget Authority]
    ------------------------------------------------------------------------
                                                        Fiscal year
                                             -------------------------------
                                               2009 request    2010 request
    ------------------------------------------------------------------------
    Military Construction...................          11,283          12,835
    NATO Security Investment Program........             241             276
    Base Realignment and Closure IV.........             393             397
    Base Realignment and Closure 2005.......           9,065           7,480
    Family Housing Construction/Improvements           1,457             489
    Family Housing Operations & Maintenance.           1,741           1,444
    Chemical Demilitarization...............             134             147
    Family Housing Improvement Fund.........               1               3
    Energy Conservation Investment Program..              80              90
    Homeowners Assistance Program...........               5              23
                                             -------------------------------
          TOTAL.............................          24,400          22,515
    ------------------------------------------------------------------------

        We are continuing ongoing initiatives to reshape and resize our
    infrastructure, and at the same time, we recognize that there will be
    localized growth in the facilities footprint to accommodate changes in
    force structure, end strength, and weapons systems. These efforts
    include facilities to support Army Modularity, Army and Marine Corps
    Grow-The-Force initiatives, and bed-down of new weapons systems such as
    the Joint Strike Fighter.
        While our basing initiatives continue the process of reconfiguring
    our overall physical plant, and acquiring facilities for future
    requirements, we cannot lose sight of the importance of maintaining and
    modernizing our existing facilities. It is imperative that we continue
    to invest in our existing infrastructure, and plan for the appropriate
    level of investment in all our facilities going forward.
        Facilities sustainment has been and continues to be the most
    important program to support the overall health of our inventory of
    facilities. Sustainment funds regularly scheduled maintenance and major
    repair or replacement of facility components expected periodically
    throughout the life cycle of a facility. Investing in sustainment
    prevents deterioration, maintains safety, and preserves performance. As
    you know, we use the Facilities Sustainment Model (FSM) to estimate the
    funding requirements for our facilities. The model uses benchmark costs
    from public and private sources which are updated on a regular basis.
    Our goal continues to be full sustainment of our facilities to optimize
    our investment and ensure readiness. The fiscal year 2010 President's
    Budget provides $7.8 billion for sustaining the Department's
    significant inventory, representing 91 percent of the FSM requirement.
        The second key element of our facilities investment program is
    recapitalization, which includes restoration and modernization, and is
    funded primarily with O&M and MilCon appropriations. Restoration
    includes repair and replacement work to restore facilities damaged by
    inadequate sustainment, natural disaster, fire, accident, or other
    causes. Modernization includes alteration of facilities to implement
    new or higher standards, accommodate new functions, or replace building
    components that typically last more than 50 years. The Department
    remains committed to maintaining a rate of investment in facilities
    recapitalization that will improve, modernize, and restore existing
    facilities, and replace them when it is more economical to do so. To
    that end, we're refining the way we calculate the required investment
    for recapitalization, and more closely aligning it with the actual
    condition of each facility. We will keep you apprised of our progress
    as we develop the new methodology.

                    SUSTAINMENT AND RECAPITALIZATION REQUEST
                   [President's Budget in Millions of Dollars]
    ------------------------------------------------------------------------
                                                        Fiscal year
                                             -------------------------------
                                               2009 Request     2010Request
    ------------------------------------------------------------------------
    Sustainment (O&M-like) \1\..............           7,482           7,799
    Restoration and Modernization (O&M-like            1,780           2,035
     plus) \1\..............................
    Restoration and Modernization (MilCon)..           8,102           6,527
                                             -------------------------------
          TOTAL SRM.........................          17,364          16,361
    ------------------------------------------------------------------------
    \1\ Includes Operation and Maintenance (O&M) as well as related military
      personnel, host nation, and working capital funds and other
      appropriations such as Research, Development, Test, and Evaluation
      (RDT&E)

        Separate and distinct from the BRAC process, we continue to right-
    size our inventory through the elimination of excess and obsolete
    facilities. The Military Departments continue to maintain and execute
    robust disposal and demolition programs to improve the safety and
    aesthetics of our installations, to ensure that only essential
    facilities are retained, and to reduce overall operating costs. In
    fiscal year 2008, the Department eliminated 6 million square feet of
    unneeded facilities. Another 5.5 million square feet is projected for
    demolition in fiscal year 2009. The fiscal year 2010 request includes
    almost $200 million to eliminate approximately 8 million additional
    square feet of unneeded infrastructure.
        Global Defense Posture.--Now I'd like to tell you more about our
    initiatives to provide the right military facilities in the right
    location with the right capabilities, beginning with the status of our
    global restationing efforts. As we continue with planned posture
    changes to meet our world-wide missions, the Department is improving
    its ability to contend with post 9/11 security challenges and
    developing more relevant relationships and forward capabilities for
    21st century expeditionary operations. The fiscal year 2010 MilCon
    request supports the Department's efforts to strengthen our forward
    military presence, including facilities and infrastructure, and to
    transform overseas legacy forces, Cold War basing structures, and host-
    nation relationships into a flexible network of access and capabilities
    with allies and partners. These efforts include:
      --Continued force posture realignments within and from Central Europe
            which enable advanced training and flexible ground force
            capabilities to support NATO's own transformation goals. The
            European Command's transformation and recapitalization efforts
            will require investments in fixed facilities, mobility,
            prepositioning of equipment, and interoperability. Future
            infrastructure requests will enable the elimination of
            substandard housing and will include projects that support
            continued transformation efforts.
      --Shifting our European posture south and east by transforming the
            173rd Airborne Brigade in Italy, and establishing
            infrastructure support for rotational presence in Romania and
            Bulgaria. Permanent Forward Operating Sites and other training
            facilities in Romania and Bulgaria have projected completion
            dates of 2009 and 2011, respectively. In addition to supporting
            a full-time training effort, Joint Task Force-East provides the
            logistical base for United States Air Forces in Europe and
            Special Operations Command Europe exercises in Eastern Europe
            and Eurasia.
      --Continued progress toward future realignments in the Pacific as
            part of U.S.-Japan force posture changes that will have far-
            reaching, beneficial impacts for the U.S.-Japan alliance, and
            will shape our strategic posture throughout the Asia-Pacific
            region. While Japan is shouldering most of the costs associated
            with the planned posture changes per the Defense Policy Review
            Initiative (DPRI), U.S. MilCon funds are necessary to complete
            remaining facility construction and other infrastructure needs
            on Guam. MilCon funding will provide projects such as utilities
            and airfield pavement to bed-down Marine aviation at Andersen
            Air Force Base, wharf improvements, and the relocation of a
            military working dog facility at Naval Base Guam. Investments
            are also needed to improve off-base infrastructure, including
            selected roads and bridges required for throughput of necessary
            construction materials.
      --Continued consolidation and restructuring of forces on the Korean
            peninsula to strengthen our overall military effectiveness and
            to prepare for transitioning wartime operational control of
            Republic of Korea (ROK) forces to the ROK military forces by
            2012. This includes relocating U.S. troops out of Seoul,
            returning most of Yongsan Army Garrison to the ROK, and
            consolidating remaining troops into two hubs south of Seoul.
            This effort positions U.S. forces to better conduct combat
            operations should deterrence fail on the Korean peninsula, and
            makes the U.S. presence less intrusive on the Korean people. We
            anticipate the ROK to continue funding much of the facilities
            and infrastructure construction for this transition in
            accordance with the amended Land Partnership Plan and Yongsan
            Relocation Plan. However, MilCon funding is needed at Camp
            Humphreys to support U.S. Army forces relocating from camps
            north of the Han River.
      --Developing basic infrastructure and capabilities for current and
            future operations in the U.S. Central Command area of
            responsibility and other overseas contingency operation areas.
      --Enhancing contingency access through an array of sites in Africa
            that serve as focal points for combined training, capacity
            building, and broadened relationships with host nations and
            other partners. MilCon funding is needed at Camp Lemonier, the
            Department's enduring Forward Operating Site in Djibouti, to
            support such requirements and improve infrastructure needs
            within the U.S. Africa Command.
        The Department continues to maintain and strengthen host-nation
    partnerships supporting these posture changes. The fiscal year 2010
    global defense posture projects ensure strengthening of forward
    capabilities for OCO and other expeditionary non-traditional missions,
    commitment to alliance goals and collective defense capabilities, and
    enhanced deterrent capabilities for addressing future security
    challenges.
        Base Realignment and Closure (BRAC) 2005.--In addition to our
    global posture realignments, we continue to execute BRAC 2005, the
    largest round undertaken by the Department. After an exhaustive
    examination of over 1,200 alternatives, the Secretary of Defense
    forwarded 222 recommendations to the BRAC Commission for its review.
    The Commission accepted about 65 percent without change and its
    resulting recommendations were approved by the President and forwarded
    to the Congress. The Congress expressed its support of these
    recommendations by not enacting a joint resolution of disapproval by
    November 9, 2005, therefore, the Department became legally obligated to
    close and realign all installations so recommended by the Commission in
    its report. These decisions affect over 800 locations across the Nation
    and include 24 major closures, 24 major realignments, and 765 lesser
    actions. The BRAC Act required that the Department begin implementation
    of each recommendation within two years of the date the President
    transmitted the Commission's report to the Congress and complete
    implementation of all recommendations within 6 years of that date. The
    Department continues to monitor BRAC implementation to ensure we are
    meeting our legal obligation.
        Beyond the comparative size, it is important to note that BRAC 2005
    is the most complex round ever. This complexity is not merely a
    function of its magnitude, but is, to the largest extent, a function of
    the original goal established for this round: that BRAC 2005 would
    focus on the reconfiguration of operational capacity to maximize war
    fighting capability and efficiency. Focusing on operational capacity
    required that we appropriately assess the increased military
    capabilities we are achieving through these recommendations.
        We accomplished that requirement and, through BRAC, are
    significantly enhancing each capability. Two locations, Fort Bliss,
    Texas, and Naval Air Station (NAS) Brunswick, Maine, highlight what we
    are achieving. Fort Bliss is the largest operational Army BRAC
    movement. Approximately 15,000 Soldiers and their family members will
    move to Fort Bliss and the surrounding communities, and construction of
    BRAC operational facilities is moving ahead as planned in preparation
    for the arrival of the 1st Armor Division at Fort Bliss. In September
    2008, Soldiers of the 1st Brigade, 1st Armored Division took occupancy
    of the first Brigade Combat Team (BCT) Complex. Soldiers of the 4th
    Brigade, 1st Armored Division are now in temporary facilities and
    eagerly await completion of the second BCT complex scheduled for
    September 2009. The Army has programmed the construction of several
    quality of life facilities to support this growth including dental/
    health clinics, a hospital, a child development center, a commissary, a
    physical fitness center, and youth centers.
        The closure of NAS Brunswick will reduce operating costs while
    allowing the single-siting of the East Coast Maritime Patrol (VP)
    community at NAS Jacksonville, Florida. NAS Jacksonville and NAS
    Brunswick are collaborating to ensure seamless relocation of five
    aircraft squadrons along with the realignment of the maintenance
    functions and various mission support groups. In preparation for the
    arrival of the first Brunswick aircraft, a new type II hangar
    construction project is on track for completion this month. It will be
    the home for the first returning Brunswick VP squadron which is
    currently deployed. The hangar, the Navy's largest, will provide
    maintenance spaces for all five Brunswick squadrons and will also be
    able to support the future transition to the P-8 Poseidon multimission
    maritime aircraft.
        A key component of this BRAC round was rationalizing medical
    infrastructure. This rationalization was needed to address the
    transformation in healthcare that has occurred since these facilities
    were constructed, and to adapt our facilities to the continuing changes
    in warrior care. At one end of the scale, BRAC enabled the Department
    to close seven small and inefficient inpatient operations, converting
    them to ambulatory surgery centers. BRAC also enabled DOD to realign
    medical operations from McChord Air Force Base, Washington, to Fort
    Lewis, Washington, and to transform the Medical Center at Keesler Air
    Force Base, Mississippi, into a community hospital. On the larger end
    of the scale, BRAC enabled DOD to realign two of its major military
    medical markets: San Antonio, Texas, and the National Capital Region
    (NCR). The strategic realignments in San Antonio of Brooke Army Medical
    Center and Wilford Hall medical center, and in the NCR of Walter Reed
    Army Medical Center and the National Naval Medical Center at Bethesda,
    Maryland, address critical needs to realign and consolidate key
    clinical and clinical research capabilities, undertake serious facility
    modernization requirements, as well as better matching facility
    locations and capabilities, achieving medical advances, and adapting to
    changing needs of wounded warriors.
        For the NCR, the fiscal year 2010 costs (including the $263 million
    included in the fiscal year 2009 supplemental request) are $2.4
    billion. As is the case with San Antonio, costs rose due to
    construction inflation, wounded warrior lessons learned, and unforeseen
    costs as the construction process has unfolded.
        Unique to the NCR is the effort to enhance and accelerate
    construction at Bethesda and Fort Belvoir, Virginia, as a result of
    lessons learned and the Department's commitment to implement the
    recommendations of the Independent Review Group (IRG) on Rehabilitative
    Care and Administrative Processes at Walter Reed Army Medical Center
    and National Naval Medical Center Bethesda. The IRG's April 2007 report
    recommended a variety of measures to improve medical care and that DOD
    accelerate BRAC projects in the NCR. In order to implement the report's
    recommendations and incorporate other war-related lessons learned, the
    Department committed to create Warrior Transition Unit facilities at
    the Bethesda Campus to enhance wounded warrior care, especially the
    outpatient convalescent phase. The Department also committed to
    enhancing inpatient facilities at both Fort Belvoir and Bethesda. These
    enhancements, together with a commitment to accelerate construction to
    ensure that the new facilities will be operational as soon as possible,
    required the investment of an additional $679 million. The fiscal year
    2008 supplemental appropriated $416 million.
        The BRAC 2005 Commission Report also calls for the transfer of
    installation management functions from 14 designated installations to
    12 other installations to create 12 Joint Bases. Joint basing calls for
    installations that share a common boundary or are in close proximity to
    consolidate installation management functions and the delivery of
    installation support functions while considering best business
    practices and ensuring warfighting capabilities are preserved or
    enhanced. The 12 Joint Bases will be established in two phases, with
    Full Operational Capability (FOC) for Phase I bases in October 2009 and
    Phase II bases in October 2010. At FOC, total obligation authority and
    real property will transfer from supported Component(s) to the
    supporting Component.
        The Department is using this opportunity to create the conditions
    for more consistent and effective delivery of installation support
    through Common Output Level Standards (COLS), which establish joint
    definitions, standards, and performance metrics for each identified
    installation support function that will be consolidated at each Joint
    Base.
        In its entirety, the BRAC program is substantial. As of the fiscal
    year 2010 President's Budget it represents a $35.4 billion requirement
    over 2006-2011 and $4 billion in annual savings after full
    implementation (after fiscal year 2011). The Department originally
    estimated BRAC 2005 investment using the Cost of Base Realignment
    Actions (COBRA) model at $21.1 billion (in constant fiscal year 2005
    dollars) with annual recurring savings of $4.4 billion. The COBRA model
    used in the analysis estimated costs based on standard factors to array
    the relative merit of options--it was never intended to be budget
    quality nor used for implementation planning. When compared to our
    current requirement, there is a $14.3 billion or 68 percent increase in
    COBRA-estimated costs. The increase was fully funded in the President's
    fiscal year 2010 budget request, and results primarily from inflation,
    changes in MilCon, environmental restoration and program management
    costs not included in COBRA, additional O&M to support fact-of-life
    cost increases, and construction for additional facilities to enhance
    capabilities and/or address deficiencies. The savings decrease is
    primarily a result of revised personnel eliminations.
        Almost 70 percent of the BRAC 2005 program supports MilCon
    requirements compared to 33 percent experienced in the previous rounds.
    In the BRAC 2005 round, DOD has now made decisions to:
      --Use new construction vs. renovated space (existing space diverted
            to other needs)
      --Accommodate changes in unit sizes, functions or responsibilities by
            increasing facilities, changing configurations, or building
            additional facilities
      --Accept inflation factors exceeding previous planning factors
            (delayed implementation compounds the inflation increase).
        Assisting Communities.--As we execute BRAC 2005, we continue to
    abide by the DOD policy that when implementing DOD actions that
    seriously affect the economy of a community, every practical
    consideration shall be given to minimizing the local impact. To that
    end, DOD provides economic adjustment assistance through its Office of
    Economic Adjustment (OEA) to help communities help themselves, using
    the combined resources of Federal, State, and local governments and
    private sector to support local initiatives.
        OEA, through the Defense Economic Adjustment Program (DEAP),
    continues to work with States, territories, and more than 147
    communities across the country impacted by the Department's continuing
    closure, downsizing, and mission-growth actions.
        Over two dozen locations are looking at unprecedented increases in
    military, civilian, and contractor personnel as a result of BRAC 2005,
    Global Defense Posture Realignment, Army Modularity, and Grow-the-Force
    activity. For most locations, OEA is providing overall planning support
    for personnel, procurement, and construction activity to prepare local
    adjustment strategies, including growth management plans, to support
    local mission growth. The challenge for many of these locations is to
    respond to myriad hard (road, schools, houses, water and sewer) and
    soft (public services, health care, child care, spousal employment)
    infrastructure issues that directly bear on the quality of life for our
    warfighters, their families, and the homeowners, businesses, and
    workers in the surrounding communities.
        A primary concern, particularly at this time of economic
    uncertainty, is how to apply scarce Federal, State, and local public
    resources with those of the private sector to carry out adjustments in
    local facilities and public services, workforce training programs, and
    local economic development activities. Needs for public investment,
    such as road improvements, water and sewer infrastructure, and school
    construction have emerged and OEA is working with each affected State
    and region to document these needs and bring them to the attention of
    other Federal Agencies for their consideration and assistance. To date,
    OEA has found over 50 critical projects that are ready to move forward,
    but need a total of $1.7 billion in Federal or other support.
    Communities also identified over 300 other mission-growth-related
    projects in various planning phases, at a total cost of $7 billion that
    had incomplete funding strategies. While OEA is presently bringing
    these needs to the attention of the U.S. Departments of Transportation,
    Commerce, Education, and Agriculture as the cognizant agencies where
    assistance might be made available, they are also seeking to update the
    information to account for current economic strains and those other
    growth efforts that may have information available.
        OEA, on behalf of DOD, has recognized Local Redevelopment
    Authorities (LRAs) for 116 locations to: provide leadership and speak
    on behalf of the impacted area with one voice; identify the impacts of
    closure across local businesses, workers, and communities; plan
    redevelopment and other economic development activities to lessen these
    impacts; and direct implementation of the redevelopment plan to respond
    to these actions. Approximately 96 redevelopment plans have been
    completed to date. When completed, redevelopment plans are submitted as
    part of a statutorily-mandated homeless assistance application to the
    U.S. Department of Housing and Urban Development (HUD), who, in turn,
    must review each application for compliance with statute prior to
    Military Department property disposal and the redevelopment effort
    going forward.
        The redevelopment plan is also significant at the Federal level
    because: (1) the Military Departments dispose of buildings and property
    in accordance with a record of decision or other decision document and,
    in preparing this decision document, give substantial deference to the
    LRA's redevelopment plan; and (2) other Federal agencies are to afford
    priority consideration to requests for Federal assistance that are part
    of the plan under Executive Order 12788, as amended, ``Defense Economic
    Adjustment Programs.''
        As with the growth-impacted communities, OEA is presently working
    with affected closure and downsizing communities to identify specific
    needs for ``public'' investment and expects to have a working estimate
    of those needs by this summer. In the past, these needs have included
    demolition, road alignments, infrastructure development, etc. With
    disposal for these locations yet to occur, communities will need some
    additional support from the U.S. Departments of Commerce (Economic
    Development Administration (EDA)), Labor ((Employment Training
    Administration (ETA)), and Agriculture (Rural Development
    Administration) through fiscal year 2014.
        The ability to support State and local economic adjustment
    activities, including road construction, infrastructure development,
    demolition and site preparation, workforce development, and general
    economic development is beyond the Department's capacities.
    Accordingly, the Department relies upon the Economic Adjustment
    Committee (EAC), through DEAP, as directed by Executive Order 12788.
    The EAC is comprised of 22 Federal Departments and Executive agencies,
    and among its functions is to: coordinate interagency and
    intergovernmental adjustment assistance; serve as a clearinghouse for
    the exchange of information between Federal, State, and local officials
    involved in the resolution of economic adjustment concerns resulting
    from DOD actions; and, afford priority consideration to requests from
    Defense-affected communities for Federal assistance that are part of a
    comprehensive base redevelopment or growth management plan.
        In response to previous BRAC activity, approximately $1.9 billion
    in Federal assistance was provided to assist affected States,
    communities, workers, and businesses. EDA, ETA, the Federal Aviation
    Administration, and OEA were the source of this funding. The response
    to date for BRAC 2005 has consisted of approximately $212 million,
    primarily from OEA and the Department of Labor. The BRAC support has
    concentrated on worker assistance, community economic adjustment
    planning for growth and downsizing, and coordinating public benefit
    property conveyances for downsizing communities.
        The EAC is chaired by the Secretary of Defense, and the Secretaries
    of Commerce and Labor are co Vice-Chairs. If affected States and
    communities are to benefit from these Federal resources, it will be
    important for the cognizant Federal programs to adequately source their
    staff and program budgets to respond. To date, we have not had much
    response to assist either growth- or downsizing-impacted areas.
    Moreover, the current Federal response to the national economic crisis
    has placed even greater stress on the cognizant agencies, with the
    effect of further subordinating needed attention for Defense-impacted
    communities. Accordingly, the intergovernmental coordination of
    adjustment assistance under the EAC will continue to be reviewed to
    further improve overall responsiveness to the needs of these States and
    communities.
        The Department has used the full range of transfer and conveyance
    authorities to dispose of real property made available in prior BRAC
    rounds (1988, 1991, 1993, and 1995). Property disposal is complete at
    205 of 250 prior BRAC locations where property became available for
    disposal, and local redevelopment efforts in turn have resulted in the
    creation of over 143,700 jobs, more than offsetting the 129,600
    civilian jobs that were lost across 73 prior BRAC locations where OEA
    is monitoring redevelopment activity.
        Improving The Quality of Housing. Just as the Department works to
    maintain the fabric of communities affected by BRAC, we also work to
    maintain the communities of our military installations. At the same
    time that our military installations must support the operational needs
    of warfighters, they must also provide for the quality of life of our
    Service members and their families. Access to quality, affordable
    housing is a key factor affecting service member recruitment,
    retention, morale, and readiness. Through privatization and increases
    in housing allowances, DOD has made great strides in increasing service
    members' housing choices. Privatization allows for rapid demolition,
    replacement, or renovation of inadequate units and the sale of units no
    longer needed. Privatization also enables DOD to make use of a variety
    of private sector approaches to build and renovate military housing
    faster and at a lower cost to American taxpayers.
        To date, the Military Services have leveraged DOD housing dollars
    by 10 to 1, with $2.5 billion in Federal investments generating $25
    billion in housing development at privatized installations. The fiscal
    year 2010 President's Budget request includes $2.0 billion for Family
    Housing, a decrease of $1.2 billion below the fiscal year 2009 enacted
    amount, for continued efforts toward reduction of inadequate units,
    operation and maintenance of government-owned housing, and the
    privatization of over 2,400 family housing units. Over 600 of these
    units support the Grow-the-Force initiative.
        The housing privatization program was created to address the
    oftentimes poor condition of DOD-owned housing and the shortage of
    affordable private housing of adequate quality for military service
    members and their families. Privatization allows the military services
    to partner with the private sector to generate housing built to market
    standards for less money and frequently better quality than through the
    MilCon process. Additionally, and almost of greater importance, the
    projects include 50 years of maintenance and replacement where
    necessary. Although nearly all projects have been awarded, we are still
    in the early stages of the program since the housing will be privately
    owned for fifty years. With privatization deal structures and an income
    stream in place, full revitalization will be completed within a five to
    ten-year initial development period.
        Military family housing requirements are changing at multiple
    installations due to BRAC, Global Posture, Joint Basing, and Grow-the-
    Force. While some installations may find they have a surplus of
    housing, others may experience a deficit. No matter where military
    family housing is needed, our Service members and their families need
    access to safe, desirable, and affordable housing. The Military
    Services continue to evaluate installation housing requirements, and
    the opportunities to meet additional housing needs through
    privatization continue to expand.
        The fiscal year 2010 budget request also includes funding to
    eliminate inadequate family housing outside the United States. The
    budget request reflects a MilCon cost of $52 million for the Army to
    construct 138 family housing units in Baumholder, Germany.
        As it has increased the quality of family housing, privatization is
    also helping the Military Services provide quality housing for our
    unaccompanied Service members. To date, the Army has added bachelor
    officer quarters and senior enlisted bachelor quarters to its existing
    family housing privatization projects at Fort Bragg, North Carolina;
    Fort Stewart, Georgia; Fort Drum, New York; and Fort Irwin, California.
    A fifth project is planned soon at Fort Bliss, Texas. In contrast to
    the Army, the Navy is mainly focusing its unaccompanied housing
    privatization efforts to bring shipboard junior enlisted sailors ashore
    using a special pilot authority (10 USC 2881a). The first unaccompanied
    housing privatization pilot project was awarded in December 2006 at San
    Diego, the second was executed in December 2007 at Hampton Roads,
    Virginia, and a third project is under consideration at Jacksonville-
    Mayport, Florida. Both of the awarded Navy pilot projects have
    demonstrated that, with partial Basic Allowance for Housing authority,
    privatization of single, junior enlisted personnel housing is less
    costly on a lifecycle basis than the traditional Government-owned
    model. The pilot projects have also demonstrated that through
    privatization, single members can enjoy a quality living environment
    more equitable with housing for their married counterparts and
    commensurate with the sacrifices they are asked to make.
        Energy Management. Just as we take responsibility for caring for
    our human resources, the Department also takes responsibility to wisely
    manage its energy resources. By aggressively implementing energy
    conservation measures, we are avoiding costs while improving utility
    system reliability and safety. The Department developed comprehensive
    policy guidance incorporating the provisions of the Energy Security and
    Independence Act of 2007. This guidance will continue to optimize
    utility management by conserving energy and water usage, and improving
    energy flexibility by taking advantage of restructured energy commodity
    markets when opportunities arise.
        The Department's efforts to conserve energy are paying off. DOD is
    the largest single energy consumer in the Nation and consumed $3.95
    billion in facility energy in fiscal year 2008. DOD facility energy
    consumption intensity has decreased nearly 11 percent since 2003. Our
    program includes energy efficient construction designs, aggregating
    bargaining power among regions and the Services to achieve more
    effective buying power, and investments in cost-effective renewable
    energy sources.
        DOD has significantly increased its focus on purchasing renewable
    energy and developing resources on military installations. In 2005, DOD
    set a goal to reach 25 percent renewable energy procured or produced by
    fiscal year 2025 and Congress placed this goal in the National Defense
    Authorization Act 2007. Even though the increasing cost of Renewable
    Energy Certificates drove down the percentage of renewable energy
    consumption in fiscal year 2008, I am pleased to report that the
    Department remains ahead of the curve, achieving 9.8 percent renewable
    energy procured and produced for fiscal year 2008.
        Renewable energy projects are consistently more expensive than
    similar conventional energy sources, resulting in limited opportunities
    that are lifecycle cost effective. Still, the Department has increased
    the use of Energy Conservation Investment Program (ECIP) funds for
    renewable energy projects from $5 million in fiscal year 2003 to $86
    million out of the $120 million provided for ECIP in the ARRA funding
    for 2009. Plans call for ECIP funding to increase $10 million per year,
    from $90 million in fiscal year 2010 up to $120 million in fiscal year
    2013, and renewable energy projects will continue to be a high
    priority.
        The Department began tracking water consumption in fiscal year
    2002. While the Energy Policy Act of 2005 did not articulate a specific
    water reduction goal, Executive Order 13423 includes a requirement of 2
    percent water reduction per year. By fiscal year 2007, DOD reduced
    total water consumption by 27 percent or 43.8 million gallons per year.
    While we continue to strive to exceed requirements, our prior
    achievements have set the baseline low, so continuing the trend will be
    a challenge. Even with the reduced baseline, DOD achieved a 2.9 percent
    reduction in water intensity in fiscal year 2008.
        Environmental Management.--In addition to our commitment to
    managing our energy requirements, we also recognize our natural
    infrastructure as a priority. The Department sustains the environment
    on our installations, not only to preserve these lands for our future
    generations, but also to maintain current and future readiness. The
    Department practices integrated planning to preserve the land, water,
    and airspace needed for military readiness while maximizing critical
    environmental protection. We maintain a high level of environmental
    quality in defense activities by integrating sustainable practices into
    our operations, acquisition of materials, and weapon systems. We
    protect and conserve natural and cultural resources and restore sites
    to productive reuse on more than 29 million acres. We strive to protect
    and to sustain the environment while strengthening our operational
    capacity, reducing our operational costs, and enhancing the well being
    of our soldiers, civilians, families and communities.

