    [Senate Hearing 112-80, Part 3]
    [From the U.S. Government Publishing Office]

                                                      S. Hrg. 112-80, Pt. 3

    DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR
                   2012 AND THE FUTURE YEARS DEFENSE PROGRAM

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

                                    HEARINGS

                                   before the

                          COMMITTEE ON ARMED SERVICES
                              UNITED STATES SENATE

                          ONE HUNDRED TWELFTH CONGRESS

                                 FIRST SESSION

                                       ON

                                    S. 1253

         TO AUTHORIZE APPROPRIATIONS FOR FISCAL YEAR 2012 FOR MILITARY
    ACTIVITIES OF THE DEPARTMENT OF DEFENSE AND FOR MILITARY CONSTRUCTION,
    TO PRESCRIBE MILITARY PERSONNEL STRENGTHS FOR FISCAL YEAR 2012, AND FOR
                                 OTHER PURPOSES

                                   ----------

                                     PART 3

                        READINESS AND MANAGEMENT SUPPORT

                                   ----------

                           MARCH 17 AND MAY 18, 2011

             Printed for the use of the Committee on Armed Services
    DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR
       2012 AND THE FUTURE YEARS DEFENSE PROGRAM--Part 3  READINESS AND
                               MANAGEMENT SUPPORT

                                                       S. Hrg. 112-80 Pt. 3

    DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR
                   2012 AND THE FUTURE YEARS DEFENSE PROGRAM

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

                                    HEARINGS

                                   before the

                          COMMITTEE ON ARMED SERVICES
                              UNITED STATES SENATE

                          ONE HUNDRED TWELFTH CONGRESS

                                 FIRST SESSION

                                       ON

                                    S. 1253

         TO AUTHORIZE APPROPRIATIONS FOR FISCAL YEAR 2012 FOR MILITARY
    ACTIVITIES OF THE DEPARTMENT OF DEFENSE AND FOR MILITARY CONSTRUCTION,
    TO PRESCRIBE MILITARY PERSONNEL STRENGTHS FOR FISCAL YEAR 2012, AND FOR
                                 OTHER PURPOSES

                                   __________

                                     PART 3

                        READINESS AND MANAGEMENT SUPPORT

                                   __________

                           MARCH 17 AND MAY 18, 2011

                                   __________

             Printed for the use of the Committee on Armed Services

            Available via the World Wide Web: http://www.fdsys.gov/

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                          COMMITTEE ON ARMED SERVICES

                         CARL LEVIN, Michigan, Chairman

    JOSEPH I. LIEBERMAN, Connecticut     JOHN McCAIN, Arizona
    JACK REED, Rhode Island              JAMES M. INHOFE, Oklahoma
    DANIEL K. AKAKA, Hawaii              JEFF SESSIONS, Alabama
    E. BENJAMIN NELSON, Nebraska         SAXBY CHAMBLISS, Georgia
    JIM WEBB, Virginia                   ROGER F. WICKER, Mississippi
    CLAIRE McCASKILL, Missouri           SCOTT P. BROWN, Massachusetts
    MARK UDALL, Colorado                 ROB PORTMAN, Ohio
    KAY R. HAGAN, North Carolina         KELLY AYOTTE, New Hampshire
    MARK BEGICH, Alaska                  SUSAN M. COLLINS, Maine
    JOE MANCHIN III, West Virginia       LINDSEY GRAHAM, South Carolina
    JEANNE SHAHEEN, New Hampshire        JOHN CORNYN, Texas
    KIRSTEN E. GILLIBRAND, New York      DAVID VITTER, Louisiana
    RICHARD BLUMENTHAL, Connecticut

                       Richard D. DeBobes, Staff Director

                   David M. Morriss, Minority Staff Director

                                     ______

                Subcommittee on Readiness and Management Support

                      CLAIRE McCASKILL, Missouri, Chairman

    DANIEL K. AKAKA, Hawaii              KELLY AYOTTE, New Hampshire
    E. BENJAMIN NELSON, Nebraska         JAMES M. INHOFE, Oklahoma
    JIM WEBB, Virginia                   SAXBY CHAMBLISS, Georgia
    MARK UDALL, Colorado                 ROB PORTMAN, Ohio
    MARK BEGICH, Alaska                  SUSAN M. COLLINS, Maine
    JOE MANCHIN III, West Virginia       LINDSEY GRAHAM, South Carolina
    JEANNE SHAHEEN, New Hampshire        JOHN CORNYN, Texas

                                      (ii)
    ?

                                C O N T E N T S

                                  ----------

                        CHRONOLOGICAL LIST OF WITNESSES
        Military Construction, Environmental, and Base Closure Programs
                                 march 17, 2011

                                                                       Page

    Robyn, Dr. Dorothy, Deputy Under Secretary of Defense,
      Installations and Environment..................................     9
    Hammack, Hon. Katherine G., Assistant Secretary of the Army,
      Installations and Environment..................................    23
    Pfannenstiel, Hon. Jackalyne, Assistant Secretary of the Navy,
      Energy, Installations, and Environment.........................    32
    Yonkers, Hon. Terry A., Assistant Secretary of the Air Force,
      Installations, Environment, and Logistics......................    52

                 The Current Materiel Readiness of U.S. Forces
                                  may 18, 2011

    Stevenson, LTG Mitchell H., USA, Deputy Chief of Staff,
      Logistics, U.S. Army...........................................   133
    Panter, Lt. Gen. Frank A., Jr., USMC, Deputy Commandant for
      Installations and Logistics, U.S. Marine Corps.................   137
    Reno, Lt. Gen. Loren M., USAF, Deputy Chief of Staff for
      Logistics, Installations, and Mission Support, U.S. Air Force..   142
    Burke, VADM William R., USN, Deputy Chief of Naval Operations for
      Fleet Readiness and Logistics (N4), U.S. Navy..................   146

                                     (iii)

    DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR
                   2012 AND THE FUTURE YEARS DEFENSE PROGRAM

                                  ----------

                            THURSDAY, MARCH 17, 2011

                               U.S. Senate,
                  Subcommittee on Readiness and
                                    Management Support,
                                   Committee on Armed Services,
                                                        Washington, DC.

        MILITARY CONSTRUCTION, ENVIRONMENTAL, AND BASE CLOSURE PROGRAMS

        The subcommittee met, pursuant to notice, at 2:33 p.m. in
    room SR-232A, Russell Senate Office Building, Senator Claire
    McCaskill (chairman of the subcommittee) presiding.
        Committee members present: Senators McCaskill, Webb, Udall,
    Shaheen, and Ayotte.
        Majority staff members present: Peter K. Levine, general
    counsel; Jason W. Maroney, counsel; and Russell L. Shaffer,
    counsel.
        Minority staff members present: Lucian L. Niemeyer,
    professional staff member; and Diana G. Tabler, professional
    staff member.
        Staff assistants present: Kathleen A. Kulenkampff and Breon
    N. Wells.
        Committee members' assistants present: Ann Premer,
    assistant to Senator Nelson; Gordon Peterson, assistant to
    Senator Webb; Tressa Guenov, assistant to Senator McCaskill;
    Joanne McLaughlin, assistant to Senator Manchin; Clyde Taylor
    IV, assistant to Senator Chambliss; and Brad Bowman, assistant
    to Senator Ayotte.

        OPENING STATEMENT OF SENATOR CLAIRE McCASKILL, CHAIRMAN

        Senator McCaskill. Thank you for being here.
        I'd like to take just a moment to acknowledge a moment of
    history here. There is something happening today that has never
    happened before in the history of the U.S. Senate. What we have
    today is a woman chairman and a woman ranking member on a
    subcommittee in Armed Services, and that has never happened
    before in our country.
        So, with that, I want to welcome Senator Ayotte to the
    Senate Armed Services Committee, and this subcommittee in
    particular. She and I are taking on this responsibility with
    enthusiasm. I'm honored to have the opportunity to do whatever
    I can to support the military.
        I will give a very brief opening statement and then turn it
    over to Senator Ayotte for her opening statement. Then we'll
    look forward to your testimony today.
        The Subcommittee on Readiness and Management Support meets
    this afternoon to hear testimony on fiscal year 2012 budget
    request for Department of Defense (DOD) Installations and
    Environment. At today's hearing, we will hear from our
    witnesses on the request for military construction (MILCON) and
    environmental programs for fiscal year 2012.
        This is our first subcommittee hearing in the 112th
    Congress, and I want to welcome all of the members of the
    subcommittee and say how much I look forward to working with
    everyone this year.
        I'd also like to thank our witnesses for rearranging their
    schedules to appear today on such short notice. It is very
    important for us to have this hearing as early in the
    congressional budget process as possible so we can have a full
    and frank discussion of the President's request that informs
    this year's Defense authorization bill, and we appreciate your
    help in enabling us to do that.
        The subcommittee has scheduled a hearing on the Secretary's
    efficiencies initiatives for later this month. As far as I'm
    concerned, however, every hearing that we hold will be about
    efficiencies.
        Earlier this week, the Congressional Budget Office reported
    that the DOD budget has grown by 75 percent over the last
    decade. That is the base budget, not including the cost of
    overseas contingency operations. I do not believe there is
    anything DOD is doing that they cannot do better. I do not
    believe that there is any part of the budget that can be off
    limits as we look for potential savings. I will be looking at
    every area of this subcommittee's jurisdiction as we attempt to
    cut duplicative projects and programs, increase management
    efficiencies, and reduce waste while we stay very focused on
    maintaining the finest military in the world.
        Overall, the President's budget request for MILCON and
    family housing is $14.7 billion in fiscal year 2012, as
    compared to a $19.3 billion authorized in last year's National
    Defense Authorization Act (NDAA). That sounds like a huge drop,
    and it is. However, it is worth noting that more than half of
    the decrease is attributable to a drop in requests for Base
    Realignment and Closure (BRAC) construction as we near the
    completion of the 2005 BRAC recommendations, and a drop of $1.2
    billion in requests for MILCON in the budget for overseas
    contingencies operations.
        This budget arrives at a time when DOD has embarked on a
    number of large force posture adjustments that should have
    significant impacts on our MILCON programs, such as the
    realignment of the U.S. forces on Okinawa and Guam, and the
    2005 BRAC round scheduled to be completed this year.
        Indeed, I'm told that DOD plans to announce another
    significant decision today, the number of brigade combat teams
    (BCT) it expects to retain in Europe. I'm assuming that
    announcement has not been made yet, or has it? Was it made
    today?
        Dr. Robyn. It was delayed.
        Senator McCaskill. It was delayed. Okay. I'm on the edge of
    my seat. I just wanted to make sure I hadn't missed it.
    [Laughter.]
        I'm very curious to see what happens there.
        Force posture decisions like these come with associated
    costs, and those costs are often first apparent in the MILCON
    accounts, as infrastructure and facilities are either prepared
    or closed. Making sure those initial expenditures are the
    result of well thought out and planned decisionmaking should
    result in more effective and efficient results. As chairman, I
    plan to be very aggressive in my oversight to make sure these
    large, costly, force-posture actions are accompanied by
    careful, rigorous planning and analysis. Too often, when we
    look back on failed projects and programs, we see that the
    analysis and decisionmaking on the front end were deficient.
        In this regard, I have concerns about DOD's plan to move
    8,000 marines and their dependents from Okinawa to Guam by the
    agreed-upon date of 2014. Successful execution of this program
    will require the coordination of over $10 billion in
    construction projects on Guam and the construction of a new
    airfield at Camp Schwab in Okinawa. Congress has asked DOD
    repeatedly for a master plan laying out the costs and schedule
    for the various projects necessary to effect this large
    realignment. To date, we have not received such a master plan,
    which makes it difficult to determine when certain projects
    must be funded.
        For instance, the fiscal year 2012 budget again includes a
    request for $181 million for two projects on Guam that Congress
    cut from last year's budget because they were clearly ahead of
    need. The Navy claims that if, for some reason, the Marine
    squadron scheduled to use the utility project at Andersen Air
    Force Base does not arrive as planned, then the Air Force would
    use it. However, the Air Force has its utilities requirements
    for Andersen Air Force Base on Guam planned as a part of the
    planned fiscal year 2013 budget, and states that the Air Force
    would have no need for the Navy's planned project. This is one
    example, but there are others.
        Obviously, we have to talk about what the impact of the
    decision to assist Japan, where clearly they are going to have
    huge needs in their budget for rebuilding their country,
    regaining their manufacturing, and all--everything that's
    associated with that disaster. As we all know, a huge part of
    our decision to move that force to Guam had to do with Japan's
    willingness to foot a large part of the bill. The question is,
    are they still going to be in a position to foot a large part
    of the bill, and what impact does that have on our decision? I
    certainly don't want to spend a lot of money on preparing to
    move this force, knowing that, at the end of the day, all of
    the predicates that we made the decision on are no longer
    valid. I think it's time for a real pause and a look at the
    whole decision to move the marines from Okinawa to Guam.
        There are other areas in which we can, and should, do
    better. For example, the budget request includes funding for a
    new medical center near Ramstein Airbase, Germany, at an
    expected cost of $1.2 billion. That is as much as the entire
    DOD budget for family housing this year, for one single
    hospital. I recognize that the medical facility at Ramstein has
    been the first stop for our wounded warriors returning from
    Iraq and Afghanistan. But, we will be out of Iraq, and maybe
    out of Afghanistan, before this facility is ever built.
        The budget request includes four new fitness centers, with
    a cost of over $100 million, including a single fitness center
    that will cost almost $50 million to build. I understand that
    fitness is a requirement of the job. We will always need
    fitness centers for our military. But, at a time when our
    Nation is facing fiscal cuts, I have trouble seeing how we can
    justify spending $50 million on a single fitness center. I want
    to examine that more fully in the questions that will follow
    our statements.
        The budget also includes funding for working dog facilities
    at $3.5 million and $4.9 million. Those are expensive working
    dog facilities.
        Simply put, the era when cost was no object for DOD
    construction projects must come to an end. Critics of the DOD
    acquisition system have long complained about our tendency to
    build so-called gold-plated weapon systems. What the Secretary
    of Defense has referred to as ``exquisite'' designs.
        Unfortunately, this problem is not limited to weapon
    systems. I believe we have a similar problem in the area of
    MILCON. I'll be asking today's witnesses how they intend to
    address that issue.
        We have a great deal to discuss today. I look forward to
    your testimony and a lively discussion that will follow, not
    only today, but throughout the year.
        I now turn to Senator Ayotte for any opening remarks she
    may have.
        [The prepared statement of Senator McCaskill follows:]

                 Prepared Statement by Senator Claire McCaskill

        The Subcommittee on Readiness and Management Support meets this
    afternoon to hear testimony on the fiscal year 2012 budget request for
    Department of Defense (DOD) installations and environment. At today's
    hearing we will hear from our witnesses on the request for military
    construction and environmental programs for fiscal year 2012.
        This is our first subcommittee hearing in the 112th Congress, and I
    would like to begin by welcoming all of our members and say how much I
    look forward to working with you this year. I am particularly pleased
    to welcome Senator Kelly Ayotte as our new ranking member. We have
    already seen Senator Ayotte's sharp focus on readiness and management
    issues in full committee hearings this year, and I look forward to a
    very productive partnership with her as we get to work on these
    important issues.
        I'd also like to thank our witnesses for rearranging their
    schedules to appear 1today on short notice. It is very important for us
    to have this hearing as early in the congressional budget process so we
    can have full and frank discussions of the President's request that
    inform this year's defense authorization bill, and we appreciate your
    help in enabling us to do that.
        The subcommittee has scheduled a hearing on the Secretary's
    efficiencies initiatives for later this month. As far as I am
    concerned, however, every hearing that we hold will be an efficiencies
    hearing. Earlier this week, the Congressional Budget Office reported
    that the DOD budget has grown by 75 percent over the last decade--and
    that is the base budget, not including the cost of overseas contingency
    operations. I do not believe there is anything DOD is doing that we
    cannot do better, and I do not believe that there is any part of the
    budget that can be off limits as we look for savings. I will be looking
    at every area of this subcommittee's jurisdiction as we attempt to cut
    duplicative projects and programs, increase management efficiencies,
    and reduce waste.
        Overall, the President's budget request for military construction
    and family housing is $14.76 billion in fiscal year 2012 as compared to
    $19.3 billion authorized in last year's National Defense Authorization
    bill. That sounds like a huge drop, and it is, but it is worth noting
    that more than half of the decrease is attributable to a drop of $1.3
    billion in requests for the Base Realignment and Closure (BRAC)
    construction, as we near the completion of the 2005 BRAC
    recommendations and a drop of $1.2 billion in requests for military
    construction in the budget for overseas contingency operations.
        This budget arrives at a time when DOD has embarked on a number of
    large force posture adjustments that should have significant impacts on
    our military construction programs, such as the realignment of U.S.
    forces on Okinawa and Guam and the 2005 BRAC round scheduled to be
    completed this year. Indeed, I'm told that the Department plans to
    announce another significant decision today--the number of brigade
    combat teams (BCT) it expects to retain in Europe.
        Force posture decisions like these come with associated costs, and
    those costs are often first apparent in the military construction
    accounts as infrastructure and facilities are either prepared or
    closed. Making sure those initial expenditures are the result of well
    thought out and planned decisionmaking should result in more effective
    and efficient results. As chairman, I plan to be very aggressive in my
    oversight to make sure these large, costly force posture actions are
    accompanied by careful, rigorous analysis. Too often when we look back
    on failed projects and programs we see that the analysis and
    decisionmaking on the front end were deficient.
        In this regard, I have concerns about the Department's plan to move
    8,000 marines and their dependents from Okinawa to Guam by the agreed
    upon date of 2014. Successful execution of this program will require
    the coordination of over $10 billion in construction projects on Guam
    and the construction of a new airfield at Camp Schwab on Okinawa.
    Congress has asked DOD repeatedly for a master plan laying out the
    costs and schedule for the various projects necessary to effect this
    large realignment. To date, we have not received such a master plan
    which makes it difficult to determine when certain projects must be
    funded.
        For instance, the fiscal year 2012 budget again includes a request
    for $181 million for two projects on Guam that Congress cut from last
    year's budget because they were clearly ahead of need. The Navy claims
    that if, for some reason, the Marine squadron scheduled to use the
    utilities project at Andersen Air Force Base does not arrive as planned
    then the Air Force would use it. However, the Air Force has its
    utilities requirements for Andersen Air Force Base on Guam planned as
    part of the planned fiscal year 2013 budget and states that the Air
    Force would have no need for the Navy's planned project.
        There are other areas in which we can and should do better. For
    example:

             The budget request includes funding for a new medical
            center near Ramstein Air Base, Germany at an expected cost of
            $1.2 billion. That is as much as the entire DOD budget for
            family housing this year, for a single hospital. I recognize
            that the medical facility at Ramstein has been the first stop
            for wounded warriors returning from Iraq and Afghanistan--but
            we will be out of Iraq, and may be out of Afghanistan, before
            this facility is ever built.
             The budget request includes four new fitness centers
            with a total cost of over $100 million--including a single
            fitness center that will cost almost $50 million to build. I
            understand that fitness is a requirement of the job, and we
            will always need fitness centers for our military. But at a
            time when our Nation is facing a fiscal crisis, I have trouble
            seeing how we can justify spending $50 million on a single
            fitness center.
             The budget also includes funding for working dog
            facilities at $3.5 and $4.9 million each. You could buy an
            exceptional house in St. Louis for that much money.

