[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]




                         [H.A.S.C. No. 112-105]

                                HEARING

                                   ON

                   NATIONAL DEFENSE AUTHORIZATION ACT

                          FOR FISCAL YEAR 2013

                                  AND

              OVERSIGHT OF PREVIOUSLY AUTHORIZED PROGRAMS

                               BEFORE THE

                      COMMITTEE ON ARMED SERVICES

                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                               __________

               SUBCOMMITTEE ON MILITARY PERSONNEL HEARING

                                   ON

MILITARY PERSONNEL BUDGET OVERVIEW--OFFICE OF THE SECRETARY OF DEFENSE 
                              PERSPECTIVE

                               __________

                              HEARING HELD
                           FEBRUARY 28, 2012




                                _____



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                   SUBCOMMITTEE ON MILITARY PERSONNEL

                  JOE WILSON, South Carolina, Chairman
WALTER B. JONES, North Carolina      SUSAN A. DAVIS, California
MIKE COFFMAN, Colorado               ROBERT A. BRADY, Pennsylvania
TOM ROONEY, Florida                  MADELEINE Z. BORDALLO, Guam
JOE HECK, Nevada                     DAVE LOEBSACK, Iowa
ALLEN B. WEST, Florida               NIKI TSONGAS, Massachusetts
AUSTIN SCOTT, Georgia                CHELLIE PINGREE, Maine
VICKY HARTZLER, Missouri
               Michael Higgins, Professional Staff Member
                 Debra Wada, Professional Staff Member
                      James Weiss, Staff Assistant












                            C O N T E N T S

                              ----------                              

                     CHRONOLOGICAL LIST OF HEARINGS
                                  2012

                                                                   Page

Hearing:

Tuesday, February 28, 2012, Military Personnel Budget Overview--
  Office of the Secretary of Defense Perspective.................     1

Appendix:

Tuesday, February 28, 2012.......................................    19
                              ----------                              

                       TUESDAY, FEBRUARY 28, 2012
MILITARY PERSONNEL BUDGET OVERVIEW--OFFICE OF THE SECRETARY OF DEFENSE 
                              PERSPECTIVE
              STATEMENTS PRESENTED BY MEMBERS OF CONGRESS

Davis, Hon. Susan A., a Representative from California, Ranking 
  Member, Subcommittee on Military Personnel.....................     2
Wilson, Hon. Joe, a Representative from South Carolina, Chairman, 
  Subcommittee on Military Personnel.............................     1

                               WITNESSES

Rooney, Dr. Jo Ann, Acting Under Secretary of Defense for 
  Personnel and Readiness; accompanied by Dr. Jonathan Woodson, 
  Assistant Secretary of Defense (Health Affairs) and Director of 
  TRICARE Management Activity; Virginia S. Penrod, Deputy 
  Assistant Secretary of Defense (Military Personnel Policy); and 
  Pasquale (Pat) M. Tamburrino, Jr., Deputy Assistant Secretary 
  of Defense (Civilian Personnel Policy).........................     3

                                APPENDIX

Prepared Statements:

    Davis, Hon. Susan A..........................................    25
    Rooney, Dr. Jo Ann...........................................    27
    Wilson, Hon. Joe.............................................    23

Documents Submitted for the Record:

    [There were no Documents submitted.]

Witness Responses to Questions Asked During the Hearing:

    [The information is retained in the subcommittee files and 
      can be viewed upon request.]

Questions Submitted by Members Post Hearing:

    Ms. Bordallo.................................................    75
    Mrs. Davis...................................................    73
    Mr. Jones....................................................    74
    Mr. Loebsack.................................................    87
    Mr. Wilson...................................................    73
 
MILITARY PERSONNEL BUDGET OVERVIEW--OFFICE OF THE SECRETARY OF DEFENSE 
                              PERSPECTIVE

                              ----------                              

                  House of Representatives,
                       Committee on Armed Services,
                        Subcommittee on Military Personnel,
                        Washington, DC, Tuesday, February 28, 2012.
    The subcommittee met, pursuant to call, at 1:32 p.m., in 
room 2128, Rayburn House Office Building, Hon. Joe Wilson 
(chairman of the subcommittee) presiding.

  OPENING STATEMENT OF HON. JOE WILSON, A REPRESENTATIVE FROM 
  SOUTH CAROLINA, CHAIRMAN, SUBCOMMITTEE ON MILITARY PERSONNEL

    Mr. Wilson. The hearing will come to order. Like to welcome 
everyone to the Military Personnel Subcommittee hearing 
relative to the testimony of the perspective of the Office of 
the Secretary of Defense on the President's fiscal year 2013 
budget regarding military personnel matters.
    Let me be very clear, personally: If it were up to me the 
defense budget would not be reduced. The Department of Defense 
[DOD] would not be tasked to find the $259 billion in reduction 
over the next 5 years. And the services would not be operating 
under the threat of a devastating sequestration process next 
year.
    America is at war today with increasing threats around the 
world, and yet this budget proposes cuts that break faith with 
military, military families, and veterans. And in particular, I 
have just gotten back from Pakistan and last week it was 
heartbreaking to be there at a time when there was a bombing at 
a bus station--14 people killed, including 2 children--and then 
the next day 5 policemen in an attack on a police station, and 
then today there was the stopping of a bus and 16 people were 
selected, taken off the bus, and executed right in front of the 
other persons. And so there is such conflict around the world, 
and I am just so proud of our military trying to stop those 
types of attacks from being here.
    Additionally, these cuts, I think, give a false 
encouragement to our enemies, who are obsessed with death. 
Having said that, the budget challenge that we are discussing 
today is the reality and we must now confront it.
    Certainly no one expected personnel programs to escape 
close scrutiny. However, contrary to the public statements to 
the Department of Defense that military personnel programs and 
benefits have been protected under this budget proposal, the 
totality of the personnel-related cuts are proportionate to the 
cuts taken in any other budget category.
    Major reductions to the Active Duty end strength of 100,000 
will reduce spending but also exact a human cost on our 
military families. The loss of the skills and experience within 
the All-Volunteer Force will directly diminish our combat 
capability when it is very likely we will continue to be 
engaged in conflict in Afghanistan and other locations around 
the world by enemies who dream of a long war.
    This committee will endeavor, within the fiscal constraints 
of an austere budget, to legislatively protect the annual end 
strength targets to maintain a responsible drawdown. For those 
who remain on Active Duty the budget projects reduced pay 
raises in future years, precisely when economic conditions may 
present the All-Volunteer Force with the challenge of a robust 
job market.
    The budget also recommends that the Congress eliminate 
itself from the debate about reforming military retirement and 
entrust that to a base realignment and closure-like commission. 
Removing Congress from the reform process, I believe, is wrong-
headed when the Department of Defense leaders have not 
recommended a retirement reform solution they believe will 
successfully support the All-Volunteer Force. The people's 
Congress must be accountable and not defer to unelected 
appointees.
    Finally, the most disturbing budget proposals are the 
increases in health care premiums, and the increases are up to 
345 percent. Not only will we question those increases today, 
but we will also address them during a subcommittee hearing on 
military health care next month.
    I would like to welcome our distinguished witnesses from 
the Office of the Secretary of Defense: Dr. Jo Ann Rooney, the 
Acting Under Secretary of Defense for Personnel and Readiness; 
Dr. Jonathan Woodson, the Assistant Secretary of Defense, 
Health Affairs, and Director of TRICARE Management Activity; 
Ms. Virginia S. Penrod, Deputy Assistant Secretary of Defense, 
Military Personnel Policy; and Mr. Pasquale ``Pat'' M. 
Tamburrino, the Deputy Assistant Secretary of Defense for 
Civilian Personnel Policy.
    And Mrs. Davis, we are very fortunate to have as ranking 
member, Congresswoman Susan Davis, of California.
    [The prepared statement of Mr. Wilson can be found in the 
Appendix on page 23.]

    STATEMENT OF HON. SUSAN A. DAVIS, A REPRESENTATIVE FROM 
 CALIFORNIA, RANKING MEMBER, SUBCOMMITTEE ON MILITARY PERSONNEL

    Mrs. Davis. Thank you, Mr. Chairman.
    And, Dr. Rooney, welcome. And we certainly appreciate your 
being here, along with Dr. Woodson, Ms. Penrod, and Mr. 
Tamburrino, Jr. Thank you very much.
    Hope I said that right--Tamburrino? Okay.
    The subcommittee members appreciate your views on the 
fiscal year 2013 budget request for military personnel and we 
look forward to hearing how the proposed budget will impact our 
military personnel and their families.
    While I think it is probably safe to say that the budget 
reductions have not severely impacted the military personnel 
accounts, they were not immune and they affect each and every 
person who is serving today. My colleagues and I would like to 
understand which personnel and family programs will be impacted 
and to what extent.
    We know the Department is undergoing an effort to eliminate 
redundant and duplicative programs and ensure that the programs 
that do remain are effective, but how are those decisions being 
made? What measures will the services and the Department use in 
making a determination of a program's effectiveness? Who will 
decide the priority of one program over another?
    And in this time of reduced defense spending we need to 
ensure we are making well-informed decisions and have an 
understanding of what these proposed cuts will have on the 
recruitment and retention of our Armed Forces as well as the 
impact to their families. We have seen over the past several 
years the services making a good-faith effort to move funding 
for quality of life programs into the base budget.
    I am concerned, however, that the recent budget would move 
the additional end strength for the Army and Marine Corps into 
the Overseas Contingency Operations [OCO] account. If 
additional end strength for the forces are being moved into the 
OCO, will we begin to see other areas, such as quality of life 
and support for wounded warriors that may not be an enduring 
requirement, also included in the Overseas Contingency 
Operations fund? And if that is the case, then what message 
does that send to our men and women in uniform and their 
families?
    These are the types of questions and concerns that the 
subcommittee will need to address. As the demand for these 
programs and services remain constant, or in some cases rises 
as the force returns home while the budget continues to 
decline, we are going to face very difficult choices. So we 
must remember that it is our men and women in uniform that 
makes our military the best in the world and we must proceed 
with caution.
    Thank you, Mr. Chairman.
    [The prepared statement of Mrs. Davis can be found in the 
Appendix on page 25.]
    Mr. Wilson. Thank you very much, Mrs. Davis.
    And we will proceed to testimony, and we will be hearing--
for the benefit of the subcommittee members, you should be 
aware that Dr. Rooney will make a statement and then we will 
proceed straight to questions.

   STATEMENT OF DR. JO ANN ROONEY, ACTING UNDER SECRETARY OF 
    DEFENSE FOR PERSONNEL AND READINESS; ACCOMPANIED BY DR. 
   JONATHAN WOODSON, ASSISTANT SECRETARY OF DEFENSE (HEALTH 
AFFAIRS) AND DIRECTOR OF TRICARE MANAGEMENT ACTIVITY; VIRGINIA 
  S. PENROD, DEPUTY ASSISTANT SECRETARY OF DEFENSE (MILITARY 
   PERSONNEL POLICY); AND PASQUALE (PAT) M. TAMBURRINO, JR., 
   DEPUTY ASSISTANT SECRETARY OF DEFENSE (CIVILIAN PERSONNEL 
                            POLICY)