                  COMPARISON OF ENVIRONMENTAL PROGRAMS REQUESTS
          [President's Budget in Millions of Dollars--Budget Authority]
    ------------------------------------------------------------------------
                                                        Fiscal year
                                             -------------------------------
                                               2009 request    2010 request
    ------------------------------------------------------------------------
    Environmental Restoration...............           1,506           1,475
    Environmental Compliance................           1,660           1,618
    Environmental Conservation..............             330             323
    Pollution Prevention....................             163             103
    Environmental Technology................             212             225
    Base Realignment and Closure (BRAC).....             455             554
                                             -------------------------------
          TOTAL.............................           4,327           4,298
    ------------------------------------------------------------------------

        Over the past 10 years, the Department has invested nearly $42
    billion in our environmental programs. In fiscal year 2008, we
    obligated $4.3 billion and in fiscal year 2009 we are executing another
    $4.5 billion for natural and cultural resource conservation, pollution
    prevention, cleanup, compliance, and environmental technology. The
    fiscal year 2010 budget request of $4.3 billion will enable us to
    continue to demonstrate leadership in protecting and preserving the
    environment on our installations.
        In fiscal year 2008, the Military Services invested $353 million in
    conservation programs to protect natural and cultural resources located
    on and near our installations. Our cultural resources include
    archeological sites, historic buildings, relics of prior civilizations,
    artifacts, and other national historic treasures.
        In 2008, the Department inventoried 480,706 acres and found 6,118
    new archaeological sites. The Department has surveyed a total of
    8,082,925 acres and has found 112,774 archaeological sites. The
    Department treated 2,602 of the sites to include stabilization,
    rehabilitation, monitoring, and protection in 2008. In 2009, the DOD
    will continue to sustain and manage its archeological and historic
    cultural resources. Some of the current activities include preserving
    the fabric, systems, historic character, and function of the DOD-built
    environment; maintaining readiness while protecting our heritage by
    incorporating cultural resources into installation planning; and
    consulting in good faith with internal and external stakeholders.
        The Department is also protecting its older properties, not only
    for historical interest, but for continued active use to support
    today's operational requirements. Over 32 percent of DOD's 344,000
    buildings are over 50 years old, and by 2025, more than 67 percent of
    the Department's buildings will exceed 50 years of age. Buildings that
    have passed the 50 year benchmark present a challenge to the
    Department, but also offer the potential for cost-savings and resource
    conservation. By using historic buildings and properties, instead of
    building new structures, the Department reduces its environmental
    footprint while retaining the properties' historic features. DOD's
    Cultural Resources Program ensures balance between responsible
    stewardship of this significant legacy with meeting the demands of
    defending our Nation.
        Our installations also steward some of the finest examples of rare
    native vegetative communities, such as old-growth forests, tall grass
    prairies, and vernal pool wetlands. As of April 28, 2008, the U.S. Fish
    and Wildlife Service (USFWS) listed 1,317 species as either threatened
    or endangered within the United States, nearly 350 of which inhabit DOD
    lands. DOD has a greater density of listed species than any other
    Federal agency: some 40 threatened or endangered species are found only
    on DOD installations. The Department prepares and implements Integrated
    Natural Resource Management Plans (INRMPs) for each installation with
    significant natural resources, that include land management and other
    actions to protect these endangered species. These plans, developed in
    coordination with the USFWS and State fish and wildlife agencies, have
    helped the Department avoid critical habitat designations at 35
    installations because the plans provide protection equal to or greater
    than what would be obtained if critical habitat had been designated for
    these endangered species. When coupled with our conservation efforts to
    protect species at risk and common species and their habitats before
    they become rare, INRMPs have provided increased flexibility in how DOD
    conducts its mission activities.
        The Department is executing $344 million in fiscal year 2009
    conservation efforts, of which $215 million is planned for recurring
    continuous conservation management activities, such as preserving
    habitat for at risk species and habitat vulnerable to global climate
    change. Additionally, $129 million is planned for non-recurring one-
    time projects such as installation of exclusion devices to protect
    endangered of at-risk species habitats, development of automated
    acoustic technologies for monitoring migratory birds, and shoreline
    protection projects. Fiscal year 2009 Cultural Resource projects
    include identifying design efficiencies and LEED equivalence standards
    for historic buildings, and producing historic context studies for Cold
    War sites in the Pacific and rural industrial sites on DOD lands in the
    Southeast.
        The Department is requesting $323 million for fiscal year 2010
    conservation efforts, which includes $209 million in recurring funds
    for continuous conservation management activities and $114 million in
    non-recurring funds for one-time conservation projects associated with
    threatened and endangered species, wetland protection, or other
    natural, cultural, or historical resources.
        Since 1984, the Department has obligated $40 billion in the Defense
    Environmental Restoration Program (DERP), including an fiscal year 2009
    appropriation of $1.5 billion. Through DERP, the Department has
    restored 74 percent of those areas on installations or Formerly Used
    Defense Site (FUDS) that have been impacted by past defense activities,
    in cooperation with State agencies and the U.S. Environmental
    Protection Agency. DERP consists of two categories of sites; (1)
    Installation Restoration Program (IRP) sites which contain hazardous
    substances, pollutants, and contaminants, and (2) Military Munitions
    Response Program (MMRP) sites which contain unexploded ordnance and
    discarded military munitions. The Department applies a risk-based
    prioritization process to determine the order of cleanup for both IRP
    and MMRP sites. By the end of 2008, the Department had completed
    cleanup on 82 percent of IRP sites on active installations, 69 percent
    of IRP sites on FUDS, and 74 percent of IRP sites on installations
    closed or realigned in the first four rounds of BRAC and BRAC 2005. In
    fiscal year 2009, we are executing approximately $1.5 billion at active
    and FUDS locations and another $525 million at BRAC bases for
    environmental restoration efforts. These expenditures should enable us
    to complete cleanup at an additional 619 sites at active and FUDS
    locations and 154 sites at BRAC bases.
        For the MMRP, DOD has completed cleanup of military munitions at 33
    percent of sites at active installations, over 58 percent of BRAC
    installation sites, and 34 percent of FUDS. By cleaning up our sites on
    a ``worst first'' basis, we have significantly reduced the potential
    risk associated with many of the sites in our inventory. As we continue
    to make cleanup progress, we are emphasizing optimization of
    performance. Optimization efforts include considering green remediation
    technologies, reducing the number of cleanups involving long-term
    management, and achieving site close out in a timely manner. These
    efforts will reduce our long-term liability and ensure the expeditious
    return of these properties to productive reuse. Our fiscal year 2010
    budget request of $1.5 billion will help implement these improvements
    while continuing to make progress to complete our cleanups and close
    out the properties.
        The fiscal year 2010 budget request of $103 million for pollution
    prevention will enable DOD to continue to meet our solid waste
    diversion and recycling goals while reducing our operating costs.
    Striking a balance between mission requirements and environmental
    quality, the Department employs long-term solutions to eliminate
    hazardous material use in operations and weapon systems acquisition,
    promote the use of alternative fuels, and implement innovative
    pollution prevention technologies to reduce pollution to our air,
    water, and land. In 2008, the Department invested $162 million in
    pollution prevention programs, including recurring requirements such as
    solid waste diversion and recycling, hazardous material reduction, and
    green procurement. In fiscal year 2008 the Department diverted 3.9
    million tons or 63 percent of our solid waste from landfills, avoiding
    approximately $260 million in landfill costs. Additionally, the
    Department has reduced hazardous waste disposal by 37 percent from
    calendar year 1996 to 2007. The Department is also effectively managing
    air quality, reducing hazardous air pollutant emissions at our
    installations by 24 tons from 2006 to 2007. To further reduce waste and
    resource consumption, in 2008 the Department updated its Green
    Procurement Program (GPP) strategy, which encourages Military Services
    to purchase environmentally preferable products and services. Through
    the GPP, the DOD has become a leader in green procurement, and we
    continue to make further improvements to GPP, most recently issuing
    policy direction requiring DOD contracting officers to use a contract
    provision giving preference to bio-based products. In fiscal year 2009,
    we are executing $165 million for pollution prevention, with another
    $103 million planned for fiscal year 2010. These levels of investment
    will enable DOD to continue to meet our diversion and recycling goals
    while reducing our operating costs.
        In fiscal year 2008, the Department obligated $1.54 billion for
    environmental compliance activities, including an $83 million MilCon
    investment in new construction projects to build drinking water
    facilities, wastewater treatment facilities and above ground fuel
    storage tanks that comply with Safe Drinking Water and Clean Water Act
    requirements. Clean water and clean air are essential to the health and
    well being of our communities and ecosystems. DOD management practices
    reduce discharged pollutants, leverage water conservation
    opportunities, and protect watersheds. Our drinking water program has
    consistently provided over 3,550,000 men, women, and children living
    and working on our installations with safe drinking water. The
    Department also manages over 1,600 water pollution control permits for
    our wastewater and storm water treatment systems, which achieved an
    overall 95 percent rate of compliance in 2008. Our fiscal year 2009
    appropriation included another $1.67 billion to upgrade treatment
    facilities and meet new and expanding permit requirements. Our fiscal
    year 2010 budget request of $1.6 billion will enable the Department to
    continue to sustain our air, water, and land resources to maintain
    operational readiness and enhance the health and welfare of surrounding
    communities, and the natural environment.
        Emerging Contaminants.--Our experiences with mission and
    environmental consequences associated with perchlorate, ozone-depleting
    substances, and other chemicals with evolving regulatory standards
    indicate a need to establish a program to make earlier, better-
    informed, risk management decisions regarding these emerging
    contaminants (ECs). This new program is already helping us better
    protect human health and the environment, and enhance military
    readiness. Simply put, the EC program identifies risks early in the
    process, before regulatory actions take place or materials become
    unavailable, thus protecting our people, assets, and the mission.
        We have established a three-tiered process to (1) look ``over-the-
    horizon'' and identify chemicals and materials with evolving science
    and regulatory interest; (2) assess the risks to human health, the
    environment, and DOD's mission; and (3) develop appropriate risk
    management options for DOD program managers. Twenty-one EC impact
    assessments have been completed for chemicals that include explosives,
    fuel constituents, corrosion preventatives, fire-fighting foams, and
    industrial degreasers. Examples of risk management options resulting
    from these assessments include conducting research to fill basic
    science gaps, improving material handling and personal protection
    practices, developing new or improved remediation technologies, and
    developing less toxic substitute materials or processes. One of the
    major thrusts of the program is to work closely with the DOD industrial
    base to conduct lifecycle analyses regarding less toxic alternative
    chemicals for use in weapons platforms, systems and equipment. A
    significant recent example of a risk management action is a new DOD
    policy to minimize the use of hexavalent chromium, a known carcinogen,
    throughout DOD.
        Because of the many national policy issues related to ECs, we
    continue to work with a number of Federal and State regulatory
    agencies, industry, academia, and professional organizations. In
    particular, we formed an EC working group with the Environmental
    Protection Agency (EPA) and the Environmental Council of States (ECOS)
    to address and discuss EC issues. Four important work products,
    including procedures for dealing with new ECs, have been completed and
    endorsed by all parties and are publically available on the ECOS, EPA,
    and DOD websites.
        We are also working in partnership with a new Industry-University
    Cooperative Research Center, initiated by the National Science
    Foundation, to focus on emerging contaminant research. Some of this
    effort will be geared to helping Federal agencies and industry use
    safer chemicals and materials for improved long-term sustainability.
        Sustaining the Warfighter.--All of our efforts with regard to both
    our built and natural infrastructure are because, simply put, our
    Nation's warfighters need the best training and equipment available.
    This means sustaining our vital training and test range and
    installation infrastructure. Incompatible land use in the vicinity of
    DOD installations and ranges continues to challenge training and
    testing sustainability. Particular challenges from incompatible land
    use include noise complaints from new neighbors, concerns about smoke
    and dust, diminished usable airspace due to new structures or growing
    civil aviation, a loss of habitat for endangered species, and a
    compromised ability to test and train with the frequency needed in time
    of war.
        History has demonstrated that effective training of U.S. troops has
    a direct impact on their success on the battlefield. Reliable access to
    operational ranges and supporting installations is needed to sustain
    that training. In 2002, Congress provided statutory authority to use
    O&M funds to create buffers around our ranges and installations. Using
    this authority, DOD established the Readiness and Environmental
    Protection Initiative (REPI), and has worked with willing partners to
    cost-share compatible land use solutions that benefit military
    readiness and preserve natural habitat. In fiscal year 2005, REPI
    leveraged $12.5 million of O&M Congressional funding to secure $55
    million worth of buffer land and easements, encompassing 13,939 acres
    at seven installations. In fiscal year 2006, with $37 million of O&M
    funding, REPI secured over $93 million worth of buffer land and
    easements, encompassing 33,521 acres.
        Overall in fiscal year 2007, REPI initiated 27 projects in 17
    States; in fiscal year 2008, REPI funded 36 projects in 19 States.
    Already, $23.2 million from fiscal year 2007 and fiscal year 2008
    funding has secured $74 million of buffer land, encompassing 28,378
    acres. For fiscal year 2009 REPI identified an additional 39 projects
    in 21 States for funding. Congress appropriated $56 million for REPI in
    fiscal year 2009. Such REPI and partner funding has resulted in
    projects providing clear benefit to the military mission, such as
    protecting the Navy's one-of-a-kind La Posta Mountain Warfare Training
    Facility in California; keeping training areas open at Marine Corps
    Base Camp Lejeune, North Carolina; and buffering live-fire training
    ranges at Fort Carson, Colorado.
        After several years of implementing REPI projects, DOD asked the
    RAND Corporation to assess the program's effectiveness. In 2007, RAND
    issued its report, titled The Thin Green Line: An Assessment of DOD's
    Readiness and Environmental Protection Initiative to Buffer
    Installation Encroachment. The report found that REPI projects, as in
    the case of the installations noted above, have proven effective in
    relieving military training and testing activities from encroachment
    pressures and in strengthening joint readiness.
        According to RAND, REPI also helped improve the natural environment
    and the quality of life in communities where the projects were located.
    The environmental benefits of REPI projects have included helping to
    preserve habitat, biodiversity and threatened and endangered species;
    protecting wildlife corridors; and safeguarding water quality and
    supply. REPI also was shown to improve local economies and the
    reputation of installations with surrounding communities; for example,
    the project near NAS Fallon in Nevada has helped preserve productive
    local agricultural land and the continued viability of local farms.
        Many of the challenges facing DOD are also of mutual concern to
    other Federal agencies and State governments. These issues can and do
    cross administrative boundaries, demanding cooperative action at the
    regional level. The Department is partnering regionally with State
    governments and Federal agencies to identify and address such shared
    concerns. These partnerships are proving essential to sustaining our
    ranges and installations, as well as to furthering our partners' goals
    and missions. For example, DOD continues to work with State governments
    and other Federal agencies in the Southeast Regional Partnership for
    Planning and Sustainability--or SERPPAS. The States of Alabama,
    Florida, Georgia, North Carolina, and South Carolina are engaged with
    the military and other Federal agencies in this important regional
    initiative. Through the SERPPAS process, the partners are promoting
    better planning related to growth, the preservation of open space, and
    the protection of the region's military installations. A similar effort
    is now getting underway in the southwestern United States, a region of
    critical military training and testing importance that is facing myriad
    growth and environmental challenges.
        DOD continues to work closely with other Federal agencies to
    sustain military readiness. One major thrust is to ensure that wind
    farm projects and energy transmission corridors are compatible with
    military readiness activities. The Department also coordinates with the
    Department of Homeland Security to ensure that our military readiness
    activities and infrastructure in border regions are compatible with new
    security measures. The Department's sustainability program continues to
    reach out to non-Federal partners, working regularly with State,
    county, and local governments, Tribal, and non-governmental
    organizations on issues of mutual concern to seek win-win solutions.
    Meanwhile, overseas, DOD continues to develop mission sustainment
    procedures with host nations. The Department looks forward to further
    building upon all of these efforts to ensure that warfighters' current
    and future training and testing opportunities remain unrivaled.
        Additionally, DOD's Office of Economic Adjustment (OEA) has managed
    the Joint Land Use Study (JLUS) program since 1985. JLUS is a
    cooperative land use planning effort between affected local governments
    and military installations that seeks to anticipate, identify, and
    prevent growth conflicts by helping State and local governments better
    understand and incorporate technical data developed under Service Air
    Installation Compatible Use Zone, Range Air Installation Compatible Use
    Zone, Operational Noise Management Program, Encroachment Action Plan,
    and Encroachment Control Plan studies into local planning programs.
    When a Service believes an installation may be experiencing
    incompatible development problems, or that there is likelihood for
    incompatible development that could adversely affect the military
    mission, the Service may nominate the installations for a JLUS to OEA.
    All the Services takes advantage of the JLUS program, finding it an
    effective tool for bringing communities and the military together to
    mutually address development issues and needs.
        Safety and Health Risk Management.--A significant responsibility
    associated with Installations and Environment is the management of the
    Department's safety and health programs. Over the last year, the
    Department experienced some improvement in its safety and health
    performance, but we have a way to go.
        In 2005, the Department published policy (DOD Directive 4715.1E)
    that required implementation of management systems for safety and
    health (similar to environmental management systems described by the
    International Standards Organization (ISO) 14000 series of standards)
    emphasizing the integration of safety and health into day-to-day
    operations. By ``operationalizing'' safety and health, we make safety a
    part of every process and operation.
        We are encouraging commanders to meet and exceed tough performance-
    based criteria for a managed safety and health system and proving it by
    achieving ``Star'' recognition in the Occupational Safety and Health
    Administration's Voluntary Protection Program (VPP). Installations
    holding VPP Star Status undergo an independent review of their programs
    and must be among the best, having injury and illness rates at or below
    the national average. So far, the Department has 22 Star Sites to date;
    we anticipate more than 36 Star Sites by the end of fiscal year 2009
    and we further expect that number to increase every year. Recently, the
    Pentagon began its journey toward Star recognition.
        Operationalizing safety applies to every aspect of the Department's
    missions. In preparing for basing changes on Guam, we, through the
    Department of Defense Explosives Safety Board, developed a
    comprehensive Military Munitions Annex to the Guam Joint Military
    Master Plan. This effort sought to fully harmonize the receipt,
    storage, maintenance, transportation, and use of military munitions by
    the Department of Defense and Department of Homeland Security
    organizations on Guam. Explosives safety risks on Guam have been
    identified and strategic recommendations will result in risks from
    military munitions being eliminated or mitigated. Furthermore,
    operationalizing safety improves the entire operation, by improving
    munitions support to execution of war plans and contingencies and
    optimizing munitions processes. We are continuing this effort by
    integrating explosives safety into all facets of operational planning.
        In the area of Strategic Human Capital Management, my organization,
    along with the entire Department, is focused on human capital planning
    emphasizing improved competency-based workforce planning. In
    establishing ``Functional Community Managers'' for: Safety and Health,
    Explosives Safety, Fire and Emergency Services, and Expeditionary
    Environment Safety and Occupational Health (ESOH), we will implement a
    comprehensive strategy to ensure a strong safety and health workforce
    that is able to meet the challenges of today and the future. Our
    Functional Community Managers, bringing first hand knowledge of
    competencies needed, work in partnership with the Department's Human
    Resource experts to ensure the Department is positioned to acquire and
    retain the talent it needs to meet current and future mission
    requirements.
        The ability to send our people home from work healthy and safe is
    of paramount concern. The number of civilian injuries is one measure of
    our success in managing safety and health. For our civilian employees,
    we reduced the lost time injury rate over the last five years by 13
    percent. We continue to seek improvements to prevent all mishaps and
    the resulting injuries and losses. Operating motor vehicles continues
    to be the most significant mishap threat to our military members. We
    have reduced the number of military fatalities for all privately-owned
    motor vehicles on public highways from 308 in fiscal year 2002 to 260
    in fiscal year 2008--a 16 percent reduction. However, for motorcycles,
    we are part of a national trend in increasing motorcycle fatalities.
    Nationally, motorcycle fatalities increased by 58 percent from 2002 to
    2007. DOD fatalities increased from 71 to 124 for fiscal year 2002 to
    fiscal year 2008--a 75 percent increase. We are continuing to develop
    programs and initiatives to address this negative trend.
        Operating military vehicles in Iraq and Afghanistan is also a
    significant risk, with 24 motor vehicle fatalities in fiscal year
    2008--a reduction from a peak of 59 motor vehicle fatalities in fiscal
    year 2005. Our military members have met the combined threats from
    Improvised Explosive Devices and poor roadways with increased training
    and experience in operating tactical vehicles, and by improved
    survivability of crashes from increased seat belt use, gunner's
    harnesses, and rollover training.
        In early 2009, Installations and Environment published policy that
    defines ``all-hazards'' emergency management for DOD installations
    worldwide. DOD installations now have consistent guidance to improve
    their compatibility with their civilian counterparts and a management
    structure focused on preparing for and responding to emergencies
    regardless of the hazard. Our ability to seamlessly interact with
    civilian responders will make us much more effective in times of
    disaster. We are continuing to work with other offices in DOD to
    eliminate unnecessary redundancy and confusion at the time of an
    emergency and provide holistic emergency response on and around our
    installations.
        Integrating Business Management.--Accomplishing the diverse
    missions of the Installations and Environment community requires
    integration across organizational boundaries. We have made great
    progress with our initiatives to improve the efficiency of the
    Department's business processes. We are working to develop and
    implement common data standards across the Military Departments and
    Defense Agencies, modernize business systems, and enable audit-ready
    processes. In the Installations and Environment community, we have
    three key business transformation efforts: real property
    accountability, environmental liabilities, and hazardous materials
    information management.
        The Department manages almost 60 percent of the Federal
    Government's buildings and structures--over 539,000 assets worldwide.
    Each Military Department has a separate system to manage their share of
    this property. Several years ago we conducted research and hired a top
    ranked information technology firm to help us develop our business
    system modernization strategy. We determined, based upon the firm's
    recommendation and the Military Service leadership's concurrence, that
    building a single system would not be the optimal solution. Instead, we
    decided to develop DOD-wide standards and upgrade or replace the
    existing systems so that they can be interoperable across DOD. To
    achieve this goal, we developed common data standards and reengineered
    business processes. As of September 30, 2009, all of DOD's primary real
    property systems will be interoperable, ensuring that accurate, timely,
    and reliable real property information is available for more
    transparent management decision making.
        In addition to the data and business process standards initiatives,
    we are also working to modernize our systems. Many of the existing,
    government-built legacy systems use outdated technology and do not
    apply current industry best practices. Led by my organization, the
    Military Services are in the process of acquiring new commercial off-
    the-shelf systems or upgrading their current systems to comply with the
    standards. To further integrate real property information for
    Department-level analysis, my office is building the real property data
    hub that will provide real-time accessibility to data.
        Uniquely identifying each of our real property assets is
    fundamental to real property accountability. Our Real Property Unique
    Identifier Registry is at full operational capability. These unique
    identifiers allow us to establish linkages within our systems between
    facilities, equipment and people. The registry includes address
    information on all DOD installations and sites and we are working with
    other DOD functional communities to ensure that physical location
    information used across DOD comes from one authoritative source--the
    Registry.
        The ability to share data with the communities that surround our
    installations is a key component in our ongoing efforts to sustain
    military readiness. My organization is working with stakeholders across
    the Federal Government on aligning geospatial data standards so that
    data sharing can take place between the local and Federal communities.
    We have recently integrated geospatial data requirements into the
    Department's Business Enterprise Architecture, which will further
    expand interoperability opportunities in DOD.
        On the environmental management side, my office has been leading
    efforts to standardize and streamline the complex processes required to
    accurately value and report environmental liabilities. We are
    developing a blueprint for implementation of the reengineered business
    processes in the Department's enterprise resource planning systems.
        To minimize future needs for environmental cleanup and to ensure
    safety of our personnel, ready access to complete and accurate
    hazardous material information is critical. We are working to improve
    availability of timely, accurate, consistent, and complete product
    hazard data for use across the Department.
        In summary, our business transformation efforts are helping the
    Department efficiently share information and best practices across
    organizational boundaries. As the Services modernize their systems and
    achieve interoperability, the Department will gain access to secure,
    reliable information crucial for effective management of assets, and
    ultimately reducing costs and improving performance across all of DOD.
        Conclusion.--In closing, Mr. Chairman, I sincerely thank you for
    this opportunity to update you on our work in Installations and
    Environment on behalf of the Department of Defense. To meet the ever
    changing warfighting landscape, our military must be flexible and
    responsive and our installations must adapt, reconfigure, and be
    managed to maximize that flexibility and responsiveness. I appreciate
    your continued support and I look forward to working with you to
    provide the quality installations that our military forces need and
    deserve.

        Senator Johnson. Thank you.
        Secretary Hale, as you know the Secretary of Defense has
    put a hold on providing Congress with updated FYDPs for 2010.
    This committee works very closely with the authorizers to
    ensure that the projects we fund are mission critical and are
    in the MILCON pipeline.
        Public Law 104-196 requires the National Guard bureau to
    prepare and to submit to Congress an annual FYDP. Doesn't the
    current guidance fly in the face of that law? And can you
    suggest another way for this committee to do its due diligence
    and vet military construction projects if we cannot determine
    whether the projects are in the FYDP?

                                      FYDP

        Mr. Hale. Well, Mr. Chairman, as I said, we don't have an
    out-year plan, and it is not without precedent. It was the same
    situation in 2001 and 1993 at the beginning of the Bush and
    Clinton administrations.
        We need to go through the Quadrennial Defense Review and
    the fall program and budget review in order to have a plan that
    fully fits with the administration's priorities. So it is not
    that we are not trying to give it to you. We don't have one.
        I understand that it creates problems. We have a year-old
    FYDP, which you have. It is not consistent with administration
    policy, but it is at least a start. And we would be glad, if
    there are specific projects, to try to work with you to provide
    what information that we can.
        I know it is a difficult situation, and we need to help you
    all we can, but there is no out-year plan and this not by
    design. Frankly, it takes 6 to 9 months to create a FYDP. We
    had about 3, and we made major changes in the Fiscal 2010
    budget, and it just didn't all add up. I mean, there is no way
    we could have gotten it done.
        Senator Johnson. Would you please take a message back to
    the Secretary and urge him to reconsider what I believe is a
    very unhelpful policy for both Congress and the services?

                                  FULL FUNDING

        Secretary Hale, have you sought authority to increment
    projects from the OMB, and what is your position, as the one
    who writes the checks, on incremental funding?
        Mr. Hale. I believe in full funding, Mr. Chairman, with
    limited exceptions. I think it is the right way on both sides
    of the river. It requires that we face up to the full cost of
    the projects, whether it is military construction or aircraft
    or ships.
        Now there are limited exceptions, certainly with advanced
    procurement on the weapons side, and I know that we have
    sometimes incrementally funded military construction. But I
    think they ought to be rare exceptions, and it does violate
    OMB's policy. And so, we are not doing it in this budget, and I
    believe that is the right way to go. Again, I think it is
    consistent with transparency and accountability to face the
    full cost of projects.
        Senator Johnson. Even, for example, the fiscal year 2010
    budget request includes $800 million for a National Security
    Agency project in Utah and $226.9 million for a pier
    replacement project in Virginia. There is no way the Department
    could execute that amount of money for a single project in 1
    year.
        Mr. Hale. Well, MILCON is 5-year money so we have plenty of
    time to obligate it. I think that that is not the issue in my
    mind. There may be some projects that are so large that they
    just create unacceptable budget spikes. In those cases, we may
    need to look at some kind of incremental funding.
        But I will repeat my statement. I believe full funding is
    the right way on both sides of the river, and I would want to
    see incremental funding it, I have my way, as a fairly rare
    exception.
        Senator Johnson. Yes. Mr. Arny, what is the status of the
    two brigade combat teams in Germany? And how can the Department
    go forward with MILCON projects, including some that were
    funded last year, when we don't know how this issue will be
    resolved?
        Mr. Arny. Mr. Chairman, I defer to my Army colleagues when
    you talk to them. But as I understand the BCT issue, we are not
    changing the force structure in terms of troops, but we are
    changing the organization. We are looking as part of the global
    posture review exactly how we will change the structure. But we
    believe for 2010, our military construction is needed, no
    matter what the end result is in terms of the number of BCTs.

                                INFLATION POLICY

        Senator Johnson. Secretary Hale, the OMB's construction
    pricing guide is generally not as responsive to changing
    economic conditions as the private sector. Is the Department
    working with OMB to develop a pricing system that is more
    timely and agile than the current system?
        Mr. Hale. Are you thinking mainly of inflation adjustments,
    Mr. Chairman?
        Senator Johnson. With the current economic environment, are
    you seeing any significant trends with regard to bids versus
    cost estimate?
        Mr. Hale. Well, unfortunately, I think that we probably
    have solved temporarily the problem of high inflation in the
    construction industry with the recession. But let us hope that
    ends quickly.
        You know, we do accept generally OMB inflation indices, and
    I think we will continue to do that. I understand there may be
    certain areas in the construction industry when the economy is
    recovered that have extraordinarily high rates of inflation for
    special reasons.
        I mean, my personal reaction to that is that we ought to
    look at the projects in that area and cost them in a way that
    takes into account special circumstances rather than trying to
    build in some new deflator, which will be a challenge with
    regard to OMB and to derive an inflator. So that would be my
    suggested way to go.
        But it is not a problem at the moment, unfortunately. Yes,
    I think we are seeing bids that are lower than we expected, and
    let us just hope it doesn't last too long.
        Senator Johnson. Thank you.
        Senator Hutchison.
        Senator Hutchison. Thank you, Mr. Chairman.
        I just wanted to follow up on one of the questions that the
    chairman asked, and that is the FYDP for the Guard and Reserve.
    Are you taking the same position, even though it is in the law
    that they have to provide a FYDP, that it can't be done? Or are
    you making an exception there?
        Mr. Hale. Well, they don't have one either in the sense
    that we have not gone through the process that would determine
    a level of military construction for the actives or the Guard
    that is consistent with overall administration policy.
        Again, I understand the problem. We can go back to the last
    FYDP. It is at least some guide, although I think you have to
    understand it is not consistent with current administration
    policy. And on specific projects, we can try to work with the
    committee to provide what information we can.
        I know it is not an ideal solution, but I think it is a
    common one at the beginning of administrations. You have 2
    months to do something that normally takes 9, and we need the
    output of the Quadrennial Review and the fall budget and
    program review before we have a worked-out Future Years Defense
    Plan.
        Senator Hutchison. Are you prepared to say what is not part
    of the current administration's plans that was a policy of the
    previous administration?
        Mr. Hale. No, not beyond fiscal 2010. I mean, in fiscal
    2010, we can, of course. But that is the problem. We don't have
    that information. We really haven't gone through the review
    process.
        I think, inevitably, a number of the projects that are in
    the 2010 or the 2011 and out-year columns of the fiscal 2009
    FYDP will stay. I mean, we don't redo everything. But some
    won't. There will be new ones, and some will come off. So I
    don't know a better solution than to try to work with you if
    there are individual projects.
        It isn't a gag order. It is not that we are trying to stop
    people from supplying information. It is that we don't have the
    information.
        Senator Hutchison. Would you be prepared to say that the
    BRAC that Congress enacted is going to continue as Congress has
    directed?
        Mr. Hale. Yes. I mean, I think we are close enough. I am
    going to ask Wayne Arny to correct me if I am wrong, but we are
    pretty close on that. I mean, after all, we have a detailed
    plan in fiscal 2010, and September 2011 is the goal. So I don't
    know what 2011 will look like, but it has got to be coming down
    sharply at that point.
        We are going to do BRAC as it was stated by the Congress,
    that is to fully fund it.
        Senator Hutchison. And the military construction that would
    prepare for it?
        Mr. Arny. Yes. The Secretary----
        Mr. Hale. Yes. Do you want to add to that?
        Mr. Arny. The Secretary did commit to that in even this new
    administration we would fully fund BRAC.
        Senator Hutchison. Mr. Arny or Mr. Hale, either of you can
    answer this, but it is back to my question on Fort Carson and
    Pinon Canyon. Are you looking in your QDR about the
    difficulties that clearly we are facing with Pinon Canyon? And
    as you know, when I asked last week, the Army said they really
    didn't have a plan B for not having that training capability
    that they certainly expected to have when a new brigade combat
    team was scheduled to move to Fort Carson.
        My question is, is there going to be a plan B pretty soon?
    Because no one seems to be fighting all of the environmental
    concerns about Pinon Canyon, and should we begin to start
    looking at a different priority than for that brigade combat
    team, especially with the lowering of the number and perhaps
    that that one might be directed somewhere else?
        Mr. Hale. Do you want to take it?
        Mr. Arny. Ma'am, I think we can safely say that all the
    factors involved in those basings are being taken into
    consideration.
        Senator Hutchison. It would be part of the expectation of
    this committee and Congress that you would have a plan B that
    would be part of the Quadrennial Review. If Pinon Canyon is
    going to be off limits, and I think this administration is
    pretty strong on the environmental concerns with Pinon Canyon--
    and at least Secretary Salazar has been very plain about it--so
    are you looking at a near term for making decisions on that?
        Mr. Arny. I cannot say specifically, but I know that the
    Army in their plans are going to look at all the factors that
    affect their training when they make their decision. I am sorry
    I can't be more specific than that.
        Senator Hutchison. But timetable for the decision?
        Mr. Arny. I would say within the next few months as part of
    the QDR.
        Senator Hutchison. That is what I was trying to find out.
        The buildup on Guam, where do we stand on a plan for that?
    And there have been a lot of reports of infrastructure needs--
    --
        Mr. Arny. Difficulties.
        Senator Hutchison. Yes, difficulties. Where do we stand on
    addressing those and coming forward with a plan that we know is
    going to be able to be executed within the $10 billion that has
    been allocated?
        Mr. Arny. We are working very hard in the services
    especially, especially the Navy, to put together the
    environmental impact statement, which is more than just the
    environmental impact statement. It has less to do with the
    environment than it does with the lay-down and the mitigation
    of that.
        Included in that will be the planning for how to put the
    buildings in, the raw things that you expect, but also the
    mitigation on how we will do, how we will mitigate in the
    private sector, how we will bring in the workforce because the
    island does not have a workforce large enough to support that
    level of construction, how to work with the port, with the
    power, with housing, with all the aspects.
        And like I said, a major part of that will be included in
    the environmental impact statement. This is the--since the
    advent--we have built bases, obviously, in the past. But we
    have never built one this big since the advent of the
    environmental impact statement.
        So it is a very complex operation. We have to take into
    account far more different laws and effects than we did before.
    And I would say that I would defer my answer to the Navy as to
    the specifics, but it would be within a matter of months to
    have that plan.

                                      GUAM

        Mr. Hale. I would like to add to that and just underscore
    the administration remains fully committed to moving the
    marines off Okinawa and into Guam. We have signed an agreement
    with the Japanese, and we remain fully committed. We know there
    are significant challenges, and we will work through them.
        Senator Hutchison. Thank you very much.
        Thank you, Mr. Chairman.
        Senator Johnson. Senator Pryor, do you have any questions
    or comments?
        Senator Pryor. I do, Mr. Chairman. Thank you for having
    this hearing and your attention to this.
        Secretary Arny, let me ask you, if I may, about the Office
    of Economic Adjustment, which obviously helps when a base or a
    facility is being downsized. Can you, if you know about
    specifically the Pine Bluff Arsenal, which is in Arkansas, but
    the other facilities around the country who are going through
    the process of destroying their chemical weapons, I think we
    are going to lose somewhere in the neighborhood of 1,100 jobs
    at Pine Bluff.
        Do you have any progress report on that and any plans that
    you are making for not just Pine Bluff, but the other
    facilities?
        Mr. Arny. I have a paper that I am going to look at here
    and refresh myself. But I can say that OEA does have a
    responsibility and is funded to provide communities that are
    growing or decreasing, whenever there is a change that we in
    the Department cause, they are required by law to go in and
    assist with grants for funding and also advice.
        I don't know that Pine Bluff specifically, but I could
    almost guarantee you that they will be--because OEA works for
    me, and we have got people scattered all over the country. We
    will be working with the community to help them recover and
    take into effect that downsizing.
        Senator Pryor. That would be great. And if you could just
    keep us posted on that, that would be great.
        I know the community is very supportive of the arsenal and
    all the things that the arsenal does, even though they handle
    some very dangerous material there. But nonetheless, they are
    very, very supportive, and I just want to make sure they have a
    good transition and, hopefully, come through this thing in good
    shape.
        Let me ask also, if I may, about really the advent of
    unmanned aerial vehicles (UAVs), which didn't exist just a few
    years ago. And now I think we have thousands of them in our
    inventory.
        A lot of those are in theater right now, but there will be
    a day when I think we will need a pretty sizable UAV training
    system here in this country. And of course, you all have to
    work through those issues with the FAA about having rated
    pilots versus just other folks flying these, and it gets into a
    big airspace issue.
        Is the DOD in the process right now of lining up more
    airspace and looking for new areas where they can meet the
    needs of this rapidly growing technology?
        Mr. Arny. Senator, as a rated pilot myself, this sounds
    like a union issue. I want to make sure that there is nothing
    but rated pilots working these.
        I will look into that for you. It had popped on my scope,
    and I don't have an answer. I will work with the services. I
    would be amazed if the Air Force, the Army, and the Navy who
    are working with UAVs are not--I know it is a rated pilot
    because in the magazines that I get monthly, I see discussions
    on both sides of it.
        So I will get an answer back for you, but I would be
    dumbfounded if they are not trying to consider that now.
        [The information follows:]

        The Military Services are faced with expanding UAV inventories at
    bed-down locations throughout the CONUS. These UAV forces require use
    of the Federal Aviation Administration National Airspace System (NAS)
    for training purposes to meet mission readiness. Like the Air Force,
    all the services are focused on integration of these expanding UAV
    training requirements into the NAS. The Army, perhaps more than the
    other services, is taking on a growing UAV mission without benefit of a
    significant pre-existing inventory of airspace over or around its
    ranges. The Navy and the USMC also must identify and secure access to
    appropriate training space as their UAV missions and inventories
    expand. In the case of the Navy, such access is required both over land
    and at sea.
        The Office of the Deputy Under Secretary of Defense for Readiness
    (DUSD(R)) is leading a UAV Tiger Team to address specifically the
    challenges of UAV training within the NAS and to develop a multi-
    Service UAV Training Airspace Plan that will accommodate increasing UAV
    training requirements in the CONUS. The UAV Tiger Team is represented
    by all Military Services, the Office of the Secretary of Defense (OSD),
    the Joint Staffs, and the military testing community. UAV training and
    airspace experts will convene to assess and develop strategies that
    seek to include UAV training within the NAS in ways similar to the
    training activities of military aircraft within the NAS to the extent
    possible. These strategies will inform the UAV Training Airspace Plan.
    The UAV Tiger Team will convene in the summer of 2009 and will continue
    until the UAV Training Airspace Plan is complete in 2010. The UAV
    airspace effort is being coordinated with other ongoing UAV planning
    activities within DOD, and is part of the broader sustainable ranges
    initiative within OSD.

