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



 
             DEPARTMENT OF DEFENSE APPROPRIATIONS FOR 2013 

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



                                HEARINGS

                                BEFORE A

                           SUBCOMMITTEE OF THE

                       COMMITTEE ON APPROPRIATIONS

                         HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION
                                ________

                         SUBCOMMITTEE ON DEFENSE

                   C. W. BILL YOUNG, Florida, Chairman

 JERRY LEWIS, California                  NORMAN D. DICKS, Washington
 RODNEY P. FRELINGHUYSEN, New Jersey      PETER J. VISCLOSKY, Indiana
 JACK KINGSTON, Georgia                   JAMES P. MORAN, Virginia
 KAY GRANGER, Texas                       MARCY KAPTUR, Ohio
 ANDER CRENSHAW, Florida                  STEVEN R. ROTHMAN, New Jersey
 KEN CALVERT, California                  MAURICE D. HINCHEY, New York
 JO BONNER, Alabama
 TOM COLE, Oklahoma         

 NOTE: Under Committee Rules, Mr. Rogers, as Chairman of the Full 
Committee, and Mr. Dicks, as Ranking Minority Member of the Full 
Committee, are authorized to sit as Members of all Subcommittees.

        Tom McLemore, Jennifer Miller, Paul Terry, Walter Hearne,
            Ann Reese, Tim Prince, Brooke Boyer, B G Wright,
      Adrienne Ramsay, and Megan Milam Rosenbusch, Staff Assistants
                  Sherry L. Young, Administrative Aide
                                ________

                                 PART 1
                                                                   Page
 Military Health Systems Governance Review........................    1
 Fiscal Year 2013 Department of Defense Budget Overview...........   81
 Fiscal Year 2013 Navy / Marine Corps Budget Overview.............  169
 Fiscal Year 2013 Air Force Budget Overview.......................  335
                                ________

                     U.S. GOVERNMENT PRINTING OFFICE

 79-873                     WASHINGTON : 2013




                        COMMITTEE ON APPROPRIATIONS

                    HAROLD ROGERS, Kentucky, Chairman

 C. W. BILL YOUNG, Florida \1\        NORMAN D. DICKS, Washington
 JERRY LEWIS, California \1\          MARCY KAPTUR, Ohio
 FRANK R. WOLF, Virginia              PETER J. VISCLOSKY, Indiana
 JACK KINGSTON, Georgia               NITA M. LOWEY, New York
 RODNEY P. FRELINGHUYSEN, New Jersey  JOSE E. SERRANO, New York
 TOM LATHAM, Iowa                     ROSA L. DeLAURO, Connecticut
 ROBERT B. ADERHOLT, Alabama          JAMES P. MORAN, Virginia
 JO ANN EMERSON, Missouri             JOHN W. OLVER, Massachusetts
 KAY GRANGER, Texas                   ED PASTOR, Arizona
 MICHAEL K. SIMPSON, Idaho            DAVID E. PRICE, North Carolina
 JOHN ABNEY CULBERSON, Texas          MAURICE D. HINCHEY, New York
 ANDER CRENSHAW, Florida              LUCILLE ROYBAL-ALLARD, California
 DENNY REHBERG, Montana               SAM FARR, California
 JOHN R. CARTER, Texas                JESSE L. JACKSON, Jr., Illinois
 RODNEY ALEXANDER, Louisiana          CHAKA FATTAH, Pennsylvania
 KEN CALVERT, California              STEVEN R. ROTHMAN, New Jersey
 JO BONNER, Alabama                   SANFORD D. BISHOP, Jr., Georgia
 STEVEN C. LaTOURETTE, Ohio           BARBARA LEE, California
 TOM COLE, Oklahoma                   ADAM B. SCHIFF, California
 JEFF FLAKE, Arizona                  MICHAEL M. HONDA, California
 MARIO DIAZ-BALART, Florida           BETTY McCOLLUM, Minnesota
 CHARLES W. DENT, Pennsylvania
 STEVE AUSTRIA, Ohio
 CYNTHIA M. LUMMIS, Wyoming
 TOM GRAVES, Georgia
 KEVIN YODER, Kansas
 STEVE WOMACK, Arkansas
 ALAN NUNNELEE, Mississippi
   
 ----------
 1}}Chairman Emeritus    

               William B. Inglee, Clerk and Staff Director

                                  (ii)



             DEPARTMENT OF DEFENSE APPROPRIATIONS FOR 2013

                              ----------                              

                                       Wednesday, February 8, 2012.

               MILITARY HEALTH SYSTEMS GOVERNANCE REVIEW

                               WITNESSES

LIEUTENANT GENERAL (DR.) CHARLES B. GREEN, SURGEON GENERAL OF THE AIR 
    FORCE
LIEUTENANT GENERAL PATRICIA D. HOROHO, SURGEON GENERAL OF THE ARMY
VICE ADMIRAL MATTHEW L. NATHAN, SURGEON GENERAL OF THE NAVY
VICE ADMIRAL JOHN M. MATECZUN, COMMANDER, JOINT TASK FORCE, NATIONAL 
    CAPITAL REGION MEDICAL

                  Opening Statement of Chairman Young

    Mr. Young.  The committee will come to order. This morning 
the committee will hold an open hearing on the Governance 
Review of the Military Health System.
    I would like to welcome the new Surgeon General of the 
United States Army, Lieutenant General Patricia Horoho, who has 
not been here in that official capacity before, so we are very 
happy to have you. Although we have known you and all of the 
others for quite some time, we welcome to your first visit, 
official visit to this committee.
    And the new Surgeon General of the United States Navy, Vice 
Admiral Matthew Nathan, same story. We have known him for 
years. We met him first during a big hurricane down in 
Pensacola when his hospital was nearly blown away, and his time 
at command at Bethesda. But again, Admiral, in your first 
official visit before this subcommittee, so welcome to you, 
sir.
    And, General Green, you are the old timer, you have been 
here before and we always look forward to your testimony, and 
we look forward to it again today.
    Admiral Mateczun has been before the committee on a number 
of occasions, and we have had some interesting discussions 
during those periods, and we welcome him back for this general 
overview of the governance of our military health system, a 
health system that is just extremely important.
    I just want to make a, just a couple of quick comments 
before I yield to Mr. Dicks and then we will go to the 
witnesses.
    In today's world, our soldiers, sailors, airmen, marines, 
Coast Guardsmen are getting hurt really bad. But because of the 
advances in new medicines, because of the better training for 
our medics and corpsmen, because of the ability to move from 
the battle zone quickly to a field hospital or to a hard 
hospital, and then quickly on to a hospital like Landstuhl and 
then back to the U.S., we are saving soldiers who would have 
died in previous conflicts.
    Because of that, we have a tremendous obligation to them, 
and that obligation is going to last for a long time because 
these injuries, as we see them, and we encourage as many of our 
colleagues as we can to visit the hospital at Walter Reed 
Bethesda so that they can see firsthand what it is that this 
war is actually costing us, not the cost in dollars, but it is 
a big cost, and it is a big obligation.
    But, anyway, we--I read this Department of Defense task 
force or Military Health System governance several times, and I 
will tell you it is really interesting reading. And you have to 
read it several times to fully understand it. And I am not sure 
that I fully understood it yet, but it is really good reading 
and creates a lot of questions, and we will be discussing some 
of those things.
    But before we go to your testimony, let me yield to my 
friend and my former chairman, Mr. Dicks.

                          Remarks of Mr. Dicks

    Mr. Dicks.  Thank you, Mr. Chairman. We want to welcome all 
of our witnesses today, and the subcommittee has had a history 
of championing for the soldiers, sailors, airmen and, marines 
that willingly serve and are truly at the heart of what 
services do. We know that taking care of our servicemembers and 
ensuring that they, as well as their dependents, receive world 
class medical care, is at the heart of what you do.
    We also know that governance and military health is a topic 
that has been widely studied and discussed, but is difficult to 
change. Today we want to discuss governance of the Military 
Health System, and we are interested in hearing each of your 
thoughts on how the task force on governance proposed structure 
will enable you to provide the best care possible as well as 
what proposals may create obstacles to overcome.
    We are also interested in hearing how implementing 
recommendations for better governance can create efficiencies 
within the system and highlight opportunities for new 
partnerships, not only between the services, but with local 
communities and the Department of Veterans Affairs.
    As for the National Capital Region we are interested in 
hearing how the new Walter Reed National Military Medical 
Center at Bethesda is operating and with an integrated staff, 
resulting from the merging of the Navy and Army cultures. Each 
brings their own unique capabilities to the mission to provide 
care and help to servicemembers and their family heal.
    We now eager to hear from the new Fort Belvoir Community 
Hospital that is operating.
    We have also seen a dramatic rise in the need for 
behavioral health services for our wounded warriors returning 
from war and assimilating back into their services, their home 
life, and in the case of the Guard and Reserve, their towns and 
cities. These invisible wounds have been called the signature 
wound of this generation. I believe the health care issue will 
be one of the greatest challenges for personnel who are 
correctly serving and for veterans as well.
    We thank all of you for your service, and we look forward 
to hearing your views on governance.
    Thank you, Mr. Chairman.
    Mr. Young.  Yes. Mr. Dicks, thank you very much.
    We understand that you don't have prepared statements, 
which is certainly not necessary, because I know that you all 
know your issues extremely well, and so we will just, we will 
hear from you, whatever you want to tell us, tell us and we are 
going to listen patiently. We will do our best not to interrupt 
you as you proceed, but then you are fair game after you have 
finished your opening statements.
    Let me start with General Horoho. General--and we will go 
to all four of you before we do open up for questions.

                  Summary Statement of General Horoho

    General Horoho.  Okay, thank you, sir.
    Chairman Young, Ranking Member Dicks and distinguished 
members of the committee, thank you for providing me the 
opportunity to talk with you today about the future of the 
Military Health System.
    I am convinced that we must pursue the most effective and 
efficient command structures to support the strategic goal of 
the Military Health System, the services and the combatant 
commanders. There are many ways to realign and consolidate the 
Department of Defense common medical functions to enhance 
performance, reduce costs and increase efficiencies. The Army's 
position is to organize military health system under a unified 
medical command or move towards a unified effort in 
synchronizing the delivery of health care.
    As the task force on Military Health System Governance 
reports highlights, there have been numerous studies supporting 
the establishment of a unified medical command or some 
variation aimed at optimizing the health of the force and the 
health care outcomes: Standardizing health care metrics, 
reducing redundancy among the services, and reducing 
unwarranted clinical and administrative variation.
    I believe there is a strong collaborative effort between 
all three of our surgeon generals as well as the JTF commander. 
Our commitment is to ensure we optimize the delivery of health 
services to ensure our medical support to each of our services 
while reducing redundancy, while maintaining unity of effort, 
and focusing on health.
    I look forward to the dialogue that will follow and 
appreciate the opportunity to respond to any of your questions. 
Thank you.
    Mr. Young.  General, thank you very much.
    Next we go to Admiral Nathan.

                  Summary Statement of Admiral Nathan

    Admiral Nathan.  Chairman Young, Ranking Member Mr. Dicks 
and the committee. Again, thank you for the opportunity to 
discuss these issues. Also, as the previous commander at the 
National Naval Medical Center and then the Walter Reed National 
Medical Military Center, my thanks to all of you for your 
personal interest. I remember seeing many, if not all of you at 
one time or another coming out to the campus to survey the 
situation on behalf of the interests of the men and women who 
we take care of.
    I thank the committee also for the funding and the 
stewardship you provided to allow this magnificent facility to 
be built. That said, it represents an icon and a new change in 
the way we do business in the Military Health System. We have 
taken the two flagship hospitals of the Army and the Navy, and 
we have combined them into a premier institution, certainly not 
without growing pains, but I am a witness to the synergy that 
is created when we collaborate and we bring the best of the 
services together to find best practices.
    That momentum is carrying on now as we look for better ways 
to create efficiencies, transparencies, and remove redundancies 
all in the name of finding best value while maintaining best 
care for the most precious resource in America, the men and 
women who serve in the Armed Forces and their families and 
those who came before.
    So I look forward to your questions and the discussion. I 
recognize that we are in somewhat uncharted waters, as we say 
in the Navy, as we look for a new footing and a new landscape 
to find a governance structure that will accommodate these 
efficiencies and these transparencies, and at the same time, 
preserve the amazing combat war fighter support that has been 
evident over this last decade, resulting in the greatest 
survival rates and the lowest disease nonbattle injury rate in 
military history.
    Thank you, sir.
    Mr. Young.  Thank you, Admiral.
    Mr. Young.  General Green.

                Summary Statement of General (Dr.) Green

    General Green.  Mr. Chairman, Representative Dicks and 
esteemed members of the committee, thank you for inviting me 
here today to discuss the way ahead for the governance of the 
military health system (MHS). This is an important issue that 
is appropriately addressed jointly by all of us here today as 
the stakes for our military mission and for our beneficiaries 
are very high.
    The MHS Governance Task Force recommendations are 
important, because they represent the intense and informed 
deliberation of both line and medical professionals who are 
seeking the best solutions to maintain exceptional care to our 
servicemembers while finding more effective and efficient ways 
to deliver that care. We believe that efficiency and cost 
containment are best obtained through an agency construct. I 
applaud the 2012 NDAA language that requires thorough cost 
analysis and review by the GAO to ensure we have it right. I am 
confident that a comprehensive business case analysis will 
support the conclusions and recommendations of the task force. 
Today's military departments' oversight of medical assets 
created the most effective system for treatment of casualties 
with the lowest died of wounds rates and the lowest disease 
non-battle injury rates in history.
    Our highly capable and efficient expeditionary medical 
support platforms and aeromedical evacuation operations would 
not exist without the close alignment of our Air Force medics 
to the Line of the Air Force operational missions. Deployed to 
our theater hospitals and supporting our aeromedical evacuation 
system, Air Force medics have safely returned 93,000 U.S. 
casualties to their families from Iraq and Afghanistan. Every 
day our medics are saving the lives of Soldiers, Sailors, 
Marines, Airmen, civilians, coalition forces, friend and foe 
alike, under the watchful eye of Air Force commanders.
    Implementation of the task force recommendations will 
ensure the sustainment of this high level of mission success. 
It is an imperative for the MHS to have a single financial 
accounting system to ensure transparency and promote trust and 
accountability between the services. We believe that a more 
effective and efficient joint medical solution can be attained 
without the expense of establishing a unified medical command.
    The Services should and will continue integrating common 
medical platforms to reduce redundancy and lower costs. The 
task force recommendations will move us quickly to a construct 
that curtails expenses and achieves savings to the greatest 
extent possible while meeting our mission.
    In conclusion, the Air Force Medical Service remains 
committed to working with Health Affairs and our sister 
Services to ensure the Military Health System is organized in 
the most effective manner to provide quality care to military 
members and their families while also being good stewards of 
American taxpayer dollars.
    I thank you for your continued support and look forward to 
your questions.
    Mr. Young.  General, thank you very much.

                 Summary Statement of Admiral Mateczun

    Mr. Young.  And, Admiral Mateczun, we are happy to hear 
from you now, sir.
    Admiral Mateczun.  Thank you, Chairman Young, Ranking 
Member Dicks, and other distinguished members of the committee 
for inviting me today.
    I first appeared before this committee in 2009. This will 
be my last opportunity to testify before this distinguished 
panel in my role as the commander of the Joint Task Force 
National Capital Region Medical or JTF CapMed. Secretary 
Panetta has approved my request to retire from active duty 
after 4\1/2\ years executing the BRAC projects and achieving 
unity of effort in the National Capital Region.
    I would like to thank this committee for providing the 
Department the critical support over the past 4\1/2\ years that 
was necessary to be able to finish the largest and most complex 
BRAC project, medical realignment project, in the history of 
the Department.
    As you know, Secretary Gates established JTF CapMed in 2007 
after The Washington Post articles about the Walter Reed Army 
Medical Center to ensure the effective and efficient delivery 
of world class military health care in the National Capital 
Region. In fact, world class is not just an aspiration for us, 
it is a statute. And so we are required by law for the 
hospitals in the National Capital Region to be world class. As 
part of our mission, we oversaw the closure and relocation of 
the Walter Reed Army Medical Center to Bethesda and to Fort 
Belvoir where the Fort Belvoir Community Hospital was 
established.
    Those projects included, and I will just give you a few 
statistics here, construction and renovation of over 3 million 
square feet of space, the footprint of the Walter Reed National 
Military Medical Center is the equivalent of the footprint of 
the Mall of the Americas, the procurement of 160,000 new items 
of equipment, relocation of 750,000 cubic feet of material, 
transition of 9,600 staff, including a guaranteed placement 
program that enabled us to keep the civilian personnel at the 
Walter Reed Army Medical Center on the job through the heights 
of the fighting seasons after the BRAC, BRAC law was passed.
    We had to reassign 34,000 enrollees in terms of their 
primary care manager, and our most precious mission, we 
relocated 400 wounded warriors and their families from Walter 
Reed and other facilities to the new Bethesda complex, which 
provides extraordinary lodging for them.
    Mr. Chairman, Ranking Member Dicks, I am pleased to report 
to you, the Department completed all of those tasks, and I am 
glad to speak about any of the efficiencies that we were able 
to achieve as we did it.
    And I think that the record of the joint task force has 
illustrated the power of achieving unity of effort through 
joint command, and I am pleased to answer any of the questions 
that you may have.
    Mr. Young.  Admiral, thank you very much.

                COMMAND AND CONTROL OF JOINT TASK FORCE

    Mr. Young.  Thank you all of you for getting us started 
here today, and I at one point, I thought it would be 
appropriate to do an overall governance hearing and then do a 
separate hearing for the merger of Walter Reed in Bethesda. The 
more I thought about it, the more I realized you can't do that, 
it all works together. It is all part of the same system that 
and we need to make sure that all of it does work.
    On the task force study that I mentioned earlier came up 
with a number of options as to how we should proceed at this 
merged facility, and I think it has been said numerous times 
that this is probably the most complex, the largest merger of 
any medical facilities anywhere, and I can understand that 
because Walter Reed was in my opinion, a world class military 
medical facility that took great care of our soldiers.
    And I know you mentioned there was a problem with Walter 
Reed a few years back, and there was, and I will mention that 
in just a minute. And Bethesda also, a world class--I think I 
have witnessed miracles at Bethesda and at Walter Reed, people 
who lived when I don't think anybody really believed they 
would.
    Now, to me, that is a miracle, and I have seen them in both 
hospitals.
    In fact, when the Walter Reed issue, Admiral, that you 
mentioned, came up, I took a lot of lumps because I took the 
position that first of all, that problem had nothing to do with 
medicine. It was a trashy building that even the then-Army 
Surgeon General admitted that didn't know that it existed, and 
it was housing, people on med hold. And so I took the position 
that that aside, Walter Reed, is a great, military medical 
facility.
    I took some lumps for that because there are some that 
thought I should have really jumped on the bandwagon and beat 
up on Walter Reed, which I just wouldn't do. But anyway, the 
task force came up with a number of options. None of the 
options got a majority. There were nine members of the task 
force. One option got five votes, and that is the only option 
that got five votes.
    And the way I read that option and, by the way, the Army 
and the Navy both supported that option which we referred to as 
option two, suggested that a Defense Health Agency would be 
established replacing TMA to consolidate a far broader set of 
shared health support services. MHS-wide shared services 
activities include, but are not limited, through the TRICARE 
health plan.
    But basically, without going through the whole language, it 
basically suggested that the merger should be managed by a 
joint organization created by, and with the approval of the 
Army and the Navy. And that is the only one that got five 
votes. None of the others got five votes, so, and I don't know 
what the decision at DOD is going to be. But now when I listen 
to Admiral Mateczun, the joint task force is in addition to the 
Army and the Navy running the facility. Am I correct there?
    Admiral Mateczun.  That is correct, sir. I have command and 
control over the Walter Reed National Military Medical Center 
and the Fort Belvoir Community Hospital.
    Mr. Young.  And so you are telling me that the Army and the 
Navy, then, they report to you or do they report to their 
surgeons general?
    Admiral Mateczun.  The commanders of those hospitals report 
to the joint task force, they report to me. There is a 
relationship to the services that is called AD-CON, 
administrative control. It is a route through which fitness 
reports and other administrative matters pass.
    Mr. Young.  But that system is not what the joint task 
force, or it is not what the task force voted for; correct? Are 
you familiar with option 2?
    Admiral Mateczun.  No, sir. I was not a member of that 
working group.

              CONTRACTORS ON JTF CAPMED HEADQUARTERS STAFF

    Mr. Young.  Oh, but I thought you might have read the 
report. So the decision is still out.
    BRAC supposedly is to consolidate and to save money. It 
seems to me the joint task force becomes a separate layer in 
addition to the Army and the Navy who have traditionally run 
those two hospitals, which are now one, and we haven't, we 
haven't received your budget yet. We haven't received any of 
the budget for any of the Defense Department yet, and we are 
anxiously awaiting that.
    But I look at the--I look at your budget for fiscal year 
2012, and I see that your JTF headquarters staff, the budget is 
$11,723,000, with 119 full-time employees and X number of 
contractors.
    Do you know how many contractors you have plus your regular 
staff?
    Admiral Mateczun.  Sir, we had a great many during the BRAC 
processes, a lot of program managers and others and we have 
attrited most of those now. If I might address the question 
what is the size, the right size of the staff? An apples-to-
apples comparison is necessary to take a look at different 
governance structures so that when you take a look at running, 
for instance, a market, as is described in San Antonio, you 
also have command and control layers and so each of the 
services has command and control headquarters in San Antonio, 
for instance.
    Here in the National Capital Region, if there is a joint 
task force--and I think this gets to the point of the GAO 
studies--if you can reduce those intermediate levels of 
command, you can find efficiencies. So the only way that the 
JTF is not efficient is if you take a look at, as a model, if 
you take a look at what are the command and control costs for 
the services.
    What does it cost to run the North Atlantic Regional 
Medical Command, Navy Medicine National Capital Area and the 
79th wing, and how can something like a JTF with only 117 
people reduce that level of effort? I provided information to 
the chairman of the working group that showed that we would be 
cost neutral at worst and be able to find efficiencies if you 
take command and control into account.
    Mr. Young.  Well, is it, I don't think I see this any 
place, but I am curious, is it the intention that joint task 
force will eventually reach out and absorb other military 
hospitals and clinics that are not presently subject to JTF?
    Admiral Mateczun.  That has never been a matter of intent 
in the Department, to my knowledge.
    Mr. Young.  Okay. The Army and the Navy coming together 
there is going to be problems. Any time you have a merger of 
any kind, there is going to be problems. But my understanding 
is that your Army and Navy commanders are really working things 
out fairly well. But I wasn't so sure, I wasn't sure they had 
the report to JTF, and I don't understand that because BRAC 
itself, the BRAC law, did not create JTF.
    But, anyway, that remained to be seen what the Defense 
Department is going to decide to do on those various options.
    I have a lot of other questions, but I don't want to use up 
all the time today. And I will get back to you on some other 
questions, but I want to yield now to Mr. Dicks.
    Mr. Dicks.  Yes, I want to--is this system on?
    Mr. Lewis.  Press the button.

                      INTENSIVE OPERATION PROGRAM

    Mr. Dicks.  I know, I did, but it wouldn't come on. I have 
never been known not to be able to be heard, though.
    Anyway, I wanted to ask Lieutenant General Horoho, who had 
served as the commanding officer at Madigan Army hospital there 
has been some pressing accounts of concerns at Madigan. And one 
of the things that I have just heard about in the last few days 
is a program that was created at Madigan and operated by Doctor 
Hicks called the intensive operation program.
    And this was extremely successful, but it was cancelled, 
and I am told by my sources that it was cancelled because they 
came up with too many recommendations that the patients had 
post-traumatic stress disorder and that Colonel Kepler and 
others, you know, were enforcing. I don't know where this came 
from. But we are enforcing a return to duty standard and, you 
know, we are not very interested in seeing and characterizing 
the people who had been diagnosed with post-traumatic stress 
disorder as malingerers, which I find offensive, and you have 
taken certain actions here.
    But I would like to know why this intensive operation 
program, which I am told was absolutely a great program of 
treatment for these soldiers, was cancelled, and I am told, you 
know, that there has been emails sent to my office about this, 
I don't know if you have seen them. I guess you have seen them. 
And I just want to get your take on this, General.
    General Horoho.  Yes, sir. Thank you for allowing me to 
comment on that. Actually, yesterday it came to my knowledge 
with concerns over that center, and I had already initiated--on 
Friday--the 15-6 investigation to look into the practices at 
Madigan Army Medical Center in the Western Region and to look 
specifically at the variance with forensic psychiatrists and 
psychologists reviewing behavioral health diagnoses.
    In addition to that last night, I actually expanded the 
investigation to include the intents about patient center so 
that we can understand why it was actually closed, was there 
undue command influence in closing of it, has it had any 
negative impact on our patients?
    Since the closure of it, those capabilities in the program 
have actually not gone away. They have been merged into the 
other behavior health programs that they have there and so 
there still is outpatient, intensive outpatient capability. It 
has just been merged into their primary care behavior health 
programs that they have.
    Having said that, we are going to investigate to make sure 
that is actually true and that we are providing the best care 
to our servicemembers.
    Mr. Dicks.  Is there a standard, is the Army leadership 
saying, you know, returning to duty is our number one priority 
and are putting pressure on these doctors, like Kepler, to come 
in with decisions that, you know, I am told that Kepler would 
take files and change the diagnosis without talking to the 
patients. Now, is that acceptable, even for somebody who, with 
his background, can he just take a file and change the 
diagnosis----
    General Horoho. Sir, if I can.
    Mr. Dicks [continuing]. Without seeing the patient?
    General Horoho.  If I can address the first part and then I 
will address the second part, if you don't mind. Absolutely, 
the Army is not putting pressure on any of our clinicians.
    Mr. Dicks.  It really sounds like it and, you know, the 
Army has had a history here. We have had hearings before where 
there was analysis done of the Army versus the Navy and the Air 
Force, and it was found that the Navy, that the Navy and the 
Air Force had a higher rate of disability than the Army. Now, 
that is hard to conceive of.
    But, I mean, in other words, they were fairer. As you have 
said, you have got a standard, give them the reason, the 
benefit of the doubt.
    General Horoho.  The benefit of the doubt, sir.
    Mr. Dicks.  Well, apparently, the Army has had a long 
history of their being more concerned about money, frankly, 
than the soldiers. And you know I have great confidence in you, 
but you have got to get this straightened out. And apparently 
there is a problem at Landstuhl as well, which is mentioned in 
this thing.
    But, you know, we can't be getting rid of an intensive 
operations program because they came up with too many 
diagnoses. Either a person has got post traumatic stress 
disorder or not, and I don't see how a doctor can change the 
diagnosis without, without seeing the patient.
    General Horoho.  If I could just explain with forensic 
psychiatrists and psychologists; one, we have administratively 
removed Dr. Kepler while this investigation is ongoing, and I 
also have an investigation ongoing into Landstuhl with their 
behavior health practices across Europe.

            INVESTIGATION INTO BEHAVIORAL HEALTH PHYSICIANS

    Mr. Dicks.  You better look across the whole Army.
    General Horoho.  I am, sir. Yes, sir, absolutely. And that 
is part of what we have ongoing. So I am looking at the entire 
spectrum. I have a team that is formed. We also have an IG.
    I have asked the Department of the Army IG to actually do 
an evaluation investigation as well on the practices, so we are 
looking at this from a very strategically--with forensic 
psychiatrists and psychologists. But that practice that was a 
variance at Fort Lewis. Because they had that capability there, 
when they had patients that were going through the integrated 
disability evaluation system, when they had a diagnosis that 
the disability evaluator was unsure of whether or not it was 
PTSD or not, he then would refer the cases to forensic 
psychiatry.
    And then what they do is all administrative, it is not a 
patient encounter. And they look at all sorts of administrative 
data, and then they make that diagnosis. So that is why there 
wasn't a face-to-face encounter because it is actually not 
treatment. But that variance is not how we handle the 
disability process across all of Army medicine. And so it was 
an unfair disadvantage to those servicemembers, so we have 
suspended that.

                      BOARD DECISIONS ON PATIENTS

    Mr. Dicks.  Also, I was told that for a long time, the 
treating physician would write up a factual paper about the 
condition of the soldier. That was then taken away from the 
primary physician and given to a board to do. Why was that?
    And the people who were giving these things felt that it 
was improper to do this, that the physician who had looked at 
the patient, talked to the patient, diagnosed the patient, 
should be writing up the report, not some board. Do you know 
anything about that?
    General Horoho.  No, sir. But I will ensure that that gets 
looked into. You have my pledge that I am looking at this very, 
very hard. We take it seriously.
    Mr. Dicks.  I have got to tell you, General, it is hard for 
me to believe that these doctors are doing this on their own, 
that there has to be some direction. You know, I am told that 
your deputy was involved in this, and in changing the way this 
system was when you were at Fort Lewis. I hope that is not the 
case and I hope, I hope you didn't know about it.
    But that is what we are told.
    General Horoho.  Okay. Sorry, I will have all of this 
evaluated.
    Mr. Dicks.  Thank you, Mr. Chairman.
    Mr. Young.  Mr. Lewis.
    Mr. Lewis.  Thank you very much, Mr. Chairman, for, first 
of all, including me in this process as I am progressively on 
my way out of here. But nonetheless----
    Mr. Dicks.  You got 1 more year to serve.
    Mr. Young.  It was pointed out that you served as chairman 
of the subcommittee for years.
    Mr. Lewis.  Thank you.
    Mr. Young.  As well as chairman of the full committee for a 
brief period.
    Mr. Lewis.  Thank you, Mr. Chairman.
    Mr. Dicks.  Nice picture on the wall.
    Mr. Young.  Yes, it is ahead of my own.

                          COORDINATION OF CARE

    Mr. Lewis.  General Horoho and gentlemen, welcome to the 
committee and first let me say that we are very proud of the 
services that you provide to all of our servicemembers across 
the board and quality has to be our number one objective and I 
am absolutely convinced that it is.
    I will come back to you in a moment, General, to talk to 
the Army on a more positive note but in the meantime, in many, 
many years before Congress, I made an honest living in the 
private sector, and I very early on made the decision not to do 
business with physicians because they didn't know how to manage 
their own office, let alone respond sensibly to ideas that were 
outside of their realm, even though they are considered to be 
gods once they go through residency, sometimes you have to 
scratch your head.
    So having said that, as we go about reorganizing the way we 
are managing hospitals and delivering that quality service to 
these people, I am very concerned that we might have managers 
who have similar levels of experience that management, trying 
to make these changes, changed for the sake of change in terms 
of the way we coordinate service delivery at the hospitals, 
coordinate a better capability. Delivering care for the 
physicians ought to be our priority, but a careful, careful 
examination as we progressively go forward to this, that that 
might suggest that we undo this idea and start all over again. 
That should not be beyond the realm of your responsibility 
either.
    Admiral Mateczun, as you are going to be retiring from 
this, perhaps you will be in a position after that fact to come 
back and criticize what all of these people have been about. 
But it is really important that we examine and reexamine and 
reexamine.

                     POST-TRAUMATIC STRESS DISORDER

    Now, from there, relative to your question, Mr. Dicks as it 
relates to PTSD, the Army in our own region has an ongoing 
experiment. It happens in my district at Loma Linda, a 
university hospital where they are dealing with pain receptors 
and other elements of PTSD, it is diagnosis, care, et cetera, 
that apparently the Army is very fascinated with and there is 
an ongoing relationship that it is expanding that seemingly is 
producing some positive results.
    And I would hope, General Horoho and others, that one would 
look at those models that are working to help each other better 
understand what successful avenues we might be following.
    Another, this is largely at a rumor level, but it concerns 
me a lot. Early on, when this Member arrived in the Nation's 
Capital, it was suggested that if we ever had any serious 
medical problems ourselves, that we really ought to avoid 
Bethesda, for Walter Reed was the place to actually get some 
care in spite some of the controversies we saw relative to 
personnel, et cetera. I agree with you we ought to be dealing 
on the positive that was taking place there too.
    But that kind of myth around the halls of Congress was a 
reflection where some concluded that one group, one 
organizational delivery of health care systems was working 
better than others. I hope to God that, first of all, that 
wasn't an accurate reflection.
    But secondly, if there was any truth to it, I hope to God 
we don't bring these two groups together now at the Bethesda 
location, only to misorganize the whole process. I hear lots of 
complaints about traffic around Bethesda, but that is almost 
beside the point when you are talking about high quality care 
and delivery.
    So with that, I appreciate very much your being here and I 
would love to have your response to know if you are aware of 
that which is taking place experimentally at Loma Linda. And 
then beyond that, it seems to me it is important for you to 
know this committee wants to deliver the money for the best 
possible care and we will, but we are in it together to make 
sure that we use the money well. So thank you.
    General Horoho.  Thank you, sir. We are actually working 
aggressively to have collaborative partnerships with a lot of 
our universities that are out there, both in pain management 
with PTSD and also traumatic brain injury.
    Mr. Lewis.  Correct.
    General Horoho.  And the other area that we are looking at 
is evaluating whether or not tau proteins actually have an 
impact on PTSD symptoms and the way that we manage concussive 
care. And so I think there is tremendous opportunities as all 
of our services together partner with the civilian sector to 
look at best practices out there. And so that is one of the 
outreach programs that we are looking at.
    And then on the business aspect that you mentioned, one of 
the moves that we have ongoing right now across Army medicine 
is moving towards an operating model company. We are working so 
that we decrease our variance and we make sure that we have 
standards--not standardization--but standards across all of our 
military medical treatment facilities in the Army so that we 
look at outcomes and best practices.

COMMUNICATION BETWEEN WALTER REED NATIONAL MILITARY MEDICAL CENTER AND 
                     NATIONAL INSTITUTES OF HEALTH

    Mr. Lewis.  Another line of thought if you will, Mr. 
Chairman, the National Institutes of Health are just down the 
street from Bethesda's location. I have learned over the years 
that there truly are some phenomenal people there as well doing 
all kinds of things that take us right to that cutting edge. I 
don't know how aggressively or actively that this new 
coordinated effort at the Bethesda location will 
institutionalize regular communication that goes both ways 
between NIH and our new institutions. Could you respond to 
that, General?
    Admiral Mateczun.  Yes, Mr. Lewis, I can speak to that. The 
National Institutes of Health is literally across the street--
--
    Mr. Lewis.  Correct.
    Admiral Mateczun [continuing]. From this wonderful medical 
center, America's medical center. And we have already started 
relationships, for instance with the National Cancer Institute. 
We have co-located many of the cancer centers of excellence, 
which were sponsored in the past by this committee and others. 
We have put them together in a comprehensive cancer center, so 
it is the first comprehensive cancer center in the Department 
of Defense.
    And we are working with the National Cancer Institute to 
gain NCI Comprehensive Cancer Center designation. In fact, we 
are going to expand on that partnership to be able to make the 
latest in cancer protocols available, not just at Bethesda, but 
across the entire Military Health System.
    Mr. Lewis.  Well, the NIH is really very much on the 
cutting edge of cancer, identifying the causes of cancer 
treatment. And indeed it is that sort of coordination that I 
would very much encourage and appreciate. Thank you.
    Mr. Young.  Mr. Frelinghuysen.

               COMMAND AND CONTROL OF OPERATIONAL ASPECTS

    Mr. Frelinghuysen.  Thank you, Mr. Chairman. Like other 
members, I want to pay tribute to the remarkable men and women 
that work under you that have delivered our wounded from Iraq 
and Afghanistan and done it in a unified way between the 
services through Landstuhl and to Walter Reed and to Bethesda, 
some to Brook and some out to Washington State. It is 
remarkable what has been done, and I think--we thank you for 
it.
    The task force on Military Health System governance, so 
three of you have served on this task force, is that correct? 
This is sort of the focus on our hearing today, so are you 
intimately familiar with this final report?
    Admiral Nathan.  We are familiar with the report, sir, but 
I don't think we are were members of the task force itself.
    Mr. Frelinghuysen.  But the Army and Navy have bought into 
the report, so are we able to talk with you and get some 
answers to you as to why your services, the Army, Navy, 
endorsed option 2, or are you prepared to sort of talk about 
that?
    Admiral Nathan.  I think we can speak to----
    Mr. Frelinghuysen.  This is the future here.
    Admiral Nathan.  Yes, sir. I think we can speak to the 
genesis of the task force and why it was established and then 
to some degree, as it has not been officially released yet, to 
some degree as to why certain options appeared better than 
others.
    Mr. Frelinghuysen.  Well, under this option, military 
treatment facilities would remain under a respective service 
that has historically operated, is that your understanding?
    Admiral Nathan.  Yes, sir, the command and control of the 
operational aspects of the military treatment facilities would 
remain under their respective services at this time and then 
there would be an agency that would be created to share 
administrative services and to co-locate those.
    Mr. Frelinghuysen.  This is a $50 billion enterprise. It 
is, I think things, remarkable things that are done each and 
every day but there is always the constant comment that, you 
know, that this is the Army medicine, there is Navy medicine. 
But in reality, we hope that anybody who goes through that 
door, there would be a commonality of service delivery. Yes, 
Admiral.
    Admiral Mateczun.  Sir, if I can, I believe the part that 
you are reading, and my understanding was that related to the 
concept of markets. And so in these markets, where we have 
multiple service hospitals, they would remain under service 
control. That is separate from the discussion about what 
happens in the National Capital Region, just for clarification.

              OPTION TO ESTABLISH A DEFENSE HEALTH AGENCY

    Mr. Frelinghuysen.  Yes, we could be Walter Reed Center 
Care for quite a long time. I would like for them to get a 
better idea of the broader picture here. And five of the nine 
members of the task force voted for the military health system 
option 2 to establish a defense health agency that would focus 
on consolidating, delivering a broader set of shared health 
services and implementing common, clinical and business 
processes, which, of course, you mentioned.
    I just wondered if you--if any of you had any views as to 
what are the strengths of that recommendation?
    General Green.  Sir, I think I can talk to that.
    My secretary actually says it fairly well. When you are 
dealing with a military treatment facility that has mission 
problems, you look towards a command. And so basically when you 
have a very difficult mission, such as the integration of two 
hospitals, you set up a command to run those two hospitals and 
ensure that the chain of command is very clear.
    But when the mission is actually being accomplished well, 
and I now point to what we have done with warrior care in terms 
of bringing people back from the theater--sorry, when the 
mission is being accomplished well, then the question is if you 
want to do that mission more effectively, more efficiently, 
then that is probably the purview of an agency which will focus 
on the business processes and try to get us to some point 
standards that basically all of us would then attend to.

                        UNIFIED MEDICAL COMMAND

    Mr. Frelinghuysen.  You don't have joint standards now?
    General Green.  No, sir. We tend to execute through Army, 
Navy and Air Force.
    Mr. Frelinghuysen.  But I assume--yes. General.
    General Horoho.  Sir, if I can comment. When this report 
went forward, each of the services had the opportunity to 
comment on it as it went up to our chairman of the joint 
chiefs.
    Army went on record that our preferred course of action was 
a unified medical command because of the unity of command from 
continuity of care of the battlefield, to how we deliver care 
across all of our military treatment facilities. We are very 
much in support of looking at how do we collaborate and share 
services to see where we can find efficiencies. But the one 
concern is that the focus of just being on the delivery of 
health care and not focusing on the full spectrum of providing 
care in a war zone or humanitarian effort, because that is the 
full spectrum of what we provide.

                   JOINT POLICIES AND STANDARDIZATION

    Mr. Frelinghuysen.  But if you take, you know, all the 
servicemen and women who have been subject to TBI, traumatic 
brain injury, I assume there is not an Army or Navy way of 
dealing with that.
    So if you look at unity of purpose, how we assured, does 
the new model provide for that or does it exist now?
    Admiral Nathan.  It exists now to a great extent and all of 
us, I believe, speaking for the surgeons general, have a 
collaborative spirit where we all agree that we need to find 
efficiencies and joint policies and standardization, both for 
fiscal conservancy and for quality of care.
    The question is how do you get to the final end point of a 
joint concept, whatever that may look like, ranging from a 
unified medical command to a joint operating center with 
components. And the task force looked at ways to methodically 
reach that in looking at the multiservice market, management 
areas around the country, coalescing those first using funding 
and some command oversight and joint business plans in the 
areas to create jointness in those areas.
    It is a little different than the paradigm that exists in 
the National Capital Region right now. For all intents and 
purposes, care at Walter Reed in Bethesda and, Mr. Lewis, you 
brought up was there a distinction between the care and was one 
better than the other, was really the same. For many, many 
years, those staffs have been driving back and forth operating 
at both places, and the physicians who work there and practice 
there, many of them practiced in both venues.
    And so it was a great way to socialize cultural integration 
and acceptance prior coming together. So the staffs have been 
working together for years between those two facilities. Now 
how do we harness that synergy now that we are all together.
    Mr. Frelinghuysen.  Well, are you all together? You know, I 
happen to read what is called the MHS stakeholders report. I 
was struck by the fact that none of your, at least, in your 
case, your predecessor, that there is any mention of any of the 
other services in that stakeholder report.
    Part of what we are talking about here is overall 
governance and then the phrase changed, interoperability one 
day, jointness, you know 2 years ago, unified effort.
    I think what we want is actually a unified effort. It isn't 
reflected in a pretty basic document, which I think most 
members have here.
    Admiral Nathan.  And, sir, I believe we want that too. 
There are some great examples such as the enlisted training now 
that occurs in one location in San Antonio. The Navy has folded 
its tent at Great Lakes, the Air Force at Shepherd. We have 
relocated all of our training. The majority of our enlisted 
medical training now occurs together in the same classrooms by 
tri-service instructors and civilian instructors. And so I 
think we are seeing the seeds of jointness.
    I grant you, sir, the inertia of the system does not lend 
itself easily to all coming together rapidly. But I think if we 
can do this methodically and with the collaborative spirit that 
exists here, we can find the right milestones to get there.
    Mr. Frelinghuysen.  Thank you, Mr. Chairman. For all that--
--
    Mr. Young.  Would you yield just a second?
    Mr. Frelinghuysen.  Be happy to, Mr. Chairman.
    Mr. Young.  Admiral, your discussion of how Army and the 
Navy, Walter Reed, Bethesda worked together for years. And, you 
know, I think many of us are very aware of that and the fact 
that it worked very well.
    Was there a JTF-type organization over and above your joint 
operations between--with the Army and the Navy?
    Admiral Nathan.  No, sir. The JTF organization came into 
effect as BRAC was created, to be the oversight agency to help 
coordinate many of the functions at BRAC.
    Mr. Young.  So you did a pretty good job without that extra 
layer of bureaucracy, which I prefer to call it, because that 
is what it seems like it is to me.
    Mr. Visclosky.

                         COST ANALYSIS STUDIES

    Mr. Visclosky.  Thank you, Mr. Chairman, panel, thank you 
very much for your service.
    The task force completed its report review and report of 
recommendations to the Secretary of Defense in September. One 
of the assertions is that the task force review lacked cost 
savings estimate associated with the organizational 
restructuring. Have your services and organization participated 
in cost studies regarding the possible implementation of the 
recommendations, and what are the results of those studies?
    Admiral Nathan.  I am not aware of a formal study by the 
Navy as to delineating savings that are captured in the task 
force other than evaluating various courses of action as their 
efficacy and leading to a more unified command and control 
element.
    Mr. Visclosky.  The Army----
    General Green.  And the Air Force has not done a formal 
cost analysis. I think that the only thing that has been looked 
at is what has been presented with relative numbers of manpower 
that would be assigned to the various structures that were 
proposed.
    General Horoho.  And that would be the same for the Army, 
Sir.

         OPTION TO STREAMLINE OVERHEAD AND ADMINISTRATIVE COSTS

    Mr. Visclosky.  On the multiservice market governance 
models, option three was selected by seven of the nine task 
force Members, does a governance model effectively streamline 
traditional overhead and administrative costs or, to use the 
chairman's words in his closing remarks, are we adding another 
layer of administration?
    General Green.  Sir, the problem, if I could address the 
previous question as well as this one, we have very clear 
clinical guidelines in terms of how we practice the same 
medicine. But when it comes to business practices, our business 
practices are aligned by service. Because when you go back to 
how the joint document was written in Goldwater-Nichols, 
essentially execution is done by each of the services and so 
money, for instance, the Defense Health Program starts off as a 
joint appropriation and then is given to each service where it 
is then executed by the service through their own financial 
systems and, therefore, there is not the transparency that is, 
perhaps, necessary to look at some of the cost cutting and 
things that need to be done if you were to look across the 
services in terms of what is expensive and what is not 
expensive.
    And so we have been talking for some time about how do we 
improve our financial accounting and essentially take a joint 
appropriation and make it so that it was tracked by a single 
Service, financial system. But it goes beyond financial 
systems.
    The Air Force is the only Service that doesn't currently 
have functional commands. And so today I sit before you not as 
a commander of a medical command, but as a staff officer that 
works for the chief of staff of the Air Force.
    My influence over the various wings and their medical units 
is through how we basically oversee the money and the 
transparency of how we basically ensure uniformity in terms of 
how the Air Force practices is by how we administer money when, 
on the other side of that, if my counterparts were to talk, 
they actually have a command and so they have other authorities 
that they do.
    Those differences, in terms of how we administer and do our 
business processes, are what I think Representative Lewis was 
referring to when he said he didn't like doing business with 
doctors. In essence, you know, we tend to align to our line 
counterparts so that we are basically practicing and trying to 
be effective, similar to how our line is. That is how we built 
the aeromedical evacuation systems. We knew that we had to be 
light, lean and capable and fit on every plane in order to come 
back.
    Some people refer to that as cultural, but it is really not 
just cultural. Its execution of business plans.
    And so when you try and bring those business plans 
together, the question is are there common services that 
basically would create efficiencies across the three services, 
and that is where we were looking in terms of the task force. 
That is how the task force was looking to see what are those 
common functions that could be brought together to create 
better transparency and, therefore, better efficiency.
    Mr. Visclosky.  So, General, what is your answer, do you 
think the system will be more efficient because of this, and 
you mentioned transparency and costs clearly matter but, in 
this case, we are specifically talking about people's lives and 
their health. And so I think everybody on this committee wants 
to make sure we are spending every nickel we have to or we want 
to make sure we are spending it as efficiently as probable.
    Do you think it is going to lead to efficiency? You have 
mentioned discussions taking place as far as making sure there 
is greater transparency. Are those talks ongoing? Will there be 
recommendations coming back to the subcommittee about that?
    General Green.  Because a decision has not been made, we 
have not seen anything in terms of the decision on the task 
force has worked, I can't answer you in all honesty as to what 
the Department is going to do.
    But, from my perspective, if you don't have that 
transparency, you cannot judge what is effective and what is 
not in terms of when you compare the programs. It is one of the 
problems we have today is we compare, we have the same vision 
for the quadruple aim. We are all working in medical homes. We 
have done things to equalize the systems, and yet the way it is 
implemented across the three Services makes it difficult to 
actually look at which one is most effective and most 
efficient.
    And so in answer to your question, I guess I would tell you 
that when you look at the joint doctrine, there are many 
problems associated with whom we talk joint. And I have been in 
joint positions for 8 of my 34 years. The first joint doctrine 
starts with Goldwater-Nichols. And basically if you read it, 
doctors, lawyers and chaplains do not have joint positions. And 
so that is an oddity, okay, which actually we get to deal with 
fairly frequently, and so it makes it difficult for people to 
understand what you even mean when you say joint medical.
    Now, getting past that which is simply a legal issue and 
coming to the next step, we have trained our people in 
different systems. So stepping into the Medical Education and 
Training Campus and having our folks in terms of their clinical 
training, be identical, is going to help us a great deal to 
understand where we can work together and where, for instance, 
if you are trying to be interoperable and wanted to send an Air 
Force medic into an Army 68 Whiskey role, what training would 
have to be added?
    So, I mean, I would not put my people into that role 
without going through some training that the Army has created 
for their folks because of the different missions when they are 
on a helicopter. And so it is those kinds of things.
    My answer to you is, that we need to grow into this by 
looking at those things that are common where we do agree, and 
then we can build to it. Whether ultimately it is a joint 
command or a defense health agency, or none of the above and 
just a collaborative agreement between the surgeons, what we 
need is ways that we can grow to find things that are more 
common that we basically run the finance--I believe that the 
financing is key. If we can get to a common accounting system, 
we will start seeing the waste. And I am not talking about 
waste that goes towards patient care, I am talking about waste 
in terms of administration.
    Admiral Mateczun.  I think that the key to evaluating all 
of the options that are proposed is in relation to authorities. 
That is one of the keys because--and I think that the care is 
absolutely phenomenal at both Walter Reed and at Bethesda. We 
had a great success crossing over staff. However, in business 
operations, we gained no efficiencies through the market that 
was in operation in the National Capital Region before the JTF 
came into existence, and so it is more about business process, 
and unless you have the authority to consolidate assets, you 
are not going to be able to find efficiencies, and I will give 
you two examples of what we have been able to do recently.
    As we moved and consolidated call centers and our human 
resources center, by moving from two or three systems to one, 
we were able to achieve a cost savings of $830,000 a year just 
on the civilian human resources center that we use and $240,000 
a year on the call center. That comes through being able to 
direct people into a common location. You have to consolidate 
if you want to find shared services. And then moving to 
optimize the operations and the size of the workforce. And you 
have to have the authority to be able to mold that workforce to 
find the efficiencies that I think are necessary.
    Mr. Visclosky.  Thank you very much. Thank you, Mr. 
Chairman.
    Mr. Young.  Thank you, Mr. Visclosky. Admiral, you caught 
my attention there on that last statement. I am curious, what 
qualifications, what experience, what training do the staff of 
JTF have that makes them better at this job, this 
responsibility than the Surgeons General who have been running 
the military medicine for years?
    Admiral Mateczun.  I think we have no different knowledge, 
skills or experience. What we do have is a command and control 
authority that allows us to execute, the authorities to execute 
the mission that we have been given. When you are able to 
execute across the Army, the Navy, and the Air Force, and do it 
effectively, you can find efficiencies. We do not have any more 
knowledge. It is not a special secret. It is purely, I believe, 
a matter of the authorities and how you exercise them.
    Mr. Young.  Well, this seems to assume that the Army, Navy, 
and Air Force cannot do the job, at least not as well as JTF, 
but they have been doing the job for many, many years, and I 
have been here in this institution for 41 years, and I am very 
familiar with the operations at Walter Reed and at Bethesda 
over those many, many years, and as I said earlier, I believe I 
have witnessed miracles at those two hospitals. I have not had 
that much experience with the Air Force hospitals except when 
my son was there and had to go to the hospital at one point.
    Anyway, let me yield to Mr. Kingston.

                           COMMAND AUTHORITY

    Mr. Kingston.  Thank you, Mr. Chairman. Admiral, I wanted 
to follow up on that a little bit, but it is a question for the 
panel in general. In terms of the command authority, as I 
understand it, the Joint Task Force CapMed will report to the 
DoD, the Secretary directly, right?
    Admiral Mateczun.  That is correct, our charter has us 
reporting directly to the Deputy Secretary of Defense for now.
    Mr. Kingston.  Okay, but everybody else would go to their 
own service Secretary and their Surgeons General?
    Admiral Mateczun.  That is correct.
    Mr. Kingston.  Where I am having trouble following things 
on this hearing and where we are right now is I do not have an 
organizational chart or a schematic. I think it would be very 
helpful for members of this committee and also of Congress to 
understand what is the chain of authority and how does that 
organizational box look and how will it be changed. Do you have 
such a document?
    Admiral Mateczun.  Sir, I do not, but we will take that 
request back.
    Mr. Kingston.  I am not just necessarily asking you, but 
does one exist?
    [The information follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] 

    General Horoho.  Sir, we have our own individual 
organizational structures, but there is not one that shows what 
is and what will be. That analysis has not been done by the 
governance task force.

               FACILITY CONSOLIDATION AND OVERHEAD COSTS

    Mr. Kingston.  Well, let me put on a different hat. Down 
the hall I chair the Agriculture Subcommittee, and we are 
working with the Secretary of Agriculture on reorganization, 
and he has come up with a whole list of efficiencies, number of 
offices that can be consolidated, closed, number of employees 
who can be bought out, leases on cell phones, leases on office 
space all over the country, and I can follow what he is doing, 
but what I am hearing today is that there is going to be a lot 
of functions that can be reduced, and we are looking to find 
efficiencies, and we are looking to find standardizations, and 
we are looking to work together. I do not quite understand why 
we are still looking to the degree that my assumption would be 
you have always done that, and you have identified it, and what 
I would love to hear right now is here is what we figured out, 
of all the square footage that we have, we can consolidate, and 
the numbers are right, you have 56 hospitals, 363 clinics, and 
282 dental clinics; is that right? Something like that?
    General Green.  Yes.
    Mr. Kingston.  It would appear to me that right now you 
would be saying we have eliminated 10 of them because we 
decided they did not need to be freestanding, and then we 
combined 27 of them because we figured that the Marines and the 
Navy and the Army could all go together under one roof, but I 
am not hearing that.
    Admiral Nathan.  Sir, if I may, certainly I think each 
service is now looking very hard at each medical facility, be 
it a clinic or a hospital, and to its value both in purposes of 
training, patient care, and the ability to care for wounded. To 
echo what General Green was saying, even though those hospitals 
may have to remain standing and cannot coalesce because they 
are not geographically as proximal as, say, Walter Reed and 
Bethesda were, there is no reason regionally we cannot look at 
reducing overhead administratively, combining functions, and 
that is what the task force is----
    Mr. Kingston.  But, Admiral, the budget has come from 2000 
and $19 billion to now is it $51 billion? And it would appear 
to me that somewhat without being asked and without having a 
task force or study that we would have those numbers.
    Give you another example at USDA. The Secretary asked his 
employees how many of you turn your cars in every 2 years. 
Nobody, not one person raised their hand in this interagency 
discussion they had. And he said, So why should we? And it was 
just these common sense things that did not take an act of 
Congress or a lot of bureaucracy, and what I am--you know, we 
are all proud of the work you do, but we just heard the General 
of the Air Force and the Surgeon General of the Army say that 
you do not have--and I wrote it down because it caught my 
attention. You do not have cost analysis. Is that----
    Admiral Nathan.  We do not have cost analysis for this. The 
formal cost analysis from the services for this particular task 
force recommendations. We were not asked. The services were not 
asked to include that as part of their review for this 
particular task force recommendations. However, we are all 
extremely vigilant. And many of those common sense decisions 
have been made. If you look at the Navy, I will not speak for 
others, but if you look at the Navy map of medical centers and 
facilities today compared to just 10 or 20 years ago, no longer 
is there a Philadelphia, a Long Beach, a Naval Medical Center 
Oakland. We have closed some clinics overseas. We have taken 
other commands that were full commands and converted them into 
clinics, with smaller administrative oversights, mostly because 
we have looked at bang for buck, can we reduce the size of 
them, can we eliminate them? Will the beneficiary population 
tolerate it? And in those cases where we have, they have. So 
that is an ongoing process within the services. This goes above 
what we are looking at now. This goes above and beyond those 
intrinsic efficiencies we find in our services and looks for 
even more common ground where we can share administrative 
decisions among ourselves.

              HEALTH CARE COSTS--ANALYSES BY THE SERVICES

    Mr. Kingston.  Well, you know, we are concerned because 
this committee on a bipartisan basis has always felt that we 
have to be very careful in terms of the budgeting and not 
just--we do believe that the military services has to have a 
very careful look in terms of across-the-board budget cuts, but 
if the rescissions come in next year, 2013, and that ax swings 
in the direction that it will, we want to be prepared now, and 
it would be so useful for us to be able to tell our colleagues 
that you have gone out of that litany of offices. Here are the 
six or seven things that you have done that we can walk out of 
this hearing and tell people about, and I can do that on USDA, 
but I am going to walk out of here today a little bit blurry. 
In fact, real blurry, just as I came in. And that is why to me 
that organizational chart, and the organizational chart traced 
back to your budget in each box, which was one of the 
chairman's first questions because, you know, we need to work 
with you, we want patient quality to be the absolute best, that 
is a given, but we have got to also be really hard on ourselves 
within the military family and the committee.
    General Green.  Sir, if I may, the majority of the cost 
analysis that happens because of the financial accounting by 
service is through the Services. So, for the Air Force, from 
the time I came in where we had 140 hospitals, today we have 
15. Of those 15, three are joint, five are in geographic remote 
locations, and so we have done a lot of effective and 
efficiency strategies in terms of how we are going to structure 
things. And even before the BRAC, I can tell you that the Air 
Force had 3- to 500 people that were working in other Service 
hospitals, and today we have people that are working in various 
universities to maintain trauma skills for when they go to war. 
Even the single appointment system up here was first built down 
in San Antonio with the consultant and appointment management 
office that was built back in 2004 where we invested nearly a 
million and a half dollars from the Air Force into the BAMC 
structure to basically locate that there, and currently that is 
where the Wounded Warrior transition unit is. So there is a 
huge amount of cost analysis that goes in. It is typically done 
by Service with the exception being what is done at market 
levels, such as San Antonio, where we made the decision to go 
to a single appointment system, and this was prior to BRAC. So 
it does not have to be forced.
    Mr. Kingston.  Yes.
    General Green.  There are things that BRAC did, for 
instance, when we worked with the Army at Joint Base Lewis-
McChord and Pope, basically the Army picked up that mission and 
we did very, very small clinics simply to take care of some Air 
Force-specific needs, such as some of the flight clinics that 
we do, and same thing up at Joint Base Elmendorf-Richardson in 
Alaska where the Army did not bring in a lot of additional 
assets when they brought 10,000 additional troops into the area 
because the Air Force built that up and essentially established 
more services in terms of Joint Base Elmendorf-Richardson so 
that we could support the Army folks coming in. So it tends to 
be built based on the markets where we have those collaborative 
arrangements. Otherwise it is done by Service. And then Health 
Affairs creates the overarching rules that we look at each 
other in terms of what the incentives are and how we get money. 
So there is a huge amount of cost analysis, but it is done by 
Service.
    Mr. Young.  Mr. Kingston, can you yield for just one quick 
question?
    Mr. Kingston.  Yes.
    Mr. Young.  General Green, your comment about you had 
several joint operations now; is that correct?
    General Green.  Assignments you are talking, sir?
    Mr. Young.  Yes, you said you had----
    General Green.  I was the USCENTCOM surgeon and the 
USTRANSCOM surgeon. I have 2,000 people now at SANNC in San 
Antonio, 300 people that work in Landstuhl in Germany, and 
about 150 people that work here between Walter Reed Bethesda 
and Fort Belvoir.
    Mr. Young.  My question on that is do you have any 
organization like the JTF that is sort of a superstructure over 
that jointness?
    General Green.  No, sir.
    Mr. Young.  Thank you.
    General Green.  Well, for the joint hospitals, I have ADCON 
back to the organizations that are in that area, which is what 
Admiral Mateczun referred to.

      RELATIONSHIP BETWEEN JTF CAPMED AND INSTALLATION COMMANDERS

    Mr. Kingston.  Mr. Chairman, I know I am out of time, but I 
have a question that is right on the back of yours, and I would 
like to know what is your view of the relationship between the 
command of JTF CapMed and the hospital and installation 
commanders? Is that a good relationship or is there dynamic 
friction? And is it positive or negative?
    General Green.  Are you asking me?
    Mr. Kingston.  Yes.
    General Green.  There is friction. I think that the JTF was 
very much required to integrate two very large facilities into 
a single operation for the BRAC, but from my own personal 
perspective, because we do not have joint credentialing 
guidance and joint nursing policy and joint patient 
administration, we really need to operate the hospitals today 
by one Service's rules, and so there is friction because the 
JTF would like for us to move towards more joint oversight, and 
because that does not exist yet, trying to move in that 
direction is difficult.
    Mr. Kingston.  Thank you. Thank you, Mr. Chairman.
    Mr. Young.  Ms. Granger.

                         REMARKS OF MS. GRANGER

    Ms. Granger.  Thank you. I am going to join Congressman 
Kingston. I came in here to learn and to ask some questions, 
and this seems to me muddier and muddier, and what we are 
trying to do, of course, is to deliver quality health care in a 
time where you know, our men and women are coming back with 
some terrible, terrible situations, and we do it in an 
effective, efficient way, and to do that, because we are in a 
crisis and we know what is coming down, it is more cuts, and so 
you have got a quagmire here, it seems to me, and are you 
moving toward that solution? Because it has to happen. I mean, 
it cannot continue. I had a base that was in my district that 
was set for closure and then realigned as a joint reserve base, 
and for a while it looked like instead of saving we were going 
to spend as much money as we could to put walls so every branch 
of the military could have their own set of circumstances, and 
finally from good leadership said, no, we are joint, and we are 
going to do everything we can joint. We are going to contract 
jointly, we are going to purchase jointly, we are going to do 
that. And that is what has to happen. There has to be 
leadership that says here are the problems that we are 
experiencing, and now how are we going to resolve those? And it 
may be coming back to us and say the way you think they can be 
resolved is not the way that they can be resolved, but are you 
listening also to those that serve?
    For example, I think at Walter Reed, you know, there are 
reports that there is a high turnover, that if you have this 
confusion of command and control, then how does that play out 
on a day-to-day basis with those medical health care 
deliverers, and certainly the patients that are there, and 
oftentimes it is at that level they say, hey, this does not 
work. So we are trying to work around an unworkable situation. 
So I would hope that if there are successes, and General Green, 
you talked about those successes, for goodness sakes let us 
know that so we can walk out of here or at any other meeting 
with a better picture of what is happening than we have today. 
And where it is not working, then for goodness sake, let's work 
together to say it has to be done this way. If not, it will 
deteriorate. Instead of saving money, it will not save money. 
It can very, very alarmingly affect the health care, the 
delivery of health care.
    So I do not have a question. That is just my observation 
and concern. Thank you, Mr. Chairman.
    Mr. Young.  Thank you, Ms. Granger.
    Mr. Moran.

             BETHESDA JOINT ARMED FORCES HEALTH CARE CAMPUS

    Mr. Moran.  Thanks, Mr. Chairman. When I was in premed and 
Air Force ROTC, it struck me as strange that we had no 
cooperation or collaboration with the Navy-Marine Corps ROTC on 
campus. We were told that the culture and the mission were so 
different. But certainly the mission of healing the human body 
is identical. We took the same education training, the same 
procedures were to be applied. Since DoD was put together in 
1947, there have been 10 reports that have strongly recommended 
an integration and unification of the military health service 
function among the services, and in 2005 GAO identified DoD's 
health care system as an example of one of the key challenges 
facing the U.S. Government in the 21st century to achieve 
economies of scale and improve delivery by combining, 
realigning or otherwise changing selected support functions. I 
could go down a list of other studies, but they reach 
consistent conclusions. It does not make sense to have separate 
medical care among the services, and so the combination of 
Walter Reed and Bethesda was to be the national example, 
international example in the Nation's capital of how we would 
do that. So it is a bit frustrating when we hear reports from 
folks who allege to know and would have reason to know what 
they are talking about of a, and I put in quotes, dysfunctional 
leadership arrangement is the term we are told at the combined 
Walter Reed campus.
    So let me ask General Horoho, who was not even alive when I 
was taking Air Force ROTC and premed, I will bet, and Vice 
Admiral Nathan, do we have a patient-centered, collaborative, 
Joint Armed Forces health care campus at Bethesda?
    Admiral Nathan.  Thank you, sir, and it is a very important 
question. Yes, we have a great example of a jointly staffed 
facility that by and large is taking even better care, if I 
could say that, of patients than they did before because they 
are finding collaborative practices now that they are under one 
roof. The Army is seeing things the Navy did that they like, 
and the Navy is seeing things the Army did at Walter Reed that 
they like.
    That said, this is, as I said before, this is a new 
paradigm. The command and control which, for Walter Reed Army 
Medical Center, rested entirely within the chain of command of 
the Army, to the Secretary of the Army, and of the National 
Naval Medical Center, which rested through the Navy Surgeon 
General to the Chief of Naval Operations through the Secretary 
of the Navy now resides under the command and control of the 
Joint Task Force, the commander of the Joint Task Force, and we 
all recognize that, who works directly for the Deputy Secretary 
of Defense. So the services now no longer have full cognizance 
of or control of that system. So they are looking for ways, 
since that chain of command, a Joint Task Force commander 
reporting to the DEPSECDEF, is new and does not have some of 
the administrative robustness that the services had before when 
they each owned each hospital.

        JOINT MEDICAL FACILITY BETHESDA COMMAND BILLET ROTATION

    Mr. Moran.  Well, I do not want to interrupt, and we do 
seem to be repeating ourselves, but it is 65 years now that 
there has been a consensus that we ought to combine our 
military medical services because the mission of healing the 
body is the same and the procedures are the same. This is 
supposed to be the best example, and it seems to fall short.
    Let me ask you, is the commanding officer a rotational 
billet among the services?
    Admiral Nathan.  Yes, the commanding officer at this time 
is Admiral Mike Stocks, and it is not codified yet as to what 
the rotation is, but it is presumed that the next commander of 
the new Walter Reed would be any service, best qualified 
candidate of any service. And, sir, if I may, just to say, yes, 
there are growing pains there. All the members here have been 
personally interested in this, and you have come out, and you 
have walked the deck plates, and you have heard some of the 
staff and perhaps some of the patients complain about, boy, we 
did not do it this way at Walter Reed or, you know, we used to 
do it this way at Bethesda, and that is the cultural 
integration that has to occur. Some of that is the cost of 
business, but there is, as I have just stated, this is a new 
chain of command format that presently has not been, you know, 
precedent in military medicine, and so they are finding their 
way through it. Part of the task force, the genesis of the task 
force was to see how they could move from this paradigm of a 
Joint Task Force reporting directly to Deputy Secretary of 
Defense to a more codified organizational table that you are 
looking for.
    Mr. Moran.  Well, is the TDA for Walter Reed-Bethesda a 
joint document? It is not?
    Admiral Nathan.  Not that I am aware of, no, sir.
    Mr. Moran.  Well, the table of distributional allowance, if 
it was joint, would require the integration of all Navy and 
Army personnel into one joint command document. Admiral 
Mateczun, do you want to address that?
    Admiral Mateczun.  Yes, Mr. Moran, thank you for the good 
question. There has been a decision by the Department that 
these facilities would be manned on a joint table of 
distribution. Because we----
    Mr. Moran.  But they are not now?
    Admiral Mateczun.  They are not now. We have put them all 
on what is known as an intermediate manning document. What we 
wanted to do was to allow the flexibility in the first year in 
operation to make sure we were able to adjust between the 
hospitals if we hadn't gotten it quite right, if the 
organizational structure or the people were not assigned in the 
right place, but the current decision is that they would be 
manned on a joint table of distribution.
    Mr. Moran.  They will be, but they are not, okay.
    Admiral Mateczun.  But there are supporting--there are 
Memorandums of Agreements (MOAs) between the JTF and the 
services for all of the military people assigned.

                CROSS-SERVICE MEDICAL PERSONNEL STANDARD

    Mr. Moran.  Let me just ask a very similar--is there a 
cross-service medical personnel standard? Is it the same across 
the services? General?
    General Horoho.  Sir, I just spent 4 months in Afghanistan, 
and I can tell you, at the point of health care delivery in a 
deployed environment, having Army, Navy, and Air Force working 
together, one standard of care, one chain of command, and 
everybody working together for a common mission. So we 
absolutely know how to do jointness and provide care.
    Mr. Moran.  I know you know how to do it, and in a combat 
situation in Afghanistan, you do do it. The problem is back at 
home here where we are trying to implement something that we 
have known was going to happen for some time, we are not 
necessarily doing it because we do not have the personnel and 
the line authority, et cetera. That is the purpose of the 
hearing, is it not, Mr. Chairman?
    Mr. Young.  It is one of the major purposes.
    Mr. Moran.  Well, yeah. Why cannot we do here what we have 
to do in Afghanistan and actually do quite well when we need 
to?
    General Horoho.  I would say part of it is the unity of 
command and having, we have different processes for 
credentialing, different personnel systems, which is why we 
went to the DoD civilian personnel system, so we had one 
standard for our civilian personnel. This is a maturation 
process that we have to identify what are all those business 
processes and standards that are different? Delivery of care is 
not different, but the way that we manage is different, and 
those, we have to find that commonality for shared services.
    Mr. Moran.  Well, I think my time is up, but the 
professionalism, the quality of the personnel is terrific at 
Walter Reed and at Bethesda. This is no slight as to the, you 
know, the excellence of the people assigned to this duty, but 
there does seem to be a shortfalling, a deficiency in terms of 
the administrative structure that they are governed by. I do 
not have a problem with Joint Task Force. It seems to me that 
was the most expedient way to do it, but it seems as though 
these growing pains are going to have to be dealt with on a 
more expeditious basis perhaps.
    Mr. Kingston.  Would the gentleman yield?
    Mr. Moran.  Yeah, sure. I mean, it is the chairman's time.
    Mr. Young.  I will yield. Are you through?
    Mr. Moran.  Yes.

              WOUNDED WARRIOR PROCESSING BETWEEN SERVICES

    Mr. Kingston.  Let's talk about Afghanistan. If you had, 
say, a soldier in the Army who is injured by IED, from there 
goes to Landstuhl, from there Walter Reed. Where does the 
difference begin? Let's say there was a soldier and a Marine, 
both injured, same accident, similar injury, they are side by 
side in the field, and then do they get separated in Landstuhl? 
Do they get separated in Walter Reed? And when does the 
paperwork start deviating, and do they both have that microchip 
in their uniform that gives their blood type and their medical 
history, you know, the----
    General Horoho.  Not that I am aware of on the chip now.
    Mr. Kingston.  Okay. So where do the two of them who are 
side by side, injured in the same accident, where does it start 
to split in Mr. Moran's question?
    General Horoho.  As they get transported out of Afghanistan 
and go into the system commonality through----

               UNITY OF COMMAND IN DEPLOYED ENVIRONMENTS

    Mr. Kingston.  The minute they leave theater?
    General Horoho.  No, no, I am just taking you through. So 
all the way through, and then they can, when they arrive back 
in the continental U.S., if they arrive and they get assigned 
to Walter Reed National Military Medical Center, then there is 
a chain of command following it or JTF CapMed. Or if they went 
to Brooke Army Medical Center, then there is a chain of command 
which is Air Force and Army working together under a different 
set of business rules. Or if they go out to Madigan Army 
Medical Center there is a different chain of command which is a 
straight Army chain of command. So it really is in our overall 
governance structure where things are different, but the 
delivery of the health care is the same across the board.
    If you go to any one of our military treatment facilities, 
Sir, whether it is Army, Navy, or Air Force, we are joint at 
the patient care because we treat Army, Navy, and Air Force. 
There is not a single hospital that only treats their own. And 
so we base our care on demographic patient population, all 
having business plans, doing the analysis, working to try to 
pull more work into our military treatment facilities vice into 
the civilian sector so that we are more able to manage the cost 
containment of health care, and even looking at shared services 
with the VA where we can better collaborate in certain 
geographical areas. So that work is ongoing, but it is the 
governance structure of each of those that makes the 
difference.
    General Green.  If I may add to that, the reason for the 
unity of command that you see in a deployed environment is 
because of the combatant commands, and so it is USCENTCOM that 
actually establishes what the medical guidelines will be and 
how the evacuation system will work, and basically drives that 
unity of effort until they get back to the States, and once 
they get back to the States they come back into the Service 
systems because there is not a unified command that has 
oversight of the U.S.
    When you look at Goldwater-Nichols, it was not established 
purposely, and now that USNORTHCOM is in place, but USNORTHCOM 
does not have oversight per se over the Services, they have 
components that have specific purposes, but they do not oversee 
the Services as they deliver, all Services, including health 
care, and that is why you do not have the same unity when you 
get back to the States.
    Mr. Moran.  Well, it bears noting, Mr. Chairman, that at 
Fort Belvoir it is actually working quite well. We have not 
received one single complaint. It is under Army command. It is 
working beautifully. I do not know why that is not necessarily 
the case at Bethesda. I think it is just something we need to 
look into, but it bears noting that Belvoir is working just 
fine, no complaints whatsoever.
    Thank you, Mr. Chairman.
    Mr. Young.  Mr. Calvert.

               CONSOLIDATION OF HEALTH SUPPORT FUNCTIONS

    Mr. Calvert.  Thank you, Mr. Chairman. Good morning. I want 
to thank you for your service and your leadership. We certainly 
all appreciate you, but before I get to my line of questioning, 
I do want to make a comment.
    If the traffic management and parking arrangements at the 
merger of Bethesda and Walter Reed is any evidence of what is 
going on inside, we are in trouble. The several times I have 
been there, it has been difficult.
    In November of 2006, the Deputy Secretary of Defense 
approved a plan to consolidate common health care services 
functions, finance, information management, technology, 
support, logistics, the rest of it. In 2007 the GAO criticized 
the plan because DoD had failed to do a cost analysis of this 
merger. May 24th of 2011, the administration said DoD would 
shortly complete a study on how best to deliver high quality 
medical care to service members and their families in an 
effective and cost efficient manner. On September 29th of 2011 
a task force on military health care system governance released 
its final report, recommending that a variety of health care 
support services, as we have been discussing, be consolidated 
into a defense agency, DHA, including finance, information 
management, as I mentioned earlier.
    The recommendation, therefore, is essentially the same, 
essentially the same recommendation that was made 5 years ago, 
and it still does not have an estimated cost savings analysis 
that has been completed. So I guess the logical question would 
be, has any--I heard mention of a consolidation of a call 
center, but has any consolidation of health support functions 
occurred since November of 2006 that you are aware of? And if 
not, why not?
    Admiral Mateczun.  Sir, in the NCR I think is the example 
of where we have had consolidation. I will give you an example 
of the power of being able to work across services with the 
right authorities. We had two hospitals, very large size, that 
needed to be outfitted. That is, we had to buy all of the 
equipment that goes into them, and one of them was an Army 
hospital at the time, one of them was a Navy hospital. We were 
able to consolidate those two contracts. It was a cost estimate 
of around 319----
    Mr. Calvert.  Is that the extent of consolidation?
    Admiral Mateczun.  We saved over $77 million just by 
consolidating the contracts, and then in execution we were able 
to save an additional $39 million, another 9 percent on the 
contract cost by having the authority to be able to consolidate 
some of those shared services, if you will, and part of the 
response, I think, to the GAO report is what has happened in 
the NCR in terms of being able to achieve shared services.
    Mr. Calvert.  So NCR is the----
    Admiral Mateczun.  National Capital Region.
    Mr. Calvert.  Is that the only consolidation that took 
place?
    General Green.  No, sir. You also consolidated the two 
large hospitals in San Antonio with Air Force and Army coming 
into one, saving about 500 manpower positions, and they now 
work under a structure that is overseen by the Army in the 
large facility, in other words works by their system, and has a 
market oversight that is shared between the Air Force and the 
Army. You have also seen consolidation in Alaska of services 
there, you have seen consolidation at Pope and also out at 
Madigan and Joint Base Lewis-McChord. There has been 
consolidation and closure of hospitals in Colorado Springs. 
Now, many of these are BRAC in terms of what was driven by 
BRAC, but there has been a great deal of consolidation. The 
November 2006 memo that you are referring to----

                           COST ANALYSIS DATA

    Mr. Calvert.  You say a great deal of consolidation. I 
mean, we are sitting here. I guess from my perspective looking 
at this, I do not see a great deal of consolidation. If 
consolidation is being done and you are analyzing costs, why 
was a cost analysis never done?
    General Green.  I cannot answer why a cost analysis was not 
done.
    Mr. Calvert.  How do you know, really? I am a former 
business guy. I came up here. You know, I just look at it from 
a business perspective. How do you really know what you are 
saving unless you do an analysis of what you are doing?
    General Green.  We agree. We are not disagreeing with you, 
sir. The November 2006 memo was overtaken by events at Walter 
Reed and establishment of the JTF, and so you did not see some 
of the things that were proposed back in November 2006 because 
of the efforts that went into basically trying to improve the 
wounded warrior care.
    Mr. Calvert.  You understand the position of this 
committee, since the task force recommendation largely just 
rubber stamps a decision that was made 5 years ago, why should 
we believe any changes are going to be made this time? I mean, 
to the extent that we would like to see made. We are talking 
about difficult decisions that this committee is going to have 
to make shortly, and we have got to have, I think, pretty good 
evidence of how we determine what those final decisions are 
going to be, and I do not see any great evidence on how to move 
forward here.
    General Green.  I think that the Department of Defense 
would share your frustration in terms of not having all the 
information that they would like to have to determine how to go 
forward with this, and so, again, we can give you our personal 
inputs on what should be done, but it is hard for us to speak 
for the Department when there has not been a formal decision 
with regards to what their recommendations are going to be on 
the task force. The three of us, as Surgeon Generals, before 
you understand completely that we need to collaborate and find 
ways to basically be more effective and efficient as we provide 
quality care and take care of America's most precious resource 
in terms of the people who have defended this country. And so 
we are with you, but we cannot say why the Department does not 
have the cost data that you require right now.
    Mr. Calvert.  You know, I guess I am just frustrated that 5 
years, and where are we going to be just here in 5 months when 
we are going to have to make some difficult decisions with the 
chairman? So that is the extent of my questions, Mr. Chairman.
    Mr. Young.  Thank you, sir.
    Mr. Cole.

                 SCHEDULED MEETINGS TO DISCUSS PROBLEMS

    Mr. Cole.  Thank you, Mr. Chairman, and I want to join 
everybody else, just thank you very much for your service, and 
obviously you look at survival rates and you look at disease 
rates, and you know we have been in two wars, and you have done 
an extraordinary job. A lot of us had an opportunity to visit a 
lot of medical facilities, both in the field in Iraq and 
Afghanistan and in the various way stations, and the care, the 
compassion, the focus on helping the wounded warriors through 
this is remarkable. So thank you very much.
    Having said that, I think I am like the rest of my 
colleagues, a lot of the presentation, and perhaps because I do 
not know a great deal about health care, is sort of opaque. I 
do not think we have really gotten a lot of issues defined as 
to what the big challenges you are facing are. I mean, there is 
a lot of rhetoric, but back to Mr. Kingston's point, not a lot 
of specifics, this to this and this to this, and I think we 
probably need a little bit more of that going forward.
    Let me focus on a couple of areas that I have particular 
interest in. One, just out of curiosity, do the three of you 
meet regularly? I mean, do you have like scheduled meetings 
where you literally sit down in the same way the Joint Chiefs 
do and say these are the common problems we have across the 
service?
    Admiral Nathan.  Absolutely, yes, sir.
    Mr. Cole.  Pretty frequent?
    Admiral Nathan.  If I could be so bold, I think that the 
three of us have energized actively collaborative meeting and 
spirit that I think has set the bar so far.

                      DOWNSIZING AND BUDGET IMPACT

    Mr. Cole.  That is great. That is good to hear. Thank you 
very much.
    Second question, and this maybe is a premature question, to 
be fair to all of you, because we haven't seen the budget yet. 
We all know we are going to be going through a downsizing over 
the next several years, we are going to have pretty difficult 
decisions to make in that regard. You have developed some 
astonishing capabilities, and they have not only served us very 
well on the battlefield, they have served us very well in other 
areas, the work that has been done by military people during 
Haiti and have really helped the image of the United States of 
America. So I am concerned, as you look forward, what kind of 
downsizing do you see in terms of your capabilities? What are 
you most concerned about losing, if anything, in the next 
several years?
    General Horoho.  Sir, my biggest concern is that as we 
reshape the Army, and we have troops coming home and longer 
dwell times, we are going to have a large population that we 
will still have to support with either behavior health concerns 
or traumatic brain injury and concussive care. So it is 
ensuring that we have that capability for the period of time 
that we are going to need it, so I think there is going to be a 
period as we draw down on the number of troops that we will 
have a large number that is still going to require care, and so 
the effort that I have ongoing right now is analyzing what 
capability do we need, where do we need it, and ensuring that 
we have that available for the outyears.
    Admiral Nathan.  Sir, I would echo that. Regardless of what 
happens to our medical footprint in the services, the health 
benefit requirements will probably stay about the same, and so 
how do we balance what we do within our own system with what we 
send outside of our system to the networks, to the private care 
sector, which can be pretty expensive? So we have to look at 
that.
    And then from a Navy perspective, as you mentioned, one of 
the quivers that we have to draw on is humanitarian assistance 
disaster relief. These missions can be expensive, and they can 
be sometimes material intensive and personnel intensive, yet 
they do a great deal of good and they are wonderful venues to 
show the ambassador, the ethos, and the compassion of the U.S. 
to other countries. So we are monitoring that closely to see 
just how much we can afford of that and try to maintain that 
presence.
    Mr. Cole.  Well, when you deal with one of those, I am just 
trying to remember myself, I mean, how often have we recognized 
that from the appropriations standpoint do we put an extra 
unanticipated burden on you and help defray that expense or do 
you just sort of have to eat the cost?
    Admiral Nathan.  Well, there has been appropriated money 
for those missions, and we are looking at now in the Navy, for 
example, the hospital ships, extending their shelf life, 
looking at how we can build, how we can and if we can build 
newer platforms to maintain those missions, at the same time 
sharing a warfighting responsibility. Many of our gray-hulled 
warships now do, they also carry humanitarian packages and 
often pull into port to do humanitarian work, which we think is 
a great bang for the buck. So, again, Congress has formally 
recognized those programs.
    General Green.  And I think that we would echo what my two 
counterparts have said. I would tell you that as we come out of 
the war, one of my major concerns is because we have downsized 
our hospitals so significantly that we need to be able to 
maintain these skill sets for our folks to take care of trauma 
and to do this critical care that has been so vital in this 
war, so we have been doing a lot of partnerships with local 
universities, making certain that our folks are working at 
Level 1 trauma centers, et cetera, and the other side of that 
is that because of the war and the focus on the deployments, we 
also need to make certain that we are offering the kind of care 
that everyone wants to come back to, and so we are looking at 
how we bring people back into our system to keep our hospitals 
as robust and as busy as we can because we know that physicians 
who have a busy practice are more likely to stay with us.
    Admiral Mateczun.  Thank you, Mr. Cole. One comment. From a 
strategic perspective, there has been a shift during this war 
with the great work that the critical care air transport teams 
have done and being able to move critical care patients back 
from theater. It used to be that we had to put out deployable 
platforms that kept them in theater for 2 or 3 weeks, sometimes 
a month before they could be coming back as they were in past 
wars. Thanks to General Green here and a lot of great work in 
the Air Force, those things started up with Operation Iraqi 
Freedom, and we now no longer have to have the number of 
deployable platforms that we did, but those patients are still 
in beds for the same length of time. It does not shorten the 
time that they are requiring care, and those beds are now here 
or in Landstuhl. And so we have to make sure that we maintain, 
as General Green says, I think, the number of beds that we need 
to be ready to take care of the casualty flow of the future.

          COORDINATION WITH THE DEPARTMENT OF VETERANS AFFAIRS

    Mr. Cole.  Two other quick questions, maybe not too quick, 
but obviously you have got patients, particularly critically 
wounded patients that go through a continuum from battlefield 
to transportation to Landstuhl to back here, a lot of those 
folks eventually leave the service. How comfortable are you 
that you are coordinating well with the veterans facilities and 
the care that they are headed to next? I mean, there is 
obviously a lot of opportunities along the way for somebody to 
slip through a crack accidentally.
    General Green.  I think that the work we are doing to 
improve the integrated disability system is helping with 
coordination with the VA. I think that the work we are doing 
with the integrated electronic health record to get to a single 
health record will take that much further. I think that there 
is a spirit of collaboration, and it has been steadily 
improving in terms of eliminating seams between VA and DoD to 
make certain that we do not lose somebody, that they have care 
immediately, and so there has been a lot of progress towards 
that, but I think there is still work to be done.

                         HEAD INJURIES AND PTSD

    Mr. Cole.  Last question. Thank you, Mr. Chairman, you have 
been very gracious. One of the areas that I think has concerned 
this committee, we have learned an awful lot more about head 
injuries in the last decade, you know, both at peace and at 
war, than we have known in a long time. I know there have been 
several efforts to have, you know, a little testing, joint 
centers to look at this. I have never been a hundred percent 
convinced we have really gotten to where we need to go, both in 
terms of before and after testing for people as we deploy them 
into combat theaters and best practices once they get back. So 
I would just sort of like a quick update from you on what we 
are doing on the head injuries and post-traumatic stress, for 
that matter.
    General Horoho.  Sir, I will start in Afghanistan, if I 
can, and then kind of bring you through. In Afghanistan we now 
have 11 concussive centers that are jointly manned, one 
standard of care, and this has been implemented over the last 
probably 12 to 18 months of having a DoD standard for how we 
manage. So if someone is exposed within a 50-meter radius to an 
IED blast, they are evaluated with a concussive care 
evaluation, they have mandatory 24-hour downtime, and then we 
have three neurologists that are in theater, so if they need to 
be evaluated because the symptoms showed that they have a 
concussion, they are then treated within these concussive care 
centers and can be there for several days up to several weeks.
    Mr. Cole.  Are you comfortable that you have got a 
baseline? Again, we have been sort of round and round about 
this, and I am not pointing fingers at anybody. I think we are 
all struggling to try to figure out what the appropriate things 
are so that when a soldier has an incident like you just 
described that we know sort of where they have started so you 
have got a comparative point of reference.
    General Horoho.  We have everybody that is taking the ANAM; 
so they are being evaluated 100 percent before they deploy, 
they are being reevaluated when they are exposed, and then that 
is documented both on the blast exposure side and then also on 
the medical side so that we can cross-reference and make sure 
that someone has not dropped through the cracks with that. We 
have a 90 percent return to duty rate of those in theater that 
have been exposed to an IED blast, and then we have also worked 
so that we have one standard of training for Army, Navy, and 
Air Force pre-deployment so that everybody is implementing the 
concussive care clinical practice guidelines the same way, and 
then having that capability back within our military treatment 
facilities, and then we are also standing up various satellite 
clinics to look at concussive care that actually marries up to 
the NICoE center on the Bethesda campus.
    Mr. Cole.  Thank you very much. Thank you, Mr. Chairman.
    Mr. Young.  Mr. Hinchey.
    Mr. Hinchey.  Thank you very much, Mr. Chairman.
    Mr. Young.  I was going to say the patient Mr. Hinchey.
    Mr. Hinchey.  Pardon me?
    Mr. Young.  The patient Mr. Hinchey.

        DOWNSIZING IMPACT ON MILITARY HEALTHCARE IN RURAL AREAS

    Mr. Hinchey.  Yes, indeed. Thank you very much. I deeply 
appreciate everything that you do, and all of those things are 
critically important, of course, and they have a big effect on 
a lot of people, and I very much appreciate the answers that 
you have had to the questions that were set forth. I have a 
couple of simple things to ask.
    The circumstances that we are facing now have a lot of, a 
good number of people who have had experiences of physical and 
psychological in the context of the wars that they have been 
engaged in, and particularly I guess Iraq and Afghanistan 
recently. Those people, a lot of them are located in places 
that are remote, even in a place like New York, and in other 
places across the country. What is going on to try to help 
them, to try to get them to the kind of circumstances that they 
need? I know that there are a lot of people who are really 
necessary to get this kind of attention, but so far a lot of 
them aren't. What can be done to deal with it? And, frankly, I 
understand also that the base realignment and closure is a 
situation that is reducing this whole operation, and I 
understand that there may be some more of that. So what is 
going on with those kind of circumstances with those people in 
those kind of rural areas and the physical and psychological 
efforts that they have suffered in the context of the operation 
that they have been engaged in?
    Admiral Nathan.  I will start, Mr. Hinchey. There are two 
aspects that we worry about. One is we think that people are 
getting leading edge care for post-traumatic stress and 
traumatic brain injury in these epicenters of care such as 
Walter Reed and San Antonio and San Diego, so how do we make 
sure that they get that kind of care with some of the advances 
in some of the spaces you talked about where they are away from 
that? And then secondly the administrative support, what is 
their management of care, how do they get the appointments they 
need, how do they get the proper follow-up with the right kind 
of people to do that? One of the things we have done is create 
the National Interpid Center of Excellence for Traumatic Brain 
Injury, the NICoE, that exists on the Bethesda campus. Its 
purpose is threefold. One, it has all the latest and greatest 
diagnostic and therapeutic materials, but it treats a small 
cohort of patients. It is not designed to take care of the 
enormous numbers that my colleagues have talked about that we 
are going to be facing in the coming years, but it is looking 
at ways to find recipes, if I may, for better treatment of 
Post-traumatic Stress and Traumatic Brain Injury and then 
exploiting that. Its second purpose is research, to collate 
data from our patients. Our patients are unusual because, 
unfortunately becoming too usual, but unlike motor vehicle 
accident patients or trauma patients in the States, most of our 
patients are suffering these concussive injuries that General 
Horoho was talking about, and how to approach them and 
recognize them both in the near term when they suffer some 
problems and then latent periods where maybe years later things 
will start to pop up. How do we catch them and what safety net 
exists for them? And then finally the third is a collaborative 
mission of the NICoE, and General Horoho was talking about the 
satellites that are going to be created throughout the country 
on a smaller scale of these.
    The collaborative mission I think is the most important. It 
is the one that is bringing together the private, academic, and 
Federal sectors to partner in this care. We cannot do it alone. 
I am the first to say that the military cannot be the sole 
provider of care for these TBIs nor can the VA. It is going to 
have to be a national call to arms among the private academic 
sectors. We are starting to see some of the nursing schools 
change their curriculum to add traumatic brain injury and post-
traumatic stress as part of the curriculum so that nurses will 
be more attuned to that as they go out through our society. 
Medical schools as well. The progress is slower than we would 
like, but I think there is initiative. We are having VA/DoD 
cooperation now with the VA/DoD partnership in north Chicago 
where we are fielding a joint electronic medical record system. 
One of our big obstacles to this kind of care and managing 
patients across the spectrum is finding a common medical record 
that can be easily used by both the VA and the DoD, so the VA 
can see exactly what was done in the system and we can see what 
was done in theirs, and we are working on that.
    And then there is the case management system with the 
Federal health care coordinators that now overlook both the DoD 
and the VA and other Federal care facilities as the patient 
goes back to New York or goes back to Bremerton or somewhere 
else where they are away from the mother ship. So we are all, I 
think if you ask all of us, we are still frustrated with the 
progress that is made. It is the most vexing injury and problem 
of the war from that standpoint, but yet I think we are making 
progress. I do believe we have to get more and more 
collaborative integration among the private, academic, and 
Federal sectors.
    Mr. Hinchey.  Well, thanks. The situation I think that you 
are describing is going to be even more and more difficult as 
time goes on, and it is going to be more complex and more 
complicated to deal with. What do you think we would have to 
do? Is there any contribution that this operation can make to 
make this situation better? And I mentioned that the base 
realignment and closure is not having a positive effect on the 
long range of the situation that we have to deal with here. 
What can be done to alter that, to make it more effective, to 
make the people, a lot of people across this country who need 
to get attention who are not going to get it unless the 
situation is dealt with more effectively.
    General Horoho.  Sir, one of the things that I want to 
bring out that Congress did recently, just gave us; the 
legislative authority to credential and privilege mental health 
providers across State lines, and what that is going to allow 
us to now do is to tap into that capability and get to some of 
those remote areas for our Reserves and our National Guard in 
getting tele-behavioral health out there. We are using tele-
behavioral health and have been over the last couple years to 
treat the large volumes of patients that we have within the 
Army and also in a deployed environment, but it is looking at 
those legislative requirements where we can maybe break down 
barriers on how we provide care within the civilian sector as 
well as partnering with our military.
    General Green.  In my role as co-chair on the Recovering 
Warrior Task Force that is looking at some of the programs, 
there are a lot of innovative things that are being done with 
both nonmedical and medical case managers to do outreach for 
people who have been identified as well as the work of all the 
services to basically keep registries of wounded warriors so 
that we can follow them. Some very progressive programs in 
terms of the Army's community base warrior transition units and 
also the Marine outreach to some of the communities as people 
separate. I think that you are going to see the veteran service 
organizations very busy again in terms of taking care of 
Reservists and Guardsmen who may be in faraway places and the 
VA has outreach programs. So I guess what I would tell you is 
to watch these things to see which prove to be most effective 
as you talk to your constituencies and see those things. The 
real hard piece now is making sure that these services are 
visible to people and that they know how to interface with the 
system and get the help that they need because all of us are 
concerned that as we see the end of the wars that we will see a 
rise in post-traumatic stress; whether it rises to disorder or 
not, we do not know. But there are many people that continue to 
serve, in fact I would tell you that in our numbers in the Air 
Force 70 percent of people diagnosed with PTSD are actually 
maintained on the books and returned to duty. So it is one of 
those things where we are going to have to continue to deal 
with this, and our outreach programs to the Guard and Reserve 
are going to have to remain robust.

                          TRICARE PRIME REMOTE

    Mr. Hinchey.  Yes. Well, I appreciate that, and this is 
something that has to be done. I think it is going to be more 
effective if there is a good sense of cooperation between the 
operations here.
    I also understand that there is a TRICARE Prime Remote, 
TRICARE Prime Remote operation, and there may be some others, 
and that is having a positive effect. Can you tell me something 
about that and what the positive effect of that is and what the 
likelihood is of more expansion of these likely effects?
    General Green.  Well, TRICARE Prime Remote is simply a 
system that allows an active duty member, an active duty family 
to choose a physician in a local area when there is not a 
military system there to take care of them, so they basically 
designate who their primary provider will be, and then they can 
establish a relationship, and so our managed care support 
contractors work to establish the network, and of course people 
then sign up. If we diminish our presence somewhere where we 
cannot take care of them, there is a network today that 
basically is available to the TRICARE Prime Remote for those 
people who are designated that way. It tends to be used more 
for recruiting stations and for those folks, relatively small 
numbers of people who are far away, working in cities to 
recruit new people into the services, but it can be used for 
anyone who is in a geographically remote area from one of the 
service facilities.
    Mr. Dicks.  Will the gentleman yield for just a second?
    Mr. Hinchey.  Yes.
    Mr. Dicks.  Does this relate to the Guard and Reserve as 
well? Are they eligible or is this Active Duty?
    General Green.  It is really designed for Active Duty, but 
there is a continuation of TRICARE benefits, as you know, when 
they separate from the Service or actually if they are in a 
status where they are being retained on active duty. So during 
the time that they are on active duty and for a period of 
months after they separate, they are eligible to be signed up 
into the TRICARE system, including the TRICARE Prime Remote.
    Mr. Dicks.  Thank you.
    Mr. Hinchey.  Thanks. Well, thank you very much. I very 
deeply appreciate everything that you are doing, and all of 
that appreciation is very clear from all of the answers that 
you have given to the complex questions that have arisen here. 
There is an awful lot more that needs to be dealt with, and 
anything that we can do, I think, to be helpful would be 
useful. I think there needs to be some more cooperation here, 
intelligent cooperation, you know, about the circumstances so 
that we can deal with this more effectively, and thank you 
very, very much. Thanks for all the responses that you have 
given and for all of the positive things that you are doing. I 
deeply appreciate it.