    Dr. Rooney. Thank you.
    Chairman Wilson, Congresswoman Davis, and distinguished 
members of the subcommittee, I appreciate the opportunity to 
appear before you to discuss personnel and readiness programs 
in support of the President's budget request for fiscal year 
2013. Thank you for your support of our Active and Reserve 
military members, their families, and our government's 
civilians who have done everything we ask of them and more.
    As you have heard from Secretary Panetta, our fiscal year 
2013 budget request was the product of an intensive review of 
our defense strategy after a decade of war and substantial 
growth in our budgets. Today I will describe how we can sustain 
the All-Volunteer Force for generations to come--a force that 
has a proven record of unprecedented success in operations 
around the world. Accomplishing this will require the 
Department to make hard choices regarding competing priorities 
for limited funding.
    Resourcing the reset of the force while maintaining 
readiness will undoubtedly be one of the most challenging 
issues of our time. As the Acting Under Secretary of Defense 
for Personnel and Readiness my priorities focus on: total force 
readiness, improving the military health system, and total 
force support.
    After 10 years of intensive operations our forces are among 
the most capable in our Nation's history. Our Active and 
Reserve service members and defense civilians are well prepared 
to execute current operations and respond to emergent needs. 
They are experienced and proficient in a wide range of real-
world operations, including operations not traditionally within 
the Department's scope of responsibility.
    As we end today's wars and adjust to new and changing 
missions we find ourselves naturally transitioning back toward 
a broader range of security missions. Although this transition 
is occurring in the midst of an unfavorable and unavoidable 
fiscal pressure, we have committed to maintaining a ready, 
capable, All-Volunteer Force.
    The performance of our military medical system in a time of 
war continues to set new standards. The Department strives to 
provide the best health care in the world to our service 
members but the current cost growth of the military health 
system is unsustainable.
    We are pursuing a balanced, four-prong approach for 
improving the health of our population and the financial 
stability of the system to ensure we can continue to provide 
this benefit in the future. The four legs of the stool, none of 
which can be considered in isolation, include moving from a 
system of health care to one of health, continuing to improve 
our internal efficiencies, implementing provider payment 
reform, and rebalancing cost-sharing.
    My third focus area is total force support. One of the four 
overarching principles of the defense strategy is to preserve 
the quality of the All-Volunteer Force and not break faith with 
our men and women in uniform or their families.
    Despite difficult economic circumstances requiring budget 
reductions across all levels of government, the Department 
remains committed to providing service members and military 
families with support programs and resources, empowering them 
to address the unique challenges of military life. Ensuring the 
needs of military families and service members are met 
contributes to the overall well-being of the total force. This 
includes access to mental health care; providing for the 
educational needs of service members' children; support of 
morale, welfare, and relief programs; and maintaining the 
benefits at defense commissaries.
    Secretary Panetta has directed that family programs 
continue to be a priority for the Department and it remains my 
priority as well.
    Putting together this year's budget request in a balanced 
package was a difficult undertaking. However, it was driven by 
the strategy and developed by our uniformed and civilian 
leadership working closely together.
    As a result of that process I believe we have the right mix 
of programs and policies in place to shape the force we need. 
We will reduce the rate of growth of manpower costs, including 
reductions in the growth of compensation and health care costs. 
But as we take those steps we will continue to keep faith with 
those who serve.
    During the past decade the men and women who comprise the 
All-Volunteer Force have shown versatility, adaptability, and 
commitment, enduring the constant stress and strain of fighting 
two overlapping conflicts. They have also endured prolonged and 
repeated deployments. They have made innumerable sacrifices. 
Some have been wounded and others have lost their lives.
    As the Department reduces the size of the force we will do 
so in a way that respects and honors the service of each and 
every one. I look forward to continuing to work with you, 
Chairman Wilson, Congresswoman Davis, and distinguished members 
of this subcommittee, to support the men and women in our 
Nation's armed services.
    As you heard, accompanying me today are several senior 
members of my staff. I would like to introduce Dr. Jonathan 
Woodson, Assistant Secretary of Defense for Health Affairs; Ms. 
V. Penrod, Deputy Assistant Secretary of Defense for Military 
Personnel Policy; and Mr. Pat Tamburrino, Deputy Assistant 
Secretary of Defense for Civilian Personnel Policy that also 
includes total force management. All of us before you today 
look forward to your questions.
    Thank you.
    [The prepared statement of Dr. Rooney can be found in the 
Appendix on page 27.]
    Mr. Wilson. Thank you very much. And what we will do is we 
will proceed to each member of the subcommittee having 5 
minutes to ask questions, and we have a person above reproach, 
Mr. Craig Greene, who is going to be keeping up with this.
    And I will go first.
    First of all, Dr. Rooney, I am really concerned, sincerely, 
that there seems to be a disproportionate reduction in effort 
for the military which doesn't show up in other agencies. Are 
you aware of, as you indicate a reduction in manpower cost for 
the military, are there any--is there any other agency in 
government or any other Department that is having a reduction 
in manpower cost?
    Dr. Rooney. Sir, as you indicated we are taking about 10 
percent of our projected budget cuts in things dealing with 
people and compensation but I am not aware of how that is 
impacting other Departments across the government.
    Mr. Wilson. And that just really concerns me, that there 
are reductions in spending but it is disproportionate to the 
military, again, in a time of war, as I have expressed.
    Additionally, what new initiatives is the Department 
pursuing to enhance the transition of service members and their 
families to civilian life as those families prepare to separate 
from the military?
    Dr. Rooney. There are several. Most probably are aware of 
the Yellow Ribbon Program, which really focuses on our Guard 
and Reserve members, and that particular focus is enabling them 
to transition much more effectively into their communities and 
with employers throughout the area. That continues to have 
great support and it also continues to have great results.
    We also have been working with our colleagues in the 
Department of Veterans Affairs [VA], Department of Labor, and 
Department of Education to look holistically at the transition 
of our service members. We are currently in the process, having 
completed step one of that report and now working on the 
implementation of what that will look like--so from when a 
service member comes into the service until that point when 
they make the ultimate transition, that that is a continuum and 
prepares them for life outside.
    And there are a number of other programs committed to 
education both for our service members as well as their spouses 
that we believe will positively impact that transition.
    Mr. Wilson. And I appreciate you indicating a holistic 
approach, because the Department of Labor, VA, DOD, I am just 
really hopeful that people working together can address the 
challenges. In my home state we have unemployment over 9 
percent--many communities almost 20 percent. And so this needs 
to be addressed.
    Additionally, I have already expressed concern about the 
health care insurance premium costs--TRICARE Prime. The fiscal 
year [FY] 2013 increase is 30 to 78 percent but over 5 years 
can be between 94 to 345 percent.
    And now I found out today from the Washington Free Beacon 
that the different insurance cost increases for the military do 
not apply to civilian defense employees. Why would there be a 
difference between the military and civilian defense employees?
    Dr. Rooney. Sir, I will take the first part of that and 
then I will ask my colleague, Dr. Woodson.
    First of all, the civilians are not part of our TRICARE 
system--the civilian government employees. So we are proposing 
those increases in the TRICARE system, which impacts--the 
particular increases--those that are retired, of working age, 
as well as those that are over 65. So they are two very, very 
different systems, first off, so we are just focusing in this 
particular case on those costs with a program that is 
administered within the Department of Defense. So that would be 
this particular one.
    And I will ask Dr. Woodson to comment on those specific 
increases you mentioned.
    Secretary Woodson. One of the major reasons I think, as Dr. 
Rooney has already pointed out, is that the management of the 
TRICARE insurance program and set of activities is within our 
set of responsibilities and authorities, but also, as it stands 
now, those receiving other Federal health benefits currently 
pay a much higher cost share. But most importantly, they are 
not within our authorities.
    Mr. Wilson. Well, the percent, again--345 percent--really 
is a great concern to me.
    Finally, last year Governor John Baldacci, of Maine, was 
hired for a yearlong study of military health care, and his 
requirement was to provide recommendations for reforming the 
health care system. Additionally, has he made a report? Was 
that report included in the defense health program budget 
reforms?
    Dr. Rooney. Sir, if I can speak to--actually, my 
understanding--and of course, Dr. Baldacci came before I joined 
the Department so I am having to look at history a bit here--
but my understanding was he had a fairly broad scope in his 
memorandum of understanding [MOU], which was it had to involve 
health care but it could impact everything from readiness to 
continuum of care and a number of initiatives in between. What 
I can speak to is since November, when I have been in this 
position, Dr. Baldacci has been working in two particular 
areas, which is total force fitness, along with the joint 
staff, which is a readiness issue with us and involves health 
of the force; and then also he has been one of the key members 
I have had doing site visits for our disability evaluation 
system as we try to improve our timeliness on that.
    Any reports he has given to this point have been oral to 
me, so I am not sure if there will be a finalized written 
report. And before that the only thing I saw from him were trip 
reports or meeting reports, so----
    Mr. Wilson. But not an annual report?
    Dr. Rooney. No, sir. Nothing that I have seen.
    Mr. Wilson. Thank you.
    Mrs. Davis.
    Mrs. Davis. Thank you, Mr. Chairman.
    Dr. Rooney, I wonder if we could focus for a minute on the 
issue of tuition assistance programs, because that has 
certainly come to my attention and I am sure to many others, as 
well. One out of five dollars--actually, that really refers to 
the Military Spouse Career Advancement Account--goes to for-
profit schools. But the Senate Health Committee found that half 
of all tuition assistance dollars are going to for-profit 
schools, many of which have very poor student outcomes. We know 
that these schools are aggressively targeting and recruiting 
service members for their military benefits.
    So, given the tough budget environment that we are facing 
as well as the concerns about the sustainability of the tuition 
assistance programs, I am just wondering what we are doing 
about that and whether you feel that, in fact, some of the 
concerns that Military Officers Association of America [MOAA] 
has raised, Student Veterans of America have raised, what are 
we doing to really ensure that our service members have access 
to a high-quality education that protects them from aggressive 
recruiting on bases and military-related Web sites?
    Dr. Rooney. Thank you. As you know, not only to me, 
education is extremely important, given my background that I 
brought into the Department. But throughout the Department we 
see education as a way for our service members and their 
families to reach their greatest potential.
    And you are right. The concern is that we need to be in a 
position where we balance allowing our service members to have 
the greatest choice among academic institutions--to be able to 
study what they want where they want--and that often means 
flexibility in terms of the delivery models that are given.
    But at the same time we share your concern to make sure 
that while we don't want to inhibit the members' choices that 
we need to make sure we're holding all schools accountable for 
quality delivery, being able to put together plans of education 
so that service members know how they are going to get from 
point A to the point where they are graduating with a degree or 
a certificate, whatever they are studying, and then to hold the 
institutions accountable and do such things as require them to 
look at the experience of our service members or even our 
spouses and see if there are ways that possibly that can count 
towards credit.
    So along that line, what we are currently working on is 
developing a memorandum of understanding to be signed by 
institutions that want to participate in our tuition programs. 
And that memo was expected to be put in place by the end of 
December, and because of some of the concerns you raised that 
we also heard from a number of the organizations we actually 
extended that deadline out so we could continue to meet with 
them and address the concerns.
    But the idea is not to pick particular schools or limit 
access but make sure that we are saying, ``If you want to 
participate you will need to do these things.'' And the 
deadline to have that MOU signed now is March 31st, at which 
point we feel that those schools that are willing to be held 
accountable and that we can have a basis for service members to 
compare what type of institution, that we will have that in 
place at that time. And that should go very far in addressing 
the kind of concerns that you raised.
    Mrs. Davis. And I am sure you are aware, Dr. Rooney, that 
some of our underperforming schools seem to have no problem 
signing on to that but many of our schools with very strong 
reputations, including the University of California, I believe, 
had problems because of the transferability of credits and 
experience. Do you think that as you are working--and I guess 
the memorandum is due the end of this month--that you will have 
resolved that issue?
    Dr. Rooney. I believe we definitely will. There have been a 
lot of conversations and direct work with the institutions as 
well as organizations such as American Council on Education 
[ACE] that actually represent a number of institutions on how 
can we best look at this. And our goal is not to mandate that 
institutions take experiential credits or give credit for 
experiential learning, but that in fact, there is a mechanism 
in place where they can actually look to see if that is 
possible. I think that was one sticking point that--you know, 
is it required or do we really want them to have a mechanism in 
place?
    And the other one was the transferability of credits. And 
what we are trying to do is work with the schools to say, you 
know, for instance, if you are taking English in a community 
college and you are transferring to a 4-year institution, how 
can we try to see some basis so our service members can 
understand transferability and, where possible, do it. So I 
think it was a case of just not forcing the institutions to 
mandate transferability but really create a transparency in 
process so our service members know and, frankly, so that we 
can advise them better as they are going through that process.
    Mrs. Davis. Thank you. We might come back to that.
    Thank you very much.
    Mr. Wilson. Thank you very much.
    And we have Congressman Mike Coffman, of Colorado.
    Mr. Coffman. Thank you, Mr. Chairman.
    And thank you all for your--I would like to say your 
service to the country, but some of you haven't served in 
uniform, which is surprising. But thank you for your service to 
the administration and, I suppose, to the country.
    A 2007 Government Accountability Office [GAO] report 
estimated the Reserve Component members' cost to be only 15 
percent of the Active Duty Components. And yet, when we look at 
this budget it seems to have a uniform sort of across-the-board 
reduction of both the Active and the Reserve Components, as 
well. And it would seem to me that what we ought to be doing is 
taking a look at this 1.4 million right now uniformed military 
personnel on Active Duty and saying, ``What functions could be 
provided for in the Guard and Reserve?'' So instead of reducing 
the size of the Guard and Reserve we ought to be expanding the 
size of the Guard and Reserve and maintaining it so that we 
don't have to reduce our capability and compromise our national 
security, as it seems that this budget by the administration 
does.
    Can somebody tell me the rationale for the fact that we 
didn't go down this path? I mean, Israel, as a nation, is in a 
perpetual war footing and their backbone of their military is 
the Guard and Reserve. So why didn't we--Dr. Rooney, why didn't 
we go down this path?
    Dr. Rooney. Sir, I believe if we look, in fact, we were and 
are balancing our use of the Active Component with the Guard 
and Reserve. We acknowledge that much of the capability, and in 
fact, many of the areas of the capability are within the Guard 
and Reserve. So as not to hollow out the force it is critical 
that we have a balance between the two, and in all of the 
discussions of the force reduction I can tell you that the 
Reserve Component was well represented in that same room with 
the discussions.
    So I think again, it is a case of balance. And if you are 
looking at the particular numbers, different components of the 
service are actually drawing down their Active versus their 
Reserve differently. And I can get you those specific numbers 
in terms of that balance between the two, but I don't think the 
intention is at all to diminish the use of our Guard and 
Reserve in any of the components.
    Mr. Coffman. Well it does. And that is unfortunate because 
this is a plan that clearly cuts down the capability of the 
United States military needlessly because we are cutting into 
acquisition to sustain an Active Duty larger than it needs to 
be--an Active Duty Force larger than it needs to be. But 
obviously we differ in our experience, I having served in both 
the Army and the Marine Corps.
    Let me go back to another issue, and that is the size of 
the civilian workforce at DOD. Can you tell me what the--is 
it--what is the size of it today? Is it 68,000? What is it?
    Dr. Rooney. Hang on. I can actually give you, Pat?
    Mr. Tamburrino. The size of the workforce that comes from 
the appropriated funds, approximately 730,000 people; the size 
of the workforce that comes out of non-appropriated funds, like 
Morale, Welfare, and Recreation [MWR]----
    Mr. Coffman. Oh, I was way off.
    Mr. Tamburrino [continuing]. Approximately 250,000 people. 
So in round numbers the size of the workforce total is about a 
million.
    Mr. Coffman. About a million. So we have got--so on Active 
Duty we have got 1.4 million uniformed personnel right now----
    Mr. Tamburrino. Sir.
    Mr. Coffman [continuing]. And we have--what is the--and we 
have over a million in the civilian workforce?
    Mr. Tamburrino. Slightly under a million.
    Mr. Coffman. Wow. Slightly under a million. Okay. Just 
trying to think in my mind how many casualties are produced by 
somebody sitting behind a desk.
    Now, so we are going to do an end strength reduction on our 
Active Duty Force. So tell me what the end strength reduction 
looks like for our civilian DOD workforce.
    Dr. Rooney. At this point the projected is that it will go 
down by about 7,000.
    Mr. Coffman. Wow. Okay. Let me get this straight here. This 
is great.
    So what we are doing is--what is the number that we are 
reducing our--our uniformed military by right now? 100,000 is 
what we are reducing our uniformed military by and we are 
reducing our civilian workforce by 7,000? Is that right? Is my 
math wrong?
    Dr. Rooney. Sir, I believe you have just included the 
Active; you didn't consider the Active, Guard, and Reserve, 
too----
    Mr. Coffman. No, I am just talking about Active. Because 
our DOD civilian workforce isn't part-time; they are full-time 
employees. Am I correct in that?
    Dr. Rooney. The number we gave you was full-time 
equivalents, yes.
    Mr. Coffman. Okay, so let's do the--tell me what the math 
is here. So what is our Active Duty end strength reduction is 
how much?
    Dr. Rooney. 123,900.
    Mr. Coffman. And our civilian workforce reduction is how 
much?
    Dr. Rooney. Current going forward 7,000, and that doesn't 
include any previous reductions that have been taken over the 
past several years.
    Mr. Coffman. You know, I would like those numbers--specific 
numbers back to us. And you referenced that some were done 
before. Let's look at those, too--if you could give me those 
numbers, too, that were done in the past. I find this stunning.
    [The information referred to is retained in the 
subcommittee files and can be viewed upon request.]
    Mr. Wilson. Thank you, Congressman Coffman.
    And we proceed now to Congressman Allen West, of Florida.
    Mr. West. Thank you, Mr. Chairman, and also Ranking Member.
    And thanks to the panel for being here today.
    And as I talked to you earlier, Dr. Woodson, I am just a 
