[Senate Hearing 112-]
[From the U.S. Government Publishing Office]



 
   MILITARY CONSTRUCTION AND VETERANS AFFAIRS, AND RELATED AGENCIES 
                  APPROPRIATIONS FOR FISCAL YEAR 2013

                              ----------                              


                        TUESDAY, MARCH 27, 2012

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 10:05 a.m., in room SD-124, Dirksen 
Senate Office Building, Hon. Tim Johnson (chairman) presiding.
    Present: Senators Johnson, Pryor, Murkowski, and Blunt.

                         DEPARTMENT OF DEFENSE

                        Office of the Secretary

STATEMENT OF HON. ROBERT F. HALE, UNDER SECRETARY 
            (COMPTROLLER)
ACCOMPANIED BY:
        DR. DOROTHY ROBYN, DEPUTY UNDER SECRETARY FOR INSTALLATIONS AND 
            ENVIRONMENT
        DR. PETER LAVOY, PRINCIPAL DEPUTY ASSISTANT SECRETARY FOR ASIAN 
            AND PACIFIC SECURITY AFFAIRS

                OPENING STATEMENT OF SENATOR TIM JOHNSON

    Senator Johnson. Good morning. This hearing will come to 
order. I welcome everyone to today's hearing to discuss the 
President's fiscal year 2013 budget request for military 
construction (MILCON) and family housing for the Department of 
Defense (DOD) and the Department of the Army.
    Before beginning, I would like to acknowledge the temporary 
absence of my friend and ranking member, Senator Mark Kirk. I 
wish him a speedy recovery, and I look forward to his return to 
this subcommittee. In the interim, you can be sure that I will 
represent his interests in all matters that come before our 
subcommittee.
    Our first panel today will be DOD Comptroller Bob Hale; Dr. 
Dorothy Robyn, Deputy Under Secretary of Defense for 
Installations and Environment; and Dr. Peter Lavoy, Principal 
Deputy Assistant Secretary of Defense for Asian and Pacific 
Security Affairs.
    Secretary Hale, Dr. Robyn, and Dr. Lavoy, thank you for 
coming. We look forward to your testimony.
    The President's military construction and family housing 
budget request for fiscal year 2013 totals $11.2 billion, a 
plunge of nearly 25 percent from the fiscal year 2012 request. 
I recognize that this reduction is a result of budget 
constraints and uncertainty of military construction 
requirements in the face of planned end strength reductions and 
military realignments.
    Nevertheless, I am concerned that MILCON not be the bank 
for investments in other defense programs, as critical as they 
might be. Infrastructure is the backbone of our military and a 
mainstay of support for our troops and our military families. 
We must give it the priority it requires.
    There are a number of issues in the fiscal year 2013 MILCON 
budget request that compel our attention, including the impact 
of planned end strength reductions, overseas military 
realignments, and the proposal for new base realignment and 
closure (BRAC) rounds in fiscal years 2013 and 2015. The 
President's new focus on strengthening U.S. military presence 
in the Pacific is another area that will impact future MILCON, 
and I hope Dr. Lavoy will be able to give us a preview of that 
initiative from a MILCON perspective.
    I look forward to the testimony of our witnesses on these 
and other important issues.
    Secretary Hale, Dr. Robyn, Dr. Lavoy, thank you again for 
appearing before our subcommittee. Your prepared statements 
will be placed in the record, so I encourage you to summarize 
your remarks to allow for more time for questions.
    Secretary Hale, please proceed.

                SUMMARY STATEMENT OF HON. ROBERT F. HALE

    Mr. Hale. Thank you, Mr. Chairman, members of the 
subcommittee. And Mr. Chairman, I guess I should say thank you 
for the opportunity to discuss the MILCON portion of the 
budget.
    Let me start with two pieces of introduction, one to 
express our concern and are glad to hear that Senator Kirk is 
recovering. We certainly wish him a speedy and complete 
recovery. Second, I want to thank you, Mr. Chairman, and all 
the members for your support of the men and women in uniform 
and also the civilians that support them.
    I'll summarize briefly my statement. Consistent with the 
Budget Control Act, we reduced defense funding for fiscal year 
2013 to 2017 by a total of $259 billion, compared to last 
year's plan. After these changes, we ask for $525.4 billion in 
discretionary budget authority for fiscal year 2013. Adjusted 
for inflation, that's a 2.5 percent decline, the third 
consecutive year of real decline in defense budgets.
    As we accommodated these reductions, we were guided by a 
new defense strategy, as you alluded to, Mr. Chairman, and 
three related principles. I'll briefly discuss the new strategy 
and these three principles. I'll try to focus on areas of 
particular concern to military construction.
    We will accommodate reduced defense spending in part 
through more disciplined use of defense resources, trying to 
stretch our defense dollars. Among the changes is substantial 
re-phasing of military construction, pushing off projects until 
we know the nature and location of force cuts, which we just 
don't yet in a number of cases. We'll also seek administrative 
savings and streamlining to reduce base support costs.
    Our new defense strategy provides some other opportunities 
for savings. We're planning for a smaller, leaner force, with 
ground forces no longer sized for large, prolonged stability 
operations such as the ones we carried out in Iraq. We're 
reducing Active Duty end strength by 102,000 between the end of 
2012 and the end of fiscal year 2017, and that's mostly about 
90 percent in our ground forces, the Army and the Marine Corps.
    Another strategic goal involves rebalancing our forces 
toward the Asia-Pacific and Mideast regions. This will involve 
increasing our presence in areas like--Singapore and Australia, 
moves that may eventually have effects on military construction 
costs.
    We're planning investments in high-priority initiatives, 
including special operations forces, unmanned aerial vehicles, 
and cybersecurity. We're making judicious reductions in weapons 
programs, which I won't spend much time on those today.
    Finally, we'll continue to support the All-Volunteer Force. 
However, we propose to slow the growth in selected components 
of military pay and benefits to gain control over our personnel 
costs.
    So what does all this mean for the dollars in the MILCON 
and family housing portions of the budget? For fiscal year 
2013, we're asking $11.2 billion for military construction and 
family housing, including $9.1 billion for military 
construction, $0.5 billion for BRAC expenses, and about $1.7 
billion for family housing.
    These are the numbers. I'd like to draw your attention to 
several specific issues that may be of interest to the 
subcommittee. During fiscal years 2012 and 2013, we will re-
phase military construction, as I mentioned, pushing off 
projects until we know the nature and location of force cuts. 
As a result, military construction has been reduced, markedly, 
by 17 to 63 percent, depending on the military department, 
between fiscal years 2012 and 2013.
    The exception is defense-wide military construction, which 
grows by about 6 percent between fiscal years 2012 and 2013. 
Among other things, this growth reflects support for high-
priority improvements in hospitals and DOD-dependent schools.
    We request new BRAC authority for fiscal years 2013 and 
2015 to accommodate in two rounds of BRAC. Given planned force 
cuts, we know that we need to consolidate our domestic 
infrastructure, and BRAC is the only effective means to meet 
that goal. We recognize the political difficulty of providing 
BRAC authority, but we need your support to help us hold down 
long-term costs.
    We're also working to formulate a new plan to relocate 
marines from Okinawa to Guam in a manner consistent with our 
larger Asia-Pacific strategy. The new plan will maintain 
support for the Futenma relocation facility, but we will delink 
that facility from the moves of marines off Okinawa. We now 
plan to move fewer than 5,000 marines to Guam. We're currently 
discussing the details of the new plan with the Government of 
Japan, and we'll continue to consult with Congress.
    Other initiatives in the Asia-Pacific area include forward 
deployment of littoral combat ships in Singapore and the 
rotational presence of U.S. military personnel in Australia. We 
are still working details with Singapore. But placeholder funds 
for the deployment to Singapore are included in our Future 
Years Defense Plan. No military construction funding is 
currently planned for the United States rotational presence in 
Australia, but we'll continue environmental studies and 
facility assessments.
    Last, we recently announced reductions in United States 
troops stationed in Europe. We will remove from Europe an Army 
headquarters, two heavy combat brigades, an attack air 
squadron, an air control squadron, and other enablers. Despite 
these changes, the United States will maintain a strong 
presence in Europe with greater emphasis on joint exercises and 
training.
    But these changes will lead to reductions in our overseas 
infrastructure, and we will take those into account. We don't 
need BRAC for that. We will do that in tandem with our two 
rounds of BRAC which will be aimed at domestic infrastructure.

                           PREPARED STATEMENT

    In conclusion, Mr. Chairman, we believe that our overall 
budget request, including military construction and family 
housing, is prudent and balances the needs of the armed forces 
with the Nation's economic situation. We request your support 
for our proposals.
    That concludes my statement. Dr. Robyn will have an opening 
statement. Dr. Lavoy will not. But then we will all three be 
available to answer your questions.
    [The statement follows:]

               Prepared Statement of Hon. Robert F. Hale

    Mr. Chairman, members of the subcommittee, thank you for the 
opportunity to discuss the Military Construction and Family Housing 
portion of the fiscal year 2013 budget for the Department of Defense.
    As always, your support is essential if America's all-volunteer 
force is to have the infrastructure and facilities needed to ensure our 
national security and to carry out its missions around the world.
    To put the Military Construction and Family Housing requests into 
context, I will begin with a brief summary of the President's budget 
for the entire Department--with a focus on the portions of the Defense 
budget that most affect Military Construction and Family Housing. Then 
I will highlight a few key financial issues related to facilities.

                      BASE BUDGET AND OCO REQUESTS

    Mr. Chairman, the Department's request for fiscal year 2013 seeks 
$525.4 billion in discretionary budget authority. Adjusted for 
inflation, that is a reduction of 2.5 percent, the third consecutive 
year of real decline in the Defense budget. In the years beyond fiscal 
year 2013, the budget will grow modestly, enough to keep up with 
inflation and in some years a bit more.
    In addition, for Overseas Contingency Operations, we are asking for 
$88.5 billion in fiscal 2013, a reduction of $26.6 billion below the 
fiscal enacted amount of $115.1 billion in fiscal year 2012. This 
proposed budget reflects the withdrawal of combat troops from Iraq last 
December, as well as savings due to operational progress in Afghanistan 
and the beginning of the transition to Afghan responsibility for their 
security.
    Our overall budget is consistent with the provisions of title I of 
the Budget Control Act of 2011. However, our request does not assume 
the sequestration specified in title III. If enacted, the President's 
budget would provide a basis for halting sequestration, while ensuring 
the maintenance of a strong national defense.
    To reach the base funding requested in this budget, and to be 
consistent with the Budget Control Act of 2011, we reduced defense 
funding for fiscal year 2013-2017 by a total of $259 billion compared 
to last year's plan. Our budget reductions were shaped by a new 
strategy for defense and by three key principles related to that 
strategy:
  --More disciplined use of resources;
  --Reductions in forces and investment consistent with the strategy; 
        and
  --Support for the All-Volunteer Force but also a review of military 
        compensation.
    We achieved $60 billion in savings--about one-quarter of the total 
required reduction--through more disciplined use of Defense resources. 
Our proposals include reducing expenses in the Office of the Secretary 
of Defense and the Defense Agencies, continued efforts to cut back on 
IT expenses, and improved buying practices. Of particular interest to 
this subcommittee, we rephased Military Construction projects in view 
of planned force structure cuts.
    Our new national security strategy provides additional 
opportunities for savings through force structure reductions. By the 
end of fiscal year 2017, the Army will eliminate a minimum of eight 
brigade combat teams, the marines will disestablish six battalions and 
four tactical air squadrons, the Air Force will eliminate seven 
tactical air squadrons and a number of mobility aircraft, and the Navy 
will retire nine ships.
    In short, we are planning for a force that is smaller and leaner, 
with ground forces that are no longer sized for large, prolonged 
stability operations. We are reducing Active Duty end strength by 
102,400 between the end of fiscal year 2012 and the end of fiscal year 
2017. These reductions mostly affect ground forces. The new 5-year 
budget plan calls for an end strength reduction of about 72,000 Army 
soldiers and about 20,000 marines by fiscal year 2017. This will result 
in an Army of 490,000 soldiers and a Marine Corps of 182,100 marines. 
Reductions in the Navy and Air Force will be substantially smaller. By 
fiscal year 2017, we will also reduce end strength in the Reserve 
components by 21,500, resulting in a total Reserve force of 825,600, 
with Navy Reserve and Air Force National Guard components experiencing 
the greatest Reserve force reductions.
    These reductions in force structure require that we consolidate our 
infrastructure. We are, therefore, asking Congress to authorize two new 
rounds of the Base Realignment and Closure (BRAC) program, one in 
fiscal year 2013 and the other in fiscal year 2015.
    The Department's shift to a smaller, leaner force increases the 
need to ensure that our forces are ready and agile. That puts an 
emphasis on Special Operations forces, which are increasing in size. We 
will also maintain the current size of our bomber and carrier forces, 
which can essentially self-deploy. Readiness concerns led us to 
increase our Operation and Maintenance budget, which will increase by 6 
percent in our request even as our overall budget falls by one percent.
    Another goal is to rebalance our forces towards the Asia-Pacific 
and Middle East regions. Of particular interest to this subcommittee, 
we have made a commitment to enhance U.S. military presence in 
Australia on a rotational basis and are discussing options to improve 
security cooperation with the Philippines. We will also forward deploy 
a number of littoral combat ships in Singapore and three patrol craft 
in Bahrain. Since we do not expect to fight alone, our fiscal year 2013 
budget continues to invest in strong alliances.
    We must plan for other investments in high-priority initiatives. 
That does not mean that we will spend as much as we planned last year, 
but investments will be substantial even in these difficult times. 
Specifically, we will invest substantially in our Special Operations 
forces, unmanned aerial systems, and cybersecurity.
    At the same time, we are making judicious reductions in key weapons 
where those cuts are consistent with our new strategy and good 
management. Compared with last year's plans, we are reducing funding by 
$15.1 billion over the next 5 years for the Joint Strike Fighter, and 
we are cutting shipbuilding by $13.1 billion with an emphasis on 
cutbacks in support ships. We will terminate six weapons programs 
including the Global Hawk Block 30 program--a program that is no longer 
cost-effective as a replacement for the U-2 aircraft. Instead we will 
extend the life of U-2 planes.
    Turning to the All-Volunteer Force (AVF), we will continue to 
support many programs--family support, healthcare, and others--that 
nurture the AVF. At the same time, we cannot ignore the growth in 
military pay and benefits--up almost 90 percent since 2001 (about 30 
percent more than inflation) while net end strength grew only 3 
percent.
    Obviously, we need a military compensation system that is 
commensurate with the stress in military life. That means we cannot 
simply copy the civilian system. We have to be sure that we have a 
system that allows us to attract and retain the people we need. And we 
are committed to ensuring that no one's pay is cut.
    However, we found it necessary to slow growth in pay and benefits 
to avoid overly large cuts in force structure and modernization. We are 
proposing changes that will save about $30 billion over the Future 
Years Defense Plan (FYDP) or slightly more than 10 percent of our $259 
billion savings target.
    Our budget for fiscal year 2013 includes a pay raise for the 
military that is consistent with the Employment Cost Index (ECI). We 
will propose a raise in 2014 that is consistent with the ECI but, in 
later years, we will propose raises that are lower in order to control 
personnel costs. Restricting changes to future years will provide 
servicemembers and their families with time to plan. Adjustments to pay 
raises will lead to savings of $16.5 billion over the FYDP.
    For military healthcare, we are proposing increases in TRICARE 
Prime enrollment fees, using a tiered approach with higher fees for 
higher ranking retirees earning greater retired pay and lower increases 
for more-junior retirees earning lower retired pay. That's for Prime, 
the HMO version of TRICARE. For TRICARE Standard/Extra, which are the 
fee-for-service options, we will ask Congress to enact a new enrollment 
fee and higher deductibles. We will also ask for a new enrollment fee 
in the TRICARE for Life program--for retirees 65 and over--again using 
a tiered approach. And we will continue to increase pharmacy co-pays, 
aimed at encouraging people to order by mail and to use generic-brand 
prescriptions. Medically retired members, their families, and survivors 
of members deceased while on Active Duty would be exempt from these 
benefit adjustments.
    We are also asking Congress to set up a Military Retirement 
Modernization Commission that will have the time and staff to look at 
this complicated area of military compensation and to make 
recommendations. We envision a process much like those followed by past 
BRAC commissions. The administration believes in full grandfathering to 
protect the benefits for current retirees and those serving in the 
military at the time of enactment.

                MILITARY CONSTRUCTION AND FAMILY HOUSING

    The Military Construction and Family Housing portion of this budget 
supports the various objectives I just noted. For fiscal year 2013, we 
are asking for $11.2 billion for Military Construction and Family 
Housing.
    Of the $11.2 billion requested, $9.1 billion is for Military 
Construction. This request will provide operational and training 
facilities and supporting infrastructure. It also continues to 
recapitalize aging facilities--beginning with those with the greatest 
needs--and to modernize DOD facilities to support the U.S. military and 
their families, including dependent schools, dorms and barracks, and 
medical facilities.
    The fiscal year 2013 budget includes $0.5 billion for BRAC-related 
environmental clean-up and caretaker costs and $1.7 billion for 
construction, operation, and maintenance of Government-owned family 
housing worldwide. This investment will help to provide and maintain 
quality, affordable housing for U.S. military personnel and their 
families stationed in locations lacking adequate rental housing.

                            SELECTED ISSUES

    I would like to complete my testimony by saying a few words from 
the Comptroller's standpoint about several specific Military 
Construction issues.
    This budget rephases Military Construction funding for each of the 
Military Departments. As a result, between fiscal year 2012 and fiscal 
year 2013, Military Construction funding has been reduced by 17 to 63 
percent, depending on the Military Department. We must determine what 
bases and installations will experience force structure reductions and 
avoid unneeded Military Construction projects at those facilities. The 
only exception to this rephasing is in the Defense-wide Military 
Construction accounts. They grow by about 6 percent, reflecting support 
for high-priority improvements in hospitals and DOD dependents' 
schools.
    As I mentioned earlier, the Department seeks two new rounds of BRAC 
in fiscal year 2013 and fiscal year 2015 in order to reduce excess 
infrastructure. The change in force structure and fiscal constraints 
make it imperative for the Department to close and realign unnecessary 
military installations, and we can only do this effectively using BRAC 
authority. An internal working group is refining the Department's goals 
for BRAC and deciding how to manage our preparation for BRAC 2013.
    Another issue involves the relocation of marines from Okinawa to 
Guam. Consistent with the DOD strategic goal of rebalancing our global 
posture, Guam remains an essential part of our larger Asia-Pacific 
strategy. The United States and Japan have begun official discussions 
to adjust our current posture plans. This includes reviewing the unit 
composition and number of marines who will relocate to Guam and 
delinking progress on the Futenma Replacement Facility (FRF) from the 
relocation of marines to Guam. However, both countries remain committed 
to the construction of the FRF. We will continue to consult with 
Congress as these discussions progress. Pending further definition of 
our plan, the fiscal year 2013 budget request includes $51 million for 
construction of a parking ramp on Andersen Air Force Base and continued 
planning and design efforts.
    Other initiatives in the Asia-Pacific area include the rotational 
presence of U.S. Marines and Air Force personnel in Australia and 
forward deployment of littoral combat ships in Singapore. Neither 
involves infrastructure funding in fiscal year 2013. Funds for the 
deployment to Singapore are programmed in the FYDP. While no funding 
request is planned in the FYDP for the United States rotational 
presence in Australia, we will continue planning efforts such as 
environmental studies and facility assessments.
    Lastly, we recently announced changes in U.S. troops stationed in 
Europe. These include inactivation of force structure associated with 
the Army's V Corps headquarters and two heavy brigades, an A-10 
aircraft squadron, an Air Control squadron, and various enablers. These 
changes notwithstanding, the United States will maintain a strong 
presence in Europe to support our Article 5 commitments and to meet the 
full range of 21st century challenges. There will be a greater emphasis 
on joint exercises and training to enhance interoperability for 
coalition operations, as well as new capabilities such as missile 
defense.

                               CONCLUSION

    In conclusion, I believe that the fiscal year 2013 budget is 
prudent, given the needs of the Armed Forces and the Nation's economic 
situation. The budget supports a reasonable and responsible Military 
Construction and Family Housing program. I request your support.
    Again, Mr. Chairman, members of the subcommittee, thank you for 
your strong support of the men and women of the Department of Defense. 
That concludes my statement. I welcome your questions.

    Senator Johnson. Thank you, Secretary Hale.
    Dr. Robyn, please proceed. I understand you were in 
something of an accident.

                     STATEMENT OF DR. DOROTHY ROBYN

    Dr. Robyn. No. I had committed to speak to 400 military 
engineers. Unfortunately, they were in Rockville, Maryland. So 
it was a just-in-time appearance.
    Thank you very much, Chairman Johnson and Senator Pryor.
    I want to touch on three issues: Our military construction 
and family housing budget, our request for two new BRAC rounds, 
and what we're doing in environment and energy. Mr. Hale 
covered all of the statistics that I had in my opening 
statement on the MILCON budget, so what I want to do is 
highlight what we are not asking money for in our MILCON 
budget, namely, family housing here in the United States. We're 
not asking money for that because we have now privatized nearly 
all of our 200,000 units of family housing.
    Using the power of the commercial market, we have leveraged 
a $3 billion DOD investment to generate $27 billion worth of 
high-quality, well-maintained homes, and that has done a lot to 
improve the quality of life for military families. It's an 
extraordinary success story, the most successful reform my 
office has carried out and something we should be looking to do 
much more broadly, particularly as budgets tighten.
    The second issue is BRAC. As Mr. Hale said, we need another 
BRAC round, ideally two. The math is straightforward. Force 
reductions produce excess capacity. Excess capacity is a drain 
on resources. Only through BRAC can we align our infrastructure 
with our strategy.
    It has not gone unobserved that Congress is not terribly 
enthusiastic about this. So let me try to anticipate a couple 
of your criticisms.
    The first: Can't we close bases in Europe before we have a 
BRAC round here? Let me say that we have already made 
significant reductions in our European footprint. In the last 
20 years, we have reduced U.S. force presence, as measured by 
personnel and installation sites, by 80 percent. Just since 
2003, we have returned more than 100 sites in Europe to their 
respective host nations, and we've reduced personnel by one-
third. Between fiscal years 2012 and 2015, the Army alone will 
close 23 additional sites as previously announced.
    With the recently announced force structure changes in 
Europe, we can do more to consolidate our infrastructure. And 
we have a BRAC-like process that my office is leading, working 
closely with the United States European Command (EUCOM) theater 
commander, his component commanders, and the service leadership 
here in Washington. But even if we make a significant cut in 
our footprint in Europe, which we will, we still need a 
domestic BRAC.
    Now, the second criticism is: How can we do another BRAC 
round when the last one, the 2005 round, doesn't pay off until 
2018? And that's a fair question. But let me say that the 2005 
round is not the right comparison.
    Unlike the first four BRAC rounds, which paid off in a 
relatively short period of time, the 2005 round was not about 
savings and eliminating excess capacity. Carried out in a post 
9/11 environment, when the Department was at war and the 
military was growing, it was about transforming installations 
to better support the war fighter. The Army, in particular, 
used BRAC 2005 to carry out major transformational initiatives 
such as the modularization of brigade combat teams.
    To quote the Assistant Chief of Staff of Army Installation 
Management, ``the urgency of war drove the Army to leverage 
BRAC 2005 as the tool to integrate several critical 
transformational initiatives which, if implemented separately, 
might have taken decades to complete.''
    So the 2005 round is not the right comparison. Because the 
focus was on transforming, as opposed to saving, it's a poor 
gauge of the savings the Department can achieve through another 
BRAC round. The prior BRAC rounds, the 1990s rounds, which 
reduced capacity and paid off in a relatively short period of 
time, represent a better gauge of such savings.
    Finally, let me briefly address what we're doing on the 
environment and energy. We're requesting $4 billion for 
environmental programs, and my statement details our progress 
and our goals with respect to cleanup and pollution prevention. 
Separately, I describe our four-part installation energy 
strategy, which is designed to reduce our energy costs and make 
our installations more resilient in the event of disruption to 
the commercial power grid.
    Let me highlight one common theme across both energy and 
the environment in our efforts, and that is technological 
innovation. Technological innovation has been Department of 
Defense's comparative advantage for 200 years. Although we tend 
to talk about technology in the context of weapon systems and 
combat operations, it is important to harness that advantage 
for what we are trying to do with respect to both the 
environment and energy.
    Let me give you an example. A decade ago, the two 
department-wide environmental technology programs, which I 
oversee, took on a challenge, developing technologies that 
could discriminate between scrap metal and hazardous unexploded 
ordnance (UXO), in other words, telling beer cans from bombs. 
Current cleanup methods lack the ability to do that. Their 
false positive rate is 99.99 percent. As a result, contractors 
must dig up hundreds of thousands of metal objects in order to 
identify and remove just a few pieces of UXO. Because this 
process is so labor-intensive, it is very expensive, and our 
estimated bill to clean up known UXO is more than $14 billion.
    The two programs that I oversee, after 10 years of 
investment, have yielded 10 technologies that can discriminate 
between UXO and harmless metal objects with a very high degree 
of reliability. No less important, we are doing live site 
demonstrations of this technology on an accelerated basis, and 
we're working with the UXO cleanup firms and State regulators 
to get them comfortable with what is a fundamentally new 
approach to UXO cleanup, one that we think can save the 
Department billions of dollars.
    Similarly, the Department's facility energy strategy is 
attempting to exploit DOD's extraordinary strength as a 
technological innovator. To illustrate, 3 years ago, my office 
created the Installation Energy Test Bed run by the same people 
who solved the UXO problem. The rationale is similar.
    In the energy area, as in the environmental area, emerging 
technologies offer a way to significantly reduce DOD's costs 
and improve its performance. But because of fundamental market 
failures, those technologies are very slow to get to market. 
The valley of death is very deep, if you will.
    As the owner of 300,000 buildings, it is in the Defense 
Department's direct self-interest to help industry overcome the 
barriers that inhibit innovative technologies in this area in 
order to get them commercialized and deployed on DOD 
installations. We do this by using our installations as a 
distributed test bed to demonstrate and validate the 
technologies in a real-world integrated building environment. 
And I could give you lots of wonderful examples. By 
centralizing the risk and distributing the benefits of new 
technology to all DOD installations, the test bed can provide a 
significant return on DOD's investment.
    In sum, the two themes I want to hit: Competition and 
technological innovation. The management of installations and 
the related energy and environmental issues is one of the most 
business-like activities the Department of Defense carries out. 
We should be taking full advantage of market mechanism and 
competition to do that, and we should be leveraging our 
extraordinary talent for driving technological change.