                    FRICTION AT WALTER REED-BETHESDA

    Mr. Young.  Thank you, Mr. Hinchey. I have to go back, 
General Green, we have talked a lot this morning about 
consolidations, about mergers, about jointness, and things 
apparently work very well, but from time to time there is a 
little friction. You said that, yes, there were some examples 
of friction, and I think that might be an understatement. The 
major focus on merger right now is Walter Reed-Bethesda. I can 
tell you that there is friction at Walter Reed-Bethesda. I 
think the Army and Navy have worked very well together to do 
what they do best, and that is to create the organization that 
they are called upon to create, work out the problems, and if 
we did it one way at Walter Reed and one way at Bethesda, we 
end up doing it whichever is the best way of the two ways. The 
friction, and no personalities involved here, please, Admiral, 
understand this, the friction is between the established 
military and the JTF, and I think anyone who knows anything 
about this and is willing to be honest will admit that there is 
some serious friction with the JTF, with JTF countermanding 
decisions made by Walter Reed-Bethesda, with personnel issues, 
and I do not know if there is some way to work this out, but I 
think it has got to be worked out because I did not bring a lot 
of anecdotal names and addresses and stories, but I can tell 
you that there are a lot.
    Now, of all of the other collaborations and mergers and 
work that you have talked about today, which you are proud of 
it and we are proud of it, I did not detect the presence of a 
JTF-type organization anywhere except Walter Reed and Bethesda. 
So I am just wondering, are you, Surgeon General of the Navy, 
are you, Surgeon General of the Army, are you basically being 
replaced in your role of authority by JTF or have you worked 
out some kind of an accommodation?
    Admiral Nathan.  JTF has been given OPCON, or operational 
control, over the Walter Reed National Military Medical Center.
    Mr. Young.  I am aware of that, yes, sir.
    Admiral Nathan.  So they are responsible for the daily 
mission there. The Navy retains--because until told otherwise--
it is technically still a Navy command and facility, 
recognizing it is jointly staffed and recognizing it is jointly 
led and recognizing that it has operational command oversight 
by the Joint Task Force.
    The Navy retains administrative control, as Admiral 
Mateczun spoke about, that has to do with personnel issues, pay 
issues, fitness reports issues, all those various things that 
support it. There has been friction over what is ADCON, 
administrative control, and what is operational control or 
OPCON, and there have been discussions and disagreements at 
times with the JTF over whether or not they are now usurping 
authorities that really come under the administrative control 
of the service in providing its mission there.
    Always recognizing that the Army personnel there need to be 
given complete understanding and entitlement to those personnel 
policies which are germane to them, because this is one of a 
kind right now. I mean, Fort Belvoir, it was brought up earlier 
that Belvoir doesn't have as many problems, but Belvoir has 
only a small percentage of Navy personnel there.
    Walter Reed is about 50/50 and at Belvoir it is about 80/20 
or so. So recognizing that when people leave in the current 
system, when a staff member leaves Walter Reed-Bethesda and 
goes back to any other facility, they are going back to 
basically their home port service facility. And so they have to 
adhere to certain administrative policies which lie resident 
within their own service.
    So that is where the majority of friction has come, 
defining what is really operational control and administrative 
control and then trying to understand exactly the complete 
chain of command and who is responsible for that policy.
    Mr. Young.  Is Fort Belvoir under jurisdiction of JTF?
    Admiral Nathan.  Yes, sir.
    Mr. Dicks.  Anything else? Just those two? Mr. Chairman.
    Mr. Young.  Well, I asked at one point earlier on if there 
was a decision to reach out and bring in other organizations, 
and the answer was, no, not at this time. I think that was the 
answer, Admiral, that you gave.
    Admiral Nathan.  Yes.
    Mr. Young.  Is that friction going to work out? Can you get 
this resolved? It is pretty serious. You know----
    General Green.  Sir, I would tell you, most of you have 
probably visited Landstuhl. Landstuhl is designated a joint 
facility. It is an Army facility run by Army rules that has 
both Air Force and Navy.
    Air Force has been in that facility now for almost 14 
years, and so with any new system, until you understand what 
the rule sets are and how it works, there is going to be 
friction and, frankly, I think even when you talk with us, we 
are like siblings. From time to time we have rivalries.
    Mr. Young.  Well, I understand that.
    General Green.  Okay. And so I think that it does get 
better with time, so Landstuhl is functioning very well. Down 
in San Antonio it is not quite as much friction perhaps as you 
see up here, but if you looked, you would see there are 
frictions there as well in terms of Air Force not understanding 
why the Army does something a certain way.
    But over time we will find a way to integrate and do these 
things. So the answer is yes, over time.
    The harder piece is your question regarding what should be 
the oversight, and it really has to do with joint doctrine. I 
would tell you that I have watched this closely and watched the 
evolution of the doctrine to see how we would deal with joint 
bases, and there are very similar issues going on with joint 
bases, because we tend to execute by Service because that is 
the way it was set up back here in the States. And so getting 
to what the right level of headquarters should be there and, 
you know, again, if you don't like the JTF, then one of the 
problems is that when you establish a joint headquarters for 
all the Services, essentially you are also establishing another 
layer of oversight. And so it is really a question of what do 
we want as a nation and then how do we proceed to make this 
clear to everyone so we all understand the rules, because we 
will salute and make it work.
    Mr. Young.  I think it is very interesting, the JAC, not 
the joint task force but the task force that came up with five 
options as to how to proceed with this governance of the 
merger, the Army and the Navy are major players here in this 
particular merger. It is interesting to me that of the five 
people who voted their service or their organization, the Army 
and the Navy both voted for option 2, which did not include 
JTF, which included a joint structure between the Army and the 
Navy, who are merging their two hospitals.
    BRAC is supposed to eliminate functions or consolidate, not 
to create new functions or new organizations or new 
bureaucracy. And so I do have a little bit of a problem with 
this, and I do believe that there is more friction than has 
been acknowledged at the table today, and I also know that 
friction will cause a deterioration of health care. And the one 
thing we don't want to happen is for a medical professional 
here or on this side of the bed because of a friction offending 
a patient or offending a patient's family, and that does worry 
me because if the care of that soldier is affected, and you 
know better that I do that these kids are hurt really bad, and 
they are not kids really. Chronologically they are, but after 
what they have been through, believe me, they are not kids, and 
we just can't risk doing anything that is going to affect their 
care and their treatment. We owe them a lot.
    I have had my say. It is not personal with anybody involved 
with the JTF or anybody involved with the merger. I just am 
concerned that that friction by General Green was an 
understatement, and I think there is a lot more friction, and I 
think JTF is a major part of it.
    And so now, Mr. Dicks, do you have any closing thoughts?

                      CAREER IMPLICATIONS OF PTSD

    Mr. Dicks.  Yes, I got just a couple of things I wanted to 
go back with on General Horoho, and we have been told that one 
of our major efforts has been to tell the soldiers that they 
should seek care if they think they have got a traumatic brain 
injury or post-traumatic stress disorder.
    Now, I am told this, I want you to think about this. Is the 
Army advising the soldier that if he claims PTSD it could 
affect his future in the military?
    General Horoho.  I have never heard that statement, sir.
    Mr. Dicks.  Or it could affect him as a civilian?
    General Horoho.  I have never. We have senior leaders who 
have actually sought care themselves and have gone on to get 
promoted, so it has been a campaign across all of Army for 
people to break down the barriers and seek care. So I have not 
heard those particular statements.

                    DISABILITY DETERMINATION PROCESS

    Mr. Dicks.  Okay. Now, on the return to duty, I mean, I can 
understand, when you go out to Bethesda or Landstuhl, the first 
thing these kids say is I want to go back to my unit, I want to 
go back to serving in the military. So I understand why the 
soldiers would want to do that.
    On these examinations, when they are looking at these 
disability benefits, how long are the sessions when they meet 
with the doctor?
    General Horoho.  There is a couple of sessions. We have a 
comprehensive behavioral system of care. So it is mandatory 
that 100 percent of our servicemembers redeploying back have at 
least a 45-minute face-to-face evaluation. And so that is upon 
redeployment; and then we have five different touch points that 
occurs over a 12-month period. And then if they determine that 
they need further care in that initial evaluation, then they 
either see a psychiatrist, a psychologist, psych nurse 
practitioner or primary care trained in behavioral health. And 
those sessions are determined based on your clinical symptoms.
    Mr. Dicks.  Okay. Well, again, I hope that we do get to the 
bottom of this other thing.
    General Horoho.  Yes, sir.
    Mr. Dicks.  And I just, you know, again, we appreciate the 
good work you all do, and we want to make sure these kids are 
taken care of. That is our motivation.
    And on the Joint Task Force, you know, what is the future, 
what is the future supposed to be of the Joint Task Force?
    Admiral Mateczun.  Mr. Dicks.
    Mr. Dicks.  Is it going to be there forever; is it going to 
go away?
    Admiral Mateczun.  It was chartered as a standing Joint 
Task Force and so there is no sunset clause, no go-away date. 
Ultimately it will have to follow what happens with the rest of 
the MHS governance decision.
    Mr. Dicks.  All right. Thank you, Mr. Chairman.
    Mr. Young.  Okay. Mr. Frelinghuysen has a quick follow-up, 
as does Mr. Kingston.
    Mr. Frelinghuysen.  I would like to put a finer point, 
could you provide us where we literally stand on electronic 
medical records. I mean, I think the VA is there but there 
seems to be quite a gap. I don't need to hear, but that is for 
the record. I would like to see how close we are.
    A number of us go out to Walter Reed. The medical review 
panels that a lot of these soldiers are, you know, subject to, 
is there any uniformity in the services relative to those types 
of decisions? Just for the record as well. Yes, sir, Admiral.
    [The information follows:]

    Our Military Health System (MHS) medical facilities use AHLTA, the 
Department of Defense's current outpatient EHR capability, as part of a 
family of health and benefits systems. AHLTA generates, maintains, 
stores and provides secure online access to comprehensive outpatient 
records. The current DoD EHR family of systems forms one of the largest 
ambulatory EHRs in the world, with documentation of an average of 
145,000 clinical encounters each day.
    Leveraging existing EHR systems within DoD and the Department of 
Veterans Affairs (VA), the Departments share a significant amount of 
health information today via one way (Federal Health Information 
Exchange), bidirectional (Bidirectional Health Information Exchange), 
and computable data exchange mechanisms to transmit historical 
information at the time of separation, support access to clinical 
information on shared patients across agencies, share computable 
outpatient pharmacy and medication allergy data on shared patients, and 
ensure radiology images and scanned paper medical records are available 
at VA Polytrauma Rehabilitation Centers to support continuity of care 
for our most severely wounded and injured Service members. Each of 
these interagency electronic health data sharing initiatives enhance 
healthcare delivery to beneficiaries and improve the continuity of care 
for those who have served our country.
    However, the current suite of applications and underlying 
infrastructure does not support the challenges of the rapid evolution 
of today's healthcare practices, the ever-increasing need to transact 
and share data across the continuum of care, and the timely fielding of 
new capabilities. For the future, DoD and VA are committed to 
establishing and refining an integrated electronic health record 
(iEHR). While assuring that current systems capabilities remain stable, 
going forward, a joint, common EHR platform will be implemented. DoD 
and VA will purchase commercially available components for joint use 
when possible and cost effective. Adherence to the ``Adopt, Buy, and 
Create (only as a last resort)'' acquisition approach will speed 
delivery of capabilities to the user community. The iEHR will enable 
DoD and VA to align resources and investments with business needs and 
programs. The iEHR also will leverage open source and traditional 
approaches to software acquisition to foster innovation and expedite 
delivery of products to the user, and will promote Virtual Lifetime 
Electronic Record (VLER) initiative by being a source system for shared 
healthcare information.

    Admiral Mateczun.  Yes, the difference is, you know, a lot 
of the different disability evaluation systems that each of the 
services has, there has been a great deal of work with those 
systems and with the VA to make sure that by the time somebody 
leaves active duty they have got both a VA determination and a 
DoD determination.
    Mr. Frelinghuysen.  Just one other comment, I know, I 
visited both the Marine and Army PFC. Changeover of doctors, I 
mean, every time I go out there they said there is another 
team. They are all excellent MDs but there seems to be quite a 
turnover of military doctors, and that concerned me.
    Let me put in a plug. Is the mail system screwed up out 
there? I am hearing from some of the soldiers that they are not 
getting their mail. That is pretty essential. For the record.
    Admiral Mateczun.  I would say that is an ADCON 
responsibility that belongs to the----
    Mr. Frelinghuysen.  Whatever it is, let's get it resolved.
    Thank you, Mr. Chairman.
    [The information follows:]

    Although medical specialists in large medical treatment facilities 
may stay in one place for extended periods, uniformed medical 
professionals are generally subject to permanent change of station 
moves for the same reasons as non-medical service personnel. Reasons 
for transfer would include needs of the Service (such as to cover 
operations in remote locations), opportunities for training or 
leadership positions, and departure from the Service. Deployments to 
Iran and Afghanistan have also produced changes in military health 
clinics. Although the length of assignment for a doctor at any base has 
probably not changed, the time actually spent at those bases has often 
decreased due to the increased rate of deployments.
    Continuity of care is very important and the Military Health System 
is changing the way we do business to improve that continuity. At the 
center of this change is the patient centered medical home (PCMH), a 
model of care in which patients see the same primary care provider or 
small team of providers, as needed, over time. The issue of continuity 
of care and accessible health care is also a problem in the civilian 
healthcare sector, and the PCMH model is increasingly popular there. 
The Agency for Healthcare Research and Quality (AHRQ) in the Department 
of Health and Human Services recognizes that revitalizing the Nation's 
primary care system is foundational to achieving high-quality, 
accessible, efficient health care for all Americans, and has recognized 
the PCMH as a promising model for transforming the organization and 
delivery of primary care.

                 Remarks and Questions of Mr. Kinigston

    Mr. Kingston.  Thank you, Mr. Chairman. And I guess I have 
five questions for the record.
    Number one, if you could get an organizational chart to me, 
that would be extremely helpful. I think other committee 
members would like it, but I would specifically like it. And 
don't kill yourself in terms of the details, but the personnel 
in each box, the budget, that would be helpful as well. And 
that would be kind of the before and after organizational 
chart.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] 

    Then, secondly, in terms of the recommended changes to the 
governance structure, especially the ones that will require an 
increase in budget or an increase in personnel, could we see 
what the impact on the ability of the MHS to effectively and 
efficiently utilize and integrate and procure interoperable 
technologies to maximize the purchasing power--I will submit 
this to you in writing--but the measurement of what kind of 
impact that would have would be helpful.
    Then, number 3, the task force only allowed 90 days for the 
NCR and was that enough time? The NCR part of the study, as I 
understand it, only took 90 days. And was that enough time?
    [The information follows:]

    The entire Task Force took only 90 days to complete its 
deliberations, including its analysis of the NCR. The review was 
intended as a high-level review to provide the Deputy Secretary 
options. In addition, the Task Force took advantage of the work done in 
most of the prior 15 such task forces, of which the most recent was in 
2005-6.

    And then in terms of the Joint Task Force on CapMed, did it 
actually save money? I would actually like to know the answer 
to that if any of you know on the top of your hand.
    [The information follows:]

    With regard to savings, JTF CapMed has been a model for 
efficiencies in the Military Health System and has saved the Department 
money through its oversight of transitioning four inpatient Military 
Treatment Facilities (MTFs) in the National Capital Region (NCR) into 
two and implementing an integrated healthcare delivery system (IDS). 
Specific initiatives (implemented and future) include:

                        Implemented Initiatives

     $114M in cost avoidance through equipment re-use programs.
     $109M+ in savings through using a single contractor to 
provision Initial Outfitting and Transition (IO&T).
           $77M upfront by competitively bidding the equipment and 
        relocation costs
           $32M in savings due to incentive plan allowing IO&T 
        contractor to share in savings due to lowering equipment costs 
        through competitive pricing events, bulk buying power, as well 
        as a willingness for vendors to accommodate the needs of such a 
        large volume customer
           The total savings from this contract cannot be quantified 
        at this time, but will be realized after the contract 
        optimization is completed
     $16M per year in savings through staffing and operational 
efficiencies.
           $15M a year through establishing a Joint Pathology Center 
        to assume core functions of the Armed Forces Institute of 
        Pathology (now closed)
           $810K a year through establishing a regional Civilian Human 
        Resources Center
           $230K a year by consolidating appointment call centers in 
        the NCR

                           Future Initiatives

     Installation of an Integrated Healthcare Data Network 
(Joint Medical Network) across the NCR will reduce IM/IT sustainment 
costs throughout all NCR MTFs as well as provide better performance.
     Consolidation of the workforces at Walter Reed National 
Military Medical Center (WRNMMC) and Fort Belvoir Community Hospital 
(FBCH) and authorities sufficient to implement shared services will 
enable efficiencies and economies of scale that will result in 
contractor and civilian personnel savings of approximately $60M per 
year (FY 2011 dollars).
     With command and control over WRNMMC and FBCH, JTF CapMed 
continues to identify additional opportunities to develop shared 
services capabilities and achieve efficiencies in the NCR IDS.

    And then my fifth question is in terms of consolidation of 
Bethesda and Fort Belvoir, they are complete but there still 
are some outstanding projects, and what are the projects that 
are still outstanding, and what is the cost of those?
    [The information follows:]

    The National Defense Authorization Act (NDAA) for Fiscal Year (FY) 
2010 codified the definition of a World-Class Medical Facility and 
required DoD to provide Congress with a plan to meet this standard at 
Bethesda. DoD provided Congress with this plan, the Comprehensive 
Master Plan (CMP), in 2010 which described $800M in facility projects 
DoD plans to complete at Bethesda by 2018 to meet the requirements of 
the law. The President's Budget FY 2012 fully funded these projects at 
Bethesda over the next 6 years. Status has been included below:
     FY12 Program ($109M) funded and includes:
           All MILCON design funds ($66M)
           Funding to build Child Development Center (CDC) ($18M)
           O&M investment ($25M)
                   Medical Technology Upgrade
                   Master Planning
                   Campus Wayfinding
                   ADA Accessibility
                   Pedestrian Improvements
     Construction award for FY12 CDC MILCON project expected in 
May 2012
     Design awards for FY13 are underway and include:
           Temporary Facilities
           Electrical capacity/cooling towers Upgrade Phase 1
           Implement Accessibility & Appearance Plan
     FY14 projects are awaiting completion of Congressional 
Notification period (required by Title 10 USC Section 2807) and 
include:
           Electrical capacity/cooling towers Phase 2
           Parking Garage
           New Central Clinical Building
     FY13-17 Program funding dependent on the President's 
Budget FY 2013:
           DoD continues to examine projects to determine whether 
        other improvements or refinements should be incorporated
           Last estimate was in DoD's Supplemental-CMP (AUG 2010) and 
        the President's Budget FY 2012 ($707M)
                   $618M in MILCON
                   $89M in O&M/OP

    So with that, Mr. Chairman, I would like to yield back 
unless somebody could tell me if any money was actually saved 
because I know the original BRAC recommendation was supposed to 
save money.
    Admiral Mateczun.  The return on investment payback period 
changed significantly, but there is a return on investment.
    Mr. Kingston.  For the Bethesda and Walter Reed?
    Admiral Mateczun.  For the infrastructure changes in the 
National Capital Region.
    Mr. Kingston.  Because that was one of the--the outside 
report says that it was supposed to save a lot of money and it 
ended up costing a billion dollars or something. And so I think 
it would be helpful for us to be able to answer that.
    [The information follows:]

    Over the long term, the Department avoided costs of operating four 
inpatient hospitals in close proximity and having to recapitalize each 
to match the infrastructure to current medical practices. At the time, 
estimates indicated that it would cost $600-700 million to replace or 
renovate Walter Reed and that, under existing budget assumptions, the 
work would take many years to complete (6-8 years for replacement, 10-
15 years for renovation). While that is a major cost avoidance for 
which we could take credit, the Department has elected to be 
conservative in its savings estimates and have focused instead on 
estimating the savings or avoidances that are derived by calculating 
the net facility overhead costs (i.e. the sum of the support personnel, 
base operating support, and sustainment and modernization costs saved 
at the closing location less the sum of the incremental increase of 
those costs at the new location). For the Walter Reed closure, those 
avoided costs are around $170M annually.

    Thank you, Mr. Chairman. I yield back.
    Mr. Young.  Okay, thank you, sir. And I want to thank all 
of you for being here today and answering some pretty tough 
questions that we were curious about.
    We stand by as a committee to provide the best we possibly 
can for medical care of our wounded soldiers and, of course, 
for those who are your retirees that you deal with. We are here 
to support, and we are here to do the best we can to help you 
do a good job.

   COORDINATION WITH VETERANS ADMINISTRATION TO PROVIDE QUALITY CARE

    Now, Mr. Lewis, you have the last word.
    Mr. Lewis.  Thank you, Mr. Chairman.
    Very briefly, 25 years ago, I found that the VA didn't seem 
to have a system to care very much long term for the real care 
needs of local veterans. My staff accompanied veterans to the 
local hospital as though they were relatives, and this went on 
for about 2 months, Mr. Chairman.
    The director went through the roof when he heard about this 
but, my God, suddenly that VA hospital discovered the computer, 
and that was the beginning of what you described, the VA 
getting a handle on how the computer otherwise can be used to 
have information flows that cross over territory, hospitals and 
service delivery systems.
    We could learn a lot from that as we go forward with the 
project that you are about. That original change was not easy. 
Any change is difficult.
    But if we really want to maximize quality care, we have got 
to break down these barriers and you are almost like ``yes'' 
people to us today, because you have got a mission and people 
suggest that we are moving forward. We are not hearing very 
much about the problems, and I will be asking questions for the 
record in connection with that. But know it is going to be very 
difficult and quality of care will be at risk if you don't 
break down these barriers.
    Thank you, Mr. Chairman.
    Mr. Young.  Thank you, and this hearing is adjourned.
    [Clerk's note.--Questions submitted by Mr. Lewis and the 
answers thereto follow:]

                            Malaria Vaccines

    Question. According to the World Health Organization malaria killed 
655,000 people around the world in 2010. Since our nation's military 
often go to very out-of-the-way places, often in tropical countries 
and/or remote areas, infectious diseases are a very significant threat.
    Is malaria a top threat to U.S. forces, particularly as they deploy 
to tropical areas?
    General Green's Answer. Yes, malaria is the top infectious disease 
threat, as determined by the 2010 Joint consensus panel, the Infectious 
Diseases Threats to the U.S. Military Prioritization Panel, convened by 
the Army's Medical Research and Materiel Command which is the executive 
agent for infectious disease research and development.
    Question. Is malaria a top threat to U.S. forces, particularly as 
they deploy to tropical areas?
    General Horoho's Answer. Malaria is the top disease threat to 
deployed U.S. forces in tropical and sub-tropical areas and prevalent 
in 109 countries.
    Question. Is malaria a top threat to U.S. forces, particularly as 
they deploy to tropical areas?
    Admiral Nathan's Answer. Yes, the potential risk to U.S. forces is 
high. Malaria attack rates for unprotected troops in field settings 
could reach 50% per month in parts of tropical Africa.
    Diarrheal disease and respiratory infections occur more frequently 
in deployed military, but Plasmodium falciparum malaria is the most 
common life-threatening tropical infection. In 2011, 124 service 
members were reported with malaria. Nearly three-fourths of cases were 
presumably acquired in Afghanistan and one-fifth were considered 
acquired in Africa. In 2003, out of 250 U.S. Marines deployed to 
Liberia, 44 were evacuated with either confirmed or presumed Plasmodium 
falciparum malaria.
    Malaria infection in U.S. personnel causes a debilitating, 
potentially fatal, febrile illness that affects military readiness. 
Uncomplicated malaria typically involves 1 to 7 days of inpatient care, 
followed by return to duty. Severe malaria requires intensive care and 
results in a prolonged convalescence.
    Question. Does DOD currently have an FDA approved malaria vaccine 
to protect service members from the disease?
    General Green's Answer. No, it does not. The Army's Medical 
Research and Materiel Command is the executive agent for infectious 
diseases research and development and coordinates malaria vaccine 
research through the Walter Reed Army Institute of Research and the 
Navy Medical Research Command. There are several candidate vaccines 
currently still in clinical trials.
    Question. Does DOD currently have an FDA approved malaria vaccine 
to protect service members from the disease?
    General Horoho's Answer. There is no FDA approved malaria vaccine 
for use by U.S. military forces.
    Question. Does DOD currently have an FDA approved malaria vaccine 
to protect service members from the disease?
    Admiral Nathan's Answer. No. There are no approved FDA malaria 
vaccines. Navy researchers at Navy Medical Research Command are 
developing and studying candidate vaccines.
    Question. Discuss DOD's use of FDA approved anti-malaria drugs and 
their limitations for military use during combat operations.
    General Green's Answer. The Air Force abides by the Code of Federal 
Regulations and the United States Code to use only Food and Drug 
Administration approved medications; in this case for the prophylaxis 
and treatment of malaria. The Air Force also abides by the 2009 memo by 
the Assistant Secretary of Defense for Health Affairs directing that 
the drug of choice for the prophylaxis of malaria be doxycycline with 
mefloquine only as a second-line drug in persons who did not have a 
contraindication to mefloquine. This Assistant Secretary of Defense for 
Health Affairs memo closely parallels a previous Assistant Surgeon 
General of the Air Force for Healthcare Operations memo from 2005 
requiring providers to adhere to the Food and Drug Administration 
approved package insert for mefloquine. The Air Force's use of 
mefloquine has since declined by over 90 percent in 2011 from the usage 
levels in 2008. The Air Force does not use mefloquine in any of its 
aircrew. The Air Force uses either doxycycline or atovaquone-proguanil 
for aircrew personnel.
    Question. Discuss DOD's use of FDA approved anti-malaria drugs and 
their limitations for military use during combat operations.
    General Horoho's Answer. Malarone is the most tolerable FDA 
approved malaria drug currently available and requires daily dosage. 
Malarone is the highest cost of all FDA approved malaria drugs. Other 
available FDA approved malaria drugs are mefloquine, chloroquine, and 
doxycycline, all having contraindications or tolerability limitations 
which decrease their effectiveness. The limitations resulting from 
dosage, contraindication, and/or tolerability create a need for better 
malarial drugs for use during combat operations.
    Question. Discuss DOD's use of FDA approved anti-malaria drugs and 
their limitations for military use during combat operations.
    Admiral Nathan's Answer. For the Navy and Marine Corps, malaria 
chemoprophylaxis is administered as a force health protection measure 
under local command authority. Ensuring compliance with prophylaxis is 
a command responsibility.
    Unit pre-deployment medical planning includes a malaria risk 
assessment for the intended itinerary, review of Combatant Commander's 
guidance, and selection of an FDA approved chemoprophylaxis regimen. 
Anti-malaria drug selection is informed by two Assistant Secretary of 
Defense for Health Affairs memoranda: ``Anti-Malarial Medications,'' 
October 17, 2002; and ``Policy Memorandum on the Use of Mefloquine 
(Lariam') in Malaria Prophylaxis,'' September 4, 2009. The 
September 2009 memorandum stated mefloquine should only be used for 
personnel with contraindications to doxycycline and who do not have any 
contraindications to the use of mefloquine.
    FDA approved drugs used for primary malaria prevention include 
doxycycline, atovaquone-proguanil, mefloquine, and chloroquine. Use of 
chloroquine is limited by widespread drug resistance.
    In the past decade doxycycline has been the drug used most 
frequently by naval forces for malaria chemoprophylaxis. Doxycycline is 
effective worldwide but requires daily administration and even a few 
missed doses may result in prophylaxis failure. Side effects include 
gastrointestinal disturbances, yeast infections, and photosensitivity 
dermatitis.
    Atovaquone-proguanil, also administered daily, is effective 
globally, may be better tolerated than doxycycline, has a lower risk of 
break through infection following missed doses, and requires only seven 
days of post-exposure prophylaxis whereas doxycycline requires 28 days.
    Mefloquine is also effective and is dosed weekly. Side effects 
include sleep disturbances and is contraindicated in persons with a 
history of mental health disorders.
    Directly observed therapy (DOT) is strongly recommended for high 
malaria transmission areas. Combat operations may decrease individual 
adherence for drugs requiring daily administration and for other 
components, e.g., insect repellant application, of a malaria prevention 
program.
    Question. Both the Army and the Navy have malaria vaccine and anti-
malarial drug research programs. Please describe the goals of these 
programs.
    General Green's Answer. The Air Force does not directly participate 
in malaria vaccine research. The Army's Medical Research and Materiel 
Command is the executive agent for infectious diseases research and 
development and coordinates malaria vaccine research through the Walter 
Reed Army Institute of Research and the Navy Medical Research Command.
    Question. Both the Army and the Navy have malaria vaccine and anti-
malarial drug research programs. Please describe the goals of these 
programs.
    General Horoho's Answer. The U.S. Military Malaria Vaccine Program 
(USMMVP), a joint Army/Navy enterprise, pursues the goal to produce 
safe and effective vaccine(s) against Plasmodium falciparum and 
Plasmodium vivax malarias. USMMVP is the world leader in developing and 
testing malaria vaccines. The first manufactured malaria vaccine ever 
tested in man, R32Tet32, was developed by the U.S. Army in 1986. The 
first malaria vaccine ever to reach phase 3 clinical trials in man, 
RTS,S, was also developed by the U.S. military's malaria vaccine 
program and will likely be licensed for use in African children in 1-2 
years.
    The U.S. military anti-parasitic drug program is largely an Army 
effort and is tasked to discover and develop new drugs to prevent and 
treat malaria and assess existing drugs for improved safety, efficacy 
and delivery. The Army has been the world leader in malaria drug 
development since WWII and has been involved with nearly every single 
antimalarial in use world-wide today. Among antimalarial drugs used 
today, those that were solely developed by the US Army in partnerships 
include chloroquine, primaquine, sulfadoxine/pyrimethamine, mefloquine, 
halofantrine, doxycycline, and atovaquone/proguanil. Artesunate, an 
intravenous drug developed by the US Army to treat severe malaria, is 
available under a compassionate use indication through the CDC. The 
drug is saving American lives now and is expected to be FDA approved by 
2014. Tafenoquine, WR238605, was discovered by the US Army and is in 
clinical trials for the treatment of relapsing P. vivax malaria by 
GlaxoSmithKline.
    Question. Both the Army and the Navy have malaria vaccine and anti-
malarial drug research programs. Please describe the goals of these 
programs.
    Admiral Nathan's Answer. Protecting our fighting forces against 
infectious disease threats such as malaria is the primary reason Navy 
Medicine and our sister services continue to conduct this medical 
research. Our goal is to provide our forward-deployed forces with the 
best in force health protection. While the Army has been the Lead Agent 
for DoD Infectious Disease Research since 1982, Navy Medicine works in 
close collaboration with the Army on malaria research projects through 
the US Military Malaria Vaccine Program (USMMVP). The USMMVP is a joint 
NMRC/WRAIR program that serves the dual function of advising the 
Commander, USAMRMC on the DoD malaria research investment and 
coordinates malaria research efforts across the Navy and Army research 
laboratories to include many extramural investments outside of 
USAMRMC's portfolio.
    The USMMVP program's mission is: ``Development of P. falciparum and 
P. vivax malaria vaccines to prevent malaria morbidity and mortality in 
military personnel and in vulnerable populations for the benefit of 
global public health.'' Resources are shared between Army and Navy 
components with a research coordinator assigned to assure efficient 
use. The USMMVP is composed of Army and Navy elements at the Walter 
Reed Army Institute of Research (WRAIR) and Naval Medical Research 
Center (NMRC), respectively, located in Silver Spring, MD with links to 
overseas DoD laboratories in Thailand, Cambodia, Kenya, Ghana and Peru.
    A second joint effort is the Division of Experimental Therapeutics 
(ET). ET is also based at WRAIR/NMRC, encompassing supporting 
activities at the five overseas DoD laboratories. It addresses the 
following mission goal: ``To prevent and minimize the morbidity and 
mortality caused by malaria in military personnel by the development of 
novel drugs for prevention and treatment.''
    Question. If Congress provided additional funds in fiscal year 2013 
for competitive research on malaria vaccines, how would this accelerate 
DoD research efforts and ultimate fielding of safe, new vaccines for 
our service members?
    General Green's Answer. The Air Force does not directly participate 
in malaria vaccine research. The Army's Medical Research and Materiel 
Command is the executive agent for infectious diseases research and 
development and coordinates malaria vaccine research through the Walter 
Reed Army Institute of Research and the Navy Medical Research Command.
    Question. If Congress provided additional funds in fiscal year 2013 
for competitive research on malaria vaccines, how would this accelerate 
DoD research efforts and ultimate fielding of safe, new vaccines for 
our service members?
    General Horoho's Answer. The Army and Navy programs have multiple 
candidate vaccines available for testing in clinical trials. Additional 
funding would accelerate the manufacture and safety testing of such 
vaccines, allow down selection of candidate products through efficacy 
testing at WRAIR/NMRC in human clinical trials and transition a 
successful candidate to advanced development and subsequent testing in 
clinical trial sites in malaria endemic areas in East Africa or South 
East Asia.
    Question. If Congress provided additional funds in fiscal year 2013 
for competitive research on malaria vaccines, how would this accelerate 
DoD research efforts and ultimate fielding of safe, new vaccines for 
our service members?
    Admiral Nathan's Answer. The USMMVP is a joint NMRC/WRAIR program 
serving the dual function of advising the Commander, USAMRMC on the DoD 
malaria research investment and coordinating malaria research efforts 
across the Navy and Army laboratories. The effort includes many 
extramural investments outside of USAMRMC's portfolio. Research is 
funded through multiple sources including the Military Infectious 
Diseases Research Program (MIDRP), Army and Navy specific funding 
sources, other government, and private, not-for-profit entities.
    Increased funding in FY13 would allow USMMVP to manufacture and 
test candidate vaccines in humans according to DoD's programmatic needs 
and schedule without reliance on external funders. Vaccine development 
is a long-term process that requires stable and sustained support, not 
just in FY13. With an enhanced ability to manufacture and evaluate 
candidates, the potential for competitive development is enhanced. 
Within the constraints of the regulatory approval processes, stable and 
consistent funding would support accomplishing or accelerating major 
milestones. Currently, the program is anticipating a vaccine that meets 
threshold requirements (80% efficacy for 1 year) by 2026-28.
    Question. For the record, please provide a detailed breakout of the 
funding in the fiscal year 2013 budget for research on malaria vaccines 
by appropriation and R-1 line.
    General Green's Answer. The Air Force does not directly participate 
in malaria vaccine research. The Army's Medical Research and Materiel 
Command is the executive agent for infectious diseases research and 
development and coordinates malaria vaccine research through the Walter 
Reed Army Institute of Research and the Navy Medical Research Command.
    Question. For the record, please provide a detailed breakout of the 
funding in the fiscal year 2013 budget for research on malaria vaccines 
by appropriation and R-1 line.
    General Horoho's Answer. FY2013 funding for research on malaria 
vaccine is:

------------------------------------------------------------------------

------------------------------------------------------------------------
Line #2, PE 61102..........................        S13        $2,270,000
Line #28, PE 62787.........................        870         3,974,000
Line #30, PE 63002.........................        810         5,827,000
------------------------------------------------------------------------

    Question. For the record, please provide a detailed breakout of the 
funding in the fiscal year 2013 budget for research on malaria vaccines 
by appropriation and R-1 line.
    Admiral Nathan's Answer. The FY13 funding for the USMMVP 
anticipated from MIDRP is $10.275M (Army component $5.792M, Navy 
component $4.483M). These resources are assigned to the following FY13 
research objectives, which are pursued jointly by Army and Navy 
components:
    (1) Identify antigenic targets: Discover new antigens for use in 
elucidating mechanisms of immunity to malaria and for inclusion in 
novel candidate malaria vaccines ($1.912M).
    (2) Characterize mechanisms of protective immunity: Devise 
experiments to enhance the protective immune response to antigens that 
are potential malaria vaccine candidates; explore new adjuvants as well 
as new regimens for vaccine administration including prime-boost 
combination vaccines and alternative routes of administration 
($1.838M).
    (3) Evaluate candidate vaccines in animal models: Evaluate vaccine 
candidates in animal models to assess breadth and longevity of 
protection and develop preliminary safety profiles ($3.281M).
    (4) Manufacturing and preclinical/early clinical testing of 
candidate vaccines: Undertake manufacturing of new vaccine candidates 
and testing in animals in preparation for filing investigation new drug 
applications with the FDA requesting allowance for clinical testing; 
conduct early proof-of-concept human trials in non-immune adults in the 
USA ($1.193M).
    (5) Conduct field-related research activities: Develop challenge 
models, conduct laboratory-based clinical investigations and develop 
endemic area field sites for clinical trials ($0.417M).
    (6) Maintain Core Service Capabilities: Maintain core immunological 
assays, the life cycle of murine and human malarias and malaria blood 
stage culture/Anopheles mosquito colony for the conduct of human 
challenge studies ($1.634M).
    These MIDRP funds are used to support research activities and the 
salaries of civilian staff and contractors. Not included are DoD-funded 
salary costs for four medical corps officers and four medical service 
corps officers (Navy side), and four medical corps officers, two 
medical service corps officers and two enlisted personnel (Army side).
    We estimate that MIDRP funds will be supplemented in FY13 by: $0.8M 
(Navy Medical Development Program, line 126), $2.5M (USAID), $4.0M 
(BMGF), $1.25M (PATH-MVI), $2.8M (various sources) = $11.35M total 
leveraged funds.\1\
---------------------------------------------------------------------------
    \1\ Abbreviations: USAID: US Agency for International Development; 
BMGF: Bill & Melinda Gates Foundation; PATH-MVI: Program for 
Appropriate Technology in Health--Malaria Vaccine Initiative (funded by 
BMGF).
---------------------------------------------------------------------------
    Question. For the record, please provide an overview of DOD's 
strategy for development of malaria vaccines with an estimated research 
and fielding timetable, and a description of each class of malaria 
vaccine being funded.
    General Green's Answer. The Air Force does not directly participate 
in malaria vaccine research. The Army's Medical Research and Materiel 
Command is the executive agent for infectious diseases research and 
development and coordinates malaria vaccine research through the Walter 
Reed Army Institute of Research and the Navy Medical Research Command.
    Question. For the record, please provide an overview of DOD's 
strategy for development of malaria vaccines with an estimated research 
and fielding timetable, and a description of each class of malaria 
vaccine being funded.
    General Horoho's Answer. The Army program (protein and particle 
based constructs) and the Navy Program (viral vector and DNA plasmid 
based constructs) have multiple candidates at various stages of 
development with anticipated manufacture/clinical testing scheduled 
from FY12-FY16. Once tested for safety and initial efficacy in humans 
using a mosquito challenge model, the most promising candidates will be 
selected in FY16 for advanced development and testing in humans in 
field sites in South East Asia and Africa.
    Question. For the record, please provide an overview of DOD's 
strategy for development of malaria vaccines with an estimated research 
and fielding timetable, and a description of each class of malaria 
vaccine being funded.
    Admiral Nathan's Answer. Malaria is a primary pathogen target for 
vaccine development because of its global importance and the 
availability of a human challenge model, allowing rapid iterative 
testing of novel approaches for efficacy (contrast HIV). Since there 
are currently no licensed vaccines against this disease and because of 
its potential impact on the readiness of our forces, malaria vaccine 
development has been a long-term investment for Navy Medicine. The 
technologies developed in this effort have potentially enormous, 
broadly applicable benefits that can be used to address other human 
parasitic disease prevention.
    There are three primary technologies being researched for the 
malaria vaccine by USMMVP:
    1. Recombinant proteins--These approaches are based on formulated 
particles in potent adjuvants that induce antibody responses to the 
attacking sporozoites. RTS,S is 1st generation of this technology 
(GSK), and gives 50% protection. Tech development: particle and 
adjuvant formulations, antigen design, antigen combinations, prime-
boost regimens.
    2. Gene-based--These approaches are based on heterologous prime-
boost regimens (e.g., DNA prime--viral vector boost) that induce cell-
mediated immunity. These regimens attack the liver stage of malaria 
parasites. NMRC-M3V-D/Ad-PfCA (Vical/GenVec) is the 1st generation, and 
gives 27% protection. Tech development: improved DNA delivery, 
stimulatory cytokines, vector adjuvants, novel backbones, antigen 
combinations.
    3. Cryopreserved Whole Sporozoites--This approach is based on using 
the whole sporozoites purified from mosquitoes. These sporozoites are 
attenuated genetic, chemically or via irradiation. PfSPZ is the 1st 
generation and gives 5% protection. Tech development: improved route of 
delivery, adjuvant formulations, co-administration of 
immunopotentiating drug.
    Research and fielding time-table: It is not known when a technology 
will cross the target protection threshold, justifying a multi-
prototype approach to mitigate risk. The tentative timeline calls for a 
first technology down-select for advanced development (``Milestone B'') 
by 2016. Although, this timeline is not assured, steady progress and 
the existence of highly protective malaria vaccine models herald 
eventual success.

                     Whole Blood Pathogen Reduction

    Question. Other nations are ahead of the United States in using 
modern whole blood pathogen inactivation technologies to prevent 
organisms in blood from replicating, whether or not the organisms are 
known or new. The Army is executive agent for combat blood products.
    What is the Army doing to investigate whole blood pathogen 
reduction technologies to improve the safety of blood products to 
support U.S. forces wounded in combat?
    Answer. The Army has directly supported and monitored industry 
efforts in Pathogen Reduction Technology over the last 10 years for 
blood components, specifically plasma and platelets. Since 2007, the 
requirement for development of Whole Blood Pathogen Reduction 
Technology moved to the forefront based on the operational necessity of 
emergency Fresh Whole Blood collections in combat. The FY 08 Department 
of Defense Deployment Related Medical Research Program specifically 
addressed the need for methods to pathogen reduce Fresh Whole Blood. In 
2011, the Combat Casualty Care Research Program released a Program 
Announcement for the long-term goal of the Department of Defense to 
develop a FDA (Food and Drug Administration) licensable pathogen 
reduction device/ methodology wherein whole blood may be treated and 
then further processed as needed to produce pathogen-reduced red cells, 
platelets, plasma, and whole blood for transfusion. Specifically, the 
present program is for the development of methodology for whole blood 
and the production of FDA licensable red cells. By the end of the award 
period, the product should have completed FDA phase I and II clinical 
trials, or equivalent, in accordance with FDA requirements. Proposals 
submitted are under evaluation.
    Question. Why do military forces of some of our NATO allies use 
these modern techniques, while American military so far do not?
    Answer. Medical products used by U.S. forces are required to be 
licensed or approved for use by the U.S. Food and Drug Administration. 
NATO member medical products are subject to licensure and approval by 
their national laws and regulations. Pathogen Reduction technologies 
licensed for use for treatment of plasma products and platelets in 
Europe are currently undergoing necessary clinical trials to support 
submission packets to the U.S. Food and Drug Administration.
    Question. Do Army solicitations to industry for pathogen reduction 
technologies seek technical solutions that are effective on the 
broadest number of pathogens, specifically to be effective against each 
and all of the pathogens that are of the highest threat to U.S. forces? 
What discussions has the Army had with the FDA to ensure that its whole 
blood pathogen reduction research efforts dovetail with FDA clinical 
trial requirements?
    Answer. Previous and current solicitations to industry seek 
Pathogen Reduction Technologies that are effective at reducing the risk 
of disease caused by transfusion of blood products. The solicitations 
are written to address tactical capability gaps/ operational needs for 
deployed forces. The requirements identified in the most recent Program 
Announcement (2011) are to develop a process of pathogen reduction for 
treating emergency fresh whole blood with a safe, non-toxic (in humans) 
methodology, (a) to inactivate parasites, (b) to inactivate donor white 
blood cells, (c) to inactivate/reduce the amount of virus load (i.e. 
HCV, HBV, HIV), (d) to inactivate clinically significant bacteria, (e) 
to demonstrate viability and suitability of derived red cells and (f) 
to demonstrate potential for further development for production of 
platelets, plasma, and whole blood. The Army is an active participant 
in FDA and HHS committees to ensure the safety of both the civilian and 
military blood supply. Jointly held meetings with the FDA and leaders 
in the blood bank industry have examined the current state of pathogen 
reduction technologies. When appropriate, Army representatives have 
communicated and participated in FDA meetings to address FDA clinical 
trial requirements, as well as open discussions on the possible 
regulatory pathway to approval of pathogen reduction technologies.

    [Clerk's note.--End of questions submitted by Mr. Lewis. 
Questions submitted by Mr. Frelinghuysen and the answers 
thereto follow:]

                    Combat Casualty Care Initiative

    Question. General Horoho, in your recent remarks before the 2012 
Military Health System Conference, you rightfully noted that many 
innovations in healthcare have their origins on the battlefield.
    Can you discuss the USAMRMC's core S&T programs and priorities 
going forward? In particular, can you provide an update on the Combat 
Casualty Care Initiative which plays a vital role in providing the best 
medical products to deliver the best possible medical care for the 
deployed soldier.
    Answer. The USAMRMC's core S&T priorities going forward are: TBI 
and Combat Trauma, Psychological Health, Damage Control Resuscitation, 
Limb, Face and Eye Restoration, Infectious Diseases, and Biomedical and 
Environmental Stressors as described below:
    TBI and Combat Trauma:
    This project refines and assesses concepts, techniques, and 
materiel that improve survivability and ensure better medical treatment 
outcomes for Warfighters wounded in combat and other military 
operations. It also matures, demonstrates, and validates promising 
medical technologies and methods to include treatment for traumatic 
brain injury (TBI), revival and stabilization of trauma patients, 
treatment of burns, and prognostics and diagnostics for life support 
systems.
    Traumatic Brain Injury research efforts support refinement of drugs 
and therapeutic strategies to manage brain injury resulting from 
battlefield trauma, to include mature drug technologies, novel stem 
cell strategies, and selective brain cooling. It also supports work 
required to validate safety and effectiveness of drugs, biologics 
(products derived from living organisms), and medical procedures 
intended to minimize immediate and long-term effects from penetrating 
brain injuries.
    Psychological Health:
    This effort refines, validates, and disseminates early 
interventions to prevent and reduce combat-related behavioral health 
problems, including symptoms of post-traumatic stress disorder (PTSD), 
depression, anger problems, anxiety, substance abuse, post-concussive 
symptoms, preventive factors in military suicides, and other health 
risk behaviors. This effort also assesses and refines interventions to 
enhance and sustain resilience throughout the Warfighter's career. 
Additionally this effort refines and evaluates methods to detect and 
treat concussion as well as identify and evaluate the effects of 
cognitive deficits in Soldiers during operations. The effort also 
serves to validate neurocognitive assessment and brain injury detection 
methods and validate tools and preclinical methods to treat PTSD in a 
military population.
    Damage Control Resuscitation:
    This effort develops and refines knowledge products (such as 
manuals, protocols, studies, and media), materials, and systems for 
control of internal bleeding; minimizing the effects of traumatic blood 
loss; preserving, storing, and transporting blood and blood products; 
and resuscitation following trauma. It also supports work required to 
validate safety and effectiveness of drugs and medical procedures to 
maintain metabolism and minimize harmful inflammation after major 
trauma. Efforts focus on blocking complement activation (a series of 
disease fighting proteins and their reactions in the body) from 
damaging healthy cells of the body and preventing or minimizing 
secondary organ failure (including brain and spinal cord injury).
    Limb, Face and Eye Restoration:
    This effort supports clinical studies for treatment of ocular and 
visual system traumatic injury, improved rehabilitation therapies, hand 
and face transplants, as well as restoration of function and appearance 
by regenerating skin, muscle, and bone tissue in battle-injured 
casualties. Areas of interest for regenerative medicine include healing 
without scarring, repairing large losses of tissue (nerve, muscle and 
bone), repair of compartment syndrome (muscle and nerve damage 
following reduced blood flow due to swelling), improved skin grafting 
approaches following burn injury, and facial reconstruction. Most of 
the research efforts are conducted through the Armed Forces Institute 
of Regenerative Medicine (AFIRM).
    Infectious Diseases:
    This effort conducts research for medical countermeasures to 
naturally occurring infectious diseases that pose a significant threat 
to the operational effectiveness of forces deployed outside the United 
States. Effective preventive countermeasures (protective/therapeutic 
drugs and vaccines, insect repellents and traps) protect the Force from 
disease and sustain operations by avoiding the need for evacuations 
from the theater of operations. Diseases of military importance are 
malaria, bacterial diarrhea, and viral diseases (e.g., dengue fever and 
hantavirus). In addition to countermeasures, conduct research into the 
refinement of improved diagnostic tools to facilitate early 
identification of infectious disease threats in an operational 
environment, informing Commanders of the need to institute preventive 
actions and improved medical care. Additionally, the Army conducts 
research on the human immunodeficiency virus (HIV), which causes 
acquired immunodeficiency syndrome (AIDS). Work in this area includes 
refining improved identification methods to determine genetic diversity 
of the virus, evaluating and preparing overseas sites for future 
vaccine trials, and research to develop candidate HIV vaccines, assess 
their safety and effectiveness in evaluation with human subjects, and 
protect the military personnel from risks associated with HIV 
infection.
    Biomedical and Environmental Stressors:
    Biomedical and Environmental Stressors include research into 
biomarkers of exposure and environmental biomonitoring, environmental 
health and protection, physiological health, and injury prevention and 
reduction.
    The biomarkers of exposure and environmental biomonitoring area 
include research efforts that support refinement and evaluation of 
methods to detect environmental contamination and toxic exposure during 
military operations.
    The environmental health and protection area includes research 
efforts which evaluate remote monitoring of Soldier physiological 
status and mitigating/eliminating the effects of heat, cold, altitude, 
and other environmental stressors on Soldier performance. Additional 
efforts include development non-invasive technologies, decision-aid 
tools, and models to enhance Warrior protection and sustainment across 
the operational spectrum.
    The physiological health and environmental protection area includes 
efforts that support development of laboratory products, interventions, 
and decision aids for the validation of physiological status and 
prediction of Soldier performance in extreme environments. This effort 
also evaluates methods for managing and controlling the effects of 
nutrition and fatigue on Soldier operational performance.
    The Injury Prevention and Reduction area supports, analyzes, and 
models the effects of mechanical and operational stressors on Soldier 
performance, to include acoustic and impact trauma, vision, vibration, 
and jolt to model the effects of these stressors on the brain, spine, 
eyes, and hearing. This effort evaluates and assesses the effects of 
repetitive motion during military operations and training on the human 
body. This effort also allows for the prediction of injuries as a 
result of continuous operations and muscle fatigue. This effort 
evaluates current standards for return-to-duty and establishes improved 
medical assessment methods with the goal of rapid return to duty of 
Soldiers following injury.
    Question. Among those S&T programs, can you update the Committee on 
plans to initiate a competitive process for the Autonomous Decision 
Assist System (ADAS), which combines automated control with small 
critical care platforms developed for DOD medical operations, in order 
to continue researching and developing the next generation of automated 
control and to also continue with clinical trials to test these systems 
in order to reduce patient mortality and enhance our ability to move 
patients quickly to definitive care center.
    Answer. Background: The Combat Critical Care Engineering research 
task area under the U.S. Army Institute of Surgical Research and the 
U.S. Army Medical Research and Materiel Command's Combat Casualty Care 
Research Program has initiated several projects and efforts into the 
development of automation and decision support technologies for care of 
military casualties at all echelons. Projects are submitted to the 
Broad Agency Announcement or to Program Announcements. These projects 
involve using decision support technology to assist providers in making 
better diagnosis of injured patients and provide recommendations for 
optimal care of the casualty in the emergency department, operating 
room, intensive care unit, and during evacuation (including en route 
care). Efforts also include design and testing of automated and closed 
loop systems that allow providers a complete hands-off approach for 
patient care during certain situations. Efforts involve research and 
development into new patient sensing technologies, better information 
processing approaches, artificial intelligence in the critical care 
environment, and interoperability of medical devices for use in 
automated environments. Several projects are being developed in 
consultation with the U.S. Navy and U.S. Air Force. The following is a 
list of projects currently under development in the area of ADAS:
           Decision support system for burn resuscitation
           Decision support system ventilator management
           Decision support system for prediction of life 
        saving interventions
           Closed loop control of burn resuscitation
           Decision support and closed loop control of trauma 
        resuscitation
           Automated decision support system for extra 
        corporeal lung management
           Wound mapping, tracking, and modeling of injury 
        progression
           Intelligent critical care checklists
           Nutrition decision support system
           Critical care integrated data exchange and archival 
        system
           Wireless vital signs monitor and WiMed system with 
        integrated prediction of the need for patient interventions
           Automated smart alarm system for the critical care 
        environment

    [Clerk's note.--End of questions submitted by Mr. 
Frelinghuysen. Questions submitted by Mr. Kingston and the 
answers thereto follow:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] 

    Question. How would the recommended changes to governance 
structure, especially those selected which provide increased budget and 
personnel authority, impact the ability of MHS to efficiently and 
effectively utilize, integrate, and procure technological resources? 
How are these impacts being measured--is there any applicable personnel 
and budget information that was used to make the analysis and/or 
recommendations for changes? Has a cost analysis been accomplished for 
this Task Force recommendation?
    Question. How would the recommended changes to governance 
structure, especially those selected which provide increased budget and 
personnel authority, impact the ability of MHS to efficiently and 
effectively utilize, integrate, and procure technological resources?
    Answer. The proposed DHA would focus on implementation of an 
organizational model that would accelerate implementation of shared 
services, identify and proliferate common clinical and business 
practices, and consider entirely new approaches to delivering shared 
activities. A single clinical and business system should allow for 
significant savings. Enhanced responsibilities and authorities for MSM 
managers would enable implementation of unified business plans, common 
business and clinical processes; common workload accounting processes; 
a single credentialing process and system; the ability to move 
personnel between MSM MTFs to accommodate workload; etc., to more 
efficiently and effectively provide the same services for any Service 
member in the market by any MTF in the market.
    Question. How are these impacts being measured--is there any 
applicable personnel and budget information that was used to make the 
analysis and/or recommendations for changes?
    Answer. The impacts are not being measured yet because the Deputy 
Secretary of Defense has not decided whether to accept the 
recommendations. Following that decision, an implementation team must 
decide what changes will take place and only after implementation of 
such changes would it be possible to start measuring results.
    Question. Has a cost analysis been accomplished for this Task Force 
recommendation?
    Answer. A detailed cost analysis was not accomplished during this 
90-day Task Force; one was not required by the Terms of Reference for 
the Task Force. However, the Task Force provided a ``rough order of 
magnitude'' estimate of staffing increases or reductions based on the 
organizational construct considered. The Task Force acknowledged that 
no allocations of personnel revisions should be considered until a more 
detailed analysis is completed.

                         DoD Task Force Review

    Question. The DoD Task force review was completed in 90 days; was 
this an adequate amount of time for a review of this magnitude? Why was 
the review accomplished with such a seemingly tight time constraint? 
Did this amount of time allow a comprehensive enough review, 
particularly with regard to implementation plans and cost estimates?
    Question. Was this an adequate amount of time for a review of this 
magnitude?
    Answer. Yes, the review was intended as a high-level review. In 
addition, the Task Force took advantage of the work done in most of the 
prior 15 such task forces, of which the most recent was in 2005-6.
    Question. Why was the review accomplished with such a seemingly 
tight time constraint?
    Answer. A goal was to make recommendations that would inform the 
President's budget decisions for Fiscal Year 2013. It was a factor in 
the tight time constraint.
    Question. Did this amount of time allow a comprehensive enough 
review, particularly with regard to implementation plans and cost 
estimates?
    Answer. The time was not intended to cover the implementation plans 
or the cost estimates of the implementation. After the Deputy Secretary 
makes a decision on the way ahead, an implementation team will identify 
the details of the way ahead, and complete more detailed cost estimates 
that will affect the final implementation decisions.

                         JTF CAPMED Initiative

    Question. The JTF CAPMED initiative was established in 2007 to 
oversee the delivery of integrated healthcare in the National Capital 
Region, with the goal of increasing efficiency--did this initiative 
actually save any money?
    Answer. The Department conducted a comprehensive examination of its 
medical infrastructure in the National Capital Region and determined 
that it did not make sense to continue to have large in-patient 
hospitals operating in close proximity to each other when the physical 
assets were aging and the mode of treatment was shifting to more 
outpatient care. This examination resulted in the closure of the aging 
Walter Reed Army Medical Center, the replacement of the Fort Belvoir 
hospital, the expansion of medical facilities at Bethesda (establishing 
the Walter Reed National Military Medical Center), and the closure of 
the inpatient facility at Joint Base Andrews.
    Over the long term, this change is avoiding costs of operating four 
inpatient hospitals in close proximity and having to recapitalize each. 
Moreover, it matches the infrastructure to current medical practices. 
In this particular case estimates at the time indicated that it would 
cost $600-700 million to replace or renovate Walter Reed and that, 
under existing budget assumptions, the work would take many years to 
complete (6-8 years for replacement, 10-15 years for renovation). While 
that is a major cost avoidance for which we could take credit, the 
Department has elected to be conservative in its savings estimates and 
have focused instead on estimating the savings or avoidances that are 
derived by calculating the net facility overhead costs (i.e. the sum of 
the support personnel, base operating support, and sustainment and 
modernization costs saved at the closing location less the sum of the 
incremental increase of those costs at the new location). For the 
Walter Reed closure, those avoided costs are around $170M annually.
    Question. With the consolidation and construction of the Bethesda 
and Ft. Belvoir facilities mostly complete, can you provide an update 
of ongoing and future projects for the two facilities, to include 
timeline and associated costs?
    Answer. The National Defense Authorization Act (NDAA) for Fiscal 
Year (FY) 2010 codified the definition of a World-Class Medical 
Facility and required DoD to provide Congress with a plan to meet this 
standard at Bethesda. DoD provided Congress with this plan, the 
Comprehensive Master Plan (CMP), in 2010 which described $800M in 
facility projects DoD plans to complete at Bethesda by 2018 to meet the 
requirements of the law. The President's Budget FY 2012 fully funded 
these projects at Bethesda over the next 6 years. Status has been 
included below:
     FY12 Program ($109M) funded and includes:
         All MILCON design funds ($66M)
         Funding to build Child Development Center (CDC) ($18M)
         O&M investment ($25M)
                   Medical Technology Upgrade
                   Master Planning
                   Campus Wayfinding
                   ADA Accessibility
                   Pedestrian Improvements
     Construction award for FY12 CDC MILCON project expected in 
May 2012
     Design awards for FY13 are underway and include:
           Temporary Facilities
           Electrical capacity/cooling towers Upgrade Phase 1
           Implement Accessibility & Appearance Plan
     FY14 projects are awaiting completion of Congressional 
Notification period (required by Title 10 U.S.C. Section 2807) and 
include:
           Electrical capacity/cooling towers Phase 2
           Parking Garage
           New Central Clinical Building
     FY13-17 Program funding dependent on PB13
           DoD continues to examine projects to determine whether 
        other improvements or refinements should be incorporated
           Last estimate was in DoD's Supplemental-CMP (AUG 2010) and 
        the President's Budget FY 2012 ($707M)
                   $618M in MILCON
                   $89M in O&M/OP

    [Clerk's note.--End of questions submitted by Mr. Kingston. 
Questions submitted by Mr. Calvert and the answers thereto 
follow:]

  Final Report of the Task Force on Military Health System Governance

    Questions. At the hearing, I asked whether any consolidation has 
occurred since November 2006. While I appreciated the examples 
provided, many of them were consolidation of facilities. The November 
2006 statement by the Deputy Secretary of Defense approved a plan in to 
consolidate common health care services and functions, such as finance, 
information management and technology, support, logistics, etc.--
similar to the Task Force's recommendation on September 2011.
    Outside the JTF CapMed, has any consolidation of these 
administrative functions occurred since November 2006? If not, why not? 
If not, what is the likelihood that the current Military Health System 
Governance will implement the preferred options outlined in the Final 
Report of the Task Force On Military Health System Governance which 
include consolidation of administrative activities under a new Defense 
Health Agency?
    Answer. There are many examples in the Military Health System of 
the Services coming together to use common services, such as the 
Defense Medical Logistics Standard Support (DMLSS), the TRICARE Managed 
Support Contracts, the MHS Pharmacy benefit, the Armed Services Blood 
Program, and the Defense Health Program Research and Development 
portfolio management. To expand on one, DMLSS is the primary support 
system for all military logistics functions associated with medical 
treatment facilities (MTFs) worldwide. Critical MTF logistics functions 
managed include medical equipment inventories, consumable supplies 
management, and similar related inventory services. Some examples of 
DMLSS common services are:
     Automates requisition, acquisition, procurement, shipment, 
receipt, storage, distribution, and disposal of medical supplies.
     Provides automated information management capabilities to 
support the management of facility-related business operations.
     Provides capabilities to track and manage facility real 
property inventories, and promotes standard administrative procedures.
     Delivers information to decision-makers concerning the 
allocation of resources for operations and maintenance and alterations 
of medical facilities.
     Supports budgeting and accounting information management 
associated with the management of materiel and facilities.
     Reports financial information to higher authorities, 
allows customers to manage their authorized funding targets, and tracks 
materiel and facilities management expenses.
     Provides contract services documentation and management 
supporting MHS MTFs and their customers.

                                Tricare

    Question. In the Final Report of the Task Force on Military Health 
System Governance, Option 2 for the Military Health Service recommended 
that the Defense Health Agency (DHA) would assume management of the 
TRICARE health plans.
    Why did the Task Force recommend that the TRICARE health plan 
oversight and management should move from TMA to a flag officer?
    General Green's Answer. The TRICARE health plan oversight is 
provided by a general officer today who serves as the deputy director 
of TRICARE Management Activity. A major responsibility of the Defense 
Health Agency (DHA) is to identify and communicate common clinical and 
business practices across the entire Military Health Service. The DHA 
is charged with reviewing processes and finding/capitalizing on 
efficiencies. Due to interactions with Service Surgeons General and 
other Service counterparts, a 3-star military lead for the DHA places 
the role of the DHA Director on equal footing with his or her 
colleagues.
    Question. In the Final Report of the Task Force on Military Health 
System Governance, Option 2 for the Military Health Service recommended 
that the Defense Health Agency (DHA), would assume management of the 
TRICARE health plans.
    Why did the Task Force recommend that the TRICARE health plan 
oversight and management should move from TMA to a flag officer?
    General Horoho's Answer. Relocating management and oversight of the 
TRICARE Health Plan under a flag officer better aligns the health plan 
management to the Services' portfolio in delivering healthcare to our 
beneficiaries. The transfer of management and oversight also provides 
clear decision-making authority, clear lines of accountability, and the 
ability to resolve disputes at the lowest appropriate level.
    Question. In the Final Report of the Task Force on Military Health 
System Governance, Option 2 for the Military Health Service recommended 
that the Defense Health Agency (DHA), would assume management of the 
TRICARE health plans.
    Why did the Task Force recommend that the TRICARE health plan 
oversight and management should move from TMA to a flag officer?
    Admiral Nathan's Answer. I was not a member of the Task Force; 
however, it is my understanding that the decision for the Defense 
Health Agency to be led by a civilian or flag officer/general officer 
was not addressed as a vote by the Task Force.
    Question. Do you agree that TRICARE health plan oversight and 
management should move from TMA to a flag officer? Why or why not?
    General Green's Answer. The Military Health System Task Force 
believed, and I agree, that health plan oversight and management should 
organizationally align under a Defense Health Agency led by a flag 
officer. The TRICARE Management Activity is overseen today by a flag 
officer in the deputy director position. Management and oversight of 
TRICARE Management Activity was not the major focus of the Military 
Health System Task Force; rather, the focal point was the appropriate 
Military Health System Governance structure to capitalize on common 
clinical and business practices to promote interoperability and gain 
efficiencies. Aligning oversight under a Defense Health Agency will 
promote collaboration and efficiency.
    Question. Do you agree that TRICARE health plan oversight and 
management should move from TMA to a flag officer? Why or why not?
    General Horoho's Answer. Management and oversight of the TRICARE 
Health Plan should fall under a flag officer to better align the health 
plan management to the Services' portfolio in delivering healthcare to 
our beneficiaries. The transfer of management and oversight also 
provides clear decision-making authority, clear lines of 
accountability, and the ability to resolve disputes at the lowest 
appropriate level.
    Question. Do you agree that TRICARE health plan oversight and 
management should move from TMA to a flag officer? Why or why not?
    Admiral Nathan's Answer. Yes. I believe there is benefit in having 
a prior Service Surgeon General or experienced Deputy Surgeon General 
serve as the head of the Defense Health Agency. Leaders with this 
experience would bring a broad understanding of the full continuum of 
care, from operational medical care and Force Health Protection to our 
Military Health System beneficiary mission.

                            Chain of Command

    Question. In Option 2, the Task Force also recommended that the DHA 
would report to ASD(HA) but would be designated as a Combat Support 
Agency (CSA) and would report to the Chairman Joint Chiefs of Staff for 
CSA missions.
    Please explain why the CSA designation is necessary or advisable. 
Please explain why a dual- or split reporting-chain is necessary? Why 
wouldn't the DHA staff and functions simply chop over to the combatant 
commander or the appropriate Surgeon General when mobilized?
    General Green's Answer. The establishment of the Defense Health 
Agency as a Combat Support Agency would provide a means for line 
oversight of the Military Health System and Defense Health Agency 
activities through the Chairman, Joint Chiefs of Staff to ensure 
readiness missions and line priorities remain paramount. Agencies are 
independent entities that have specific responsibilities. Their 
activities and responsibilities are captured in war plans. There is no 
need for them to report to a combatant commander since their 
contribution as a combat support activity will be delineated in plans.
    Question. In Option 2, the Task Force also recommended that the DHA 
would report to ASD(HA) but would be designated as a Combat Support 
Agency (CSA) and would report to the Chairman Joint Chiefs of Staff for 
CSA missions.
    Please explain why the CSA designation is necessary or advisable. 
Please explain why a dual- or split reporting-chain is necessary? Why 
wouldn't the DHA staff and functions simply chop over to the combatant 
commander or the appropriate Surgeon General when mobilized?
    General Horoho's Answer. The CSA designation would provide a direct 
link to combatant commanders, through the Chairman, Joint Chiefs of 
Staff (CJCS), which is critical to the DHA accomplishing its combat 
support mission responsibilities. The DHA has authority shared health 
services and implementing common clinical and business processes. It 
does not report to the CJCS and does have authority over operational 
medical forces. The CJCS would oversee the planning and execution of 
the CSA's combat support mission and provide military advice and 
planning guidance to the CSAs and the combatant commanders in the 
preparation of their operational plans.
    Question. In Option 2, the Task Force also recommended that the DHA 
would report to ASD(HA) but would be designated as a Combat Support 
Agency (CSA) and would report to the Chairman Joint Chiefs of Staff for 
CSA missions.
    Please explain why the CSA designation is necessary or advisable. 
Please explain why a dual- or split reporting-chain is necessary? Why 
wouldn't the DHA staff and functions simply chop over to the combatant 
commander or the appropriate Surgeon General when mobilized?
    Admiral Nathan's Answer. The CSA was an option introduced by a 
member of the Joint Staff to give the Chairman of the Joint Chiefs 
oversight of this newly established joint entity. The option was not 
deemed necessary under the agreed upon option of a Defense Health 
Agency without medical treatment facilities aligned.

    [Clerk's note.--End of questions submitted by Mr. Calvert. 
Questions submitted by Mr. Young and the answers thereto 
follow:]

          Military Health System Governance Review Task Force

    Question. In June 2011, then Deputy Secretary of Defense William 
Lynn established a task force to review the governance of the Military 
Health System (MHS) as a whole and governance in Multi-Service Markets 
in particular, including the National Capital Region. The task force 
was co-chaired by Dr. George ``Peach'' Taylor, Deputy Assistant 
Secretary of Defense (Health Affairs), and MG (Dr.) Doug Robb, Joint 
Staff Surgeon. Other members of the review group were senior 
representatives from the military Services, the Joint Staff, and the 
Office of the Secretary of Defense. For each of the three focus areas, 
various alternatives were researched, and the nine members of the 
review group voted for the best way ahead. Not a single recommendation 
of the Task force was voted for unanimously by the members.
    The Task Force review was completed in 90 days. Do you feel that 
this was an adequate amount of time for a review of this magnitude? Do 
you know why the review was accomplished under such a tight time 
constraint? Did the time constraint allow the review to be 
comprehensive enough, particularly with regards to implementation plans 
and cost estimates?
    Was this an adequate amount of time for a review of this magnitude?
    Answer. Yes, the review was intended as a high-level review. In 
addition, the Task Force took advantage of the work done in most of the 
prior 15 such task forces, of which the most recent was in 2005-6.
    Question. Why was the review accomplished with such a seemingly 
tight time constraint?
    Answer. A goal was to make recommendations that would inform the 
President's budget decisions for Fiscal Year 2013.
    Question. Did this amount of time allow a comprehensive enough 
review, particularly with regard to implementation plans and cost 
estimates?
    Answer. The time was not intended to cover the implementation plans 
or the cost estimates of the implantation. After the Deputy Secretary 
makes a decision on the way ahead, an implementation team will identify 
the details of the way ahead, and more detailed cost estimates will 
affect the final implementation plan.
    Question. ``Were the Services'' concerns heard and responded to 
during the development of the Military Health System governance Task 
Force review and recommendations?
    General Green's Answer. The Military Health System Task Force 
encouraged complete transparency and full disclosure throughout the 
development of the Military Health System Task Force review, voting 
process and recommendation development. Each Service Secretary was 
represented per the Task Force charter, so they had a voice in the 
discussion. Subsequent to the report the Chiefs and Secretaries were 
actively engaged in discussions that led to the final decision by 
Secretary of Defense. It was the responsibility of the Service 
representative to keep their chain of command informed. The Air Force 
Surgeon General, Chief of Staff, and Service Secretary were briefed 
regularly and had considerable input in the process and final decision.
    General Horoho's Answer. Concerns of the Army were heard and 
considered in Task Force deliberations, courses of action and 
recommendations.
    Admiral Nathan's Answer. I was not a member of the Task Forces; 
however, it is my understanding that all concerns of the Task Force 
members, both from the Services and OSD, were discussed during 
deliberations. The Task Force worked very effectively as a 
collaborative joint integrated product team to develop final 
recommendations.
    Question. If your Service did not vote in the majority for a 
recommendation, did you have the opportunity to express dissenting 
views? If, so, do you feel your views were seriously considered?
    General Green's Answer. All views (dissenting or otherwise) were 
welcomed and considered. Deliberations of the Military Health System 
Task Force were transparent throughout the entire process. Per the 
charter, dissenting or minority opinions were to be represented in the 
report. No minority opinions were brought forward or requested to be 
placed in the report.
    General Horoho's Answer. Concerns of the Army were heard and 
considered in Task Force deliberations, courses of action and 
recommendations.
    Admiral Nathan's Answer. I was not a member of the Task Forces; 
however, it is my understanding the Department of the Navy was part of 
the majority vote for all options.
    Question. The task force did not reach unanimity on any 
recommendation. Throughout the review, did you communicate your 
thoughts and ideas to one another, or did you only share your Services' 
opinions through the voting process?
    General Green's Answer. The forum created by the Military Health 
System Task Force encouraged transparency and full disclosure 
throughout the deliberation process. The Military Health System Task 
Force worked independently and encouraged very open communication of 
ideas between the members. All participants had opportunity to discuss 
and share a multitude of options before, during and following the 
formal voting process.
    General Horoho's Answer. I was not a member of the Task Force; 
however, it is my understanding that thoughts and ideas of the Army and 
all Services were communicated through open discussion in the Task 
Force. Consensus was reached through the voting process with minority 
views having the option to be noted where there was a significant 
difference of views among Task Force members. Those members expressing 
minority opinions did not request their opinions to be placed in the 
report.
    Admiral Nathan's Answer. I was not a member of the Task Force; 
however, it is my understanding that all concerns of the Task Force 
members, both from the Services and OSD, were discussed during 
deliberations. The Task Force worked as a joint integrated product team 
and members were given sufficient time to input their ideas with good 
discussion. The Task Force did not arrive at unanimous decision on any 
vote; however, there was always a clear majority vote on all options.
    General Horoho's Answer. The Task Force considered enhanced 
interoperability to be a product of improved governance at MHS 
headquarters levels and that enhanced interoperability is an inherent 
element within each of the higher weighted criteria. As such, enhanced 
interoperability received adequate emphasis.
    Question. One of the criteria that the Task Force used in 
evaluating the governance models was enhancing interoperability among 
the Services. However, in the evaluation process the importance of 
enhancing interoperability was only weighted 3%. With the end of BRAC 
2005 and the consolidation of military treatment facilities and co-
location of bases, do you feel that the Task Force placed enough 
emphasis on this important requirement?
    General Green's Answer. All of the listed criteria were considered 
important by the Military Health System Task Force. It was essential to 
distinguish and assign a priority/weighting for the established 
criteria. When considering both criteria number 4 (cost savings through 
reduction in duplication and variation) and criteria number 7 (enhance 
interoperability) 20 percent of the total score was about credible 
interoperability. Recommendations from the Military Health System Task 
Force regarding overall Military Health System Governance, Enhanced 
Multi-Service Markets and National Capital Region Governance, do indeed 
capitalize on interoperability among the Services.
    Admiral Nathan's Answer. As the Navy Surgeon General, I was not a 
member of the Task Force nor were the Surgeon Generals of the Army and 
Air Force. In addition, as of this date, there has been no official 
Department of Defense decision regarding the Task Force deliberations, 
findings and recommendations.
    General Horoho's Answer. I am told that the Task Force considered 
cost estimates for personnel and associated savings in accordance with 
its charter to review organizational structure and management 
headquarters. A more detailed analysis of cost savings will be required 
during the implementation planning phase.

                   Implementation of Recommendations

    Question. The Task Force completed its review and reported 
recommendations to the Deputy Secretary of Defense in September 2011. 
It was reported that the new Deputy Secretary of Defense, Ashton 
Carter, was about to announce decisions based on the Task Force review 
in December 2011; however, the fiscal year 2012 National Defense 
Authorization Act passed in December and included language prohibiting 
the Secretary of Defense from restructuring or reorganizing the 
Military Health System until 120 days following comprehensive reports 
submitted by the Comptroller General and the Secretary of Defense.
    A concern stemming from the Task Force's review is the lack of cost 
savings estimates associated with the organizational restructuring. 
Were cost estimates taken into account when reviewing the governance 
options?
    General Green's Answer. Cost estimates/savings were performed on a 
macro basis. Criteria number 4 clearly utilized the expertise of the 
Task Force members (both medical and line) for macro estimates of 
savings during deliberations. The Military Health System Task Force 
recognized that a more detailed cost analysis than could be achieved in 
their 90-day timeline would be required during the implementation 
planning phase.
    Admiral Nathan's Answer. Analyses of potential costs or savings for 
the options were extrapolated from work done by a 2006 workgroup and 
Center for Naval Analyses (CNA) study tasked with assessing Military 
Health System governance models. The Task Force staff expanded this 
analysis by applying data related to the Services' Headquarters Support 
and Intermediate Headquarters functions, allowing it to develop an 
estimate for the sizes of these Headquarters levels. It was noted 
during the deliberations that each Service has different functions and 
processes for grouping some of its key management and support elements. 
This results in widely varying comparisons that would require further 
study. The estimates were based upon the 2006 study and not an 
assessment of a newly defined and detailed construct for a Defense 
Health Agency with thoroughly reengineered shared service processes. 
This important task is expected to be accomplished as part of 
implementation planning activities.
    Question. Have your Services and organization participated in 
adequate cost studies regarding possible implementation of the 
recommendations following the completion of the review?
    General Green's Answer. The Air Force has reviewed the projected 
costs to be submitted by the department. We await the formal 
announcement of the Military Health System Governance decision and look 
forward to participating in implementation activities to maximize 
savings while enhancing access and quality of care under the new 
governance.
    General Horoho's Answer. No cost studies have been completed 
relating to the MHS Governance Task Force.
    Admiral Nathan's Answer. No separate Service-level cost studies 
have been completed in reference to Military Health System Task Force 
on Governance.
    Question: If these recommendations are adopted, how quickly would 
you recommend implementation take place?
    General Green's Answer. There is an opportunity to advance/execute 
the adoption and implementation of more efficient, common clinical and 
business processes through reengineered and streamlined shared 
services. Based on the current and anticipated austere fiscal 
environment, the conditions are right to rapidly implement Military 
Health System Task Force efficiencies. Based on the Fiscal Year 2012 
National Defense Authorization Act, the required Government 
Accountability Office study, and Congressional review, the optimal time 
for initial operating capability is estimated to be October 1, 2013 
with full operating capability one year later.
    General Horoho's Answer. The Army recommends rapid implementation 
in accordance with Section 716 of NDAA 2012 which requires Department 
and Comptroller General of the US to provide a report to congressional 
defense committees before restructuring or reorganizing. Earliest 
possible implementation is October 2013 in light of NDAA 2012 
requirements.
    Admiral Nathan's Answer. The agreed upon Course of Action (COA) 
from the Task Force could be implemented in a phased approach. 
Disestablishment of the Joint Task Force National Capital Region 
Medical and the continued alignment of the medical treatment facilities 
to the Services could occur with minimal to no delay. Development of 
the Enhanced Multi-Service Market managers (E-MSM) would occur by a 
collaborative agreement to align fiscal oversight of the 15 defined 
market areas. The timeline for the development of E-MSMs must be 
carefully constructed to ensure that all potential factors are 
considered including applying some of the lessons learned from the San 
Antonio medical model. Establishing the Defense Health Agency should be 
a deliberate process with clear delineations of authorities before 
resource allocations are made.
    Question. What discussions, if any, have taken place with your 
Services and organization to ensure that continuum of care for 
servicemembers and medical readiness would not be negatively affected 
by a change in organizational structures?
    General Green's Answer. The top three criteria used by the Military 
Health System Task Force for model evaluation focused on the readiness 
mission and quality care to service members and their families. These 
three criteria aggregated to nearly 70 percent of the total ``weight'' 
and these criteria were at the forefront of all Service deliberations. 
The Air Force is confident that the recommendations appropriately 
considered these factors and the proposed governance will not degrade 
capability or quality. We look forward to participation in the 
implementation team to ensure the new governance enhances both 
readiness and quality care.
    General Horoho's Answer. Continuum of care and medical readiness 
lead Service discussions related to change in organizational 
structures. The successful and seamless move of WRAMC to the new Walter 
Reed National Military Medical Center and Fort Belvoir Community 
Hospital represents one example of the Services' commitment to 
continuum of care and that medical readiness is not negatively 
affected.
    Admiral Nathan's Answer. My priority remains ensuring the readiness 
of Navy Medicine to support the warfighting and core capability of the 
Navy and Marine Corps, as well as maintaining the excellence in health 
care delivery for our beneficiaries. Continued alignment of the medical 
treatment facilities to the Services is critical to our ability to 
properly man, equip and train our medical forces.
    Question. As noted in the Task Force report, more than 15 studies 
on MHS governance have been performed since the Department of Defense 
was first established in 1947. While some have led to minor changes in 
the way the Department manages its health care, in most cases the DOD 
did not implement overarching recommendations. Instead, the Department 
implemented a number of policy and program changes that have 
incrementally increased the interoperability and ``jointness'' of both 
combat and peacetime health care delivery.
    Do you think that the Department is going to change course and make 
these significant program changes? If so, why now? What is different 
about this time and this study?
    General Green's Answer. Overall the Services believe there is an 
opportunity to accelerate the adoption and implementation of more 
efficient, common clinical and business processes through reengineered 
and streamlined shared services. This recommendation allows us to 
pursue cost savings and efficiencies in a collaborative manner through 
shared services without sacrificing our Service culture. We believe, 
based on the current/projected fiscal and political environment, the 
conditions are right to rapidly implement Military Health System Task 
Force efficiencies.
    Question: Do you think that the Department is going to change 
course and make these significant program changes? If so, why now? What 
is different about this time and this study?
    General Horoho's Answer. The Army is committed to implementing 
changes now. The DepSecDef has directed the Under Secretary of Defense 
(Personnel & Readiness) and the Chairman of Joint Chiefs of Staff to 
establish a planning team to develop an implementation plan for the 
governance changes. This will ensure that the Department does not lose 
momentum on this important issue and that we will be prepared to begin 
the actual implementation of these governance changes when the GAO 
review and the statutory waiting period are complete.
    Question. Do you think that the Department is going to change 
course and make these significant program changes? If so, why now? What 
is different about this time and this study?
    Admiral Nathan's Answer. The Department of Defense has not 
officially submitted its report with the proposed changes in Military 
Health System governance. Notwithstanding, the Secretary of Defense has 
articulated that the current rate of growth of health care spending 
within the Department is not sustainable and changes are necessary. We 
support his efforts and believe we have an important opportunity to 
improve our joint capabilities and improve efficiencies.

            Overall Military Health System Governance Models

    Question. Five of nine members of the Task Force voted for MHS 
Option 2--to establish a Defense Health Agency that would focus on 
consolidating and delivering a broader set of shared health services 
and implementing common clinical and business processes. Military 
Treatment Facilities would remain under the respective Service that 
historically operated them.
    What are the strengths of this recommendation?
    General Green's Answer. The Service Secretaries, not an agency, 
should be responsible for providing care to their Airmen, Soldiers, 
Sailors, and Marines. The Office of the Secretary of Defense for Health 
Affairs will no longer be involved in execution of the medical mission 
and will focus on policy to facilitate readiness and quality care. The 
Defense Health Agency will be focused on implementation of an 
organizational model that will accelerate realization of shared 
services, identify and enforce common clinical and business practices, 
and consider entirely new approaches to delivering shared activities. 
Leveraging effective and efficient common clinical and business 
processes will lead to cost savings and even greater collaboration 
between Services.
    General Horoho's Answer. This recommendation represents an 
opportunity to achieve cost savings through the reduction of 
duplication and variation, while accelerating the implementation of 
shared services, identify and proliferate common clinical and business 
practices, and develop entirely new approaches to delivering shared 
activities.
    Admiral Nathan's Answer. Establishing a Defense Health Agency can 
potentially improve efficiencies and reduce redundancies associated 
with shared or common services. Aligning the medical treatment 
facilities with the Services will allow the Defense Health Agency to 
focus on the primary mission of enhancing shared services. We need 
deliberate and careful planning to assess the consolidation of shared 
services within the Defense Health Agency to ensure that the Services 
have the capabilities to meet their missions.
    Question. In this decision, the military Services would retain 
ownership and oversight of their respective medical treatment 
facilities. What do you see as potential weaknesses associated with 
this plan?
    General Green's Answer. The greatest weakness in the current 
proposal is that it does not mandate a single financial accounting 
system for Defense Health Program dollars. A single financial 
accounting system is required to ensure transparency in Defense Health 
Agency and Service spending and programming to avoid redundancy. The 
Air Force believes the gains for the Defense Health Agency construct 
outweigh any potential weakness and will work with the implementing 
group to ensure transparency and move Defense Health Program dollars to 
a single financial accounting system for improved accountability.
    General Horoho's Answer. I do not see weaknesses inherent on this 
plan. I am encouraged by the potential and benefits achieved by this 
plan.
    Admiral Nathan's Answer. I do not view Services retaining ownership 
of their MTFs as a weakness. It is in fact an important aspect for us 
in meeting our Force Health Protection mission and sustaining our 
capabilities to deliver world-class care, anytime, anywhere.
    Question. If your Service did not vote for the recommendation, 
which option did you prefer, and why?
    General Green's Answer. The Military Health System Task Force 
recommendations are largely reflective of the Air Force final 
recommendations and position. The Air Force favors all Multi-Service 
Market areas be treated alike with a designated Service lead.
    General Horoho's Answer. Our original vote was for a Unified 
Medical Command as unity of effort is achieved under the mission 
command of a single commander. This is seen in the deployed environment 
and affords the opportunity to capitalize on strengths and capabilities 
of each Service while reducing redundancy. However, this course of 
action was not the one chosen and the Army Medical Department stands 
ready to collaborate with our sister Services and support the DHA 
course of action implementation.
    Admiral Nathan's Answer. The Department of the Navy agrees with the 
Task Force recommendations and Courses of Action as presented at the 
Department working groups.

                 Multi-Service Market Govrenance Models

    Question. Seven of nine Task Force members voted for MSM Option 3--
to introduce enhanced MSM Manager authorities for Multi-Service medical 
markets. This would include providing budgetary and short-term 
personnel management authority to the market manager.
    Currently, a governance structure similar to the recommendation is 
in place in the San Antonio, Texas area. What has been the feedback 
from the San Antonio model?
    General Green's Answer. The feedback from San Antonio, Texas, is 
positive. The current governance in San Antonio was only given short 
term personnel management authority. Budgetary authority has not been 
implemented for the director of the San Antonio Multi-Service Market 
(MSM). Although we agree San Antonio most reflects the recommended 
Military Health System Task Force MSM model, the Enhanced Multi-Service 
Market authorities will provide additional opportunities for Service 
integration, transparency and interoperability. Leadership in San 
Antonio and other MSMs have asked for these enhanced authorities for 
several years. These authorities enhance interoperability and care 
recapture opportunities.
    Question. Currently, a governance structure similar to the 
recommendation is in place in the San Antonio, Texas area. What has 
been the feedback from the San Antonio model?
    General Horoho's Answer. Feedback from San Antonio is very good. 
All beneficiaries continue to receive the highest quality of care. The 
transition is ongoing and leadership continues work to arrive at 
optimal Service integration and interoperability through Multi-Service 
market authorities.
    Admiral Nathan's Answer. I was advised that the Deputy Surgeon 
General of the Air Force discussed the Headquarters for the San Antonio 
Military Health System with the Task Force. He stated that it has been 
working effectively and could be enhanced if granted the same 
governance authorities that would be aligned to the Enhanced Multi-
Service Markets in the Task Force report.
    Question. What lessons have been learned and what improvements need 
to be made in order to enhance the San Antonio model and provide the 
best organizational structure possible? What weaknesses exist with this 
structure?
    General Green's Answer. The Military Health System Task Force (MHS 
TF) valued input from existing Multi-Service Market leadership. Three 
current Multi-Service Market managers briefed the MHS TF on their 
approaches within their market, lessons they've learned, and their 
recommendations for improved operations. Those lessons learned were 
incorporated into the MHS TF discussions and influenced the resulting 
MHS TF recommendations for enhanced authorities. Clear accountability 
and business planning in these markets will enhance recapture of 
beneficiary care, which translates into currency and readiness. 
Movement to a single financial accounting system (whether a separate 
system or any of the Service financial accounting systems) to be used 
by the entire Military Health System would significantly improve 
transparency of operations and accountability.
    General Horoho's Answer. This is a new model that just stood up in 
the Fall of 2011 and the transition is ongoing. It is too early to 
garner lessons learned.
    Admiral Nathan's Answer. I will defer to the Army and Air Force 
regarding the lessons learned in San Antonio model.
    Question. In your opinion, does this governance model effectively 
streamline traditional overhead and administrative costs or does it add 
an extra layer of bureaucracy?
    General Green's Answer. The Enhanced Multi-Service Market model 
streamlines and minimizes overhead and administrative costs. This model 
leverages the medical assets already in the market areas and if given 
full visibility of all dollars in the Multi-Service Market, operations 
to include traditional overhead and administrative costs will be 
streamlined. Bureaucracy should be reduced by separating the Office of 
the Secretary of Defense for Health Affairs policy from Defense Health 
Agency execution by having a military director of the Defense Health 
Agency. There are many other opportunities for reduction in bureaucracy 
through elimination or reduction of intermediate Service and TRICARE 
Management Activity regional oversight of Military Treatment Facilities 
that must be evaluated by the implementing group.
    General Horoho's Answer. The Enhanced Multi-Service Market model 
has the potential to streamline and minimize overhead and 
administrative costs through common accountability and business 
planning. A detailed cost analysis is required to identify overhead and 
administrative savings.
    Admiral Nathan's Answer. I was not a member of the Task Force; 
however, it is my understanding that without a detailed cost analysis 
we cannot definitively assess the cost of transitioning to an Enhanced 
Multi-Service Market model.
    Question. What is the size of the administrative staff in the San 
Antonio Multi-Service Market? How does this compare with the staff size 
of the NCR market?
    General Green's Answer. The office of the San Antonio Military 
Health System is charged with overseeing the San Antonio, Texas market. 
Their administrative staff consists of 15 personnel. The Joint Task 
Force National Capital Region Headquarters administrative staff is 
comprised of 152 personnel.
    General Horoho's Answer. The office of the San Antonio Military 
Health System is charged with overseeing the San Antonio market and has 
an administrative staff of 15 personnel. The Joint Task Force National 
Capital Region Headquarters has administrative staff of 152 personnel.
    Admiral Nathan's Answer. I will defer to the Army and Air Force 
regarding the staffing in San Antonio, and to DoD for specific 
information regarding the National Capital Region.

               National Capital Region Governance Models

    Question. Five of nine Task Force members voted for NCR Option 6--
to transition JTF CAPMED to a market management office with enhanced 
MSM Manager authorities, similar to the model that would be applied in 
all other MSM markets based on the MSM governance recommendation. The 
Task Force did not see the need for the National Capital Region to have 
a unique military medical structure, although it appears to have 
evolved into a very unique structure. The medical treatment facilities 
would continue to be staffed by personnel from all three military 
departments, and common clinical and business processes would be 
maintained. The medical treatment facilities would be operated by the 
military Services that have historically operated them.
    What are the differences between an enhanced Multi-Service Market 
structure (as voted on by the members of the Task Force) and the 
current joint operating model of JTF CAPMED?
    Admiral Mateczun Answer. A Multi-Service Market structure is a tri-
Service collaborative model to coordinate activities involving more 
than one Service. An enhanced market would have additional budgetary 
authorities.
    The current joint operating model of Joint Task Force National 
Capital Region Medical follows Department of Defense doctrine for 
coordinating the activities of more than one Service, i.e. joint 
methodology. However, the presence of command authority provides a 
singular authority to direct transformational change necessary to 
increase interoperability. The authority, responsibility, and 
accountability are vested in a single entity that can affect the 
necessary change.
    Question. What makes the National Capital Region different from 
other Multi-Service Markets and why would it be necessary to have a 
unique command structure?
    Admiral Mateczun's Answer: The National Capital Region (NCR) has 
the largest concentration of healthcare assets in the Military Health 
System. It contains a mix of nearly 40 Army, Navy, and Air Force 
Medical Treatment Facilities (MTFs), has 550,000 eligible beneficiaries 
and 12,000 staff, and runs on an annual operating budget of almost $1.5 
Billion. In order to reduce redundancies inherent in operating three 
separate Service systems and increase effectiveness and efficiency, the 
Department directed the establishment of an Integrated Healthcare 
Delivery System in the NCR to be managed by a Joint command with 
command authority.
    The presence of command authority provides a singular authority to 
drive the transformational change necessary to control unnecessary 
duplication among the Services and to increase interoperability. This 
improves responsiveness to our beneficiary population and our 
operational commanders. The authority, responsibility, and 
accountability are vested in a single entity that can hone in and 
affect the change necessary to improve care.
    Question. One of JTF CAPMED's main missions was to oversee the 
consolidation and realignment of military health care resources in the 
National Capital Region. With the completion of the consolidation, what 
would be the purpose for an enduring JTF CAPMED organization?
    Admiral Mateczun's Answer. Oversight of the Walter Reed Base 
Realignment and Closure (BRAC) recommendation was only one of several 
specified tasks assigned to Joint Task Force National Capital Region 
Medical by the Deputy Secretary of Defense. The JTF's first and 
foremost specified task was to oversee the efficient and effective 
delivery of all healthcare in the National Capital Region. This is an 
enduring mission by definition and all other specified and implied 
taskings are sub-sets designed to enhance and enable the care we give 
to wounded warriors and their families, our operational forces, and our 
eligible beneficiaries.
    Question. What are the drawbacks associated with having JTF CAPMED 
continue as the organizational structure in the National Capital 
Region?
    Admiral Mateczun's Answer. The primary drawback would be 
redundancy. However, this redundancy would be present only if Army, 
Navy, and Air Force medical command and control entities in the 
National Capital Region (NCR) were to be maintained at Pre-BRAC levels.
    Question. What are your greatest concerns with the governance of 
the National Capital Region as it is structured now, and as recommended 
by the Task Force?
    Admiral Mateczun's Answer. As with many organizations, the smooth 
transition from one structure to another is always a challenge. The 
transition from the current JTF CapMed organizational structure must 
ensure continued commitment to achieving the world-class attributes 
mandated by the National Defense Authorization Act for FY10. The 
constant goal of providing continuity of care for Wounded, Ill, and 
Injured Service Members and their families must continue to be met.