simple old paratrooper, you know? Life is easy for us: red 
light means you don't jump, green light means you do jump.
    So when I sit and look at this I recall a great statement 
by a famous Army general by the name of Cavasos, who said, 
``Quantity has a quality all its own.'' So my first question is 
this: I hear about how we sat down and we developed strategy.
    When I was a commander we had a simple thing. Whenever we 
had a mission we did what was called a troop-to-task analysis. 
Did we really sit down and do a sincere troop-to-task analysis 
for our uniformed military services as we look across every 
single geographic area of responsibility [AOR] based upon the 
threat assessment for the next 10 to 15 years so that we can 
have the right capacity and capability to meet those threats?
    The reason why I say this, after World War II we gutted our 
military and then came Korea. We continue to try to make the 
military bill-payer for our fiscal irresponsibility up here in 
Washington, DC.
    You know, we are not talking about units; we are talking 
about real people, some of those people still my friends, some 
of them even my relatives. So I would like to know that we 
really and truthfully do a troop-to-task analysis by geographic 
AOR that looked at the threat assessment, the capacity and 
capability that will be necessary for the next 10 to 15 years.
    Dr. Rooney. Sir, ultimately what we were having to do is 
comply with the Budget Control Act. So we had a budget number 
that we needed to fit our responses into. And I will tell you 
that as the numbers in terms of what our troop drawdown is--the 
goal of all of us in the Department is to make sure we do not 
hollow out the force; so as we are drawing down we pay 
attention to exactly the details you have indicated.
    Mr. West. So based upon your answer, you know, we continue 
to hear everyone come up and say, ``This is all based on 
strategy. It was not based on budget and numbers first.'' What 
you are telling me it was based upon the budget and numbers 
first; it was not based upon a troop-to-task analysis of the 
volatile situation in which we find ourselves all across the 
world projecting out for the next 10 to 15 years.
    Dr. Rooney. No. In fact, it was the strategy, and then 
within the strategy then we had to tailor our budget to fit in 
that strategy but we did have the constraint of what the 
numbers on that budget were to meet that strategy.
    Mr. West. This is my concern, going along with the ranking 
member: We already have men and women doing five and six combat 
tours of duty, and the unintended consequences of that--
divorces are up, suicides are up, drug problems are up. If we 
are making this force smaller and these requirements continue 
to get bigger, what is going to happen with all of these second 
and third order things that are going to continue to occur, 
especially for our families? We taking that into consideration?
    Dr. Rooney. Sir, I believe we acknowledge the challenges 
that you indicated and acknowledge that there is a special 
stress on our military families and what the rotation and the 
deployments have done to the families. It is one of the 
reasons, also, that the Secretary mandated that we did not take 
any significant cuts or, in many cases, no cuts at all to 
family programs and instead tasked to make sure that those 
programs we are delivering address those kinds of issues that 
you indicated on there and that we wouldn't take a reduction in 
those particular support programs.
    Mr. West. Last question: You know, I am a 22-year veteran. 
Has anyone--because everyone keeps talking about the rising 
costs of retirees--have we looked at the adult population of 
the United States of America--18 to whatever--and how many out 
of that population are military retirees? Can anyone give me 
that percentage?
    Dr. Rooney. Percentage or total number? Sir, and you are 
talking----
    Mr. West. Either one.
    Dr. Rooney [continuing]. How many are in the military 
retirement system at this point?
    Mr. West. Absolutely. When you look at comparison to the 
population of the United States from 18 to--to whatever--
adults.
    Ms. Penrod. Currently there are 1.47 million retirees.
    Mr. West. Okay, so 1.47 million, and let's say out of an 
overall population--let's be kind--300 million? What is that 
percentage? You know, somebody that didn't go to the University 
of Tennessee, can you do that real quick?
    Dr. Rooney. Not even 3 percent.
    Mr. West. My point is this----
    Dr. Rooney. 0.3 percent.
    Mr. West. My point is this: I read down here that we say 
the primary criticism of military retirement over the last 25 
years has been the escalating cost of the program. You are 
talking about a small percentage of Americans that were willing 
to give their entire lives to make sure we stay free and 
protected this democracy. I don't think we should be going 
after those people when they constitute such a small percentage 
of our society.
    So with that being said, I yield back, Mr. Chairman.
    Mr. Wilson. Thank you, Congressman West.
    And we now proceed to Congressman Austin Scott, of Georgia.
    Mr. Scott. Thank you, Mr. Chairman.
    And, Ms. Rooney, I just--you said it was three-tenths of 1 
percent. Is that what you said--the last number that you gave?
    Dr. Rooney. I believe based on the numbers the congressman 
did, but my math might be off today so my apologies if it was.
    Mr. Scott. No, that is pretty close to what I thought. And 
just going back to the other numbers that you said, there will 
be 123,900 reduction in our uniformed troops--total reduction 
in troop--and only 7,000 in non-uniformed personnel?
    Dr. Rooney. For fiscal year 2013.
    Mr. Scott. Of the total number of employees, uniformed and 
non-uniformed, how many uniformed personnel do we have right 
now?
    Dr. Rooney. If you count Guard and Reserve, approximately 
2.2 million.
    Mr. Scott. 2.2 million. And how many non-uniformed do we 
have?
    Dr. Rooney. Just under a million.
    Mr. Scott. Just under a million. If we did it on a--on an 
equal ratio then you would have--if you reduced 123,000 from 
the uniformed you would be looking at somewhere in the range of 
a 50,000-person reduction in the civilian force. Is that 
correct?
    Dr. Rooney. Let me make sure I clarify: That number that I 
gave you for the reduction in the military was over the FYDP 
[five year defense plan], and the civilian was just for the 1 
year, which is the only thing we have for the budget right now.
    Mr. Scott. Okay. And so if you did it on an equivalent 
basis what do you think it would be?
    Dr. Rooney. Your total number is about right if, in fact, 
that was over the FYDP.
    Mr. Scott. So I guess my question is if we are going to 
have so many--if we are going to have that much reduction in 
troop force why wouldn't you have a corresponding reduction in 
the bureaucracy?
    Dr. Rooney. Sir, as we view--and I mentioned and used the 
term ``total force'' several times, so what we are doing as a 
Department is looking at across, which includes our 
contractors, our uniformed military, and our civilians, and at 
any point in time looking and saying, ``What are these various 
people doing and do we have the right people in the right 
jobs?'' So I don't think I can sit here and say to you that 
there is any specific number in terms of the civilians. At this 
point we are looking at the appropriate mix and seeing and 
viewing this in a total force, so it is not looking at one 
particular component.
    Mr. Scott. But ma'am, the reduction to the soldier is 17.7 
times what it is to the bureaucratic machine that is over 
there.
    Dr. Rooney. I appreciate your comments, but I would say to 
you that the services themselves, who understand what their 
requirements are and what they need for end strength, are 
driving our number in terms of what that military number is.
    Mr. Scott. And ma'am, without the soldiers we don't need 
all of the other bureaucrats, quite honestly. But I guess my 
question, getting back to this--with all of the challenges that 
we have going on in America right now with regard to the 
economy, the proposal for the TRICARE Prime increase--are you 
aware of any other increase that is as draconian as the TRICARE 
Prime rate increases that are being proposed by this 
administration?
    Dr. Rooney. To comment generally, and I will ask Dr. 
Woodson to step in--part of when you look at this increase it 
is appropriate to go back to roughly 1996 and see that for most 
of the time up till the current--about a year ago--there have 
been no increases, and that is very different than what we have 
seen in terms of even health care costs as well as what has 
happened to most people in terms of their health care premiums. 
The other piece is that 60 percent of our health care comes 
from the private sector, so as private sector health care costs 
are increasing we are actually seeing those same increases 
going.
    So I think that the reason, you are seeing first-time costs 
that have not risen since 1996. But I will ask my colleague, 
Dr. Woodson, to also comment specifically----
    Mr. Scott. Ma'am, I am almost out of time. But with all due 
respect, the general belief from the administration seems to be 
that health care should be free for everybody other than the 
people in the military, and if you are in the military then 
they are going to get a five-fold increase over the next 5 
years if we allow this to happen. Congress made it very clear--
chairman--the chairman of this committee--we suggested that 
there could be increases but that those increases should not 
exceed what the increase in pay or retirement benefits was. We 
were very clear.
    And that leads me to the next question of why do you 
believe that it should--that it should be handled in a BRAC-
like manner--that the changes in the benefits should be handled 
in a BRAC-like manner?
    Dr. Rooney. You are specifically referring to the 
retirement, sir, correct?
    Mr. Scott. Yes, ma'am.
    Dr. Rooney. Okay. We feel at this point we are internally 
working on looking at retirement and saying if, in fact, 
balancing recruitment and retention, are there other potential 
systems? But we understand the difficulty in terms of making 
any changes to this. So having an independent group and 
commission, as is proposed by the President, be able to look at 
the alternatives and a number of the possible alternatives that 
we as a Department might put forward and be able to look at 
that independently, and again, not work with all of you but 
continue to work with Congress on this, that we felt the BRAC-
like commission would actually get us to a good result.
    Mr. Wilson. Thank you very much, Congressman Scott.
    And we now proceed to Congressman Joe Heck, of Nevada.
    Dr. Heck. Thank you, Mr. Chairman. I apologize for having 
to step out, but I kept one ear tuned to the television while I 
was in the other room.
    You know, I certainly appreciate what you all are trying to 
accomplish. I think we all do. We understand we are in a very 
difficult situation with a very constrained fiscal environment 
trying to manage what we are going to do with one of the 
largest drivers of our national budget.
    And, of course, my biggest issue and my biggest concern has 
always been with the Reserves. And, you know, I--Lieutenant 
General Stultz comes in here quite a bit and talks about 
recruiting a soldier for life and giving them the opportunity 
to move between Active Duty, Reserve, you know, training 
participation unit [TPU], into the Individual Ready Reserve 
[IRR], and based Active Guard and Reserve [AGR] tour--whatever 
is necessary to keep them engaged and keep them part of the 
military establishment.
    And I see now that we are going to, you know, cut upwards 
of about 80,000 from the Army Active Duty Force over time. But 
we are capping the Army Reserve where it is now at 205. And 
actually, I think we are still over strength. We still have 
somewhere to go until we get to 205.
    But then there is--so I just question, how are we going to 
keep that soldier for life? We are going to tell them, ``You 
are leaving,'' through attrition, or whatever method, but we 
don't have a spot for them in the Reserves now if we are going 
to stay capped at 205, or we are already over our cap at 205.
    You know, we have built an incredible capability in our 
Reserves. We truly have become an operational force over the 
last 10 years and a lot of that has been based on OCO money, 
which is going away, not to mention baseline money--but OCO 
money that is going away.
    And so we see this requirement that we are going to put an 
ever-increasing emphasis on utilization of the Reserves, which 
is what General Odierno mentioned when he was before the full 
committee not long ago on how he was going to mitigate risk, 
and I wonder how we are going to maintain that capability as we 
lose the funding source which has built it, which is OCO, and 
not, then, keeping folks separating from the Active Component 
and have the opportunity to go in--go into the Reserve Force.
    I looked at these two, you know, involuntary separation 
examples, and I hope they are just examples because, you know, 
they are based on an E5, E6 and O3, O4, which in my mind are 
the very folks we should be trying to keep at those grade 
levels, and we should be trying to shed, you know, O5s and O6s 
before we get rid of O3s and O4s. So I just wonder, how are you 
going to balance that issue of, we are cutting up to 80,000 
Army Active Duty troops and we have got no place to put them 
even though the Reserves are saying we need to recruit a 
soldier for life?
    Dr. Rooney. Sir, I will start that and then I will turn it 
over to Ms. Penrod.
    Our role, and one that we take very seriously, is working 
very closely with each of the services so that we can have 
exactly the conversation you are indicating, which is, what is 
that balance? What tools do we need to make sure that we are 
maintaining capabilities, that we have identified and will 
continue to identify as either current or emerging types of 
requirements, and how do we best use that tool? And it is, 
frankly, the force shaping.
    Because you are right: We are constrained by the numbers, 
we are constrained by our budget resources, and we are having 
to make sure we continue to support that All-Volunteer Force 
and make sure that it is ready and adaptable and all the 
challenges that we have to it. So our role, clearly--and I will 
ask Ms. Penrod to comment on the types of tools and the 
directive that we have actually sent out to the forces saying 
we will work with you but we need to look first at voluntary 
separations, and then how do we use these tools forward? So I 
will ask her to comment a little bit more about that.
    Ms. Penrod. Yes. We have been working with the services. We 
have had meetings with the Army staff, Navy, Air Force, Marine 
Corps, but you can understand, they are--those are draft plans. 
They intend to brief you when they come over to testify.
    But one thing we are emphasizing--again, as Dr. Rooney 
said, are voluntary over involuntary measures. We want to thank 
the Congress for the tools that you provided last year in the 
National Defense Authorization Act extending the voluntary 
separation pay. We also understand, you know, there is normal 
attrition in the Guard and Reserve. The services do plan as 
much as possible to help transition the Active Duty Force into 
the Guard and Reserve.
    But again, I don't have the specifics for the plans, but we 
are working with the services and trying to help them shape 
their force and using all the tools so that the--they have the 
skill sets that they need, they have the grade structure that 
they need, and that they do not go after recessions like they 
did in the mid-1990s.
    Dr. Heck. And I appreciate that. And I know you are keeping 
these things in mind, but I just want to emphasize the fact 
that a lot of the high-demand, low-density units that are 
currently being utilized are located in the Guard and the 
Reserve, and if we are going to draw down Active Duty and we 
don't have a place to put them in the Reserve, I feel that we 
are ultimately going to impair our ability to be fully capable, 
trained, and ready to go to war.
    Thank you, Mr. Chair. I yield back.
    Mr. Wilson. Thank you very much, Congressman Heck.
    And we proceed now to Congresswoman Vicky Hartzler, of 
Missouri.
    Mrs. Hartzler. Thank you, Mr. Chairman. I had several 
constituents in so I haven't been able to be here earlier, so I 
don't have any questions. Thank you.
    Mr. Wilson. And does anyone have any proceeding or further 
question?
    Mrs. Davis.
    Mrs. Davis. Thank you, Mr. Chairman.
    One thing I would like to ask, and this is always a 
difficult thing--I am not asking for specifics so much, but we 
are talking about TRICARE, we are talking about pharmacy 
copays--difficult issues, I think, for people to address. But 
one of the things that we haven't talked about is what if we 
don't do that? Then, you know, what is it that has to pick up 
that difference in trying to maintain what we have, which we 
would all agree is very beneficial and we feel that it is, you 
know, critically important to our families? At the same time we 
are having to find cuts in other areas.
    So I wonder, Dr. Woodson, what does that look like if, in 
fact, we don't address it in this way?
    Secretary Woodson. Yes. Thank you very much for that 
question.
    Given the constraints of the Budget Control Act, if no 
adjustments are made in TRICARE fees and we don't achieve what 
is a $12-plus billion savings over the FYDP, additional force 
structure cuts will need to be made. And so, you know, the 
optic that I think everyone needs to understand in these very 
difficult times--and, you know, I am sitting here listening to 
your questions and I understand what you are saying, 
Congressman Heck, and Congressman West. You know, we have 
talked offline about some of these issues.
    And so the real issue is the constraint of the Budget 
Control Act mandates that we have to look across the broad 
spectrum of sort of programs and activities. I think the 
Secretary made an incredible effort to limit the impact on 
personnel and benefits like TRICARE--90 percent of the savings 
comes from other areas.
    But we need it to be considered at the table, and so the 
issue and the short answer to your question is that without the 
adjustment in fees there, force structure impacts will be felt. 
We are now 10 percent of the base DOD budget; if we continue to 
inflate at what has really been a moderated rate of about 5.3 
percent and the top line of the DOD budget comes down we become 
an increasingly greater percentage of the Department of Defense 
budget and then we really impact training, manning, and 
equipping the force.
    So I think the key to remember--issue to remember is that 
the line leadership was at the table with the civilian 
leadership, that the proportion of cuts in programs was driven 
by the strategy with input from the commanders at all levels--
the combatant command [COCOM] commanders--understanding what 
capabilities they needed to preserve, as the Secretary has 
said. We are going to be a smaller but more agile force that 
leverages technology to be formidable wherever we go.
    But also, getting our fiscal house in order is in the 
national security best interest, as well. And so I think, you 
know, the issue is that without additional TRICARE adjustments 
force structure will be impacted.
    Mrs. Davis. Thank you. I think sometimes just trying to 
remember, I think, for a lot of my colleagues who don't go 
back, necessarily, to 2001, is the rise that we had in terms of 
defense spending. We obviously needed to do that, but I think 
that--I know my colleague asked the question, do we have any 
other increases across the board--the reality is there--if you 
compare that to other accounts that rose during that period 
there are very few that even come close. And so obviously there 
are some changes that are being suggested.
    I think we all just are pretty possessive of the personnel 
accounts and want to be sure that those are reasonable and that 
it makes sense.
    Very quickly if you could, I think the issue of military 
retirement has come up, and I know the BRAC-like commission has 
been suggested. The question really is, is that an area that we 
need to be changing now? I mean, is that something that really 
is going to make a difference in this budget or are there other 
changes that are occurring that make a whole lot more sense 
right now? And how strongly do you feel that their retirement 
issues should be addressed?
    Dr. Rooney. Actually, the retirement--there is nothing in 
the fiscal year 2013 budget that accounts for any change in 
retirement. So that isn't a budget holder even in there.
    We are looking at retirement--believe we should look at 
retirement as part of overall compensation. And it is the 
opportunity for us to look and say, does the current system 
work for what we feel is the force of the future? So there 
isn't a preconceived notion that, you know, there is a 
particular proposal out there that is better than anything 
else. In fact, that is why we are taking the time, looking and 
saying, ``If you change this what does that do to recruitment 
and retention?'' So this is more of a do we have the right 
tools in terms of overall compensation, and this is the time to 
be able to look at that as opposed to it being something 
necessarily driven by a budget.
    Mrs. Davis. Thank you.
    Mr. Wilson. And thank you, Mrs. Davis.
    And thank you all for being here. I would like a follow-up, 
if I could be provided in regard to Governor Baldacci--the 
costs of creating his position, the pay for his--himself as an 
individual, administrative costs, travel costs, support 
personnel with pay, administrative and travel costs. If you all 
could provide that to me I would appreciate it.
    [The information referred to is retained in the 
subcommittee files and can be viewed upon request.]
    Mr. Wilson. And again, thank you for being here today.
    And the subcommittee shall be adjourned.
    [Whereupon, at 2:26 p.m., the subcommittee was adjourned.]