                           PREPARED STATEMENT

    Thank you very much, and I look forward to your questions.
    [The statement follows:]

                Prepared Statement of Dr. Dorothy Robyn

    Chairman Johnson, Senator Kirk and distinguished members of the 
subcommittee: Thank you for the opportunity to present the President's 
fiscal year 2013 budget request for the Department of Defense programs 
to support installations, facility energy and the environment. My 
testimony covers four topics: International and domestic basing, 
including the Department's request for authorization of two new rounds 
of base realignment and closure; our management of the built 
environment, including the programs that support military construction, 
family housing, and sustainment and recapitalization; our strategy for 
managing facility energy to reduce costs and improve installation 
energy security; and our management of the natural environment, 
including the programs that support environmental conservation and 
restoration, environmental technology and compatible development.

         THE GLOBAL PICTURE: INTERNATIONAL AND DOMESTIC BASING

    To project power globally, the Department must have the right mix 
of forces and facilities at strategic locations. My office supports the 
Department's strategic security objectives by ensuring that decisions 
about basing of troops and facilities are the product of joint planning 
and rigorous analysis. We also seek to reduce our installation 
footprint wherever possible.

                 REBASING MARINES FROM OKINAWA TO GUAM

    The United States is rebalancing its global posture to reduce its 
presence in certain regions and enhance it in others. As the recent 
United States-Japan joint statement made clear, the United States and 
Japan are strongly committed to strengthening our robust security 
alliance, which is dedicated to the security of Japan and to the 
maintenance of peace and security in the Asia-Pacific region. The 
United States has conducted a strategic review of its defense posture 
in Asia in order to achieve a more geographically distributed, 
operationally resilient and politically sustainable force structure. 
Japan has welcomed this initiative.
    Based on that review, the development of Guam as a strategic hub, 
with an operational Marine Corps presence including marines relocated 
from Okinawa, remains an essential part of the Alliance's Asia-Pacific 
Strategy. The United States and Japan have begun official discussions 
to adjust our plans as set forth in the 2006 Realignment Roadmap. In 
particular, we propose to delink the movement of marines to Guam and 
the resulting land returns south of Kadena from progress by Japan on 
the Futenma Replacement Facility (FRF) near Camp Schwab. We remain 
committed to mitigating the impact of U.S. forces on Okinawa and to 
construction of the FRF as the only viable way forward. That said, we 
believe the two sides must invest in the Futenma facility in the near-
term, to ensure both safety and combat readiness.
    The President's fiscal year 2013 budget request includes $51 
million for construction to support the Marine relocation to Guam. Our 
request includes another $139.4 million for Guam civilian 
infrastructure to address population growth there, of which $106.4 
million is for Guam water and wastewater infrastructure capital 
improvements such as water treatment plant modifications, supply well 
improvements and provision of backup power at wastewater pump stations.

                      BASE REALIGNMENT AND CLOSURE

    After a decade of war the United States is at a strategic turning 
point. With changes in strategy come changes--in this case reductions--
in force structure. Simply stated, the cuts in force structure that we 
are implementing must be accompanied by cuts in supporting 
infrastructure, including military bases. Absent a process for closing 
and realigning bases, the Department will be locked in a status quo 
configuration that does not match its evolving force structure, 
doctrine and technology. Given the high cost of our infrastructure, 
moreover, if we retain bases that we do not need, we will be forced to 
cut spending on forces, training and modernization.

Overseas Basing Review
    The Department's request for additional rounds of BRAC comes at a 
time when we are looking aggressively at where we can close bases 
overseas--particularly in Europe. (Although domestic closures require 
legislative authority, overseas closures do not.)
    We have already made significant reductions in our European 
footprint. Since 2003, the Department has returned more than 100 sites 
in Europe to their respective host nations, and we have reduced our 
personnel by one-third. Between fiscal year 2012 and fiscal year 2015 
the Army alone will close 23 additional sites as previously announced.
    With the recently announced force structure changes in Europe, we 
can do more to consolidate our infrastructure with the goal of reducing 
long-term costs while still supporting our operational requirements and 
strategic commitments. First, we can reduce the number of discrete 
installation sites we maintain in Europe. We have more than 300 such 
sites--ranging from small communications posts to robust Main Operating 
Bases--of which about 200 house most of our activities. Second, we can 
eliminate excess support infrastructure such as warehouses, 
administrative space and housing. The infrastructure located off-base 
presents a particularly attractive target for consolidation. Third, we 
can take advantage of the capacity made excess by force structure 
changes to accommodate new functions.
    My office has undertaken the first step in this process: We are 
working with the EUCOM theater commander, his component commanders and 
Service leadership here in Washington to measure the capacity of all of 
our European installations. This inventory will allow us to analyze how 
much capacity can be shed and where. With the goal of long-term cost 
reduction, we will assess the costs and savings of each proposed action 
and identify those with the highest payback. We anticipate having 
preliminary options for the Secretary to review by the fall.

Domestic Basing: The Need for BRAC
    Even a significant reduction of our footprint overseas will not 
achieve the needed cuts to overall infrastructure--hence our request 
for a parallel, BRAC process. It makes sense to look at our domestic 
and overseas bases at the same time, moreover, so that the two reviews 
can inform one another. The Department took this approach in 2004-2005, 
and it would be no less useful now given the major strategic 
realignment underway. Let me briefly summarize the case for BRAC.
    First, the same strategic and fiscal factors that compel 
consolidation overseas require it here. In addition to the global 
posture shifts discussed above, we are shaping a joint force for the 
future that, while agile and technologically advanced, will be smaller 
and leaner across the board. The Army is reducing force levels by 
72,000, the Marine Corp is resizing to 182,000 Active Marines, and the 
Air Force is eliminating approximately 300 aircraft over 5 years. We 
are also delaying, restructuring and canceling modernization programs. 
To adjust to these strategic changes, and to eliminate the excess 
capacity that results from reductions in force structure, the 
Department will need to close and realign installations in the United 
States as well as Europe.
    Moreover, the overhead cost to maintain, sustain and protect bases 
is high. In recent years we have spent about $40 billion a year on 
facilities construction, sustainment and recapitalization. Other costs 
associated with operating military installations (e.g., air traffic 
control, religious services and programs; payroll support; personnel 
management; morale, welfare, and recreation services; and physical 
security) have averaged about $15 billion a year. If we retain bases 
that are excess to need, we will be forced to cut spending on forces, 
training and modernization.
    Second, the statutory commission process provided by BRAC is the 
only fair, objective and proven method for eliminating excess domestic 
infrastructure and reconfiguring what remains. BRAC provides for a 
sound, thorough and transparent analytical process, based on a 20-year 
force structure plan developed by the Joint Staff; a comprehensive 
inventory of installations by the Department to ensure a thorough 
capacity analysis; and defined selection criteria that place priority 
on military value. The requirement to look at every installation means 
DOD must consider a broad range of approaches, not just the existing 
configuration; and the transparency of the process facilitates 
independent review by the commission and affected communities. Most 
important, the requirement that the President and Congress accept or 
reject the Commission's recommendations on an ``all-or-none'' basis 
insulates BRAC from political interference.
    Third, the savings from BRAC are real and substantial. Of all the 
efficiency measures that the Department has undertaken over the years, 
BRAC is perhaps the most successful and significant. The first four 
rounds of BRAC (1988, 1991, 1993, and 1995) are producing a total of 
about $8 billion in annual recurring savings, and the comparable figure 
for BRAC 2005 is $4 billion. This amount ($12 billion) represents the 
additional costs that the Department would incur every year for base 
operating support, personnel and leasing costs had we not had BRAC. 
These annual savings, or avoided costs, are equivalent to what the 
Department would spend to buy 300 Apache attack helicopters, 124 F/A-
18E/F Super Hornets or four Virginia class submarines.
    Understandably, some have questioned the specifics of our savings 
calculations, and critics have pointed to the 2005 round as evidence 
that BRAC does not produce the hoped for savings--or at least not in a 
reasonable timeframe. I will respond to these criticisms in more detail 
tomorrow when I testify before the House Armed Services Committee's 
Subcommittee on Readiness, but let me say this here: The 2005 round 
took place during a period of growth in the military, and it reflected 
the goals and needs of that time. Because the focus was on transforming 
installations to better support forces--as opposed to saving money and 
space--it is a poor gauge of the savings that the Department can 
achieve through another BRAC round. The prior BRAC rounds--which 
reduced capacity and paid off in 2 to 3 years--represent a better gauge 
of the savings potential of future BRAC rounds.

Joint Basing
    A significant action under BRAC 2005 that my office has championed 
is the consolidation of 26 installations into 12 Joint Bases. This 
action responded to persistent internal and external criticism that 
base support was duplicative. The Department also felt that joint 
operation would enhance the military value of Service-unique 
installations, making them a DOD-wide asset.
    The creation of a Joint Base is complex. The commander must merge 
diverse, service-specific financial systems, management structures, 
operating procedures, and staffs, so as to jointly manage functions 
ranging from facilities sustainment to mail delivery to the provision 
of family support services. Considering the size of many of our 
installations, such a consolidation is equivalent to the merger of two 
corporations. As with corporate mergers, moreover, the cultural 
differences are often the hardest to bridge.
    I chair a flag-level group (the Senior Joint Base Working Group, 
SJBWG) that has met regularly for the last 3 years to oversee the 
implementation and operation of Joint Bases. The SJBWG created the 
initial framework for joint basing, including a body of policy guidance 
(Joint Base Implementation Guidance) and a collaborative governance 
structure (Joint Management Oversight Structure). Throughout the 
process, the SJBWG made key strategic decisions.
    First, to hold the lead Service accountable, the SJBWG created a 
comprehensive set of Common Output Level Standards, or COLS. Previous 
efforts to create Joint Bases had encountered strong resistance because 
of concerns by one Service that another Service would not provide 
adequate base support--i.e., that it would adopt a ``lowest-common-
denominator'' approach to installation management. To allay this fear, 
the SJBWG led an exhaustive effort to define a COLS metric for every 
relevant aspect of base support--274 COLS in all.\1\ Significantly, in 
every case the SJBWG opted for the highest standard used by any of the 
Services as the COL standard for Joint Bases. Although this ``highest-
common-denominator'' approach allayed the fears that had doomed joint 
basing in the past, it did so at a price: Installation support costs 
for the Joint Bases have gone up by 6 percent on average. However, we 
expect the savings from consolidation to offset this. Moreover, COLS 
give the Department a solid basis for estimating and budgeting for 
installation support requirements--a best practice that we hope to 
apply to all military bases.
---------------------------------------------------------------------------
    \1\ For example, one COLS metric specifies the maximum height that 
grass on an installation can reach before it must be cut. In addition 
to defining the underlying metric (grass height, measured in inches), 
the SJBWG selected the actual value (standard) for that metric to which 
the Joint Bases as a whole would be held.
---------------------------------------------------------------------------
    Second, the SJBWG opted to give the Joint Bases a transition period 
to merge their organizations before asking them to achieve a savings 
target.\2\ This represents a conscious decision by the Services to 
defer the near term savings from joint basing in order to increase the 
odds that it will succeed in the long run. It is directly analogous to 
the Department's approach to traditional BRAC actions, which often 
require an up-front investment in order to achieve the long-term 
savings.
---------------------------------------------------------------------------
    \2\ Specifically, Joint Base commanders were given leeway to adjust 
resources within their portfolios, for fear that premature staff 
reductions could compromise the design and implementation of their new 
organizational constructs. Ironically, the Joint Bases have had to 
function with a large number of civilian vacancies largely because of 
the Services' backlog of personnel actions.
---------------------------------------------------------------------------
    Joint Bases represent a fundamental change in our approach to 
installation management. Although these bases have been operating for 
only a short time, we are already beginning to see the expected 
economies of scale from consolidation. For example, by combining its 
recycling operations, Joint Base McGuire-Dix-Lakehurst is avoiding $1 
million in facility and equipment costs and $200,000 a year in contract 
costs. Less expected, however, is that our Joint Bases are proving to 
be incubators for innovation, as the commanders, faced with 
inconsistent Service rules and requirements, adopt new, cross-cutting 
business processes. For example, at Joint Base San Antonio, the 
commander standardized security procedures and created a single chain-
of-command across the three facilities that make up the installation, 
thus facilitating cooperation with State and local law enforcers.
    I have had the opportunity to meet personally with most of the 
Joint Base Commanders. They get it. They see ``jointness'' not just as 
a more efficient and effective way to support the installation missions 
on their bases but as a superior way to support the soldiers, sailors, 
airmen and marines learning to fight together. I strongly believe their 
ability to transcend traditional practices and develop innovative 
solutions to long-standing inefficiencies will position us for future, 
Department-wide reforms.

                     MANAGING OUR BUILT ENVIRONMENT

    The President's fiscal year 2013 budget requests $11.2 billion for 
Military Construction (MILCON) and Family Housing--a decrease of 
approximately $3.5 billion from the fiscal year 2012 budget request. 
This decrease primarily reflects the declining budget environment and 
the Services' decision to defer facility investments at locations that 
may be impacted by changes in force structure.

            TABLE 1.--MILCON AND FAMILY HOUSING BUDGET REQUEST, FISCAL YEAR 2012 VS. FISCAL YEAR 2013
                                              [Dollars in millions]
----------------------------------------------------------------------------------------------------------------
                                                                                  Change from fiscal year 2012
                                                  Fiscal year     Fiscal year  ---------------------------------
                                                 2012 request    2013 request       Funding          Percent
----------------------------------------------------------------------------------------------------------------
Military Construction.........................        12,006.4         8,540.6        (3,465.8)             (29)
Base Realignment and Closure..................           582.3           476.0          (106.3)             (18)
Family Housing................................         1,694.4         1,650.7           (43.7)              (3)
Chemical Demilitarization.....................            75.3           151.0            75.7              100
Energy Conservation Investment Program........           135.0           150.0            15.0               11
NATO Security Investment Program..............           272.6           254.1           (18.5)              (7)
                                               -----------------------------------------------------------------
      Total...................................        14,767.0        11,222.7        (3,544.3)             (24)
----------------------------------------------------------------------------------------------------------------

                         MILITARY CONSTRUCTION

    We are requesting $8.5 billion for ``pure'' military construction--
i.e., exclusive of BRAC and Family Housing. This addresses routine 
needs for construction at enduring installations here and overseas and 
for specific programs such as the NATO Security Investment Program and 
the Energy Conservation Investment Program. In addition, we are 
targeting three priorities.
    First and foremost are the operational missions. Our fiscal year 
2013 budget requests $3.5 billion to support operations and training 
requirements, including a second Explosives Handling Wharf at Kitsap, 
Washington; communications facilities in California and Japan that are 
needed for operations in the Pacific region; specialized facilities for 
Special Operations forces at various global locations; and range and 
training facilities for ground forces at several Army installations.
    Second, our budget request continues the recapitalization of DOD-
owned schools as part of the 21st Century Schools Initiative. We are 
requesting $547 million to replace or renovate 11 schools that are in 
poor or failing condition, primarily at enduring locations overseas. By 
the end of fiscal year 2018, more than 70 percent of the DOD-owned 
schools will have been replaced or undergone substantial renovation. 
The new buildings, intended to be models of sustainability, will 
provide a modern teaching environment for the children of our military 
members.
    Although it is not part of the military construction budget, the 
fiscal year 2013 budget also requests $51 million to construct, 
renovate, repair or expand schools that, while located on military 
installations, are operated by Local Education Agencies (LEA). This 
request represents a third year of funding for LEA schools (Congress 
set aside $250 million for LEA schools in fiscal year 2011 and again in 
fiscal year 2012, in response to concerns about poor conditions and 
overcapacity). The request is part of DOD's proposed budget for the 
Office of Economic Adjustment (OEA), which Congress designated to 
execute the LEA school funding it provided. OEA is working with other 
parts of the Department and giving priority to those schools with the 
most serious deficiencies.
    Third, the fiscal year 2013 budget request includes $1 billion for 
21 projects to upgrade our medical infrastructure. By modernizing our 
hospitals and related facilities, we can improve healthcare delivery 
for our servicemembers and their families, and enhance our efforts to 
recruit and retain personnel. The fiscal year 2013 request provides the 
next increment of funding to replace the William Beaumont Army Regional 
Medical Center in Texas ($207 million) and the Landstuhl Regional 
Medical Center in Germany ($127 million). It also provides for 
continued improvement of the medical research facilities that support 
our chemical-biological mission.

                    FAMILY AND UNACCOMPANIED HOUSING

    The Services rely largely on privatization to provide family 
housing on U.S. bases. As I have said many times, privatization of 
family housing--where the Services partner with the private sector to 
generate housing built to market standards--is the single most 
effective reform my office has carried out. Prior to privatization, the 
Services' chronic underinvestment in their facilities had created a 
crisis, with almost 200,000 of the Department's family housing units 
rated ``inadequate.'' Privatization leveraged the power of the 
commercial market to serve our needs. With an investment of 
approximately $3.6 billion, the Services have generated $29.7 billion 
in construction to build new and renovate existing family housing 
units. The Services also transferred responsibility for maintenance, 
operation and recapitalization for 50 years to (private) entities that 
have an incentive to maintain the housing so as to attract and retain 
military tenants. My office works closely with the Office of Management 
and Budget to ensure that the relevant Federal budget policy continues 
to support this much-heralded success story.

                 TABLE 2.--FAMILY HOUSING BUDGET REQUEST, FISCAL YEAR 2012 VS. FISCAL YEAR 2013
                                              [Dollars in millions]
----------------------------------------------------------------------------------------------------------------
                                                                                   Change from fiscal year 2012
                                                    Fiscal year     Fiscal year  -------------------------------
                                                   2012 request    2013 request       Funding         Percent
----------------------------------------------------------------------------------------------------------------
Family Housing Construction/Improvements........           372.7           190.6          -182.1             -49
Family Housing Operations & Maintenance.........         1,318.2         1,458.3          +140.1             +11
Family Housing Improvement Fund.................             2.2             1.8            -0.4             -18
Homeowners Assistance Program...................             1.3  ..............            -1.3            -100
                                                 ---------------------------------------------------------------
      Total.....................................         1,694.4         1,650.7           -43.7              -3
----------------------------------------------------------------------------------------------------------------

    Most of the remaining Government-owned family housing is on 
(enduring) bases overseas. The fiscal year 2013 budget requests $1.7 
billion for government-owned family housing. This allows us to maintain 
90 percent of non-Navy, Government-owned family housing in good or fair 
condition in keeping with the goal we will meet this year; the Navy-
owned family housing will not achieve this goal until fiscal year 2017. 
The request includes $191 million for construction and improvements of 
Government-owned family housing and $1.4 billion to operate and 
maintain it.
    The Department is committed to improving housing for our 
unaccompanied personnel as well. In recent years, we have made sizable 
investments in this area to support initiatives such as BRAC, global 
restationing, force structure modernization and Homeport Ashore--a Navy 
program to move Sailors from their ships to shore-based housing. The 
fiscal year 2013 budget request includes $1.1 billion for 28 
construction and renovation projects that will improve living 
conditions for more than 10,000 unaccompanied personnel. We are also 
focusing on long-term sustainment of the modernized inventory. My 
office has worked closely with the Comptroller to establish performance 
goals for sustaining our permanent party unaccompanied housing. Under 
these standards, 90 percent of the non-Navy Government-owned housing 
for unaccompanied personnel must be in good or fair condition by fiscal 
year 2018; the Navy will not achieve that benchmark until fiscal year 
2022.

              FACILITIES SUSTAINMENT AND RECAPITALIZATION

    In addition to investing in new construction, we must maintain, 
repair, and recapitalize our existing facilities. The Department's 
Sustainment and Recapitalization programs strive to keep our inventory 
of facilities mission capable and in good working order. Moreover, by 
maintaining a consistent level of quality in our facilities, we can 
improve the productivity and quality of life of our personnel.

        TABLE 3.--SUSTAINMENT AND RECAPITALIZATION BUDGET REQUEST, FISCAL YEAR 2012 VS. FISCAL YEAR 2013
                                              [Dollars in millions]
----------------------------------------------------------------------------------------------------------------
                                                                                   Change from fiscal year 2012
                                                    Fiscal year     Fiscal year  -------------------------------
                                                   2012 request    2013 request       Funding         Percent
----------------------------------------------------------------------------------------------------------------
Sustainment (O&M & MilPers).....................           8,835           8,674           (161)             (2)
Recapitalization (O&M, MilCon, MilPers, RDT&E)..           9,031           5,331         (3,700)            (41)
      Total.....................................          17,866          14,005         (3,861)            (22)
----------------------------------------------------------------------------------------------------------------

    The fiscal year 2013 budget request includes $8.7 billion for 
sustainment, which is the single most important investment we make to 
keep our facilities in good working condition. Sustainment includes 
regularly scheduled maintenance and repair and replacement of facility 
components.
    Our policy calls for the Services to fund sustainment at no less 
than 90 percent of the requirement generated by DOD's Facilities 
Sustainment Model, which uses industry benchmarks to estimate the 
annual cost of regularly scheduled maintenance and repair for different 
types of facilities. Nevertheless, for fiscal year 2013, as was the 
case in fiscal year 2012, the Navy and Air Force are funding 
sustainment at only 80 and 82 percent of their requirement, 
respectively. Thus, our budget request funds sustainment DOD-wide at 
only 84 percent of the FSM-generated estimate.
    The fiscal year 2013 budget requests $5.3 billion for 
recapitalization, a reduction of $2.5 billion from last year. 
Recapitalization (restoration and modernization) serves to keep the 
inventory of facilities modern and relevant, extend the service life of 
individual facilities and restore capability lost due to man-made or 
natural causes. The reduction in recapitalization funding reflects an 
overall decrease in both O&M- and MilCon-funded replacement and 
renovation projects.
    A final category of investment (one not shown in the table) is 
demolition, which allows the Services to eliminate facilities that are 
excess to need or no longer cost effective to repair. Our fiscal year 
2013 budget request includes $123 million in operations and maintenance 
funding, which will allow us to demolish 5 million square feet of 
facilities. With this funding, we will reach our formal goal, 
established in fiscal year 08, to eliminate over 62 million square feet 
by fiscal year 2013. We are also working with the Services to identify 
facilities that could be repurposed--for example, the use of barracks 
as administrative space.