 Joint Task Force National Capital Region Medical--BRAC Implementation

    Question. The Joint Task Force--National Capital Region Medical 
(JTF CAPMED) was established in September 2007 to oversee the delivery 
of integrated healthcare in the National Capital Region (NCR), ensure 
readiness, and facilitate the BRAC directed consolidation of Walter 
Reed Army Medical Center, National Naval Medical Center at Bethesda, 
and DeWitt Army Hospital at Fort Belvoir. The mission of JTF CAPMED was 
to effectively and efficiently achieve the vision of establishing a 
world-class medical center at the hub of the Nations' premier regional 
healthcare system serving our military.
    The military Services have completed a difficult BRAC move that has 
unified two flagship hospitals with extraordinary histories. How is the 
operation proceeding since the completion of BRAC?
    Admiral Mateczun's Answer. One of JTF CapMed's specified missions 
was to oversee the Base Realignment and Closure (BRAC) directed 
transition and closure of Walter Reed, which I am pleased to report was 
completed on time. Today, Wounded, Ill, and Injured (WII) Service 
Members (SMs) and their families are receiving care in 3M SQ FT of new 
and renovated facilities at Bethesda and Fort Belvoir that have been 
outfitted with 160,000 of new equipment items and the latest medical 
technologies available.
    The Walter Reed BRAC was one part of the larger transformation of 
Military Medicine in the NCR. The NCR has a specific congressional 
mandate to provide world-class healthcare through an integrated 
healthcare delivery system (IDS). As discussed in the Comprehensive 
Master Plan provided to Congress, JTF CapMed is implementing an IDS to 
provide more effective and efficient healthcare in the NCR and is 
overseeing projects at Bethesda required to achieve the world-class 
facility standards required by the National Defense Authorization Act 
for FY 2010.
    Examples of IDS efficiency initiatives include:
    Implemented Initiatives
     $114M in cost avoidance through equipment re-use programs
     $109M+ in savings through using a single contractor to 
provision Initial Outfitting and Transition (IO&T)
           $77M upfront by competitively bidding the equipment and 
        relocation costs
           $32M in savings due to incentive plan allowing IO&T 
        contractor to share in savings due to lowering equipment costs 
        through competitive pricing events, bulk buying power, as well 
        as a willingness for vendors to accommodate the needs of such a 
        large volume customer
           The total savings from this contract cannot be quantified 
        at this time, but will be realized after the contract 
        optimization is completed
     $16M per year in savings through staffing and operational 
efficiencies
           $15M a year through establishing a Joint Pathology Center 
        to assume core functions of the Armed Forces Institute of 
        Pathology (now closed)
           $810K a year through establishing a regional Civilian Human 
        Resources Center
           $230K a year by consolidating appointment call centers in 
        the NCR
    Future Initiatives
     Installation of an Integrated Healthcare Data Network 
(Joint Medical Network) across the NCR will reduce IM/IT sustainment 
costs throughout all NCR MTFs as well as provide better performance
     Consolidation of the workforces at Walter Reed National 
Military Medical Center (WRNMMC) and Fort Belvoir Community Hospital 
(FBCH) and authorities sufficient to implement shared services will 
enable efficiencies and economies of scale that will result in 
contractor and civilian personnel savings of approximately $60M per 
year (FY 2011 dollars)
     With command and control over WRNMMC and FBCH, JTF CapMed 
continues to identify additional opportunities to develop shared 
services capabilities and achieve efficiencies in the NCR IDS.
    Question. What have the benefits and strengths been with regards to 
the BRAC move and consolidation?
    Admiral Mateczun's Answer. Over the long term, the Medical Base 
Realignment and Closure (BRAC) recommendations in the NCR avoid costs 
of operating four inpatient hospitals in close proximity and having to 
recapitalize each. Moreover, it matches the infrastructure to current 
medical practices. In this particular case estimates at the time 
indicated that it would cost $600-700 million to replace or renovate 
Walter Reed and that, under existing budget assumptions, the work would 
take many years to complete (6-8 years for replacement, 10-15 years for 
renovation). While that is a major cost avoidance for which we could 
take credit, the Department has elected to be conservative in its 
savings estimates and have focused instead on estimating the savings or 
avoidances that are derived by calculating the net facility overhead 
costs (i.e. the sum of the support personnel, base operating support, 
and sustainment and modernization costs saved at the closing location 
less the sum of the incremental increase of those costs at the new 
location). For the Walter Reed closure, those avoided costs are around 
$170M annually and for Malcolm Grow at Joint Base Andrews they are 
around $8M annually.
    The Walter Reed BRAC was one part of the larger transformation of 
Military Medicine in the NCR and laid the groundwork for providing 
healthcare more effectively and efficiently. The NCR has a specific 
congressional mandate to provide world-class healthcare through an 
integrated healthcare delivery system (IDS). As discussed in the 
Comprehensive Master Plan provided to Congress, JTF CapMed is 
implementing an IDS to provide more effective and efficient healthcare 
in the NCR and is overseeing projects at Bethesda required to achieve 
the world-class facility standards required by the National Defense 
Authorization Act for FY 2010.
    Examples of IDS efficiency initiatives include:
    Implemented Initiatives
     $114M in cost avoidance through equipment re-use programs
     $109M+ in savings through using a single contractor to 
provision Initial Outfitting and Transition (IO&T)
           $77M upfront by competitively bidding the equipment and 
        relocation costs
           $32M in savings due to incentive plan allowing IO&T 
        contractor to share in savings due to lowering equipment costs 
        through competitive pricing events, bulk buying power, as well 
        as a willingness for vendors to accommodate the needs of such a 
        large volume customer
           The total savings from this contract cannot be quantified 
        at this time, but will be realized after the contract 
        optimization is completed
     $16M per year in savings through staffing and operational 
efficiencies
           $15M a year through establishing a Joint Pathology Center 
        to assume core functions of the Armed Forces Institute of 
        Pathology (now closed)
           $810K a year through establishing a regional Civilian Human 
        Resources Center
           $230K a year by consolidating appointment call centers in 
        the NCR
    Future Initiatives
     Installation of an Integrated Healthcare Data Network 
(Joint Medical Network) across the NCR will reduce IM/IT sustainment 
costs throughout all NCR MTFs as well as provide better performance
     Consolidation of the workforces at Walter Reed National 
Military Medical Center (WRNMMC) and Fort Belvoir Community Hospital 
(FBCH) and authorities sufficient to implement shared services will 
enable efficiencies and economies of scale that will result in 
contractor and civilian personnel savings of approximately $60M per 
year (FY 2011 dollars)
     With command and control over WRNMMC and FBCH, JTF CapMed 
continues to identify additional opportunities to develop shared 
services capabilities and achieve efficiencies in the NCR IDS.
    Question. Has this consolidation actually saved any money? How did 
the Department mitigate the risk of possible disruptions of medical 
care during the transition? What were the major challenges of 
consolidation?
    Admiral Mateczun's Answer. Estimating cost savings or avoidances 
for the Walter Reed BRAC recommendation are around $170M annually.
    The Department began addressing the major challenges of 
consolidation with the establishment of JTF CapMed in 2007. Major 
challenges included access to care, realignment of staff, information 
technology, and the implementation of standardized business and 
clinical processes in the new Medical Treatment Facilities (MTFs). 
These challenges illustrate how the Department mitigated the risk of 
potential disruptions to medical care during the transition--through 
detailed planning, appropriate distribution of patient care, and 
training and preparedness of staff. Examples of these efforts include:
    (1) Distribution of patients: While maintaining standards of care, 
JTF CapMed worked with the Services, USTRANSCOM, and the Joint Staff to 
distribute war casualties to world-class military hospitals outside of 
the NCR, such as those in San Antonio, TX and San Diego, CA, which also 
have the capability to handle complex orthopedic trauma including 
prosthetic rehabilitation. This reduced war casualties having to enter 
the NCR during the height of the fighting season.
    (2) Wounded, Ill, and Injured (outpatient): Multiple strategies 
were instituted to ensure that there was no decrement to casualty care 
during the transition, including maintaining medical and support 
capabilities at Walter Reed Army Medical Center (WRAMC) until patients 
relocated to Bethesda.
    (3) Inpatients: Detailed inpatient movement plans were developed 
and exercised which ensured a safe relocation of all WRAMC inpatients 
to Bethesda and DeWitt Army Community Hospital patients to Fort Belvoir 
Community Hospital. Utilizing industry best practices, DoD relocated 35 
WRAMC inpatients systematically, employing skilled medical and move 
teams and a cadre of ambulances using planned, low-traffic times. JTF 
CapMed coordinated the moves with D.C. and Montgomery County Police, 
and no inpatients suffered safety or medical problems during the move.
    (4) Clinical Services: A detailed clinical service relocation plan 
was developed based on hospital relocation industry best practices 
which ensured minimal decrement to any one medical capability during 
the transition phase. Prior to the move, WRAMC departments eliminated 
routine appointments for five days as staff and materiel were packed 
and relocated to their new sites. During that period, the other NCR 
hospitals and clinics were available for routine outpatient 
appointments.
    (5) Retention of staff: A Guaranteed Placement Program required 
that all WRAMC employees be offered positions at the new hospitals, 
helping to maintain the civilian workforce at WRAMC throughout the 
transition.
    (6) Staff training and patient education: JTF CapMed proactively 
communicated with patients about their future healthcare delivery 
locations through mailers and other means. To ensure safe patient care 
in the new facilities, extensive training and orientation plans were 
developed for WRNMMC and FBCH.
    (7) Access to Care: JTF CapMed established an Integrated Referral 
Management and Appointing Center (IRMAC), which consolidated 
appointment and referral processes in the NCR to improve service and 
standardize the processes. The consolidation has improved services by 
eliminating the confusion of multiple appointment processes at the 
different MTFs in the NCR and has increased access to care by offering 
appointments at any MTF in the NCR in order to meet patient needs. The 
IRMAC will also proactively schedule specialty referrals and routine 
appointments for patients to enhance continuity of care.
    (8) Information Technology: In order to have fully integrated 
Information Technology connectivity in the NCR, networks, hardware, and 
clinical systems must work seamlessly together. To that end, JTF CapMed 
established a Joint Medical Network (JMED) that consolidated 
infrastructure and provided a common platform between NCR medical 
Service Components and the Military Health System (MHS) to decrease 
redundant activities, software, and applications/systems in the NCR, as 
well as reduce the number of software licenses and applications 
required.
    Question. While the consolidation and construction of the 
facilities in Bethesda and Fort Belvoir are effectively complete, there 
are still projects on the horizon for the two facilities. Please 
provide an update of ongoing projects and the timeline and costs 
associated with them.
    Admiral Mateczun's Answer. The National Defense Authorization Act 
(NDAA) for Fiscal Year (FY) 2010 codified the definition of a World-
Class Medical Facility and required DoD to provide Congress with a plan 
to meet this standard at Bethesda. DoD provided Congress with this 
plan, the Comprehensive Master Plan (CMP), in 2010 which described 
$800M in facility projects DoD plans to complete at Bethesda by 2018 to 
meet the requirements of the law. The President's Budget for FY 12 
fully funded these projects at Bethesda over the next 6 years. The 
status has been included below:
     FY12 Program ($109M) funded and includes:
         All MILCON design funds ($66M)
         Funding to build Child Development Center (CDC) ($18M)
         O&M investment ($25M)
                   Medical Technology Upgrade
                   Master Planning
                   Campus Wayfinding
                   ADA Accessibility
                   Pedestrian Improvements
     Construction award for FY12 CDC MILCON project expected in 
May 2012
     Design awards for FY13 are underway and include:
         Temporary Facilities
         Electrical capacity/cooling towers Upgrade Phase 1
         Implement Accessibility & Appearance Plan
                   Medical Technology Upgrade
                   Master Planning
                   Campus Wayfinding
                   ADA Accessibility
                   Pedestrian Improvements
     FY14 projects are awaiting completion of Congressional 
Notification period (required by Title 10 USC Section 2807) and 
include:
         Electrical capacity/cooling towers Phase 2
         Parking Garage
         New Central Clinical Building
     FY13-17 Program funding dependent on the President's 
Budget for FY 13
         DoD continues to examine projects to determine whether 
        other improvements or refinements should be incorporated
         Last estimate was in DoD's Supplemental-CMP (AUG 2010) 
        and PB12 ($707M)
                   $618M in MILCON
                   $89M in O&M/OP
    Question. Do the Surgeons General have input into the Comprehensive 
Master Plan and future projects related to Walter Reed National 
Military Medical Center and Fort Belvoir Community Hospital?
    Admiral Mateczun's Answer. The Chairman of the Joint Chiefs of 
Staff, each Service Secretary, and USD (P&R) and appropriate Office of 
the Secretary of Defense (OSD) entities provided the DEPSECDEF with 
comments on the Comprehensive Master Plan (CMP) and its supplement 
before the Department provided them to Congress. Additionally, before 
inclusion of the CMP facility projects in the President's Budget 2012, 
OSD Cost Assessment and Program Evaluation (CAPE) chaired a working 
group, with representation from the Joint Staff, each Service, and OSD, 
to further evaluate the scope and implementation of the facility 
requirements in the CMP. The recommendations from the group were 
forwarded to the 3-star programmers and ultimately to the Deputy's 
Management Action Group (DMAG) for consideration. In late 2011, CAPE 
chaired a second working group, with representation from the same 
equities, to again determine whether other improvements or refinements 
should be incorporated.

   Joint Task Force National Capital Region Medical--Organizational 
                               Structure

    Question. The JTF CAPMED has a unique reporting structure. Unlike 
military treatment facility commanders who report to their respective 
Surgeon General, the Commander of JTF CAPMED reports directly to the 
Deputy Secretary of Defense, effectively removing the Service Surgeons 
General and Service Secretaries from the chain of command, although 
they are ultimately responsible for the health care of their respective 
servicmemembers. This chain of command has at times caused confusion 
and ambiguity.
    Who has daily operational control of Walter Reed National Military 
Medical Center and Fort Belvoir Community Hospital and what is the 
chain of command?
    Admiral Mateczun's Answer. The Commander, Joint Task Force National 
Capital Region Medical has operational control of Walter Reed National 
Military Medical Center and Fort Belvoir Community Hospital and has 
Tactical Control of all outpatient clinics assigned. The Commander 
reports directly to the Secretary of Defense through the Deputy 
Secretary of Defense. While this chain of command may be unprecedented 
to the medical enterprise, it is the standard for commanding and 
controlling Service forces in a joint environment.
    Ultimate responsibility for all matters within the Department of 
Defense lies with the Secretary of Defense. Service Secretaries and 
their respective Surgeons General are responsible to provide, train, 
and equip their forces. However when forces from more than one Service 
come together in a common area for a common purpose, those provided 
forces are employed by a joint force commander as established by the 
Secretary of Defense to ensure a single point of responsibility, 
authority, and accountability and to enhance unity of effort.
    The Secretary of Defense through the Deputy Secretary of Defense 
has deemed the National Capital Region along with its composite warrior 
and beneficiary population to be best served by a joint command 
structure to guarantee the most effective and efficient employment of 
the medical forces provided by the Service Secretaries and the Surgeons 
General. All have a role in the successful completion of the medical 
mission.
    In the JTF CapMed charter there is an NCR (National Capital Region) 
OIPT (Overarching Integrated Product Team) which includes members from 
the Services, the Service Secretariats, the Joint Staff, and the Office 
of the Secretary of Defense. The primary decisions made about JTF 
CapMed were all coordinated through this OIPT to include the type of 
manning documents, civilian workforce consolidation, hospital command 
structures, and the Comprehensive Master Plan submitted to Congress.
    Question. What is the relationship between the Service Surgeons 
General and the Commander of JTF CAPMED?
    Admiral Mateczun's Answer. The Commander, Joint Task Force National 
Capital Region Medical is the joint force commander overseeing the 
employment of forces provided by the Services to accomplish all medical 
missions within the National Capital Region. As such, the JTF is the 
supported organization. The Services, including the Surgeons General, 
are supporting organizations since they provide the forces to the 
supported commander. This supported-supporting relationship is common 
in all Department of Defense joint operations.
    Question. What are the relationships between the Commander of JTF 
CAPMED and the Hospital and Installation commanders?
    Admiral Mateczun's Answer. Commander JTF CapMed has operational 
control of Walter Reed National Military Medical Center (WRNMMC) and 
Fort Belvoir Community Hospital as well as tactical control of the 
outpatient clinics in the National Capital Region. Neither Naval 
Support Activity (NSA) Bethesda nor the Fort Belvoir Garrison has a 
formal reporting relationship to JTF CapMed. However, both 
organizations have the responsibility to appropriately support the 
hospitals and warrior care functions on their installations. Moreover, 
the Comprehensive Master Plan provided to Congress in April 2010 
defines a specific relationship between WRNMMC and NSA Bethesda. It 
states, ``Naval Support Activity Bethesda Installation Commanding 
Officer will be assigned an additional duty reporting relationship to 
the WRNMMC, Bethesda Commander for day-to-day mission support and will 
receive a concurrent Fitness Report.''
    Question. When dispute resolution is required, where does the 
Commander of JTF CAPMED go and how are the Services involved, if at 
all?
    Admiral Mateczun's Answer. According to established Department of 
Defense procedures for joint operations, if a dispute involves a 
Service entity possibly encroaching upon a joint force commander, the 
joint force commander refers that matter to the appropriate Service 
Chief of Staff via the Service Component Commander assigned to the 
joint force commander. If the issue is not resolved at that level, the 
joint force commander can take the issue up his chain of command.
    In the specific case of Joint Task Force National Capital Region 
Medical, the Commander would first take the matter up with the Service 
Chief of Staff via the Service Component. If that did not resolve the 
dispute, the Commander, in accordance with his establishing charter, 
will take the matter to the Vice Chairman, Joint Chiefs of Staff, and 
if necessary to the Secretary of Defense as the ultimate adjudication 
authority.
    If the dispute involves a question over the joint force commander's 
authority, the Service Component Commander can bring the issue to his 
specific Service Chief of Staff who in turn can bring it to the 
attention of the Vice Chairman, Joint Chiefs of Staff If the Vice 
Chairman and the joint force commander fail to resolve the dispute, it 
goes to the Secretary of Defense as the ultimate adjudication 
authority.
    Question. How many positions are in the JTF CAPMED headquarters? 
What is the annual operating budget of JTF CAPMED? How does this 
compare with the staff size and budget of the San Antonio region eMSMO?
    Admiral Mateczun's Answer. JTF CapMed HQ has an Operations and 
Maintenance budget of $11.7M in FY12 and 119 civilian and military 
staff. The San Antonio Military Health System is smaller in size, but 
an ``apples to apples'' comparison of overhead would necessarily 
include consideration of command and control costs for Army, Navy, and 
Air Force medical headquarters in the NCR, which can be considered 
redundant overhead if the JTF exercises command and control over NCR 
hospitals.
    As the eMSMO concept has not been completely fleshed out in terms 
of details about staff, size, and budget. Therefore, no direct 
comparison is possible. When such a comparison is possible it should 
include an ``apples to apples'' evaluation of functions.

  Joint Task Force National Capital Region Medical--Integration Into 
                             Joint Facility

    Question. The Committee remains concerned with the importance of 
integrating the military hospitals into true joint facilities. An 
integrated delivery system must be operated and managed as a single 
entity with a regional, unified view of acquiring materials, training 
personnel, and coordinating administrative tasks. Since each Service 
has unique cultural traditions, norms, practices and language for 
managing, it is truly a challenge to fully integrate. Another area of 
concern is the ability for the Services to transition to a functioning 
joint Information Technology (IT) system.
    With each Service medical component employing different concepts of 
care delivery and processes, how have you developed common practices 
within the National Capital Region that is suitable for a multi-Service 
pool of beneficiaries?
    Admiral Mateczun's Answer. When the Department of Defense decides 
to operationally employ forces from two or more Services to achieve 
unity of effort, it does so using joint principles stressing unity of 
command to ensure accomplishment of all objectives. Applied to medical 
capability from diverse Service backgrounds in the National Capital 
Region, the Commander, Joint Task Force National Capital Region Medical 
is instituting an Integrated Delivery System characterized by:
    1. A single entity responsible for providing all services, 
including delivery of care and risk management.
    2. A seamless continuum of services whereby consumers are provided 
a consistent point of access to all services and their care is 
coordinated and managed.
    3. Standardization of equipment and clinical practices.
    4. Managed fixed resources and capital investments.
    5. Avoidance of duplication of services to control costs and 
improve outcomes.
    Currently, the following represent fundamental building blocks 
already in various stages of implementation within the National Capital 
Region:
    1. Patient Centered Medical Home Concept where the focus is on 
organizing care around the patient and family.
    2. Integrated Referral Management and Appointing Center to assure 
the entire loop of communications of the care of a patient is completed 
by centralizing appointing and referral management systems thereby 
greatly facilitating patient access to care.
    3. Joint Medical Network providing a seamless, integrated, and 
interoperable information exchange.
    4. Standardized Quality Management Program providing the ability to 
shift healthcare providers between facilities to maximize our ability 
to deliver care where the patients require it.
    Only through an Integrated Delivery System can there be one 
standard of care for beneficiaries. And to effectively institute and 
manage an Integrated Delivery System requires consolidating 
responsibility, authority, and accountability into a single entity 
accountable to transform and blend different practices into best 
practices for the given population.
    Question. How has JTF CAPMED addressed these inherent differences? 
Are there still differences that endure, and how are they being 
addressed?
    Admiral Mateczun's Answer. While there may be differences in 
business practices, there is little inherent difference in medical 
practice. Following Department of Defense emphasis on interoperability 
as a means to increase effectiveness and control costs, the Joint Task 
Force National Capital Region Medical builds upon the natural 
commonality of medical practice to overarch cultural barriers through 
standardization of equipment and clinical practices. At the same time, 
the Joint Task Force National Capital Region Medical remains responsive 
to the administrative requirements of the Services, such as 
administrative processes for their wounded ill and injured personnel.
    Question. How have best practices from each Service been integrated 
into the joint facility?
    Admiral Mateczun's Answer. Yes. The integration of clinical 
departments and technical programs was accomplished early on and 
working groups, with representation from each hospital, developed 
implementation plans to achieve and standardize best practices. In many 
cases, one Service's model was adopted. For example, Walter Reed 
National Military Medical Center (WRNMMC) adopted the Navy's Blood Bank 
Program and the Army's clinical investigations program.
    Another example of the clinical success of this method of 
integration is provided by the recent Joint Commission survey of WRNMMC 
and the behavioral health departments. The surveyor had inspected both 
Walter Reed Army Medical Center (WRAMC) and National Naval Medical 
Center (NNMC) within the last 18 months and noted that the WRNMMC 
behavioral health processes were better than either WRAMC or NNMC 
practices previously. She attributed the accomplishment directly to the 
integration process.
    Question. How are Service specific cultures being sustained to 
ensure that Airmen, Sailors, Marines and Soldiers stationed in the NCR 
can leave and easily transition back into a Service-specific 
environment?
    General Green's Answer. Airmen assigned to Joint Task Force Capital 
Region Medical (JTF CapMed) support the mission of health care in the 
National Capital Region while maintaining critical clinical currency 
skills required to meet Air Force-specific and joint theater taskings.
    Service component commands provide administrative and logistic 
support for JTF CapMed per joint doctrine. In JTF CapMed, Airmen 
sustain Air Force-specific cultures through their direct administrative 
relationship with the Air Force medical component (the 79th Medical 
Wing) to JTF CapMed.
    General Horoho's Answer. Service members remain assigned to their 
Service for command and control while these Soldiers, Sailors and 
Airmen provide outstanding care to our military beneficiaries. Service 
members performing duties in the NCR retain titles, rank and grade, and 
uniforms of their respective Service and participate in Service unique 
training.
    Admiral Nathan's Answer. Walter Reed National Military Medical 
Center Bethesda (WRNMMC) is providing outstanding care to our wounded 
warriors, active duty personnel, families and all beneficiaries. The 
staff, comprised of Navy, Army, Air Force and civilian personnel, is 
executing their mission with skill, compassion and professionalism. 
While the focus is clearly on unity of mission and effort, important 
Service-specific culture components remain part of duty at WRNMMC, 
including the maintenance of titles, rank and grade, and uniforms. In 
addition, as the Services retain administrative control over their 
service members, culture is maintained in the administration of 
service-specific training requirements. We are committed to joint 
solutions and improved interoperability; however, we recognize that 
Service-unique traditions and aspects must be sustained, celebrated and 
shared. The leadership at WRNMMC continues to stress this important 
consideration at all levels of the command.

              Walter Reed National Military Medical Center

    Question. Unsubstantiated reports have surfaced that due to the 
confusing command and control structure at Walter Reed National 
Military Medical Center (WRNMMC), there has been a high level of 
turnover and employee turbulence. While the care at WRNMMC is beyond 
reproach, there are concerns that increasing conflict and confusion may 
eventually impact medical care at the facility.
    Has there been an unusual amount of turnover and/or attrition at 
WIUNIMMC?
    Admiral Mateczun's Answer. No. Attrition at WRNMMC is less than 1% 
per month, which is well below the national average and is not 
significantly different from pre-Base Realignment and Closure (BRAC) 
levels. All subjective and objective data, to include a command climate 
survey, indicate that WRNMMC staff morale is good and personnel take 
pride in their mission. This was also the impression of the surveyors 
from the Joint Commission who independently inspected the hospital 
recently. They were particularly complimentary on the interactive 
nature of the staff and reported that the hospital exemplified holistic 
practices for patients.
    Question. Have there been any employee issues or concerns expressed 
since Bethesda and VVI I C unified into a single facility? If so, how 
have you listened to and responded to those concerns?
    Admiral Mateczun's Answer. Yes. A Guaranteed Placement Program 
required that all Walter Reed Army Medical Center civilian employees be 
offered employment at Walter Reed National Military Medical Center or 
Fort Belvoir Community Hospital. While this posed some initial 
challenges for the WRNMMC staff, data indicates that staff morale is 
good and personnel take pride in their mission. This data included 
objective measures, such as low attrition rates and positive survey 
results, and subjective measures, such as meeting with WRNMMC staff 
individually or in groups. The hospital has been working through 
individual points of friction with specific groups, such as the cancer 
infusion center, but these are isolated events and are not indicative 
of any trend. Military and civilian staff also both has their 
respective channels to route formal grievances or complaints.
    Question. How have you ensured the needs and concerns of patients 
and families receiving care at WRNMMC are heard and responses are 
communicated effectively?
    Admiral Mateczun's Answer. WRNMMC has multiple venues for receiving 
and responding to patient and family concerns. These include:
    1. Communication encouraging patients to voice concerns: Patients 
are informed via written materials displayed throughout the hospital 
signage, information packages, and clinic brochures that WRNMMC 
encourages patients to voice any concerns so that all issues have an 
opportunity to be fully addressed. WRNMMC further utilizes available 
communication tools (internet and social media) to welcome patient 
feedback as we continually strive to provide exceptional patient- and 
family-centered care.
    2. Customer Advocacy: Patients reach out to our Customer Advocacy 
Office of our Patient Relations Service to let their concerns be known 
via telephone, face to face and written comments. The Patient Relations 
Service investigates and resolves any issues to the extent possible and 
provides direct feedback to the patient. Patient experience data is 
communicated to our leadership on a weekly basis including positive 
stories, narratives with need for improvement, and feedback from 40 
randomly selected patients visiting the hospital. In addition, Town 
Hall Meetings are held in with Joint Task Force National Capitol 
Region, Naval Support Activity Bethesda, and the military service 
representatives for our Wounded Warriors to provide direct feedback to 
leadership. A web based tracking system for concerns is shared with 
patients and their families at the Town Hall Meetings. Common patient 
concerns are discussed in a monthly column in our base newspaper which 
is widely available to patients, families, and staff.
    3. Headquarters Patient Satisfaction Survey: Patients participate 
in the Navy Bureau of Medicine and Surgery Patient Satisfaction Survey 
and the TRICARE Outpatient and Inpatient Surveys which focus on access 
to care, staff communication, and overall satisfaction.
    4. Case Managers for patients with complex chronic diseases: Using 
a family-centered approach, the case managers regularly meet with 
patients and families to address their medical and administrative 
concerns, thus addressing concerns as they are raised. The case 
managers may also arrange patient and family care conferences to 
include providers, patient administration, and leadership to provide a 
comprehensive approach to address the needs and concerns of the patient 
and family.
    5. Patients with Unanticipated Healthcare Outcomes: WRNMMC has a 
model Healthcare Resolutions Program that becomes involved when there 
are unanticipated/adverse outcomes of care, quality of care concerns, 
or complex healthcare issues to ensure that full transparency is 
practiced as well as to ensure that patients and families receive 
answers to all care related concerns. The healthcare resolutions 
specialists train providers in full disclosure related to adverse 
outcomes of care. This service also receives care related questions via 
the internet. Healthcare Resolutions is a 24/7 service.
    6. Special Populations--Wounded Warriors: Patient and family care 
conferences are also used in Warrior Care as a means to address 
specific and unique requests. In addition to Wounded Warrior Case 
Managers, the Nurse Case Manager has two avenues in which to advocate 
the family's needs and concerns--through weekly Platoon Meetings and 
Warrior Clinic Rounds. Administrative issues affecting their care and 
rehabilitation are discussed in collaboration with the patient 
leadership and Recovery Care Coordinators in weekly Platoon Meetings. 
The Warrior Clinic rounds are another opportunity to advocate their 
needs and concerns through a multi-disciplinary meeting on the patient 
and family progression through care.
    Question. How long has true joint staffing been in place at WRNMMC? 
How effectively has it worked?
    Admiral Matezun's Answer. The Joint Table of Distribution (JTD) is 
not in place and WRNMMC does not have Joint staffing, but rather Tr-
Service staffing. There is an Intermediate Manning Document (IMD), in 
which the Services have and maintain their own supporting manpower 
documents and authorities over personnel. Until WRNMMC becomes a joint 
command with its manpower documented on a JTD, the disciplinary 
authority of the commander over all assigned Service Members is 
limited.
    Question. Have the Services had opportunities to review directives 
and plans set out by JTF CAPMED? If they have had concerns, have those 
been heard and addressed?
    Admiral Mateczun's Answer. Yes. The Department's decisions 
regarding the transformation of the National Capital Region Medical 
were deliberated through several sessions, NCR OIPT meetings, to 
include coordination of the Comprehensive Master Plan and its 
supplement. Each of these forums had strong Service representation. 
Ultimately, the Department delegated JTF CapMed with the command 
authority to manage military healthcare in the NCR and execute the NCR 
Medical Base Realignment and Closure recommendations.
    The NCR has the largest concentration of healthcare assets in the 
Military Health System. It contains a mix of nearly 40 Army, Navy, and 
Air Force Medical Treatment Facilities (MTFs), has 550,000 eligible 
beneficiaries and 12,000 staff, and runs on an annual operating budget 
of almost $1.5 Billion. In order to reduce redundancies inherent in 
operating three separate Service systems and increase effectiveness and 
efficiency, the Department directed the establishment of an Integrated 
Healthcare Delivery System in the NCR to be managed by a Joint command 
with command authority. The presence of command authority provides a 
singular authority to drive the transformational change necessary to 
control unnecessary duplication among the Services and to increase 
interoperability. This improves responsiveness to our beneficiary 
population and our operational commanders. Authority, responsibility, 
and accountability are vested in a single entity that can hone and 
affect the change necessary to improve care, as recommended in the 
report of the congressionally mandated independent review of achieving 
world-class medical capabilities in the NCR.

       Enhanced Interoperability for Joint Military Medical Care

    Question. Admiral Nathan recently commented that ``the synergy of 
creating efficiencies, removing redundancies and allowing transparency 
will elevate care and reduce costs. Accepting a ``joint culture'' does 
not mean loss of identity of service culture. Incredible joint care 
exists on the battlefield and we are seeing joint staffing at major 
medical centers and within our graduate medical education programs. 
Joint command and control cannot happen overnight and must grow from 
the deck plates with coordinated efforts from the services and those 
best informed to provide input so that more light than heat is 
generated.''
    How do you effectively communicate with each other on behalf of 
your Services?
    General Green's Answer. The Service Surgeons General meet at least 
once a week and communicate even more frequently. Medics at all levels 
from all Services are working side by side to form partnerships and 
cultivate trust. Integrated Service executive leadership teams are 
developing strategies to meet mission requirements while enhancing 
communication, transparency and trust. The Service led jointly manned 
hospitals at Landstuhl, Walter Reed Bethesda, Belvoir, and San Antonio 
Military Medical Center encourage even greater interaction and 
collaboration. The Medical Education and Training Center in San Antonio 
is fostering the entire enlisted corps to understand and value 
similarities and differences between Services while teaching common and 
service specific skills. As joint policy evolves, medical personnel 
will be at the forefront of new joint operations. We are poised to do 
even greater things in the future together. Thus far we have 
established the most effective trauma system in the history of war and 
brought America's heroes home, regardless of the severity of their 
injuries, within three days. The future is even brighter based on new 
training and collaborative environments that now exist.
    General Horoho's Answer. The Surgeons General meet and communicate 
frequently when collaborating on issues important to the Military 
Health System and care of its beneficiaries. Joint medical facilities 
at Landstuhl, Walter Reed National Military Medical Center, Fort 
Belvoir, and San Antonio are successful results and examples of the 
continued communication underway amongst the Services and the Surgeons 
General.
    Admiral Nathan's Answer. I, along with my fellow Surgeons General, 
am committed to implementing joint solutions and improving 
interoperability. We have great examples of joint operations including 
our in-theater combat casualty care, within our jointly staffed medical 
treatment facilities, as well as in our classrooms and research labs. 
We need to build on these efforts to further enhance efficiencies and 
reduce redundancies.
    Question. How are you working cooperatively to ensure 
interoperability and a smooth transition to ``jointness''?
    General Green's Answer. The Service Surgeons General meet at least 
once a week and communicate even more frequently. Medics at all levels 
from all Services are working side by side to form partnerships and 
cultivate trust. Integrated Service executive leadership teams are 
developing strategies to meet mission requirements while enhancing 
communication, transparency and trust. The Service led jointly manned 
hospitals at Landstuhl, Walter Reed Bethesda, Belvoir, and San Antonio 
Military Medical Center encourage even greater interaction and 
collaboration. The Medical Education and Training Center in San Antonio 
is fostering the entire enlisted Corps to understand and value 
similarities and differences between Services while teaching common and 
service specific skills. As joint policy evolves, medical personnel 
will be at the forefront of new joint operations. We are poised to do 
even greater things in the future together. Thus far we have 
established the most effective trauma system in the history of war and 
brought America's heroes home, regardless of the severity of their 
injuries, within three days. The future is even brighter based on new 
training and collaborative environments that now exist.
    Weekly formal and informal opportunities are the ``norm'' where the 
Services cooperate and communicate, tackling issues and developing 
interoperable solutions. The relationships and cooperative spirit are 
the highest seen in the last 15 years.
    General Horoho's Answer. The Surgeons General meet and communicate 
frequently when collaborating on issues important to the Military 
Health System and care of its beneficiaries. Jointly staffed medical 
facilities at Landstuhl, Walter Reed National Military Medical Center, 
Fort Belvoir, and San Antonio are successful results and examples of 
the continued cooperation underway amongst the Services and the 
Surgeons General. The successful and seamless move of WRAMC to the new 
Walter Reed National Military Medical Center and Fort Belvoir Community 
Hospital represents one example of the Services' continuing efforts to 
ensure a smooth transition to jointness and interoperability.
    Admiral Nathan's Answer. I, along with my fellow Surgeons General, 
am committed to implementing joint solutions and improving 
interoperability. We have great examples of joint solutions in-theater 
in supporting combat operations, in our medical treatment facilities, 
classrooms and labs. We need to build on these efforts to further 
enhance efficiencies and reduce redundancies. All of us recognize that 
we must be deliberate and measured in our approach to ensure that our 
Services' unique readiness missions are maintained and our excellence 
in health care delivery to all our beneficiaries is sustained.
    Question. What is being done to ensure that the Reserve components 
are being included in the discussion of the future of joint military 
health care?
    General Green's Answer. From an Air Force perspective, our Reserve 
components are integral partners to our enterprise. They are part of 
our leadership team devising policy, determining priorities, and 
developing goals to meet our mission. Air Force Reserve and Guard 
Surgeons General have been regularly briefed on discussions of 
governance just as we meet regularly to improve services to Active 
Duty, Reservists, and Guardsmen.
    General Horoho's Answer. Army Reserve components participate in 
leadership discussions on the future of joint military health care and 
help to determine policy and priorities.
    Admiral Nathan's Answer. The hallmark of Navy Medicine is our 
professional and dedicated workforce. Our team consists of over 63,000 
active component (AC) and reserve component (RC) personnel, government 
civilians as well as contract personnel--all working around the world 
to provide outstanding health care and support services to our 
beneficiaries. We recognize how vital our reserve component personnel 
are to meeting our mission requirements.
    Question. Please provide examples of joint sharing of services 
operating today.
    General Green's Answer. There are many examples of joint sharing 
and joint medical operations. Through a number of initiatives and 
partnerships our Nation has realized the highest survival rates and 
lowest disease, non-battle injury rates in recorded history. Some 
examples of interoperability and sharing include:
      Craig Joint Theater Hospital at Bagram
      Joint Base Balad Theater Hospital
      The National Capital Region Multi-Service Market
      San Antonio Military Health System
      Uniformed Services University of the Health Sciences
      Medical Education Training Campus
      Capital Investment Decisions Model (Military Construction 
Planning)
      Landstuhl Regional Medical Center
      Joint Base Ft Lewis-McChord
      Pope Army Airfield
      Defense Medical Readiness Training Institute
    General Horoho's Answer. Some examples of joint sharing are:
      San Antonio Military Health System
      The National Capital Region Multi-Service Market
      Uniformed Services University of the Health Sciences
      Medical Education Training Campus, San Antonio
      Landstuhl Regional Medical Center
      Joint Base Ft Lewis-McChord
      Pope Army Airfield
      Defense Medical Readiness Training Institute
      Craig Joint Theater Hospital at Bagram
    Admiral Nathan's Answer. We have solid examples of jointly sharing 
services in place today including components of the information 
management/information technology program, graduate medical education 
and at the Medical Education Training Campus in San Antonio. In-
theatre, our medical personnel are working together and demonstrating 
unmatched skill in treating and transporting our wounded warriors from 
the battlefield to jointly staffed facilities like Landstuhl Regional 
Medical Center and Walter Reed National Military Medical Center. Moving 
forward, I believe we can further develop this collaborative sharing of 
services to improve efficiencies, reduce redundancies and improve 
overall value to our beneficiaries.
    Question. What is the greatest challenge to providing a true joint 
operating environment for military health care?
    General Green's Answer. It is difficult to define a ``true joint 
operating environment.'' If execution of the mission will not be 
Service led, Joint Doctrine must evolve to support joint execution 
activities (in this case--hospitals). Today, by law, medics do not fill 
joint billets and do not get joint credit for assignments to any joint 
manning document. Therefore, we do not have a systematic way to develop 
medics to lead joint operations. Oversight of a hospital requires 
Service guidance because joint standards and guidance for hospitals 
does not exist. The shift from Service run facilities to more jointly 
operated facilities requires evolution of joint policy to establish 
``joint'' execution standards and development of joint medical leaders.
    Air Force medics are central players in some of the most effective 
joint casualty care systems in military history. Joint theater 
hospitals, Landstuhl Regional Medical Center in Germany and the San 
Antonio Military Health System are all examples of these quality health 
care delivery systems. We believe through continued communication, 
transparency, interoperability and trust, we will continue to build 
strong partnerships to deliver world-class quality care.
    General Horoho's Answer. The Services must successfully Service-
unique requirements while maintaining mission readiness and ensuring 
excellence in health care delivery is sustained.
    Admiral Nathan's Answer. We must proceed in a deliberate and 
measured manner to ensure that our readiness to support our Services' 
missions and core warfighting capabilities will be maintained and our 
excellence in health care delivery will be sustained. We cannot 
compromise our capabilities to meet Service-unique requirements.

    [Clerk's note.--End of questions submitted by Mr. Young.]
                                       Thursday, February 16, 2012.

         FISCAL YEAR 2013 DEPARTMENT OF DEFENSE BUDGET OVERVIEW

                               WITNESSES

THE HON. LEON E. PANETTA, SECRETARY OF DEFENSE
GENERAL MARTIN E. DEMPSEY, USA, CHAIRMAN, JOINT CHIEFS OF STAFF
HON. ROBERT HALE, UNDERSECRETARY OF DEFENSE, COMPTROLLER

                  Opening Statement of Chairman Young

    Mr. Young.  The committee will be in order. The 10:00 hour 
has arrived. I certainly welcome our guests today, Secretary 
Panetta, who is no stranger to the Congress.
    But I think this is your first time before this 
subcommittee, and you are more than welcome, as I am sure you 
know that.
    And General Dempsey also, I asked the General if he would 
like to start off the hearing with a song.
    General Dempsey.  That comes during the Q and A.
    Mr. Dicks.  That is better.
    Mr. Young.  We have followed, since he was the Central 
Command, which was in my neighborhood, through his ascension to 
Chief of Staff, and also your first time before this committee.
    General Dempsey.  Yes, sir.
    Mr. Young.  And Secretary Hale, you have been here a lot of 
times, and we have communicated with you regularly, and we 
appreciate the good communication that we have always had. I do 
have a brief statement to sort of set the stage for some of the 
things that we will be interested in. Your statements will be 
provided for the record, and then you present them any way you 
like.
    Like I said, this is your fourth appearance on the Hill 
this week, so you have this down.
    Secretary Panetta.  Got it down.
    Mr. Young.  We have followed you on TV and in the media, so 
we know pretty much what somebody else did not ask you that we 
are going to try to get to.
    So the hearing today is on the 2013 budget request for the 
Department of Defense, and as I said, we welcome all of you. We 
are talking about a budget that is reduced, and you have made 
it very clear that you understand the difficulties, and we 
certainly understand the difficulties, and we know that it is 
not easy because last year, we had to do fiscal year 2011 and 
fiscal year 2012, and we were required to make substantial cuts 
even below the President's budget, and we did so carefully. We 
did the best we could not to affect readiness or not to affect 
the troops, our fighting warriors, but we want to investigate 
and analyze some of the issues that you have talked about, the 
new strategies, the new emphasis on the Pacific Rim.
    We are somewhat concerned about aviation assets, where we 
are going, because we know that in so many of our wars that 
aviation was a very, very big part of it. Of course, the most 
important part of our military capability are the men and women 
who serve in uniform, and it is essential that we take very 
good care of them.
    We have a lot of interesting questions, but we want to hear 
what you have to say, but before we get to your testimony, I 
would like to yield to my friend Mr. Dicks and the former 
chairman of this committee.
    Mr. Dicks.

                          Remarks of Mr. Dicks

    Mr. Dicks.  Thank you, Mr. Chairman, and this morning, the 
committee welcomes the Honorable Leon Panetta, Secretary of 
Defense, and General Martin Dempsey, United States Army, 
Chairman of the Joint Chiefs of Staff.
    Leon Panetta and I came to Congress in 1976 after being 
Senate staffers, so we have known each other for at least 45 
years. It has always been a pleasure to work with Leon in all 
of his various assignments, including CIA and Chief of Staff 
during the Clinton administration. We will forgive him for his 
time at OMB. Now you understand.
    And Bob Hale, of course, we count on to explain things to 
us and help us implement our various policies. We extend our 
sincere thanks to all of you for your many years of service and 
dedication to our Nation. This hearing takes place at a time 
when we have to make many difficult choices, given the fiscal 
environment that confronts us.
    Mr. Secretary, as you have discussed many times, the Budget 
Control Act required the Department to identify $487 billion in 
savings over the coming decade. We recognize that overall the 
budget declines by nearly $30 billion, including base and 
overseas contingency operation funding compared to fiscal 2012.
    We also recognize that this budget is the result of 
strategic review and threat assessment. It is not simply an 
effort to meet targets in the Budget Control Act. To achieve 
these savings, you have adjusted programs across the board. We 
understand that this budget builds on $150 billion in 
operational efficiencies identified over fiscal year 2012 
through 2016 and includes another $60 billion over 5 years 
beginning in 2013.
    The budget reduces many modernization programs as well. The 
procurement budget declines by $5.8 billion, and programs have 
been stretched out over time, such as the Joint Strike Fighter, 
selected shipbuilding programs, the Army's ground combat 
vehicle, and many others. We are aware of measures in the 
budget to reduce personnel strength. Over the coming 5 years, 
the budget proposes reducing U.S. Forces by 124,000 personnel, 
including the active, Guard, and Reserve components.
    We look forward to working with you on this and other 
proposals regarding medical care, which Chairman Young has been 
a major advocate for, and retirement to help control DOD 
personnel costs. We clearly need to find ways to reduce these 
costs in a manner that keeps the faith with the all-volunteer 
force, and we need to make sure we preserve the all-volunteer 
force.
    We appreciate that you have developed a 2013 budget in the 
context of a review of our Nation's military strategy and that 
this strategy played a major role in guiding funding 
adjustments. We are particularly interested in the way this 
budget supports strategic imperatives, such as the increased 
focus on the Asia-Pacific region, and how it protects key 
investments in new technology and new capabilities. We also 
appreciate that these changes take place in the complex threat 
environment.
    While our troops have come home from Iraq, many security 
challenges remain, including Iran, the Arab Spring, North 
Korea, China, Russia, and elsewhere. At the same time, we 
continue to fight in Afghanistan. We understand that the fiscal 
year 2013 budget assumes continued operations, involving over 
117,000 U.S. personnel. We also realize that this budget is 
being presented without assumptions on sequestration. We are 
very interested in your views on how sequestration would affect 
the Defense Department.
    Mr. Secretary, General, Mr. Hale, we look forward to your 
testimony and working with you in the coming year. Thank you, 
Mr. Chairman.
    Mr. Young.  Thank you, Mr. Dicks.
    We have the chairman of the full committee here with us 
this morning.
    Mr. Chairman, thank you for being here, and we yield to you 
for opening remarks.

                       Remarks of Chairman Rogers

    Mr. Rogers.  Thank you, Mr. Chairman, for the time.
    And Leon and General and Mr. Hale, thank you for being 
here.
    My first encounter with Leon Panetta was when he chaired 
the Budget Committee, and I don't know when that was, 1843 or--
somewhere in that decade. But nevertheless, we have learned to 
like and respect his work, and we are proud that you are here 
this morning, Mr. Secretary, and General and Mr. Hale.
    We are going through an unprecedented shift in world 
history at the moment. It is an awkward time for the defense of 
this country. The Cold War is over, and, you know, we like to 
think that we are prepared, but sometimes we think that with 
the view that we are fighting the last war, and certainly we 
are not. The world has drastically changed since the end of the 
Cold War, a changed landscape in the world: Terrorism, that is 
now the biggest threat that we militarily face; asymmetric 
warfare, which demands that we change the way we build our 
forces and deploy them; a shift in world attention from Europe 
to Asia and all that that implies; the redeployment of whole 
segments of our military to an altogether different part of the 
world with different expectations, different reasons for 
existence, and the like.
    So I don't envy you your decisions that are being made even 
as we speak, and it is for that reason that on the defense 
budget this year, we will be taking an unprecedented look at 
how the world has shifted and how we must shift with it to 
maintain our leadership in the world, and I am really 
interested in the costs associated with some pretty big moves 
that you are going to be making, particularly in the East of 
the world.
    I am concerned about the cost of that relocation to Guam, 
for example, huge expenditure. And then you have got all sorts 
of extra bases that we are going to have to deal with, and I 
don't envy you that one at all. But we will be there alongside 
doing what we can to be involved.
    But secondly and finally, Mr. Chairman, I want us to focus 
on the words of some military people that have most recently 
said that our fiscal crisis here at home is perhaps the biggest 
threat to our national security. I don't recollect who was the 
prominent speaker of that. Perhaps it was the Secretary.
    Secretary Panetta.  Chairman Mullen.
    Mr. Rogers.  Yes, and there is no doubt about it, and that 
is what we are going to have to wrestle with here with you. 
This committee has been front and center in trying to address 
the very real security threat posed by--I am going to call it 
out-of-control Washington spending, trillion dollar deficits 4 
years in a row.
    Last year, this committee worked to restore transparency to 
this process, austerity, tough oversight to the appropriations 
process. We went back to regular order, thanks in large measure 
to my working partner, Mr. Dicks. We succeeded in reducing 
discretionary spending last year by some $98 billion compared 
to fiscal 2010. That has not happened since World War II.
    And while the Department of Defense is not immune to the 
difficult budget challenges we face, national security, keeping 
our brave men and women serving in uniform safe and supplied 
with the equipment they need remains a top, perhaps the top 
priority. We have to take temperate and responsible steps to 
reduce spending without negatively impacting the warfighter or 
military readiness in the future, but I hope you can illuminate 
us this morning on how a 100,000-man troop reduction will 
ensure sufficient security to meet future threats, maintain the 
conventional and nuclear war readiness, address the growing 
cyber warfare challenges, and uphold our treaty obligations.
    So you are sitting in a seat that is shifting with the 
winds, as we speak, and it is tough sledding, but I can think 
of no one I would rather have at the helm than the Secretary 
and the General and Mr. Hale.
    Thank you, Mr. Chairman.
    Mr. Young.  Well, thank you very much, Mr. Chairman.
    All the members are anxious to really say something to you 
and ask you questions, but I think it is proper that we first 
hear from you, Mr. Secretary, and hear what you want to tell 
the committee this morning.

                 Summary Statement of Secretary Panetta

    Secretary Panetta.  Thank you very much, Mr. Chairman, 
Norm, members of this committee.
    It is always an honor for me to have the opportunity to 
come back home. The House is my home. And my roots are here. 
And I have had the honor of serving with many of you in the 
House and developed close friendships with many of you. And at 
times, our views have differed, but at the same time, we have 
always remained good friends, and I appreciate that. That is 
one of the great things about the People's House, and makes it 
a great institution.
    I would like my statement to be made part of the record, 
and I will just try to briefly summarize some of the 
highlights. I am sure you are familiar with the key elements of 
what we are trying to do in this budget. Let me first begin by 
thanking you for the support that all of you provide for our 
servicemembers and for their families. I have said this time 
and time again. We can look at the weapons systems, we can look 
at the technology, we can look at all of the fancy things that 
are being developed, but the most important weapon we have are 
the men and women who serve in uniform. And they, along with 
the Department civilian professionals, have done everything 
that has been asked of them and more. And we have been through 
a decade of war, and I cannot tell you how thankful I am for 
the support that you help provide them, and I appreciate your 
loyalty. I appreciate the great work that you do in providing 
what is necessary for them to have the support system that is 
so essential to their doing the job.
    Let me talk briefly about the budget. The budget request 
itself obviously was developed, as you all know, going through 
a very intensive strategy review that was conducted with our 
senior military as well as with the civilian leaders of the 
Department, and we got a lot of advice and guidance, obviously, 
through the national security team and advice and guidance from 
the President himself. The total request that we are asking is 
$614 billion in national defense, and it is made up of a base 
budget of $525.4 billion and virtually what we would call an 
OCO budget of $88.5 billion, which supports our troops in 
combat.
    The reasons for the review that we had to go through are 
pretty clear to all of you. Number one, the United States is at 
a strategic turning point after a decade of war and after very 
substantial growth in defense budgets over the last 10 years. 
Second, with the Nation confronting this national security 
threat of a very large debt, I think it was the USA Today that 
said our national debt is now comparable to our GDP, and you 
know the size of the annual deficits that we are confronting. 
Congress passed the Budget Control Act of 2011 on a bipartisan 
basis and, in effect, imposed a law on me and the Department 
that we reduce the defense budget by $487 billion over the next 
decade.
    At the Department, we decided to step up to the plate. I 
don't think you can confront the challenges that you are facing 
with regard to the deficit and not have defense play part of 
the role. It should not play all of the role, by the way. Not 
all of it should come out of defense. It should come out of 
other areas of the budget.
    But having said that, we felt it was our responsibility to 
do our part. So we viewed it as an opportunity. Instead of just 
complaining about it and calling it a crisis, we decided to 
view it as an opportunity to try to establish a new strategy 
for the future. What is the force that we need not just now, 
but what is the force that we need in 2020 to help protect this 
country?
    The fact is, as I said, we are at a turning point. We have 
ended the mission in Iraq. We are still in a tough fight in 
Afghanistan, but 2011 was really kind of a--marked a 
significant turning point in Afghanistan as well. We made very 
marked progress with regard to violence, with regard to 
transitioning to the Afghan-led army, and giving them 
responsibility for security, and we are on track to complete 
the transition that we are engaged in here with NATO, with our 
ISAF forces, by the end of 2014. We have all made the same 
commitment. We are in together and out together with regard to 
Afghanistan, and we all agree as to what that path should be.
    Last year, as you know, the NATO effort in Libya, which we 
participated in, resulted in the fall of Qadhafi, and we have 
made, as all of you are aware of, some very successful 
counterterrorism efforts that have significantly weakened Al 
Qaeda and decimated its leadership, so that they are having a 
very difficult time exercising command and control and putting 
together the kind of attack plans we saw on 9/11.
    Having said all of that, and what we have achieved, unlike 
the drawdowns in the past, and many of you, just like myself, 
have been through those drawdowns in the past, the problem is 
that we are not in a period where the threats we confront have 
receded. We are facing, at the same time we have this fiscal 
problem that we are dealing with, we are still confronting a 
series of very important security challenges that are out 
there.
    We are still a Nation at war in Afghanistan. We still face 
threats to our homeland from terrorism. There are still 
terrorists out there that are intent on trying to attack our 
homeland. There is a dangerous proliferation of lethal weapons 
and materials, the behavior of Iran, the behavior of North 
Korea continue to threaten global stability. We have the 
continuing turmoil and unrest in the Middle East.
    This is an area in which any one of these countries could 
explode on us, from Syria--which is already in turmoil--to 
Egypt, to Yemen, and elsewhere. We have rising powers in Asia 
that keep testing international rules and relationships, and 
there are growing concerns about cyber attacks, cyber 
intrusions which could very well be the battle front of the 
future.
    So our challenge is, how do we meet all these threats, 
protect our Nation, protect our people, and at the same time 
meet our responsibility to fiscal discipline? This is not an 
easy task. It is a tough challenge. But it is what faced us at 
the Department, and it is what faces all of you as your 
responsibility in the Congress.
    But to do this, what we decided to do, in looking at the 
strategy, we developed five very important elements that we 
thought were important for the strategy and for the force of 
the future. Number one, we are going to be dealing with a 
smaller force; that is just a fact. It is going to be smaller. 
It is going to be leaner. But we felt that it had to be agile. 
It had to be flexible. It had to be quickly deployable, and it 
had to be technologically advanced. That was kind of one key 
premise.
    Secondly, looking at the world that we are dealing with, we 
wanted to rebalance our global posture so that we would 
emphasize the Asia-Pacific and the Middle East because these 
are the two areas where obviously we confront some of our 
greatest threats.
    Third, for the rest of the world, we did not want to walk 
away from our responsibilities there, so what we thought made 
sense is to develop innovative partnerships, strengthen key 
alliances, develop kind of an innovative rotational presence 
that we could use from Europe to Latin America to Africa.
    Fourth, we wanted to ensure that we always have the 
capability to confront and defeat aggression from any adversary 
any time anywhere. This budget, the cuts we are making cannot 
be an excuse for us not to confront any adversary. We have got 
to be able to say to the American people, we can confront and 
defeat any adversary at any time.
    And, fifth, we have to make sure that even as we make cuts 
we invest, and so we prioritized key investments in technology 
and new capabilities.
    We wanted to implement this strategy without making the 
mistakes of the past, so the key was, let's keep the strongest 
military in the world; let's not hollow out the force, which 
has always been the danger in the past. We cannot--you cannot 
maintain, you know, a bigger force structure and then cut 
training and equipment and all of the things that that force 
needs. That is the definition of hollowing out the force. So we 
do not want to make that mistake.
    The other thing we want to do is look at all of the budget, 
put everything on the table, to look at all areas that we have 
to deal with if we are going to face this issue.
    And last, of course, we did not want to break faith with 
the troops and with their families. So that is the way we 
approached this budget, and what we put together, we think, is 
a balanced and complete package, but it meant we had to look at 
savings from all of the key areas within our budget: Number 
one, efficiencies, this is an area that we have to keep going 
back to; two, force structure; three, procurement reform and 
adjustments; and, lastly, compensation. Compensation is an area 
of our budget that has grown by 90 percent. If we do not pay 
attention to that, those costs could eat up our ability to deal 
with some of the other areas that we have to confront. So all 
of those areas were looked at.
    On efficiencies, if we have to tighten up our force, we 
have got to tighten up the operations to the Department. So on 
top of the $150 billion in efficiencies that were proposed in 
the fiscal year 2012 budget, we have added another $60 billion. 
We are going to streamline support functions, we are going to 
consolidate IT enterprises, we are going to rephase military 
construction programs, we are going to consolidate inventory, 
and we are going to reduce service support contractors.
    The other piece of this, which I know is controversial, is 
we have a responsibility to look at cost-efficient support for 
the troops that we are going to have. If we are going to draw 
down the troops, you have got to look at infrastructure. You 
cannot avoid taking that on. And that is the reason that the 
President will ask Congress to authorize the base realignment 
and closure process for 2013 and 2015. And as I have said in my 
testimony and all of you know, I have been through the BRAC 
process, and it is hell. I went through it in my district. One 
of the biggest posts in the country, Fort Ord, was closed by 
the BRAC process, so I know what that means. I know how tough 
that is and the impact it can have on constituencies and the 
impact it can have on your communities.
    But, nevertheless, I do not know of another effective way 
to do that. If you can come up with one, please let me know. 
But it is, in effect, the only effective way to kind of look at 
this process and be able to adjust the infrastructure that we 
have.
    And the last point is, I owe you better financial 
information, and that is the reason I am telling the Department 
we have to prioritize audit readiness. We have to accelerate 
key timelines with regards to auditability. As a former OMB 
director, as a former chairman of the House Budget Committee, I 
can't face the American people and tell them I am spending this 
kind of money without saying to them, I can audit what we do. 
And so for that reason, I have asked Bob Hale and the 
Department to speed up the process. I think the mandate was we 
should do this by 2017. My orders to them is we can get this 
done by 2014. And that is the track we are on.
    But efficiencies, as I said, are not enough. So that is the 
reason we have to look at force structure. We have to look at 
these other areas of the budget. But we wanted to tie it to our 
strategy. As I said, we wanted to have an agile and effective 
force, but that means we still have to have an adaptable and 
battle-tested Army. We have got to have a land force that can 
be able to confront any enemy on land and defeat them. At the 
same time, the Army has got to learn to be innovative and 
develop a rotational capability, and that is what they are 
going to do.
    The Navy is obviously agile. They represent our forward 
presence. They can penetrate enemy defenses. You know, with 
regards to the Pacific, obviously, they are our key to being 
able to project force structure.
    The Marine Corps, always a great middle weight 
expeditionary force, amphibious capabilities. We need to have 
that. That is another agile element of the force.
    The Air Force dominates air and space. We want to make sure 
that they do, that they have rapid mobility, global strike and 
persistent ISR.
    And we have got to maintain a strong National Guard and 
Reserve in the event that we have to mobilize and be able to 
put a strong force in the field.
    So you know what that means on the other side of the 
ledger. We are going to be reducing the Army and the Marine 
Corps. We are going to be cutting back on the Air Force's air 
forward fleet, trying to get rid of aging planes that we think 
we can do without but at the same time maintain a fleet that 
will give us the capacity to move if we have to.
    And the Navy does the same thing. We are going to maintain 
a 285-ship Navy, we are going to maintain the aircraft fleet, 
our air carrier fleet, but at the same time, there are some 
ships, some old Navy cruisers that we think, you know, we can 
remove that, frankly, aren't worth the cost of upgrading.
    The second area, which is this moving to project our forces 
in the Middle East and the Asia Pacific, that means we have got 
to maintain our current bomber fleet. We have got to maintain 
the aircraft carrier fleet, as I said, 11 ships, 10 air wings. 
We have got to maintain big deck amphibious fleet, and we have 
got to maintain a strong Army and Marine Corps presence in both 
the Pacific as well as the Middle East.
    The third area is the strategy that we have for the areas 
beyond the Asia Pacific and Middle East area, and that means we 
have got to build a strong relationship with NATO. We have got 
to build a strong relationship with the ASEAN nations. We have 
got to be able to deploy these rotational presence units 
similar to what Special Forces does all the time. Go in, 
exercise, do training, do advice with other countries, and 
develop that kind of presence whether, as I said, it is Europe 
or Africa or Latin America, and I think there is some really 
innovative stuff that they are working on in order to maintain 
that presence.
    The fourth area is that we also have to make sure that we 
have the capability, as I said, to defeat more than one enemy 
at a time. Now, we are in the 21st century. They are going to 
come at us using 21st century technology, and we have got to be 
able to respond with 21st century technology. So that means we 
have to invest in space. We have to invest in cyberspace. We 
have to invest in long-range precision strike capabilities. We 
have to invest in Special Operations Forces to ensure that we 
can confront any enemy with the agility that we need in order 
to be able to do that.
    I have said, you know, the one possibility that we always 
talk about is if we are confronting a land war in Korea and 
suddenly the Straits of Hormuz close, what do we do to be able 
to confront that? We have to have the Naval and air power that 
can move quickly and confront that other threat as well. So 
that is another one that we think is important.
    By the way, the force we are going to have is still a 
significant force, even with the reductions that we are talking 
about. We are going to have an Army of more than 2 million 
active and Reserve soldiers, 18 divisions, 65 combat brigade 
teams; a Naval combat force of 285 ships; as I mentioned, a 
Marine Corps with 31 infantry battalions, 10 artillery 
battalions, and 20 tactical air squadrons; and an Air Force 
that has 54 combat coded fighter squadrons along with that 
fleet of airlifters, 275 airlifters and 318 C-130s, so we are 
going to have a pretty significant force that will be able to 
engage any enemy.
    The last point I would make is we have got to invest in 
these new technologies. We have got to invest in science and 
tech, in basic research. We have got to invest in Special 
Operations Forces, unmanned air systems, and in cyber 
activities.
    The last point I would like to make is that we have got to 
also make sure we have got a strong Reserve and a strong 
National Guard that can respond if we have to mobilize quickly, 
and that also means I have got to protect a strong and flexible 
industrial base.
    The very last point I want to make is with regards to our 
most important feature, which is our people. And what we try to 
do is to maintain the basic benefit structure, the basic health 
care benefits, the basic assistance we provide to wounded 
warriors. We do not make any cuts in those programs. Indeed, we 
try to not only sustain them but add investments to ensure that 
we are prepared to support these troops and their families as 
they return.
    But at the same time, in order to build the force that I 
need, I have got to look at the growth in this area, the growth 
in military pay and benefits so that we do this on a 
sustainable basis, and that is the reason, with the support of 
the Chiefs, that we looked at this area and said, we have got 
to do this.
    Otherwise, it is going to come out of force structures. It 
is going to come out of training. It is going to come out of 
the very things that we need to provide for our troops, and so 
we have got to try to control this growth in costs. So that is 
why we looked at, you know, not cutting military pay. We are 
going to provide pay raises these next 2 years, but try and 
limit those pay raises in the out years. We have looked at 
TRICARE costs, obviously, for health care, and we have looked 
at a retirement commission with the proviso that we grandfather 
those that are serving so that they do not lose any retirement 
benefits. We think that is important to maintaining our faith 
with them.
    So that is the package. This has not been easy. It is 
tough. I really want to urge you, and I have a lot of trust in 
this committee, that you will look at every element that we 
have provided you. I think you will have the service chiefs. 
You have got all of our people available to you to explain the 
different proposals that we have here. We need your support. We 
need your partnership to try to implement a vision for the 
future. This isn't just about cutting. It has got to be about 
the kind of force we need for the future to confront the 
threats that I talked about.
    I know this is going to be tough. I mean, the cuts here 
impact on all of the States, all 50 States, and I know that it 
is going to have an impact on people, but what the Congress 
mandated on a bipartisan basis is that we reduce the defense 
budget by almost half a trillion dollars, and I need your 
partnership to be able to do this right and to be able to 
preserve the strongest military in the world. In many ways this 
is going to be a test. Everybody talks about deficit reduction, 
everybody talks about cutting costs. This is a test of whether 
or not we can do it right or whether we are going to walk away 
from that responsibility.
    Let me be clear, you cannot take a half a trillion dollars 
out of the defense budget and not increase the risks. I cannot 
do that. And I am not going to kid you, that there are risks 
that are increased. When you have a smaller force, you cannot 
deploy them as quickly. When you have a smaller force, the 
issue is going to be can we mobilize quickly and be able to 
respond to crises that are there? When you have a smaller 
force, you know you have got to rely on technology. Can we 
develop the technology we need? When you have a smaller force, 
you have got troops coming back. Can we support them and make 
sure they have the jobs, the education, and the business 
opportunities so that they do not become part of the 
unemployment rolls? This is a very tight margin of error here. 
We think they are acceptable risks. We think we can deal with 
those risks.
    But this is a very small margin, and let me tell you 
something, if sequester goes into effect, you can throw all of 
this out the window. Sequester doubles the numbers of cuts, 
does it through that crazy formula, and guarantees that we are 
going to hollow the force and devastate our national security. 
So I really urge you to try to confront that issue and try to 
do everything you can. We will work with you to try to do 
everything we can to detrigger sequester because that would 
truly be a disaster.
    So, with that, Mr. Chairman and members, I look forward to 
working with you. This is a responsibility we all have. It is 
not just my responsibility. It is yours as well. I think we can 
do this. I think we can do this in an effective way, but we are 
going to have to roll up our sleeves and make some very tough 
decisions that I think is what people elect us to do. It is 
what they elected you to do. When I was in the House, people 
expect you to exercise tough leadership and make tough choices. 
This committee has done that, and that is why I am confident 
that you will do that in the future.
    [The biography and statement of Secretary Panetta follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] 
    
    Mr. Young.  Mr. Secretary, thank you very much.
    You have convinced me that the world is still a very 
dangerous place, and when you talk about reduction of the 
force, you know, we all know that we do not have the largest 
Army in the world, but we also agree that we have the best Army 
in the world with no comparison. So we understand that issue, 
and we will be getting into it in more detail.
    But now I would like to recognize the Chairman of the Joint 
Chiefs of Staff, General Dempsey, and again, your statement, 
your total statement will be placed in the record. Oh, by the 
way, your biographies will also be placed in the record since 
we have not had you here before.
    Secretary Panetta.  That is true.
    Mr. Young.  So General Dempsey, we are anxious to hear from 
you, sir.

                  Summary Statement of General Dempsey

    General Dempsey.  Thank you, Chairman.
    I always enjoy meeting others who I can call chairman, it 
just takes the burden off me. By the way, I will say to your 
point about--to your point actually, Congressman Rogers, about 
the burden, it is both--it is an honor to be serving right now.
    I tell people often when they do reflect on how difficult a 
time it is for our Nation that when we all aspire to lead, when 
would you want to lead? Would you want to lead when things are 
relatively easy or would you want to lead when things are 
extraordinarily difficult? So thank you to this committee for 
your leadership during one of those times in our history I 
think that leadership is extraordinarily difficult.
    So, Chairman Young, Congressman Dicks, distinguished 
members of this committee, thank you for the opportunity to 
discuss the President's defense budget for fiscal year 2013. 
This budget represents a responsible investment in our Nation's 
security, this budget. I share the Secretary's concerns, deep 
concerns, potentially anxieties, in fact not potentially, about 
sequestration. But this budget represents a responsible 
investment.
    At its core, it is an investment in our people, the sons 
and daughters of America who serve this Nation and our 
military. Allow me to open with a few words about them and what 
they have accomplished in the past year.
    The last 10 years of war, in fact, have been among the most 
challenging in our Nation's military history. Through it all, 
the Joint Force has persevered, and it has prevailed. Our 
families have stood with us deployment after deployment, and so 
have you. Together we have fulfilled our solemn vow to protect 
and defend America, her citizens, and her interests. As I sit 
with you today, our service men and women remain globally 
engaged. They are deterring aggression, developing partners, 
delivering aid, and defeating our enemies. They stand strong, 
swift, and ready in every domain every day.
    I had the privilege to be with them, many of them, while 
traveling to Afghanistan and Egypt just last week. As always, I 
witnessed extraordinary courage and skill in the young soldiers 
just coming off patrol in the deep snows of the Hindu Kush; in 
the men and women of the NATO training mission, who are charged 
with developing the Afghan national security forces; in the 
brave and vigilant Marine security detachment in our embassy in 
Cairo; and in the superb airmen who flew us and got us where we 
needed to be at the right time and the right place. They 
exemplify a professional military with a remarkable and 
reliable record of performance.
    In just the past year, we crippled Al Qaeda. We helped 
protect the Libyan people from near certain slaughter while 
affirming NATO's role beyond the borders of Europe. We brought 
to a close more than 20 years of military operations in and 
over Iraq, and as we did in Iraq, we are steadily transitioning 
responsibility even now to our Afghan partners. We also helped 
Japan recover from the perfect storm of tragedy and 
destruction, and of course, those are just the most visible 
accomplishments. Behind the scenes and under the sea, we 
defended against cyber threats, sustained our Nation's nuclear 
deterrent posture and worked with allies and partners to build 
capacity and to prevent conflict across the globe.
    We continue to provide this Nation with a wide range, the 
widest possible range of options for dealing with the security 
challenges that confront us. We live in an increasingly 
competitive, dangerous, and uncertain security environment, and 
that demands that we be alert, responsive, adaptive, and 
dominant.
    This budget helps us do that. It is informed by a real 
strategy that made real choices. It maintains our military's 
decisive edge, and it sustains our global leadership. Moreover, 
it ensures we keep faith with the true source of our military 
strength, which is our people. With this in mind, just a few 
additional comments to add to those of the Secretary.
    First, this budget really needs to be considered 
holistically. It is a joint budget, not a collection of 
separate service budgets. I caution against viewing its 
programs in isolation. It represents a comprehensive, carefully 
prepared set of decisions. It achieves balance among force 
structure, modernization, pay and compensation. Changes that 
are made without this context do risk upending that balance and 
potentially compromising the force.
    And second, this budget is a waypoint, not an end point. We 
are actually trying to build toward Joint Force 2020, and this 
budget is just the first of what needs to be four steps in 
doing that. It puts us on a path to restore versatility at an 
affordable cost. Specialized capabilities, once on the margins, 
become more central, even while we retain our conventional 
overmatch. It builds a global networked Joint Force that is 
ably led and always ready.
    And third, this budget honors commitments made to our 
military family. It keeps faith with them. As the Secretary 
said, there are no freezes or reductions in pay. There is no 
lessening in the quality of health care received by our active 
duty service members nor our medically retired military 
personnel.
    That said, we just cannot ignore increasing costs of pay 
and benefits. To manage costs, we need pragmatic reform. All of 
this can be done in a way that preserves our ability to recruit 
and then retain the best of America's youth.
    And finally, all strategies and all the budgets that 
support them carry risk. This one is no different. In my 
judgment, the risk lies not in what we can do but in how much 
and how often we can do it. This budget helps buy down that 
risk by investing in our people and in the joint capabilities 
they need most.
    And to close, thank you. Thank you for keeping our military 
strong. Thank you for taking care of our military family, for 
supporting those who serve, who have served, and who, 
importantly, will serve. I know you share my pride in them. I 
look forward to your questions.
    [The biography and statement of General Dempsey follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] 
    
                        FY 2013 BUDGET STRATEGY

    Mr. Young.  General, thank you very much, sir.
    And Secretary Hale, I understand that you do not have a 
prepared statement?
    Mr. Hale.  Right.
    Mr. Young.  And so we will now begin on this side of the 
table.
    And I want to say, Mr. Secretary, your very eloquent and 
very, very revealing comments are taken to heart by everyone 
here. The comment that I have made consistently for years is 
that you cannot make defense budget decisions based on politics 
or based on a number that sounds good or anything else other 
than the real threat. You have got to know what the real threat 
is to the best of your ability, and that is where we should 
base our defense investments.
    That also means we better have the best intelligence in the 
world, better than anybody else's, so that we do not get 
behind. With that, we do have some questions about some of the 
issues that you have talked about, and the decisions you made 
very clear, and you are exactly right, decisions that will be 
made this year will set the defense posture for the next 10 
years and maybe beyond that. We will do our very best to make 
sure that sequestration is not a part of that. We are committed 
to that.
    With this in mind, I remain concerned over some of the 
decisions that have been made here. For instance, programs that 
were argued as strategically important, if not imperative, as 
recently as a few months ago have been abandoned in the name of 
budget savings. What changed in the threat, or did anything 
change in the threat? What changed, this particular program we 
will get into the specifics, but what changes for you to say 2 
months ago that this program was imperative to our national 
security and now you are scrapping it?
    So that is my opening question, and I will have a few more, 
although I am going to limit my questions because we have a 
limited time today, and I want to make sure that everyone has 
an opportunity. But, please, respond to that. It is something 
that I know you are concerned about as well.
    Secretary Panetta.  Well, the only way we could approach 
this when you have a half a trillion in savings that you have 
got to reduce is, I said, look, this cannot be a hit-and-miss 
process; we have got to tie it to some kind of strategy that 
says, you know, what is it we want to develop for the future? 
And so, for example, when we looked at agility and the ability 
to move quickly, we knew what we needed. We needed multi-
mission weaponry and technology that could assist that kind of 
agility. So when you have some kind of single mission areas 
that might have been important in the past--I know one of the 
planes that used to lift the Army was one of those things that 
the Army liked, but it was kind of singly a mission for that 
purpose. When we could take a C-130 and be able to use that to 
perform those missions, that is kind of an example of what kind 
of decisions we had to make.
    Secondly, when you are looking for savings and you are 
looking particularly at the whole, weaponization area, how do 
we make--how can we find savings by trying to delay the 
procurement process in a way that makes sense? For example, on 
the F-35 fighter, which is important to us, can we move this 
slower so that we can incorporate the changes that have to be 
made and make it less expensive when it comes to full 
production as opposed to going to full production, and then 
having to make horrendous changes that are going to add to the 
costs of doing that. So we want that fifth-generation fighter, 
but we also want it to be done in a way that makes sense for 
us.
    The other decisions, I guess the one we have taken 
criticism on is the Global Hawk decision, but that is just one 
branch of the Global Hawk program.
    Mr. Young.  Understand.
    Secretary Panetta.  And that is one that, frankly, is not 
cost efficient.
    Mr. Young.  That is the Block 30 we are talking about?
    Secretary Panetta.  I am sorry, Block 30 branch of the 
Hawk. I asked the same question because I am big on unmanned 
systems, both from my prior role as well as this role, and I 
think that is something we have to invest in.
    But they said, look, when you look at the cost-
effectiveness here, actually, the U-2 provides an even better 
picture at a lesser cost and does the job, and it is just one 
element of Global Hawk. The other elements of Global Hawk we 
are going to maintain. That is a little bit of the kind of 
mentality that we went through as we made those decisions.
    All right, let me yield to the General as well.
    General Dempsey.  Yeah, I will just give you three words or 
three phrases that might help as we look at each of these 
systems, help articulate the decisionmaking tree, if you will. 
Redundancy, multi-role, as the Secretary said, and the value 
proposition.
    Are we increasing capability by 10 percent at 50 percent 
more cost? That is not a great value proposition. So those are 
the three things, redundancy, multi-role, and the value 
proposition.

                          JOINT STRIKE FIGHTER

    Mr. Young.  Well, you mentioned the Joint Strike Fighter, 
and that, of course, is something that is extremely important 
to this country. The fact is we have got to be the dominant 
aviation factor in the world. My commitment to this goes way 
back.
    When I first started here, I was a member of the Armed 
Services Committee, and I remember being a quite young 
freshman, and after the hearing, a Marine officer walked up to 
me and he said, hey, kid, let me tell you something. Your 
Marines will go anywhere you send us. We will fight any fight 
you want us to fight, but please, if there is an airplane over 
the battlefield, make sure it is an American airplane. And I 
can see that.
    You know, if we do not control the air, we are at a 
tremendous threat to our forces on the ground. The Joint Strike 
Fighter seems to be our primary fighter now when the F-22 did 
not deliver everything we thought it would. We are buying some 
additional F-18s, but that does not compare to the Joint Strike 
Fighter. So where do we go on the Joint Strike Fighter? Now 
numbers are changing. You took the program off of probation, 
which I think was a smart thing to do to make this a very 
robust program. But we have got to control the air over the 
battle. So tell us about where we are going with that 
capability. Are we going to rely on the Joint Strike Fighter, 
or are we going to develop something different?
    Secretary Panetta. No. We need a fifth-generation fighter, 
and the F-35 is that, that new generation fighter that we 
absolutely have to have. My goal here is to try to, as we go 
through the process, obviously look at what changes that need 
to be made. Frankly, I think this plane is now testing pretty 
well in all three areas. The reason I took the STOVL off of 
probation, there were five areas that concerned Secretary 
Gates, that raised questions about its capability. All five 
areas have been addressed, all have been corrected. And now we 
are looking at software issues related to the plane. I have 
gone down to Pax River. I have looked at all of the plane's 
development and its capabilities. This truly is one of the 
finest planes that we are developing for the future. Its 
capabilities, its stealth capabilities, its targeting 
capabilities, precision targeting, all of that is amazing stuff 
that is part of this plane, but the result, as you know, when 
you develop, and Norm Dicks knows this better than anybody, you 
develop these planes. They have got a lot of technology in 
them. They have got a lot of systems in them, and you have got 
to make sure that it is all working. You have got to make sure 
that it all comes together, and we are doing that. We are 
working with industry, as a matter of fact, to make sure that 
industry, as we have to make these changes, is going to pick up 
some of the costs because in the end, it is about 
affordability. I have got to make sure this is cost efficient 
as we go through this. We want to develop these planes. We want 
to put them in place, but I also want to make damn sure that we 
do not wind up keep going back and redoing these planes and 
adding to the cost. That is what I have to be careful of, and 
that is why we slowed the production of these planes to have 
the time, to look at it to make sure we do it right.
    Mr. Young.  Thank you for that.
    I have about another hour's worth, at least, and you and I 
and Mr. Dicks have met on numerous occasions and talked about 
these things in your office, but I am going to yield to Mr. 
Dicks at this time because I want to make sure that everybody 
has an opportunity to get into this conversation today.
    Mr. Dicks.

                             CYBER SECURITY

    Mr. Dicks.  One of the areas that was mentioned----
    Mr. Rogers. Mike.
    Mr. Dicks. I can normally be heard, but--can you hear me, 
Hal?
    Mr. Rogers. Unfortunately.
    Mr. Dicks.  That is what Senator Magnuson used to say. This 
guy in the front said--I cannot hear what you are saying, and 
the guy--the guy in the front says, I can hear everything, and 
I will gladly trade seats with you.
    Anyway, you talked about cyber security. Obviously, this is 
one of the concerns, Admiral Mullen, when he was doing his kind 
of go-around to see everybody when he was leaving as chairman 
said that he felt that this cyber threat was one of the 
preeminent threats that we face, and if you look at the 
numbers, we have lost over a trillion dollars--this has all 
been in the public print--of intellectual property through 
cyber attacks. I mean, you talk about industrial base. It is 
our defense contractors. It is our banks. It is our utilities.
    All this responsibility is not yours. Homeland Security. We 
had Secretary Napolitano up here. One of the things that was 
good I thought was that Gates and her put together an agreement 
on how we are going to proceed, but I think this is, as you and 
I have talked about this before, this is one of the things 
where it is an asymmetrical threat. We cannot be certain, you 
know, always where the attack is coming from, and so it is that 
kind of concern that we have got to do something about this. 
And we have invested a lot in cyber technology to defend 
ourselves. We are pretty good on offense. We do not talk a lot 
about that, so we can do a lot of things to other people. But 
the question really gets down to, how do you feel about what we 
are doing, and are we making progress, and should there be more 
attention by the administration as a whole, not just the 
Defense Department and NSA and General Alexander, and the 
Congress. The Congress has got to play a role here. There is a 
new bill that has just been introduced in the Senate that 
apparently the administration is supporting, and I just 
reviewed that last night. Give us your sense on this and 
especially the sense of your intelligence sense and General 
Dempsey as well.
    Secretary Panetta.  I am going to have General Dempsey 
respond to some of the particulars here because he just had 
conversations with General Alexander about this whole issue.
    I think that, as I said, I worry about this area because, 
as all of you know, similar to what is happening with 
technology generally, this stuff is moving very fast. And 
capabilities are being developed very quickly, and we are the 
subject of a lot of attacks that come in that are largely 
exploitive at this point, but that have the capability to bring 
down our power grid, that have the capability to bring down our 
financial systems, that have the capability to bring down our 
governmental systems, and virtually paralyze this country. That 
is of concern.
    I think we have some very strong defenses. We have some 
very strong capabilities, but there, frankly, are a lot of 
departments and agencies in the government that haven't 
developed those same skills and that same capability, and that 
is what has to be addressed. We have got to make sure that 
everybody is prepared to deal with this issue, and frankly that 
is an issue of authorities, and that goes to the legislation 
that you talked about.
    General Dempsey.  We have been taking our new strategy 
that--Combatant Commanders, the Service Chiefs, and I have been 
taking the new strategy and essentially wringing it out, 
testing it. We have had a couple of strategic seminars, and one 
of the emerging insights, I will describe it as an emerging 
insight, is that any conflict with a near-peer competitor in 
the future will have effects in the homeland.
    In other words, and I have said this before, the Homeland 
can never again be considered sanctuary, and one of the reasons 
is cyber. At the level of classification of this briefing, I 
will just say I know what we can do, and therefore, I am 
extraordinarily concerned about cyber. And you know what we can 
do and, therefore, should be extraordinarily--simply stated, it 
is one of those areas where at this point we cannot place 
enough emphasis on it until we are satisfied we know exactly 
what we are doing. We do support the legislation. It is 
actually a Lieberman-Collins-Rockefeller legislative proposal 
that has been added to by Senator Feinstein, and we think that 
is a very good and important first step, but we cannot stop 
there.
    Just like we worry about nuclear proliferation, we should 
be worried about cyber malware proliferation. So I said near-
peer competitors. But a near-peer competitor could give cyber 
malware capability to some fringe group and some hacker in 
Russia--I said Russia, it could be any country. Some hacker 
next thing you know could be into our electrical grid. We have 
to get after this.
    Mr. Dicks.  Well, I appreciate that, and you know, as far 
as Congress, we have to be able to pass legislation on this 
subject. I mean, I think it is important. I know that Chairman 
Rogers and Congressman Ruppersberger and others have been 
working on a bill in the House. If there is necessity for a 
counterpart, I am sure we can get people to introduce the bill 
over here or the Senate bill or some variant of that. But I 
think, Mr. Chairman, so we can get others a chance, I will wait 
for the next round.
    Mr. Young.  Okay, Mr. Dicks, thank you very much, and you 
have touched on an extremely, extremely important subject, and 
you and I have spent some serious time with General Alexander 
on that issue, and I can tell you that he is very, very 
valuable to the security of this country.
    Chairman Rogers.

                             SEQUESTRATION

    Mr. Rogers.  Mr. Secretary, I want to talk to you about 
sequestration, the sword of Damocles is over our heads. We are 
looking for guidance from you and the administration on how you 
would prefer that the, if there is a restructuring of the 
sequestration, how that should take place. Only you can tell us 
how that should be done. What can you say about it?
    Secretary Panetta.  I do not think you can restructure 
sequestration. It is a crazy, nutty tool that, frankly, cannot 
be restructured.
    Look, anytime you approach deficit reduction, it ought to 
be done on a responsible basis that looks at areas, looks at 
where we can afford to find savings, and looks at areas that we 
have to invest in. That is the responsibility of the Congress. 
When you rely on some kind of automatic meat axe approach, it 
undermines everything that you represent in terms of doing it 
right.
    Now, my advice would be that we should work together to 
find a way to detrigger the entire sequestration process. You 
know, the administration has made some recommendations in the 
budget. I know there are Members that have ideas about how to 
do this. This has to be a bipartisan effort to detrigger 
sequestration.
    Now, one tactic is here, the mentality is, well, hell, this 
does not take effect until January of 2013, but let me tell 
you, it is creating a huge shadow, a huge shadow of doubt out 
there. It is impacting on industry. It is impacting on whether 
jobs are going to be there. It is impacting on the military. 
The shadow from sequestration is having an impact. Now, I have 
said, we are not paying attention to sequestration. I do not 
think it is going to happen. I do not think that Congress is 
going to allow it to happen, but at the same time, the threat 
that it may happen is something that is having an impact.
    Mr. Rogers.  Well, you are exactly right, and that is the 
reason I brought it up. We have got to deal with it. If there 
were interest in the Congress in passing a bill that modifies 
the impacts of sequestration, it seems to me then that you 
would have a deep interest in having input on how that bill is 
constructed. That is the context of my question to you. Is that 
so?
    General Dempsey.  This, I think, will contribute to the 
answer, and then I am sure the Secretary will put an apostrophe 
on it. So the two things about sequestration that are alarming 
to us is, one, the magnitude; second, the mechanism. It sounds 
like you are suggesting if we handle the mechanism, you know, 
can we handle the magnitude, the 550. Let me just tell you 
where we are in restructuring our force. There is only a 
certain number of variables the service chiefs can really 
manipulate to absorb reductions. Two of them are fundamentally 
fixed right now.
    One of those is people. We are, as you know, we are going 
to ease 124,000 mostly soldiers and Marines out of the services 
over the next 5 years. There is physics involved. We cannot do 
it much faster than that. And so if another round of reductions 
come, that variable to me is fixed, unless we just want to fire 
them and hand them a pink slip and send them off, and I do not 
think anybody wants to do that. So there is physics. That 
variable is fixed.
    The other one that is fixed is infrastructure. We can talk 
about BRAC, but even if we gather the will to do it, it is 
going to take time to be implemented. It will not help in the 
next 5 or probably 10 years, to tell you the truth. If you fix 
those two variables and then give me, us, another bill for $550 
billion, it is coming out of three places, and that is it. It 
is coming out of equipment and modernization; that is one. It 
is coming out of maintenance. And it is coming out of training, 
and then we have hollowed out the force.
    Secretary Panetta.  And compensation.
    General Dempsey.  Well, potentially compensation.
    Mr. Rogers.  Is there a way to tell us the actual impact, 
the size of the impact on these elements?
    Secretary Panetta.  Actually, I responded to a letter from 
Senator McCain that laid out some of the particulars that would 
be impacted, but when you take--as you know, the mechanism in 
sequester is to cut across the board. It does not take into 
consideration priorities. It is basically just a meat axe 
approach to the entire budget. So what we are doing, in effect, 
is hollowing out every area of the defense budget by a 
significant amount. So it is impacting on force structure. It 
is going to impact on compensation. It is going to impact on 
training and equipment. It is going to impact on personnel. It 
is going to impact on every area of the budget. And it is 
mindless. It does not make sense.
    So I guess what I would say to you, Congressman, is that it 
is very important that we get together, both the administration 
and the Congress, and we develop a package that is able to make 
sure this does not happen. I thought the committee would be 
able to do that, the so-called supercommittee had the 
responsibility to try to come up with a package that would make 
sure that that did not happen, and unfortunately, they were not 
able to come together with any kind of approach. I think it is 
incumbent on the Congress to try to come together with an 
approach that gets rid of sequestration and, you know, gets 
back to approaching the whole issue of defense--of deficit 
reduction in a responsible way.
    Mr. Rogers.  Well, and I am imposing, Mr. Chairman, if that 
is impossible, that is doing away with sequestration, I think 
it behooves all of us, you and us, to try to find a way, if 
there is one, to modify the impact on the military rather than 
the meat axe, across-the-board cuts, which all of us abhor. It 
would behoove us to try to minimize the danger or the impact on 
the military if all else fails. That is the context of what I 
wanted to know from you.
    Secretary Panetta.  I hope to God that all else does not 
fail, and, I know that everybody is concerned, particularly 
these days, that somehow that may still be allowed to happen, 
but I cannot believe that Members who have the responsibility 
to govern this country and do the right thing, particularly for 
national defense, are not going to take the approach that 
represents what is in the interests of protecting the Nation.
    General Dempsey.  The only thing I will add, sir, if I 
could is, I have been in the Army now almost 38 years, and I 
have been through two previous drawdowns, fundamentally that is 
what we are in now is a drawdown period, one after Vietnam, one 
after Desert Storm, and right now. Big difference in the 
previous two. In the previous two, we were entering a period of 
relative stability. I cannot impress on you that in my personal 
military judgment formed over 38 years, we are living in the 
most dangerous time in my lifetime right now, and I think 
sequestration would be completely oblivious to that and 
counterproductive.
    Mr. Rogers.  Thank you, Mr. Chairman.
    Mr. Young.  Actually, we cannot allow sequestration to 
happen. It just cannot happen. So we need to work together to 
find a solution and work us out of this.
    Mr. Lewis.

                       DECREASING DEFENSE BUDGET

    Mr. Lewis.  Thank you very much, Mr. Chairman.
    Mr. Secretary, you can put me in that same column relative 
to sequestration. We will be able to figure this out.
    But I am very concerned, Mr. Secretary, General Dempsey, 
Secretary Hale, that behind the veil of this discussion, there 
are other discussions going on that could be startling when 
this Member looks at your budget and tries to project where it 
really would take us.
    I am very concerned that you have done a pretty good job 
within your own circle of arguing that national security is 
critical, and this is the most dangerous time in our lifetime, 
for our country, our freedom, our security.
    But within the mix of people who are behind that veil are 
people who do not have that same priority. I am concerned as I 
look at this budget, which today is considerably more generous 
than I kind of anticipated, but there is little doubt that a 
foundation is laid that would cause the transfers in the 
future, short of sequestration, to see us take significant 
dollars away from national security in order to sustain dollars 
for other priorities of this administration. And if we get on 
that pathway, it could lead to the disaster that General 
Dempsey has referred to.
    It is very important for us to know that this is the first 
step, the budget is within your limits hard for me to 
criticize, but I see elements here that would suggest that we 
might very well be going down a pathway that says next year's 
budget could be dramatically different in terms of defense. 
This budget would have been considered a disaster to us 5 years 
ago, but indeed, if we see a different kind of transition over 
the next year, America ought to be concerned about its 
security; certainly our allies overseas ought to be concerned 
about our security.
    So tell me, am I wrong in being concerned that a pattern is 
being set here that lays the foundation for other people in the 
mix behind your veil will win the day in terms of reducing 
defense spending on the one hand and, in turn, sustaining and 
expanding other priorities that really are important but not 
nearly as important as our national security?
    Secretary Panetta.  Well, look, all I can tell you is that 
the President of the United States has made clear to us that he 
supports what we are presenting here in terms of a strategy, 
and he has made clear that he opposes sequestration and 
additional cuts. He wants to give us the opportunity to put 
this strategy in place for the future, and, you know, there are 
always people that, will have their own ideas. There are always 
individuals that want to come back and make other adjustments, 
but I have to tell you, I have made clear to the Department, 
and I have made clear to the President, and the President 
supports me, that we have to--we are responding to a law that 
was passed by the Congress as to what we have to reduce the 
defense budget. We have done the best job in developing this 
strategy in order to accomplish that, but we have no margin for 
error here, and if additional efforts are made to go after the 
defense budget, I think it could have a serious impact in terms 
of our ability to implement the strategy I just presented.
    General Dempsey.  If I could elaborate, sir, that is 
exactly right. The important thing here is, first of all, the 
President was deeply involved with us in formulation of the 
strategy, in a way that I frankly found very encouraging. It is 
a strategy that has to have this budget to support it. Anything 
beyond this, we have to go back to the drawing board on the 
strategy, you know. You cannot just keep tinkering with the--
strategy is kind of the aggregate of your objectives, the 
resources or the means and the ways; how are you going to do 
it? And we have got it about balanced right now, but any change 
in the future means we have to go back and redo our strategy, 
and I have heard nothing that would indicate the President 
wants to do that.

                                  IRAN

    Mr. Lewis.  Mr. Chairman, not much longer, but Iran is a 
major challenge in the region of greatest concern. To think 
that Iran is not going to directly, if they have any of their 
way, have an impact upon Iraq is just plain nuts, and to 
suddenly have us have a vacuum there in terms of the role we 
are going to play, Charlie Wilson's War suggested to us that 
Afghanistan was a bit complex. What did we do following that 
successful effort? We walked away, and we are planning to walk 
away. So it is my concern that a debate needs to take place on 
your side of the veil and our side that says we must not go 
down this pathway that is already planning to reduce numbers of 
personnel, undermining some assets that are critical to our 
future. You touched upon cyber security.
    So, Mr. Chairman, I appreciate the time.
    Mr. Young.  Thank you, sir. Thank you, Mr. Lewis.
    Mr. Visclosky.

                              SHIPBUILDING

    Mr. Visclosky.  I will speak loudly. Will that be 
permissible?
    Secretary, just a couple of quick editorial comments, if I 
could, and then I want to ask about shipbuilding and the 
strategic submarine replacement program. I have been associated 
with this committee either on staff or as a member almost 
continuously since 1977, and I would associate myself with 
everyone's remarks about sequestration. We as an institution 
need to make individual, discrete decisions.
    Having said that, I speak only for myself that the 
administration and the Congress approach sequestration by 
recognizing we have fundamental financial decisions to make 
relative to the Department of Defense, discretionary spending, 
entitlement spending, and tax policy.
    There are two ways to avoid sequestration for the 
Department of Defense, and I absolutely agree with your 
position on it. That is, we can finagle for the next 10 months 
to try to avoid across-the-board cuts in defense and avoid 
making fundamental decisions; or we can avoid sequestration by 
making fundamental decisions, and I only speak for myself.
    The Global Hawk has been brought up, and I would simply 
point out and not ask a question, but emphasize I would want to 
follow up with the Department that, on June 14th, last year it 
was emphasized in the Nunn-McCurdy certification that when 
analyzed in the context of the Global Hawk mission, the U-2 
cost $222 million per year more than the Global Hawk.
    Every year also I must point out that the Department of 
Defense comes up and talks with great pride about their 
emphasis on small business. I do believe we need to obviously 
find efficiencies to continue to try to emphasize competition 
for those who contract with the Department. I am familiar with 
a small firm that had to spend over a million dollars just to 
get certified to get on the list to bid with the Department of 
Defense, and between you and me, I do not call that encouraging 
for small business to participate with the Department of 
Defense.
    But having said that, on shipbuilding, last year's 5-year 
proposal talked about a 57-ship budget, this year's 5-year plan 
calls for 41, and with the increased emphasis on the Asia-
Pacific region, the question is a brief explanation, if you 
would, on the reduction in ships and whether or not 313 ships 
is still the right size. And as an important addendum, last 
year's budget submission talked about the scheduled 
construction beginning in 2019 on the ballistic force. There 
has been a 2-year slippage this year.
    Secretary Panetta.  On the Naval force, that we consider a 
very important priority because of the missions that I talked 
about, our goal is to maintain the 285-ship Navy. When this 
budget, between 2013-2017, we are going to do everything we can 
to maintain that size Navy. In the 5 years beyond that, going 
to 2020, our hope is to target the 300 number and be able to, 
in that 5 years, increase the fleet so that we are at 300. Some 
of the slippage, obviously, is again because of affordability 
and cost-effectiveness issues, and in addition to that, the 
Navy itself felt that as we prioritized some of these, the 
amphibious fleet, the littoral ships, the ships that would be 
very helpful to us in terms of agility, maintaining the 11 
carriers, even though we are going to take down one carrier, 
but it is going to come back, the Enterprise is going to go 
down, but we have a replacement for that, so we are going to 
try to stay at 11 carriers over that period of time, plus the 
air wings that are associated with it.
    So I think the bottom line here is there are some ups and 
downs in terms of, you know, adjusting the dial here, but the 
bottom line is we are going to maintain a 285-ship Navy for the 
next 5 years, and we are going to try to increase that in the 
next 5 years.
    Mr. Visclosky.  Secretary, for years, we have talked about 
a 313-ship Navy, and again with the emphasis on the Pacific, do 
you feel comfortable at that 285, understanding, as you have 
emphasized, there is risks involved?
    General Dempsey.  Congressman, the Chief of Naval 
Operations and I and the other chiefs, you know, we are looking 
at this as a Joint Force, what can we do to offset capabilities 
that, where we thought we would be at one level, we are going 
to be at a different. He will be in here, I am sure, to talk 
with you, but he has got what I think is a very good strategy 
in work, and for example, some of the proposals might be to 
forward position ships but rotate crews from the CONUS base in 
order to keep the presence forward.
    One of the other emerging insights of our strategy as we 
wring it out is that the kind of conflicts we expect to face in 
this century will occur faster than we think. You know, the 
amount of warning we are likely to have will be very limited. 
And so we are coming to grips with all of that. But I think the 
CNO will be able to give you some--not some confidence, give 
you confidence that he will be able to do the job we have asked 
him to do at 285 for the foreseeable future.
    Mr. Visclosky.  I assume he would be able to address more 
in depth the issue on the ballistic program as well.
    Secretary Panetta.  He would.
    Mr. Visclosky.  Mr. Chairman, gentlemen, thank you very 
much.
    Mr. Young.  Thank you, Mr. Visclosky. The Navy will be in 
for hearings on March the 1st, which is the week after next.
    Mr. Frelinghuysen.

                                  IRAN

    Mr. Frelinghuysen.  Thank you, Mr. Chairman.
    Gentlemen, thank you for your service. I would like to sort 
of go from the general to the specific, and I think General 
Dempsey was quite emphatic about what a dangerous world we are 
in, so I would like to focus for a few minutes on Iran and what 
is going on over there.
    It has obviously been a focus of our attention for years, 
and a lot of resources have been brought to bear on Iran. The 
Washington Post opined yesterday, and I will quote from the 
editorial entitled The U.S.-Israeli Trust Gap on Iran. Quote, 
Rather than publicly arguing with Israel, they should be more 
clearly spelling out U.S. willingness to take military action 
if Iran is discovered taking steps toward bomb making, such as 
enriching its uranium beyond present levels or expelling U.N. 
inspectors, saying, and these are The Washington Post's quotes, 
all options on the table, within quotations, is not enough. The 
Obama administration should be explicit about Iranian actions 
that will violate its red lines and what the consequences will 
be.
    It seems there are quite a lot of red lines here, and I 
think the administration, both on the military side and the 
State Department side, has been pretty explicit that there are 
some clear lines here. We are talking about the defense budget, 
and I think an inordinate amount of focus has been on Iran's 
potential to do harm. Would you comment on that editorial and 
where you think we are going here? It is one thing to say we 
are going to do something, but----
    Secretary Panetta.  I think the administration has been 
very clear on this issue, and the President has stated it. I 
have stated it. Secretary of State has made this clear as well. 
We have some common cause here with Israel and with the 
international community, and all of us share the same concerns: 
Number one, that we will not allow Iran to develop a nuclear 
weapon. This is not about just containment. We will not allow 
Iran to develop a nuclear weapon. Two, we will not allow Iran 
to close the Straits of Hormuz, and in addition to that, 
obviously, we have expressed serious concerns to Iran about the 
spread of violence and the fact that they continue to support 
terrorism, and they continue to try to undermine other 
countries.
    All of that has been made very clear, and we have stated 
that Iran needs to take steps to ensure that that does not 
happen, that they do not develop that kind of nuclear 
capability, and we have taken actions to deal with that. The 
international community has now implemented a set of very 
strong sanctions, diplomatic sanctions, economic sanctions that 
are having an impact, having a very strong impact in terms of 
Iran. And the result of that is that Iran is increasingly 
isolated in the world because the international community has 
sent a very clear message: We will not tolerate this. You have 
got to change your ways. You have got to come into the 
international community. You have got to abide by international 
laws, rules, and regulations. And we are open, obviously, to 
negotiations with them to try to find a diplomatic solution to 
these issues. But we do keep all options on the table in the 
event that the red lines that I just made very clear are 
crossed.
    Mr. Frelinghuysen.  But there has been a general consensus 
that the Iranians are barreling ahead with developing nuclear 
capacity. I mean, I think there is a general consensus that 
they are doing that.
    Secretary Panetta.  They are developing.
    The intelligence has been very clear on this. You know, 
they continue to develop their enrichment capabilities, but the 
intelligence does not show that they have made the decision to 
proceed with developing a nuclear weapon. That is the red line 
that would concern us and that would ensure that the 
international community, hopefully together, would respond.
    Mr. Frelinghuysen.  Okay, thank you, Mr. Chairman.
    Mr. Young.  Mr. Kingston.

                             SEQUESTRATION

    Mr. Kingston.  Mr. Secretary, you have an outstanding resum 
and have great respect all over this town and all over the 
world for good reason.
    However, we still think of you as one of us. And the 
Panetta school of public policy was a bipartisan operation, 
emphasizing public involvement from a bipartisan basis, and I 
think what the frustration that we have right now in the 
legislative branch, particularly in the House, is that it would 
appear that the Pentagon and our friends in the Armed Services 
feel that we are going to stop sequestration from the 
legislative branch of government the whole time that the 
executive branch is sniping at us.
    And we all understand it is an election year, and you have 
got to have that kind of friction and so forth, but when I see, 
for example, the chairman of the authorizing committee 
authoring legislation to get the equivalent of sequestration 
elsewhere, so that the military does not have to suffer from 
it, it is not--it is a good thing, but it is not as 
inspirational to me as a good bipartisan effort. And what we do 
not see as Members of the House, and just speaking as one tiny 
member in a foxhole, I do not see the administration coming up 
and saying, we may not have been as active as we could have 
been during the supercommittee time period in which we could 
have prevented sequestration. Now that is my point of view, I 
understand that. Others may have a different point of view. But 
I do not see it now.
    But I do see Members on a bipartisan basis in the House 
saying we have got to stop this sequestration, and as I said, 
you know, one Member putting forward legislation about it, but 
what we need to see is the administration saying, here is an 
alternative and something besides your budget, because we 
believe this budget is responsible, but still we have got this 
sequestration thing, which is a bonding opportunity and an 
opportunity, perhaps, for the President to call his bipartisan 
pro-military members down to the White House and say, let's 
figure out what we can do together, what is some legislation 
that we could all rally behind? And you, with your background 
as a guy who could really advocate that, and I do not know if 
you want to comment or not, but I just wanted to get that off 
my chest. It is not even my real question, by the way.
    Secretary Panetta.  Well, let me just in some way share 
your frustration.
    You know, and I say this not so much as Secretary of 
Defense but as a former OMB director and former chairman of the 
Budget Committee, I engaged in every major budget summit during 
that period of time, going back to the Reagan years. Ronald 
Reagan sent up his Secretary of Treasury, sent up his key 
individuals. Jim Baker was there. We sat around a table in Tom 
Foley's office and worked through a deficit reduction package 
that included all of the elements, not only, spending cuts, not 
only entitlement savings, but revenues, and we were able to get 
that passed.
    When I was chairman of the Budget Committee, I went out to 
Andrews Air Force Base and spent almost 2 months out there 
negotiating with the Bush administration, and they sent their 
key people there. We had Republicans and Democrats working 
together at Andrews for almost 2 months, and we came up with a 
package of deficit reduction. It was a significant, almost $500 
billion in deficit reduction that, again, included all the 
elements. And in the proposal that Bill Clinton submitted for 
his budget, it included $500 billion in deficit reduction and 
included all of the elements. You are not going to deal--and, 
frankly, as a result of that, we balanced the budget. We 
balanced the Federal budget, and we developed a surplus, and I 
never, in my own history or imagination, believed that we would 
be back in the same damn hole. And if you want to get out of 
that hole, you have got to do exactly what history tells us. 
You have got to sit down on a bipartisan basis and be able to 
put everything on the table and be able to include that kind of 
package if you are serious about dealing with deficit 
reduction.
    My concern now, I responded to the law with regards to 
defense spending and what we need to do to meet the number that 
Congress said we had to meet, but do not balance this budget on 
the backs of defense. I do not think you can balance this 
budget on the backs of discretionary spending. You have got to 
be able to look at every area if you are going to be serious 
about getting the deficit reduced.
    Mr. Kingston. Well, you know, Mr. Secretary, and again your 
remarkable background and the fact that you have such great 
respect on a bipartisan basis, it would be, to me, perhaps a 
solution or if you look at who are the bipartisan, who is a 
bipartisan committee and who are the bipartisan Members on the 
Hill, and it really is the defense committee. So many of those 
other issues involve lightning rod, divisive public policy 
matters, and yet if the President got people with the 
relationship of a Bill Young and a Norm Dicks down to the White 
House and said, let's use sequestration as a way to drive a 
compromise, and I think we could do it. I think you would find 
willing Members who could come together. So I just wanted to 
float that out there.
    And I guess I am out of time, Mr. Chairman. Are we going to 
have a second round?
    Mr. Young.  We are going to try to have a second round if 
we can.
    Mr. Kingston.  Well, thank you.
    Mr. Young.  Thank you, Mr. Kingston.
    Mr. Moran.