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                            A P P E N D I X

                           February 28, 2012

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              PREPARED STATEMENTS SUBMITTED FOR THE RECORD

                           February 28, 2012

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


              QUESTIONS SUBMITTED BY MEMBERS POST HEARING

                           February 28, 2012

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

      
                   QUESTIONS SUBMITTED BY MR. WILSON

    Mr. Wilson. What specific efforts are being made to address suicide 
and suicide prevention in the National Guard and Reserves? Is there an 
opportunity for local entities such as universities and hospitals to 
partner with local Guard units to combat the problem? Where are the 
biggest gaps right now in suicide prevention outreach?
    Dr. Rooney. There are several efforts underway to address suicide 
amongst the National Guard and Reserves. First, the Services utilize 
Suicide Prevention Program Mangers (SPPM) to oversee and inform suicide 
prevention efforts. The Directors of Psychological Health (DPH) operate 
to assess and refer those needing behavioral health services. The SPPMs 
and the DPHs work closely together to ensure goals of the suicide 
prevention program are supported by the proper amount of behavioral 
health resources in a specific location. The Vets4Warriors Peer Support 
Helpline is available 24/7 to all of the Reserve Components and their 
families. It offers access to well trained veteran-peer supporters who 
have access to behavioral health clinicians and community referral 
networks. Reserve Component Service and family members can call, text, 
or chat online with the Veterans Crisis Line, and Military OneSource.
    The National Defense Authorization Act for FY 2012 (section 533) 
requires the Secretary of Defense develop suicide prevention 
information and resources in a cooperative effort with other entities. 
DOD is accomplishing this goal with a focus on the Reserve Components 
through its membership on the National Action Alliance, which is 
creating a National Suicide Prevention Strategy. A particular focus for 
this group is Partners In Care, which under the auspices of the 
Veteran/Military Working Group has developed a pilot in 5 states to 
involve the faith based organizations in supporting local Reserve 
Component units by training chaplains. Once the pilot is complete and 
best practices identified, plans are underway by DOD to expand to all 
interested states and territories. Also through the National Action 
Alliance, DOD has networked with organizations interested in reaching 
Reserve Component members who are enrolled in higher education.
    Reserve Affairs has instituted a Suicide Prevention and Resilience 
Resource Inventory project to identify best practices, gaps, 
redundancies, and unmet needs among the Reserve Components.
                                 ______
                                 
                   QUESTIONS SUBMITTED BY MRS. DAVIS
    Mrs. Davis. The FY12 National Defense Authorization Act requires 
the Services to treat graduates from non-traditional secondary schools 
that meet State graduation requirements in the same manner as they 
treat graduates of secondary schools for the purposes of recruitment 
and enlistment. As a non-traditional secondary education program that 
provide mentorship and education focus, the National Guard Youth 
ChalleNGe program has been successful in increasing the high school 
diploma or GED attainment of its participants by 29%. Under the change 
in law, will the Department now recognize graduates from the Challenge 
program as Tier 1 graduates? If not, why?
    Dr. Rooney. The answer to this question will vary state by state. 
The National Guard Youth ChalleNGe program offers many benefits to 
youth--and key among those benefits for participants is the opportunity 
for a second chance to earn a high school diploma or a GED Certificate. 
The law addresses equal treatment for individuals, ``Covered 
Graduates,'' who receive a diploma from a legally operating secondary 
school or otherwise completes a program of secondary education in 
compliance with the education laws of the State in which the person 
resides. If a State official attests that a ChalleNGe participant is a 
``Covered Graduate,'' then that individual will be given Tier 1 
enlistment priority.
                                 ______
                                 
                    QUESTIONS SUBMITTED BY MR. JONES
    Mr. Jones. I very much appreciate your forthright testimony that I 
was told you recently gave before the Military Personnel Subcommittee. 
Unfortunately, I was unable to attend. I have great sympathy for the 
budget constraints with which our Country finds itself and certainly 
with those constraints in the DOD budget. That being said, I am very 
concerned about the proposed changes in cost sharing in the TRICARE 
pharmacy program.
    I strongly believe that TRICARE beneficiaries should not be 
discouraged from using their local community pharmacy, but should be 
given a fair choice. TRICARE beneficiaries strongly prefer local, 
community pharmacies, despite strong incentives that already encourage 
the use of mail order. Rather than denying patient choice, I believe 
the department should implement many of the best practices in use in 
the private sector to manage prescription drug costs, such as 
increasing generic utilization and improving medication adherence. 
Other than driving beneficiaries to use mail order, can you tell me 
what steps the department is taking to control prescription drug costs?
    Additionally, I would like to see the cost data that the DOD uses 
that shows that mail ordering drugs is more cost effective than 
purchasing them from a drug store? Thank you very much for your 
consideration and your outstanding service to our Nation.
    Secretary Woodson. We agree that TRICARE beneficiaries should have 
a choice on where their prescriptions are filled. Beneficiaries 
continue to have the option of filling prescriptions at a military 
treatment facility (MTF) pharmacy, a retail network pharmacy, through 
TRICARE Pharmacy Home Delivery or a non-network retail pharmacy.
    Over the last several years, Department of Defense (DOD) has made 
significant efforts to control rising pharmacy benefit costs. The 
strategies and efforts pursued have been drawn from private sector best 
business practices, national trends, Congressional mandates, 
professional consultants, and independent studies. Each effort has had 
an effect in controlling the rise in pharmacy costs.
    The TRICARE pharmacy benefit, by regulation and consistent with 
industry practice, has a long standing mandatory generic use policy. 
The DOD requires that prescriptions be filled with generic medications 
when generics are available. When a generic equivalent exists, the 
brand name drug is only dispensed if the prescribing physician provides 
clinical justification for use of the brand name drug and approval is 
granted. Approximately 71% of prescriptions for DOD beneficiaries are 
filled with generics. The remainder prescriptions either have no 
generic equivalent or have documented clinical justifications.
    Many programs and policies surrounding formulary management within 
TRICARE closely mirror what commercial plans do to manage drug 
benefits. For example, we have active utilization management programs 
to encourage the use of cost effective drug therapy through the tiered 
formulary. Other formulary tools common with commercial practices are 
step-therapy, mandatory generic use, and prior authorizations. In 
addition, the Federal Ceiling Price (FCP) refunds collected for brand 
name prescriptions filled through network retail pharmacies are 
successful in further lowering drug costs. Substantial additional cost 
avoidance, over and above the FCP refunds, is obtained by DOD as a 
result of the ongoing negotiations with the pharmaceutical industry for 
additional voluntary refunds in return for preferential placement of 
their products on the TRICARE Uniform Formulary. The recent copay 
changes have also added to our negotiation leverage with the 
pharmaceutical manufacturers.
    A broad range of Medication Therapy Management (MTM) services are 
already provided by DOD. MTM is a component of the Patient Centered 
Medical Home (PCMH) model which is being implemented throughout the 
MTFs. The PCMH model enables clinical pharmacists to contribute to the 
healthcare team through services focused on medication management in 
improving patient clinical outcomes while lowering total healthcare 
costs. In addition, the TRICARE managed care contractors provide 
disease management services and case management services where TRICARE 
determines it to be necessary to achieve cost savings along with 
desired outcomes.
    Based on DOD analysis of maintenance medications, which comprised 
19.9M prescriptions filled during 4QFY11 at all three points of service 
(MTF, Retail, and Mail), the data show that the mail order and MTF 
venues to be more cost effective points of service. The results showed 
the mean cost per 90-day supply of a market basket of maintenance 
medications was 19% lower through either the mail order program or 
military pharmacies, compared to the retail pharmacy network.
                                 ______
                                 