                  ONGOING INITIATIVES TO REDUCE COSTS

    Finally, I would like to mention three ongoing initiatives designed 
to improve the Department's management of the built environment. The 
first initiative has to do with the Department's anti-terrorism/force 
protection (AT) standards, which impose certain minimum requirements on 
all buildings and add as much as 9 percent to the cost of leased space 
and new construction. The rest of the Federal Government uses a 
somewhat different approach, based on the Interagency Security 
Committee (ISC) standards, which were developed by a 21-agency group 
led by the Department of Homeland Security and issued in updated form 
in April 2010. The ISC standards reflect the risk to an individual 
building, including its size, location, mission criticality and 
symbolism.
    To evaluate the two approaches, my office looked first at leased 
space. Working closely with the General Services Administration (GSA), 
which is responsible for incorporating AT standards into its leases, we 
commissioned an expert analysis that compared the scope, cost and 
effectiveness of the DOD standards versus the ISC standards for six DOD 
leases in the National Capital Region. Based on that expert analysis, 
an internal DOD working group, led by the Office of the Under Secretary 
of Policy and the Joint Staff, is evaluating the merits of adopting the 
ISC process for leased space. Once the Department has made a decision 
on whether to alter DOD's AT standards with respect to leased space, we 
will pose the same question for on-base buildings.
    Second, my office is looking at how to promote innovation and 
efficiency in the construction industry--in particular, military 
construction. The U.S. construction industry is plagued by high costs 
and low productivity growth as a result of low investment in research 
and development, a fragmented industry structure and other factors. 
Moreover, some data suggest that the Federal Government's construction 
costs are higher than those of the private sector for comparable 
facilities. Finally, the contractual incentives for Federal 
construction projects lead to a focus on reducing ``first costs''--the 
cost of constructing a building--as opposed to the much larger costs 
associated with building ownership and operations (life cycle costs).
    We are working with the GSA to identify ways that the two largest 
Federal customers for construction (DOD and GSA) can incentivize 
behavior on the part of construction firms that will lead to more 
innovation and lower costs, including life cycle costs. Two areas offer 
promise. We are looking at accelerating requirements for the use of new 
technologies, such as building information modeling (BIM), which can 
improve the efficiency and reduce the cost of the construction process 
as well as and lead to lower life cycle costs for the buildings 
themselves. In addition, we are looking at alternative contracting 
methods, such as ones that reward contractors based on how well they 
meet the owner's objectives (e.g., optimal energy efficiency).
    Third, we are analyzing the effect that investments in energy 
efficiency and sustainability have on the long-term cost of owning and 
operating our buildings. Building on past studies, we are working with 
the National Research Council to understand the impact of the 
requirement that DOD facilities be built to certain sustainability 
standards--namely, LEED (Leadership in Energy and Environmental Design) 
Silver or an equivalent standard and/or the five principles of High 
Performance Sustainable Buildings, as well as consensus based standards 
such as the American Society of Heating, Refrigeration and Air 
Conditioning Engineers (ASHRAE) 189.1. The study will help us invest 
smartly in our buildings to reduce the total cost of ownership while 
increasing mission effectiveness.\3\
---------------------------------------------------------------------------
    \3\ The study will also meet the requirement to report to Congress 
on the return on investment from using consensus standards such as 
ASHRAE 189.1.
---------------------------------------------------------------------------
                        MANAGING OUR ENERGY USE

    Facility energy is important to the Department for two reasons.\4\ 
The first is cost. With more than 300,000 buildings and 2.2 billion 
square feet of building space, DOD has a footprint three times that of 
Wal-Mart and six times that of GSA. Our corresponding energy bill is $4 
billion annually--roughly 10 percent of what DOD spends to maintain its 
installation infrastructure. There are non-monetary costs as well: 
Although facility energy represents only 20-25 percent of DOD's energy 
costs, it accounts for nearly 40 percent of our greenhouse gas 
emissions.
---------------------------------------------------------------------------
    \4\ Facility energy refers to the energy (largely electricity) used 
to operate the buildings on DOD's 500+ fixed military installations in 
the United States and overseas. It also includes the fuel used by DOD's 
approximately 200,000 non-tactical vehicles. Facility energy is 
distinct from operational energy--largely fuel used for mobility 
(military aircraft, ships and tanks) and by the generators that produce 
power on our forward operating bases.
---------------------------------------------------------------------------
    Second, facility energy is key to mission assurance. Our military 
installations here at home support combat operations more directly than 
ever before, and they serve as staging platforms for humanitarian and 
homeland defense missions. DOD installations are almost entirely 
dependent on a commercial power grid that is vulnerable to disruption 
due to aging infrastructure, weather related events and (potentially) 
direct attacks. According to the Defense Science Board, DOD's reliance 
on a fragile grid to deliver electricity to its bases places critical 
missions at risk.\5\
---------------------------------------------------------------------------
    \5\ ``More Fight-Less Fuel,'' Report of the Defense Science Board 
Task Force on DOD Energy Strategy, February 2008.
---------------------------------------------------------------------------
    The Department's facility energy strategy is designed to reduce 
costs and improve the energy security of our fixed installations. It 
has four elements: Reduce the demand for traditional energy through 
conservation and improved energy efficiency; expand the supply of 
renewable and other distributed (on-site) generation sources; enhance 
the energy security of our installations directly (as well as 
indirectly, through the first two elements); and leverage advanced 
technology.

Reduce Demand
    First and most important, we are reducing the demand for 
traditional forms of energy through conservation and improved energy 
efficiency. The Department's fiscal year 2013 budget includes more than 
$1.1 billion for energy conservation investments--up from $400 million 
in 2010. Almost all of that funding is designated for energy efficiency 
improvements to existing buildings.\6\
---------------------------------------------------------------------------
    \6\ Of the $1.1 billion, $968 million is in the Military 
Components' operations and maintenance accounts, to be used for 
sustainment and recapitalization projects aimed at energy efficiency, 
including improved lighting, high-efficiency HVAC systems, double-pane 
windows, energy management control systems and new roofs. Another $150 
million is for the Energy Conservation Investment Program (ECIP), a 
MilCon fund that my office distributes to the Services for specific 
projects (see discussion below). Only about $35 million of ECIP's 
budget will go for investments in distributed and renewable energy as 
opposed to energy efficiency and water conservation.
---------------------------------------------------------------------------
    In addition to their own funding, the Services are using third-
party financing tools, such as Energy Savings Performance Contracts 
(ESPCs) and Utility Energy Service Contracts (UESCs), to improve the 
energy efficiency of their existing buildings. In response to the 
President's memo calling on the Federal Government to initiate $2 
billion worth of these performance-based contracts over the next 2 
years, the Department has as its own goal to execute roughly $465 
million in ESPCs and UESCs in fiscal year 2012 and $718 million in 
fiscal year 2013.
    In addition to retrofitting existing buildings, we are taking 
advantage of new construction to incorporate more energy-efficient 
designs, material and equipment into our inventory. Currently, all new 
construction projects must meet the LEED Silver or an equivalent 
standard and/or comply with the five principles of High Performance 
Sustainable Buildings. This year my office will issue a new 
construction code for high-performance, sustainable buildings, which 
will govern all new construction, major renovations and leased space 
acquisition. This new code, which will draw on ASHRAE 189.1, will 
accelerate DOD's move toward efficient, sustainable facilities that 
cost less to own and operate, leave a smaller environmental footprint 
and improve employee productivity.
    As DOD strives to improve its energy efficiency, accurate, real-
time facility energy information is becoming essential. Although we 
collect a massive amount of data, we lack the standardized processes 
and integrated systems needed to systematically track, analyze and 
benchmark our facility energy and water use and the related costs. The 
absence of usage and cost data reduces the efficiency of our existing 
facility operations, and it limits our ability to make the right 
investments in new, efficiency-enhancing technology and tools.
    To fill this gap, my office has been leading the development of an 
Enterprise Energy Information Management system (EEIM) that will 
collect facility energy data in a systematic way. The EEIM will also 
provide advanced analytical tools that allow energy professionals at 
all levels of the Department both to improve existing operations and to 
identify cost-effective investments.
    I will also be issuing an updated policy on the metering of DOD 
facilities; in addition to lowering the threshold for buildings that 
must be metered, the policy will address the types of meters that can 
be used and establish guidelines for determining when advanced meters 
make financial sense. No less important, the policy will help ensure 
that installed meters can securely deliver data to the energy 
professionals in the field. As an example, Naval District Washington 
has developed an innovative approach that uses a secure network to 
integrate data on energy usage with information on building management 
so as to allow for active management of facility energy. We would like 
to see this approach or one like it deployed throughout the Department.

Expand Supply of On-Site Energy
    Second, DOD is increasing the supply of renewable and other 
distributed (on-site) sources of energy on our installations. On-site 
energy is critical to making our bases more energy secure. Together 
with the kind of smart microgrid and storage technologies discussed 
below, it allows a military base to maintain its critical operations 
``off-grid'' for weeks or months if necessary.
    DOD's installations are well situated to support solar, wind, 
geothermal and other forms of distributed energy. In response to a 
congressional directive, my office commissioned a study of the 
potential for solar energy development on military installations in the 
Mojave and Colorado Deserts in California and Nevada. The year-long 
study looked at seven military bases in California and two in Nevada. 
It found that, even though 96 percent of the surface area of the nine 
bases was unsuited for solar development because of military 
activities, the presence of endangered species and other factors, the 
solar-compatible area on four of the California bases was nevertheless 
large enough to support the generation of 7000 megawatts (MW) of solar 
energy--equivalent to the output of seven nuclear power plants.\7\
---------------------------------------------------------------------------
    \7\ ICF International, Solar Energy Development on Department of 
Defense Installations in the Mojave and Colorado Deserts (January 
2012). http://www.serdp.org/News-and-Events/News-
Announcements/Program-News/DOD-study-finds-7-000-megawatts-of-solar-
energy-potential-on-DOD-installations-in-Mojave-Desert
---------------------------------------------------------------------------
    The study also confirmed the logic of the approach the Department 
is already taking for large-scale renewable energy projects--namely, 
third-party financing. (Third-party financing makes sense because 
private developers can take advantage of tax incentives that are not 
available to Federal agencies.) In September, the Army established its 
Energy Initiatives Task Force to work with the private sector to 
execute 10+ MW projects at Army installations. The Army hopes to 
develop around one gigawatt of renewable energy on its installations by 
2025, and it has projects underway at Fort Bliss, TX, and White Sands 
Missile Range, NM. The Navy has used the Title 10 authority in Section 
2922a to contract for renewable energy development in California, 
including a 3 MW landfill gas facility at Marine Corps Air Station 
Miramar, a 14 MW solar photovoltaic (PV) array at Naval Air Weapons 
Station China Lake, and a 1 MW solar PV array at Marine Corps Air 
Ground Combat Center Twentynine Palms. The Air Force is using the title 
10 authority in Section 2667 to lease non-excess land for the 
development of large-scale renewable projects, the first of which is 
under negotiation at Edwards Air Force Base.
    My office is working closely with the Department of Interior (DOI) 
to identify and overcome impediments to the execution of renewable 
energy projects on public lands withdrawn for military purposes (many 
of the sites identified in the ICF study are on ``withdrawn land''). 
Where renewable energy development is compatible with the military 
mission, these lands offer a significant opportunity to improve our 
energy security while lowering the cost of energy. However, we must 
first overcome the policy and authority challenges posed by this unique 
construct whereby DOD uses and manages land under the administrative 
jurisdiction of DOI.

Enhance Security
    The first two elements of our facility energy strategy contribute 
indirectly to installation energy security; in addition, we are 
addressing the problem directly. A major focus of my office is smart 
microgrid technology. Smart microgrids and energy storage offer a more 
robust and cost effective approach to ensuring installation energy 
security than the current one--namely, back-up generators and (limited) 
supplies of on-site fuel. Although microgrid systems are in use today, 
they are relatively unsophisticated, with limited ability to integrate 
renewable and other distributed energy sources, little or no energy 
storage capability, uncontrolled load demands and ``dumb'' distribution 
that is subject to excessive losses. By contrast, we envision 
microgrids as local power networks that can utilize distributed energy, 
manage local energy supply and demand, and operate seamlessly both in 
parallel to the grid and in ``island'' mode.
    Advanced microgrids are a ``triple play'' for DOD's installations. 
Such systems will reduce installation energy costs on a day-to-day 
basis by allowing for load balancing and demand response. They will 
also facilitate the incorporation of renewable and other on-site energy 
generation. Most important, the combination of on-site energy and 
storage, together with the microgrid's ability to manage local energy 
supply and demand, will allow an installation to shed non-essential 
loads and maintain mission-critical loads if the grid goes down.
    The Installation Energy Test Bed, discussed below, has funded 10 
demonstrations of microgrid and storage technologies to evaluate the 
benefits and risks of alternative approaches and configurations. 
Demonstrations are underway at Twentynine Palms, California; Fort 
Bliss, Texas; Joint Base McGuire-Dix-Lakehurst, New Jersey; Fort Sill, 
Oklahoma; and several other installations.
    Although microgrids will address the grid security problem over 
time, we are taking steps to address near-term concerns. Together with 
the Assistant Secretary of Defense for Homeland Defense and Americas' 
Security Affairs, I co-chair DOD's Electric Grid Security Executive 
Council (EGSEC), which works to improve the security, adequacy and 
reliability of electricity supplies and related infrastructure key to 
the continuity of critical defense missions. In addition to working 
across DOD, the EGSEC works with the Departments of Energy and Homeland 
Security. The three agencies recently created an Energy Surety Public 
Private Partnership (ES3P) to work with the private sector. As an 
initial focus, the ES3P is collaborating with four utilities in the 
National Capital Region to improve energy security at mission critical 
facilities.
    Finally, my office is updating the DOD Instruction on 
``Installation Energy Management'' (DODI 4170.11), which provides 
guidance to installation commanders and energy managers on a range of 
energy security and energy efficiency matters. For example, we are 
updating the requirements for fuel distribution plans to ensure that 
emergency generators can operate for a sufficient time.

Leverage Advanced Technology
    As the discussion of microgrids illustrates, one of the ways DOD 
can lower its energy costs and improve its energy security is by 
leveraging advanced technology. Technology has been DOD's comparative 
advantage for 200 years, as evidenced by the military's leadership in 
the development of everything from interchangeable machine made parts 
for musket production to the Internet. This advantage is no less 
important when it comes to facility energy.
    To leverage advanced technology relevant to facility energy, 3 
years ago my office created the Installation Energy Test Bed, as part 
of the existing Environmental Security Technology Certification Program 
(ESTCP). The rationale is straightforward. Emerging technologies offer 
a way to cost effectively reduce DOD's facility energy demand by a 
dramatic amount (50 percent in existing buildings and 70 percent in new 
construction) and provide distributed generation to improve energy 
security. Absent outside validation, however, these new technologies 
will not be widely deployed in time for us to meet our energy 
requirements. Among other problems, the first user bears significant 
costs but gets the same return as followers. These barriers are 
particularly problematic for new technologies intended to improve 
energy efficiency in the retrofit market, which is where DOD has the 
greatest interest.
    As the owner of 300,000 buildings, it is in DOD's direct self-
interest to help firms overcome the barriers that inhibit innovative 
technologies from being commercialized and/or deployed on DOD 
installations. We do this by using our installations as a distributed 
test bed to demonstrate and validate the technologies in a real-world, 
integrated building environment.\8\ Projects conduct operational 
testing and assessment of the life cycle costs of new technology while 
addressing DOD unique security issues. For example, the Test Bed is 
doing a demonstration of an advanced control system that could increase 
boiler efficiency by 10 percent; if the technology proves out, DOD can 
deploy it on thousands of boilers and see a meaningful energy savings. 
More generally, by centralizing the risk and distributing the benefits 
of new technology to all DOD installations, the Test Bed can provide a 
significant return on DOD's investment.
---------------------------------------------------------------------------
    \8\ The approach is similar to one that ESTCP has used since 1995 
to demonstrate innovative environmental technologies on DOD sites and 
in doing so help them transition to the commercial market. As discussed 
in section IV below, ESTCP has a strong track record of reducing DOD's 
environmental costs.
---------------------------------------------------------------------------
    The Test Bed has about 70 projects underway in five broad areas: 
Advanced microgrid and storage technologies, such as the project at 
Twentynine Palms; advanced component technologies to improve building 
energy efficiency, such as advanced lighting controls, high performance 
cooling systems and technologies for waste heat recovery; advanced 
building energy management and control technologies; tools and 
processes for design, assessment and decisionmaking on energy use and 
management; and on-site energy generation, including waste-to-energy 
and building integrated systems. (See the next section for additional 
detail.)

Progress on Goals
    In 2011, the Department made progress in its performance with 
respect to facility energy and water although it fell short of its 
statutory and regulatory goals for energy.
  --DOD reduced its energy intensity by 2 percent--a meaningful 
        improvement but less than the 3 percent needed to meet the 
        annual goal. Overall, DOD has reduced its energy intensity by 
        13.3 percent since 2005, compared to the cumulative goal of 18 
        percent.
  --With respect to the renewable energy goal (produce or procure 25 
        percent of all electricity from renewable sources by 2025), DOD 
        lost ground, going from 9.6 percent to 8.5 percent. The drop 
        was partly the result of a policy decision to buy fewer 
        Renewable Energy Credits.\9\ It also reflected a decline in the 
        output of the 270 MW geothermal facility at China Lake.
---------------------------------------------------------------------------
    \9\ The purchase of renewable energy credits (RECs) is an 
alternative to the actual development of renewable energy; DOD has 
decided to meet the goals by adding supply on its installations as 
opposed to buying RECs.
---------------------------------------------------------------------------
  --DOD continued to reduce its consumption of petroleum, reaching a 
        cumulative reduction of 11.8 percent since 2005--just shy of 
        the 12 percent goal.
  --DOD reduced its potable water intensity (measured as consumption 
        per gross square foot) by 10.7 percent from 2007 to 2011--well 
        above the goal of 8 percent.

                    FISCAL YEAR 2013 BUDGET REQUEST

    The President's fiscal year 2013 budget request includes funding 
for the ESTCP Installation Energy Test Bed as well as the Energy 
Conservation Investment Program (ECIP).

                      INSTALLATION ENERGY TEST BED

    The budget request includes $32 million in fiscal year 2013 for 
energy technology demonstrations under ESTCP.\10\ ESTCP began these 
demonstrations--now known as the Installation Energy Test Bed--as a $20 
million pilot in 2009. Seeing its value, the Department continued to 
fund the Test Bed on an annual basis the $30 million level. Starting 
this year, we have funded the test bed, as an RDT&E line, across the 
FYDP. Although a modest investment, the Test Bed is a high leverage 
program that the Department believes will produce major savings.
---------------------------------------------------------------------------
    \10\ As discussed in section IV, we are also requesting $43.9 
million for ESTCP for environmental technology demonstrations. These 
two demonstration programs appear as separate lines under ESTCP in the 
fiscal year 2013 budget.
---------------------------------------------------------------------------
    ESTCP awards funds based on rigorous competition. The process 
begins with a solicitation to firms and others to identify emerging 
technologies that would meet installation needs. The response has been 
huge: The 2012 solicitation drew 600 proposals from leading companies 
in the building energy sector, small startups with venture capital 
funding and the major DOE labs. The proposals are reviewed by teams 
made up of technical experts from inside and outside of DOD along with 
Service representatives familiar with the installations' needs; winning 
proposals are matched up with a Service and an installation at which to 
demonstrate the technology. ESTCP has funded about 70 projects, and the 
fiscal year 2010 projects will begin reporting results this year.
    The timing for an Energy Test Bed is ideal--one reason the response 
from industry has been so strong. The Federal Government has invested 
significant resources in energy R&D, largely through DOE, and the 
private sector is making even larger investments as evidenced by the 
growth of venture capital backing for ``cleantech.'' As a structured 
demonstration program linked to the large DOD market, the Test Bed can 
leverage these resources for the military's benefit.

                 ENERGY CONSERVATION INVESTMENT PROGRAM

    The fiscal year 2013 budget requests $150 million for ECIP, $15 
million above the fiscal year 2012 appropriation. ECIP has a long 
history of producing savings for the Services, and we have reoriented 
the program to give it even greater leverage.
    ECIP traditionally has funded small projects that promised a 
significant payback in reduced energy costs, and the Services relied 
heavily on it to achieve their energy goals. In keeping with DOD's 
focus on energy, last year we began to reshape the role that ECIP 
plays--from one of funding the Services' routine energy projects to one 
of leveraging their now-larger investments in ways that will produce 
game-changing improvements in energy consumption, costs or security. 
Two other changes are worth noting. To encourage long-term planning, we 
are requiring the Services to build a 5-year program of projects that 
they want to get funded through ECIP. To encourage them to put forward 
their best ideas, we are replacing formula-funding with competition. In 
fiscal year 2013, we incorporated competition but guaranteed each 
service a minimum level of funding. Beginning in fiscal year 2014, we 
will award the funds based purely on competitive merit.

                        ENVIRONMENTAL MANAGEMENT

    The Department has long made it a priority to protect the 
environment on our installations, not only to preserve irreplaceable 
resources for future generations, but to ensure that we have the land, 
water and airspace we need for military readiness. Over the last 10 
years, the Department has invested more than $40 billion in its 
environmental programs, and our steady level of expenditure has 
produced quality results. In the President's fiscal year 2013 budget, 
we are requesting $3.97 billion to continue the legacy of excellence in 
our environmental programs. While this is below the fiscal year 2012 
request, the reduction reflects management efficiencies and improved 
technology rather than any decline in effort.

                   ENVIRONMENTAL PROGRAM BUDGET REQUEST, FISCAL YEAR 2013 VS. FISCAL YEAR 2012
                                              [Dollars in millions]
----------------------------------------------------------------------------------------------------------------
                                                                                   Change from fiscal year 2012
                                                    Fiscal year     Fiscal year  -------------------------------
                                                   2012 request    2013 request       Funding         Percent
----------------------------------------------------------------------------------------------------------------
Environmental Restoration.......................           1,467           1,424             -43            -2.9
Environmental Compliance........................           1,552           1,449            -103            -6.6
Environmental Conservation......................             380             378              -2            -0.3
Pollution Prevention............................             104             111            +6.4            +6.1
Environmental Technology........................             227             220            -6.9            -3.0
Legacy BRAC Environmental.......................             394             318           -75.6           -19.2
BRAC 2005 Environmental.........................             127              73           -54.2           -42.7
                                                 ---------------------------------------------------------------
      Total.....................................           4,250           3,974            -277            -6.5
----------------------------------------------------------------------------------------------------------------

                       ENVIRONMENTAL CONSERVATION

    In order to maintain access to the land, water and airspace needed 
to support our mission needs, the Department continues to manage 
successfully the many threatened and endangered species found on our 
lands. (Military installations are home to more than 400 threatened and 
endangered species, about 40 of which are found only on our 
installations.) DOD develops and implements detailed Installation 
Integrated Natural Resource Management Plans (INRMPs) in coordination 
with the U.S. Fish & Wildlife Service (USFWS) and its State 
counterparts. These plans help us avoid critical habitat designations--
thereby maintaining our flexibility to carry out mission activities--
while providing equal or greater protection for endangered species.
    To preserve mission readiness while complying with the Endangered 
Species Act, we must prepare for new requirements. The USFWS is 
required to evaluate 251 ``candidate'' species for potential listing on 
the Federal Endangered Species List by 2017. The Services have 
identified some 60 of these as species sufficiently present on our 
bases that a listing could impact mission activities. We are 
establishing a partnership with USFWS to share management and 
scientific data and discuss natural resource management actions that 
can benefit these species. We are also working with the Services to 
ensure they are actively managing the candidate species that pose the 
greatest risk to mission, including making the appropriate changes to 
their INRMPs.
    In addition to natural resources, the Department is responsible for 
thousands of archaeological sites, historic buildings and other 
cultural resources. DOD owns or manages the nation's largest inventory 
of Federal historic properties and continues to use many of these 
historic properties to meet mission requirements. Use of these 
properties allows DOD to retain significant cultural resources for 
future generations. In addition, many older buildings have features 
that are now considered ``green,'' such as high ceilings to encourage 
air circulation, large windows to provide maximum natural light and 
operational shutters to reduce heat gain.
    The Department is requesting $378 million in fiscal year 2013 for 
environmental conservation, which includes $213 million in recurring 
funds for ongoing activities and $165 million in non-recurring funds 
for one-time projects directed at threatened and endangered species, 
wetland protection, or other natural, cultural and historical 
resources.

                       ENVIRONMENTAL RESTORATION

    The Defense Environmental Restoration Program provides funds for 
two types of environmental cleanup. The Installation Restoration 
Program (IRP) manages the cleanup of hazardous substances, pollutants 
and contaminants--things that cause human health concerns. The Military 
Munitions Response Program (MMRP) manages the cleanup of unexploded 
ordnance and discarded military munitions--things that may explode. The 
cleanup occurs at three types of locations: Active military bases, 
bases closed through the BRAC process, and other Formerly Used Defense 
Sites (FUDS).
    By the end of 2011, the Department, in cooperation with State 
agencies and the U.S. Environmental Protection Agency, completed 
cleanup activities on 78 percent of IRP sites and is now monitoring the 
results. For MMRP sites, the comparable figure is 40 percent. The 
Department determines the order of cleanup for both IRP and MMRP sites 
on the basis of risk: By cleaning up the ``worst first,'' we reduce our 
long-term liability and expedite the return of properties to productive 
reuse.
    Our cleanup program is mature enough that we can begin to envision 
completion. We are approaching 2014, by which time we have committed to 
have a remedy in place (RIP) or response complete (RC) for every 
cleanup site. In anticipation of reaching that milestone, we are 
developing the next major goal for our environmental cleanup program. 
We have established as goals to achieve RC at 90 percent of our active 
installations in 2018 and at 95 percent in 2021. The sites that remain 
will be the most complex ones, and we will need to conduct another 
review of the cleanup program when we reach that point.
    We are requesting $1.8 billion for fiscal year 2013 to clean up IRP 
and MMRP sites. This includes $1.42 billion for ``Environmental 
Restoration,'' which encompasses active installations and FUDS sites, 
$318 million for ``Legacy BRAC Environmental'' and $73 million for 
``BRAC 2005 Environmental.'' While these figures represent reductions 
from fiscal year 2012, we have not reduced our commitment to the 
program, as evidenced by our ambitious goals for achieving 95 percent 
RC over the next decade. Rather, the cut to Environmental Restoration 
is attributable to program reforms and reorganized oversight of the 
FUDS program by the Corps of Engineers. In addition, we have 
temporarily reduced investments in the MMRP portion of our program, 
anticipating validation of a major new cleanup approach able to detect 
and characterize unexploded ordinance (see the discussion below). We 
expect the MMRP request to increase once the new technology is 
validated and put into wider use. Finally, the BRAC investments are 
decreasing because we are making progress completing the much smaller 
number of BRAC sites.

                          POLLUTION PREVENTION

    For fiscal year 2013, the DOD is requesting $110 million for 
pollution prevention efforts. DOD's approach to pollution prevention 
has many elements: Recycling, reducing the use of hazardous materials 
and developing safer alternatives to them, eliminating the use of 
ozone-depleting substances, purchasing environmentally preferable 
products, and ensuring that DOD activities do not adversely impact the 
nation's air, water and land resources.
    DOD is working to incorporate sustainable practices into 
acquisition and maintenance operations of military systems and into the 
day-to-day operations of our installations. By designing systems or 
practices such that waste (hazardous or non-hazardous) is minimized or 
eliminated, we reduce the overall cost of operations over the long 
term. For operational systems that are well past the design phase, the 
pollution prevention program funds initiatives that will, for example, 
change maintenance practices or find alternatives for toxic substances 
used to prevent corrosion.
    With its limited budget, DOD's pollution prevention program has 
emphasized cost-effective investments that lower lifecycle costs and 
improve efficiency. These investments continue to pay dividends. In 
fiscal year 2011, the Department diverted 4.1 million tons or 64 
percent of our solid waste from landfills, avoiding approximately $148 
million in landfill disposal costs. We generated over 4 million tons of 
construction and demolition debris, diverting more than 77 percent of 
that debris to reuse and recycle. Additionally, the Department realized 
a 4-percent reduction in Toxic Release Inventory reportable releases in 
2010 compared to 2009.