        Senator Pryor. Yes. That would be great. And another
    question is just the money involved. And is this one that takes
    money, or is it more just working out agreements with FAA, et
    cetera? And we just need to be prepared for the future because
    I think UAVs will have a big presence in the future for our
    military needs.
        And one other thing, and this is also sort of a space
    issue, and I know there are a lot of bases, et cetera, that are
    constrained by various geographical considerations around their
    areas of operation. But your air and land ranges, as I
    understand it, you are getting to a point, at least in some
    areas, where those ranges are used--I don't want to say
    overused, but they are kind of hitting the max. They are
    bumping up against the ceiling in terms of the amount of
    training that can be done at those, especially, as I understand
    it, at Eglin and at Fort Bragg.
        But do you know anything about that, or have you been
    working on that issue to make sure that there is sufficient air
    and land ranges?
        Mr. Arny. Not about those specifically, but in my time in
    the Navy and here, we have been working very hard over the last
    10 to 15 years on finding ways to fight encroachment. Our
    Readiness and Environmental Protection Initiative (REPI)
    program has been very active, with help from the Congress,
    where we go out and buy easements on land around our bases and
    around our ranges to make sure that we have buffer zones.
        And frankly, where--as we tried to do with Pinon Canyon,
    where we think we need more ranges, we will go out and try to
    acquire land. I know in the Navy, we acquired land down in
    Mississippi in a range down there. I know the Marine Corps is
    looking to expand 29 twentynine Palms.
        So where we can and where it is required, we will use
    military construction funding and other land acquisition to
    expand it. Where we feel we have enough ranges, but we need
    buffer zones, then we are using REPI and other programs,
    cooperative programs with the private sector.
        In the Pensacola area, the local community is very active.
    The local community will actually buy up land around the bases
    to ensure that they are okay.
        Senator Pryor. Right. I think that Eglin may have an issue
    with the F-35 Joint Strike Fighter going there----
        Mr. Arny. Yes, sir. I believe that is more of a perceived
    noise issue than it is actually a training range issue, and we
    will have to work through it. And if you look at--I was down in
    San Antonio, at an Air Force base down there, and in the 1930s,
    the ideal was you put all the housing and admin facilities
    between the two runways. Well, nowadays, you wouldn't think
    about doing that.
        So it is a matter of things have changed. Oceana on the
    east coast has a lot of housing around it. In the 1950s, we
    bought 18,000 acres in the San Joaquin Valley and easements on
    another 12,000 acres to build the Naval Air Station Lemoore,
    where both of my sons have been.
        So it is a different mentality, and we have to accommodate
    it as things move.
        Senator Pryor. Thank you.
        Thank you, Mr. Chairman.

                         ADDITIONAL COMMITTEE QUESTIONS

        Senator Johnson. Secretary Hale and Mr. Arny, thank you so
    much, and you may be excused.
        [The following questions were not asked at the hearing, but
    were submitted to the Department for response subsequent to the
    hearing:]

                   Questions Submitted to Hon. Robert F. Hale

                 Questions Submitted by Senator Mitch McConnell

        Question. In fiscal year 2009, Fort Knox received funding from the
    Department of Defense to widen portions of Wilson Road, an on-base
    road, which leads to the Human Resources Center of Excellence on the
    installation. The amount only funded half of the project, however. Why
    was this project only partially funded? When will it appear on the
    Future Years Defense Plan?
        Answer. The East Access Road Improvements fiscal year 2008 military
    construction project (project number 66549 for $6.7 million) was
    authorized and appropriated at the scope requested. The project scope
    included widening the main access corridor from Wilson Gate to
    Eisenhower Avenue to four traffic lanes, improving road drainage,
    upgrading traffic signals, relocating overhead utility lines
    underground, installing curbs and gutters, and adding reflectorized
    pavement markings.
        This project was an emergency requirement included in the fiscal
    year 2008 President's Budget. It supports a Grow the Army Brigade
    Combat Team and the Base Realignment and Closure relocation of the
    Human Resources Command to Fort Knox. As a result, insufficient design
    was performed, which led to a poor estimate of construction material
    quantities for milling and paving, as well as inadequate drainage and
    safety features. The lack of proper design, coupled with increased
    labor, construction material, and fuel costs caused the project to lose
    scope in order to stay within funding limits. An Above Threshold
    Reprogramming (Congressional authorization for projects greater than $2
    million or 125 percent of the programmed amount) was considered to
    achieve full scope, but funding was not available.
        East Access Corridor Improvements (project number 70261 for $6.4
    million) has been developed to capture the lost scope and will compete
    in future budget cycles.
        Question. Ireland Army Community Hospital at Fort Knox is one of
    the oldest hospitals in the Army. A study was to be undertaken to
    examine whether the facility needed to be replaced. What is the status
    of that report? When will it be submitted to Congress?
        Answer. The U.S. Army Medical Command (MEDCOM) recognizes the need
    to ensure medical treatment capabilities at Fort Knox match the needs
    of the supported beneficiary population. In the first quarter of fiscal
    year 2009, MEDCOM funded a planning effort to determine the scope,
    capabilities, siting, and cost for an Ireland replacement facility.
    Analysis of population, workload, services, and network are now
    complete. Facility requirements associated with this analysis are in
    development and will be complete in July with final deliverables to
    follow. The outcome of the planning effort will be used to program the
    project for a future budget submission. The MEDCOM Commanding General
    would be happy to meet with you later this summer to share the results
    of the planning process and the proposed facility solution.
        Question. By law, DOD must complete disposal of the chemical
    weapons stockpile at Blue Grass Army Depot by 2017. What is the Army's
    long-term plan to take advantage of the Blue Grass Army Depot's
    capabilities following completion of the chemical weapons disposal
    efforts?
        Answer. Blue Grass Army Depot is a very valuable component of the
    Army's Industrial Base. Its mission is and will continue to be to
    support the Joint Warfighter by safely providing a wide range of high
    quality Defense products and services at the right price, place, and
    time.
        Currently, Blue Grass Army Depot conducts Standard Depot Operations
    (store, issue, receipt, inspect, maintain, and demilitarize) for
    conventional and non-standard (Special Forces unique) ammunition and
    missiles, as well as Chemical Defense Equipment (CDE). On a daily
    basis, Blue Grass ships critical munitions and CDE to Joint SOF and
    conventional units worldwide for both training and combat use.
    Routinely, on a quarterly basis, Blue Grass Army Depot supplies
    munitions for the CENTCOM ammunition resupply vessel with critical
    munitions in support of OIF/OEF.
        In addition to Standard Depot Operations, Blue Grass also produces
    kits and ships weapons system, combat vehicle and ammunition components
    to fill critical Warfighter requirements. Recent examples of this
    industrial capability include MRAP add-on armor, overhead wire
    mitigation kits, and Gunner Restraint Kits. Ammunition specific
    component production examples include 81mm mortar piston plates and
    mortar tail fin sections. Blue Grass Army Depot also conducts container
    (MILVAN and Ammunition unique) refurbishment and repair, as well as
    fabrication and heat treatment of MIL SPEC ammunition pallets. Blue
    Grass Army Depot commercial tenants also provide additional, non-
    ammunition SOF support.
        Blue Grass Army Depot plans to fully utilize critical capability
    remaining on the Depot at the completion of the Chemical weapons
    demilitarization mission. This would include those ammunition storage
    structures currently storing chemical munitions and administrative
    facilities constructed in support of the Chemical Demilitarization
    mission.
        Question. What is the planned arrival date for Fort Knox's brigade
    combat team?
        Answer. The 3d Brigade, 1st Infantry Division is programmed to
    relocate from Fort Hood, Texas, to Fort Knox, Kentucky, on October 16,
    2009.
                                     ______

                  Question Submitted by Senator Susan Collins

        Question. Mr. Hale, We need more emphasis on military construction
    to properly modernize and maintain the industrial infrastructure to
    support our military in the 21st century. For example, Portsmouth naval
    Shipyard in Kittery, Maine, has had to depend on Congressional plus-up
    funding in order to get many of the new facilities they need. While
    these projects have been reviewed, approved and included in the out
    year Program Objective Memorandums (POMs), the Navy continues to not
    include them in their budget requests.
        What more can be done to ensure that all of the Navy's repair and
    support facilities have all of the needed equipment and military
    construction required to perform their missions?
        Answer. The Department of the Navy applies a prioritized
    methodology in determining which projects are included in its Military
    Construction request. The infrastructure investment development
    incorporates the following factors: (1) a top down programmatic
    approach, which incorporates strategic investment guidance from the
    Chief of Naval Operations; (2) Global Shore Infrastructure Plans (GSIP)
    identify capability gaps; and (3) an analytical decision process. There
    are three weighted criteria which determine priorities. These include
    strategic guiding principles (e.g. mission alignment, condition based
    maintenance/recap), shore capability areas (e.g. operations, training),
    and components of the shore investment model (e.g. capacity,
    condition). The described process provides for a prioritized executable
    global Navy construction program.
                                     ______

                       Questions Submitted to Wayne Arny

                   Questions Submitted by Senator Mark Pryor

        Question. On February 26th 2009, I wrote you a letter requesting
    data in regard to property disposal. My intent was to better understand
    the performance of conveyances and how they relate to the creation of
    jobs, particularly with respect to the Economic Development Conveyance
    (EDC). It is my understanding that the purpose of EDCs, that proceed
    from land disposition, is to advance the economic development and job
    creation objectives of communities. Last week in front of this
    Committee, I asked your Army colleague, Mr. Calcara, his thoughts on
    those tools available by DOD to convey surplus land.
        I am very interested in your thoughts on this matter. While it is
    DOD policy to fully utilize all appropriate means to transfer property
    at installations closed or realigned under the base closure law, to
    include public benefit transfers, EDCs at cost and no-cost, and
    negotiated or public sales, can you explain to this Committee how DOD
    makes decisions as to which conveyance is best suited for a particular
    community?
        Answer. In consultation with the Local Redevelopment Authority
    (LRA), DOD considers many local community factors as well as the
    characteristics of the property itself when making property disposal
    decisions. These factors include the redevelopment plan for the
    property prepared by the LRA, potential environmental impacts pursuant
    to analysis under the National Environmental Policy Act, environmental
    condition of the property, zoning, and applicable statutory and
    regulatory requirements associated with each property conveyance
    authority, property value, and other relevant factors. As indicated in
    my response to your letter dated April 30, 2009, DOD has used the full
    range of conveyance authorities to address the wide variety of
    circumstances encountered at communities which have hosted closing
    installations. It is also common to convey the property at larger
    closing installations in multiple parcels using different conveyance
    authorities for different future uses based upon consideration of the
    factors described above.
        Question. In regard to no-cost EDC requests, how much consideration
    does the DOD give today's economic climate when negotiating with Local
    Redevelopment Authorities (LRAs) for communities who have been BRAC'd?
        Answer. The Secretary concerned has discretion and flexibility to
    structure an EDC that can be tailored to local needs to assist local
    job creation/recovery activities and base redevelopment. This is done
    in close collaboration with the Local Redevelopment Authority (LRA) and
    local economic conditions are an important factor considered.
    Specifically, as set forth in the governing regulation (32 CFR Part
    174), the Secretary concerned will consider the following factors, as
    appropriate, in evaluating the application and the terms and conditions
    of the proposed transfer:
      --Adverse economic impact of closure or realignment on the region and
            potential for economic recovery through an EDC.
      --Extent of short- and long-term job generation.
      --Consistency with the entire redevelopment plan.
      --Financial feasibility of the development, including market analysis
            and need and extent of proposed infrastructure and other
            investments.
      --Extent of State and local investment, level of risk incurred, and
            the LRA's ability to implement the plan.
      --Current local and regional real estate market conditions.
      --Incorporation of other Federal agency interests and concerns, and
            applicability of, and conflicts with, other Federal surplus
            property disposal authorities.
      --Relationship to the overall Military Department disposal plan for
            the installation.
      --Economic benefit to the Federal Government, including protection
            and maintenance cost savings and anticipated consideration from
            the transfer.
      --Compliance with applicable Federal, State, interstate, and local
            laws and regulations.
        Under the applicable statutory authority, a no-cost EDC may only be
    made if:
      --the LRA agrees that the proceeds from any sale or lease of the
            property (or any portion thereof) received by the LRA during at
            least the first seven years after the date of the initial
            transfer of property shall be used to support economic
            redevelopment of, or related to, the installation; and
      --the LRA executes the agreement for transfer of the property and
            accepts control of the property within a reasonable time after
            the date of the property disposal record of decision.
        Question. In particular to no-cost EDCs, would you happen to
    roughly know how long it takes for an acre of BRAC property to be
    conveyed (by disposal type) or how long it typically take for an acre
    of BRAC property to be productively reused?
        Answer. There is really no ``typical'' BRAC property conveyance
    situation. Every closing base, and surrounding community, has unique
    features that affect the length of time to convey property, the
    disposal methods, and reuse implementation period. In some cases, where
    there is strong market demand, immediate public use needs, little
    investment required to achieve reuse, and minimal environmental cleanup
    concerns, property has been conveyed and reused relatively quickly
    after the base closes. At other locations where market demand is
    limited, substantial investment is required to enable the desired
    reuses, and/or environmental conditions require significant effort and
    regulatory involvement to resolve, conveyance and reuse occurs more
    slowly.
        As Chairman of the Senate Special Operations Forces Caucus, I am
    concerned with the realignment of the 7th Special Forces Group (SF0)
    from Fort Bragg, NC to Eglin Air Force Base, FL. While gunnery and
    artillery ranges are critical for the 7th SF0 to continue to maintain a
    high level of combat readiness, the available shooting ranges at Eglin
    are currently being used by Air Force Special Operations AC-130
    Gunships.
        Question. With both entities in extraordinarily high demand in
    support of operations in Iraq and Afghanistan, how is the DOD planning
    to redesign air and land ranges to ensure a seamless transition for
    training and preparedness?
        Answer. Air Force and Army Special Operations officials have worked
    closely to ensure the Army's 7 SFG Airborne (A) move to Eglin AFB is
    seamless and preserves optimum training capabilities for all Eglin
    range complex users.
        The Air Force Special Operations Command (AFSOC) and 7 SFG (A)
    estimate approximately 10-20 percent of their local missions will be
    bi-lateral in nature, which will evolve as the SFG (A) moves to Florida
    and begins operations. Joint training opportunities should increase as
    AFSOC and 7 SFG (A) further develop training scenarios. Eglin ranges
    are centrally scheduled. Schedules are de-conflicted to maximize
    training opportunities for all users. 7 SFG (A) requires 14 live-fire
    training ranges that currently do not exist at Eglin AFB. The Army has
    funded 11 of the 14 ranges through DOD's Military Construction program,
    and worked with Eglin range managers to optimally site them. The Army
    and the Air Force have also agreed on the locations for the remaining
    three ranges that are competing for funds within DOD's priorities.
        Eglin range managers have also established ground maneuver areas to
    support 7 SFG (A) non-live-fire training activities. Activities in
    these areas will have little to no impact on other Eglin range users.
                                     ______

                  Question Submitted by Senator Susan Collins

        Question. Although I am encouraged by this good news, I continue to
    be concerned about the lack of alignment between the branches' funding
    timelines, which could increase the overall cost to the taxpayer and
    threaten the viability of the project itself.
         Can you assure us that you will work with the Maine Congressional
    Delegation to ensure that these facilities are constructed making the
    most efficient use of taxpayer dollars, and fulfill the requirements of
    both the Army National Guard and the Marine Corps?
        Answer. My office will continue to monitor the efforts of the Maine
    Army National Guard (MEARNG) and the Naval BRAC Office both of which
    have achieved mutual goals to allow their projects to stay on track for
    successful execution. Two Joint Forces site development projects
    programmed under two separate appropriations, in two separate years are
    planned for the Brunswick Naval Air Station (NAS). The MEARNG will
    control a 51-acre parcel of land on the Brunswick NAS under a Federal
    license upon transfer from the Navy. The Department of Navy maintains a
    requirement to provide a project for the U.S. Marine Corps Reserves
    (USMCR) at Brunswick as well. There are a number of constraints, which
    render only 10 acres of the site as tenable for development. The site
    is currently envisaged to accommodate both the MEARNG requirements as
    well as the USMCR requirements. The Adjutant General--Maine (TAG-ME)
    has reviewed the Navy's Site Proposal and concurs with placement; staff
    is drafting a request to issue an execution directive for the
    appropriate real estate instruments to move forward.
                             Department of the Navy

    STATEMENT OF HON. B.J. PENN, ASSISTANT SECRETARY OF THE
                NAVY (INSTALLATIONS AND ENVIRONMENT)
        Senator Johnson. I am pleased now to welcome our second
    panel of witnesses--the Honorable B.J. Penn, Assistant
    Secretary of the Navy (Installations and Environment); Major
    General Eugene G. Payne, Jr., Assistant Deputy Commandant for
    Installations and Logistics, Facilities Division; Rear Admiral
    Mark A. Handley, Deputy Commander, Navy Installations Command
    Director Ashore Readiness Group.
        Thank you all for coming. We look forward to your
    testimony, and again, your full statements will be entered into
    the record.
        Secretary Penn, please proceed.
        Mr. Penn. Thank you, Mr. Chairman.
        Chairman Johnson, Senator Hutchison, members of the
    subcommittee, it is a privilege to come before you today to
    discuss----
        Senator Johnson. The microphone.
        Mr. Penn. How is this?
        Senator Johnson. Okay.

                          STATEMENT OF HON. B.J. PENN

        Mr. Penn. Chairman Johnson, Senator Hutchison, members of
    the subcommittee, it is a privilege to come before you today to
    discuss the Department of the Navy's installation efforts. I am
    joined this afternoon by Major General Payne, the Marine Corps
    Assistant Deputy Commandant for Installations and Logistics,
    and Rear Admiral Handley, Director of the Navy's Shore
    Readiness Division.
        I would like to touch on a few highlights in the
    Department's overall facilities budget request, a healthy $14.4
    billion, or 9.2 percent of the Department's TOA. In MILCON,
    fiscal year 2010 continues the Marine Corps Grow the Force
    initiative with a $1.9 billion investment, targeted primarily
    at infrastructure and unit-specific construction required to
    move marines from interim facilities and provide adequate
    facilities for new units.
        The fiscal year 2010 MILCON budget also provides funds for
    the first five construction projects to support the relocation
    of marines from Okinawa to Guam in the amount of $378 million.
        Our fiscal year 2010 budget request complies with the
    Office of Management and Budget policy and the DOD Financial
    Management Regulation that establishes criteria for the use of
    incremental funding. The use of incremental funding in this
    budget has been restricted to the continuation of projects that
    have been incremented in prior years. Otherwise, all new
    projects are fully funded or are complete and usable phases.
        In family housing, our budget request of $515 million
    reflects the continuation of investment funding for locations
    where we still own and operate military family housing and
    where additional privatization is planned. Prior requests
    reflected an accelerated program to address additional housing
    requirements associated with the Marine Corps Grow the Force
    structure initiatives.
        The Navy and Marine Corps have privatized virtually all
    family housing located in the United States. Where we continue
    to own housing at overseas and foreign locations, we are
    investing in a steady-state recapitalization effort to replace
    or renovate housing where needed. Our request also includes
    funds necessary to operate, maintain, and lease housing to
    support Navy and Marine Corps families located around the
    world.
        Regarding legacy BRAC, we continue our request for
    appropriated funds in the amount of $168 million, as we
    exhausted all land sale revenue. We have disposed of 93 percent
    of the prior BRAC properties, so there is little left to sell,
    and the real estate market is not as lucrative as it was
    several years ago. We expect only limited revenue from the sale
    of Roosevelt Roads in Puerto Rico and other small parcels.
        With respect to the BRAC 2005 program, our budget request
    of $592 million represents a shifting emphasis from
    construction to outfitting and other operations and maintenance
    costs. One success story I would like to highlight comes from
    New Orleans, which still struggles to recover from the
    aftermath of Hurricane Katrina.
        We entered into a 75-year leasing agreement with the
    Algiers Development District in September 2008. In exchange for
    leasing 149 acres from Naval Support Activity New Orleans, the
    headquarters, marine forces Reserves, will receive
    approximately $150 million in new facilities.
        Demolition began recently, and we have established
    temporary quarters for the commissary so that military
    personnel, retirees, and their families still have access to
    this quality of life service during construction. We continue
    to work with Algiers Development District to ensure this
    partnership's successful outcome.
        We have been able to hold down our own cost increases to a
    modest 2 percent for the implementation period of 2006 through
    2011.
        We have made significant progress in the past year in
    planning for the relocation of the marines from Okinawa to
    Guam. The environmental impact statement (EIS) for Guam is
    underway, with a targeted Record of Decision in time for
    construction in fiscal year 2010.
        The Government of Japan ratified the international
    agreement on May 13, 2009 and appropriated $336 million in
    fiscal year 2008 equivalent dollars to complement our own
    fiscal year 2010 investment. We expect to see Japan's
    contribution deposited in our Treasury by July.

                               PREPARED STATEMENT

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

                      Prepared Statement of Hon. B.J. Penn

        Chairman Johnson, Senator Hutchison, and members of the
    subcommittee, I am pleased to appear before you today to provide an
    overview of the Department of Navy's investment in its shore
    infrastructure.
                      the navy's investment in facilities
        Our Nation's Sea Services continue to operate in an increasingly
    dispersed environment to support the Maritime Strategy and ensure the
    freedom of the seas. This requires an ever strong foundation of
    installations from which to re-supply, re-equip, train, and shelter our
    forces. We must continue to make smart infrastructure investments to
    prepare for the future and secure the peace abroad. Our fiscal year
    2010 shore infrastructure baseline budget totals $14.3 billion,
    representing 9.2 percent of the DON's fiscal year 2010 baseline request
    of $156 billion.

        The fiscal year 2010 military construction (active+reserve) request
    of $3.8 billion is $674 million more than the fiscal year 2009 request.
    This growth in Department's military construction program is primarily
    due to the continuation of the Marine Corps' ``Grow the Force''
    ``initiative and the inclusion of the first capital investments to
    support their realignment of forces from Okinawa to Guam.
        The fiscal year 2010 Family Housing request of $515 million
    represents a 32 percent decrease from the fiscal year 2009 request. It
    is helpful to examine the table at left to put this decrease in
    perspective. Prior year family housing construction requests reflected
    an accelerated program to address additional housing requirements
    associated with Marine Corps force structure initiatives. The Navy and
    Marine Corps have continued to invest in housing, including both the
    recapitalization of overseas housing as well as additional
    privatization to address housing requirements. The fact that the
    investment in family housing construction has decreased should be seen
    as an indication that we have ridden the ``crest of the wave.''

        Our BRAC program consists of environmental cleanup and caretaker
    costs at prior BRAC locations, and implementation of BRAC 2005
    recommendations.
        As in fiscal year 2009, we must seek appropriated funds in fiscal
    year 2010 in the amount of $168 million for Legacy BRAC activities as
    we have exhausted land sales revenues. We anticipate some limited
    future revenue as we move to dispose of the former Naval Station
    Roosevelt Roads in Puerto Rico and some other smaller property sales.
    We will use revenue from these future sales to accelerate cleanup at
    the remaining prior BRAC locations.
        The fiscal year 2010 BRAC 2005 budget request of $592 million
    represents a significant shift from construction to Operation &
    Maintenance funds as our focus turns to outfitting facilities with
    equipment and materiel and supporting the physical relocation of
    personnel, rather than constructing new or renovating existing
    structures, as one might expect as the statutory deadline approaches.
    Although we are on track to meet the September 15, 2011 deadline, we do
    face some significant challenges ahead.
        Here are some of the highlights of these programs.
                             military construction
        The DON's fiscal year 2010 Military Construction program requests
    appropriations of $3.8 billion, including $169 million for planning and
    design and $12.5 million for Unspecified Minor Construction.
        The active Navy program totals $1.1 billion and includes:
      --$302 million to support three intermediate and depot level
            maintenance projects: the second increment of the CVN
            replacement pier at Puget Sound Naval Shipyard, Bremerton,
            Washington; modifications to the P-8/MMA facility at Naval Air
            Station Jacksonville, Florida; and the largest of the three
            projects at $227 million--Pier 5 Replacement at Norfolk Naval
            Shipyard, Portsmouth, Virginia;
      --$84 million to fund 11 airfield projects. Included among these
            projects are seven supporting the Joint Strike Fighter: 6 at
            Eglin AFB, Florida and 1 at Edwards AFB, California;
      --$42 million to fund four expeditionary operations projects at Camp
            Lemonnier, Djibouti, which include an ammunition supply point,
            security fencing; road improvements, and a fire station;
      --$86 million to fund five training projects: a submarine learning
            center in Guam; the Asia-Pacific Center in Honolulu, Hawaii; a
            SERE school for SOCOM in Spokane, Washington; and E-2D Trainer
            Facility at Naval Station, Norfolk, Virginia; and a flight
            simulator at NAS Pensacola, Florida;
      --$193 million to fund four ordnance related projects: the 6th of 7
            increments of the Limited Area Production and Storage Complex
            and the 2nd of two increments of the waterfront security
            enclave fencing, both projects at Naval Submarine Base, Bangor,
            Washington; constructs missile magazines at Naval Station Pearl
            Harbor, Hawaii; and a torpedo exercise support building in
            Guam;
      --$95 million to construct three enlisted training barracks, one each
            in Newport, Rhode Island; Eglin AFB and NAS Pensacola, Florida;
      --$126 million to fund four waterfront operations projects, which
            include dredging the entrance to the turning basin at Naval
            Station, Mayport, Florida to enable nuclear carriers to transit
            the channel without risk to the propulsion system, and Charlie
            One Wharf replacement (unrelated CVN homeporting) also at
            Mayport. The remaining two projects are the second phase of the
            waterfront development project at Naval Support Activity,
            Bahrain, and the final increment of the magnetic silencing
            facility at Naval Station, Pearl Harbor, Hawaii;
      --$22 million to build base support facilities: Naval Construction
            Division Operations Facility and a centralized public works
            facility at Naval Base, Point Loma, California; and
      --$83 million for planning and design efforts.
        The active Marine Corps program totals $2.7 billion (of which $1.9
    billion is for ``Grow the Force''), a $705 million increase over the
    fiscal year 2009 Military Construction request. This cost increase is
    due to the initial construction investment in Guam and a continued
    emphasis on Grow the Force.
      --$323 million for the construction of unaccompanied housing at Camp
            Pendleton, Twentynine Palms, California, and Camp Lejeune,
            North Carolina in a continuation of the Commandant of the
            Marine Corps' initiative to improve the quality of life for
            single Marines;
      --$200 million to provide quality of life facilities such as dining
            facilities, physical fitness centers, and fire houses at
            Twentynine Palms, San Diego, and Camp Pendleton, California,
            the Basic School at Quantico, Virginia, and Camp Lejeune,
            Cherry Point and New River in North Carolina;
      --$109 million to construct new recruit barracks and student
            billeting supporting the School of Infantry and the recruit
            training at Camp Pendleton and for the Basic School in
            Quantico, Virginia;
      --$977 million to build infrastructure to support new construction.
            These projects include communications upgrades, electrical
            upgrades, natural gas systems, drinking and wastewater systems,
            and roads. These projects will have a direct effect on the
            quality of life of our Marines. Without these projects, basic
            services generally taken for granted in our day-to-day lives,
            will fail as our Marines work and live on our bases;
      --$744 million to fund operational support projects such as those
            needed for the stand-up of V-22 aircraft in North Carolina and
            California; and operational units in Camp Lejeune, North
            Carolina and Camp Pendleton, California. Logistics operations
            will be enhanced with a new Port Operations facility at Marine
            Corps Support Facility, Blount Island, Florida;
      --$140 million to provide training improvements for aviation units
            and Marine Corps Security Force training at Quantico, VA, and
            Marines training at the School of Infantry at Camp Lejeune,
            North Carolina, and Camp Pendleton, California. A new range
            will be provided in Hawaii.
      --$122 million to construct maintenance facilities at Twentynine
            Palms, California, Yuma, Arizona, Beaufort, South Carolina, and
            New River and Camp Lejeune, North Carolina;
      --$41 million for the construction of storage facilities at
            Twentynine Palms and Camp Pendleton, California and Cherry
            Point, North Carolina; and
      --$84 million for planning and design efforts.
        With these new facilities, Marines will be ready to deploy and
    their quality of life will be enhanced. Without them, quality of work,
    quality of life, and readiness for many Marines will have the potential
    to be seriously degraded.
        The Navy and Marine Corps Reserve Military Construction
    appropriation request is $64 million, including $2 million for planning
    and design efforts, to construct three reserve centers--one each at
    Luke AFB, Arizona; Alameda, California; and Joliet, Illinois. These
    funds will also be used to construct a C-40 Hangar at Naval Air Station
    Oceana, Virginia Beach, Virginia; a parachute and survival equipment
    center in San Antonio, Texas, and vehicle maintenance facility in
    Charleston, South Carolina.
    Fully-funded and Incrementally-funded MILCON Projects
        Our fiscal year 2010 budget request complies with Office of
    Management and Budget Policy and the DOD Financial Management
    Regulation that establishes criteria for the use of incremental
    funding. The use of incremental funding in this budget has been
    restricted to the continuation of projects that have been incremented
    in prior years. Otherwise, all new projects are fully funded or are
    complete and usable phases. However, as the cost of complex piers and
    utilities systems rise above the $100 million and even $200 million
    threshold, compliance with the full-funding policy drives both Services
    to make hard choices regarding which other equally critical projects
    must be deferred into the next year.
    Meeting the Energy Challenge
        In August 2006, I directed that all new Department of Navy
    facilities and major renovations be built to U.S. Green Building
    Council ``LEED Silver'' standards starting in fiscal year 2010. For
    military construction projects, we met the requirement a year earlier,
    in fiscal year 2009. This year we began including sufficient funds for
    major renovations where the work exceeds 50 per cent of the facility's
    plant replacement value.
        With funds provided through the American Recovery and Reinvest Act
    (ARRA) we are able to leverage current technological advances to reduce
    energy demand and increase our ability to use alternative and renewable
    forms of energy for shore facilities as well as in our logistics
    processes. This technology improves energy options for our Navy today
    and in the future. Of the $1.2 billion in ARRA funds that have been
    provided to Navy, $577 million in Operation and Maintenance, Navy;
    Operation and Maintenance, Marine Corps, and Military Construction has
    been applied to projects that will reduce our fossil fuel energy
    consumption. Major investments include $169 million to install
    photovoltaic systems, $71 million for advance metering installation,
    $30M for the energy conservation improvement program (ECIP), $9 million
    for geothermal energy development, and $31 million for energy
    improvements in various facilities, (such as critical repairs to major
    utilities systems, HVAC replacement, etc.).
    Encroachment Partnering
        The Department of the Navy has an aggressive program to manage and
    control encroachment, with a particular focus on preventing
    incompatible land use and protecting important natural habitats around
    installations and ranges. A key element of the program is Encroachment
    Partnering (EP), which involves cost-sharing partnerships with States,
    local governments, and conservation organizations to acquire interests
    in real property adjacent and proximate to our installations and
    ranges. The Department prevents development that is incompatible with
    the readiness mission, and our host communities preserve critical
    natural habitat and recreational space for the enjoyment of residents.
    Navy and Marine Corps have ongoing EP agreements at 14 installations
    and ranges nationwide, with additional agreements and projects planned
    in fiscal year 2009. EP has been a highly effective tool for addressing
    encroachment threats from urban development and is a win-win for the
    Department and our host communities.
        In fiscal year 2008, Navy and Marine Corps completed partnership
    acquisitions on 16,662 acres. Funding for those purchases of land and
    easements included a combined contribution from DOD and DON of $11.72
    million, which was matched by similar investments from partner
    organizations. In fiscal year 2009, Navy and Marine Corps received an
    additional $19.78 million from the DOD Readiness and Environmental
    Protection Initiative program, which will be combined with funding from
    the Department and our partner organization.
                                    housing
        The following tenets continue to guide the Department's approach to
    housing for Sailors, Marines, and their families:
      --All service members, married or single, are entitled to quality
            housing; and
      --The housing that we provide to our personnel must be fully
            sustained over its life.
        With the support of Congress, and particularly this Committee, we
    have made great strides in improving the quality of life for our
    members and their families over the past years. These include:
      --Funds programmed and contracts in place to eliminate inadequate
            family housing in the Navy and Marine Corps.
      --A robust military construction program to meet the Marine Corps'
            unaccompanied housing needs.
      --Successful execution of the first two unaccompanied housing
            privatization projects within the Department of Defense.
        Despite these achievements, there remain challenges that we face as
    a Department. A detailed discussion of the Department's family and
    unaccompanied housing programs, and identification of those challenges,
    follows:
                                 family housing
        As in past years, our family housing strategy consists of a
    prioritized triad:
      --Reliance on the Private Sector.--In accordance with longstanding
            DOD and DON policy, we rely first on the local community to
            provide housing for our Sailors, Marines, and their families.
            Approximately three out of four Navy and Marine Corps families
            receive a Basic Allowance for Housing (BAH) and own or rent
            homes in the community. We determine the ability of the private
            sector to meet our needs through the conduct of housing market
            analyses that evaluate supply and demand conditions in the
            areas surrounding our military installations.
      --Public/Private Ventures (PPVs).--With the strong support from this
            Committee and others, we have successfully used PPV authorities
            enacted in 1996 to partner with the private sector to help meet
            our housing needs through the use of private sector capital.
            These authorities allow us to leverage our own resources and
            provide better housing faster to our families. Maintaining the
            purchasing power of BAH is critical to the success of both
            privatized and private sector housing.
      --Military Construction.--That Military construction (MILCON) will
            continue to be used where PPV authorities don't apply (such as
            overseas), or where a business case analysis shows that a PPV
            project is not feasible.
        Our fiscal year 2010 budget includes $146 million in funding for
    family housing construction and improvements. This amount includes $79
    million for the Government investment in continued family housing
    privatization at Camp Lejeune and includes funding for an addition to a
    Department of Defense school. It also includes the replacement or
    revitalization of Navy housing in Japan, Korea, and Spain where the
    military housing privatization authorities do not apply. Further, there
    are proposed projects in Guam, unrelated to the Realignment of Marine
    Forces that would replace or revitalize existing homes there. Finally,
    the budget request includes $369 million for the operation,
    maintenance, and leasing of remaining Government-owned or controlled
    inventory.
        As of the end of fiscal year 2008, we have awarded 30 privatization
    projects involving over 61,000 homes. As a result of these projects,
    nearly 20,000 homes will be renovated and over 21,000 new or
    replacement homes will be built. (The remaining homes were privatized
    in good condition and did not require any work.) Through the use of
    these authorities we have secured approximately $8 billion in private
    sector investment from approximately $800 million of our funds, which
    represents a ratio of almost ten private sector dollars for each
    taxpayer dollar.
        While the military housing privatization initiative has been
    overwhelmingly successful, there are challenges in this program area as
    well. They include:
      --The Current Economic Climate.--In the current economic climate, we
            have seen a dramatic curtailment in the amount of private
            financing available for our future military housing
            privatization projects/phases. This, in turn, affects plans for
            future construction and renovations. We are working with the
            Office of the Secretary of Defense, the other Services, and the
            lending community on ways in which we might mitigate such
            impacts and preserve our ability to leverage private capital on
            future projects/phases.
      --Program Oversight.--There has been a great deal of attention
            focused by Congress on the Service's oversight of housing
            privatization projects in the wake of difficulties experienced
            by some partners. We take seriously our responsibility to
            monitor the privatization agreements to ensure that the
            Government's long term interests are adequately protected. We
            have instituted a portfolio management approach that collects
            and analyzes financial, occupancy, construction, and resident
            satisfaction data to ensure that the projects remain sound and
            that the partners are performing as expected. We conduct
            meetings with senior representatives of our partners and, where
            necessary, resolve issues of mutual interest. Where our
            projects have encountered difficulties, appropriate corrective
            actions have been taken. For example, we had concerns regarding
            performance of the private partner in our Pacific Northwest
            project. We worked with that partner to sell its interest to
            another company which has a record of good performance with
            military housing privatization projects.
        Perhaps the most important measure of success of our privatization
    program has been the level of satisfaction on the part of the housing
    residents. To gauge their satisfaction, we used customer survey tools
    that are well established in the marketplace. As shown at right, the
    customer surveys indicate a steady improvement in member satisfaction
    after housing is privatized.