                           CIVILIAN WORKFORCE

    Mr. Moran.  Secretary, nice to see you.
    General, Mr. Hale.
    Following up on the last line of inquiry, there is a band-
aid bill offered by Chairman McKeon and Senator McCain to delay 
defense sequestration for a year. Would you tell me, Mr. 
Secretary, by what percent your civilian workforce or the 
number of people have been reduced over the last few years? 
Maybe Mr. Hale would have those numbers.
    Mr. Hale.  Well, in this budget, Mr. Moran, they go down 
about 1 percent, 1 to 2 percent from 2012 to 2013, kind of 
similar to what the military is going down. In the out years, 
there is pretty modest decline right now. I think it is an 
issue we will have to look at again. We are trying hard to make 
some reductions in contractor workforce, where that is a cost-
effective decision, and that is part of the reason there is 
modest decline, but I do think in the out years, we will have 
to look at the mix.
    Mr. Moran.  I understand, but the bill would reduce Federal 
civilian employment.
    Secretary Panetta.  It would go well beyond that.
    Mr. Moran.  I understand one of the problems we have had 
that has cost us money is that we do not have the Federal 
civilian acquisition procurement personnel, et cetera, that we 
need to perform those functions. Would reducing your workforce 
in accordance with this proposed bill actually save money, or 
do you think it could possibly jeopardize the mission of the 
military in important areas?
    Secretary Panetta.  I do not think you should detrigger 
sequester on the backs of our civilian workforce. I mean, I 
realize that savings could be achieved there, but the civilian 
workforce does perform a very important role for us in terms of 
support, and I just think that if we are going to do sequester, 
we really need to look at all of the areas that, you know, the 
President suggested and others have suggested in order to try 
to detrigger not just the defense side of the budget but the 
domestic side of sequestration.
    Mr. Moran.  I understand. A number of my colleagues think 
that reducing the size of the workforce would be the simplest, 
best way of finding that money, but two-thirds of the civilian 
Federal workforce is actually Defense Department, is it not?
    Secretary Panetta.  That is right.
    Mr. Moran.  So it is conceivable it could be 
counterproductive.
    Secretary Panetta.  Yes.

                             IRAQ AND IRAN

    Mr. Moran.  Thank you.
    In looking at the Iraq war, and of course, we have been 
discussing Iran, you mentioned Iran as the most serious concern 
in the Middle East and why we need to shift some of our forces 
to deal with that threat. Looking back at the Iraq war, Mr. 
Secretary, do you think that that has proved to strengthen or 
weaken Iran's posture in the Middle East?
    Secretary Panetta.  You know, the whole mission in Iraq, 
whether people agreed or disagreed with the policy there, the 
whole mission was to establish an Iraq that could govern and 
secure itself. That was the whole point. You know, in the end, 
obviously, they have developed democratic institutions. They 
have established, you know, an approach that does try to govern 
the country and to try to secure it on the secure side. 
Frankly, the level of violence has been relatively down for a 
period of time.
    On the governing side, frankly, it is not as smooth as we 
would like it, but then again, they do not have a long history 
of democratic institutions, but they are working at it. So I 
guess I am not pessimistic that they aren't going to be able to 
stand up and to assert authority over it, and understand that 
some think that Iran is always going to be a problem there. 
Iran will always try to exert influence, but the one thing I 
have learned in the time that I have been in Iraq is that I do 
not think Maliki or anybody else that serves in the government 
is interested in having Iran dominate or try to influence what 
happens in Iraq. They are nationalistic, and they want to 
assert their own authority.
    Mr. Moran.  I understand that, but you also understand that 
the Shi'a influence within Iraq is dominant, and of course, 
many of the current leadership have gotten their training and 
have their alliances in Iran.
    We have seen the bombs in Thailand, Georgia, India, some of 
them thwarted, other assassination attempts have gone further. 
Could we possibly be seeing a proxy war between the West and 
Iran that is engaged beyond the Middle East? What are your 
concerns in that regard?
    Secretary Panetta.  Well, you know, we have always had 
concerns about Iran exporting violence, and as you pointed out, 
there was a situation in Iraq where we knew that they were 
supplying some of the Shi'a extremist groups, and that 
concerned us. We know that Iran, through the IRGC, tries to 
export violence in other parts of the world and tries to work 
with individuals that would try to undermine the stability of 
other nations. And that concerns us, and I think, you know, 
what the message we have made clear to Iran is that this is not 
tolerable behavior. And if they want to be part of the 
international community, then they have to abide by 
international law and international rules. And right now, they 
are not doing that.

                         AFGHANISTAN WITHDRAWAL

    Mr. Moran.  Thank you, Mr. Secretary.
    I do wonder what you expect to have to sacrifice in terms 
of our expedited withdrawal from Afghanistan. If you can answer 
that very quickly in deference to my colleagues, great. 
Otherwise, you might wants to elaborate in a subsequent 
question.
    Secretary Panetta.  The question?
    Mr. Moran.  What are we going to sacrifice in terms of our 
expedited withdrawal from Afghanistan? There are going to be 
areas where we are just going to have to give up in terms of 
completing our mission there.
    Secretary Panetta.  No. Right now, frankly our approach 
that we have worked through following on the Lisbon commitment 
and that ISAF has all agreed to is that we will transition 
these areas on a gradual basis. We have already made two 
tranches in terms of the transition. We have just completed the 
second tranche. Once we complete that, we will have over 50 
percent of the Afghan population under Afghan governance and 
control. The Afghan army is much more effective operationally. 
They are much better at doing the job that they have to do, and 
as General Allen said, you know, as we make this transition, we 
have got to be assured that they have the capability to provide 
security. So our goal is to continue that transition. We have 
made good progress in 2011. We will continue that progress in 
2012. We make the last transitions to Afghan control in 2013, 
at which time we think the Afghan army will be capable of 
providing the lead on combat operations. We will still be 
there. We will still provide support. The President has made 
clear that we will have an enduring presence beyond 2014 in 
Afghanistan to support some key missions there. So we are not 
going anywhere. We are going to be there to support this.
    Mr. Moran.  Thank you, Mr. Secretary.
    Thank you, Mr. Chairman.

                      SECURITY FORCES PARTNERSHIPS

    Mr. Young.  Mr. Secretary, the issue that really concerns 
me on this subject of Iran, I am sure you have seen this 
because I know that you visit the military hospitals on a 
regular basis. I see kids out there, not kids anymore once they 
have been where they have been, who have been hurt by people 
who were supposedly on their side, who have been hurt by 
members of the Afghan security forces or the Afghan army. How 
can we be sure that once we depart and turn over the security 
of the nation to that kind of an organization, how do we know 
they are not going to turn on us or turn on their own country, 
turn on their own governance? We see them turning on our kids 
right now, and that to me is a real disaster.
    General Dempsey.  I will take a stab at that one, Chairman.
    Since May of 2007, 47 instances. Less than 10 of them were 
actually committed by individuals who had either infiltrated or 
who had been self-radicalized; the others were all issues of 
culture, tribe, personal issues and animosities that were 
developed. What we find, frankly, is that the closer we partner 
with them, are in bed with them, the less likely it is that 
they will turn on you. That is not counting the ones that have 
infiltrated, but that actually is less than 20 percent of the 
cases. We have an eight-step vetting model that only went into 
existence in about 2009, you know, that is beginning to bear 
fruit, but we have got some catch-up to do, and we are training 
them in counterintelligence and also working with their 
government to embed, fundamentally embed counterintelligence 
agents throughout their system to try to determine, the same 
thing we do in our own system, by the way.
    So what I would suggest to you is that this is a problem, a 
big problem, but we think we have got a way ahead. We also 
think that as we move away from a model where we are just 
partnering side by side with them and embed more fully with 
them, we think this action will improve the situation.
    You might say why haven't you done that in the past? There 
is some evolution here, and I did this in Iraq, as you know, I 
built the Iraqi security forces. You start out with partnering 
with them, and then you build the institution, you know, you 
build the ministries, you build the architectures, training 
architectures, education architectures, logistic architectures, 
and then as they mature to the point where you can, you embed 
with them, and you run missions with them in the lead and you 
in support. We are just there now, but it has taken years to 
get here.
    Mr. Young.  General, thank you very much, and I certainly 
wish you the best of luck because I have some personal 
suspicions about some of those people.
    Anyway, Ms. Granger.

                       NATIONAL GUARD AND RESERVE

    Ms. Granger.  Thank you very much. Secretary Panetta and 
General Dempsey, I want to thank you, and we all do for the 
very strong, clear message you gave about sequester. We--you 
can see we are very sympathetic up here. But there are Members 
of Congress that are saying this is what is going to happen, 
and for you to be able to say, this is the seriousness of it, 
this is what the costs will be to our national security is just 
extremely important, so thank you for that.
    I have an issue, and then a short question. The issue that 
I would just like, Secretary Panetta, you to be aware of, you 
made a statement that I certainly agree with, and that is that 
we need to maintain a strong Guard and Reserve, which is one of 
the reasons I want to bring this to your attention because the 
Air Force has a plan to move C-130s out of Texas, and I am 
concerned that that plan is not a good plan for the taxpayers. 
It is not a good plan for the warfighter. The squadrons were 
the first to respond after Katrina, and it is essential for the 
Gulf Coast disaster response efforts. The plan is to move that 
out of Texas to Montana, without trained pilots, so there will 
be a time when it will be a poor use of taxpayer dollars but 
also will leave an essential capability during the training 
time.
    My concern about it is history of the Air Force not doing 
the cost-benefit analysis, that they haven't looked at the 
costs repeatedly. I just recently received a GAO study that I 
requested, and once again, it confirmed the Air Force was not 
doing their due diligence, so I would really appreciate you 
looking into that and see if it really will be cost-effective.
    [The information follows:]

    Thank you, Congresswoman Granger, for your question. The transfer 
of eight C-130s from Carswell, TX is a decision based on mission 
leveling within the Air National Guard. It better postures total force 
lift capabilities within the United States and fills an existing 
requirement for lift in the Northwest, specifically FEMA Region 10. 
Great Falls currently flies F-15C aircraft. The Air Force had 
programmed military construction and maintenance and operations 
training to convert the unit from operating F-15Cs to C-27J aircraft. 
The funding for these conversion costs will be applied to converting 
the same unit to operate C-130s. Most of the C-130 conversion costs at 
Great Falls are offset by the reduction of C-27J aircraft at Great 
Falls, MT.
    While cost savings are part of the decision-making process, the 
most important factor is the Air Force's ability to provide the 
capabilities required by the Defense Strategic Guidance, ``Sustaining 
US Global Leadership: Priorities for 21st Century Defense.'' This new 
strategy directs the Services to build a leaner, more flexible, and 
technologically advanced force. As a result, the Air Force is 
rebalancing its Total Force to match the capability and capacity 
requirements of the new guidance. The proposed Reserve Component force 
structure reductions were determined using a deliberate and 
collaborative process, leveraging careful analytical review of 
warfighting scenarios that are consistent with the new strategic 
guidance. Two decades of military end strength and force structure 
reductions in the Air Force's active duty component have changed the 
active and reserve component mix, and achieving the appropriate active 
and reserve component mix is critical to sustaining Air Force 
capabilities for forward presence and rapid response, as well as 
meeting high rate rotational demands with a smaller force.

                                 EGYPT

    My question, General Dempsey, has to do with some 
statements that you made. It is the situation in Egypt having 
to do with our NGOs that are there now going on to I think 6 
weeks. We all know that it is a really very serious situation. 
The Congress is very aware of it, and Ambassador Patterson has 
been very active, and we have talked almost daily about this 
situation. My question has to do with defunding the military 
funding for Egypt, and I understand that you made some 
statements about what the impact would be of cutting off our 
aid, our military aid to Egypt, which is growing, something 
that in the Congress has been talked about more. Could you 
address that?
    General Dempsey.  Thank you, Congresswoman. We have a 
history of when we use funding to separate ourselves from prior 
partners, nothing good comes of it because what essentially we 
do is we fence ourselves off from the next generation. I mean, 
to the extent that the SCAF has acted responsibly, and we could 
certainly debate which areas have been more responsible than 
others, but to the extent that they have, I would like to 
believe it is partly because they have been partnered with us, 
coming to our schools, exchanging with us for 30 years, and I 
actually believe that.
    Cutting off aid, and therefore cutting ourselves off from 
them, means that the next generation won't have that benefit, 
and I do not know where that takes us, to tell you the truth. 
So I am always reluctant to come to some stark conclusion about 
cutting aid. I am sure there are other ways to do it. I leave 
that to you. I hope you would take us in your advisement, but 
conditioning certain things. There have to be some consequences 
for the choices they have made, I fully agree with that. But we 
do have a very close partnership with them. We have--they grant 
us great overflight rights. They grant us priority passage 
through the Suez Canal. I mean, we get things for our aid that 
truly we need, and before we simply cut it off because of this 
issue, I would certainly like to examine those.
    That said, I was over there 10 days ago, and I made it 
extraordinarily clear that this situation must be resolved. So 
I think we just have to work together to figure out the right 
path.
    Ms. Granger.  Good, and I appreciate your making that 
clear. There were many articles written that we were 
threatening to cut off aid when what we are doing is explaining 
that in some of the aid, it is the law, and so we were trying 
to explain what our law was. So thank you very much for your 
attention to that.
    Mr. Young.  On that subject, when President Mubarak was in 
charge of Egypt, he basically was a blocker for anyone 
attempting to attack Israel. The relationship between Mubarak 
and the Israelis might not have been very friendly, but at 
least it worked. What do you see the new regime in Egypt, will 
they be protective of Israel the same as the Mubarak era did?
    General Dempsey.  To be determined, to tell you the truth, 
chairman. I mean, we have had conversations about that with 
them.
    I will say that in a fascinating way, the mil-to-mil 
relationship between Israel and Egypt is probably as strong as 
I have ever seen it in the, let's say, 20 years when I have 
been involved with it. So it is building on a strong 
foundation, but when I say to be determined, I think we have to 
see where the--you know, they have elected both houses now. 
They are getting ready to craft a constitution and elect a 
president, and we will see where the civil government takes 
them.
    Mr. Young.  Thank you, sir.
    Mr. Crenshaw.

                      AIRCRAFT CARRIER HOMEPORTING

    Mr. Crenshaw.  Thank you, Mr. Chairman, and welcome to you 
all.
    I think we all look forward to working together to not only 
meet some of these tough budget choices but also to understand 
what kind of impact it is going to have on our military today 
as well as our national security in the future, and so I wanted 
to start by just bringing up something I have been working on 
for sometime now, and that has to do with the strategic 
dispersal of our nuclear aircraft carriers. Members of the 
subcommittee have heard me talk about this from time to time, 
but as you all know, when we went to an all-nuclear fleet of 
carriers, then we went on the East Coast from having two home 
ports to just one home port, and so the Navy did a study for 2 
and a half years, concluded that it was a strategic imperative 
to have two home ports on the East Coast because we have three 
on the West Coast. And I think, Mr. Secretary, it was your 
predecessor who said it has never been acceptable to have a 
single home port on the West Coast, and it certainly should not 
be acceptable to have only one on the East Coast.
    So the Navy began the process to create a second home port 
for a nuclear carrier, but this budget does not have any money. 
It kind of has zero money to continue that strategic 
imperative. So I think that is really more of a question for 
Secretary Mabus and the CNO, but I wanted to bring it up 
because I think it is symbolic of a decision that I think all 
of us have certainly in the back of our mind because when we 
look at the budget, we cannot help but ask the question, are we 
making these decisions based on strategic needs, or are we 
trying to find the easiest way to save some money?
    And that is very important. You heard Chairman Young say, I 
do not think we ever ought to make decisions about national 
security based on politics or budgetary constraints. So I 
wanted to make that point.

                     STRATEGIC GUIDANCE DEVELOPMENT

    But before I ask a question about where we spend money or 
where we do not spend money, this is something I would like to 
ask you, Mr. Secretary. When I read about the new strategic 
guidance, you know, there are several fancy words about 
aggression and things. When I look back at the QDR we did a 
couple years ago, it kind of reinforces the simple statement 
that we ought to be able, among other things, we ought to be 
able to fight, I think it said, two wars at one time or defeat 
two nations or nonstate aggressors at one time. When you talk 
about strategic guidance, you defeat a major adversary, you 
stop aggression, and my kids always used to ask me when I would 
say something that I did not quite think they would understand, 
they would say, dad, would you unwrap that for me.
    So just talk about, you know, how your Department came to 
this new strategic guidance, what that means in real world 
terms about how we would deal with some of the situations we 
are dealing now, and then maybe most importantly, are you 
convinced that everything in this budget that we are--there are 
some things you have got to have in terms of assets, in terms 
of platforms, in terms of people, and does this budget really 
make sure that we have those assets as we go forward?
    Secretary Panetta.  I am going to ask Marty Dempsey to 
comment on that as well because, we relied a great deal on our 
military chiefs to give us guidance with regards to this key 
issue. From the very beginning, when we sat down, particularly 
with the combatant commanders, we said, you know, we have got 
to have the capability of confronting more than one adversary 
at a time, and in many ways, that has always been the key. I 
know there has been talk about two land wars. The fact is, we 
had two land wars in these last 10 years, but in order to do 
that, we had to mobilize. We really did not have the capacity, 
even though it may have been in the QDB and all the other 
things that they have for planning. The reality was, when it 
came to it, we had to mobilize additional forces in order to be 
able to do that.
    And so our approach was, okay, let's assume we have to 
confront more than one adversary at a time. The more likely 
scenario is you are fighting a land war in Korea, and as I 
said, the Straits of Hormuz suddenly get closed by Iran, tries 
to take advantage of it. Do we have the capability to be able 
to address that kind of crisis and make sure we have got a 
sufficient force able to deal with it, to deter it, and to make 
sure that we can defeat that adversary as well? The military 
said we have got the capability to do that. We have got the air 
power. We have got the Naval power located in the right places 
to be able to confront that situation. Can we address other 
challenges that might come up at the same time?
    And the key there is to recognize that we are in the 21st 
century, and we are going to be dealing with the kind of 
asymmetric kind of attacks that are going to be a lot different 
than what we have seen in the past. Our ability to use cyber, 
our ability to use space, our ability to use precision 
weaponry, all of that, those kind of new capabilities is going 
to give us the kind of advantage we need to have.
    In many ways, what I have said is we need to leap ahead of 
our adversaries. For example, you know, China is developing 
obviously and adding more to their military. We have to have 
the capability not just simply to match them; we need to have 
the capability to leap ahead, to be able to have the kind of 
technology we need in order to deal with that, and that is 
where we put our investments.
    General Dempsey.  The only thing I would add, Mr. 
Secretary, and Congressman, is that, you know, when we 
unwrapped the QDR and looked at some of the accounting rules 
that accrue from strategy, so we say we have to fight two 
conflicts, and we kind of name them, and then we look at 
accounting rules. There was a tyranny of language actually, 
which your children would probably appreciate, and the tyranny 
of language was that, you know, we say we have got to be able 
to do something in Korea that is going to last X number of 
days, we need this much ammunition, and therefore you need this 
many trucks. And the next thing you know you have got this 
incredibly large, cumbersome structure that is not as agile as 
what the Secretary has challenged us to find or to be.
    And so as we have unwrapped the two-war strategy, what I 
will tell you is it was never all that it said it was, to be 
honest, and I was part of it, so I mean it is a self-
indictment. But the other thing about it was, in this century, 
it is actually quite imprecise because the other insight that I 
shared earlier about this strategic seminar series that I am 
running with the chiefs and combatant commanders is that if we 
are doing anything or two places, there is going to be a third, 
and that is the homeland, and we have to account for the 
structure required to stay here in the homeland for consequence 
management, relief, protection, and all of that. So it never 
was a two-war strategy. It really was always at three. And so 
what we have actually tried to do is now talk to ourselves 
about how to take the resources available, change the way we 
apply them to achieve the same ends, and we think--not we 
think, we know we can do that, and we are continuing to work 
toward that end.
    Mr. Crenshaw.  Thank you very much.
    Thank you, Mr. Chairman.
    Mr. Young.  Ms. Kaptur.

                            CARE OF VETERANS

    Ms. Kaptur.  Thank you, Mr. Chairman.
    Welcome. Welcome, gentlemen, great to have you here today.
    There are several topics I cannot get into in detail, but I 
just wanted to tick them off. In none of your formal testimony 
this morning did you mention the imperative of energy 
independence for our country, and I would hope that in 
additional documents you can submit to the committee, you can 
address how the Department views that strategic issue and what 
you are doing to meet it and to help us restore energy 
independence as a country, both in your own operations and in 
the research you support.
    [The information follows:]

    The Department of Defense (DoD) submits a section of the 
Quadrennial Defense Review; the Department of Defense Operational 
Energy Strategy and corresponding Implementation Plan for the record.
    The Quadrennial Defense Review is a legislatively mandated review 
of DoD strategy and priorities. The Quadrennial Defense Review sets a 
long-term course for DoD as it assesses the threats and challenges that 
the Nation faces and re-balances the Department of Defense's DoD 
strategies, capabilities, and forces to address today's conflicts and 
tomorrow's threats. The attached section of the Quadrennial Defense 
Review describes the Department's energy security mission.
    Operational Energy accounts for 75 percent of all energy use by the 
Department of Defense. The Operational Energy Strategy (attached) sets 
the overall direction for operational energy security for the Office of 
the Secretary of Defense, Combatant Commands, Defense Agencies, and 
Military Departments/Services, pursuant to 10 U.S.C. Sec. 138c.
    The Department of Defense Operational Energy Strategy 
Implementation Plan (attached) establishes specific targets and 
timelines for the Operational Energy Strategy. Together, the Strategy 
and the Implementation Plan provide a roadmap for the Department to 
meet the Strategy's goal of energy security for the Warfighter through 
three principal means: demand reduction, supply expansion, and building 
energy security into the future force.

    Number two, I cannot, I do not have time to ask questions 
about the security contractors in Afghanistan and how you 
intend to prevent corruption. I have a great interest in that.
    Thirdly, in the area of sexual assault, are you 
implementing the recommendations of the GAO report that we 
assume DoD is doing, but if you could give us a report on that?
    [The information follows:]

    Since 2008, the GAO has conducted a number of reviews to help 
inform congressional deliberations on issues related to sexual assault 
in the military.\1\ The work has resulted in a total of 25 
recommendations on various aspects of the SAPR program. DoD has since 
begun or completed action on each of these recommendations. To date, 
DoD has fully implemented 13 recommendations and has partially 
implemented the remaining 12 recommendations, of which GAO continues to 
monitor. The breakdown of the remaining 12 is as follows:
---------------------------------------------------------------------------
    \1\ See GAO, Military Personnel: The DOD and Coast Guard Academies 
Have Taken Steps to Address Incidents of Sexual Harassment and Assault, 
but Greater Federal Oversight Is Needed, GA0-08-296 (Washington, D.C.: 
Jan. 17, 2008); Military Personnel: DOD's and the Coast Guard's Sexual 
Assault Prevention and Response Programs Face Implementation and 
Oversight Challenges, GA0-08-924 (Washington, D.C.: Aug. 29, 2008); 
Military Personnel: Additional Actions Are Needed to Strengthen DOD's 
and the Coast Guard's Sexual Assault Prevention and Response Programs, 
GA0-10-215 (Washington, D.C.: Feb. 3, 2010); and Military Justice: 
Oversight and Better Collaboration Needed for Sexual Assault 
Investigations and Adjudications, GA0-11-579 (Washington, D.C.: June 
22, 2011).
---------------------------------------------------------------------------
    1. Six of the partially implemented recommendations pertain to the 
development and implementation of the Defense Sexual Assault Incident 
Database (DSAID).
    a. As DoD detailed in its February biannual status report to the 
Committees on Armed Services of the U.S. Senate and House of 
Representatives, the Department has continued efforts to bring DSAID to 
operational status, in accordance with the integrated master schedule, 
while collaborating with the developer and the Military Services 
through the full System Development Lifecycle, in accordance with 
industry best practices and GAO expectations.
    b. The Department intends for DSAID to be fully operational by the 
end of August 2012. DSAID will adhere to key standard information 
technology practices as prescribed by the GAO.
    2. Three recommendations direct the DoD Inspector General, in 
conjunction with the military services, to provide oversight of the 
services' criminal investigative organizations. The Department 
concurred with these recommendations and is taking actions to address 
by:
    a. drafting a sexual assault investigations policy that would be 
applicable to the services' military criminal investigative 
organizations and coordinating the expertise and resources of the 
services' criminal investigative organizations, and
    b. evaluating the military criminal investigative organizations' 
sexual assault investigation training.
    3. The remaining three partially implemented recommendations 
pertaining to performance measures and evaluating program positions are 
ongoing within the Department.

    And finally, any convergence you see between the space 
missions of DoD and NASA? I am very interested in convergence 
and ways we can save money. Obviously, with the budget mandates 
on us, and there is not time to talk about it this morning, but 
I wanted to mention those four areas.
    [The information follows:]

    Yes, the Department sees opportunities to collaborate with NASA in 
developing and employing common space launch services. First, NASA 
acquires some of their launch services from the United Launch Alliance 
(ULA), currently the primary space launch provider for DoD. Although 
NASA contracts directly with ULA and does not use the Air Force 
contract, our combined acquisitions maintain a viable industrial 
market. Second, we collaborate with NASA to develop new rocket 
propulsion technologies under the Integrated High Payoff Rocket 
Propulsion Technology (IHPRPT) program. The Air Force Research 
Laboratory executes the IHPRPT effort. Finally, we are seeking 
additional opportunities to collaborate with NASA on space launch, as 
demonstrated by a coordinated strategy signed in October 2011 between 
the Air Force, the National Reconnaissance Office, and NASA on new 
entrant criteria for launch providers.

    In terms of questioning, I would like to thank you for your 
dedication both to our missions abroad as well as the homeland, 
General, I was very happy you talked about that. In some parts 
of the homeland, economic stress is quite significant, even now 
with unemployment going down. And I wanted to ask you if there 
was a way in your planning, you could look carefully at parts 
of the country where recruitment and retention have been 
phenomenal. I would put Ohio at the top of the list. However, 
we have 52,000 returning veterans who have no work. I am 
wondering if there is a way, as you look at defense assets, to 
take a look at the parts of the country that are obviously very 
patriotic and have contributed much to ongoing operations and 
what you might do in your own internal decisionmaking to help 
them. How can that be done, number one?
    We know that there was a lot of equipment, computers, 
kitchen equipment, blankets, and so forth left in Iraq, and 
some of it maybe even having been looted. Is there any possible 
way you can look at your excess materiel and get it to places 
that are trying to take care of homeless veterans, keep our 
feeding kitchens stocked, try to help libraries that are 
operating on a shoestring get additional computers. Perhaps 
there is a way that the geniuses at Defense can take a look at 
this country, overlay where the unemployment remains, high 
levels of unemployed veterans, and think of a way to connect 
some of your underutilized assets to these places.
    Also, as you return goods to the United States, consider 
using the Saint Lawrence Seaway, ports of call include places 
like Buffalo and Cleveland and Toledo and Detroit. The 
President mentioned Cleveland, Toledo, and Detroit in his State 
of the Union, it is pretty clear he understands what the people 
there are enduring. So I would just ask for some attention 
there if you could possibly do it.
    In terms of forward planning, it is amazing that places 
that send soldiers to die in the Marine Corps who have terrible 
missions in terms of guarding convoys of trucks taking gasoline 
to the front lines, who are in combat engineering units, 
medics, and so forth, that those parts of the country that have 
high rates of recruitment and retention really do not have 
major defense bases, that they are in need of some additional 
attention. So as you look at missions, it is amazing to me to 
live in the Washington area half my life here and see that 
certain accounting offices, they are fighting about too much 
traffic as they create 9,000 more jobs in a place that does not 
have unemployment, and I am thinking, give it to us. What is 
the matter at DoD? Do they not look at this? A strategic 
location around the country. So I just wanted to make you 
aware.

                        DEFENSE INDUSTRIAL BASE

    Finally, my question is, on the defense industrial base, 
Secretary Panetta, Acting Under Secretary Kendall has been 
quoted as saying the Department is preparing to intervene to 
assist failing defense companies to maintain critical 
industrial base capabilities. In the Midwest, Machine Tool, 
Advance Machine Tool, many of these companies are at the edge 
because of the economy. When Secretary Kendall talks about 
intervening to assist failing companies, what type of 
intervention might he be envisioning that the Department would 
be undertaking to help us retain critical portions of the 
industrial base of this country?
    Secretary Panetta.  Thank you very much for that. You have 
obviously touched on a number of areas. Let me just respond to 
the last one you mentioned and one other.
    On the industrial base, I am very committed to making sure 
that we maintain the industrial base, the skills, the 
capabilities that we have because, frankly, we cannot mobilize, 
we cannot do the kind of surge that we have to do unless we 
have that base in place.
    You know, somebody told me, I think during World War II, as 
we got into World War II, with regards to shipbuilding, we were 
the biggest shipbuilders in the world at that point. So we had 
a lot of shipbuilding capability. We are down to eight now. I 
think it is eight, right? We have got about eight. And there is 
always the danger that we may lose that. And most of them are 
there because they are obviously working on defense ships. I 
have got to maintain that base if we are going to mobilize in 
the future. If we face the kind of crisis that requires us to 
do that, I have got to be able to maintain those shipyards, 
those skills, those capabilities, and at the same time maintain 
the industrial base that we have in the Midwest and elsewhere 
in order to be able to develop the vehicles, the MRAPS, all the 
other things that we are going to need.
    So the way I have asked our people to look at this is how, 
what can we do to try to, A, assist them by making sure that we 
are giving them pieces of these contracts so that they can stay 
busy, so that they can work on the issues that we care about, 
that we can be helpful and try to make sure that I know, for 
example, there was one, we were dealing with a plane issue, a 
bomber issue, and the question was, okay, I think we decided 
against developing a particular bomber at some point before I 
got there, but the key was, how can we keep those capabilities 
in place in the industry. And so what we did is we issued a 
contract to try to make sure that they would help us develop 
the next bomber, to keep their capabilities in place, to keep 
the people who do the design work, who has the knowledge of it, 
to keep them working. That is the kind of approach that I think 
we have got to emphasize for the future in order to maintain 
that.
    The other thing I wanted to mention is with regards to the 
concern you have on people coming back, that is a big concern 
of mine. We are going to be taking down the force over these 
next 5 years by over 100,000 people. That means each year, we 
could be bringing back anywhere from 12,000 to 15,000. In many 
ways, the system right now is clogged and not doing a very good 
job at it. I want to make sure that we provide the support 
structure to try to take these men and women as they return, 
make clear to them what are the educational opportunities that 
are available to them, what are the jobs that may be available 
to them. The private sector is now putting up, you know, has 
really done a remarkable job at trying to tee up a whole job 
Web site with regards to veterans returning. In addition to 
that, what can we do to try to help them start businesses, 
start small businesses and give them the assistance to do that. 
How can we improve medical screening so that we have better 
relationship between the Veterans Administration and the DoD? 
What kind of GI benefits can we provide? What are we doing to 
help military spouses so that they have some opportunities as 
well and that the families are protected? The services do have 
some of this in place, but frankly, we just need to do a much 
better job at bringing these kinds of services together because 
we are going to face a huge return, and we have got to make 
sure that they are not going to just wind up on the 
unemployment rolls.
    Ms. Kaptur.  I want to thank the Secretary for his 
sensitivity to this and also just mention that in terms of the 
defense industrial base, strategic metals is an area that we 
focused on in northern Ohio because of our machine tool 
capabilities, and the last beryllium plant in America took us 
almost 15 years to transition to save it, the last one, and we 
have got the issues of titanium, magnesium, all of the ums, 
aluminum, the Department really needs to focus on strategic 
metals and this machine tool industry because it is very, very 
fragile. With the automotive industry recovering a bit, it is 
coming back, but somebody there ought to actually have a list 
of critical industries. I am sure that exists in somebody's 
drawer. The need for us to meet the demands in these areas and 
to make sure that that capability exists in this country is 
huge. And a lot of the subcontractors, I will just tell you, 
when they get the big primes and they give it to 
subcontractors, and they subcontract out a lot of this, the 
primes do not follow that. And so things can end up going 
abroad, and we do not even know it. And it is hard to catch up 
to it once it is gone, so I just wanted to put that on your 
horizon also.
    As you look at shipbuilding, please look at the Great 
Lakes. Again, the Saint Lawrence Seaway is an underdeveloped 
asset, purposely built too small. Eisenhower knew it was the 
fourth seacoast; did anybody else remember it after he did 
that? We just mention that as you look at departmental 
responsibilities, and I thank you so very much for your 
replies.
    Mr. Young.  Ms. Kaptur, thank you very much.
    Mr. Calvert.

                            EUROPEAN ALLIES

    Mr. Calvert.  Thank you, Mr. Chairman.
    I have a couple of issues, but I have a question for the 
record, and regarding defense acquisition. I used to think 
California water policy was complicated, and I got on to 
defense acquisition, so I will submit that for the record.
    During the testimony, one thing that was of concern to me, 
as we reshape the force and shifting responsibilities in Europe 
to our allies, NATO, and I think one thing that was exposed in 
Libya that there is some cracks there, the capabilities that 
they do not have, and I think without the United States' 
assistance, that the outcome may very well have been different. 
And as the economies in Europe obviously are having 
difficulties. And it will maybe get worse before it gets 
better, are they going to be able to step up and meet those 
responsibilities? Obviously, Italy, others have written, you 
know, we are all tied together on this F-35 contract, their 
force structure. I read where they are having their own 
problems, and I worry that they are not going to be able to 
meet the challenges. And obviously, with a rising Russia, that 
is a challenge.
    And then another comment, South America, since that was not 
brought up. We may have a failed state in Honduras, the murder 
capital of the world now. Guatemala is a close second. God 
knows it is not much better than Mexico. We have got problems 
in Bolivia and Venezuela; that is right next door. So I just 
thought I would let you comment on those things.
    Secretary Panetta.  Thank you very much.
    Good issues.
    On the first one, with regards to Europe, we are taking 
down two brigades in Europe, and frankly, those two brigades 
were not even--I mean, we have got four brigades in Europe. 
Those two were not even in Europe. They were basically fighting 
wars in Iraq and Afghanistan. And what we are going to do as we 
bring them back is we are starting a third brigade that will 
have battalions that will rotate in and out of Europe and do 
exercises and training and have a rotational presence there so 
that in the end, we are going to have about 40,000 troops that 
will be there, still a large presence that we will have in 
Europe. So we are by no means in any way backing away from our 
relationship to NATO.
    In addition to that, we are providing the investment on the 
AGS, the Global Hawk. That NATO ministerial I was just at 
agreed to, after 15 years of battle on this thing, finally 
agreed to go ahead with that and purchase that ISR capability. 
And we are going to help support that, as will the other 
nations.
    In addition, we will--you know, we are going to continue to 
have, as I said, this kind of continuing rotational presence 
and doing exercises with them. You are absolutely right, one of 
the things I urged NATO to do is that they have to develop and 
Secretary General Rasmussen has made this year, they have got 
to develop smart defense. They have got to develop the 
capabilities that they need, and NATO, as you know, and you 
pointed out, in the NATO mission, we provided most of the air 
tanker support. We provided most of the ISR. We did a lot of 
the backup. NATO, which is very effective, and they proved 
themselves to be effective, they have got to develop these 
capabilities. Now, that means to invest in that. And you are 
right; they are going through the same kind of budget 
constrictions or worse in many cases that are impacting on the 
defense budgets, but one of the things we have said to them is, 
you cannot back away from your responsibilities to NATO. You 
have got to continue to dedicate a good portion of your defense 
budget to supporting NATO and making sure that we do not back 
away from the broad capabilities we need in the event NATO has 
to deploy. NATO has become more than just protecting Europe. 
NATO has become, in many ways, an international force to deal 
with crises throughout the world. They are in Afghanistan. They 
dealt with Libya, and even beyond that, we have developed other 
partners in the Arab community that now join with NATO in being 
able to accomplish that mission.
    Secretary Panetta.  I think that that is a very effective 
way to try to develop the kind of alliances and partnerships we 
need for the future, but to make it work they have got to put 
their money where their mouth is.
    General Dempsey.  I will just tell you on NATO service that 
any aggregate, you know, their budget collectively is about 
$300 billion, so that is not an insignificant sum. But I mean, 
I do share the Secretary's concerns that they have to keep 
investing in defense and that this thing called ``smart 
defense'' doesn't become an excuse for, you know, for trying to 
do more with less and less and less. But they are, if we go 
someplace to fight tomorrow, we are going to ask our NATO 
partners first to join us, and that will always be the case.
    On Mexico, Central America, South America, we have strong 
mil to mil. The issues you talk about are really transnational 
criminal organizations, and we do what we can within DOD 
equities and authorities to support them, but other agencies 
and government tend to be the lead in issues of criminality.
    Mr. Young.  Thank you, Mr. Calvert. Mr. Rothman.

                     SPECIAL OPERATIONS DEPLOYMENTS

    Mr. Rothman.  Thank you, Mr. Chairman, Mr. Secretary, 
General, Mr. Hale. It is remarkable to me how we just 
transition from one extraordinary Secretary of Defense and one 
extraordinary head of the Joint Chiefs to another extraordinary 
Secretary of Defense and another extraordinary head of our 
Joint Chiefs. We are a blessed country in many ways, with lots 
of resources and it is clear, a deep bench of brilliant, very, 
very experienced and tough smart people. So thank you for your 
service. Thank you for being here.
    A couple of distinct questions, I will hope to get them 
both in. There was an article that appeared in the New York 
Times just a couple of days ago, ``Admiral Seeks Freer Hand in 
Deployment of Elite Forces.'' The distinguished Admiral 
McRaven, who leads the Special Operations Command, was said to 
be pushing for greater autonomy in positioning his forces 
around the globe at his direction. That is what the article 
said, anyway, and there was no comment yet from the White House 
or State Department, and no decisions have been made with 
regard to this rumored request in the story. And I wonder if 
you had a comment about that.
    And then I wanted to ask you another question, distinct, 
with regard to U.S.-Israel and military intelligence 
cooperation. Last year about this time, in March of 2011, I had 
the pleasure and the opportunity to ask Secretary Gates and 
Admiral Mullen about the status of U.S.-Israel military and 
intel relations, and they said it was at the highest level it 
had been in their entire military and intelligence careers. I 
think you have reiterated that as well today.
    My question is, does Iran know that? Does Iran have any 
doubt about the closeness between the mil and intelligence 
cooperation between the United States and Israel? And also, 
would you agree with what Secretary Gates said last year and 
Admiral Mullen last year, that the U.S.-Israel relationship is 
not--is beneficial and essential to the national security 
interests of the United States as well as to Israel.
    General Dempsey.  So, I will take the Special Operations 
Command. We have got the world organized into, for our military 
purposes, into five geographic combatant commands: NORTHCOM, 
SOUTHCOM, PACOM, CENTCOM, EUCOM. And then we have got 
functional commands: TRANSCOM, STRATCOM, SOCOM, CYBERCOM.
    What Admiral McRaven is doing is proposing that he would 
become--he would have the ability to maneuver forces across 
geographic combatant command lines to keep up with an agile 
enemy. However, it is important to note, nobody commits forces 
in this Nation into conflict of any kind, of any size, without 
the Secretary of Defense's approval and ultimately the 
President's approval.
    Mr. Rothman.  Good.
    General Dempsey.  So this is an issue--yes, I am sure you 
would approve of that.
    Mr. Dicks.  What if it isn't a conflict?
    General Dempsey.  Sorry?
    Mr. Dicks.  What if it isn't a conflict?
    General Dempsey.  Well, if they want to go to a training 
mission in Mali, right now the AFRICOM commander has that 
authority delegated to him. What Bill McRaven is suggesting is 
maybe SOCOM should. But this is a proposal that comes to me and 
then eventually to the Secretary in a process called the 
Unified Command Plan.
    And I don't know where the story came from, frankly, but 
that is normally the case. But I assure you, we are not doing 
anything--there was a hint of this, that SOCOM would kind of be 
running amok, getting us, dragging us into issues where we 
wouldn't have civil authority.
    Mr. Rothman.  By the way, I have enormous regard for the 
work that SOCOM has done.
    General Dempsey.  Yes, they are terrific.
    Mr. Rothman.  Yes, they are amazing. And it is not a 
reflection on that, it is about civilian control, ultimately, 
and the right decisionmakers making the judgment calls.
    General Dempsey.  It is there. It is there, believe me.
    Mr. Dicks.  Would you just yield for a second?
    Mr. Rothman.  Of course.
    Mr. Dicks.  I thought Admiral McRaven in the article said 
that he wasn't going to be doing this without consulting, with 
the CINC, I guess, the combatant command, or the Ambassador of 
the country.
    General Dempsey.  Right, right.
    Mr. Dicks.  You know, you can't have this situation where 
people are going out there and the Ambassador doesn't know and 
CENTCOM doesn't know.
    Secretary Panetta.  Absolutely, absolutely.
    Mr. Dicks.  I mean, General Brown used to say, when he was 
the head of--you know, I can go anywhere, I can do anything. I 
said, you better let somebody know where you are going, okay, 
or you are going to get in a lot of trouble.
    General Dempsey.  I assure you that we don't bring a single 
soldier, let alone an organization, into a country without the 
Ambassador's approval and the approval of the Secretary of 
Defense. So this is, honest to God, this is a nonissue and a 
story that was badly interpreted.
    Secretary Panetta.  I mean, as an Italian, I am a control 
freak. I don't like anybody doing anything like that without 
running it by me.
    But on this issue, as he has pointed out, this was in the 
discussion phase, and what we are looking at is, you know, 
various suggestions as to how best to deploy them in an 
effective way.

                        U.S.-ISRAEL INTELLIGENCE

    On the issue of Israel, I can assure you that we view the 
relationship with Israel as an essential relationship; 
essential to their security, essential to our security, and 
essential to the security of that region. And for that reason, 
we have provided I think more military assistance to Israel 
than in the past.
    Mr. Rothman.  Mr. Secretary, my big question was, does Iran 
know that there is no room between the two--there are 
disagreements among friends at all levels, as well as nations, 
but do they--the President used the word ``prevent,'' and you 
have used the word, that the United States will ``prevent'' 
Iran from acquiring nuclear weapons capability. And I think the 
President and you have shown that what you say you mean, and 
you will put into effect. Does Iran understand that you have 
used the word ``prevent'' and that you mean it?
    Secretary Panetta.  You know, it is a little tough to tell 
what Iran thinks these days because of the, you know, the 
governance situation there, and who in fact speaks for the 
Iranian Government. But all we can do is make clear what the 
message is. We have made that clear, not only publicly but 
through private channels as well.
    Mr. Rothman.  And by the way, I don't seek a rush to war.
    Secretary Panetta.  No, I understand.
    Mr. Rothman.  If the sanctions are abiding and diplomacy--
there may be a window for diplomacy now. But as you have said, 
and the President, that if all other options fail, force is on 
the table, and we will prevent that.
    Secretary Panetta.  That is correct. All options are on the 
table. And I would also add on the intelligence side that there 
is a very close relationship that continues on the intelligence 
side. When I was director of the CIA, we maintained that kind 
of very close relationship, and that is continuing under 
General Petraeus.
    Mr. Rothman.  Thank you, gentlemen.
    Mr. Young.  Mr. Cole.

                 STRATEGIC RISK AND ACQUISITION REFORM

    Mr. Cole.  Thank you, Mr. Chairman, and thank you, 
gentlemen. I can't resist a quick contribution to the Kingston-
Panetta dialogue. It is on; is it working now?
    Mr. Young.  Raise your voice like you do when you get 
angry.
    Mr. Cole.  I never get angry in this committee, Mr. 
Chairman. There we go. Okay, thank you.
    I can't resist sort of joining just a brief observation on 
the dialogue that you two had, because I think it is important 
when it really overhangs everything that we are talking about 
today. And I think you have given us a very, very serious 
budget. This is actually a terrific budget. It is clearly well-
thought-through, and we may have our differences here or there, 
but the reality is it is serious.
    I am not sure that is true with the overall budget that the 
administration has presented, sitting as I do with my 
colleague, Mr. Calvert, on the Budget Committee.
    Look, with this committee there are three elements here, it 
seems to me. Number one is discretionary spending. This 
committee has already demonstrated it can be pretty tough on 
discretionary spending. Thanks to Chairman Rogers we got a lot 
of money, gave the President actually less than he asked for in 
defense last year. That is unusual for a Republican Congress.
    And honestly, you know, then there is the tax portion, the 
revenue portion. The President had an opportunity in 2008, all 
the Bush tax cuts ran out, chose to extend them given the 
economy, a reasonable decision. That opportunity will come 
again in 2010 automatically, so revenue will be on the table. 
It comes. They all run out--2012, excuse me. And, finally--it 
was on in 2010.
    And, finally, you know, the real crux of this issue is 
always the entitlement programs. And we have got a proposal on 
the table, the Ryan budget. Like it, not like it, but it is 
real.
    What we haven't seen from the President is an entitlement 
reform proposal. And I think when you see that, that is when 
you can finally get all those people in the room for the amount 
of time you need. But until that component is there, we can't 
do it. I don't ask you to comment on that, I just posit that.
    Two questions I do have, though, that are serious. First, 
your comments, Mr. Secretary. You mentioned this budget will 
increase risk. You know, that was unavoidable. So I would like 
for you to lay out, if you could, the risks that you are most 
concerned about that the budget will enhance.
    The second question, and I can ask them both at once and 
probably, you know, again for both of you. I remember the first 
time I met you, by the way, General Dempsey, was when you were 
in command of the 1st Armored in October of 2003 in Baghdad. 
And I asked you, Gosh, what do you do with an armored division 
in the middle of a city? And you said, Pretty much anything you 
want to do. And I would like to always make sure you have that 
kind of capability, and that is pretty much what this is about.
    But I am very worried on the procurement side, as my friend 
Mr. Calvert pointed out. I have got Fort Sill Army Post. We 
have lived through the cancellation of Crusader, the 
cancellation of the NLOC. We have watched the Future Combat 
System for billions of dollars and produced nothing at the end 
of it that is really very usable.
    And so I would like to know in the budget as you move 
forward, what are you doing to make sure in reforming the 
acquisition, the whole procurement process, that we don't go 
through these situations where we are spending $20, $30 
billion, and then not producing a deployable weapons system at 
the end of the process.
    Secretary Panetta.  Let me comment on a couple of your 
areas, and then I will ask General Dempsey as well to comment.
    You know, with regard to the procurement side, that frankly 
when I was on the budget side, I would look at that, and it was 
a process that involved billions and billions and billions of 
dollars. And then at the end of that process, you didn't get it 
or it was cancelled or something went wrong and you went off to 
something else.
    We just cannot afford to do that. We are working with our 
people on the procurement side to tighten up that process--to 
make it more competitive to begin with.
    I have to say, private industry is getting much better now 
at understanding the constrictions we are operating under, and 
they are implementing a lot of very effective cost controls as 
well. I sit down with our industrial base, I sit down with the 
people that are involved in our defense contracts, and I have 
to tell you, every one of them understands that we are 
operating with limited resources now, particularly now, and 
that they have to play a role as well. They have to be partners 
in this process.
    So tightening it up, making it more competitive, trying to 
make sure that when we develop these weapons, we don't keep 
changing the rules of the game. We don't keep coming in with 
new additions. We don't keep adding, you know, additional 
requirements that basically add to the cost. We have got to be 
able to say, this is what we need, stick to it and have them 
deliver that.
    We did that with the MRAP, frankly, and we were able to 
deliver the MRAP on a fast basis and get what we needed. And we 
didn't make a lot of changes and niches on it, and that helped 
a great deal. That is the kind of model we need to apply in the 
rest of the procurement process.
    On the risk, you know, they are just--I mean, anytime you 
cut the budget anyplace, there are risks that are inherent in 
it. But when you cut half a trillion dollars, you do have 
risks. We think they are acceptable. But the main risks are 
these. You are going to have a smaller force. When you have a 
smaller force you can't--you are not going to be able to move 
as quickly. You have got to be agile, as I said, to move them 
quickly because they are not going to be in place the way they 
are now in terms of numbers. That is number one.
    Number two, mobilization is going to be very important 
here. If we face a crisis, we have got to be able to mobilize 
quickly. Thank God we have a very strong Reserve and a National 
Guard. They performed in outstanding fashion the last few 
years. We have developed tremendous expertise among them. I 
want to be able to maintain that.
    But the ability to mobilize quickly, to be able to put 
these people in place, to develop the skills that they have to 
have, to make sure we have that, we are going to protect mid-
level officers, we are going to protect NCOs so that they can 
bring the experience they need in order to make sure that we 
speed that up. But just the nature of mobilization aviation 
itself and what you have to do raises risks.
    Technology. We are depending a lot on technology. That 
means we better have the brain power out there to develop the 
technology we need. We have got to be on the cutting edge. And 
things are moving fast and, frankly, other countries are 
developing a lot of expertise in this area. We have got to be 
ahead of the game on that to be able to do that.
    I mentioned the concern about people coming back and making 
sure they have jobs and support, because we are going to be 
bringing a lot of people back.
    And the last point I would make is that when you do all of 
this, you have very little margin for error. The nature of this 
budget, we just have very little margin for error. And that 
means we really have to be very tight and it means, frankly, 
from your point of view, that as you make decisions on the 
budget or make adjustments, it has got to be a zero-sum gain. 
You can't just say, let's restore all of this and then not pay 
for it. And that represents a risk as well.
    General Dempsey.  Briefly, Congressman, there are two kinds 
of risk that I assess. And I have to perform a risk assessment 
every year and it is risk to mission and risk to the force. 
Risk to mission: Can we accomplish the objectives laid out in 
the guidance that we receive? And as far as risk to force, what 
are we doing to the people?
    And so two brief additions to that. The risk to mission is 
really measured in time. We can still do everything we always 
said we can do. It might take us longer to do it. Now that 
could mean, fundamentally, more casualties, depending on the 
nature of the conflict. But we can accomplish the mission, it 
may take us longer. In terms of risk to force, it is a capacity 
issue.
    And I will use the Army brigade combat teams as an example. 
We are going from 73 to 68. All eight of those will come out of 
the Active component. So the Active component will go from 42 
down to, I guess that is 30--or 45 down to 37.
    That is an 11 percent change in the overall number of 
brigade combat teams. So as you cycle them in order to keep the 
force, you know, at a reasonable pace, you have 11 percent 
fewer of them to cycle.
    So we are measuring all that risk, and I think I have 
assessed it to be manageable. It would get a lot more 
difficult, though, the deeper we get into that.
    On acquisition, just to add to what the Secretary said, it 
really is about getting the requirements under control, get 
senior leader involvement early. We used to do the requirement, 
toss it over the transom to the Acquisition Corps, and then 7 
years, 8 years, 10 years, 11 years later, something popped out 
and we said, Well, hell, we were looking for a Swiss Army knife 
and you gave me a piece of rebar.
    So what we did in the Army, for example, is we went to 
these things called capability portfolio reviews, where the 
vice chief of the Army would get everybody in the room and say, 
let's wrestle the requirement to the ground and stay involved 
with it throughout, in a portfolio, like fires, for itself.
    The Secretary has just chartered the Deputy Secretary of 
Defense (DEPSECDEF) to take a look at doing something at the 
department level called a ``strategic portfolio review'' where 
we can look at things like ISR, because every service has ISR. 
The question is, are they complementary, and where they are 
less than complementary, potentially redundant, we can get 
after it. So we are moving in the right direction. If it seems 
slow to you, it seems slower to him.
    Mr. Cole.  Thank you very much.
    Mr. Young.  Now, Mr. Hinchey.

                              SOLAR ENERGY

    Mr. Hinchey.  Thank you, Mr. Chairman. Thank you, very, 
very much, and I just want to express my appreciation and 
deeply appreciate everything that you do, and particularly what 
you have said here today. I mean, the responses that you have 
given to the questions are very, very interesting and very, 
very important. And I thank you very much for all that you have 
done today and everything that you do elsewhere.
    I just want to make a simple question, but first I want to 
just express my appreciation also to the reduction that you 
have been engaged in in Iraq and elsewhere, and the very 
effective way in which you have been reducing what many people 
would say, the waste prices that have been engaged out in other 
parts of the world. So thank you very much for all of that.
    I want to just ask a very simple question. It has to do 
with energy and the initiation of solar energy and how this is 
something that you are engaged in and something that you have 
done very effectively, initially, to try to bring this about, 
and bring it back effectively, actually. But also there is a 
lot of energy that is coming in from elsewhere. In Nellis Air 
Force Base, for example, how the solar energy is coming from 
China.
    And there is a lot of, now, speculation that some of the 
energy that has come from elsewhere, outside of this country, 
is weak and it is not lasting. There are some people who are 
saying that there are some indications that some of this, some 
of these energy contracts are lowering down in 3 years or so.
    So I just wonder what we can do. What are we doing with 
regard to this? What are we going to do to stimulate more of 
the energy operation here internally in the United States? 
There are a lot of things that are going on here that are 
trying to make it better, but we have competition from 
elsewhere. Places that we have competition from do not have 
competition from us with regard to energy of this kind.
    So what are we going to do, what are we going to do to 
maintain this, make it more effective? I mean, all of the 
prices that we are now experiencing with the normal energy that 
we have always been dependent upon, is getting higher and 
higher and higher, and solar energy is becoming more and more 
important.
    So this is something that is critically important for all 
of us and it is something that you are doing that is very 
important. And I was just wondering what you could do to help 
on this, and what kind of examples you could set forward that 
might extend beyond the military operation into this--the rest 
of this country, to get more and more concentration of solar 
energy?
    General Dempsey.  Well, let me take a stab, Congressman, 
knowing full well that as I begin the journey, I am probably 
not going to give you as complete an answer as you would like, 
because some of that I am less familiar with than I should be.
    By the way, thanks for your service. I know that you have 
decided not to renew your contract here in the Congress of the 
United States, so thanks for your service.
    Every service has a program of becoming more energy 
independent, if you will, or semiautonomous anyway. So I will 
speak to the one I know most about, which is the Army, from my 
time as the Army Chief. We have got a net zero program, five 
pilot organizations where we aspire to be fundamentally net 
zero in terms of energy consumption by 2017. But every service 
has it. That is garrison energy or, if you will, institutional 
energy and we are trying to be a leading edge organization to 
do that.
    Then there is operational energy. You know, we have got a 
brigade combat team sitting in Afghanistan that is vulnerable 
to lines of communication moving materiel, food, fuel, all of 
the supplies that are necessary. And we put our soldiers at 
risk in transiting those LOCs, line of communication. So we 
also have prototypes--as do the Marines in Afghanistan, 
probably actually ahead of the Army in this regard--using solar 
energy to become as semiautonomous as we possibly can be in 
terms of energy dependence so that we are not putting our kids 
on the road and putting them at risk.
    And so all I can really do today is assure you that we are 
seized with this and looking for opportunities in every 
service. As the Service Chiefs rotate through here, I am sure 
they will be able to speak a lot more eloquently about this 
than I can.
    Mr. Hinchey.  Uh-huh. So I believe that we, too, should be 
doing things to concentrate this energy operation and to make 
it much more effective and to ensure that the initiation of 
solar energy is done by us here in this country for our own 
future. All of those things, I think, are very important.
    Secretary Panetta.  Oh, absolutely. If you go to the 
battlefield, you can see these units, and it isn't just the 
Army, it is the Marines and others. They immediately put up a 
solar-powered operation and they are working off solar power as 
one of the efficiencies that they put in place. I am actually 
amazed to see how far they have gone in terms of being able to 
develop that capability.
    The Navy, as you know, is one of the services that has done 
a tremendous amount in trying to develop energy efficiency as 
well, using biofuels and other things to really be able to--I 
mean, that is a big price tag for the Navy to begin with in 
their ability to be able to develop energy independence, and 
the way they operate is going to be tremendously important to 
cutting costs in the future.
    Mr. Hinchey.  Well, thanks very much. Thanks very much for 
everything. I deeply appreciate it.
    Mr. Young.  Mr. Hinchey, thank you very much. We are being 
pushed to vacate the room. Somebody else needs it.
    I want to thank you for a really good hearing. Thank you, 
Mr. Secretary, and General Dempsey, for your service to our 
country.
    I have one question, series of questions, that probably 
wouldn't interest anybody except the members of this committee 
and our staff, and that is on reprogramming. And so I am just 
going to submit those to you for the record and ask that you 
respond, or Secretary Hale respond and we communicate with 
you----
    Secretary Panetta.  Put it to the attention of Bob Hale, 
would you please?
    Mr. Young.  Well, we communicate with Secretary Hale quite 
often.
    General Dempsey.  That is how they are sending him----
    Mr. Dicks.  Just very briefly, Mr. Chairman.
    Mr. Young.  And I just wanted to say thank you again very 
much, and we are going to close this hearing and the last word 
goes to Mr. Dicks.

                               READINESS

    Mr. Dicks.  General Dempsey, the Department's quarterly 
readiness report to the Congress states that 75 percent of the 
Army military units are not able to accomplish their assigned 
mission. Now, I realize that for the last 10 years we have been 
doing counterinsurgency, but I assume we have a plan to try to 
get that turned around now that we are out of Iraq.
    General Dempsey.  We do, and that is a reflection in some 
cases of the fact that we haven't trained to our maneuver 
tasks. You know, we have been involved in stability operations 
which tend to be a static environment. And what you are 
probably seeing reflected there is--against what we call the 
mission-essential tasks. You are probably seeing a reflection 
that they recognize that they need to restore or rekindle those 
skills. But there are also some equipping issues, you know, 
that we have to clean up our tables of organization of 
equipment. We are probably reporting against things we no 
longer need.
    So I would--I will pass that on to Ray Odierno, and he will 
be ready for you.
    Mr. Dicks.  Reset, too, is going to be a problem. Thank 
you, Mr. Chairman.
    General Dempsey.  You are right.
    Mr. Young.  Thank you, thanks very much.
    [Clerk's note.--Questions submitted by Mr. Frelinghuysen 
and the answers thereto follow:]

  Military's Utilization of Short Sea Transportation (E.G., Barge) of 
                             Military Cargo

    Question. What are the criteria used by the Pentagon and its agents 
in arranging military cargo shipments domestically and internationally?
    Answer. The Department of Defense (DOD) uses short sea 
transportation in circumstances when barges or smaller vessels are 
required and available. Short sea transportation, in these instances, 
is cost effective and satisfies military requirements.
    Domestic Business: U.S. Transportation Command's Surface Deployment 
& Distribution Command (SDDC) and Military Sealift Command (MSC) 
components manage short sea shipping requirements. Shippers select 
carrier tenders via the Global Freight Management System. The criteria 
to be a responsive, responsible carrier includes U.S. flag status, past 
performance, ability to meet Required Delivery Dates (RDDs) for the 
shipment, ability to provide the necessary equipment, current 
eligibility as a SDDC approved carrier for the DOD and capability to 
utilize the government's Third Party Pay System (TPPS), which currently 
is Syncada. Additionally, all carriers must meet the Environmental 
Liability limits for the cost of oil spill cleanup within the United 
States' territorial seas or economic zones. In the case of MSC, they 
submit a Request for Proposal (RFP) to industry soliciting carriers to 
fulfill the shipment requirement. The RDD, along with the type of ship 
required, including minimum/maximum size, speed of vessel, size of 
cargo, type of cargo, HAZMAT, ammo, and under deck storage 
requirements, are all taken into account in developing a Statement of 
Work for RFP.
    International Business: Similar procedures are followed for 
international short sea shipments of DOD cargo, although the use of 
U.S. flag vessels becomes very difficult when operating in foreign 
markets. MSC international charters must meet all applicable 
international requirements, as well as the cargo preference law. 
Military cargo is shipped on U.S. flag vessels, unless no U.S. flag 
vessel is available that meets the requirements of the charter.
    Question. One area of tremendous expense to the Department of 
Defense is the transport of goods to various theaters of operation such 
as Afghanistan. In the interests of saving taxpayer money, have 
Pentagon officials considered playing a role in choosing transport 
subcontractors to ensure that the most cost effective methods of 
transport are utilized?
    Answer. Yes, the Department uses commercial partners to provide 
1,203 Civil Reserve Air Fleet (CRAF) aircraft and 379 Voluntary 
Intermodal Sealift Agreement (VISA) vessels.
    The Department is committed to reducing transportation costs. The 
U.S. Transportation Command (USTRANSCOM) operates as a working capital 
fund commanded by a four-star General. It provides responsive strategic 
air, land, and sea mobility capability in times of peace and war in the 
most cost-effective manner possible while maintaining the 
transportation readiness assets needed to support combat operations. 
Cost-saving initiatives include:
    Productivity and Organizational Streamlining:
    -- Renegotiating ship contracts
    -- Reducing ship testing periods
    -- Initiating fuel savings techniques for ship charters and 
military aircraft
    -- Operating aircraft channels and utilizing aircraft more 
efficiently
    -- Phasing out unneeded commercial air passenger and cargo capacity
    -- Eliminating redundancies between components
    -- Rightsizing port infrastructure
    -- Consolidating command headquarters and streamlining 
organizational structures
    -- Improving container utilization on ocean liner missions
    Distribution Process Owner (DPO) Cost Avoidance:
    -- Shifting transportation modes from air to sea and truck to rail
    -- Canceling redundant orders or contracts due to supply system 
interventions
    -- Identifying and returning lost transportation equipment to the 
supply system
    -- Comparing non-standard transportation mode rates prior to 
awarding contracts
    -- Working with Combatant Commands to use the most efficient 
transportation modes
    -- Engaging Services to maximize use of sealift and multi-modal 
operations
    -- Improving container utilization on ocean liner missions
    Question. Do Pentagon officials consider, in addition to the 
paramount issue of cost-effectiveness, other pertinent issues such as 
energy efficiency and cargo security, as they relate to ALL segments of 
military cargo transport?
    Answer. As with many other acquisitions, the Department acquires 
transportation (including barge transportation) based on best value to 
the Government. This includes cost, technical, and performance 
evaluation factors, which may include energy efficiency and cargo 
security, that are tailored to the particular procurement to ensure 
that DoD mission requirements will be met.
    Question. Has the Pentagon instructed its vendors to investigate 
short sea transportation projects in the movement of military cargo as 
per the Energy Independence and Security Act (EISA2007)?
    Answer. While the Department uses barges in circumstances when they 
are available and cost effective and satisfy military requirements, we 
have not specifically instructed vendors to investigate short sea 
transportation projects; however, the topic is discussed and reviewed 
during various industry/DoD forums.

    [Clerk's note.--End of questions submitted by Mr. 
Frelinghuysen. Questions submitted by Mr. Kingston and the 
answers thereto follow:]

                   Downsizing the Military--Personnel

    Question. The Army is preparing to be cut 72,000 soldiers and 
20,000 Marines, with the Navy and Air Force losing another 10,000+ 
together. Reserve strength is scheduled to be cut by 22,000.
    Will these be specific targeted military skill sets or across the 
board cuts? How will these personnel cuts impact Deployment/Dwell time 
ratio?
    Answer. With regard to whether there will be targeted military 
skill sets or across the board cuts, readiness is our number one 
priority. The Department, teamed with experts from each of the 
Services, is carefully examining the right mix of exit strategies to 
shape the force with precision. Our plan is to take a targeted, precise 
approach when reducing the force size; thus, avoiding across the board 
cuts. We will focus our reductions on surplus and obsolete skill sets. 
We will continue to work with the Congress to reinstate additional 
expired authorities from previous drawdowns that would offer the 
Department the ability to target separations and avoid the loss of 
critical expertise.

                                  Iraq

    Question. With the small number of personnel left behind (600 or so 
soldiers and civilians working OSCI--Office of Security Cooperation in 
Iraq) under the State Department, where are we with respect to 
facilitating the training of Iraqi army and police forces and what 
still remains to be done?
    Answer. The OSC-I, under Chief of Mission authority, is the 
cornerstone of the long-term U.S.-Iraqi strategic security partnership, 
and represents a critical component of the normalization of the U.S.-
Iraq bilateral relationship. The OSC-I coordinates security assistance 
and security cooperation activities, and conducts training to support 
the development and modernization of the Iraq Security Forces (ISF). 
OSC-I activities are focused on addressing the remaining ISF 
intelligence fusion, air sovereignty, logistics, and combined arms 
training capability gaps, as well as on developing a joint training 
exercise program.

                              Afghanistan

    Question. Is the United States still on track to transfer Afghan 
forces to the lead security role, as we have planned with our NATO and 
ISAF allies? What impact does it have when nations (like France, most 
recently) announce that they are withdrawing early? Has this impacted 
our decision at all with respect to our withdrawal timing?
    Answer. The Government of Afghanistan is still on track to take the 
lead for security throughout the country by the end of 2014. To date, 
approximately 50 percent of the population of Afghanistan is currently 
in areas that have started the transition process. Even though France 
has stated its intent to end its participation in combat operations in 
2013, it will likely continue to play a significant role in training 
and development of the Afghan National Security Forces in 2013 and 
beyond, which will support the overall transition process. Commander, 
International Security Assistance Force (COMISAF) is working with our 
Coalition partners to enable them to maintain their long-term 
commitments to Afghanistan.
    Question. What were some of the military & national security 
considerations that were taken into account when looking at the timing 
of withdrawal? What level have these discussions been occurring at?
    Answer. Discussions on withdrawal are conducted at all levels, from 
U.S. Forces-Afghanistan to the U.S. Government leadership in 
Washington, D.C. We continue to work towards the core goal of 
disrupting, dismantling, and defeating al-Qaeda, and preventing 
Afghanistan from ever again becoming a safe haven that could threaten 
the United States or our Allies and partners. We have started this 
drawdown from a position of strength, taking many factors into account. 
These include the fact that al-Qaeda is under more pressure now than at 
any other time since 9/11, and that we have taken much of al-Qaeda's 
leadership out of the fight. The Afghan National Security Forces (ANSF) 
have grown to approximately 330,000 personnel and are on track to meet 
the October 2012 goal of 352,000 personnel. The ANSF are in the process 
of taking the lead for security in many provinces and municipalities, 
and year over year trends continue to show a decrease in insurgent 
incidents. As Afghans have fought and many have died for their country, 
they also have began to establish local police forces, open markets and 
schools and create new opportunities for women and girls, as they try 
to turn the page on decades of war. This process of transition is on 
track to be complete by the end of 2014 and the Afghan people and the 
ASNF will be responsible for their own security.
    Question. News media have recently been reporting that US officials 
are supporting establishment of a Taliban mission in Qatar to discuss 
the status of Afghanistan post US withdrawal. Are we elevating a 
hostile, non-state terrorist entity and undermining the Afghan 
government by supporting and conducting talks through such a mission in 
Qatar? Do we legitimize a lead Taliban role in post-US Afghanistan by 
allowing this to occur?
    Answer. For reconciliation to succeed, the process must be Afghan-
led. Our role is to support that process. We continue to support a 
process to bring Afghans together and insurgents off the battlefield, 
provided they break from al Qaeda, abandon violence, and abide by the 
Afghan Constitution, which includes its provisions on respect for the 
rights of all Afghan women and ethnic minorities. Both the Afghan 
government and the Afghan Taliban have voiced support for a venue for 
talks with the US.
    Question. By directly engaging the Taliban in talks--especially 
through a new quasi-embassy entity outside Afghanistan, what does this 
say about the US view of the government of Afghanistan's ability to 
assume control over the situation and lead? Is the withdrawal of surge 
forces this year in sync with the need for trainers at the Afghani 
police and Army unit levels?
    Answer. Our Afghan partners are on track to successfully assume 
security lead in their country by the end of 2014. With the 
implementation of tranches 1 and 2 transition areas, the Afghan 
National Security Forces (ANSF) have begun to take security lead and 
will be responsible for the security of approximately 50% of the Afghan 
population once these transfers are complete. There will be more risk 
as we begin the transition process in some of the more security 
challenged areas of Afghanistan, but the ANSF have proven themselves as 
capable partners. The surge recovery of U.S. troops is synchronized in 
the COMISAF Campaign Plan with transition and ANSF development. These 
efforts take into account the need for trainers for both the army and 
police.
    Question. Do you have any estimate of the full time span required 
to ``reset'' of equipment used in Iraq and Afghanistan? Any idea of how 
much it will cost? (DoD comptroller, Mr. Hale said we have $9.3 billion 
planned for FY13 OCO reset at the 15 Feb HASC hearing).
    Answer. We have a large wave of recapitalization and reconstitution 
coming our way. Even if the war ended today, the next two to three 
years would be spent resetting the force. Unfortunately, precise reset 
requirements are difficult to estimate--dependent on many variables 
including equipment condition upon return--and we cannot predict 
exactly what those costs will be at this point. However, we do know 
that the high operating tempo and harsh environments of Afghanistan and 
Iraq have a substantial deteriorating effect on equipment.
    Question. What factors in the reset guide the decisions between 
refurbishing our legacy equipment versus deciding to buy new equipment? 
In other words where is the line drawn generally in this budget between 
committing to new, next generation systems and replacing the old?
    Answer. Whether to repair or replace a wartime item depends largely 
on the condition of the item as well as other factors such as necessary 
upgrades available for the item. If the item is worn through regular 
use, but economically viable to repair, and still meets the operational 
requirement, the item would be repaired through a combination of depot, 
intermediate, or organizational level maintenance. If the item is lost 
or destroyed, it must be replaced, either with the same item, or a 
current variant, if the original item is no longer manufactured. 
Sometimes, an item may go through a repair cycle, but also receive an 
upgrade, depending on operational requirement. These are the basic 
factors in determining the requirement to repair vs. replace.

                       Sea-Based X-Band Radar Cut

    Question. Can you expand on the proposal to place the Sea-Based X-
Band Radar in a `limited test support' status? What does that mean? Are 
there any unique capabilities that we give up when we take this action?
    Answer. In the Limited Test Support Status, the SBX will have an 
increased response time for operational contingency missions. There is 
a tremendous cost to keeping the SBX manned around the clock for 
operational contingencies and at sea for an extended amount of time as 
we have in the past. The Missile Defense Agency is working with the 
U.S. Strategic Command's Joint Functional Component Command for 
Integrated Missile Defense to determine the appropriate response time.
    SBX gives up no radar unique capabilities while in a Limited Test 
Support Status. The SBX will retain its current technical performance 
capability, to discriminate targets and pass that information to the 
Ground-Based Midcourse Defense Fire Control and Communication System. 
Additionally, development of algorithms to improve its discrimination 
capability will continue. The SBX will be staffed to perform normal 
maintenance on the vessel, X-Band radar, and other critical systems. It 
will participate in ballistic missile defense system ground and flight 
testing, while being available to support contingency operations as 
necessary and directed by the Office of the Secretary of Defense and 
the Joint Staff.
    Question. The justification for this action states that the US will 
rely on existing systems like THAAD and AN/TPY-2, but this budget 
request cuts back on planned purchases of both of those systems. Do we 
have enough systems currently fielded so that we aren't sacrificing our 
ability to detect ballistic missiles and track them through their full 
flight from all regions of threat?
    Answer.------

                            Global Hawk Cuts

    Question. The administration is proposing to cut the Global Hawk 
Block 30 unmanned aerial vehicle, saying that reconnaissance missions 
will be done using the U-2 instead, due to lower operating costs. Are 
we going to stop flying the Block 30 variant altogether or will we be 
looking at using these for other missions? We have invested a lot of 
money in the Block 30 variant. How can we just tie up that investment 
by having them sit in a hangar somewhere? Is there a way to use, sell 
or salvage that investment? If we can't afford to operate the system, 
knowing the operating cost of the U2 by comparison, why did we take it 
this far?
    Answer. The Air Force has stated they will stop flying the Block 30 
altogether. In terms of dispositioning the current Block 30s, the Air 
Force is considering several alternatives at this time but has not made 
a final determination. Potential uses include spares for other Air 
Force and Navy Global Hawk variants, transfer to other U.S. Government 
organizations, or selling the assets to non-U.S. government customers. 
With respect to Block 30 operating costs, the cost savings that the Air 
Force expected as the program matured did not materialize. In addition, 
the Joint Staff approved a change in high altitude airborne 
requirements, allowing the Air Force to cancel Block 30 with no 
significant impact to requirements.

                         Ohio-Class Replacement

    Question. What is your degree of confidence that we will not have a 
reduction in submarine launched ballistic missile capability, given 
that we are looking at slipping the Ohio-class replacement by 2 years? 
Based on our latest briefings from the DoD, the existing fleet is 
already intended to be stretched to its absolute maximum service life. 
How will this proposed SSBN(x) delay not put enormous pressure on the 
development and construction of the new subs staying on schedule? How 
will we plan to avoid any gap as the old ships phase out without 
reducing the integrity of the strategic nuclear triad deterrent?
    Answer. Details on force structure will be in the Annual Report to 
Congress on the Long Range Plan for Construction of Naval Vessels for 
FY 2013, which is currently under review within the Department and will 
be provided to Congress upon completion of this review.
    This 2-year delay to all 12 ships makes the timely delivery of each 
OHIO Replacement (OR) ship even more important. The lead ship is 
scheduled to be ready for strategic deterrence patrol in 2031. Any 
further delays to delivery of OR ships will impact the operational 
capability of the SSBN force, since the OHIO Class has already been 
extended as long as possible. Further delays to OR delivery will reduce 
the number of SSBNs available for strategic deterrence. The Navy will 
be closely managing this risk during this transition period.
    To control cost and risk, the OR SSBN is planned to maximize reuse 
of VIRGINIA and OHIO Class systems where feasible. The 2-year delay 
allows some additional time to mature designs and reduce the risk 
associated with designing new systems and integrating existing 
technology. Overall design maturity at construction start will be no 
less than originally planned, commensurate with the funding provided.
    Ensuring adequate resources to maintain the operational 
availability of the OHIO Class SSBNs and on-time delivery of OHIO 
Replacement SSBNs will be necessary to help mitigate this risk during 
this period until the last OHIO Replacement enters strategic service.
    The current plan leverages the highly successful VIRGINIA modular 
construction techniques. The lead ship construction and certification 
timelines were not compressed in response to the 2-year delay allowing 
adequate time for construction, lead ship testing, and strategic 
certification.

                                  Iran

    Question. How confident are we in our ability to ensure freedom of 
movement through the Straits of Hormuz? The Operation Millennium 
Challenge exercise (in 2002) was fairly widely known to have revealed 
some concerns with our capabilities in this specific area, so in light 
of the cuts that we are considering making, has anything changed, 
either with our capabilities or with any potential adversary 
capabilities?
    Answer.------
    Question. Secretary Panetta was recently quoted (Jan 2012 Wall 
Street Journal) as saying that we do not have a bunker buster (bomb) 
big enough to penetrate/destroy the underground facilities that we 
suspect Iran is using to develop their nuclear program, but you said 
we'd have that capability soon. How confident are we that we will have 
the capabilities that we need to counter this threat when we need it?
    Answer. We are confident that we have the resources required to 
defend our national interests. The Massive Ordnance Penetrator (MOP) is 
a weapon system designed to accomplish a difficult, complicated mission 
of destroying our adversaries' weapons of mass destruction located in 
well protected facilities. MOP integration activities and initial 
weapons delivery are complete. As with all weapon systems, MOP 
capabilities will continue to evolve to meet the dynamic threat 
environment.
    Question. Specifically regarding US submarine-launched ballistic 
missile capabilities, how has our balance of presence in the Indian 
Ocean been affected by our concerns with ensuring the Straits of Hormuz 
stays open? Are either the east or west coast Ohio-class bases being 
over-tasked due to the current situation in the Gulf?
    Answer. With respect to US submarine-launched ballistic missile 
capabilities, our balance of presence in the Indian Ocean has not been 
affected by concerns with ensuring the Straits of Hormuz stays open. 
Neither the east or west coast Ohio-class bases are being over-tasked 
due to the current situation in the Gulf.

                       Egyptian-Israeli Relations

    Question. What is the current assessment of the state of Egyptian-
Israeli relations in light of the recent political upheaval in Egypt 
and the ongoing concern of Iranian development of nuclear weapons 
capabilities?
    Answer. Egypt maintains a strong relationship with Israel and has 
assured us that it remains committed to the 1979 Peace Accord with 
Israel. We are working very closely with the Egyptian political and 
military leadership to ensure a smooth and stable transition to 
democracy during this sensitive time in Egypt's history, and we will 
continue to monitor Egypt-Israel relations as a critical consideration 
in our foreign military assistance and sales to Egypt.
    The U.S. commitment to Israel's security is unshakeable and as the 
President has said many times, the U.S. is committed to preventing Iran 
from obtaining a nuclear weapon. Recognizing the instability in the 
region, including the threat of a nuclear Iran, the United States has 
continued to strengthen the U.S.-Israel relationship. Today, we are 
working with Israel more closely than ever in areas such as missile 
defense technology, counter-terrorism, through military exercise--to 
ensure the Israel is always secure that its qualitative military edge 
is maintained. We are engaged in a robust ongoing dialogue with the 
Government of Israel regarding its requirements and capabilities.

                            Cyber Protection

    Question. With all of the recent examples of foreign entities 
hacking into our networks (those of defense contractors, FBI and law 
enforcement, as well as our military unmanned aerial vehicle systems), 
it's clear that we can't prevent all of these incidents. Is there more 
we can do on the detection side? Given recent incidents (such as the 
Air Force discovery of malware on the Unmanned Aerial System hard-
drives) how confident are we that our military operations networks are 
secure?
    Answer. The Department continues to strengthen cyber security 
detection efforts and address the threat posed by network attacks. The 
current philosophy is to first block most of the adversarial activity 
via layered security fundamentals and to fight the balance based on 
network and host-based detection and prevention mechanisms. With a 
flexible defense posture, detection should feed new signatures to be 
applied on the protection mechanisms to reduce the attack. This 
essentially drives up the required skill, sophistication, cost, risk 
factors and difficulty for exploiting our networks, while limiting the 
attack damage and timeframe. Fundamental protections layered against 
the entire attack lifecycle should flush out most moderately-skilled 
actors so that nation-state level effort and sophistication is required 
for success.
    Our unclassified network hardening initiative has resulted in 
movement of outward internet-facing servers into what are termed DoD 
Demilitarized Zones (DMZs), which effectively isolate the departments 
official use networks from the internet using a variety of techniques. 
Those include redesigning the domain name addressing system for 
increased security, searching for and removing web browsing malware, 
and filtering malware and spam from incoming email. We have also 
improved blocking for distributed denial of service attacks at 
perimeter routers, and that, coupled with quarantine of suspicious and 
known bad traffic and files, these efforts have resulted in increased 
security from internet probes and attacks. Our internal efforts include 
configuring every computer securely and keeping them that way. We do 
this through the use of Defense Information Systems Agency and National 
Security Agency published security guides, which are now being 
automated for ease of implementation, and applying Unified Government 
Configuration Baseline operating system settings in accordance with 
Office of Management and Budget direction. Additionally, we are 
procuring advanced automated vulnerability scanning & management tools 
for our networks, and implementing a Department-wide enterprise Host-
based Security System to extend protections to the user's desktop 
level. Implementation of the Host-based Security System is nearing 
Department-wide deployment on our unclassified and classified systems. 
This will result in a new landscape of reduced noise where detection 
can be geared toward the remaining threats.
    We are also increasing our identity and access management 
capability to drive out anonymity within our networks. In FY13 the 
department will move entirely to smart card/PKI logon on the SIPRNET in 
accordance with existing CIO guidance. In FY-13 the department will 
configure the SIPRNET-based and JWICS-based web servers to require end-
users to present the PKI credentials for all information access, and 
will log these accesses. In FY-13, 14, and 15 the department will 
transition remaining user-accessible information services in the 
SIPRNET and JWICS to require such PKI authentication as the first part 
of each information access decision. In FY13 and 14 the department will 
finish doing the same for the NIPRNET web and other server and 
information services.
    Although there is always room for improvement, we are increasingly 
confident that our classified military operations networks are secure 
as we pursue balanced investment in protection backed by aggressive 
detection. Cyber Command has made progress in recruiting and hiring 
cyber specialists. Operations plans and directives have also been 
issued to strengthen the U.S. Cyber Command role in defending, 
protecting, and operating the Department's vital classified and 
unclassified networks.

                              Procurement

    Question. Small businesses are providing a great deal of innovation 
throughout this country. These small businesses provide the new and 
interesting ideas into the defense industry, help ensure the vitality 
of the overall industrial base, and support the economy. How does 
concern for the defense industrial base, including the small and mid-
size suppliers, factor into the development of this budget proposal?
    Answer. Small business participation continues to be a high 
priority for the Department of Defense (DoD). The Department recognizes 
the ability of small businesses to innovate and the important 
contributions to the economy and military capability. A recent Deputy 
Secretary of Defense memorandum requires senior executives to support 
the attainment of established small business goals. The requirement is 
part of the annual performance evaluation for senior executives that 
acquire services or supplies and oversee acquisition officials, 
including program managers, contracting officers, and other acquisition 
workforce personnel who are responsible for formulating and approving 
acquisition strategies and plans that directly influence procurement 
decisions.
    All DoD acquisitions are reviewed to determine if small businesses 
can competitively provide the required service or supply. When market 
research indicates two or more small businesses have the ability to 
provide the required service or supply at a fair market price, the 
acquisition is reserved exclusively for small businesses. Only when 
market research indicates that just one small business can respond, the 
acquisition will be competed among large and small businesses. However, 
acquisitions under the simplified acquisition threshold are always 
reserved exclusively for small businesses.
    Each fiscal year, a Military Department or DoD Component with 
contracting authority has an established contracting goal for awards to 
small businesses. Additional goals are established for awards to small 
disadvantaged businesses, service-disabled, veteran-owned small 
businesses, women-owned small businesses, and HUBZone small businesses. 
Performance is monitored by the Office of the Under Secretary of 
Defense for Acquisition, Technology and Logistics (USD(AT&L)) Office of 
Small Business Programs on a continuing basis.
    It is also important to note that:
      Technology development awards under the Small Business 
Innovation Research/Small Business Technology Transfer program are 
reserved exclusively for small businesses.
      Other programs, such as the Rapid Innovation Fund, 
provide a preference for small business during the selection process.
      The Secretary of Defense issued a memorandum to the 
entire Department emphasizing the need to better utilize small 
businesses.
      The USD(AT&L) conducts several small business outreach 
events and supports numerous others.
      The Military Departments and DoD Components each conduct 
and support numerous small business outreach events to ensure their 
awareness of planned procurements.

    [Clerk's note.--End of questions submitted by Mr. Kingston. 
Questions submitted by Ms. Granger and the answers thereto 
follow:]

                      Afghan Security Forces Fund

    Question. Secretary Panetta/General Dempsey: The ASFF budget 
request has been cut by 50% which you and others have attributed to a 
drop-off in front loaded costs, such as equipment and facilities as the 
primary justification. This is understandable, but my reading of 
requests also shows a 50% reduction in funds from $2.113 to $500M for 
``training and operations'' for the Ministry of Interior forces which 
includes the Afghan National Police. Is such a dramatic reduction wise, 
especially when by all accounts fielding a police force that is 
sufficient in size and capabilities is key to the U.S. transition plan 
and the Afghan people's security?''
    Answer. The Afghan National Security Forces (ANSF), specifically 
the Afghan National Police (ANP), is growing in capability. This growth 
in capability is covered by two distinct phases: Build ANP capabilities 
and Sustain ANP capabilities. During FY 2012, the ANP will achieve 
their planned end strength of 157K. This fact passes the ANP into the 
Sustain phase in FY 2013 and subsequently reduces their requirement for 
initial entry training to only sustaining the force level. Another 
savings is projected based upon the Afghans assuming a greater role in 
overall training mission in FY 2013 and thus significantly reducing the 
reliance upon mentor and trainer contracts to meet these needs. The ANP 
is growing in overall strength and in capability. This capability will 
be reflected in both their operating and generating forces. For 
clarification, the funding decrease for training and operations for the 
ANP is $1.1B in FY 2012 and $570M in FY 2013 for a reduction of 48%.

    [Clerk's note.--End of questions submitted by Ms. Granger. 
Questions submitted by Mr. Calvert and the answers thereto 
follow:]

                          Defense Acquisition

    Question. In the President's Budget, acquisition reform is included 
for the Department of Defense. It builds upon the Better Buying Power 
Initiative initiated under Secretary Gates. Could you walk us through 
what the Department is doing to reform acquisition, in particular an 
update on: Mandating Affordability as a requirement as part of the 
Acquisition Decision Memorandum. The Will Cost/Should Cost management 
technique to address the problem of underestimating costs which then 
result in cost overruns. Promoting competition at each program 
Milestone.
    Answer. The Department is making great progress in executing the 
Better Buying Power (BBP) efficiency initiatives we introduced in the 
latter half of CY 2010. First, we are working with the requirements and 
resource communities to ensure the programs we start have firm cost 
goals in place, appropriate priorities set, and the necessary trade-
offs made to keep our programs within affordable limits. In concert 
with this, the Milestone Decision Authority must now establish 
affordability targets at Milestone (MS) A decisions, to include 
sustainment costs, that are applicable to design and decisions early in 
the program. At MS B and beyond, these targets become requirements, 
based on the information garnered from the technology development phase 
and a more mature cost estimate. In each case, the affordability 
targets are captured in the Acquisition Decision Memorandum documenting 
the milestone approval. Additionally, the affordability requirements 
are now being treated as Key Performance Parameters in the Acquisition 
Program Baseline and will be closely monitored during the remainder of 
the acquisition process. In parallel, we are also mandating the use of 
``Should-Cost'' principles to eliminate non-value added costs at the 
program level and continually reduce costs wherever it makes sense. At 
each program milestone, the initiatives that we have implemented, such 
as assessing program affordability; analyzing effectiveness of Should-
Cost opportunities; promoting real competition by scrutinizing 
contracts and the overall program strategy; and integrating small 
business opportunities whenever possible, will ensure we have the 
appropriate incentives structures in place to provide best value to the 
Government. These practices are, and will continue to be, major drivers 
in all current and future Defense Acquisition Board investment 
decisions.
    Question. I would like to bring your attention to the Light Utility 
Helicopter which is part of the helicopter fleet for the Army and the 
Army National Guard. I bring your attention to it because this 
helicopter was competed and a contract was awarded to EADS North 
America. The LUH is essentially a militarized version of the Eurocopter 
which had already been developed by our allies in Germany and France. 
However, in another instance, the Army recently awarded two technology 
development contracts for the new Ground Combat Vehicle. The Army could 
have awarded a third contract to a competitor that was basing its model 
off of the already fielded Puma in Germany. While I am sure there are 
specific reasons the Army chose not to award the third contract, I am 
concerned that in this instance we are not availing ourselves of proven 
technology that has already been fielded and in this case the Army is 
not even testing it. I support utilizing American ingenuity when 
possible, but what is the Department doing to optimize off-the-shelf 
proven design and technology, whether it is in the U.S. or outside the 
U.S. in order to get away from a trend of never-ending requirements, 
immature technology and faulty design?
    Answer. The Department does support off-the-shelf solutions. DoD 
Directive 5000.01 states that DoD Components shall work with users to 
define capability needs to facilitate the procurement or modification 
of commercially available products, services, and technologies, from 
domestic or international sources, or the development of dual-use 
technologies. Most systems being developed today use some commercial 
items (e.g., computer hardware, operating systems, database management 
systems, and even batteries, engines, and air conditioners).
    With respect to the specific examples you mention, the Army's Light 
Utility Helicopter (LUH) is a commercial aircraft, operated under a 
Federal Aviation Administration (FAA) certificate and maintained under 
FAA standards. The LUH can only be used in ``permissive-use'' 
environments, for example, as an aeromedical evacuation aircraft at 
training ranges; it does not meet the requirements for ``combat use'' 
and is fielded only in the United States and select European sites. It 
is important to note that commercial aircraft generally cannot meet the 
statutory requirements for combat. Further development and testing, to 
include live fire test and evaluation, adds cost and schedule.
    The Ground Combat Vehicle Request for Proposal specifically 
encouraged the use of non-developmental vehicles as part of the 
technology development competition. In addition to the technology 
development contracts for the Ground Combat Vehicle, the Defense 
Acquisition Executive directed the Army to resource and execute a 
follow-on Analysis of Alternatives and an assessment of selected non-
developmental vehicles to support a Milestone B decision in FY 2014. 
The additional efforts include technical and operational assessments of 
the existing platforms: Bradley, Stryker, CV9035 (Sweden), and the 
Namer (Israel). An assessment was conducted on the Puma (Germany) with 
the cooperation of the German government. Limited assessments were also 
conducted on the Boyevaya Mashina Pekhoty from Russia, and the Le 
Vehicule Blinde de Combat d'Infanterie and Nexter, which are both from 
France.
    All data and information derived from the Analysis of Alternative 
and non-developmental vehicle assessments will be used to inform the 
requirements and support the Milestone B decision.
    Question. I am worried that with the significant decrease in 
defense dollars, small and mid-size defense companies that have been 
the backbone of the defense industrial base may be squeezed out of the 
competition. The Department has a long history of actively working to 
promote fair competition, but what is the Department doing now to 
ensure that the large Prime Contractors are not going to begin unfairly 
competing with their small and mid-size suppliers, that currently 
support their programs, as the competition for limited defense dollars 
increases?
    Answer. For FY 2012, the Department of Defense (DoD) established a 
mandatory performance requirement for senior executives that are within 
the Performance Element of their annual performance evaluation. The 
performance criteria requires senior executives to address and support 
the attainment of established DoD small business goals by considering 
potential small business contracting opportunities during the 
acquisition process and by establishing a command or program climate 
that is responsive to small business.
    Small business participation is a high priority for the Department. 
The Department recognizes their ability to innovate and their 
contribution to the economy and military capability. Every defense 
acquisition is reviewed to determine if small businesses can 
competitively provide the required service or supply. When market 
research indicates two or more small businesses have the ability to 
provide the required service or supply at a fair market price, the 
acquisition is reserved exclusively for small businesses.
    When market research indicates only one small business can respond, 
the acquisition will be competed among large and small businesses. 
Acquisitions under the simplified acquisition threshold are always 
reserved exclusively for small businesses.
    Each Military Service/DoD Component with contracting authority has 
an established goal for awards to small businesses. Additional goals 
are given for awards to small disadvantaged businesses, service-
disabled, veteran-owned small businesses, women-owned small businesses, 
and HUBZone small businesses. Performance is monitored by the Under 
Secretary of Defense for Acquisition, Technology and Logistics' Office 
of Small Business Programs on a continuing basis.
    For procurements above $650 thousand, prime contractors are 
required to establish small business subcontracting plans. These plans 
establish goals for small business subcontracts to small businesses, 
small disadvantaged businesses, service-disabled, veteran-owned small 
businesses, women-owned small businesses, and HUBZone small businesses. 
Small business subcontracting plans and the small business 
subcontracting performance achieved in past contracts are both 
evaluated as part of the source selection process for new procurements. 
DoD guidance has been issued to provide incentives to Prime contractors 
for achieving and exceeding small business subcontracting goals.
    Question. I am very concerned that as the DoD's budgets grow 
smaller and large weapons programs are reduced or cancelled the major 
Primes will seek additional profits by trying to deliver the same 
technologies and subcomponents already provided by their 
subcontractors--the very same subcontractors that were selected by the 
Primes in the first place because of their expertise and competiveness. 
I believe such a ``gobbling up'' of the services and technologies 
already being provided by the downstream subs will severely shrink the 
defense industrial base and ultimately decrease competition. It will 
also offer little incentive for our best entrepreneurial and creative 
smaller companies to participate in a defense industrial base dominated 
by a few Primes if they think their technologies and processes will be 
stolen by their partners. If the major Primes are allowed to dominate 
the entire upstream and downstream programmatic process, I fear the 
competitive defense procurement and research processes as we know them 
will severely suffer. I would appreciate specific answers to the 
questions above as well as general comments on this topic.
    More than 10% of the total Future Years Defense Program (FYDP) 
savings come from delays and terminations of acquisition projects 
($41.8 billion come from delays; and $9.6 billion from cancellations). 
Do these figures include the penalties that will be imposed by the 
contractors for those delays and cancellations? What is the total cost 
of those penalties?
    Answer. The savings are calculated net of the termination and 
penalty costs based on the Department's best estimates before actually 
negotiating the terms of the contract modifications. Delay costs are 
largely borne throughout the remainder of the program and are typically 
caused by less efficient program execution, e.g., reducing buy rates. 
In contrast, program cancellation costs are typically incurred in the 
fiscal year prior and the budget year in which the action is taken. The 
total cost for these actions vary significantly from program to 
program.

                         Rebalancing the Force

    Question. In a steady, non-deployed state, reserve and guard forces 
are undoubtedly less expensive to maintain than active duty forces. A 
traditional reservist, for example, is only paid by the DoD two days 
out of every month, rather than 30 or 31 days for the active duty 
member. And, the reservist's pay does not include housing, subsistence, 
or COLA allowances. Even though the average reservist has more years of 
service and has a higher rank than the average active duty member, the 
associate increased expense is more than offset by the pay 
differentials listed above. Even when the reserve and guard members' 
annual 2-week tour is figured in, the costs still are not even 
comparable. Reserve and guard forces are significantly less expensive.
    That being the case, why are the Navy and Air Force active duty 
personnel cuts smaller than their reserve force cuts? The Navy is 
cutting back 1,000 more reserve sailors than active duty and the Air 
Force is cutting 2,000 more than active duty. Given the transition from 
a fully-deployed operational force to a more steady-state, ready-and-
waiting force, the Army and Marine Corps model (cutting active duty, 
not reserve and guard) seems more appropriate. Why aren't the Navy and 
Air Force taking that approach?
    Answer. It is true that Reserve Component forces are less costly--
as long as we do not mobilize them. Our National Security Strategy 
demands, however, that we have routine access to certain forces (i.e., 
Active Component). As part of our comprehensive review we have 
determined the required mix between Active and Reserve Component 
forces.
    In determining the best approach to support the President's 
National Security Strategy, both the Air Force and Navy assessed the 
contribution and required levels of various current and future 
capabilities to meet the strategy. In assessing where risks were 
prudent to take, these Services determined that certain levels of 
specific legacy systems could be divested. In many cases, much, and in 
some cases all, of the force structure associated with these legacy 
systems reside in the Reserve Components. As a result, the Reserve 
Components bore a larger share of the force structure decrements.

                    Overseas Contingency Operations

    Question. The President's Budget asks for $96.7 billion for 
overseas contingency operations (OCO) this fiscal year (including State 
Department funding) and seeks a $450 billion cap on fiscal year 13 to 
fiscal year 21 OCO funding. This cap is purportedly intended to 
preclude future Administrations and Congresses from evading the fiscal 
discipline the Budget Control Act requires.
    Is the cap intended to apply to any and all overseas contingency 
operations--even those that have not yet been identified? Doesn't this 
cap do precisely what the Department has so consistently cautioned 
Congress against--establishing a funding cap and then forcing the 
Department to develop a defense strategy within the limits of funding 
provided? How do, will the Department manage its OCO mobility 
requirements to achieve as-yet-unidentified strategic goals within an 
arbitrarily-determined OCO cap?
    Answer. The proposed $450 billion cap on OCO spending was 
established based on the current strategies for ending the military 
presence in Iraq and drawing down troops in Afghanistan. The 
Administration believes that the proposed cap is sufficient to cover 
OCO costs. To allow for ample flexibility in budgeting for OCO, the 
$450 billion proposed cap is multi-year as opposed to a series of year-
by-year caps. Moreover, in the event of a new contingency that requires 
significant additional OCO funding, the President may propose, or 
Congress may simply act, to adjust the cap to address the need. Without 
some limit on OCO funding, current law does nothing to prevent the 
shifting of base costs to the OCO budget in order to evade the fiscal 
discipline the Budget Control Act requires in other areas of 
discretionary spending.