                  QUESTIONS SUBMITTED BY MS. BORDALLO
    Ms. Bordallo. Of the slightly less than 1 million DOD civilians, 
how many have volunteered to go into harm's way since 2001 and deployed 
in support our men and women in theater; how many DOD civilians are 
currently overseas in theater or other forward deployed areas; of the 
slightly less than 1 million DOD civilians, how many ``sit behind a 
desk''?; and how many DOD civilians fatalities have occurred as a 
result of Operations Enduring and Iraqi Freedom? How many wounded?
    Dr. Rooney. Since 2001 approximately 52,000 Department of Defense 
(DOD) civilian employees have volunteered for deployments in the 
Central Command area of responsibility (CENTCOM AOR) to provide support 
to our men and women in theater. Currently there are approximately 
4,500 civilians deployed in the CENTCOM AOR to support on-going 
operations.
    The DOD currently employs approximately 750,000 appropriated fund 
employees and approximately 130,000 non-appropriated fund employees in 
diverse occupations ranging from doctors and nurses to fire fighters, 
electricians and mechanics to budget analysts, contracting specialists, 
and attorneys. The Department does not maintain the number of primarily 
sedentary occupations in any database.
    During Operations Enduring Freedom and Iraqi Freedom there have 
been 14 DOD civilian fatalities. Twelve of those fatalities occurred in 
Iraq (11 appropriated fund employees, 1 non-appropriated fund employee) 
and two fatalities occurred in Afghanistan (2 appropriated fund 
employees). The Department does not track the manner in which non fatal 
injuries occur.
    Ms. Bordallo. You mentioned civilian reductions of 7,000 across DOD 
yet the Air Force reports that they have nearly 16,000 civilians they 
are reducing, and that's just the Air Force. How do you reconcile these 
figures? Do you believe that reductions in the civilian workforce 
should mirror and be proportionate to those in the uniformed workforce? 
How about contractor support to the warfighter? Should reductions in 
area be proportionate, based on work and deliverables, to other 
reductions in the Total Force?
    Dr. Rooney. DOD-wide the aggregate reduction in civilians reflected 
in the fiscal year 2013 budget is approximately 7,000. However, in the 
Air Force's case, the reductions they are implementing total 
approximately 16,500 from the service's fiscal year 2011 baseline as a 
result of efficiencies directed in the fiscal year 2012 budget. To 
achieve this reduction of approximately 9%, the Air Force conducted a 
strategic evaluation of their civilian workforce to realign civilian 
resources from lower priority functions to higher priority mission 
areas, such as nuclear, intelligence, and cyber. Overall, reductions in 
the Total Force are correlated to workload and mission prioritization, 
as well as force structure and overseas posture changes. The fiscal 
year 2013 budget request reflects our best judgment today and 
represents a carefully coordinated approach based on the Department's 
strategy and policy that balances operational needs and fiscal reality.
    Ms. Bordallo. Why would Congress consider any potential changes to 
recruiting and retention incentives such as military retirement and 
health care or reductions to essential training accounts when Defense 
can't identify the cost of what you pay for in contracted services? So 
what are you doing to reduce contracted services and work requirements 
instead of just reducing dollars? If you are only reducing dollars then 
you are likely setting up conditions to default to contractors in light 
of the current civilian personnel constraints.
    Dr. Rooney. The Department takes very seriously its commitments to 
the All-Volunteer Force, and any proposed reforms to benefits would be 
well-reasoned and would be designed to ``keep faith'' with those who 
are serving, and have served. Additionally, any proposed reductions to 
training accounts are based on proposed changes to the Department's 
strategy, overseas posture and commitments, and force structure. The 
Department is very committed to increasing visibility and accounting of 
contracted services, and reducing spending in areas that are not 
directly linked to the strategy, priorities, and force structure of the 
Department. To that end, in November 2011, the Department submitted to 
the Congressional defense committees a comprehensive plan that 
delineated both short- and long-term actions related to the statutorily 
required inventory and review of contracts for services. As we 
implement this plan, we will be able to better understand what we spend 
on contracted services and the true level of effort associated with 
those services. Having comprehensive information on contracted services 
that can be translated to units of measure that are comparable to the 
other elements of our workforce (military and civilian) is critical to 
making improved value and planning judgments.
    Ms. Bordallo. In November 2011, you co-signed a comprehensive plan 
to document contractor FTE and comply with requirements set forth in 
title 10 for the inventory of contracts for services. How are those 
efforts progressing?
    Dr. Rooney. The plan submitted in November 2011 included both 
short- and long-term actions. As delineated in that plan, the 
Department issued guidance on December 29, 2011 directing the 
preparation of the fiscal year 2011 inventory of contracts for 
services. That guidance was a significant step forward in meeting the 
requirements of title 10, as it broadened the scope of responsibility 
to all Components of the Department that rely on contracted support, 
and delineated the requirements for reviewing contracted services in 
accordance with the statutory requirements. Based on this guidance, we 
are working with all DOD organizations towards completion of a more 
accurate and comprehensive data set to be submitted this summer.
    Additionally, together with the staff of the Department's Deputy 
Chief Management Officer, we are working towards implementing the 
Army's ``Contractor Manpower Reporting Application'' across the entire 
DOD-enterprise in order to leverage established processes, lessons 
learned, and best practices to comply with the law in the most cost 
effective and efficient manner.
    Long-term actions delineated in the November 2011 plan were 
contingent on approval of an emergency waiver to the Paperwork 
Reduction Act, which the Department submitted to the Office of 
Management and Budget in December 2011. As of mid-March, the Department 
has not received the emergency waiver and is unable to address efforts 
beyond the short-term until a waiver is granted.
    Ms. Bordallo. The Department requested emergency relief from the 
Paperwork Reduction Act in order to move forward, after four plus years 
of non-compliance, with the Inventory of Contracts for Services. 
However, OMB has failed to act on that request. What is the impact to 
the Department's progress, and the fiscal implications, of not getting 
the emergency filing approved?
    Dr. Rooney. As of early April, the Department has not received the 
emergency waiver to the Paperwork Reduction Act (PRA) as requested from 
OMB in December 2011 and is proceeding with the full PRA filing process 
that will take an additional 2-3 months. While the Department continues 
to press forward and will submit the annual Inventory of Contracts for 
Services (ICS) in June as required by statute, this submission will 
include contractor full time equivalents (CFTE) calculated from 
obligated dollar amounts and an Army factor derived from data reported 
by their contractors, as opposed to on actual direct labor hours as 
required by statute. Without the emergency waiver to the PRA as 
requested, the Department is delayed by at least one more year to 
demonstrably improve the ICS, and at least two years from full 
compliance with the fiscal year 2011 NDAA changes to section 2330a of 
title 10 requiring that CFTE be calculated based on direct labor hours 
and other data collected from private sector providers.
    Until the PRA waiver is granted, the Department cannot take steps 
to modify statements of work to collect the required data. Most DOD 
Components had planned to begin modifying statements of work this 
fiscal year. As a result of the delay, contracts will likely not begin 
being modified until fiscal year 2013, resulting in a delay until 
fiscal year 2014 of the first real data collection.
    While the fiscal implications are challenging to quantify, they do 
exist and are related to Components' ability to improve planning for 
increasingly scarce resources. Delays in collecting direct labor hours 
prevent the Department from getting an accurate accounting of the level 
of effort for contracted services, which would facilitate assessing 
those services using a common unit of measure, full-time equivalents. 
Without this level of fidelity, making value-based decisions and trade-
offs by distinguishing between direct labor hours supporting the 
mission and indirect costs, overhead, and other costs is adversely 
impacted. For example, the Army, which has had the necessary PRA waiver 
in place for over 5 years, has found that approximately half of all 
Army contract dollars in the base budget go to non-labor costs, such as 
overhead and profit, rather than direct execution of mission and 
workload. Such increased fidelity has enabled the Army to more 
appropriately realign limited resources to its more pressing 
priorities.
    Ms. Bordallo. Secretary Panetta has stated that the Department is 
looking at reductions in contracted services as part of the $60B in 
savings. Of the $60 billion, how much exactly is associated with 
civilian personnel and how much is service support contractors--do you 
believe this is an appropriate ratio give then ballooning growth over 
the past 10 years in contracted services?
    Dr. Rooney. Of the $60 billion, approximately $13.2 billion (22%) 
is attributed to better contracting practices and reduced spending on 
contracted services. As governance plans for these acquisition 
initiatives are fine-tuned, adjustments to these savings may occur. The 
total reduction associated with the civilian workforce is approximately 
$11.2 billion. Most of this ($10.4 billion or 92%) is attributable to 
the adjustment to the civilian workforce pay raise from 2.3 percent to 
0.5 percent. The FY 2013 budget reflects a balanced workforce that 
decreases spending on military personnel, civilian full-time 
equivalents, and spending for contract services. It reflects our best 
judgment today and represents a carefully coordinated approach based on 
the Department's strategy and policy that balances operational needs 
and fiscal reality. The Department remains committed to meeting its 
statutory obligations to annually review missions, functions, and 
workforce composition, including reliance on contracted services, and 
to ensure the workforce is appropriately balanced and aligned to our 
most critical priorities.
    Ms. Bordallo. Secretary Panetta has stated that the Department 
needs to reduce the large numbers of contractors. Personnel & Readiness 
is charged with overseeing and implementing the Department's workforce 
mix and in-sourcing policies--do you support in-sourcing as one way to 
reduce reliance on contractors?
    Dr. Rooney. Yes, in-sourcing is one of many tools available to 
managers to shape the workforce, including reducing inappropriate or 
excessive reliance on contracted services. I support in-sourcing of 
contracted services in order to: ensure inherently government, closely 
associated, or critical work is performed by government civilians or 
military; maintain management control and oversight of key functions 
and workload in support of our warfighter; and deliver services in the 
most cost efficient manner possible.
    Ms. Bordallo. If the Department is holding to FY10 civilian levels 
and in fact, the FY13 budget further reduces the civilian workforce, 
how can DOD organizations in-source if it is more cost effective? What 
recourse, in a particular year of execution, does a manager or 
Commander have if he wishes to in-source a contract in order to achieve 
fiscal savings?
    Dr. Rooney. The Department remains committed to its statutory 
obligations under title 10 to annually review contracted services and 
ensure that they are being performed in the most cost effective manner 
possible. Where appropriate, DOD organizations may immediately in-
source by absorbing work into existing government positions by refining 
duties or requirements; establishing new positions to perform 
contracted services by eliminating or shifting equivalent existing 
manpower resources (personnel) from lower priority activities; or on a 
case-by-case basis, requesting an exception to their existing civilian 
levels. To ensure increasingly constrained resources are allocated 
appropriately and with consideration for organizational mission 
priorities, the Department is currently assessing the process by which 
the civilian workforce is administered in the year of execution in 
order to increase management flexibilities at the mission level.
    Ms. Bordallo. What if the work is found to be inherently 
governmental or otherwise should be performed by civilians, instead of 
contractors? What flexibility is there to immediately convert that work 
to civilian performance without having to ask permission to add 
civilians or reduce staffing in other equally important missions?
    Dr. Rooney. The Department remains committed to its statutory 
obligations under title 10 to annually review contracted services and 
ensure appropriate performance of functions that are inherently 
governmental, closely associated, or otherwise exempted from private 
sector performance (to mitigate risk, ensure continuity of operations, 
build internal capability, meet and maintain readiness requirements, 
etc). Contracted services that meet the necessary criteria should be 
immediately divested, if of low priority, or in-sourced to government 
performance. Where appropriate, DOD organizations may immediately in-
source by absorbing work into existing government positions by refining 
duties or requirements; establishing new positions to perform 
contracted services by eliminating or shifting equivalent existing 
manpower resources (personnel) from lower priority activities; or on a 
case-by-case basis, requesting an exception to their civilian levels. 
To ensure increasingly constrained resources are allocated 
appropriately and with consideration for organizational mission 
priorities, the Department is currently assessing the process by which 
the civilian workforce is administered in order to increase management 
flexibilities at the mission level.
    Ms. Bordallo. How does the DOD's budget request reconcile with 
legislative language set forth in Division A, Section 8012 of 
Consolidated Appropriations Act of 2012 (P.L. 112-74) which states that 
``. . . during fiscal year 2012, the civilian personnel of the 
Department of Defense may not be managed on the basis of any end-
strength, and the management of such personnel during that fiscal year 
shall not be subject to any constraint or limitation (known as an end-
strength)'', and more specifically, that the fiscal year 2013 budget 
request be prepared and submitted to the Congress as if this provision 
were effective with regard to fiscal year 2013?
    Dr. Rooney. The DOD budget request complies with Section 8012 of 
the Consolidated Appropriations Act of 2012 (P.L. 112-74). Defense 
civilian personnel are not managed on the basis of end-strength. The 
Defense budget is managed based on executive and legislative guidance, 
strategic plans, resource levels, workload, and mission requirements. 
As required by the Congress, the DOD documents the civilian personnel 
levels supported in the budget request in the OP-8 exhibit. The OP-8 
reflects the specific funding for civilian personnel, as well as the 
number of full-time equivalents (FTEs) and end-strength.
    Ms. Bordallo. President Obama has made reducing reliance on 
contractors and rebalancing the workforce a major management initiative 
of his Administration. Does the Department's FY13 budget request and 
reductions in the civilian workforce reflect an opinion that the 
Department has achieved an appropriately balanced workforce?
    Dr. Rooney. The Department's ``sourcing'' of functions and work 
among military, civilian, and contracted services must be consistent 
with workload requirements, funding availability, readiness and 
management needs. The FY 2013 budget request, and associated civilian 
workforce reductions, reflects our best judgment today and represents a 
carefully coordinated approach based on the Department's strategy and 
policy that balances operational needs and fiscal reality.
    Ms. Bordallo. In FY10, the Department added 17,000 new positions as 
a result of in-sourcing contracted services. Can you tell us what that 
number was in FY2011? And to what extent will in-sourcing continue?
    Dr. Rooney. In fiscal year 2011, DOD organizations reported that 
they established nearly 11,000 civilian positions as a result of in-
sourcing contracted services. The Department remains committed to 
meeting its statutory obligations to annually inventory and review 
contracted services and identifying those that are no longer required 
or are inappropriately aligned to the private sector. In-sourcing 
remains a very effective and critical tool for the Department to 
rebalance its workforce, realign inherently governmental and other 
critical work to government performance from contract support, and, in 
many instances, to generate resource efficiencies.
    Ms. Bordallo. We've heard a lot about decreases and reductions in 
contracted services, yet when we look at the figures and talk to the 
field, what is evident is that reductions in contracts are very 
narrowly defined and limited to only a miniscule subset of what the 
Department actually purchases in terms of services. Why has the 
Department chosen to levy across the board reductions to only military 
E/S and civilian personnel without considering wholesale reductions to 
more expensive contractors?
    Dr. Rooney. The fiscal year 2013 budget reflects a balanced 
workforce that decreases spending on military end-strength, civilian 
personnel, and spending for contract services. It reflects our best 
judgment today and represents a carefully coordinated approach based on 
the Department's strategy and policy that balances operational needs 
and fiscal reality. Proposed reductions in military end-strength are 
not across the board but are linked to declines in our current overseas 
commitments; revised strategy, posture and operational planning; and 
changes to our force structure. Similarly, the proposed reductions in 
civilian personnel and contracted services are predominantly associated 
with ongoing organizational assessments and mission/function 
prioritization in an effort to reduce administrative workload. 
Contracted services are a key enabler of the war-fighter and a source 
of overall infrastructure operations, and in many instances provide 
cost effective support. The Department remains committed to meeting its 
statutory obligations to annually review services provided by contract, 
ensuring that they are aligned to our most pressing priorities and 
continue to be the most cost effective means of delivering such 
support. As part of such reviews, some services may be identified for 
in-sourcing because they can be more cost effectively delivered by 
government personnel, while some services may be determined to be no 
longer required or of low priority and, as such, be eliminated or 
reduced in scope. In other instances, continued contracted support may 
be the most appropriate and cost effective source of delivering 
services.
    Ms. Bordallo. What assurances can you give me that as wide-spread 
civilian reductions are occurring across the military departments work 
is not shifting illegally to contract performance?
    Dr. Rooney. Reductions in the civilian workforce are correlated to 
workload and mission prioritization. The Department is committed to 
ensuring that workload associated with civilian reductions does not 
shift to contract but is eliminated or realigned to other civilians. On 
December 1, 2011, the Under Secretary of Defense for Personnel and 
Readiness issued guidance to the Department reiterating the statutory 
prohibition on conversion of work to contracts. This guidance directed 
vigilance in preventing the inappropriate conversion of work to 
contract performance, particularly as the Department adapted to 
declining budgets. Specifically, managers and Commanders were reminded 
of their obligations to preclude such illegal shifting of work as they 
implemented the results of organizational assessments, continued to 
assess missions and functions in terms of priority, and revisited both 
their civilian and military force structures. Through the use of our 
on-going communications with national labor leadership, the Department 
has been able to look into allegations of improper workload shifts and, 
if justified, take corrective actions.
    In addition, the DOD has established an internal, multi-level 
governance process for monitoring implementation of all efficiencies, 
to include those resulting in civilian workforce reductions. Any issue, 
such as illegal shifting of work, can be addressed via this governance 
process for adjudication. If circumstances warrant, an exception 