                        ENVIRONMENTAL COMPLIANCE

    Clean water and air are essential to the health and well-being of 
our communities and ecosystems. The Department continues to maintain a 
high level of compliance with environmental laws and regulations. For 
example, the Department provides safe drinking water to the 3.4 million 
men, women, and children working and living on our military 
installations. Our fiscal year 2013 budget requests $1.4 billion for 
environmental compliance--$103 million below last year's request. This 
decrease reflects the fact that the Department has completed many one-
time repairs and upgrades to infrastructure, such as hazardous waste 
storage facilities, underground storage tanks, and waste water 
treatments facilities.

                        ENVIRONMENTAL TECHNOLOGY

    A key part of DOD's approach to meeting its environmental 
obligations and improving its performance is its pursuit of advances in 
science and technology. The Department has a long record of success 
when it comes to developing innovative environmental technologies and 
getting them transferred out of the laboratory and into actual use--on 
our installations, in our depots and in the very weapon systems we 
acquire.
    To accomplish this, the Department relies on two closely linked 
programs--the Strategic Environmental Research and Development Program 
(SERDP) and the Environmental Security Technology Certification Program 
(ESTCP). SERDP is DOD's environmental science and technology program; 
its mission is to address high priority cross-service environmental 
requirements and develop solutions to the Department's most critical 
environmental challenges. As one of the only R&D programs aimed at 
reducing DOD operating costs, SERDP has allowed Department to avoid 
spending billions of dollars for environmental cleanup, environmental 
liability and weapons system maintenance. ESTCP's mission is to 
transition technology out of the lab. It does this by demonstrating the 
technology in a real-world setting, such as a clean-up site on a 
military installation or at an aircraft maintenance depot. This 
``direct technology insertion'' has proven key to getting regulators 
and end users to embrace new technology.
    A decade ago, SERDP and ESTCP took on a challenge--developing 
technologies that could discriminate between scrap metal and hazardous 
UXO (``beer cans and bombs''). Current clean-up methods lack that 
ability--their false-positive rate is 99.99 percent. As a result, 
contractors must dig up hundreds of thousands of metal objects in order 
to identify and remove just a few pieces of UXO. Because this process 
is so labor-intensive, it is very expensive: The estimated cost to 
clean up UXO on known DOD sites is more than $14 billion. However, as I 
reported last year, 10 years of investment by SERDP and ESTCP have 
yielded technologies that can discriminate between UXO and harmless 
metal objects with a high degree of reliability. This is a remarkable 
achievement and one that many clean-up experts thought was impossible.
    ESTCP has initiated live-site demonstrations to acquire the data 
needed to validate, gain regulatory approval for and fully transition 
these technologies into the field. Beginning in fiscal year 2011, we 
accelerated these demonstrations so that the technology would be ready 
by 2015, when the Services undertake major UXO clean-up efforts. We 
have conducted demonstrations on seven sites exhibiting diverse 
conditions, and the results show that on most sites the new 
technologies can distinguish the metallic scrap 70-90 percent of the 
time.
    The challenges to implementing new technology go beyond 
demonstration of technical success, however. For these new UXO 
technologies to get deployed, our key partners--commercial cleanup 
firms, State and Federal regulators, and DOD contracting experts--must 
all be comfortable with what represents a fundamentally new approach to 
UXO cleanup (e.g., with the current technology, DOD pays contractors 
for each hole they dig up). Toward that end, my office is engaging with 
each group to work through its concerns. For example, contractors want 
to be sure they can recoup their investment in expensive new equipment; 
and regulators want to provide for management of the residual risk 
(i.e., any UXO found after the cleanup is complete). The interactions 
to date have been promising: All of our partners appear committed to 
adopting the new technologies once we have answered their concerns. 
State regulators are particularly supportive because they recognize 
that DOD will be able to clean up UXO sites sooner.
    The fiscal year 2013 budget request includes $65.3 million for 
SERDP and $43.9 million for ESTCP for environmental technology 
demonstrations. (The budget request for ESTCP includes an additional 
$32 million for energy technology demonstrations, as discussed in 
section III above.) Of the $43.9 million requested for ESTCP 
environmental technology demonstrations, $14 million will go to support 
the UXO live-site technology demonstrations.
    The fiscal year 2013 budget request for Environmental Technology 
overall is $220 million. In addition to SERDP and ESTCP, this includes 
funding for the Services' environmental research and development. The 
Services' investments focus on Service-unique environmental technology 
requirements and complement the larger, cross-Service SERDP and ESTCP 
investments. SERDP and ESTCP work closely with the Services to 
coordinate and leverage their investments.

                         COMPATIBLE DEVELOPMENT

    Encroachment is a growing challenge to the military mission, 
particularly test and training. Sprawl, incompatible land use and other 
forms of encroachment put the Department's test and training missions 
at risk and reduce military readiness. For example, lights from 
developments near installations reduce the effectiveness of night 
vision training, and land development that destroys endangered species 
habitat causes those species to move onto less developed military 
lands, resulting in restrictions on the type, timing and frequency of 
test and training. I want to highlight three efforts I oversee that are 
designed to deal with this challenge.

           READINESS AND ENVIRONMENTAL PROTECTION INITIATIVE

    The Readiness and Environmental Protection Initiative (REPI) is a 
key tool for combating the encroachment that could negatively impact 
the operations of our bases. Under REPI, the Department partners with 
conservation organizations and State and local governments to preserve 
buffer land around our installations and ranges. The preservation of 
buffer land allows the Department to avoid much more costly 
alternatives, such as training workarounds or investments to replace 
existing testing and training capability. Through its unique cost-
sharing partnerships, REPI directly leverages the Department's 
investments one-to-one. In the current real estate market, where 
property is more affordable and there are a great may willing sellers, 
REPI is a particularly good investment.
    REPI's utility can be enhanced by looking beyond the immediate 
vicinity of installations and leveraging it across a regional 
landscape. For example, the airspace in and around Eglin Air Force Base 
has become increasingly crowded as new missions drive testing and 
training requirements. To avoid saturating the airspace, the Air Force 
is looking at the possibility of conducting missions across the entire 
gulf coast region (lower Alabama, Mississippi and the Florida 
Panhandle) in an effort called the Gulf Regional Airspace Strategic 
Initiative (GRASI). REPI can help GRASI achieve its goals by conserving 
key areas well outside Eglin--effectively expanding the training space 
available to Eglin and other installations in the region. This strategy 
will allow the Air Force to expand capacity at a fraction of what it 
would cost to acquire additional installations and build permanent 
infrastructure. Further, REPI hopes to take advantage of its unique 
authority by leveraging funding from environmental organizations that 
have a similarly ambitious plan to conserve lands in this region, 
providing an opportunity to meet compatible military and environmental 
goals at reduced cost for each stakeholder.
    The President's fiscal year 2013 budget requests $50.6 million for 
REPI.

         OFFICE OF ECONOMIC ADJUSTMENT'S COMPATIBLE USE PROGRAM

    OEA's Compatible Use Program provides direct assistance to 
communities to help them prevent and/or mitigate development that is 
incompatible with nearby military operations. OEA provides technical 
and financial assistance to State and local governments to undertake a 
Joint Land Use Study (JLUS) in cooperation with the local military 
installation.
    A JLUS serves as a powerful tool to bring a military installation 
and the surrounding community together to identify and address 
compatible use issues, develop a set of compatibility guidelines and 
implement specific measures to ensure the long-term viability of the 
military mission. The kinds of implementation measures that come out of 
a JLUS include: Conservation buffers; aviation easements; the 
establishment of military influence areas with associated limits on 
development; the incorporation of sound-attenuation measures into 
building codes; requirements for disclosure of military activities 
(e.g., aircraft noise) in real estate transactions; ordinances to limit 
lighting that would interfere with night vision training; the transfer 
of development rights; and local development review procedures that 
ensure military input.
    OEA has more than 70 JLUS projects currently underway, and they 
provide a useful complement to REPI's efforts. For example, through the 
JLUS process, military and stakeholder communities may identify an 
issue for which a REPI project may provide resolution.

                        RENEWABLE ENERGY SITING

    Although most transmission and renewable energy projects are 
compatible with the military mission, some can interfere with test, 
training and operational activities. Until recently, the process by 
which DOD reviewed projects and handled disputes was opaque, time-
consuming and ad hoc, resulting in costly delays. Spurred in part by 
Congress, DOD created the DOD Siting Clearinghouse to serve as a single 
point of contact within the Department on this issue and to establish a 
timely and transparent review process. The goal is to facilitate the 
siting of energy projects while protecting test, training, and 
operational assets vital to the national defense.
    The results are impressive: To date, the Clearinghouse has overseen 
the evaluation by technical experts of 506 proposed energy projects; 
486 of these projects, or 96 percent, have been cleared, having been 
found to have little or no impact. These 486 projects represent 24 
gigawatts of potential energy from wind, solar and geothermal sources. 
The 20 projects that have not been cleared are undergoing further 
study, and we are working with industry, State and local governments, 
and Federal permitting and regulatory agencies to identify and 
implement mitigation measures wherever possible.
    In addition to reviewing projects, the Clearinghouse has conducted 
aggressive outreach to energy developers, environmental and 
conservation groups, State and local governments, and other Federal 
agencies. By encouraging developers to share project information, we 
hope to avert potential problems early in the process. We are being 
proactive as well in looking at regions where renewable projects could 
threaten valuable test and training ranges.\11\ The Clearinghouse is 
working with DOE, DHS, and the Federal Aviation Administration to model 
the impact of turbines on surveillance radars, evaluate alternative 
mitigation technologies, and expedite fielding of validated solutions.
---------------------------------------------------------------------------
    \11\ DOD is conducting a study to identify areas of likely adverse 
mission impact in the region that is home to China Lake and Edwards Air 
Force Base in California, and Nellis Air Force Base and the Nevada Test 
and Training Range in Nevada. These installations are the Department's 
premier sites for test and evaluation and require a pristine 
environment clear of interference. The results of the study will be 
used to inform stakeholders of areas where the Department is likely to 
oppose the siting of wind turbines and solar towers.
---------------------------------------------------------------------------
    Finally, the Clearinghouse is taking advantage of section 358 of 
the fiscal year 2011 NDAA, which allows DOD to accept voluntary 
contributions from developers to pay for mitigation. The Clearinghouse 
and the Navy recently negotiated an agreement that provides for the 
developer to pay the cost to mitigate the impact of wind turbines on 
the precision approach radar on a runway at Naval Air Station (NAS) 
Kingsville, Texas. The agreement facilitates the continued growth of 
wind energy generation along the Texas Coastal Plain while providing 
for the safety of student pilots at NAS Kingsville and NAS Corpus 
Christi. We believe there will be many other situations in which a 
developer is willing to pay the relatively small cost of mitigation in 
order to realize the much larger value of the project; section 358 is 
an extremely useful, market-based tool that allows us to negotiate 
those win-win deals.

                               CONCLUSION

    My office takes seriously our mission to strengthen DOD's 
infrastructure backbone--the installations that serve to train, deploy 
and support our warfighters. Thank you for your strong support for the 
Department's installation and environment programs and for its military 
mission more broadly. I look forward to working with you on the 
challenges and opportunities ahead.

    Senator Johnson. Thank you, Dr. Robyn. Thank you for your 
opening statements.
    For the information of Senators, we will begin with a 7-
minute round of questions.

                             SEQUESTRATION

    Secretary Hale, several months ago, Secretary Panetta said 
that sequestration, if military personnel costs are exempt, 
could hit an across-the-board cut in defense programs of as 
much as 23 percent in fiscal year 2013, although I understand 
that projection has since been revised downward. What is the 
current projection, and how would that impact the fiscal year 
2013 MILCON program? Would the MILCON program be executable? 
Could you give us some examples of what sequestration would 
mean to the fiscal year 2013 MILCON program?
    Mr. Hale. Let me try to be helpful, Mr. Chairman. First, 
the 23 percent was compared to last year's plan. We have now 
submitted a budget that makes significant cuts, 8 to 9 percent 
in the overall defense budget. And we've also learned more 
about this arcane law that--the Budget Control Act that was 
passed last year, amended the 1985 act that budget junkies will 
remember as the Gramm-Rudman-Hollings legislation. So we're all 
dusting off our knowledge.
    Given what we know now, it'll probably be more in the 
range--compared to this plan, the one that's before you at the 
moment--8 to 10 percent. And I think our lawyers believe, and 
we believe, that it would be applied at what's called the 
program project and activity level, which means the percentage 
would have to be the same for every military construction 
project.
    I think this overall sequestration would be highly 
disruptive. It would be disruptive to military construction 
programs. You would eat up the reserves for sure. You might not 
have enough money to complete buildings or to fully make them 
ready for occupancy.
    Outside of the military construction account, it would be 
devastating. We would be forced into probably furloughs of our 
civilian personnel with adverse effects on readiness. We would 
disrupt dozens if not hundreds of weapons programs which would 
also have to be cut by the same sort of 8 to 10 percent.
    An overall sequestration was never a policy that was meant 
to be implemented. It's a bad idea. I think we all recognize 
that. It was meant as a prod to the Congress to pass a large 
balanced cut in the deficit and then a law halting 
sequestration. So we're still hoping you do just that. It's a 
bad idea. We don't want to do it.

                      BASE REALIGNMENT AND CLOSURE

    Senator Johnson. Dr. Robyn, DOD has proposed two additional 
BRAC rounds for fiscal years 2013 and 2015. Direction by 
Congress thus far has been less than encouraging. You have 
stated that if Congress does not approve a new BRAC round, DOD 
will have to use existing authorities to eliminate excess 
inventory.
    What are those authorities, and how would they be applied? 
Does DOD have the authority to actually close or realign bases 
in the United States absent a BRAC or simply starve them of a 
mission, possibly creating even more excess inventory?
    Dr. Robyn. Let me give you a two-part answer. We do have 
limited authority, and we've said that if we don't get BRAC 
authority, because of the urgency of the need to reduce the 
budget, that we will have to move ahead using our existing 
authorities. And our existing authority consists of what we can 
do under section 2687. That specifies that the Secretary may 
not close any military installation at which at least 300 
civilian personnel are authorized to be employed, meaning 
things below 300 civilian personnel with the appropriate 
notification, procedural steps, can be done outside of the BRAC 
process.
    Now, I should say that to date, the Department has not ever 
been successful in using section 2687 for a closure. So what we 
would probably do would be to eliminate personnel over a longer 
period of time at many installations rather than quickly close 
individual installations.
    Let me say why we don't want to go that route. The 
communities that have hosted installations are enormously 
important to us. They have been our partners, our hosts. In the 
past, they were not particularly well-treated after bases were 
closed.
    And Senator Pryor, you know this very, very well.
    When I first got involved in this as a member of President 
Clinton's economic team right after on the verge of the 1993 
round, the way the military treated communities was not good. 
They would take any excess property that they could. They would 
rip sprinkler systems out of the ground and take them when they 
closed a base.
    Environmental cleanup took forever. Property disposal was 
slow, bureaucratic, and penny-pinching. And I led the effort--
the Clinton administration's effort to reform that process with 
enormous help from other Pryors, and my single biggest backer 
in the Clinton administration was then Office of Management and 
Budget (OMB) Director Leon Panetta, who represented the 
district in California where Ford Ord had been closed as part 
of the 1991 round.
    So we dramatically improved--it's still not perfect by any 
means, but we have a much, much better approach to working with 
communities. And we do that under authorities that we have in 
the BRAC law. So if we have to realign and close bases without 
BRAC authority, we can't do it in a way that is good for 
communities. They're left to fend for themselves. So we very 
much want to do this with the protection that the BRAC law 
provides for communities.
    Senator Johnson. Dr. Lavoy, the President has announced a 
new strategic defense pivot to the Asia-Pacific region. And the 
Washington Post reported this morning that military ties with 
Australia, in particular, could be broader than previously 
discussed.
    Could you give us an overview of the force structure and 
military construction implications of this initiative as they 
relate to Japan, Okinawa, Guam, Korea, Australia, Singapore, 
and the Philippines, and any other nations that might be 
affected?
    Dr. Lavoy. Thank you for that question, Mr. Chairman. It's 
a pleasure to answer this question, because I think it's a very 
important part of the new defense strategy--the rebalancing 
toward the Asia-Pacific and, in fact, rebalancing within the 
Asia-Pacific region.
    As the President indicated and as the Secretary of State 
has indicated on many occasions, we are rebalancing and 
prioritizing the Asia-Pacific because of the centrality of this 
part of the world to our economy and, indeed, to the global 
economy. And of course, the economic growth in this part of the 
world was premised on stability and peace for many decades. 
These are conditions that we need to see continue and, in fact, 
all of the countries in the region want to see continue.
    And so the new defense strategy emphasizes five elements 
that are aimed at perpetuating this peace and stability and 
economic prosperity in this region. And I will just list these 
and then talk about the countries in question that you 
addressed.
    First of all is to ensure that the U.S. military capability 
remains as robust as it always has been and we can achieve all 
the operational missions that we're responsible for.
    Second, a key feature of the strategic guidance is 
emphasizing the importance of our alliances in the Asia-
Pacific. We have five vital allies in this part of the world, 
and strengthening and modernizing these alliances is critical.
    The third aspect is supporting multilateral institutions, 
ASEAN being the biggest one among them.
    Fourth is building partner capacity, working not only with 
our allies but with a whole array of countries in the region to 
help them improve their defense capabilities and strengthen and 
professionalize their militaries, including for humanitarian 
and disaster relief operations.
    And the final feature of this defense strategy involves our 
new force lay-down, our force posture in the region, which, Mr. 
Chairman, was the focus of your question. And we have three 
principles that guide our force posture considerations in this 
region.
    First of all, we want this to be politically sustainable. 
Any force movements in the region have to mesh with the 
politics in the region and, in fact, our politics.
    Second, our forces have to be operationally resilient. They 
can't be distributed in a way that blunt or minimize their 
operational impact.
    And finally, we focus on geographical distribution of the 
forces. In the past, we've had forces focused mainly in 
northeast Asia, Japan and South Korea, in particular. Today, 
we're looking at a much more balanced force posture, and thus 
the interest in having a rotational presence of marines in 
Australia to provide more of that balanced force posture.
    So that's a key element that--a decision that President 
Obama announced in November when he was in Australia is to move 
a group of marines, ultimately totaling about 2,500. Over 
several phases, they'll get to that number. Right now, the 
number is much smaller. So that's one piece.
    Of course, we're also talking to Australia about other 
kinds of military cooperation, and the article that you 
mentioned that came out today talked about some of the 
interests of the Australians in a naval rotational presence 
there. But I need to tell you we're at a very early stage in 
discussions with the Australians about that. The only decision 
today is on the marine rotational presence.
    But in addition to Australia, we, of course, are 
maintaining our military presence on the Korean peninsula. 
That's, of course, vital to peace and deterring conflict in 
that region, and as well, we're adjusting our force lay-down in 
and around Japan. And the key elements of this, as Secretary 
Hale already indicated, are keeping a marine presence on 
Okinawa and also in mainland Japan and moving approximately 
5,000 or just under 5,000 marines to Guam. So that's a 
significant adjustment.
    But we're also not linking the movement of marines to Guam 
any more to the marines on Okinawa. And of course, we continue 
to be interested in--the Futenma replacement facility is really 
the ideal location and the only operationally viable 
alternative to the current Futenma facility on Okinawa for our 
marines.
    We're also in discussions with Singapore and have agreed 
with the Singapore government to have a rotational presence of 
littoral combat ships to and through Singapore. And we're also 
in very early discussions with other countries in the region 
about rotational movements of forces and helping them improve 
their military capabilities.
    Thank you.
    Senator Johnson. Senator Pryor.
    Senator Pryor. Thank you, Mr. Chairman.
    And thank you, Dr. Robyn, for referring to my father. He 
was very, very focused on BRAC and all the implications and how 
that process would be handled in the various communities where 
that happened. Thank you for your work back then and thank you 
for the work you're continuing to do.
    Let me follow up on a BRAC point. You mentioned that 
overseas, you're going through a BRAC-like process right now. I 
would say that most of the Senators I've talked to on this 
think that if we do a BRAC, we should do an overseas BRAC 
first, and then maybe come back and do a domestic BRAC. But you 
seem to argue that we should do the domestic BRAC now, because 
you already have something going on overseas.

                            OVERSEAS BASING

    What is going on overseas? And you say it's BRAC-like. Is 
it the same as BRAC, in that you're making these decisions and 
realigning and closing and doing all the things that a normal 
BRAC Commission would do?
    Dr. Robyn. We, of course, don't need legislative authority 
to do it overseas. Let me start by saying that we would like to 
do the two in tandem. We would like to do the analysis of 
domestic installations at the same time that we are looking at 
consolidation overseas.
    The advantage of doing that--and we were able to do in 
2004, 2005. It worked very well. The advantages is that it 
helps us be more efficient in where we place returning soldiers 
and airmen returning from Europe. If we are not able to do a 
domestic BRAC at the same time, then we have to put people 
where we have available space. And ideally, that isn't always 
the best place to put them.
    And so if we can do the two processes in tandem, then we're 
able to be more efficient in where we put people who are 
returning from Europe. So we would like to be able to do them 
in tandem.
    We're in the early stages--as I mentioned, there is a lot 
that's already been announced. We're going to close 23 sites in 
the next 3 years, the Army alone. But we're working closely 
with the European Union (EU) commander, Admiral Stavridis, his 
theater commanders, the services here at home, looking at 
everything that we have in Europe.
    We have 300 sites in Europe. Most of our activity is on 200 
of those sites. We're looking at, in particular, infrastructure 
support, administrative sorts of support. We're looking at 
where--the goal is reducing our costs over the long term while 
maintaining our strategic and our operational commitments. So 
we're looking at how much can we cut and where, and we will 
give the Secretary options later this year as to where we think 
we can----
    Senator Pryor. What's your timeframe on that? How long 
until you know what you're going to do, and then how long will 
it take to actually do it?
    Dr. Robyn. We're proposing to give the Secretary options 
later this year. I don't know how long it will take--1 year or 
2, I would think.
    Senator Pryor. Just depends?
    Dr. Robyn. Yes.
    Senator Pryor. Okay. Thank you for that.
    Mr. Hale, let me ask you a question. I know that there's 
this long process that everybody goes through to get to this 
point where you are today with the budget and all these changes 
and proposals, and I appreciate that.

                   AIR NATIONAL GUARD AND AIR RESERVE

    I am concerned, though, that the Air National Guard and the 
Air Reserve component were not necessarily listened to with 
regard to some of the decisions that were made by the Air Force 
in terms of consolidating, eliminating, and transferring 
missions. One, in particular, is the issue of the National 
Guard losing most of their A-10s, the Warthog.
    Did the Air Force listen to the Air National Guard and to 
the Reserve component?
    Mr. Hale. Yes, I believe they did, Senator Pryor. I mean, 
they're well represented through a member of the Joint Chiefs 
of Staff, who represents their interests. The Air Force looked 
carefully at balancing its Active Duty and Guard forces in 
light of their needs and also costs, and I believe they were 
fully heard. That doesn't mean that everything the Guard wanted 
occurred.
    But I believe their arguments were heard, and obviously, 
we're now having further discussion, and that's fine. We'll 
work with the Congress to answer questions through the Air 
Force. But at the moment, at least, we certainly want to stay 
with our proposal with regard to the Guard.
    Senator Pryor. One of the things that I'm not at all 
convinced of is the cost savings achieved by doing this, 
specifically with the A-10s. I have seen numbers that indicate 
that it's quite a bit cheaper to maintain and fly the A-10s in 
the Guard than it is in Active Duty.
    And one of the frustrations I've had, as well as several 
other members of this body, is that the cost analyses have not 
been forthcoming from DOD. I know I've requested repeatedly to 
get the DOD's cost analyses on this move and others, and I've 
been greeted with reluctance to share the data. Because there's 
a lack of transparency and a lack of sharing of information, I 
have a lot of questions about it, and others do, too.
    Is it possible for you to share those numbers with the 
subcommittee and with my office?
    Mr. Hale. Let me see what I can do. I need to take that one 
for the record. I certainly don't have it in my head. Let me 
just say, in general, once you call up a Reserve unit, its 
costs are pretty similar to that for an Active unit.
    So I think the Air Force is looking at its wartime needs 
and how quickly forces are needed and making a judgment about 
the balance, and then considering, obviously, cost--to the 
extent we can use reserves that we'll only call up 
occasionally, the overall cost would be less. But there are 
operational considerations as well.
    As far as cost analysis, I will take that one for the 
record and check for you and see what I can do.
    Senator Pryor. That would be great. I'd appreciate it.
    [The information follows:]

    Based on the current fiscal environment, the Air Force budget 
balanced reductions with the need to maintain a more capable force.
    While cost savings are part of the decisionmaking process, the most 
important factor is the Air Force's ability to provide the capabilities 
required by the new Defense Strategic Guidance, ``Sustaining U.S. 
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 our 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 which leveraged careful analytical review of 
warfighting scenarios consistent with the new strategic guidance. Two 
decades of military end strength and force structure reductions in our 
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.
    Air Force analysis, based on scenarios consistent with the new 
Defense Strategic Guidance, resulted in a reduced requirement for 
tactical combat aircraft and intra-theater airlift. The analysis 
identified a preference for multi-role aircraft 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 totaling 102 A-10 
aircraft.
    As mission demands evolve and resource constraints emerge, the Air 
Force will continue to leverage the collective talent and experience of 
our Air Force Reserve and Air National Guard partners to provide the 
most effective and efficient air, space, and cyberspace power for the 
Nation.