                              Health Care

    Question. The President's Budget requests nearly $50 billion for 
military health care; an amount has more than doubled over the past 10 
years. As Secretary Panetta explained to the Senate Armed Services 
Committee, the proposed budget intends to control the growth of health 
care costs by increasing TRICARE co-pays and deductibles over the next 
five years for retirees. The proposal, however, does more than that. It 
deletes non-formulary prescription coverage from the TRICARE program 
altogether, for all beneficiaries. It also establishes a fee for the 
military's Medicare supplemental program (TRICARE for Life)--currently 
a free benefit. And that enrollment fee increases over five years to as 
much as $475 per year. The proposal also increases the current TRICARE 
Prime annual enrollment fee from $460 per year to $2,048 per year for 
almost all retired officers and for E-9s with 26 years or more of 
service. That is more than a 400% increase!
    A) If an active duty member retires in the next 2-5 years, all of 
these increased TRICARE enrollment fees will apply to them, won't they? 
B) If an active duty dependent--or reservist--is presently taking a 
non-formulary prescription medication to control a disease or 
condition, will they have any insurance or health care benefit for that 
prescription? C) Current active duty members are not being protected 
from these reductions by a grandfathering clause, are they? D) You 
proposed establishing a commission to review military retirement 
payments and requested that current troops' retirement benefits should 
be protected by grandfathering. Why not grandfather reductions in 
healthcare retirement benefits too?
    Answer. A)
     If the proposals are enacted, as requested by the Department, all 
retirees, with the exceptions of the most vulnerable beneficiaries (as 
noted below), will be impacted by the increased fees beginning in FY 
2013.
     Exemptions: To protect the most vulnerable, the proposals exempt 
survivors of members who die on active duty and medically retired and 
their family members from these increases.
     It is important to note, that even once the proposals are fully 
implemented, the TRICARE program remains a very generous benefit with 
the average beneficiary cost share well below the original 27 percent 
of health care costs when the program was fully implemented in 1996.
    Answer. B)
     Absolutely. Beneficiaries will always have access to needed 
medications in all venues. The vast majority of drugs prescribed to 
beneficiaries will continue to be available in retail venues.
     For beneficiaries requiring non-formulary maintenance medication, 
the Department would follow commercial best practices, whereby, 
beneficiaries would be instructed to obtain two prescriptions from 
their doctor, one for a 30-day supply that could be filled immediately 
in a retail network pharmacy and a 90-day prescription with three 
refills that must be filled at the mail order pharmacy.
     The 30-day prescription is needed in most cases to start therapy 
immediately while the mail order prescription is processed and the 
medications mailed to the beneficiary within two to three weeks.
     There would be exceptions when clinically necessary, such as, 
refrigerated medications that cannot be mailed or lost medications.
    Answer. C)
     If enacted, as requested by the Department, all retirees, with 
the exceptions of the most venerable beneficiaries, will be impacted by 
the increased fees beginning in FY 2013.
    Answer: D)
     The Nation's fiscal crisis and the resulting Budget Control Act 
of 2011 required DoD to find $487 billion in budget reductions over ten 
years. The department's senior civilian and military leaders determined 
how they could meet that target and meet the mission.
     Almost all the savings were achieved through changes in force 
structure reductions and investment changes consistent with our new 
defense strategy. However, to avoid overly large cuts in forces and 
investments, DoD also reviewed military pay and allowances. Health care 
costs, comprising ten percent of the department's overall budget, had 
to be included.
     The Department has studied the health care benefit for the past 
decade and multiple Administrations have recommended changes to the 
beneficiary cost shares. Grandfathering these changes would have meant 
higher cuts in forces and investments; however the Department believes 
that the approach put forward is careful and responsible and that the 
cost shares properly recognizes the special sacrifices of our men and 
women in uniform, past and present.
     For fifteen years the Department had not increased most TRICARE 
fees. In 1996, retired beneficiaries used to bear 27 percent of overall 
health care costs; by 2012 they were responsible for less than 11 
percent of the costs of their health care. If these proposals are 
enacted, the beneficiary share for costs rises to only 14 percent of 
overall health care cost.
     At the end of this effort, the TRICARE benefit will remain one of 
the finest and most generous health benefits available in the country 
and better than the TRICARE benefit in 1996. The beneficiary out-of-
pocket cost share will remain among the lowest available to anyone--and 
lower than costs by other federal government employees.

                                  Guam

    Question. The Department of Defense requested $159 million for 
funding for the Okinawa to Guam realignment in fiscal year 2012. For 
fiscal year 2013, the Department has requested only $51 million. As I 
understand it, this lowered request is to allow the Department time to 
obligate existing authorizations, complete an expanded environmental 
impact study, etc.
    Will this reduced funding (at only \1/3\ of the previous year) 
cause a delay in the move from Okinawa to Guam? If so, how much of a 
delay? Have you discussed the reduced funding and any potential delay 
with the Japanese government? If so, what was Japan's response?
    Answer. As was announced in early February, we have begun 
discussions with the Government of Japan (GoJ) to adjust our current 
realignment plans. We remain committed to the principles set forth in 
the 2006 Realignment Roadmap, establishing an operational Marine Corps 
presence on Guam, mitigating the impact of U.S. forces in Okinawa, 
constructing a Futenma Replacement Facility (FRF) at Camp Schwab, and 
returning lands south of Kadena Air Base at the conclusion of the 
process. We have discussed with the GoJ a plan to move fewer Marines 
(5,000 instead of 8,000) to Guam from Okinawa. We have also discussed 
plans to delink the movement of Marines to Guam and the return of lands 
south of Kadena, from progress on the FRF. These proposals have both 
U.S. Government and GoJ support. There have been no final decisions at 
this point. As we have explained to the GoJ, Our Funding request for 
Guam will be limited until we have finalized these understandings and 
have completed any necessary environmental assessments. We will keep 
Congress closely apprised of developments in these discussions, so that 
we end up with a plan that Congress can support, and that meets our 
strategic and operational imperatives for the Asia-Pacific region.

    [Clerk's note.--End of Questions submitted by Mr. Calvert. 
Questions submitted by Mr. Visclosky and the answers thereto 
follow:]

                   Nuclear Deterrent Force Structure

    Question. Secretary Panetta, recent media reports have indicated 
that the Administration is reviewing alternatives to the current 
nuclear deterrence force structure. In the near future, important and 
resource intensive decisions will be necessary regarding the 
recapitalization of the triad, decisions that will drive the strategic 
force for decades to come. I would hope that these decisions are driven 
by policy rather than resource constraints, however, we all must 
recognize that resources are tight in the current environment.
    How does the military determine the required size and capabilities 
of the nuclear deterrent force structure?
    Answer. Presidential Policy Directives on nuclear deterrence policy 
are the starting point for the Department in determining U.S. nuclear 
deterrent plans, force structure, and required capabilities. Based on 
this guidance from the President and relevant intelligence assessments, 
the Chairman of the Joint Chiefs and I issue specific planning guidance 
that directs the Commander of Strategic Command to prepare appropriate 
concepts of operation and plans. Those plans inform the development of 
requirements for the Services. The Services meet these requirements in 
accordance with planning guidance and fiscal guidance which I issue, as 
well as treaty requirements, in particular the New START Treaty. As 
stated in the 2010 Nuclear Posture Review, ensuring the United States 
remains well hedged against geopolitical or technological surprise 
remains a key priority in determining the size and capabilities of our 
nuclear deterrent. The Department reviews these Service program 
proposals in a defensewide context during the annual Program and Budget 
Review process. Upon my approval, program and budget proposals are 
submitted to OMB and from there to the Congress.
    Question. Once decisions are made regarding the size and 
capabilities of the stockpile and required delivery platforms, how do 
you assess the cost implications of those needs? In particular, how do 
you assess the requirements within a leg of the triad?
    Answer. The components of the existing strategic triad have been 
deployed for many years. The Air Force and the Navy have considerable 
experience in assessing the cost of maintaining and modernizing these 
weapon systems. The Services model the cost implications of any 
potential change to force structure and use that information as one 
input to assess such potential changes. Once decisions are made 
regarding changes to size and capabilities of the force structure, 
platforms and associated warheads, my office provides programming 
guidance to the Services to implement those decisions. The Services 
prepare detailed budget estimates based on that guidance as part of the 
annual Planning, Programming, Budgeting, and Execution process. If 
concerns or issues arise during this process, they are subjected to a 
detailed review in the Program and Budget Review. The outcome of these 
efforts is used to prepare the President's Budget.
    Question. How does the DoD and the NWC interact with the NNSA to 
fulfill the requirements of the stockpile? Does the NNSA provide any 
feedback regarding costs to fulfill those requirements, and is that 
feedback taken into account?
    Answer. The Nuclear Weapon Council (NWC) is a statutorily required 
(10 USC 179) joint DoD and Department of Energy (DoE)/NNSA organization 
that provides the primary mechanism for coordinating activities among 
the two Departments related to the nuclear weapons stockpile. The Under 
Secretary of Defense for Acquisition, Technology, and Logistics serves 
as the NWC chairman, and the DoE/NNSA Administrator serves as the vice-
chairman. The DoE/NNSA routinely provides weapon program updates to the 
NWC. When an issue or change to a program is required, the NWC conducts 
a formal vote to determine the path forward. The DoE/NNSA provides 
feedback through the NWC regarding costs to fulfill DoD's requirements, 
which occurs for all of the major weapons activities.

    [Clerk's note.--End of questions submitted by Mr. 
Visclosky. Questions submitted by Mr. Hinchey and the answers 
thereto follow:]

                              Solar Energy

    Question. The financing end is a great deal for the federal 
government, however the current contract requirements allow for solar 
panels manufactured in foreign countries. Nellis Air Force Base is a 
prime example of how Chinese solar panels can end up installed on our 
bases. I would be surprised if China would ever allow a U.S. solar 
panel on their military bases. I find it unfortunate, particularly when 
there is an anti-dumping and countervailing duty case filed against the 
Chinese solar industry, that current Department contracting rules allow 
for the Buy American Act to be circumvented for solar projects. 
Further, many of these foreign solar panels have significant failure 
rates. Anecdotal evidence has been provided to me claiming cheap solar 
panels were purchased and are beginning to fail after only three years.
    When will the Department adjust its contracting rules to stop the 
circumvention of the Buy American Act for the installation of solar 
panels on military bases? Also, when will the Department begin 
implementing more stringent requirements in its contracts on the 
quality of solar panels installed on military bases?
    Answer. The Department of Defense published an interim rule to 
implement section 846 of the Ike Skelton National Defense Authorization 
Act for Fiscal Year 2011 in the Federal Register on December 20, 2011. 
It became effective immediately. The rule provides that photovoltaic 
devices utilized in performance of any covered contract shall comply 
with the Buy American statute, subject to the exceptions provided in 
the Trade Agreements Act of 1979 or as otherwise provided by law. This 
rule applies to any photovoltaic device installed on DoD property or in 
a facility owned by DoD, and reserved for the exclusive use of DoD for 
the full economic life of the device.

                              Contracting

    Question. Mr. Secretary, for a number of years now I have been 
concerned about the privatization of services that we're seeing at 
military facilities across the country. As we all understand that 
current budget constraints are going to take shared sacrifice. As you 
know, the Department's civilian workforce has been capped since 2010, 
despite the fact that the Department's overall budget has continued to 
grow. Section 808 of the last year's National Defense Authorization Act 
caps the Department's spending on service contracts with private 
companies for this and next year at $63 billion, the level of the 
President's budget request in 2010. In the past few years, however, the 
Department has spent well over $63 billion on private service 
contractors. And in 2010, the Department exceeded its budget for 
service contract spending by tens of billions of dollars. With this in 
mind, and now that Congress has imposed a statutory cap on private 
service contractor spending, I'm concerned that the Department's self 
imposed cap on civilian employees will affect services at our military 
installations. There is plenty of evidence that civilian employees can 
perform the same level of services as private contractors for the same 
or lower costs.
    What guidance has been issued by the Department to comply with 
Section 808? Under Section 808, how much less will the Department be 
able to spend on contractors in next year and what functions will no 
longer be performed by private contractors?
    Answer. Formal guidance to the Department of Defense Components is 
forthcoming. The FY 2012 and FY 2013 budget reviews specifically 
established savings goals for advisory and assistance services and 
service support contracts. The goals are reflected in the FY 2012-
enacted budget and the FY 2013 President's Budget request. Although the 
Department has not categorically identified specific functions that 
will no longer be performed by private contractors, the primary areas 
affected will be those contracts that entail staff augmentation or the 
performance of functions that are closely associated with inherently 
governmental functions (as defined in section 2383(b)(3) of title 10, 
U.S. Code, and described in Office of Federal Procurement Policy Letter 
11-01). In addition to the adjustments to the amount of services 
acquired, we expect to fulfill the requirements of section 808 by 
acquiring these services in a more efficient manner as directed in the 
September 14, 2010, USD(AT&L) ``Better Buying Power'' memorandum.
    Question. Has the Pentagon given further thought to lifting the cap 
on the civilian workforce? What assurances can you give us that as 
wide-spread civilian reductions are occurring across the Department 
work is not shifting illegally to contract performance?
    Answer. The Department's FY 2013 budget request reflects a 
continuation of the initiative to hold civilian FTE levels at the FY 
2010 level with some adjustments for recognized workload increases. In 
the aggregate, U.S. Direct Hires are declining by 7,367 from FY 2012 to 
FY 2013. The reduction is in the reimbursable program (12,194) which is 
partially offset by an increase in the direct program. The direct 
program increases by 4,827 for critical workload requirements 
supporting the National Guard and Reserves; the acquisition, audit and 
contract management communities; and medical readiness programs.
    The size of the civilian workforce is 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 & 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. In addition, the 
Department has established a multi-level governance process for 
monitoring implementation of all efficiencies, to include the civilian 
workforce reduction. Any issue, such as illegal shifting of work, can 
be addressed by these governing bodies. If warranted, a waiver request 
to grow the civilian workforce can also be submitted to the Deputy 
Secretary of Defense.
    In the long-term, the Department is making improvements to its 
Inventory of Contracts for Services to provide 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.
    Question. 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?
    Answer. The efficiencies initiatives began 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.
    Question. 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?
    Answer. The FY 2013 budget reflects continuation of the initiative 
to hold civilian FTE levels at the FY 2010 level. While the budget 
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 developed their FY 2013 budget 
requests. 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 allocations would vary based on the processes they undertook 
and other available data sources.
    Question. As civilian personnel reductions are being executed 
across the Department, are the workload and functions associated with 
those being tracked as eliminated or divested through the annual 
inventory of functions?
    Answer. 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 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.

                             Iran Spending

    Question. Mr. Secretary, the Overseas Contingency Operations (OCO) 
budget asks for $2.9 billion for Iraq spending despite the official end 
of Operation Iraqi Freedom. Your budget overview states this funding 
will finalize transition in Iraq and ``continue security assistance and 
security cooperation.'' Can you please provide a more detailed 
breakdown and justification of how this money will be spent?
    Answer. The $2.9 billion FY 2013 OCO request for Iraq provides for 
equipment reset, the Department of Defense (DoD) portion of cost for 
the continuation of the Office of Security Cooperation--Iraq (OSC-I), 
continued security assistance and cooperation with the Government of 
Jordan, and classified programs.

------------------------------------------------------------------------
                                                            FY 2013 OCO
                                                            request for
                       Description                         post-OND/Iraq
                                                            activities
                                                               ($B)
------------------------------------------------------------------------
Equipment Reset and Retrograde..........................            $1.4
OSC-I...................................................             0.5
Coalition Support.......................................             0.1
Classified Programs.....................................             0.9
                                                         ---------------
    Total...............................................             2.9
------------------------------------------------------------------------

    The $1.4 billion requested for equipment reset and retrograde 
activities includes maintenance for rotary wing aircraft, and combat, 
field artillery, ammunition supply, and tactical wheeled vehicles 
redeployed from Iraq and required in DoD inventory to maintain combat 
readiness.
    The $0.5 billion requested for the OSC-I provides for the 
development and sustainment of facilities, equipment, vehicles, and 
security services for the DoD portion of cost for the continuation of 
the OSC-I.
    The $0.1 billion requested for coalition support includes amounts 
for reimbursement to the Government of Jordan for logistical, military, 
and other expenses incurred in the conduct of border operations, as 
long as the border operations are deemed essential to the activities of 
the OSC-I. Border operations include curbing undesirables from 
transiting across the border and protecting key transit routes 
supporting the OSC-I.

    [Clerk's note.--End of questions submitted by Mr. Hinchey. 
Questions submitted by Mr. Young and the answers thereto 
follow:]

         Fiscal Management: Growing Reliance on Reprogrammings

    Question. While an increased number of funding transfers would be 
expected in the early stages of a contingency operation, the war should 
not be the rationale for increasing funding transfers after ten years. 
There appears to be a fundamental flaw in the Department's budget 
process that started when the structure of the Planning, Programming, 
and Budgeting System process was abandoned in favor of a simultaneous 
program and budget review.
    Secretary Panetta, we are concerned that your Department has 
increasingly transferred and spent funding differently than the 
purposes for which the funding was justified and appropriated. What 
actions are being taken to enhance the discipline in the budget 
process?
    Answer. The current reprogramming process provides the Department 
of Defense (DoD) with necessary flexibility while preserving Congress's 
appropriate oversight. The Department prepares the budget 18 to 20 
months prior to actual execution; the reprogramming process permits the 
Department with Congressional approval, to meet emerging requirements 
in a timely manner. My staff will meet with your staff to provide 
details on how reprogramming actions are reviewed and prioritized 
within the Department.
    Question. Mr. Secretary, establishing a clear strategic plan, which 
you have done, is very important and you are to be commended for that. 
However, there is not a disciplined process which forces resource 
allocation decisions to occur deliberatively. How do you plan to fix 
this? Have you considered resuming sequential program and budget 
reviews within your Department, rather than conducting these two not-
insignificant events simultaneously?
    Answer. On the contrary, the Department's process is very 
deliberative and disciplined. The new strategic guidance was developed 
before any final budget decisions were made to ensure that the budget 
choices reflected the new defense strategy. While shaping this 
strategy, the Department of Defense leadership did not want to repeat 
the mistakes of the past. The goals were: to maintain the strongest 
military in the world, to not ``hollow out'' the force, to take a 
balanced approach to budget cuts, to put everything on the table, and 
to not break faith with troops and their families. Throughout the 
review all steps were taken to ensure this was an inclusive process. 
General Dempsey and the Secretary of Defense worked closely with the 
leadership of the Services and Combatant Commanders, and consulted 
regularly with members of Congress. As a result of these efforts, the 
Department is strongly united behind the President's budget request for 
fiscal year 2013, and the accompanying Future Years Defense Program.

   Fiscal Management: Use of Reprogrammings To Initiate New Programs

    Question. The increased use of reprogramming actions to finance new 
programs or ``new starts'' during the execution year is a fairly recent 
phenomenon and appears to be directly related to the breakdown of a 
rational and deliberative budget process. The Department's financial 
management regulation states ``. . . Congressional committees 
discourage the use of the reprogramming process to initiate programs. 
Except for extraordinary situations, consideration will not be given 
new start reprogramming requests for which the follow-on funding is not 
budgeted or programmed . . .'' However, there has been an extraordinary 
increase in the number of new program starts initiated via 
reprogramming: Fiscal year 1999 contained no new starts, fiscal year 
2000 contained seven new starts, and fiscal year 2010 saw 46 new starts 
initiated during the execution year via a reprogramming action.
    Secretary Panetta, we are concerned with the Department's increased 
use of reprogramming actions to initiate new weapon systems and 
research efforts. Often the rationale for the request is simply that 
the program fulfills a joint urgent operational need. Although this may 
be a valid reason, it seems after ten years of war many of these 
operational needs should be accommodated in the budget request rather 
than in the year of execution. Those programs and projects that are 
truly urgent should be able to be justified and defended in some 
detail. Why is the Department increasingly initiating so many programs 
outside of the normal budget process?
    Answer. The current reprogramming process provides the Department 
of Defense (DoD) with necessary flexibility while preserving Congress's 
appropriate oversight. The Department prepares the budget 18 to 20 
months prior to actual execution; the reprogramming process permits the 
Department to meet emerging requirements in a timely manner. Given the 
dynamic nature of operations in Afghanistan and a desire to take 
advantage of emerging technology where appropriate, a few new starts 
are necessary to meet the needs of the Combatant Commanders. The 
Department conducts a careful review of all new start requests before 
they are forwarded to Congress. The ones forwarded to you represent the 
high priority requirements.
    Question. Secretary Panetta, the Department's own financial 
regulation states that reprograming requests must reflect ``total 
program costs, proposed funding and procurement quantities by year . . 
. [and] an explanation of how subsequent years' funding will be 
provided . . . The Department will not approve new starts that do not 
have budgeted or programmed follow-on funding.'' Recent requests have 
contained none of this information required by your own regulations, 
yet your Department always expects a quick turnaround by the Committee. 
This information is vital to the Committee in order to make an informed 
decision about the projects. Without this information readily 
available, time is added to the review process. Why has your Department 
routinely failed to follow your own regulation and procedures when 
submitting these reprogramming requests? Do you expect this trend to 
continue this year and into the future?
    Answer: I was not aware that we were not complying with policy. I 
can assure you that the Department will redouble our efforts to ensure 
that all reprogramming requests are in full compliance with the 
financial regulations.

    [Clerk's note.--End of questions submitted by Mr. Young.]
                                           Thursday, March 2, 2012.

           FISCAL YEAR 2013 NAVY/MARINE CORPS BUDGET OVERVIEW

                               WITNESSES

HON. RAY MABUS, SECRETARY OF THE NAVY
ADMIRAL JONATHAN W. GREENERT, CHIEF OF NAVAL OPERATIONS
GENERAL JOSEPH F. DUNFORD, JR., ASSISTANT COMMANDANT OF THE MARINE 
    CORPS, ON BEHALF OF GENERAL JAMES F. AMOS, COMMANDANT OF THE MARINE 
    CORPS

                  Opening Statement of Chairman Young

    Mr. Young. The committee will be in order. And we welcome 
our guests.
    This afternoon the subcommittee will hold an open hearing 
on the posture and budget requests of the Department of the 
Navy. We will focus on Navy and Marine Corps personnel, 
training and equipment readiness, and will also touch on 
acquisition issues to gain insights into the Department's 
priorities and decisionmaking.
    I would like to welcome the Secretary of the Navy, Raymond 
Mabus; Chief of Naval Operations, Admiral Jonathan Greenert; 
and Assistant Commandant of the Marine Corps, General Joseph 
Dunford, to the subcommittee. And I would explain that General 
Amos is a little indisposed today, but he is okay.
    While Secretary Mabus is a familiar face to the 
subcommittee, Admiral Greenert is making his first appearance 
in his new capacity as the 30th Chief of Naval Operations.
    Admiral, congratulations, and welcome to you, sir.
    Additionally, General Dunford is filling in for General 
Amos, as I said. And to whatever extent he wants to explain 
that, we will let the general be in charge of that. We welcome 
General Dunford. As you know, the Marine Corps has a very, very 
deep history, and I am sure General Amos can use this time to 
recover from some of that history that he has played a part in 
and know that the Marines are in very capable hands here today. 
And I can say that without contradiction, because I spent the 
morning with General Dunford, and he performed extremely well 
on behalf of the Marine Corps at the Subcommittee on Military 
Construction.
    I thank all of you for being here today, and I think I can 
speak safely for every member of this subcommittee in thanking 
you for your service to our great Nation, the challenges that 
you have met over the years, just really extremely proud of all 
of you and the troops that you command.
    We are looking forward today to hearing how you were able 
to craft a workable budget for fiscal year 2013 with the 
constraints that were placed upon you with respect to the 
decreasing top line. We are especially anxious to hear how the 
Marine Corps is going to handle the force reductions that seem 
to be coming right on the heels of the recent force buildup. We 
certainly do not want to break faith with any of our young 
marines who have been performing so well, and we are not going 
to turn our backs on them and send them along their way without 
having some plan to be of help and service to them.
    Also of interest to the subcommittee is the apparent 
contradiction that we see in the shipbuilding program. When it 
was announced that the Department of Defense was increasing its 
focus on the Asia-Pacific region, an increased naval presence 
immediately came to mind. I was comforted in recalling 
Secretary Mabus' words to the subcommittee last year when he 
told us that the Navy would be building 57 ships over the 
period of 2013 to 2017, finally putting the Navy on pace to 
reach 300 ships. Now, when it would seem even more important to 
have a larger fleet, the Navy has actually decreased the number 
of ships planned for construction over that same period, and 
the decrease is not small. The current number of ships planned 
for construction over the 2013 to 2017 timeframe is 41 ships, a 
decrease of 16 from what was forecast last year. This is a 28 
percent decrease from last year's number.
    I am a little concerned about the contradiction of planning 
to use a smaller fleet to cover a larger portion of the globe. 
And I know that if it can be done, you are going to do it, and 
I don't have any question about that. And granted, our new 
ships will be more capable, but they can still only be in one 
place at a time, and I would think that in some respects 
quantity itself is a capability.
    However, as we have always done in the past this 
subcommittee will work hard to ensure the Department of the 
Navy is ready and able to conduct the very important mission 
that you have been given or will be given. We understand as 
well as anybody that the most important component of your 
Department are the sailors and marines that you have the 
privilege to lead, and who sacrifice so much in defending our 
freedoms.
    So, again, welcome, we look forward to your comments and an 
informative question-and-answer session. And now let me turn to 
my good friend and partner, former chairman of this 
subcommittee, the ranking member Mr. Dicks for any comments he 
would like to make.

                          Remarks of Mr. Dicks

    Mr. Dicks. Thank you, Mr. Chairman.
    I want to also welcome our witnesses today, especially 
Admiral Greenert in his first appearance as the CNO. And a 
special welcome to General Dunford, who, like a good deputy, is 
stepping up to the plate when needed. Thanks to all of you for 
being here today.
    The Navy and Marine Corps find itself in an interesting 
place for fiscal year 2013. Both services are dealing with the 
logistics tail of the end of operations in Iraq, yet maintain 
and seek to expand upon a strong presence in the region. 
Concurrently both are preparing for the eventual drawdown in 
Afghanistan, which is slated for 2014, while maintaining 
current operations in an increasingly dangerous security 
environment.
    The Navy and Marine Corps find themselves simultaneously 
expanding to new places such as Darwin, Australia, and some 
familiar ones like the Philippines while winding down combat 
operations, reducing the size of the Marine Corps, and 
resetting the forces in all areas of readiness, personnel, 
training and equipment.
    The committee looks forward to hearing your views on the 
new defense strategy and how it influenced the difficult budget 
decisions made for fiscal 2013, as well as in the outyears. We 
look forward to learning how the Navy and Marine Corps will be 
shaped to meet the renewed focus on the Asia-Pacific region and 
continued focus on the Middle East.
    The new defense strategy places great responsibility on the 
Navy and Marine Corps as it acknowledges the strong historical 
presence you have had in the region during both wartime and in 
periods of peace. However, while much of the focus in recent 
months has been on the budget process, we are now interested in 
how you are focusing on your returning sailors and marines, 
particularly the wounded warriors and their families. This is 
especially true in the Marine Corps where many returning 
marines may wonder if there will be a place for them in the 
smaller corps.
    We are also interested to learn how you are handling the 
disposition of equipment from Iran and Afghanistan as well as 
setting the conditions for success for the next time a nation 
calls upon you to respond to a crisis somewhere in the world. 
We want to hear about future ships and submarines, as well as 
aircraft you are developing and acquiring. We want to learn 
about the new programs you have proposed, the programs you have 
decided you can do without, and the process of acquiring and 
shedding these programs.
    The constrained budget environment can force efficiencies, 
and out of painful decisions new and better acquisition 
practices can result, we hope. I look forward to hearing about 
those improvements.
    In addition to all this, we are eager to hear how you are 
focusing your efforts on the newest warfighting domain, 
cyberoffense and cyberdefense. The threat is real, and it has 
already affected how the military operates and thinks about 
future operations. The threat is pervasive. It is a concern not 
only for military operations and systems, but also to protect 
the ideas and intellectual data that sets us apart from our 
adversaries.
    We are eager to hear from you on these issues, on the 
decisions that influenced your 2013 budget, and on other topics 
important to the Navy and Marine Corps. Again, thank you for 
appearing before the committee, and thank you for your service 
to the Nation.
    Mr. Young. Mr. Dicks, thank you very much.
    Mr. Secretary, we would be happy to hear from you. Your 
total statement will be placed in the record. You can present 
it to us in any way that you would like. And we will recognize 
you at this time, sir.

                     Statements of Secretary Mabus

    Mr. Mabus. Thank you, Mr. Chairman, Ranking Member Dicks, 
distinguished members of this committee.
    As you pointed out, Mr. Chairman, the Commandant of the 
Marine Corps is not with us today. He had a minor surgical 
procedure, although I think minor surgical procedures only 
happen to other people. Nothing that happens to you is minor. 
And I told him when I spoke to him that I thought he was being 
a little extreme in trying to avoid this hearing. But I know 
that I have a wonderful representative for the Marine Corps in 
the Assistant Commandant of the Marine Corps, General Joe 
Dunford, and I am very happy to be here with him today, and 
with Admiral Jon Greenert, the Chief of Naval Operations. And 
the pride that the three of us and all the leadership of the 
Navy and Marine Corps take in leading the sailors, marines, 
civilians and their families who selflessly serve the United 
States is exceeded only by the accomplishments of those 
selfless individuals. Whatever has been asked of them by the 
American people through their Commander in Chief, from 
Afghanistan to Libya, from assisting the stricken people of 
Japan to assuring open sea lanes around the world, from 
bringing Osama bin Laden to final justice to bringing hostages 
out of wherever they may be hidden by terrorists or pirates, 
they answer the call, they get the job done.
    The CNO, the Commandant, the ACMC and I are confident the 
United States Navy and Marine Corps are well prepared to meet 
the requirements of this new defense strategy and maintain 
their status as the most formidable expeditionary fighting 
force the world has ever known. No one should ever doubt the 
ability, capability or superiority of the Navy and Marine Corps 
team.
    As we repositioned after two long ground wars, it was 
essential to review the basic strategic posture. And your 
guidance, developed under the leadership of the President and 
the Secretary of Defense, and with the full involvement, every 
service secretary, every service chief, responds to changes in 
global security. The budget presented to implement this 
strategy, which was also arrived with the full collaboration of 
all the services, assures that the Navy and Marine Corps will 
be able to fully execute this strategy while meeting the 
constraints imposed by the Budget Control Act passed by 
Congress.
    This new strategy, as you pointed out, Mr. Chairman, has an 
understandable focus on the Western Pacific and Arabian Gulf 
region. It has a maritime focus. It requires us to maintain our 
worldwide partnerships and our global presence using 
innovative, low-cost, light-footprint engagement. It absolutely 
requires a Navy and Marine Corps team that is built and ready 
for any eventuality on land, in the air, on and under the 
world's ocean and in the vast cyberspace that Congressman Dicks 
mentioned. And it is going to be operated forward to protect 
American interests, respond to crises, and to deter and, if 
necessary, win wars.
    I want to talk about ship numbers for a minute. Mr. 
Chairman, I appreciate very much your raising that issue. The 
impact of two ground wars over the last decade on our Fleet and 
our force is unmistakable. A Fleet that stood at 316 ships and 
over 377,000 sailors on 9/11, 2001, dropped to 283 ships and 
close to 49,000 fewer sailors just 8 years later when I took 
office.
    This administration has made it a priority to rebuild our 
Fleet. Despite the budget constraints imposed under the Budget 
Control Act, our plan assures that we will have no fewer ships 
at the end of this 5-year period than we do today, although, as 
you pointed out, the Fleet of 2017 will include more ``more 
capable'' ships equipped with state-of-the-art technology, 
manned as always by highly skilled personnel.
    And although we are presenting one 5-year budget, one 
Future Years Defense Program (FYDP), this is certainly not a 
one-FYDP issue. As the defense strategy states, we are building 
the force for 2020. In the years beyond the current FYDP, we 
have a plan to grow our Fleet and ensure our capacity continues 
to match our missions. In fact, our plan will have us cross the 
threshold of 300 ships again in 2019.
    Overall we will fully meet the requirements of the new 
strategy and maintain the industrial base needed. This is in 
spite of the fact, as you pointed out, that we have had to 
defer building some 16 ships. But the good news on that part is 
that the ships that--a vast majority of the ships that we are 
deferring are support ships and not combat capability ships. 
And as the mission has changed, the need for some of these 
ships has decreased.
    And that is why I am particularly pleased that we will be 
able to have the same size Fleet 5 years from now that we do 
today, because we are not only deferring the building of the 
ships that you mentioned, we are also retiring seven cruisers 
and putting two small amphib ships into reserve status.
    Speaking of amphibious roles, the Marine Corps will also 
return to its maritime routes and resume its traditional role 
as the Nation's expeditionary force in readiness. Our marines 
will retain the lessons of a decade of hard, but effective 
fighting in Iraq and Afghanistan as they transition back to a 
middle-weight force and amphibious force optimized for foreign 
presence engagement and rapid response.
    We will very carefully manage the reduction in Active-Duty 
end strength from 202,000 to 182,100 marines by the end of 
fiscal year 2016 in order to keep faith with the marines and 
their families to the maximum extent possible.
    This restructured Marine Corps, a plan that was arrived at 
after a year and a half of very careful study by the Marines, 
will be smaller, but it will be fast, it will be agile, it will 
be lethal. The number of marines in certain critical jobs like 
Special Forces and cyber will be increased, and unit manning 
levels, and therefore readiness, will go up.
    Both the Navy and Marine Corps will continue to decrease 
operational vulnerabilities in ways that are cost efficient. 
That means we will maintain our efforts to reduce our 
dependence on foreign oil and to use energy more efficiently. 
These efforts have already made us better warfighters. By 
deploying to Afghanistan with solar blankets, charged radios 
and other electrical items, a marine patrol dropped 700 pounds 
in batteries from their packs and decreased the need for risky 
resupply missions. Using less fuel in theater can mean fewer 
fuel convoys, which will save lives. For every 50 convoys we 
bring in, a marine is killed or wounded. That is too high a 
price to pay.
    We already know the reality of a volatile oil global 
market. Every time the cost of a barrel of oil goes up a 
dollar, it costs the Department of the Navy an additional $31 
million in fuel costs. These price spikes have to be paid for 
out of our operational funds. That means that we sail less, we 
fly less, we train less. For these reasons we have to be 
relentless in our pursuit of energy goals that will continue to 
make us a more effective fighting force and our military and 
our Nation more energy independent.
    But as both you, Mr. Chairman, and Congressman Dicks have 
pointed out, as much as we focus on our Fleet's assets of 
ships, and airplanes, and vehicles and submarines, they don't 
sail, or fly, or drive or dive without the men and women who 
wear the uniform and their families. They have taken care of 
us. They have kept the faith with us. We owe them no less.
    The commitment to sailors and marines and their families is 
there whether they serve 4 years or 40. It begins the moment 
they raise their hand and take the oath to defend our Nation. 
It continues through the training and education that spans 
their entire career. It reaches out to their loved ones, 
because it is not just an individual who serves, it is the 
entire family. It supports our wounded warriors with recovery, 
rehab and reintegration. It continues with transition services 
for our veterans to locate new jobs, and the GI Bill for their 
continued education or to transfer for a family member's 
education. The list goes on and on and on, as it should. Our 
commitment to our sailors and marines can never waiver, and it 
can never end.
    So finally, for 236 years, from sail to steam to nuclear, 
from the USS CONSTITUTION to the USS CARL VINSON, from Tripoli 
to Tripoli, our maritime warriors have upheld a proud heritage, 
protected our Nation, projected our power and provided freedom 
of the seas. In the coming years this new strategy and our 
plans to execute that strategy will assure that our naval 
heritage not only perseveres, but that our Navy and Marine 
Corps continue to prevail.
    Thank you, Mr. Chairman.
    Mr. Young. Mr. Secretary, thank you very much.
    [The written statement of Secretary Mabus follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] 
    
                     Statements of Admiral Greenert

    Mr. Young. We are all very much aware that you, your 
Department and this committee have been given a tremendous 
budget challenge this year. The committee proved that we were 
up to the task last year because we were able to find $39 
billion in savings for the fiscal year 2011 and fiscal year 
2012 bills. It was not easy, but we were determined to do that 
without affecting readiness and without affecting the men and 
women who wear our uniform. And in working in conjunction with 
you, and the Navy, and Marine Corps and all of the services, we 
will do our very best to again make sure that we have adequate 
funding, and that we do not have an adverse affect on readiness 
or the ability to protect our troops while they are providing 
for our security.
    So thank you very much. And I know that you are up to the 
challenge. And with a partner like Admiral Greenert, I know 
that we are going to face up to this challenge. It may not be 
easy, but we are going to deal with it.
    And, Admiral Greenert, we are happy to hear from you sir.
    Admiral Greenert. Thank you, Mr. Chairman.
    Chairman Young, Ranking Member Dicks, distinguished members 
of the committee, it is my honor to appear before you for the 
first time to discuss our budget submission. Because of the 
dedication of 625,000 Active and Reserve sailors and civilians 
and their families, the Navy and our primary joint partner, the 
Marine Corps, remain a vital part of our national security. I 
am honored to be able to serve and lead the Navy in these 
challenging times, and I thank this committee for your 
continued support.
    This afternoon I will address three points: the Navy's 
importance to security; our enduring tenets and the priorities 
that guided my decisions in the Navy; and how these decisions 
were shaped--excuse me, how these decisions shaped the Navy's 
budget submission.
    Today our Navy is the world's preeminent maritime force. 
Our global Fleet operates forward from U.S. bases and partner 
nation, quote, ``places,'' unquote, around the world to deter 
aggregation, to respond to crises, and, when needed and when 
called upon, to win our Nation's wars.
    If you refer to the chartlet that I have provided, it 
should be in front of you, you can see that on any given day we 
have about 50,000 sailors and 145 ships underway with about 100 
of those ships deployed overseas. These ships and sailors allow 
us to influence events abroad because they ensure access to 
what I refer to as the maritime crossroads. These are areas 
where shipping lanes and our security interests intersect, and 
they are indicated by orange bow ties, if you will, on the 
chartlet. We can remain forward in these areas because of 
facilities and support from nearby allies and partners.
    For example, in the Middle East we have 30 ships and more 
than 22,000 sailors at sea and ashore. They are combating 
piracy, supporting operations in Afghanistan, assuring our 
allies, and maintaining a presence in the region to deter or 
counter destabilizing activities. These forces rely on 
facilities in Bahrain, our U.S. partner for six decades.
    In the Asia-Pacific region, we have about 50 ships 
supported by our base in Guam and our facilities and places in 
Singapore, the Republic of Korea and Japan. They will be joined 
next spring by our first littoral combat ship, which will 
deploy to Singapore for several months to evaluate that 
operational concept.
    In the Indian Ocean we depend on Diego Garcia and the fleet 
tender and the airfield there for ship repair and logistics 
support.
    Around the Horn of Africa we depend on the airfield and 
port in Djibouti to support our forces conducting 
counterterrorism and counterpiracy operations.
    In Europe we rely on places in Spain, Italy and Greece to 
sustain our forces forward in support of our NATO allies.
    And in our own hemisphere, our port and airfield at 
Guantanamo Bay will grow more important in the next several 
years as the Panama Canal is widened.
    When I assumed the watch of CNO, I established three key 
principles for our decisionmaking. I call them tenets, and, to 
me, they are the clear, unambiguous direction for my Navy 
leadership. And they are warfighting first, operate forward, 
and be ready.
    Warfighting first. That means the Navy must be ready to 
fight and prevail today while building the ability to win 
tomorrow. This is our primary mission, and all our efforts must 
be grounded in this fundamental responsibility.
    Iran's recent provocative rhetoric highlights the need for 
us to have forward-deployed warfighting capability. In our 2013 
budget submission, we redirected funding toward weapons 
systems, sensors and tactical training that can be more rapidly 
fielded to the Fleet. This includes demonstrators and 
prototypes that could quickly improve our force's capability.
    Operate forward. That means we will provide the Nation 
offshore options to deter, to influence and to win in an era of 
uncertainty. Our 2013 budget submission supports several 
initiatives to establish our forward posture at the maritime 
crossroads. These include placing forward-deployed Navy force 
destroyers in Rota, Spain, and forward stationing littoral 
combat ships in Singapore, and patrol coastal ships in Bahrain. 
One ship that is operating from an overseas location can 
provide the same presence as about four ships if we would 
rotationally deploy from the continental United States. We are 
also collaborating with the Marine Corps to determine the 
support and the lift needed for marines to effectively operate 
forward in Darwin, Australia, in the future.
    Be ready. That means we will harness the teamwork, the 
talent and the imagination of our diverse force to be ready to 
fight and responsibly use our resources. This is more than 
completing required maintenance and ensuring parts and supplies 
are available. Being ready also means being proficient; being 
confident with our weapons, our sensors, command and control, 
communications, and our engineering systems as well.
    In applying these tenets to meet the strategic--the defense 
strategic guidance, we built our 2013 budget submission to 
implement three main investment priorities. Number one, we will 
remain ready to meet our current challenges today. Consistent 
with the defense strategic guidance, I will continue to 
prioritize readiness over capacity and focus our warfighting 
presence on the Asia-Pacific and the Middle East. We will also 
sustain the Nation's most survivable strategic deterrent in our 
Ballistic Missile Submarines (SSBNs).
    Priority two. We will build a relevant and capable future 
force. Our Navy will evolve to remain the world's preeminent 
maritime force, and our shipbuilding and aircraft construction 
investments will form the foundation of the future Fleet.
    In developing our aircraft and ship procurement plans, we 
focused on three approaches: one, to sustain serial production 
of today's proven platforms, including Arleigh Burke 
destroyers, Virginia-class submarines, and F/A-18 Super 
Hornets; two, to promptly field new platforms in development 
such as the littoral combat ship, the Joint Strike Fighter, the 
Ford-class carrier, the P-8A Poseidon aircraft and the America-
class amphibious assault ship; three, will improve the 
capability of today's platforms through new weapons, sensors 
and unmanned vehicles, including the advanced missile defense 
radar, the Fire Scout unmanned aerial system, and the Fire-X 
unmanned aerial system.
    New payloads like these will help ensure we can project 
power despite threats to access as described in the new defense 
strategic guidance. They will also enable our continued 
dominance in the undersea environment and support our goal to 
operate effectively in cyberspace and to fully exploit the 
electromagnetic spectrum.
    Now, in developing the future force, we will continue to 
emphasize jointness as described in our air-sea battle concept. 
We will also emphasize affordability by controlling 
requirements creep and by making cost the entering argument for 
our new systems.
    Third priority, we will enable and support our sailors, 
civilians and their families. I am extremely proud of our 
people. We have a professional and moral obligation to lead, to 
train, and to equip and to motivate them. Our personnel 
programs deliver a high return on investment and readiness. We 
fully funded our programs to address operational stress, 
support families, eliminate the use of synthetic drugs like 
Spice, and aggressively prevent suicides and sexual assaults.
    I support the compensation reforms included in the Defense 
Department's 2013 budget submission, which I believe are 
appropriate changes to manage the cost of the All-Volunteer 
Force.
    In closing, Mr. Chairman, your Navy will continue to be 
critical to our Nation's security and prosperity by assuring 
access to the global commons and by being at the front line of 
our Nation's efforts in war and in peace. I assure you, the 
committee and the Congress, the American people, that we will 
focus on warfighting first. We will operate forward, and we 
will be ready.
    I want to thank you for your support. I want to thank also 
the professional staff that sit around us here and for their 
help through the deliberations here in the budget. They are of 
great assistance to us. And I thank you very much, sir, and I 
look forward to your questions.
    [The written statement of Admiral Greenert follows.]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] 
    
    Mr. Young. Admiral, thank you very much. We have tremendous 
confidence in the United States Navy and the United States 
Marine Corps, and we are happy to have your presentation today. 
And we look forward to General Dunford. You will find that this 
committee is supportive. We are not in a negative or 
adversarial role.
    General, we love the Marine Corps, and we are here to be 
supportive, although we will have questions that you might 
wonder sometime if that is being adversarial. It is not. It is 
seeking out our constitutional responsibility to appropriate 
the money and to know where it is going. So we are anxious to 
hear from you today, sir, and you have the floor.

                      Statement of General Dunford

    General Dunford. Thank you, Chairman Young, Ranking Member 
Dicks and members of the committee. Thanks for the opportunity 
to represent General Amos today and articulate the Marine Corps 
budget submission.
    Today more than 24,000 marines are forward deployed and 
forward engaged; 18,000 are in Afghanistan, while others around 
the world are projecting influence, deterring aggression, and 
poised for crisis response. Over the past year the Marine 
Corps, working in concert with our closest joint partner, the 
United States Navy, has provided the Nation a flexible and 
effective means of engaging, responding to crises, and 
providing decision space for our Nation's leaders.
    Your marines provided humanitarian assistance and disaster 
relief in Japan in the aftermath of last year's earthquake and 
tsunami. They flew airstrikes over Libya. They evacuated nine 
noncombatants from Tunisia, and they reinforced our embassies 
in Egypt, Yemen and Bahrain. They did all that while continuing 
to support combat and counterinsurgency operations in 
Afghanistan.
    Natural disasters, regime change, civil uprisings, this 
past year has reminded us that it is impossible to predict the 
future. That is why as our Nation's risk mitigator the United 
States Marine Corps is focused and prepared for unexpected 
crises and contingencies. We are committed to be the force that 
is most ready when the Nation is least ready.
    There is a cost to maintaining that capability, but it is 
nominal in the context of the total defense budget, and it 
provides true value for our Nation. This fiscal year we are 
asking Congress for $30.8 billion. With your continued support 
we will fund ongoing operations around the world; provide 
quality resources for our marines, sailors and their families; 
and allow us to reset equipment worn from more than 10 years at 
war. This will also enable us to posture for the future.
    As our Nation begins to direct its attention to the 
challenges and opportunities of a post-Afghanistan world, a 
world where the Pacific and the Middle East are our focus, the 
Marine Corps will stand ready to respond there and in other 
regions.
    The strategic guidance directs that we rebalance and reset 
for the future, and we have a solid plan to do that. Our plan 
maintains balance across the five pillars of a ready Marine 
Corps: recruiting and retaining high-quality people, 
maintaining a high state of unit readiness, meeting the 
combatant commanders' requirements for marines, and ensuring 
that we maintain appropriate infrastructure investment. We will 
do all that while keeping an eye toward the future by investing 
in the capabilities we will need to meet tomorrow's challenges.
    By the end of fiscal year 2016, your corps will be 
streamlined to 182,100 marines. This Active-Duty force will be 
complemented by the depth of our Reserve component that remains 
39,600 strong. Our corps will be optimized for forward-
presence, engagement and rapid crisis response. It will be 
enhanced by critical enablers, special operators and cyber 
capabilities, all necessary in a modern battlefield.
    Chairman, thanks for the opportunity this morning to appear 
before you, and I look forward to your questions.
    Mr. Young. Well, General, thank you very much.
    [The written statement of General Amos follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] 
    
                          LITTORAL COMBAT SHIP

    Mr. Young. We are looking forward to your responses to our 
questions. One of our Members has a very close scheduling 
problem this afternoon, so I am going to recognize him first, 
and that is Mr. Bonner, who usually has to wait for a long time 
to get his turn.
    But, Mr. Bonner, you are recognized.
    Mr. Bonner. Thank you, Mr. Chairman. And out of my 
appreciation for giving me a chance to go at the top of the 
ticket, I will be brief with my questions, but I appreciate 
this opportunity.
    General, Admiral, Mr. Secretary, thank you for your 
service. We all on this committee, like you, take a broader 
look at how our Navy and our other services work together to 
keep this great country of ours strong and free, and how we are 
able to support our allies around the world.
    I would be remiss on a parochial note if I didn't say a 
special thanks to Secretary Mabus. I had the privilege of being 
with him somewhere, they didn't tell us where, off the North 
Pole last year on the USS Connecticut as the Libyan mission was 
being launched, and I had a chance to see your involvement with 
our Navy that was so involved in that and the respect that you 
command from the young men and women who serve under you. And I 
have had a chance to walk on the beaches of my own district 
when we had the worst environmental disaster in U.S. history, 
the Deepwater Horizon, which is coming up on its 2-year 
anniversary. President Obama chose the right man to help us 
deal with that tragedy, and I just want to personally thank you 
for your leadership, as well as for what you do on a daily 
basis in support of our great Navy.
    Two quick questions, if I might, because while we have a 
broader look, we also have a parochial interest as well. And 
the chairman mentioned in his question the concern about the 
Navy. I remember when I was a young staffer, and Secretary 
Lehman was Secretary of the Navy, and we were looking at a 600-
fleet Navy, and now we are below half that. You mentioned that, 
Mr. Secretary.
    But if you could expand for just a minute on the mission of 
the littoral combat ship, which you have been such a great 
leader of, and which I believe some of our colleagues still 
know so little about and that they oftentimes offer a scathing 
criticism of something they have never seen or they do not 
understand.
    And, Admiral, I am going to give you a chance to take a 
shot at this as well.
    Obviously I have a parochial interest in it, but thinking 
larger about the challenges in the South China Sea, the 
challenges in Iran and other areas of the world where there is 
trouble, as well as the obvious mission with the pirates off 
the coast of Somalia, can you give us an update on where you 
feel the LCS is in terms of its overall role in a strong, 
vibrant United States Navy?
    Mr. Mabus. Thank you very much, Congressman.
    I think the LCS is clearly going to be one of the backbones 
of the Fleet as we go forward. We are committed to buying 55 of 
these very capable ships. They are capable for a lot of 
reasons. They are very fast, they have shallow draft, and they 
are modular.
    We have got three weapon systems being developed for them 
now, and those weapon systems are in the stage of development 
that we expect them to be at this point, antimine, antisub, 
antisurface. The threats of the future, a lot of them are in 
the littorals, are in the brown water that transition from land 
to blue water. These ships can do any mission in those 
littorals, but they also can do blue-water naval needs as well.
    The CNO pointed out that we are putting littoral combat 
ships in Singapore to forward deploy them. We are going to man 
these ships differently. We are going to have three crews for 
every two ships. So we are going to leave the ship in place, 
and we are going to rotate the crews to come in to man those 
ships. And being modular means that as technology improves, as 
technology changes, we don't have to build a new ship, we don't 
have to build a new platform; all we have to do is put a new 
weapon system on it. So I think for that reason they are not 
only incredibly competent and capable now, but they will 
continue to be over the lifetime that they are in our Fleet.
    The last thing I will say is we have already deployed the 
LCS-1 to the Caribbean 2 years early. In a little over 3 weeks, 
it seized more than 3 tons of cocaine. And one of the reasons 
that it did is when these drug runners would--in their fast 
boats would see a gray hull on the horizon, they would just 
assume they could outrun it, and they were wrong. They were 
wrong every single time. And I think that the T-shirt that the 
workers wear as they are building these, that variant of these 
great ships, it says ``A Pirate's Worst Nightmare,'' is 
absolutely correct.
    Mr. Bonner. Admiral.
    Admiral Greenert. Sir, maybe just using what is in front of 
us for perspective, today if I am doing countermine, I have to 
what they call ``mow the lawn.'' You drive back and forth if 
you are clearing the field. So I can cover an area about the 
size of that bench maybe at one given time.
    Imagine in the future with a littoral combat ship, I have 
its own remote vehicle. It is a multimission rural vehicle, and 
it is out with its own propulsion. Attached, tethered to it is 
a mine-hunting sonar. So it is out doing the rest of this area 
among us, while over there the ship itself is neutralizing 
mines that were already found. And that can be done with a 
drone that is in the air, a helicopter that is in the air. So 
that gives you, again, that much more area for neutralization. 
Or they offload a small boat out the back door or out the side 
door in the back, and they go neutralize it with either marine 
mammals or people if you need to. So while we are out here 
searching for mines, there is no, if you will, man in the loop, 
so there is a safety aspect to that, too.
    So there is tremendous volume. There is a safety aspect. 
You can already see, I think, the flexibility of the mission to 
clear the field. If you need to get rid of the mines or just 
find where they are not, all that is available to you at a 
larger rate.
    I just close by saying it is speed, it is volume, and it is 
modularity, and it is change-out of payload. And in my view, 
that has to very much be what I need to think about, what we 
need to think about in the future, lethal payload, that can be 
modularized and installed on vessels.
    Thank you.
    Mr. Bonner. Mr. Chairman, I have got other questions I 
would like to put in the record with your permission.
    Mr. Young. Without objection, sir, that will be done.
    Mr. Bonner. And again, I can't thank you enough for letting 
me go ahead. Thank you so much.

                      AIRBOURNE ELECTRONIC ATTACK

    Mr. Young. Mr. Dicks.
    Mr. Dicks. Thank you.
    Admiral Greenert, I have a concern with the joint airborne 
electric attack mission that our combatant commanders need to 
support our ground forces. As I understand it, most of the EA-
6Bs are going to be decommissioned. And with the F-18 line I 
think going down in 2014, I think you are going to have a 
problem. You are not going to have enough of these aircraft, 
which are so important for jamming and other. Can you tell us 
about that? I think the Marine Corps is getting rid of their 
EA-6Bs because they are old and expensive. How are we going to 
meet the requirement?
    Admiral Greenert. Well, sir, when we defined our mission 
and, therefore, how many of these Growlers we were going to 
buy, EA-18Gs, to replace our EA-6Bs, we determined what was 
needed for the airwing and what was needed for Navy and Joint 
Forces in an expeditionary role. We have the electronic attack 
mission. We have the lead for the Department of Defense, and we 
turned to our sister-brother services and said, so what is your 
plan so that we can make sure we buy enough, to your point. 
That decision was made. The Air Force has a different plan to 
provide their jamming need for their missions. I will defer to 
General Dunford to explain the Marine Corps's options, if you 
will.
    The other piece of this is the pod, the future pod. We got 
a super aircraft, but we have a legacy pod that does the 
jamming. It provides the signals; it provides the amplitude of 
that. We have that program on line. It is called the Next 
Generation Jammer. We have got about $1.8 billion in this FYDP 
for that, too. Those have to go hand in hand, Congressman, to 
make sure that we meet that mission both afloat and ashore, and 
we are on track for that.
    Mr. Dicks. Do you think it is a good idea to shut down the 
F-18 line in 2014 with this concern about the Joint Strike 
Fighter?
    Admiral Greenert. With the Growlers, or are you talking 
about the Hornet itself? We transitioned to a new question, the 
Hornet line, right? Shut down the Hornet line.
    I think it provides a great leverage for those that are 
building the Joint Strike Fighter. I think that we need to keep 
an eye on it, be vigilant, and make sure that the Joint Strike 
Fighter delivers. And we have another year to look at it, but I 
think we need to look very closely at it.
    Mr. Dicks. Thank you.
    General.
    General Dunford. Congressman, the only thing I would add is 
we have looked very carefully at the life of EA-6Bs, and we are 
doing all we can to keep them in service as long as possible 
until the arrival of the F-35, which, as you know, will bring 
its own inherent and extraordinarily capable electronic attack.
    Mr. Dicks. So you are going to use the Joint Strike 
Fighter?
    General Dunford. We will in the future, that is correct, 
Congressman.

                           MARINE CORPS RESET

    Mr. Dicks. General Dunford, what about reset cost? The last 
time I saw General Amos, he was concerned about fixing up the 
equipment that we are bringing back, and how do you see that 
budget?
    General Dunford. Thanks, Congressman. That is a very 
important question.
    As you may know, about two-thirds of our units at home 
station right now are at the greatest state of readiness. And 
the reason for that is we have an excess amount of equipment in 
Afghanistan relative to the units that are on the ground 
because of the mission requirements.
    The Commandant's number one priority is supporting our 
marines and sailors in harm's way, and that is exactly what we 
have done. We have this year in the fiscal year 2013 budget a 
request for $1 billion in reset costs. We have additionally 
identified what we call strategic reset costs, and that is the 
cost of equipment, that is the cost of resetting or replacing 
equipment once we come out of Afghanistan. And so our 
expectation is once we actually pull the gear out of 
Afghanistan in the future, we will need about 2 to 3 years to 
reset that equipment, in some cases repair that equipment or 
replace that equipment that can't be repaired, and that cost is 
approximately $3 billion, Congressman.
    Mr. Dicks. Is that in the 5-year plan?
    General Dunford. That is in the 5-year plan, Congressman. 
But again, the critical piece of our reset dollars is we really 
expect that we are going to need to spend that money for 2 to 3 
years after our equipment is actually brought out of 
Afghanistan.

                  VIRGINIA CLASS SUBMARINE PROCUREMENT

    Mr. Dicks. Admiral Greenert, on the Virginia-class 
submarines, there is--as I understand it, we have gone to two a 
year, but there is one year out there that we only have one. I 
thought we made a decision to do two a year. Can you explain 
what the reality is here or what the chances are of getting a 
second one? Will Congress have to step in here?
    Admiral Greenert. The reality of the situation was money. 
2014 was a particularly tough year as we build our budget. If 
one looks, you will see a lot of the retirements that we talked 
to, ship retirements. They mostly occur in 2014. So in that 
year we build one SSN.
    Now, there is a block of nine, so we have two in 2011, two 
in 2012, two in 2013, one in 2014, and then we have two a year 
through the FYDP. We have a block of nine. To get a block of 10 
would require an incremental funding approach, multiyear 
procurement. We are in deliberations with the committees, as 
you well know, sir, and we would certainly appreciate your help 
in that.
    Mr. Dicks. All right. Thank you.
    Thank you, Mr. Chairman.
    Mr. Young. Thank you, Mr. Dicks.
    Mr. Lewis.

                                SUICIDE

    Mr. Lewis. Thank you very much, Mr. Chairman.
    I will have questions to follow the first line to have you 
share with the committee the significance of modularity in 
terms of ships that we are looking to be of service over time. 
But before getting to that, dealing with the personnel matter, 
I am interested in having, Mr. Secretary, the Secretary of the 
Navy as well as the Marine Corps talk with the committee a bit 
about suicides within our troops.
    There has been a problem that we are all aware of, it is a 
volunteer force, but in the meantime the real pressures of 
service once you are out there become an entirely different 
thing. Could you describe for us the experience the Navy has 
had, as well as the Marine Corps, with suicides in recent 
years?
    Mr. Mabus. Yes, sir. The experience over the last year, the 
Marine Corps suicide numbers went down fairly significantly, 
but the flip side of the coin, the Navy's numbers went up. Both 
the Navy and the Marine Corps have put out very aggressive 
programs to address the causes and to prevent these tragedies 
that are striking too many. One is too many, but the numbers, 
again, while they are getting better for the Marine Corps, are 
not getting better for the Navy. And we want to make sure that 
we have the programs in place that people will seek help 
through hotlines. The Marines have a hotline now that if you 
call, you will talk to a marine in terms of getting you through 
whatever rough patch it is.
    We are focusing on leadership, both at the committing 
Officer (CO) level, but, more importantly, at the Non-
Commissioned Officer (NCO) level, in terms of recognizing signs 
and being ready to intervene in these things. I am announcing 
on Monday a program called 21st Century Sailor and Marine. One 
of the things that we have noticed as we run various programs, 
whether it is for suicide or sexual assault or any number of 
things, we are finding some common themes across them. One of 
them that is found in suicide, in sexual assault, in relief of 
COs is abuse of alcohol, and we are going to attack that in 
some ways to--not to ask people to quit drinking, but to ask 
people to make sure that they don't do something either life-
ending, career-ending or career-changing because they don't use 
it correctly. So we are focused on this.
    Instinctually you would think that people who have deployed 
recently would be at higher risk. So far--and we follow these 
numbers very carefully, I get an update every 2 weeks about 
what is happening in the force--so far we cannot make a strong 
connection between deployment and suicide or some of these 
other activities that we have to intervene in and that we have 
to do a better job of making sure that our sailors and marines 
don't engage in.
    Mr. Lewis. Okay. Thank you.
    General Dunford. Congressman, as the Secretary said, this 
is an issue that has been of extraordinary importance across 
the Department for all leadership. And the Commandant has 
certainly been personally and decisively engaged in the issue 
of suicide over the last few years. In 2009, we had 52 
suicides; in 2010, we had 37; and last year we had 32. We are 
encouraged by those trends, and we want to believe a key part 
of it is the training that the Secretary spoke about, which is 
focused on our small unit leadership and their ability to 
recognize the signs of distress and decisively engage in the 
fellow marine's health.
    The other thing we did is introduce what we call the 
``DSTRESS.'' It is the hotline that the Secretary alluded to. 
Last year was a pilot program. We used it in a limited part of 
the Marine Corps. We just are in the process of completing a 
contract that will expand that DSTRESS hotline across the whole 
Marine Corps.
    The Secretary hit it really right on the mark when he 
associated many of the same things that we're focused on, 
whether it be sexual assault, alcohol abuse or suicides. At the 
end of the day, the Commandant sees all these issues as 
leadership issues, and it is about creating a climate within 
which our marines will be successful. It is about making sure 
that bystanders intervene in sexual assault. It is making sure 
you have that same attitude with fellow marines when it comes 
to cases of suicide, and we are very much focused on that. And 
again, we are cautiously optimistic that the focus that we have 
had over the past year, year and a half on small unit 
leadership is making a difference, but this is an area that we 
will never be complacent in and an area that we will never be 
comfortable at doing all that we can.

                       WEAPONS SYSTEM MODULARITY

    Mr. Lewis. Thank you for those responses. I must say making 
certain that we are doing everything that is necessary to have 
services available, that are acceptable, and, in a way, a level 
of confidentiality that allows a person to have some sense of 
security about that which they are discussing with advisors and 
counselors is very important.
    In the meantime, back to another part of our world. Those 
ships at sea are fundamental. I am not sure that automatically 
the committee is fully aware of the significance of modularity 
in terms of our program for making sure our ships are operating 
at the highest possible level over time. So would you talk out 
loud about modularity, what that means to the Navy and the 
Marine Corps?
    Mr. Mabus. Yes, sir. If I could take the first shot at 
that, and then I will turn it over to the experts here on 
either side of me. But modularity means that as we get 
improvements in technology, which almost inevitably happens, as 
our research and development provides new ways of doing things, 
that we don't have to start over and get a new ship, get a new 
platform to do it; that we can simply pull out whatever we have 
got there and replace it. The same thing with combat systems, 
communication systems, whatever is on the ship.
    Back in the 1990s, I was an ambassador to Saudi Arabia, and 
I showed up in 1994, and on my desk was a Wang computer. Now, 
Wang had been out of business then for about 8 years, but we 
had invested in that particular computer system instead of the 
capabilities that a system would offer us. And so one of the 
things that we are trying to do not only with the LCS, but also 
with all the ships that we build, is to make them modular so 
that as things change, as technology improves, that we can keep 
up with the latest technology, but that we don't have to 
replace the whole platform to do that.
    Admiral Greenert. Thank you.
    Open architecture, I think, is the simplistic term for 
this. We define the military standards, the performance 
standards, how much power it needs, the cooling, and you say, 
industry, what do you got? And have them come in. If it is a 
weapon, what is the lethality that you can deliver?
    We have had success in our Tomahawk systems. A lot of those 
are drop-in. You might remember when the Congress gave us the 
Spruance-class destroyer, people looked at it and said, what 
are we going to do with that; it has got two guns and one box 
on the front. And then we modularized the Tomahawk missile, and 
we ended up with like 96 Tomahawk cells there. Similarly that 
is an example, sir. So it is not really a new concept, but it 
sure is effective.
    General Dunford. Similarly, Congressman, what we are really 
talking about is ensuring that we develop a program, we factor 
in growth, and growth that we can do in an efficient way. For 
example, in command-and-control systems, to the extent that we 
can be software-based, we will.
    Even as we developed a light vehicle, certainly far less 
complex than the LCS, what we try to do is anticipate what 
changes, what growth requirements will exist over the next 7, 
10, 15 years, and ensure that we can absorb that growth in a 
particular program to, again, be more efficient stewards of 
resources over time.
    Mr. Lewis. Well, thank you.
    Mr. Chairman, you have given me plenty of time. Thank you 
very much.
    Mr. Young. Thank you, sir, Mr. Lewis.
    Mr. Frelinghuysen.

                           SIZE OF THE FLEET

    Mr. Frelinghuysen. Thank you, Mr. Chairman.
    I sort of want to get back to where the chairman started 
off with the numbers of ships here. Whether it is in Asia or in 
the Atlantic, numbers matter. And inherent in some of our 
discussions is exactly how large the Fleet is. Today there are 
288 ships in the Navy, 25 below the 313 minimum requirement. 
And under this budget the Navy will have 19 fewer ships than 
planned, representing about a 15 percent lower--15 percent 
fewer ships than the Chief of Naval Operations says the Nation 
requires.
    How are we going to accomplish what we need to accomplish 
in the Asia-Pacific with so few ships? How are we going to 
accomplish this pivot.
    Mr. Mabus. Well, again, if I can take the first.
    Mr. Frelinghuysen. Because I know you talked about 
capability. Every ship we have has new capabilities, but 5 
years to get to the proper number, given the aggressiveness of 
China, doing things to deny our ships and our planes access to 
their so-called territorial waters, we don't have much time 
here to move ahead here.
    Mr. Mabus. Well, two general points and then a couple of 
specific ones, if I could. One is that the CNO in the 
Department of the Navy is conducting a force structure 
assessment right now to look at the new strategy, the new 
requirements for the Navy, and put the force that we need to do 
those requirements against it. The 313 number that you 
mentioned came out of the 2005 Quadrennial Defense Review, and 
it is time for us to take another looking at the numbers 
needed.
    Mr. Frelinghuysen. To some extent we are laying out our 
Asia-Pacific strategy right now. We are deploying some littoral 
combat ships potentially in Singapore. Assuming the Marines are 
agreeable, we are going to send 3,000 marines to Darwin. We are 
going to be reducing forces in Okinawa. I mean, what is the 
timetable here to get the number of ships we need to project 
the type of power we need to have in the region?
    Mr. Mabus. The second general thing I would say is to echo 
something the CNO said earlier. By putting littoral combat 
ships in Singapore, by putting DDGs in Rota, by putting patrol 
boats in Bahrain, the four DDGs (Guided Missile Destroyers) in 
Rota, for example, does the job of 16 ships if they were 
homeported in the U.S. So you can do exactly the same mission 
with only forward-deployed ships.
    Mr. Frelinghuysen. I am talking, sir, about having four 
Aegis destroyers in Rota. How many do we have in the Pacific?
    Mr. Mabus. Well, if I could, I will turn that one over to 
Admiral Greenert, to the CNO.
    Mr. Frelinghuysen. Admiral, how about weighing in here?
    Mr. Mabus. But I do want to talk about the total numbers of 
the fleet when the CNO talks about this.
    Mr. Frelinghuysen. It is a little unclear. I think numbers 
do matter here. I don't think we can wait 5 years.
    Admiral Greenert. The numbers do matter, sir, but you have 
got to have the right ships where they need to be, and what we 
are saying is they need to be forward. That is where they are 
effective. Because our job is if some dust-up, something 
occurs, we have to act now. We are the enabling force, we are 
the first force.
    With that said, we have to have the right forces forward; 
therefore, four DDGs in Rota so they can be there for missile 
defense for whatever is needed. By doing that, I don't have to 
deploy forces to Europe. Now I have freed up rotational forces 
to go elsewhere for the same number, as you said, 285.
    Mr. Frelinghuysen. Okay. So the numbers are in state of 
flux. But what are we assigning to the Pacific here? We often 
talk about the tyranny of distance here. The ships we do deploy 
obviously have wear and tear associated with them. How are you 
going to put it all together with such a vast area where we 
continue to be challenged by, shall we say, the Chinese denying 
us access?
    Admiral Greenert. Today, my demand signal, based upon what 
the combatant commanders ask, and that goes into the Joint 
Staff and they say, this is what you are required to provide. I 
provide 50 ships, it is on the little chart there----
    Mr. Frelinghuysen. I saw that.
    Admiral Greenert [continuing]. To the Western Pacific. In 5 
years that number will be 55. As I project out, the global 
force management plan that I am assigned to provide out there, 
we are assigned to provide out there. And then as you see in 
the Arabian Gulf, 30, that will go to 32.
    Well, how do you do that? You do that by operating forward, 
by having four littoral combat ships, as I said, down in 
Singapore all the time there, able to provide that presence, 
because, sir, that is what it is all about. It is presence 
forward. It is being able to be there.
    A large Navy back in the States that has to rotationally 
move all the time, as an example, has to be that much larger if 
it is all about rotation, because you have to support going to, 
somebody coming back, somebody getting ready, as opposed to 
being there. And that is what makes the difference.
    Mr. Frelinghuysen. But if we are going to pivot to the 
Pacific, we are going to have--our ships are going to be and 
the crews are going to be--obviously, you know, there is going 
to be a lot of stress not only on operations and maintenance, 
but also on crews. And this is all being put into the----
    Admiral Greenert. The littoral combat ship as built and as 
designed from the get-go would have three crews supporting two 
ships, so they will rotate between those two ships. One is on 
each ship and one is in a trainer and in schools. And then one 
of those ships is forward. So two ships, one in CONUS, one 
forward. They will rotate every 16 months to a location, and 
then there are three crews. So as you said, it is a 
rotational----
    Mr. Frelinghuysen. And you are putting into the mix the 
possibility that some of these ships may have to come in for, 
you know, reequipping and resetting. You are putting into the 
mix as we pivot to Asia, factoring that in as well. You don't 
keep all your ships out there at all times. Some are in for 
reconditioning.
    Admiral Greenert. They will rotate. Exactly. For example, 
ships in Japan, they rotate back to the United States about 
every 6 years, thereabouts, for deep maintenance, they go into 
drydock, do major upgrades, modularity. And that will be in 
Singapore, for example, when they are there. They will be there 
about 16 months and then rotate back.
    Mr. Frelinghuysen. And the Singaporeans have agreed to 
this?
    Admiral Greenert. Yes, sir, it was at their invitation.
    Mr. Frelinghuysen. I know we have gone military to military 
with the Philippines, and there is probably not a great desire 
on their part to have us based there. But we are taking a look 
at these issues and the stress of this distance to meet these 
obligations.
    Admiral Greenert. Yes, sir. The concept of a littoral 
combat ship to Singapore in and of itself is not a brand new 
concept. We always designed the littoral combat ships to be 
forward stationed somewhere, and by virtue of the Singapore 
Government inviting us to pursue this concept, as I mentioned 
in my statement, we are going to send the Freedom there in 
about a year at their invitation, the Singapore Government, to 
deploy for 8 months to work out the concept of how this is 
going to--exactly how this is going to work, what kind of 
support will we need there at Changi.
    Mr. Frelinghuysen. And this is all recognizing, of course, 
that we have a growing situation where the Chinese are in some 
ways, you know, taking territorial waters way out into the 
Pacific here, and you are saying we can project enough power to 
meet those types of challenges and tests.
    Admiral Greenert. We can. And that is a good point that you 
make. We have to do it right.
    Mr. Frelinghuysen. We absolutely have to.
    Admiral Greenert. So air/sea battle and all the concepts 
across anywhere, from policy to a concept of operations and how 
we work with allies and then have a common set of protocols in 
the South China Sea with all of our allies, all of that is in 
the mix, sir, and we have to do that right.
    Mr. Frelinghuysen. And we are with you and we are in 
support. We appreciate what you do. If we are making this major 
shift, we need to make sure you have enough ships to do it, 5 
years is a long time to get up fully to the number that you say 
you need.
    Thank you, Mr. Chairman.
    Mr. Young. Thank you, Mr. Frelinghuysen. Mr. Visclosky.

                          REQUIRED FLEET SIZE

    Mr. Visclosky. Thank you, Mr. Chairman. Gentlemen, thank 
you. I would like to follow up on Mr. Frelinghuysen's line of 
questioning.
    Mr. Secretary, perhaps you would want to follow up because 
you indicated you wanted to respond more fully to the total 
size, if you would, of the Fleet, because 313 sticks in mind. I 
understand you have a force structure review. We are at 288.
    I guess one of my questions is, is there a consensus as to 
when that force structure will be finished and we will have, if 
you would, a new number and a new composition of the total 
Fleet?
    Mr. Mabus. I think it is fair to say that the force 
structure assessment will be done by the end of this fiscal 
year, because you not only have to put it against a strategy, 
you have got to put it against particular plans as well.
    But I do think that history is important here, that one of 
the great military buildups that we have had in the United 
States, the Navy from 2001 to 2009 went down, went down by more 
than 30 ships and went down by almost 49,000 sailors. So the 
first thing, when I was fortunate enough to get this job, that 
we had to do was stabilize the Fleet to keep it from getting 
smaller, and we have done that. Today we have 36 ships under 
contract and they are all firmed fixed-price contracts.
    That was the other thing we were facing was that too many 
of these programs, the costs had gotten out of control and we 
were not going to be able to afford the numbers that we have 
had. And I was remiss in my opening statement for not thanking 
this committee for the things that you have done to help us 
keep the number of ships. And we understand where so many of 
these ships and our ability to buy them have come from, and it 
has come from the people in this room, and I want to thank you 
so much for that.
    But with this new Budget Control Act, with the fact that we 
had to cut back in terms of spending the amount that we did, 
the fact that on a purely financial basis we deferred building 
these ships that the chairman mentioned at first; but a 
majority of the ships that we are deferring building are joint 
high-speed vessels which are not combat vessels, and we will 
build enough joint high-speed vessels to meet every war plan 
requirement, and on and on. We were building oilers before 
need. We have slid those. We are not canceling those, but we 
are having to slide them later on because of the budget 
situation.
    Mr. Visclosky. If I could, because I have got limited time 
and I have another question. On the review, if it is completed 
at the end of this fiscal year, you don't anticipate anything 
in the review would impact on the request before the committee 
for 13?
    Mr. Mabus. No, sir.

                        COMPOSITION OF THE FORCE

    Mr. Visclosky. The second thing is it has been reported 
that when that review is completed and there is a number and we 
look at what the composition is, that it may be some apples and 
oranges; that contrary to previous years, hospital ships might 
be included in that number to make it look better. Is that true 
or not?
    Mr. Mabus. Well, two things are true. One is that we are 
looking at force structure assessment and, two, we are looking 
at accounting rules. But the thing I will pledge to this 
committee is that if we make a change, and that is certainly 
not a done deal, that we will be very transparent about it. We 
will give you the count before the new rules and after the new 
rules.
    The current accounting rules have been in effect for a 
couple of decades now. Accounting rules as we have looked back 
have changed over time, and it is mainly based on what you use 
the ships for; that solely support ships you tend not to count, 
ships that are combat, part of your combat fleet, you do.
    Mr. Visclosky. We can count on transparency.
    Mr. Mabus. Absolutely.

                 NUCLEAR POSTURE REVIEW IMPLEMENTATION

    Mr. Visclosky. I appreciate the chair's indulgence. Mr. 
Frelinghuysen chairs the Energy and Water Subcommittee. I have 
the privilege of serving on it as well. And for years we pushed 
DOD, DOE, relative to a nuclear posture review. That was 
completed in 2010. I personally think it is very important to 
determine what that strategy is so that we can have a 
determination on weapons and then ultimately what DOE has the 
responsibility for and NNSA has.
    Administration officials have recently apparently indicated 
that there could be steps taken to strengthen our deterrence 
posture at lower stockpile numbers, speaking vaguely, I might 
add, of the nuclear posture review implementation study that is 
currently taking place. I am concerned that in the case of DOE, 
in the budget consequences that are not insignificant, that we 
are compelled to hit a moving target as far as what that 
strategy will be.
    Do you have a sense that there is going to be some 
fundamental change in that strategy, since the Navy is a 
significant participant?
    Mr. Mabus. Sir, as you know, that strategy, that look is 
being undertaken by the White House right now and I don't have 
any idea of where it is going to come out. But I am glad that 
you have mentioned the dual roles here of DOD and DOE, because 
in the Ohio class replacement program that the Navy is 
responsible for the most survivable leg of the nuclear triad, 
our ballistic missile submarines, the Department of Energy has 
responsibilities in terms of reactors for that, and the funding 
for them has an impact on how fast we can move in terms of the 
Ohio class replacements.
    Mr. Visclosky. There was a deferral in the budget request 
for 2 years.
    Mr. Mabus. There was a slide of 2 years, that is correct. 
That is going to mitigate some risk from the Navy's standpoint 
because we have still put a significant amount of money into 
research, development, and design of that ship, and we think it 
will take down some risk by moving it 2 years to the right.
    Mr. Visclosky. Thank you, Mr. Chairman.
    Mr. Young. Thank you, sir. Mr. Crenshaw.

                    HOMEPORTING OF AIRCRAFT CARRIERS

    Mr. Crenshaw. Thank you, Mr. Chairman, and thank you all 
for being here today. A special word of thanks, Mr. Secretary. 
I know you were in Jacksonville, Florida, in my home district 
this week and talking about some exciting plans, and I hope you 
saw the love that our community has for the Navy. And I can 
tell you as somebody that represents that community where we 
have got two naval bases and a Marine base, it is hard not to 
understand how important the Navy is to our national defense, 
and sitting on this subcommittee it is hard not to understand 
how important planning and funding are to our military.
    So it is hard for me based on that information not to have 
a couple of questions about the budget that is in front of us--
one about ships, one about planes.
    We talked some about the whole issue of ships and 
shipbuilding, and I have heard you talk before and I appreciate 
the fact that we have got all the technology advancements that 
have been made, but people talk about the fact that numbers do 
matter. And I have watched, the Navy is asked to chase pirates 
in Somalia and ferry humanitarian aid to Haiti, interdict drugs 
in the Caribbean, protect the Strait of Hormuz, put destroyers 
in the Mediterranean to deal with Iranian missiles. It is tough 
to meet all those demands.
    I guess my question that always comes to mind, and you have 
answered part of it, is that age-old question, How do you have 
one ship in two places at the same time? And that is always 
tough. The platforms are necessary, and that is of concern in 
terms of are we taking risks with this budget.
    And the other example is more I guess immediate and 
parochial in the sense that this budget doesn't have any 
additional funding to do the military construction that is 
needed to upgrade a homeport on the east coast for a nuclear 
carrier. I think you all know that when we went to an all-
nuclear force back in 2005, we had always had the strategic 
imperative to have redundancy, to have at least two homeports 
on the east coast and the west coast.
    So when we went all nuclear, I know there was a study done, 
it has kind of spanned my career in Congress, they spent 2\1/2\ 
years to decide what to do, a decision was made. A 218-page 
report said that it is a strategic imperative to have two 
homeports for nuclear carriers on the east coast. I think 
Secretary Gates at the time, who was the Secretary of Defense, 
said that it is not acceptable to have one homeport on the west 
coast and it is certainly not acceptable to have only one 
homeport for nuclear carriers on the east coast. So that was a 
decision that I think was reviewed in the Quadrennial Defense 
Review in 2010. But this budget doesn't have any money to 
continue the upgrades that started 3 years ago.
    So because of that, I have maybe one big question and one 
little question. The big question to you, Mr. Secretary, is, 
When you made all the tough decisions you had to make when you 
put this budget together, are there risks that you recognize 
that we are taking because we can't do everything necessary in 
terms of our national security strategy? I guess in other 
words, are those decisions based on the strategic imperatives 
of national security, or to a certain extent are they based on 
budget constraints, and, if so, what kind of risks do you think 
are involved and are they manageable?
    And maybe just for the Admiral, just can you tell the 
committee that plans haven't changed in terms of the strategic 
imperative to have two homeport nuclear carrier bases, in other 
words, to disburse our strategic assets? And if so, is that 
still the plan? I guess I would ask you, is it still planned to 
be at NAS Mayport, or Mayport, and do you know when there will 
be additional budget dollars to finish those remaining 
projects?
    If you could answer those two questions, and then I have 
one quick question about an airplane.
    Mr. Mabus. This budget was a strategy-driven budget, it was 
not a budget-driven strategy. The strategy came first. It was 
very carefully thought through, as I said in my opening 
statement. We had the President of the United States, we had 
the Secretary of Defense, all the Joint Chiefs and all the 
service secretaries had full participation, and the combat 
commanders were also involved in that.
    In making some of these decisions, some of them were very 
hard and some of them were strictly budget-driven. You have 
alluded to one. But we wanted to ensure that we could meet 
every requirement that this new strategy set out. And I am 
confident, and I know the CNO and the Commandant are confident 
as well, that in this budget the Navy and the Marine Corps can 
meet every mission that this new strategy assigns to us, and 
that we will have a flexible force that can meet any mission 
that we don't foresee right now.
    So there is never enough money in the world to take out all 
risk, and that is a quote from Secretary Gates, I believe. But 
I think that looking at the new strategy, looking at the funds 
that were going to be available or that we had to manage, we 
have matched the budget to the strategy and not vice versa.
    Mr. Crenshaw. Thank you. Admiral.
    Admiral Greenert. Strategic, being able to strategically 
disburse nuclear carriers remains our policy on the east coast, 
on both coasts, and the coast that we don't have it right now 
is the east cost. So that remains a policy, sir.
    I can't tell you when we will have enough money. I don't 
know what the fiscal future looks like. We didn't have enough 
money in this future-year defense plan, and that is why we have 
not pursued that.
    To answer your question on risk, it is capacity is the 
simple answer. Where is the risk? Well, for us we had to retire 
force structure, how do we accommodate that and operate forward 
and have to forward deploy as much as feasible and pursue those 
opportunities that were presented to us to forward-station and 
forward-deploy Navy forces.
    Mr. Crenshaw. Thank you. So you haven't changed the 
strategic goal of having, you know--like on the west coast I 
think we have three nuclear carrier home ports and the goal is 
to someday have two on the east coast.
    Admiral Greenert. That remains our goal; yes, sir.

                             P-8A AIRCRAFT

    Mr. Crenshaw. Real quick, Mr. Chairman, if I might, I want 
to ask a quick question about aircraft. In this subcommittee a 
lot of times we have people come in and they say things are 
taking longer than they thought or costing more they should. 
And I don't know that we pay enough attention to the good 
programs, the P-8s and the Advanced E-2C Hawkeye, the Advanced 
Hawkeye, those programs seem to be models of the way we ought 
to do acquisition. So I wanted to congratulate you all, and I 
think the committee would, for the work that is being done 
there.
    But I did, I guess, have a concern when I saw that in the 
5-year plan that went on with the budget, that I think some of 
the Advanced Hawkeyes are cut out and some of the P-8s are cut 
out in the 5-year plan. I wondered if that is a permanent cut 
or if that is just you still plan to build the number that you 
originally set out to do, but you will just do it over a longer 
period of time?
    Mr. Mabus. The answer is to the second part of your 
question, in terms of P-8s, it is one of the platforms that we 
need the most. P-3s are getting really long in the tooth, 
although they performed amazingly well. My former naval aide 
was a P-3 pilot. He flew the same airframe that his father 
flew, not the same type, but the same actual airframe. And we 
have, because of purely financial decisions, we have moved 10 
P-8s outside the FYDP. Now, they are planes from--there is one 
plane that we moved and 15-20 planes that we moved in--10 
planes that we moved in 2016, and we buy back one in 2017. So 
they are toward the end of the FYDP. We are going to keep the 
numbers in 2013, 2014, 2015 the same. And our plan, though, is 
to buy the entire number of P-8s, to do the full buy that is in 
the program of record now.

                BROAD AREA MARITIME SURVEILLANCE PROGRAM

    Mr. Crenshaw. Thank you. And real quick, BAMS, that is an 
unmanned surveillance aircraft, as you know, and I think the 
Air Force had one similar called the Global Hawk and they have 
decided not to build that. Does that give you concern? Because 
I know they were kind of on the same platform, a lot of 
commonality. Is that going to make it cost more? Are you 
concerned about that, or are you still on track?
    Because let me tell you, I was down at Pax River sitting in 
a room watching the Strait of Hormuz, and it is just an 
incredible valuable asset in terms of surveillance. So I wanted 
to see how the BAMS program is----
    Mr. Mabus. The BAMS (Broad Area Maritime Surveillance) 
program is on track. It is, again, an incredibly valuable 
program. And what the Air Force canceled was one block, Block 
30 of Global Hawk, and they even called out in that 
cancellation that the Navy BAMS program would continue and 
would be an important part based on the same airframe.
    Mr. Crenshaw. Thank you so much. Thank you, Mr. Chairman.
    Mr. Young. Thank you, Mr. Crenshaw. Mr. Calvert.

                              NAVAL ALLIES

    Mr. Calvert. Thank you, Mr. Chairman, I appreciate it. Just 
to carry on with what Mr. Frelinghuysen was talking about as 
far as the number of ships and requirements--and, again, thank 
you for your service; I certainly appreciate your being here.
    Our allies--and I know there is a lot of sensitivity about 
Japan and that part of the world--but is there any talk about 
Japan--I know going beyond their Constitution, their self-
defense force and the rest--to augment some of their capability 
to assist the United States, especially in the South China Sea 
and some other areas that are obviously of concern, including 
the Aussies and maybe even the South Koreans?
    Mr. Mabus. Well, the Japanese self-defense forces are 
upgrading their equipment, sometimes pretty dramatically. They 
have a commitment to buy F-35s. There are ships, some of which 
they have on station, some of which they are building, are 
Aegis equipped so that they are operational with ours.
    We have, as you know, a carrier strike group homeported in 
Yokosuka. We have aircraft in two airfields, Iwakuni in the 
south and Atsugi in the middle of the country. We have Marines 
in Okinawa with their air assets. We have an amphibious ready 
group homeported in southern Japan. The Japanese currently 
provide host nation support for that, I believe $4 billion this 
year, to keep those sailors and marines and those assets in 
Japan.
    I think one of the things that the CNO talked about is the 
importance of interoperability, the importance of having ships 
like our Aegis that can operate and seamlessly integrate with 
Japanese ships or with any of our other allies in that part of 
the world. The Koreans have ships that are Aegis equipped as 
well, and that is certainly part of this strategy, that we have 
to maintain those partnerships, we have to maintain that 
interoperability around the world.

               ELECTROMAGNETIC AIRCRAFT LAUNCHING SYSTEM

    Mr. Calvert. I appreciate that. One of the criticisms, and 
this isn't pointed at the Navy or the Marine Corps necessarily, 
but servicewide, is the entire procurement process that I think 
and I think most Members would agree needs to be reevaluated. 
We have had problems in the Air Force, obviously the Marines, 
the Navy, everywhere.
    So as we look at bringing on new technology--which we want 
to make sure we do, but also be cost-aware--some of these new 
technologies, like this new electromagnetic launch system--
which is very promising technology I know for the new carrier 
systems that we plan on bringing on--but as I read about it, 
there has been a lot of concern on whether or not it is going 
to work. And I was wondering how the testing is going, the 
certification; is the schedule accurate, are we going to delay 
the new carriers because of this launch system? Just in 
general, how is that coming along?
    Mr. Mabus. Yes, sir. The EMAL (Electromagnetic Aircraft 
Launch) system, the testing is on track. It will be ready to be 
integrated into the new Ford aircraft carrier on schedule. The 
Ford will be built on schedule, including EMALS.
    But if I could, talking about procurement and our 
acquisition strategy, I am really proud of what we have done in 
the Navy on that. And I absolutely share your concern about how 
we buy things and making sure that taxpayers get value for the 
money that we spend on their behalf. And in the programs that 
Navy has in shipbuilding, I will just take shipbuilding, the 
Virginia class submarine has been coming in under budget and up 
to a year ahead of schedule. The DDG-51s, the last three that 
we bid out, we saved $300 million on those three, lower than 
what had been budgeted.

                      AIRCRAFT CARRIER COST GROWTH

    Mr. Calvert. Now, in that regard, though, I understand that 
the Gerald Ford has a $811 million cost growth that it has to 
pay for in the future years defense program, and I also heard 
there may be another $600 million cost overrun that you haven't 
accounted for as yet. Is that true?
    Mr. Mabus. Well, a couple other programs, and then I will 
be happy to talk about the Ford. LCS, 40 percent decrease in 
cost, firm fixed-price contracts stretching out 5 years.
    On the Ford, when Navy started to look at building a new 
carrier, new type of carrier in the late nineties, the plan was 
to build three transitional carriers, to put things like EMALS, 
the new technology, on three different carriers so that you 
didn't have it on one and raise the risk.
    In 2002, the decision was made at the Department of Defense 
to change that strategy, to put all this new technology on one 
carrier, on the Ford. You sent the risk through the roof by 
doing that.
    The Ford, the contract was supposed to be signed in 2006 
for that ship. Because of all the new technology, it was not 
signed until 2008. When the contract was signed, that ship was 
30 percent designed. That is not the way to build a ship. Now, 
that is history. That is where we were.
    What we have done to try to arrest that growth--and there 
has been cost growth, there has been cost growth not only from 
the shipyard but there has been cost growth from some of the 
other elements like EMALs--the result is the shipyard will make 
no money on this carrier. We have taken their fee away from 
them because of cost growth. So any money that goes to the 
shipyard is just going to be what they are spending in their 
cost.
    In terms of things like EMALs, we have capped the amount 
that we are going to pay for EMALs and basically told the 
company that is building it, General Atomics, that if you are 
asking us to bet our ship on it, we are asking you to bet your 
company on it. It is going to have to come in inside of a 
certain budget.
    The other important thing that I think we have done is we 
have taken the lessons learned, because this is a brand new 
ship, it has got a new hull, it has got a new reactor, it has 
got a new propulsion system, it has got a new electrical 
system, a new island, a new launch system, a new arresting 
gear, is taking all those lessons learned to make sure that the 
next carrier, CVN-79, the John Kennedy, won't have those issues 
and that we will be able to bring it in at the cost that we 
think it should cost.
    But you are absolutely correct. There has been cost growth 
in this carrier. It was a factor of decisions that were made a 
long time ago, and to quote the punch line of an old joke, 
``That bed was already on fire when I got in it.'' But I am 
committed and the Navy is committed to making sure that we take 
firm action now, and that in the future as we continue to build 
these new types of carriers this isn't going to happen.
    Mr. Calvert. I am very optimistic about the EMAL system. I 
think that is a great new technology to go to. Just sometimes 
with these new technologies, the tail is wagging the dog. And 
as far as slowing down the whole process to get something 
across, you are confident that is not the case.
    Mr. Mabus. I am.
    Mr. Calvert. Thank you.
    Mr. Young. Mr. Calvert, thank you very much. Mr. Moran.

                  JOINT STRIKE FIGHTER--SJOVL VARIANT

    Mr. Moran. Thanks, Mr. Chairman. Nice to see you, Mr. 
Secretary, and welcome aboard, Admiral.
    General Dunford, I don't know whether you have followed the 
F-35B development as closely as General Amos has. Are you 
prepared to get into that?
    General Dunford. I am, Congressman.
    Mr. Moran. Okay. Well, as of November of last year, the B 
variant of the F-35 had only 230 pounds of margin between its 
current weight and its maximum weight of 32,557. That means 
there is only two-tenths of 1 percent weight growth possible 
per year during your performance measurement period. By 
contrast, the FA-18 had a seven-tenths of 1 percent weight 
growth each year during its development phase.
    Given that the F-35--I know this gets pretty technical 
here, but it is an important issue. Given that the F-35B has 
structural and propulsion design fixes to implement over the 
coming years, are you concerned that the plane's potential to 
breach its maximum weight would put in jeopardy its vertical 
landing capability?
    So the real question is: What mitigating factors would you 
be encouraging the program office to implement should it 
approach its maximum weight when it is so close to it already, 
and how confident are you that it won't breach that 32,557 cap?
    General Dunford. Congressman, first you mentioned General 
Amos' personal involvement, and he is personally and decisively 
engaged in the F-35 program. He meets every 2 weeks with the 
program manager, the Lockheed Martin team, on a frequent basis, 
and the entire team in the Marine Corps and the Department of 
the Navy. He is involved with every single decision that 
affects 1 pound on the F-35. You mentioned November as a point 
in time, and actually the trends have been positive since 
November and we are actually getting better than we were back 
in November.
    Weight is always a concern with aircraft. Weight is a 
particular concern with the F-35B. But based both on the trends 
and the decisive engagement of leadership right now--and, by 
the way, the engineering solutions that have been identified 
for those challenges they had in 2011--we think all trends are 
in a positive direction and we are cautious--we are optimistic, 
we are fully optimistic about the F-35B.
    Mr. Moran. Well, okay. You are optimistic. I guess we want 
to raise that as a warning flag, though. I think you are 
getting very close and it should be of some concern, and I 
trust it is.
    General Dunford. Congressman, I am not saying it is not a 
concern. I guess what I am just saying is that the trends are 
moving in the right direction. So you identified a point in 
time when there was an issue. We are actually better off than 
we were back in November.
    Mr. Dicks. Can you tell us what you have done to do that?
    General Dunford. I think really it is the engineering 
theme. We had some engineering solutions that were identified, 
and weight is an independent variable in every single one of 
the engineering solutions that has been identified. Again, with 
the Commandant's personal engagement as well as the design team 
in Lockheed Martin sitting down and realizing that weight is an 
independent variable, the solutions that have been identified 
for those engineering challenges have been such that they have 
not penalized the aircraft with regard to weight.
    So, again, I think with regard to the scrutiny that is in 
the program, as well as the trends right now, that is why I say 
it is not just wishful thinking. I think the trends are 
absolutely in the right direction, and everyone that is 
involved in the program is sensitized to the issue of weight 
and how important that is, particularly in a V-STOL aircraft.

               BROAD AREA MARITIME SURVEILLANCE AIRCRAFT

    Mr. Moran. Well, we can't help but have confidence and 
trust that you are on top of it.
    Mr. Secretary, I want to ask about the BAMS in the context 
of the Global Hawk again because, as you know, the BAMS system 
is based on the Global Hawk airframe with different sensors. 
You know the Navy intends to buy 68 BAMS, making it the world's 
largest long endurance marinized UAV flight, and the Air Force 
intends to mothball the 18 Global Hawk Block 30s that this 
Congress intended be used. In fiscal year 2012, we appropriated 
money for two additional Block 30 aircraft which the Air Force 
may now decide to reprogram to other needs.
    Should the Air Force not purchase the two additional Block 
30s, a production break may very well impact the cost and 
schedule for the BAMS. It seems to me the two have an 
interrelationship here.
    So you tell me, is there not--are we not compromising our 
intent on the BAMS system if we have a significant line break 
on the Global Hawk production?
    Mr. Mabus. Congressman, I don't believe we are, and I think 
I have gotten the Air Force nomenclature correct here. But what 
the Air Force canceled, as you pointed out correctly, was Block 
30. The Air Force did not cancel all of their Global Hawks. 
They have Block 60 still in production, and because of that and 
because of our BAMS production, it is my understanding that 
there won't be a production break.
    It was one of our concerns in terms of BAMS, but the way 
that--when the Air Force canceled Block 30 for purely financial 
reasons, it was because of the way it was being used, because 
of the sensors it was using. The U-2 was simply a more economic 
way to go.
    But with the demand signal for BAMS, the demand signal for 
other Global Hawk airframes, and with the numbers that we are 
going to buy, I think that we don't foresee the per-unit cost 
rising as a result of that decision by the Air Force to cancel 
that one block.
    Mr. Moran. Well, I hope you are right. Do we have time for 
one more question?
    Mr. Young. Yes, you do, sir.

                  SEA BASED BALLISTIC MISSILE DEFENSE

    Mr. Moran. Thank you, Mr. Chairman. And I address this to 
Admiral Greenert or Secretary Mabus.
    According to the GAO, once the flight to a retrofit is 
installed on our destroyer, the DDG-53, the Navy will certify 
that the upgraded Aegis system is mission-ready without 
validating with live ballistic and cruise missile targets, 
validating that it can perform integrated air and missile 
defense missions. So why would the Navy certify a major upgrade 
to the Aegis system, saying that it is combat-ready without 
testing the system's ability to perform both air and ballistic 
missile defense?
    Admiral Greenert. I will have to take that one for the 
record and get back to you, because how we certify I couldn't 
tell you right now. So I would like to lay that down for you 
and see how we reconcile that.
    [The information follows:]

    The Navy is committed to conducting operational testing of the 
Aegis Advanced Capability Build 12 (ACB-12) upgrades and the 
certification of the ACB-12 Integrated Air and Missile Defense (IAMD) 
capability. The test plan includes sufficient simultaneous live-fire 
testing to fully validate IAMD capabilities. Working with US Fleet 
Forces Command (USFFC), Commander Pacific Fleet (CPF), the Navy's 
Commander Operational Test and Evaluation Forces (COTF), and the 
Missile Defense Agency (MDA), the Navy has developed a certification 
and operational test program that allows for analysis and incorporation 
of required fixes as well as certification prior to deployment. This 
plan also supports incremental increases in the MDA funded ballistic 
missile defense (BMD) capabilities that are expected to be fielded 
within the current ACB-12 test and certification timeline. A full year 
of testing is planned for USS JOHN PAUL JONES (DDG 53) following the 
completion of the ACB-12 installation that includes multi-mission and 
IAMD events that align with MDA planned BMD events. An update to the 
Aegis Enterprise Test and Evaluation Master Plan (TEMP) is in progress 
that will incorporate the operational testing planned for ACB-12 and is 
planned for completion in FY 2013.