request to increase the civilian workforce to meet workload 
requirements can be made.
    Long-term, as the Department makes improvements to its Inventory of 
Contracts for Services, as required by title 10, we will have increased 
visibility and accountability into such contracts. Specifically, 
improvements currently underway will enable the Department to more 
accurately identify contracted level of effort based on direct labor 
hours and associated data. This increased fidelity into contracted 
services will serve as another critical tool for the Department to 
monitor and preclude possible workload realignment.
    Ms. Bordallo. What processes are in place to ensure the workload 
associated with reductions being made in the civilian workforce is in 
fact ceasing, as opposed to being absorbed by other labor sources such 
as contractors or military personnel?
    Dr. Rooney. Reductions in the civilian workforce are correlated to 
workload and mission prioritization. The Department is committed to 
ensuring that workload associated with civilian reductions does not 
shift to other sectors of the Total Force, such as military or contract 
performance.
    To that end, on December 1, 2011, the Under Secretary of Defense 
for Personnel and Readiness issued guidance to the Department 
reiterating the statutory prohibition on conversion of work to 
contracts. This guidance directed vigilance in preventing the 
inappropriate conversion of work to contract performance, particularly 
as the Department adapted to declining budgets and operating in a 
constrained fiscal environment. Specifically, managers and Commanders 
were reminded of their obligations to preclude such illegal shifting of 
work as they implemented the results of organizational assessments, 
continued to assess missions and functions in terms of priority, and 
revisited both their civilian and military force structures.
    Additionally, on March, 2, 2012, the Under Secretary of Defense for 
Personnel and Readiness issued guidance to the Department regarding the 
use of ``borrowed'' or ``repurposed'' military manpower. This guidance 
is intended to ensure that amidst declining operational tempos for our 
military personnel and, as civilian reductions associated with 
efficiencies are implemented, military personnel are not 
inappropriately utilized, particularly in a manner that may degrade 
unit readiness.
    Through the use of our on-going communications with national labor 
leadership, the Department has been able to look into allegations of 
improper workload shifts resulting from civilian workforce reductions 
and, if justified, take corrective actions. In addition, the DOD has 
established an internal, multi-level governance process for monitoring 
implementation of all efficiencies, to include those resulting in 
civilian workforce reductions. Any issue, such as inappropriate 
shifting of work, can be addressed via this governance process for 
adjudication. If circumstances warrant, an exception request to 
increase the civilian workforce to meet workload requirements can be 
made.
    Ms. Bordallo. There was a lot of discussion last year about the 
``exceptions'' to the FY10 civilian levels Secretary Gates' mandated. 
What role does Personnel & Readiness have in the exceptions process and 
is it consistent with statutory requirements set forth for Personnel & 
Readiness in title 10?
    Dr. Rooney. Personnel and Readiness is a key contributor to the 
process of reviewing and making recommendations to the Deputy Secretary 
of Defense for approving growth in the civilian workforce. Requests for 
civilian growth must be based, in part, on the workforce mix criteria 
policy issued by Personnel & Readiness. This workforce mix criteria, 
founded in statutory and regulatory considerations, drives the 
``sourcing'' determination of work between military, civilian, and 
contracted services and is a key factor that justifies civilian growth 
across the Department. Such determinations must be consistent with 
workload requirements, funding availability, readiness and management 
needs, as well as applicable laws and statute. Personnel & Readiness 
works together with other elements of the Secretary's and Department's 
leadership team to deliver a balanced, flexible, responsive workforce 
that: is the appropriate mix of military, civilian, and contracted 
support; mitigates risk, ensures continuity of operations, and promotes 
organic knowledge base; and ensures mission requirements are met most 
cost effectively and efficiently. Where necessary to deliver that 
workforce, exceptions to current authorized civilian levels are 
considered and, if appropriate, granted.
    Ms. Bordallo. To what extent have the existing data sets available 
to Department planners, specifically the Department's annual inventory 
of inherently governmental and commercial activities, contributed to 
the functional streamlining, organizational realignments, workforce 
shaping decisions, and civilian personnel reductions reflected in last 
year's efficiencies initiative and continued in this year's budget?
    Dr. Rooney. The efficiencies initiatives begun under Secretary 
Gates, and continued in this year's budget, were implemented based on 
guidance to conduct organizational assessments and mission/function 
prioritization. This guidance required DOD Components to: baseline 
their organizations; assess and prioritize missions; eliminate 
duplication; ensure workload distribution; and submit recommendations 
for organization restructuring and reallocation of manpower, including 
workforce reductions.
    While the guidance did not specifically require DOD Components use 
their annual inventory of inherently governmental and commercial 
activities, it is one of many data sets and workload quantification 
sources that DOD Components had available as they conducted their 
assessments. The inventory provides DOD Components with visibility into 
their respective workforce and organizations based on functional 
descriptors, manpower mix criteria, location of services, and specific 
units and assignment of billets. The extent to which individual DOD 
Components relied on their respective inventories of inherently 
governmental and commercial activities to inform their efficiencies and 
personnel reductions would vary based on the processes they undertook 
and other available data sources.
    Ms. Bordallo. In achieving the right mix for the Total Force, how 
does the Department use the annual inventory of inherently governmental 
and commercial activities, and associated manpower mix determinations, 
to identify the civilian workforce reductions reflected in the past two 
budgets?
    Dr. Rooney. The civilian workforce reductions reflected in the past 
two budgets demonstrate the Department's commitment to challenge 
workload requirements and more appropriately size its workforce to meet 
our most pressing and critical priorities. The reductions also ensure 
an appropriate Total Force mix while considering changes in our 
overseas commitments and our force structure. The annual inventory of 
inherently governmental and commercial activities is one of many data 
sets and workload quantification sources that DOD components had 
available as they shape their workforces, develop their budget 
proposals, and identify proposed reductions. The inventory provides DOD 
components with visibility into their respective workforces and 
organizations based on functional descriptors, manpower mix criteria, 
location of services, and specific units and assignment of billets.
    Ms. Bordallo. As civilian personnel reductions are being executed 
across the Department, is the workload and functions associated with 
those being tracked as eliminated or divested through the annual 
inventory of functions?
    Dr. Rooney. The Department is tracking Component efficiency 
initiatives implementation using the Defense Enterprise Performance 
Management System (DEPMS). This includes monitoring compliance with the 
direction to maintain, with certain exceptions, civilian full-time 
equivalent authorizations at fiscal year 2010 levels and any attendant 
civilian personnel reductions. In addition, the Department's guidance 
for the annual inventory of inherently governmental and commercial 
functions, issued 24 October 2011, required DOD Components to identify 
and provide rationale for all major changes, to both civilian and 
military workload, ``to include identification of any difference 
resulting from the implementation of organizational efficiencies and 
budgetary reductions as a result of the Department's efforts to 
streamline business operations, reduce redundancies and/or overhead 
functions, and maximize shared services.'' DOD Components are required 
to submit their data sets for DOD review beginning in April 2012.
    Ms. Bordallo. What is the status of DOD's insourcing effort? How 
many positions were added to the in-house workforce in FY10 and in 
FY11? For each year, how many of the positions were added in order to 
save money for taxpayers and how many in order to better serve our 
warfighters?
    Dr. Rooney. The Department continues to execute its statutory 
requirement to review contracted services and identify those that 
should be in-sourced to government performance. In-sourcing remains a 
very effective and critical tool for the Department to rebalance its 
workforce, realign inherently governmental and other critical work to 
government performance (from contract support), and, in many instances, 
to generate resource efficiencies.
    In FY10, the Department added nearly 17,000 new government 
positions as a result of in-sourcing. Of those nearly 17,000 positions, 
9% were established because the contracted service was found to be 
inherently governmental, 41% were because the work was determined to be 
exempted from private sector performance (to mitigate risk, ensure 
continuity of operations, build internal capability, meet and maintain 
readiness requirements, etc.), and 50% were based solely on cost 
savings.
    In FY11, the Department added nearly 11,000 new government 
positions as a result of in-sourcing. Of these, 6% were because the 
work was inherently governmental, 13% was because the work was 
exempted, and 81% were based solely on cost savings.
    Ms. Bordallo. Is DOD's official position that, ``Insourcing has 
been, and continues to be, a very effective tool for the Department to 
rebalance the workforce, realign inherently governmental and other 
critical work to government performance (from contract support), and in 
many instances to generate resource efficiencies''?
    Dr. Rooney. Yes, and the Department remains committed to using the 
process of in-sourcing as an integral part of its Total Force 
management strategy to deliver a balanced, flexible, responsive 
workforce that is the appropriate mix of military, civilian, and 
contracted support while mitigating risk, ensuring continuity of 
operations, promoting organic knowledge base, and ensuring mission 
requirements are met most cost effectively and efficiently.
    Ms. Bordallo. A recent GAO report (12-319) seems to provide some 
much need context to a remark made by former Secretary Gates on 
insourcing: ``In August 2010, the Secretary of Defense stated that he 
was not satisfied with the department's progress in reducing over-
reliance on contractors. Representatives of (Personnel & Readiness) and 
(the Comptroller) told us that although DOD avoided $900 million in 
costs for contracted support services in fiscal year 2010 due to the 
budget decision to reduce funds associated with insourcing, total 
spending across all categories of service contracts increased in fiscal 
year 2010 by about $4.1 billion''. Is it correct to say that rather 
than deprecate insourcing during his press conference, Secretary Gates 
was actually lamenting that insourcing, despite savings of almost $1 
billion in FY10, could not offset the ever-escalating costs of service 
contractors.
    Dr. Rooney. I cannot speculate on the message or spirit of 
Secretary Gates' remarks. However, in-sourcing was not intended to 
offset cost of service contracts, but rather is one process by which 
the Department can rebalance its workforce, realign inherently 
governmental and other critical work to government performance (from 
contract support), and in certain instances, generate resource 
efficiencies. Data from across the Department indicates that on a case-
by-case basis, reductions in operating costs or fiscal efficiencies are 
gained through in-sourcing certain types of services or functions. As 
noted by the GAO, these savings are generally not visible at an 
aggregate level but rather materialize in the form of resource 
realignment at the field/command level to other priorities or 
requirements. Certain commercial functions can be more cost effectively 
delivered by the government and are appropriate for in-sourcing, while 
in other instances, a cost analysis may demonstrate that continued 
contract performance is appropriate.
    Ms. Bordallo. Should DOD be denied cost savings from insourcing 
where work is being performed by small business contractors, even if 
in-house performance would result in savings to taxpayers?
    Dr. Rooney. No, if in-sourcing services provided by small business 
can generate savings for the Department, then consistent with title 10 
obligations and our fiduciary responsibilities to the taxpayer, such 
services should be considered for potential in-sourcing. The Department 
values the contributions made by small businesses in support of our 
mission, and we are committed to meeting our small business goals. 
Furthermore, we follow the requirement set forth in Office of Federal 
Procurement Policy Letter 11-01, Performance of Inherently Governmental 
and Critical Functions, to place a lower priority on reviewing work 
performed by small businesses when the work is not inherently 
governmental and where continued contract performance does not put the 
agency at risk of losing control of its mission or operations. However, 
the Department is committed to ensuring its workload is met in the most 
cost effective and efficient manner possible and, in some instances, 
which may result in the in-sourcing of services performed by small 
businesses.
    Ms. Bordallo. Do small business contractors currently perform 
functions that are inherently governmental, closely associated with 
inherently governmental function, or critical? Why should DOD not be 
denied the capacity to insource such functions?
    Dr. Rooney. Consistent with statute, federal policy, DOD guidance, 
and federal acquisition regulations, the Department has processes and 
safeguards in place to preclude the contracting of functions that are 
inherently governmental or otherwise exempted from private sector 
performance (to mitigate risk, ensure continuity of operations, build 
internal capability, meet and maintain readiness requirements, etc). 
Functions that are determined to be closely associated with inherently 
governmental or critical in nature may, under certain circumstances, be 
contracted for provided there are sufficient management and contract 
oversight mechanisms in place to ensure the agency is not at risk of 
losing control of its mission or operations. In instances where 
inherently governmental functions, or functions otherwise exempt from 
private sector performance, are found to be performed under contract, 
that work must be immediately divested or in-sourced to government 
performance, regardless of whether that work is performed by a large or 
small business. To the maximum extent practical, as dictated by title 
10 requirements, the Department is reducing the level of contracted 
support performing closely associated with inherently governmental or 
critical workload. This may include workload performed by small 
businesses; but a lower priority is placed on such work where continued 
contract performance does not put the agency at risk of losing control 
of its mission or operations.
    Ms. Bordallo. Is there evidence to indicate or suggest that DOD's 
insourcing is having a disproportionately adverse impact on small 
business contractors? Is there anything in the insourcing law or the 
DOD regulation carrying out that law that would single out, target, or 
disproportionately adversely impact small business contractors?
    Dr. Rooney. No, there is currently no data that would indicate a 
disproportionate impact on small businesses as a result of in-sourcing. 
In fact, as reported by DOD Components, of the nearly 17,000 government 
positions established as a result of in-sourcing in fiscal year 2010, 
less than 1,000 (approx. 6%) were the result of in-sourcing a 
contracted service where the prime contractor was a small business. The 
Department values the contributions made by small businesses in support 
of our mission, and we are committed to meeting our small business 
goals. There is nothing in current law, regulation or DOD policy that 
targets small businesses for in-sourcing. In fact, the Department 
follows the requirement set forth in Office of Federal Procurement 
Policy Letter 11-01, Performance of Inherently Governmental and 
Critical Functions, to place a lower priority on reviewing work 
performed by small businesses when the work is not inherently 
governmental and where continued contract performance does not put the 
agency at risk of losing control of its mission or operations.
    Ms. Bordallo. What precautions does DOD take to ensure that 
insourcing does not have a disproportionate impact on small business 
contractors? Is it necessary for an advocate for small business 
contractors or even a ``breakout procurement center representative'' to 
participate in any session or planning process and reviewing any 
documents related to insourcing from a small business contractor in 
order to prevent a disproportionately adverse impact on small business 
contractors from DOD's insourcing? Are any other interest groups in 
sourcing and procurement represented in DOD's decision-making process? 
For example, do advocates for or representatives of federal employees 
participate in sourcing and procurement decisions that might adversely 
affect federal employees?
    Dr. Rooney. The Department values the contributions made by small 
businesses in support of our mission, and we are committed to meeting 
our small business goals. Consistent with requirements set forth in 
Office of Federal Procurement Policy Letter 11-01, Performance of 
Inherently Governmental and Critical Functions, DOD Components place a 
lower priority on reviewing work performed by small businesses when the 
work is not inherently governmental and where continued contract 
performance does not put the agency at risk of losing control of its 
mission or operations. However, the Department remains committed to its 
statutory obligations under title 10 to annually inventory and review 
contracted services, including those delivered by small businesses. In 
doing so, the Department ensures appropriate performance of functions 
that are inherently governmental, closely associated, or otherwise 
exempted from private sector performance (to mitigate risk, ensure 
continuity of operations, build internal capability, meet and maintain 
readiness requirements, etc). Where necessary and appropriate, 
contracted services may be in-sourced to government performance. This 
is a process that requires inputs and collaboration among many 
different stakeholders, including the financial management/budget, 
manpower, personnel, and procurement/acquisition (including small 
business advocacy as appropriate) communities.
    Ms. Bordallo. Would Section 302 of H.R. 3893 allow contractors to 
litigate agencies' determinations that certain functions should be 
insourced for performance reasons, e.g., that the functions are 
inherently governmental, ``closely associated'', or critical, i.e., are 
too important or sensitive to be performed by contractors? Would there 
be any precedents for substituting a court's opinion for that of the 
executive branch in such instances? What are the department's views of 
such a change? On average, how much longer would decisions whether to 
insource, whether for cost or performance reasons, take if Section 302 
became law? Do federal employees have legal standing to challenge 
agencies' outsourcing decisions in federal court? Do federal employees 
have any legal standing to challenge agencies' insourcing decisions in 
federal court? Would H.R. 3893 provide federal employees and small 
business contractors with the same legal standing in the insourcing 
context?
    Dr. Rooney. Whether section 302 of HR 3893, if enacted into law, 
would allow contractors to litigate agency determinations as described 
is a matter of judicial interpretation of both legal standing and 
executive agency discretion. The Department cannot speculate on the 
judicial branch's potential interpretation of section 302. As a matter 
of policy, executive level federal agencies have historically had broad 
discretion in determining their own requirements and how these 
requirements will be met, whether with government employees or by 
contracting for the work. In exercising this discretion, the agency 
must make any such decisions in accordance with agency guidelines, 
applicable statutes, and federal regulations. If an agency fails to 
abide by its own guidelines or the law, then parties with standing 
could potentially litigate the actions. Even in instances where the 