        Simply put, the era when cost was no object for DOD construction
    projects must come to an end. Critics of the DOD acquisition system
    have long complained about our tendency to build so-called ``gold-
    plated'' weapon systems--what the Secretary of Defense has referred to
    as ``exquisite'' designs. Unfortunately, this problem is not limited to
    weapon systems. I believe that we have a similar problem in the area of
    military construction, and I will be asking today's witnesses how they
    intend to address the issue.
        We have a great deal to discuss today. I look forward to your
    testimony and a lively discussion that will follow not only today but
    throughout the year.
        I now turn to Senator Ayotte for any opening remarks that she may
    have.

                   STATEMENT OF SENATOR KELLY AYOTTE

        Senator Ayotte. Thank you so much, Madam Chairman. It is an
    honor to be able to work on this committee with you. I had not
    appreciated the historic nature of today's hearing, so thank
    you so much for raising that.
        I thank all of you, first of all, for coming to testify
    before us today. This is our first hearing together, and I look
    forward to working with you in the years to come to address the
    critical programs under the oversight of this committee.
        As the wife of an Air National Guardman who has served in
    the Iraq war as an A-10 pilot, I share your concerns and
    commitment to ensure that the resources we provide to our men
    and women in uniform are used wisely and effectively to sustain
    the readiness of our forces, as well as the quality of life of
    our military.
        I want to thank our witnesses for their dedicated public
    service. I know that the issues you deal with are not easy.
        As we consider the overall DOD budget, as well as MILCON,
    environmental, and BRAC funding issues, more specifically, I
    believe the dire fiscal condition of our country must guide our
    efforts. In our current fiscal crisis, as Chairman McCaskill
    also identified, we cannot afford to waste even $1 on a program
    that does not address a valid military need or shortfall. As
    Admiral Mullen has said, the national debt is a threat to our
    national security. In the midst of this fiscal crisis, the
    spending of every department of the Federal Government requires
    scrutiny, including DOD. At the same time, I believe we have a
    sacred obligation to our servicemembers and veterans. As we go
    forward, we must fulfill our moral obligation to our troops
    while reviewing every program to eliminate duplication and
    waste.
        DOD has proposed, for 2012, a budget that includes $14.8
    billion for MILCON, BRAC, and housing programs, as well as
    $10.6 billion for facility sustainment. Many aspects of this
    request for 2012 certainly deserve praise and recognition,
    based on prior history of the work done on this committee. I
    commend DOD's commitment to invest in new K-12 schools run by
    DOD, and a full range of facilities to support our Special
    Operations Forces who've we asked so much of in Afghanistan and
    in Iraq, as well.
        I note that DOD has abandoned a former set of goals for
    facility recapitalization. While some deferrals may be
    necessary in light of the current fiscal crisis, we must
    scrutinize these deferrals to ensure that none of them endanger
    our mission. I look forward to working with DOD to scrutinize
    these deferrals and to reinstate standards, which I think is
    very important that we have standards that will serve as
    benchmarks to assess future funding requests.
        In the midst of the 10th year of war, the Guard and Reserve
    components have shouldered an increasing share of the burden.
    For example, the New Hampshire National Guard is currently
    undergoing its largest deployment since World War II. The Guard
    and Reserve is now a critical component of our operational
    force, not an infrequently used Strategic Reserve, as it was
    historically. Yet, in some important areas, DOD budget levels
    and prioritization have not evolved to reflect this reality.
    For example, I'm concerned about the levels of investment for
    proposed facilities for our Guard and Reserve. We certainly owe
    it to our Guard and Reserve, given the multiple deployments
    that they are now undertaking, to make sure that we review this
    carefully.
        In response in the past, Members of Congress have used
    earmarks to provide the Guard and Reserve the facility funding
    that their operational tempo requires. Utilizing earmarks to
    meet these essential Guard and Reserve needs is not the proper
    way to provide adequate resources for our citizen soldiers. DOD
    cannot continue to rely on Congress to direct additional
    spending for the programs that are actual needs. I ask each of
    you to review your Service's priorities for your Reserve
    components.
        I look forward to hearing from the witnesses their views on
    the conclusion of the 2005 round of BRAC, which has a statutory
    deadline to be completed by September 15 of this year. For the
    local communities that faithfully support our military bases, I
    know how important it is to have certainty regarding schedules
    for BRAC.
        It is also important to control the cost growth in every
    aspect of BRAC. We cannot afford to spend even one dollar more
    than is absolutely necessary to complete the moves directed by
    BRAC.
        As the Honorable Chairman has mentioned, I also look
    forward to discussing the complex issue of the realignment of
    the U.S. Marines on Okinawa and the relocation of 8,000 marines
    and their families to Guam. Again, I think the issues in Japan
    further complicate this decision, and we should not make this
    investment if it is going to be one that we cannot afford and
    we're not going to be able to get the support from the Japanese
    Government, given the current events in Japan.
        In the environmental area, the President's budget request
    for fiscal year 2012 proposes an investment of nearly $4.25
    billion for DOD's environmental program, a level that is
    consistent with funding provided in past years. While DOD
    continues to make steady progress in achieving its cleanup
    goals, which includes having a cleanup remedy in place, or
    completed cleanup, at all Active-Duty military installations by
    2014, I certainly would like our witnesses to address the
    actions of the Environmental Protection Agency (EPA) at Tyndall
    Air Force Base. The EPA is threatening to take enforcement
    action which could impact military training and readiness
    activities there and in the adjoining airspace over the Gulf of
    Mexico. I would like both Dr. Robyn and Mr. Yonkers to address
    the situation with the EPA and overall cleanup at Tyndall.
        Finally, Madam Chairman, I hope we will look into DOD's
    position on the use of Defense funds to support grants and
    other initiatives for nonmilitary requirements. Given our
    Nation's fiscal crisis, I fully support the Secretary of
    Defense's initiatives to spend each Defense dollar wisely and
    only on critical military priorities. Therefore, I believe this
    committee must lead the way in stopping the use of Defense
    funds to support special interests for medical research, local
    roads, and other public infrastructure. While these projects
    may be worthwhile, non-Defense projects should be funded by
    other Federal, State, or local agencies, and should go through
    the proper committees of jurisdiction in the Senate.
        I would like to conclude by thanking you again, Madam
    Chairman. I look forward to serving alongside you on this
    important subcommittee to sustain the readiness of our military
    forces, eliminate wasteful DOD spending, and improve the
    quality of life for our military members and their families.
        Thank you again.
        [The prepared statement of Senator Ayotte follows:]

                   Prepared Statement by Senator Kelly Ayotte

        Madam Chairman, I thank you for calling this hearing to review the
    2012 budget request for military installations and environmental
    programs. This is our first hearing together and I look forward to
    working with you in the years to come to address the critical programs
    under the oversight of this committee. As the wife of a member of the
    Air National Guard, who served in the Iraq War as an A-10 pilot, I
    share your concerns and commitment to ensure the resources we provide
    our men and women in uniform are used wisely and effectively to sustain
    the readiness of our forces as well as the quality of life for our
    military members and their families.
        I want to thank our witnesses for their dedicated public service as
    you manage the full range of installation, environment and energy
    programs for your respective departments. Many of these programs have
    complex and difficult issues associated with them, and you deserve our
    gratitude and appreciation for your service.
        As we consider the overall Department of Defense (DOD) budget, as
    well as military construction, environmental, and base realignment and
    closure (BRAC) funding issues more specifically, I believe the dire
    fiscal condition of our country must guide our efforts. In our current
    fiscal crisis, we cannot afford to waste even one dollar on a program
    that does not address a valid military need or shortfall. As Admiral
    Mullen has said, the national debt is a threat to our national
    security. In the midst of this fiscal crisis, the spending of every
    department of the Federal Government requires scrutiny--including DOD.
        At the same time, I believe we have a sacred obligation to our
    servicemembers and veterans. We must ensure our warfighters have
    everything they need to succeed in their missions and to keep us safe.
    We must also ensure that servicemembers and veterans and their families
    have access to the support they have earned. We have a moral obligation
    to ensure we take care of those who have taken care of us, not just
    now--but years from now--when the current wars end. As we go forward,
    we must fulfill our moral obligation to our troops while reviewing
    every program to eliminate duplication and waste.
        DOD has proposed a budget for 2012 that includes $14.8 billion for
    military construction, BRAC, and housing programs as well as $10.6
    billion for facility sustainment. Many aspects of this request for 2012
    deserve praise and recognition. I commend the Department's commitment
    to invest in new K through 12 schools run by the Department and a full
    range of facilities to support our Special Operations Forces.
        I note that DOD has abandoned a formal set of goals for facility
    recapitalization. While some deferrals maybe necessary in light of the
    current fiscal crisis, we must scrutinize these deferrals to ensure
    none of them endanger the mission. I look forward to working with the
    Department to scrutinize these deferrals and to reinstate standards
    that will serve as benchmarks to assess future funding requests.
        In the midst of the 10th year of war, the Guard and Reserve
    components have shouldered an increasing share of the burden. For
    example, the New Hampshire National Guard is currently undergoing its
    largest deployment since World War II. The Guard and Reserve is now a
    critical component of the operational force, not an in frequently used
    Strategic Reserve. Yet, in some important areas, DOD budgeting levels
    and prioritization processes have not evolved to reflect this new
    reality. For example, I am very concerned about the levels of
    investment proposed for new facilities for our Guard and Reserve
    components in the 2012 budget. Underfunding of Guard and Reserve
    facilities is a chronic problem based on the processes used by the
    Services to prioritize military construction projects. In response, in
    the past Members of Congress have used earmarks to provide the Guard
    and Reserves the facility funding their new operational tempo requires.
    Utilizing earmarks to meet these essential Guard and Reserve needs is
    not the proper way to provide adequate resources for our citizen
    soldiers. DOD cannot continue to rely on Congress to direct additional
    spending to Guard and Reserve construction programs. I ask each of you
    to review your Service's priorities for your Reserve components.
        I look forward to hearing from the witnesses their views on the
    conclusion of the 2005 round of BRACs, which has a statutory deadline
    to be completed by September 15, 2011. For the local communities that
    faithfully support our military bases, I know how important it is to
    have certainty regarding schedules for base closures and realignments.
    It is also important to control cost growth in every aspect of BRAC. We
    cannot afford to spend even $1 more than is absolutely necessary to
    complete the moves directed by BRAC.
        I also look forward to discussing the complex issue of the
    realignment of U.S. marines on Okinawa and the relocation of 8,000
    marines and their families to Guam. This issue has been further
    complicated by the catastrophic events in Japan which the recovery will
    affect each and every funding decision by the Government of Japan for
    some time to come. I am extremely concerned that the Department has
    decided to award construction contracts on Guam to support the
    relocation of forces without having any sign of tangible progress by
    the Government of Japan on the relocation of Marine Corps Air Station
    Futenma on Okinawa. This decision represents a potential substantial
    waste of U.S. taxpayer funds. Our warfighters will find no stronger
    advocate, but I will look to all departments of the U.S. Government--
    including DOD--to identify and eliminate redundancies and waste.
        In the environmental area, the President's budget request for
    fiscal year 2012 proposes an investment of nearly $4.25 billion for the
    Department's environmental program, a level that is consistent with
    funding provided in past years. While the Department continues to make
    steady progress in achieving its clean up goals, which includes having
    a cleanup remedy in place or a completed clean up at all Active-Duty
    military installations by 2014, I would like our witnesses to address
    the actions of the Environmental Protection Agency (EPA) at Tyndall Air
    Force Base. The EPA is threatening to take enforcement action which
    could impact military training and readiness activities there and in
    the adjoining airspace over the Gulf of Mexico. I would like both Dr.
    Robyn and Mr. Yonkers to address the situation with EPA over cleanup at
    Tyndall.
        Finally, Madam Chairman, I hope we will look into the Department's
    position on the use of defense funds to support grants and other
    initiatives for non-military requirements. Given our Nation's fiscal
    crisis, I fully support the Secretary ofDefense's initiatives to spend
    each defense dollar wisely and only on critical military priorities.
    Therefore, I believe this committee must lead the way in stopping the
    use of defense funds to support special interests for medical research,
    local roads, and other public infrastructure. While these projects may
    be worthwhile, non-defense projects should be funded by other Federal,
    State, or local agencies.
        I would like to conclude by thanking you again, Madam Chairman. I
    look forward to serving alongside you on this important subcommittee to
    sustain the readiness of our military forces, eliminate wasteful DOD
    spending, and improve the quality of life for our military members and
    their families.
        Thank you, Madam Chairman.

        Senator McCaskill. We have just had two votes called on the
    Senate floor.
        So, why don't we begin, Dr. Robyn, with you. Approximately
    how long is your testimony?
        Dr. Robyn. Just a few minutes.
        Senator McCaskill. Okay.
        Dr. Robyn. Just a couple of minutes.
        Senator McCaskill. Why don't we do your testimony and then
    the three of us will go vote.
        Dr. Robyn. Okay.
        Senator McCaskill. By then we'll be at the end of the first
    vote and near the beginning of the second vote and we can be
    more efficient--since this is about efficiencies----[Laughter.]
        --we'll be more efficient, in terms of getting over there
    and getting back, and not keep all of you waiting any longer
    than absolutely necessary.
        Dr. Robyn. Terrific.
        Senator McCaskill. Thank you, Dr. Robyn.
        Dr. Robyn. Thank you.