                     AIR AND MISSILE DEFENSE RADAR

    Mr. Moran. Let me follow up then. For Flight III of the 
DDG-53 restart, the Navy will spend at least $2.2 billion 
developing a new air and missile defense radar, the AMDR. 
According to the GAO, the development and integration of the 
AMDR on DDG-51 ships face significant technical challenges that 
may be difficult, and I am quoting, to overcome within the 
Navy's current schedule. Further, a Navy red team assessment 
found that the introduction of AMDR on DDG-51 leads to 
significant risks in the ship's design and a reduced future 
capacity, and could result in design and construction delays 
and cost growth on the lead ship.
    So the question is, and this will be my last question, 
given that the DDG-51 is the Navy's primary surface combatant, 
what assurances can the Navy provide to the subcommittee that 
the Flight III upgrade can proceed as planned?
    Mr. Mabus. I will also get you a far more detailed 
technical answer, Congressman. But, as you know, the AMDR radar 
came off the DDG-1000. It is an incredibly capable radar. The 
Navy design acquisition team looked at whether we could put the 
AMDR on the Flight III DDG-51s. It was determined that we could 
with the current configuration and that there would be no cost 
growth for the planned cost of the lead ship and then the other 
ships in Flight III.
    It was the Navy red team that, as you pointed out, came up 
with some concerns. Since that red team has met, I believe 
those concerns have been met by the design team. That was the 
reason the red team was put together. It was the reason that we 
wanted to identify if there were any risks. But in the 
briefings that I have received about whether the Flight III is 
on schedule and on track to have the budget--I believe the 
first Flight III ship will start in fiscal year 2016, the 
information that I have is that it is. But I will get you, as I 
said, a far more detailed engineering analysis of why we 
believe that.
    Mr. Moran. I think that would be helpful.
    [The information follows:]

    As has been done previously in the DDG-51 program, the DDG-51 
Multi-year Procurement (MYP) will include nine Flight HA destroyers, 
with the Flight III capability introduced in FY 2016 as an Engineering 
Change Proposal (ECP). Introducing the Flight III design by an ECP 
allows for maximum flexibility and ensures the lowest risk in 
introducing the Air and Missile Defense Radar (AMDR). Both the DDG 51 
program and the AMDR development may proceed without introducing 
substantial risk to either effort and allow for ADMR or Flight III 
capability when the design is fully matured and ready for fielding. The 
Navy intends to compete the nine ship DDG 51 MYP in FY 2012 for a FY 
2013 award. In conjunction, the Navy will continue towards a down 
select of the AMDR design in FY 2013 and will begin preliminary and 
contract design efforts in FY 2012-FY 2015. This timeline will allow 
for introduction of Flight III on the FY 2016 ship, as planned.

    Mr. Moran. Just to respond to the concern raised by the 
GAO, you may have already fixed it, as you are saying. So just 
to keep us up to date on it would be fine.
    Mr. Young. Thank you, Mr. Moran.
    The patient Mr. Cole will be next, and following that the 
Chairman will take his turn and then we will be getting close 
to the end of this hearing.

                  CAPABILITIES OF OTHER NATIONS' NAVYS

    Mr. Cole. Thank you, Mr. Chairman. I may be at the end of 
the chow line, but you always make sure I get something to eat. 
So I appreciate that very much.
    Gentlemen, thank you very much for your service. It is 
appreciated. You may or may not agree, but I am not especially 
happy with the reductions that we are having to make, but I 
think you have done it in about as thorough and thoughtful a 
way as it could possibly be done. I really do mean that. I 
think clearly, in the whole defense budget and your respective 
component, there has been a great deal of careful thought about 
what to do under a difficult budget circumstance. So I laud you 
for that.
    Mr. Calvert anticipated some of my questions about what 
some of our friends are doing. I would like to ask you, you 
have told us where you think we are going to be in 5 and 10 
years, looking forward as best you can. What do you think our 
sort of near peer competitors are going to be, the Chinese in 
the Pacific, the Russians in the Atlantic? What do you 
anticipate? You clearly didn't make your plans in a vacuum. You 
have got some idea of where they are headed.
    Mr. Mabus. The Chinese are clearly investing a lot in 
maritime capabilities, but they start from--while it is a large 
fleet, the numbers of highly capable ships is fairly small. And 
given where we are and where they are, I am very comfortable 
that we will be able to meet any sort of challenge.
    And I won't constrain that to the Chinese. That may come 
our way. That the types of ships we are building, the numbers 
of ships we are building, where they are going to be deployed, 
the persistent presence that we will have, the fact that our--I 
think our secret weapon is our sailors and marines are just the 
best trained, the most highly skilled of any military force on 
Earth--that given all those things, that with this new defense 
strategy, with the challenges we face around the world in a 
global manner, that we can meet any of those.
    And as importantly, I think, these platforms and these 
people will be flexible, will be agile, because the only 
certainty that we face is uncertainty, and we don't know the 
next thing that is going to come over the horizon, and we just 
have to make sure that we have platforms that are flexible 
enough and people that are well-trained and innovative enough 
to meet whatever that new thing is.

                     MARINES IN THE WESTERN PACIFIC

    Mr. Cole. If I could ask you a couple of specific questions 
particularly about the Western Pacific, the first one would be, 
give us sort of an update on the movement from Okinawa to Guam, 
where are we at on that? Obviously, Japan has had an 
intervening situation that is both political and obviously much 
more important in terms of a natural disaster that is going to 
undoubtedly impact the timetable and the discussions.
    Second, I recently had the privilege with a number of 
members of this committee to travel in the region. I had not 
been there for many years. I had a couple of observations. The 
first was I haven't been that welcome in a long time anyplace I 
have gone. I mean, they really are anxious to see a strong 
American presence in the area, and obviously a great deal of 
concern about the South China Sea and the Chinese assertions of 
territorial waters in that area.
    But one of the countries we stopped at was the Philippines. 
And this may not actually be a fair question for you, but if 
you have got an opinion I would like to get it. They had made 
requests in terms of, number one, they wanted--they were very 
interested in even easier access to their facilities and a sort 
of rotating presence.
    Two, they were interested--I think we are giving them a 
Coast Guard cutter--they were interested in getting another one 
and building up to two or three.
    Third, they were very interested, they are Army heavy and 
sort of Air and Navy weak, and very interested in sort of an F-
16 squadron somewhere down the road. That would be a 
considerable investment on our part and they are not in a 
position to finance all of those things.
    So if you have some thoughts on those things, I would very 
much appreciate it.
    Mr. Mabus. On the movement of Marines in the Western 
Pacific, first, as you know, we are in discussions with the 
Japanese Government, and a couple of things have come out of 
those discussions already. One is that we are delinking the 
move of some Marines off of Okinawa with the building of the 
Futenma replacement facility. Now, as a result of that, the 
Marine air units will have access to Futenma until a new 
replacement facility is built.
    Secondly, the number of Marines going to Guam will be 
somewhat less than 5,000. Part will be permanent change of 
station, part will be rotational there. As you noted in 
Australia, we are going to have 2,500 rotational Marines going 
in and out of Darwin. I think the important number there is 
that when all the moves are made, there will be as many, at 
least as many Marines west of the International Date Line as we 
have today. So the focus on the Western Pacific from the 
Marines' standpoint will be there, absolutely.
    In terms of the Philippines, I can't give you a specific 
response to your question, only to say that I had two personal 
reactions. One is that as I travel through the region, the 
esteem with which the United States is held, in our keeping sea 
lanes open for everybody, our protection of the world economic 
system because of that, and how much that is valued by the 
countries in that region; and, secondly, as someone who served 
in the Navy when Subic Bay in the Philippines was a huge base 
and then watched as the Navy left, the fact that it has come 
back around has been an interesting development to me. And I 
would defer to Admiral Greenert, though, in terms of any 
specifics he would like to add about the Philippines.
    Admiral Greenert. Today we operate about once a month out 
of Clark Air Base--it used to be Clark Air Force Base--with the 
Philippines as a partner, and we go out flying and they call it 
maritime domain awareness flights. So there is activity there. 
They support and we operate together in the southern Philippine 
archipelago for counterterrorism. We have been doing this since 
2002. We have--it is called a Joint Special Operations Task 
Force. So it is about ramping up the level.
    It is a long-term commitment though, I think you 
understand, for us to consider going and basing again, staff 
force agreements, and it takes time to get the infrastructure 
in place, and I think that is the question: How long are we 
willing to make the commitment?
    Mr. Cole. Thank you very much. Mr. Chairman, thank you.

                        SECURITY OF NAVAL ASSETS

    Mr. Young. Thank you, Mr. Cole.
    I hope that you all noticed this afternoon that the members 
of this subcommittee are really interested and dedicated to 
their responsibility under the Constitution to the national 
defense. I am very proud of this subcommittee. All of the 
members are very heavily involved in what our responsibilities 
are.
    I want to take a few minutes. A few years back, I had the 
privilege of being invited to visit with a new President who 
had not taken office yet. I was invited, Jerry Lewis was 
invited, and several others. When it came time for my 
presentation as chairman of the Appropriations Committee at the 
time, I said to the President-elect, when you are dealing with 
the national defense, you should not decide about the 
investment based on politics, based on a number that sounds 
really good. You have got to make that decision based on what 
is the threat to the United States of America and to the forces 
that defend our country. And in a very respectful way, he 
reminded me that he was the President and that he probably knew 
how to handle that job.
    Nevertheless, I still have that concern. In an earlier 
hearing today, at the MILCON subcommittee, we talked about 
budget-driven missions or mission-driven budgets. Frankly, I am 
somewhat concerned. And I realize that in today's world 
everybody wants to cut the budget, not necessarily the defense 
budget, but to cut spending. And I think that is a good mantra 
and I think that I am part of that. But when it comes to 
national defense, we have got to make the decisions that are 
based on the real threat, because the threat is not going to 
change because of some number we pick out of the air. So, as we 
go through the process, that is always on the back of my mind.
    But now that leads me up to my real question. The world is 
basically in turmoil. We have Navy facilities, we have Marines, 
we have Army, we have Air Force that are deployed around 
different parts of the world where there are problems, where 
there are protestors, where there are riots, where there are 
governments killing their people, where there are people 
overthrowing their governments. And I am specifically thinking 
about Bahrain, with the headquarters of our Fleet in Bahrain, 
and there has been considerable unrest in Bahrain, which is a 
bit of a surprise because they have always been very, very 
stable.
    How are we being affected by all of these uprisings, by all 
of these protests, by all of this turmoil that is taking place 
in the world? Are our troops safe? Do they have the ability to 
do whatever they need to do to carry out the mission, or are we 
short-cutting them for any reason at all? I am not suggesting 
that we are, I am asking the question.
    Mr. Mabus. To answer these in a little bit of reverse 
order, I think that this budget that we have put in does not 
short-cut anybody in terms of the things they need to 
accomplish, the mission that the country has asked our sailors 
and Marines to do. And I do think that this was a strategy-
driven budget, as I said I believe to Mr. Bonner, instead of a 
budget-driven strategy.
    But in terms of your specific question about where we have 
assets, we have talked about some of the places, and a lot of 
the places we have naval and Marine assets are some of the most 
stable places on Earth--Japan, soon to be Singapore, Spain, 
Italy--that our assets there are welcome and are very secure.
    In Bahrain, we watched, as you did, last year when the 
protests against the Government of Bahrain occurred. Never at 
one point in that protest did any of the protestors raise the 
Fifth Fleet presence there. We never had travel restrictions, 
for example, on our sailors or their families in Bahrain. We 
kept the school open in Bahrain almost the entire time. But we 
obviously keep a close eye on something like that.
    February 14th was the anniversary of the start of those 
protests, and there was some activity, but not much, in Bahrain 
on that day, on that anniversary, which was being watched very 
carefully.
    I had a meeting this week with the commander of the Fifth 
Fleet, Admiral Mark Fox, and asked him. And he said that from 
his vantage point in Bahrain, that our assets there and, most 
importantly, our people there, he thought, were very safe, very 
secure, and that our ability to operate out of there was, 
today--which is all you can look at--guaranteed and secure.
    Mr. Young. Mr. Secretary, this committee is going to be as 
helpful as we can to help you get the most for the dollar and 
to provide whatever it is that we need to provide to face 
whatever the threat might be. So we will be in a support role. 
We might think you are not spending enough here, there, or 
somewhere else. That being the case, we will talk to you about 
it. But we are in this together and we are going to meet our 
responsibilities, as you always have, our military always has.
    So we appreciate this hearing. This has been very good. The 
questions have been interesting. Your responses have been very 
interesting and very transparent, and we appreciate all of 
that. So, we want to thank you very much.
    Before we close, Mr. Dicks has the last word.

                    USS ``ENTERPRISE'' INACTIVATION

    Mr. Dicks. Thank you, Mr. Chairman. I completely concur in 
your support for what the Navy and Marine Corps are doing.
    Admiral Greenert, the OMB budget includes more than $900 
million to decommission the Enterprise. It seems highly unusual 
to use a 1-year appropriation for a 5-year contract.
    How common is it for the Navy to obligate 1-year funding 
for a multiyear contract? Is the contract to decommission the 
Enterprise considered severable? Can you fill us in on this? If 
Congress gave you the authority, would it be in your interest 
to do a multiyear--or incremental funding, I guess, would be 
the more appropriate word?
    Admiral Greenert. I think it would. I need to get you a 
better answer on, okay, what is the long-range plan. As you 
well know, this workforce will go up while we decommission the 
Enterprise, and then it will go back down, because she is a 
project, she has a beginning, she has an end, almost like a 
commissioning in a strange way. So let me get back to you on 
that.
    [The information follows:]

    Traditionally, Operations and Maintenance, Navy (OMN) funding 
contracts are 12 months. However, there are several cases, such as the 
ENTERPRISE inactivation, that are obligated in one year while executed 
over several years. In the case of ENTERPRISE, since the nuclear work 
associated with the inactivation is planned over several years as a 
deliverable, or non-severable effort, the effort must be fully funded 
upon award of the contract based on the current ``bona fide need'' rule 
(31 USC 1502(a)) and also with guidance contained in the DoD Financial 
Management Regulation (FMR). The ``bona fide need'' rule requires that 
we establish and articulate a need when using a particular year of 
funding and that when entering into that need, the effort be properly 
financed to complete the effort, regardless of the length of the 
contract.
    Funding the inactivation of the ENTERPRISE over several years, 
incrementally, would require congressional action similar to that which 
allows the incremental funding of aircraft carrier Refueling Complex 
Overhauls.
    It is not in the Navy's interest to incrementally fund the 
inactivation of USS ENTERPRISE. Incremental funding authority provided 
in law develops an ``out year'' requirement. If accompanied by a 
subsequent out year funding reduction, this would mandate a bill for 
the Navy in the out years. Additionally, the contractor may charge a 
premium for increased administrative costs and associated risks of an 
incrementally funded contract.

    Mr. Dicks. The Enterprise, I have had a long time working, 
going back to Admiral Rickover. He made a call to me one day. 
He said, ``Norm you go down to that shipyard in Bremerton and 
you tell those people down there I am mad as hell and I need 
that Enterprise out of there.''
    And the Enterprise has eight reactors. It is the only one 
of our carriers that has eight reactors. They are going to be 
taken out in Norfolk and then it is going to be taken around to 
Puget Sound Shipyard to be taken apart. We have also taken 
apart all of the submarines over the years.
    But take a look at this. Is there some way in Congress we 
could work with the authorizers if doing this incrementally 
would help your budget? I don't see any reason why we shouldn't 
try to at least take a look at that.
    Admiral Greenert. As usual, you are thinking ahead for us. 
Thank you very much for that opportunity.
    Mr. Young. Okay, Mr. Dicks. Thank you for your comment 
about Admiral Rickover, because when he used to come see me, he 
was always mad at me.
    Mr. Lewis.
    Mr. Lewis. Mr. Chairman, he wasn't mad at you, as a matter 
of fact. But Mr. Chairman, thank you for having this hearing. 
It is very valuable for all of us.
    One of the items I just wanted to mention to these great 
leaders that seemed to me to be an underlying theme asked by a 
number of members, Mr. Frelinghuysen, Mr. Calvert, Mr. 
Crenshaw, the Chairman himself, a 600-ship Navy down to--the 
goal is 313. Those ships are better used--your answer to the 
decreasing numbers--they are much better used and effective if 
they are out there where we may have to use them.
    Mr. Lewis. In the meantime, several questions from Members 
said, what about those alternative demands that seem to be ever 
present; pirates, drugs, et cetera? I have no idea how you 
readjust those priorities, but these ships with shrinking 
numbers have got to be where America needs to protect itself 
and its interests, and you need to share with us your concerns 
that lie there. I didn't hear very much of that today, Mr. 
Chairman, but a very good hearing, and I appreciate it.
    Mr. Young. Mr. Frelinghuysen, do you have a last word?
    Mr. Frelinghuysen. No.
    Mr. Young. Mr. Visclosky, do you have a last word?
    Mr. Visclosky. Thank you, Mr. Chairman.
    Just a couple of things, gentlemen. One, on the leasing of 
foreign-built ships, I would want to thank you. In 2007, 51 
percent of your sealift capacity was foreign built; today it is 
43 percent. I will simply state for the record that since we 
are the United States Navy, I would hope that we could work our 
way to have domestically built ships exclusively used for 
sealift.
    Secondly, I have an interest as you answer for the record 
of the justification for that 2-year slippage on the submarine 
program. We had touched on it earlier.
    And finally, in following up on Mr. Dicks, for the record, 
why does it take 5 years to take a ship apart? We won World War 
II in 4 years. It takes 5 years to take a ship apart. For the 
record.
    Thank you, Mr. Chairman.
    [The information follows:]

    In the close examination of all programs and the budget pressures 
on the Department, the Navy judged that the OHIO-Class Replacement 
ballistice missile submarine could be delayed two years and still meet 
its operational requirements with some increased operational risk. Long 
term, the Navy will need twelve OHIO-Class Replacement SSBNs to meet 
existing class maintenance and at-sea presence requirements. Ten SSBNs 
will be adequate until the OHIO-Class Replacement SSBNs begin their 
first docking availability. This year's budget continues the ramp-up 
for OHIO-Class Replacement engineering manning, albeit at a slower 
rate, to support FY 2021 lead ship construction.

    Mr. Dicks. It is a 5-year contract. 
    Mr. Chairman, can I just say one final word?
    Mr. Young. That is your second last word.
    Mr. Dicks. Very quick, though.
    I am glad you remembered that we added the money for the 
mobile landing platform a couple years ago. Mr. Lewis was very 
concerned about that. And I saw your plans for that. That looks 
very exciting, and it saves you a lot of money, according to 
the experts.
    Mr. Mabus. Mr. Chairman, if I may have one last word to 
thank the committee. As I said, we know where--the ability to 
build these ships and aircraft and to provide for the sailors 
and marines that serve with us, and we deeply, deeply 
appreciate it. Thank you.
    Mr. Young. Thank you very much.
    Mr. Cole, do you have a last word?
    Mr. Cole. No, sir.
    Mr. Young. No more last words?
    The committee is adjourned.
    [Clerk's note.--Questions submitted by Mr. Kingston and the 
answers thereto follow:]

                         Ohio-Class Replacement

    Question. What is your degree of confidence that we will not have a 
gap in submarine launched ballistic missile capability, given that we 
are looking at slipping the Ohio-class replacement by 2 years, and 
existing SSBNs are approaching the end of their service life with very 
little flexibility for extension?
    Answer. The two-year delay reduces the available SSBN force to 10 
ships during a portion of the transition from the OHIO Class to the 
OHIO-Class Replacement. During this period SSBN overhauls will be 
complete. The absence of SSBN class overhauls (currently, average of 
two in long-term maintenance) during this transition period helps 
mitigate this reduced available force level and will support current 
at-sea presence requirements with moderate operational risk. Unforeseen 
issues with construction of the OHIO-Class Replacement or emergent 
material problems with the aging OHIO Class will present challenges. 
Therefore, we must be very vigilant.
    If available SSBN force requirements remain at ten, as the OHIO-
Class Replacement SSBNs begin their first extended midlife overhauls, 
12 SSBNs may be required to offset ships in planned maintenance.
    Question. What risks do we assume in continuing to operate our 
existing ballistic missile submarine fleet beyond what we initially 
planned? This scenario seems to leave little room for any additional 
schedule slip in the development and procurement phases.
    Answer. The Navy extended the current OHIO Class SSBN, from its 
original service life of 30 years to 42 years, based on detailed 
engineering analysis, including evaluation of the current material 
condition of the Class, remaining nuclear fuel levels, and expected 
future operational demands of the OHIO SSBNs. With the two-year delay 
to the OHIO-Class Replacement SSBN, there is no additional margin. 
Additional delay in OHIO Class Replacement could prevent meeting 
current sea-based strategic deterrent requirements. The Navy will be 
closely managing risk during the transition period.

                                  Iran

    Question. Are you confident in our ability to ensure continuous and 
safe freedom of movement through the Straits of Hormuz?
    Answer. Yes. We take the threat of attack very seriously and 
maintain intelligence, surveillance, and reconnaissance (ISR) assets at 
a high state of readiness in order to discern Iranian intentions as 
quickly as possible and respond appropriately.
    Question. The Operation Millennium Challenge exercise (2002) was 
fairly widely known to have revealed some concerns with our 
capabilities in this specific area; so, in light of the cuts that we 
are considering making, has anything changed, either with our 
capabilities or with any potential adversary capabilities?
    Answer. Recent budget cuts will not impact our ability to prevent 
Iran from being able to close the Strait of Hormuz in the near term. 
Consistent with the Defense Strategic Guidance released in January and 
the 2007 Maritime Strategy, the Navy postures continuous, credible 
combat power in the Western Pacific and the Arabian Gulf/Indian Ocean 
to protect our vital interests, assure friends and allies, and deter 
potential adversaries. Navy will continue to prioritize the Western 
Pacific and the Arabian Gulf/Indian Ocean while providing resources to 
``rest of the world'' missions as available.
    Question. In light of considering even further cuts to the DoD, are 
we risking our ability to ensure that the Straits of Hormuz remain 
open?
    Answer. Navy's PB13 budget submission includes investments for 
capability improvements in mine warfare, defense against small boat 
attacks, and intelligence, surveillance, and reconnaissance (ISR), 
further bolstering the U.S. Navy's ability to prevent Iran from closing 
the Strait. Additional budget cuts beyond those informing the PB13 
Future Years Defense Program (FYDP) will require further prioritization 
of limited assets and could eventually impact Navy's ability to counter 
Iranian aggression.

                     Alternative Fuels Initiatives

    Question. In the past two years, the biofuels industry has sought 
legislative support for the DoD to secure authority to execute long-
term (20+ years) contracts for the purchase of biofuels. A long-term 
contract commitment would go a long way toward facilitating private 
sector financing of things like refinery infrastructure. However, as 
introduced, long-term contracting legislation has attracted negative 
attention due to high ``first year'' costs of such a contract.
    Are there ways that we can provide the biofuels industry with 
better certainty with respect to purchasing the supply of these fuels?
    Answer. It is the long-term contracting authority in question here 
that could provide the biofuels industry with the certainty needed to 
enable investment in production facilities. In our discussions with 
industry, they have expressed that a 10 to 15 year long-term 
contracting authority would be sufficient to catalyze investment from 
the commercial sector. This contracting authority needs to be on a 
``pay-as-you-go'' basis, where a long-term fuels purchasing contract is 
viewed as an operating lease, that is, the yearly contract cost is paid 
for in that year's budget (termination liability must also be set aside 
in the first year). This approach differs from a capital lease, where 
the entire contract lifetime cost must be reserved in the first year of 
the contract's budget. Long-term purchasing authority with capital 
lease constraints would be of little value to government in encouraging 
the industry as they are likely to be untenable from a budgeting 
perspective.
    In addition the biofuels industry needs to be assured that the 
Renewable Fuels Standard 2 (RFS2) and corresponding Renewable 
Identification Numbers (RINs) will remain intact for the project life 
of their projects. This would allow for more certainty in economic 
planning and also serves to incentivize biofuel production.
    Question. Won't this help us in the long run with respect to 
reducing costs?
    Answer. The ability to engage in long-term contracts as detailed 
above would aid greatly in driving down the costs of biofuels to the 
government. If industry can phase the recovery of their capital 
expenditures over a longer period of time, the amount recovered per 
gallon delivered will go down accordingly. As long-term authority 
catalyzes commercial market investment, efficiencies will be realized 
as additional production facilities are designed and built. 
Efficiencies can also be realized as feedstock demand reaches 
commercially mature scales.
    Question. Has the Navy considered a long-term contracting proposal 
in the fiscal year 2013 budget request?
    Answer. The Department of Navy is coordinating with the Office of 
the Assistant Secretary of Defense for Operational Energy Plans and 
Programs to address scoring as well as long-term contracting proposals.

                            USMC Downsizing

    Question. With the Marine Corps projecting cuts of 20,000, will 
these be specific targeted military skill sets or across the board 
cuts?
    Answer. Marine Corps endstrength reductions result from right-
sizing the Marine Corps to meet the anticipated security environment 
and needs of the Nation after the drawdown in Afghanistan as well as 
the impacts of the Budget Control Act on the Department of Defense 
budget. The force funded in the 2013 budget is fully capable of 
executing all assigned missions in the new strategic guidance and is 
optimized for forward-presence, engagement, and rapid crisis response. 
It balances capacity and capabilities across our forces while 
maintaining the high level of readiness on which the Nation relies.
    In developing the force of the future, the Marine Corps 
incorporated the lessons learned from ten years of war and reshaped 
organizations, capabilities and capacities to increase our utility and 
flexibility across the range of military operations. Our 182,100 Marine 
Corps represents fewer infantry battalions, artillery battalions, 
fixed-wing aviation squadrons, and general support combat logistics 
battalions than we had prior to 9/11; however, it adds cyber operations 
capability, Marine special operators, wartime enablers and higher unit 
manning levels.
    This enduring strength level and force structure ensures that the 
Marine Corps retains the necessary level of non commissioned officer 
and field grade officer experience and war-fighting enablers to support 
the future security environment. The Marine Corps drawdown plan ensures 
the Marine Corps remains the Nation's expeditionary force in readiness 
while simultaneously keeping faith with our Marines and their families 
who have excelled during the last ten years of combat operations.
    Question. How will these personnel cuts impact deployment/dwell 
time ratio for those remaining?
    Answer. As the Marine Corps reduces endstrength by approximately 
5,000 Marines per year and as we drawdown in Afghanistan, the Marine 
Corps will return to a more sustainable deployment to dwell time ratio. 
The Marine Corps will continue to support operational requirements and 
our commitment as the nation's expeditionary force in readiness. The 
Marine Corps will always be forward-deployed in our partnership with 
the Navy aboard amphibious ships. The Marine Corps' mid-term deployment 
to dwell goal is 1:2 for active duty units and 1:4 for reserve units 
with a long term goal of 1:3 for active duty units and 1:5 for reserve 
units.

                              F-35B STOVL

    Question. We were pleased with the SECDEF's recent decision to lift 
probation on the F-35B STOVL variant earlier this year. Can you outline 
the Marine Corps variant's performance over the last 14 months and to 
describe the reasons that led to this decision?
    Answer. There has been sufficient progress in F-35B development, 
test and production over the last year such that no unique issues 
require more scrutiny than that given to the other two variants of the 
F-35. The F-35 is progressing well in flight test metrics, resolving 
technical issues, and meeting performance requirements.
    In October 2011, the F-35B satisfactorily executed a limited 
demonstration of ship suitability when two aircraft completed the 
initial sea trials on the USS Wasp. Testing included flight envelope 
expansion, airborne and deck handling qualities, and aircraft effects 
on the shipboard environment. The sea trials were very successful, and 
flight deck heating and exhaust jet blast velocity demonstrated 
satisfactorily results.
    The following are some examples of progress the F-35B has made:
     F-35B weight remains essentially stable since January 
2011.
     Engine performance data collected has allowed credit for 
better lift performance, and the Vertical Landing Bring Back (VLBB) key 
performance parameter (KPP) has maintained consistent positive margin.
     In 2011, the F-35B performed on or ahead of the test plan. 
Total flights planned versus actual were 293/333 and total test points 
planned versus actual were 2,272/2,636.
     The FS 496 bulkhead has been redesigned for production, 
with fixes identified for retrofit as needed.
     The F-35B fatigue test (also known as durability test) 
resumed again on January 19, 2012 after having been halted for new 
bulkhead fabrication and instrumentation and test article 
reconstruction in November 2010.
     The redesigned upper auxiliary air inlet door hardware 
began flight test in December 2011. Analyses of the results from early 
test flights are promising and will continue pending weather and the 
pace of flights. Modification kits for aircraft retrofit ordering began 
in parallel with this testing in order to gain clearance for fleet 
STOVL mode operation as soon as possible.
     Airworthiness concerns with the lift fan clutch heating 
issue have been mitigated by the incorporation of a temperature sensor 
that alerts the pilot to take corrective action if the clutch exceeds 
acceptable temperatures. A detailed root cause investigation to 
determine a permanent fur is underway.
     The vertical lift propulsion system driveshafts are being 
custom fitted with spacers to ensure the shaft can accommodate the 
airframe thermal expansion and contraction. This temporarily eliminates 
the airworthiness concerns with the current driveshaft design. A new 
driveshaft that can meet the actual aircraft environmental requirements 
is in the early phases of the design process.
     The airworthiness risk assosciated with roll post actuator 
heating has temporarily been mitigated by insulating the actuator with 
a thermal blanket. The critical design review for a new actuator design 
was conducted January 19-20, 2012.
    Based upon their assessment of requirements and recent system 
performance, the Commandant of the Marine Corps and other Department of 
Navy leadership recommended the removal of F-35B from probationary 
status. The Secretary of Defense determined F-35B had made sufficient 
progress in development, test and production and on January 20, 2012 
announced that F-35B was no longer in probationary status.
    Question. We fully understand that our allies are critical to the 
success of the F-35 Joint strike fighter program. Some forget that the 
JSF program is not only one of our largest defense programs, but that 
of many of our allies as well. What is the current assessment of the 
impact that international partners and allies have on the program form 
your unique perspective as Assistant Commandant of the Marine Corps?
    Answer. The F-35 Lightning II Program is a joint, multi-national 
program among the U.S. Air Force (USAF), U.S. Navy (USN), U.S. Marine 
Corps (USMC), and eight cooperative international partners: the United 
Kingdom (UK), Italy (IT), the Netherlands (NL), Turkey (TU), Canada 
(CA), Australia (AS), Denmark (DK), and Norway (NO).
    Our U.S. Service and international partners are keenly interested 
and engaged in seeing the JSF enter into service as soon as practicable 
and affordable. The U.S. is leading test, development, production, and 
sustainment efforts, and as such has assumed the highest risk in 
regards to the concurrency strategy of these efforts. A reduction in 
U.S. procurement rates or significant changes in initial operational 
capability (IOC) dates could easily be misinterpreted as lack of 
confidence and uncertainty by our international partners.
    The Marine Corps is continually engaged with our international 
partners, particularly those procuring the STOVL and carrier variants 
(CV), in seeking out and planning for opportunities to collaborate in 
development, training, and long term sustainment of the Joint Strike 
Fighter. Stability in procurement rates, infrastructure build-out, and 
meeting our development and test schedules demonstrate our commitment 
to the program and our international partners.

                                  F-35

    Question. We fully understand that our allies are critical to the 
success of the F-35 Joint Strike Fighter program. Some forget that the 
JSF program is not only one of our largest defense programs, but that 
of many of our allies as well. What is the current assessment of the 
impact that international partners and allies have on the program from 
your unique perspective as Chief of Naval Operations?
    Answer. As a Joint Cooperative initiative, the Joint Strike Fighter 
(JSF) program and the Navy have seen economic, industrial base and 
capability benefits by leveraging our international partners in our 
effort to field a family of fifth generation strike fighters to meet 
warfighter needs of the USN, USMC, USAF and eight International 
Partners. In addition to the $5.2B that our international partners have 
already contributed to the Systems Development and Demonstration of the 
JSF, we have also been able to reduce Navy's anticipated procurement 
costs through the more than 700 aircraft that these partners are 
projected to procure. These relationships have also yielded access to 
our partners' industrial base allowing our team to leverage their know-
how and technologies to improve the JSF's capability and 
interoperability with partner militaries once the aircraft is fielded.
    Question. With affordability as an underlying premise of the F-35 
program, what can be done in the near term to help drive down costs and 
ensure an efficient ``ramp rate'' to make certain the F-35 program will 
be affordable in the long term for the DoN?
    Answer. Based upon F-35 aircraft pricing changes that have evolved 
from the Nunn-McCurdy breach through the FY11/FY12 re-baseline; the 
results from the F-35 Milestone-B Service Cost Position developed by 
the Program Executive Officer for the Joint Strike Fighter and the 
Independent Cost Estimate developed by the Office of the Secretary of 
Defense for Cost Assessment and Program Evaluation; and current/
projected budget authority, the DON reduced the overall F-35B/C 
procurement by 69 aircraft through the FYDP to ensure that the program 
is adequately resourced and affordable in the long term.

                            Cyber Protection

    Question. With all of the recent examples in the news of foreign 
entities hacking into our networks (defense, contractor, FBI, and law 
enforcement as well as our military unmanned aerial vehicle systems), 
it is clear that we can't prevent all of these incidents. Are you 
confident that our military operations networks are secure?
    Answer. The nature of the cyber threat is severe and of great 
complexity. It is persistent, adaptive, simultaneous, irrespective of 
distance, unpredictable, strategic or tactical, and a source of 
uncertainty that often amplifies caution and introduces delay into 
decision making processes. It is feasible that a cyber actor could 
impact many facets of the Navy, to include research and development, 
logistics, combat systems, engineering systems, personnel and medical 
records, critical infrastructure, maintenance, command and control, 
etc. Additionally, through network exploitation, our adversaries are 
able to accelerate their weapons development thereby eroding our 
technologic advantage while they are potentially ``preparing the 
battlespace'' in the event of future conflict.
    Most Navy architectures were not originally designed to be 
resilient against attack and control but instead to be resilient to 
failure. This perspective introduces systemic vulnerabilities that 
potentially propagate risk across systems, platforms, and enterprises. 
To improve our networks' security posture, we have programmed 
investments to centrally manage network services and to evolve legacy 
ashore and afloat networks to a common, enterprise environment.
    The Navy is continuously updating and testing the security of its 
networks with the assistance of USCYBERCOM. There is a deliberate 
effort to exercise command and control over classified networks which 
significantly increases the level of trust and confidence in the data. 
However, combat effectiveness of a capability could be theoretically 
impacted by an ancillary network interface (e.g., a secure 
communication facility is degraded due to a network-controlled cooling 
system or a ship is disabled through the use of a remotely-managed 
maintenance interface to the engine room). Resiliency is more than 
redundancy, it is the ability to operate through cyber conflict and 
recover to a trusted environment. It involves people, processes, and 
technology. It is through this lens that Navy has begun to mitigate 
this threat.
    Question. What is the status of the Navy/Marine Corps transition to 
a new enterprise network?
    Answer. Next Generation Enterprise Network (NGEN) is the same 
physical network as Navy Marine Corps Intranet (NMCI). NGEN Increment 1 
is a non-developmental acquisition of IT services in support of the 
transition to Government owned and managed services. NGEN will provide 
the acquisition framework to secure net-centric data and IT services to 
the USN and USMC similar to the program/system it is replacing, NMCI 
Contract.
    . . . across the full Range Of Military Operations (ROMO). 
Divestiture of the third MPSRON impacts global coverage, forward 
presence and crisis response in EUCOM, AFRICOM, SOUTHCOM and NORTHCOM. 
However, these COCOMs have no registered demand for a MPSRON in OSD 
Policy approved war plans. The deployment of the force in support of a 
large scale operation will require additional equipment and sustainment 
to close across strategic distances via USTRANSCOM and will be subject 
to prioritization of limited assets to meet competing demands. The 
Marine Corps views this risk as acceptable given the continued funding 
for two MPSRONs comprised of sufficient lift capacity, forward deployed 
along with the procurement and fielding of two MLPs and T-AKEs in 
addition to exercise funding.
    Question. Can you please provide the specific plans for the ships 
in reserve status?
    Answer. Pending DoN concurrence, a revised PB13 MPF Posture and 
MPSRON composition will balance operational risk with programmatic 
necessity. PB13 eliminates MPSRON 1 and increases the number of ships 
forward deployed in MPSRON(s) 2 and 3; including 1 MLP in a Full 
Operational Status (FOS) and one MLP in a Reduced Operational Status 
(ROS) status. Other ships leaving prepositioning duty will be 
maintained in 5-day ROS along with our other strategic sealift vessels. 
The sole exception is the T-5 tanker ship which will be sent to the 
Maritime Administration's National Defense Reserve Fleet.
    Question. Does the FY13 budget or the budget for follow on years in 
the FYDP support funding for the maintenance and upkeep of the ships 
maintained in reserve status?
    Answer. Yes. The ships are budgeted with our other strategic 
sealift vessels by the National Defense Sealift Fund (NDSF).
    Question. Can you please provide the specific intentions for the 
equipment installed on the ships placed in reserve status?
    Answer. None of the ships placed in ROS, whether the MLP for 
prepositioning or the other ships for sealift, will have embarked 
equipment or supplies.

                         Sea-Based X-Band Radar

    Question. Can you expand on the proposal to place the Sea-Based X-
Band Radar in a ``limited test support'' status? Where will it be 
stored? How will its function/mission change?
    Answer. The Secretary of Defense in consultation with the Director 
of the Missile Defense Agency, who has technical responsibility for the 
Ballistic Missile Defense System, and the Commander of U. S. Strategic 
Command, have determined that Sea-Based X-Band Radar should be placed 
in a ``limited test support status.'' As part of that decision, the 
Director of the Missile Defense Agency is responsible for the 
determination of where it will be placed while in this status. In 
addition, the Director of the Missile Defense Agency is the best 
authority to comment on how its functions and missions will change as a 
result.
    Question. Are there any unique capabilities that we give up when we 
take this action? What risks will we assume by relegating SBX to a 
``limited test support'' role?
    Answer. I would defer to the Director of the Missile Defense Agency 
and the Commander of the U. S. Strategic Command on what risks, if any, 
would be assumed by placing SBX in a ``limited test support role.''
    Question. How long would it take to get SBX back to a ``full up'' 
operational mode if we realize we needed it? How does this action 
affect the balance between ground and space-based tracking capability?
    Answer. I would defer to the Director of the Missile Defense Agency 
with the technical responsibility and oversight of Sea Based X-Band 
Radar to respond on the time it would take to bring SBX to a ``full 
up'' operational mode if needed, and its affect on ground and space-
based tracking capabilities.
    Question. The justification for this action states that the US will 
rely on existing systems like THAAD and AN/TPY-2, but DoD is projected 
to cut back on purchases of both of those systems. Do we have enough 
systems currently fielded so that we aren't sacrificing our ability to 
detect ballistic missiles?
    Answer. I would defer to the Director of the Missile Defense Agency 
with technical responsibility for the Ballistic Missile Defense System 
and the Commander of the U.S. Strategic Command in reference to the 
specific capability of the BMDS to detect ballistic missiles and 
sufficiency of systems currently fielded.

                           Satellite Systems

    Question. Regarding termination of the AF Defense Weather Satellite 
Systems (DWSS), the AF says they can meet mission requirements and save 
money by launching 2 existing Defense Meteorological Satellite Program 
(DMSP) satellites, currently in storage. Does this impact Navy and/or 
Marine Corps operations?
    Answer. Navy/Marine Corps operations will not be impacted by the 
termination of DWSS as long as the two remaining DMSP satellites are 
launched and operate per design.
    Question. Can your weather satellite mission requirements be met 
with the older DMSP satellites?
    Answer. Most environmental satellite mission requirements can be 
met with older DMSP satellites. The most significant requirements that 
cannot be met by DMSP are for radar altimetry and sea surface 
temperature (SST). Navy is seeking to address radar altimetry gaps to 
support our antisubmarine warfare mission through partnership with the 
National Oceanic and Atmospheric Administration's (NOAA) Jason-3 
program. While DMSP does not meet Navy's needs for SST, the Navy 
obtains adequate SST data from NOAA and European space agency partners 
to meet our requirements.

                      UHF Satellite Communications

    Question. With the Navy's recent launch of the first MUOS 
satellite, what capabilities is it providing? Are all the associated 
systems in place for the program to operate as designed?
    Answer. MUOS 1 was launched on 24 February 2012 and will reach on-
orbit capability in May 2012. After testing is complete, it will begin 
providing legacy UHF SATCOM services equivalent to one of the current 
UHF Follow On (UFO) satellites.
    Initial ground infrastructure in Wahiawa, HI, and Pt. Mugu, CA, is 
installed, supported the launch of MUOS 1, and is currently supporting 
legacy payload operations and initial MUOS testing. Final ground 
infrastructure build is scheduled to be complete at all ground sites, 
including Northwest, VA, Niscemi, Italy, and Geraldton, Australia, by 
the launch of MUOS 2, tentatively scheduled for July 2013.
    Like any new system, fielding of the new Wideband Code Division 
Multiple Access (WCDMA) capability requires the completion of 
Developmental Testing (DT) and Operational Testing (OT). Per the MUOS 
Test and Evaluation Master Plan (TEMP), approved in November 2010, DT/
OT on the full MUOS capability requires that a user signal be relayed 
by one satellite to a ground station and then relayed again from a 
ground station through a second satellite to the receiver. This ability 
to connect two users regardless of their location on the globe is one 
of the new capabilities of the MUOS system, which is a significant 
improvement over legacy SATCOM systems in which users can only talk to 
each other when they are in the same satellite footprint. MUOS 2 is 
scheduled for on-orbit capability in October 2013, 90 days after 
launch, at which time DT/OT of the new WCDMA capability will begin. 
After completion of DT/OT, the two launched MUOS satellites will be 
capable of providing full WCDMA capability, with 10 times the capacity 
of current systems, in their respective footprints.
    Question. Is there a shortage of UHF capacity for our warfighters?
    Answer. Chairman, Joint Chief of Staff (CJCS) sets requirements for 
Narrowband MILSATCOM for all DoD users based on warfighter needs, and 
the Navy fills those as the DoD Acquisition Agent for Narrowband 
SATCOM. CJCS legacy UHF SATCOM requirements are met, and are projected 
to be met or exceeded through 2018. The follow on MUOS CJCS 
requirements are captured in the MUOS Capabilities Production Document 
dated 15 January 2008, and the MUOS program is on track to meet all key 
performance parameters given in that document. Increased capacity 
requirements, combined with inherent limitations of the military UHF 
SATCOM spectrum, drive the need to move beyond legacy UHF waveforms 
found in current military and commercial UHF SATCOM systems to the new 
WCDMA capability found in MUOS.
    Question. What is the DoN's view on both existing UHF 
communications capacity and the current MUOS and associated ground 
system development schedules?
    Answer. Statistical reliability analysis conducted by the Navy has 
shown that, with the launch schedule the Navy anticipates for MUOS 
satellites (actual dates are set by the Air Force Current Launch 
Schedule Review Board), the legacy UHF SATCOM requirements set by the 
Joint Requirements Oversight Council (JROC) will be met or exceeded 
through 2018. The new MUOS Wideband Code Division Multiple Access 
(WCDMA) capability will be operationalized with the launch and 
completion of on-orbit testing of the MUOS-2 satellite, projected in 
late CY2013. The MUOS WCDMA capability will reach Full Operational 
Capability with the launch and checkout of the fifth satellite 
projected for the end of 2016, at which time the JROC mandated 
requirement for legacy UHF SATCOM is retired. Legacy capability will 
continue to be maintained beyond 2018, although at lower levels, to 
allow time for remaining users to transition to the new WCDMA 
capability.
    Question. When will these terminals be available for global 
deployment?
    Answer. The Joint Tactical Radio System Network Enterprise Domain 
(JTRS NED) program office is projecting Formal Qualification Testing 
(FQT) of the MUOS Waveform v3.1 (a.k.a. Red/Black Waveform) in August 
2012, which would enable it to be ported to the JTRS HMS Manpack radio 
by February 2013. This would mean that an operationally representative 
user terminal would be available in time for the MUOS Developmental 
Testing (DT)/Operational Testing (OT) period in early FY14.
    Question. How long will the U.S. DoD be reliant on legacy UHF 
satellite services?
    Answer. As noted above the Navy anticipates the legacy capability 
will meet and exceed the current requirement levels through 2018. 
Legacy capacity is expected to decline after 2018 due to the expiration 
of the UFO satellites, but the legacy payload on MUOS satellites, each 
of which provide legacy capacity equivalent to one UFO satellite, will 
continue to maintain legacy capability throughout the lifetime of the 
MUOS program.
    The level of DoD reliance on legacy UHF satellite services depends 
on the fielding of MUOS capable terminals. The Navy currently intends 
to buy 202 JTRS HMS Manpack radios across the FYDP, including 50 radios 
in FY13 to support MUOS testing, as part of an inventory objective of 
approximately 450. The Navy does not have the details of the current 
MUOS terminal fielding plan for the other services.
    Question. Will coalition forces also be adopting the advanced 
waveform?
    Answer. The National Security Agency (NSA) currently restricts the 
MUOS Wideband Code Division Multiple Access waveform from being 
released outside of the United States.
    Question. Both MUOS and JTRS programs have experienced major cost 
overruns. Have some of the services pushed their JTRS terminal 
procurements beyond the FYDP? Does this increase the risk that the 
satellite could orbit in space underused for many years at a time when 
we can't afford this kind of thing?
    Answer. Each MUOS spacecraft has a legacy UHF SATCOM payload 
equivalent to one of the current UFO satellites. That legacy UHF 
payload is required to maintain warfighter legacy UHF SATCOM 
requirements set by the Joint Requirements Oversight Council (JROC) 
until MUOS full operational capability is reached in 2016, at which 
time the requirement is retired.
    Per the MUOS Test and Evaluation Master Plan, approved in November 
2010, the first requirement for a MUOS WCDMA capable radio will be for 
Developmental Testing (DT) and Operational Testing (OT) conducted after 
MUOS 2 is launched and reaches on orbit capability, which is projected 
to occur in October 2013. The Joint Tactical Radio System Network 
Enterprise Domain (JTRS NED) program office is projecting Formal 
Qualification Testing of the MUOS Waveform v3.1 (a.k.a. Red/Black 
Waveform) in August 2012, which would enable it to be ported to the 
JTRS HMS Manpack radio by February 2013. This would mean that an 
operationally representative user terminal would be available in time 
for the DT/OT period.
    As noted above, the Navy currently intends to buy 202 JTRS HMS 
Manpack radios across the FYDP, including 50 radios in FY13 to support 
MUOS testing, as part of an inventory objective of approximately 450. 
The Navy does not have the details of the current MUOS terminal 
fielding plan for the other services.
    Question. What is the Department's view on JTRS as a program of 
record?
    Answer. The Department of the Navy is dependent on the JTRS program 
to deliver an NSA compliant software encrypted MUOS waveform and MUOS 
capable radio for MUOS DT/OT and initial fleet operational capability. 
As mentioned previously, JTRS NED has stated they will conduct final 
qualification testing of the MUOS waveform in August of 2012, and the 
JTRS HMS Manpack program has indicated that they will have that 
waveform ported to their radio by February 2013. This timeline will 
support the MUOS Satellite WCDMA DT/OT in early FY14 and the Navy's HMS 
Manpack fielding timeline.
    Question. There are commercial companies that can provide much of 
the same capability. If these companies are funding 100 percent of the 
entire cost of building satellites and are paying for the launch of the 
satellites, and are offering up the satellite time to the military so 
we can purchase capability, as we need it, via the GSA schedule, is 
this something that we should evaluate? What is your view of this 
approach?
    Answer. UHF SATCOM payloads currently available on commercial 
satellites provide less than 3% of the capacity of a MUOS WCDMA payload 
due to the inherent limitations of their design and the UHF SATCOM 
spectrum. The Navy has evaluated the use of hosted UHF payloads on 
commercial satellites, is currently leasing capacity on two commercial 
satellites, and has access to additional commercial capacity through 
partnerships with foreign governments. The current military and leased 
commercial legacy UHF SATCOM capacity provides the warfighter with 
approximately 111 more channels worldwide than required by the CJCS 
capacity requirement, which is equivalent to three UFOs and provides a 
buffer against unplanned losses in the future. Because DoD requirements 
are met for the foreseeable future, the U.S. Navy is not pursuing any 
additional commercial UHF SATCOM capacity at this time. The Navy will 
continue to monitor the health of the current UHF SATCOM constellation 
for any signs that it is degrading more rapidly than currently 
projected. If it appears the level of legacy UHF SATCOM service will 
fall below CJCS requirements, the Navy will revisit all options, 
including commercial leases and hosted payloads, to maintain the 
current level of legacy service to the warfighter until the transition 
to the MUOS WCDMA capability is complete.
    Additional details are available in the Report to the Senate Armed 
Services Committee on ``Ultra High Frequency (UHF) Satellite 
Communications (SATCOM) Requirements and Options for Additional 
Capacity'' signed on 19 March 2012 by the Assistant Secretary of the 
Navy for Research, Development and Acquisition in response to the 
Fiscal Year 2012 Senate Armed Service Committee Report 112-26.
    Question. The U.S. made the decision in 2010 to partner with the 
Australians on a commercially-provided, UHF hosted payload in the 
Indian Ocean Region. With the private sector intending to launch an 
identical payload into the Atlantic Ocean Region, are there any U.S. 
and/or Allied plans to use this capability?
    Answer. The U.S. DoD partnered with the Australian Minister of 
Defense (not the commercial provider) for access to 250 kHz of UHF 
Narrowband SATCOM on a commercial satellite payload that Australia is 
leasing over the Indian Ocean region from 2012 to 2027. In exchange, 
the U.S. will provide the Australians access to 200 kHz of spectrum 
over the Pacific and 50 kHz of spectrum globally from 2018-2033.
    Since all DoD requirements for UHF SATCOM capacity are projected to 
be met over the Atlantic Ocean region through 2018, the U.S. DoD is not 
planning to take advantage of this commercially-provided UHF hosted 
payload in the Atlantic Ocean region.
    Through a combination of the implemented gap mitigation actions, 
commercial leases, international partnerships, and the MUOS legacy 
payloads, the DoD UHF SATCOM leadership is maximizing technical and 
fiduciary efficiencies to ensure the warfighter has access to legacy 
UHF SATCOM capacity that meets the CJCS requirements and provides a 
buffer against unplanned losses. Despite projected losses in the UFO 
constellation, current predictions indicate that the UFO constellation 
augmented by the MUOS legacy payloads will likely provide the required 
legacy UHF capacity in all AORs through at least 2018. MUOS WCDMA 
terminals are projected to be available in 2013, and the Navy will 
start fielding them in 2014. Extended availability of legacy capacity 
will allow the MUOS WCDMA-capable constellation to reach Full 
Operational Capability and the corresponding terminal programs to 
synchronize fielding timelines.
    As discussed in the previous question, because DoD requirements are 
met for the foreseeable future, the U.S. Navy is not pursuing any 
additional commercial UHF SATCOM capacity at this time. The Navy will 
continue to monitor the health of the current UHF SATCOM constellation 
for any signs that it is degrading more rapidly than currently 
projected. If it appears the level of legacy UHF SATCOM service will 
fall below CJCS requirements, the Navy will revisit all options, 
including commercial leases and hosted payloads, to maintain the 
current level of legacy service to the warfighter until transition to 
the MUOS WCDMA capability is complete.
    Additional details are available in the Report to the Senate Armed 
Services Committee on ``Ultra High Frequency (UHF) Satellite 
Communications (SATCOM) Requirements and Options for Additional 
Capacity'' signed on 19 March 2012 by the Assistant Secretary of the 
Navy for Research, Development and Acquisition in response to the 
Fiscal Year 2012 Senate Armed Service Committee Report 112-26.

    [Clerk's note.--End of questions submitted by Mr. Kingston. 
Questions submitted by Ms. Granger and the answers thereto 
follow:]

                            Fuel Procurement

    Question. In your testimony, you indicate that ``treating energy as 
a strategic national security issue'' as one of your chief priorities 
for the Navy. I agree with you that we must take into consideration 
fuel supply as a strategic concern, yet I do not understand how 
procuring 450,000 gallons for approximately $12 million last year is in 
the best interest of our sailors and the overall mission of the Navy.
    Would you please explain to the Committee your rationale for this 
contract?
    Answer. This was a demonstration purchase--not unlike corporations 
conduct in their due diligence of a new product or drug. Our first 
priority is to protect this great nation and ensure the men and women 
of our Services remain the world's greatest warfighters. In keeping 
with this priority it is imperative that we know a large scale use of 
biofuel is possible, seamless, and has no negative impact on our 
mission. This purchase will prove that very point when it is used in an 
operational environment, by operational forces, in the Rim of the 
Pacific Exercise in July 2012. This purchase was an important step 
towards the future, but not indicative of future price point sought for 
operational quantities of fuel. In FY-12, this purchase of $12M is only 
0.3% of our total fuel budget of $4B. Over the past three years, the 
total amount we have put towards biofuels is only 0.17% of our total 
fuel budget for those years.
    Going forward, our intent is to reduce the effects of petroleum 
volatility by expanding the diversity of sources for liquid fuel 
available to Navy for consumption in our operational assets. Higher oil 
prices and greater price volatility complicates fuel budgeting and can 
greatly impact Navy's readiness. By reducing this budgetary uncertainty 
related to the fuel bill, Navy can more effectively protect the nation 
by directing the maximum resources necessary to train and equip our 
sailors and Marines.
    Question. Do you have documents for review illustrating the cost-
benefit analysis for this buy?
    Answer. Navy budget displays show a $1.2B increase in current year 
fuel costs. This small investment provides validation of operational 
suitability of this fuel and adds an energy option that could dampen 
the current volatility of petroleum. A secure, dependable energy source 
such as domestically produced advanced alternative fuels helps ensure 
the safety and integrity of our nation and the men and women in 
uniform--a monetary value worth much more than $12 million.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] 

    As you can see from the chart, biofuel prices have decreased 
significantly from when Navy first started its test and certification 
process; Navy anticipates that as demand increases and the supply base 
expands further reductions in biofuel prices will occur. 
Correspondingly, the cost-benefit analysis will likely improve in the 
upcoming years.
    There are a number of studies that state the case that biofuels 
will be cost competitive in the 2018-2025 timeframe without government 
investment. These studies are from LMI and Bloomberg New Energy 
Finance. The LMI report also states that tools like the Defense 
Production Act could speed up the process.
    Additionally, the Office of the Deputy Assistant Secretary of the 
Navy for Energy has met with over 80 alternative fuel companies, trade 
organizations, and venture capital and investment firms over the past 
two years. When directly asked about the potential for their product to 
be cost competitive with fossil fuels, the resounding reaction from 
numerous alternative fuel companies is that the costs for alternative 
fuel will be cost competitive in the future. A large majority of the 
firms did state that with the infusion of capital (from DPA Title III 
or other investment sources) would assist in speeding up the timeline.
    For historical context, when the United States first started 
pumping oil in the mid 19th century, oil prices were extremely high, 
but as the market matured and demand forced an expansion of supplies, 
the prices dropped to price levels for widespread use.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] 

                        Alternative Fuel Pricing

    Question. When does the Navy expect the prices for alternative 
fuels to be competitive with traditional fossil fuels?
    Answer. There are a number of studies that state the case that 
biofuels will be cost competitive in the 2018-2025 timeframe without 
government investment. These studies are from LMI and Bloomberg New 
Energy Finance. The LMI report also states that tools like the Defense 
Production Act could speed up the process.
    Additionally, the Office of the Deputy Assistant Secretary of the 
Navy for Energy has met with over 80 alternative fuel companies, trade 
organizations, and venture capital and investment firms over the past 
two years. When directly asked about the potential for their product to 
be cost competitive with fossil fuels, the resounding reaction from 
numerous alternative fuel companies is that the costs for alternative 
fuel will be cost competitive in the future. A large majority of the 
firms did state that the infusion of capital (from DPA Title III or 
other investment sources) would assist in speeding up the timeline.
    Question. Have you had conversations with leaders at Department of 
Energy about this?
    Answer. Yes, the Department of the Navy has been working closely 
with the Department of Energy on these issues. DOE is a partner in the 
Defense Production Act (DPA) advanced biofuel commercialization 
initiative and both agencies are fully supportive of the effort.

                                Biofuels

    Question. From your enthusiastic statements regarding biofuels, I 
understand you strongly support continued research and development. Why 
do you think the other Services are not investing to the extent of the 
Navy?
    Answer. The Navy led the transition from sail to coal, coal to 
petroleum, and petroleum to nuclear power. The Navy will lead the 
transition to advanced alternative fuels too because Naval forces 
critically need the energy security that can be provided by alternative 
fuels.
    Although the Army has a far smaller operational fuel demand than 
the Navy, they have been collaborating with the Navy on alternative 
fuels. Also, the Air Force has in fact invested heavily in developing 
and testing advanced alternative fuels, and continues to do so. The 
Navy and Air Force collaborate on certifying advanced alternative fuel 
specifications for use in our platforms, with both services being able 
to reduce test expenditures, and reduce the duration of the tests to 
certify alternative fuel specifications for use in tactical platforms. 
Perhaps the most meaningful difference between the Air Force and Navy 
is that they both use JP-8 for aviation fuel, but the Navy also uses a 
substantial amount of JP-5 in ship-based aircraft (JP-5 has a higher 
flashpoint than JP-8 and is less common in the commercial markets) and 
F-76 marine diesel to power Navy ships. Since the Navy must have 
multiple types of fuels, to use in marine and aviation environments, 
its test efforts are intrinsically more involved.

                           Energy/Fuel Usage

    Question. In your testimony, you indicate, and I quote ``that we 
must use energy efficiently''. How is spending $15/gallon (nearly four 
times that of traditional fuel), qualify as efficient use?
    Answer. The alternative fuel initiative is an important investment 
for the Navy, because it addresses a core concern for the future; 
specifically, our national strategic and military operational need for 
energy security and energy independence. Investing in future 
technologies, which the alternative fuel effort represents, is crucial 
to Navy's ability to remain the world's premier Navy and avoid 
detrimental operational effects of rising energy costs. This purchasing 
decision cannot be made on cost alone; for example, if cost was the 
only deciding factor the Navy would not purchase nuclear submarines 
because of their significant unit price compared to conventionally 
powered subs. However, nuclear subs have significant strategic and 
operational advantages that that make their value to national security 
worth the cost.
    Navy's purchase of the fuel for the Great Green Fleet demonstration 
(at $15/gallon) was only 0.3% of the Navy's total fuel budget in FY-12. 
The need to find cost competitive alternative fuels has never been 
greater. Just in FY11 alone, the price of petroleum went up by $38/
bbls, an increase of 30%. This extreme price volatility and upward 
trend of fuel prices significantly impacts readiness in execution years 
and represents the real future opportunity cost of failing to position 
the Navy to use promising cost effective energy sources.
    Although the Navy must pay a premium price to obtain biofuel for 
research and development, as well as test and certification purposes, 
the Navy cannot and will not purchase alternative fuels for operational 
purposes unless the price is competitive with conventional fossil 
fuels.
    Question. If available, would you support domestically-sourced fuel 
like oil shale or coal-to-liquids that would insulate our sailors from 
the consequences of fuel shortage?
    Answer. The Energy Independence and Security Act (EISA) of 2007 
(Section 526) specifies that all fuel purchased and used by federal 
agencies must have a life cycle emissions impact equal to or less than 
that of fossil fuels. Currently, oil shale and coal-to-liquid 
technologies do not meet this regulation. If technology got to a point 
where this environmental regulation was met and fuel could be produced 
economically, the Department of the Navy would certainly look at 
supporting these efforts.

    [Clerk's note.--End of questions submitted by Ms. Granger. 
Questions submitted by Mr. Crenshaw and the answers thereto 
follow:]

                       USMC Pre-Positioning Ships

    Question. As part of the fiscal year 2013 budget, we are reducing 
the number of Maritime Pre-Positioning Squadrons from three to two. 
What was the rationale behind this change?
    Answer. Given fiscal challenges and current DoD priorities, DON has 
realigned assets necessary to optimize our maritime prepositioning 
capabilities within fiscal boundaries. The Global Prepositioned 
Materiel Capabilities Study (GPMCS) informed the POM-12 summer review 
and determined a DoD requirement for two, more robust Maritime 
Prepositioning Squadrons (MPSRONs). The DoD-directed Efficiencies 
Review (PB12) subsequently recommended that one of the three MPSRON(s) 
being assigned to a Reduced Operating Status (ROS). As the impacts were 
being examined, the POM13 review required additional efficiencies be 
considered. The Department of the Navy's POM-13 efficiency included 
divestment of the 3rd MPSRON; this action generated risk and required a 
thorough review and assessment of the remaining two squadrons in order 
to preserve Combatant Command (COCOM) required Maritime Prepositioning 
Force (MPF) capabilities (capacity). Through an ongoing extensive 
effort, the Department achieved a balanced MPF posture consisting of 
two fully operational MPSRONs with Seabasing Enabled capabilities. 
Divestiture of the third MPSRON impacts global coverage, forward 
presence and crisis response in EUCOM, AFRICOM, SOUTHCOM and NORTHCOM. 
However, these COCOMs have no registered demand for a MPSRON in OSD 
Policy approved war plans. The deployment of forces in support of a 
large scale operation will require additional equipment and sustainment 
to close across strategic distances via USTRANSCOM and will be subject 
to prioritization of limited assets to meet competing demands. The 
Marine Corps views this risk as acceptable given the continued funding 
for two MPSRONs comprised of sufficient lift capacity, forward deployed 
along with the procurement and fielding of two Mobile Landing Platforms 
(MLPs) and T-AKEs in addition to exercise funding (-$60Mil across the 
FYDP).
    Question. I understand an additional Large, Medium Speed Roll-On/
Roll-Off ship (LMSR) will be added to each of the two remaining 
squadrons. Can you please provide the strategy that shows the Marine 
Corps will still be able to meet the requirements of Component 
Commanders while providing a ``quick reaction force'' to our Commander-
In-Chief with the remaining squadrons?
    Answer. Within the FYDP, MPF will transition to an initial 
Seabasing Enabled (SE) capability with the completed integration of 
Large Medium Speed Roll On/Roll Off (LMSR) vessels and the introduction 
of the MLP and the Dry Cargo/Ammunition (T-AKE) ships. Introduction of 
TAKE into the MPF Program in FY13 will transition MPF from a Major 
Combat Operation (MCO) focused capability to a more scalable option 
that supports a limited employment capability, through the selective 
offload of tailorable sustainment packages necessary to support 
conventional and Special Operations Forces operating from a sea base. 
MPF (SE) provides a limited employment option in low spectrum 
operations while retaining high end deployment capability allowing MPF 
(SE) to be scalable across the full Range Of Military Operations 
(ROMO). Divestiture of the third MPSRON impacts global coverage, 
forward presence and crisis response in EUCOM, AFRICOM, SOUTHCOM and 
NORTHCOM. However, these COCOMs have no registered demand for a MPSRON 
in OSD Policy approved war plans. The deployment of the force in 
support of a large scale operation will require additional equipment 
and sustainment to close across strategic distances via USTRANSCOM and 
will be subject to prioritization of limited assets to meet competing 
demands. The Marine Corps views this risk as acceptable given the 
continued funding for two MPSRONs comprised of sufficient lift 
capacity, forward deployed along with the procurement and fielding of 
two MLPs and T-AKEs in addition to exercise funding.
    Question. Can you please provide the specific plans for the ships 
in reserve status?
    Answer. Pending DoN concurrence, a revised PB13 MPF Posture and 
MPSRON composition will balance operational risk with programmatic 
necessity. PB13 eliminates MPSRON 1 and increases the number of ships 
forward deployed in MPSRON(s) 2 and 3; including 1 MLP in a Full 
Operational Status (FOS) and one MLP in a Reduced Operational Status 
(ROS) status. Other ships leaving prepositioning duty will be 
maintained in 5-day ROS along with our other strategic sealift vessels. 
The sole exception is the T-5 tanker ship which will be sent to the 
Maritime Administration's National Defense Reserve Fleet.
    Question. Does the FY13 budget or the budget for follow on years in 
the FYDP support funding for the maintenance and upkeep of the ships 
maintained in reserve status?
    Answer. Yes. The ships are budgeted with our other strategic 
sealift vessels by the National Defense Sealift Fund (NDSF).
    Question. Can you please provide the specific intentions for the 
equipment installed on the ships placed in reserve status?
    Answer. None of the ships placed in ROS, whether the MLP for 
prepositioning or the other ships for sealift, will have embarked 
equipment or supplies.

                           Shipbuilding Plans

    Question. The President's ``Defense Strategic Guidance'' shifts our 
focus from the two-front strategy to a primary focus on the Pacific 
theatre. The Navy's budget calls for the cutback of the fleet from 313 
ships to 285. With the threats and the commitments in the AFRICOM and 
SOUTHCOM theatres increasing, the emphasis on building partnerships and 
maintaining a strong US presence seems more necessary than ever.
    Based on your shrinking fleet size and the growing number of 
threats in the AFRICOM and SOUTHCOM AoRs, do you still possess the 
necessary assets to address existing concerns such as partner building, 
maintaining a U.S. presence, and combating counter drug and pirate 
threats, in addition to meeting future COCOM requests?
    Answer. The Fleet is not in fact shrinking. Despite the constraints 
of the congressionally passed Budget Control Act, the Fleet will be at 
the same level at the end of FYDP as it is today, and will continue to 
grow outside the FYDP as the shipbuilding plan delivers three to four 
littoral combat ships, two to three destroyers and two to three 
submarines per year. It should be pointed out; however, it did shrink 
in the eight years before I took office. The Fleet stood at 316 on 
September 11, 2001, but had dropped to 283 by 2008. To determine the 
ideal size and composition of the fleet beyond the FYDP timeframe, the 
Navy is currently conducting a Force Structure Assessment that will 
address both peacetime and wartime requirements.
    Question. Do you foresee less of a presence in these AoRs or having 
to tier multiple commitments based on available fleet resources?
    Answer. Building partnership capacity--including those in Africa 
and Latin America--remains important for sharing the costs and 
responsibilities of global leadership. As always, the mismatch between 
supply and demand will require Navy to carefully prioritize its 
commitments in the various AORs. Consistent with the Defense Strategic 
Guidance, we will develop innovative, low-cost, and small-footprint 
approaches to achieve our security objectives, relying on exercises, 
rotational presence, transit opportunities and advisory capabilities to 
maximize our influence.

                              Maintenance

    Question. Prior defense budgets have mitigated an aging naval fleet 
with a plan focused on replacing out of date ships with technologically 
advanced ships. However, this budget proposes a production shift to the 
right for key ships that are reaching the upper limits of their 
intended usability (for example, the reduced production of SSNs from 2 
a year to 1, the 2-year freeze on the SSBN-X, the retirement of FFGs 
and homeport shift of DDGs to Rota). To meet current and future 
commitments, regardless of Defense Strategic Strategies, it appears you 
will need to increase operational tempo of the remaining fleet.
    By increasing the OPTEMPO of the current fleet, how does this 
affect the ships from entering their scheduled maintenance cycles?
    Answer. Our PB13 budgeted OPTEMPO is sustainable and supported by 
our Fleet Readiness and Training Plan (FRTP). This plan includes one 
deployment and one maintenance period during each 32-month operational 
cycle for surface combatants, 27 months for amphibious ships, and 24 
months for attack submarines. Our PB13 budgeted OPTEMPO is sufficient 
to support the FY13 Global Force Management Allocation Plan (GFMAP) 
approved by the Secretary of Defense. The approved FY13 GFMAP has a 
lower presence requirement than in previous years, which allows the 
fleet to establish a sustainable deployment schedule. Meeting the 
baseline requirements of the GFMAP will require about 6 of our ships to 
conduct slightly longer (8-9 month) deployments, but each ship will be 
able to conduct its planned maintenance during the year.
    Combatant Commander Requests for Forces (RFF), however, are in 
additive to the GFMAP baseline. These requests, made in response to 
world events, may require longer or more frequent deployments. This can 
cause rescheduling of maintenance, which could make maintenance more 
expensive because it is done more quickly or less efficiently. We will 
seek Overseas Contingency Operations funding to resource additional or 
emergent maintenance resulting from approved RFFs. We consider this to 
be part of the ``reset'' of forces that do additional deployments to 
allow those forces to get back on their normal operational cycle.
    Our PB13 budget submission includes changes in OPTEMPO resulting 
from four DDG-51 class ships being forward deployed to Rota, Spain, in 
FY14 and FY15. The FFG-7 class decommissioning plan, adjustments to SSN 
production rates, and changes to SSBN(X) development plans do not 
impact our planned FY13 OPTEMPO. The only change to the scheduled 
maintenance cycle will be for the four Rota-based DDG-51 Class ships, 
which will be placed on the Forward Deployed Naval Forces (FDNF) 
operational cycle to compensate for their increased OPTEMPO. This 17-
month cycle includes one maintenance period per cycle.
    Question. How will you alleviate the additional wear the ships will 
incur due to increased OPTEMPO and less time in the shipyards?
    Answer. For CONUS ships experiencing a high OPTEMPO due to 
answering RFFs, we will seek additional OCO funding to complete the 
required maintenance. We consider this to be part of the ``reset'' 
following contingency operations that allows those forces to get back 
on their normal operational cycle. The additional wear experienced by 
FDNF ships, as a result of their higher OPTEMPO, is addressed by the 
FDNF operational cycle. Ships in an FDNF cycle receive more continuous 
maintenance, spend more time in maintenance availabilities, and receive 
more depot maintenance man-days, as compared to CONUS-based ships on a 
Fleet Response Plan (FRP) operational cycle. These additions compensate 
for the relative reduced access that FDNF ships have to intermediate 
level maintenance provided to CONUS-based ships through Regional 
Maintenance Centers.
    Question. Have increased maintenance costs been factored into the 
FY13 budget or throughout the FYDP?
    Answer. Our PB13 budget submission funds required maintenance for 
ships and aircraft based on the approved FY13 GFMAP. Additional or 
longer deployments will be addressed by requests for OCO funding to 
``reset'' these forces back to their regular operational cycles. The 
increased maintenance costs associated with FDNF deployment of the four 
DDGs to Rota, Spain are included in the PB13 budget request.
    Question. Have recent studies been conducted concerning lengthened 
deployments and the effects on personnel?
    Answer. Navy commissioned two studies, conducted by the Center for 
Naval Analysis in 2004 and 2008, on the relationship between deployment 
length and retention. These studies did not find any negative retention 
effects of 8-month or longer deployments over the past 20 years, noting 
only a small negative effect among 6-year obligation re-enlistments.
    A 2011 Navy-wide quick poll survey suggests that long deployment 
lengths are a key contributor for Navy personnel to leave the service. 
Also sea-duty and deployments are associated with higher levels of 
operational stress. Medically oriented studies that focus on combat 
deployments (particularly to combat zones in Iraq and Afghanistan) find 
that longer deployments are associated with higher rates of PTSD, 
depression and substance abuse.
    We will be working closely with the Secretary of Defense and the 
Joint Staff to ensure RFFs in excess of the GFMAP are carefully 
considered due to these potential impacts of longer or more frequent 
deployments.

                   Forward Deployed Fleet Maintenance

    Question. Based on the desire to forward station key multi-mission 
ships to address maritime threats and concerns, can you please explain 
the maintenance cycle for these units?
    Answer. Per Title 10 USC subsection 7310, Restrictions on Repair of 
Vessels in Foreign Shipyards, ships homeported in CONUS may only have 
emergent voyage repairs performed in foreign locations. However, ships 
homeported overseas are exempt from Title 10 restrictions and may have 
routine scheduled maintenance performed in the local economy. LCS in 
Singapore will remain homeported in CONUS, and provide deployed 
presence, while DDGs in Rota will be homeported as Forward Deployed 
Naval Forces.
    Answer (LCS). Navy intends to operate LCS Class ships via a multi-
crewing Concept of Operations (CONOPS). This CONOPS enables LCS Class 
ships to be forward stationed for approximately 50% of their 32-month 
operational cycle, operating from a host nation facility. LCS's 
operational cycle will include one CONUS-based maintenance availability 
per 32-month cycle, alternating between a 3-month Docking Selected 
Restricted Availability in one cycle and a 7-week Selected Restricted 
Availability during the subsequent operational cycle.
    Answer (DDG). Navy intends to operate DDG Class ships assigned to 
Rota, Spain as Forward Deployed Naval Forces (FDNF) similar to FDNF 
DDGs homeported in Japan. The Rota DDG's operational cycle will include 
one OCONUS maintenance availability per 17-month cycle. Since these 
ships are homeported abroad, the Title 10 restriction on voyage repairs 
does not apply.
    Question. Are the maintenance cycles similar to the requirements 
for units stationed in overseas stations like Japan?
    Answer (LCS). No, LCS Class ship maintenance cycles will be similar 
to those of other CONUS-based surface ships, which receive one depot-
level maintenance availability in CONUS per 32-month operational cycle.
    Answer (DDG). Yes, the maintenance cycle for DDGs assigned to Rota 
is similar to those units assigned to Yokosuka, Japan, which receive 
one major OCONUS maintenance availability every 17 months. DDGs 
homeported in Rota, Spain will remain in country for all required 
maintenance with the exception of mid-life maintenance and 
modernization availabilities.
    Question. Is funding for these maintenance periods covered in the 
FY13 budget? Is this funding covered in the FYDP?
    Answer (LCS/DDG). LCS and DDG Class ship depot maintenance 
availabilities are fully funded in FY13 in the PB13 budget request and 
recognized across the FYDP.
    Question. Will ``fly-away'' teams conduct the scheduled 
intermediate maintenance cycle at the forward deployed station?
    Answer (LCS). Yes. Fly-away teams will execute planned maintenance 
of forward-stationed LCS Class ships, including the Preventive 
Maintenance and Corrective Maintenance that the crew does not perform, 
as well as the emergent voyage repair work that is outside of the 
technical capability of local host nation personnel. In accordance with 
Title 10, host nation personnel will only conduct emergent voyage 
repairs.
    Answer (DDG). No. Since the DDGs will be homeported in Rota, Spain, 
they are exempt from the Title 10 restrictions regarding maintenance in 
foreign shipyards. Navy intends to contract required maintenance to the 
qualified local ship repair industrial base as appropriate. The 
maintenance will be monitored by a detachment of the Norfolk Ship 
Support Activity (NSSA). As needed, U.S. shipyards will be contracted 
to conduct DDG maintenance.
    Question. If the ``fly-away'' teams are used to conduct the 
maintenance, will they be government personnel or private ship repair 
contractors?
    Answer (LCS). The composition of fly-away teams will vary based on 
the type and scope of planned maintenance and required skills to 
conduct the maintenance, but typically are a combination of government 
and private ship repair contractor.
    Answer (DDG). It is not envisioned (at this time) that DDGs in Rota 
will require flyaway teams to support regularly schedule maintenance. 
However, government civilians and private contractors may be sourced 
from CONUS on a case-by-case basis, if subject matter expertise is 
required.
    Questions. Does the infrastructure exist to conduct intermediate 
maintenance periods in foreign ports? Is funding covered in the FY13 
budget for infrastructure deficiencies?
    Answer (LCS). The maintenance infrastructure at several forward/
foreign ports (e.g., Singapore Naval Base) can support the LCS Class 
ship maintenance plan. The FY13 budget request does not include 
resources for foreign port infrastructure specifically related to LCS 
Class maintenance. This will be addressed in subsequent budgets.
    Answer (DDG). The private sector ship repair industrial base in 
Rota, Spain is capable of performing the majority of maintenance 
required for the DDGs to meet current operational commitments and reach 
expected service life. Maintenance on systems requiring security 
clearances will be supported by ship's company, NSSA detachment 
personnel, and CONUS personnel on a case-by-case basis. Funding for the 
refurbishment of facilities to accommodate the NSSA detachment and 
other support personnel in Rota is included in the FY13 budget request.
    Question. Will the ships homeported overseas be rotated back to the 
US for depot maintenance and upgrade periods?
    Answer (LCS). Forward-stationed LCS Class ships will alternate 
between operating forward for half (16 months) of their 32-month 
operational cycle followed by operating from CONUS for the other half 
(16 months). LCS Class ships will conduct their depot maintenance 
availabilities and upgrade periods at CONUS facilities while they are 
in the 16-month CONUS half of their operating cycle.
    Answer (DDG). DDGs homeported in Rota, Spain will remain in country 
for all required maintenance with the exception of mid-life maintenance 
and modernization availabilities. For the mid-life availabilities, the 
ships will return to CONUS with a replacement ship sent to Rota.

                   Forward Deployed Personnel Manning

    Question. Concerning different ship manning formulas, I understand 
the manning rotation for LCS ships deployed in the PACOM theatre will 
not align to the conventional one ship, one crew formula. For example, 
SSBNs cycle two crews for one ballistic missile submarine and there 
will be 3 crews for every 2 LCS ships deployed to the PACOM theatre.
    Please explain the crew rotation of ships stationed overseas. For 
example, will the ships stationed at Rota, Spain mirror one of these 
manning formulas?
    Answer. DDGs stationed in Rota, Spain are forward deployed naval 
forces (FDNF) and will be manned with single crews, not rotational 
crews. Navy recently initiated a study on the benefits and costs of 
expanding the use of rotational crewing, and results will inform future 
decisions. LCS will be forward stationed and manned under the 3:2:1 
construct which is three crews for every two ships, with one deployed 
at any given time.
    Question. Do you intend to use a similar LCS manning formula for 
the LCS ships stationed in the East Coast, West Coast, and overseas?
    Answer. Yes. The entire Littoral Combat Ship class, regardless of 
homeport or primary area of operations, will be manned under the 3:2:1 
construct
    Question. In August 2011, the Administration announced a $510 
million Memorandum of Understanding (MOU) between the Secretaries of 
Energy, Navy, and Agriculture to assist the deployment of advanced 
drop-in hydrocarbon biofuels that can meet Department of Defense 
specifications and power both military and commercial transportation 
sectors.
    Why are advanced, drop-in biofuels well-suited to meet military 
requirements?
    Answer. Drop-in, advanced alternative fuels are well-suited to meet 
military demands because they can be handled and used in the exact same 
manner as the conventional petroleum-derived fuels that they replace. 
No modifications or additions to infrastructure or tactical platforms 
are needed and no changes in operational procedures or platform 
performance occur. Therefore, the operator is free to conduct the 
mission with no concern of special characteristics or considerations 
that must be given to the fuel used, and the Navy does not have to 
spend additional efforts and funds on new or different infrastructure 
to handle these fuels. Developing domestic alternative fuel sources 
increases the security of our supply and reduces our vulnerability to 
price shocks. For every dollar rise in the price of a barrel of oil the 
Navy's fuel bill rises by $30 million. Last year when the situation in 
Libya started the price of oil increased by $38 a barrel or a one 
billion dollar increase to the Navy.
    Question. Last year, the Department put out a Request for 
Information (RFD around this initiative, seeking detail from industry 
about its ability to deliver safe, effective, and cost-competitive 
advanced biofuels for military use. I understand the Department 
received over 100 responses to this RFI.
    What has the Department learned from these responses? Do the 
responses indicate that the initiative is likely to be a success in 
deploying advanced biofuels plants and refineries?
    Answer. The DON did indeed receive over 100 responses to the RFI. 
What was learned was the extent of the options available in terms of 
regional feedstocks and various pathways (i.e., thermochemical, 
biochemical, hybrid) that are ready to be placed into commercial-scale 
production in many different locations across all US territories and 
protectorates. There are certainly more viable, commercial-scale 
approaches than the effort will have funding to see to fruition. The 
DON expects that if it can implement the DPA Title III effort, there 
will be multiple integrated biorefineries that will produce fuels for 
the DON at commercial scale at prices competitive with petroleum.
    However, the ability to enter into longer-term contracts than the 
current limitation of five years with the ability to pay for the fuels 
delivered from the year's budget corresponding to the year in which the 
fuels were delivered, would greatly enhance the ability to grow the 
industry. Such provisions would be a boon for the industry, as it would 
enable financing to be secured on commercial-scale would be a boon for 
the industry, as it would enable financing to be secured on commercial-
scale alternative fuel projects, and a benefit for the DOD, as driving 
down the capital that must be recouped in a given contract year will 
decrease the prices paid for fuels produced from these efforts.
    Question. In FY12, Congress added $150 million above the budget 
request for Defense Production Act Title III initiatives. When and how 
will the Department determine how this funding will be allocated?
    Answer. Discussions are still being held by Department of Navy and 
Department of Defense on the exact funding levels and the timeline for 
the allocation of those funds.
    Question. The FY13 budget request includes $70 million DPA funding 
for advanced drop-in biofuels production. Does the Department believe 
this request, in addition to funding that may be available in FY12, 
will fully meet the DoD's portion of funding under the MOU or will 
additional funding be requested in subsequent years?
    Answer. If the $100 million that was intended to go to the FY12 DPA 
Title III efforts were to be combined with the intended $70 million in 
the FY13 budgets, this would comprise the full DON commitment of $170 
million to the DPA Title III program.
    Question. Does the Department intend to release a Broad Agency 
Announcement or a Request for a Proposal for this initiative in FY12, 
and if so, when can we anticipate that will occur?
    Answer. An industry forum is tentatively planned for May 18, 2012. 
Feedback from this forum will help craft the eventual BAA which should 
be released summer 2012.

                       Enlisted Retention Boards

    Question. As a means to reduce overmanned ratings, rebalance the 
enlisted force, and improve advancement across all ratings, the Navy 
conducted an Enlisted Retention board (ERB). The results of the board 
were released at the end of 2011 and nearly 3,000 sailors were told 
they had to separate from the Navy by September 1, 2012.
    How did you decide on the number of 16,000 sailors for the initial 
review and how did you decide on the number 3,000 sailors for 
separation?
    Answer. Record high retention and low attrition over the past few 
years resulted in an uneven distribution of manning across Navy skills 
and specialties. The Navy recognized a need for additional force 
management tools to assist in rebalancing the force. The Enlisted 
Retention Board (ERB), established by the Secretary of the Navy, was 
designed to rebalance the force in terms of seniority, experience and 
skills in a performance-based process. We focused on ratings overmanned 
at greater than 103 percent, and targeted the board for Sailors with 
more than 7, and less than 15 years of service. These criteria yielded 
a review of 16,000 Sailors. Based on our analysis that was conducted at 
the year group level, we determined that approximately 13,000 Sailors 
in these ratings and years of service needed to be retained for future 
community health.
    Question. Will the ERB be used again? Did you reach your goal?
    Answer. The ERB achieved the desired balance in our overmanned 
ratings. The Navy currently anticipates only six of the original 31 
ratings evaluated by the ERB will be overmanned at the end of FY12. 
Based on what we know now, we will not need to hold another ERB in 
Fiscal Year 2013 or 2014. Navy will continue to update and review our 
force management actions with a focus on obtaining the right balance of 
seniority, skills and experience to meet our mission, now and into the 
future.
    Question. Did you intend to provide specifics as to why sailors 
were separated to Commanding Officers as a means to educate Commands 
and prevent the loss of valuable sailors in the future?
    Answer. Deliberative information from selection boards is not 
releasable.
    Question. If ERB is used in the future, will you apply feedback 
attained from this ERB to minimize the backlash of negative responses 
you have received as a result of this process?
    Answer. There has been a wide range of feedback received, some 
negative but also some positive. Like any new process in the Navy, the 
feedback will be used to improve execution in the future.

    [Clerk's note.--End of questions submitted by Mr. Crenshaw. 
Questions submitted by Mr. Calvert and the answers thereto 
follow:]

                         USMC Force Reductions

    Question. The fiscal year 13 budget proposes to immediately cut 
4,800 Marines and shift all of the manpower costs for 15,200 other 
Marines into the Overseas Contingency Operations (OCO) fund for the 
fiscal year. Please explain how you will identify and cut that many 
Marines without hurting the Corps.
    Answer. Marine Corps endstrength reductions have resulted from 
right-sizing the Marine Corps to meet the anticipated security 
environment after the drawdown in Afghanistan and to address the 
impacts of the Budget Control Act on Department of Defense budgets. The 
force funded in the 2013 budget is fully capable of executing all 
assigned missions in the new strategic guidance and is optimized for 
forward-presence, engagement, and rapid crisis response. It balances 
capacity and capabilities while maintaining the high level of readiness 
on which the Nation relies.
    In order to ensure a measured drawdown and simultaneously keep 
faith with our Marines, the Marine Corps will make maximum use of 
voluntary measures such as natural attrition and early separation/
retirement authorities. Additionally, the Commandant of the Marine 
Corps (CMC) approved the use of several force shaping tools to reduce 
Marine Corps end strength by approximately 5,000 Marines per year 
beginning in FY 2013. These include:
          --Early discharge authority
          --Voluntary separation pay
          --Involuntary separations through Selective Early Retirement 
        Boards (SERBs) for senior officers (05 & 06) and Enlisted 
        Career Force Controls
    The Marine Corps does not plan on using a reduction-in-force and 
will minimize the use of involuntary separations such as SERBs.
    This enduring strength level and force structure ensures that the 
Marine Corps retains the necessary level of non commissioned officer 
and field grade officer experience and war-fighting enablers to support 
the future security environment. The Marine Corps drawdown plan ensures 
the Marine Corps remains the Nation's expeditionary force in readiness 
while simultaneously keeping faith with our Marines and their families 
who have excelled during the last ten years of combat operations.
    Question. Also, in the past, OCO funds were only used to pay the 
increased incremental costs per Marine, caused by deployments. Why has 
the Marine Corps changed its accounting and moved the entire cost into 
OCO?
    Answer. The reduction in Marine Corps active end strength in the FY 
2013 budget request is directly tied to the Department's new strategic 
guidance released in January 2012 and the fiscal realities represented 
by the Budget Control Act of 2011. The new strategic guidance 
emphasizes a smaller and leaner force that will no longer be sized to 
support long-term stability operations that have dominated the past 
decade. The enduring active duty end strength required for the Marine 
Corps to support the new strategy is 182,100.
    The Marine Corps grew by approximately 27,000 Marines in order to 
meet the demands of Operations Enduring Freedom and Iraqi Freedom (OEF/
OIF) and is now in the process of reducing end strength to reach an 
optimal number of Marines that will be required to execute the USMC's 
mission as outlined in the strategic guidance. Under the OCO funding 
criteria established by the Office of Management and Budget (OMB), the 
Department must fund all permanent end strength in the base budget; 
with the move to the new strategy and the Marine Corps' commensurate 
reduction to 182,100 Marines, end strength above 182,100 is now 
considered to be temporary end strength and as such, has been requested 
in the OCO budget.
    This overstrength must be maintained through the end of FY16 to 
allow the Marine Corps to simultaneously support its forward presence 
mission, combat operations in support of OEF, Combatant Commander 
requirements, and ensure that it keeps faith with its Marines.

                        Strike Fighter Shortfall

    Question. Last year, the Navy testified that it had a 65 aircraft 
shortfall. What is the shortfall this year and how was that number 
calculated?
    Answer. The PB-13 Strike Fighter Shortfall is predicted to peak at 
56 aircraft in 2025 and remain below 65 through 2028. The Navy will 
continue to mitigate Strike Fighter sustainment issue through the 
implementation of management and supply initiatives including the 
accelerated transition of Legacy Hornet squadrons into Super Hornets 
and the service life extension of 150 Legacy Hornets. The change in our 
Strike Fighter inventory projections from FY 2012 to FY 2013 is 
attributable to a substantial decrease in Hornet historical 5-year 
utilization rates and the proposed reduction in USMC TACAIR force 
structure to 20 squadrons (18 act/2 res) instead of 24. The Strike 
Fighter Shortfall is calculated using the NAVAIR Inventory Forecasting 
Tool (IFT). The IFT was updated to version 20 and primarily 
incorporated significant changes in F/A-18A-D utilization rates and 
USMC transition plans. The IFT uses a historic 5 year average of 
utilization rates--flight hours, landings, CATS/TRAPS, FLE, etc.--and 
assumes that average rate across future years: The 5 year historic 
utilization rates dropped significantly from IFT v19 to the latest IFT 
v20.
    Question. How much risk is associated with the fiscal year 13 
shortfall?
    Answer. The FY13 Strike Fighter shortfall represents an acceptable 
level of risk with anticipated global demand for forces and planned 
investments in procurement and sustainment.

               Next Generation Enterprise Network (NGEN)

    Question. The DON has launched its NGEN program to replace the 
Navy-Marine Corps Intranet (NMCI) program. This is basically the 
intranet for the Navy and Marine Corps. Has the Department decided 
whether the NGEN will simply build upon the existing NMCI with a wider 
operation area or is the NGEN supposed to be an entirely new system?
    Answer. NGEN is not a new system, but rather the follow-on to the 
Navy Marine Corps Intranet (NMCI), and will provide secure, 
comprehensive, end-to-end information services through a common 
computing and communication environment to USN and USMC military, 
civilian, and contractor users. It is a non-developmental program that 
shifts the operating model from a Contractor Owner/Contractor Operated 
(CO/CO) to a Government Owner/Contractor Operated (GO/CO) for the USN 
and to a Government Owner/Government Operated (GO/GO) for the USMC. 
NGEN Increment 1 includes the existing NMCI network and services, along 
with additional requirements for increased Government Command and 
Control (C2), enhanced Information Assurance (IA) and Government 
ownership of the network infrastructure.
    Question. If the latter, has the Department adequately defined what 
future capabilities it is seeking in the NGEN?
    Answer. NGEN is not a new system; however, the NGEN Request for 
Proposal (RFP) was structured to provide flexibility and incentivize 
evolution, innovation and cost reduction.
    Question. Is the Department planning to select the NGEN contractor 
with the lowest-price, technically acceptable (LPTA) bid?
    Answer. The current strategy is to competitively select either one 
or two vendors for the two main segments of the network (Transport and 
Enterprise Services) using a Lowest Price Technically Acceptable (LPTA) 
source selection; a best value determination in accordance with Federal 
Acquisition Regulation (FAR) Part 15.101-2. This approach for NGEN has 
been endorsed as appropriate at the OSD level via a robust oversight 
process that included multiple Overarching Integrated Product Team 
(OIPT), OSD Peer and Milestone Decision Authority (MDA) reviews.
    Question. If so, please explain why the Department believes this is 
a better contracting vehicle than best value.
    Answer. Lowest Price Technically Acceptable (LPTA) is a best value 
source selection method in accordance with Federal Acquisition 
Regulation (FAR) Part 15.101-2.
    LPTA is considered appropriate when the requirement is well 
defined, price control is paramount, and the risk of non-performance is 
low. The performance requirement for NGEN is NMCI as it performed on 
September 30, 2010. It is well understood. The technologies integral to 
NGEN are widely used Commercial-off-the-Shelf (COTS) technologies. As 
the network operates today, there is no development under NGEN. The 
major change requirements are for increased Government Command and 
Control (C2), enhanced Information Assurance (IA) and Government 
ownership of the network infrastructure; there are no significant 
changes in the technology required or how the Contractor executes the 
contract. Finally, the DON has determined that there are no clear 
discriminators for which the Government would be willing to pay more, 
and, given that there are several companies that are capable of 
delivering this service in accordance with the DON's requirements, 
price was determined to be the overriding factor.

    [Clerk's note.--End of questions submitted by Mr. Calvert. 
Questions submitted by Mr. Bonner and the answers thereto 
follow.]

                  Littoral Combat Ship Mission Modules

    Question. It is my understanding that the issues relating to the 
mission modules, currently controlled by the mission module integrator, 
have delayed sea trial for the LCS. These delays impact total program 
ownership and are out of the control of the single party who has the 
most to lose, the shipbuilder.
    Has the Navy considered any options to mitigate the impact of these 
delays on the shipbuilders?
    Answer. Littoral Combat Ship (LCS) Mission Package schedules have 
no direct link to the builder's sea trials. Builder's trials test the 
vessel's propulsion, communications, navigation and core mission 
systems, as well as all related support systems prior to Navy 
acceptance trials. LCS is not tested with a mission package during sea 
trials, as sea trials are ship-focused and do not depend on embarking a 
mission package for scheduling or completion. The development concept 
for LCS mission modules is to integrate existing military systems, 
either fielded or in the acquisition process, into a System of Systems 
(SOS). Operational utility is not fully evaluated until the individual 
components are tested as a SOS in LCS. PEO LCS has aligned 
Developmental Testing (DT) and Initial Operational Testing and 
Evaluation (IOT&E) for various systems to occur simultaneously with 
mission package DT and IOT&E to better streamline and synchronize the 
mission package testing on LCS.
    In July 2011, NAVSEA consolidated all aspects of the LCS program 
under PEO LCS, focused entirely on delivering the complete LCS program. 
PEO LCS provides a single program executive responsible for acquiring 
and maintaining the littoral mission capabilities of the LCS Class from 
end to end, beginning with procurement, and ending with fleet 
employment and sustainment. These include programs in support of Mine 
Warfare, Littoral Combat Ship Mission Modules, Unmanned Maritime 
Systems, and Fleet Introduction, Test & Evaluation, In-Service Support.
    Question. Given the fact that the LCS 1 deploys in October of this 
year, when are you planning to get the mission package out there and 
which one do you anticipate it will be?
    Answer. There are no plans to deploy LCS 1 in October of this year. 
When LCS does deploy, it will do so with the mission package needed to 
support the Combatant Commander's mission, Currently, two Surface 
Warfare (SUW) and two Mine Countermeasures (MCM) mission modules are in 
Navy inventory. The first ASW mission module delivered to the Navy will 
not count toward final ASW mission module inventory in lieu of upgraded 
capabilities that will be included in an Increment 2 ASW mission module 
currently under development. The LCS mission packages will be 
operationally deployable when they reach Initial Operating Capability 
(IOC) on LCS. The completion of IOT&E marks the point at which the 
mission package has demonstrated IOC--that it meets specified 
capability requirements and could be effectively employed to provide 
its primary warfare capabilities. To achieve IOC, one LCS seaframe with 
a mission package operated by adequately trained personnel and 
supported by the necessary infrastructure and logistics is required.
    The planned IOCs of the SUW, MCM, and ASW mission packages are 
FY13, FY14, and FY16 respectively. If LCS is deployed earlier than the 
planned IOC of the required mission package, that deploying mission 
package would most likely be tested through a quick reaction assessment 
(QRA) to support rapid deployment and early operational capability of 
the ship for overseas operations.

                   Littoral Combat Ship Survivability

    Question. Recently I've read press reports regarding concerns over 
the survivability of the LCS platform in area denial environments such 
as the Persian Gulf. Clearly, the LCS has a reputation problem right 
now and the periodic battering by the press continues to raise concern 
for all parties involved.
    Can you comment on the LCS mission and how these vessels would 
interact with other vessels in the fleet as they work to accomplish 
their mission, specifically in environments like the Strait of Hormuz 
and the South China Sea?
    Answer. LCS is designed to meet Joint Requirement Oversight Council 
(JROC) approved operational requirements in the littorals, and the 
likely challenges to be encountered in this environment to include: 
shallow water, congested sea and air space, and difficult acoustic and 
atmospheric conditions. LCS' role is to prepare the operational 
environment for the joint force and assure access to critical littoral 
regions by independently conducting mine countermeasures, antisubmarine 
warfare, and surface warfare operations.
    The LCS employment concept calls for each ship to have operational 
and self-defense capabilities, with the ability to quickly adapt to 
specialized warfare missions by embarking a mission package to support 
focused operations. LCS is employed to address the global demand 
signals of the combatant commanders to ensure timely joint force access 
to critical littoral regions in the mission areas of Mine 
Countermeasures (MCM), Surface Warfare (SUW) or Anti-Submarine Warfare 
(ASW). LCS will be configured as required by the operational commander 
and is able to conduct missions such as Freedom of Navigation (FON) 
operations, Theater Security Cooperation (TSC) operations, Maritime law 
enforcement operations (LEO), Maritime counter piracy operations and 
Search and rescue operations.
    LCS is designed and built to operate in environments near the 
coastline. The LCS fills critical gaps in mine warfare and provides 
advanced capabilities to ensure our Fleet can safely access the 
littorals. LCS also provides a wide array of capabilities for Surface 
Warfare including defending against small boat threats, performing 
Maritime Domain Awareness (MDA) patrols, and as a platform for Maritime 
Security Operations (MSO). Lastly, the ASW mission package will provide 
improved capability against diesel submarine threats. The LCS will be a 
cornerstone of our fleet over the coming decades with its rapid ability 
to reconfigure, wide range of capability, speed and agility that assure 
access to littorals for the Carrier Strike Group and Expeditionary 
Strike Group (ESG).