agency has followed its own guidelines and the law, contractors could 
still seek to litigate the agency's determination. Presumably, 
contractors with legal standing could be given an opportunity to 
challenge a broad range of issues that have historically been based on 
executive policy and discretion. This could potentially include in-
sourcing decisions that must be subjective in nature based on a variety 
of circumstances and an exercise of discretion, such as determinations 
of inherently governmental, closely associated, or critical.
    Designations of specific functions as inherently governmental in 
judicial decisions would have the force of law, at least within the 
jurisdictions where the decisions are precedent and for so long as the 
decisions are not overturned. However, to date, the Department has no 
knowledge of any court overturning an agency's in-sourcing decision, 
and the cases that have been brought have not progressed beyond 
preliminary questions like which court has jurisdiction to provide 
relief for improper in-sourcing decisions and whether the plaintiff has 
standing to bring the challenge. Absent interagency coordination and 
clearance by the Office of Management and Budget (OMB), as required by 
OMB Circular A-19, the Department may not comment on the proposed 
legislation at this time.
    The Department cannot predict the effect section 302 may have, if 
it were enacted, on the time it takes to in-source a contracted 
service. Given standing, a contractor could foreseeably pursue a number 
of courses of actions, including recourse to GAO, federal circuit 
court, and court of federal claims. Depending on a number of factors 
that fall under the jurisdictional purview of those forums, times to 
resolve and adjudicate could vary from weeks to years, factoring in 
appeals and filings with higher forums.
    Under section 3551 of title 31, United States Code, federal 
employees have limited standing to file a protest with the GAO related 
to outsourcing decisions as part of a public-private competition 
conducted under OMB Circular A-76. Representatives of federal employees 
may also have standing with the United States Court of Federal Claims 
under section 1491 of title 28, United States Code. In both these 
instances, the standing afforded federal employee representatives is 
related to public-private competition conducted under OMB Circular A-76 
and in accordance with section 2461 of title 10, United States Code. 
Such public-private competitions are expressly prohibited for the 
purposes of in-sourcing determinations per section 2463 of title 10, 
United States Code.
    Under Article III of the Constitution, plaintiffs have standing if 
(1) they allege an injury that is concrete, particularized, and actual 
or imminent, instead of conjectural or hypothetical (injury-in-fact); 
(2) the alleged injury is sufficiently traceable to the defendant's 
challenged action (causal connection); and (3) the requested relief 
will likely redress the alleged injury (redressability). In addition to 
having the burden of showing Article III standing, under the 
Administrative Procedure Act plaintiffs must also demonstrate 
prudential standing by establishing that the alleged injury falls 
within the zone of interests protected by the statute in question.
    Historically, the zone-of-interests test has generally led to the 
dismissal of federal employee suits challenging outsourcing decisions. 
If the federal employees can show that they are within the zone of 
interests protected by the statute in question that governs an in-
sourcing decision, they may be held to have standing to sue.
    While H.R. 3893 does not appear to provide federal employees and 
small business contractors with the same legal standing in the in-
sourcing context, the Department cannot speculate on the judicial 
branch's potential interpretation should this bill, or portions 
thereof, be enacted into law.
    Ms. Bordallo. H.R. 3893 would prevent insourcing from occurring 
until, among other things, has published for comment its insourcing 
policy. Has DOD published its outsourcing policy for comment?
    Dr. Rooney. DOD's outsourcing of new or expanding work to the 
private sector is governed by the Federal Acquisition Regulation, and 
Defense supplement, and applicable statutory requirements. The 
Department's current policies regarding in-sourcing of existing work, 
as well as competitive sourcing of such work, are all publicly 
available. The decision to use a sector (public or private) to perform 
work must be made in accordance with governing statutes and is a matter 
of executive branch policy. Lessons learned and best practices, 
including those from both internal and external stakeholders, are 
regularly reviewed and considered as policies and procedures are 
implemented and refined.
    Ms. Bordallo. H.R. 3893 would prevent insourcing from occurring 
until, among other things, all decisions are reviewed by advocates for 
or representatives of small business contractors. Are DOD's outsourcing 
decisions reviewed by advocates for or representatives of federal 
employees?
    Dr. Rooney. No, decisions to purchase services from the private 
sector are not subjected to review by advocates or representatives of 
federal employees. In certain instances where existing government work 
is competed via a public-private competition under Office of Management 
and Budget Circular A-76 and the determination is to procure work from 
the private sector, the designated government official (or their 
representative) may challenge aspects of the solicitation and 
evaluation process, but those rights are not exclusive to the 
government and do not differ from those of a private sector entity in 
the same process.
    Ms. Bordallo. As a result of Section 938 of the FY12 National 
Defense Authorization Act, all DOD contractors were given two new 
protections in the insourcing process: 1) a requirement that federal 
employees be marginally more efficient than contractors in order for 
functions to be insourced for cost reasons; 2) special notification 
when functions are being considered for insourcing for cost reasons. Do 
either or both of these requirements apply when DOD is thinking of 
switching from a small business contractor to a large contractor or 
when a large DOD contractor is thinking of taking work back from a 
small business subcontractor?
    Dr. Rooney. No, the requirements pertaining to conversion 
differential or timely notification included in section 938 are 
specific to the governing statute for in-sourcing contracted services, 
section 2463 of United States Code title 10. They do not apply to 
shifts in workload between two or more private sector firms, either 
large or small.
    Ms. Bordallo. Of the slightly less than 1 million DOD civilians, 
how many have volunteered to go into harm's way since 2001 and deployed 
in support our men and women in theater; how many DOD civilians are 
currently overseas in theater or other forward deployed areas; of the 
slightly less than 1 million DOD civilians, how many ``sit behind a 
desk''?; and how many DOD civilians fatalities have occurred as a 
result of Operations Enduring and Iraqi Freedom? How many wounded?
    Secretary Woodson. Since 2001 approximately 52,000 Department of 
Defense (DOD) civilian employees have volunteered for deployments in 
the Central Command area of responsibility (CENTCOM AOR) to provide 
support to our men and women in theater. Currently there are 
approximately 4,500 civilians deployed in the CENTCOM AOR to support 
on-going operations.
    The DOD currently employs approximately 750,000 appropriated fund 
employees and approximately 130,000 non-appropriated fund employees in 
diverse occupations ranging from doctors and nurses to fire fighters, 
electricians and mechanics to budget analysts, contracting specialists, 
and attorneys. The Department does not maintain the number of primarily 
sedentary occupations in any database.
    During Operations Enduring Freedom and Iraqi Freedom there have 
been 14 DOD civilian fatalities. Twelve of those fatalities occurred in 
Iraq (11 appropriated fund employees, 1 non-appropriated fund employee) 
and two fatalities occurred in Afghanistan (2 appropriated fund 
employees). The Department does not track the manner in which non fatal 
injuries occur.
    Ms. Bordallo. You mentioned civilian reductions of 7,000 across DOD 
yet the Air Force reports that they have nearly 16,000 civilians they 
are reducing, and that's just the Air Force. How do you reconcile these 
figures? Do you believe that reductions in the civilian workforce 
should mirror and be proportionate to those in the uniformed workforce? 
How about contractor support to the warfighter? Should reductions in 
area be proportionate, based on work and deliverables, to other 
reductions in the Total Force?
    Secretary Woodson. DOD-wide the aggregate reduction in civilians 
reflected in the fiscal year 2013 budget is approximately 7,000. 
However, in the Air Force's case, the reductions they are implementing 
total approximately 16,500 from the service's fiscal year 2011 baseline 
as a result of efficiencies directed in the fiscal year 2012 budget. To 
achieve this reduction of approximately 9%, the Air Force conducted a 
strategic evaluation of their civilian workforce to realign civilian 
resources from lower priority functions to higher priority mission 
areas, such as nuclear, intelligence, and cyber. Overall, reductions in 
the Total Force are correlated to workload and mission prioritization, 
as well as force structure and overseas posture changes. The fiscal 
year 2013 budget request reflects our best judgment today and 
represents a carefully coordinated approach based on the Department's 
strategy and policy that balances operational needs and fiscal reality.
    Ms. Bordallo. Why would Congress consider any potential changes to 
recruiting and retention incentives such as military retirement and 
health care or reductions to essential training accounts when Defense 
can't identify the cost of what you pay for in contracted services? So 
what are you doing to reduce contracted services and work requirements 
instead of just reducing dollars? If you are only reducing dollars then 
you are likely setting up conditions to default to contractors in light 
of the current civilian personnel constraints.
    Secretary Woodson. The Department takes very seriously its 
commitments to the All-Volunteer Force, and any proposed reforms to 
benefits would be well-reasoned and would be designed to ``keep faith'' 
with those who are serving, and have served. Additionally, any proposed 
reductions to training accounts are based on proposed changes to the 
Department's strategy, overseas posture and commitments, and force 
structure. The Department is very committed to increasing visibility 
and accounting of contracted services, and reducing spending in areas 
that are not directly linked to the strategy, priorities, and force 
structure of the Department. To that end, in November 2011, the 
Department submitted to the Congressional defense committees a 
comprehensive plan that delineated both short- and long-term actions 
related to the statutorily required inventory and review of contracts 
for services. As we implement this plan, we will be able to better 
understand what we spend on contracted services and the true level of 
effort associated with those services. Having comprehensive information 
on contracted services that can be translated to units of measure that 
are comparable to the other elements of our workforce (military and 
civilian) is critical to making improved value and planning judgments.
    Ms. Bordallo. Of the slightly less than 1 million DOD civilians, 
how many have volunteered to go into harm's way since 2001 and deployed 
in support our men and women in theater; how many DOD civilians are 
currently overseas in theater or other forward deployed areas; of the 
slightly less than 1 million DOD civilians, how many ``sit behind a 
desk''?; and how many DOD civilians fatalities have occurred as a 
result of Operations Enduring and Iraqi Freedom? How many wounded?
    Ms. Penrod. Since 2001 approximately 52,000 Department of Defense 
(DOD) civilian employees have volunteered for deployments in the 
Central Command area of responsibility (CENTCOM AOR) to provide support 
to our men and women in theater. Currently there are approximately 
4,500 civilians deployed in the CENTCOM AOR to support on-going 
operations.
    The DOD currently employs approximately 750,000 appropriated fund 
employees and approximately 130,000 non-appropriated fund employees in 
diverse occupations ranging from doctors and nurses to fire fighters, 
electricians and mechanics to budget analysts, contracting specialists, 
and attorneys. The Department does not maintain the number of primarily 
sedentary occupations in any database.
    During Operations Enduring Freedom and Iraqi Freedom there have 
been 14 DOD civilian fatalities. Twelve of those fatalities occurred in 
Iraq (11 appropriated fund employees, 1 non-appropriated fund employee) 
and two fatalities occurred in Afghanistan (2 appropriated fund 
employees). The Department does not track the manner in which non fatal 
injuries occur.
    Ms. Bordallo. You mentioned civilian reductions of 7,000 across DOD 
yet the Air Force reports that they have nearly 16,000 civilians they 
are reducing, and that's just the Air Force. How do you reconcile these 
figures? Do you believe that reductions in the civilian workforce 
should mirror and be proportionate to those in the uniformed workforce? 
How about contractor support to the warfighter? Should reductions in 
area be proportionate, based on work and deliverables, to other 
reductions in the Total Force?
    Ms. Penrod. DOD-wide the aggregate reduction in civilians reflected 
in the fiscal year 2013 budget is approximately 7,000. However, in the 
Air Force's case, the reductions they are implementing total 
approximately 16,500 from the service's fiscal year 2011 baseline as a 
result of efficiencies directed in the fiscal year 2012 budget. To 
achieve this reduction of approximately 9%, the Air Force conducted a 
strategic evaluation of their civilian workforce to realign civilian 
resources from lower priority functions to higher priority mission 
areas, such as nuclear, intelligence, and cyber. Overall, reductions in 
the Total Force are correlated to workload and mission prioritization, 
as well as force structure and overseas posture changes. The fiscal 
year 2013 budget request reflects our best judgment today and 
represents a carefully coordinated approach based on the Department's 
strategy and policy that balances operational needs and fiscal reality.
    Ms. Bordallo. Why would Congress consider any potential changes to 
recruiting and retention incentives such as military retirement and 
health care or reductions to essential training accounts when Defense 
can't identify the cost of what you pay for in contracted services? So 
what are you doing to reduce contracted services and work requirements 
instead of just reducing dollars? If you are only reducing dollars then 
you are likely setting up conditions to default to contractors in light 
of the current civilian personnel constraints.
    Ms. Penrod. The Department takes very seriously its commitments to 
the All-Volunteer Force, and any proposed reforms to benefits would be 
well-reasoned and would be designed to ``keep faith'' with those who 
are serving, and have served. Additionally, any proposed reductions to 
training accounts are based on proposed changes to the Department's 
strategy, overseas posture and commitments, and force structure. The 
Department is very committed to increasing visibility and accounting of 
contracted services, and reducing spending in areas that are not 
directly linked to the strategy, priorities, and force structure of the 
Department. To that end, in November 2011, the Department submitted to 
the Congressional defense committees a comprehensive plan that 
delineated both short- and long-term actions related to the statutorily 
required inventory and review of contracts for services. As we 
implement this plan, we will be able to better understand what we spend 
on contracted services and the true level of effort associated with 
those services. Having comprehensive information on contracted services 
that can be translated to units of measure that are comparable to the 
other elements of our workforce (military and civilian) is critical to 
making improved value and planning judgments.
    Ms. Bordallo. Of the slightly less than 1 million DOD civilians, 
how many have volunteered to go into harm's way since 2001 and deployed 
in support our men and women in theater; how many DOD civilians are 
currently overseas in theater or other forward deployed areas; of the 
slightly less than 1 million DOD civilians, how many ``sit behind a 
desk''?; and how many DOD civilians fatalities have occurred as a 
result of Operations Enduring and Iraqi Freedom? How many wounded?
    Mr. Tamburrino. Since 2001 approximately 52,000 Department of 
Defense (DOD) civilian employees have volunteered for deployments in 
the Central Command area of responsibility (CENTCOM AOR) to provide 
support to our men and women in theater. Currently there are 
approximately 4,500 civilians deployed in the CENTCOM AOR to support 
on-going operations.
    The DOD currently employs approximately 750,000 appropriated fund 
employees and approximately 130,000 non-appropriated fund employees in 
diverse occupations ranging from doctors and nurses to fire fighters, 
electricians and mechanics to budget analysts, contracting specialists, 
and attorneys. The Department does not maintain the number of primarily 
sedentary occupations in any database.
    During Operations Enduring Freedom and Iraqi Freedom there have 
been 14 DOD civilian fatalities. Twelve of those fatalities occurred in 
Iraq (11 appropriated fund employees, 1 non-appropriated fund employee) 
and two fatalities occurred in Afghanistan (2 appropriated fund 
employees). The Department does not track the manner in which non fatal 
injuries occur.
    Ms. Bordallo. You mentioned civilian reductions of 7,000 across DOD 
yet the Air Force reports that they have nearly 16,000 civilians they 
are reducing, and that's just the Air Force. How do you reconcile these 
figures? Do you believe that reductions in the civilian workforce 
should mirror and be proportionate to those in the uniformed workforce? 
How about contractor support to the warfighter? Should reductions in 
area be proportionate, based on work and deliverables, to other 
reductions in the Total Force?
    Mr. Tamburrino. DOD-wide the aggregate reduction in civilians 
reflected in the fiscal year 2013 budget is approximately 7,000. 
However, in the Air Force's case, the reductions they are implementing 
total approximately 16,500 from the service's fiscal year 2011 baseline 
as a result of efficiencies directed in the fiscal year 2012 budget. To 
achieve this reduction of approximately 9%, the Air Force conducted a 
strategic evaluation of their civilian workforce to realign civilian 
resources from lower priority functions to higher priority mission 
areas, such as nuclear, intelligence, and cyber. Overall, reductions in 
the Total Force are correlated to workload and mission prioritization, 
as well as force structure and overseas posture changes. The fiscal 
year 2013 budget request reflects our best judgment today and 
represents a carefully coordinated approach based on the Department's 
strategy and policy that balances operational needs and fiscal reality.
    Ms. Bordallo. Why would Congress consider any potential changes to 
recruiting and retention incentives such as military retirement and 
health care or reductions to essential training accounts when Defense 
can't identify the cost of what you pay for in contracted services? So 
what are you doing to reduce contracted services and work requirements 
instead of just reducing dollars? If you are only reducing dollars then 
you are likely setting up conditions to default to contractors in light 
of the current civilian personnel constraints.
    Mr. Tamburrino. The Department takes very seriously its commitments 
to the All-Volunteer Force, and any proposed reforms to benefits would 
be well-reasoned and would be designed to ``keep faith'' with those who 
are serving, and have served. Additionally, any proposed reductions to 
training accounts are based on proposed changes to the Department's 
strategy, overseas posture and commitments, and force structure. The 
Department is very committed to increasing visibility and accounting of 
contracted services, and reducing spending in areas that are not 
directly linked to the strategy, priorities, and force structure of the 
Department. To that end, in November 2011, the Department submitted to 
the Congressional defense committees a comprehensive plan that 
delineated both short- and long-term actions related to the statutorily 
required inventory and review of contracts for services. As we 
implement this plan, we will be able to better understand what we spend 
on contracted services and the true level of effort associated with 
those services. Having comprehensive information on contracted services 
that can be translated to units of measure that are comparable to the 
other elements of our workforce (military and civilian) is critical to 
making improved value and planning judgments.
                                 ______
                                 