    Unaccompanied Housing
        Our budget request includes $527 million for 14 unaccompanied
    housing projects (included 6 training barracks) at seven Navy and
    Marine Corps locations. The budget continues the emphasis on improving
    living conditions for our unaccompanied Sailors and Marines.
        Our current inventory consists of over 157,000 unaccompanied
    housing spaces for permanent party Sailors and Marines. These represent
    a wide mix of unit configurations including rooms occupied by one, two,
    or more members. There are challenges, however, which the Department is
    committed to address.
      --Provide Homes Ashore for our Shipboard Sailors.--The Homeport
            Ashore initiative seeks to provide a barracks room ashore
            whenever a single sea duty sailor is in his or her homeport, so
            they need not live on the ship. The Navy has made considerable
            progress towards achieving this goal through military
            construction; privatization and intensified use of existing
            barracks capacity. In his May 6, 2009 testimony before the
            House Appropriations Committee, Subcommittee on Military
            Construction, the Chief of Naval Operations committed to
            providing housing ashore for all junior sea duty Sailors by
            2016 at the Interim Assignment Policy standard (55 square feet
            of space per person). The inclusion of $88 million in funding,
            in the ARRA, for a new barracks in San Diego is helping us meet
            this goal. The Navy's long term goal is to achieve the OSD
            private sleeping room standard (90 square feet per person).
        Commandant's BEQ Initiative.--It is the Commandant of the Marine
    Corps' priority to ensure single Marines are adequately housed. Thanks
    to your previous support, in fiscal year 2009 the Marine Corps will
    make significant progress toward fulfilling this priority. Your 2009
    appropriation of $1.2 billion in MILCON funding for Marine Corps
    barracks will result in the construction of approximately 12,300
    permanent party spaces at eight Marine Corps installations. Your
    continued support of this initiative in our fiscal year 2010 proposal
    will allow us to construct an additional 3,000 new permanent party
    barracks spaces. With this funding we will stay on track to meet our
    2014 goal. The fiscal year 2010 request for bachelor housing will
    provide eight barracks projects at Camp Lejeune, North Carolina, and
    Twenty-Nine Palms, and Camp Pendleton, California. We are also
    committed to funding the replacement of barracks' furnishings on a 7-
    year cycle as well as the repair and maintenance of existing barracks
    to improve the quality of life of our Marines. These barracks will be
    built to the 2+0 room configuration, as have all Marine Corps barracks
    since 1998. This is consistent with the core Marine Corps tenets for
    unit cohesion and teambuilding.
    Unaccompanied Housing Privatization
        The Navy has also executed two unaccompanied housing privatization
    projects using the pilot authority contained in section 2881a of Title
    10, United States Code. In March we cut the ribbon on the Pacific
    Beacon project in San Diego. Pacific Beacon includes 258 conveyed units
    targeted for unaccompanied E1-E4 sea duty Sailors and 941 newly
    constructed dual master suite units targeted for E4-E6 Sailors.

        The second unaccompanied housing privatization project is in
    Hampton Roads (executed in December 2007) and included the conveyance
    of 723 units in seven buildings on Naval Station and Naval support
    Activity Norfolk and the construction of 1,190 dual master suite units.
    The first of three construction sites opened in November 2008 and the
    remaining units are scheduled for completion in 2010.
        The Navy is continuing to evaluate candidate locations for the
    third pilot project, including the Mayport/Jacksonville, Florida area
    and additional phases at San Diego and Hampton Roads using the public/
    private entities previously established.
                         relocating the marines to guam
        The fiscal year 2010 budget request includes $378 million to
    construct facilities in support of the relocation. The Government of
    Japan, in its JFY-2009 budget (which runs April 1, 2009 through March
    31, 2010) has provided a comparable amount and we expect to receive
    their contribution in June. The graph at right identifies the projects
    each funding stream constructs.

        The Department of Defense recognizes that the condition of Guam's
    existing infrastructure could affect our ability to execute the
    aggressive program execution and construction schedule. Construction
    capacity studies, assessments of socioeconomic impacts, and the
    development of the Environmental Impact Statement (EIS) have
    demonstrated that, in particular, Guam's road network, commercial port,
    and utilities systems are in need of upgrades.
        Roadway, intersection, and bridge upgrades are required to handle
    the flow of materials from the port to work sites. Through the Defense
    Access Road (DAR) program, DOD is working to identify, certify as
    eligible for funding, and consider in future DOD budgets the need for
    improvements to roadways, intersections, and bridges that are critical
    to executing the construction program. Five road improvement projects
    have been certified by Transportation Command's Surface Deployment and
    Distribution Command under the DAR program and more are under
    consideration. Existing deficiencies in the island's road system and
    long-term traffic impacts due to the projected population increase are
    being considered in partnership between Guam Department of Public Works
    and the U.S. Federal Highway Administration. These efforts are
    occurring in parallel in order to ensure compatibility and mutual
    benefit to DOD and the Guam community.
        The Port of Guam requires near and long-term improvements. The Port
    Authority of Guam and the U.S. Maritime Administration (MARAD) signed a
    memorandum of understanding to improve the port by developing an
    adequate master plan and implementation of a Capital Improvement Plan.
    These plans will develop the port into a regional shipping hub that
    will serve both military and civilian needs in the region in the long
    term. Near-term improvements to the port are underway, including the
    recent delivery of three refurbished cranes that will become fully
    operational soon. With these upgrades and improvements to materials-
    handling processes, the Port of Guam should be able to accommodate
    throughput to sustain the expected $1.5-2.0 billion per year in
    construction volume.
        Of the total $6.09 billion Japanese commitment included in the
    Realignment Roadmap, $740 million is for developing electric, fresh
    water, sewer, and solid waste infrastructure in support of the
    relocating Marine Corps forces. Analysis of utilities options indicates
    that developing new, stand-alone systems may not be cost-effective. DOD
    is collaborating with the Government of Guam to understand its needs
    and to determine the feasibility of water, wastewater, solid waste and
    power solutions that are mutually beneficial and acceptable to DOD, the
    civilian community and the regulatory agencies. Japan's contribution to
    the utilities special purpose entity is but one example of how bringing
    private investment through public-private partnerships may be part of
    the solution to Guam's infrastructure problems.
        Relocation to Guam represents a strategic opportunity for the
    United States that we must get right. Our strategy is to identify
    options that will support DOD missions, provide the widest possible
    benefit to the people of Guam, be technically and financially
    supportable by current and future utilities providers, and be
    acceptable to Government of Guam and environmental regulators. A
    business model is being developed to support these requirements while
    ensuring the interests of the U.S. Government and the GOJ are met. The
    EIS is addressing both interim and long-term solutions as they relate
    to infrastructure on Guam.
        DOD's Office of Economic Adjustment (OEA) has provided the
    Government of Guam with grants totaling more than $4.5 million to
    support environmental, financial and planning studies; staffing; and
    community outreach programs. Additionally, the Department of Defense is
    working with other Federal agencies to determine what appropriate roles
    DOD and other Federal agencies can play in helping Guam to address
    necessary infrastructure and services improvements on Guam, as noted by
    recent Government Accounting Office reviews. Additionally, the
    Department will ensure that Guam's local economic adjustment
    requirements, as they are known at the time, are provided to the
    Economic Adjustment Committee, chaired by the Secretary of Defense and
    the Secretaries of Commerce and Labor as co-Vice Chairs.
        We recognize the potential for significant socioeconomic effects on
    Guam with the introduction of off-island workers who will support the
    construction program. In order to minimize negative effects, we are
    collaborating with the Government of Guam to develop a program for the
    equitable and safe treatment of all workers, including Guam residents,
    workers from the Commonwealth of the Northern Mariana Islands (CNMI),
    Hawaii and the U.S. mainland, and any necessary H2-B laborers. We are
    evaluating methods to have contractors manage safety, medical, housing,
    transportation, and security for their workers, taking into account
    potential long-term positive side benefits that different solutions may
    have on the Guam community.
    Environmental Impact Statement
        As it is designed to do, the National Environmental Policy Act
    (NEPA) process and associated studies are helping us identify and
    address environmental issues and constraints. A key milestone to
    executing the realignment in the established timeframe is achieving a
    Record of Decision on a schedule that allows for construction to begin
    in fiscal year 2010. The target for a Record of Decision is January
    2010. We realize there are significant and complicated issues that need
    to be addressed in this study, and the interests of the public need to
    be protected. This is a complex EIS, as it considers not only the
    relocation of the 8,000 Marines and their dependents, but also a Navy
    proposal for a transient nuclear-powered carrier capability at Apra
    Harbor, and an Army proposal to station a ballistic missile defense
    capability on Guam. However, we remain on an aggressive schedule to
    finish the final EIS by the end of 2009, with a Record of Decision
    following. To that end, we are holding informal discussions with
    regulatory agencies early and often to uncover and address issues of
    concern well in advance of the formal review process; we are
    streamlining existing internal and external review and approval
    processes with regulatory agencies and other external partners; and we
    are conducting concurrent internal DOD reviews to expedite approval of
    the EIS for distribution and publication. We will share with the
    Congress significant issues that emerge during the EIS process.
                     prior brac cleanup & property disposal
        The BRAC rounds of 1988, 1991, 1993, and 1995 were a major tool in
    reducing our domestic base structure and generating savings. The
    Department has achieved a steady State savings of approximately $2.7
    billion per year since fiscal year 2002. All that remains is to
    complete the environmental cleanup and property disposal on portions of
    16 of the original 91 bases and to complete environmental cleanup on 15
    installations that have been disposed.
    Property Disposal
        By the end of fiscal year 2008, we have disposed of 93 percent of
    the real property slated for closure in the first four rounds of BRAC.
    Throughout that time, we have used a variety of the conveyance
    mechanisms available for Federal Property disposal, including the
    Economic Development Conveyance (EDC) that was created for BRAC
    properties. Ninety-one percent of the Department of the Navy real
    property was conveyed at no cost. From the remaining 9 percent, the
    Department of Navy has received over $1.1 billion in revenues via a
    variety of conveyance mechanisms. Nearly all of this revenue has been
    generated since fiscal year 2003. Since then, we have used these funds
    to accelerate environmental cleanup, and to finance the entire
    Department of the Navy prior BRAC effort including caretaker costs from
    fiscal year 2005 through fiscal year 2008.

        These funds have enabled us to continue our environmental clean-up
    efforts at 31 installations. We have used these funds to accelerate
    cleanup at Naval Shipyard Hunters Point, CA, as well as Naval Air
    Station Alameda, CA, enabling us to be closer to issuing Findings of
    Suitability to Transfer or conveyance of the property for integration
    of environmental cleanup with redevelopment.
    Land Sale Revenue
        Despite our success in using property sales to augment funding for
    environmental cleanup and property disposal, as well as recover value
    for taxpayers from the disposal of Federal property, future revenues
    are very limited. In fiscal year 2009, we resumed our budget requests
    for appropriated funding.
    Prior BRAC Environmental Cleanup
        The Department has spent about $4.0 billion on environmental
    cleanup, environmental compliance, and program management costs at
    prior BRAC locations through fiscal year 2008. We project an increase
    in the cost-to-complete of about $172 million since last year. Nearly
    all of this cost increase is due to additional munitions cleanup at
    Naval Air Facility Adak, AK, Naval Shipyard Mare Island, CA, and Marine
    Corps Air Station El Toro, CA. The increase is also associated with
    additional radioactive contaminations at Naval Station Treasure Island,
    CA, Naval Air Station Alameda, CA, and Naval Shipyard Mare Island, CA.
                            brac 2005 implementation
        The Department has moved expeditiously from planning to the
    execution of the BRAC 2005 Program. The Office of the Secretary of
    Defense has approved all 59 Navy-led business plans. Additionally, 24
    other service-led business plans with some form of Navy equity have
    been approved. The Department's BRAC 2005 Program is on track for full
    compliance with statutory requirements by the September 15, 2011
    deadline. However, some significant challenges lie ahead.
    Accomplishments
        In total, the Department awarded 85 of 118 BRAC construction
    projects with a combined value of $1.4 billion.\1\ Eighteen fiscal year
    2009 projects worth $256 million are on track to award this year. Some
    noteworthy projects include:
    ---------------------------------------------------------------------------
        \1\ Three fiscal year 2008 projects valued at $14 million remain to
    be awarded.
    ---------------------------------------------------------------------------
      --In July 2008, the Department awarded a $325 million project to co-
            locate Military Department Investigative Agencies at Marine
            Corps Base, Quantico, VA. When complete it will combine almost
            3,000 personnel from the Department of Defense (DOD) and the
            Services' Investigative Agencies. It also includes the
            construction of a collocated ``School House'' for the Joint
            Counterintelligence Training Academy (JCITA) as well as nearby
            roadway improvements. Combined together, these actions will
            significantly enhance counterintelligence synchronization and
            collaboration across DOD.
      --In less than 12 months since business plan approval, nine projects
            for a combined $222 million were awarded at Naval Air Weapons
            Station, China Lake, CA, Naval Weapons Station, Indian Head,
            MD, and Dahlgren, VA, in support of the Department's effort to
            consolidate and create a Naval Integrated Weapons & Armaments
            Research, Development, Acquisition, Test, and Evaluation
            Center. Two projects worth $39 million are projected to award
            next month.
    Helping Communities
        Fifteen impacted communities have established a Local Redevelopment
    Authority (LRA) to guide local planning and redevelopment efforts. The
    DOD Office of Economic Adjustment has been providing financial support
    through grants and technical assistance to support LRA efforts. Of
    these 15 communities, six reuse plans have been approved by the
    Department of Housing and Urban Development (HUD). Three communities
    are still preparing their plans with submissions planned for later this
    year. At the installations where the reuse plans have been completed,
    the Department has initiated the National Environmental Policy Act
    documentation for disposal of those properties.
    Land Conveyances and Lease Terminations
        By the end of fiscal year 2008, the Department disposed of 43
    percent of the property that was slated for closure in BRAC 2005. These
    disposal actions were completed via lease termination, reversions, and
    Federal and DOD agency transfers. Of interest is the reversion of
    Singing Island at Naval Station Pascagoula and the Dredge Spoil
    Material Area at Naval Station Ingleside, transfer of the tidal area of
    Naval Weapons Station Seal Beach Detachment Concord to the Department
    of the Army, and disposal of 78 percent of the reserve centers slated
    for closure.

        The Department has also closed or realigned 38 of 49 Naval Reserve
    Centers, Navy Marine Corps Reserve Centers, Navy Recruiting Districts,
    Navy Regions, and Navy Reserve Readiness Commands. Seven of these were
    disposed in 2008. The 2009 Plan includes transfer of 144 acres at Naval
    Air Station Atlanta, Reserve Centers at Orange, TX, and Mobile, AL, and
    75 acres from Naval Station Pascagoula to the Air Force.
    NSA New Orleans, LA
        In September 2008, the Department and the Algiers Development
    District (ADD) Board entered into a 75-year leasing agreement. We
    leased 149 acres of Naval Support Activity New Orleans West Bank to the
    ADD in exchange for up to $150 million in new facilities to support
    Headquarters, Marine Forces Reserve.
        Simultaneously, the Department finished construction, relocated
    from New Orleans, and formally opened the new Commander, Navy Reserve
    Force Command Headquarters in Norfolk, VA. In their new $33 million,
    90,000-square foot facility, the 450-man command is in very close
    proximity to the Department's U.S. Fleet Forces Command as well as the
    Joint Forces Command. This proximity means better communication between
    active and reserve forces, including more face-to-face meetings with
    local commands.
    Naval Air Station Brunswick, ME
        The Department's largest BRAC 2005 operational action will close
    Naval Air Station Brunswick, Maine, and consolidate the East Coast
    maritime patrol operations in Jacksonville, Florida. The cornerstone of
    this relocation is a $132 million aircraft hangar scheduled for
    completion and occupation in May 2009. This project represents the
    Department's largest patrol squadron hangar, and it will serve to
    maintain all five P-3 squadrons. It is also designed for the future
    transition to the P-8 Poseidon aircraft. The first relocating P-3
    Squadron deployed from Naval Air Station Brunswick occurred in November
    2008 and will return directly to their new home in Jacksonville.
    Naval Station Ingleside/NAS Corpus Christi, TX
        Significant progress was also made to prepare facilities to
    relocate eight Mine Counter Measure (MCM) ships from Naval Station
    Ingleside, TX to Naval Base San Diego, CA. The Department re-evaluated
    its infrastructure footprint in the greater San Diego area and elected
    to change from new construction to renovation of existing facilities,
    thereby saving more than $25 million in construction costs. These ships
    will start shifting homeport this spring, with completion later in the
    calendar year.
    Joint Basing
        Two of four Joint Base Memorandums of Agreement (MOAs) where the
    Department is the lead component have been approved. The MOA for each
    joint base defines the relationships between the components, and
    commits the lead component to deliver installation support functions at
    approved common standards. Resources--including personnel, budget, and
    real estate--transfer from the Supported component(s) to the lead.
    Joint Basing has two implementation phases, with Phase I installations
    scheduled to reach full operational capability in October 2009, and
    Phase II installations in October 2010. The four Department-led joint
    bases are Little Creek-Fort Story (Phase I), Joint Region Marianas
    (Phase I), Anacostia-Bolling (Phase II), and Pearl Harbor-Hickam (Phase
    II).
    Environmental Cost to Complete
        Given the relatively few number of closures, the absence of major
    industrial facilities, and the extensive site characterization,
    analysis, and cleanup that has occurred over the last several decades,
    the Department's remaining environmental liabilities for BRAC 2005 are
    substantially less than in previous rounds of BRAC. We have spent $148
    million in cleanup at BRAC 2005 locations through fiscal year 2008. The
    majority of this has been spent at Naval Air Station Brunswick, ME and
    Naval Weapons Station Seal Beach Detachment Concord, CA. Our remaining
    environmental cost to complete for fiscal year 2009 and beyond is $99
    million. This estimate is $8 million higher than last year's estimate
    due to additional munitions, groundwater, and landfill cleanup and
    monitoring at Naval Air Station Brunswick, ME, Naval Weapons Station
    Seal Beach Detachment Concord, CA, and Naval Air Station Joint Reserve
    Base Willow Grove, PA.
    Financial Execution
        The execution of our fiscal year 2006-2008 funds is now at nearly
    90 percent. This is a significant improvement over the same period last
    year and further demonstrates our shift from planning to execution and
    accelerated implementation. We are also on track to obligate over 90
    percent of our fiscal year 2009 funds by the end of the fiscal year. We
    appreciate the efforts of Congress to provide these funds early in the
    fiscal year, which directly contributed to our success.
    Challenges
        Although we are on track to meet the September 15, 2011 deadline,
    we do face some significant challenges ahead. Seven major construction
    projects at Naval Air Weapons Station China Lake, CA and Naval Weapons
    Station Indian Head, MD require complex site approvals and
    certifications for operation from the Department of Defense Explosive
    Safety Board. Additionally, Correctional Facilities require
    certification before occupancy. The Department plans to closely manage
    construction so that it completes in time to conduct the necessary
    certifications.
        Several complex move actions require close coordination with other
    services and agencies. While they remain on track for timely
    completion, we must maintain effective and continuous coordination to
    succeed.
                  meeting the construction execution challenge
        We have outlined how our facilities investment continues at a
    record setting pace, and the Department's execution agent, the Naval
    Facilities Engineering Command (NAVFAC), is ready to meet the demand.

        While market conditions exacerbated by world-wide natural disasters
    led to lagging execution rate during fiscal year 2006, NAVFAC has
    drastically reduced carryover despite a 60 percent increase in contract
    awards, as the graph depicts. Smart acquisition strategies and vigorous
    management in the field continue to reduce the carryover.

        Special consideration is being given to executing the construction
    program in Guam. To the maximum extent possible NAVFAC will apply
    criteria and standards that enable offsite construction methodologies.
    This will not only reduce the importation of raw construction materials
    to the island but it also helps to minimize the socio-economic impact
    by reducing the off-island labor required. NAVFAC continues to make
    concerted efforts to reach out to Small Business enterprises, and will
    also utilize a variety of contracting vehicles, such as the, 8(A)
    Multiple Award, HUBZONE Multiple award, and the new Small Business
    Global Multiple Award that is pre-award status.
                                   conclusion
        Our Nation's maritime forces operate closely with other joint
    forces allies, and coalition partners, delivering the main tenets of
    our Cooperative Strategy for 21st Century Seapower: protecting the
    homeland, preventing conflicts, and when necessary, winning our
    Nation's conflicts. To fulfill this challenge we must ensure our
    Sailors and Marines have the training, education, and tools necessary
    to prevail in conflict and promote peace abroad. The Department of
    Navy's (DON) investment in our shore infrastructure represents our
    deepening commitment to this goal. Our installations are where we
    homeport the Fleet and her Marine forces, train and equip the world's
    finest Sailors and Marines. Our fiscal year 2010 budget supports a
    forward posture and readiness for agile, global response.
        Thank you for your continued support and the opportunity to testify
    before you today.

        Senator Johnson. Thank you, Mr. Penn.
        Major General Payne.
        General Payne. Sir, I have no statement this afternoon.
        Senator Johnson. Rear Admiral Handley.
        Admiral Handley. Sir, it is a privilege to be here again in
    front of this committee, yourself, Senator Hutchison. And
    again, no formal statement, but will defer to your questions.

                                      GUAM

        Senator Johnson. General Payne, the Commandant of the
    Marine Corps, General Conway, recently testified on DOD's plan
    to move 8,000 marines and 9,000 dependents from Japan to Guam.
    He suggested that the $4 billion cost estimate for the move is
    way short of what the move will really cost.
        Could you comment on the projected cost of the Guam buildup
    and what the military is doing to ensure the adequacy of
    essential services on the island?
        And I believe there is some concern over the availability
    of training ranges on Guam. If the marines could not acquire an
    adequate training range co-located with its forces, will the
    move to Guam still make any sense?
        General Payne. Yes, sir. I would be glad to comment on
    that.
        I think the Commandant's comments pertained to several
    things in particular. When the initial budget for Guam, the $10
    billion budget, was developed, it did not include
    considerations for infrastructure improvements on the island of
    Guam because at that time, quite frankly, I don't think we knew
    the extent of what improvements might be required.
        Since then, it has become apparent that the island of Guam
    does need some assistance on those infrastructure improvements.
    So that would be additive to the $10 billion.
        And in regards to the other comment you made, which is
    absolutely correct, sir, and that is with respect to the
    ranges. Our analysis to date indicates that we can put some
    small arms ranges on Guam, but there are larger weapon systems
    and combined arms training, in particular, that will have to be
    at other ranges. And it is our intent at this point to analyze
    the viability of putting those ranges in the Northern Mariana
    Islands, principally the islands of Tinian and Pagan.
        And the reason that it is difficult to pinpoint the
    specific additive cost today is that the analysis is still
    underway on Guam relative to the infrastructure, and we have
    not had an opportunity to analyze, from an EIS standpoint, and
    understand what mitigation may be required concerning the range
    possibilities in the Northern Mariana Islands.
        Senator Johnson. General, so many strategic issues are
    going to be dependent on the outcome of the upcoming QDR,
    including the Guam buildup. What impact might the QDR have on
    the plan to build up our forces in Guam?
        General Payne. Sir, that is an excellent question, and I am
    not one to second-guess the QDR. But I could speculate to the
    extent that I think it is going to give us guidance relative to
    potential force capabilities required on Guam in order to
    support the Combatant Commander.
        I don't think it is going to be terribly detailed. I think
    it is going to address, however, the Combatant Commander's
    requirements and will give the Marine Corps some guidance in
    that regard. We do not, in any way, anticipate that it is going
    to negate the current plan to move to Guam and move marines and
    marine families to Guam.

                                 NNMC AND WRAMC

        Senator Johnson. Admiral Handley, the BRAC plan for the
    relocation of Walter Reed to the Bethesda Naval Medical Center
    campus includes two traffic mitigation projects to be funded in
    fiscal year 2010 and 2011. Could you outline the cost and
    nature of these projects?
        Admiral Handley. Mr. Chairman, I will have to get back to
    you on the specific ones within the BRAC program. That doesn't
    necessarily fall under my direct purview. But I do recognize
    that there were mitigation projects involved with the Bethesda
    project, and we will get those specific details to you, sir.
        [The information follows:]

        The Army is the BRAC Business Plan lead and funding agent
    for the issue outlined in this question. JTF CAPMED is the lead
    in administering the budget and realignment functions. The Navy
    is the construction agent for the Bethesda receiver site and
    from this perspective provides the following answer.
        Traffic mitigation measures at the National Naval Medical
    Center will be on both the Medical Center Campus and outside
    the Campus gates. Improvements on Campus, including access
    roads, gate houses, and anti-terrorism/force protection
    measures as well as construction of a truck inspection station
    and small visitor's center, will result in enhanced access to
    the Campus and superior security measures. Funding for the
    Campus improvements is currently budgeted at $26 million ($18.4
    million in fiscal year 2010 and $7.6 million in fiscal year
    2011). Outside the Campus gates, the Navy has worked closely
    with Montgomery County and the Maryland State Highway
    Administration to design improvements which facilitate greater
    access to the Campus from public transportation and major
    thoroughfares. DOD has committed $1 million of the budgeted $26
    million to improve a turn lane at the Campus North Gate to
    provide safer access to the Campus for cross traffic on
    Rockville Pike/Hwy 355. Consistent with the results of the
    Environmental Impact Statement (EIS), the DOD has submitted a
    needs report to the Defense Access Road (DAR) Program
    requesting certification of improvements to the Medical Center
    Metro Station as eligible for DOD funding. If the proposal is
    certified, an additional $20 million of DOD BRAC funds would be
    available in fiscal year 2011 to enhance access to the station
    from the east side of Rockville Pike/Hwy 355.

        Senator Johnson. How far along in planning is the proposal
    to connect the Metro to the hospital? If the elevator and
    tunnel turn out to be too difficult or expensive, is there a
    plan B?
        [The information follows:]

        The Washington Area Metro Authority (WMATA) is currently exploring
    a number of options to enhance access to the Medical Center Metro
    Station. These options include:
      --No build with improvements at grade
      --Elevator entrance on the east side of Rockville Pike, including
            improvements at grade and three high-speed elevators on the
            east side of Rockville Pike
      --Shallow pedestrian tunnel underneath Rockville Pike approximately
            30 feet in length
      --Shallow pedestrian tunnel plus an elevator entrance on the east
            side of Rockville Pike (a combination of Options 2 and 3,
            without the upgraded crosswalk)
      --Pedestrian Bridge crossing over Rockville Pike
        WMATA is currently evaluating the business case for each of these
    options and vetting them with the general public. We rely on WMATA to
    define the way ahead while remaining convinced improvements need to be
    made if we expect more Medical Center staff to take advantage of the
    Metro option for commuting.

        Admiral Handley. Sir, again, my apologies for not having
    that one on hand today. But again, that is, as you have
    outlined, the current plan. I am not personally familiar with a
    backup plan for that but will look specifically into that and
    get specific details back to you and your staff.
        Senator Johnson. With the additional funding for Walter
    Reed and Fort Belvoir in the supplemental, what is the target
    date for completion?
        [The information follows:]

        The Supplemental funding directed for the National Naval Medical
    Center (NNMC) Bethesda will support completion of the Defense Base
    Realignment and Closure (BRAC) Commission related construction in time
    to meet the BRAC mandated deadline of September 2011. At present, the
    major additions to NNMC Bethesda are scheduled to be complete by
    October 2010 thus providing adequate time to outfit and occupy these
    buildings prior to the BRAC deadline. Specifically, the supplemental
    funding for NNMC Bethesda will support the construction of the new
    wounded warrior enlisted quarters, a new fitness center, an additional
    administrative facility, and a new parking garage. These facilities,
    which are scheduled for completion in July and August of 2011, are
    needed to support the patient and staff increases that are anticipated
    as we move toward creation of the Walter Reed National Military Medical
    Center.
        The construction at Fort Belvoir is the responsibility of the U.S.
    Army.