             Joint High Speed Vessel Procurement Reduction

    Question. With an expansive cargo bay of some 20,000 square feet, 
JHSV can move 600 tons of cargo at over 35 knots, carrying over 300 
combat-ready troops. When compared to conventional sealift and airlift, 
JHSV is more efficient and more affordable. As we draw down our forces 
in the Middle East and Afghanistan, we strengthen our focus on the 
Asia-Pacific region; a large area of the globe characterized by huge 
expanses of ocean and small, disconnected islands. At this same time, 
the Navy is reducing the number of JHSVs in the FYDP by eight.
    What is the Navy's plan to fill the vital gap in lift capability 
that would otherwise be provided by JHSVs?
    Answer. The Combatant Commander (COCOM) requirements for Joint high 
speed intratheater lift, maneuver and sustainment in support of major 
combat operations and contingencies and for peacetime intra-theater 
movement and other seabasing support will be supported by the JHSV. Our 
CONOPS modification in our FY12 budget submission to operate 50% more 
of the year using a Military Sealift Command crew reduced the number of 
JHSVs required from 21 to 16. The recent strategic review concluded 9 
JHSVs would meet the minimum requirement. Further analysis of 
requirements validated that 10 JHSVs will more than meet needs.
    Question. With our renewed focus on tightening our budget, 
including limiting our energy usage, how can we justify continued use 
of expensive, inefficient airlifters for everyday operations?
    Answer. Airlifters and ships, such as JHSV, typically serve 
different mission requirements. Airlifters are used for more time-
sensitive missions. Although ships are effective in transporting large 
quantities of cargo, they cannot always meet the mission timelines 
required for some of these more time-sensitive missions. A proper mix 
of capabilities is needed to best balance war-fighting risk across the 
full range of potential military operations.
    Question. I also understand the crew size of the HSV to be less 
than 30 persons, a significant reduction over current crew sizes for 
similarly sized platforms. At approximately $160M per ship, the Navy 
could buy 10 JHSVs for the price of one DDG. When compared with other 
platforms, HSV has an excellent acquisition price, has a lower 
projected life cycle cost and it provides increased flexibility for the 
military when executing missions.
    Can you explain the logic behind delaying acquisition of an 
affordable and capable vessel that meets deployment mission 
requirements and helps achieve our desired fleet numbers?
    Answer. To accomplish the broad range of missions assigned to the 
Navy within the challenging fiscal constraints set by the Budget 
Control Act of 2011, the Navy's plan for ship procurement is designed 
to achieve the capabilities and capacities needed to best balance war-
fighting risk across the full range of potential military operations. 
The proper mix of capabilities is a more important factor than ship-
count alone in order to achieve naval supremacy across a wide range of 
possible contingencies and deployment missions--intra-theater lift and 
theater security cooperation are just two requirements out of many. 
Therefore, comparing cost and quantity of a relatively cheaper ship 
with a smaller crew and an extremely limited set of missions against 
the cost of a multi-mission, front-line combatant in isolation is not 
relevant in the context of the total force. The Navy buys multi-mission 
combatants for very specific missions--we procure JHSV for a very 
specific mission set as well. These mission sets are fundamentally 
different and cannot be traded across ship types.

                      Littoral Combat Ship Manning

    Question. The LCS is planned to be minimally manned by small, 
experienced crews. Berthing is limited, and many of the perks that 
exist on a larger ship do not exist on the LCS. It was this Committee's 
understanding that all crewmembers would have experienced at least one 
deployment prior to joining the LCS crew and that no junior officers or 
first term enlisted sailors would be eligible to join the LCS crew. 
Opportunities to train sailors are not available on the LCS and, 
because of its minimal manning requirements, the entire crew must be 
capable of performing a variety of tasks.
    I understand that the LCS was offered as an option for six Naval 
Academy midshipmen during the ship selection process for the class of 
2012 scheduled to graduate this May. Has the Navy changed its manning 
policy for the LCS?
    Answer. LCS will continue to be manned by experienced Officers and 
Sailors. The 12 Ensigns (six USNA, six ROTC) selected this year are 
part of a pilot program on four LCS crews (three Ensigns per crew) to 
assess the benefits, costs and challenges associated with integrating 
junior Officers into the crews should the decision to do so be made in 
the future. The Ensigns assigned as part of this pilot program are not 
replacing more senior Officers assigned to LCS crews.
    Question. Will the newly commissioned junior officers and first 
term enlisted personnel be permitted to serve on the crews of the LCS?
    Answer. The pilot program incorporates 12 Ensigns into four LCS 
crews (three Ensigns per crew) to assess potential benefits, costs and 
challenges associated with integrating junior Officers into the crews. 
The program does not include enlisted personnel.
    Question. Are there concerns regarding the lack of training 
opportunities and experience level for these sailors aboard these 
ships?
    Answer. These Ensigns will be in addition to planned LCS manning as 
a pilot project to broaden the pool of Officers with LCS experience. 
The LCS training construct relies heavily on shore-based training for 
qualification and, to a lesser degree, certification of all crew 
members. The off-ship training opportunities are intended to provide 
all crewmembers, including junior Officers, with sufficient training to 
be fully qualified and able contributors when on-ship.
    Question. Part of the rationale for manning the ship with more 
experienced Sailors was that they would be better equipped to handle 
the long hours and multiple responsibilities without having to devote 
as much time to initial training and qualification as would be required 
on a more traditional surface combatant. Please explain what drove the 
decision to change this policy.
    Answer. There have been no changes to LCS manning policy. The 12 
Ensigns selected this year are part of a pilot program on four LCS 
crews (three Ensigns per crew) to assess the potential of integrating 
junior Officers into the crews. The Ensigns assigned as part of this 
pilot program are not replacing more senior Officers assigned to LCS 
crews.
    Question. Are there going to be other changes regarding manning of 
the LCS appearing in the near future?
    Answer. As with all programs, Navy will continue to evaluate all 
aspects of the LCS program and make revisions as necessary to ensure 
operational ``success.

    [Clerk's note.--End of questions submitted by Mr. Bonner. 
Questions submitted by Mr. Moran and the answers thereto 
follow:]

                    DDG-51 Flight IIA and Flight III

    Question. Flight IIA of the recently restarted DDG-51 production 
line will have a significantly upgraded Aegis Combat System capability 
that for the first time will provide limited integrated air and missile 
defense capabilities. However, software delays have delayed testing, 
and may impact the Navy's schedule. According to the GAO's report 
entitled, ``Additional Analysis and Oversight Required to Support the 
Navy's Future Surface Combatant Plans,'' once the Flight IIA retrofit 
is installed on DDG 53, the Navy will certify that the upgraded Aegis 
system is mission ready without validating with live ballistic and 
cruise missile targets that it can perform the Integrated Air and 
Missile Defense mission.
    Why would the Navy certify a major upgrade to the Aegis system is 
``combat ready'' without testing the system's ability to perform both 
air and ballistic missile defense?
    Answer. The AEGIS Combat System Advanced Capability Build (ACB) 12 
or AEGIS Baseline 9 software development is proceeding as scheduled. 
The Navy and the Missile Defense Agency (MDA) are working closely 
together to validate Integrated Air Missile Defense (IAMD) capabilities 
with combined live ballistic and cruise missile tests. All IAMD tests 
will be performed prior to combat system certification (3rd Qtr FY2015) 
and deployment of the first AEGIS Baseline 9 Destroyer. The current 
IAMD test plan includes two tracking events and two live fire events to 
be completed by 1st Qtr FY2015. In addition to conducting live IAMD 
testing in conjunction with MDA, the Navy has developed a rigorous 
Developmental Test (DT) program that stresses the performance of AEGIS 
Baseline 9 IAMD capability. Prior to installing AEGIS Baseline 9 
onboard ships, several thousand hours of testing will be performed at 
government and contractor land based test sites (LBTS) to gain an early 
look at AEGIS Baseline 9 functionality and performance. Throughout the 
at sea DT period, the Navy will conduct thirteen live fire cruise 
missile events and more than seven hundred simulated missile exercise 
events. Modeling and Simulation (M&S) will also be utilized to define 
the entire battle space.
    Note: NAVSEA is working with the U.S. Fleet Forces Command to 
enable the use of DDG 53 as the Developmental Test (DT) and Operational 
Test (OT) ship and it will be able to remain in an uncertified, but 
deployment ready, status throughout system certification. The scope 
delta between the IAMD DDG with a SPY-1D radar and new construction 
IAMD DDG with a SPY-1D(V) radar baselines is very small.
    Question. For Flight III of the DDG-51 restart, the Navy will spend 
at least $2.2 billion developing a new Air and Missile Defense Radar 
(AMDR). According to the GAO, the development and integration of the 
AMDR on DDG-51 ships ``faces significant technical challenges that may 
be difficult to overcome within the Navy's schedule. . .[further] a 
Navy red team assessment found that the introduction of AMDR on DDG-51 
leads to significant risks in the ship's design and a reduced future 
capacity and could result in design and construction delays and cost 
growth on the lead ship.''
    Given that the DDG-51 is the Navy's primary surface combatant, what 
assurances can the Navy provide to this Subcommittee that the Flight 
III upgrade will proceed as planned?
    Answer. As has been done previously in the DDG 51 program, the DDG 
51 Multi-year Procurement (MYP) will include nine Flight HA destroyers, 
with the Flight III capability introduced in FY 2016 as an Engineering 
Change Proposal (ECP). Introducing the Flight HI design by an ECP 
allows for maximum flexibility and ensures the lowest risk in 
introducing the Air and Missile Defense Radar (AMDR). Both the DDG 51 
program and the AMDR development may proceed without introducing 
substantial risk to either effort and allow for ADMR or Flight III 
capability when the design is fully matured and ready for fielding. The 
Navy intends to compete the nine ship DDG 51 MYP in FY 2012 for a FY 
2013 award. In conjunction, the Navy will continue development of AMDR 
by awarding an AMDR Engineering and Manufacturing Development (EMD) 
contract in FY 2013 and will subsequently begin conducting preliminary 
and contract design for the Flight III in FY 2012-2015. This timeline 
allows the Navy to perform required engineering activities assuring 
ship design and service life allowances are adequately assessed. 
Further, the timeline allows for introduction of Flight III on the FY 
2016 ship, as planned.

             Virginia Class Submarine Multiyear Procurement

    Question. Today the Navy buys two VA class submarines per year in 
order to reap efficiencies from the two remaining submarine shipyards. 
The result has been hundreds of millions of dollars in cost avoidance. 
In its Fiscal Year 2012 shipbuilding plan, the Navy planned to build 2 
of these submarines in FY14. That has apparently been modified, so that 
one of the FY14 submarines will now be procured in FY18. While I 
understand the total number of submarines to be procured in the Block 4 
Multiyear Procurement will not change, I am nonetheless concerned about 
the industrial base impacts of this deferral.
    Has the navy reviewed the possible impacts resulting from the 
deferral on the 2 construction yards?
    Answer. Yes. While maintaining procurement at 2 submarines per year 
is the most cost effective way to ensure stability within the submarine 
vendor base, the FY13 budget request represents the best balance of 
resources and requirements within budget constraints. The deferral of 
the second FY14 ship will create some industrial base instability and 
loss of efficiency.
    Question. Has the Navy determined its decision will increase the 
overall cost of the program?
    Answer. Yes. The decision to defer the second FY14 submarine will 
increase overall program cost, largely due to inflation and loss of 
efficiency.
    Question. To restore funding for the 2nd FY14 VA class submarine, 
how much funding would be required in FY13?
    Answer. To restore the second FY14 ship and sustain VIRGINIA-class 
submarine procurement at 2 per year would require an additional $778 
million of Advance Procurement in FY13.

                       NGEN Acquisition Strategy

    Question. The Navy has designated the NGEN program as the successor 
to its NMCI desktop to warfighter Information Technology Network. Under 
the current acquisition strategy, the Navy is expected to release a 
Request for Proposal (RFP) using a low bid technical pass/fail 
contracting method for NGEN. There is concern that using this strategy 
on a program as complex as NGEN will result in serious consideration 
being given only to bids with the lowest price, eliminating important 
flexibility for evaluating risk and DoN total cost of operation and 
ownership.
    The Navy's own procurement guidelines on LPTA state that it should 
only be used for procurement of ``non complex, low risk, clearly 
defined or routine requirements'' and never used for acquisition of 
design or development efforts, software integration or professional 
services. Why isn't the use of LPTA for NGEN in conflict with these 
guidelines?
    Answer. Lowest Price Technically Acceptable (LPTA) contracting is 
considered appropriate when the requirement is well defined, price 
control is paramount, and the risk of non-performance is low. The 
requirement for NGEN is a continuation of the Navy Marine Corps 
Intranet (NMCI) contract originally awarded in Oct 2000 and extended 
under the Continuity of Services Contract (CoSC). Thus, the network has 
been operational for nearly 12 years. The technologies integral to NGEN 
are well-defined Commercial-off-the-Shelf (COTS) technologies. There is 
no development under NGEN, so the risk of non-performance is low. 
Overall, the operational performance requirements for NGEN are very 
similar to those for NMCI. The only contractual requirement changes 
from NMCI 2010 to NGEN were for the increased government command and 
control (C2), enhanced Information Assurance (IA) and Government 
ownership of the network infrastructure; there are no significant 
changes in the technology required or how the contractor provides the 
services under the contract. The current strategy is to competitively 
select either one or two contractors for the two main segments of the 
network (Transport and Enterprise Services) using a LPTA source 
selection, a best value determination in accordance with Federal 
Acquisition Regulation (FAR) Part 15.101-2. This approach for NGEN has 
been endorsed as appropriate by the Office of the Secretary of Defense 
(OSD) via a robust oversight process that included multiple Overarching 
Integrated Product Team (01PT), OSD Peer and Milestone Decision 
Authority (MDA) reviews.
    Question. Was LPTA one of the acquisition strategies evaluated in 
the Navy's Analysis of Alternatives (AoA) for NGEN?
    Answer. No. The purpose of the AoA was to perform an analytical 
comparison of the operational effectiveness, suitability and life-cycle 
costs of acquisition alternatives to satisfy the DON's requirements for 
its enterprise network. LPTA is not an acquisition alternative but a 
source selection method that will be used to evaluate offerors' 
proposals.
    Question. Please explain how the Navy determined using a low bid/
technically acceptable acquisition strategy for NGEN was the best 
course. What were the overriding factors in this evaluation?
    Answer. LPTA is considered appropriate when the requirement is well 
defined, price control is paramount, and the risk of non-performance is 
low. The performance requirement for NGEN is NMCI as it performed on 
September 30, 2010. It is well understood. As the network operates 
today, there is no development under NGEN. Finally, the technologies 
integral to NGEN are widely used COTS technologies.
    Question. Has the Navy evaluated the impact of this acquisition 
strategy on forecasted network life-cycle costs?
    Answer. Yes. The DON has completed and approved a Cost Analysis 
Requirements Description (CARD), Program Life Cycle Cost Estimate 
(PLCCE) and a Service Cost Position (SCP) for NGEN. An Economic 
Analysis (EA) has been drafted and is in the process of being reviewed 
for approval.
    Question. What is the status of the Navy's most recent cost 
estimate for this program and how was this cost estimate validated?
    Answer. SCP was completed by the Naval Center for Cost Analysis and 
approved by a DON Cost Review Board in October 2011. Both the SCP and 
the EA will be updated prior to acquisition Milestone C, which is 
anticipated in early Q1 FY 2013.
    Question. What are the factors preventing the Navy from conducting 
a full trade-off (best value) acquisition strategy for this program?
    Answer. In FAR Part 15 there are two types of best value source 
selections; the tradeoff process and the LPTA approach. The tradeoff is 
appropriate when there are technical or programmatic discriminators for 
which the Government would be willing to pay a premium, or, in other 
words, pay more for more. The DON has determined that there are no 
clear discriminators for which the government would be willing to pay 
more, and, given that there are several companies that are capable of 
delivering this service in accordance with the DON's requirements, 
price was determined to be the overriding factor.
    Question. Has the Navy conducted a risk analysis of the impact a 
segmented computer network may have on operational forces for both the 
Navy and Marine Corps?
    Answer. It is not the computer network that is being segmented, it 
is the acquisition support to the network environment that is being 
segmented to increase competition, a lesson learned from NMCI. The DON 
has been clear that it will infuse government ownership and control to 
its network environment and will be the lead integrator for contractor 
actions in the environment. The strategy was subjected to a rigorous 
System Engineering Technical Review process prior to RFP development 
that analyzed technical risk. The Program Office developed extensive 
mitigation strategies, including Service Level Requirements (SLR) that 
define performance requirements. The Performance Work Statement clearly 
defines performance requirements for all services to be provided in 
NGEN. A comprehensive transition strategy has been developed that 
defines the required actions on the part of the government and the 
contractor and discretely sequences those actions with contract awards. 
The REP requires all offerors to submit a detailed transition approach 
with the proposal as well. The Program Office and DON's Network 
Operations authorities have developed a comprehensive Concept of 
Operations and are conducting a rigorous government operational 
readiness assessment that will identify any gaps in readiness and 
develop required mitigation strategies. Finally, the NGEN RFP contains 
award and incentive fees that incentivize the contractor to ensure 
performance is uninterrupted during transition and steady-state 
operations.
    Question. Has the Navy considered that skilled personnel and 
industry innovation may be lacking from proposed bids if the 
acquisition strategy is based on the low bid and minimal technical 
ability? Isn't that being penny wise and pound foolish?
    Answer. The DON considered various options in developing the RFP 
and considered LPTA as the best value for the Government. The NGEN 
strategy selected was designed to ensure uninterrupted operation of the 
network, sustainment of a strong security posture, increased Government 
operational control and robust competition. The RIP has been the 
product of a lengthy process involving substantial input from DON and 
DoD subject matter experts and incorporating over 10 years of 
experience with NMCI. The DON has also conducted significant market 
research to gain feedback from industry; this information exchange 
enabled the DON to establish appropriate benchmarks for determination 
of ``technically acceptable'' system performance by balancing 
industry's lessons learned and perspective against NGEN's goals and 
objectives. The NGEN requirements are well defined. The NGEN RFP is 
structured such that to be technically acceptable offerors must propose 
an approach that meets these requirements. Evaluation criteria for the 
proposed staffing plan and key personnel are specifically included to 
ensure adequately skilled personnel are proposed. Finally, the NGEN RIP 
includes multiple mechanisms to encourage industry innovation including 
a performance-based contracting approach, Award Fee provisions, and a 
shared savings clause.

    [Clerk's note.--End of questions submitted by Mr. Moran. 
Questions submitted by Mr. Rothman and the answers thereto 
follow:]

                         Shipbuilding Strategy

    Question. Since 1998, the Navy has requested approximately seven 
new construction ships per year. The fiscal year 2013 budget request 
averages about 8 ships per year through 2017. At the end of the day, 
constructing seven or eight ships per year will eventually result in a 
fleet of 210 to 240 ships. With the cost of construction on an upward 
trend, how can you realistically believe that the Navy's fleet will 
reach anywhere near 300 ships?
    Answer. The overall size of the battle force begins a steady climb, 
reaching 300 ships by FY2019 with delivery of ships contracted over the 
last few budget cycles.
    The Navy's shipbuilding strategy has three central objectives: (1) 
maintain required battle force capability to meet the national defense 
strategy, (2) balance needs against expected resources, and (3) 
maintain an adequate shipbuilding industrial base. The FY2013 
President's Budget and the Future Years Defense Plan through FY2017 
fully fund the construction of naval vessels within the FYDP. The Navy 
is continuing to employ acquisition reform and competitive pressure to 
our programs to deliver ships and ship systems at cost and on schedule. 
In the near-term planning period (FY2013-FY2022), the Department of the 
Navy continues to program ships within budget constraints to support 
missions outlined in the new defense strategy.
    Question. In addition, these unpredictable shipbuilding plans are 
driving costs and inefficiencies into construction of Navy ships. Can 
you give the Subcommittee your thoughts on the impact of the FY13 
shipbuilding budget on our shipbuilding industrial base?
    Answer. The Navy's FY2013 shipbuilding plan supports an adequate 
shipbuilding industrial base. The Navy recognizes that level loading of 
ship procurement to help sustain minimum employment levels and skill 
retention promotes a healthy U.S. shipbuilding industrial base. 
Consequently the ship construction plan has been adjusted to reduce 
year-to-year budget fluctuations as much as possible while maintaining 
the best feasible procurement sequence to help stabilize shipyard 
loading.
    An example is the procurement of the lead replacement Fleet Oiler 
(T-A0(X)) in FY2016. While this procurement schedule is slightly early 
for the need, it does support transition to a force of MARPOL compliant 
double-hull oilers at the earliest affordable opportunity and further 
increases sustainability and stability in the auxiliary sector of the 
shipbuilding industrial base.
    In addition, through the use of fixed-price and Multi-Year 
Procurement (MYP) contracts the Navy allows for continuous, stable 
construction of ships and related combat system components in the FYDP. 
Cost stability, and greater shipyard, vendor, and Navy Field Activity 
efficiencies result from: level workloads, retention of skilled 
workforces, improved overhead planning, and capitalization of 
facilities. The MYP also permits economic order quantity procurement 
and the efficient production and delivery of materiel and services, 
which reduce the cost of material and labor.
    MYP contracts are currently used to procure attack submarines, 
littoral combat ships, and joint high speed vessels and the Navy 
intends to use this strategy to procure 9 DDG 51 destroyers across the 
FYDP.
    Taking all of this into account, I believe the Navy is doing all it 
can to control costs and introduce stability in shipbuilding. However, 
this effort requires a balanced industry-Navy approach. If we are going 
to maintain a stable demand signal, industry must also control their 
costs or we will be in an unwinnable tail-chase with costs spiraling 
higher and ship quantities being adjusted downward in response to those 
cost increases.
    Question. Are you satisfied that the shipbuilding industrial base 
will be viable and capable of providing the types of ships necessary 
for the Navy's recapitalization over the next 10 years?
    Answer. Yes. The shipbuilding plan effectively accounts for and 
supports both the anticipated Combatant Commander demands and those of 
the national shipbuilding design and industrial base to build and 
sustain tomorrow's Navy. In the near-term the Navy has a good 
understanding of requirements, costs and capabilities and the 
construction plan is based on actual contract costs or, at the least, 
well founded cost estimates based on this understanding. The Navy's 
construction plan assesses those costs to the greatest extent possible 
to ensure the industrial base remains evenly loaded and the workforce 
levels can be sustained at profitable levels within the individual 
shipyards. New construction will be funded consistent with balanced 
investment profiles and expected future budgets.
    Beyond the near-term, the need to fund SSBN recapitalization will 
result in significant risk to the Navy's overall shipbuilding plan. If 
funding is not made available to support the procurement plan, a 
significantly constrained ship procurement profile will be necessary 
during the years in which the OHIO Replacement is programmed. This will 
cause a reduction in procurement of other ship types resulting in force 
level and industrial base impacts. If future funding becomes more 
constrained, the Navy will have to assess the impact of yard 
constriction or closure on the existing industrial base and the effect 
these changes would have on competition.
    Question. Are there certain areas or types of ships that are more 
at risk than others?
    Answer. Yes. During the years in which the OHIO Replacement Program 
is being procured, if funding is not made available to support the 
procurement plan, maintaining required levels of guided missile 
destroyers, attack submarines, and amphibious ships would be a 
challenge.

    [Clerk's note.--End of questions submitted by Mr. Rothman.]
                                            Tuesday, March 6, 2012.

               FISCAL YEAR 2013 AIR FORCE BUDGET OVERVIEW

                               WITNESSES

HON. MICHAEL B. DONLEY, SECRETARY OF THE AIR FORCE
GENERAL NORTON A. SCHWARTZ, CHIEF OF STAFF, UNITED STATES AIR FORCE

                  Opening Statement of Chairman Young

    Mr. Young. The committee will come to order.
    Mr. Secretary, General, good morning. Welcome to today's 
hearing on the fiscal year 2013 budget request for the United 
States Air Force. Pleased to welcome you back, Secretary 
Donley, General Schwartz. Neither of you are strangers to this 
committee. You know us, and we know you, and it is a good 
working relationship.
    The Air Force's total fiscal year 2013 budget request for 
programs under this subcommittee's jurisdiction is $138.9 
billion, a decrease of $3.9 billion from fiscal year 2012. The 
most notable aspect of this decrease is a $3 billion cut in 
procurement.
    The main lesson of this year's budget request is that in 
the eyes of the Department of Defense, yesterday's vital 
requirement quickly became today's unaffordable luxury. The 
one-two punch of fiscal misery and lowered strategic 
expectations is clearly reflected in the Air Force's plan this 
year, and I would add that I think that many of us are somewhat 
concerned about this, and I suspect that both of you are, too, 
to whatever degree you can speak to that today.
    The proposal before us envisions significant cuts in the 
tactical fighter and airlift fleets. It includes the 
termination of once-prized programs, such as the Global Hawk 
Block 30 and the C-27 Joint Cargo Aircraft. It leaves other 
programs and missions with an uncertain future.
    Finally, this budget is full of implications for future 
base realignments and closures, and this committee is 
especially concerned by the impact all of the above will have 
on the Air National Guard, and I am sure you will have some 
interesting questions on that subject today.
    And I am pleased to see that the Air Force is sticking by 
certain programs such as the new bomber and an improved combat 
rescue helicopter, but I do worry that even those programs 
could be delayed or terminated, with future decisions driven by 
short-term budget considerations.
    I understand the dilemma the Air Force has. We are at the 
point where it is very difficult to achieve significant savings 
and maintain readiness without sacrificing some force 
structure, but we have to be extremely careful how we do this. 
At the same time, Congress has the final say through the power 
of the purse, and we hope that the Air Force will work with us 
to consider any alternatives.
    General Schwartz, Secretary Donley, thank you again for 
being with us today. Your written statements will be entered 
into the record, and you will summarize your statement any way 
that you like.
    Now, before we turn to your remarks, let me turn to the 
famous Mr. Chairman Dicks, who surprised all of us this weekend 
by announcing that he would not run for reelection, and I would 
tell you that comes as a tremendous disappointment to this 
Member and this chairman, with whom Norm and I have worked 35 
years together on very, very important issues.
    So former chairman of this committee, Mr. Dicks, you are 
recognized.

                      Opening Remarks of Mr. Dicks

    Mr. Dicks. Thank you, Mr. Chairman. I appreciate your kind 
remarks. I join Chairman Young in welcoming both Secretary 
Donley and General Schwartz before the committee. We extend our 
sincere thanks to both of you for many years of service and 
dedication to our Nation. We look forward to your testimony on 
the state of the Air Force and the fiscal year 2013 budget 
request.
    You are testifying before the committee at a difficult time 
that places many often competing demands on the Air Force. The 
Budget Control Act requires Department-wide savings of $487 
billion over the coming decade, including $60 billion in 
efficiencies above the levels incorporated in the budget under 
former Defense Secretary Gates.
    Now, we recognize the Department will begin to implement 
significant changes in the strategy to address both the global 
security realities and the obvious financial challenges. We 
also recognize that the Air Force, like all the military 
services, will continue to conduct combat operations in 
Afghanistan for the next several years. We are interested in 
your approach to meet these many demands.
    We understand that some recommendations in this budget will 
not be popular. Force structure recommendations, such as the 
retirement of seven tactical aviation squadrons and rebalancing 
the mix of Active Guard and Reserve components, have drawn 
strong reactions. I expect you are aware of the States' 
reaction to proposed reductions to the Guard and Reserve. We 
are most interested in your testimony on these matters.
    We are looking forward to hearing your views on major 
acquisition programs. We are aware that some programs have been 
stretched out over time. For example, the Joint Strike Fighter 
program has been restructured; 13 aircraft once planned for 
fiscal year 2013 have been deferred as well as 179 aircraft 
over the FYDP. We understand that deferring these aircraft will 
generate over $15 billion in savings across the 5-year defense 
program.
    We also want to hear about the program's technical progress 
and how you are managing the issue of concurrency. We 
understand some programs have been cancelled; the Global Hawk 
Block 30, joint common airlifter, C-130 Avionics Modernization 
Program are primary examples. We want to hear your views on the 
analysis that led to these decisions.
    Now, I must tell you, putting the Global Hawk in a hangar 
is not acceptable to this Member. I think we have got to find 
somewhere--either it is NATO, SOCOM, the Navy, or somewhere--to 
use these Global Hawks. The idea that we would spend all this 
money to buy them and then put them in a hangar is just not 
acceptable. It does not mean we do not support your decision, 
but it says we have got to find a way to use these aircraft, 
and intelligence, reconnaissance and surveillance is a high 
national priority. So if the Air Force is not going to use 
them, we have got to find a home for them.
    We also want to hear your views on investments in the 
fiscal year 2013 request, and over the FYDP we also--that will 
allow the United States to maintain our technological edge over 
our rivals and adversaries, for the programs represent key 
future capabilities. We want to hear your assessment of 
progress and risks concerning technical, schedule, and cost 
matters.
    And, you know, one of the big issues that we are facing is 
cybersecurity, and we want to know what part of the budget of 
$18 billion over the FYDP for cybersecurity is the Air Force 
playing a role in. And we are obviously supporting you on the 
tanker, the new bomber, and space program.
    So we look forward to hearing your testimony, and I want to 
thank you all for your years of service and for working with us 
in a very responsible way.
    Thank you, Mr. Chairman.
    Mr. Young. Okay, Mr. Dicks, thank you very much, sir.
    And I would like to at this point present for the record--I 
will not read the letters, but letters from--signed by 50 
Governors and another letter signed by 50 TAGs, and I am going 
to present this to the record. They are somewhat critical of 
the cuts required by this budget for the Air National Guard.
    [The information follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] 
    
    Mr. Young. Also I have a letter that will be presented to 
the committee from Sanford Bishop, Congressman Sanford Bishop, 
who is here today, although he gave up his membership on this 
subcommittee to become the ranking member on the Military 
Construction Subcommittee, and he does have to attend that 
meeting this morning. But I wanted to note his presence and 
state that we also have a letter that I will place in the 
record expressing the same, basically the same, views that the 
Governors and the TAGs have presented to the Congress and to 
the Secretary of Defense.
    So, Mr. Bishop, thank you very much for being here, and you 
can be sure we will be discussing this issue this morning.
    [The information follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] 
    
    Mr. Young. Now, Mr. Secretary, look forward to hearing from 
you. Mr. Dicks and I have both had the opportunity to meet with 
you and the general prior to this hearing, and we will shoot 
for some very good, productive conversations. So we would love 
to hear your statement at this point.

                 Summary Statement of Secretary Donley

    Mr. Donley. Thank you, Mr. Chairman, and if I might, I 
would also like to express the sincere thanks of our Air Force 
leadership going back over 30 years now for the partnership 
that we have enjoyed with Congressman Dicks over these many, 
many years and the relationships developed to further the 
United States Air Force and the Airmen who serve in it. Sir, we 
appreciate all that you have done over the years to support our 
Air Force.
    Mr. Dicks. Thank you.
    Mr. Donley. Members of the committee, it is a pleasure to 
be here today representing more than 690,000 Active Duty Guard, 
Reserve, and civilian Airmen. I am also honored to be joined by 
my teammate today, the dean of the Joint Chiefs of Staff and 
one of America's finest public servants, General Norty 
Schwartz. We also have joining us today the Director of the Air 
National Guard, General Bud Wyatt, and the Chief of the Air 
Force Reserve, Lieutenant General Charlie Stenner.
    This budget request represents the culmination of many hard 
decisions taken to align our Fiscal Year 2013 budget submission 
with the new strategic guidance and with the cuts required by 
the Budget Control Act over the next 10 years. Finding the 
proper balance between force structure, readiness, and 
modernization is our guiding principle. In short, we determined 
that the Air Force's best course of action is to trade size for 
quality. We will become smaller in order to protect a high-
quality and ready force, one that will continue to modernize 
and grow more capable in the future.
    The capabilities resident in the Air Force mission set are 
fundamental to the priorities outlined in the new strategic 
guidance, and in assessing how to adjust Air Force programs and 
budgets in the future, we have taken care to protect the 
distinctive capabilities our Air Force brings to the table: 
control of air, space, and cyberspace; global intelligence, 
surveillance, and reconnaissance (ISR); rapid global mobility; 
and global strike all enabled by effective command and control.
    Our Air Force and our Joint Interagency, and Coalition 
teammates and partners rely on these capabilities, and though 
we will be smaller, we intend to be a superb force at any size, 
maintaining the agility and flexibility that is inherent in our 
airpower capabilities and ready to engage a full range of 
contingencies and threats.
    This budget protects the Air Force's top priorities. We 
protect the size of the bomber force. We are ramping up our 
remotely piloted aircraft (RPA) force to a goal of 65 combat 
air patrols (CAPs) with the ability to surge to 85 CAPs. We 
protect our special operations forces capabilities, largely 
protect space programs, and protect our cyber capabilities.
    But as we get smaller, it is not possible to protect 
everything. Our proposed force structure changes include the 
reduction of 286 aircraft over the Future Years Defense Plan, 
including 123 fighters, 133 mobility aircraft, and 30 ISR 
platforms. Many of these changes correspond to adjustments in 
the overall size of the Armed Forces, especially Army and 
Marine Corps ground forces, which is the case for the proposed 
reduction in A-10s.
    Our smaller force structure has also led us to favor 
divesting smaller niche fleets, such as the C-27J, and 
emphasizing multirole capabilities that will provide 
operational flexibility across the spectrum of conflict 
demonstrated by our C-130s and by our choices in fighter force 
structure, which include a smaller A-10 fleet and plans for the 
F-16 service life extension.
    We also emphasize common configurations, which can be seen 
in adjustments to C-5 and C-17 mobility fleets and in ongoing 
efforts to seek common configuration within the F-22 and F-15C 
fleets. Because force structure changes have a ripple effect on 
manpower needs, our budget proposal calls for a reduction of 
9,900 Air Force military personnel. By component, this amounts 
to reductions of 3,900 Active Duty, 5,100 Air National Guard, 
and 900 Air Force Reserve personnel.
    Fighter, mobility, and other force structure changes have 
been strategy driven, based on changed requirements, and 
consistent with that strategy, especially where Air National 
Guard units are affected, we have proposed to remission units 
where feasible. We have carefully balanced our Active and 
Reserve changes to make sure that we can meet the demanding 
operational tempos, including both surge and rotational 
requirements that are part of the current and projected 
strategic environment.
    As our force gets smaller, all of our components get 
smaller together and will become even more closely integrated. 
We remain fully committed to our Total Force capability and 
have proposed several initiatives to strengthen integration of 
effort, including increasing the number of Active/Reserve 
Component associations from 100 to 115. Our intention is to 
protect readiness at any force level, because if we are going 
to be smaller, we have to be prepared.
    To that end, we put funds in critical areas such as flying 
hours and weapons systems sustainment. We also support the Air 
National Guard readiness reset, which balances manpower across 
the States from lower-demand units to new high-demand 
intelligence, surveillance, and reconnaissance missions, and 
increases readiness in 39 units. We are committed to ensuring 
that our military forces do not go hollow, and readiness bears 
watching as we move forward.
    Modernization is our most significant concern, especially 
as our fleets age and new technologies drive new investment 
needs. In this year's budget proposal, we slow modernization as 
we protect programs that are critical to future capabilities. 
We also restructure or terminate some major programs to protect 
key priorities. Protected modernization priorities include the 
Long Range Strike Bomber, the KC-46 refueling tanker, and key 
space programs such as the SBIRS (Spaced-Base Infrared System) 
and AEHF (Advanced Extremely High Frequency) satellites, and 
follow-on GPS (Global Positioning System) work, and advanced 
ISR.
    We remain fully committed to the F-35 Joint Strike Fighter, 
which is the future of the fighter force, but we reduce the 
rate of procurement for a few years because, in our judgment, 
Lockheed Martin is not ready to ramp up to full-rate 
production. Due to recent delays in the F-35 program, we will 
also proceed with an F-16 service life extension program.
    Among the programs slated for termination are the Global 
Hawk RQ-4 Block 30 aircraft, because, among other reasons, we 
could not justify the cost to improve the Block 30 sensors to 
achieve capability that already exists in the U-2 and the 
Defense Weather Satellite System, a termination initiated by 
Congress, but one we can accept for now because the program is 
early to need.
    As noted earlier, we decided to divest the C-27J, but we 
have a good alternative to this aircraft with the multirole-
capable C-130, which has demonstrated its ability to provide 
the direct support mission in Iraq and Afghanistan. We remain 
committed to providing this support to the United States Army.
    In other cases we eliminated programs that were judged to 
be nonessential in the current budget environment, such as the 
Light Mobility Aircraft and the Light Attack and Armed 
Reconnaissance Aircraft.
    Through more disciplined use of resources, the Air Force 
continues to wring savings out of overhead, squeeze 
discretionary spending, and find more efficient ways of doing 
business. In fiscal year 2012, we committed to $33.3 billion in 
efficiencies across the FYDP (Future Years Defense Plan). In 
this year's budget we identified about $3.4 billion in 
efficiencies and another 3.2 in programmatic adjustments to add 
on top of that $33.3 billion.
    In keeping with our enduring obligation to take care of our 
people, we will keep faith with Airmen and their families. 
Doing right by our service members is key to our ability to 
recruit and retain a high-quality force. Nevertheless, the 
impact of increasing personnel costs continues to be a serious 
concern. Therefore, we support the military compensation 
program reforms in the President's budget, which includes a 
modest pay raise, proposals to control health care cost growth, 
and calls for a commission to recommend reforms in retired pay. 
We must continue to seek and develop reforms to ensure the 
long-term sustainability of the benefits our men and women in 
uniform have earned.
    Identifying $487 billion in defense cuts to comply with the 
current requirements of the Budget Control Act has been 
difficult. Our Air Force will get smaller, but we are confident 
that we can build and sustain a quality force that is ready for 
the contingencies ahead, and that will improve in capability 
over time. However, further cuts through sequestration or other 
means will put at risk our ability to execute the new strategy. 
To get this far we made tough decisions to align, structure and 
balance our forces in a way that can meet the new strategic 
guidance. If substantially more reductions are imposed on DOD, 
we will have to revisit the new strategy. We cannot afford the 
risk of a hollow force.
    General Schwartz and I feel deeply that our leadership team 
has inherited the finest Air Force in the world, and it is our 
obligation to keep it that way so that our Joint and Coalition 
partners know that they can count on the United States Air 
Force to deliver the capabilities that we need to meet the 
security challenges ahead, and so that our future Airmen remain 
confident, as we are today, that they are serving in the 
world's finest Air Force. That is our obligation going forward, 
and we are going to meet it.
    Mr. Chairman, we remain grateful for the continued support 
and service of this committee, and we look forward to 
discussing our proposed budget.
    [The joint statement of Secretary Donley and General 
Schwartz follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] 

    Mr. Young. Well, Mr. Secretary, thank you very, very much, 
and we share your pride in the world's most efficient, the 
world's best Air Force, and we are convinced of that, and we 
appreciate the role that you have played to maintain that.
    General Schwartz, we are happy to hear from you now, sir.

                 Summary Statement of General Schwartz

    General Schwartz. Mr. Chairman and Congressman Dicks, 
members of the committee, I am privileged to be here today with 
Secretary Donley representing the men and women of the United 
States Air Force. When we appeared before you last year to 
discuss our budget request, America's Airmen were serving in 
Iraq and Afghanistan alongside their Joint and Coalition 
teammates. Little did anyone know that they were on the verge 
of surging into two additional theaters of operations, ranging 
more than 5,500 miles apart, and engaging in operations 
spanning the entire spectrum of activity. But when multiple 
disasters struck our friends in Japan on March 11th, and when 
the United Nations Security Council passed Resolution 1973 six 
days later, the men and women of the United States Air Force 
and the Armed Forces were ready to respond, and they responded 
magnificently.
    The ability to address concurrent surge requirements while 
we maintained fully engaged on two fronts in the United States 
Central Command area of responsibility was most assuredly not 
trivial. Such capability and capacity to address potential 
similar scenarios remains important to our success in the 
future security environment, but in light of fiscal 
circumstances, both presently and for the foreseeable future, 
helping to ensure America's success in these and other 
contingencies requires carefully tailored preparedness of 
America's Air Force and her Armed Forces.
    This budget request, fully appreciating the Defense 
Department's role in helping to stabilize the Nation's 
extraordinary fiscal condition, supports our Airmen and our 
continuing efforts to structure the force for a maximized 
versatility with minimized risk across the spectrum of 
operations. So using our very own version of ``March Madness'' 
last year as an example, this spectrum includes humanitarian 
relief operations in places like Japan, where more than 13,000 
Air Force personnel were called to action to increase much-
needed airfield capacity; to conduct search-and-rescue 
operations; to provide airborne, wide-angle views of the 
devastation for overall situation awareness; and to provide 
rapid and tailored airlift capability, delivering some five 
million pounds, or 60 percent, of the total of U.S. emergency 
relief supplies.
    The operational continuum also includes airpower-intensive 
combat operations such as Libya, where Airmen surged to 
contribute more than 65 percent of all Coalition sorties, 
notably 99 percent of the lift, 79 percent of the in-flight 
refueling, 50 percent of the airborne reconnaissance, and 40 
percent of the strike missions. And our Nation's full-spectrum 
requirements that rely on Air Force capabilities include 
everything else from counterinsurgency to counterterrorism, to 
irregular operations, to the safe and reliable operations, 
maintenance, and security of two of our Nation's three legs of 
the nuclear deterrent.
    In all of these mission areas, Airmen are committed to the 
task of leveraging air and space power with all of its 
versatility. Ultimately Air Force capabilities present to the 
President and the national leadership a range of options to 
meet priorities in the new Defense Strategic Guidance, such as 
projecting power in anti-access and area-denial environments, 
conducting space and cyber operations, and maintaining the 
preponderance of the Nation's nuclear deterrent.
    The wide array of Air Force capabilities which will remain 
vital to our Nation's diplomatic, economic, and military 
interests fall into four general categories of enduring and 
core contributions: air and space control; global intelligence, 
surveillance, and reconnaissance; rapid global mobility; and 
global strike. These contributions are integrated and 
harmonized across multiple operating domains via the Air 
Force's high-volume command and control of air, space, and 
cyber systems.
    As part of the Defense Strategic Guidance, we are 
restructuring our force to be agile and responsive, even as we 
accept the risk associated with a smaller force. While still 
maintaining quality, we will divest 230 fighter, mobility, and 
ISR aircraft in fiscal 2013 toward a total of 286 retirements 
over the program period. We project that targeted divestitures 
will achieve $8.7 billion in total force savings over the 
planning period, which then can be applied to our modernization 
strategy, as Secretary Donley discussed, as well as to all 
important operations and maintenance accounts.
    Our guiding principles in these careful and responsible 
reductions were to favor multi-role systems over those with 
niche capabilities so that we could maximize versatility, and 
to retire entire aircraft types where possible so that we could 
potentially eliminate the entire support infrastructure, 
thereby achieving greater efficiency. But where retirements of 
entire fleets was not feasible, we evaluated options for 
eliminating aircraft that were the least capable or the most 
costly to operate.
    For the assets that we retain, that is 54 combat-coded 
fighter squadrons, 275 airlifters, 453 tankers, and a robust 
mix of remotely piloted U-2, E-3, E-8, and other ISR systems, 
we are emphasizing common configurations for fewer support-and-
sustainment requirements, and therefore we would be positioned 
to achieve greater efficiency in delivering Air Force 
capabilities I mentioned earlier.
    The Defense Strategic Guidance articulates our plan to 
execute the $487 billion cut in defense spending over 10 years. 
Although we have no illusion about the road ahead being easy, 
we have confidence in our ability to manage in this tight 
fiscal circumstance. And I must echo Secretary Donley's concern 
that across-the-board cuts driven by sequestration would 
dramatically change the complexion of our thoroughly 
deliberated defense strategy. We effectively would be sent back 
to the drawing board, because any indiscriminate salami slicing 
of the budget would nullify the carefully considered and 
responsible reductions that preserve our readiness and 
effectiveness, notwithstanding the fiscal constraints in a 
smaller force.
    The comprehensive nature of our fiscal 2013 budget request 
includes a holistic interstate approach to Air National Guard 
and Air Force Reserve force structure from both an operational 
effectiveness and a fiscal responsibility perspective. We 
prefer this strategy over a more piecemeal state-by-state 
approach. Our proposed efforts will correct several manpower 
disconnects, rebalance forces, and improve sortie generation 
and aircraft utilization rates, thereby improving the Total 
Force's readiness and responsiveness across the spectrum of 
operations. The strategy also allows us to better resource our 
higher-priority requirements such as ISR, distributed mission 
training, and domestic and homeland defense operations.
    On the manpower side, the program Total Force realignment 
actions on the order of 10,000 Active, Guard, and Reserve 
Airmen will bring the Total Force end strength down to 501,000 
by the end of fiscal 2013. We hold no illusions that these 
personnel reductions affecting all 54 states and territories 
will be easy. Taken comprehensively, however, this 
recalibration will robust almost 40 units across the Air 
National Guard and thus enhance overall Total Force readiness.
    Clearly, the Air Force's vitality and effectiveness is 
dependent on the Total Force. Therefore, the leadership of both 
the Active and Reserve Components work closely together in all 
deliberations and decisions affecting the Total Force. 
Understandably, we did not always achieve total unanimity, but 
we most certainly were unified, and we remain unified in the 
common goal of ensuring Total Force vitality and viability. 
Together we remain committed to fulfilling the requirements of 
the Defense Strategic Guidance as one Air Force.
    Finally, please allow me to make one comment concerning 
military compensation. I appeal to the committee to carefully 
consider those initiatives in our budget proposal that begin to 
tackle escalating personnel costs: compensation, health care, 
and retirement. Among all the challenges facing us, the reality 
of fewer members of the Armed Forces costing increasingly more 
to recruit, train, and retain for promising careers is the 
monumental defense issue of our time. Our inability to address 
this issue properly will place other areas of the budget, 
including force structure and modernization, under yet more 
pressure, forcing out needed military capability at a time when 
we are already right sized for the likely missions ahead.
    Mr. Chairman and committee members, the Air Force remains 
committed to providing Global Vigilance, Reach, and Power for 
America's needs today and for her aspirations in the challenges 
we will face as a Nation tomorrow. Every single day our 
Airmen--Active, Guard, Reserve--proudly serve on behalf of the 
American people as trusted stewards of the Nation's resources 
and stalwart defenders of her security.
    Thank you again for your continued support of the United 
States Air Force, for our Airmen, and certainly for our 
families. We look forward to your questions, sir.
    Mr. Young. General, thank you very much. We appreciate your 
statement, the importance of your statement.
    With the agreement of Mr. Dicks, we are going to have a 
little change of format this morning. The Budget Committee is 
meeting. Two of our members serve on the Budget Committee, and 
it is important that they be there to protect the interests of 
this subcommittee and our jurisdiction. So I am going to go 
first to Mr. Calvert, who is a member of the Budget Committee 
as well as this subcommittee. So, Mr. Calvert, you are on.

                     COST OF RESTRUCTING THE FORCE

    Mr. Calvert. Thank you, Mr. Chairman, and thank you for the 
opportunity to serve on the Budget Committee. I really 
appreciate it.
    Mr. Young. We are counting on you, believe me.
    Mr. Calvert. Thank you.
    Mr. Young. And Mr. Cole.
    Mr. Calvert. Thank you.
    And thank you, Mr. Secretary and General, for your service. 
I certainly appreciate your coming here today.
    Mr. Secretary, I recently sent a letter to you outlining 
several questions relating to the Air Force budget, so you may 
recognize several of these questions.
    As you know, the Air Force plans on moving a lot of 
airplanes around, retiring several airframes, remissioning 
several bases. Do you have an estimate what the cost of 
remissioning these bases may be?
    Mr. Donley. Well, the overall cost of--or actually this is 
built around force structure savings in our Air Force, so a 
combination of reductions in costs and the costs of moving, 
altogether that is about $8.7 billion in savings across the 
five-year plan.
    Mr. Calvert. And what is the cost, though, of remissioning 
those bases, savings over time?
    Mr. Donley. I can get that for you for the record. It is 
localized, different at each location, depending on the 
missions that are going out and those that are coming in. It is 
balanced out.
    Mr. Calvert. If you could get that for us, I would 
appreciate it.
    Mr. Donley. Sure.
    [The information follows:]

    The Air Force programmed approximately $600 million dollars across 
the Future Years Defense Program to enable the re-missioning and 
relocation of aircraft. The $600 million funds aircraft flying hours 
for training, depot maintenance for aircraft, manpower authorizations 
to meet prescribed crew ratios/new missions, minor construction, and 
military construction projects. Minus these costs, the Air Force 
projects to net savings of approximately $8.7 billion across the Future 
Years Defense Program from all our proposed force structure 
adjustments. Starting in April of this year, the Air Force's major 
commands, including the Air Force Reserve Command and the Air National 
Guard, will begin site surveys to identify any facility and non-
facility requirements that we may not have anticipated so they can be 
addressed during the development of the Fiscal Year 2014 budget.

                              MQ-9 BASING

    Mr. Calvert. Why are five new MQ-9 squadrons being located 
at different bases?
    Mr. Donley. I will let the Chief address some of this in 
more detail, but this has been a growing part of our Air Force 
force structure, so while we have come down in Active Duty 
strength about 24-, 25,000 in the last six or seven years, the 
number of personnel in our ISR work has been growing, so we 
have been creating new RPA units and ISR units across the Air 
Force, both Active and Guard and Reserve.
    Mr. Calvert. I appreciate that, but would it not make sense 
if the Air Force could save money by collocating some of those 
units together with existing MQ-1 units?
    Mr. Donley. Just quickly, we have maxed out the capability 
at certain locations, like Creech Air Force Base, which was the 
primary location we started with early in this decade, so we 
have clearly outgrown Creech and other locations as well.
    Mr. Calvert. But not all locations?
    General Schwartz. But more importantly, most of the units 
that are involved, particularly in the re-missioning sir, are 
what we call RSO units, the remote split operation units. In 
other words, they have no aircraft, but they have the ground 
stations in order to control these aircraft. And so it is not 
so much an issue of----
    Mr. Calvert. Well, without sounding too parochial, in 
California you have an existing schoolhouse up in Victorville. 
You have an existing Predator unit at March, but they fly them 
out of Victorville. Actual aircraft flies out of the old George 
Air Force Base, which has plenty of space to train around 
Twentynine Palms, Fort Irwin, and certainly the Nevada area, 
and it seems that they have plenty of space, plenty of 
opportunity to expand that. So I just wanted to bring that to 
your attention because there is some concern about that.

                           C-5 MODERNIZATION

    The other thing that I wanted to bring to your attention is 
the C-5 modernization, and I know there is considerable cost to 
some of these older aircraft and maintenance costs and the 
rest. Would it not make sense of retiring some of these older 
C-5s and buying C-17s instead, rather than keeping some of 
these old airframes around?
    General Schwartz. Well, in fact, we are retiring 27 C-5As 
in this program.
    Mr. Calvert. Why not retire more?
    General Schwartz. Because we are re-engining the B models 
and the C models, and they are going to be very capable 
aircraft at considerably less cost, frankly, than would new 
production C-17s. That is a decision that is behind us, and 
frankly----
    Mr. Calvert. You talk about the issue of common 
configuration in your statement.
    General Schwartz. Yes, sir, and we are establishing Block 
18 as the common configuration for all 223 C-17s. And we are 
going to have the re-engined version; the C-5M will be the 
common configuration for the remaining C-5 fleet of 52 
aircraft.
    Mr. Calvert. Thank you, Mr. Chairman.
    Mr. Young. Thank you, Mr. Calvert.
    Mr. Cole is also an extremely important member of this 
committee as well as the Budget Committee, and, Mr. Cole, you 
are recognized, and then you can both be excused to get to that 
important budget meeting.

                        F117 ENGINE SUSTAINMENT

    Mr. Cole. Thank you very much, Mr. Chairman. I will just 
point out for the record that Mr. Calvert and Mr. Simpson and I 
are all draftees, not volunteers for that particular committee, 
but we are happy to be there.
    Mr. Secretary, as you know, we are moving the engine-
sustainment activities for the F117 engine to Tinker Air 
Logistics Center, and that has got a very expensive supply 
chain associated with that, sole-sourced right now. It has come 
to my attention there is a lot of commercially available parts 
that could be in that. I would like to know what your thoughts 
are going forward as to whether or not we should look at those 
supply chains and begin to compete them as opposed to sole-
source them.
    Mr. Donley. We have taken a look at competing some aspects 
of engine components and have seen the potential for 
significant reductions. My recollection is here on one 
component we have forecast savings of up to $40 million, so 
this has some potential. Let me get you the details for the 
record here.
    General Schwartz. I can offer, if I may, sir.
    Mr. Cole. Please.
    General Schwartz. The experience we have had thus far with 
using both reconditioned commercial parts and nonoriginal 
equipment-manufactured new parts, in particular with the F108 
engine, which is the KC-135 engine, where we have had fan 
blades that we are now purchasing from non-OEM (original 
equipment manufacturer) sources at very considerable savings 
that the Secretary addressed.
    With respect to the F117, we are securing data rights in 
order to pursue a similar strategy, and this is a key thing for 
defense procurement more broadly is assuring that the 
government possesses data rights, particularly for those 
systems that are not blended commercial/military, that are 
military-only application, like the 117.

                  C-130 AVIONICS MODERNIZATION PROGRAM

    Mr. Cole. Well, I would certainly encourage you to continue 
and expedite that, because I think it might save us a lot of 
money and hopefully save you some of the tough decisions you 
have had to make going forward.
    Let me also switch and be a little parochial here again. I 
am concerned, I guess, first and foremost, just about the 
number of C-130s that are being retired, and particularly 
concerned that the decision was made on the C-130 Avionics 
Modernization Program, the C-130 AMP program. Actually Mr. 
Dicks, I think, mentioned that in his opening comments.
    If the idea is to cut numbers, but retain and, if possible, 
improve quality, what is the rationale behind abandoning that 
program which would improve quality?
    General Schwartz. It would, without a doubt, and in a prior 
budget environment, it was a magnificent modification to the 
airplane, no question about it, and it removed one crew member, 
the navigator, from the platform. But, sir, the reality is that 
that modification per airplane is in the neighborhood of $19 
million a bird. The less ambitious program that will satisfy 
international navigation requirements and so on is less than $5 
million an airplane. This was simply a recognition of 
affordability. Having that magnificent cockpit and one less 
crew member was desirable, but it is in this environment not 
affordable, sir.

                       AIR FORCE MISSION CAPACITY

    Mr. Cole. Thank you.
    Let me ask you one last question, and then I will go about 
my business of trying to make sure you have the largest 
possible budget. You mentioned, I think, General Schwartz, the 
extraordinary achievement of this last year of maintaining 
military operations in two theaters while we are at war, in 
conflict, and at the same time on a dime moving toward Libya 
and doing the incredible work you did in Japan. After we do all 
the things that you are recommending here, are you going to be 
able to do that again?
    General Schwartz. Probably not. We will not have the same 
depth that we had a year ago at the end of fiscal 2013. We will 
be as good as we were, but there will be less capacity. That 
was the strategy we followed was to sacrifice capacity for 
quality. If we go beyond 487, then we are talking about both 
capability and capacity.
    Mr. Cole. I would just ask both of you to make that point 
repeatedly, that we literally--I mean, we have too many people 
on here who look at this in terms of numbers, and that is 
important, but do not understand what it is going to mean we 
cannot do going forward that we are in the habit of doing, and, 
you know, those are--I mean, that is going to be lives lost. 
That is going to be tremendous loss of capability. But again, 
thank you for what you are doing to wrestle with a very 
difficult situation.
    Mr. Chairman, thank you for your indulgence.
    Mr. Young. Mr. Cole, thank you very much.
    And now we will go to Mr. Dicks.

                          GLOBAL HAWK BLOCK 30

    Mr. Dicks. Thank you, Mr. Chairman.
    General Schwartz and Secretary Donley, did the Air Force 
propose to terminate Block 30, or was this decision made by 
OSD? And what is the basic reasoning behind the decision?
    Mr. Donley. This was an Air Force recommendation. We looked 
at the relative costs of the Block 30s going forward and the 
relative costs of the U-2 going forward, and there were changes 
in the joint requirements for high-altitude ISR that caused us 
to revisit how we could meet those requirements with both of 
these platforms, and our conclusion was that we could get this 
work done with the U-2. While it does not have the persistence 
of the Global Hawk, the reduced overall requirements would 
still allow us to get the missions done and meet the 
operational tempo required, and the U-2 has, in some areas, a 
superior sensor, which the Global Hawk does not. So bringing 
the Global Hawk Block 30 up to the U-2 would take time and 
money. The net impact of that is a $2.5 billion savings in the 
FYDP.
    Mr. Dicks. Were there other factors involved in the 
decision to terminate Block 30 such as reliability or sensor 
performance, or was it solely a matter of cost? You said there 
was some difference in the sensors, I heard that.
    General Schwartz. Sir, the costs are, at least at this 
moment in time, roughly a push. They are about $32,000 a flying 
hour U-2 versus Block 30. With respect to the sensors, the 
sensor capability on the U-2 is better in at least two 
dimensions, both on the EO/IR (electro-optical/infrared) side 
and in the signal side, and with respect to the reliability of 
the airplane, although we have made improvements of 
subsystems--generators, for example, were a significant issue 
in the Block 30--that has largely been corrected. But 
reliability is an issue, it is a cost driver, and it was 
recognized in the cost per flying hour.
    Mr. Dicks. The committee has been seeking a detailed 
breakdown of the cost per flying hour and maintenance costs to 
compare the U-2 and Block 30. Will you encourage your staff to 
supply this data as soon as possible?
    General Schwartz. Of course, sir.
    Mr. Donley. We will.
    [The information follows:]

    The detailed breakdown of the cost per flying hour maintenance 
costs to compare the U-2 and RQ-4 is shown below. The RQ-4 flying hour 
breakout is based on data from Air Force Total Ownership Cost (AFTOC) 
system and includes all RQ-4 configurations. The RQ-4 FH breakout is 
based on program office data and shows a mix of blocks. Block 30 flew 
nearly 45 percent of the total. The RQ-4 does not represent steady 
state operations and sustainment costs. Steady state is defined as end 
of production and when the program has reached reliability and 
maintainability maturity.

------------------------------------------------------------------------
              Then year $                    RQ-4A             U-2
------------------------------------------------------------------------
Mission Personnel:
    Operations........................      $28,571,948       $5,365,619
    Maintenance.......................       29,604,964       36,708,722
    Other Mission Personnel...........       31,317,633        6,160,553
Unit-Level Consumption:
    POL/Energy Consumption............        4,376,241       25,829,422
    Consumables.......................        5,774,192        5,622,410
    Depot Level Reparables............          379,589          772,586
    Other Unit Level Consumption......       34,675,502       20,849,584
Depot Maintenance (not Depot Level
 Reparables):
    Overhaul/Rework...................                0          907,059
Contractor Support:
    Contractor Logistics Support......      314,379,249      417,628,143
Indirect Support:
    Personnel Support.................        3,077,080        4,355,094
    Installation Support..............       14,892,739        4,850,351
                                       ---------------------------------
        Total:........................      467,049,137      529,049,542
Hours.................................           14,620           16,518
Operational Cost Per Flying Hour......           31,947           32,029
------------------------------------------------------------------------

                               U-2 FLEET

    Mr. Dicks. All right. Now, what is the average age of the 
U-2 fleet?
    General Schwartz. Sir, the average age of the birds is in 
the neighborhood of 25 years. You know, there is a mythology 
out there that these are 40- or 50-year-old airplanes. Of 
course, you know, in the 1980s we bought the U-2s essentially 
new, the U-2Ss as they were called at the time, and so these 
are 20- to 30-year-old airframes that have been, like so many 
of our birds, improved over time.
    Mr. Dicks. What is the mission-capable rate of the U-2 
fleet?
    General Schwartz. Sir, I would have to get that to you for 
the record.
    Mr. Dicks. That is fine.
    [The information follows:]

    For Fiscal Year 2011, the U-2 mission capable rate was 81.8 
percent. As of March 6, 2012, the U-2 mission capable rate is 77.2 
percent.

    Mr. Dicks. We understand that you will need to spend $1.1 
billion over the next 5 years to extend the U-2 to 2025. Some 
have characterized the cost as what is needed to modernize or 
overhaul the U-2. Can you please clarify what you have restored 
to the budget for the U-2 and what this is for?
    General Schwartz. It is largely operations and sustainment. 
There is modest RDT&E (Research, Development, Test and 
Evaluation) involved, which we would use on any platform, but 
it is primarily flying hours, personnel, and sustainment of the 
weapons system. I was just going to say, on the other hand, the 
predominant portions of the Block 30 that create that $2\1/2\ 
billion in savings are procurement and substantial RDT&E in the 
neighborhood of six or eight times that of the U-2.
    Mr. Dicks. Do your estimates include the cost associated 
with keeping the pilot-training pipeline open for the U-2?
    General Schwartz. It does, sir.
    Mr. Dicks. Okay. You know, are you aware that the budget 
justification for operation and maintenance in fiscal 2013 
includes adjustments predicated on retiring the U-2 and 
continuing Block 30? For example, the budget removed $519,000 
from U-2 manpower to ramp down support in preparation for the 
retirement of the U-2 system. Is this an indication that the 
decision regarding Block 30 and U-2 was done in a rushed 
manner, the fact that this is in your budget for 2013? It just 
seems hard to understand how that would be in there if this was 
a well-thought-out, well-considered decision.
    Mr. Donley. Sir, we will go back and look at the 
justification material there and make sure it is correct. That 
may have been what the 2013 line looked like for the Fiscal 
Year 2012 budget.
    Mr. Dicks. Yeah, before the decision was made. I understand 
that. I mean, these errors can be made.
    You know, I hope you are doing everything you can to figure 
out a way to use these 18 Global Hawks; I mean, if NATO needs 
them, if Special Forces need them, the Navy, if you can work 
out something with the Navy. I just think the American people 
are going to have a hard time understanding how when we said a 
year ago that these were $220 million less expensive to operate 
than the other ones, that all of a sudden now we are just going 
to put 18 of these things in a warehouse. I mean, that just 
does not seem right to me. I hope the Navy or somebody can use 
these things. We need ISR, you know, dramatically, and the idea 
of this just really bothers me, and I am not--I do not care 
about who manufactures them or anything else. I am worried 
about we have already bought them, and we better figure out a 
way to get some utilization out of this.
    Mr. Donley. We understand, Mr. Dicks, and we are open to 
further discussion on how best to use these platforms going 
forward.
    Mr. Dicks. And the Navy is going to get these BAMs.
    Mr. Donley. That is correct.
    Mr. Dicks. I mean, if there is a way to use this or to 
change the sensors, I hope we consider that.
    Thank you, Mr. Chairman.
    Mr. Young. Thank you, Mr. Dicks.
    Mr. Lewis.

                           144TH FIGHTER WING

    Mr. Lewis. Thank you, Mr. Chairman.
    Welcome, gentlemen.
    The 144th Fighter Wing has been preparing facilities, 
maintenance, and support functions for several years. More than 
half of the support equipment for the F-15 conversion is on 
hand, and maintenance training began in May. The delegation 
supported military construction money that the fiscal year 2010 
budget appropriated for the 144th Fighter Wing for its 
operations facility. The wing has already trained five pilots 
to fly the F-15, has four scheduled to begin training in July, 
and has hired four experienced F-15 pilots. The environmental 
impact study is on schedule and will be completed by July 15, 
2012. The first 21 assigned F-15 aircraft are scheduled to 
arrive at Fresno, California, on August 15, 2012. The wing will 
have 18 F-15 aircraft by January 31, 2013, with the balance 
arriving by May of the next year.
    The fundamental question here, Secretary Donley and General 
Schwartz, is, is the F-15C the best platform for aerospace 
controller missions for the 144th Air National Guard Wing at 
Fresno and March Air Force Base? Is that fielding plan still on 
track for mid-August, and are there any plans to eliminate the 
144th?
    Mr. Donley. So, those plans are on track, Mr. Lewis, and 
the F-15C is an excellent platform for air superiority, of 
course, and including the air sovereignty mission as well.
    Mr. Lewis. General Schwartz?
    General Schwartz. I would just concur that the logic of 
putting F-15s into Fresno was because they are in a geographic 
position which is ideal for performing the ACA (Airspace 
Control Authority) mission, and so at least at this moment in 
time, sir, that is clearly the plan ahead.

                   UNMANNED AERIAL VEHICLE PERSONNEL

    Mr. Lewis. I have noted over this last 18 months in 
recruitment patterns of people coming into the Air Force that 
there is a very high percentage of people who seem to be 
entering with, in part, an objective to fly Unmanned Aerial 
Vehicles. Is that a significant shift? And discuss that with 
the committee, if you would.
    General Schwartz. Sir, it is. I mean, I must admit candidly 
that, you know, folks from our generation did not look up into 
the sky and dream about operating remotely piloted aircraft 
from the surface, but the reality is that time has moved on, 
and these platforms are a vital part of our Air Force both for 
intelligence surveillance and reconnaissance missions, as well 
as strike. And so a couple years back, sir, we created a 
separate career path for--we started the mission with 
traditionally trained pilots and so on, and we have since 
established a separate career path for the remotely piloted 
mission. It is viable, it is enduring. These youngsters are 
professional in what they do, and it is a very powerful and 
meaningful mission because they see what they achieve every 
day. And as I have said in public, but I will repeat it here, 
that being the al Qaeda operations officer is now a short-term 
assignment, and that is in no small part due to the efforts of 
our remotely piloted aircraft operators.
    Mr. Lewis. No small amount of revolutionary change here 
that is very, very significant.
    Mr. Chairman, thank you.
    Mr. Young. Thank you, Mr. Lewis.
    Ms. Granger.

                          RELOCATION OF C-130S

    Ms. Granger. Secretary Donley and General Schwartz, when 
Secretary Panetta testified before this subcommittee, he 
highlighted the importance of maintaining a strong National 
Guard and Reserve, and I wholeheartedly agree with his 
comments. And I am very concerned that the Air Force's proposed 
cuts to the National Guard are not consistent with the 
Secretary of Defense's statement. Relocating the Texas Air 
Guard's eight C-130s is a prime example of what I think are 
poor decisions contained in your Air Force proposal. There is 
no justification for moving the assets of an established, well-
functioning, and experienced unit from Texas, where the C-130s 
are critical to domestic response, and moving them to Montana, 
which is far less prone to the number of natural disasters 
experienced in the Gulf Coast region. The unnecessary cost in 
military construction, additional training, and operational 
requirements is unacceptable, and I believe it is ill advised.
    Mr. Secretary, Congressman Sam Johnson and I talked to you 
a little over a week ago, and you told us at that time this was 
not your decision. This was very concerning for us to hear 
since this is the Air Force's budget proposal, and a decision 
of this magnitude with this impact should be made with the full 
knowledge and approval of the service Secretary. I was pleased 
to hear that you have decided to review this proposal, and I 
hope that any alternatives and adjustments proposed by the Air 
Guard are given serious considerations. I look forward to 
personally briefing, with you personally briefing, Senators 
Hutchison, Cornyn, and me on your decision.
    General Schwartz, last week Congressman Conaway asked you 
about the impact of moving the C-130s from Texas, what impact 
it would have on the Gulf States' ability to respond to 
disasters or other domestic contingency. Your response did not 
address the Congressman's question and left the members of the 
Armed Services Committee believing that there are Guard assets 
in the Gulf States that they do not have, specifically C-130s 
in Mississippi and Arkansas. As we both know, there are no Air 
National Guard C-130s in Mississippi. The C-130s in Arkansas 
are used for training and have not been used to respond to 
disasters.
    So I want to give you another opportunity to respond to 
that question with accurate information, because I am concerned 
that the Members of the House Armed Services Committee left 
their hearing with this misinformation. I want to make sure the 
same thing doesn't happen to this subcommittee.
    General Schwartz. Ma'am, you are well aware that in the 
2011 NDAA (National Defense Authorization Act), there was 
authorization for using Title X assets to support domestic 
contingencies. There are 28 C-130s at Abilene at Dyess Air 
Force Base, there are Reserve assets clearly in Mississippi, 
there are Air National Guard assets and Active Duty lift assets 
in Arkansas in close proximity. The bottom line is that there 
are considerable lift assets available to support a 
contingency. This is what we did during Katrina. I think you 
are aware of all the support that we offered.
    The bottom line here, ma'am, is that we had to reduce the 
C-130 inventory by 65 aircraft, 39 of which will retire in 
2013. The connection between Fort Worth and Great Falls, I 
would argue, is serendipitous. It is not A to B. These were 
independent choices. There is capability that resides within 
Texas, there is a very modest capability of lift in FEMA 
(Federal Emergency Management Agency) region 8, and so on what 
we did when the C-27s retired and the reduction of the C-130s 
was to make the best possible choices, given the overall 
footprint of our Total Force.
    Mr. Donley. Ma'am, I would also like to correct the record, 
make sure there was no misinterpretation of our conversation 
last week. The decision to move C-130s, like all the decisions 
in the Air Force's budget proposal for Fiscal Year 2013, are my 
decisions with the rest of the Air Force leadership, and in 
this regard, as we evaluated how many C-130s we were going to 
take down in the Air Force and where we might do that, I took 
the advice of the senior Air Staff and including the Director 
of the Air National Guard and the Air Force Reserve as well. So 
these were the collective recommendations on how to make these 
adjustments.
    Ms. Granger. I am going to tell you, I am just a real 
straightforward person. I asked a question, and I believed the 
answer, and the answer you gave me, it was the Guard's 
decision, because I said on the telephone at that time, not the 
Guard that was in my office, and Sam Johnson said the same 
thing.
    On the response about the C-130s, according to the 
Governors of the Gulf States--Gulf Coast States, they do not 
agree, and they say losing the C-130s takes away an essential 
asset for saving the lives of Gulf Coast State citizens.
    I ask unanimous consent to include the letter to President 
Obama from the Governors, signed by all the Governors of the 
Gulf Coast States, for the record.
    Mr. Young. Without objection.
    [The information follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] 
    
    Ms. Granger. Mr. Secretary, when we spoke, you mentioned 
that you would get me the numbers the Air Force had run to 
determine all the costs associated with the proposed move of 
the 136th Airlift Wing, and I have not received that 
information. Have you sent that to me?
    Mr. Donley. We have not completed all our work, but I can 
give you an update at least on part of the issue that you asked 
about, which had to do with the military construction costs at 
Great Falls. That installation had already been slated for 
military construction (MILCON) to support the C-27, so the 
appropriate measure there is the difference between the MILCON 
for the C-27 and the MILCON for the C-130, and that looks to be 
about $6 million.
    Ms. Granger. Six? So $6 million can change those hangars in 
Montana to hold C-130s?
    Mr. Donley. That is the difference between the MILCON 
costs, as I understand it, between the C-27 mission and the C-
130 mission.
    Ms. Granger. And then you have to train the pilots in 
Montana to fly those C-130s?
    Mr. Donley. I do not have that information for you today.
    Ms. Granger. Okay, but you will get that full information?
    Mr. Donley. That is the difference between what the 
operation of the training costs would have been to train them 
as C-27 pilots versus training them as C-130 pilots.
    Ms. Granger. So you will get the full cost to us?
    I am going to tell you, I haven't had good experience with 
the Air Force and due diligence.
    General Schwartz, you know that 2 years ago I expressed 
concerns directly to you about the Air Force plan to relocate 
Air Force Electronic Warfare Simulator. Unfortunately, my 
concerns were not taken seriously by the Air Force, but were 
confirmed in a January 2011 GAO report that stated the Air 
Force did not follow relevant guidance or best practices for 
completing the cost/benefit analysis. So I come with some 
concerns and doubts because of my personal experience.
    So, once again, I would like to know that the Air Force did 
its homework, and was there a cost/benefit analysis prior to 
deciding to relocate the 136th Airlift Wing? Was there a cost/
benefit analysis done?
    Mr. Donley. I would not call this a cost/benefit analysis. 
This was a balancing of missions across the--a balancing of the 
C-130 missions across the states. That is what this was about, 
I think.
    Ms. Granger. Across the States. Because I do not agree with 
the answer, but the C-130s in Texas do cover the Gulf States, 
and that mission and those C-130s and what they are able to do 
is not replaced.
    I have one more question. There are currently Air Force C-
130s stationed all over the world to include 14 C-130Js at 
Ramstein Air Force Base, and with the Army's drawdown in Europe 
and our renewed focus on the Asia Pacific region, have you 
considered transferring those C-130s to the continental U.S. 
and into the Air National Guard? It seems like a prudent 
decision that would reduce costs while still maintaining the 
ability to respond to the national security needs.
    General Schwartz. Ma'am, those airplanes support both the 
European theater, they are downrange into the Central Command 
area, and importantly support AFRICOM (United States African 
Command). It is not that they are under-utilized. And the 
question is there will still be an airborne battalion plus, a 
reinforced battalion, at Vicenza. It will need C-130 support. 
So the short answer is that there is a legitimate need for U.S. 
airlift capability in supporting EUCOM (United States European 
Command) and AFRICOM, and I do not foresee the relocation of 
the single squadron in Europe that provides that support.
    Ms. Granger. If the Guard operates at a third of the cost 
of the Active Duty Force, why would it not be more effective to 
have the Guard perform those missions in Europe?
    General Schwartz. If the Guard can perform those missions 
on a volunteer basis, on a continuing volunteer basis, that may 
be a legitimate strategy. What we do not want to have, ma'am, 
is a situation where we require perpetual mobilization in order 
to perform those missions at the tempo and with the coverage 
that is required.
    Ms. Granger. I understand that. I also understand that in 
looking at this situation with the C-130s in Texas, the 
mobilization, the time, the way the response that occurs when 
those C-130s are needed for those emergencies, when they are in 
Texas by the Governor of Texas is far different from having--
saying they are going to be in Montana, and we are going to 
have these, in an emergency like Katrina, and the time it will 
take, which can be days, not hours.
    Thank you, Mr. Chairman.
    Mr. Young. Thank you, Ms. Granger.
    Mr. Secretary and General, I hope that you will save time 
here and just assume that I have asked you the same questions 
that Ms. Granger asked about my home State of Florida.
    Mr. Moran.

                          GLOBAL HAWK BLOCK 30

    Mr. Moran. Thanks, Mr. Chairman.
    Mr. Chairman, I want to associate myself with the concern 
registered by Ranking Member Dicks over the idea of mothballing 
18 new Global Hawk Block 30s, because it really seems to be an 
about-face. Over the last decade the Department has asked for, 
and this committee has provided, $4 billion to meet the six-
orbit, 1,200-nautical-mile ISR requirement. The U-2 fleet is 
operating today at its maximum capacity, and yet it can only go 
0.6 orbits at 1,200 nautical miles and 1.15 orbits at 400 
nautical miles. So it is concerning that we have changed the 
requirements in terms of what we need for ISR.
    And then there is some questions as to whether we are 
really mixing--we are using comparable data. For example, I 
have to wonder whether the Air Force is including the cost to 
train, equip and compensate U-2 pilots, because obviously the 
Global Hawk is pilotless, and this committee appropriated 
funding just last year to procure three more Global Hawk Block 
30s. Have they been put on contract?
    General Schwartz. Sir, they have not, and they will not be 
put on contract.
    Mr. Moran. So even though we appropriated the money, you 
are not going to spend it?
    General Schwartz. Sir, given the decision on not 
maintaining the fleet, we do not think that would be prudent, 
and we would offer that for your consideration.
    But let me, if I may, just make the point that the reason 
we changed the name from ``unmanned systems'' to ``remotely 
piloted aircraft'' is exactly to make the point that while the 
aircraft are not manned when they are in the air, they are 
piloted from the ground. There is air crew required to operate 
this system, just like there is the U-2, just in a different 
location.
    Mr. Moran. Well, okay.
    Mr. Young. Would the gentleman yield for a second?
    Mr. Moran. I would be happy to yield to the chairman.
    Mr. Young. To follow up on your question, if you are not 
going to spend the money for the program that we were told last 
year was imperative to do this program, if you are not going to 
spend that money, what are you going to do with it?
    Mr. Donley. Mr. Chairman, as Mr. Dicks suggested earlier, 
the current plan would be to put the existing fleet in Type 
1000 storage. In the Global Hawk program, it is a complicated 
situation since some of the aircraft have already been 
delivered and are operating, some are in production, and some 
have yet to be put on contract. So we are working through, over 
the next several months, how to balance all those 
considerations together in developing a plan forward, 
understanding that, as Mr. Dicks suggested, there are multiple 
Global Hawk programs that are still alive; the Block 20 
capability, the Global Hawk Block 40 capability in the Navy 
bands, the German Euro Hawk, the NATO AGS, (Alliance Ground 
Surveillance) and a number of other nations interested in this 
capability. So there are lots of moving parts, and we will 
continue to work through the best course of action and the 
options for that this summer.
    Mr. Young. So, Mr. Secretary, is it safe to say that you 
are not sure what you are going to do with that money yet?
    Mr. Donley. That is correct.
    Mr. Young. Thank you, Mr. Moran.

                       F-35 JOINT STRIKE FIGHTER

    Mr. Moran. Well, thank you, Mr. Young, for underscoring the 
concern that I think is shared by a number of the members of 
the committee. The committee has been given justification to 
put all this money into the Global Hawk. We do so, and then all 
of a sudden, well, wait a minute, we are going to mothball 18 
of them after the committee has spent taxpayers' money on it.
    Let me move to another topic. The F-35. The Department of 
Operational Testing and Evaluation in its fiscal year 2011 
report, its most current report, stated that, and I quote, the 
F-35 program is not on track to meet operational effectiveness 
or operational stability requirements. It concluded, again 
quoting, while additional time and resource and development may 
aid the program in resolving some deficiencies, several 
requirements are not going to be met given current known 
program plans.
    Given the fact that the F-35, as you know, constitutes the 
vast majority of the Air Force's tactical fighter fleet, that 
would seem to be cause for concern, and both Secretary Donley 
and General Schwartz may want to respond to this.
    Your Vice Chief, General Breedlove, is a member of JROC, 
and JROC apparently accepted a less demanding flight profile 
for the F-35A that will allow it to meet its key performance 
parameter for combat radius, but it seems as though when they 
found there was a deficiency, they simply changed the standards 
to a less demanding flight profile so that it can meet it. In 
other words, they simply changed the goalpost.
    Do you want to respond to that?
    General Schwartz. Congressman, the difference between the 
key performance parameter for distance versus the estimate for 
performance was five miles, a five-mile delta. And so the 
question to me is how much do we want to invest in order to 
recover that five-mile margin?
    Mr. Moran. Okay. It was a judgment call, in other words? 
Okay.
    General Schwartz. It was a judgment call, and I think not 
an unreasonable one.

                       F-22 PILOT OXYGEN SYSTEMS

    Mr. Moran. Okay. It is worth putting out there.
    I just have one last question, this time about the F-22. In 
November of 2010, an F-22 crashed in Alaska. It killed the 
pilot Captain Haney. The investigation board blamed Captain 
Haney for the crash. His family obviously is very much troubled 
by that because the same crash report said the fighter jet's 
bleed air intakes malfunctioned, and Captain Haney stopped 
receiving sufficient oxygen.
    Now, Captain Haney was blamed for not activating the system 
quickly enough to recover from a dive, but there has been 
considerable question, there has been a suggestion, not just 
implication, explicit really questioning, saying the service is 
trying to protect its fifth-generation fighter and those 
involved with the program because there have been a number of 
pilots apparently who have experienced hypoxialike symptoms, 
indicating a lack of oxygen. And our subcommittee has been told 
that it is the on-board oxygen-generating system or some other 
deficiency, but you have been unable to identify a single 
cause, and I think it is worth giving you an opportunity to 
respond to the situation with regard to the F-22. And that will 
be the end of my questions.
    General Schwartz. Sir, you are quite right. We have been 
unable to identify a single engineering fault that is producing 
some of the phenomenon that we have seen with respect to 
hypoxia-like symptoms. We had a stand-down for five months with 
the weapons system. We employed the expertise of the Air Force 
Scientific Advisory Board, the best physiologists, the best 
engineering talent we could put together, and as a result of 
their effort, although again not definitive in terms of cause, 
we implemented a number of risk-mitigation measures, among them 
including real-time monitoring of oxygenation for the pilots, 
filtering the oxygen flow to the pilot to make sure it did not 
have contaminants, and so on and so forth.
    We have flown 8,000 hours since that stand-down concluded, 
and we have had several additional incidents as well, and we 
are investigating those. We have got the data take, and so on 
and so forth.
    The bottom line is that in the Haney case, and we need to 
acknowledge the sacrifices of the Haney family here, the 
accident board's purpose was to identify causal issues, and 
certainly part of the causal chain was the interruption of 
bleed air flow and oxygen flow to the pilot, no question, no 
debating that that occurred. And in the process regrettably, 
sadly, the pilot was unable to maintain control of the 
aircraft.
    Mr. Moran. But should the pilot have been blamed?
    General Schwartz. We did not blame him, sir. In my view, 
this is an extrapolation of the board report. We did not assign 
blame to the pilot.
    Mr. Moran. The investigation board did. Okay, I do not mean 
to interrupt you. Excuse me.
    General Schwartz. Sir, what I am saying is that this was a 
complex contingency that he did his best to manage, and in the 
end we lost aircraft control, in the end.
    But the bottom line is this airplane is important to the 
national security. We have got the best minds we know we can 
find working both the engineering and the physiology side of 
it, and we are working hard both to manage the risk and 
ultimately, through data reduction, to identify the exact 
cause.
    Mr. Moran. Thank you, General.
    Thank you, Mr. Chairman, unless the Secretary----
    Mr. Donley. I just want to add that we would not have come 
back from the stand-down unless we felt that it was safe and 
prudent to do that. And to echo the Chief's points, the 
aircraft and the pilots are now equipped with the sensors that 
will help us collect the data and will add to the safety of the 
pilots and reinforce the procedures inside the cockpit that 
will provide for their safety in the event they have an 
emergency. But this is a critical capability for our Nation 
going forward, and so we will continue to fly this airplane and 
collect all the information we can necessary to make any--take 
any corrective action that is necessary going forward. But this 
is a national-level capability that we must maintain.
    Mr. Moran. Thank you, Mr. Secretary.
    Thank you, Mr. Chairman.
    Mr. Young. Mr. Crenshaw.

                                 C-130S

    Mr. Crenshaw. Thank you, Mr. Chairman.
    And first let me associate myself with the remarks of Ms. 
Granger and the chairman. In Florida, right after I became 
president of the Florida Senate, we had the largest natural 
disaster that Florida has ever had, something called Hurricane 
Andrew. I flew over the area. It was like a war zone. The roads 
were destroyed. The only way we could get provisions and 
supplies to the people in Miami and Homestead was through 
military aircraft, and we do not have a C-130 air wing in our 
National Guard, so we relied on Texas. And I can tell you that 
if you move that air wing somewhere else out of the Gulf Coast 
region, then we are all going to lose a valuable resource in 
meeting our natural disasters. So I wanted to add my words to 
associate that.

                           LIGHT AIR SUPPORT

    I wanted to ask you all about the Light Air Support 
program. I know that has been a difficult situation. That is a 
program, as you know, that was designed to have some light 
aircraft in Afghanistan, have them kind of utilize their own 
air cover. It would save NATO and U.S. money, so we would not 
use the very expensive airframes that we are using now. And I 
think the contract was for $335 million, about 20 aircraft. 
Last summer one of the competitors was disqualified; I think it 
was Hawker Beech. The contract was awarded to Sierra Nevada, a 
joint venture for Sierra Nevada and Embraer, and I think 
Beechcraft offered or filed a protest with GAO. That was 
denied. Then they filed a lawsuit.
    What disappointed me, I found out last week that the Air 
Force took the unusual step of just canceling, rescinding the 
entire contract, and I guess it was based on not so much the 
lawsuit, but some internal discoveries, some process, 
procedures. I do not know exactly what that was, but it has to 
be disappointing to all of us, and I am sure it is embarrassing 
to you all. It kind of brings to mind the tanker saga where 
that controversy set us back billions of dollars and years in 
terms of modernization.
    And so I want to ask you about that. I know there is a 
lawsuit going on, but I am concerned that this was an urgent 
program to get down to Afghanistan. Now you wonder if we are 
ever going to get the aircraft there, is it going to be too 
late?
    So several questions come to my mind. Number one, what is 
the plan? What is the schedule for getting these aircraft down 
there? We were going to do some training here with our troops, 
and how is that going to work out? Is there going to be a new 
competition? What is the plan for that? Some of the savings 
that we were going to find by using these airplanes instead of 
our kind of overtrained aircraft, more expensive aircraft, are 
those savings going to disappear? Are the requirements going to 
be the same? Is it still a nondevelopmental aircraft? Again, 
they were going to be delivered about a year from now.
    And comment on those questions. And, of course, the big 
question is that I do not know how much you can talk about 
because of the lawsuit, but you ought to learn from your 
mistakes. I know we all try to do that, and we went through 
this. So what happened to kind of cause this breakdown and 
cancelling this project? Could you comment on that?
    Mr. Donley. Sir, there are a number of issues here in your 
question, but let me just echo that we are also disappointed 
that we arrived at a situation in this program where in 
developing Air Force and Department of Justice responses to the 
court case, it was discovered internal to the Air Force that 
the documentation associated with this source selection was not 
what it needed to be, and it was just not sufficient. And so we 
made a decision to terminate the award, and we made that 
notification to the court last week, that we were going to be 
reopening this issue. We have started a commander-directed 
investigation to determine exactly what happened inside this 
source selection, why the documentation was not sufficient, why 
it was not as settled as it should be according to regulation, 
and we will find out the results of that investigation in a few 
weeks.
    In the meantime, we have to figure out a way forward for 
the program. As you rightly point out, this was an urgent need 
from our Afghan partners, and this program has now been set 
back. It is very likely that we will need to go back and start 
from scratch on this source selection, and we are determining 
exactly the parameters for how to structure that going forward. 
We are working through that to determine how quickly we can get 
restarted on this path.
    But there is no question there is a delay now for our 
Afghan partners of several months, and this is problematic. It 
is not the way we wanted this program to be managed or to play 
out. So it is less than ideal. But our task now is just to put 
it back together, get it back, get a competition back on track 
as soon as we can to get this capability downrange.
    Mr. Crenshaw. Do you have any idea when the competition is 
going to start?
    Mr. Donley. I do not have those details. We are literally 
working those day by day based on the decisions made a little 
over a week ago.
    Mr. Crenshaw. Have the requirements changed?
    Mr. Donley. In my view, they have not, but I have not yet 
gotten a recommendation back from our Service acquisition 
officials on how to approach the competition going forward. But 
in my view, based on what I know, I do not see that the 
requirements have changed.
    Mr. Crenshaw. Still be kind of a nondevelopmental aircraft, 
something you can kind of get up and get going?
    General Schwartz. Right.
    Mr. Donley. Yes.
    Mr. Crenshaw. The problem is we are talking about leaving, 
what, a couple years--the plan was to leave it there; we were 
going to do some training. Are you still working on that, how 
that training is going to occur? Because all of a sudden a year 
or two from now we are supposed to be leaving the place.
    General Schwartz. Two parts, sir. One is that we have 
Afghan students in pilot training as we speak. That is sort of 
the precursor. The predicate to this whole process is having 
Afghan pilots that we can train in a light strike aircraft, so 
that process is underway and will continue. The efforts that we 
are--what we call advisory missions will also continue and 
likely will continue after December of 2014. But we have about 
350 Airmen that are doing this advisory mission in MI-17s, in 
G-222s. These are assets that the Afghans operate, and not just 
airplane issues; how to run an airfield, how to measure 
airfield pavement, how to do aerospace physiology, all the 
things that made for an effective Air Force. And so that will 
continue as well. Without a doubt, sir, you know, you are 
embarrassed; I am, too.
    Mr. Young. Mr. Crenshaw, thank you very much.
    The procedure for the balance of the hearing will be Mr. 
Bonner, Mr. Hinchey, and then the chairman will take the last 
segment of time.
    Mr. Bonner is recognized.

                          GLOBAL HAWK BLOCK 30

    Mr. Bonner. Thank you, Mr. Chairman.
    Mr. Secretary, General, it is good to have you here. This 
is a target-rich environment of things to talk about.
    I want to associate with Mr. Crenshaw and Chairman Young, 
with Ms. Granger. I do not know how many hurricanes they have 
in Montana or oil spills, but I will tell you, it is a real 
concern. If you take the five Gulf Coast States, they represent 
the seventh largest economy to the world, and I just hope that 
great deliberation is given before you think about taking an 
asset that serves an area that is so important to our country 
away from this region.
    I want to certainly associate myself with Chairman Young, 
the former chairman Mr. Dicks, Mr. Moran about the Block 30 
issue, and I am going to address that in a minute.
    Before I do, since Mr. Dicks came back, I think I would be 
remiss, and we all feel a sense of loss with his decision. Now, 
he and I have sparred--I was not even on the committee, so that 
is like, you know, a kid boxer going up against a heavyweight--
on the tanker program, and while we were on opposite sides of 
that, there was nothing but mutual respect or certainly respect 
from my side in terms of his leadership.
    You take Chairman Lewis and Chairman Dicks, that is 70 
years of service in this Congress, almost the entire time of 
which has been in support of the Air Force and other branches, 
and so we are going to lose a lot of institutional knowledge, 
and the country will lose a lot as well.
    But Mr. Dicks started off on the Block 30, and I want to 
follow up on it, because I have got a couple questions that 
might need to be--that will be asked with a different accent 
perhaps to try to get a little bit more clarification on this.
    Am I correct that the Air Force stated that the Block 30 
program has become unaffordable, and its mission can be 
accomplished by the U-2 at a lower cost, but just last June you 
declared that the Block 30 was essential to national security, 
and that there were no alternatives to providing the acceptable 
capability at less cost, and that the Global Hawk's units were 
reasonable? If that is true, it sounds to me that Global Hawk 
performed better than the U-2, it was less expensive to 
operate, but the Air Force changed the requirements. So that is 
my first question. Did you change the requirements? And if so, 
why?
    General Schwartz. Well, first, we did not change the 
requirements. The Joint community, the Joint activity that 
establishes these requirements reduced it, as Congressman Moran 
indicated. In this forum I would prefer not to be specific. I 
will be happy to go offline with you to tell you exactly what 
that new requirement was.
    But, sir, it is important also to put this in context, that 
that certification was made before the Budget Control Act, 
before the mandate for $487 billion, and before the JROC (Joint 
Requirements Oversight Council) changed the requirement for 
high-altitude ISR.
    Mr. Donley. I would add, too, that as the Nunn-McCurdy on 
Global Hawk came up, the Nunn-McCurdy measured the ability of 
other aircraft to perform the Global Hawk mission, and in that 
context the persistence of the Global Hawk has great 
advantages, and that is--that causes the cost issue that you 
referred to, about $220-some million delta between the U-2 and 
the Global Hawk capability in that comparison. So that Nunn-
McCurdy certification had to do with what it takes to do the 
Global Hawk mission, what does it take to do persistence.
    When the requirements changed, that calculus also changed, 
and when we had to look at the budget situation and the changed 
requirements, the two in combination caused us to ask, what 
does it take to do the U-2 mission, because the U-2 is funded, 
the airframe has a life up to 2040, and it has a better sensor. 
So there, while the persistence of the Global Hawk is certainly 
an advantage, the changed requirement allows us to get the 
mission done with U-2s, and so we understood we had enough U-2 
capacity to get the mission done.
    Then the issue was the sensors. And so in what does it take 
to do the U-2 mission, the Global Hawk needs a sensor 
adjustment that requires significant investment and time to get 
there, and in that context, looking out for 10 years ahead of 
us, it was more expensive to go forward with the Global Hawk 
Block 30 than to sustain the U-2 capability.
    General Schwartz. And I would only add, sir, if I may, that 
we are retaining the Block 20 communications capability and, 
importantly, the Block 40 ground moving-target radar capability 
as well.
    Mr. Bonner. And I appreciate that, but I think there is 
still concern, at least with this Member, that by cancelling 
the Block 30, you are going to be increasing the cost of other 
variants.
    General Schwartz. Sir, all I can tell you is that the delta 
between keeping the Block 30 and keeping the U-2 is over $2 
billion.
    Mr. Bonner. Well, again, I think, Mr. Dicks----
    Mr. Dicks. Will the gentleman yield?
    Mr. Bonner. I would be happy to.
    Mr. Dicks. Why did we not know this 5 years ago? I mean, 
why would we go out and buy 18 of these if we knew this? We had 
to have some indication, you know. In all the statements, the 
Nunn-McCurdy, everything else, it said this is essential, we 
have to have it. I just do not understand how we could not have 
figured this out before we bought 18 of these things.
    I yield. Thank you.
    Mr. Bonner. The gentleman yields, but it is an open 
question, and I certainly hope that the Secretary and the 
general are listening to the passion upon which these questions 
are coming. They are not just coming from one region of the 
country, and as Mr. Dicks said, we are not asking this on 
behalf of a company. It is just hard. I have actually been to 
the facility in Mississippi, and it is just hard for me to 
believe that the newest technology that seems to be out there, 
that we are going to be putting it in somewhere else.

                        KC-46 TANKER DEVELOPMENT

    But that point said, I want to just turn my attention to 
one other issue. Mr. Crenshaw mentioned it. I was not going to. 
But I will point out, and I do not believe that the ranking 
member was opposed to this, but I think I owe a debt of 
gratitude to the chairman and to the staff on both sides. We 
were successful in getting language in talking about the 
tanker, since Mr. Crenshaw raised it. We need the tanker, and 
we are not going to retry that case, but as both the Secretary 
and the general know, the program is already way over budget 
from what we had been led to believe. We have got some directed 
questions that we will put in the record, and thanks to the 
support of the leadership of the committee and their staff, we 
were able to get some language in the omnibus that was approved 
in December that requires DOD and the Air Force to notify us of 
any expenditure over $5 million or greater on a quarterly 
basis.
    So we hope that the leadership of the Air Force is going to 
take this seriously. We are looking at pennies and dollars. We 
just want to make sure that a program as vital to the national 
security of this country, such as the tanker is, that it does 
not get way off track in terms of cost overruns.
    I thank you, Mr. Chairman.
    Mr. Young. Thank you, Mr. Bonner.
    Mr. Hinchey.

                            CIVIL AIR PATROL

    Mr. Hinchey. Well, thank you, Mr. Chairman.
    Secretary Donley and Chief of Staff Schwartz, I thank you 
very much for everything that you do and all the things that 
you have been talking about here. There is just a couple of 
little minor things, but nevertheless they are significant, 
that I wanted to ask you about, and they are similar to some of 
the things that have been mentioned already.
    First of all, the Air National Guard, it performs critical 
work that is necessary for the Air Force to fulfill its larger 
mission. However, the Air Force is proposing numerous aircraft 
retirements and mission realignments that will have a major 
impact on the Air National Guard. I am sure you remember the 
devastation along the east coast caused by Hurricane Irene and 
Tropical Storm Lee just this past summer. The National Guard 
was integral to New York State response and the recovery that 
came about as a result during these natural disasters. I know 
this is true of many other places along the country.
    Basically I fear mass reductions to the National Guard will 
affect our ability to respond to future disasters, natural or 
otherwise. So I just wanted to say that, first of all, 
similarly the Civil Air Patrol is scheduled to take significant 
cuts this year, and I know that these volunteers did invaluable 
work for an extremely low cost following Tropical Storm Lee in 
Binghamton, New York, for example. Has the Air Force fully 
considered the effects of these cuts at all? Anything? What is 
going on with that?
    Mr. Donley. Sir, I would like to give you a more fulsome 
answer for the record here, but the Air Education and Training 
Command (AETC) was required to make reductions in its manpower 
as well, and I understand there may be some impact on the Civil 
Air Patrol, but I do not recall that the Chief and I ever 
discussed Civil Air Patrol issues directly in our headquarters 
discussions, and this was worked mainly through AETC.
    [The information follows:]

    The Civil Air Patrol Corporation funding has not been cut for 
fiscal year 2013. The Air Force programmed a modest 1.8% increase to 
their operations and maintenance funds each year across the future 
years defense plan (FY11-15) and each year thereafter. By law, all 
funds appropriated for the Civil Air Patrol are for the Civil Air 
Patrol's exclusive use. However, we are very much aware of the fiscal 
challenges the country is facing. Should Congress reduce the Civil Air 
Patrol's appropriated budget in the Fiscal Year 2013 Defense 
Appropriations Act, the impact will be felt in missions and programs 
funded through its annual operations and maintenance appropriation. 
These speculative cuts may or may not be realized at the wing (state) 
level. Funding is provided to wings based on a historical and 
proportional distribution and further tailored by Civil Air Patrol 
Region Commanders' recommendations.
    In keeping with the Air Force's reduction of civilian manpower 
positions, Air Education and Training Command was required to make 
manpower reductions and a portion of these cuts fell on Civil Air 
Patrol-United States Air Force (CAP-USAF) as a subordinate unit. CAP-
USAF is the Air Force organization responsible for oversight of, 
support to, and liaison for the Civil Air Patrol Corporation. CAP-USAF 
took a 22-person reduction of civilian positions or 23 percent of their 
total authorizations, including one civilian position in New York. CAP-
USAF, in concert with the Civil Air Patrol, has re-engineered its 
organization and processes, and we do not believe the oversight 
activities related to the Civil Air Patrol will be significantly 
impacted. To the contrary, CAP-USAF believes their oversight 
responsibilities at the wing (state) level and above will be enhanced. 
However, support at the local level might diminish if operations tempo 
increases with fewer CAP-USAF members. The Air Force remains committed 
to our partnership with the Civil Air Patrol and we will strive to 
achieve appropriate Civil Air Patrol utilization and oversight while 
supporting missions in the Homeland.