       STATEMENT OF DR. DOROTHY ROBYN, DEPUTY UNDER SECRETARY OF
                 DEFENSE, INSTALLATIONS AND ENVIRONMENT

        Dr. Robyn. Madam Chairman, Senator Ayotte and Senator
    Udall, thank you for the opportunity to testify on the
    President's fiscal year 2012 budget request.
        I will submit my written statement for the record, and it
    includes details on the numbers that you all have been citing--
    $14.8 billion for MILCON, family housing, and BRAC, $17.9
    billion for sustaining, restoring, and upgrading the condition
    of our existing facilities, and $4.3 billion for environmental
    programs. The $14.8 billion for MILCON, as you said, Madam
    Chairman, is down about $4 billion from last year, largely due
    to the fact that we're completing BRAC. Conversely, a request
    for sustainment and recapitalization is up by about the same
    amount, primarily reflecting efforts by the Army and the Air
    Force to upgrade their existing facilities. Finally, the
    environmental program is fairly level, reflecting maturity and
    stability of our efforts in this area.
        My service colleagues will detail parts of the budget--of
    the request within their individual budgets. I want to use my
    time to highlight two key priorities, both of which I think
    drive your major interest in efficiency.
        The first is energy. Energy is important to DOD for two
    reasons. The first is mission assurance. Our installations
    support combat operations more directly than ever before. From
    domestic bases, we pilot unmanned aerial vehicles, perform
    intelligence analysis, and even deploy long-range bombers.
    These bases rely, in turn, on a fragile and vulnerable
    commercial electricity grid.
        The second reason energy is important to DOD is cost. We
    have 300,000 buildings, 2.2 billion square feet of space.
    That's three times as much as Walmart, 10 times as much as
    General Services Administartion. We have an energy bill that
    matches that: $4 billion a year. That's fully a quarter of
    DOD's total energy bill.
        With an eye toward lowering those energy bills and
    improving the energy security of our installations, we've
    adopted a multifaceted strategy. We're using our MILCON and
    sustainment budgets to drive the effort to make our buildings
    more energy efficient. We're installing renewable and
    alternative sources of energy on our installations, primarily
    using third-party financing. We're taking steps to make our
    installations more secure, in the event of a major disruption
    to the electric grid, such as what is happening now in Japan. I
    should say that renewable energy is helpful in this regard.
        These efforts to green DOD are good for the environment, to
    be sure. But, that's not the main reason we're pursuing them.
    The main reason is cost savings and mission assurance. They're
    smart investments for DOD, and they will pay for themselves
    many times over.
        The second theme I want to hit is technology. One of the
    great opportunities we have to improve our performance and
    lower cost is to leverage technology. This has been DOD's great
    advantage when it comes to combat operations, and the same is
    true when it comes to running installations.
        Let me just give you one example from the environmental
    area. We have a major program to clean up unexploded ordnance
    (UXO). The estimated bill is $17 billion. The cost is high
    because current cleanup methods can't distinguish between UXO
    and harmless scrap metal--beer cans, barbed wire, horseshoes.
    As result, contractors have to dig up literally hundreds of
    thousands of items. Each one is remotely exploded in order to
    retrieve just a handful of UXO--pieces of harmful UXO.
        A program that I help oversee has developed technology that
    can reliably distinguish UXO from scrap metal. Over the next 4
    years, we will validate and test this technology. We think it
    can save up to $12 billion in cleanup costs.
        Let me mention just give one other quick example. We are
    using our installations as a testbed for next-generation energy
    technology. This emerging energy technology has the potential
    to produce dramatic savings in our energy bill. But, there are
    huge impediments to the commercialization of this technology. A
    lot has been written about it. It's the nature of the building
    sector.
        It is in our direct self-interest, as the owner of 300,000
    buildings, to help overcome these impediments. We're doing that
    by demonstrating these technologies at our installations, using
    our installations as a virtual testbed. For those technologies
    that prove effective, we'll go on to serve as an early
    customer, creating a market, just as we did with aircraft, with
    electronics and the Internet. We have about 40 projects
    underway, and we expect to have results later this year.
        Let me thank you for the opportunity to testify. I look
    forward to your questions. I look forward to working with you
    on your agenda.
        [The prepared statement of Dr. Robyn follows:]

                    Prepared Statement by Dr. Dorothy Robyn

        Chairman McCaskill, Senator Ayotte, and distinguished members of
    the subcommittee: thank you for the opportunity to present the
    President's fiscal year 2012 budget request for the Department of
    Defense (DOD) programs to support installations, installations energy
    and the environment.
        Installations are the military's infrastructure backbone--the
    platform from which our soldiers, sailors, airmen, and marines
    accomplish their missions. Installations have long supported the
    maintenance and deployment of weapons systems and the training and
    mobilization of combat forces. Increasingly, they have an even more
    direct link to the warfighter, by providing ``reachback'' support for
    combat operations. Our installations are also becoming more important
    as a staging platform for homeland defense missions.
        Installations affect not just our mission effectiveness but the
    very quality of life that our servicemembers and their families enjoy.
    Families' satisfaction with the most critical services they receive--
    housing, healthcare, childcare, on-base education--is linked to the
    quality and condition of our buildings and facilities.
        My testimony addresses four key topics: first, international and
    domestic basing decisions, including the buildup of marines in Guam and
    the 2005 Base Realignment and Closure (BRAC) process; second, the
    Department's management of the built environment, including the
    programs that support military construction, family housing, and
    sustainment and recapitalization; third, our strategy for improving the
    energy efficiency and energy security of our installations; and,
    fourth, our programs for protecting the natural environment.

            I. THE GLOBAL PICTURE: INTERNATIONAL AND DOMESTIC BASING

    Global Basing
        To project power globally, the Department must have the right mix
    of military forces and facility infrastructure at strategic locations.
    My office supports the Department's strategic security objectives by
    ensuring that decisions about international basing of troops and
    facilities are the product of joint planning and rigorous analysis. We
    also seek to leverage existing infrastructure wherever possible. As
    examples, we are assisting the Services with planning for the U.S.
    Forces Korea transformation initiatives, the recapitalization and
    consolidation of the Landstuhl Regional Medical Center in Germany, and
    the relocation of thousands of marines and their families from Okinawa
    to Guam.
        Rebasing Marines from Okinawa to Guam
        The realignment of marines from Okinawa to Guam represents a major
    change in our force posture in Asia. It is designed to further several
    strategic goals. First, it will strengthen our alliance with Japan by
    relieving longstanding pressures associated with our presence in
    Okinawa. Second, it will ensure the long-term presence of U.S. forces
    in Japan and the Western Pacific. Third, by making better use of Guam's
    strategic advantages, it will more effectively array U.S. forces to
    deal with the complex and evolving security environment in Asia.
        The United States is unlikely to get another opportunity to craft a
    strategic realignment that both enhances our regional force posture and
    incorporates substantial funding from a key ally--in this case, the
    Government of Japan, which has pledged more than $6 billion. As a
    testament to its commitment to the realignment plan, Japan has already
    provided $834 million in direct funding for construction and has
    another $582 million in its current budget, $415 million of which will
    go to improve Guam's utilities infrastructure.
        The President's fiscal year 2012 budget request includes $181
    million for construction projects to support the marine relocation to
    Guam. Our request includes another $33 million for projects to address
    the socio-economic impact of the buildup, including a repository for
    the preservation of artifacts unearthed during military construction as
    required by the National Historic Preservation Act (NHPA). Recognizing
    that the strategic value of the buildup warrants a ``whole-of-
    government'' approach, the fiscal year 2012 budget request also
    includes $34 million in commitments from other Federal agencies. These
    projects will yield long-term benefits for U.S. military forces as well
    as help mitigate the impact of the marked increase in Guam's population
    that a major military construction program and the subsequent
    realignment will produce. They will also demonstrate our commitment to
    working with the Goverment of Guam, whose support for the relocation is
    key. As one indication, Guam last week signed the ``Programmatic
    Agreement'' required under the NHPA, which paves the way for military
    construction by establishing protocols for the preservation of
    artifacts that we uncover.
        The movement of marines from Okinawa to Guam gives us a rare
    opportunity to build an installation from the ground up. We intend to
    take full advantage of this opportunity, using contemporary urban
    planning techniques to avoid sprawl and minimize land use. We will also
    integrate modern energy technology and sustainability practices to
    create an enduring base that meets our current and future requirements
    while minimizing impact on the local community and the island's natural
    resources.

    Domestic Basing: Base Realignment and Closure
        Turning to domestic basing, we are in the final year of
    implementation of BRAC 2005, with all 222 recommendations required to
    be completed by September 15. While the Department is facing challenges
    to meeting that schedule in a few cases, we are working diligently to
    ensure that we satisfy our legal obligations. Once implementation is
    completed, we expect to realize an estimated $4 billion in annual
    savings.
        While our investments are creating economic opportunities for
    communities experiencing growth as a result of BRAC, some of those
    communities feel that the Department has ignored potential adverse
    effects. One particular concern is the impact of growth on local
    transportation networks. Although we have the authority to mitigate
    transportation impacts of BRAC through the Defense Access Road (DAR)
    program, we have been criticized for defining those impacts too
    narrowly. In response to congressional direction, the National Academy
    of Sciences studied the effects of BRAC on local transportation, and we
    plan to revise the DAR funding criteria based on the findings of this
    recently completed study. This revision will make it easier for us to
    mitigate adverse traffic impacts caused by the Department's actions,
    particularly in congested urban areas.
        A significant action under BRAC 2005 that my office has championed
    is the consolidation of 26 installations into 12 Joint Bases. Joint
    Bases represent a fundamental change in our approach to installation
    management. Predictably, we are beginning to realize efficiencies from
    this initiative, many of them the result of economies of scale. For
    example, consolidating all recycling operations at Joint Base McGuire-
    Dix-Lakehurst saved $1 million in facility and equipment requirements
    and reduced overall contract costs by $200,000 annually. Far more
    important, however, is that our Joint Base commanders--faced with
    parallel and often-conflicting Service rules and requirements--are
    successfully implementing new, cross-cutting business processes. This
    ability to transcend traditional practices and develop innovative
    solutions to long-standing inefficiencies is key to positioning
    ourselves for future, Department-wide reforms.
        I had the opportunity to meet personally with most of the Joint
    Base Commanders in February at our Program Management Review. I am
    excited about the prospects for using Joint Bases as ``incubators for
    innovation,'' as one Joint Base commander put it. I also continue to be
    encouraged by their can-do attitude and dedication to providing the
    highest quality service, not only in support of the military missions
    on their sites, but to servicemembers and their families as well.
        Finally, one of the key tools for disposing of property under BRAC
    is the Economic Development Conveyance (EDC), which was created in 1994
    to promote the rapid transfer of BRAC property for job-creating
    economic development. In recent years, EDC conveyances have been
    delayed by complicated negotiations over the value of one-of-a-kind
    parcels of property. As negotiations dragged on, the Department paid
    for property maintenance and the community was unable to redevelop the
    property and create jobs. Last year, Congress amended the statutory
    authority underlying EDCs to remove the requirement that the Department
    seek to obtain Fair Market Value for an EDC. The amended law also
    provides explicit authority for the Department to use flexible tools
    for determination of ``consideration'' (payment), such as so-called
    ``back-end'' financing. We are finalizing a regulation that will
    implement these much-needed amendments to the EDC law, and we hope to
    issue it soon. Our goal is to simplify and accelerate the EDC process
    by allowing both communities and the Department to share in the success
    of redevelopment efforts.

                       II. MANAGING OUR BUILT ENVIRONMENT

        The President's fiscal year 2012 budget requests $14.8 billion for
    Military Construction (MILCON) and Family Housing--a decrease of
    approximately $4.0 billion from the fiscal year 2011 requested level.
    This decrease primarily reflects the decline in investment needed as we
    approach the end of BRAC 2005.

    Military Construction
        We are requesting $12.5 billion for ``pure'' military
    construction--i.e., exclusive of BRAC and Family Housing. This request
    addresses routine needs for construction at enduring U.S. and overseas
    installations and for specific programs such as the NATO Security
    Investment Program and the Energy Conservation Investment Program. In
    addition, we are targeting MILCON funds in three key areas.
        First and most important, we are supporting operational mission
    requirements. MILCON is key to initiatives such as Grow the Force and
    the Global Defense Posture Realignment, as well as to the fielding of
    modernized and transformational weapon systems such as the F-22, the F-
    35, and the MQ-9. Our budget request also includes a range of mission
    support facilities--for Special Operations Forces, Guard and Reserve
    units, and the Army's transformation into a brigade-centric, modular
    force.
        Second, the President's budget request supports the continued
    recapitalization of our DOD-dependent schools here in the United States
    and overseas. We are now in the second year of a 6-year plan to repair
    or replace all 134 schools that were in poor or failing physical
    condition. The fiscal year 2012 budget request includes $550 million to
    recapitalize 15 of these schools.
        Third, the fiscal year 2012 budget request includes more than $1.1
    billion 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. Our budget addresses projects that
    directly affect patient care by improving and expanding existing
    facilities, and providing additional capacity to support Grow the Army.
    It also allows us to continue improving the medical research facilities
    that support vital chemical-biological defense efforts.

    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. The fiscal
    year 2012 budget request includes $8.8 billion for sustainment and $9.0
    billion for recapitalization (restoration and modernization) of our
    facilities.
        Sustainment represents the Department's single most important
    investment in the health of its facilities. It includes regularly
    scheduled maintenance and repair or replacement of facility
    components--the periodic, predictable investments an owner should make
    across the service life of a facility to slow its deterioration and
    optimize the owner's investment.

        We use a Facilities Sustainment Model (FSM) based on industry
    benchmarks to estimate the annual cost of regularly scheduled
    maintenance and repair for different types of facilities. Our policy
    calls for the Services to fund sustainment at no less than 90 percent
    of the FSM-generated estimate. For fiscal year 2012, however, the Navy
    and Air Force have opted to take risk, funding sustainment at only the
    80 percent level.\1\ As a result, our fiscal year 2012 budget request
    funds sustainment DOD-wide at only 86 percent of the FSM-generated
    estimate.
    ---------------------------------------------------------------------------
        \1\ The Navy and Air Force believe they can manage this risk by
    prioritizing their sustainment needs. However, the recent flooding of
    the U.S. Strategic Command headquarters demonstrates how difficult it
    is to do this: the flooding was due in part to a history of
    insufficient preventive maintenance at what is a mission-critical
    facility.
    ---------------------------------------------------------------------------
        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. Compared with sustainment, recapitalization needs are
    harder to forecast because they are a function of change--in functional
    standards (e.g., a new requirement for the configuration of enlisted
    housing rooms), in available technology (e.g., new lighting fixtures
    and next-generation boilers) and even in the mission that the facility
    supports. The fiscal year 2012 budget requests $9.0 billion for
    recapitalization--$4.4 billion more than the fiscal year 2011 request.
    This reflects an increased emphasis by the Army and Air Force on
    upgrading their existing facilities.
        Finally, demolition (including deconstruction to recycle and reuse
    building parts) is an important tool in any recapitalization effort.
    Our fiscal year 2012 budget requests $409 million to eliminate more
    than 17 million square feet of facilities--a demonstration of our
    commitment to demolish what we no longer need or cannot economically
    repair.

    Family and Unaccompanied Housing
        Housing is key to quality of life--in the military no less than in
    the civilian world. The fiscal year 2012 budget requests $1.7 billion
    for family housing, which supports our goal of having 90 percent of
    family housing in good or fair condition starting in fiscal year 2012.
        The Services have relied largely on privatization to address a dual
    problem: traditionally, much of the military-owned family housing was
    in poor condition, and military families often could not find
    affordable rental housing in the local economy. In my view,
    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. First, it is
    extremely cost effective: with an investment of only $2.7 billion, the
    Services have generated $27 billion in privatized housing--a 10:1
    leverage ratio. Moreover, the private owners are responsible for
    maintenance and operation, including necessary recapitalization, for
    the full 50 years of the project. Second, the housing is of high
    quality; most of it is more appealing to young families than what the
    MilCon process would produce. Finally, the private owners have a strong
    incentive to maintain the housing because they need to be able to
    attract and retain military tenants.

        For government-owned family housing, the fiscal year 2012 budget
    requests $374 million to replace or improve 2,412 units at U.S. bases
    and enduring locations overseas. We are requesting an additional $1.3
    billion to operate and maintain 42,000 units worldwide.
        The Department is committed to improving housing for its
    unaccompanied servicemembers as well. In past 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 2012 budget request includes about $1.7
    billion for construction of new and replacement projects for nearly
    15,000 unaccompanied servicemembers.
        As the Department nears the goal it set for new construction of
    unaccompanied housing, we are shifting the focus to long-term
    sustainment of the modernized inventory. My office has worked closely
    with the Comptroller to establish quality standards and performance
    goals for sustainment of unaccompanied housing. In this year's budget
    process, we instituted a key performance goal: 90 percent of
    unaccompanied housing should be in good or fair condition by the end of
    fiscal year 2017.

                          III. MANAGING OUR ENERGY USE

        The performance of an installation is increasingly linked to its
    management and use of energy. Installation, or facilities, energy is
    important for two reasons. First, it represents a significant cost. In
    2010, DOD spent $4.0 billion, or 26 percent of the Department's energy
    bill, on facilities energy. Second, facilities energy is key to mission
    assurance. According to the Defense Science Board, DOD's reliance on a
    fragile grid to deliver electricity to its bases places critical
    missions at risk.\2\ Most installations cannot manage their demand for
    and supply of power and are thus vulnerable to intermittent and/or
    prolonged power disruption due to natural and manmade disasters.
    ---------------------------------------------------------------------------
        \2\ ``More Fight-Less Fuel,'' Report of the Defense Science Board
    Task Force on DOD Energy Strategy, February 2008.
    ---------------------------------------------------------------------------
        The Department has three interrelated goals with respect to
    facilities energy:

             Reduce energy usage and intensity
             Increase renewable and onsite (distributed) energy
            generation
             Improve energy security