    Senator Pryor. And last, because I'm out of time here, 
there seems to be something inconsistent with the Air Force's 
plan. For example, the A-10s, the Air Force wants to eliminate 
several A-10 Guard missions, but at the same time requests a 
BRAC. Shouldn't the Air Force wait until the BRAC does its work 
before making a determination on where the A-10s should be 
located?
    Mr. Hale. And we will. What we're seeking now is authority 
for BRAC. And I'd ask Dr. Robyn if she wants to add to this. 
We're seeking authority for BRAC at the moment. Once we get it, 
we will go through a full analysis of every base and 
installation in the Department of Defense, measuring both its 
cost and its mission, and that will be the basis for deciding 
what's closed or reorganized in some fashion.
    So I think we're not prejudging that, but we need the 
authority to do that in order to move forward to try to get a 
more efficient installation.
    Dorothy, do you want to add to that?

                      BASE REALIGNMENT AND CLOSURE

    Senator Pryor. But do you understand the inconsistency? The 
Air Force wants to do it now before there's a BRAC, before 
there's the thorough review. And I would call the BRAC 
Commission an independent study and analysis of everything. And 
they're wanting to do it now before there's a BRAC. Do you know 
why?
    Dr. Robyn. I think they want to do what they can do within 
the law now. I mean, it's certainly well within their authority 
to do that.
    Senator Pryor. Thank you, Mr. Chairman.
    Senator Johnson. Senator Blunt.
    Senator Blunt. Thank you, Mr. Chairman. I have a statement 
for the record. I might summarize it just briefly by saying 
that it talks about the importance of the big base we have in 
our State, the big Army base, Fort Leonard Wood, and some 
single-soldier housing questions I have there, and also a 
hospital question. But I think we can get to those pretty 
quickly.
    [The referenced statement was not available at press time.]

                               HOSPITALS

    I agree with Senator Pryor that he and I and many of our 
colleagues want to be sure that we've done all the overseas 
repositioning before we make the domestic decisions about 
bases. And I may have a question about that.
    Mr. Hale, on hospitals, I think the Fort Leonard Wood 
hospital is No. 2 on the priority list for construction behind 
Fort Knox. And I think your Department makes that decision 
rather than the service. I think the Army had the Fort Leonard 
Wood No. 1 and Fort Knox No. 2. And I'm wondering what criteria 
you would have used to reprioritize what the Army thought they 
needed to do on these two bases.
    Mr. Hale. I think, Senator, it's a collaborative process. I 
mean, we certainly hear the Army needs. We also look broadly at 
defense-wide requirements, and many of these hospitals are 
funded in the defense-wide military construction appropriation.
    My understanding is we have some funds programmed in the 
out-years to replace the Fort Leonard Wood hospital. I can't 
tell you exact details of why it's in 1 year or another, but I 
would be glad to answer that one for the record. I can tell you 
we do talk to the Army, and we try to come up with a set of 
recommendations that are consistent across the Department in 
terms of the priorities of hospitals.
    Dorothy, do you want to add to that?
    Dr. Robyn. Typically, we take the input from the services, 
and then Health Affairs, which is part of our Personnel and 
Readiness in the Office of the Secretary of Defense, does the 
ranking.
    Senator Blunt. I think the Army did rank these, though, 
when they submitted them. Right?
    Mr. Hale. Right.
    Dr. Robyn. I think that's right.
    Senator Blunt. And I'd be glad to have more information on 
that.
    Mr. Hale. Okay.
    Senator Blunt. You don't have to have it today, but I'd 
like to know what----
    Mr. Hale. Would be glad to.
    Senator Blunt [continuing]. Criteria you would use on two 
Army bases that would reverse the priority that the Army had 
for those two bases. This is not a system-wide--it's an Air 
Force versus an Army base. You've got two Army bases. The Army 
said they thought that Fort Leonard Wood needed to be built 
first and Fort Knox second. And I'd like to know why you 
changed that ranking.
    [The information follows:]

    The OSD (Health Affairs) and the Army's Surgeon General staff have 
reviewed the priorities used in the development of the fiscal year 2013 
President's budget. The Fort Knox Hospital Replacement was submitted as 
the Army's No. 2 priority. The Fort Irwin Hospital Replacement was the 
first priority. The Fort Leonard Wood Hospital was not one of the 
Army's top three priorities in the fiscal year 2013 program development 
process. In actuality, the Army's priorities were unchanged from what 
was submitted to the OSD (Health Affairs). The Fort Leonard Wood 
project, as were scores of other medical facilities projects, was 
evaluated through the Military Health System's Capital Investment 
Model. The major criteria used through the evaluation and 
prioritization process were strategic alignment, effectiveness of the 
infrastructure, and collaborative synergies. As a result of this 
evaluation and prioritization process, and as reflected in the fiscal 
year 2013 President's budget FYDP, a replacement for the Fort Leonard 
Wood Hospital is planned for fiscal year 2015.

                      BASE REALIGNMENT AND CLOSURE

    Senator Blunt. Also, Secretary Robyn, on the realignment 
opportunities, do I understand that you feel like that the 
overseas realignment is completed in your answer--in your 
response to Mr. Pryor?
    Dr. Robyn. No. No, I did not. I misstated if I implied 
that. No. I think we have already--I made the point that we 
have already done a lot over the last 20 years, and we have 23 
closures already announced that the Army alone will be doing 
over the next 3 years. But we're just beginning the BRAC-like 
process that my office leads to look at everything we have in 
Europe and figure out--to what extent can we consolidate. And 
it will be looking at discreet installations, our discreet 
sites, of which we have 300, ranging from small communication 
posts to robust operating bases.
    We're looking at excess infrastructure, such as warehouses, 
administrative space, and housing. And in particular, we're 
looking at things that are located off-base as a particularly 
attractive target, and then we're trying to take advantage of 
capacity that's made excess by force structure changes to 
accommodate any new functions. So it's a fairly elaborate 
process. We've started it, working closely with the EU, EUCOM, 
Admiral Stavridis, with his component commanders and with 
service leadership here in Washington.
    Senator Blunt. And is it possible that some of these things 
are not going to be left overseas would come back to bases 
here?
    Dr. Robyn. We've already announced the reduction in force 
structure, so yes, that's right, which is why we want to do a 
domestic BRAC simultaneously, so that we can be more efficient 
in where we put people.
    Mr. Hale. Although, Senator, I would add that many of the 
units that come out of Europe will be disestablished because of 
the overall drawdown. We're cutting 100,000 troops out of eight 
brigade combat teams. So I think in many cases these units will 
be disestablished. The Army hasn't made all the decisions; 
other services are involved as well. But many of these are just 
going to go away.
    Senator Blunt. I'm definitely not an opponent of forward 
positioning our troops. At the same time, you know, if you're 
going to have an economic impact in a community, I think we 
ought to be sure that we have first looked at where we're 
stationed overseas that might possibly benefit a base here or a 
station here of some kind, and I hope you're doing that. And I 
think many of our colleagues will want to have as many of those 
questions answered as possible before we go into the domestic 
BRAC process.
    Mr. Chairman, I may have questions for the second panel, 
but I think that's all I've got here.
    Senator Johnson. Senator Murkowski.
    Senator Murkowski. Thank you, Mr. Chairman, and thank you 
all this morning.
    Dr. Robyn, I want to speak a little bit this morning about 
where we are with Eielson Air Force Base. As you know, there 
has been a proposal that would move the F-16 Aggressor Air 
Squadron from Eielson down south to Joint Base Elmendorf-
Richardson (JBER). This is more than a little bit troubling to 
the interior economy and to the folks up north there. Back in 
2005, this same proposal was put before the BRAC Commission, 
and the commission then went ahead and rejected it.
    Many up north feel that the Air Force, since it was not 
able to get this proposal through the BRAC Commission, is 
simply trying to accomplish this through a different means. 
You've mentioned the two statutes that are on the books, 
section 2687, and there's also section 993, which require the 
submission of the detailed information and then congressional 
consultation before the service realigns outside of a BRAC 
round.
    It seems to me that the Air Force is taking the position 
that it can avoid the intent of either of these two statutes 
by--rather than realigning Eielson in one action, they simply 
cut the size of Eielson in half through a series of moves, none 
of which would trigger application of either of the two 
statutes, which, in my opinion, looks like it is going around 
the intent of the statute, failing to keep faith there.
    And I guess the question that I would have to you is, 
first, whether or not you think that is what we're dealing with 
and whether or not we're honoring the intent of the statute, 
and then, also, as the Air Force is looking at this issue, 
whether it should defer from either taking any action to 
implement any realignment until it has considered or complied 
with either of these two statutes or put the entire plan before 
Congress early on.
    I'm concerned that what it looks like is we're trying to 
break Eielson down in small pieces to put it in a situation 
where it really doesn't stand on its own, that that warm base 
in a cold place just doesn't work out. Can you speak to me 
directly about these two statutes and the implementation as 
they relate to Eielson?
    Dr. Robyn. You've given me some facts that I'm not familiar 
with, so I'm hesitant to talk about what you describe as the 
Air Force going ahead and doing something that was rejected by 
the commission. So I can't reconcile the fact that they asked 
the commission for approval to do something--it sounds like, 
though, what they're doing is within the law.
    I think what I can say is that when a base like Eielson, if 
we do a BRAC analysis, we look at all bases equally. The fact 
that the Air Force is moving things out of Eielson would not 
affect Eielson's analysis.
    Senator Murkowski. Right. But this is not a BRAC analysis 
at this point. Is that correct?
    Dr. Robyn. Right. No. It sounds like they are----
    Senator Murkowski. And this is----
    Dr. Robyn [continuing]. Doing what they can within the law 
outside of BRAC.
    Senator Murkowski. Without, then, triggering again----
    Dr. Robyn. Right.
    Senator Murkowski [continuing]. These statutes.
    Dr. Robyn. It sounds that way, yes.
    Senator Murkowski. You know, contained within the BRAC 
process, there are significant, I guess, economic resources 
that are made available to the communities to adapt to any 
changes, whether social or economic. But with this somewhat ad 
hoc realignment proposal that is now out there on the table for 
Eielson, it doesn't bring any of that assistance to the 
communities.
    Is the Air Force looking at any aspect of that, if, in 
fact, this proposal were to advance?
    Dr. Robyn. I don't know.
    Senator Murkowski. Is there somebody that can get back to 
me on that?
    Dr. Robyn. Yes. I'll take that for the record. I apologize.
    [The information follows:]

    The Department relies on the Office of Economic Adjustment (OEA) to 
work with communities that are affected by a defense action, including 
defense industry downsizing, establishment or expansion of a military 
installation, a base closure or realignment under BRAC, or a (smaller) 
realignment done outside of BRAC. Under any of those scenarios, OEA is 
ready to work with the affected community as soon as it is ready--even 
before the realignment or other action has been finalized. OEA 
typically assigns a project manager to the community, provides planning 
grants, and if appropriate helps the community organize an ad hoc 
organization to speak with one voice on behalf of affected workers and 
firms. The community can use the planning grant to start the economic 
adjustment process, including doing such things as a workforce 
assessment, a workforce development strategy, a housing market 
evaluation, a business assessment, a school system business plan, and a 
review of local economic strengths, weaknesses, opportunities and 
threats (SWOT). OEA also serves as a single point of contact for a 
defense community and helps the community get access to other Federal 
agencies that have funds with which to implement its economic 
adjustment strategy.

    Senator Murkowski. Secretary Hale.
    Mr. Hale. Senator, I wonder if I might put your question 
and the answer in a broader context, though.
    Senator Murkowski. Okay.
    Mr. Hale. The United States Congress passed the Budget 
Control Act last year--required us to be consistent, whether we 
take $45 billion out of the budget in 2013 alone or $259 
billion over the 5 years. I would take exception to the ad hoc 
statement at least, broadly, we weren't ad hoc.
    We tried to look across a range of missions. We came up 
with a new strategy. We made major changes in investment--
tried, frankly, to minimize force structure changes, but made 
those that were consistent with that strategy.
    I know it's hard to make any force structure changes, but 
we had to. Had we not done so, we would have ended up with 
investment accounts that were just not enough to sustain this 
military. As it was, we made major changes in investment, 
particularly military construction.
    So we were confronted with a major challenge budgetarily by 
the Congress. I think we met it as best we could, and I don't 
think it was ad hoc. I think it was very much consistent with 
the strategy.
    Senator Murkowski. And I appreciate that, most certainly. 
But I also recognize that with or without the Budget Control 
Act, we still have in place these statutes that require a 
consultation process, that require a submission of detailed 
information. What is proposed currently takes half, half of the 
population from Eielson, reducing the structure from 3,000 to 
about 1,500, so clearly triggering both of these statutes. And 
yet we're not seeing any consultation. We're not getting the 
required information that we would have under those two 
statutes.
    So, again, I appreciate that the Budget Control Act puts us 
in a very difficult spot. But I also recognize that there is an 
obligation for consultation. There is an obligation for that 
information.
    And I would appreciate, Dr. Robyn, if you can get me some 
information on the resources that might be made available 
outside of the BRAC.
    One final point that I'd like to bring up here is calling 
attention to the fact that on JBER we currently have a 
situation where housing capacity is limited. We've got our 
soldiers that are living in trailers. So the observation that 
you can take 1,500 from Eielson, move them down to JBER in a 
situation where we're already over capacity with housing, 
causes me to question whether or not we have the ability not 
only to take them in, but how from a budgetary perspective, 
because that's what we're talking about here--how we allow and 
accommodate that.
    Also, if new hangars are going to be needed for the F-16s 
as we relocate them, where do we find the funds to not only 
provide for the housing, but to provide for the hangars if 
we're looking at a 68-percent reduction in this fiscal year 
2013 MILCON program. So I throw that out to you.
    I know that the site survey team is going up there within 
the next month, and I think we'll find out some of this 
information. But it is more than a bit disconcerting to know 
that the proposals have been made, everything is on a very 
aggressive schedule to implement, and in fact, we simply don't 
have information available on some pretty basic areas. So if 
you can get back to me with information, I would appreciate it.
    [The information follows:]

    All the family housing on Joint Base Elmendorf Richardson (JBER) is 
privatized. The installation has over 3,100 homes and with an occupancy 
of around 97 percent. Approximately 60 percent of the families reside 
off the installation in the Anchorage area. While the Air Force does 
not anticipate any housing issues as a result of this move, they are 
still reviewing the information to determine the ability of the 
installation and the local community to accommodate the increase in 
families. Should additional homes be required on JBER, they could be 
constructed through housing privatization.
    The draft 2012-2016 Air Force Dorm Master Plan projects a future 
deficit of 162 bed spaces for airmen at JBER in fiscal year 2015. To 
meet this deficit, the plan recommends a 144-room dormitory be 
considered for construction. In the case that the 18th Aggressor 
Squadron relocates to JBER (about 127 airmen), the total deficit will 
increase to about 289 bed spaces. To cover this deficit, the Air Force 
recommends reprogramming the fiscal year 2012 Eielson Air Force Base 
168-room dormitory to JBER, as well as programming a dormitory in 
future year plans. As an interim measure until the final dorm is 
constructed, the Air Force will allow airmen to live off-base or place 
them in any available Army barracks.
    Air Force personnel assessed available hangar space at JBER, and 
determined there will not be a need for new hangars driven by the F-16 
move.

    Senator Murkowski. Thank you, Mr. Chairman.

                     ADDITIONAL COMMITTEE QUESTIONS

    Senator Johnson. Thank you.
    The first panel may be excused. Thank you.
    [The following questions were not asked at the hearing but 
were submitted to the Department for response subsequent to the 
hearing:]

               Questions Submitted to Hon. Robert F. Hale
              Questions Submitted by Senator Patty Murray

    Question. Under Secretary Hale, language that I included in the 
fiscal year 2012 National Defense Authorization Act (NDAA) requires the 
Department of Defense (DOD) to submit to Congress a report on its 
current authority for multiyear contracts and additional authorities 
needed.
    What is the status of that report?
    Answer. The Department is in the process of analyzing its needs and 
determining what legislative language, if any, might be needed to 
provide the Department with appropriate long-term contracting 
authority. After this process is completed, the report will be 
completed.
    Question. What options are available to the Department to provide 
the biofuels industry with sufficient certainty with respect to 
purchasing the supply of such fuel?
    Answer. The Department currently has authority to enter into 
contracts for alternative fuels for up to 5 years. A major impediment 
to issuing such contracts are fiscal scoring rules which require funds 
for the entire contract to be allocated in the first year of the 
contract. These rules significantly overestimate the risk associated 
with the Department's use of long-term contracting authority, as the 
Department would only enter into such contracts for alternative fuels 
on a cost-competitive basis with their conventional counterparts, and 
the Department would be purchasing the same quantities of fuel 
regardless of whether they are alternative or conventional.
    Question. Do you believe legislative authority is needed for the 
Department to enter into long-term contracts for alternative fuels?
    Answer. The Department currently has authority to enter into 5-year 
contracts for alternative fuels. Potential biofuels suppliers have 
indicated to DOD that long-term contracts of at least 10 years are 
necessary because of the commercially underdeveloped production 
capabilities for these types of fuels. A major impediment to issuing 
such contracts are current fiscal scoring rules, which require funds 
for the entire contract to be allocated in the first year of the 
contract. DOD is looking into what longer term contracting authorities 
might be prudent and beneficial, and what additional legislative 
authority these options would require.
    Question. Has the Department considered the option of using the 
Defense Working Capital Fund contract authority for a long-term (20+ 
years) biofuels contract as a way of meeting the needs of the industry 
while not increasing the budget authority requirements?
    Answer. The Department has considered this option and, at the 
volume and scale required to cost-competitively purchase operational 
quantities of fuel, found it to be unworkable. An exceptionally large 
amount of funding, covering the full projected cost of the contract, 
would need to be allocated in the first year of the contract, thus 
imposing significant budgetary constraints on the Defense Working 
Capital Fund. This would considerably reduce the Fund's ability to meet 
its primary obligation, which is to ensure that our forces have the 
fuel they need in the year of execution.
    Question. If so, what legislation or executive direction would be 
required to accomplish this option of Working Capital Fund contract 
authority?
    Answer. As noted in the answer to [the previous question], because 
this option is unworkable, additional legislative authority or 
executive direction is not required.
                                 ______
                                 
                Question Submitted by Senator Mark Kirk

                       BUILDUP OF FORCES ON GUAM

    Question. Mr. Hale, in your statement you emphasize the 
Administration's new emphasis on Asia and the Pacific. Last year during 
our hearing we tried to discuss alternatives to Guam for the stationing 
of Marine forces and you told us there were none. Now we see there are, 
in fact, alternatives, and the United States and Japanese Governments 
are renegotiating the entire plan. A lot has changed since last year, 
but a tremendous number of decisions have yet to be made.
    Mr. Hale, the Future Years Defense Plan (FYDP) has over $800 
million in ``undistributed Guam Wedges'' in it starting in 2014, with 
the wedges for 2015, 2016, and 2017 being for $270 million each. In 
total, there are over $1.3 billion in the FYDP for Guam. That is a lot 
of total obligation authority to tie up considering we have no idea 
what the final Pacific theater review will recommend. Would you please 
comment as to why the FYDP contains such large wedges and other 
projects in the FYDP when the Department's review of the entire Pacific 
region has yet to be completed?
    Answer. Consistent with the DOD strategic goal of rebalancing our 
global posture toward Asia-Pacific, as well as the President's emphasis 
on the importance of the Asia Pacific region, Guam remains critical as 
part of our larger Asia-Pacific strategy. Both the United States and 
Japan have recently underscored that the development of Guam as a 
strategic hub remains an essential part of the Alliance's Asia Pacific 
Strategy. In support of that, the fiscal year 2013 FYDP includes 
funding toward that end. Since the United States and the Government of 
Japan (GOJ) have just recently re-visited the terms of the 2006 
Realignment Roadmap and the Guam International Agreement, the detailed 
project information normally included in the FYDP is still under 
development and we will continue working the details in preparation for 
future budget submissions. As we continue work to adjust our current 
posture plans with the Japanese, we understand the need to keep 
Congress informed and are committed to balancing fiscal realities with 
achieving a military presence in the region that is operationally 
resilient, geographically distributed, and politically sustainable.
                                 ______
                                 
               Question Submitted by Senator Daniel Coats

    Question. If Davis-Bacon was waived for military construction 
projects, how much would it save the Department of Defense in fiscal 
year 2013?
    Answer. The Department does not have empirical data to assess the 
effect of a waiver of the Davis-Bacon Act on military construction. The 
Department is aware of anecdotal data, supplied by opponents and 
proponents of the act, to support either cost savings (through lower 
wage and benefit payments and administrative costs) or cost increases 
(through increased building costs and higher accident rates on projects 
with lower paid, less-skilled workers). The Department has experienced 
contracts where wages paid are at the Davis-Bacon rate, and some where 
the wages paid exceed the Davis-Bacon rates. One of many unknowns with 
a Davis-Bacon waiver is whether the Government would see cheaper, but 
equally qualified, or lesser qualified tradesmen being hired for our 
jobs as a result of lower wages than those found to be prevailing by 
the applicable wage rate.
    The closest impartial consideration of the Davis-Bacon issue can be 
found in the February 24, 2010, GAO report (GAO-10-421) www.gao.gov/
new.items/d10421.pdf. That report looked at the effect of applying the 
Davis-Bacon Act to a number of American Recovery and Reinvestment Act 
(ARRA) funded Federal programs, including some that had not previously 
been subject to the ARRA. A very brief summary of those findings--small 
construction projects in more rural areas would be impacted (i.e., cost 
more) because of Davis-Bacon required wages and administrative costs. 
The labor rates and payroll administration costs of major construction 
projects, particularly in large metropolitan areas, would not incur 
additional cost due to Davis-Bacon coverage.
                                 ______
                                 
                Questions Submitted to Dr. Dorothy Robyn
               Question Submitted by Senator Tim Johnson

    Question. Dr. Robyn, according to your written testimony, DOD is 
reshaping the Energy Conservation Investment Program (ECIP) to focus on 
larger investments that produce ``game-changing'' improvements in 
energy consumption. What constitutes a ``game-changing'' improvement, 
and are there any in the fiscal year 2013 budget request?
    Answer. Game-changing improvements are intended to leverage the 
Services' larger investments in energy to create synergistic effects on 
the energy consumption, utilities cost or energy security of a 
particular installation. The six overarching program objectives for 
this concept are:
  --Dramatically change the energy consumption at an individual 
        installation or Joint Base;
  --Implement a technology validated in a demonstration program 
        sponsored by the DOD such as the Environmental Security 
        Technology Certification Program (ESTCP);
  --Integrate multiple energy savings, monitoring, and renewable energy 
        technologies to realize synergistic benefits;
  --Integrate distributed generation or storage to improve energy 
        security and supply resilience for critical loads;
  --Implement an energy security plan at a given installation 
        especially when such an investment entails partnering with the 
        Department of Energy; and
  --Maximize contribution towards a Service's or installation's energy 
        intensity, renewable energy and water consumption reduction 
        goals put forth in the Department's Strategic Sustainability 
        Performance Plan.
    In the fiscal year 2013 program, there are two projects which could 
be considered game-changing on a small scale. A 1.0 MW solar microgrid 
at Fort Hunter Liggett, California, incorporates distributed renewable 
energy production to improve energy security and provide reliable 
energy supply for critical loads on the base. This project is also a 
critical element in the Army's efforts to make Fort Hunter Liggett one 
of its net-zero energy bases, integrating multiple technologies to help 
it maximize its contribution to the Army's strategic energy plan. A 
combined heat and power plant in Quantico, Virginia, similarly creates 
reliable distributed generation to improve energy security on base. The 
plant also contributes to the base's energy intensity goals by 
efficiently reusing the waste heat that is generated by the plant.
                                 ______
                                 
               Question Submitted by Senator Tim Johnson

    Question. Dr. Robyn, you note that in fiscal year 2014, DOD will 
replace ECIP formula funding with competitive, merit based funding. 
What criteria will you use to determine which projects have the most 
merit? Are you taking steps to make sure the services are aware of 
these criteria and that the process is transparent?
    Answer. The Department issues annual ECIP guidance to the Services 
to establish priorities, processes and criteria for their project 
submissions. The criteria used for fiscal year 2013 ECIP project 
selection are identified in the table below. Before issuing guidance to 
the Services for their fiscal year 2014 ECIP submissions, we intend to 
conduct a series of working group meetings with ECIP stakeholders from 
the DOD services and agencies to refine these criteria and our 
evaluation process.
                                 ______
                                 
                Questions Submitted by Senator Mark Kirk

                            ENERGY SECURITY

    Question. Dr. Robyn, under your leadership the Department of 
Defense has done an outstanding job advocating energy efficient and 
alternative energy projects, but there is one aspect of the new energy 
program that I am concerned about and that is energy security. Our 
power grids are indispensable to the operational missions of our bases 
and a cyber attack on a grid that makes the base go dark could prove 
disastrous. I applaud the focus on renewable sources of energy but I do 
not see the same focus on energy security.
    Is the focus on renewable energy more of a priority that energy 
security?
    Answer. Energy security is the primary reason we are pursuing 
renewable energy development, since it provides an independent energy 
source for our installations. Due to the intermittent nature of most 
renewable energy, however, we must combine these projects with 
microgrids and energy storage technologies.
    The combination of on-site energy and storage, together with the 
microgrid's ability to manage local energy supply and demand, will 
allow an installation to shed non-essential loads and maintain mission-
critical loads if the grid goes down. DOD had made the development of 
advanced micogrids a major priority. Towards this end, the 
Environmental Security Technology Certification Program (ESTCP) is 
pursuing a wide range of technology and innovation efforts. ESTCP has 
funded 10 demonstrations of microgrid and storage technologies to 
evaluate the benefits and risks of alternative approaches and 
configurations.
    Question. There are several microgrid demonstration projects 
underway at this time and I would like to know if you plan to 
incorporate microgrid technology into your energy programs to ensure 
greater energy security. Do you have any thoughts on this technology 
yet?
    Answer. A major focus of my office is advanced, or ``smart,'' 
microgrid technology. Smart microgrids and energy storage offer a more 
robust and cost effective approach to ensuring installation energy 
security than the current one--namely, back-up generators and (limited) 
supplies of on-site fuel. Although microgrid systems are in use today, 
they are relatively unsophisticated, with limited ability to integrate 
renewable and other distributed energy sources, little or no energy 
storage capability, uncontrolled load demands, and ``dumb'' 
distribution that is subject to excessive losses. By contrast, we 
envision microgrids as local power networks that can utilize 
distributed energy, manage local energy supply and demand, and operate 
seamlessly both in parallel to the grid and in ``island'' mode.
    Advanced microgrids are a ``triple play'' for DOD's installations. 
First, they will facilitate the incorporation of renewable and other 
on-site energy generation. Second, they will reduce installation energy 
costs on a day-to-day basis by allowing for load balancing and demand 
response--i.e., the ability to curtail load or increase on-site 
generation in response to a request from the grid operator. Most 
important, the combination of on-site energy and storage, together with 
the microgrid's ability to manage local energy supply and demand, will 
allow an installation to shed non-essential loads and maintain mission-
critical loads if the grid goes down.
    The Installation Energy Test Bed, discussed below, has funded 10 
demonstrations of microgrid and storage technologies to evaluate the 
benefits and risks of alternative approaches and configurations. We are 
working with multiple vendors so as to ensure that we can capture the 
benefits of competition. Demonstrations are underway at Twentynine 
Palms, California (General Electric's advanced microgrid system); Fort 
Bliss, Texas (Lockheed Martin); Joint Base McGuire-Dix-Lakehurst, New 
Jersey (United Technologies); Fort Sill, Oklahoma (Eaton); and several 
other installations.
    In addition to funding technology demonstrations, my office has 
commissioned three studies from outside experts. First, Massachusetts 
Institute of Technology's Lincoln Laboratory is reviewing all of the 
Department's work on microgrids from a technical standpoint, and its 
report will be completed in May. In addition to helping us understand 
the range of ongoing activity, Lincoln Lab's work will serve to 
classify different microgrid architectures and characteristics and 
compare their relative cost-effectiveness. Second, a private 
organization is just beginning a financial analysis of the 
opportunities for installations to use smart microgrids and other 
energy security technologies (on-site generation, load management, 
stationary energy storage and electric vehicle-to-grid) to generate 
revenue. Although some installations engage in demand response even 
with their existing energy systems (typically, a base agrees to use 
backup generators on a few peak demand days in return for a payment 
from the local utility), advanced microgrid and storage systems will 
create opportunities for much more sophisticated and lucrative 
transactions. Third, Business Executives for National Security (BENS), 
a nonprofit, is analyzing alternative business models for the 
deployment of microgrids on military installations. As part of that 
analysis, which will be completed this summer, BENS is looking at the 
appropriate scale and scope for an installation microgrid (e.g., Should 
it stop at the fence or include critical activities in the adjacent 
community?) and at the impediments to widespread deployment.