    General Schwartz. I would only indicate, though, that some 
of this was civilian manpower, which we took a reduction of 
some 16,000 throughout our Air Force, and that this has 
affected some of the oversight activities related to the Civil 
Air Patrol. And I think in the case of your unit in New York, 
it is somewhat at McGuire Air Force Base in New Jersey, but it 
is one position.

                AIR NATIONAL GUARD AND AIR FORCE RESERVE

    Mr. Hinchey. Well, I know that, you know, just locally, you 
know, unfortunately the number of personnel was already planned 
to be reduced, for example, in the district that I represent, 
as it transitions from a C-5A mission to C-17s, for example, at 
Stewart Air National Guard. Other bases in New York are in a 
much worse situation, such as the 107th Airlift Wing at Niagara 
Falls Air Reserve Station.
    What do you think about the specific efforts that can be 
done to find new missions for units directly affected by 
aircraft retirements? Can new opportunities in cyber or 
remotely--you know, the aircraft keep work that the Guard 
presented at these locations can get into effect and make some 
positive effect?
    General Schwartz. Sir, as we get smaller, there are fewer 
and fewer opportunities for backfill. In this budget, we 
actually affected 24 units total in the Air National Guard and 
were able to cover 14 of them with successor missions, but the 
bottom line is that we could not cover all of them.
    In the case of the Niagara unit that I know you are 
concerned about, we have a situation where you had two units 
collocated, and in the end--again, this was part of the larger 
reduction of C-130 force structure in our Air Force--the 
reality was we are preserving a mission capability at Niagara, 
admittedly on the Air Force Reserve side, and there were four 
other bases in New York that had flying missions, and this was 
part of the consideration, sir.

                              SOLAR PANELS

    Mr. Hinchey. Well, in some ways, you know, I appreciate it. 
I know what you have got to deal with, and I know what in some 
cases is the difficulty of what you have to deal with and the 
effect of the situations in a number of places, and the 
economic situation that it affects as well. But, nevertheless, 
I want to commend you on your efforts to commit the Air Force 
to significant renewable energy goals, all of this on its 
installations, say, for example, and your leadership, of 
course, as I mentioned, is deeply appreciated.
    I just want to mention one other minor thing, but it has 
some effect. As you know, there is a strong supporter of the 
military utilization solar panels in its installations. 
However, some of the installations touted for their solar 
energy, such as Nellis Air Force Base, uses Chinese panels, 
panels that are developed over there, manufactured over there, 
moved into here, and used, used here. If our military is 
expected to become truly energy independent, I believe we 
should be relying on American-made technology.
    Under third-party contracts, such as power purchase 
agreements, the Air Force does not technically own the solar 
panels located on their base, which allows contractors to skirt 
the Buy American law. So while I, of course, do not believe it 
is the intention of the Air Force to ignore the spirit of this 
law, can you tell us how is the Air Force planning to adjust 
these contract rules to stop the circumvention of the Buy 
American Act for solar panels on military bases?
    Mr. Donley. Sir, we are looking at that issue now and how 
to implement the intent of the Buy America provision in the 
Fiscal Year 2011 budget. I would just note that the Nellis 
project predated that, and so we did not have that legislative 
requirement. As we went back and looked at Nellis, there is the 
possibility of Chinese-manufactured panels at the Nellis site, 
but most of the panels at the Nellis site, most of them, were 
probably built in the Philippines, just for awareness. But we 
are assessing now how to go about implementing the new 
provisions that you referred to going forward.
    Mr. Hinchey. Well, I appreciate it. I deeply thank you for 
your attention to that, because I think it is significant, and 
I once again want to express my appreciation to everything that 
you do and all of the concentration that you have for all of 
these sometimes difficult circumstances that have to be dealt 
with. Thank you very much.

                    ACCEPTABLE RISK FORCE STRUCTURE

    Mr. Young. Thank you, Mr. Hinchey.
    Mr. Secretary and General Schwartz, thank you very much for 
a very good hearing, some penetrating questions. There are 
still a few to go. The chairman is going to take his turn, and 
a number of the specific issues that I would address I am going 
to submit to you in writing, because there is something that I 
really need to talk with you about.
    The members of this committee, basically our responsibility 
is spelled out in Article I of the Constitution. Section 8 and 
Section 9 both refer to the work that we do on this committee. 
Last year we were required to make certain reductions in the 
President's budget request, and for 2011 we had to reduce by 
$18 billion, and for the 2012 budget we had to reduce by close 
to $20 billion. That is a lot of reduction.
    I was determined that we would not produce any bill that 
would affect adversely the readiness of our national defense, 
and I think this committee worked very hard, and the very, very 
professional staff worked very hard, and we accomplished those 
reductions without affecting readiness. And I have asked the 
question many times from the Pentagon all the way through the 
services, and we tend to get agreement, we did not affect 
readiness or we did not affect the warfighter. But now here we 
are faced with a substantial request now to reduce especially 
in procurement.
    I do not see the world any better, any safer, any more 
stable this year than it was last year. In fact, I see Korea is 
up and down. North Korea, they are our friends one day, and one 
day they are not our friends. We have a deal with them one day, 
and the next day we don't have a deal. Other parts of the 
world, the Mideast is in constant turmoil, riots and protests, 
and killing of innocent civilians. And then we have the issue 
of Iran, and I think it is pretty generally conceded by 
spokesmen that speak from the Pentagon that they definitely 
believe that Iran is on the way to a nuclear weapon. So the 
world is not safer than it was.
    But now we are making reductions in our weaponry not only 
in the Air Force, but throughout. We have already had the Navy 
and Marines, they are having to make substantial cuts, and it 
bothers me that the investment in our national defense should 
be based on the threat, the threat to our country, the threat 
to our security, the threat to the safety of our citizens, the 
threat.
    And, General Schwartz, several times during your statement, 
you talked about acceptable risk. What is acceptable risk? When 
you talk about the safety of the Nation, when you talk about 
the safety of our troops who are providing for our national 
security, who are flying the airplanes, who control the air 
over the battlefield, so far anyway, and have done such a 
tremendous outstanding job, what is an acceptable risk? What 
can we afford to do without and still maintain the readiness 
that we need and handle that acceptable risk, whatever it is?
    And if you can describe for me what acceptable risk is, 
that would maybe make me feel better, but right now I am not 
really happy about this budget that we have received because I 
do not believe that it guarantees the readiness that this 
Nation requires and deserves, and I do not believe that it is 
sufficient to protect our troops who are fighting the fight. So 
please talk to me about acceptable risk and where you think 
this budget takes care of any acceptable risk.
    General Schwartz. Sir, we had a force sizing mandate from 
the new Defense Strategic Guidance that talked about one major 
campaign followed by a lesser campaign; in other words, not two 
regime changes, but something less than that. What I am saying 
is that the force that we have, both on the strike, on the ISR, 
and the lift side, is sufficient to support that kind of a 
contingency, a North Korea followed by a Strait of Hormuz 
contingency, for example. It would not be a cakewalk, but we 
would prevail. That is how I define an acceptable risk.
    Would we prefer to have overwhelming superiority? Of 
course, Chairman. But given the financial guidance that we have 
received, we did the very best we could to provide the breadth 
of capability, less depth, that would allow us to succeed in a 
major contingency followed by a more modest one in close 
succession.
    Mr. Young. General, I understand that, and you know that I 
have just great confidence in you and Secretary Donley, but 
when we talk about acceptable risk, and we talk about it might 
be--it will not be a cakewalk is your words, it will be tough, 
but it would be tougher. What would be the cost in casualties? 
You have a situation where you are utilizing the effort to take 
care of an acceptable risk. What is it going to cost us in 
manpower? What is it going to cost us in casualties? What is it 
going to cost us in soldiers, warfighters who come home 
without--well, you know what I am saying. You have been to the 
hospitals as much as I have, and you have seen the type of 
injuries that we have. How much more of a risk do we put the 
warfighters in?
    General Schwartz. We would prefer zero risk, sir. I mean, 
clearly, as an Airman, as a military professional, you would 
prefer to have minimal risk. The question for the country is 
whether that is affordable at this moment in time. I have 
guidance via the Budget Control Act and so on that tells me 
what the country is willing to invest in our Armed Forces and 
in our Air Force in this particular case, and my obligation was 
to try to give you the best proposal I could based on that 
guidance. And I agree with you, Mr. Chairman, it is not without 
risk both to human capital and equipment, but it is the best-
faith effort, sir, that we could give you.
    Mr. Young. General, believe me, I understand what you are 
saying to me, and I know where your heart is, because you and I 
have discussed this many times, as have Mr. Secretary and I. So 
I know where your heart is, and I know some of the rules and 
regulations you have to go by, some of the direction that is 
handed down to you. I have got to be open, upfront, and honest 
with you. It bothers me. I will not feel comfortable presenting 
a bill to the Congress for national defense that I believe has 
an adverse effect on readiness and our warfighters.
    And then just one quick statement. Talking about readiness, 
when we have talked about the National Guard and the aviation 
assets, we are talking about readiness for our States, and some 
of these situations are really serious. Those of us who are in 
hurricane-prone areas, or those who are in flooding areas, or 
the massive tornadoes that we saw just this weekend, readiness 
is also an issue for our States and for our National Guard. And 
our military does an amazing job, and I just really--I am proud 
to be part of supporting what our military does. I want to 
thank you both for the role that you play, the very important 
role that you play, but I just had to get this off my chest 
today because as we go through preparing to mark up our bill, 
in the back of this chairman's mind is going to be what is an 
acceptable risk. And I thank you very much, and I yield to Mr. 
Dicks.
    Mr. Dicks. Thank you, Mr. Chairman, and I agree with you. I 
also must say that General Schwartz is correct when he says 
this is the Budget Control Act that Congress enacted last year, 
and we are dealing with the consequences of that. And I know 
everybody on this committee is going to work hard to avoid 
sequestration. I certainly want to do that. And that would be a 
far more serious problem than we are faced with now.
    And I think General Dempsey and General Schwartz, all the 
leaders, have done a very good job, I believe, of coming up 
with a strategy-driven budget. It is not perfect, but, you 
know, the last time I checked, I think we still spend more on 
defense than the next 10 countries in a row. So there is a 
little give here, and there is a lot of things we could do 
about acquisition, as you and I have talked about so many 
times, especially with the Army, that we could save money on.
    You know, there is still, I think, a way to do this without 
threatening our troops. But I am just going to stand with you. 
If there is something in here that needs to be fixed on 
readiness, we will certainly be supportive of that.
    And if I could just ask a quick question?
    Mr. Young. Surely.

                             KC-46 PROGRAM

    Mr. Dicks. First of all, I want to disagree with my good 
friend Mr. Bonner, who made some assertions regarding the KC-46 
program. As I understand it, this thing has met the milestones, 
and that there is not any increased costs. If there is an 
increased cost, Boeing has to pay for it, as I understand the 
contract. Is that not your understanding?
    Mr. Donley. Yes, sir, this is a fixed-price contract.
    Mr. Dicks. And so far, so good, as I understand it. In 
fact, I understand from the Boeing people that they feel very 
excited about this program, and they put their best team on it, 
and this is a critically important program.
    You know, the one thing about the 10-year battle, we are 
going to get a better tanker because of that, because of some 
of the upgrades in equipment that we are going to get from the 
787 and other things. So even though this has been one of the 
most painful things that we have been through, when we finally 
get these planes, they are going to be extraordinary, and such 
a difference between these and the KC-135s.

                           STARS REPLACEMENT

    Now, just one other thing. You were looking at a JSTARS 
replacement, and I just want to mention this again. I have 
talked to you both about this. The idea of leveraging the 
Navy's purchase of 117 P-8A aircraft, investment of 
approximately $6 billion in P-8A nonrecurring engineering, 
flight test sensors and development, additionally the Navy and 
Air Force will save even more in the efficiencies gained in a 
production line, common training, and depot maintenance. Last 
week during our naval posture hearing, Admiral Greenert lauded 
the P-8A program and its successful acquisition progress. To me 
it is a no-brainer to use this $6 billion that has already been 
spent, this is kind of like off-the-shelf in a sense, for a 
replacement for JSTARS or some of the current E-8 programs, and 
I know you are looking at this.
    You know, if the Air Force intends to proceed with a small 
business jet solution, and given the small global inventories, 
won't that actually perpetuate the small-fleet dynamics of 
high-cost sustainment and limited logistics support they are 
facing today with limited numbers of spare parts for Boeing 
707s and KC-135 aircraft? I mean, if you have got a program, 
and you have got--you know, this is what we did for many years 
with the 707s. And so you have got a chance here to look at the 
full picture of the cost, and, you know, if you can use this 
plane that the Navy has developed, I think you should take a 
serious look at it.
    Thank you, Mr. Chairman.
    Mr. Young. Thank you, Mr. Dicks.
    And Secretary Donley and General Schwartz, thank you very 
much for your direct answers to some penetrating questions. We 
look forward to being supportive of our United States Air 
Force, of whom we are very, very proud.
    The committee will be adjourned until 10 a.m. tomorrow when 
we will have a hearing with the Secretary of the Army and the 
Chief of Staff of the Army.
    [Clerk's note.--Questions submitted by Mr. Kingston and the 
answers thereto follow:]

                              Afghanistan

    Question. If we complete our mission in Afghanistan sooner than was 
originally envisioned and as recently announced accelerated troop 
withdrawals might indicate, do we know how much will be saved from OCO 
funds as currently requested in the President's Budget Request?
    Answer. The Air Force overseas contingency operations (OCO) budget 
is a bottom-up budget preparation each year, and is configured to 
support current national policy and military strategy, to include troop 
rotations and planned deployments/redeployments, and commander needs on 
the ground in the area of responsibility.
    The OCO budget is adjusted when the President decides to implement 
additional troop redeployments or drawdown forces. Specific dollar 
savings are unknown until detailed operational and tactical plans are 
released. In addition, Air Force funding may increase due to increased 
movement of equipment and personnel movement in/around/out of country 
and an increase in potential intelligence, surveillance, and 
reconnaissance and/or flying hour presence as ground forces exit.
    Question. Do you have any estimate of when the ``reset'' of the Air 
Force equipment used in Iraq and Afghanistan will be complete? Any idea 
of how much it will cost? (DoD Comptroller, Mr. Hale, said we have $9.5 
billion planned for FY13 OCO reset at the 15 Feb HASC hearing).
    Answer. The Air Force requested reset level for Fiscal Year 2013 is 
$2.183 billion. Major Air Force weapon systems (aircraft and engines) 
are reset on an ongoing basis. Aircraft and engines redeploy to home 
station to meet regularly scheduled depot maintenance based on various 
timing criteria, including engine cycles, life-limited parts, and 
flying hours. The tempo of combat operations drives weapon system 
sustainment (WSS) and support equipment reset costs. As overseas 
contingency operations (OCO) wind down, Air Force WSS requirements will 
not immediately decrease; therefore, funding should transition from OCO 
to the Air Force baseline to ensure successful reversion to peacetime 
operational readiness support.
    Support equipment, vehicles, Base Expeditionary Airfield Resources 
(BEAR), and war reserve materiel (WRM) remain in-theater throughout the 
duration of the operation with major repairs conducted while in theater 
(with the exception of depot-level repairs for special purpose vehicles 
and generators). Some BEAR and WRM assets will also require reset 
funding comparable to reconstitution costs once operations cease and we 
pull out of theater.
    After the conclusion of combat operations, the Air Force expects a 
limited reset requirement due to WSS and support equipment sustainment 
accomplished during those operations. This limited reset will apply to 
requirements for repairing aircraft and engines roughly equivalent to 
the OCO cost of those activities during the previous and current year. 
Even though operations in Iraq and Afghanistan would have concluded, 
the Air Force will have a significant and continued presence in the 
Middle East and elsewhere. These rotational demands will continue to 
require WSS support to maintain the high operations tempo.

                                 JSTARS

    Question. When will the Analysis of Alternatives for JSTARS 
replacement be complete? When will the report be released and when can 
we anticipate the AF making a decision on a way ahead?
    Answer. Air Combat Command presented the results of the Airborne 
Synthetic Aperture Radar/Moving Target Indicator and Joint STARS 
Mission Area analysis of alternatives to the Air Force Requirements 
Oversight Council for validation on November 30, 2011. The Vice Chief 
of Staff of the Air Force approved the analysis of alternative's 
release on January 12, 2012, to the Office of the Secretary of 
Defense's Cost Assessment and Program Evaluation (CAPE) office. CAPE is 
currently reviewing the final report for sufficiency. Air Force senior 
leadership is studying options to determine the best course of action 
based on operational requirements and the current fiscal environment.

                              Rotary Wing

    Question. With the termination of the CVLSP, is this now an area 
where we are assuming an unacceptable level of risk with respect to the 
existing fleet of helicopters?
    Answer. Due to fiscal constraints, there are several areas where 
the Air Force is assuming operational risk. The 2005 service life study 
for the UH-1N assessed that it could be operated through 2020. With the 
large number of UH-1s operating around the world, we are confident that 
the Air Force will be able to support the UH-1N beyond 2020 and reduce 
capability gaps while considering fiscal realities. To minimize these 
gaps, the Air Force will selectively modernize the UH-1N. These efforts 
include upgrades to make the cockpit fully night vision compatible, 
sensor upgrades to better support the security mission, and safety and 
sustainment improvements. Additionally, the Air Force is relooking at 
UH-1N employment methods to see if there are opportunities to further 
minimize UH-1N deficiencies and reduce operational risk.
    Question. What actions are we going to have to take to ensure that 
the current H-1 fleet remains viable? How much will it cost?
    Answer. We have and will continue to address diminishing 
manufacturing and obsolescence for the dynamic (rotary) components, 
engines, and existing avionics for the UH-1N fleet. Given current usage 
(flight loads and environment), the aircraft structure should be safe 
for operations, though we will continue to analyze aircraft structural 
integrity. These efforts require sustaining engineering funds. The UH-
1N has proven to be extremely versatile, yet additional upgrades are 
required for it to remain viable. The aircraft's communications, 
navigation and survivability systems will need to be upgraded, as well 
as improvements in aircrew safety.
    Although the costs are not fully captured at this time, Air Force 
Global Strike Command's UH-1N Master Plan, currently being developed, 
will define the way ahead for the weapon system and become the 
foundation for future budget submissions.
    Question. What are the major deficiencies of our current fleet? Can 
these deficiencies be overcome through programs like the Operational 
Loss Replacement Program?
    Answer. The Air Force has two major deficiency issues regarding our 
Combat Search and Rescue fleet: capacity and capability. While the 
operational loss replacement (OLR) program will fix our capacity issue, 
it fails to fulfill our current fleet's capability deficiency.
    Our capacity issue centers on an increasing shortage of flyable 
aircraft. Our current program of record is 112 HH-60G aircraft. The 
current Air Force inventory consists of 99 aircraft, of which only 93 
are flyable. The OLR program will provide sufficient aircraft to raise 
the fleet back to the 112 program of record. The OLR replacement 
aircraft will provide the identical capabilities as the current HH-
60Gs.
    However, neither the current HH-60G or the OLR aircraft will 
resolve the second deficiency, capability. Capability gaps will be 
addressed by the Combat Rescue Helicopter program.
    OLR is designed to fix a short term capacity (aircraft 
availability) issue and ensure the Air Force can continue providing 
rescue capability to combatant commanders. However, OLR cannot resolve 
our current capability gaps.
    Question. How long will the HH-60 be the workhorse of our current 
fleet? What actions do we need to take in order to ensure that we have 
a viable personnel recovery platform?
    Answer. The HH-60G will remain in service until the combat rescue 
helicopter program is at full operational capability, which is 
currently scheduled for 2025. The Air Force has modification programs 
to address sustainment issues, safety features, defensive systems, and 
avionics upgrades that allow the HH-60G to continue providing rescue 
capability to the combatant commanders. Additionally, the operational 
loss replacement program is a short term fix to address aircraft 
availability issues to ensure the Air Force can continue providing 
rescue capability to combatant commanders

                  C-130 Avionics Modernization Program

    Question. The budget request indicates that the C-130 avionics 
modernization program can be achieved with a less robust program while 
maintaining the ability to perform the mission. Will the C-130s that 
are not upgraded still be able to operate internationally without 
restriction if they don't receive these modifications?
    Answer. Although the C-130 avionics modernization program was 
terminated in the Fiscal Year 2013 President's Budget request, the Air 
Force is committed to modernizing and ensuring the legacy C-130H fleet 
has unlimited access to international airspace. To this end, the Air 
Force has initiated a new program titled ``Optimize Legacy C-130 
Communication, Navigation, Surveillance/Air Traffic Management (CNS/
ATM).'' This upgrade will ensure that the entire C-130H fleet will meet 
the Federal Aviation Administration's January 1, 2020, requirements for 
automatic dependent surveillance-broadcast and continue to operate 
internationally without restriction.
    Question. Will any additional crewmembers be required to compensate 
for not doing this upgrade? If additional crewmembers will be required, 
are we merely shifting costs from equipment to personnel?
    Answer. When evaluating the total program cost, including retaining 
the navigator position, the new ``Optimize Legacy C-130 Communication, 
Navigation, Surveillance/Air Traffic Management (CNS/ATM)'' program is 
a lower-cost approach for modernizing the legacy C-130H fleet to meet 
domestic and international airspace requirements.

                              Global Hawk

    Question. The Air Force is proposing to cut the Global Hawk Block 
30 unmanned aerial vehicle, saying that reconnaissance missions will be 
done using the U-2 instead, due to lower operating costs. Are we going 
to stop flying the Block 30 altogether or will we be looking at using 
these for other missions? It seems like we have invested a lot of money 
in the Global Hawk program and that it would not be a good use of 
resources to have them sitting in storage.
    Answer. Based on the Fiscal Year 2013 President's Budget, the Air 
Force will stop buying the Global Hawk Block 30 aircraft in Fiscal Year 
2013. The final disposition of these aircraft is unknown at this time; 
however, the Air Force is developing disposition alternatives which 
include plans to place these assets in usable storage to preserve 
future options.
    Question. What are the worldwide ISR requirements (total amount in 
general) compared to what the Air Force is able to provide? What kind 
of implications does this have for our strategic shift to the Pacific 
theater?
    Answer. The Air Force acts in concert with Department of Defense 
(DoD) intelligence agencies, the military Services, and the U.S. 
Intelligence Community to meet worldwide intelligence, surveillance, 
and reconnaissance requirements. In September 2011, the DoD Joint 
Requirements Oversight Council reviewed recent adjustments in military 
strategy and determined that high-altitude ISR force structure could be 
reduced. The Air Force further determined that the U-2, which remains 
viable until at least 2040, was sufficient to meet these reduced 
requirements. There will be no impact to warfighting capabilities, and 
peacetime support will be managed by the current Global Force 
Management Process. Forward basing the U-2 now will meet combatant 
commander requirements in the near term and Navy BAMS will provide 
additional support in the Pacific operating area when those assets 
deliver later in the decade.
    Question. What was the requirement change that seems to have been 
the main driver in the decision to discontinue use of the Global Hawk 
in favor of the U-2? Does the AF foresee the possibility of a future 
requirement that would tilt the balance back in favor of the Global 
Hawk?
    Answer. In September 2011, the DoD Joint Requirements Oversight 
Council (JROC) reviewed recent adjustments in military strategy and 
determined that conventional high-altitude intelligence, surveillance, 
and reconnaissance (ISR) force structure could be reduced. The Air 
Force further determined that the U-2, which remains viable until at 
least 2040, was sufficient to meet these reduced force structure 
requirements. Continued increased investment in RQ-4 was required to 
field a comparable capability to U-2 and was determined to be 
unaffordable.
    The JROC will continue to monitor adjustments in military strategy 
to determine future force structure requirements, and the Air Force 
will continue to determine the most efficient and effective methods to 
meet those requirements.
    Question. One of the reasons given for cutting the Block 30 variant 
was sensor performance. Was sensor performance inadequate? Did it not 
meet the requirements that we set for it?
    Answer. The sensor suites aboard the RQ-4 and U-2 are not 
equivalent. However, the RQ-4 imaging sensors meet the stated Joint 
Requirements Oversight Counsel (JROC) requirement and, therefore, were 
not a factor in the divestment decision.
    The total cost of keeping the Global Hawk Block 30 and continuing 
the investment to improve the RQ-4 to reach a comparable capability 
with the U-2 was more expensive than keeping the U-2. As a result, the 
Department chose to save $2.5 billion across the Future Years Defense 
Plan (FYDP) in a reduced budget environment since the U-2 is sufficient 
to meet the requirement and remains viable through 2040.
    Question. How much operations and maintenance savings is reflected 
in the FY 2013 budget request as a result of ``mothballing'' the Block 
30s?
    Answer. The Air Force operations and maintenance cost avoidance/
savings reflected in the Fiscal Year 2013 budget request as a result of 
divesting the Block 30s is $82.6 million.

                                  F-35

    Question. Since the F-35 is important to the US and many of our 
allies, what is the impact of international partners and involvement of 
our allies on the continued acquisition program?
    Answer. The eight International Partners and the foreign military 
sales nations are one of the key elements to success of the Joint 
Strike Fighter (JSF) program. Their participation contributes the 
following: sharing of JSF development costs among all partners, 
lowering of U.S. procurement and operating costs due to economies of 
scale, and assuring of a future fleet of tactical aircraft that are 
interoperable with our coalition partners.
    Just like the U.S., the partner nations are reassessing their 
short-term procurement needs and long-term strategies as a result of 
today's challenging fiscal environment. However, at a recent 
multilateral meeting, all of the partners underscored their full and 
continued support for the JSF program.
    Question. The greatest cost efficiencies are typically realized 
when production rates increase and we start getting much needed 
economies of scale. Is there anything that can be done in the near term 
to help drive down costs and ensure that the F-35 program will be 
affordable in the long term for the Air Force (and DoD as a whole)?
    Answer. In the near term, the Air Force deferred the purchase of 98 
F-35A conventional take-off and landing (CTOL) aircraft to outside the 
Fiscal Year 2013 President's Budget request Future Years Defense Plan 
(FYDP) in order to mitigate increased concurrency costs. In addition, 
the Department of Navy deferred 81 short take-off and vertical landing 
and carrier variant aircraft. This realigns the pace of production to 
balance the need for a stable industrial base with the realities of 
increasing concurrency modification costs in a resource-constrained 
fiscal environment. We expect concurrency costs to begin to decrease 
starting in Fiscal Year 2015. Therefore, we plan on increasing the 
production ramp rate from 19 CTOL aircraft in Fiscal Year 2014 to 48 
aircraft in Fiscal Year 2017. As the production rate increases, the 
unit recurring flyaway cost will decrease from $122 million in Fiscal 
Year 2014 to $91 million in Fiscal Year 2017.
    In addition, the F-35 JSF Program Office (JPO) is using low rate 
initial production Lot 5 ``should cost'' analysis from the Office of 
the Secretary of Defense to support contract negotiations. The focus of 
the effort is to reduce contractor overhead and pass-through fees. The 
JPO is also conducting a business case analysis to determine proper 
contractor/organic maintenance mix to provide the best value 
sustainment solution. The JPO is engaged on several affordability 
initiatives focusing on unit level consumables (45 percent of overall 
operational and sustainment costs) and sustaining support (24 percent 
of operational and sustainment costs).
    The Air Force has also taken active measures to reduce costs. The 
Air Force reduced the deployed spares package requirement from one per 
squadron (for 44 squadrons) to 25 total. It also reduced field training 
detachment quantities and requirements. We drove additional savings by 
reducing the flying hour requirement from 300 to 250 flying hours/
aircraft/year for operational aircraft. In order to identify cost 
efficiency opportunities within the Air Force force structure, the Air 
Force has commissioned RAND to study potential base reductions and 
varying squadron sizes and its impact on maintenance manpower, support 
equipment, and spares requirements.

                                 C-27J

    Question. It is my understanding that at least part of the 
rationale for divesting the C-23 Sherpa fleet was that we were going to 
acquire the C-27J. With the C-27J fleet now being divested, do we need 
to re-look at the original C-23 divestiture or can the requirements be 
met with other assets (like the C-130)?
    Answer. With the divestment of the C-27J fleet, the requirement to 
provide time-sensitive, mission-critical air delivery over unsecured 
ground lines of communication will be met by the C-130 fleet. The Air 
Force cannot comment about the Army's decision to divest their C-23 
Sherpa aircraft, but the Air Force is committed to the direct support 
mission for Army forces and retains sufficient force structure to 
accomplish this mission.

                         Satellite System Cuts

    Question. Regarding the termination of the AF Defense Weather 
Satellite System (DWSS), the AF says it can meet mission requirements 
and save money by launching two existing Defense Meteorological 
Satellite Program (DMSP) satellites, currently in storage. What 
capabilities do we lose by not launching the DWSS? Can we meet 100 
percent of our mission requirements with the older DMSP satellites?
    Answer. Yes, the remaining Defense Meteorological Satellite Program 
(DMSP) satellites will continue to meet the Department of Defense's 
overhead weather collection requirements until a follow-on program is 
fielded. The Defense Weather Satellite System (DWSS) would have 
exceeded legacy DMSP capabilities with newer technology to improve 
atmospheric and ionospheric measurement capability, such as a more 
detailed depiction of clouds and aerosols. Collectively, DWSS 
capabilities would have improved weather forecast accuracy; however, 
DMSP continues to meet legacy requirements for environmental 
battlespace awareness to support worldwide military operations.
    Question. The budget request indicates that it will cost $120 
million per year to extend DMSP on-orbit operations; does this include 
all of the costs (refurbish, prepare and the actual launch of the final 
2 satellites?
    Answer. Yes. The approximately $120 million per year encompasses 
all costs associated with integrating and testing the DMSP F-19 and F-
20 spacecraft and seven mission sensors for each satellite and 
performing launch processing for the satellites. Additionally, it 
covers all costs associated with operating the on-orbit constellation, 
sustaining the ground command and control segment, and performing 
anomaly resolution for all of the on-orbit satellites, as well as DMSPs 
F-19 and F-20 during pre-launch integration and test.

                            Cyber Protection

    Question. With all of the recent examples in the media of foreign 
entities hacking into our networks (defense contractor, FBI and law 
enforcement as well as our military unmanned aerial vehicle systems), 
it's clear that we can't prevent all of these incidents. Is there more 
we can do on the detection side, though? If we can't stop it, what are 
we doing so that we at least know about it, and then we try to manage 
it from there?
    Answer. The Air Force is intent on providing a full range of cyber 
capabilities to Joint Force commanders, whenever and wherever needed. 
The Air Force contributes to the Joint Force by developing, 
integrating, and operating cyberspace capabilities across the full 
spectrum of operations to include defense.
    The Air Force is moving forward aggressively to integrate mission 
assurance capabilities in the network strategy through a defense-in-
depth framework, such as implementing cyber defense hunter teams to 
provide a mobile, precision capability against cyberspace threats. We 
also are expediting requirements and acquisition processes to deliver 
proactive and responsive cyber defense capabilities. We are improving 
commanders' decision making abilities by increasing situational 
awareness, developing doctrine, policies, security and guidance to 
effectively employ and innovate in cyberspace defense. For example, we 
are developing innovative active cyber defense concepts as part of the 
Department of Defense Cyber Integration Group in accordance with the 
Department's Strategy for Operating in Cyberspace. We also are 
affecting changes in behavior, practices, and culture by improving 
training, standards, communication and accountability by instituting 
cyberspace operations guidance. Finally, we are partnering with the 
Department of Defense, industry, and academia to share cyber defense 
information, including the Defense Industrial Base Opt-In Pilot.

    [Clerk's note.--End of questions submitted by Mr. Kingston. 
Questions submitted by Mr. Bonner and the answers thereto 
follow:]

                                 KC-46A

    Question. I understand that the total additional costs to taxpayers 
that this contract allows, some $500 million, has already been 
incurred. Is it correct that any and all other cost overruns from this 
point forward will be paid exclusively by the Boeing Company?
    Answer. The government's current estimate at completion (EAC) for 
the KC-46 development contract is $5.3 billion. However, the $5.3 
billion EAC is just an estimate at this point. Since we are only one 
year into contract execution, Boeing has not yet incurred that amount 
of cost. The Government is liable for up to $0.5 billion above the 
contract's target price of $4.4 billion.
    The KC-46 development contract has an overall contract ceiling 
price of $4.9 billion. Boeing is fully responsible for any cost growth 
beyond the $4.9 billion overall contract ceiling price.
    Question. Exactly what does the contract require Boeing to deliver 
78 months after contract award? I understand it is 18 operational 
aircraft on the flight line, but what are the details of those aircraft 
in terms of certification, operational status and total refueling and 
other capabilities?
    Answer. The contract requires Boeing to deliver 18 aircraft that 
meet all the terms and conditions of the contract, to include all 
performance specifications and FAA certifications, 78 months after 
contract award, with the necessary support and training. Required 
aircraft, support, and training includes:
          --18 aircraft meeting final product baseline in place 78 
        months after contract award
          --Interim Contractor Support (ICS) in place to support 18 
        aircraft, according to basing and military construction plans
          --Inventory and Maintenance Data Collection Systems in place
          --Requisitioning process connecting the Inventory Control 
        Points to the Standard Base Supply System in place
          --Field Service Representatives/Logistics Support 
        Representatives in place
          --Item Unique Identification (IUID) implemented
          --Two spare engines delivered
          --Warranty plan implemented
          --Required verified technical documentation in place
          --Initial Type 1 maintenance cadre training completed
          --Nine shipsets (18 total) Wing Air Refueling Pods (WARP) in 
        place
    Question. Exactly what if the terms of the contract of the 18 
aircraft delivery are not met within the timeframe specified by the 
contract, or not with the operational capabilities stipulated in the 
contract?
    Answer. The contract requires Boeing to deliver 18 aircraft that 
meet all the terms and conditions of the contract, to include all 
performance specifications and FAA certifications, 78 months after 
contract award, with the necessary support and training. Failure to 
comply with the technical or schedule requirements of the contract 
could result in a default termination.
    In addition to the significant financial incentives that Boeing has 
to deliver aircraft on time--inherent in the competitively negotiated 
fixed-priced engineering and manufacturing development and production 
contract structure--the Air Force will use all the tools available to 
motivate Boeing to meet its schedule commitments, and penalize them 
when they do not.
    The Air Force is not required to accept delivery of any aircraft 
that does not meet the performance specification stipulated in the 
terms and conditions of the contract. Accordingly, the Air Force will 
not complete payment on any aircraft until it formally accepts delivery 
of that aircraft. If Boeing does not meet its schedule commitments, per 
the contract, the Air Force could obtain appropriate consideration for 
late delivery which would likely translate into a reduction to both 
target and ceiling prices and also require Boeing to continue 
development until it finds a solution to meet the contractual scheduled 
event at no additional cost to the Air Force. Additional available 
management tools include withholding progress payments and downgrading 
Contract Performance Assessment Report (CPAR) ratings.
    Question. If KC-46A deliveries are late, I assume that planned 
retirements of existing KC-135s will be delayed. I also am aware that 
major maintenance to those aircraft comes due in the 2017 to 2018 
timeframe, specifically the resurfacing of major portions of the 
aircraft. If that maintenance is necessary to keep the aircraft flying 
longer, what will be the cost to the taxpayer? What other costs accrue 
to the taxpayer if the service life of the KC-135 fleet has to be 
extended?
    Answer. Boeing remains on schedule to deliver 18 aircraft that meet 
all the terms and conditions of the contract, to include all 
performance specifications and FAA certifications, 78 months after 
contract award (August 2017), with the necessary support and training.
    If KC-46 deliveries are delayed, the Air Force is confident in our 
current KC-135 service-life estimates that project fleet viability 
through 2040. In mid-2016, we will have the results of the six-year 
tear-down study on three retired KC-135 aircraft. This assessment will 
provide a better understanding of future KC-135 fleet sustainment 
costs.
    Question. If Boeing defaults on this contract, how is the taxpayer 
protected? What are the Air Force's legal and financial obligations? 
More importantly, how will the nation's vital interests be protected? 
The new Strategic Planning Guidance makes it clear that this program 
and a robust global refueling capability are more important than ever. 
It seems that the KC-135 will be wholly inadequate by 2018 in terms of 
both capability and cost to operation and maintain. What is your 
contingency plan to deal with a default on this contract?
    Answer. The Air Force has mitigated the greatest risk to the 
taxpayer--cost growth and open ended financial liability--by 
structuring the competitive development contract with both Fixed Price 
Incentive (Firm Target) and Firm Fixed Price components. The KC-46 
development contract has an overall contract ceiling price of $4.9 
billion. Boeing is fully responsible for any cost growth beyond the 
$4.9 billion overall contract ceiling price.
    The Air Force is mitigating the greatest risk to the warfighter--
schedule--by maintaining tight oversight of contract execution to 
ensure that Boeing delivers on its contract commitments. Boeing has 
completed every major milestone on or ahead of schedule, and Boeing 
remains on schedule to deliver 18 aircraft that meet all the terms and 
conditions of the contract, to include all performance specifications 
and FAA certifications, 78 months after contract award (August 2017), 
with the necessary support and training, ready to go to war on day one. 
There is no indication that Boeing will default on any portion of the 
KC-46 program. However, if Boeing does default, the taxpayer is 
protected under the Termination for Default clause of the contract. 
Under the default clause, the government is not liable for the 
contractor's costs on undelivered work, is entitled to the repayment of 
any applicable advance and progress payments, and may elect to require 
the contractor to transfer title and deliver to the government 
completed supplies and manufacturing materials.
    With the above in mind, the Air Force is committed to maintain the 
health and viability of the KC-135 fleet through selective component 
replacement and modernization. We are confident in our current KC-135 
service-life estimates that project fleet viability through 2040. The 
KC-135 fleet remains and will remain a rapid global capability in 
support of our Joint and Coalition forces.

                              Global Hawk

    Question. I understand the Department's Cost Assessment and Program 
Evaluation (CAPE) performed a detailed cost analysis associated with 
the decision to terminate and mothball the Global Hawk Block 30 
program. Please share this analysis with the Congress so it can better 
understand the analytical foundation of this decision. Provide a 
detailed cost assessment including the basis of costs for both 
sustainment and procurement through 2025.
    Answer. In support of the Fiscal Year 2013 President's Budget 
request, the Air Force analyzed the operational output of both the RQ-4 
and the U-2 using existing concepts of operation for both aircraft and 
determined that U-2 capability was sufficient for operational needs. 
When analyzed in this context, the U-2 and RQ-4 operating costs were 
nearly equal. Given comparable flying hour costs, and given the large 
investment required for the RQ-4, the Air Force chose to divest the 
Block 30 program and save a net of $2.5 billion. OSD/CAPE conducted 
their own independent cost analysis based on three scenarios to come to 
the conclusion that the U-2 was the more affordable option to meet the 
newly reduced requirement. The Air Force will defer to OSD/CAPE to 
provide Congress the details of their independent cost analysis.
    Question. The Department based its Global Hawk Block 30 divestment 
decision on it being more expensive to operate than the U-2. Can you 
explain how the Department determined these costs?
    Answer. The Department of Defense (DoD) conducted an analysis 
during the Fiscal Year 2013 budget review using data from previous Air 
Force and DoD efforts. The Air Force Total Ownership Cost (AFTOC) 
database figures in Fiscal Year 2011 show that both the U-2 and the RQ-
4 cost $32,000 per hour to operate. However, the costs for the U-2 
included signals intelligence (SIGINT) sensors. The Air Force did not 
fly the RQ-4 Block 30 with its SIGINT sensors in 2011. The Air Force 
will begin flying Global Hawk with SIGINT sensors in April 2012 and 
expects the RQ-4 flying hour costs to become greater than those for the 
U-2. Given comparable flying hour costs, and given the large investment 
required for the RQ-4, the Air Force chose to divest the Block 30 
program and save a net of $2.5 billion.
    Question. If the U-2 is extended until 2025, and the system that 
was slated to replace it is cancelled, what is your plan for replacing 
the U-2? How much will it cost to modernize and maintain the U-2 for 
another 15 years?
    Answer. There is no projected U-2 retirement date. The U-2 aircraft 
remains viable until 2040 and meets all sensor requirements currently 
tasked by the combatant commands. The Air Force will invest 
approximately $68 million per year in sustainment and enhancement 
modifications to ensure platform modernization and maintenance.
    Question. General Schwartz mentioned operations and support costs 
are an issue for the Global Hawk program. When the decision was made to 
retire the U-2 a few years back, specific costs (base support, 
infrastructure and indirect support) where allocated to Global Hawk. As 
a result, these costs have inflated the Global Hawk cost per flight 
hour while the U-2's cost per flight hour has decreased. Did the Air 
Force look at doing an apples-to-apples comparison of costs for both 
systems? If not, why not?
    Answer. Base support, infrastructure, and indirect support costs 
were included in the Department's Total Ownership Costs computations 
and appropriately allocated to each program. As a result, the cost per 
flying hour for each platform totaled $32,000 per hour. However, a 
direct flying hour comparison does not illustrate the differences in 
the maturities of the two programs. For example, the costs for the U-2 
included a signals intelligence (SIGINT) suite flown for many years. 
The SIGINT suite aboard the Global Hawk has yet to reach operational 
maturity, and therefore, has not been included in its cost per flying 
hour as the cost is not yet known. The Air Force will begin flying 
Global Hawk with SIGINT sensors in April 2012 and expects the RQ-4 
flying hour costs to outpace those for the U-2.

    [Clerk's note.--End of questions submitted by Mr. Bonner. 
Questions submitted by Mr. Cole and the answers thereto 
follow:]

                   Sustainment Issues and Competition

    Question. The Air Force has acknowledged that 91% of the F117 
engine is common with the commercial variant PW-2000 series engine 
flown world-wide on Boeing 757s. This confirms there is significant 
capability in the commercial market to supply parts and repairs for the 
F117 engine. Is the Air Force going to take advantage of this fact as 
it prepares the Request for Proposal to solicit bids from industry for 
supply chain management services?
    Answer. The proposed F117 sustainment strategy is structured to 
take advantage of the industrial capability supporting the PW2000 
family of engines. Section 805 of the Fiscal Year 2010 National Defense 
Authorization Act states that our objective will be to ``maximize 
competition and make the best possible use of available Department of 
Defense and industry resources at the system, subsystem and component 
levels.'' Using the current strategy, the Air Force will maximize 
competition at the system level by transitioning F117 engine 
sustainment from the Globemaster Integrated Sustainment Partnership 
contract with the C-17 product support integrator (The Boeing Company) 
to a competitively-chosen F117 production manager to accomplish the 
engine overhaul (touch labor). The Air Force is also developing a 
strategy to expand competition in engine supply chain management. The 
Air Force is maximizing competition at the subsystem level by allowing 
a mix of repaired and new parts procurement. Finally, the Air Force is 
further maximizing competition at the component level by utilizing the 
Air Force's Source Approval Request process, which will allow for 
approval of non-original equipment manufacturer (OEM) parts into the 
F117 engine.
    In December 2011, at the Air Force's request, the engine OEM (Pratt 
and Whitney) agreed to negotiate licenses to both the F117 Overhaul and 
Component Repair manuals, for use in competitor proposal preparation 
and program execution. This access provides the Air Force with the 
ability to compete F117 engine sustainment in a manner comparable to 
commercial industry strategies for PW2000 series engine sustainment.
    Question. When competition becomes a factor in military programs, 
we see cost reductions between 30-50% over the life-cycle of the 
activity. We have a tight budget request before us and the Air Force is 
requesting new funding of $230 million in a direct appropriation to the 
Air Force Working Capital Fund for F117 sustainment. The Air Force's 
justification for the $230 million request states that it is for 
Contractor Logistics Support, of which the supply chain is a critical 
component. Could the requirement for this funding be eliminated or at 
least reduced if we ensure competition for the supply chain management 
requirements?
    Answer. The C-17 Contractor Logistics Support engine cost increase 
line item provides additional funding to accomplish major overhauls on 
all scheduled F117 engines during Fiscal Year 2013. Cost increases are 
the result of excessive wear and tear on the engine while operating in 
the contingency environment. F117 engine sustainment for Fiscal Year 
2013, including supply chain management, has already been negotiated as 
a pre-priced option under the Globemaster Integrated Sustainment 
Partnership contract. Elimination or reduction of this funding would 
require the engine sustainment option to be renegotiated and engine 
overhauls to be deferred to the following year. Deferring engine 
overhauls would cause a decrease in C-17 aircraft availability as 
specified in the working capital fund justification.
    The Air Force plans to conduct a competition for F117 engine 
sustainment, to include overhaul and supply chain management, with 
performance starting in 2014. While the sustainment plan has been 
modified to leverage competition, any savings will not be realized 
until after 2013. Projected savings derived from this competition will 
be validated after receipt and review of proposals for the F117 engine 
sustainment for 2014 and beyond.
    Question. The Air Force's justification for the $230 million direct 
appropriation includes only 3 sentences. Can you explain to me the 
requirement for this funding, the financial analysis and assumptions 
that were made in determining the funding level requested, and what Air 
Force organization conducted the analysis?
    Answer. The C-17 Contractor Logistics Support engine cost increase 
line item provides additional funding to accomplish major overhauls on 
all scheduled F117 engines during Fiscal Year 2013. Cost increases are 
the result of excessive wear and tear on the engine while operating in 
the contingency environment. Increased flying hours and utilization 
factors have resulted in the increased replacement of engine life 
limited parts and increased engine component repair and scrap rates 
during overhaul. Overseas Contingency Operations (OCO) environmental 
factors, including sand ingestion and increases in the number of 
maximum power takeoffs, have caused life limited parts to reach their 
replacement thresholds more quickly than programmed. Additionally, 
these factors have caused a greater rate of replacement for parts which 
were previously repairable during overall.
    The financial analysis and assumptions made in determining the 
funding level requests were originally based on the Boeing/Pratt and 
Whitney engine sustainment contract proposal to the Air Force. Further 
analysis was conducted by a government tiger team composed of the C-17 
System Program Office at Wright-Patterson Air Force Base, Ohio, the 
Engines System Program Office, the Engines Product Group Manager, the 
C-17 Combined Program Office (CPO), and the Air Mobility Command staff. 
The main assumption during the analysis was the number of anticipated 
engine cycles the C-17 fleet will accomplish each year. The estimate 
was provided by each of the C-17 using commands and then used by the C-
17 CPO to place the C-17 Product Support Integrator, The Boeing 
Company, on contract to achieve the performance based outcomes of 
available aircraft and serviceable propulsion systems.
    Further analysis was conducted by the C-17 CPO in July 2011 to 
determine a fair and reasonable cost. This effort led to a contract 
award to Boeing with their subcontractor Pratt and Whitney, for engine 
sustainment in Fiscal Year 2012 with pre-priced options available in 
Fiscal Year 2013 and Fiscal Year 2014. The Fiscal Year 2013 option 
represents a total cost to the C-17 program for engine management with 
OCO requirements included.
    Question. If the basis for the $230 million request is relative to 
excessive wear and tear from operating in the contingency environment, 
why isn't the Air Force requesting this funding from the Overseas 
Contingency Operations budget request?
    Answer. The Air Force Working Capital Fund budget submission 
requests $230 million of overseas contingency operations (OCO) direct 
appropriation for repair of C-17 aircraft engines (F117). These engine 
repairs are necessary due to excessive wear and tear sustained in 
support of United States Transportation Command contingency operations.
    Additionally, $120 million of OCO operation and maintenance funding 
is requested to repair excessive engine wear and tear sustained on the 
C-17 fleet operated by Air Force Active, Reserve, and Guard.

                               C-130 AMP

    Question. General Schwartz, you have said earlier this year that 
your greatest concern with the new defense strategy is that the Air 
Force may not have the capacity in the mobility aircraft and combat 
fleets to execute the new strategy. Can you please quantify for the 
committee the risks incurred with the significant reduction to the 
mobility airlift fleet and what it may mean in meeting war fighting 
requirements of the combatant commanders?
    Answer. We carefully analyze each warfighting scenario laid out by 
the Office of the Secretary of Defense (OSD) to determine what the 
mobility air fleet capacity should be to support strategic guidance. We 
measure the capacity in million ton-miles per day (MTM/D), which 
expresses a theoretical capacity of the fleet to move an amount of 
cargo over a set distance per day and is used as a common metric for 
quantifying airlift requirements as a basis for computing the size and 
optimal mix of airlift forces.
    The Mobility Capability Requirement Study 2016 (MCRS-16) analyzed 
requirements of the previous strategy and called for a peak capacity of 
32.7 MTM/D. One of the study's scenarios (Case 3) was approved by OSD 
as sufficiently consistent with the new strategic guidance to inform 
our force structure and indicated that a capacity of 29.1 MTM/D was 
adequate.
    Analysis of additional scenarios in-line with strategic guidance 
and approved by OSD requires slightly more capacity than MCRS Case 3. 
The President's Budget Fiscal Year 2013 mobility air fleet provides a 
capacity of 30.4 MTM/D, which meets this anticipated demand with a 
small margin in reserve.

                           Strategic Airlift

    Question. General Schwartz, the Major Capabilities Requirements 
Study-16 assumed that DOD would maintain 3 prepositioned locations of 
military stock equipment. Now that DOD plans to downsize the number of 
locations of prepositioned stock equipment to 2 locations, what does 
this do in terms of adding additional requirements for strategic 
airlift during a major contingency operation?
    Answer. The Mobility Capabilities & Requirements Study 2016 (MCRS 
16), like its predecessors did and as its successors will, begins with 
the National Military Strategy which determines the capabilities and 
requirements needed to deploy, employ, sustain, and redeploy Joint 
Forces in order to accomplish that strategy. While it does take into 
account locations of prepositioned stock, it is not prudent to assume 
that there is a linear relationship between numbers of prepositioned 
stock locations and the size of the strategic airlift fleet. The multi-
modal modeling assesses airlift, aerial refueling, sealift, surface 
transportation, ashore and afloat prepositioning, forward stationing, 
and infrastructure. It puts these multimodal tools against the time 
phased force deployment plan. Ultimately, for planning purposes we run 
excursion upon excursion against scenarios anticipated by the National 
Military Strategy and determine the optimum force structure to 
accomplish that strategy with a given level of risk.
    While MCRS-16 analyzed requirements of an older strategy which 
called for a peak capacity of 32.7 million ton miles per day (MTM/D), 
one of the study's scenarios is sufficiently consistent with the new 
strategy to inform our force structure and indicates that a 29.1 MTM/D 
capacity is sufficient. Our proposed mobility air fleet has a capacity 
of 30.4 MTM/D and will meet this potential demand with a small margin 
in reserve as we continue to shape our force based on strategy looking 
forward. This fleet size and mix is the right one to execute national 
strategy at an appropriate level of risk.

                  C-130 Avionics Modernization Program

    Question. General Schwartz, why has the Air Force decided to 
terminate the C-130 AMP program that is over 98% complete with 
development activities and with very little risk going forward? How 
much will the new start effort truly save after considering the 
termination liability, and other life cycle cost savings are removed 
from the solution?
    Answer. The Future Year Defense Plan (FYDP) investment cost savings 
from terminating C-130 Avionics Modernization Program (AMP) and 
initiating the ``Optimize Legacy C-130 Communication, Navigation, 
Surveillance/Air Traffic Management (CNS/ATM)'' program is $2.3 
billion. Additionally, when adding the ``To Complete'' cost of AMP in 
the Fiscal Year 2012 President's Budget request and comparing it to 
what the Air Force has funded in the Fiscal Year 2013 President's 
Budget request for CNS/ATM, including its ``To Complete'' cost, the Air 
Force identified a total investment cost savings of $3.5 billion.
    By going with the new Optimize Legacy C-130 CNS/ATM, which retains 
the navigator position, the Air Force took into consideration that we 
would lose the mission personnel ``cost savings'' of $482 million in 
base year dollars vice AMP (reference number 31, Dec 2010 C-130 AMP 
Selected Acquisition Report (SAR) to Congress). This additional cost of 
retaining the navigator reduces the program savings referenced in the 
above paragraph. The 2010 Selected Acquisition Report (SAR) identified 
that there were no other life cycle costs savings by continuing with 
AMP.
    The termination liability for C-130 AMP is $5.1 million, and has 
been factored into the cost savings referenced above.
    Question. General Schwartz, could you explain the numbers that have 
been circulating in the press regarding the cost of the current 
program? My understanding that about $2.1 billion has been invested to 
date and there is about $2.5 billion needed to complete the program. 
However, it appears the Air Force is using a $6.2 billion total program 
cost, leaving over $4.1 billion yet to be spent. With less than 200 
aircraft to be modified and using $8 million a copy, we should be able 
to finish the program for around $2 billion.
    Answer. Due to budget constraints, the Fiscal Year 2013 Presidents 
Budget request recommends terminating the C-130 Avionics Modernization 
Program (AMP) and initiating a new lower cost program titled ``Optimize 
Legacy C-130 Communication, Navigation, Surveillance/Air Traffic 
Management (CNS/ATM).'' As reflected in the December 2010 Selected 
Acquisition Report (SAR), the C-130 AMP per aircraft estimate is $19 
million. The Fiscal Year 2013 President's Budget request per aircraft 
cost of the C-130 CNS/ATM program is $3.7 million. A total of $1.8 
billion has been spent to date on C-130 AMP ($1.7 billion in research, 
development, testing, and evaluation, and $0.1 billion in procurement). 
Total cost of the 221 C-130 AMP aircraft fleet is estimated at $6.3 
billion. This latest estimate is from the Office of the Secretary of 
Defense Cost Assessment and Program Evaluation's independent cost 
estimate dated March 23, 2010; it reflects total cost of $6.3 billion 
($1.8 billion in research, development, testing, and evaluation, and 
$4.5 billion in procurement).
    Question. General Schwartz, the current AMP system of record 
eliminated the navigator position and essentially paid for the upgrade 
in the early days of the program. Will a new start require a navigator 
and if so, what is the impact on availability, training, and life cycle 
costs for a new program of record without eliminating the navigator and 
one with the navigator.
    Answer. When terminating the C-130 avionics modernization program 
(AMP) and initiating the new lower cost program titled ``Optimize 
Legacy C-130 Communication, Navigation, Surveillance/Air Traffic 
Management (CNS/ATM),'' which retains the navigator position, the Air 
Force took into consideration that we would lose the mission personnel 
``cost savings'' of $482 million in base year dollars vice C-130 AMP 
(reference 31, December 2010 C-130 AMP Selected Acquisition Report 
(SAR) to Congress).
    However, the 2010 SAR identified that there were no other life 
cycle costs savings by continuing with C-130 AMP. The SAR identified an 
expected cost increase in both Unit Level Consumption ($513.4 million 
base year dollars) and sustaining support ($157.7 million base year 
dollars) for C-130 AMP modified aircraft over the current C-130 combat 
delivery fleet.
    Question. General Schwartz, Is the Air Force at all entertaining a 
modified AMP for the C-130 in lieu of terminating the program in FY13? 
It is my understanding that the Saudis and the Chileans have a modified 
AMP program and would a modification like that be an alternative to 
terminating the program as funds were available?
    Answer. The Fiscal Year 2013 President's Budget request recommends 
terminating the C-130 Avionics Modernization Program (AMP) and 
initiating a new program titled ``Optimize Legacy C-130 Communication, 
Navigation, Surveillance/Air Traffic Management (CNS/ATM).'' The 
primary difference between the C-130 AMP and the C-130 CNS/ATM program 
is that the new program retains the navigator position requiring much 
less avionics integration than C-130 AMP. The new program does not 
standardize the aircraft cockpit across the C-130H fleet and we 
anticipate more than a 40 percent reduction in the number of 
requirements when compared to C-130 AMP. These changes were too 
significant to modify or de-scope C-130 AMP. A review of similar CNS/
ATM solutions on other Air Force mobility aircraft (KC-10, KC-135), and 
an awareness of CNS/ATM modifications to foreign nations' C-130 
aircraft, indicate that CNS/ATM solutions that are less expensive than 
AMP are currently available. As the Saudi and Chilean efforts were 
direct commercial sales, the Air Force does not have detailed 
information on what these modifications entailed or whether or not they 
would be value-added for the Air Force C-130 fleet. The Air Force is 
committed to full and open competition for the C-130 CNS/ATM program 
with planned contract award in Fiscal Year 2014.

                                 KC-46A

    Question. General Schwartz, as you have mentioned, the development 
and procurement of the KC-46A is on track for initial delivery in FY16 
with the strategic basing process underway. Can you please provide and 
update on the timeline for key decisions and milestones going forward, 
particularly as it related to the bedding down plan?
    Answer. The next milestone in the KC-46A strategic basing process 
is the announcement of the basing criteria, which is scheduled to occur 
in the spring of 2012. The announcement of the candidate bases is 
scheduled for the summer of 2012. The announcement of the preferred and 
reasonable alternatives is scheduled for the end of 2012. The final 
basing decisions will be announced in calendar year 2013.

                                Bombers

    Question. General Schwartz, as the backbone of the Air Force's 
nuclear and conventional bomber fleet, what is the Air Force's plan to 
maintain a reliable and viable B-52 with such drastic cuts?
    Answer. The Air Force continues to ensure the B-52 stays relevant 
throughout its service life (2040) by focusing on bomber sustainment 
and addressing diminishing manufacturing source issues in the Fiscal 
Year 2013 President's Budget request. Efforts such as the fielding of 
Combat Network Communications Technology (CONECT) visual displays and 
the anti-skid braking system address existing supportability issues. 
Multiple smaller efforts continue to add B-52 capability including 
Military Standard 1760 Internal Weapons Bay Upgrade and Mode S/5 
identification friend or foe. Funding totals include $202 million for 
research, development, testing, and evaluation and $250 million for 
procurement across the Future Years Defense Plan. The B-52 remains the 
backbone of the Air Force's manned strategic bomber force, actively 
supporting the continued bomber presence in Guam and maintaining a high 
state of nuclear mission readiness.
    Question. General Schwartz, one of the cut programs is the CONECT 
program. It provides much needed digital communication and mission 
retasking capability for our warfighters, which is essential for B-52 
missions, especially with the added emphasis on the Pacific theater. 
With this program successfully finishing flight tests, why would the 
Air Force cut production funding, leaving our crews with a temporary 
laptop solution that doesn't satisfy the CONECT operational 
requirements?
    Answer. Based on competing budget priorities, the Air Force 
restructured the Combat Network Communications Technology (CONECT) 
program to address the sustainability issues within the program, 
including the replacement of legacy displays. The restructured program 
also funds conversion of the temporary Evolutionary Datalink system 
into a permanent modification providing a viable (although less robust) 
communications capability for the B-52. This decision was made as part 
of a balanced investment strategy for the Air Force Nuclear Deterrence 
portfolio. At the time the decision was made, CONECT had not completed 
the flight test program and the program faced significant cost, 
schedule, and performance issues. The completion of Milestone-C 
certification later this year provides the Air Force with an option to 
reexamine the CONECT program in future budget cycles.

                              Global Hawk

    Question. Secretary Donley, how have the Department's decisions to 
reduce Global Hawk Block 30 quantities while at the same time 
increasing requirements (increasing the number of simultaneous sensors 
required) contributed to the increased system cost of Global Hawk?
    Answer. The Air Force decision to terminate the Block 30 program 
was based upon a reduced requirement rather than an increased 
requirement. The requirement for the Global Hawk Block 30 aircraft is 
to execute electro-optical/infrared, synthetic aperture radar, limited 
moving target indicator, and signals intelligence missions 
simultaneously. No change to the Block 30 requirement factored into the 
decision to terminate the program.
    In September 2011, the Department of Defense Joint Requirements 
Oversight Council reviewed recent adjustments in military strategy and 
determined that conventional high-altitude intelligence, surveillance, 
and reconnaissance orbit requirements could be reduced. The Air Force 
further determined that the U-2, which remains viable until at least 
2040, was sufficient to meet these reduced force structure 
requirements. Continued, increased investment in RQ-4 was not warranted 
given a significant reduction in the Department's budget with an 
alternative system, the U-2, still operationally viable at considerably 
lower total cost over the Future Years Defense Plan.
    Question. General Schwartz, when looking at the Air Force Total 
Ownership Cost data for U-2 and Global Hawk, the cost per operational 
hour in 2011 (that is, the cost per hour executing missions) for Global 
Hawk is lower than the U-2. This seems to be a much more relevant 
number than cost per flying hour. How does this correlate with the 
assertions that Global Hawk operating costs are higher?
    Answer. The Department of Defense (DoD) conducted an analysis 
during the Fiscal Year 2013 budget review using data from previous Air 
Force and DoD efforts. The Air Force Total Ownership Cost database 
figures in Fiscal Year 2011 show that both the U-2 and the RQ-4 cost 
$32,000 per hour to operate. However, costs for the U-2 included 
signals intelligence (SIGINT) sensors. The Air Force did not fly the 
RQ-4 Block 30 with its SIGINT sensors in 2011. The Air Force will begin 
flying Global Hawk with SIGINT sensors in April 2012 and expects the 
RQ-4 flying hour costs to become greater than those for the U-2. Given 
comparable flying hour costs, and given the large investment required 
for the RQ-4, the Air Force chose to divest the Block 30 program and 
save a net of $2.5 billion.
    Question. General Schwartz, please detail how terminating a new 
cutting edge platform, Global Hawk Block 30, is less expensive than 
extending the life of an aging platform, U-2, which would require 
increased investments in coming years in a fiscally responsible manner.
    Answer. The total cost of keeping the Global Hawk Block 30 and 
continuing the investment to improve the RQ-4 to reach a comparable 
capability with the U-2 was more expensive than keeping the U-2. As a 
result, the Department chose to save $2.5 billion across the Future 
Years Defense Plan (FYDP) in a reduced budget environment since the U-2 
is sufficient to meet the requirement and remains viable through 2040.
    In September 2011, the Department of Defense Joint Requirements 
Oversight Council reviewed recent adjustments in military strategy and 
determined that conventional high-altitude ISR force structure could be 
modified. The Air Force further determined the U-2 was sufficient to 
meet these modified force structure requirements. Continued increased 
investment in RQ-4 was required to field a comparable capability to U-2 
and was determined to be unaffordable.
    Continued, increased investment in RQ-4 was not warranted given a 
significant reduction in the Department's budget and an alternative 
system, the U-2, is still operationally viable at a considerably lower 
cost over the FYDP.
    Additionally, the actual cost per flying hour data, when the U-2 is 
employed at its normal operational distance, shows the U-2 cost is 
comparable to the RQ-4 cost. The latest actual cost per flying hour 
data shows that both platforms are operating at $32,000 per hour.

    [Clerk's note.--End of questions submitted by Mr. Cole. 
Questions submitted by Mr. Visclosky and the answers thereto 
follow:]

                           Air National Guard

    Question. Why would the Air Force propose changes to the current 
force structure ratio of reserve and active duty service members if the 
performance of present ratio had performed positively? Were there 
specific instances where performance was not adequate? What is the 
increased pace of operations that is envisioned that justifies this 
change?
    Answer. The proposed changes to the current force structure ratio 
are not the result of a performance issue. The new Defense Strategic 
Guidance, ``Sustaining US Global Leadership: Priorities for 21st 
Century Defense'' directs the services to build a leaner, more 
flexible, and technologically advanced force. To meet budgetary 
constraints dictated by the Budget Control Act, the U.S. Air Force had 
to make force structure reductions. These reductions required the U.S. 
Air Force to examine the amount of force structure remaining to 
determine the best ratio of Active Component and Reserve Component (Air 
National Guard and the Air Force Reserve) to meet the warfighting 
requirements of the new guidance. The Reserve Component trains to the 
same level as the Active Component. However, the ratio had to be 
determined based on the ``availability rate'' of the two components. At 
a recent Air Force Reserve Senior Leaders Conference, I stated that we 
place an enormous value on the experience provided by the Reserve 
Component, but we don't want to shift the warfighting burden to a part-
time force. This burden isn't what the Reserve Component signed up for. 
As we plan our Total Force mix, we keep the components' contributions 
and commitments in mind and look to size our Active, Guard, and Reserve 
forces so they can meet their respective roles.
    The new Defense Strategic Guidance requires the Joint Force to be 
capable of fighting one large scale, combined arms campaign with 
sufficient combat power to also deny a second adversary and 
deemphasized large-scale, prolonged military operations. Some of the 
missions identified in the new guidance include deter and defeat 
aggression; project power despite anti-access/area denial challenges; 
conduct stability and counterinsurgency operations; conduct 
humanitarian, disaster relief, and other operations; etc. Although the 
U.S. has removed all combat forces from Iraq and the new guidance 
reduces the steady state requirement for ground forces, we expect Air 
Force steady state rotational requirements to remain nearly constant, 
or perhaps increase, under the new strategy. The continuing post 
rotational post-surge requirement is a key factor in determining the 
required mix between Active and Reserve Component forces due to 
differences in sustainable deployment rates and operations tempo.
    Sustaining the health of the force means the Air Force is seeking 
to manage both Active Component and Reserve Component forces at a 
sustainable level capable of meeting Department of Defense best 
possible projections of routine requirements for overseas rotational 
forces, surge forces for crises, and sustained expeditionary 
operations. The Secretary of Defense's deploy-to-dwell goal is to 
ensure Active Component forces deploy at a rate of no more than 1:2 
(for example, 6 months deployed followed by 12 months at home base) and 
the Reserve Components at a rate of no more than 1:5. An Active 
Component/Reserve Component balance that requires either routine Active 
Component forces deployment more frequently, or involuntary 
mobilization of Reserve Component forces to avoid over-use of Active 
Component forces, would add further stress on the Total Force and 
indicate that the Air Force does not have the proper balance. The 
Fiscal Year 2013 adjustments made to the Active Component/Reserve 
Component mix contribute to the Air Force's ability to meet current and 
foreseeable demand within these deploy-to-dwell goals.
    Question. For the development of the new force structure ratio, did 
the Air Force make specific underlying assumptions regarding the rate 
of deployment that the Guard is capable of achieving? What were these 
assumptions?
    Answer. Yes, the Air Force used specific rate of deployment 
assumptions for Active Duty, Air Force Reserve Command, and Air 
National Guard during development of the Fiscal Year 2013 President's 
Budget request. In accordance with the Secretary of Defense Memorandum, 
``Utilization of the Total Force,'' dated January 19, 2007:
    [T]he planning objective for involuntary mobilization of the Guard/
Reserve units will remain a one year mobilized to five years 
demobilized ratio. However, today's global demands will require a 
number of selected Guard/Reserve units to be remobilized sooner than 
this standard. Our intention is that such exceptions be temporary and 
that we move to the broad application of the 1:5 goal as soon as 
possible. Continue to plan your force structure on that basis.
    The planning objective for the Active Force remains one year 
deployed to two years at home station [or a 1:2 ratio].
    This guidance has been repeated in numerous subsequent documents, 
including the 2010 Quadrennial Defense Review, current Guidance for 
Employment of the Force, and Air Force Instruction 10-401, Air Force 
Operations Planning and Execution, among others, and is used for all 
Air Force force structure planning for post-surge operations.
    Current Office of the Secretary of Defense, Joint Staff, combatant 
commander, and Service-developed integrated scenario constructs used 
for force sizing require that all programmed Air Force fighter, bomber, 
tanker, and mobility aircraft be used during the surge (1:0 ratio).
    Question. Within the Air Force proposal to remission or eliminate a 
number of Air National Guard aircraft, are any of these aircraft 
transferring to active duty or will they be retired? Should any 
transfer to active duty, are these actions in compliance with Section 
345 of the 2011 National Defense Authorization Act? Has Lt Gen Wyatt 
made any comments on the possibility of the aircrafts transferring to 
active duty that will be made publicaly available?
    Answer. Based on the force structure reductions identified in the 
Fiscal Year 2013 President's Budget submission, the Air Force is 
reviewing the Total Force aircraft inventory fleet to ensure that we 
divest the oldest, less capable aircraft, while maintaining the newest 
and most modern aircraft in the Total Force. As such, the Air Force may 
transfer aircraft between components. If it does, the Air Force will 
ensure it stays in compliance with Section 345. The review includes 
full participation by the Air National Guard and Air Force Reserve 
leadership.

    [Clerk's note.--End of questions submitted by Mr. 
Visclosky. Questions submitted by Mr. Young and the answers 
thereto follow:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] 

                           Air National Guard

    Question. The combination of aircraft divestments and mission 
realignments within the Air National Guard will generate a re-
stationing and retraining bill. What is your estimate of this cost in 
fiscal year 2013, and across the current FYDP? Is this cost accounted 
for in your estimate of $8.7 billion in savings?
    Answer. Yes, the Air Force programmed approximately $43 million in 
Fiscal Year 2013 and $600 million across the Future Years Defense Plan 
to enable the re-missioning and relocation of aircraft. Minus these 
costs, the Air Force projects a net savings of approximately $8.7 
billion across the Future Years Defense Plan from all our proposed 
force structure adjustments. Starting in April of this year, the Air 
Force's major commands, including the Air Force Reserve Command and the 
Air National Guard, will begin site surveys to identify any facility 
and non-facility requirements that we may not have anticipated so that 
they can be addressed in the next budget cycle.
    Question. How has the Air Force accounted for the Air National 
Guard's state missions, such as disaster relief, during its divestment 
decision?
    Answer. Air Force force structure reductions were a Total Force 
effort--Active Duty, Reserve and National Guard--working together to 
achieve our end state of a ready and sustainable force that can meet 
our surge and rotational requirements. The Secretary of the Air Force 
directed the Air Force to realign our forces to better meet this new 
strategic guidance using the following four principles: ensure the 
Total Force can fulfill surge requirements; maintain a balance between 
components that allows the Air Force to fulfill continuing rotational 
requirements at sustainable rates; retain the recruiting, training and 
operational seasoning base required to sustain the Total Force's needs 
into the future; and ensure the Reserve Component remains relevant and 
engaged in both enduring and evolving missions.
    To meet this end, the Air National Guard (ANG) developed five 
Capstone Principles to help guide this transition: allocate at least 
one flying Wing with ANG equipment to each state; recapitalize 
concurrently and in balance with the Regular Air Force; manage ANG 
resources with ANG people; adopt missions that fit the militia 
construct; and, build dual-use capabilities (Emergency Support 
Functions) relevant to the states. Similarly, the Air Force Reserve 
used the following four principles: ensure aircraft reductions do not 
negatively impact operational support to Combatant Commands; ensure 
force structure movements do not create any new Air Force bills; ensure 
risk is minimized by optimizing crew ratios to exploit expected 
increases in mission capability rates; and, consider locations that 
continue to have an Air Force mission due to the presence of another 
Air Force Component. This Total Force approach allowed us to maintain 
the right Active/Air Guard/Reserve mix which will allow us to meet our 
operational demands with a leaner force while taking care of our 
Airmen. A copy of the ``USAF Force Structure Changes: Sustaining 
Readiness and Modernizing the Total Force'' is attached for your 
reference on our force structure changes.
    The Air Force conducted detailed analysis of wartime and disaster 
response scenarios, including Homeland Defense, consistent with the new 
DoD strategic guidance. This analysis validated a reduced airlift 
requirement, leaving the Air Force with excess airlift capacity. As a 
result, the Air Force was able to reduce the C-130 fleet by 65 aircraft 
and divest the C-27J fleet. To support the Homeland Security mission, 
including disaster response, the Air Force meets mission requirements/
taskings through the Global Force Management process that prioritizes 
all combatant commanders' (NORTHCOM, CENTCOM, PACOM, etc.) 
requirements.
    On March 2, 2012, in response to the Council of Governors' (CoG) 
concerns, Secretary Panetta offered the CoG an opportunity to present 
an alternative to our FY13 President's Budget (PB) submission. General 
Schwartz and I met with their designated representatives on four 
occasions to discuss their alternative proposal and various excursions. 
We concluded the CoG proposal fell short of meeting the five criteria 
for an acceptable alternative conveyed to the CoG representatives. As 
detailed in the attached US Air Force White Paper, those criteria 
include Combatant Commanders' demand, balance across weapons systems, 
manpower, cost, and policy considerations.
    The Air Force developed and discussed with the CoG's 
representatives five excursions, each designed to provide the ANG with 
combat and/or combat enabler missions while remaining consistent with 
the established criteria. On April 23rd, Secretary Panetta responded to 
the continued concerns of the governors regarding the impact of the 
FY13 PB on their ability to meet state missions by requesting 
congressional support for an adjustment to the DoD's budget submission. 
His proposal offers a $400 million package that retains 24 C-130s and 
the associated 1,179 manpower positions in the Air National Guard. In 
addition, the proposal restores 1,004 agile combat support manpower 
positions that will be funded by converting two percent of full-time 
ANG technician positions to part-time ANG positions. Secretary Panetta 
is aware these additional aircraft are excess to Title 10 requirements, 
but also is cognizant that the governors have a responsibility for 
civil support and state disaster response, and has offered this 
proposal in order to support their concerns.
    Attachments:
          1. USAF Force Structure Changes: Sustaining Readiness and 
        Modernizing the Total Force
          2. USAF White Paper: Proposed Way Forward on Air National 
        Guard Force Structure

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] 
        
    Question. What is the optimal ratio of active to reserve component 
forces? Is this based on any comprehensive analysis?
    Answer. The optimal ratio of Active to Reserve Component forces is 
a function of a myriad of variables that change over time, including a) 
sourcing for continuous presence versus surge demands; b) 
responsiveness of the force based on complexity of the task or 
operation; c) sustainability of the Active and Reserve Component 
operations tempos; d) compliance with deploy to dwell policy as it 
differentiates between the Active and Reserve Components; e) 
maintenance of the Active Component recruiting, training, and 
operational seasoning base required to sustain the Regular Air Force, 
Air National Guard, and Air Force Reserve; and f) the relative cost of 
manning and equipping for specific Active and Reserve Component units 
and capabilities. The optimal ratio balances both personnel and 
aircraft. On the personnel side, after the proposed force reductions 
and mitigations of Fiscal Year 2013, Air Force Reserve Component end 
strength will make up 33 percent of Total Force military personnel, a 
reduction of two percent from the Fiscal Year 2012 numbers. For the 
mobility air forces, the Reserve Component's share shifts from 51 
percent to 46 percent. In order to maintain and enhance combat 
capability, the Air Force intends to grow the number of Total Force 
Integration Associations from 100 to 115. This will enable the 
seasoning of our regular Air Force personnel while improving the combat 
capacity of our Reserve Component. On the aircraft side of the 
equation, within the combat air forces, the Reserve Component will have 
38 percent of total aircraft which is only four percent lower than 
Fiscal Year 2012. The Fiscal Year 2013 Active and Reserve Component mix 
is the appropriate mix to maintain the Air Force's combat capability.
    Question. The Air National Guard would realign 3,150 billets under 
this plan. Is there any precedent for such a realignment?
    Answer. The Air National Guard (ANG) has historically realigned 
billets to source new missions. For example, the ANG realigned over 
3,800 positions to comply with the 2005 Defense Base Closure and 
Realignment Commission's directed actions. The ANG also realigned over 
6,100 positions due to subsequent Total Force Initiative actions 
enacted in Fiscal Year 2008.

                              Global Hawk

    Question. How much money has the Air Force Invested in the Global 
Hawk Block 30 program through fiscal year 2011, including RDT&E and 
procurement?
    Answer. The total funding for Global Hawk Block 30s through Fiscal 
Year 2011 is broken out in the table below.

------------------------------------------------------------------------
                                                               Block 30
                 ($ in millions/Then year)                   total costs
                                                              thru FY11
------------------------------------------------------------------------
RDT&E......................................................      $809.20
Procurement................................................     2,223.40
                                                            ------------
    Total..................................................     3,032.60
------------------------------------------------------------------------

    Question. Has the Air Force engaged with the Navy on the 
possibility of transferring Block 30 airframes for use in the Broad 
Area Maritime Surveillance (BAMS) program?
    Answer. The Fiscal Year 2013 President's Budget request provides 
for recoverable storage of the Block 30 aircraft at the Aerospace 
Maintenance and Regeneration Group. The Air Force is open to 
alternative disposition options pending congressional approval of the 
Fiscal Year 2013 President's Budget request. The Navy is working 
options to receive Block 30 systems in response to a Defense 
Acquisition Executive information request.

                             Fighter Attack

    Question. What is the current Air Force tactical fighter shortfall? 
Would there be a shortfall during any year of the FY13-17 FYDP proposed 
by the Air Force
    Answer. The Air Force has sufficient tactical fighter aircraft to 
meet the President's new Defense Strategic Guidance. Previous projected 
shortfalls were based on a strategy sized to conduct long term 
stability operations and assumed a lower level of risk. Under the new 
defense strategy, the Air Force re-assessed fighter force structure 
requirements and assumed a higher level of risk.
    Question. The Air Force estimated it needed a fighter aircraft mix 
of approximately 1,200 primary mission aircraft inventory and 2,000 
total inventory to execute the National Defense Strategy with moderate 
risk. The Committee understands the current respective numbers to be 
1,100 and 1,900. How did the new strategy drive down the numbers by 100 
aircraft?
    Answer. The new strategy states the force ``will no longer be sized 
to conduct large-scale, prolonged stability operations.'' This, along 
with decreased overall ground force size in the Army and Marine Corps, 
led to the decision by the Department of Defense to take additional 
risk in fighter force structure. Our risk analysis using the smaller 
force structure led us to favor multirole capabilities that provide 
operational flexibility across the spectrum of conflict. The Air Force 
reduced its fighter force structure by approximately 100 4th-generation 
fighters as part of its effort to meet Budget Control Act 2011 fiscal 
guidelines.
    Question. What would be the year-to-year inventory of Air Force 
fighter aircraft under the Air Force's proposed FY13-17 FYDP?
    Answer. Air Force fighter aircraft include the A-10C, F-15C/D, F-
15E, F-16C/D, F-22A, and the F-35A. The Air Force total fighter 
inventory over the Fiscal Year 2013-2017 Future Year Defense Plan as 
proposed in the Fiscal Year 2013 President's Budget request is as 
follows:
    FY12: 2,035 (Baseline)
    FY13: 1,927
    FY14: 1,949
    FY15: 1,971
    FY16: 1,990
    FY17: 1,989
    NOTE: Totals include F-35A quantities based on the latest F-35 
production schedule and Air Force beddown plan dated March 9, 2012. 
Beginning in Fiscal Year 2017, F-35A deliveries begin to replace legacy 
fighter aircraft at approximately a one-for-one rate.

                           Mobility Aircraft

    Question. According to the Defense Budget Priorities and Choices 
document released by the Department of Defense on January 26, ``we do 
not need to retain the airlift capacity to support two large, 
simultaneous and rapidly developing ground campaigns.'' The Air Force 
is proposing to retire or divest 27 C-5As, 65 legacy C-130s, and the 
entire fleet of C-27s. Are the airlift requirements driving these 
divestment decisions based on any new analysis? If not, is such an 
analysis forthcoming?
    Answer. The divestiture of airlift assets is based upon a new 
analysis of the new Department of Defense Strategic Guidance, both 
internal and external to the Air Force, and an existing analysis 
consistent with this guidance. Internal Air Force modeling of the new 
strategic guidance informed the reduction in inter-theater airlift and 
indicated that a fleet with a capacity of 30.4 million-ton-miles per 
day (MTM/D), a reduction from 32.7 MTM/D, was sufficient with 
manageable risk. Since the forces are no longer sized to meet two near-
simultaneous large scale campaigns, the analysis also allowed for 
reductions in the intra-theater airlift and direct support mission 
fleets while still honoring the committed support to the Army and 
homeland defense. The Office of the Secretary of Defense conducted an 
independent analysis of the new strategic guidance and validated the 
Air Force divestiture decisions.
    The Mobility Capability Requirement Study 2016 (MCRS-16) analyzed 
requirements of the previous strategy and called for a peak capacity of 
32.7 MTM/D. One of the study's scenarios (Case 3) was approved by the 
Office of the Secretary of Defense as sufficiently consistent with the 
new strategic guidance to inform our force structure and indicated that 
a capacity of 29.1 MTM/D was adequate.
    Analysis of additional scenarios consistent with strategic guidance 
and approved by the Office of the Secretary of Defense requires 
slightly more capacity than MCRS Case 3. Our Fiscal Year 2013 
President's Budget request for mobility air fleet provides a capacity 
of 30.4 MTM/D, which meets this anticipated demand with a small margin 
in reserve.

                                 C-130

    Question. What additional costs will be borne by the Air Force as a 
result of terminating the C-130 Avionics Modernization Program (AMP), 
since the Air Force will be retaining different legacy C-130 
configurations as well as the navigator crew position?
    Answer. The current termination liability for C-130 AMP is $5.1 
million. The Air Force also took into consideration the loss of mission 
personnel ``cost savings'' of $482 million in base year dollars. The 
2010 Selected Acquisition Report identified no other life cycle costs 
savings by continuing with C-130 AMP. The report also identified an 
expected cost increase in both unit level consumption ($513.4 million 
base year dollars) and sustaining support ($157.7 million base year 
dollars) for C-130 AMP modified aircraft over the current C-130 combat 
delivery fleet.
    Question. The fiscal year 2013 budget request does not include any 
advance procurement (AP) funds for C-130Js programmed in fiscal year 
2014, which may include a multiyear procurement request. Why didn't the 
Air Force request AP for C-130Js in FY13? Do you require these funds, 
and if so, how much per aircraft?
    Answer. The Fiscal Year 2013 President's Budget request did not 
include advance procurement because it was the Department's position in 
Fiscal Year 2012 that it is not required. In keeping with this 
position, the Air Force did not include it in Fiscal Year 2013. In the 
event that a C-130J multiyear contract is pursued in Fiscal Year 2014, 
advance procurement will be included beginning in Fiscal Year 2014 for 
Fiscal Year 2015 aircraft. The Fiscal Year 2014 aircraft will be fully 
funded. In this situation, advance procurement will be $10 million per 
aircraft.

                                  F-22

    Question. What has been the impact of the F-22 hypoxia-type events 
on the mission availability of the F-22, as well as pilot training and 
certification?
    Answer. Following the stand down that began on May 3, 2011, the Air 
Force implemented the F-22A Return to Fly plan on September 21, 2011 in 
order to reconstitute combat capability as rapidly as possible. The Air 
Force tailored reconstitution plans to meet individual wing needs based 
on squadron experience mix, area of responsibility specifics, external 
support availability, and the local environment. We reconstituted 
deployable combat capability after four weeks, operational test 
capacity after two weeks, and training production after eight weeks.
    The F-22 life support system issues have not been attributed to the 
Onboard Oxygen Generating System (OBOGS) or any other subsystem and the 
root cause has yet to be identified. Since Return to Fly, as of June 
23, 2012, there have been 15,759 sorties flown with 11 unexplained 
incidents for a 0.07 percent rate. The Air Force has implemented 
measures to protect the crews and gather appropriate data to narrow the 
possible root cause, while maintaining combat capability. On May 15, 
2012, the Secretary of Defense directed additional measures to further 
ensure F-22 safety of flight and enhance the safety of our pilots while 
preserving our ability to meet mission requirements in support of our 
national security objectives.
    These additional measures will have a negligible impact on unit 
readiness and operational capability, as well as pilot training and 
certification. Although pilots are required to remain within proximity 
of potential landing locations during training sorties, they are able 
to effectively train and maintain readiness for their assigned 
missions, and the F-22's operational capabilities remain unparalleled. 
These measures also will have no impact on the ability of F-22s already 
deployed overseas to execute their intended missions. The deployed F-
22s are still able to promote regional security in the Gulf region and 
strengthen military-to-military ties while remaining within proximity 
of potential landing locations. In the Pacific theater, the Secretary 
of Defense has decided to delay the use of F-22 aircraft to fill 
theater security posture requirements due to the greater distances from 
divert bases during deployment to this region compared to the Central 
Command area of responsibility. The Secretary of Defense will reassess 
the Pacific posture based on monthly Air Force senior leader updates.

                              MQ-9 Reaper

    Question. The testimony states ``We are actively managing our 
procurement rate of MQ-9s to efficiently increase RPA fleet size while 
allowing for necessary aircrew training.'' Please provide more detail 
on RPA aircrew training throughput. When will the Air Force have the 
aircrews to match MQ-9 Reaper production? Are additional resources 
included in the FY13 budget to increase aircrew throughput?
    Answer. The Fiscal Year 2013 MQ-9 procurement rate of 24 aircraft 
per year is sufficient to achieve and sustain 65 combat air patrols 
(CAPS) by the third quarter of Fiscal Year 2014, assuming continued use 
of viable MQ-1 aircraft.
    The Air Force is on track to produce the aircrews to meet this 
operational requirement and match planned MQ-9 Reaper production by the 
third quarter of Fiscal Year 2014. To restore the aircrew training 
capacity interrupted during the 2011 Afghanistan fighting season surge, 
a Secretary of Defense approved plan limited the total Air Force MQ-1/9 
CAPs to a maximum of 57 through November 2012. In order to reconstitute 
training capacity, the Air Force expanded the number of Total Force 
Remotely Piloted Aircraft formal training units (FTU). In Fiscal Year 
2012 there will be one MQ-1 and two MQ-9 active duty FTUs at Holloman 
AFB, NM, one Air National Guard MQ-1 FTU at March ARB, CA, and one Air 
National Guard MQ-9 FTU in Syracuse, NY. In addition to the FTU 
training capacity, ``just-in-time'' MQ-1 and MQ-9 launch and recovery 
training to support operational deployment requirements will continue 
at Creech AFB, NV. Finally, additional resources were added to the 
Fiscal Year 2013 President's Budget request to increase aircrew 
production by 70 initial qualification MQ-9 aircrews over the Fiscal 
Year 2012 numbers and maintain 30 MQ-1 to MQ-9 conversions.

                         CVLSP/Nuclear Security

    Question. Does the Air Force have a long-term solution for 
replacing or modernizing the UH-1N helicopter fleet now that the CVLSP 
has been terminated?
    Answer. The Air Force is taking an acquisition pause to explore 
more cost effective strategies to meet the nuclear security and 
continuity of government missions. We are considering all alternatives 
to address these mission requirements, and no decisions have been made 
at this time.

                Air National Guard and A-10 Retirements

    Question. Did the Air Force mandate a ``one flying mission per 
state'' standard for its FY13 plan?
    Answer: The Air Force aligned its forces to better meet the new 
Defense Strategic Guidance using the following four principles: ensure 
the Total Force can fulfill surge requirements, maintain a balance 
between components that allows us to fulfill continuing rotational 
requirements at sustainable rates; retain the recruiting, training and 
operational seasoning base required to sustain the Total Force's needs 
into the future; and ensure the Reserve Component remains relevant and 
engaged in both enduring and evolving missions.
    To meet this end, the Air National Guard (ANG) developed five 
Capstone Principles to help guide this transition: allocate at least 
one flying wing with ANG equipment to each state; recapitalize 
concurrently and in balance with the Regular Air Force; manage ANG 
resources with ANG people; adopt missions that fit the militia 
construct; and, build dual-use capabilities (Emergency Support 
Functions) relevant to the states. Similarly, our Air Force Reserve 
Command used the following four principles: ensure aircraft reductions 
do not negatively impact operational support to Combatant Commands; 
ensure force structure movements do not create any new Air Force bills; 
ensure risk is minimized by optimizing crew ratios to exploit expected 
increases in mission capability rates; and, consider locations that 
continue to have an Air Force mission due to the presence of another 
Air Force Component. This Total Force approach allowed us to maintain 
the right Active/Air Guard/Reserve mix which will allow us to meet our 
operational demands with a leaner force while taking care of our 
Airmen.
    Question. Is there an A-10 basing study? If not, what criteria were 
used in determining basing?
    Answer. The reduction of A-10 aircraft is driven by the need to 
reduce excess force structure as identified in the new Defense 
Strategic Guidance and was not driven by a basing study. The new 
guidance states that U.S. Forces will no longer be sized to conduct 
large-scale, prolonged stability operations. Analysis based on 
scenarios consistent with the Defense Strategic Guidance resulted in a 
reduced requirement for tactical combat aircraft and a preference for 
multi-role fighters to provide the most flexible capability within each 
scenario. As a result, A-10 retirements were selected in lieu of other 
combat aircraft and the Air Force made the difficult choice to retire 
five A-10 squadrons comprised of 102 A-10 aircraft. Previous reductions 
in fighter force structure shifted the Total Force ratio toward Reserve 
Component forces, and Air Force decisions in the Fiscal Year 2013 
President's Budget request rebalanced that ratio to create a more 
sustainable force structure over the long term.
    In conjunction with National Guard Bureau leadership, the Air Force 
considered the Air National Guard Capstone Principle (previously 
approved by TAGs) of maintaining at least one Air Force flying unit in 
each state. As such, the Air Force chose the 188th Fighter Wing, Fort 
Smith, Arkansas, as one of three ANG A-10 unit closures because the 
base, along with those in Michigan, has other manned ANG flying units 
in addition to the A-10 units selected for divestment. Additionally, 
the proximity of Arkansas' Razorback Range (less than 10 miles from 
Fort Smith) and Hog Military Operation Area, coupled with joint 
training opportunities, make Fort Smith a very attractive location for 
remotely piloted aircraft (RPA) joint training. The divestiture of the 
A-10s afford an opportunity for the Air Force to assign Fort Smith a 
RPA mission and take advantage of range capabilities to facilitate 
joint training.
    Question. Why did the Air National Guard bear the brunt of the cuts 
to A-10 flying units?
    Answer. Revised Strategic Guidance states that U.S. Forces will no 
longer be sized to conduct large-scale, prolonged stability operations. 
Analysis based on scenarios consistent with the Strategic Guidance 
resulted in a reduced requirement for tactical combat aircraft and a 
preference for multi-role fighters to provide the most flexible 
capability within each scenario. As a result, A-10 retirements were 
selected in lieu of other combat aircraft and the Air Force made the 
difficult choice to retire five A-10 squadrons comprised of 102 A-10 
aircraft.
    Previous reductions in fighter force structure shifted the Total 
Force ratio toward Reserve Component forces, and Air Force decisions in 
the Fiscal Year 2013 President's Budget request (20 A-10s from Active 
Duty, 61 from the Air National Guard, and 21 from the Air Force 
Reserves) rebalanced that ratio to create a more sustainable force 
structure over the long term. Maintaining the appropriate mix of forces 
between the Active and Reserve Components is critical to sustaining Air 
Force capabilities for forward presence, rapid response, and high-rate 
rotational demands with a smaller overall force.
    Question. Did the Air Force follow their established procedures for 
A-10 basing decisions? Was the process deliberate, repeatable and 
transparent, with defined roles and responsibilities?
    Answer. The change to the 188th Fighter Wing was not a basing 
decision but a force structure realignment decision. The Air Force's 
goal was to reduce force structure based on the new Defense Strategic 
Guidance. The Air Force formed a general officer-led team of Active 
Duty and Reserve Component experts that determined force structure 
changes at various locations. Each course of action was assessed using 
specified criteria to include manpower composition, location of the 
installation, Reserve Component presence in the state, and how well a 
replacement mission is suited for a given location (e.g., military 
construction needed and range and airspace availability). The team's 
recommendations were reviewed by Air Force leadership and ultimately 
approved or disapproved by the Secretary of the Air Force and Chief of 
Staff of the Air Force. Before backfill missions were identified, 24 
squadron-level units were in jeopardy of being eliminated and 8 
installations would have been left without an operational Air Force 
mission. After backfill missions were identified, 10 squadron-level 
units were eliminated and only one installation was left without an 
operational mission.
    Question. When making basing decisions, did the Air Force consider 
energy costs and sustainability? If so, what weight was given to the 
significant energy savings of the 188th Fighter Wing?
    Answer. As the largest consumer of operational energy in the 
Department of Defense, the Air Force considers the impact of energy on 
basing decisions. However, the changes for the 188th Fighter Wing are 
not a basing decision but a force structure realignment decision. This 
force structure realignment decision was made in conjunction with 
National Guard Bureau leadership, the Air Force considered the Air 
National Guard's first Capstone Principle, ``allocate at least one 
flying unit with Air National Guard equipment to each state,'' when 
deciding which A-10 bases would be affected. Of the five states with 
Air National Guard A-10 units, two have no other flying unit and so 
reductions came from the three states, including Arkansas, that have 
other flying units.
    Question. Was the Senate Armed Services Committee's guidance to 
consider distance to operational training areas followed in the A-10 
basing decision? If so, what weight was given to the significant 
taxpayer savings achieved due to the transit time from the 188th 
Fighter Wing to its training ranges?
    Answer. When determining A-10 divestitures, Air Force assessed 
various criteria to include manpower composition, location of the 
installation, Reserve Component presence in the state, and how well a 
replacement mission is suited for a given location (e.g., military 
construction needed and range and airspace availability). The team's 
recommendations were reviewed by Air Force leadership, and ultimately 
approved or disapproved by the Secretary and Chief of Staff of the Air 
Force. Arkansas' Razorback Range and Hog Military Operation Area make 
Fort Smith a very attractive location for remotely piloted aircraft 
joint training, providing an enduring mission capability to Fort Smith 
while facilitating training with our Joint warfighters.
    Question. Were the Special Operations Forces training needs and 
their operational tempo considered in the A-10 basing plan? If so, what 
weight was given to the joint force multiplier capabilities of the 
188th Fighter Wing?
    Answer. The change for the 188th Fighter Wing was not a basing 
decision, but, rather a force structure realignment decision. Working 
with our Guard and Reserve leaders, we used a balanced approach to 
adjust our Total Force end strength while maintaining the ability to 
execute strategic guidance. The Air Force provides full spectrum 
support to all Joint warfighters. Special operations forces training 
involves a variety of weapon systems, and the Air Force will continue 
to provide required support while accounting for the divestiture of A-
10s from Fort Smith.
    Question. Does the re-missioning of the 188th Fighter Wing, and 
losing its unique training relationship with SOF, support the SOF in 
accordance with the Senate Armed Services Committee's direction?
    Answer. Analysis based on scenarios consistent with the Defense 
Strategic Guidance resulted in a reduced requirement for tactical 
combat aircraft and a preference for multi-role fighters to provide the 
most flexible capability to successfully prosecute each scenario. The 
Air Force will continue to provide the necessary training capability 
required by Special Operations Forces. United States Special Operations 
Command is aware of the divestiture of A-10s at Fort Smith and has not 
expressed any concerns with operational training impacts.
    Question. Did the Air Force consider JTAC training requirements? If 
so, what weight was given to the significant JTAC training production 
and partnership of the 188th Fighter Wing?
    Answer. The new Department of Defense Strategic Guidance, 
``Sustaining U.S. Global Leadership: Priorities For 21st Century 
Defense,'' directs the Services to build a force that will be smaller, 
leaner, flexible, ready, and technologically advanced. As a result, the 
Air Force is reducing its size to support one large-scale combined arms 
campaign with sufficient combat power to deny a second adversary. With 
the divestiture of Fort Smith's A-10s, the Air Force will maintain 
sufficient capacity to produce and train Joint Terminal Attack 
Controllers to support the new Defense Strategic Guidance.
    Question. The Secretary of Defense has emphasized the need to 
retain capability to quickly reconstitute greater combat forces if 
events overtake the new strategy. Does the Air Force intend to put the 
A-10s it proposes to retire into Type 1000 storage?
    Answer. The Air Force programmed Type 1000 storage for the A-10 
force structure reductions, allowing the Air Force to restore aircraft 
as dictated by national strategies. The Air Force continues to review 
the final divesture plan for the A-10 and may store a portion of the 
aircraft at a different storage level, enabling the Air Force to 
reclaim spare parts and improve the readiness of the remaining A-10 
fleet.

    [Clerk's note.--End of questions submitted by Mr. Young.]
                           W I T N E S S E S

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                                                                   Page
Amos, General J. F...............................................   247
Dempsey, General M. E............................................    81
Donley, M. B.....................................................   335
Dunford, General J. F., Jr.......................................   169
Green, Lieutenant General (Dr.) C. B.............................     1
Greenert, Admiral J. W...........................................   169
Hale, Robert.....................................................    81
Horoho, Lieutenant General P. D..................................     1
Mabus, Ray.......................................................   169
Mateczun, Vice Admiral J. M......................................     1
Nathan, Vice Admiral M. L........................................     1
Panetta, Hon. L. E...............................................    81
Schwartz, General N. A...........................................   335
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