        Our strategy directly reflects those goals.
        First and most important, we are reducing the demand for
    traditional energy through conservation and energy efficiency. The
    Department spends almost $10 billion a year to sustain, restore and
    modernize our existing facilities. As part of this process, we are
    retrofitting our buildings with energy efficient components and
    systems, such as improved lighting, high-efficiency HVAC systems,
    double-pane windows, energy management control systems and new roofs.
    Fully one-fourth of the $7.4 billion that the Department spent on
    facility sustainment and recapitalization under the American Recovery
    and Reinvestment Act (ARRA) went directly to improve energy efficiency.
        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. All new
    construction must meet the Leadership in Energy and Environmental
    Design (LEED) Silver standard and/or the five principles of High
    Performance Sustainable Buildings. In either case, new construction
    must exceed the energy efficiency standard set by the American Society
    of Heating, Refrigerating and Air-Conditioning Engineers by at least 30
    percent.
        In short, the Department's Sustainment and Milcon programs are the
    engine of our drive to reduce facility energy use. To be sure, this
    effort to ``green'' our facilities is good for the environment. But it
    is driven above all by our desire to get major cost savings.
        Second, the Department is increasing the supply of renewable and
    alternative energy on our installations. Our installations are well
    situated to support solar, wind, geothermal and other forms of
    renewable energy. The geothermal plant at Naval Weapons Center China
    Lake in California provides 270 MWs of power to the State's electrical
    grid--enough to supply a small city; and Nellis Air Force Base in
    Nevada has the second largest solar array in North America. Although
    opportunities for utility-scale solar may be limited (one impediment is
    the lack of water), the roofs of our buildings represent a major
    resource. For example, in Hawaii, the 5,900 units of privatized Army
    family housing feature rooftop photovoltaic (PV) solar panels, making
    this the world's largest residential PV project. As a matter of policy,
    the Navy and the Marine Corps now require that all new roofs and roof
    replacements incorporate solar panels or some other green feature.
        Third, we are striving to improve the energy security of our
    installations, with an emphasis on the risk from potential disruptions
    to the commercial grid. The Department is participating in interagency
    discussions on the magnitude of the threat to the grid and how best to
    mitigate it. Closer to home, we are looking at how to ensure that we
    have the energy needed to maintain critical operations in the face of a
    major disruption. As required by the National Defense Authorization Act
    (NDAA), the Department recently gave Congress a preliminary plan for
    identifying and addressing areas in which electricity needed to carry
    out critical military missions on DOD installations is vulnerable to
    disruption. The development of renewable and alternative energy sources
    on base will be one element of this effort: in combination with other
    investments such as smart microgrid technology, renewable and onsite
    energy sources can help installations carry out mission-critical
    activities and support restoration of the grid in the event of
    disruption.
        As DOD strives to improve its energy efficiency and security,
    accurate, real-time information about energy use is essential: to
    borrow the oft-used phrase, you can't manage what you can measure. My
    office is developing policy guidance that will require the Services to
    meter a larger share of their energy consumption. We are also leading
    the effort to develop a DOD-wide energy information management system.
    Leading firms such as Walmart have such a system, and so should DOD.
    Toward that end, we have defined a standard set of energy information
    management requirements and are assessing which information management
    technologies (future and current) will best support them.
        Although the Department is steadily improving its installation
    energy performance, we have failed to meet key statutory and regulatory
    goals for the last 2 years. We fell short of the 2010 goal for energy
    intensity (15 percent reduction relative to 2003) largely because of
    the Army's performance. On another key metric, renewable energy, while
    we are on track to meet the NDAA target (produce/procure 25 percent of
    electricity from renewable sources by 2025), we missed the Energy
    Policy Act target (7.5 percent renewable use by 2013), which excludes
    geothermal. See the Appendix for more detail.
    Fiscal Year 2012 Budget Request
        Let me highlight two programs in our fiscal year 2012 budget
    request that are particularly important to the Department's energy
    strategy: the Installation Energy Test Bed and the Energy Conservation
    Investment Program (ECIP).
        Installation Energy Test Bed
        We are requesting $30 million in fiscal year 2012 for energy
    technology demonstrations by the Environmental Security Technology
    Certification Program (ESTCP).\3\ ESTCP began these demonstrations--
    known as our Installation Energy Test Bed--as a pilot in 2009 with $20
    million in ARRA funds. Seeing the value of these demonstrations, in
    2010, the Department directed $30 million from ECIP, a flexible MILCON
    line, to ESTCP to continue the Test Bed. This year, we are seeking to
    fund the Test Bed as the RDT&E activity it is. It is a high leverage
    program that we believe will produce major savings.
    ---------------------------------------------------------------------------
        \3\ As discussed in section IV below, we are also requesting $33.6
    million for ESTCP for environmental technology demonstrations. These
    two demonstration programs appear as separate lines under ESTCP in the
    President's fiscal year 2012 budget request.
    ---------------------------------------------------------------------------
        The purpose of the Test Bed is to demonstrate new energy
    technologies in a real-world, integrated building environment so as to
    reduce risk, overcome barriers to deployment and facilitate wide-scale
    commercialization. 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. There is an extensive literature on the
    impediments to commercialization of emerging technologies for the
    building energy market. 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.
        It is in DOD's direct self-interest to help firms overcome the
    barriers to deployment and commercialization of their technology. We
    have a vast inventory of buildings: nearly 300,000 structures and 2.2
    billion square feet of space--three times the footprint of Walmart and
    ten times that of the General Services Administration. Given what we
    spend to power our facilities ($4 billion a year), the potential cost
    savings are significant.
        One indication of the value of this approach is that Walmart, the
    largest private sector energy consumer in the United States, has its
    own test bed. Walmart systematically tests innovative energy
    technologies at designated stores to assess their performance and cost
    effectiveness. For technologies that prove to be cost effective (not
    all of them do, which is itself a valuable finding), Walmart deploys
    them in all of its stores. This approach has helped Walmart
    dramatically reduce its energy consumption. But whereas Walmart's focus
    is narrow because all of its stores are identical (big-box design), the
    military needs solutions for a diverse mix of building types and
    sizes--everything from barracks and office buildings to aircraft repair
    depots and data centers.
        ESTCP has successfully piloted the Test Bed over the last 2
    years.\4\ Each year, ESTCP has issued a solicitation inviting private
    firms, universities and government labs to identify emerging
    technologies that would meet DOD installation needs. The response has
    been huge: in 2010, ESTCP received more than 300 proposals from leading
    corporations in the building energy sector, small startups with venture
    capital funding and the major DOE labs. Teams made up of technical
    experts from inside and outside of DOD and Service representatives
    familiar with the installations' needs review the proposals, and
    winning proposals (ESTCP has selected about 15 percent of the ones
    submitted) are matched up with a Service and an installation at which
    to demonstrate the technology. ESTCP expects some of the projects to
    begin to show results this year.
    ---------------------------------------------------------------------------
        \4\ 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 five focus areas: advanced components to improve
    building energy efficiency; advanced building energy management and
    control; smart microgrid and energy storage to improve energy security;
    tools and processes for design, assessment and decisionmaking for
    energy use and management; and renewable energy generation on DOD
    installations. The Test Bed requires no new physical infrastructure;
    rather, it operates as a distributed activity whose key element is the
    systematic evaluation of new technologies, both to determine their
    performance, readiness and life cycle costs, and to provide guidance
    and design information for future deployment across installations.
        The timing for an Energy Test Bed is ideal--one reason the response
    from industry has been so strong. The Federal Government is investing
    significant resources in building energy R&D, largely through the
    Department of Energy (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 ESTCP Test Bed can leverage these
    resources for the military's benefit.
        Energy Conservation Investment Program
        The second key program to highlight is the Energy Conservation
    Investment Program (ECIP). The fiscal year 2012 budget requests $135
    million for ECIP, a $15 million increase compared to our fiscal year
    2011 request. ECIP has a long history of producing savings for the
    Services, and we are reorienting the program to give it even greater
    leverage.
        ECIP traditionally has funded small projects that promise a
    significant payback in reduced energy costs, and the Services have
    relied heavily on it to achieve their energy goals. Although ECIP has
    enjoyed strong support in Congress and elsewhere, it is and will remain
    a relatively small program. Thus, it can achieve only a fraction of the
    Department's energy goals. Moreover, the Services are establishing and
    funding their own, much larger programs aimed at improving their energy
    performance.
        In keeping with the Department's growing focus on energy, I
    recently issued policy guidance designed to change the role that ECIP
    will play--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
    and/or security. To illustrate, ECIP projects should have the following
    types of goals:

             Dramatically change energy consumption at an
            individual installation, e.g., by fundamentally improving the
            performance of the power or steam plant;
             Implement across multiple installations a technology
            validated in a demonstration program sponsored by DOD (e.g.,
            the Installation Energy Test Bed) or DOE;
             Integrate technologies designed to achieve different
            goals (e.g., energy efficiency and energy security) to realize
            synergistic benefits;
             Integrate distributed generation and storage
            technologies to improve supply resiliency for critical loads;
            and,
             Implement energy security or net-zero energy
            installation plans, especially at those installations where
            such investments leverage partnerships with DOE.

        In terms of implementation, this new vision for ECIP means that my
    office will no longer use financial payback as the sole criterion for
    judging the merits of potential projects. In evaluating a candidate
    project, we will now give as much weight to its energy impact
    (reduction in BTUs) as to its financial payback, and we will give
    secondary consideration to the impact of the project on the nominating
    installation's energy security.
        As this change reflects, ECIP is now part of a portfolio approach
    in which the Services can pursue the most financially attractive energy
    projects via third-party financing, such as an Energy Savings
    Performance Contract, or through their own budgets. ECIP will support
    projects that will have a big impact on the Services' energy efficiency
    and energy security but that cannot be justified under their internal
    funding strategies.

                     IV. PROTECTING THE NATURAL ENVIRONMENT

        The Department has long made it a priority to protect our natural
    and cultural resources: as the Marine Corps puts it, ``A country worth
    fighting for is a country worth preserving.'' The Department protects
    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 $42 billion in its
    environmental programs, and our steady level of expenditure has
    produced quality results. In fiscal year 2012, we are requesting $4.3
    billion to continue this legacy of leadership.

    Environmental Conservation
        Our installations are home to some of the finest examples of rare
    native vegetative communities, such as old-growth forests, tall grass
    prairies and vernal pool wetlands. DOD has a greater density of
    endangered and threatened species than any other Federal agency. Of the
    1,372 species considered threatened or endangered by the U.S. Fish &
    Wildlife Service (USFWS), more than 420 inhabit DOD land. Nearly 40
    threatened and endangered species are found exclusively on DOD
    installations. The Department develops plans to protect the natural
    environment while maintaining support for mission requirements in
    coordination with the USFWS and its State counterparts. These plans
    have helped us maintain flexibility for mission activities, avoiding
    critical habitat designations while providing equal or greater
    protection for endangered species.
        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. Using these
    properties reduces DOD's environmental footprint and retains
    significant cultural resources for future generations. In addition,
    many older buildings have features that we consider to be ``green''
    today, 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 $380 million in fiscal year 2012 for
    environmental conservation, which includes $226 million in recurring
    funds for ongoing activities and $154 million in non-recurring funds
    for one-time projects directed at threatened and endangered species,
    wetland protection, or other natural, cultural and historical
    resources. This represents an increase of 18.8 percent over the fiscal
    year 2011 request. Specifically, the Navy has increased its request to
    meet legal requirements of conservation laws and regulations, primarily
    in support of offshore range Environmental Impact Statements and
    consultations under the Marine Mammal Protection Act and the Endangered
    Species Act. The Army has increased its request as well to more
    accurately reflect program requirements.

    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.
        By the end of 2010, the Department, in cooperation with State
    agencies and the U.S. Environmental Protection Agency, had completed
    cleanup activities on 79 percent of IRP sites, and it 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.
        We are requesting $2.0 billion for fiscal year 2012 to clean up IRP
    and MMRP sites. (This includes both $1.5 billion for ``Environmental
    Restoration'' and $458 million for ``BRAC Environmental.'') The budget
    request for Environmental Restoration is $72 million less than it was
    in fiscal year 2011, primarily because of a reduction in the Army's
    MMRP requirement. At the same time, we are asking for $76 million more
    than in fiscal year 2011 for BRAC Environmental to support requirements
    at Army and Navy BRAC installations.

    Pollution Prevention
        The Department employs a number of strategies to reduce pollution
    of our air, water, and land. They include eliminating the use of
    certain hazardous materials in our operations and weapon systems,
    promoting the use of alternative fuels and green products, and
    implementing innovative technologies. These and other strategies lower
    our life cycle costs, improve mission capabilities and protect our
    assets.
        Investments in pollution prevention pay dividends. In 2010 the
    Department diverted 3.9 million tons or 62 percent of our solid waste
    from landfills, avoiding approximately $176 million in landfill
    disposal costs. We reduced hazardous waste disposal by 8 percent from
    2008 to 2009. Our installations also effectively manage air quality:
    they reduced hazardous air pollutant emissions by 420 tons, or 25
    percent, from 2008 to 2009.
        The President's budget requests $104 million for pollution
    prevention in fiscal year 2012, a reduction of $13 million from our
    fiscal year 2011 request. This decrease reflects the growing maturity
    of the pollution prevention program: having completed activities that
    require significant investment to reduce pollution after the fact, the
    Department is now focusing on the more cost-effective strategy of
    preventing pollution in the first place, for example, by influencing
    the planning and design of weapons systems.

    Environmental Compliance
        Clean water and air are essential to the health and well being of
    our communities and ecosystems. The Department maintains a high level
    of compliance with environmental laws and regulations: although
    environmental regulators performed more than 3,000 inspections in
    fiscal year 2010--a 30+ percent increase from 10 years ago--DOD was
    subject to enforcement actions for only 9 percent of these inspections,
    which is an all time low.
        Our fiscal year 2012 budget requests $1.6 billion for environmental
    compliance--a negligible ($19 million) decrease from last year's
    request. This steady level of investment will enable the Department to
    continue to protect the environment while maintaining operational
    readiness.

    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 the Department'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. Through a competitive process,
    it invests in applied research and advanced technology development
    guided by DOD users needs but executed by the leading research
    establishments in both the private and public sectors. It has a
    balanced portfolio of projects ranging from high risk leap-ahead
    technologies to fundamental engineering needed to solve critical near
    term problems. SERDP has a superb track record: as one of the only R&D
    programs aimed at reducing DOD operating costs, it has saved the
    Department billions of dollars in environmental cleanup costs, avoided
    liability costs and reduced weapons system maintenance and life cycle
    costs.
        One reason SERDP has been so successful is the complementary role
    played by ESTCP, the Department's environmental test and evaluation
    program. SERDP and ESTCP are managed out of a single program office.
    ESTCP's mission is to transition technology out of the laboratory. 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.
        One area where SERDP and ESTCP have excelled is the development of
    technologies to detect unexploded ordnance (UXO). Current clean-up
    methods cannot discriminate between scrap metal and hazardous UXO; 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 an eye-popping $17 billion.
    However, 10 years of investment by SERDP and ESTCP have yielded
    technologies that can discriminate between UXO and harmless metal
    objects with almost perfect reliability. This is a remarkable
    achievement and one that many clean-up experts thought was impossible.
    Based on estimates from the 2003 Defense Science Board Task Force on
    Unexploded Ordnance, implementation of reliable discrimination
    technologies can reduce DOD's projected cost for UXO cleanup by 75
    percent--or up to $12 billion.
        ESTCP has recently funded live-site demonstrations to acquire the
    data needed to validate, gain regulatory approval for and fully
    transition these technologies into the field. We are proposing to
    accelerate these demonstrations so that the technology is ready by
    2015, when the Services undertake major UXO clean-up efforts.
    Recognizing that the challenges go beyond technology, we are addressing
    other potential impediments to the deployment of new technology. We are
    talking with environmental regulators to gain their endorsement,
    working with contracting offices so that contracts allow for early
    adoption, and cooperating with industry to encourage embrace of the new
    technology.
        The fiscal year 2012 budget request includes $66.4 million for
    SERDP and $33.6 million for ESTCP for environmental technology
    demonstrations. (The budget request for ESTCP includes an additional
    $30 million for energy technology demonstrations, as discussed in
    section III above.) Of the $33.6 million requested for ESTCP, $7.5
    million will go to support the accelerated program of UXO live-site
    demonstrations.
        The overall budget request for Environmental Technology for fiscal
    year 2012 is $227 million. In addition to SERDP and ESTCP, this request
    includes funding for the Services' environmental research and
    development activities. The Services' investments focus on Service-
    unique environmental technology requirements and complement the larger
    SERDP and ESTCP investments, which address those issues that are common
    across the Services. SERDP and ESTCP work closely with the Services in
    order to coordinate and leverage these investments.

    Compatible Development
        Encroachment is a growing challenge to the military mission,
    particularly our test and training activities. I want to highlight two
    efforts which I spearhead that are designed to deal with this
    challenge.
        Readiness and Environmental Protection Initiative
        DOD's ability to conduct realistic live-fire training and weapons
    system testing is vital to preparing troops and the equipment they use
    for real-world combat. Sprawl, incompatible land use and other forms of
    encroachment put the Department's training and testing 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 pushes
    those species onto less developed military lands, resulting in
    restrictions on testing and training.
        A key tool for combating encroachment is the Readiness and
    Environmental Protection Initiative (REPI). Under REPI, the Department
    partners with conservation organizations and State and local
    governments to preserve buffer land around our installations and
    ranges. Through its unique cost-sharing partnerships, REPI has directly
    leveraged the Department's investments by two-to-one. The indirect
    benefits are even greater: by helping to preserve buffer land, the
    Department avoids much more costly alternatives, such as training
    workarounds and investments to replace existing testing capability. In
    the current real estate market, where property is more affordable and
    there are a great many willing sellers, REPI is a particularly good
    investment.
        The President's fiscal year 2012 budget requests $54.2 million for
    REPI, an increase of $15 million over our fiscal year 2011 request.
        Renewable Energy Siting
        Although most renewable energy projects are perfectly compatible
    with the military mission, in some cases, they can create a conflict.
    Until recently, the process through which DOD reviewed proposed
    projects and handled disputes was opaque, timeconsuming, and ad hoc,
    and the resulting delays were costly for industry and for our partners
    elsewhere in governments. Spurred in part by your direction in section
    358 of the NDAA for Fiscal Year 2011, we have moved aggressively to
    develop a timely, transparent review process and to pursue
    technological fixes that allow for compatible energy siting.
        We have made rapid progress. Even before the President signed the
    NDAA into law, we had created the DOD Energy Siting Clearinghouse to
    provide a ``one-stop shop'' within the Department for developers and
    other government agencies. The Clearinghouse has conducted aggressive
    outreach to industry, other Federal agencies, environmental advocacy
    groups, and State and local governments. Among other things, the
    Clearinghouse hosted a conference with key interagency stakeholders to
    analyze the backlog of renewable energy projects filed with the Federal
    Aviation Administration (FAA) and the Department of Interior's Bureau
    of Land Management, focusing on protecting critical military mission
    requirements as we promote energy independence. We are also engaged in
    Interior's efforts to open public lands and the Outer Continental Shelf
    to renewable energy generation--ensuring that we do this in a way that
    preserves military testing, training and homeland defense capabilities.
        At the same time, the Clearinghouse has worked with interagency
    partners on R&D to promote mission compatible renewable energy, with an
    emphasis on technology to mitigate the impacts of wind turbines on
    radars. DOE has been an enthusiastic collaborator, and we are planning
    to host an interagency field evaluation of existing mitigation
    technologies in the near future. Through the Interagency Policy
    Committee on the Air Domain, we are looking at options to accelerate
    the process for upgrading older surveillance radars and set the stage
    for long-term solutions.
        Renewable energy is vital to America's future security and economic
    vitality and it need not be incompatible with the preservation of the
    Department's irreplaceable test and training ranges and its radar-based
    surveillance network. We are making great strides in learning how
    minimize the impacts of renewable energy projects on vital military
    missions. This effort will help give our Nation a clean, reliable and
    secure energy future.