        Admiral Handley. Again, my apologies on that. I know there
    is a 2011 deadline, and that, I believe, as Secretary Arny
    previously testified, that we are on track for the BRAC
    requirements for 2011 as well.

                                      GUAM

        Senator Johnson. General Payne, the budget request includes
    over $700 million for military construction in Guam. How can
    Congress determine the validity of those projects without a
    FYDP to see how they fit into the long-range plan for Guam?
        General Payne. Well, we certainly are understanding of the
    desire for a longer-range plan. But in answer to the fiscal
    year 2010 projects in particular, these are all projects that
    essentially address infrastructure needs. They are projects
    that include the haul road, upgrade to the wharfs, and other
    infrastructure projects that, quite frankly, we think would set
    the stage for any growth on Guam whatsoever.
        Senator Johnson. Senator Hutchison.
        Senator Hutchison. Mr. Chairman, I think--I don't really
    have questions.
        The Guam issue, I think you have covered well, and I just
    believe that, in general, the Navy has done well in focusing on
    quality of life issues. And the Marine Corps I think is doing
    well in preparing for its end strength increase. And so, we
    want to continue to monitor that and also help in every way
    possible.
        I think the Guam issue is one that we really need to work
    together to plan for and assure that we are doing everything to
    make that transition as seamless as it can be, but I think you
    realize that. So we will work with you and try to accommodate
    that need.
        Thank you very much.

                         ADDITIONAL COMMITTEE QUESTIONS

        Senator Johnson. I would like to thank all of our witnesses
    for appearing before the subcommittee today. We look forward to
    working with you in what is likely to be a very compressed
    schedule.
        For the information of members, questions for the record
    should be submitted by the close of business on May 22.
        [The following questions were not asked at the hearing, but
    were submitted to the Department for response subsequent to the
    hearing:]

                Questions Submitted by Senator Daniel K. Inouye

        Question. The Pearl Harbor Naval Shipyard's motto is, ``We Keep
    Them Fit to Fight.'' It has a proud and storied legacy which includes
    the tireless work by the Shipyard's workers in the days and years
    following December 7, 1941. Hawaii will be in receipt of the new
    Virginia-class submarines. The decision by the Navy to position its
    latest class of submarines is attributable to the importance of
    stability in the Asia-Pacific region. Though our focus is trained on
    the Middle East, the Asia-Pacific region is home to serious concerns
    such as the potential of North Korean long-range ballistic missiles. To
    this end, the Virginia-class submarines will silently keep watch on
    this vast area of ocean.
        Would it be fair to characterize our force's broad-spectrum
    capabilities as being dependant on the ability of those charged with
    the maintenance and upkeep? Furthermore, would it be fair to
    characterize the infrastructure to ensure the long-term viability of
    these state-of-the-art-submarines as a complementary component to the
    maintenance and readiness of our forces, keeping them, ``Fit to
    Fight,'' and support our national security
        Answer. The force's broad-spectrum capabilities, including those of
    our state-of-the-art-submarines, are strongly linked to our ability to
    maintain those ships. The ship depot maintenance program provides the
    maintenance necessary to sustain the Navy's global presence and to
    support the Navy's force structure goals by ensuring that ships receive
    the required life cycle maintenance to reach their Expected Service
    Life (ESL). Ship depot maintenance provides funding for ship and
    submarine scheduled and unscheduled maintenance conducted by both
    public shipyards and private sector contractors. This program directly
    supports the Surface Warfare Enterprise, Naval Aviation Enterprise and
    the Undersea Enterprise by providing units ready for operational
    tasking. We value the long tradition of excellence and dedication
    embodied by the Naval Shipyard workforce.
        Question. I appreciate the difficult budgetary decisions that must
    be made with regard to military construction. The basic infrastructure
    that supports our war fighters and their equipment, while bereft of
    eye-catching appeal, provides a strong foundation for our military.
    Each Shipyard faces its own set of challenges, and Pearl is no
    different. The Shipyard's modernization plan seeks to address the
    challenges the industrious employees have managed to work-around.
    Regrettably, this is a less than ideal situation, and I am concerned
    that Pearl's infrastructure needs are being continually pushed down the
    road. Neglecting the smaller projects places strain on existing
    infrastructure and the workforce, that may lead to larger more serious
    problems, and potentially places people at risk of injury.
        The current business model seems to be short-sighted, only
    addressing the most immediate infrastructure problems at the Shipyard.
    This is not the most cost-effective way in which to ensure its
    longevity and viability. Could you please clarify how projects are
    given priority? Is the current approach more, or less, cost-effective
    for the Navy given the finite amount of annual resources provided for
    Shipyard construction?
        Answer. In PB10 the Navy changed its MILCON process from a bottom-
    up, advocacy-based process to a top-down capabilities-based process
    designed to holistically integrate warfare/provider enterprise
    requirements. The Navy's strategic MILCON guidance is based on the
    Chief of Naval Operations (CNO) Shore Investment Strategic Guidance.
    This guidance focuses on Mission and Quality of Life/Workplace, with a
    goal to achieve the lowest life cycle facility costs.
        Specific projects are developed at the installation level and
    validated regionally in accordance with the top-down guidance. The Navy
    assesses each prospective MILCON project through a structural model
    aligned to Navy priorities. This objective structural model assessment
    leads to a prioritized ranking of all MILCON requirements and forms the
    basis of the Navy MILCON program.
        Shipyard projects are evaluated and prioritized in the same manner
    as, and with, all Navy MILCON requirements. Each fiscal year shipyard
    projects meet or exceed the minimum capital investment requirements of
    U.S.C. Title 10 Section 2476 (Minimum capital investment for certain
    depots). The fiscal year 2010 Budget Submission included two MILCON
    projects valued at $296 million in support of Norfolk Naval Shipyard
    and Puget Sound Naval Shipyard and Intermediate Maintenance Facility,
    comprising 27 percent of the total Navy MILCON program.

                              SUBCOMMITTEE RECESS

        Senator Johnson. This hearing is recessed.
        [Whereupon, at 3:41 p.m., Tuesday, May 19, the subcommittee
    was recessed, to reconvene subject to the call of the Chair.]

       MILITARY CONSTRUCTION AND VETERANS AFFAIRS, AND RELATED AGENCIES
                      APPROPRIATIONS FOR FISCAL YEAR 2010

                                  ----------

                            THURSDAY, JUNE 11, 2009

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 1:30 p.m., in room SD-124, Dirksen
    Senate Office Building, Hon. Tim Johnson (chairman) presiding.
        Present: Senators Johnson, Murray, Reed, Nelson, Pryor,
    Hutchison, and Murkowski.

                         DEPARTMENT OF VETERANS AFFAIRS

    STATEMENT OF HON. ERIC K. SHINSEKI, SECRETARY
    ACCOMPANIED BY:
            GERALD M. CROSS, MD, FAAFP, ACTING UNDER SECRETARY FOR HEALTH
            PATRICK W. DUNNE, UNDER SECRETARY FOR BENEFITS
            STEVE L. MURO, ACTING UNDER SECRETARY FOR MEMORIAL AFFAIRS
            RITA A. REED, ACTING ASSISTANT SECRETARY FOR MANAGEMENT
            ROGER W. BAKER, ASSISTANT SECRETARY FOR INFORMATION AND
                TECHNOLOGY

                    OPENING STATEMENT OF SENATOR TIM JOHNSON

        Senator Johnson. The meeting will come to order. I welcome
    Secretary Shinseki and those accompanying him to the
    subcommittee. The leadership has announced that there will be a
    conference meeting regarding the supplemental at 3 o'clock, so
    we had to start this hearing early. I want to thank the
    secretary for accommodating this change. We are going to have
    to compress the hearing today, so I would like to waive all
    opening statements from members and go straight to the
    secretary's testimony. This will allow more time for senators
    to ask questions. The secretary's statement will be made part
    of the record as any member wishing to submit theirs. I request
    that our members limit their questions to 6 minutes. Again,
    thank you Secretary Shinseki for appearing before the committee
    today.
        Senator Hutchison, do you have any comments you would like
    to make?
        Senator Hutchison. Mr. Chairman, let's go forward. I think
    you're right to try to compress the hearing.
        Senator Johnson. Secretary, you may proceed.

                         STATEMENT OF ERIC K. SHINSEKI

        Secretary Shinseki. Thank you Chairman Johnson, Ranking
    Member Hutchison, other distinguished members of the committee.
    Thank you as always for this opportunity to discuss the
    President's budget for the Department of Veterans Affairs.
        I'm pleased to be joined today by VA's senior leadership,
    and I'd like to take a few seconds just to introduce them.
    Beginning on my far left Under Secretary Pat Dunne, who takes
    care of our benefits administration. Next to me is Acting
    Assistant Secretary for Health, Dr. Gerald Cross. To my right
    Acting Assistant Secretary for Management, Rita Reed. To her
    right Acting Under Secretary for Memorial Affairs, Steve Muro,
    and then to the far right Assistant Secretary for Information
    and Technology, Roger Baker.
        Let me also acknowledge the presence of leaders of our
    veterans service organizations in the audience today. We, in
    fact, are partners as advocates for our Nation's veterans.
        In my short tenure as Secretary, every Member of Congress
    who has welcomed me back to Government has almost in the same
    breath asked me to do more, better, faster for our veterans
    longstanding needs that they face and need help on. I guess I
    would tell you that your individual and your collective
    devotion to our veterans is clear to me from my visits with
    you. Clear, comprehensive, and unwavering. And so, Mr.
    Chairman, to you and the members of this committee I want to
    express upfront my thanks for your support of VA, first to care
    for those veterans, and most especially for the generous
    appropriations in some years past when budgets were lean. You
    ensured that we were able to meet mission for those veterans.

                               PREPARED STATEMENT

        Veterans are our sole reason for existence. In today's
    challenging economic environment we must be diligent stewards
    of every dollar if we are to deliver timely, high quality
    benefits and services to the men and women we serve. The growth
    in funding for fiscal year 2010 is significant, I will say that
    upfront. We accept the responsibility for being accountable and
    showing measurable returns on this investment that we've been
    entrusted with. I will do everything possible to ensure the
    funds Congress appropriates will be used to improve the quality
    of life for veterans and the efficiency of our operations. So
    with those comments, Mr. Chairman, thank you for this
    opportunity, and I look forward to your questions.
        [The statement follows:]

                  Prepared Statement of Hon. Eric K. Shinseki

        Mr. Chairman, Senator Hutchison, distinguished members of the
    Committee: Thank you for this opportunity to present the President's
    2010 budget for the Department of Veterans Affairs (VA). The
    President's vision for the Department is to transform VA into a 21st
    Century organization that is Veteran-centric, results-driven, and
    forward-looking. This transformation is demanded by new times, new
    technologies, new demographic realities, and new commitments to today's
    Veterans. It requires a comprehensive review of the fundamentals in
    every line of operation the Department performs.
        VA's budget request for 2010 provides the resources for this
    transformation that will take more than one year to complete. It
    provides the resources to move the Department closer to achieving the
    President's vision for VA, and will help ensure that Veterans--our
    clients--receive timely access to the highest quality benefits and
    services we can provide and which they earned through their sacrifice
    and service to our Nation.
        Some have complained that, in the past, VA has been seen as
    difficult and bureaucratic in providing for our Nation's Veterans.
    Change requires strong leadership amidst finite resources to improve
    access, quality, safety, timeliness, and advocacy for the care and
    services we provide to our Veterans. This is not about nibbling around
    the edges of change.
        The President's budget request for 2010 provides the Department
    with resources needed to become a 21st Century organization as the
    Department's leadership develops further the individual investments
    currently in the Budget to better align with evolving Departmental
    priorities.
        The President has requested that I do two things--first, transform
    VA into a 21st Century organization, and second, to ensure that we
    approach Veterans care as a lifetime initiative, from the day the oath
    is taken until they are laid to rest. With this budget, the
    transformation begins.
        At present, the budget request contains four major categories of
    transformational activity collectively designed to initiate the process
    of creating a 21st Century VA. These transformational initiatives
    include creating a reliable management infrastructure, delivering
    ongoing services, making progress on Departmental priorities, and
    instituting important new initiatives to meet the needs of Veterans
    today and tomorrow.
        VA's request for 2010 is nearly $113 billion--an increase of over
    $15 billion, or 15.5 percent, from the 2009 enacted budget. This is the
    largest 1-year percent increase for VA requested by a President in over
    30 years.
        I would like to take this opportunity to highlight how this budget
    will help VA begin the transformation in these four areas.
        First, Management Infrastructure. In order to transform VA, we must
    begin with ourselves. Transformation must start within our own doors.
    VA will create a reliable management infrastructure that expands or
    enhances corporate transparency at VA, centralizes leadership and
    decentralizes execution, invests in leader training, and focuses on
    research and development on 21st Century requirements. This
    infrastructure also is a key to dramatically improved client services
    and enhanced responsiveness to the needs of Veterans and all VA
    stakeholders. Examples include increasing investment in training and
    career development for the VA career civil service; improving capacity
    to manage IT services and major programs; employing a suitable
    financial management system to track expenditures; and achieving
    significant realignment of VA's acquisition processes for improved
    transparency of and accountability for spending across the VA.
        Second, delivering and maintaining ongoing services. Transformation
    does not mean throwing out the baby with the bath water. What it does
    mean is that we must identify the things that work best and improve
    upon them. Some of the services that we can improve upon, and must
    improve upon, are our ongoing services provided to Veterans on a daily
    basis, such as care for polytrauma, substance abuse, mental health, and
    preventive health care. Such activities include access to the highest
    quality care, delivered at best-in-class facilities, and powered by
    excellence in medical research. These also encompass fair, consistent,
    and rapid processing of benefits claims, memorial services that honor
    service to the Nation, and evolving needs, such as rural care and
    outreach, care for homeless Veterans, Veterans' families, and women's
    health care.
        Third, the 2010 budget will provide VA with sufficient resources to
    continue to make progress on Departmental priorities. VA will assess
    and revitalize core programs that have already been recognized by the
    VA and Congress as important to improving quality and access to
    services for Veterans. These programs provide access for additional
    Priority 8 Veterans; improve interoperability and coordination between
    the Department of Defense (DOD) and VA; increase investment in mental
    health and telemedicine; and continue the development and
    implementation of the Post-9/11 GI Bill. Progress on these initiatives,
    begun in 2009, will be sustained in 2010 to ensure that VA follows
    through on its existing commitments.
        Lastly, transformation is about making bold moves to introduce
    entirely new concepts of best business practices that lead the
    organization into the 21st Century. The fiscal year 2010 budget request
    will enable new approaches to meet emerging needs that change the way
    VA serves Veterans. The on-going work of the VA's Transformation Task
    Force will further inform the development of these elements. And while
    these four areas of transformation represent the opportunities
    presented by the 2010 budget, below are specific examples to
    demonstrate how these funds will help our Veterans thorough their
    entire service lifetime, beginning at the day they take their oath.
      the transformation from within--increasing investment in training,
              career development and other organizational reforms
        In order to transform VA, we must begin with a commitment to
    critically assess ourselves. Transformation must start within our own
    doors. The transformation of VA will require many organizational
    reforms to better unify the Department's efforts on behalf of Veterans.
    These will take time and may even result in up-front costs within our
    overall budget, but all are designed to save taxpayer dollars over time
    while ensuring VA successfully accomplishes its mission. Lastly, where
    we can save costs to our Veterans, without impacting quality of care,
    or diminishing our core mission, we will be sound stewards of the
    taxpayer dollar. Some of these key reforms are presented below.
    Increasing Investment in Training and Career Development
        The 2010 budget will help ensure that VA's workforce will remain
    leaders and standard-setters in their fields. The Department will
    continue to grow and retain a skilled, motivated, and client-oriented
    workforce. Training and development (including a leader development
    program), communications and team building, and continuous learning
    will all be components of reaching this objective.
    Establishing an Office of Analysis and Evaluation
        The Department will establish an office with robust program
    analysis and evaluation capability. This office will conduct in-depth
    reviews of VA programs and operations, and will assess their return on
    investment. These independent evaluations will help inform program and
    budget decision-making.
    Enabling Improved Communications
        The Department will invest in a virtual forum and related services
    to enable better communications with Veterans, Veterans Service
    Organizations, Congress, and other government agencies.
    Implementing Management Control Systems for Acquisitions
        This initiative will allow VA to gather and use information to
    assist senior leadership in steering the Department toward its
    strategic objectives. This will involve allocating resources,
    motivating employee behavior, and evaluating performance.
    Improving Medical Collections
        The Department expects to receive nearly $2.9 billion from medical
    collections in 2010. About $8 of every $10 in extra collections will
    come from increased third-party insurance payments, with the vast bulk
    of the remaining collections growth resulting from rising pharmacy
    workload. The 2010 budget supports the establishment of additional
    consolidated patient account centers (CPACs) that help maximize the
    efficiency and effectiveness of VA's medical collections program
    through standardized processes, accountability for results, improved
    decision support capabilities, and more stringent internal controls.
    The implementation of six more centers from 2009 to 2011 will generate
    approximately $1.7 billion in additional revenue during the next
    decade.
        In addition to investing in VA to provide the best quality of care
    to our Veterans, we are rededicating ourselves to improving our VA
    infrastructure, construction and logistics, to provide Veterans with
    the comfort in knowing that they will always have a place to go to seek
    their care that they can call their own.
    new construction and funding the new office of the assistant secretary
                  for acquisition, construction, and logistics
    Establishment of a New Office of Acquisition, Construction, and
            Logistics
        The President's 2010 budget request is so firmly committed to this
    goal, that it includes funding for the establishment of a new Office of
    the Assistant Secretary for Acquisition, Construction, and Logistics.
    The necessity of this new office is highlighted by the $1.921 billion
    in capital funding for VA in the 2010 budget. Our request for
    appropriated funds includes $1.194 billion for major construction
    projects, $600 million for minor construction, $85 million in grants
    for the construction of State extended care facilities, and $42 million
    in grants for the construction of State Veterans cemeteries.
        The 2010 request for construction funding for our health care
    programs is $1.584 billion--$1.077 billion for major construction and
    $507 million for minor construction. All of these resources will be
    used to further renovate and modernize VA's health care infrastructure,
    provide greater access to high-quality care for more Veterans, closer
    to where they live, and help resolve patient safety issues.
      --Major Construction Initiatives. Within our request for major
            construction are resources to continue five medical facility
            projects already underway:
        --Orlando, Florida ($371.3 million)--complete a new medical center
                consisting of a hospital, medical clinic, community living
                center, domiciliary, and full support services;
        --Denver, Colorado ($119.0 million)--replacement medical center on
                the same campus as the University of Colorado Hospital
                complex in Aurora, consisting of an inpatient medical
                center, spinal cord injury and community living center, and
                research building;
        --Bay Pines, Florida ($96.8 million)--inpatient and outpatient
                facility improvements;
        --San Juan, Puerto Rico ($42.0 million)--seismic corrections to the
                main hospital building; and
        --St. Louis, Missouri ($19.7 million)--medical facility
                improvements and cemetery expansion at Jefferson Barracks.
      --New Facilities. Major construction funding is also provided to
            begin seven new medical facility projects:
        --Livermore, California ($55.4 million)--design and land purchase
                for new community-based outpatient clinic in East Bay,
                expanded community-based outpatient clinic and new
                community living center in the Central Valley, and
                minimally invasive procedure center at the Palo Alto VA
                Medical Center;
        --St. Louis, Missouri ($43.3 million)--design new inpatient bed
                tower, emergent response unit, spinal cord injury beds,
                intensive care unit beds, and clinical expansion at the
                John Cochran Division;
        --Canandaigua, New York ($36.6 million)--design new community
                living center and new domiciliary/residential
                rehabilitation facility;
        --Long Beach, California ($24.2 million)--design new mental health
                center and community living center;
        --Brockton, Massachusetts ($24.0 million)--design new long-term
                care spinal cord injury unit;
        --San Diego, California ($18.3 million)--design new spinal cord
                injury building and renovations to provide a community
                living center and hospice unit; and
        --Perry Point, Maryland ($9.0 million)--design new community living
                center.
      --Minor construction.
        Minor Construction is an integral component of our overall capital
    program. In support of the medical care and medical research programs,
    minor construction funds permit VA to realign critical services; make
    seismic corrections; improve patient safety; enhance access to health
    care; increase capacity for dental care; enhance patient privacy;
    improve treatment of special emphasis programs; and expand research
    capability. Further, minor construction resources will be used to
    comply with energy efficiency and sustainability design requirements.
        We are requesting $162.9 million in construction funding to support
    the Department's burial program--$112.2 million for major construction
    and $50.7 million for minor construction. Within the funding we are
    requesting for major construction are resources for gravesite expansion
    and cemetery improvement projects at two national cemeteries--Abraham
    Lincoln ($38.3 million) and Houston ($35.0 million).
        VA is requesting $25.5 million for land acquisition in the major
    construction account. These funds will be used to purchase land as it
    becomes available in order to quickly take advantage of opportunities
    to ensure the continuation of a national cemetery presence in areas
    currently being served. All land purchased from this account will be
    contiguous to an existing national cemetery, within an existing service
    area, or in a location that will serve the same Veteran population
    center.
        VA's commitment to our clients does not end at building a world-
    class, 21st Century Veterans healthcare and benefits organization. We
    also have an obligation to ensure that America never forgets their
    sacrifices. The 2010 Budget assures that the legacy of honoring our
    Veterans continues.
        Although the foundation of transformation is laid first internally,
    by focusing on our own transformation within the walls of VA, at the
    end of day, we are judged by our performance, not our promises. The
    President has charged VA with providing for our Veterans for their
    entire lifetime. The President's 2010 Budget allows VA to focus on this
    continuity of care earlier than ever before.
                          one life continuity of care
        One of VA's highest priorities is to ensure that active and Reserve
    component Veterans returning from service in Operation Enduring Freedom
    and Operation Iraqi Freedom receive everything they need to
    effortlessly make their transition from active military service to
    civilian life. The Department will take all measures necessary to
    provide them with timely benefits and services, to give them complete
    information about the benefits they have earned through their military
    service, and to implement streamlined processes that simplify their
    interactions with VA.
    Early Transition Initiatives
        The most effective way to ensure servicemembers receive continuous
    care from military service to civilian life is to begin the transition
    process at the time they are sworn in for active duty. VA will continue
    to collaborate with DOD to facilitate the transition of military
    personnel into civilian status through a uniform approach of both
    registering into VA and accessing electronic records data. This will
    involve the development and implementation of a Joint Virtual Lifetime
    Electronic Record that will contain both administrative and medical
    information, resulting in improved delivery of benefits and assuring
    the availability of medical data to support the care of patients shared
    by VA and DOD. This will be achieved while maintaining the privacy and
    security of servicemembers' and Veterans' personal information.
    Developing and New Partnerships with DOD
        The Department will continue to partner with DOD to establish and
    administer programs to support this continuity of care, including
    participation in demobilization events, the Yellow Ribbon Reintegration
    Program, the Center of Excellence in Psychological Health and Traumatic
    Brain Injury, and others. Our facility-to-facility collaborations
    foster improved care coordination and delivery at the local level and I
    will continue to work with Secretary Gates to ensure this continuum of
    care is supported and addressed at the highest levels. To this end, I
    am establishing a new VA/DOD Collaboration Office with dedicated
    staffing to support our efforts at the Departmental level.
        As our Veterans move from DOD to VA as their principal care
    provider, we must ensure that we are poised to address their specific
    needs. This requires that VA look at the most effective ways to meet
    the needs of this latest generation of Veterans. We will strive not to
    repeat the mistakes of the past, and ensure that once Veterans are
    fully under our care, we are poised to deliver the specialty health
    care and services that they need and that this budget will provide.
    Meeting Emerging Needs of All Veterans Across All Generations
        In addition to this newest generation of veterans, we must ensure
    that the budget addresses the needs of all Veterans, across all
    emerging demographics. This includes funding initiatives for women
    Veterans, the growing elderly population of Veterans, and Veterans
    living in rural areas. VA's request for 2010 provides the resources
    required to treat nearly 6.1 million patients as they enter our system
    of care. This is 474,000 (or 9 percent) above the patient total in 2008
    and is 122,000 (or 2 percent) higher than the projected number in 2009.
    Advance Appropriations for VA Medical Care
        The President and I share the concern that the care our Veterans
    receive should never be hindered by budget delays. The Administration
    plans to work with the Congress to develop a specific advance
    appropriations proposal for the VA Medical Care program.
            funding care for a new and changing veteran demographic
    Meeting the Medical Needs of Women Veterans
        The 2010 budget provides $183 million to meet the gender-specific
    health care needs of women Veterans, an increase of $15 million (or 9
    percent) over the 2009 resource level. The delivery of enhanced primary
    care for women Veterans is one of VA's top priorities. The number of
    women Veterans is growing rapidly and these women are increasingly
    reliant upon VA for their health care. More than 450,000 women Veterans
    have enrolled for care and this number is expected to grow by 30
    percent in the next five years. We will soon have 144 full-time Women
    Veterans Program Managers serving at VA medical facilities. They will
    function as advisors to and advocates for women Veterans to help ensure
    their care is provided with the appropriate level of privacy and
    sensitivity.
    Expanding Care for Veterans in Rural Areas
        The Department appreciates the additional resources provided by
    Congress for rural health care initiatives. Using some of these 2009
    funds as well as additional resources we are requesting in 2010, VA's
    budget includes $440 million to implement the President's initiative to
    continue improving access to medical care for Veterans in rural and
    highly rural areas, including use of rural health resource centers,
    mobile clinics, rural health consultants, and outreach. VA will also
    continue to expand its telehealth program which is the largest of its
    kind in the world. Where appropriate, the Department will provide fee-
    basis access to mental health professionals when VA services are not
    reasonably close to Veterans' homes.
    Emerging Elder and Long-term Care
        VA's budget for 2010 contains more than $5.9 billion for long-term
    care, a rise of $663 million (or 13 percent) over the 2009 resource
    level. About 60 percent of the additional resources will support
    institutional care while 40 percent will be devoted to expanding non-
    institutional long-term care services. We anticipate increased demand
    for long-term care services resulting from severe injuries, such as TBI
    and polytrauma.
        The Department's 2010 request includes $1.2 billion for non-
    institutional long-term care, an increase of $265 million (or 28
    percent) over 2009. By enhancing Veterans' access to non-institutional
    long-term care, VA can provide extended care services to Veterans in a
    more clinically appropriate setting, closer to where they live and in
    the comfort and familiar settings of their homes. These services
    include adult day health care, home-based primary care, purchased
    skilled home health care, homemaker and home health aide services, home
    respite and hospice care, and community residential care. During 2010
    we will increase the number of patients receiving non-institutional
    long-term care, as measured by the average daily census, to nearly
    91,000. This represents a 25 percent rise above the level we expect to
    reach in 2009.
    Funding Care for Newly Qualified Veterans (Priority 8)
        Building on the resources provided by Congress in 2009 for VA to
    begin a gradual expansion of health care eligibility for non-service-
    disabled Veterans earning modest incomes (Priority 8 Veterans), the
    President's Budget includes funds to expand eligibility to this group
    for the first time since 2003. This year, VA will open enrollment to
    Priority 8 Veterans whose incomes exceed last year's geographic and VA
    means-test thresholds by no more than 10 percent. We estimate that
    266,000 more Veterans will enroll for care by the end of 2010 due to
    this policy change. Furthermore, the budget includes a gradual
    expansion of health care eligibility which will enable over 500,000
    Veterans who were previously not eligible for VA medical care to enroll
    by 2013. This expansion of health care eligibility will be accomplished
    while improving the timeliness of care and maintaining the quality of
    VA health care that already sets the national standard of excellence.
    Funding Care for OEF/OIF Veterans
        The number of patients who served in Operations Enduring Freedom
    and Iraqi Freedom will rise to over 419,000 in 2010. This is 61 percent
    higher than in 2008 and 15 percent above the projected total this year.
    In 2010 we are requesting $2.1 billion to meet the health care needs of
    Veterans who served in Iraq and Afghanistan. This is an increase of
    $463 million (or 29 percent) over our medical resource requirements to
    care for these Veterans in 2009. The treatment of this newest
    generation of Veterans has allowed us to focus on and improve treatment
    for PTSD as well as TBI, including new programs to reach our Veterans
    at the very earliest stages of these conditions.
         enhancing outreach and services for mental health care and tbi
        VA's 2010 budget includes nearly $4.6 billion for mental health
    care, an increase of $288 million, or 7 percent, above the 2009
    resource level. These resources will allow the Department to expand
    inpatient, residential, and outpatient mental health programs. A key
    element of VA's program expansion is integrating mental health services
    with primary and specialty care. Veterans receive better health care
    when their mental and physical needs are addressed in a coordinated and
    holistic manner.
    PTSD and TBI Commitments
        This budget allows us to continue our effort to improve access to
    mental health services across the country. We will continue to place
    particular emphasis on providing care to those suffering from post-
    traumatic stress disorder (PTSD) as a result of their service in
    Operations Enduring Freedom and Iraqi Freedom. The Department will
    increase outreach to these Veterans as well as provide enhanced
    readjustment and PTSD services. Our strategy for improving access
    includes expanding our tele-mental health program, which allows us to
    reach thousands of additional mental health patients annually,
    particularly those living in rural areas.
        To better meet the health care needs of recently discharged
    Veterans, the 2010 budget enables VA to expand its screening program
    for depression, PTSD, TBI, and substance use disorders. The Department
    will also enhance its suicide prevention advertising campaign to raise
    awareness among Veterans and their families of the services available
    to them.
        VA's 2010 budget contains $298 million for the care of Veterans
    with TBI, an increase of $41 million (or 16 percent) over the 2009
    resource level. TBI and polytrauma are serious conditions that Veterans
    injured as a result of their service in Operations Enduring Freedom and
    Iraqi Freedom experience, and we must find even more ways to address
    their needs. While VA's Polytrauma System of Care is unique in its
    expertise and capabilities, we are learning more every day about
    effective treatments. The additional resources in 2010 will help ensure
    these Veterans receive the specialized care they require.
    Investments in New Vet Centers to Address Unique Mental Health
            Challenges of Combat
        In 2010, VA will open 28 new Vet Centers providing readjustment
    counseling services to Veterans, including those suffering from PTSD.
    The Department will also improve access to mental health services
    through our community-based outpatient clinics. Where appropriate, we
    will provide fee-basis access to mental health providers when VA
    services are not reasonably close to Veterans' homes. We will also
    expand use of Internet-based mental health services through
    ``MyHealtheVet,'' which provides an extensive degree of health
    information to Veterans electronically. These steps are critical to
    providing care to Veterans living in rural areas.
        In addition to identifying and funding care for the evolving
    Veteran demographic, VA must commit adequate resources to addressing
    the needs of today's Veteran, and that can only be accomplished with
    adequate funding for research. The President's 2010 budget allows us to
    commit dramatically increased resources to research.
      increasing investments in research and other health care initiatives
        The 2010 budget provides $580 million for medical and prosthetic
    research, an increase of $70 million (or 14 percent) over the 2009
    resource level. Our request will fund nearly 2,400 high-priority
    research projects to expand knowledge in areas critical to Veterans'
    health care needs, most notably in the areas of mental illness ($74
    million), aging ($51 million), acute and traumatic injury ($46
    million), military occupations and environmental exposures ($43
    million), and cancer ($41 million).
    Groundbreaking Research Initiatives
        Some of this research will focus on TBI and polytrauma, including
    studies on blast force-related brain injuries, enhancing diagnostic
    techniques, and improving prosthetics. We will strengthen our burn
    injury research to improve the rehabilitation and daily lives of
    Veterans who have suffered burns. VA will also enhance research on
    chronic pain, which afflicts approximately two of every five recently
    discharged and enrolled Veterans. And the Department will also advance
    research on access to care, particularly for Veterans in rural areas,
    by studying new tele-medicine efforts focused on mental health and
    PTSD.
        One of our highest priorities in 2010 will be to continue our
    aggressive research program aimed at improving the lives of Veterans
    returning from service in Operations Enduring Freedom and Iraqi
    Freedom. The President's budget request for VA contains $299 million
    devoted to research projects focused specifically on Veterans returning
    from service in Afghanistan and Iraq, an increase of $20 million (or 7
    percent) over the 2009 resource level. The new research initiatives
    will focus on post-deployment mental health, spinal cord injury,
    sensory loss, TBI and other neurotrauma, and pain.
        The President's request for research funding will help VA sustain
    its long track record of success in conducting research projects that
    lead to clinically useful interventions that improve the health and
    quality of life for Veterans and the general population. Recent
    examples of VA research results that have direct application to
    improved clinical care include the successful use of tele-medicine to
    improve Veterans' mental health status, quality of life, and
    satisfaction with care; better understanding the specific factors
    leading to the development of osteoporosis; delineating the critical
    brain structures involved in components of learning and memory that are
    important for improving care for Veterans with brain injury and memory
    disorders; improving treatment for Veterans suffering from the combined
    effects of hepatitis C and depression; and utilizing deep-brain
    stimulation to improve the quality of life for patients suffering from
    advanced Parkinson's disease.
        The 2010 budget for medical care provides funds for VA to
    strengthen its focus on critical ongoing programs and new initiatives
    that will improve care and clinical outcomes for Veterans. Certain new
    initiatives that support overall transformation include:
    Patient Centered Care
        The Veterans Health Administration (VHA) will deploy a patient-
    centric care model called Veteran Centered Care, based on best
    practices in private sector health care, which will result in a fully
    engaged prevention partnership between Veteran, family, and health care
    team, established through healing relationships and provided in optimal
    healing environments in order to improve health outcomes and the
    Veteran's experience of care.
    Medical Home and Care Coordination
        The patient centered medical home is a team based model of care
    that provides continuous, first contact, comprehensive care to maximize
    health and functionality. The model focuses on preventive health care
    and emphasizes a holistic approach that addresses the medical,
    psychological, and social needs of the patient. These teams consist of
    medical professionals, mental health providers including behaviorists,
    nurses, nutritionists, and care coordinators. These models can be
    adapted to meet the specific needs of unique patient populations such
    as those with advanced heart disease.
    Leveraging Technology in Health Care Services
        As part of our continued operation and improvement of the
    Department's electronic health record system, VA is seeking $360
    million for development and implementation of the Veterans Health
    Information Systems and Technology Architecture (HealtheVet) program.
    Facets of the program have already received national accolades as a
    model for improving online accessibility of health records. This is $47
    million (or 15 percent) above the estimated resource commitment for
    this key project in 2009. HealtheVet will equip our health care
    providers with the modern technology and tools they need to improve the
    safety and quality of care for Veterans.
        Until HealtheVet is operational, we need to maintain the VistA
    legacy system. This system will remain operational as new applications
    are developed and implemented. This approach will mitigate transition
    and migration risks associated with the move to the new architecture.
    Our budget provides $116 million in 2010 for the VistA legacy system.
    Health Care Spending Summary
        In total, the President's 2010 request includes total budgetary
    resources of $47.4 billion for VA medical care, an increase of $4.6
    billion (or 11 percent) over the 2009 resource level (which excludes $1
    billion for non-recurring maintenance projects, including renewable
    energy and efficiency projects, supported through resources from the
    American Recovery and Reinvestment Act). Our total medical care request
    is comprised of funding for medical services ($34.7 billion), medical
    support and compliance ($5.1 billion), medical facilities ($4.7
    billion), and resources from medical care collections ($2.9 billion).
        As we focus on the new medical care services and delivery
    mechanisms needed to transform VA care, we must ensure that we do not
    repeat the mistakes of the past, and disassociate the injuries from the
    full social and economic impacts of those left untreated, or whom we
    simply cannot reach. This budget allows us to address some of the
    social and economic impacts that we cannot address with health care
    alone, such as addressing homelessness and providing other economic
    benefits.
                             combating homelessness
        The President has committed to expanding proven programs and
    launching innovative services to prevent Veterans from falling into
    homelessness. The 2010 budget provides more than $3.2 billion for
    homeless Veterans programs. This includes $2.7 billion to furnish
    health care to homeless Veterans and $500 million for other programs
    providing supportive services, which help to break the cycle of
    homelessness among the estimated 131,000 Veterans who are homeless on
    any single night.
    Joint Initiatives
        The budget provides $26 million for VA to work with the Departments
    of Housing and Urban Development, Labor, Education, Health and Human
    Services, and the Small Business Administration, in partnership with
    non-profit organizations, to reduce homelessness. This pilot project
    coordinates VA's efforts with programs of partner agencies and non-
    profits to target Veterans who are most at risk of becoming homeless.
    It aims to maintain stable housing for Veterans while continuing to
    provide them with support services and ongoing medical care.
        In addition, this historic budget allows us to set our Veterans up
    for success well into the future by investing now in their education
    and in the future financial stability of America by educating the next
    greatest generation of Veterans.
       automating the application for and delivery of education benefits
        The Department is on target to implement the Post-9/11 Veterans
    Educational Assistance Act starting August 1, 2009, and began signing
    up Veterans online for this program on May 1, 2009. VA is pursuing two
    parallel strategies to successfully implement this new education
    program, both of which are fully supported by the resources presented
    in the 2010 budget.
    Short Term Strategy
        The short-term strategy relies upon a combination of traditional
    claims processing and modifications to existing IT systems. Until a
    modern eligibility and payment system can be developed, VA will
    adjudicate claims manually and use the existing Benefits Delivery
    Network to generate benefit payments to schools and program
    participants. This budget includes funds to hire and maintain the
    additional staff required.
    Long Term Strategy
        The long-term strategy is the development and implementation of an
    automated system for claims processing. The Department has teamed with
    the Space and Naval Warfare Systems Command to address the necessary IT
    components of this strategy. They are the premier systems engineering
    command for the Department of the Navy. The automated solution will be
    available by the end of calendar year 2010, by which time full
    operational control of the automated system will be in VA's hands.
    Dramatic Increase in the Number of Educational Beneficiaries
        As a result of the Post-9/11 Veterans Educational Assistance Act,
    we expect the number of education claims to rise dramatically. We
    anticipate in excess of 2 million education claims in 2010, a total 8
    percent higher than the number we projected for 2009 and 25 percent
    above the 2008 total. Despite this significant growth in workload, the
    resources provided in the President's 2010 budget will allow us to
    maintain our program performance for two key measures. The timeliness
    of processing original education claims will be at least as good as the
    level (24 days) we estimated for 2009, while the average time it takes
    to process supplemental claims will be no higher than the estimated
    level (10 days) for 2009.
        Of import, this program will invest in knowledge and education for
    our latest generation of Veterans.
              providing additional economic stability to veterans
    Providing Greater Benefits to Veterans Who Are Medically Retired from
            Service
        In addition, the President's 2010 budget provides for the first
    time concurrent receipt of disability benefits from VA in addition to
    DOD retirement benefits for disabled Veterans who are medically retired
    from service. Presently, only Veterans with at least 20 years of
    service, who have service-connected disabilities rated 50 percent or
    higher by VA, are eligible for concurrent receipt. Receipt of both VA
    and DOD benefits, for all who were medically retired from service, will
    be phased in starting in 2010. The estimated VA costs in 2010 are $47
    million.
    Improving Compensation and Pensions
        A major challenge in improving the delivery of compensation and
    pension benefits is the steady and sizeable increase in workload. The
    volume of claims receipts is projected to reach 972,000 in 2010--a 5
    percent rise from the 2009 level and a 23 percent increase since 2005.
        The number of Active Duty service members as well as Reservists and
    National Guard members who have been called to active duty to support
    Operations Enduring Freedom and Iraqi Freedom is one of the key drivers
    of new claims activity. This has contributed to an increase in the
    number of new claims, and we expect this pattern to persist, at least
    for the near term. An additional reason that the number of compensation
    and pension claims is climbing is the Department's commitment to
    increased outreach. We have an obligation to extend our reach as far as
    possible and to spread the word to Veterans about the benefits and
    services VA stands ready to provide.
        Disability compensation claims from Veterans who have previously
    filed a claim comprise about 55 percent of the disability claims
    received by the Department last year. Many Veterans now receiving
    compensation suffer from chronic and progressive conditions, such as
    diabetes, mental illness, cardiovascular disease, orthopedic problems,
    and hearing loss. As these Veterans age and their conditions worsen, VA
    experiences additional claims for increased benefits.
    Increasing Number of Beneficiaries Receiving Compensation
        The growing complexity of the claims being filed also contributes
    to our workload challenges. For example, the number of original
    compensation cases with eight or more disabilities claimed increased
    from 43,700 in 2005 to 61,600 in 2008. Nearly 27 percent of all
    original compensation claims received last year contained eight or more
    disability issues. In addition, we expect to continue to receive a
    growing number of complex disability claims resulting from PTSD, TBI,
    environmental and infectious risks, complex combat-related injuries,
    and complications resulting from diabetes. Claims now take more time
    and more resources to adjudicate. Additionally, as VA receives and
    adjudicates more claims, a larger number of appeals are filed from
    Veterans and survivors, which also increases workload in other parts of
    the Department, including the Board of Veterans' Appeals and the Office
    of the General Counsel.
    Addressing Innovative Ways to Decrease Waiting Time for Benefits
        VA will address its ever-growing workload challenges in several
    ways. For example, we will enhance our use of IT tools to improve
    claims processing. In particular, our claims processors will have
    greater online access to DOD medical information as more categories of
    DOD's electronic records are made available through the Compensation
    and Pension Records Interchange project. We will also strengthen our
    investment in a paperless claims processing infrastructure, to reduce
    our reliance upon paper-based claims folders and enable accessing and
    transferring electronic images and data through a Web-based
    application. This infrastructure will also dramatically increase the
    security and privacy of Veteran data. The existing Virtual VA
    repository will be sustained until the more robust enterprise paperless
    infrastructure is developed and deployed. The Department will continue
    to move work among regional offices in order to maximize our resources
    and enhance our performance. Also, the Department will demonstrate
    improved timeliness and quality of service resulting from the recent
    expansion of the Benefits Delivery at Discharge program at all regional
    offices, demobilization sites, military installations, and VA health
    care facilities.
        As a result of staffing increases, more efficient claims processes,
    and enhanced use of IT tools, we expect to lower the average number of
    days to complete rating-related compensation and pension claims to 150
    days in 2010. This represents a 29-day improvement (or 16 percent) in
    processing timeliness from 2008 and an 18-day (or 11 percent) reduction
    in the estimated amount of time required to process claims this year.
        In addition, we anticipate that our pending inventory of disability
    claims will fall to about 302,000 by the end of 2010, a reduction of
    more than 78,000 (or 21 percent) from the pending count at the close of
    2008. At the same time we are improving timeliness, we will also
    increase the accuracy of the compensation rating decisions we make,
    from 86 percent in 2008 to 90 percent in 2010.
        As we press to build momentum on our forward leaning initiatives,
    it is with the sense that, every day we stand still, we face
    irrelevancy. The future moves at the pace of the micro-chip processor,
    and we must invest in technology to remain relevant. This budget
    provides a serious down-payment on leveraging technology to transform
    VA into a 21st Century Organization.
        processing benefits claims in a paperless environment and other
                            critical it investments
        Leveraging information technology (IT) is crucial to achieving the
    President's vision for transforming VA into a 21st Century organization
    that meets Veterans' needs. Key concepts of the transformation include
    creating an electronically based benefits system to speed processing
    and address the backlog; integrating service member information from
    DOD with all VA information about a Veteran to create a seamless
    transition from warrior to Veteran; using Customer Relationship
    Management (CRM) techniques to work proactively with Veterans and
    provide them with a view of all of their VA benefits; ensuring
    continued innovation of the award winning Computerized Patient Record
    System and VISTA medical records systems; and creating ``anywhere,
    anytime'' access to VA by developing multiple access channels for
    information and transactions.
        IT is an integral component of VA's health care and benefits
    delivery systems.
        VA depends on a reliable and accessible IT infrastructure, a high-
    performing IT workforce, and modernized information systems that are
    flexible enough to meet both existing and emerging service delivery
    requirements. Only in this way can we ensure system-wide information
    security and the privacy of our clients.
    Meeting Vital IT Needs
        The President's 2010 budget for VA provides more than $3.3 billion
    to meet these vital IT requirements. This is $559 million (or 20
    percent) above the 2009 resource level (which excludes $50 million made
    available through the American Recovery and Reinvestment Act). Almost
    all of the Recovery Act funds will be used to develop IT solutions
    associated with the implementation of the Post-9/11 Veterans
    Educational Assistance Act.
        The 2010 budget provides $144 million to continue moving toward the
    President's goal of reforming the benefits claims process to make VA's
    claims decisions timely, accurate, and consistent through use of
    automated systems. VA's paperless processing initiative expands on
    current paperless claims processing already in place for some of our
    benefits programs. It will strengthen service to Veterans by providing
    them the capability to apply for and manage their benefits on-line. It
    will also reduce the movement of paper files and further secure
    Veterans' personal information. The initial features of the paperless
    processing initiative will be tested in 2010, and by 2012, we expect to
    implement an electronically based benefits delivery system.
    Funding for New Technology
        The Department is requesting $86 million for the Financial and
    Logistics Integrated Technology Enterprise (FLITE) system. This is an
    increase of $38 million (or 78 percent) from the 2009 resource level.
    FLITE is being developed to address a long-standing internal control
    material weakness and will replace an outdated, non-compliant core
    accounting system that is no longer supported by industry.
        We recently completed an in-depth analysis of our patient
    scheduling program. I have directed a similar review of all our major
    IT programs to evaluate program performance against cost and schedule
    milestones. Changes in how we manage IT projects include use of
    standard templates to ensure completeness and consistency of
    development and testing processes, initiation of an IT competency
    assessment, and formation of integrated project teams, such as the
    Post-9/11 GI Bill team to ensure close collaboration between IT and
    education program experts.
        In total, within VA's total IT request for 2010, nearly $2.4
    billion (or 72 percent) will be for IT investment (non-payroll) costs,
    while the remaining $939 million (or 28 percent) will provide for
    payroll and administrative requirements.
    Benefits Spending Summary
        In summary, the Department's 2010 resource request for General
    Operating Expenses (GOE) is just over $2.2 billion. Within this total
    GOE funding request, more than $1.8 billion is for the management of
    the following non-medical benefits administered by the Veterans
    Benefits Administration (VBA)--disability compensation; pensions;
    education; vocational rehabilitation and employment; home loan
    guaranty; and insurance. Our request for GOE funding also includes $394
    million to support General Administration activities.
        Funding for VBA in 2010 will be $364 million (or 25 percent) higher
    than the 2009 resource level (which excludes $157 million from the
    American Recovery and Reinvestment Act). Almost all of the resources
    provided to VBA through the Recovery Act will be used to hire 1,500
    additional staff to support the processing of compensation and pension
    claims; 500 of these will be permanent employees who will replace staff
    losses through attrition while the other 1,000 will be temporary
    employees hired under term appointments. The temporary employees will
    conduct follow-up actions to expedite claims development and perform
    other administrative activities to free up claims decision-makers to
    handle more complex claims processing tasks.
      service to the last breath and beyond--funding the memorials to our
                                     heroes
        The President has charged me with caring for our Veterans until
    they take their last breath. The VA's commitment, however extends
    beyond the last solemn ceremony and last note of Taps. We are committed
    to continuing the memories of our heroes with the dignity and respect
    they deserve. The Recovery Act funds available to the National Cemetery
    Administration (NCA) will be used for national shrine projects, energy
    projects, monument/memorial repairs and other non-recurring maintenance
    activities, and equipment purchases.
    Increasing Memorial Services
        The resources requested for 2010 will allow us to meet the growing
    workload at existing cemeteries by increasing funding for contract
    maintenance, supplies, and equipment, continuing the activation of new
    national cemeteries, and maintaining our cemeteries as national
    shrines. VA expects to perform 111,500 interments in 2010, or 4 percent
    above the estimate for this year. The number of developed acres (8,015)
    that must be maintained in 2010 is 3 percent greater than the 2009
    estimate.
    Improving Memorial Services
        Our budget request includes an additional $1.6 million to continue
    daily operations and to begin interment activities at the last three of
    the six new national cemeteries established by the National Cemetery
    Expansion Act of 2003. Burial operations at Bakersfield National
    Cemetery in California, Alabama National Cemetery in the Birmingham
    area, and Washington Crossing National Cemetery in southeastern
    Pennsylvania are expected to begin by the end of calendar year 2009.
    Expanding Memorial Services and Access for Veterans
        The President's resource request for VA provides $38 million in
    cemetery operations and maintenance funding to address gravesite
    renovations as well as headstone and marker realignment. When combined
    with another $26 million in minor construction, $2 million in non-
    recurring maintenance, and $1 million for monument and memorial
    preservation, VA is requesting a total of $67 million in 2010 to
    improve the appearance of our national cemeteries which will help us
    maintain cemeteries as shrines dedicated to preserving our nation's
    history and honoring Veterans' service and sacrifice.
        With the resources requested to support NCA activities, we will
    expand access to our burial program by increasing the share of Veterans
    served by a burial option within 75 miles of their residence to 90
    percent in 2010. This is 3.1 percentage points above our expected
    performance level for 2009.
        In addition, we will maintain the level of service to our clients
    that resulted in VA's national cemetery system receiving the highest
    rating in customer satisfaction for any Federal agency or private
    sector corporation ever surveyed as part of the American Customer
    Satisfaction Index (95 out of a possible 100 points). We expect that 98
    percent of our survey respondents in 2010 will rate the quality of
    service provided by national cemeteries as excellent and 99 percent of
    survey respondents will rate the appearance of national cemeteries as
    excellent. These performance levels will reinforce that the
    Department's cemetery system is a model of excellence in providing
    timely, accessible, and high-quality service to Veterans and their
    families.
    Memorial Spending Summary
        The President's 2010 budget request for VA includes $242 million in
    operations and maintenance funding for the NCA. This is $12 million (or
    5 percent) above the 2009 resource level (which excludes $50 million
    provided through the American Recovery and Reinvestment Act).
                                    summary
        At the end of the day, none of these reforms can be implemented by
    money alone without investments in our own internal growth and
    development. As a people-centric organization, investments in training
    recruiting, and educating the best workforce for our Veterans will take
    a priority in my tenure as the Secretary of the Department of Veterans
    Affairs. If we make those investments, and commit to true
    organizational change, we will succeed, if we do not, we will fall
    short of major transform.
                                    closing
        Veterans are VA's sole reason for existence and my number one
    priority. In today's challenging fiscal and economic environment, we
    must be diligent stewards of every dollar and apply them wisely to
    deliver timely, high-quality benefits and services to Veterans whom we
    serve. While we recognize the growth in funding that we are requesting
    in 2010 is significant, we also acknowledge the responsibility,
    accountability, and importance of showing measurable returns on that
    investment. You have my pledge that I will do everything possible to
    ensure that the funds Congress appropriates to VA will be used to
    improve both the quality of life for Veterans and the efficiency of our
    operations.
        Organizational transformation is a challenging task that requires
    changes in culture, systems, and training. This will require resources,
    but it will also demand commitment and teamwork. The entire Department
    is dedicated to serving the needs of Veterans in the 21st Century and
    every VA employee has a stake in transformation to meet those needs.
        Leadership will continually assess and re-assess the necessary
    funding resources for transformation. It should be expected that these
    bold new initiatives will result in adjustments to the budget request
    within the 2010 topline during the next several months. The results of
    this ongoing management decision-making process--in partnership with
    the Congress--will be a budget that starts the VA down a path toward
    becoming a model for 21st Century governance.
        I am confident that Congress and VA can work together to achieve a
    common goal on Veterans.