                            ENERGY SECURITY

    Question. What are you doing to ensure energy security, 
particularly cybersecurity, is part of the Services plan for energy 
projects?
    Answer. The Department is pursuing use of microgrid technology, 
combined with on-site energy generation, to improve the energy security 
of its fixed installations. Our installations rely almost completely on 
the U.S. electric grid for power. Since the grid is vulnerable to cyber 
threats, use of microgrids must be cyber secure to provide reliable 
backup in the face of a cyber threat. The Department will use existing 
standards, such as National Institute of Standards and Technology 
(NIST) and DOD Information Assurance Certification and Accreditation 
Process (DIACAP), to ensure its microgrids are protected from 
everything that can prevent critical applications from satisfying their 
intended requirements, including insider and outsider misuse, malware 
and other system subversions, physical damage, and environmental 
disruptions. The application of existing recognized approaches to DOD 
microgrids, such as NIST's Guidelines for Smart Grid Cyber Security, 
will ensure that the Department is able to meet today's cyber threat 
challenges.
    These approaches are being used in the DOD's Environmental Security 
Test and Certification Program's (ETCPs) microgrid demonstration 
projects. ESTCP has funded 10 demonstrations of microgrid and storage 
technologies to evaluate the benefits and risks of alternative 
approaches and configurations. The Department is also testing the 
adequacy of these standards for cybersecurity in the Smart Power 
Infrastructure Demonstration for Energy Reliability and Security 
(SPIDERS) program. This effort is investigating cyber protection of 
industrial control systems and integration of distributed generation 
with renewable energy sources, including conducting exercises to test 
performance against cyber threats. SPIDERS will provide a replicable 
cybersecurity template when employing microgrids at DOD installations.

                          ROCK ISLAND ARSENAL

    Question. In May 2011, the G-4 Director for Maintenance Policy, 
Programs, and Process briefed me on the Army's ongoing Organic 
Industrial Base Policy Review. Since then, the Army continues to refuse 
requests to provide updates on that strategy refresh. The fiscal year 
2012 budget that the committee supported contained MILCON that the Army 
requested to expand capacity at Army organic industrial base (OIB) 
facilities. While the fiscal year 2013 contains limited MILCON at 
organic industrial facilities, we remained concerned about the absence 
of a strategy.
    Could you please outline the Army's strategy for work-loading its 
organic industrial base to a sufficient level to ensure it remains 
viable to meet future wartime needs, and specifically the Joint 
Manufacturing and Technology Center Rock Island Arsenal?
    Answer. The Army's workload will decline in the future because of 
the drawdown from current contingency operations. Linking the depots 
and arsenals, including the Rock Island Arsenal Joint Manufacturing and 
Technology Center, with the critical items they repair and manufacture 
will be the first step in establishing a sound baseline to determine 
required capability, capacity, capital investment requirements, and 
workload. This will allow both the depot maintenance and arsenal 
manufacturing competencies to remain complementary with private 
industry, and support the Army's action to right size the Government-
owned maintenance and manufacturing base and encourage more public-
private partnerships.
    The Army is assessing ways to maintain critical skill sets at 
organic facilities like Rock Island Arsenal by:
  --Exploring Foreign Military Sale opportunities to manufacture 
        components for foreign nations;
  --Investing in organic facilities infrastructure to ensure 
        modernization with advanced technological capabilities;
  --Encouraging organic facilities to partner with commercial firms to 
        meet future requirements; and
  --Encouraging involvement with the programs managers at the beginning 
        of the acquisition process to ensure consideration of organic 
        facility capabilities when economically feasible.
    The Army will designate critical items to be manufactured at 
facilities based on manufacturing economies or unique manufacturing 
capabilities such as those at Rock Island Arsenal. This sustains 
efficient and cost-effective facilities. In such cases, the Army will 
identify the type of work and resources needed to sustain the 
capability and capacity and will develop an implementation strategy to 
do so.
    Further, the Army has taken a number of steps to ensure that our 
organic facilities are postured to support requirements by identifying 
and prioritizing core requirements; sizing the facilities, 
infrastructure, and workforce to meet and sustain those core 
requirements; and using proven practices like Lean Six Sigma to ensure 
that its organic facilities maintain their core competencies and 
capabilities to meet future requirements.
    The Army's will ensure that the Army's OIB, including Rock Island 
Arsenal, remains viable and relevant by investing in new technology; 
providing training and plant equipment to support the modernization of 
Army weapon systems; identifying and aligning core competencies and 
resources to support current and future surge requirements; investing 
to maintain state-of-the-art capabilities and quality of work 
environment standards; and prioritizing funding to achieve the desired 
end state--viable and relevant OIB facilities.
    Question. To date, there has been no substantive joint-service 
work-loading of the Arsenal. What steps is the Army taking to engage 
the other services and expand access to its industrial base facilities, 
specifically Rock Island Arsenal? Please be specific and offer a 
timeline.
    Answer. The Army is working to ensure that the capabilities of the 
Army manufacturing arsenals are known and provided to all Department of 
Defense (DOD) Program Managers. This helps maintain the viability of 
the Army manufacturing arsenals and the unique capabilities of these 
arsenals to support the national security interests of the United 
States. We are encouraging the DOD Program Managers to compete or 
partner with commercial manufacturing sources for weapon system 
assembly, sub-assembly, and component manufacturing workloads. 
Partnering between the arsenal and commercial section should occur if 
it's economical to do so or if it's needed to support a unique, 
necessary capability of the arsenal.
    Workloads in all Army organic industrial base facilities are 
projected to decline at moderate rates through fiscal year 2015 as 
operational requirements are reduced in Iraq and Afghanistan. 
Throughout this period and beyond, the Army's arsenals will continue to 
be designated as Centers of Industrial and Technical Excellence (CITE) 
for maintenance and repair; for example, Rock Island Arsenal Joint 
Manufacturing Technology Center is designated as a CITE for Mobile 
Maintenance Systems.
    Question. Are there any studies, reviews, and/or activities 
underway within the Army that could lead to the closure of the Joint 
Manufacturing and Technology Center Rock Island Arsenal? Please list 
all studies, reviews, and/or activities; the responsible USG/Army 
entity; and the final decision maker for each.
    Answer. We know of no study that specifically recommends the 
closure of the Joint Manufacturing and Technology Center Rock Island 
Arsenal. The Secretary of Defense has requested Base Realignment and 
Closure (BRAC) legislation in order to give the Department of Defense 
(DOD) a tool for reshaping and right-sizing its infrastructure. 
Potential closures or realignments of any Army installation would be 
considered as part of this process.
    In 2011, the Secretary of the Army directed the Army Materiel 
Command and the Assistant Secretary of the Army for Acquisition, 
Logistics and Technology to conduct a study on the optimization of 
materiel development and sustainment. The study will examine ways to 
improve the Army materiel and sustainment processes and institutions 
and is currently on-going.
                                 ______
                                 
                 Questions Submitted to Dr. Peter Lavoy
               Questions Submitted by Senator Tim Johnson

    Question. Dr. Lavoy, under the accelerated plan to withdraw 8,700 
marines from Okinawa, the Department of Defense (DOD) has said that 
4,700 marines will relocate to Guam, and the remaining 4,000 marines 
will rotate through the Pacific or shift to Hawaii.
    How many forces do you expect will be home-based in Hawaii, and 
what MILCON requirements will that entail? Where will the rotational 
forces be home-based, and where will they be deployed? Do you expect 
future year MILCON needs for these components?
    Answer. A final determination of the military construction (MILCON) 
funding requirements for the expected end strength of 8,800 marines in 
Hawaii will depend on the outcome of environmental studies and other 
considerations. Rotational forces are globally sourced, which in 
practical terms usually refers to Marine units rotating from bases in 
the continental United States or Hawaii. The MILCON funding requirement 
for the rotational forces to be located in Australia, estimated at $1.3 
billion, is very preliminary, and will depend on such factors as 
environmental assessments and Australian contributions.
    Question. Dr. Lavoy, according to your testimony, maintaining USFK 
is a key component of U.S. strategy in Asia. With the effective 
cancellation of Tour Norm, what do you foresee for our future MILCON 
needs on the Peninsula? How will future MILCON in Korea augment our 
medium and long-term strategies?
    Answer. A final determination of the military construction (MILCON) 
funding requirements for the expected end strength of 8,800 marines in 
Hawaii will depend on the outcome of environmental studies and other 
considerations. Rotational forces are globally sourced, which in 
practical terms usually refers to Marine units rotating from bases in 
the continental United States or Hawaii. The MILCON funding requirement 
for the rotational forces to be located in Australia, estimated at $1.3 
billion, is very preliminary, and will depend on such factors as 
environmental assessments and Australian contributions.
                                 ______
                                 
                Question Submitted by Senator Mark Kirk

                          PACIFIC ENGAGEMENTS

    Question. The Future Years Defense Plan contains very specific 
``Pacific Engagement Wedges,'' even though the review for the Pacific 
region has yet to be completed. The wedges are:
  --2015: $50,000,000;
  --2016: $49,905,000;
  --2016: $101,317,000; and
  --2017: $101,183,000.
    Dr. Lavoy, today's (March 27) Washington Post ran a story about the 
administration's plans to broaden ties to Australia and other nations 
in the Pacific region. The article mentioned expanding the carrier port 
in Perth, Australia; deploying combat ships to Singapore; operating 
UAV's from Cocos Island; and even operating out of Viet Nam. Can you 
please supple details of the plans as you see them thus far? A 
classified briefing will be acceptable.
    Answer. [Follows:]
    Australia.--Our alliance with Australia is solidly grounded on 
shared values and common security concerns and approaches. Australia 
and the United States see many shared regional challenges in South East 
Asia and Oceania, including responding to natural disasters, ensuring 
freedom of navigation, combating piracy, and enhancing regional 
stability. The force posture initiatives announced last November by 
President Obama and Australian Prime Minister Gillard--including the 
rotation of U.S. Marines to Darwin and an increased U.S. Air Force 
presence in northern Australia--are examples of increased United States 
and Australian cooperation to address these regional challenges.
    The United States continues to discuss a wide range of ways to 
enhance military cooperation with allies and partners, including ways 
to increase our cooperation and interoperability with Australia. 
Discussions on force posture initiatives are ongoing; however, no 
decisions have been made by either the United States or Australian 
Governments regarding initiatives beyond those announced last November.
    Singapore.--Singapore is an active security partner with a strong 
commitment to promoting regional and international security. Singapore 
shares the belief that a strong United States presence in the Asia-
Pacific enhances this security. We are working with Singapore to 
operationalize the partnership agreed upon in the 2005 Strategic 
Framework Agreement (SFA). The SFA provides the foundation for our 
overall bilateral relationship.
    As one part of this effort, we have agreed to forward deploy 
littoral combat ships (LCS) to Singapore on a rotational basis as an 
example of our operational engagement. The LCS will not be based in 
Singapore and will be home-ported in the United States. This marks a 
significant movement in terms of our cooperation with Singapore. Once 
forward deployed to Singapore, the LCS will make port calls in the 
region to engage regional navies through activities such as exercises 
and exchanges. The LCS is a fast, agile, mission-focused platform 
designed to operate in near-shore environments. The modular design 
allows the ship to be tailored specifically for the mission at hand. 
The operational details of forward deploying LCS to Singapore, 
including the timeline, are still under discussion. More information 
will be made available as Singapore and the United States finalize 
plans.
    On April 4, Secretary Panetta met with Singaporean Defense Minister 
Ng and discussed the forward deployment of LCS to Singapore. This 
deployment signals the U.S. commitment to the region and enhances our 
ability to train and engage with regional partners.
    Vietnam.--This year marks the 17th anniversary of the normalization 
of diplomatic relations between the United States and Vietnam. The 
United States and Vietnam continue to build an increasingly robust 
bilateral defense relationship based on shared objectives for peace and 
stability in the region. Improving defense cooperation is a reflection 
of the overall improving relationship between the two countries.
    Since the first ship visit of the USS Vandegrift to Vietnam in 
November 2003--the first United States Navy ship to visit Vietnam in 30 
years--the United States has made a port call in Vietnam every year, 
establishing a routine pattern of United States Navy maritime 
engagement. These ship visits have played a critical role in enhancing 
our maritime security cooperation with Vietnam, and helping to expand 
our overall bilateral defense relationship. We memorialized maritime 
security cooperation with Vietnam in the 2011 Memorandum of 
Understanding (MOU) for Advancing Bilateral Defense Cooperation. The 
MOU also identified four other priority areas to move the defense 
relationship forward: Routine dialogues and exchanges, search and 
rescue, UN Peacekeeping Operations, and humanitarian assistance/
disaster relief.
    To continue our routine naval engagements, the United States and 
Vietnam navies conducted a port call in Da Nang, Vietnam in April 2012. 
Both countries designed this activity to foster friendship, mutual 
understanding, and improve defense relations.
    These kinds of activities underscore the closer ties between the 
United States and Vietnam. They enhance collective regional 
capabilities and cooperation, promote understanding, and improve the 
interoperability of our forces. However, it would be inaccurate to 
suggest that these activities feature U.S. naval assets ``operating out 
of Vietnam.'' To the contrary, these activities involve U.S. vessels 
making brief visits before departing to continue operations elsewhere 
in the region.

                         Department of the Army

STATEMENT OF HON. KATHERINE G. HAMMACK, ASSISTANT 
            SECRETARY OF THE ARMY, INSTALLATIONS, 
            ENERGY, AND ENVIRONMENT
ACCOMPANIED BY:
        LIEUTENANT GENERAL MICHAEL FERRITER, ASSISTANT CHIEF OF STAFF 
            FOR INSTALLATION MANAGEMENT AND COMMANDING GENERAL, ARMY 
            INSTALLATION COMMAND
        MAJOR GENERAL TIMOTHY KADAVY, DEPUTY DIRECTOR OF THE ARMY 
            NATIONAL GUARD
        TAD DAVIS, CHIEF EXECUTIVE OFFICER OF THE ARMY RESERVE COMMAND

    Senator Johnson. I am pleased to welcome our second panel 
of witnesses.
    I am pleased to introduce Secretary Katherine Hammack, 
Assistant Secretary of the Army for Installations, Energy, and 
Environment; Lieutenant General Michael Ferriter, Assistant 
Chief of Staff for Installation Management and Commanding 
General, U.S. Army Installation Command; Major General Timothy 
Kadavy, Deputy Director of the Army National Guard; and Mr. Tad 
Davis, Chief Executive Officer of the Army Reserve Command.
    This year's military construction and family housing budget 
request for the Army is $3.6 billion, 32 percent below the 
fiscal year 2012 enacted amount. This steep decline in funding 
reflects the uncertainty injected into the Army MILCON planning 
as a result of recent policy decisions, including the reduction 
of 72,000 Army personnel and at least eight brigade combat 
teams through fiscal year 2017.
    While these uncertainties are reflected in the fiscal year 
2013 budget request, they are more glaringly apparent in the 
Army's fiscal years 2013 through 2017 Future Years Defense Plan 
(FYDP). The Army's revised FYDP for fiscal years 2013 through 
2017 is a full 70 percent lower than last year's FYDP 
projections.
    Clearly, the Army is facing a huge task in manpower and 
facility resourcing as it transitions from a wartime footing. 
This subcommittee stands ready to assist in helping the Army 
make this transition in terms of military construction, but it 
is imperative that we have a clear picture of the Army's way 
ahead as we make these decisions.
    I thank our witnesses for coming today, and we look forward 
to your testimony. I understand that each of the witnesses will 
make a very brief opening statement. Your full statements will 
be entered into the record, so I encourage you to summarize 
them to leave more time for questions.
    Madam Secretary, please proceed.

             SUMMARY STATEMENT OF HON. KATHERINE G. HAMMACK

    Ms. Hammack. Thank you, Chairman Johnson, Senator Blunt. On 
behalf of soldiers, families, and civilians of the U.S. Army, 
thank you for the opportunity to present our military 
construction budget for fiscal year 2013.
    I do want to recognize the absence of Senator Kirk from 
Illinois. His support and representation of Rock Island Arsenal 
is appreciated. We also wish him a speedy recovery.
    We know the fiscal challenges that this Nation faces and 
are planning accordingly to implement what was asked of us by 
the Budget Control Act. The MILCON budget before you, as you 
mentioned, supports an Army in transition while at war and is a 
32-percent reduction from prior year.
    Pending strategic decisions in the Army's end strength 
reductions, force structure, and stationing has required us to 
prioritize our facility investments and to defer some of those 
investments that could be impacted. Once a Total Army Analysis 
(TAA) is complete later this year, we will then rebalance the 
fiscal year 2014 military construction budget to meet the needs 
of a realigned force.
    I do want to talk about BRAC. As Dr. Robyn said in the 
previous panel, BRAC 2005 was a very different BRAC round for 
the Army from previous rounds. It was a transformational BRAC 
with a focus on restructuring to train and man the way that we 
currently fight. Although there are cost savings, they are much 
longer term cost savings than all prior rounds of BRAC.
    BRAC 2005 also benefited the Army Guard and Reserve. In 
some areas, they consolidated on a 3-to-1 basis out of failing 
facilities into newer facilities, returning land to communities 
for greater economic and taxpaying use. And I'm sure you'll 
hear more about that from my fellow panelists.
    The Army does support the administration's request for a 
BRAC in fiscal years 2013 and 2015. We know that changes in 
force structure will necessitate evaluation of our facilities 
to optimize usage, capabilities, and costs.
    We have listened to Congress and have followed your 
guidance to reduce cost and footprint in Europe and in Korea. 
And as Dr. Robyn mentioned on the panel previously, in Europe, 
over the last 6 years, we have closed 97 sites and returned 
23,000 acres to the host nation. In the next 4 years, we plan 
to close another 23 sites and return 6,400 acres primarily in 
Germany.
    In Korea, over the last 6 years, we have closed 34 sites 
with 7,300 acres returned. And in the next 4 years, we plan to 
close another 20 sites and 9,400 acres returned to host nation. 
So we have been implementing a BRAC-like base realignment and 
closure overseas for many years, similar to what has been done 
in the United States.
    I want to briefly touch on our Energy and Sustainability 
program. Since 2003, we have reduced our installation energy 
consumption by over 13 percent. We have implemented a Net Zero 
Initiative which focuses on reducing energy, water, and waste 
on our Army installations, and we currently have 17 
installations that are striving to reach Net Zero by 2020.
    Our Energy Initiatives Task Force is focusing on large-
scale alternative energy production on Army installations which 
will give us the energy security that we require. At the same 
time, we have accelerated the use of Energy Saving Performance 
Contracts.
    Each of these initiatives that I mentioned is leveraging 
private sector capital, not appropriated funds, utilizing 
authorities that members of Congress have given us. This 
enables us to enhance energy security, promote job growth in 
local communities, and leverage the cost effectiveness of the 
private sector.

                           PREPARED STATEMENT

    In closing, I want to thank you for the opportunity to 
appear before you today and for your continued support for our 
Army soldiers, families, and civilians. I look forward to your 
questions.
    [The statement follows:]
  Prepared Statement of Hon. Katherine G. Hammack; Lieutenant General 
    Michael Ferriter; Major General Timothy J. Kadavy; and Tad Davis

                              INTRODUCTION

    Chairman Johnson, Senator Kirk and members of the subcommittee, on 
behalf of the soldiers, families and civilians of the United States 
Army, I want to thank you for the opportunity to present the Army's 
Installation Management Community fiscal year 2013 Military 
Construction budget request.
    The Army's fiscal year 2013 Military Construction budget request 
supports an Army in transition while still at war. We understand the 
fiscal challenges faced by the Nation. Through efforts like the Army 
Facility Strategy 2020, the Army Family Covenant, the Army Community 
Covenant, and the Army Energy Enterprise, the Installation Management 
Community is focused on providing the facilities to support a trained 
and ready land force. We continue to be careful stewards of both the 
fiscal and environmental resources provided to the Army.
    Over the past 4 years, the Army, with the support of the Congress, 
has regained balance, restoring strategic flexibility for the Nation. 
Continued support of the Congress will ensure the Army remains manned, 
trained, equipped and ready for all challenges and to protect America's 
interests at home and abroad. The subcommittee's commitment to our 
soldiers, families, and civilians and support of the Army's military 
construction program is deeply appreciated. The Army's strength is its 
soldiers--and the families and army civilians who support them. They 
are and will continue to be the centerpiece of our Army. America's Army 
is the strength of the Nation.

                                OVERVIEW

    The Army's fiscal year 2013 President's budget requests $3.6 
billion for Military Construction (MILCON), Army Family Housing (AFH), 
and Base Realignment and Closure (BRAC). This request is $1.7 billion 
less or a 32-percent reduction from the fiscal year 2012 request. The 
$3.6 billion request represents 3 percent of the total Army budget. Of 
the $3.6 billion requested, $1.9 billion is for the Active Army, $614 
million is for the Army National Guard, $306 million is for the Army 
Reserve, $186 million is for BRAC, and $535 million is for AFH. In 
addition and in support of Army installations and facilities the 
President's budget requested $9.0 billion for Base Operations Support 
(BOS) and $1.17 billion for environmental programs.
    The 32-percent reduction in this budget request reflects the new 
fiscal reality that we are facing as a Nation. The Budget Control Act 
of 2011 combined with the pending strategic decisions on Army end-
strength reductions and force structure and stationing across the 
country required the Army to review the facility investments necessary 
to sustain an All Volunteer Army. This MILCON budget request reflects 
the investments required in training, maintenance, operations, and 
quality of life facilities to preserve the all volunteer force.