                                   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.

                                    APPENDIX

    Key Facilities Energy and Water Goals
        There are four key statutory and regulatory goals related to
    installation's consumption of energy and water:

             Reduce energy intensity (BTUs per square foot) by 3
            percent per year, or 30 percent overall, by 2015 from the 2003
            baseline [Energy Independence and Security of 2007]. Under
            DOD's High Priority Performance Goals, the interim target is a
            21 percent reduction by the end of 2012.
             Increase use of renewable energy to 7.5 percent in
            2013 and beyond [Energy Policy Act of 2005, or EPACT]; and
            produce or procure 25 percent of electricity consumed from all
            renewable sources by the end of 2025 [National Defense
            Authorization Act of 2007, or NDAA]. Under DOD's High Priority
            Performance Goals, the interim NDAA target is 12 percent by
            2012.
             Reduce consumption of petroleum (gasoline and diesel)
            by non-tactical vehicles by 30 percent by 2020 [Executive Order
            13514, October 2009].
             Reduce potable water consumption intensity by 2
            percent per year, or 16 percent overall, by 2015 from the 2007
            baseline.

        DOD reduced its energy intensity by only 11.2 percent from 2005 to
    2010, compared to the goal of 15 percent. A key factor has been the
    demands on the Army related both to the movement of troops and
    equipment to and from Afghanistan and Iraq and to the completion of the
    BRAC process (as Army closes some facilities and moves to others, the
    lights are on in two locations).
        DOD increased its consumption of renewable energy by 4.1 percent,
    compared to the 2010 EPACT target of 5.0 percent. By contrast, we met
    the NDAA for Fiscal Year 2007 goal (produce or procure 25 percent of
    electricity consumed from all renewable sources) by achieving 10.4
    percent compared to the target of 10 percent.
        With respect to consumption of petroleum by non-tactical vehicles,
    the Department fell short of the target: DOD achieved a 6.6 percent
    reduction in its petroleum use from the 2005 baseline, compared to the
    target of 10 percent. The Department continues to pursue replacement of
    non-tactical fleet vehicles with more efficient models, alternative
    fuel vehicles and hybrid electric vehicles to decrease petroleum fuel
    demand.
        Finally, the Department far exceeded the 2010 goal for reducing the
    intensity of our potable water consumption. DOD reduced its potable
    water consumption intensity by 13 percent from 2007 to 2010, compared
    to the goal of 6 percent. From 2007 to 2009, we reduced the water
    consumption intensity of our facilities by 4.6 percent. This dramatic
    improvement is due to the combination of an aggressive program to
    detect leaks followed up by a program to repair them.

        Senator McCaskill. Thank you, Dr. Robyn. I will--we will go
    vote now, and return. I want to especially apologize for
    mispronouncing your name, because I know you're from St. Louis,
    which is particularly painful that I didn't get it right.
    [Laughter.]
        So, we will return in just a few minutes, after we've
    completed both votes. Thank you for your patience. [Recess.]
        Thank you very much for allowing us to run and vote. I'm
    sure the other members will return quickly.
        Secretary Hammack, why don't we begin with you at this
    point. Thank you.

    STATEMENT OF HON. KATHERINE G. HAMMACK, ASSISTANT SECRETARY OF
                THE ARMY, INSTALLATIONS AND ENVIRONMENT

        Ms. Hammack. Thank you, Chairman McCaskill.
        I want to tell you we appreciate your support for the Army
    programs, our soldiers, and our families, over the years. We're
    fighting two wars. At the same time, we're relocating,
    building, and closing with BRAC. We have one-third of our force
    that is going to be moving as part of the BRAC this summer and
    fall. We are realigning with global defense posture
    realignment. We have Grow the Army (GTA), which has grown our
    force by 50,000. We're transforming to a modular force to face
    the current wars that we're in. We have housing, barracks, and
    lodging, and infrastructure modernization programs to
    compensate for some of the infrastructure that has been
    neglected over the last 30 years. We are working to reduce our
    energy boot print. But, at the same time, we lead the Federal
    Government and water conservation and reduction. We're energy
    and environmental stewardship. So, we have a lot of programs
    that we are working on, and I'm going to talk a little bit
    about each.
        But, first, we want to thank you for the NDAA for Fiscal
    Year 2011, but want to talk a little bit about the continuing
    resolution and the challenges that it's posing to us.
        We have the inability to proceed with many programs. Right
    now, we have $1.6 billion in MILCON projects. They're on hold,
    waiting for authorization to proceed or new start authority.
    They are in, as Secretary McHugh said this morning, 18
    different States, and they do affect all of us. These are
    projects that have already been bid, that are ready to award.
    As the bids get old, they are at risk for being repriced at a
    slightly higher amount. As a matter of fact, there are 23
    projects in States represented by members of this subcommittee.
    So, support, as U.S. Senators, to enact appropriate legislation
    is something we look forward to.
        On a MILCON basis, the budget request for the Army is $5.3
    billion. This is 3.6 percent of the Army's total obligation
    authorization. It is a 33-percent reduction, or a $2.6 billion
    reduction, from the President's budget fiscal year 2011.
    Although there was a mention that some of the budget reduction
    was due to BRAC, that is not true for the Army, in that in
    fiscal year 2011 we did not have any BRAC construction projects
    budgeted. So, these represent--or, this reduction represents a
    reevaluation of our facility strategy and investments required
    to support other programs.
        In GTA, we have four projects which are necessary,
    regardless of end strength reductions, even though it's under
    the GTA program. They are correcting conditions, not capacity.
    But, we are working on an analysis of how the end strength
    change in 2015 will affect our investments, and feel confident
    it's primarily going to impact future budget requests.
        We are focusing to complete our barracks buyout program,
    transformation to a modular force, and accommodating stationing
    decisions, such as a combat aviation brigade.
        In Europe, the investments that we require are not impacted
    by any force-structure decisions in fiscal year 2012, and the
    fiscal year 2011 requirements are necessary to support
    missions, units, and locations that are known to be enduring.
    These are validated requirements, and we look forward to your
    support of them.
        Just to let you know, over the last 5 years, we have
    reduced the sites that we occupy in Germany by 91 and returned
    23,000 acres of land to the German Government. Over the next 5
    years, we plan to close 29 additional sites and return an
    additional 7,000 acres to the German Government.
        BRAC 2005 is certainly an issue that we are focused on.
    That program is three times larger for the Army than the last
    four previous rounds, combined. It is an $18 billion program,
    of which $13.5 billion are construction programs. There's 330
    projects in our construction program. We are closing 12 Active
    component installations, 1 Reserve installation, and 387
    Reserve component installations. At the same time, we are
    opening 4 centers of excellence through collocation, relocating
    5 major headquarter commands, constructing 125 Armed Forces
    Reserve Centers and restationing, as I said, one-third of the
    Active Force. The Reserve and the Guard will both say this has
    been a tremendous boost to their infrastructure and is very
    well received by all of our Reserve component.
        We are making progress, and are on target, with all 102 of
    the BRAC actions that have been tasked to the Army. There are
    six actions that are on our close watch list with critical
    milestones. We have not yet missed any of the critical
    deadlines, but we are watching them closely, because the
    deadlines are very close, and we will keep the committee
    informed if we see any change in that.
        Also, just to let you know, we have moved out, on a fairly
    expeditious basis, to transfer some of the excess land freed up
    from the BRAC program to the local community. Currently we've
    transferred 19,000 of the 70,000 acres that will be deemed
    excess.
        In energy, as Dr. Robyn mentioned, it is a key focus,
    especially energy security, to reduce our vulnerability. We
    need to retain access to energy in order to operate when there
    is a catastrophe or supplies are disrupted through acts of
    nature, accident, or acts of threat. The Army spends $3.9
    billion on energy, of which $2.7 billion is spent in theater
    and $1.2 billion is spent on our bases. We know that, to remain
    operationally relevant and viable, we have to reduce our
    dependency on foreign oil, increase efficiencies, and implement
    renewable and alternate sources of energy strategies.
        We have launched a Net-Zero Initiative to focus our
    installations on reductions in energy, water, and waste. It's a
    holistic approach. It's an integrated process, which we believe
    will afford us quite a few efficiencies.
        We have made progress on our energy goals with investments
    in many parts of the budget. In MILCON, we have adopted ASHRAE
    standard 189.1 as a environmental sustainability standard. It
    is the most stringent energy efficiency and sustainability
    strategy in the Federal Government.
        We are also implementing renewable energy in both our base
    operations and in theater. At the end of this month, we have a
    wind energy project at Fort Huachuca that comes online. I was
    just over in Iraq and Afghanistan and saw that we--our
    perimeter security systems--the sensors are solar powered. We
    have solar-powered announcement systems. We have solar-powered
    lighting. We are really working on reducing operational energy
    so that energy can be focused where it's most critical, and
    that is in our missions.
        We do want to invest in science and technology (S&T), as
    Dr. Robyn mentioned, to research more energy efficient
    strategies; and for the Army, one of the strategies is more
    efficient helicopter engines so we can reduce the amount of
    fuel so that our helicopters can fly further and utilize less
    fuel. We're also working to leverage commercial, off-the-shelf
    technologies in both base and theater.
        One of the things that did help our energy efficiency
    program in fiscal year 2010 was American Reinvestment and
    Recovery Act funding, which we leveraged quite a few energy
    efficiencies, whether they were renewable energy or improving
    the insulation in many of our buildings. We understand that
    investments in energy are operationally necessary, fiscally
    prudent, and mission essential.
        On the environmental standpoint, the Army is investing $1.4
    billion in fiscal year 2012 in environmental programs, which is
    a slight decrease from fiscal year 2011. This enables us to
    sustain compliance with State and Federal mandates, support
    conservation programs. We have over 200 endangered species,
    which we must monitor. We have over 64,000 archaeological
    sites. We have 29 sites with compatible-use buffers.
        We invest in S&T, as Dr. Robyn mentioned, in the UXO area.
    We also have investments in chemical demil and other test and
    evaluation programs. We have required investments in BRAC
    restoration to enable us to transfer some of the property that
    is deemed excess to the local community. We also have
    responsibility for all formerly used Defense sites by the
    military to implement a remedy-in-place response complete
    strategy.
        On the efficiencies standpoint, we are working on our
    facility investment strategy. We are reviewing our standards
    and our criteria to ensure that they are appropriate to the
    task. We're also looking at modernization and facility
    restoration as an alternative to MILCON. You will see changes
    and, hopefully, those strategies enacted as we go forward.
        I would close, Ma'am. I appreciate this is a historic
    moment. I find it very interesting that most of the witnesses
    here are female, as well, although----
        Senator McCaskill. We're taking over, aren't we?
        Ms. Hammack. Absolutely. Terry, God bless you, you're the
    minority here. [Laughter.]
        But, we look forward to working with you and the committee
    to ensure that our soldiers, civilians, and families have
    energy efficient facilities and the needed services they have
    to perform the many missions in defense of our Nation.
        So, thank you, and I look forward to your questions.
        [The prepared statement of Ms. Hammack follows:]

                Prepared Statement by Hon. Katherine G. Hammack

                                  INTRODUCTION

        Good afternoon Chairman McCaskill, Senator Ayotte, and members of
    the subcommittee. I appreciate the opportunity to join Dr Robyn to
    explain the Army's fiscal year 2012 budget needs and requirements.
        The Army's 2012 Military Construction (MILCON) budget request will
    continue to invest in facilities infrastructure required to support
    highly visible and synchronized initiatives of Base Realignment and
    Closure (BRAC), growth of the force to 45 Brigade Combat Teams (BCT)
    with an end strength of 547,400 soldiers, transformation to a globally
    postured and versatile modular force, and the Reserve components
    transformation from a strategic force to an operational force. Your
    committee's commitment to our soldiers, families, and civilians and
    support of the Army's MILCON 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.
        The level of investment required to complete Grow the Army (GTA)
    and Global Defense Posture Realignment (GDPR) and BRAC is declining and
    permits the Army to focus on the funding to recapitalize and modernize
    legacy facilities, construct new facilities to eliminate deficit
    requirements, such as quality of life, and complete both Permanent
    Party and Training Barracks buy-out programs. Continued timely and
    predictable funding is critical as we transition from a period of
    prolonged conflict to one of increased stability while continuing to
    focus on re-balancing the force and maintaining a combat edge developed
    through a decade of war.

                      IMPACTS OF THE CONTINUING RESOLUTION

        Under the current Continuing Resolutions, the Army is unable to
    proceed with the MILCON projects we requested over a year ago--projects
    that are needed to continue the momentum required to meet our goals. We
    have approximately $1.5 billion of Army MILCON projects--across all
    components--that are ready to award pending receipt of an
    Appropriations bill or new start authority. As long as new starts are
    prohibited, we risk increased cost to re-advertize projects, shortened
    construction seasons--especially in northern climes, and delays to
    ongoing consolidation and stationing actions. So, I strongly urge the
    committee to work hard to pass the fiscal year 2011 budget.

                                    OVERVIEW

        The Army's fiscal year 2012 President's budget requests $5.3
    billion for MILCON, Army Family Housing (AFH), and BRAC, which is $2.6
    billion less or a 33 percent reduction from the fiscal year 2011
    request. This represents 3.6 percent of the total Army budget. Of the
    $5.3 billion request, $3.2 billion is for the Active Army, $774 million
    is for the Army National Guard, $281 million is for the Army Reserve,
    $300 million is for BRAC, and $682 million is for AFH. Although the
    overall MILCON funding level declines due to completion of BRAC
    construction and reduced investments in major initiatives such as GTA
    and GDPR, the Army continued to follow the ``Pillars of Priority'' in
    development of the fiscal year 2012 MILCON program which supports Army
    Imperatives of: Sustain, Prepare, Reset and Transform.
        The five pillars of priority are the foundation of the MILCON
    program. The pillars address all categories of facilities in the Army
    facilities portfolio for active and Reserve component forces. The
    pillars are:

    Global Defense Posture Realignment/Grow the Army:
        GDPR construction provides facilities to ensure Army forces are
    properly positioned worldwide in support of the National Military
    Strategy. GTA supports the fiscal year 2013 Army end strength of
    1,111.6K (547,000 Active Army, 358,000 Army National Guard, and 206,000
    Army Reserve) necessary to increase Active component dwell time to 1:2
    years and Reserve component dwell time to 1:4 years. Construction
    provides facilities for BCTs and combat support/combat service support
    (CS/CSS) units activated as part of GTA. The Secretary of Defense
    recently announced a reduction of 27,000 in Active Army end strength
    planned for 2015. Unit level details of this reduction, and therefore
    impacts to facilities, will not be known for some time.

    Transformation:
        Supports the Army's transformation to a modular force, enables
    critical force structure initiatives and eliminates inadequate
    permanent party and trainee barracks. The last inadequate permanent
    party spaces are planned to be removed after the new barracks are fully
    occupied in fiscal year 2015, if we have new start authority for our
    fiscal year 2011 projects.

    Modernization:
        Supports ongoing investment in recapitalization of Operations
    infrastructure and Quality of Life facilities.

    Training Support:
        Supports ongoing investment in modernization and revitalization of
    Army training ranges, training centers, and supporting infrastructure.

    Strategic Readiness:
        Supports the modernization and recapitalization of the Army's
    industrial base, prepositioned stock facilities and transportation
    infrastructure.
        The Army is executing a tightly woven plan integrating BRAC, GDPR/
    GTA, and transformation to a modular force as facilitated by MILCON.
    The strategy includes aligning facilities to support a U.S. based force
    structured as an expeditionary Army; completing facilities and moving
    personnel to comply with BRAC 2005 law by 2011; and completing GDPR/GTA
    by 2013. Facilities modernization for modular force units converted
    from the legacy force structure extends beyond 2016. The fiscal year
    2012 MILCON request is crucial to the success of the Army's strategic
    imperatives to Sustain, Prepare, Reset, and Transform the force.

