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



 
   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.]