                      ARMY FACILITY STRATEGY 2020

    As we shape the Army of 2020 through a series of strategic choices 
over the coming months and years, the Installation Management Community 
looks to implement its Army Facility Strategy 2020 (AFS 2020) to 
provide quality, energy efficient facilities in support of the Force. 
AFS 2020 provides a strategic framework to manage facilities at Army 
installations and is integrated with Army Systems and Force Structure 
decisions. AFS 2020 proposes a more cost-effective and efficient 
approach to facility investments that reduces unneeded footprint, saves 
energy by preserving more efficient facilities, consolidates functions 
for better space utilization, demolishes failing buildings and uses 
appropriate excess facilities as lease alternatives while meeting 
future Force drawdown as a 2020 objective.
    AFS 2020 incorporates a facility investment strategy using MILCON 
funding to build out critical facility shortages; MILCON and Operation 
& Maintenance-Restoration & Modernization (O&M R&M) funding to improve 
existing facility quality; O&M Sustainment funding to maintain existing 
facilities; and O&M Demolition and Disposal funding to eliminate 
failing excess facilities. Investments from MILCON and O&M funding will 
support facilities grouped in the following categories: Global Defense 
Posture Realignment; Redeployment/Force Structure; Modularity; 
Barracks; Recapitalization/Deficit; and Ranges and Training Facilities. 
The fiscal year 2013 budget request begins the implementation of the 
AFS 2020 Facility Investment Strategy (FIS) by building out shortfalls 
for barracks, maintenance facilities, ranges, and Reserve component 
facilities.

                    FISCAL YEAR 2013 BUDGET REQUEST
                      MILITARY CONSTRUCTION, ARMY

    The Active Army fiscal year 2013 Military Construction, Army (MCA) 
budget request is for $1,923,323,000 (for appropriation and 
authorization of appropriations) to support the Army facility 
investment strategy. There are no requests for construction in Germany 
as we reassess our force structure in that country. The MCA budget has 
been further reduced by deferring projects that could be impacted by 
the Total Army Analysis (TAA). Upon completion of the TAA, future MCA 
budget requests will be rebalanced to meet the needs of a realigned 
force.
    Barracks Buyout ($401 Million/21 Percent).--The fiscal year 2013 
budget request will provide for 1,180 new permanent party barracks 
spaces that will meet Department of Defense ``1+1'' construction 
standard and contribute to the reduction of inadequate permanent party 
barracks and deficits. The locations of these projects are at Joint 
Base San Antonio, Texas; Wheeler Army Air Field and Schofield Barracks, 
Hawaii; and Camp Ederle, Italy. The fiscal year 2013 request will also 
provide our soldiers 2,280 new training barracks spaces that meet 
applicable standards. The locations of these projects are at Fort 
Jackson, South Carolina; Fort Lee, Virginia; and Fort Leonard Wood, 
Missouri. The total barracks buyout investments will provide 3,460 
spaces at seven installations.
    Global Defense Posture Realignment ($128 Million/7 Percent).--The 
fiscal year 2013 budget request includes two projects that support 
forward deployed forces in the Pacific Theater: $45 million for a 
battalion complex at Army Garrison Humphreys in South Korea and $18 
million for a vehicle maintenance facility in Sagami, Japan. The 
request also includes $65 million for two mission projects for units 
currently stationed at Fort Leonard Wood, Missouri in temporary or 
failing structures.
    Modularity ($301 Million/16 Percent).--The fiscal year 2013 budget 
requests $78 million to support a critical strategic communication 
facility required by the Army's Network Enterprise Technology Command 
in its continuous pursuit of improved command and control, 
communication and intelligence linkages between Combatant Commanders 
and the National Command Authorities. Another $128 million supports 
barracks and mission facilities for unaccompanied soldiers at Fort 
Campbell, Kentucky and Joint Base Lewis-McChord, Washington. The 
remaining $95 million will provide aircraft maintenance hangers for the 
Combat Aviation Brigade at Fort Drum, New York.
    Redeployment/Force Structure ($165 Million/9 Percent).--The fiscal 
year 2013 budget request includes $30 million for infrastructure 
necessary to support six Special Operations Command (SOCOM) buildings 
programmed in fiscal years 2012 and 2013. Senate Report 104-116 
accompanying the Military Construction Appropriation Bill, 1996, 
prohibited the inclusion of infrastructure improvements in SOCOM 
Defense Wide MILCON budget requests and Senate Report 104-116 directed 
the military departments responsible for supporting the special 
operations forces to provide installation infrastructure as well as 
other common support facilities. The request includes $107 million to 
support the fielding of the Gray Eagle units at Fort Bragg, North 
Carolina; Fort Campbell, Kentucky; Fort Hood, Texas; Fort Riley, 
Kansas; and Fort Stewart, Georgia. As a result of the Energy 
Independence and Security Act of 2007 and Executive Order, the 
remaining $28 million replaces failing heating systems with ground 
source heat transfer systems at Fort Benning and Fort Gordon, Georgia.
    Recapitalization/Deficit: ($572 Million/30 Percent).--The fiscal 
year 2013 budget request includes 11 projects with investments of $94 
million for operations facilities, $202 million for operational support 
facilities and $276 million for institutional support projects. 
Included in the $202 million is $91 million for a waste water treatment 
plant at Joint Base Lewis-McChord, Washington. Joint Base Lewis-McChord 
must recapitalize this plant to meet the more stringent Puget Sound 
effluent standards and avoid escalating environmental violations. Also 
included is $93 million to support the upgrade of the Army's aging 
critical industrial base facilities located at Corpus Christi Army 
Depot, Texas; Joint Base McGuire-Dix-Lakehurst, New Jersey; and the 
Military Ocean Terminal Concord, California. The two institutional 
support projects are the Cadet Barracks at the United States Military 
Academy for $192 million and the expansion of the Arlington National 
Cemetery for $84 million. The Cadet Barracks will provide 325 modern 
two-person rooms for the future leaders of the Army, eliminating 
current overcrowding. The expansion of the Arlington National 
Cemetery's Millennium Site will provide hallowed burial grounds for 
soldiers, sailors, airmen, and marines beyond 2025.
    Ranges and Training Facilities ($232 Million/12 Percent).--The 
fiscal year 2013 budget request includes $160 million for training 
ranges to support multiple weapon systems and $72 million in digital/
simulations training facilities. The Army ranges and training 
facilities are used by all components of the Army to achieve mission 
combat readiness. The current ranges do not meet the quantity required 
by training demands and/or require modernization to meet current 
weapons qualification standards.
    Other Support Programs ($124 Million/6 Percent).--The fiscal year 
2013 budget request includes $65 million for planning and design of MCA 
projects and $34 million for the oversight of design and construction 
of projects funded by host nations. As executive agent, the Army 
provides oversight of host nation funded construction in Japan, Korea, 
and Europe for all Services. The fiscal year 2013 budget also requests 
$25 million for unspecified minor construction to address unforeseen 
critical needs.

               MILITARY CONSTRUCTION, ARMY NATIONAL GUARD

    The Army National Guard fiscal year 2013 MILCON budget request of 
$613,799,000 (for appropriation and authorization of appropriations) is 
focused on Modularity, Recapitalization/Deficit, Ranges and Training 
Facilities, Barracks, and other support programs.
    Modularity ($227.2 Million/37 Percent).--The fiscal year 2013 
budget request is comprised of 15 projects, which include nine 
Readiness Centers/Armed Forces Reserve Centers, two Combined Support 
Maintenance Shops, two Army Aviation Support Facilities, one Field 
Maintenance Shop, and one Refill Station Building.
    Recapitalization/Deficit ($310.5 Million/51 Percent).--The Army 
National Guard budget requests 18 projects to replace failing, 
inefficient facilities. There is one Maneuver Area Training & Equipment 
Site, four Regional Training Institutes (RTI), five Readiness Centers/
Armed Forces Reserve Centers, two Operations Readiness Training 
Complexes, three Field Maintenance Shops, one Taxiway, Ramp & Hangar 
Alterations, one Unit Training Equipment Site, and one RTI enlisted 
barracks. These projects will provide modernized facilities to enhance 
the Guard's operational readiness.
    Ranges and Training Facilities ($34.4 Million/5 Percent).--The 
fiscal year 2013 budget request includes four projects which will 
support the Army National Guard's training of its operational force. 
These funds will provide the facilities soldiers require as they train, 
mobilize, and deploy. Included are one Live Fire Shoot House, one 
Combined Arms Collective Training Facility, one Urban Assault Course, 
and one Scout Reconnaissance Range.
    Other Support Programs ($41.7 Million/7 Percent).--The fiscal year 
2013 Army National Guard budget request includes $26.6 million for 
planning and design of future projects and $15.1million for unspecified 
minor military construction to address unforeseen critical needs.
    Special Program Considerations.--The Army National Guard requests a 
technical correction to the scope of the fiscal year 2010 North Las 
Vegas, Nevada Readiness Center. Due to technical errors, the DD form 
1391 did not reflect the correct size for two line items and omitted 
one line item from what was presented to Congress. The Readiness Center 
should read 68,593 square feet (SF) vice 65,347 SF, and the unheated 
equipment storage area read 10,000 SF vice 4,800 SF. In addition 25,000 
SF unheated vehicle storage must be added. All changes in scope can be 
executed within the appropriated amount of the project.

                  MILITARY CONSTRUCTION, ARMY RESERVE

    The Army Reserve fiscal year 2013 MILCON budget request for 
$305,846,000 (for appropriation and authorization of appropriations) is 
for Recapitalization/Deficit; Ranges and Training Facilities, Barracks, 
and other support programs.
    Recapitalization/Deficit ($258.8 Million/85 Percent).--The fiscal 
year 2013 Army Reserve budget request includes $258.8 million for 
facilities that prepare our soldiers for success in current operations. 
The construction of six new Army Reserve Centers, one Armed Forces 
Reserve Center, and one Operational Readiness Training Complex will 
provide modernized training classrooms, simulations capabilities, and 
maintenance platforms that support the Army force generation cycle and 
the ability of the Army Reserve to provide trained and ready soldiers 
for Army missions when called. The construction of one Equipment 
Concentration Site will enhance maintenance, equipment training set and 
storage capacity at Fort McCoy, Wisconsin. In addition, the request 
includes a new Central Issue Facility and a consolidated Dining 
Facility at Fort McCoy. The construction of these two facilities will 
provide modern, technologically advanced and energy efficient 
facilities, as well as demolish eight failing World War II-era wood 
structures.
    Ranges and Training Facilities ($15.9 Million/5 Percent).--The 
budget request includes three ranges that enable soldiers to hone their 
combat skills. Two ranges will be constructed at the Devens Reserve 
Forces Training Area, Massachusetts, and one will be constructed at 
Joint Base McGuire-Dix-Lakehurst, New Jersey, to support Reserve 
component soldiers in the northeastern part of the country.
    Barracks Buyout ($4.3 Million/1 Percent).--The budget request 
includes an Unaccompanied Personnel Housing (UPH) barracks project for 
permanent party soldiers assigned to Fort Hunter-Liggett, California.
    Other Support Programs ($26.8 Million/9 Percent).--The fiscal year 
2013 Army Reserve budget request includes $15.9 million for planning 
and design of future year projects and $10.9 million for unspecified 
minor military construction to address unforeseen critical needs.

                          ARMY FAMILY HOUSING

    The Army's fiscal year 2013 budget request for $534,692,000 (for 
appropriation and authorization of appropriations) is for the Army's 
investment in and operation of its worldwide inventory of family 
housing assets. The Army relies first on the local economy to provide 
housing for our soldiers. When housing on the economy is not available, 
the Army provides housing by various means including Government-owned, 
privatized, and leased housing. The Army has successfully privatized 98 
percent of on-post housing assets inside the United States, while 
overseas we primarily house families in Army-owned and leased quarters.
    Residential Communities Initiative (RCI).--In 1999, the Army began 
privatizing housing assets and the RCI continues to provide quality 
housing that soldiers and their families and senior single soldiers can 
proudly call home. The Army leverages appropriated funds and existing 
housing by engaging in 50-year partnerships with nationally recognized 
private real estate development, property management, and home builder 
firms to construct, renovate, repair, maintain, and operate housing 
communities.
    RCI Family housing is at 44 locations, with a projected end state 
of over 85,000 homes--98 percent of the on-post Family housing 
inventory inside the United States. Initial construction and renovation 
investment at these 44 installations is estimated at $12.7 billion over 
a 3- to 14-year initial development period, which includes the Army's 
contribution of close to $2.0 billion. From 1999 through 2012, our 
partners have constructed 27,497 new homes, and renovated another 
23,025 homes.
    The RCI program for Senior Unaccompanied Housing includes four 
installations for a total of 1,394 accommodations for senior single 
soldiers in grade Staff Sergeant and above including officers at 
locations where there is a deficit of adequate accommodations off post. 
The four locations are Forts Irwin, Drum, Bragg, and Stewart.

                    ARMY FAMILY HOUSING CONSTRUCTION

    AFH Construction ($4.6 Million/1 Percent).--The Army's fiscal year 
2013 Family Housing Construction request is $4.6 million for planning 
and design of future projects to continue our significant investment in 
our soldiers and their families. This supports our goal to improve 
Army-owned housing and eliminate our remaining inadequate inventory at 
enduring overseas installations.

                     ARMY FAMILY HOUSING OPERATIONS

    AFH Operations ($530 Million/99 Percent).--The fiscal year 2013 
budget request includes $530.1 million for: Operations, Utilities, 
Maintenance and Repair, Leased Family housing, and management of RCI. 
This request supports over 16,000 Army-owned homes, in the United 
States and in foreign countries, as well as almost 7,500 leased 
residences and provides Government oversight of more than 83,000 
privatized homes.
    Operations ($102.9 Million).--The operations account includes four 
sub-accounts: management, services, furnishings, and a small 
miscellaneous account. All operations sub-accounts are considered 
``must pay accounts'' based on actual bills that must be paid to manage 
and operate the AFH-owned inventory.
    Utilities ($88.1 Million).--The utilities account includes the cost 
of delivering heat, air conditioning, electricity, water, and 
wastewater support for owned or leased (not privatized) Family housing 
units. The overall size of the utilities account is decreasing in 
proportion to the reduction in supported inventory due to RCI.
    Maintenance and Repair ($109.5 Million).--The maintenance and 
repair account supports annual recurring projects to maintain and 
revitalize AFH real property assets. Since most Family housing 
operational expenses are fixed, maintenance and repair is the account 
most affected by budget changes. This funding ensures that we 
appropriately maintain housing so that we do not adversely impact 
soldier and family quality of life.
    Leasing ($203.5 Million).--The Army leasing program is another way 
to provide soldiers and their families adequate housing. The fiscal 
year 2013 budget request includes funding for a total of 7,490 housing 
units, including 250 existing section 2835 (``build-to-lease''--
formerly known as 801 leases), 1,478 temporary domestic leases in the 
United States, and 5,762 leased units overseas.
    Privatization ($26.0 Million).--The privatization account provides 
operating funds for management and oversight of privatized military 
family housing in the RCI program. RCI program costs include: Civilian 
pay, travel, and contracts for environmental and real estate functions; 
training; real estate and financial consultant services, and oversight 
to monitor compliance and performance of the overall privatized housing 
portfolio and individual projects.

                      BASE REALIGNMENT AND CLOSURE

BRAC 2005
    The Army met its BRAC obligations within the 6-year implementation 
window on September 15, 2011. The implementation of BRAC 2005 enabled 
the Army to reshape the infrastructure supporting the Operating Force, 
the Generating Force and the Reserve component transforming how the 
Army, trains, deploys, supplies, equips, cares for and garrisons its 
soldiers, families, and civilians. BRAC 2005 closed 12 installations, 
387 Reserve component sites, realigned 53 installations and/or 
functions at an investment of almost $18 billion which included 329 
major construction projects. The completion of those recommendations, 
combined with the efficiencies achieved in the completion of the other 
Army BRAC recommendations, generates almost $2 billion in annual 
recurring savings. BRAC 2005 relocated three (3) four-star and five (5) 
three-star headquarters to multi-use installations that support the 
missions of those headquarters, six (6) Joint and Army Training Centers 
of Excellence, a Human Resources Center of Excellence, seven (7) Joint 
bases, four (4) Joint mobilization sites, and two (2) Joint technical 
and research facilities. It transformed the Army's industrial base, 
medical infrastructure and authorized 125 multi-component Armed Forces 
Reserve Centers and realigned the Army Reserve command and control 
structure. The Army has also conveyed an unprecedented 47 percent of 
its 70,311 BRAC 2005 total excess acreage as of January 2012. The 
remaining focus for BRAC 2005 is to dispose of the balance of excess 
property.
    The Army fiscal year 2013 budget request for BRAC 2005 is 
$106,219,000. The funding request includes $48.4 million to support 
facility caretaker requirements. In fiscal year 2013, the Army will 
continue environmental closure, cleanup and disposal of BRAC 
properties. These activities will continue efforts previously ongoing 
under the Army Installation Restoration Program and will ultimately 
support future property transfer actions. The budget request for 
environmental programs is $57.8 million, which includes management of 
munitions and explosives of concern as well as hazardous and toxic 
waste restoration activities. The timely execution of environmental 
restoration projects in fiscal year 2013 at several industrial sites, 
such as Riverbank Army Ammunition Plant, California, Lone Star Army 
Ammunition Plant, Texas and Kansas Army Ammunition Plant, Kansas is 
critical to transferring property back into productive re-use and job 
creation.

BRAC 1990
    The Army is requesting $79,863,000 in fiscal year 2013 for prior 
BRAC rounds. The request includes $4.5 million for caretaking 
operations and program management of remaining properties and $75.4 
million for environmental restoration to address environmental 
restoration efforts at 280 sites at 36 prior BRAC installations. The 
funds requested in fiscal year 2013 are needed to keep planned clean-up 
efforts on track, particularly at Forts Ord, California; McClellan, 
Alabama; Wingate, New Mexico; Devens, Massachusetts; and Savanna Army 
Depot, Illinois. The Army has disposed of 178,357 acres (85 percent of 
the total acreage disposal requirement of 209,291 acres), with 30,934 
acres remaining. Similar to BRAC 2005, prior BRAC also produces 
recurring savings which the Army estimates at nearly $1 billion 
annually.

Future BRAC
    The Department of Defense is requesting BRAC authority in 2013 and 
2015. In BRAC 2005, the National Guard and Reserve benefited greatly 
through consolidation of facilities into joint readiness centers. On a 
3-to-1 basis, the Army closed and returned land and buildings to local 
communities, consolidating onto military or other lands. The benefit to 
the local communities and Army was both economic and operational. We 
anticipate that there could be similar efficiencies in a future BRAC 
round. Additionally, with the anticipated end-strength reduction, BRAC 
could facilitate realignment of leased facilities onto installation 
facilities vacated due to TAA. Although no analysis has been completed, 
further study could identify other opportunities to gain efficiencies 
and reduce costs.

                                 ENERGY

    The Army is the largest facilities energy user in the Federal 
Government. To maintain an effective readiness posture as energy costs 
escalate, the Army has implemented a comprehensive Energy and 
Sustainability program based on culture change, increased energy 
efficiency, and development of renewable and alternate sources of 
energy. Reducing energy use at Army facilities is mission critical, 
operationally necessary and financially prudent.
    Army installations and facilities require secure and uninterrupted 
access to energy. Dependence on fossil fuels and a vulnerable electric 
power grid jeopardizes the security of Army installations and mission 
capabilities. Investment in renewable energy and energy efficient 
technologies will help ensure the Army can meet mission requirements 
today and into the future. The Army evaluates every single energy 
investment opportunity to determine its long-term benefits for the 
Army. For investments on our installations we examine projects based on 
positive return on investment and demonstrated cost savings over its 
lifetime. We also expect projects to make positive contributions to 
energy security and improve the quality of life experienced by soldiers 
and their family members.
    Since fiscal year 2003 the Army has reduced its installation energy 
consumption by 13.1 percent while its total number of Active soldiers 
and civilians has increased 20 percent. In addition, the Army has 
adopted the highest building code in the Federal Government, ASHRAE 
189.1 which will reduce energy and water consumption on average 40 
percent annually in our new construction program and in existing 
facilities that undergo major renovations.
    In fiscal year 2013 the Army's Installation Energy budget totals 
$1.453 billion and includes $50 million from the Department of Defense 
(DOD) ``Defense-Wide'' appropriation for the Energy Conservation 
Investment Program (ECIP), $343 million for Energy Program/Utilities 
Modernization program, $1,053 million for Utilities Services, and $7.1 
million for installation related Science and Technology research and 
development. The Army conducts financial reviews, business case and 
life cycle cost analysis and return on investment evaluations for all 
energy initiatives.
    The Army's fiscal year 2013 allocation of the ECIP program, $50 
million, includes seven renewable energy projects, six energy 
conservation projects, one water project, and two Energy Security 
projects. In accordance with DOD guidance, fiscal year 2013 project 
submissions are divided into four categories: Renewable Energy; Energy 
Conservation; Water, and Security. Effective with fiscal year 2013, 
ECIP has established a new funding category to capture a project's 
contribution to enhancing water and/or grid security. The Army is 
taking a strategic look at requirements, including a thorough project 
validation and prioritization process, to develop an ECIP Future Years 
Defense Program to fund additional requirements should such an 
opportunity arise.
    The Utilities Services account pays all Army utility bills and is 
used to finance the repayment of Utilities Privatization, Energy 
Savings Performance Contracts (ESPCs) and Utilities Energy Service 
Contracts (UESCs). ESPCs and UESCs allow the Army to implement energy 
efficiency improvements through the use of private capital, repaying 
the contractor for capital investments over a number of years out of 
the energy cost savings.
    Reducing consumption and increasing energy efficiency are among the 
most cost effective ways to improve installation energy security. The 
Army funds many of its energy efficiency improvements through the 
Energy Program/Utilities Modernization program account. In addition to 
funding O&M project execution, this account enables planning and 
developing of third party financed renewable energy initiatives such as 
the Energy Initiatives Task Force ($29 million) and integrated holistic 
design strategies for managing resources on Army installations such as 
the Net Zero Initiative ($2.2 million).
    The Army is moving forward to address the challenge of Energy and 
Sustainability to ensure the Army of tomorrow has the same access to 
energy, water, land, and natural resources as the Army of today. Our 
energy goals include a 30-percent reduction in facilities energy 
intensity by 2015 from the 2003 baseline; generation of 25 percent of 
energy from renewable resources by 2025; reduction in petroleum use in 
non-tactical equipment by 20 percent by 2015; and elimination of the 
use of fossil fuel generated energy in newly constructed buildings by 
2030.
    In fiscal year 2011, the Army announced two key initiatives, the 
Net Zero Initiative and the Energy Initiatives Task Force (EITF). These 
initiatives will make the Army a leader in sustainable practices and 
use of renewable energy. The Net Zero Installation initiative is 
advancing an integrated approach and will improve the management of 
energy, water, and waste. Net zero installations will consume only as 
much energy or water as they produce and eliminate solid waste to 
landfills, and when fully implemented, will establish Army communities 
as models for energy security, sustainability, value, and quality of 
life. Seventeen installations have been identified for this effort, 
with plans to reach Net Zero by 2020.
    The EITF strengthens Army Energy Security and Sustainability by 
developing a comprehensive capability to plan and execute cost-
effective large-scale renewable energy projects by leveraging private 
sector financing. The EITF will serve as a one-stop shop and augment 
installation staff for the development of renewable energy projects 
greater than 10 MW on Army installations to obtain secure, sustainable, 
and affordable energy from a diversity of sources. The EITF is 
currently evaluating 12 projects at 8 installations to determine 
whether they are worthy of further development and has identified 
further opportunities at 21 installations.
    The Army is incorporating cost effective Energy Efficient Measures 
into the MILCON Program. The Army has implemented energy efficiency 
requirements into all new facilities construction, renovation and 
modernization requirements.
    The Army is committed to contributing to our Nation's energy 
security by reducing our dependence on foreign oil. In the Army, 
``Every Soldier is a Power Manager'' and energy is a consideration in 
every aspect of how we do business. We are committed to advancing 
energy security by changing our doctrine, our behavior, and our 
technological advancement throughout all aspects of our enterprise. We 
will build on our past accomplishments and ensure our soldiers and 
civilians wisely employ the resources entrusted to them.

                              ENVIRONMENT

    The Army fiscal year 2013 Environmental program provides $1.17 
billion in support of current and future readiness. The environmental 
program includes Army Working Capital Fund, BRAC 2005 and Prior BRAC, 
and Army O&M programs. This program ensures an adequate environmental 
resource base to support mission requirements, while maintaining a 
sound environmental compliance posture. Additionally, it allows Army to 
execute environmental aspects of re-stationing, Global Defense Posture 
Realignment and BRAC while increasing programmatic efficiencies, and 
addressing the Army's past environmental legacy.
    As a land-based force, our compliance and stewardship sustains the 
quality of our land and environment as an integral component of our 
capacity to effectively train for combat. We are committed to meeting 
our legal requirements to protect natural and cultural resources and 
maintain air and water quality during a time of unprecedented change. 
We are on target to meet DOD goals for cleaning up sites on our 
installations, and we continue to manage environmental compliance 
requirements despite operating in a constrained resource environment.

               SUSTAINMENT/RESTORATION AND MODERNIZATION

    The Army continues its commitment to fund sustainment at 90 percent 
of the OSD Facilities Sustainment Model (FSM) requirement. The Army 
views 90-percent sustainment funding as the absolute bedrock of proper 
facilities stewardship, and is an essential objective of the Army 
facilities investment strategy. The Army has chosen not to take risk in 
the sustainment of our facility inventory valued at $329 billion. In 
keeping with the Army Facility Investment Strategy (FIS), the Army has 
increased its investment in facility restoration through the O&M 
Restoration and Maintenance account. This will fully restore trainee 
barracks, enable progress toward energy objectives and provide 
commanders with the means of restoring other critical facilities. 
Facilities are an outward and visible sign of the Army's commitment to 
providing a quality of life for our soldiers, families, and civilians 
that is consistent with their commitment to our Nation's security.