                        FISCAL YEAR 2012 BUDGET REQUEST

    Military Construction, Army
        The Active Army fiscal year 2012 MILCON request is for $3,236
    million (for appropriation and authorization of appropriations) to
    support the Army Imperatives of Sustain, Prepare, and Transform.
        Grow the Army ($164 million/5 percent):
        The GTA request in fiscal year 2012 funds 4 projects. The total
    includes $137 million for operations facilities, $23 million for a
    training barracks, and $3.6 million for one operational support
    facility. These facilities are essential to support growth in the
    Army's combat support and combat service support force structure and
    establish the appropriate training support infrastructure for a 45 BCT
    Army.
        Global Defense Posture Realignment ($178 million/6 percent):
        The request includes $80 million, for barracks, an entry control
    point and the third phase of the drainage system at Bagram Air Base, as
    well $49 million for a Brigade Complex at Fort Bragg as part of the
    Army Patriot units' global realignment, and $49 million for a
    maintenance facility at Fort Leonard Wood.
        Transformation ($1,165 million/36 percent):
        The fiscal year 2012 request of $639 million supports the
    stationing of units in support of weapons systems, Theater High
    Altitude Area Defense, Joint Land Attack Cruise Missile Defense
    Elevated Netted Sensor, Combat Aviation Brigades, and Enhanced Range
    Multipurpose unmanned aerial vehicle units. Another $526 million will
    provide permanent operations and maintenance facilities and barracks to
    support the conversion of existing forces into new modular force units
    for the Active component. The Army strategy is to use existing facility
    assets to support transformation where feasible and program new
    construction projects when existing facilities are inadequate.
        Barracks Modernization ($296 million/9 percent):
        The fiscal year 2012 request will provide for 3,482 new permanent
    party barracks spaces that will meet Department of Defense ``1+1'' or
    equivalent standard and complete the permanent party barracks buyout
    program by fiscal year 2013 and beneficial occupancy by fiscal year
    2015. In addition to the barracks modernization program, additional
    barracks projects are included in the fiscal year 2012 request that
    support GTA, Transformation, and Modernization pillars. These projects
    are located, at Joint Base Lewis-McChord, Forts Bliss, Carson, and
    Knox, Germany, Honduras, and Korea. The total fiscal year 2012
    investment in permanent party barracks is $562 million.
        Training Barracks Modernization ($59 million/2 percent):
        The fiscal year 2012 request will provide 1,140 new training
    barracks spaces for our soldiers that meet applicable standards. One
    trainee barracks complex is at Fort Jackson. In addition to the
    training barracks modernization program, a second trainee barracks
    complex at Fort Benning is funded under the GTA pillar. The total
    fiscal year 2012 investment in training barracks is $82 million.
        Modernization ($685 million/21 percent):
        The fiscal year 2012 request consists of 30 projects with
    investments of $258 million for operations facilities, $321 million for
    operational support facilities and $106 million for quality of life
    projects.
        Training Support ($340 million/11 percent):
        Training Support facilities include training ranges to support
    multiple weapon systems, land acquisitions and other soldier training
    facilities.
        Strategic Readiness ($74 million/2 percent):
        Fiscal year 2012 represents the first year the Army will invest in
    industrial base and deployment facilities under the Strategic Readiness
    initiative. Prior to fiscal year 2012, these types of facilities fell
    under general recapitalization and modernization of aging facilities.
    Five transportation infrastructure projects will be constructed to
    support railhead, deployment and supply operations, as well as a
    Maneuver Systems Sustainment Center project at Red River Army Depot.
        Other Support Programs ($275 million/8 percent):
        The fiscal year 2012 budget includes $230 million for planning and
    design. As executive agent, the Army also provides oversight of design
    and construction for projects funded by host nations. The fiscal year
    2012 budget requests $25 million for oversight of host nation funded
    construction for all Services in Japan, Korea, and Europe. The budget
    request also contains $20 million for unspecified minor construction to
    address unforeseen critical needs.
    Military Construction, Army National Guard
        The Army National Guard fiscal year 2012 MILCON request of $774
    million (for appropriation and authorization of appropriations) is
    focused on GTA, Modernization, Transformation, Training Support, and
    other support programs.
        Grow the Army ($101 million/14 percent):
        The fiscal year 2012 budget request includes $101 million for 11
    energy efficient readiness centers that will support the Army National
    Guard's end strength growth and ability to react to high levels of
    force deployment.
        Modernization ($198 million/25 percent):
        The Army National Guard budget request also includes $198 million
    to replace 11 obsolete, and energy inefficient readiness centers. There
    are five Readiness Centers and one Armed Forces Reserve Center, one
    Maintenance Facility, one Army Aviation Support Facility, one U.S.
    Property and Fiscal Office, and one Utilities Replacement project that
    will provide modernized facilities to enhance the Guard's operational
    readiness.
        Transformation ($198 million/25 percent):
        The budget request offers the Army National Guard the opportunity
    to reach higher levels of readiness by equipping Army National Guard
    units on a comparable level with the active component. The request is
    comprised of 10 projects which include 3 Tactical Unmanned Aircraft
    System Facilities, 5 Readiness Centers, 1 Army Aviation Support
    Facility, and 1 Field Maintenance Shop.
        Training Support ($245 million/32 percent):
        In fiscal year 2012, the Army National Guard is requesting $245
    million for 16 projects which will support the training of its
    operational force. These funds will provide the facilities Soldiers
    require as they train, mobilize, and deploy. Included are five
    Operations Readiness and Training Complexes, seven range projects, one
    Maneuver Area Training and Equipment Site, one railhead expansion and
    container facility, and two deployment processing facilities.
        Other Support Programs ($32 million/4 percent):
        The fiscal year 2012 Army National Guard budget also contains $20
    million for planning and design of future projects and $12 million for
    unspecified minor MILCON to address unforeseen critical needs.
    Military Construction Army Reserve
        The Army Reserve fiscal year 2012 MILCON request for $281 million
    (for appropriation and authorization of appropriations) is for
    Modernization, Training Support, Strategic Readiness, and other support
    programs.
        Modernization ($216 million/77 percent):
        In fiscal year 2012, the Army Reserve will invest $216 million in
    facilities that prepare our soldiers for success in current operations.
    The construction of 10 new Army Reserve centers and 1 Armed Forces
    Reserve center will provide the 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.
        Training Support ($27 million/10 percent):
        The budget request of $27 million provides for three ranges that
    enable soldiers to hone their combat skills. It also provides for
    construction of the final phase of a Noncommissioned Officer Academy
    classroom/training billets complex that, when completed, will allow for
    a modernized training environment for training.
        Strategic Readiness ($5 million/2 percent):
        The request includes $5 million for a containerized loading
    facility supporting mobilization and demobilization missions of the
    Reserve component.
        Other Support Programs ($32 million/11 percent):
        The fiscal year 2012 Army Reserve budget request includes $29
    million for planning and design of future year projects and $3 million
    for unspecified minor MILCON to address unforeseen critical needs.
    Army Family Housing
        The Army's fiscal year 2012 budget includes $681.8 million 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 its housing assets inside the United States, while overseas
    we primarily house families in government-owned and leased quarters.
        Residential Communities Initiative
        In 1999 the Army began privatizing housing assets and Residential
    Communities Initiative (RCI) continues to provide quality housing which
    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.
        The RCI Family housing is in 44 locations, with a projected end
    state of over 85,000 homes--98 percent of the on-post family housing
    inventory inside the U.S. 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. During the 12 years since 1999
    through 2010, our partners have constructed over 25,000 new homes, and
    renovated another 19,000 homes.
        The RCI program for Senior Unaccompanied Housing includes 4
    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 ($186.9 million/27 percent):
        The Army's fiscal year 2012 Family Housing Construction request is
    $186.9 million (for authorization of appropriation, and appropriation)
    to continue our significant investment in our soldiers and their
    families. This supports our goal to sustain government-owned housing
    and eliminate our remaining inadequate inventory at enduring overseas
    installations.
        The family housing construction program includes $76 million for
    traditional MILCON to provide 128 new homes in Germany, and to acquire
    10 acres of land in Brussels for future construction so that the Army
    can eliminate 7 high-cost leased homes that cost the Army over $1
    million annually. The request also includes $103 million for
    improvements to 276 family homes in Germany, and $7.9 million for
    planning and design.
        Army Family Housing Operations ($494.8 million/73 percent):
        The Army's fiscal year 2012 Family Housing Operations request is
    $494.8 million (for appropriation and authorization of appropriations).
    This account provides for: Operations, Utilities, Maintenance and
    Repair, Leased Family housing, and management of RCI. This request
    supports almost 16,000 Army-owned homes, in the United States and in
    foreign countries, as well as almost 8,000 leased residences and
    provides government oversight of more than 80,000 privatized homes.
        Operations ($85.4 million):
        The operations account includes four subaccounts: management,
    services, furnishings, and a small miscellaneous account. All
    operations subaccounts are considered ``must pay accounts'' based on
    actual bills that must be paid to manage and operate the AFH owned
    inventory.
        Utilities ($73.6 million):
        The utilities account includes the cost of delivering heat, air
    conditioning, electricity, water, and wastewater support for family
    housing units. The overall size of the utilities account is decreasing
    in proportion with the reduction in supported inventory due to RCI.
        Maintenance and Repair ($105.7 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. Funding
    reductions result in slippage of maintenance projects that adversely
    impact soldier and family quality of life.
        Leasing ($204.4 million):
        The leasing program is another way the Army provides adequate
    housing for families. The fiscal year 2012 budget includes funding for
    a total of 9,036 housing units, including 1,080 existing Section 2835
    (``build-to-lease''--formerly known as 801 leases), 1,828 temporary
    domestic leases in the United States, and 6,128 leased units overseas.
        Privatization ($25.7 million):
        The privatization account provides operating funds for management
    and oversight of privatized military family housing in the RCI program.
    RCI 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
        BRAC 2005 is a massive undertaking, requiring the synchronization
    of base closures, realignments, MILCON and renovation, unit activations
    and deactivations, and the flow of forces to and from current global
    commitments. BRAC 2005 encompassed: 102 Army recommendations; affected
    over 150,000 soldiers and civilians, and their family members; 330
    construction projects, which includes 125 Armed Forces Reserve centers;
    closure of 12 Active component installations, 1 Army Reserve
    installation, 387 National Guard Readiness and Army Reserve Centers,
    and 8 leased facilities; and over 1,100 discrete actions. BRAC 2005
    established Training Centers of Excellence, Joint Bases, a Human
    Resources Center of Excellence, and Joint Technical and Research
    facilities.
        While the Department is facing scheduling challenges in a few
    cases, we are working diligently to ensure we satisfy our BRAC legal
    obligations. Army Senior leaders continue to intensely manage these
    recommendations and are putting in place mitigation procedures to
    ensure we meet our legal obligations. Currently, the Army has completed
    23 of 102 recommendations and awarded 327 MILCON projects, of which 154
    have been completed. The Army has initiated 850 of 1,147 actions and
    completed 393. The Army has closed 6 Army installations, 1 Army Reserve
    installation, 42 Army Reserve Centers, and disposed of 19,067 acres
    associated with the closures. The Army is on schedule to complete the
    remaining 754 actions and 173 projects in accordance with the BRAC law.
        The Army fiscal year 2012 budget request for BRAC 2005 is only $229
    million. The budget request is critical to the success of the Army's
    BRAC 2005 initiative and does not contain funding for new construction
    projects. The funding request includes $116.9 million in Operation and
    Maintenance to support facility caretaker requirements. In fiscal year
    2012, 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 $112.3 million, which includes
    munitions and explosives of concern and hazardous and toxic waste
    restoration activities.

    BRAC 95
        The Army is requesting $70.7 million in fiscal year 2012 for prior
    BRAC rounds. The request includes $4.6 million for caretaking
    operations and program management of remaining properties and $66.1
    million for environmental restoration to address environmental
    restoration efforts at 280 sites at 36 prior BRAC installations. To
    date, the Army has spent $3.1 billion on the BRAC environmental program
    for installations impacted by the previous four BRAC rounds. The Army
    has disposed of 177,842 acres (85 percent of the total acreage disposal
    requirement of 209,291 acres), with 31,448 acres remaining. As a
    result, the Army estimates approximately $14.5 billion in savings
    through 2010--and nearly $1 billion in recurring, annual savings from
    prior BRAC rounds.

                     ENERGY CONSERVATION INVESTMENT PROGRAM

        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 Energy Conservation Investment Program (ECIP) fiscal year 2012
    program includes 10 renewable energy projects and 3 energy conservation
    projects for $51.5 million. The estimated average annual savings is
    projected at $4 million dollars or 258 billion British Thermal Units.
    Although ECIP is an annual Defense wide appropriation ($135 million),
    the Army is taking a strategic look at requirements and developing an
    ECIP Future Years Defense Program that will provide the Army the
    ability to pull requirements forward should such an opportunity arise.

                       ENERGY SECURITY AND SUSTAINABILITY

        The Army is moving forward to address the challenge of
    sustainability and energy security to ensure the Army of tomorrow has
    the same access to energy, water, land, and natural resources as the
    Army of today. The Army realizes that innovative, cost-effective,
    solutions are critical to success. Addressing these challenges is
    operationally necessary, fiscally prudent, and mission essential. The
    Army is ready to lead by example.

    Drive Efficiency Across the Enterprise
        The Army is working to significantly reduce requirements for
    natural resources, to include energy and water, both on installations
    at home and in our combat operations. Reducing demand through
    efficiency improvements is often the cheapest and fastest way to save
    funds and reduce dependency. The easiest gallon of fuel to secure and
    transport is the one that is not required. The need to reduce energy
    vulnerabilities and associated costs is clear, given experiences in
    Iraq and Afghanistan. The approach will require a concerted effort
    involving a combination of new technologies, changes to user behavior,
    and conversion of ``waste'' in resource streams to energy with
    approaches that convert waste heat or garbage into electricity.

    Build Resilience through Renewable/Alternative Energy
        Army forces must still prevail, even in the face of disruptions due
    to enemy action, weather, shifting priorities, or energy availability.
    Given this, it is prudent that the Army take steps to diversify its
    sources of energy, particularly to include renewable and alternative
    sources available both here and abroad. The Army is building resilience
    and flexibility into force capabilities to continue operating in the
    face of energy disruption. These disruptions can occur at the national,
    regional, or local level and affect bases, weapons systems, vehicles,
    and soldiers.

                                   CONCLUSION

        The Army's fiscal year 2012 MILCON, AFH, and BRAC budget requests
    are balanced programs that support our soldiers, families, and
    civilians; continued rebalancing of the force; completion of BRAC 2005
    by September 2011; continued support to Army transformation, GTA and
    GDPR initiatives, and investments in barracks buyout programs. The
    Army's facilities investment strategy will be accomplished through your
    continued commitment to timely and sustained funding of MILCON, BRAC,
    and family housing.
        In closing, we would like to thank you again for the opportunity to
    appear before you today and for your continued support for our
    soldiers, families, and civilians.

        Senator McCaskill. Thank you, Secretary Hammack.
        Secretary Pfannenstiel.

     STATEMENT OF HON. JACKALYNE PFANNENSTIEL, ASSISTANT SECRETARY
          OF THE NAVY, ENERGY, INSTALLATIONS, AND ENVIRONMENT

        Ms. Pfannenstiel. Chairman McCaskill, Senator Ayotte,
    Senator Shaheen, I'm pleased to appear before you today to
    provide an overview of the Department of Navy's (DON)
    investment in our shore facilities.
        DON's fiscal year 2012 budget request includes $13.3
    billion for installations, which includes MILCON, facility
    sustainment, restoration, and modernization, BRAC, family
    housing, environmental programs, energy initiatives, and base
    operating support.
        MILCON request of $2.5 billion is significantly less than
    our 2011 request of $3.9 billion, primarily due to the
    completion of the Marine Corps barracks initiatives and the
    Grow the Force initiative. The MILCON request contains further,
    though limited, investments to relocate marines from Okinawa to
    Guam. Marine Corps relocation, along with other DOD efforts to
    realign forces and capabilities to Guam, represents a unique
    opportunity to improve the U.S. force posture in the Pacific.
    This is a major effort, and one we must get right for both our
    military families and for the people of Guam.
        I'm pleased to share with you that we're making progress in
    this effort. This week, we achieved an important milestone in
    the realignment, the finalization of a programmatic agreement,
    which, after 3 years of consultation, concludes the National
    Historic Preservation Act section 106 process. We may now move
    forward, executing construction associated with the realignment
    and with preparing a record of decision for the training ranges
    on Guam.
        This is an important year for the Guam realignment program.
    The start of construction is imminent and additional contracts
    will be awarded over the next several weeks and months at a
    sustainable pace that Guam can support. Building on fiscal year
    2010 and fiscal year 2011 projects, the projects we are
    requesting in fiscal year 2012 will enable future vertical
    construction, support the introduction of off-island workers,
    and support future operations.
        Similarly, the Government of Japan's fiscal year 2011
    request includes financing for critical utilities projects that
    will support the Marines in the long run and the boost in
    construction in the near term.
        As for BRAC 2005, we are on track to meet the statutory
    deadline of September 15th, 2011. Our fiscal year 2012 budget
    request of $26 million enables ongoing environmental
    restoration, stewardship, and property disposal efforts. DON
    has made significant progress during the past year, and, to
    date, we have completed 328 of the 485 realignment and closure
    actions, as specified in our established business plans.
        The last program I'd like to touch on is our increased
    investment to support the Secretary of the Navy's ambitious
    energy goals. DON has requested $1.2 billion for fiscal year
    2012 and $4.4 billion across the Future Years Defense Plan
    (FYDP) for shore and operational energy efficiencies. This
    supports our capacity to increase energy reliability and
    security, and to reduce our dependence on fossil fuels.
        In closing, your support of DON's fiscal year 2012 budget
    request will enable us to build and maintain the facilities our
    sailors and marines need to succeed in their defense, capacity-
    building, and humanitarian missions.
        Thank you for the opportunity to testify before you today.
    I look forward to your questions.
        [The prepared statement of Ms. Pfannenstiel follows:]

               Prepared Statement by Hon. Jackalyne Pfannenstiel

        Chairman McCaskill, Senator Ayotte, and members of the
    subcommittee, I am pleased to appear before you today to provide an
    overview of the Department of Navy's investment in its shore
    infrastructure.