        Senator Johnson. Mr. Secretary, as you know, we are likely
    to provide advance appropriations for fiscal year 2011 medical
    care. We will need to know very quickly what the VA's estimates
    for 2011 are if we are to include them in this year's bill.
    When do you expect to be able to give this committee an fiscal
    year 2011 estimate for the medical care accounts?
        Secretary Shinseki. Mr. Chairman, I am, in fact, in
    meetings with OMB as I was preparing to come over here to do
    just that. I hope to have some numbers this week that I would
    like to share with you as soon as those negotiations are
    complete.
        Senator Johnson. Mr. Secretary, I was pleased to see that
    the VA has requested $250 million in the fiscal year 2010
    budget to continue the Rural Health Initiative that was started
    in 2009. How do you plan to use the funding requested in the
    fiscal year 2010 budget?
        Secretary Shinseki. Well, Mr. Chairman, actually as it
    turns out, the $250 million that was provided to us in 2009
    about $90 million of that will actually be executed, and so
    there will be a carryover of about $190 million. So in 2010 we
    are looking at a $440 million set of funds to disperse. We will
    be looking at mobile rural health clinics, and four pilot
    sites, outreach clinics, three regional rural health resource
    centers, and a host of other initiatives pilot as well as
    programs put into place that I'd be very happy to provide you
    some more detail on for the record.
        Senator Johnson. What process do you have to evaluate the
    success of projects funded under this initiative?
        Dr. Cross. Sir, for our projects we have built in an
    evaluation component to make sure that from the very beginning
    we collect data to ensure that over time we can tell if the
    project is successful.
        We're doing some very innovative work in this rural health
    initiative. Some of them may not turn out to be successful. We
    want to know that, and we want to discontinue those and focus
    on the ones that are. So we decided to build that into the
    program from the very beginning, capture the data, monitor it
    closely, and then make some decisions over time as to what
    really works best.
        Senator Johnson. Secretary Shinseki, the VA has requested
    an increase of more than a half billion dollars for IT. How
    much of this increase is for staffing and administrative
    expenses, and how much is for system development?
        Secretary Shinseki. Mr. Chairman, I'm going to let Mr.
    Baker pick up on that initially, and I'll play clean up to him.
        Mr. Baker. Thank you, sir.
        There are substantial staffing increases in that increase,
    primarily in the field working in the hospitals and the
    regional offices providing customer support to the
    administrations and their efforts to work with the veterans.
    There's $182 million according to my sheet here for staffing
    increases. Again, primarily in the field as well as increases
    for key items like interoperability with the Department of
    Defense from an information standpoint, the FLITE Financial
    System so that we have good strong financial management, and
    increases in medical IT and benefits IT, both to support staff
    increases in those areas, and to support improvements in the
    process of speed of response, network speed, those sort of
    things. Again, most of the increases aimed at supporting the
    folks in the field doing the real work, working with the
    veterans.
        Senator Johnson. This past year the VA has had to put the
    replacement of the scheduling system on hold due to failures in
    the development process. This is very disappointing to say the
    least. What are your plans to improve the way IT systems are
    developed to ensure that we don't repeat this failure, and how
    do you plan to improve oversight of development projects?
        Secretary Shinseki. Mr. Chairman, I don't think there's
    anybody more disappointed in the fact that we had to put in
    place a strategic pause with the scheduling replacement project
    than I was. We have put in place a set of procedures that are
    going to govern us going forward, everything from oversight
    boards to how we set projects up for success. I'll let Mr.
    Baker, Assistant Secretary Baker talk about the details of
    that, but what I've asked that we do is to go through and look
    at every program that we have in our IT projects, and subject
    them all to the same level of scrutiny that we've just gone
    through with scheduling, and out of which we have gotten
    significant learning on how to do this better.
        Mr. Baker. Thank you, sir.
        We are looking at a substantial change in the way that we
    manage information technology programs at Veterans Affairs, and
    plan on briefing your staff on the details of this in the
    coming week.
        We've reviewed approximately 282 ongoing development
    programs at the department, and that initial review was on
    analyzing certain aspects such as were they on schedule, were
    they on budget, did they have sufficient staff to complete the
    project successfully. Although it's preliminary, the results of
    that review is fairly clear that we need a substantial change.
    And as I said, we will bring that forward next week, but we
    have to make certain that we implement for our programs clear
    decision criteria, better control of the programs, decreased
    infusion of new requirements in the middle of the program,
    clear participation of the internal customer that will be
    receiving the new system, and the success of the program, clear
    attention from the vendor that's working on this and their
    participation and success, and most fundamentally important we
    need to increase the probability of success for these programs.
    We do not have a good track record now as Secretary Shinseki
    said. It is one of the first things that I felt I needed to
    focus on, and it will be one of the first things that we bring
    forward to tell you about how we're going to fix that problem.
        Senator Johnson. Time is running out but I want to raise
    the issues of problems in the coordination between the VA and
    the Indian Health Service. Mr. Secretary as you get settled in
    at the VA, I want to work with you to see how coordination can
    be improved.
        Senator Hutchison.
        Senator Hutchison. Thank you, Mr. Chairman. Mr. Chairman, I
    would just say to the Secretary and the Assistant Secretary
    that I too am very concerned about the IT situation, so I would
    like to ask that we have a report back to the committee on what
    you are doing, both in the management governance structure,
    which was mentioned in the Inspector General's report, and also
    the project management plan for the implementation of the
    subprojects, just the whole thing obviously needs to be pretty
    much turned upside down I think. So I'm hoping that you would
    report back to us specifically on that. I know you're aware of
    it, so that's something we would look at.
        And then I want to say I'm very pleased that we are doing
    so much in the areas of research and mental health. I do
    believe that the Veterans Administration is giving the proper
    emphasis on mental health now, and also medical research, and I
    hope, General Shinseki that we will be able to work the
    problems out with the gulf war syndrome research so, that can
    go forward. It's mid-process, and I think it is very important
    that we continue that research.
        Secretary Shinseki. Senator, I just want to assure you we
    are in dialogue. It's my interest that this goes forward, and
    we have some technical contract details here to work out, and I
    think with cooperation on both sides we can get there.
        I just want to reinforce for you that we have
    significantly, we've invested in mental illness, mental health
    issues with dollars this year and 2010, and I'm comfortable
    we're doing more and better in terms of TBI and the
    relationship with poly-trauma, other aspects of the mental
    health portfolio.
        Senator Hutchison. I'm very pleased about the investment
    that you're going to make in the fifth poly-trauma center in
    our country that will be in the veteran's facility that's
    already a great one, but I think this will add so much in San
    Antonio.
        I wanted to ask you about another issue, and that is the
    transfers from the medical services account. Since fiscal year
    2005, Congress has provided more than $12 billion above the
    Department's request, much of which has gone into our medical
    services accounts. However, during the last 3 fiscal years the
    Department has requested significant transfers out of that
    account into other accounts that the VA has chosen. In fiscal
    year 2008 it was $1 billion out of medical services. In fiscal
    year 2009, the Department submitted $260 million request less
    than 2 months into the fiscal year. And I guess my concern is
    that this sort of undermines the appropriations process where
    we want to know that the money we're putting in is being used,
    and this year the Department is requesting $3.7 billion more in
    medical services. So my question would be are you satisfied
    that $3.7 billion increase is needed for medical services and
    will be used for medical services, and can you tell the
    committee that we will not be seeing transfers out of that
    account into other accounts outside of our process?
        Secretary Shinseki. The amount of money going into medical
    services is needed, Senator. I would like to assure the
    committee that I will do everything possible not to have to
    come up with another request for funds transfer. I think in 5
    months I've been able to get to the bottom of most of the
    issues that I needed to be educated on. This one regarding
    funds transfers out of medical services into the IT account has
    a history that goes back probably a couple of years ago when we
    centralized IT and we took all these assets from various
    places. We didn't clean up the accounts and ensure that funding
    was aligned with it. I'm comfortable that we have done a better
    job this year, and I do not intend to request funds transfer
    again this year, but I still have some things to discover.
        Senator Hutchison. Thank you, Mr. Secretary. One more
    question, and that is I had written you this year after meeting
    a veteran in a wheelchair in Houston, Texas and he had been
    able to acquire a service dog through private donations, and I
    wrote you a letter and said that this is an authorization that
    you have for veterans, especially veterans in spinal cord
    injuries, not blindness related but spinal cord injury related.
    And the service dogs apparently are very helpful in maneuvering
    these people and helping them. My question--you had written me
    back, and you had said that you would look into it, and I just
    wondered if there was any report about the capability of
    providing service dogs for this particular type of injury.
        Dr. Cross. Yes, ma'am. At the direction of the Secretary we
    have looked at this closely. We're moving forward. The key
    thing that we're doing at this time is developing a directive
    that describes what the requirements would be, what the scope
    of the program would be. We're even putting information in when
    we do this, and when we put the directive out we'll put out
    information on our website relative to this as well as to guide
    dogs, which, of course, we've been using for decades very
    successfully. And so there is work underway on this. It's
    moving forward through the staffing and evaluation process
    right now, but progress is being made in that regard.
        Senator Hutchison. Okay.
        Secretary Shinseki. Senator, I owe you a response that
    describes the program, and I will do that.
        Senator Hutchison. Okay.
        Secretary Shinseki. We've just begun the preliminaries to
    see what a requirement is, what it takes to train a dog to that
    standard, and how do we ensure that the patient to whom we've
    assigned the dog is capable of caring for the dog as well as
    being cared for by the dog, so we have some details to work
    out. I think there's good experience here. We ought to be able
    to put a program together.
        Senator Hutchison. Okay. I understand that would be
    certainly something that would have to be flushed out because
    it's a new type of help, but I appreciate your looking into it,
    and we'll look forward to hearing more from you. Thank you very
    much.
        Thank you, Mr. Chairman.
        Senator Johnson. Senator Nelson.
        Senator Nelson. Thank you, Mr. Chairman, and thank you Mr.
    Secretary for being here today, and for the courtesy of our
    visit earlier this year. Congratulations. Thanks to all of your
    colleagues who are here as well.
        As we've discussed, I've worked with past Secretaries to
    highlight the deterioration and infrastructure deficiencies
    that the current Omaha VA Medical Center, and while you and
    your staff have been very helpful to us year after year in the
    past, VA personnel have told me that Omaha didn't meet a
    certain priority in one area, and then told me the next year
    that it didn't meet criteria in another area, and so I was
    frustrated to see this year that 11 facilities freshly appeared
    as higher priorities than Omaha in the President's budget. And
    one reason is that Midwest facilities do not have access to 32
    out of the 100 possible points used for scoring VA construction
    projects because they don't have special emphasis or seismic
    risk. We do have earthquakes in Nebraska. Just recently we had
    one in the northern part, but here we are in a race to the goal
    line, but we seem stopped at the 32 yard line. And so Secretary
    Peek last year commissioned a study of the Omaha VA's
    deficiencies, and apparently the review was completed but the
    report as you mentioned is not available to you as of right
    now. Can you tell me what consideration will be given to that
    report, and how the findings might be used to correct any
    problems?
        Secretary Shinseki. Senator, I understand that the report
    has just arrived in the VA. I haven't had a chance to look at
    it. I've got people vetting it.
        Senator Nelson. Uh-huh.
        Secretary Shinseki. I understand that there is a series of
    criteria for scoring and that results in a standing of various
    projects. I have an appreciation for why those criteria. I
    mentioned that the seismic criteria is there because in our
    case several years ago a catastrophic failure of one of our
    hospitals left a number of people killed and injured, so it has
    been introduced since 2000 or shortly thereafter. What I can't
    explain today is why it carries the weighting it does in
    relation to others. I'd like to do that. I'd like to get in
    there and study it for myself, understand it and I'd like get
    your insights and share with you what I've learned as we look
    at the project list.
        Senator Nelson. I appreciate that, and I'll be looking
    forward to getting together.
        Maybe you can help me with this. Have the Department
    personnel decided that last year's rankings were inaccurate, or
    should we see the budgets, the President's budget and
    understand that the VA facility needs have changed dramatically
    from last year? You may not be able to answer that either until
    you've had the report, but to see 10 or more facilities jump
    ahead on the basis of last year's report is cause for some
    concern. It seems like either the playing field is not quite
    level with the criteria, or that it's certainly tilted a
    different way. So I'm anxious to get your response on that.
        Secretary Shinseki. I'll be happy to respond.
        Senator Nelson. And I really am frustrated in that
    prioritization model that seismic risks rank higher than the
    entirety of the facility's actual condition, and whether it's a
    specialized center of excellence, which is again located in
    population centers, is worth nearly double the condition of the
    facility. So I hope that as you review the report you will also
    perhaps deal with the question of who really should develop the
    criteria, and with the question of whether Congress needs to
    have some responsibility here for approving at least reviewing
    and/or approving the criteria because it does seem to raise
    serious questions of fairness and consistency. If you can't
    know what the criteria are going to be next year because it
    changed since last year, I don't know how you can plan ahead
    with your facility. So I look forward to working with you. I
    know that you will do an excellent job of reviewing the report
    and we'll have that chance to sit down and go through that.
        Secretary Shinseki. Thank you, Senator.
        Senator Nelson. Thank you, Mr. Chairman.
        Senator Johnson. Senator Murkowski.
        Senator Murkowski. Thank you, Mr. Chairman.
        Mr. Secretary, I want to thank you for the time that you
    spent with me in my office several weeks ago. I appreciated the
    conversation, and just the very good discussion that we had. I
    also am pleased to report, I don't know if you are aware but
    the vacant decision review officer position that we had talked
    about has now been filed, so we greatly appreciate that, and
    we're looking forward to moving with that.
        During the visit that we had in late May, we spent a fair
    amount of time talking about the challenges that Alaska
    veterans who live off the road system, who live in the bush in
    the very rural areas, the challenges that they have in
    accessing their VA healthcare benefits, and we talked about
    those who are diagnosed with PTSD really having to dip into
    their own pockets $1,000 for an airplane ticket to get into
    town to visit a counselor and the concerns. At that time we
    discussed the scope of the problem, and I'm sure that within
    this short time period you have not, you haven't figured out
    the solutions to it, and I can appreciate that but I guess I
    just want the assurance that you recognize that we have a
    problem and a situation that is more than a bit unique up
    there, and that you and your staff are working to help us as we
    try to help those veterans.
        Secretary Shinseki. Senator, as I said earlier in my
    opening comments, and as I indicated to you in your office,
    caring for veterans is our primary mission, that's veterans
    wherever they live. I also mentioned that geography in the
    United States by definitions used in the VA have three
    categories. There are urban, rural, highly rural, and then I'm
    not sure what category we use for those areas where there are
    no roads and you can't get into them. I know that's a part of
    the geography you're dealing with.
        I've asked our VHA to start thinking about how we take care
    of veterans in those areas, and let me just ask Dr. Cross to
    provide just some insight, some of which will seek out
    partnerships with the tribal healthcare program.
        Dr. Cross. Senator, I think it's fair to say that we need
    to adapt our services to meet the environment that they're
    provided in, and to meet the needs of those veterans. I think
    certainly the Alaska environment provides unique challenges for
    us, so we have to be especially innovative. I notice that some
    of the things that we're doing in our rural health initiatives,
    and some of the things that we were doing anyway I think will
    be of some benefit in this direction. Specifically in regard to
    the kind of things what we now call outreach clinics, very
    small clinics that we can adapt to small, more rural
    environments as I believe that we're putting in Juneau, and I
    think we're working on one for Homer as well. Also, the new C
    Block in--correct me on my pronunciation, Mat-Su?
        Senator Murkowski. Yes.
        Dr. Cross. Mostly we have to look at other things, and that
    means where the individual can receive the service, perhaps
    without traveling at all. And that's where I think the total
    health initiatives come in to play very much because without
    regard to weather, without regard to location, we can make
    those work in more environments even where there are no roads
    perhaps. Also, just getting the kind of service so the
    individual does not have to come see us, so our mechanism to
    provide medication by mail or through other delivery mechanisms
    so they don't have to actually come and visit the pharmacy I
    think is uniquely beneficial in that environment. I think we
    have much to learn and much to be innovative, much innovation
    to bring forward in regard to our veterans in Alaska, and I
    look toward to working on that.
        Senator Murkowski. I appreciate that, not only your
    comments but, Mr. Secretary, your acknowledgment that perhaps
    we need to look at Alaska as a unique and different situation,
    a different set of facts, and we need to be a little more
    creative, a little more nimble in how we approach, how we
    deliver these benefits because our veterans should not be
    denied benefits just because of where they chose to live. We
    want to work with you on that. I would extend the offer again
    to come up to Alaska and see for yourselves. We have been doing
    some great things within the IHS system, and we'd like to see
    how we can integrate that within the VA.
        You mention some of the opportunities for pilots. When we
    spoke, Mr. Secretary, we talked about the rural healthcare
    pilot, which was supposed to roll out on the first of June, it
    hasn't rolled out yet. I understand it's going to be coming out
    on the 11th, but I had written to you expressed some concerns
    about some of the things that we didn't see in that. There was
    a lack of involvement with the provider community, exclusion of
    southeast Alaska, and exclusion of behavioral health from the
    pilot. I know that is something that you are looking at to
    address those concerns. I don't know if you have any update at
    this point in time, but when we look to the pilots I think it
    is important that we're making sure that this is not just
    something that somebody has thought of back in their office,
    whether it's in Anchorage or Seattle, or back here in
    Washington, but they're actually working within those local
    communities, within those regions to make them work. If you
    care to comment on that I'd appreciate it, but again I extend
    that offer to come north and work with us up there as well.
        Secretary Shinseki. I'm happy to visit in the summertime,
    Senator.
        Senator Murkowski. He has already said he has no interest
    to come up in the winter, I don't understand.
        Secretary Shinseki. But before then we'll be sure to get to
    these issues.
        Senator Murkowski. Thank you. I appreciate it.
        Thank you, Mr. Chairman.
        Senator Johnson. Senator Reed.
        Senator Reed. Thank you very much, Mr. Chairman. Thank you,
    Mr. Secretary and ladies and gentlemen, and thank you Mr.
    Secretary for your visit to the Providence VA. It was a
    wonderful trip, and it shows your commitment to our veterans,
    and your constant effort to get out and walk the front lines,
    so I thank you for that. That's something that you've done for
    a long, long time, sir.
        Let me focus just a moment on veterans homelessness. I'll
    say parenthetically I had the occasion to have supper along
    with colleagues, along with Admiral Mullen the chairman, and we
    spent a long, long time talking about this because as someone
    who is responsible for these young men and women in uniform, he
    feels a continuing responsibility to the veterans who have
    fought and served, and too many are on the streets. In the
    fiscal year 2009 funding bill, there was an inclusion of $10
    million for a demonstration program under HUD to prevent
    homelessness among veterans, and HUD was directed to be the
    leader on the project, but to coordinate with the Veterans
    Administration and Labor Department. I simply want to hear from
    you or your colleagues whether this coordination is ongoing,
    what might be the status of the project.
        Secretary Shinseki. Senator, it's ongoing. In fact, the
    number of vouchers have been doubled with Secretary Donovan's
    assistance out of HUD, so that program continues. He and I have
    sat on a committee, coalition that deals with homelessness.
    This is something that he and I are both working in conjunction
    with other department heads. We've described homelessness as
    sort of the last step in opportunities to solve some problems,
    and so we do have this one and we are linking it to other
    actions that have to do with healthcare, substance abuse,
    mental health, jobs, education, all the things that could
    interrupt the cycle.
        Senator Reed. As always, sir, you've anticipated my next
    question which is in the fiscal year 2010 budget the President
    has requested $26 million for the VA to work in partnership
    with HUD, Labor, Education, HHS, Small Business and nonprofits
    to reduce homelessness. You will be in charge of that for the
    Veterans Administration, is that the way the concept is?
        Secretary Shinseki. That's my contribution to the work
    effort, and I know that other departments have money set aside
    to work.
        Senator Reed. In terms of the structure, you know, the
    chairman of the board if you will, will that be you, Mr.
    Secretary?
        Secretary Shinseki. It's about to change. I am the current
    chair, and it's about to turn over to Secretary Donovan, and so
    between the two of us we will continue working on the
    committee.
        Senator Reed. You will be, I presume given the nature of
    the agency, trying to leverage both VA programs, and HUD
    programs, and other programs--that's the whole essence of it.
        Secretary Shinseki. Right.
        Senator Reed. Let me do this, let me invite you to, and
    your colleagues to give us any ideas you believe that are
    necessary to further reduce the problem of veterans
    homelessness. Again, we could stand here and make long
    speeches, we all could, about what a remarkable shame it is to
    have men and women who serve with distinction now not finding a
    place. In fact, Admiral Mullen was talking about young veterans
    of Iraq and Afghanistan in their 20's in California who are
    essentially homeless.
        Secretary Shinseki. Right.
        Senator Reed. So this is something we've got to do, and I
    want to work with you and I'm sure all my colleagues do and the
    chairman to address this issue.
        Secretary Shinseki. Senator, I would tell you that about 6
    years ago the number of homeless veterans on the streets was
    about 195,000; 200,000. Today it's 131,000 and a year after,
    they've been taken off the street, put through our program of
    18 months to two years, and then a year after they graduate
    with pretty good results on being employed, and living
    independently. 131,000--I just spoke to a gathering of the
    coalition here a couple weeks ago, and I said five years at
    zero, we're moving to zero now. I'm not naive, I know there are
    no absolutes here, and I know that there will be, you know,
    more homeless veterans generated in the meantime, but my sense
    is if I didn't put zero as a target, we'd be somehow far off,
    further off the mark rather than giving it our best efforts.
    That hasn't been cleared by the folks who look at budgets yet,
    so I'm a little out ahead of them, but that's the intent.
        Senator Reed. I thought that was Chairman Hutchison and
    Johnson. I thought those were the ones.
        Secretary Shinseki. I just had to qualify my statement.
        Senator Reed. Very good. Thank you, Mr. Secretary.
        Senator Johnson. Senator Pryor.
        Senator Pryor. Thank you, Mr. Chairman. Thank you, Mr.
    Secretary, and thank you for making yourself available to me
    recently. Thank you for changing your schedule.
        Let me ask something that is interesting to me, and
    something you talk about as transforming the VA and changing
    the mindset there, and I think what you're talking about is
    really changing the culture in the VA. Would you give us your
    thoughts on how you plan to go about doing that?
        Secretary Shinseki. Senator, I think changing any large
    organization is pretty challenging, and I think any
    organization that has a long and proud history of contributions
    to the country like the VA has is also challenged to hear
    someone like me come in and talk about change, but I do think
    that looking at where we are, where we need to go that's an
    appropriate time that we talk about transforming ourselves.
        The President has asked us to do this for the 21st century,
    and so we are looking at new approaches and new outcomes for
    the VA, engraining new ways of thinking and acting, practicing
    new ways of working with each other, delivering services better
    than we ever have before.
        This is a work in progress. We're putting together a plan,
    but it talks about changing the climate at the VA, instilling
    in our folks the sense of advocacy for veterans. It's a slight
    change in our approach to our duties, but when you advocate for
    something, you tend to respond differently and you clearly send
    signals that are vastly different to the people, your clients
    that you're serving. So that requires a training program that
    touches all of our civil servants, talks about electronic
    health records that we've committed to upgrading, and along
    with DOD agreed that we're going to create a virtual electronic
    record that will govern youngsters from the time they serve in
    uniform until the time they arrive in our ranks as veterans, to
    the time that we lay them to final rest. A lot of good movement
    in that particular category. The President had both Secretary
    Gates and I stand up with him and announce we were going to do
    it, so we're moving in that direction.
        Centralization oversight of contracting, $13 billion to
    contract in the VA, and it's divided up in a number of
    different areas, and what lacks is synergy, discipline, and
    oversight, and so we're moving to bring that into order.
        Senator Pryor. Can I interrupt here, because I did want to
    ask that specifically.
        Secretary Shinseki. Okay.
        Senator Pryor. You envision that as being a separate office
    within VA where all the purchasing and acquisitions office, how
    is that going to be?
        Secretary Shinseki. Well, I'm looking for authorization, in
    fact, in this budget to establish a new office with an
    Assistant Secretary for Acquisition, Logistics, and
    Construction. We created an office less than a year ago,
    bringing together disparate contracting authorities. What I
    need to do is elevate this to Assistant Secretary level to
    provide the oversight that is needed to get us the efficiencies
    that we need.
        Senator Pryor. One of the concerns there, I think you're on
    the right track, and I like everything you've said, but one of
    the concerns there would be by creating a new office are you
    creating another layer of bureaucracy or another little section
    of the maze there, or are you really cutting through some of
    that and streamlining your operations?
        Secretary Shinseki. The intent is for it to be smaller than
    larger, and it's to bring together assets that are already
    significantly disbursed, and get some efficiency out of it so
    we have discipline and oversight.
        Senator Pryor. Let me ask you about an area that we get
    some complaints on sometimes in our office. As you can imagine
    like a lot of other senators, we have a person in our Little
    Rock office that that's pretty much all they do is work on VA
    cases, and try to help veterans through the system. One of the
    complaints we hear is this kind of a, I guess I'd call it a
    proof of service requirement where often times when a person
    goes in it's up to the veteran to prove that they served, but
    these records could be decades old.
        Secretary Shinseki. Sure.
        Senator Pryor. That can get very, very difficult if not
    impossible. I'm seems to me that between the VA and the DOD we
    would have all, you the Government, we would have all the
    records that we could somehow produce and verify the records if
    we needed to do that. We have those resources and not the
    veterans. Can we talk about that?
        Secretary Shinseki. It's a little bit of--I'm going to turn
    it over to Admiral Dunne here in a bit because he over watches
    our benefits administration, but it's a little bit of what I
    mentioned earlier here about advocacy. If we're advocating for
    veterans, our approach is going to be just different. Another
    aspect of this is the virtual electronic record that both DOD
    and VA have agreed on, and what that means is a youngster puts
    on a uniform, automatically is enrolled in the VA, and
    therefore this search for records at some time later is
    precluded because all those records are, in fact, in place,
    electronically shared, and available when the disability claim
    is initiated. This is a little harder than just talking about
    it, and so we are hard at work with DOD to come to those common
    protocols and let me turn to Admiral Dunne here.
        Admiral Dunne. Senator, in the meantime until we can get
    electronic records, we are first exercising what's considered
    our duty to assist, and so whenever we do get a claim from a
    veteran, we will take on the responsibility to work with DOD
    and track down those records.
        One of the things which we've accomplished recently as a
    result of our collaboration with DOD is to establish points of
    contact at each of the services so that when a regional office
    is trying to find a specific record, and often times the Guard
    and Reserve records are the most difficult ones to find, then
    we can go straight to the relevant service and identify this
    specific record that we need for a veteran, and get their
    assistance in providing it, but we will if there is any record
    or piece of evidence which a veteran needs for their claim, we
    will take on the responsibility of doing the search to find
    their records.
        Senator Pryor. Thank you. Thank you, Mr. Chairman.
        Senator Johnson. Senator Murray.
        Senator Murray. Thank you very much Chairman Johnson and
    Senator Hutchison for having this hearing today. General
    Shinseki welcome, it's good to see you as well, and to all of
    your folks who are working so hard.
        I recently came across a VA report that was called
    ``Provision of Primary Care to Women Veterans,'' which
    highlighted a number of problems preventing the highest quality
    of primary care being provided to women veterans in the VA.
    This report found that women veterans are underserved at the
    VA, that primary care delivery for women veterans at the VA is
    fragmented, that women receive lower quality care than their
    male counterparts, that there are an insufficient number of
    clinicians in the VHA with specific training and experience in
    women's health issues, and that the VA's policy for women's
    health is inconsistent.
        While the challenges that are outlined in that report are
    concerning, I do want to commend you, Mr. Secretary, and the
    members of the work group that prepared that report including
    Dr. Patricia Hayes, for really putting together a very thorough
    report on the VA's commitment to providing quality
    comprehensive healthcare for our women veterans. I wanted to
    ask you today can you tell this committee what concrete steps
    the VA is taking now that they have this report to eliminate
    those disparities?
        Secretary Shinseki. I'm going to let Dr. Cross fill in some
    of the details that go to the technical issues, but as we've
    discussed before and as I've indicated, there is a major change
    coming in our population in veterans. In the next 10 years, 15
    percent will be women, and so I am looking for the opportunity
    to put in place programs, to begin putting in place programs
    today that are going to be in place 10 years from now. We just
    need to do that.
        Senator Murray. It is the fastest growing population in the
    VA, so I appreciate that.
        Secretary Shinseki. It is, and a larger percentage of our
    women veterans coming out of OIF/OEF are, in fact, coming to us
    for care, 44 percent of that population. Whatever the
    population overall, the population today of veterans in this
    country is something around 23 million, that will adjust over
    time, but whatever that number is, whether it's 20 million or
    18 million, 15 percent is going to be a huge percentage, and we
    need to do things that, that report is outlining for us as
    corrections that need to be made, and that's part of the reason
    we asked for that report.
        Senator Murray. I'd just like to know what you're doing now
    to address those concerns.
        Dr. Cross. Senator Murray, with your permission I'll
    mention a couple of the things that we're doing, and then I'll
    be frank about a couple of the challenges that I'm concerned
    about. There's a lot going on in regard to advancing the cause
    for women's health within the VA. You certainly know about the
    women's health coordinators, the program managers that we put
    in 143 sites already, and I think I have one site to go, and
    then several more sites where we're going to put points of
    contact as well. You know that we're interested in outreach,
    and so we are concerned that some women have not yet used our
    services or come to see us, so we are making arrangements to--
    we did this with the OEF/OIF we set up a contract with someone
    to call OEF/OIF veterans and say how are you doing, can we be
    of any help to you, have you tried the VA, are you aware of our
    services. We're going to do this specifically now for women,
    specifically targeted with information, specifically targeted
    with the type of questions that we ask to engage them. We're
    supporting legislation, or we have testified on this for
    newborn care, the training, the environment of care. Patti and
    I have talked about a program to move that forward, to make
    sure that our environment of care in our primary care clinics
    especially is as well-adapted for privacy and all the needs of
    women veterans.
        Senator Murray. Are you doing one stop primary care visits
    for women veterans at all of our VA facilities?
        Dr. Cross. At each of our primary care sites we want to
    have the capability to provide most of their needs in that
    regard. I think what you're referring to is GYN exams and those
    kinds of things.
        Senator Murray. Correct.
        Dr. Cross. That's where we're going.
        Senator Murray. We're going there. Okay.
        Dr. Cross. I really dislike the idea of you get this
    service at this place, and that service at this place, even if
    it's within the same hospital, particularly if you have to come
    back for another appointment. That's not the design that I'm
    interested in. We looked at quality in regard to women's
    healthcare, and we monitor this very closely. We also compared
    with our civilian sector. There's still a gap, and even in our
    system where cost may not be an issue and we provided even such
    things as flu shots where women don't get them quite as
    frequently as we think they should.
        Senator Murray. Right.
        Dr. Cross. Having said that, we're doing better than our
    civilian colleagues on those same measures. That doesn't give
    me much comfort. I need to do better within our own system, so
    those are the kinds of things that we are pushing forward to
    make a difference in regard to women's healthcare.
        Senator Murray. Okay. Well, I want to continue to work on
    this issue. Senator Hutchison and I and other women senators
    are pushing hard on a women's health bill that we hope to get
    out----
        Senator Hutchison. Yes.
        Senator Murray [continuing]. At some point. And we will
    continue to push you on this, just so you know, and we expect
    to hear progress on a lot of the work, but I'm glad we're
    finally together and focused on it. That is a major step
    forward.
        Mr. Secretary, as you know, State veterans homes are an
    integral part of our VA's long-term care system, and according
    to the GAO they provide more than 50 percent of the VA's
    patient workload in nursing homes. Under current law the VA can
    provide up to 65 percent of the cost of constructing or
    renovating one of these State veterans homes through the
    account which includes grants for State extended care
    facilities. We included $150 million in the economic recovery
    package for the construction of additional State veterans homes
    through this program. And as you know, a number of States now
    have either withdrawn or deferred their applications for this
    Federal funding because of their large budget deficits. That
    lack of State matching funds is especially problematic in areas
    where the VA is closing down longterm care facilities, and I am
    now working on legislation to give the VA authority to provide
    grants that cover a larger proportion of these construction
    costs in certain emergency situations. For example, if a State
    is facing a massive budget shortfall, and the proposed State
    veterans home is intended to replace a closed VA operated
    facility. Do you have any thoughts about that?
        Secretary Shinseki. Not at the moment, Senator. Let me get
    into the details of what you're describing here,----
        Senator Murray. Yes.
        Secretary Shinseki [continuing]. And provide you a better
    answer for the record.
        Senator Murray. Okay. I'm very concerned about this, and I
    know it's impacting my State and a number of other States, and
    as a result we're working on this legislation. And I'd like to
    work with you and whoever you tell us so we can move that
    forward.
        Secretary Shinseki. Absolutely. I'm dealing with a
    situation like this in at least one other State and trying to
    figure out what options we have.
        Senator Murray. Okay. Good.
        Secretary Shinseki. I'll work with you on that.
        Senator Murray. Great. And I am also interested in the
    issue of veterans unemployment. I know you talked about working
    with the Department of Defense and Department of Labor to
    address that problem, so I look forward--my time is up at this
    point, but I look forward to having more conversations with you
    about that.
        Secretary Shinseki. Absolutely.
        Senator Murray. I'm very concerned about these men and
    women who are coming home and don't have a job, and where we've
    left them. So I appreciate dialogue with you about that in the
    future. And finally, Mr. Chairman, before I turn the mike back
    over, I know you're coming up to Spokane, in my home State in a
    little over a month for the VA wheelchair games that are
    occurring there. You should know that every one from the
    veterans to the community members, all the Spokane VA
    employees, to their medical center director, Sharon Hellman:
    they've all been working very, very hard to make those games a
    success, so we look forward to seeing you out in our State for
    that very important event.
        Secretary Shinseki. Thank you, Senator.