                        BASE OPERATIONS SUPPORT

    The Army's fiscal year 2013 Base Operations Support (BOS) request 
is $9.0 billion and is consistent with our fiscal year 2012 BOS budget 
request. The Army's fiscal year 2013 BOS strategy continues to 
prioritize funding for Life, Health and Safety programs and Army Force 
Generation (ARFORGEN) requirements ensuring soldiers are trained and 
equipped to meet demands of our nation at war. Army remains committed 
to its investment in Army Family Programs and continues to evaluate its 
services portfolio in order to maintain relevance and effectiveness. 
Army will meet the challenge of day-to-day requirements by developing 
more efficient service delivery or adjusting service levels while 
managing customer expectations. These efforts will encourage program 
proponents to evaluate policies, seek alternative and find innovative 
solutions to meet these challenges. The Army is committed to developing 
a cost culture for increasing the capabilities of BOS programs through 
an enterprise approach. Additionally, the Army will continue to review 
service delivery of its soldier, family, and civilian programs to 
ensure the most efficient and effective means of delivery are realized.

                               CONCLUSION

    The Army's fiscal year 2013 installations management budget request 
is a balanced program that supports the Army in transition while at 
war, supports our soldiers, families, and civilians, and recognizes the 
current fiscal reality. The Army Facility Strategy 2020 and facilities 
investment strategy will be accomplished through the Congress' 
continued commitment to timely and sustained funding of the military 
construction, BRAC and family housing budget request.
    In closing, thank you again for the opportunity to appear before 
you today and for your continued support for our soldiers, families, 
and civilians.

    Senator Johnson. Thank you.
    General Kadavy--General Ferriter. Excuse me.

            STATEMENT OF LIEUTENANT GENERAL MICHAEL FERRITER

    General Ferriter. Thank you, Mr. Chairman. I thought you 
were going to make my remarks very brief.
    Chairman Johnson and Senator Blunt, it's an honor for me to 
be with you here this morning representing the soldiers and the 
families and the civilians of the United States Army and to 
discuss the fiscal year 2013 Army military construction, family 
housing, and base realignment and closure budget request. 
Before I start, I do want to thank you and thank the 
subcommittee for its support to the Army, our soldiers, 
families, and civilians.
    I assumed my current position as the Installation 
Management Command Commanding General and the Assistant Chief 
of Staff for Installation Management for the Army shortly after 
departing Iraq where I was the Deputy Commanding General for 
Advising and Training of the Iraqi Security Forces. So, for me, 
this position is a perfect fit, because, you see, I was raised 
in an Army family, and while my father was on Active Duty we 
moved 18 times to different installations around the world.
    My wife, Margie, also comes from an Army family. And 
together we raised four wonderful children, three of whom are 
serving in the Army. My two sons each are Stryker Company 
Commanders and each have deployed four times, and our daughter, 
First Lieutenant Mary Whitney Whittaker, is stationed at Fort 
Benning. So we sincerely thank you for your support. We've been 
the recipient of Army family programs and services.
    As Madam Secretary discussed earlier regarding the pending 
Army decisions and fiscal realities we face as a Nation, this 
budget represents the prudent actions taken by the Army to be 
good stewards of the tax dollars provided to the Army by this 
subcommittee and the taxpayers of the Nation.
    I'd like to highlight three areas of this budget request. 
First is barracks. The Army's Barracks Modernization Program 
for permanent party and initial entry training barracks was to 
be completed and occupied by fiscal years 2015 and 2017. As a 
result of previous reductions, the Budget Control Act, and 
pending Army force structure and end strength decisions, both 
barracks program completion dates have been delayed.
    With that said, the Army is investing $721 million of this 
year's budget request in 12 critical barrack projects that will 
accommodate over 4,700 soldiers. These projects will build out 
barrack shortages, reduce the number of barracks with common 
area latrines, and replace temporary buildings.
    As for the cadet barracks at the United States Military 
Academy, this is not a barracks in a traditional sense, but 
rather a dormitory with cadet living and learning spaces, as 
well as company and battalion operation facilities for the 
cadre that train and mentor the future leaders of the Army and 
our Nation.
    The second area I'd like to highlight is overseas 
construction. As we've heard today, understanding the 
subcommittee's desire to minimize military construction 
investment overseas, the Army cannot ignore our soldiers who 
are forward deployed as the vanguard of our Nation.
    The five overseas projects program for $209 million in this 
request provides critical facilities in support of the 
President's increased focus in the Asia-Pacific theater and 
works to complete the requirements in Europe in support of 
Europe and Africa combatant commanders. As a part of the Army's 
prudent actions, 43 overseas projects worth $831 million were 
deferred outside of the Future Year Defense Program until Army 
force structure and end strength decisions are made.
    Finally, the last area I want to discuss is the need to 
modernize our range and training facilities. The $232 million 
for the 17 projects in this budget are critical and necessary 
in training today's Army and the Army of the future. With the 
subcommittee's support of the military construction program, 
the Army will be able to maintain the edge and the experience 
that 10 years of combat have given to this force.
    In closing, again, I want to thank the subcommittee for 
this opportunity to address the Army's most critical 
constructions needs, and I look forward to your questions. And 
I will now be followed by Major General Tim Kadavy, Director of 
the Army National Guard.
    Senator Johnson. Thank you.
    General Kadavy.

              STATEMENT OF MAJOR GENERAL TIMOTHY J. KADAVY

    General Kadavy. Thank you, Chairman Johnson and 
distinguished members of the subcommittee. It's truly an honor 
and a privilege to be here today representing the 350,000-plus 
citizen soldiers of the Army National Guard.
    Since September 11, 2001, the Army National Guard has 
completed more than 495,000 individual soldier mobilizations in 
support of a full range of Federal missions. Today, we have 
more than 35,000 soldiers serving away from their families. I'd 
be remiss if I did not acknowledge the toll of those 
deployments. We have 5,539 Army National Guard soldiers who 
have been wounded in action and 685 soldiers who have 
sacrificed their lives for our Nation.
    In fiscal year 2012, the Army National Guard will execute a 
military construction budget of $773 million across 48 projects 
in 38 States and territories. We are again forecasting a first-
year project execution rate of 90 percent or greater. This will 
be our fourth consecutive year the Army National Guard has 
achieved this level of execution.
    This year's budget request of $614 million is for 37 
military construction projects to cross 26 States and 
territories and represents 17.2 percent of the Army's military 
construction request. The request is a 21-percent reduction 
from the President's budget request of fiscal year 2012. These 
projects will include readiness centers, ranges, maintenance 
shops, and training facilities.
    We do support another Reserve component BRAC, if it is 
structured the same as in 2005 with voluntary participation by 
the States. This would help us to meet a real need and achieve 
a more effective inventory. We would use the program to replace 
our old failing facilities that are not configured for today's 
missions, that are energy inefficient, and facilities that are 
in the wrong location due to population shifts over the last 40 
years. A BRAC would help us by providing new facilities which 
would improve our efficiencies and our soldier readiness.
    The Army National Guard is truly a community-based force. 
Our readiness centers are central to their communities. They 
provide a connection between our military and hometown America. 
But many facilities now fail to meet the needs of the 21st 
century operational force. Despite this, we are committed to 
maintaining a ready force.
    Mr. Chairman and members of the subcommittee, the Army 
National Guard would not be the operational force that it is 
today without the support of Congress and this subcommittee. 
Thank you again for this opportunity to speak here today. I 
look forward to your questions. And I'll be followed by Mr. 
Davis.
    Senator Johnson. Thank you.
    Mr. Davis.

                         STATEMENT OF TAD DAVIS

    Mr. Davis. Thank you, Mr. Chairman, Senator Blunt. And 
thanks for the opportunity to appear before you all here today. 
It's an honor to be here on behalf of the more than 205,000 
Army Reserve citizen soldiers currently serving at home and 
abroad.
    The increased reliance on the Army Reserve in the future is 
quite clear, as is the need to maintain the readiness of the 
Army Reserve as an operational force. Continued investment in 
the Army Reserve places it on a solid path to support 
contingency operations and theater security cooperation 
missions worldwide.
    Army Reserve forces provide critical enablers to the Active 
component and members of the joint force as a complementary and 
essential capability, but not as a redundant force. Currently, 
over 17,000 Army Reserve soldiers are deployed in 23 different 
countries worldwide.
    The military construction Army Reserve request for $306 
million in fiscal year 2013 is in compliance with the Budget 
Control Act and supports the Army Reserve mission. It provides 
the necessary replacement for failing Army Reserve centers, 
modernization of ranges and training support facilities, and 
enhanced logistical and mobilization capabilities.
    Implementation of the Army Reserve Facility Investment 
Strategy will ensure we have sufficient facilities to meet 
mission requirements at the lowest possible cost with 
acceptable quality and quantity and at the right locations to 
support the demographics of the Army Reserve. Army Reserve 
centers are no longer just a meeting location for our units, 
but are now state-of-the-art facilities essential to training 
Army Reserve soldiers for overseas contingency operations, 
enhancing our support to domestic response missions, and 
enabling the day-to-day activities of the Army Reserve.
    BRAC 2005 had a significant impact on the organizational 
structure of the Army Reserve, enabling us to transform to a 
truly operational force. Further, we were able to close 179 
aging and failing facilities and consolidate our units in many 
cases with other joint organizations and the Army National 
Guard into 125 new, state-of-the-art, more energy-efficient 
facilities with adequate force protection. Future rounds of 
BRAC would allow us to continue to further consolidate units 
where it makes sense, to reduce reliance on leased spaces, and 
potentially maximize the use of existing facilities that might 
be vacated by other components or other services.
    In closing, Mr. Chairman, our citizen soldiers will 
continue to be the centerpiece of the Army Reserve. We 
recognize that their ability to perform assigned missions 
successfully depends upon the continued staunch support of 
Congress and this subcommittee, in particular. And, again, on 
behalf of our Army Reserve soldiers and their families, I'd 
like to thank you for your continued support.
    Senator Johnson. Thank you for your opening statements.
    Senator Blunt, you may proceed. I'll finish up.
    Senator Blunt. Thank you, Senator Johnson.

                          NET ZERO INITIATIVE

    Secretary Hammack, you and I have talked about the barracks 
situation at Fort Leonard Wood and the single-soldier barracks. 
I was able to visit there last month, and certainly, they're 
doing everything they can to refurbish the existing quarters. 
There's still a shortage. I know that you and I both believe 
that proper quarters for our troops is critically important 
here.
    I guess my question would be in a case like this where you 
really have a need for single-soldier housing, why is that 
lower on the priority list now than like the Net Zero energy 
initiative would be?
    Ms. Hammack. Thank you for your question. The Net Zero 
energy initiative is not a project funding mechanism. It is 
guidance and direction on how to appropriately spend SRM 
(sustainment, restoration, and modernization) money and MILCON 
money. The barracks program has been significantly reduced, and 
that is primarily focused on the Total Army Analysis to ensure 
that we do not build excess capacity anywhere. Once the Total 
Army Analysis is complete, we will be reevaluating and bringing 
in those barracks projects that are required and are not 
impacted by any force downsizing or restructuring.
    Senator Blunt. And are you building any barracks anywhere 
in the upcoming cycle?
    Ms. Hammack. Yes. In fiscal year 2013, as General Ferriter 
mentioned, there are, I believe, 12 barracks projects.
    Senator Blunt. Twelve barracks projects all over the 
country?
    Ms. Hammack. Yes, sir.
    Senator Blunt. And how does that comport with the idea that 
you're waiting to see how the troops settle out before you 
expand housing?
    Ms. Hammack. Those are barracks projects in areas that we 
do not believe will be impacted by the results of the Total 
Army Analysis. So one of the large projects is at West Point. 
And at West Point, we have severe overcrowding, have had for a 
while, and have come up with a strategy and design that will 
relieve that. That is not an area that would be impacted by the 
Total Army Analysis.
    Senator Blunt. And will there be any money available for 
upgrading current facilities? Are you able to find some more 
money there than we might otherwise have? We're using 
facilities that otherwise I think we'd be replacing. I wonder 
what our thoughts are about that.
    Ms. Hammack. Absolutely. We have sustainment, restoration, 
and modernization money, or SRM money, that is being used to 
restore facilities. In many cases, what we are finding is 
existing barracks buildings have the structural integrity and 
are sized appropriately, but what they need is extensive 
renovations. And so, we are finding that it costs us only a 
quarter of the amount to do the renovation as it would new 
construction. So we would, in that case, prioritize renovation 
over new construction.
    Senator Blunt. And SRM money at Fort Leonard Wood--do you 
have any report for me on that?
    Ms. Hammack. I don't have that information with me right 
now. But I can take that for the record and get the information 
to you.
    Senator Blunt. I appreciate that.
    [The information follows:]

    The Army is projected to spend $58.5 million of sustainment, 
restoration, and modernization funding at Fort Leonard Wood in fiscal 
year 2013 on the renovation of four barracks buildings, two battalion 
headquarters buildings, and two enlisted dining facilities.

    Senator Blunt. And Mr. Chairman, I just want to say to all 
the members of the panel I appreciate your service and being 
here today and your leadership at a challenging time for our 
defense structure. But I'm glad that you all are part of it.

   ARMY NATIONAL GUARD AND RESERVE MILITARY CONSTRUCTION REQUIREMENTS

    Senator Johnson. Thank you.
    This question is directed at both General Kadavy and Mr. 
Davis. General Odierno has noted that the reduction in the Army 
end strength will require the military to rely more heavily on 
the Army Guard and Reserve to maintain its capability to engage 
in major combat operations. He also suggested that the United 
States will have to keep its Reserve forces at a higher level 
of readiness than it did before the wars in Iraq and 
Afghanistan.
    How does this translate to military construction 
requirements? I'm concerned because the fiscal years 2013 
through 2017 FYDP shows an 18-percent reduction for the Guard 
and a 14-percent reduction for the Reserve below the projected 
out-year funding in last year's FYDP. How might this impact the 
ability of the Guard and Reserve to provide the necessary 
training facilities to support the increased readiness 
requirement?
    General Kadavy, would you like to answer first?
    General Kadavy. Thank you for the question, Senator. The 
Army training strategy is focused on taking the strengths of 
all three components as it deals with installations and 
training areas and ranges, et cetera, and prioritizing them for 
the units that are within the force generation model in the 
available year. So for those units that are preparing for an 
upcoming deployment, the ranges and the facilities are 
available. And we also believe that in the current budget 
request, we are able to get after requirements to critical 
requirements where ranges don't exist or to remodel or 
modernize those that are failing or failed.
    Thank you, Senator.
    Senator Johnson. Mr. Davis.
    Mr. Davis. Thank you, Mr. Chairman. I'd come at this 
question maybe a little bit differently than General Kadavy. I 
think first and foremost what we're seeing from the Army 
Reserve perspective and from the Guard's perspective is no 
detriment to our current end strength. Hence, the investments 
that are being made in our facilities are done so based on what 
we believe is our current end strength at 205,000, which we 
believe will be consistent through the FYDP, again, based on 
things like TAA, based on things like possible sequestration.
    But as we look to the future with that steady state of 
205,000 reservists, we believe that if we receive a steady 
state of MILCON funding through that period that you mentioned, 
fiscal years 2013 to 2017, that we will be able to adequately 
address those things that we need to focus on most, again, as 
General Kadavy mentioned, replacement of our aging and failing 
Army Reserve facilities that are out there, enhancements to our 
ranges and training areas, and upgrades to our ability to 
conduct simulation type training exercises, and then, finally, 
as you know, our all important equipment concentration sites 
and consolidated maintenance facilities.
    And so we will look at those major categories of facilities 
into the future, and if we continue to get in that range of 
$175-$180 million, which is what the projection is right now, 
we think we will be able to adequately provide the support from 
a MILCON perspective to the Army Reserve as an operational 
force through that period.

                          FORCE RESTRUCTURING

    Senator Johnson. General Ferriter, since 2003, the Army has 
reduced its total personnel in Europe by 50 percent. In 
addition to this previous force reduction, the Army has 
announced that it is also planning on withdrawing two brigade 
combat teams and Army 5th headquarters from Germany. While 
there is no new Army MILCON for Germany in fiscal year 2013, 
how will force restructuring impact future Army MILCON needs in 
Europe? How much money will the Army save in terms of 
operations and maintenance expenses with the withdrawal of two 
brigade combat teams and 5th headquarters?
    General Ferriter. Thank you for that question, Mr. 
Chairman. For the first part, the consolidation and movement of 
the Army forces and the families within Germany and within 
Europe by General Hertling, who is the United States Army 
Europe Commanding General--he is shrinking his footprint down 
to accommodate the smaller numbers of forces.
    In accordance with our view towards our forward presence at 
places such as Grafenwoehr and Hohenfels, they become keen 
training sites and housing sites for the United States presence 
and for the United States to work with our partners and allies. 
In shrinking down his footprint and moving and consolidating at 
a place such as Wiesbaden, then he expects that he'll be saving 
over $100 million in terms of being at multiple sites and the 
operating of many smaller sites.
    They have a very, very comprehensive plan. Now, much of it 
still is also tied to the Army's total Army view of itself and 
what forces, the size of our forces, and the overall decisions 
taken by the Secretary of the Army and the entire Department 
here. So, overall, I think they're in good shape, and they have 
a good plan to tighten their facilities and their costs over 
there.

                          EUROPEAN FACILITIES

    Senator Johnson. Secretary Hammack, what additional 
military construction costs do you expect from the 
consolidation and disposing of unneeded facilities in Europe?
    Ms. Hammack. Many of the facilities in Europe as are closed 
are being returned to host nation. And so the costs are not 
incurred in the disposing of facilities. The costs are more 
incurred in the relocation of material to wherever we decide 
its end destination is.
    There may be some costs as we consolidate in replicating 
facilities in a new location in order to close an existing 
location. Maybe we need more warehouses or other facilities. 
But that is part of the analysis that we're undergoing right 
now as we determine how to move the troops out.
    Senator Johnson. Is the Army planning on maintaining 
vacated infrastructure in EUCOM for contingency purposes? If 
so, has any analysis been conducted to determine the annual 
operation and maintenance (O&M) costs for maintaining 
contingency facilities?
    Ms. Hammack. The plan right now is not to maintain 
contingency facilities, but we plan to have a rotational force. 
So we will not need family housing, but we would need barracks 
for our rotational force. So we will need some facilities for 
our rotational force and for training, whereas we would not be 
planning for a contingency.
    Senator Johnson. General Ferriter, with the planned 
drawdown in Afghanistan, the Army has indicated that it will 
rotate units through Europe in lieu of permanent basing there. 
Where will these forces be located in Europe? Will they occupy 
vacated space from the force restructuring and troop 
reductions?
    General Ferriter. Mr. Chairman, principally, they'll be at 
and near the training facilities, the large and beautiful 
training facilities that we already have there. And these won't 
be just the forces coming directly out of Afghanistan. But 
rather this will be a part of the Army force generation and 
training model, so to push forces from the United States 
forward for a limited period of time to conduct the training 
for themselves, to have the opportunity to train with our 
allies, and then to return to their home station base in the 
United States.

                      ARLINGTON NATIONAL CEMETERY

    Senator Johnson. Secretary Hammack, this is relative to 
Arlington National Cemetery. In fiscal year 2013, the Army is 
requesting $103 million for military construction and planning 
and design and $25 million through Army O&M funds to support 
needed improvement projects at Arlington National Cemetery 
(ANC).
    While I support the Army's goal of correcting challenges 
posed by prior mismanagement at Arlington Cemetery, ANC has 
long been an independent agency reflecting the importance of 
ensuring that Arlington Cemetery is not a footnote in the 
Army's overall defense budget. Given the past mismanagement at 
Arlington Cemetery, which I think we all recognize as a genuine 
concern, is the Army considering plans to absorb ANC into the 
Army budget? If so, would there be any requirement to maintain 
it as an independent agency?
    Ms. Hammack. Right now, there are many discussions as to 
the future of Arlington and the management of Arlington. But 
our primary focus is to ensure that our dead are being buried 
appropriately and the Army appropriately stewards Arlington for 
all of the services. The money that we are asking in the MILCON 
project or in the MILCON program is for the Millennium Project, 
which is an expansion of Arlington Cemetery.
    Current forecasts are that we will run out of burial space 
and niches by 2025, and so we need to ensure that we are 
utilizing all of the land available. And so the Millennium site 
is an old Park Service warehouse, an area of the nearby fort 
and some Arlington land that has been underdeveloped. And so 
that is what the request is for.
    It is under OMB direction that we are putting it in the 
MILCON program, and it is a bit of an anomaly. But we believe 
that the Army, with the stewardship of the Army Corps of 
Engineers, can appropriately manage this expansion, and it is a 
necessary project.
    Senator Johnson. Secretary Hammack, as you know, defense 
O&M funds are appropriated through the Defense Appropriations 
Subcommittee. ANC's O&M budget is currently appropriated 
through this subcommittee. Appropriating money for Arlington 
through different subcommittees raises questions over the 
commingling of funds and how to maintain effective oversight of 
the ANC budget.
    If the subcommittee were to approve this request for fiscal 
year 2013, how does the Army propose to differentiate and 
ensure transparency between ANC O&M funding through the 
independent agency account and O&M funding through the Army?
    Ms. Hammack. I would have to take that one for the record. 
Our intention is that they be managed independently, and that 
this is a bit of an anomaly to correct challenges that ANC has 
had in the past. We have yet to decide what the appropriate 
path forward is.
    We do understand the use of security funds versus non-
security funds. And so it is something that we are going to 
have to work collectively with Congress to determine what the 
appropriate path forward is.
    [The information follows:]

    To ensure that the Army and Arlington National Cemetery (ANC) 
maintain transparency between these two appropriations, the Army will 
use ANC's Management Decision Package (MDEP) code as part of the 
project line of accounting to identify those operation and maintenance, 
Army (OMA) funds used to support each ANC project. ANC's MDEP code is 
unique for the OMA account and can be used to track these expenses.

                   PRIVATIZED FAMILY HOUSING PROJECTS

    Senator Johnson. Secretary Hammack, what effect will the 
planned reduction in Army force structure have on the Army's 
privatized family housing projects? Do you anticipate that the 
financial viability of any privatized housing projects will be 
jeopardized or that certain projects will be forced to rely on 
waterfall occupancy to remain viable? Which, if any, projects 
are at risk?
    Ms. Hammack. We have yet to identify projects as risks 
because we have not completed the Total Army Analysis. But as 
you correctly stated, sir, there is a waterfall plan which 
identifies alternate uses. And several of our RCI (Residential 
Communities Initiative) projects are already in the waterfall 
phase, in that civilians, retirees, or other entities are 
utilizing the housing on the Army base to ensure that the RCI 
program remains viable.

                     ADDITIONAL COMMITTEE QUESTIONS

    Senator Johnson. I would like to thank all of our witnesses 
for appearing before this subcommittee today. We look forward 
to working with you this year. For the information of members, 
questions for the record should be submitted by the close of 
business on April 17.
    [The following questions were not asked at the hearing but 
were submitted to the Department for response subsequent to the 
hearing:]

            Questions Submitted to Hon. Katherine G. Hammack
               Questions Submitted by Senator Tim Johnson

                        ARMY PRIVATIZED HOUSING

    Question. Secretary Hammack, what effect will the planned reduction 
in Army force structure have on the Army's privatized family housing 
projects?
    Do you anticipate that the financial viability of any privatized 
housing projects will be jeopardized, or that certain projects will be 
forced to rely on waterfall occupancy to remain viable?
    Which if any projects are at risk?
    Answer. The impact of possible future Army restructuring decisions 
may generate deficits or surplus housing at some Army installations. 
The Army is carefully reviewing and considering major new housing 
investments, only approving actions that align with known decisions.
    We are working to gather more facts as the situation develops and 
can't provide an absolute answer at this time. On average, 35 percent 
to 40 percent of assigned personnel live in installation housing and 
the majority of our Residential Communities Initiative (RCI) projects 
maintain significant waiting lists of perspective tenants so any impact 
would be minimal. Currently, of the over 85,000 homes currently in the 
Army RCI program, approximately 3 percent are occupied by personnel 
under a waterfall agreement.
    None of the Army RCI projects are currently at risk of failure due 
to Army stationing activities. Any projected or actual occupancy 
shortfalls are immediately addressed through a collective effort 
between all stakeholders including HQDA (Headquarters, Department of 
the Army), the installation and the RCI partner to determine an 
effective strategy to increase demand.
                                 ______
                                 
               Question Submitted by Senator Daniel Coats

                            DAVIS-BACON ACT

    Question. If Davis-Bacon was waived for military construction 
projects, how much would it save the Department of the Army in fiscal 
year 2013?
    Answer. The Department is not aware of any internal data or studies 
that have been able to quantify the financial effect of repealing 
Davis-Bacon. If such information exists, the Department of Labor, as 
the Davis-Bacon rate setter, would be a likely source. The Department 
has experienced contracts where wages paid are at the Davis-Bacon rate 
and some where the wages paid exceed the Davis-Bacon rates. One of many 
unknowns with Davis-Bacon repeal is whether the Government would see 
cheaper, but equally qualified, or lesser qualified tradesmen being 
hired for our jobs as a result of lower wages than those found to be 
prevailing by the applicable wage rate.

                          SUBCOMMITTEE RECESS

    Senator Johnson. This hearing is recessed.
    [Whereupon, at 11:40 a.m., Tuesday, March 27, the 
subcommittee was recessed, to reconvene subject to the call of 
the Chair.]