                  QUESTIONS SUBMITTED BY MR. LOEBSACK
    Mr. Loebsack. In the light of the reduction in end strength 
outlined in this budget request and the defense strategy released 
earlier this year, what policies are being reviewed to ease transition 
between the active, reserve, and civilian components? Do you believe 
that easing the transition between the components will help to build in 
the reversibility outlined in the new defense strategy by ensuring that 
our highly trained and experienced force can be accessed quickly if a 
contingency arises? What, if any, legislative authority would you 
require to enact policies to ease the transition between the active and 
reserve components?
    Dr. Rooney. The Department of Defense will structure and pace 
reductions in the Nation's forces in such a way that they can surge, 
regenerate, and mobilize capabilities needed for any contingency and 
focus on building upon the Department's ability as an organization and 
the personnel within those organizations to be adaptive. The Department 
will ensure a strong foundational force that is designed to adapt to 
emergent mission requirements by maintaining readiness standards 
sufficient for meeting current operational needs and surging to meet 
planned deployment, determining those capabilities that require a long 
lead time to produce and are uniquely associated with critical 
operational requirements while preserving these capabilities in 
sufficient numbers to achieve operational goals and applying 
organizational constructs and training strategies that will increase 
deployment options and training effectiveness.
    Within the active force the Department will make it faster and 
easier to generate or regenerate capabilities by etermining those 
skills and capabilities that could be drawn down; preserving key 
lessons, strategies, and processes learned; determining and preserving 
key enablers to surging or regenerating these capabilities.
    Within Reserve Affairs, as part of the work on the Commission on 
National Guard and Reserve (CNGR), and the ongoing work of the 
Comprehensive Review of the Reserve Components, we have partnered with 
the Services to examine law and policy as it pertains to transition 
between the active and reserve components. The objective is seamless, 
facilitated, and unbiased movement between components, and conveyance 
of benefits and entitlements as appropriate. This work is ongoing. As 
specific requirements necessitate, we have also advocated the Reserve 
Component as a ready, cost effective force of choice where appropriate 
in execution of the new Defense strategy.
    Lastly the Department will coordinate Service efforts to achieve 
these policy goals. We will continue to work with the Services to 
facilitate Service Member movement within and between Active, Reserve, 
and Civilian statuses to increase Total Joint Force Readiness.
    Mr. Loebsack. Taking into account co-payments and dispensing fees, 
what is the cost to the Department of generic medications dispensed by 
retail pharmacies compared to the cost of generic medications dispensed 
by the TRICARE Mail Order Program?
    Secretary Woodson. Including patient co-payments and dispensing 
fees, the average cost of a 30 day equivalent prescription for generic 
medication dispensed by retail pharmacies was $21.06 during 1st Quarter 
FY12. In comparison, the average cost of generic medication dispensed 
by the TRICARE Mail Order Program was $13.92 during 1st Quarter FY12.
    Mr. Loebsack. In the light of the reduction in end strength 
outlined in this budget request and the defense strategy released 
earlier this year, what policies are being reviewed to ease transition 
between the active, reserve, and civilian components? Do you believe 
that easing the transition between the components will help to build in 
the reversibility outlined in the new defense strategy by ensuring that 
our highly trained and experienced force can be accessed quickly if a 
contingency arises? What, if any, legislative authority would you 
require to enact policies to ease the transition between the active and 
reserve components?
    Ms. Penrod. The Department of Defense will structure and pace 
reductions in the Nation's forces in such a way that they can surge, 
regenerate, and mobilize capabilities needed for any contingency and 
focus on building upon the Department's ability as an organization and 
the personnel within those organizations to be adaptive. The Department 
will ensure a strong foundational force that is designed to adapt to 
emergent mission requirements by maintaining readiness standards 
sufficient for meeting current operational needs and surging to meet 
planned deployment, determining those capabilities that require a long 
lead time to produce and are uniquely associated with critical 
operational requirements while preserving these capabilities in 
sufficient numbers to achieve operational goals and applying 
organizational constructs and training strategies that will increase 
deployment options and training effectiveness.
    Within the active force the Department will make it faster and 
easier to generate or regenerate capabilities by etermining those 
skills and capabilities that could be drawn down; preserving key 
lessons, strategies, and processes learned; determining and preserving 
key enablers to surging or regenerating these capabilities.
    Within Reserve Affairs, as part of the work on the Commission on 
National Guard and Reserve (CNGR), and the ongoing work of the 
Comprehensive Review of the Reserve Components, we have partnered with 
the Services to examine law and policy as it pertains to transition 
between the active and reserve components. The objective is seamless, 
facilitated, and unbiased movement between components, and conveyance 
of benefits and entitlements as appropriate. This work is ongoing. As 
specific requirements necessitate, we have also advocated the Reserve 
Component as a ready, cost effective force of choice where appropriate 
in execution of the new Defense strategy.
    Lastly the Department will coordinate Service efforts to achieve 
these policy goals. We will continue to work with the Services to 
facilitate Service Member movement within and between Active, Reserve, 
and Civilian statuses to increase Total Joint Force Readiness.
    Mr. Loebsack. In the light of the reduction in end strength 
outlined in this budget request and the defense strategy released 
earlier this year, what policies are being reviewed to ease transition 
between the active, reserve, and civilian components? Do you believe 
that easing the transition between the components will help to build in 
the reversibility outlined in the new defense strategy by ensuring that 
our highly trained and experienced force can be accessed quickly if a 
contingency arises? What, if any, legislative authority would you 
require to enact policies to ease the transition between the active and 
reserve components?
    Mr. Tamburrino. The Department of Defense will structure and pace 
reductions in the Nation's forces in such a way that they can surge, 
regenerate, and mobilize capabilities needed for any contingency and 
focus on building upon the Department's ability as an organization and 
the personnel within those organizations to be adaptive. The Department 
will ensure a strong foundational force that is designed to adapt to 
emergent mission requirements by maintaining readiness standards 
sufficient for meeting current operational needs and surging to meet 
planned deployment, determining those capabilities that require a long 
lead time to produce and are uniquely associated with critical 
operational requirements while preserving these capabilities in 
sufficient numbers to achieve operational goals and applying 
organizational constructs and training strategies that will increase 
deployment options and training effectiveness.
    Within the active force the Department will make it faster and 
easier to generate or regenerate capabilities by etermining those 
skills and capabilities that could be drawn down; preserving key 
lessons, strategies, and processes learned; determining and preserving 
key enablers to surging or regenerating these capabilities.
    Within Reserve Affairs, as part of the work on the Commission on 
National Guard and Reserve (CNGR), and the ongoing work of the 
Comprehensive Review of the Reserve Components, we have partnered with 
the Services to examine law and policy as it pertains to transition 
between the active and reserve components. The objective is seamless, 
facilitated, and unbiased movement between components, and conveyance 
of benefits and entitlements as appropriate. This work is ongoing. As 
specific requirements necessitate, we have also advocated the Reserve 
Component as a ready, cost effective force of choice where appropriate 
in execution of the new Defense strategy.
    Lastly the Department will coordinate Service efforts to achieve 
these policy goals. We will continue to work with the Services to 
facilitate Service Member movement within and between Active, Reserve, 
and Civilian statuses to increase Total Joint Force Readiness.

                                  
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