                      THE NAVY'S INVESTMENT IN FACILITIES

        Our Nation's Navy-Marine Corps team operates globally, having the
    ability to project power, effect deterrence, and provide humanitarian
    aid whenever and wherever needed to protect the interests of the United
    States. Our shore infrastructure provides the backbone of support for
    our maritime forces, enabling their forward presence. The Department's
    fiscal year 2012 budget request includes a $13.3 billion investment in
    our installations, a decrease of more than $1.6 billion from last year.
        The fiscal year 2012 military construction (Active + Reserve)
    request is $2.5 billion. Although significantly less than the fiscal
    year 2011 request, it represents continued investment in quality of
    life and mission requirements, a continued emphasis on energy
    conservation, and implementation of the Defense Policy Review
    Initiative to relocate marines from Okinawa to Guam.
        The fiscal year 2012 Family Housing request of $469 million
    represents a 15 percent decrease from the fiscal year 2011 request. The
    Navy and Marine Corps continued to invest in housing, particularly the
    recapitalization of our overseas housing. Having virtually privatized
    all family housing located in the United States, we are investing in a
    ``steady state'' recapitalization effort to replace or renovate housing
    at overseas and foreign locations where we continue to own housing.
        Our Base Realignment and Closure (BRAC) program consists of
    environmental cleanup and caretaker, and property disposal costs at
    prior round BRAC and BRAC 2005 locations.
        We do not foresee much potential for large revenue from land sales,
    which were used to fund the Legacy BRAC program from fiscal year 2005
    through fiscal year 2008. Thus, we again seek appropriated funds in
    fiscal year 2012 in the amount of $129 million. Should land sale
    revenue accrue from the disposal of any BRAC property sales, we will
    reinvest them to accelerate cleanup at the remaining BRAC locations.
        The fiscal year 2012 BRAC 2005 budget request of $26 million
    supports ongoing environmental restoration, caretaker, and property
    disposal efforts. The Department has made significant progress in
    implementing the BRAC 2005 recommendations during the past year, and to
    date has completed 328 of 485 realignment and closure actions as
    specified in our established business plans and we are on track for
    full compliance with statutory requirements by the September 15, 2011
    deadline.
        Our fiscal year 2012 request for Base Operating Support is in
    excess of $7.0 billion. The BOS program finances shore activities that
    support ship, aviation, combat operations, facilities infrastructure
    maintenance, public safety, and family Quality of Life programs for
    both Active and Reserve components.
        Finally, the Department's budget request is increased to $1.2
    billion fiscal year 2012, and $4.4 billion across the Future Years
    Defense Program, to support Secretary Mabus' aggressive energy goals to
    increase energy security, reduce dependency on fossil fuels, and
    promote good stewardship of the environment. The fiscal year 2012
    program funds three military construction projects to decentralize
    steam plants, continues research and development in operational energy
    efficiencies for the tactical fleet, and will enable the Services to
    increase the energy efficiency of its infrastructure.
        Here are some of the highlights of these programs.

                             MILITARY CONSTRUCTION

        The DoN's fiscal year 2012 Military Construction program requests
    appropriations of $2.5 billion, including $87 million for planning and
    design and $23 million for Unspecified Minor Construction.
        The active Navy program totals $1.1 billion and includes:

             $190 million to fund five combatant commander
            projects: a Bachelor Quarters, a Taxiway Enhancement, and an
            Aircraft Logistics Apron at Camp Lemonnier, Djibouti; and a
            Bachelor Quarters and the fourth phase of the Waterfront
            Development in Bahrain;
             $195 million to fund four Energy Savings and Security
            projects: a Steam System Decentralization at Naval Support
            Activity Norfolk, VA; a Steam System Decentralization at Naval
            Support Activity South Potomac (Indian Head, MD); a Steam
            System Decentralization at Naval Station Great Lakes, IL; and
            an Electrical Distribution System Replacement at Pacific
            Missile Range Facility, HI;
             $128 million to fund a Bachelor Quarters at Naval
            Station Norfolk, VA in support of the Chief of Naval
            Operations' Homeport Ashore initiative; and a Fitness Center at
            Naval Base Coronado, CA;
             $208 million to fund five Nuclear Weapons Security
            projects: the first increment of a second Explosives Handling
            Wharf, Explosives Handling Wharf Security Force Facility, and
            Waterfront Restricted Area Security Enclave at Naval Base
            Kitsap, Washington; and Waterfront Restricted Area Land/Water
            Interface and Security Enclave at Submarine Base Kings Bay;
             $114 million to fund five projects to achieve Initial/
            Final Operational Capability requirements for new systems: a P-
            8A Trainer Facility, a P-8A Hangar Upgrade, and a Broad Area
            Maritime Surveillance Operator Training Facility at Naval Air
            Station Jacksonville, FL; a MH-60 R/S Rotary Maintenance Hangar
            at Naval Base Coronado, CA; and an E-2D Aircrew Training
            Facility at Naval Base Ventura County, CA;
             $15 million to fund Massey Avenue Corridor
            Improvements at Naval Station Mayport, FL, in support of
            homeporting a nuclear capable aircraft carrier by 2019;
             $198 million to fund additional critical Navy
            priorities: a Controlled Industrial Facility at Norfolk Navy
            Shipyard, VA; an Applied Instruction Facility at Eglin Air
            Force Base; an Aircraft Prototype Facility at Naval Air Station
            Patuxent River; an Integrated Dry Dock Water Treatment Facility
            at Naval Base Kitsap, WA; a Navy Information Operations Command
            FES Facility at Naval Station Pearl Harbor, HI; and a Potable
            Water Plant Modernization at Naval Support Facility Diego
            Garcia; and
             $42 million for planning and design efforts.

        The active Marine Corps program totals $1.4 billion and includes.

             $59 million for the construction of unaccompanied
            housing at Camp Lejeune and Quantico in a continuation of the
            Commandant of the Marine Corps' initiative to improve the
            quality of life for single marines;
             $48 million to provide quality of life facilities such
            as a child development center, a dining facility, and a
            physical fitness center at Twentynine Palms and Quantico;
             $28 million to construct student billeting for the
            Basic School in Quantico, VA;
             $301 million to build infrastructure to support new
            construction. These projects include, road improvements,
            drinking and wastewater systems. These projects will have a
            direct effect on the quality of life of our marines. Without
            these projects, basic services generally taken for granted in
            our day-to-day lives, will fail as our marines work and live on
            our bases;
             $511 million to fund operational and maintenance
            projects such as those needed for the MV-22 aircraft at Camp
            Pendleton and Joint Strike Fighter at Beaufort and Yuma; and
            operational units in Camp Lejeune, New River, Cherry Point,
            Twentynine Palms, Barstow, and Hawaii;
             $121 million to provide training facilities and ranges
            at Camp Pendleton, Camp Lejeune, Twentynine Palms, and
            Quantico;
             $75 million to support professional military education
            by providing facilities at Marine Corps University in Quantico;
             $9 million for land expansion for Marine Air-Ground
            Task Force large-scale training exercises at Twentynine Palms;
             $156 million for facilities necessary to support the
            relocation of marines to Guam; and
             $42 million for planning and design efforts.

        With these new facilities, marines will be ready to deploy and
    their quality of life will be enhanced. Without them, quality of work,
    quality of life, and readiness for many marines will have the potential
    to be seriously degraded.
        The Navy and Marine Corps Reserve Military Construction
    appropriation request is $26 million to construct an Armed Forces
    Reserve Center at Pittsburgh, PA, and a Marine Corps Reserve Training
    Center at Memphis, TN. Additionally, $18 million has been realigned to
    the Department of the Army to construct a Joint Navy, Marine Corps, and
    Army Reserve Complex at Indianapolis, IN.

    Fully-funded and Incrementally-funded Military Construction (MILCON)
            Projects
        Our fiscal year 2012 budget request complies with Office of
    Management and Budget Policy and the DOD Financial Management
    Regulation that establishes criteria for the use of incremental
    funding. The fiscal year 2012 request includes $78 million to support
    the first increment of a second Explosives Handling Wharf at Naval Base
    Kitsap, WA. Follow-on increments will be submitted in future budget
    requests. Otherwise, all new projects are fully funded or are complete
    and usable phases.

                             FACILITIES MANAGEMENT

    Facilities Sustainment, Restoration, and Modernization (SRM)
        The Department of Defense uses a Sustainment model to calculate
    life cycle facility maintenance and repair costs. These models use
    industry-wide standard costs for various types of buildings and
    geographic areas and are updated annually. Sustainment funds in the
    Operation and Maintenance accounts are used to maintain facilities in
    their current condition. The funds also pay for preventative
    maintenance, emergency responses for minor repairs, and major repairs
    or replacement of facility components (e.g. roofs, heating and cooling
    systems). The fiscal year 2012 budget request funds sustainment at 80
    percent and 90 percent for the Navy and Marine Corps, respectively. To
    maximize support for warfighting readiness and capabilities, the Navy
    reduced its facilities sustainment posture to 80 percent of the Office
    of the Secretary of Defense (OSD) Facilities Sustainment Model; Joint
    Bases are funded to 90 percent of this model. The Naval Academy, Naval
    War College, and Naval Postgraduate School are funded to 100 percent of
    this model. Additionally, the Navy has targeted the allocation of
    sustainment funds to increase the renovation of unaccompanied housing.
    As a result, the Navy has minimized operational impacts and ensured the
    safety of our sailors and civilians by prioritizing projects that
    address facilities with the lowest quality rating first.
        Restoration and modernization (R&M) provides major upgrades of our
    facilities using Military Construction, Operation and Maintenance, Navy
    Working Capital Fund, and BRAC, as applicable. In fiscal year 2012, the
    Department of Navy is investing nearly $1.5 billion in R&M funding.

    Naval Safety
        Protecting Department of the Navy's sailors, marines, and civilian
    employees and preserving the weapon systems and equipment entrusted to
    us by the American People remains one of our highest priorities. I
    consider continual improvement of our safety performance to be an
    integral component to maintaining the highest state of operational
    readiness for our Navy-Marine Corps Team. During fiscal year 2010, DON
    once again achieved record-setting mishap rate reductions in numerous
    key mishap categories. The Department is successfully tracking toward
    becoming a world-class safety organization, where, in step with
    civilian industry leaders, no avoidable mishap or injury is considered
    the cost of doing our business.
        The Secretary of Defense established a goal to achieve a 75 percent
    reduction in baseline fiscal year 2002 mishap rates across DOD by the
    end of fiscal year 2012. By the end of fiscal year 2010, DON exceeded
    the DOD-wide mishap rate reduction in three of the four mishap
    categories being tracked by the OSD.
        During fiscal year 2010, we continued our Department-wide assault
    to reduce the loss of sailors and marines to fatal accidents on our
    Nation's highways. Over the past 5 years, we lost on average 53 sailors
    and marines to automobile and motorcycle accidents. In fiscal year
    2010, we brought those losses down to just 34, our lowest number ever
    recorded. While we achieved unprecedented reductions in highway
    fatalities during fiscal year 2010, we still find these losses
    untenable--we can and must do better.
        In fiscal year 2010 DON achieved our best year ever recorded for
    Total Class A Operational Mishaps.\1\ While this represents a
    significant achievement, fiscal year 2010 was the fourth consecutive
    fiscal year we achieved, ``best year ever recorded'' in this category.
    Additionally, fiscal year 2010 marked DON's best year ever recorded for
    the number of Off-duty/Recreational Fatalities \2\ and for the rate of
    Class A Aviation Flight Mishaps.
    ---------------------------------------------------------------------------
        \1\ A fiscal year 2010 Class A Mishap is one where the total cost
    of damages to Government and other property is $2 million or more, or a
    DOD aircraft is destroyed, or an injury and/or occupational illness
    results in a fatality or permanent total disability. An operational
    mishap excludes private motor vehicle and off-duty recreational
    mishaps. Mishaps exclude losses from direct enemy action.
        \2\ Off-duty/Recreational fatalities do not include off-duty deaths
    resulting from automobile, motorcycle, or pedestrian/bicycle mishaps.
    ---------------------------------------------------------------------------
        Our efforts also focus on achieving continual improvement in the
    reduction of workplace injuries. By the end of fiscal year 2010, the
    Department had achieved Voluntary Protection Program (VPP) ``Star''
    status, OSHA's highest level of achievement, at 14 sites. These
    activities include all four Naval Shipyards, our largest industrial
    facilities. Additionally, over the past 8 years, we have reduced the
    Navy and Marine Corps Civilian Lost Day Rates (due to injury) by 45
    percent and 51 percent respectively.

    Encroachment Partnering
        The Department of the Navy has an aggressive program to manage and
    control encroachment, with a particular focus on preventing
    incompatible land use and protecting important natural habitats around
    installations and ranges. A key element of the program is Encroachment
    Partnering (EP), which involves cost-sharing partnerships with States,
    local governments, and conservation organizations to acquire interests
    in real property adjacent and proximate to our installations and
    ranges. Encroachment Partnering Agreements help prevent development
    that would adversely impact existing or future missions. These
    agreements also preserve important habitat near our installations in
    order to relieve training or testing restrictions on our bases. The
    program has proven to be successful in leveraging Department of Defense
    and Department of Navy resources to prevent encroachment.
        The Department of Defense provides funds through the Readiness and
    Environmental Protection Initiative (REPI) that are used in conjunction
    with Navy and Marine Corps O&M funds to leverage acquisitions in
    partnership with States, local governments, and nongovernmental
    organizations. For fiscal year 2010, the Marine Corps acquired
    restrictive easements over 8,191 acres. REPI and Marine Corps funds
    totaled and $8.7 million while the encroachment partners provided $11
    million. The Navy acquired 1,908 acres with combined REPI and Navy
    funds of $9.36 million and $6.4 million provided by partners.
        To date, the Marines have acquired mainly restrictive easements for
    32,408 acres of land with $49 million of REPI and Marine Corps funding.
    Encroachment partners have contributed $54 million. The Navy has
    acquired 9,851 acres to date with $28.4 million of REPI and Navy
    funding, and $35.5 million contribution from encroachment partners.

    Compatible Development
        Vital to the readiness of our Fleet is unencumbered access to
    critical water and air space adjacent to our facilities and ranges. An
    example is the outer continental shelf (OCS) where the vast majority of
    our training evolutions occur. The Department realizes that energy
    exploration and off-shore wind development play a crucial role in our
    Nation's security and are not necessarily mutually exclusive endeavors.
    Therefore, we are engaging with the other Services, the OSD, and the
    Department of Interior to advance the administration's energy strategy.
    We are poised to coordinate with commercial entities, where feasible,
    in their exploration and development adjacent to installations and our
    operating areas along the OCS that are compatible with military
    operations. However, we must ensure that obstructions to freedom of
    maneuver or restrictions to tactical action in critical range space do
    not measurably degrade the ability of naval forces to achieve the
    highest value from training and testing.

                                     ENERGY

        The Department of the Navy (DON) is committed to implementing a
    balanced energy program that exceeds the goals established by the
    Energy Independence and Security Act of 2007, Energy Policy Act of
    2005, National Defense Authorization Act of 2007 and 2010, Executive
    Orders 13423 and 13514. We place a strong emphasis on reducing our
    dependence on fossil fuels , reducing overall energy consumption,
    increasing energy reliability, and environmental stewardship. The
    Department is a recognized leader and innovator in the energy industry
    by the Federal Government and private sector as well. Over the past
    decade, DON has received almost a quarter of all of the Presidential
    awards and nearly a third of all of the Federal energy awards.
    Additionally, DON has received the Alliance to Save Energy ``Star of
    Energy Efficiency'' Award and two Platts ``Global Energy Awards'' for
    Leadership and Green Initiatives.

    Organization
        The Secretary established a Deputy Assistant Secretary of the Navy
    for Energy (DASN-Energy) to consolidate the Department's operational
    and installation energy missions in the office of the assistant
    Secretary of the Navy for Energy, Installations and Environment ASN
    (EI&E). The consolidation of both operational and installation energy
    portfolios under the DASN (Energy) has led to a more concentrated focus
    on the Secretary of the Navy's priority of Energy Security and Energy
    Independence. At the service level, energy efficiency is being
    institutionalized by the Chief of Naval Operations (CNO) and the
    Commandant of the Marine Corps (CMC). The Navy Energy Coordination
    Office (NECO) and Marine Corps Expeditionary Energy Office (E2O) drive
    energy efforts and initiatives within the Services.
        From the Secretary down to the deck plate sailor and the marine in
    the field, the Department is committed to meeting our aggressive energy
    goals. We all view energy as an invaluable resource that provides us
    with a strategic and operational advantage.