                         ADDITIONAL COMMITTEE QUESTIONS

        Senator Johnson. Senator Pryor, do you have any additional
    questions?
        Secretary Shinseki, I want to thank you and your colleagues
    for appearing before this subcommittee today. I look forward to
    working with you this year.
        For the information of members, questions for the record
    should be submitted by the close of business on June 16.
        [The following questions were not asked at the hearing, but
    were submitted to the Department for response subsequent to the
    hearing:]

                   Questions Submitted by Senator Tim Johnson

        Question. Secretary Shinseki, could you please provide me with some
    information regarding Project Hero? I am concerned about the size and
    scope of the pilot program. The program is supposed to augment care by
    the VA, not replace it. My understanding is that one of these pilots is
    currently operating in South Dakota. Can you provide me with the annual
    cost of that specific program?
        Answer. Project Healthcare Effectiveness through Resource
    Optimization (HERO) is a pilot program that augments VA care and helps
    Veterans access the local health care they need when the medical
    expertise or technology is not readily available within the Department
    of Veterans Affairs. The ultimate goal of Project HERO is to ensure
    that all health care delivered by VA, either through VA providers or
    community partners, is of comparable quality and consistency for
    Veterans. All care is still managed by VA.
        Project HERO contracts do exist in South Dakota as part of VISN
    23's involvement in the demonstration effort. The two VAMCs in South
    Dakota that are part of Project HERO are the Sioux Falls VA Medical
    Center and the VA Black Hills Health Care System in Fort Meade and Hot
    Springs. Thus far in fiscal year 2009, Sioux Falls expended $222,209
    and Black Hills expended $104,427 for the health care and associated
    services involved in the provision of that care. This represents only
    7.9 percent of the total purchased care expenditures in Sioux Falls and
    1.4 percent in Black Hills.
        Question. How much is the VA spending annually on this program?
        Answer. Project Hero contract expenditures for the four VISNs where
    the contracts are operational (VISNs 8, 16, 20, and 23).

                                                 DISBURSED DOLLAR AMOUNT
    ----------------------------------------------------------------------------------------------------------------
                                                                                      VISN Budgets
                              Timeframe                              Project HERO     (8, 16, 20 &     Project HERO
                                                                    Disbursements         23)            percent
    ----------------------------------------------------------------------------------------------------------------
    Fiscal year 2008 \1\.........................................       $7,797,071   $8,973,617,617             0.09
    Fiscal year 2009 \2\.........................................       26,370,526    9,470,719,115            0.28
    ----------------------------------------------------------------------------------------------------------------
    \1\ Project HERO Disbursements Jan-Sep 2008, VISN Budgets are obligations as of Sep 30, 2008.
    \2\ Project HERO Disbursements through May 2009, VISN Budgets (VERA allocation, reimbursements and collections)
      are as of May 31, 2009.

        Question. How does the VA, both at the local level and at
    headquarters, oversee the quality of care provided through Project
    HERO?
        Answer. The Project HERO Program Management Office (PMO) ensures
    Veterans receive VA-comparable care through a clinical quality
    management program. The Project HERO Governing Board, comprised of
    leaders from VA, Veterans Health Administration (VHA) and participating
    VISNs, oversees quality, reports on Project HERO activities, and
    approves changes in terms, quantities, or conditions of the Project
    HERO contracts.
      --The PMO tracks patient safety events, accreditation/credentialing
            status, clinical information returned to VA for continuity of
            care, and timely access to care.
      --Humana Veterans Healthcare Services (HVHS) and Delta Dental track
            and trend quality and safety events, as well as complaints and
            grievances, and provide peer review oversight.
      --The PMO surveys Project HERO patients and compares the results with
            the VA Survey of Healthcare Experiences of Patients (SHEP).
            Overall satisfaction with HVHS providers is 73 percent and
            overall satisfaction with Delta Dental services is 91 percent.
        Question. What procedures are in place to ensure that contract
    providers make proper referrals to the VA or outside the VA when
    veterans need specialty care or other referrals?
        Answer. VA providers determine when referrals are needed and
    whether or not non-VA care is appropriate. When care is referred
    outside VA, whether through Project HERO, another contract vehicle or
    through Fee care, VA remains responsible for reviewing recommendations
    for further care and determining the appropriate venue.
        Question. Where else are pilots operating--both by VISN and by
    health care system?
        Answer. Project HERO operates within four Veterans Integrated
    Service Networks (VISNs): 8, 16, 20 and 23.
        VISN 8: VA Sunshine Health Care Network.--Includes southern Georgia
    and most of Florida. It does not include Puerto Rico or the U.S. Virgin
    Islands. The stations included in this VISN are: Bay Pines, Miami, West
    Palm Beach, Gainesville/N.FL/S.GA, and Tampa/Orlando.
        VISN 16: South Central VA Health Care Network.--Includes Oklahoma,
    Arkansas, Louisiana, Mississippi and portions of the States of Texas,
    Missouri, Alabama, and Florida. The stations included in this VISN are:
    Alexandria, Gulf Coast (Biloxi), Fayetteville, Houston, GV Montgomery
    (Jackson), Central AR HCS (Little Rock), Muskogee, New Orleans,
    Oklahoma City, and Overton Brooks (Shreveport).
        VISN 20: Northwest Network.--Includes Washington State, Oregon,
    most of the State of Idaho, and one county each in Montana and
    California. It does not include Alaska. The stations included in this
    VISN are: Boise, Portland, Roseburg, Puget Sound, Spokane, Walla Walla,
    and South Oregon Rehab Center (White City).
        VISN 23: VA Midwest Health Care Network.--Includes Iowa, Minnesota,
    Nebraska, North Dakota, South Dakota, and portions of northern Kansas,
    Missouri, western Illinois, western Wisconsin, and eastern Wyoming. The
    stations included in this VISN in addition to Sioux Falls and Black
    Hills are: Fargo, Fort Meade, Minneapolis, Nebraska-Western Iowa
    (Omaha/Grand Island/Lincoln), Central Iowa, Iowa City, and St. Cloud.
                                     ______

                Questions Submitted by Senator Mary L. Landrieu

        Question. Has the Department finalized the design and cost estimate
    for the New Orleans VA Hospital? If so, could you please provide me
    that cost and what it includes? Did you eliminate aspects of the design
    to reduce cost? If so, is the design scalable to allow for later
    additions with additional funds?
        Answer. Schematic design has been completed for the New Orleans
    project, and design development is underway. The Department's Five Year
    Capital Plan submitted along with the fiscal year 2010 budget
    identifies the cost as $925 million. The total cost of the project will
    be dependent upon whether LSU can commit to a joint energy and utility
    plant feeding both hospitals. As the design progresses, VA is
    considering changes to aspects of the design to reduce cost, but
    maintain the capacity to meet the health care needs of Veterans that
    will be served by the new facility. The project is being designed to
    accommodate future expansion, and construction will be phased to allow
    it to start as soon as design is complete. Additional funding will be
    requested in a future budget to complete later phases of the project.
        Question. Will the delay with the LSU facility have an impact on
    the timeline for the VA Hospital?
        Answer. VA's design and construction timeline can proceed
    independent of the LSU facility. The cost of VA's facility, however,
    depends upon LSU committing to a joint energy and utility plant feeding
    both hospitals. If a decision on a combined plant cannot be reached by
    the time VA concludes the design development phase in December 2009, VA
    will have to move forward with building its own utility plant.
        Question. The notion of using electronic medical records and
    enhanced IT tools to serve the veterans is a good step in the right
    direction. My office has received many letters detailing how difficult
    it has been for certain veterans to file claims and receive benefits
    simply because the process is disorganized and inefficient. How long do
    you believe it will take to implement these electronic processes? And
    once implemented, how long until we see a positive turnaround on
    processing claims?
        Answer. The Veterans Benefits Administration (VBA) is currently
    working to transform its benefits delivery model to a paperless
    environment. A key benefit of this transformation is a common method
    for Veterans' self-service, which will greatly enhance access to both
    general and claim-specific information and allow Veterans to directly
    submit evidence in support of their claims.
        VBA will enhance its technical capabilities through a phased
    deployment strategy to facilitate continuous improvements in benefits
    delivery and claims processing. Coupled with technology, VBA is
    implementing a comprehensive business transformation strategy supported
    by an industry leader in business transformation and organizational
    change management. The business transformation contractor assists VBA
    in maximizing the capabilities of planned technology. VBA's goal is to
    be processing in a substantially paperless environment by the end of
    2012.
        Question. Coming from a State that is consistently under threat
    from with hurricanes and flooding, one of my primary concerns is care
    of our elderly citizens' and disabled veterans' during these natural
    disasters. When veterans are displaced due to these natural disasters,
    does the VA have solid emergency plans for their VA facilities treating
    veterans at the time of the disaster? If a veteran cannot return to his
    or her home immediately, how do you provide them instructions for how
    to receive medical care in displaced locations?
        Answer. Yes, VHA does have solid emergency plans for VA facilities
    treating Veterans at time of disasters. The Veterans Health
    Administration plans, organizes, equips, trains and exercises for
    disasters and emergencies common to their environment and in accordance
    with both The Joint Commission standards for Emergency Management and
    the National Incident Management System. VHA has developed a
    Comprehensive Emergency Management Program (CEMP) that ensures all VA
    medical centers develop, update, test and evaluate their emergency
    operations plans and programs on a continuous basis. VHA facility plans
    encompass extension facilities, such as outpatient clinics, community
    living centers, domiciliary units and home-based primary care programs.
        During a disaster, VHA medical center executives determine whether
    to shelter in place or evacuate their facility, based primarily on the
    safety of Veterans and employees. Utilizing a decision support system
    that weighs the disaster risk to the facility against the need to
    safely move Veteran patients, the VHA medical center director's
    decision is coordinated with the Veterans Integrated Service Network
    (VISN) Director and the VA Corporate Operations Center in consultation
    with the Deputy Under Secretary for Health for Operations and
    Management (DUSHOM).
        Question. As you know, there is a huge crisis in our country
    concerning homeless veterans. What sort of ideas or programs do you
    have concerning States, such as Louisiana, for when natural disasters
    strike and the homeless veterans are left behind or displaced?
        Answer. There has been a long term effort to provide services for
    Veterans and families in need of homeless services. Our latest effort,
    the Housing and Urban Development--Veterans Affairs Supported Housing
    (HUD-VASH) Program, has already shown great results in serving Veterans
    families including women Veterans and Veterans with children. A total
    of 315 Housing Choice Vouchers (section 8) HUD-VASH vouchers have been
    allocated to provide permanent housing resources for Veterans and
    families in Louisiana over the last 2 years. We know based upon our
    transitional housing program that these programs address the conditions
    you describe regarding displaced homeless Veterans. The VA's Homeless
    Providers Grant and Per Diem Program has a total of 348 (223 post
    Katrina) authorized beds at 14 locations with community non-profit
    providers in Louisiana.
        Question. Speaking about creating an environment of advocacy and
    change within the Department of Veterans Affairs is a positive idea.
    Perhaps there could be more jobs created within the Department for
    veterans to act as advisers during this process of change? Going
    further, perhaps homeless veterans could be identified and trained to
    give support to the new program and use their knowledge of veterans
    needs to teach those who are creating policy? Have you considered such
    an approach?
        Answer. The Department of Veterans Affairs is very committed to
    achieving a high ratio of Veterans among its workforce. Your suggestion
    to identify new ways of reaching out to Veterans--including homeless
    Veterans--is a welcome one that can help further the effort to employ
    Veterans. I also agree that the VA will be successful only if it
    listens to our Veterans to better understand their needs and to better
    serve them in the future.
        There are some ways in which the VA currently works with homeless
    Veterans to help them gain employment. These include the Compensated
    Work Therapy Program and Recovery Model programs. As we undergo
    development of new efforts to meet new Veteran needs in the 21st
    Century, we will explore how to enhance our effort to train Veterans to
    work at the VA. I welcome your suggestions in this ongoing effort.
        Further expanding on the idea of the importance of Veteran
    experience, I would note VA's Office of Mental Health Services has
    developed Recovery Model programs focusing on peer to peer support for
    Veterans helping Veterans. Homeless Veterans Programs and Psychosocial
    Programs have embraced the recovery model. VA has hired Veterans as
    peer support positions in recovery programs. VA has hired Veterans
    discharged from the Compensated Work Therapy Program. VA will explore
    the feasibility of having homeless and formerly homeless Veterans from
    the CWT program assist with the development of services and program
    policy.
        Question. Last year VA was directed to establish an office for
    survivors, a desk that would have staff focused on survivor issues.
    When will that office be operational?
        Answer. The Office was created on December 22, 2008 and set up
    under the Office of the Secretary. Four employees were immediately
    detailed to the Office to start working on the mission as defined by
    Congress. A Director and one permanent employee have been selected and
    the remaining personnel will be chosen soon. The Office has been
    gathering baseline data to see what VA offers for survivors and
    dependents. We've been evaluating various programs, such as comparing
    CHAMPVA to TRICARE. The law States CHAMPVA needs to offer the same or
    similar benefits as TRICARE. We've finished with our analysis and are
    evaluating recommendations for improvement in CHAMPVA.
                                     ______

                    Question Submitted by Senator Mark Pryor

        Question. The DOD and VA have taken crucial steps toward creating a
    Joint Lifetime Electronic Record (VLER), as announced by President
    Obama on April 9, 2009. (The vision for this initiative is for all
    current and future service members, Veterans, and eligible family
    members to have a VLER that will encapsulate all data necessary to
    uniquely identify them and ensure the delivery of care and benefits for
    which they are eligible).
        What do you think about VLER and where are we in the funding
    process to begin to implement its collaboration with in the Services?
        Answer. The Virtual Lifetime Electronic Record is extremely
    important to Veterans, VA and our service providers. We have moved
    quickly to assign staff to aggressively develop VA's vision, plan and
    approach for delivering a VLER capability. VLER is a critically
    important endeavor that will incorporate not only collaboration between
    VA and DOD but also include other Federal agencies and private
    industry. Current activities include development, review and acceptance
    of VA's VLER Strategic Vision by the JEC, redrafting of the Interagency
    Program Office's operating charter to mitigate issues regarding its
    functions and authority, extensive outreach to HHS, assessment of
    integration opportunities within the existing IT investment portfolio
    to ensure the effectiveness and efficiency of resourcing for VLER
    initiatives, and drafting and development of the master plan for VLER
    demonstrations that would leverage existing IT investments and
    initiatives. With respect to the specific question of funding, initial
    start-up funding will be provided to support a program office for VLER.
    Because the 2010 budget request had already been prepared prior to VLER
    start-up, 2010 funds will need to be identified within existing
    resources to proceed with VLER. Assessment of the IT investment
    portfolio is also required in order to evaluate whether or not current
    investments might be leveraged directly to support VLER.
                                     ______

              Questions Submitted by Senator Kay Bailey Hutchison

        Question. Mr. Secretary, it is everyone's goal to leverage
    information technology to have veterans seamlessly transition from the
    DOD to the VA. However, an Inspector General's audit of VA IT projects
    revealed that 40 are on OMB's Management Watch List, and 37 are on
    OMB's High Risk IT Project List. The Inspector General cited those
    projects as being poorly planned and poorly performing and singles out
    the HealtheVet Project as ``not having a comprehensive project
    management plan to guide the development and integration of sub-
    projects.'' One of these sub-projects, a scheduling application,
    recently failed during its deployment at the cost of 8 years and $167
    million. The report also States that the HealtheVet program ``lacks a
    fully implemented governance structure.'' As a result, the project
    completion date has slipped from 2012 to 2018. Mr. Secretary, the VA
    plans to invest $360 million in 2010 and $11 billion overall into a
    project that is said to be poorly planned and poorly performing. This
    project is of great importance to our veterans, and I do not want it to
    fail.
        Given the recent failure of the scheduling application and last
    month's Inspector General reports, how do you justify a 30 percent
    increase in Information Technology spending to $3.3 billion when so
    many of your projects and programs seem to lack basic IT project
    management oversight? How will you fix this management capability?
        Answer. The actual increase in information technology spending
    requested for 2010 is 20 percent and supports a number of high priority
    development projects such as Chapter 33, FLITE, and the Paperless
    Delivery of Benefits Initiative. A large part of the requested increase
    is to hire more IT staff, directly addressing cited weaknesses in IT
    project management oversight. Another significant increase is to
    maintain and strengthen our IT infrastructure.
        The VA has taken strong steps and a proactive approach towards
    addressing IT project management weaknesses. The Department has
    directed that IT projects be managed using incremental development
    methodologies. This approach requires close collaboration between
    developers and business owners to produce substantive deliverables on a
    6-month schedule to achieve near-term, incremental successes. This
    approach provides more transparency to management, ensuring potential
    risks and failures are identified and effectively addressed earlier in
    the development life cycle. All new VA IT projects must utilize
    incremental development methodology and be compliant with the VA's
    newly implemented Program Management Accountability System (PMAS),
    while existing IT projects must adopt both incremental development and
    PMAS compliance within one calendar year.
        Question. To improve the oversight role of this subcommittee, can
    you please provide us with additional details relating to all IT
    projects and programs, including HealtheVet, that will receive proposed
    funding in fiscal year 2010? Specifically, will the Department produce
    a list of defined requirements, a detailed cost schedule, and a
    timeline on a project-by-project basis.
        Answer. The Office of Information and Technology is in the process
    of collecting information relative to your questions and will provide a
    response to the Committee not later than July 31, 2009.
        [The information follows:]

        The Department of Veterans Affairs (VA is in the process of
    reworking its existing Guide and Service Dog program. As part of this
    effort, VA has already drafted new regulations that are currently
    undergoing review prior to their submission to the Federal Register.
    After an opportunity for public response to these regulations, VA will
    then review the public comments, edit the regulations as may be
    necessary, and then submit the regulations for final publishing.
        During this process, Guide and Service Dogs will continue to be
    provided to eligible Veterans whose attending physicians have
    documented an individual Veteran's identified need. Pending
    implementation of our new program and publication of the new
    regulations, VA will continue to work with accredited organizations to
    provide dogs to Veterans at no charge. VA will also continue to support
    the payment of the dogs' veterinary care and supportive hardware as
    required assistive devices.
        Subject to the number of public comments resulting from the public
    comment period, VA anticipates that the final version of the Guide and
    Service Dogs regulations will be published in the Federal Register
    prior to December 30th, 2009.
                                   background
      --VA IT Consolidation initiate in 2007
        --Primary purpose is to improve the results of VA IT investments
      --Replacement Scheduling Application Failure
        --VA commitment to review all ongoing development programs
      --New Secretary/Deputy Secretary/CIO confirmed
        --Significant Senate questioning on how to address program issues
                          analysis of ongoing programs
      --280+ programs reviewed to date
      --8 program attributes analyzed
      --Many programs exhibit signs of trouble
        --Greater than 13 months behind schedule
        --Greater than 50 percent over initial cost estimate
        --Decrease in software quality between releases
        --Inadequate skills to complete program
      --Substantial change is required
                            incremental development
      --All new VA IT projects/programs must use an incremental development
            approach
        --Frequent customer delivery milestones
          --At most every 6 months
        --Customer must test and accept functionality
      --To be approved for investment, a program or project must have:
        --An identified customer sponsor
        --Program plan that documents frequent delivery milestones
        --Documented, agreed to requirements for initial milestones
        --Clear plan for necessary program disciplines
        --Clear access to necessary program resources
        --Customer, program, and vendor acceptance of PMAS
        --Jointly established success criteria
                program management accountability system (pmas)
      --All incremental development programs will be managed rigorously to
            schedule
        --A program/project will be halted on its third missed customer
                delivery milestone
      --Once halted, substantial changes must be made before the program
            can restart
        --Need for program/project will be re-assessed
        --Program approach will be re-assessed
        --Make/buy and program design decisions will be re-assessed
        --New Program Manager will be assigned (rotational/training
                assignment)
        --A portion of the government program staff will be reassigned
                (rotational/training)
        --All service contracts will be re-visited
        --New program plan must be approved
      --Flexibility can be earned
        --Multiple successful milestones between strikes
        --Clear improvement in management between first and second strike
        --Significant advance warning of missed milestone provided to CIO
                            program manager benefits
      --Clear decision criteria
        --Impact on schedule will drive program choices
      --Better program control
        --Success factors must be in place before program start
      --Decreased requirements creep
        --Impact on schedule will force hard decisions
        --New requirements factored into later release schedules
      --Clear customer participation
        --Must test and approve each release
        --Clearly impacted by program halt
      --Clear vendor attention and participation
        --Motivated to help program meet milestones
      --Increased probability of successful program
                                  va benefits
      --Eliminate ``big bang'' program/project failures
      --Near-term visibility into troubled programs
        --Able to provide help if possible
        --Avoid long-term failures
      --Better insight into scarce resources
      --Frequent deliveries to customer ensures program/project
            functionality, quality, response, etc.
      --Increased probability of successful programs
                                 implementation
      --Incremental development is required for all new IT programs/
            projects starting as of 6/15/2009
      --All incremental development programs will be managed by PMAS
            effective 6/15/2009
      --VA will pause a number of Programs/projects identified as in
            jeopardy
        --Program plan re-cast for incremental development
        --New plan must be PMAS compliant
        --New program plan must be approved by CIO before program resumes
      --Within one year, all VA IT programs and projects will be
            incremental development/PMAS compliant
        --Programs that remain within 10 percent of original program plan
            (schedule, cost, function) may be excepted
        Question. Mr. Secretary, you have mentioned your plans to
    ``transform the VA into a 21st Century organization.'' We would like to
    work with you as you embark on such a large undertaking.
        Can you please clarify what these new initiatives are and from what
    appropriations account you intend to fund them?
        Answer. Transformation of the VA into a 21st century organization
    will take more than one year, but the fiscal year 2010 budget is the
    first real opportunity for VA and the Congress to move out on this
    important mission. Our review of the VA fundamentals is still in
    process. We have heard from stakeholders, and will continue to partner
    with them at every opportunity to improve our service to Veterans. Much
    of our review is informed by Congressional input and I greatly value
    those contributions.
        VA is focusing its transformation efforts to more efficiently and
    effectively deliver care and benefits, enhance the Veteran experience
    in all interactions with the VA, and improve awareness and access to VA
    services. Our work to date has already identified a number of
    opportunities to change VA in fundamental ways that will benefit our
    client--the Veteran--while doing things smarter and more effectively.
        As part of an ongoing review of all VA programs and spending, the
    VA leadership is developing new initiatives to be implemented in fiscal
    year 2010 that improve quality, increase access, and enhance
    performance while controlling costs. These build upon the efforts
    already in the fiscal year 2010 request and augment several major new
    initiatives already underway, including the implementation of the Post
    9/11 GI Bill, the most extensive educational assistance program
    authorized since the original GI Bill, and the extension of care to
    265,000 Priority 8 Veterans. In addition, VA and The Department of
    Defense have partnered to create a Virtual Lifetime Electronic Record
    to ensure that soldiers leaving the Armed Services are quickly and
    easily transitioned into the VA.
        We are in the process of identifying additional opportunities to
    adjust our investment portfolio for the benefit of Veterans. These new
    initiatives will not change the fiscal year 2010 budget top line.
        Question. Mr. Secretary, Congress's 2010 Budget Resolution includes
    a provision that would allow for advance appropriations for the VA's
    medical care accounts, meaning fiscal year 2011 funding could be
    provided during the 2010 appropriations cycle. I know you have publicly
    supported the idea of advance appropriations, but it was not included
    in the President's fiscal year 2010 budget request. If Congress decides
    to provide an advance appropriation, I want to be sure the Department
    can provide us with an accurate estimate so we can properly budget for
    the health care network that supports our Nation's veterans.
        Does the Department have the ability to provide the Congress with
    an accurate estimate of its fiscal year 2011 requirements during this
    year's appropriations cycle, or do you need more time to work on it?
        Answer. Yes, VA provided the request for advance appropriations for
    fiscal year 2011 to Chairman Johnson in a letter from Secretary
    Shinseki on June 12, 2009, as a result of Chairman Johnson's request
    for this information during the June 11, 2009, Appropriations Hearing.
        Advance appropriations will help support a reliable and timely
    resource stream to support the delivery of accessible and high-quality
    medical services to our Veterans. It also builds on the solid
    foundation set in the President's fiscal year 2010 budget as we take
    the early first steps to transform VA into a 21st century organization.
        VA is seeking support for a request for advance appropriations for
    fiscal year 2011 of $48.183 billion for the three medical care
    appropriations to support estimated growth to 6.1 million patients.
    This would represent an increase of 8.3 percent over the President's
    fiscal year 2010 appropriation request of $44.498 billion. The fiscal
    year 2011 total is comprised of $37.136 billion for Medical Services,
    $5.307 billion for Medical Support and Compliance, and $5.740 billion
    for Medical Facilities. In addition to the appropriated resource level
    we anticipate collections in the amount of $3.355 billion, for a total
    advance appropriations resource level of $51.538 billion.
        This estimate is based in part on the VA Enrollee Health Care
    Projection Model (VA model) using fiscal year 2008 as the base year,
    which is the most recent actual data available. The model continues to
    support the initiative of providing additional enrollment access for
    over 500,000 previously ineligible Priority Group 8 Veterans by 2013.
    Our estimate also includes resources for programs that are not
    projected by the VA model. These programs include long-term care, the
    Civilian Health and Medical Program of the Department of Veterans
    Affairs, Vet Centers, and the State home per diem program.
        The advance appropriations estimate will ensure timely funding at
    the beginning of fiscal year 2011 for VA's three medical care
    appropriations. We have made significant improvements over the past
    years in calculating and monitoring our resource needs. The Department
    and the Office of Management and Budget are in agreement on this
    request. We will continue to jointly monitor medical care cost and
    performance indicators on a monthly basis and will make any needed
    adjustments to the requested fiscal year 2011 advance appropriation
    level during the regular process of formulating the President's fiscal
    year 2011 Budget this fall. In addition, funding for new medical care
    program initiatives will be considered in the formulation of the
    President's Budget later this year. It is during this process that we
    will also identify the resources needed to support medical information
    technology and capital construction program budgets.
        Question. Do you intend to include more than ``Health Care'' in
    your estimate of the financial need for 2011.
        If yes, why not just include the ``Health Care'' needs in your
    estimate and submit the new initiatives and other accounts for the
    normal appropriations review process?
        Answer. VA included only the three medical care appropriations in
    the request we sent to Congress on June 12, 2009, for fiscal year 2011
    advance appropriations.
        Question. Does OMB plan to submit an estimate for 2011?
        Answer. VA submitted a request for fiscal year 2011 advance
    appropriations to Congress on June 12, 2009, for the three medical care
    appropriations. VA and OMB are in agreement on this request.
        Question. Mr. Secretary, the Department has a significant unfunded
    liability on its major construction projects. Currently in 2009, the
    Department has 14 ongoing projects that are partially funded, with a
    cumulative remaining need on those projects of more than $2.8 billion.
    Despite this need, the Department is proposing to start 7 new projects
    in its fiscal year 2010 request. This would increase the Department's
    unfunded liability to nearly $4.5 billion for ongoing projects.
        Does the Department have a Five-Year Capital Plan to guide its
    major construction projects that often span several fiscal years? If
    so, will the Department please provide that Five-Year Capital Plan to
    the subcommittee?
        Answer. While the Department does submit a Five Year Capital Plan
    with its Congressional Justifications each year, it is important to
    note that this plan will most likely change in the out-years based upon
    various factors including: the actual annual major construction funding
    appropriation provided; schedule changes for any current partially-
    funded projects, and the incorporation of additional new projects added
    and scored during the capital investment process in future budget
    cycles. That said, it is the Department's policy to prioritize
    partially funded projects from previous years, provided those projects
    are ready to execute within the budget year.
                                     ______

                 Questions Submitted by Senator Mitch McConnell

        Question. The proposed VA hospital in Louisville is currently
    stalled.
        In addition to the project in Louisville, what other VA hospital
    construction projects have a pending site selection process?
        Answer. Other than Louisville, VA is not in the site selection
    phase related to the construction of new or replacement hospitals at
    any other location.
        Question. How long have these other projects been awaiting site
    selection? When can we expect the VA to select a site in Louisville?
        Answer. The Department has contracted with the architectural firm
    selected to design the new facilities to conduct a feasibility study to
    further explore the potential for locating the facilities at the site
    of the existing VA medical center on Zorn Avenue. The study will also
    evaluate the location near the University of Louisville in downtown
    Louisville and consider the potential of an unidentified green field
    site elsewhere in the metropolitan area. This study is scheduled to be
    completed in October of this year. It is expected that before the end
    of the calendar year, the Department will select the preferred location
    of the facilities. At that time, environmental due diligence in
    accordance with the National Environmental Policy Act will be conducted
    which will then permit the final decision on the site to be made.
                                     ______

                 Questions Submitted by Senator Lisa Murkowski

        Question. The Alaska Legislature recently authorized Governor Palin
    to seek VA funding to establish Alaska's first State Veterans Cemetery
    which will be sited in Interior Alaska. However, I understand that VA
    funding for projects like this may not be immediately available due to
    a shortfall in Veterans Cemetery funding which places new projects on a
    waiting list. How much funding would the VA require to eliminate this
    shortfall? Based upon expected funding levels for the State Veterans
    Cemetery program how long would you have to expect that the State of
    Alaska would have to wait between the date upon which it submits its
    application for the cemetery and the date it would actually receive VA
    grant funding?
        Answer. The State of Alaska submitted a preapplication for the
    Fairbanks Veterans Cemetery on March 23, 2009, and was assigned Federal
    Application Identifier (FAI) AK-09-01. On March 27, 2009, State
    Cemetery Grants Service notified Mr. Jerry Beale, Director, Alaska
    Veterans Office that the project was viable and would be ranked with
    all other pending preapplications in the fiscal year 2010 Priority
    List. The priority list is annually developed, is approved by the
    Secretary, and is the basis for providing grant opportunities during
    the fiscal year. To be ranked in the highest group, States and tribal
    governments must submit legislation authorizing the project and the
    certification that funds for architectural and engineering fees are
    available to begin the project by the August 15 deadline. These fees
    are reimbursable to grant recipients. We have been in recent contact
    with Mr. Verdie Bowen, Administrator, Office of Veterans Affairs,
    requesting the signed legislation and funds certification. It is
    expected to be submitted by the State prior to the deadline. The
    project would be developed to serve the 10,800 veterans in the
    Fairbanks/North Star area.
        Until the August 15, 2009, deadline is reached and the fiscal year
    2010 Priority List is approved, it is not possible to estimate the
    funds needed to offer the State of Alaska a grant opportunity.
        Projects are ranked in accordance with Title 38 CFR 39.7. The
    Alaska project would be ranked in Priority Group 2 with 10,800 unserved
    Veterans. The priority groups are defined as follows:
      --Priority Group 1.--Projects needed to avoid disruption in burial
            service that would otherwise occur at existing Veterans'
            cemeteries within 4 years of the date of the preapplication.
            Such projects would include expansion projects as well as
            improvement projects (such as construction of additional or
            replacement facilities) when such improvements are required to
            continue interment operations.
      --Priority Group 2.--Projects for the establishment of new Veterans'
            cemeteries.
      --Priority Group 3.--Expansion projects at existing Veterans'
            cemeteries when a disruption in burial service due to the
            exhaustion of existing gravesites is not expected to occur
            within 4 years of the date of the preapplication.
      --Priority Group 4.--Other improvement projects to cemetery
            infrastructure such as building expansion and upgrades to roads
            and irrigation systems that are not directly related to the
            development of new gravesites.
        It is anticipated that 32 projects in priority groups 1 and 2 will
    be on the fiscal year 2010 Priority List. The value of those projects
    is $170 million. It is anticipated that not all projects in priority
    groups 1 and 2 will submit the documentation and will not rank high
    enough to receive a fiscal year 2010 grant opportunity. In fiscal year
    2009, there were 11 such projects with a value of $44 million.
                                     ______

                  Questions Submitted by Senator Thad Cochran

        Question. The Departments of Defense and Veterans Affairs are
    moving forward with jointly operated hospitals and clinics in several
    areas where existing facilities are co-located. One such facility is in
    my State of Mississippi.
        After Hurricane Katrina, Keesler Medical Center and the Biloxi VAMC
    used a ``centers of excellence'' approach to identify the best services
    at each of the two facilities and consolidate those services when
    possible and practical. Some activities are completely consolidated,
    with staffs working side-by side with one another, and other services
    have a partnership where they have the capability to ``trade'' doctors
    and nurses when required. In 2007, Keesler Medical Center and the Gulf
    Coast Veterans Health Care System in Biloxi were granted official
    joint-venture status.
        Currently, DOD and VA are working towards complete consolidation
    between the North Chicago VAMC and the Naval Great Lakes Health System
    in Chicago. They are finding many obstacles along the way regarding
    funding mechanisms, facilities ownership, personnel transfer, and
    information technology. For example, one of the biggest issues
    impacting all future joint venture sites is the lack of a common
    medical record between the Department of Defense and the Department of
    Veterans Affairs. Consequently, staff must learn both systems when
    working at a joint venture facility, which is neither time- nor cost-
    efficient.
        Joint cooperation has provided great benefit to veterans and
    service members in the Gulf Coast region. However, the Air Force
    Surgeon General expressed concerns that complete consolidation between
    Keesler and Biloxi VAMC could be a detriment to the Air Force mission.
        Question. Secretary Shinseki, can you comment on the current
    relationship between Keesler and Biloxi VAMC, and give me your thoughts
    on the impacts of complete consolidation there?
        Answer. The Keesler Air Force Medical Center (81st Medical Group)
    and the Biloxi VA Medical Center (VA Gulf Coast Veterans Health Care
    System) have maintained a supportive and collaborative relationship for
    decades. Hurricane Katrina inflicted heavy damage on both medical
    centers. Following Katrina, TRICARE Management Activity and VA
    developed a strategy to maximize sharing/joint services. In 2007,
    developing Centers of Excellence (COE) became the preferred strategy.
    Although sharing between the facilities has a long history, complete
    consolidation of Keesler/Biloxi is not the goal. The two medical
    centers are in close proximity. This offers each the flexibility to
    meet their core mission requirements while sharing services where and
    when appropriate. The COE model is clinically focused. It emphasizes
    joint communication and planning. Meetings are conducted at all levels
    to maintain the day-to-day management structure of each medical center.
        Question. Is the VA moving forward with complete consolidation at
    Keesler or any other joint venture sites?
        Answer. The current focus is consolidation where it makes sense
    rather than consolidation of all services. Both medical centers will
    retain independent management and operations. They will share oversight
    of all joint activities. Because of challenges based on differences in
    medical records, business rules and regulations, each COE will, by
    necessity, be carefully evaluated prior to the implementation of new
    sharing agreements. In June 2008, Keesler/Biloxi developed a COE
    Concept of Operations to evaluate progress towards consolidation based
    on a domain-based level of interface matrix that tracks nine domains
    that includes: clinical services, facilities, staffing, business
    processes, management/governance, information management and
    information technology, logistics, education and training, and
    research.
        Each domain is evaluated based on movement along a five-element
    continuum--(1) separated, (2) coordinated, (3) connected, (4)
    integrated and, (5) consolidated. Not all nine domains will end at the
    consolidated state depending on the circumstances and the feasibility
    of doing so. The process is measured and deliberate. Joint Incentive
    Funds (JIF) were used to develop and refine the COE concept. JIF funds
    in fiscal year 2007 provided resources for a Joint Magnetic Resonance
    Imaging (MRI) Center and a Joint Cardiovascular Care Center at Keesler.
    In fiscal year 2008 the JIF provided funding to administratively
    support the COE implementation. Pending JIFs would fund the renovations
    of space for joint use at Keesler, and establish infrastructure for
    Joint Business Operations. Joint initiatives currently include a Sleep
    Lab on the Biloxi Campus and a Joint Women's Health Clinic. Other
    sharing initiatives are in various stages of planning and development.
        Question. Has the VA considered duplicating the model at Keesler/
    Biloxi VAMC at other joint venture sites?
        Answer. An Executive Management Team at Keesler/Biloxi meets bi-
    monthly to set priorities and provide oversight on the sharing or
    realignment of services. This group quickly realized there are
    overlapping areas of responsibilities along the Gulf Coast. The team
    expanded and now includes: the Commander, 81st Medical Group, Keesler
    AFB; the Director, VA Gulf Coast Veterans Health Care System; the
    Commanding Officer, Naval Hospital Pensacola, Florida; and the
    Commander, 96th Medical Group, Eglin AFB, Florida. The Under Secretary
    of Defense (Personnel and Readiness) met with the Deputy Secretary of
    Veterans Affairs in March 2008 to discuss developing model programs for
    Joint Ventures that included the domain-based levels of interface. Four
    locations were selected: Biloxi, Mississippi; Las Vegas, Nevada;
    Denver, Colorado; and Honolulu, Hawaii. A Joint Market Opportunities
    Work Group provides assistance and assesses progress at each site using
    the domain-based levels of interface tool. They report to the VA/DOD
    Joint Executive Council.

                             CONCLUSION OF HEARINGS

        Senator Johnson. This hearing is recessed.
        [Whereupon, at 2:23 p.m., Thursday, June 11, the hearing
    were concluded, and the subcommittee was recessed, to reconvene
    subject to the call of the Chair.]

           LIST OF WITNESSES, COMMUNICATIONS, AND PREPARED STATEMENTS

                                  ----------
                                                                       Page
    Arny, Wayne, Deputy Under Secretary of Defense (Installations and
      Environment), Department of Defense:
        Prepared Statement of........................................    58
        Questions Submitted to.......................................    81
        Statement of.................................................    55

    Baker, Roger W., Assistant Secretary for Information and
      Technology, Department of Veterans Affairs.....................   107
    Boozer, Brigadier General James C., Sr., Director, Operations,
      Office of the Assistant Chief of Staff for Installation
      Management, Department of the Army, Department of Defense......     1

    Calcara, Joseph F., Deputy Assistant, Secretary of the Army
      (Installations and Housing), Department of the Army, Department
      of Defense.....................................................     1
    Carpenter, Major General Raymond W., Acting Deputy Director, Army
      National Guard, Department of the Army, Department of Defense..     1
    Cochran, Senator Thad, U.S. Senator From Mississippi, Questions
      Submitted by...................................................   141
    Collins, Senator Susan, U.S. Senator From Maine, Questions
      Submitted by...................................................80, 82
    Cross, Gerald M., MD, FAAFP, Acting Under Secretary for Health,
      Department of Veterans Affairs.................................   107

    Dunne, Patrick W., Under Secretary for Benefits, Department of
      Veterans Affairs...............................................   107

    Ferguson, Kathleen I., Deputy Assistant Secretary for
      Installations, Department of the Air Force, Department of the
      Defense:
        Prepared Statement of........................................    27
        Statement of.................................................    25

    Hale, Hon. Robert F., Under Secretary of Defense (Comptroller),
      Department of Defense:
        Prepared Statement of........................................    54
        Questions Submitted to.......................................    79
        Statements of................................................47, 51
    Hansen, Louis Jerome, Deputy Assistant, Secretary of the Army
      (Strategic Infrastructure) and Senior Official Performing
      Duties of Assistant Secretary of the Army (Installations and
      Environment), Department of the Army, Department of Defense:
        Prepared Statement of........................................     7
        Statement of.................................................     6
    Hutchison, Senator Kay Bailey, U.S. Senator From Texas:
        Prepared Statements of....................................... 4, 50
        Questions Submitted by.......................................   136
        Statements of................................................ 2, 48

    Inouye, Senator Daniel K., U.S. Senator From Hawaii, Questions
      Submitted by..................................................42, 104

    Johnson, Senator Tim, U.S. Senator From South Dakota:
        Opening Statements of....................................1, 47, 107
        Questions Submitted by.......................................   133

    Kraus, Brigadier General Julia A., Deputy Chief, U.S. Army
      Reserve, Deputy Commander for Managemen, Resources, and
      Support, Department of the Army, Department of Defense.........     1
        Statement of.................................................    17

    Landrieu, Senator Mary L., U.S. Senator From Louisiana, Questions
      Submitted by...................................................   134
    Lengyel, General Joseph, Commander, Air National Guard Readiness
      Center, Department of the Air Force, Department of Defense.....    25

    McConnell, Senator Mitch, U.S. Senator From Kentucky, Questions
      Submitted by..................................................79, 140
    Murkowski, Senator Lisa, U.S. Senator From Alaska, Questions
      Submitted by...................................................   140
    Muro, Steve L., Acting Under Secretary for Memorial Affairs,
      Department of Veterans Affairs.................................   107

    Penn, Hon. B.J., Assistant Secretary of the Navy (Installations
      and Environment), Department of the Navy, Department of Defense    85
        Prepared Statement of........................................    87
        Statement of.................................................    85
    Pryor, Senator Mark, U.S. Senator From Arkansas, Questions
      Submitted by..................................................81, 136

    Reed, Rita A., Acting Assistant Secretary for Management,
      Department of Veterans Affairs.................................   107

    Shinseki, Hon. Eric K., Secretary, Department of Veterans
      Affairs:
        Prepared Statement of........................................   108
        Statements of..............................................107, 108

    Thompson, General Howard, Deputy to the Chief of Staff, Air Force
      Reserve, Department of the Air Force, Department of Defense....    25

                                 SUBJECT INDEX

                                  ----------

                             DEPARTMENT OF DEFENSE

                                                                       Page

    Additional Committee Questions...................................    79
    Full Funding.....................................................    73
    FYDP.............................................................    73
    Guam.............................................................    77
    Inflation Policy.................................................    74

                          Department of the Air Force

    Additional Committee Questions...................................    42
    Air Force Reserve and Air National Guard Milcon Funding..........    33
    American Eagle...................................................    39
        Housing Privatization........................................    37
        Lessons Learned..............................................    39
    BRAC 2005 Closure of Kulis Air National Guard Base, Alaska.......    41
    Coal to Liquid Facility Near Eielson Air Force Base, Alaska......    40
    Develop and Care for Airmen and Their Families...................    28
    Ellsworth AFB Housing Privatization..............................    34
    Future Years Defense Program and Air Reserve Component Funding...    34
    F-22 for Hawaii ANG..............................................    42
    Global Strike Command............................................    44
    Joint Basing and BRAC 2005 Round Implementation..................    36
    Milcon in the American Recovery and Reinvestment Act of 2009.....    44
    Military Command Locations off Military Reservations.............    44
    Modernize our Air and Space Inventories, Organizations and
      Training.......................................................    29
    Partner With the Joint and Coalition Team to Win Today's Fight...    32
    Recapture Acquisition Excellence.................................    32
    Reinvigorate the Air Force Nuclear Enterprise....................    27
    Short Auxiliary Fields (SAAF) in Hawaii..........................    43
    24th Air Force Headquarters Milcon Requirements..................    35
    Weapons Load Training Facility at Barksdale AFB, LA..............    43

                             Department of the Army

    Army:
        BCI Growth...................................................    20
        Family Housing:
            Construction (AFHC)......................................    12
            Operations (AFHO)........................................    13
        Initiatives..................................................    10
        Modular Force (AMF)..........................................     8
        National Guard Military Construction.........................    16
            Budget...................................................    19
    BRAC 2005:
        Budget.......................................................    10
        Implementation Strategy......................................     9
    Base Realignment and Closure (BRAC)..............................     9
    Environmental Cleanup of Lone Star Army Ammunition Plant.........    22
    Expansion of Rangers in Pinon Canyon, Colorado...................    21
    Fiscal Year 2010:
        Budget Request for Army Guard................................    24
        Overseas Contingency Operations (OCO)........................    10
    Global Defense Posture Realignment (GDPR)........................     9
    Grow the Army (GTA)..............................................     8
        Projects.....................................................    17
    Homeowners Assistance Program....................................    13
        For Military Families........................................    18
    Military Construction:
        Army:
            National Guard...........................................    11
            Reserve..................................................    12
        Projects.....................................................    15
    Mission and Training Projects....................................    17
    Operation and Maintenance........................................    13
    Prior BRAC.......................................................    10
    Quality of Life for Soldiers and Their Families and the Army
      Budget.........................................................     6
    Rebalancing the Force in an Era of Persistent Conflict...........     8

                             Department of the Navy

    Additional Committee Questions...................................   104
    BRAC 2005 Implementation.........................................    96
    Family Housing...................................................    91
    Guam...........................................................101, 103
    Housing..........................................................    90
    Meeting the Construction Execution Challenge.....................    99
    Military Construction............................................    88
    NNMC and WRAMC...................................................   102
    Prior BRAC Cleanup & Property Disposal...........................    95
    Relocating the Marines to Guam...................................    93
    The Navy's Investment in Facilities..............................    87

                         DEPARTMENT OF VETERANS AFFAIRS

    Additional Committee Questions...................................   133
    Analysis of Ongoing Programs.....................................   137
    Automating the Application for and Delivery of Education Benefits   116
    Combating Homelessness...........................................   115
    Enhancing Outreach and Services for Mental Health Care and TBI...   113
    Funding Care for a New and Changing Veteran Demographic..........   112
    Implementation...................................................   138
    Increasing Investments in Research and Other Health Care
      Initiatives....................................................   114
    Incremental Development..........................................   137
    New Construction and Funding the New Office of the Assistant
      Secretary for Acquisition, Construction, and Logistics.........   110
    One Life Continuity of Care......................................   111
    Processing Benefits Claims in a Paperless Environment and Other
      Critical IT Investments........................................   117
    Program:
        Management Accountability System (PMAS)......................   138
        Manager Benefits.............................................   138
    Providing Additional Economic Stability to Veterans..............   116
    Service to the Last Breath and Beyond--Funding the Memorials to
      our Heroes.....................................................   118
    The Transformation From Within--Increasing Investment in
      Training, Career Development and Other Organizational Reforms..   110
    VA Benefits......................................................   138

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