    Naval Energy Vision, Priorities, and Goals
        As part of the Secretary of the Navy's priority on Energy, DON is
    committed to a Naval Energy Vision that states ``The Navy and Marine
    Corps will lead the Department of Defense and the Nation in bringing
    about improved energy security, energy independence, and a new energy
    economy.''
        With this vision, the Secretary of the Navy has set two priorities
    for naval energy reform: Energy Security and Energy Independence.
    Energy Security will be achieved by utilizing sustainable sources that
    meet tactical, expeditionary, and shore operational requirements and
    force sustainment functions, and having the ability to protect and
    deliver sufficient energy to meet operational needs. Energy
    Independence will be achieved when Naval forces rely only on resources
    that are not subject to intentional or accidental supply distributions.
    As a priority, DON's energy independence will increases operational
    effectiveness by making naval forces more energy self-sufficient and
    less dependent on vulnerable energy production and supply lines.
        With his vision and priorities, the Secretary of the Navy set forth
    five energy goals to reduce DON's overall consumption of energy,
    decrease its reliance on petroleum, and significantly increase its use
    of alternative energy. Meeting these goals requires that the Navy and
    Marine Corps value energy as a critical resource across maritime,
    aviation, expeditionary, and shore missions. DON will lead the Navy and
    Marine Corps efforts to improve operational effectiveness while
    increasing energy security and advancing energy independence. DON will
    achieve the Secretary of the Navy goals by adopting energy efficient
    acquisition practices, technologies, and operations.
        The Goals are:

              Goal 1 - By 2020, 50 percent of total DON energy will come
            from alternative energy resources;
              Goal 2 - By 2020, DON will produce at least 50 percent of
            shore based energy requirements from alternative resources;
              Goal 3 - DON will demonstrate a Green Strike Group in local
            operations by 2012 and sail the Great Green Fleet by 2016;
              Goal 4 - By 2015, DON will reduce petroleum use in commercial
            vehicles by 50 percent; and
              Goal 5 - Evaluation of energy factors will be used when
            awarding contracts for systems and buildings.

        As part of these ambitious energy goals, the Secretary of the Navy
    released The Department of the Navy's Energy Program for Security and
    Independence. This strategic roadmap provides guidance and direction to
    the Navy and Marine Corps. In addition, the CNO and CMC are developing
    strategic plans, baselines, and metrics to outline energy requirements,
    funding, profiles, and milestones for achieving energy efficiency and
    security. The Strategy requires action across the Department of the
    Navy and is the responsibility of every individual member.

    Energy Funding
        DON has budgeted $1.2 billion in fiscal year 2012 and approximately
    $4.4 billion across the FDYP for energy initiatives. Our strategy
    focused on reducing our dependence on petroleum, lowering our energy
    cost, and complying with Federal legislation and energy mandates. This
    focus on energy investment will result in cost savings that will allow
    DON to continue aggressively pursue the Secretary of the Navy's
    priorities and goals.
        OMN - Projects funded would include testing/certification of Great
    Green Fleet Fuel, propeller coatings, hull coatings Advanced Metering
    Infrastructure, simulator upgrades, Aviation & Maritime i-ENCON and
    facility energy audits and facility energy efficiency upgrades.
        OMMC - Projects funded would include completion of mandated energy
    audits, mobile electric power equipment units, advanced power systems,
    renovate HVAC system to increase efficiency, and complete SMART
    metering projects.
        NDSF/OPN - Projects funded would include LMSR Light Upgrades, shore
    power management/monitoring systems, ship engine automation upgrades.
        MCN - Projects funded would go towards solar array construction
    projects, energy efficiency upgrades, Critical Asset Energy Security
    Enhancements, advanced metering, ground-source heat pumps, small-scale
    wind projects and steam line distribution upgrades.
        RDT&E - Projects funded would include testing of hybrid electric
    drive, Fleet Readiness R&D Program, the shipboard energy dashboard,
    LCAC Efficiency initiatives, water purification technologies, man-
    portable electric power units, and energy storage and distribution.
        Achieving these priorities and goals will present challenges for
    the Navy and the Marine Corps. Final success will depend on
    advancements on technology maturity, resource availability, alternative
    fuel availability, and business process transformation. However, with
    the investments budgeted for energy, DON is taking the leadership role
    within DOD for this success.

    Success
        We are on track to meet all our goals, and throughout 2010, we
    demonstrated progress through an assortment of energy programs,
    partnerships, and initiatives. Our F/A18, dubbed `The Green Hornet'
    reached MACH 1.7 as part of the test and certification process using a
    50-50 blend of Camelina based JP-5. We also successfully conducted
    tests on the MH-60 Seahawk helicopter, and ran a Riverine Command Boat
    on renewable biofuel. These tests represent milestones for the
    Secretary of the Navy's goal of sailing the Great Green Fleet in 2016.
    The USS Makin Island, using a hybrid-electric drive to dramatically
    lower its fuel usage at slow speeds, will generate life-cycle savings
    of millions of dollars at today's fuel prices. We are not stopping
    there. We will continue to move forward with installation of a similar
    system on new construction DDGs and look at the feasibility of
    retrofitting the fleet with these systems in the course of routine
    shipyard availabilities.
        Additional energy initiatives that will reduce the energy
    consumption of our ships and make them more efficient are propeller and
    hull coatings. Stern flaps will also assist in reducing energy
    consumption. When we look to our future Navy, advanced materials used
    on our propellers, energy storage and power management systems, and
    advanced propulsion technology will make our warships more efficient
    while still allowing them to meet their combat capability.
        The Navy is not alone in implementing change. Last year, the
    Marines tested equipment that could be deployed on battlefields at
    their Experimental Forward Operating Bases (ExFOB) at Quantico and
    Twentynine Palms. Technologies tested at the ExFOB are now deployed
    with marines in Afghanistan. Solar power generators and hybrid power
    systems are reducing the amount of fossil fuel needed to operate in a
    combat zone. By deploying these technologies, the Marines have proven
    that energy efficiency means combat effectiveness.
        In addition to these tactical and platform applications, we have
    implemented a number of energy projects at our facilities ashore. We
    are actively exploring for new geothermal resources to augment our
    existing 270 MW geothermal power plant at China Lake. Solar Multiple
    Award Contracts in Hawaii and the southwest will allow for large-scale
    solar projects to be built on our installations. We are looking at
    developing our wind resources, exploring Waste to Energy projects and
    developing ocean power technology.
        We are also aggressively conducting facility energy audits while
    completing installation of ``Smart'' electric metering to implement a
    wide range of facility energy efficiency measures. By the end of this
    year, over 27,000 meters will be installed in our existing facilities
    and provide the means to better measure the amount of energy we are
    consuming. This will allow for our energy managers to provide `real-
    time' feedback to our leaders on our installations. At the same time,
    we continue to ensure that new construction is at a minimum LEED
    Silver. By exceeding building efficiency standards, we will be able to
    meet mandated efficiency goals and drive down our need for conventional
    energy sources.
        The Secretary of the Navy is committing DON to transform its
    requirements-setting, acquisition, and contracting processes to
    incorporate energy efficiency into decisions for new systems and
    buildings. Our Preferred Supplier Program (PSP) was developed as a tool
    to reward contractors with favorable contract conditions that have
    demonstrated superior performance in the area of cost, schedule
    adherence, quality of product/services and business relations.
    Evaluation factors for energy efficiency performance include energy
    benchmarking, goal setting, and measurement and verification. The PSP
    program has been renamed Superior Supplier Program (SSP) and
    transferred over to OSD DDR&E in early 2011.
        In October of last year, the Secretary of the Navy Green Biz Ops
    site was launched in partnership with the Small Business Administration
    as a way to partner with small businesses and highlight the
    opportunities within DON.
        Communication and awareness are critical to achieving the Secretary
    of the Navy energy goals. DON is exploring how to implement and
    maintain culture change initiatives, beginning with education and
    training, to ensure that energy management is understood by all
    personnel to be a priority in tactical, expeditionary, and shore
    missions. Energy awareness campaigns will be used to encourage personal
    actions that show commitment to energy program goals.
        DON will continue to cultivate strategic partnerships with existing
    and new organizations to leverage our energy goals. By partnering with
    Federal agencies, such as the Department of Energy, the Department of
    Agriculture, the National Aeronautics and Space Administration (NASA),
    and the Small Business Administration, we are raising the awareness at
    all governmental levels of the strategic importance of energy within
    DON. In addition, we are working with academic institutions and private
    industry to bring innovative ideas and approaches to the forefront.
        Our budget request asks for continued support of these and similar
    projects in order to enhance our efficiency and maximize our move to
    greater independence and more resilient infrastructure.

                                    HOUSING

        The following tenets continue to guide the Department's approach to
    housing for sailors, marines, and their families:

              All servicemembers, married or single, are entitled to
            quality housing; and
              The housing that we provide to our personnel must be fully
            sustained over its life.

        A detailed discussion of the Department's family and unaccompanied
    housing programs, and identification of those challenges, follows:
    Family Housing
        As in past years, our family housing strategy consists of a
    prioritized triad:

             Reliance on the Private Sector. In accordance with
            longstanding DOD and DoN policy, we rely first on the local
            community to provide housing for our sailors, marines, and
            their families. Approximately three out of four Navy and Marine
            Corps families receive a Basic Allowance for Housing (BAH) and
            own or rent homes in the community. We determine the ability of
            the private sector to meet our needs through the conduct of
            housing market analyses that evaluate supply and demand
            conditions in the areas surrounding our military installations;
             Public/Private Ventures (PPVs). With the strong
            support from this committee and others, we have successfully
            used PPV authorities enacted in 1996 to partner with the
            private sector to help meet our housing needs through the use
            of private sector capital. These authorities allow us to
            leverage our own resources and provide better housing faster to
            our families. Maintaining the purchasing power of BAH is
            critical to the success of both privatized and private sector
            housing; and
             Military Construction. Military construction (MILCON)
            will continue to be used where PPV authorities don't apply
            (such as overseas), or where a business case analysis shows
            that a PPV project is not feasible.

        Our fiscal year 2012 budget includes $101 million in funding for
    family housing improvements (including planning and design). This
    request provides for the revitalization of over 400 Navy and Marine
    Corps housing units in Japan, Spain, and Cuba. The budget request also
    includes $368 million for the operation, maintenance, and leasing of
    remaining Government-owned or controlled inventory. As of the end of
    fiscal year 2010, we have awarded 38 privatization projects involving
    over 63,000 homes. These include over 43,000 homes that will be
    constructed or renovated. (The remaining homes were privatized in good
    condition and did not require any work.) Through the use of these
    authorities we have secured approximately $9 billion in private sector
    investment from approximately $1.3 billion of our funds, which
    represents a ratio of over seven private sector dollars for each
    taxpayer dollar.

    Unaccompanied Housing
        Our budget request includes over $267 million in funding for the
    construction of unaccompanied housing to support over 2,300 single
    sailors and marines. This includes $59 million to support requirements
    to continue implementation of the Commandant of the Marine Corps
    program to construct sufficient housing so that no more than two single
    marines are required to share a sleeping room. The budget request also
    includes an $81 million unaccompanied housing project in Norfolk, VA to
    support the Chief of Naval Operations commitment to achieve the Navy's
    ``Homeport Ashore'' objective by 2016.
        The following are areas of emphasis within the Department regarding
    housing for single sailors and marines:

             Provide Homes Ashore for our Shipboard Sailors. The
            Homeport Ashore initiative seeks to provide a barracks room
            ashore whenever a single sea duty sailor is in his or her
            homeport, so they need not live on the ship. The Navy has made
            considerable progress towards achieving this goal through
            military construction, privatization, and intensified use of
            existing barracks capacity. The Chief of Naval Operations is
            committed to providing housing ashore for all junior sea duty
            sailors by 2016 at the Interim Assignment Policy standard
            (shared bedrooms at a minimum 55 square feet of space per
            person).
             Commandant's BEQ Initiative. It is the Commandant of
            the Marine Corps' priority to ensure single marines are
            adequately housed. Thanks to your previous support of this
            initiative, the Marine Corps will make significant progress
            toward fulfilling this priority. MILCON funding since fiscal
            year 2008 for the Marine Corps barracks initiative will result
            in the construction of approximately 25,500 new permanent party
            spaces at multiple Marine Corps installations. Your continued
            support of this initiative in our fiscal year 2012 proposal
            will allow us to construct an additional 800 new permanent
            party barracks spaces. With this funding we will stay on track
            to meet our 2014 goal. The fiscal year 2012 request for
            bachelor housing will provide two barracks projects at Camp
            Lejeune, NC; and Quantico, VA. We are also committed to funding
            the replacement of barracks' furnishings on a 7-year cycle as
            well as the repair and maintenance of existing barracks to
            improve the quality of life of our marines. These barracks will
            be built to the 2+0 room configuration, as have all Marine
            Corps barracks since 1998. This is consistent with the core
            Marine Corps tenets for unit cohesion and teambuilding.
             Condition of Unaccompanied Housing. The Department
            continues to address the challenge of improving the condition
            of existing Navy and Marine Corps unaccompanied housing. The
            Navy has increased its level of Restoration and Modernization
            funding targeted to unaccompanied housing across the Future
            Years' Defense Plan to ensure that 90 percent of the Navy's
            unaccompanied housing inventory is adequate by fiscal year
            2022. With the construction of a large amount of new housing
            under the aforementioned Commandant's BEQ initiative, almost 90
            percent of the Marine Corps' unaccompanied housing is now
            considered adequate.

                                  ENVIRONMENT

        In fiscal year 2012, the Department of the Navy (DON) is investing
    over $1 billion in its environmental programs across all
    appropriations. This level of investment has remained relatively
    consistent over the past few years: fiscal year 2010 - $1,117 million;
    fiscal year 2011 - $1,094 million; fiscal year 2012 - $1,221 million.
    Additionally, the relative distribution of environmental funding across
    the environmental programs, as displayed within the chart to the right,
    has also remained stable.

        Within this mature, stable environment, DON continues to seek to be
    a Federal leader in environmental management by focusing our resources
    on achieving specific goals and proactively managing emerging
    environmental issues. Many of these emerging environmental issues for
    fiscal year 2012 present unique challenges as well as provide
    environmental leadership opportunities for the Department of the Navy.

    Compliance-Sustainability
        The Department's environmental budget invests significantly in
    complying with existing regulations. Going beyond just simply
    maintaining compliance, the Department's compliance budget in fiscal
    year 2012 incorporates a vision of sustainability into our ability to
    operate into the future without decline--either in the mission or in
    the natural and manufactured systems that support our mission.
    Sustainability is seen by DON as a means of improving mission
    accomplishment and reducing lifecycle costs that apply to all DOD
    mission and program areas. DON has instituted many policies and
    practices implementing sustainability tenets including retrofitting/
    constructing buildings and expeditionary base camps to optimize energy
    and water use, adopting goals for renewable energy use on facilities,
    and conducting integrated solid waste management.
        The Department recognizes that many key issues facing DOD can be
    addressed through smart investments that improve sustainability, such
    as energy efficiency, energy management, renewable energy, water use
    efficiency, the reduced use of toxic and hazardous chemicals, and solid
    waste management.
        As an example of solid waste management, Naval Facilities
    Engineering Command Southwest recently completed a large demolition and
    environmental remediation project at Naval Security Group Activity
    Skaggs Island (Skaggs Island). Skaggs Island is located 40 miles
    northeast of San Francisco near the north shore of San Pablo Bay in
    Sonoma County. It is bounded on all sides by estuarine sloughs and
    surrounded by salt marsh wetlands beyond the island's levees. Naval
    Security Group Activity Skaggs Island was commissioned at this site on
    May 1, 1942, during World War II and was an active communications base
    for 51 years. The project was able to recycle 6,437 tons of material
    from demolition of approximately 140 buildings in preparation for the
    property to be transferred to the U.S. Fish and Wildlife Service (FWS)
    to become a part of the San Pablo Bay National Wildlife Refuge.
    Concrete and asphalt were processed for use in a local highway project.
    All metals were diverted to salvage yards, and the wood was processed
    with other materials and used as cover material in a landfill.

    National Ocean Council
        The National Ocean Council (NOC) is a Cabinet-level body
    established by Executive order in June 2010. There are 27 Federal
    agencies tasked to engage in developing a comprehensive national ocean
    policy which uses ecosystem based management and coastal and marine
    spatial planning as foundational building blocks. The Executive order
    mandates spatial planning for maximized compatible use. The Department
    of Navy equity in this Executive order is extensive: for the first time
    comprehensive spatial planning is being conducted in our Exclusive
    Economic Zones (EEZs) including the western Pacific, Alaska and the
    Arctic, the Gulf of Mexico, and the Caribbean. The DON ability to train
    and test in our current operating areas must be protected. DON is
    supporting the NOC in a variety of activities, including collecting and
    developing information about military activities in the coastal and
    marine zone, writing strategic plans, providing staff and
    administrative support, and participating in plans to produce regional
    Coastal and Marine Spatial Plans.
        The Department participates in numerous interagency ocean-policy
    working groups formed under the NOC. These include but are not limited
    to the U.S. Extended Continental Shelf Task Force, the Arctic Policy
    Group, the Ocean Science Technology (OST) ad hoc biodiversity
    Interagency Working Group (IWG), Ocean Social Science IWG, Ocean
    Education IWG, Ocean Acidification IWG, the Facilities and
    Infrastructure IWG, the Ocean and Coastal Mapping IWG, the Interagency
    Ocean Observing Committee, and the Climate Change Adaptation Task
    Force. The Department of the Navy and the Joint Chiefs Staff are
    leading a new IWG tasked with writing the ``Ocean, Coastal, and Great
    Lakes Observations and Infrastructure'' Strategic Action Plan (SAP),
    and are co-chairs for the ``Changing Conditions in the Arctic'' and
    ``Coastal and Marine Spatial Planning'' SAPs. In addition the Navy
    provides a full-time NOC staff member who serves as the primary liaison
    to the National Security Staff, and provides administrative oversight
    for the Federal Advisory Ocean Research and Resources Advisory Panel
    (ORRAP).

    Chesapeake Bay
        After issuing the Chesapeake Bay Strategy in May 2010, the
    Department has and continues to demonstrate environmental leadership
    working with the other Federal agencies to achieve Chesapeake Bay
    restoration goals. DON represents DOD as the Executive Agent for the
    Chesapeake Bay program. As such, DON has participated with the Federal
    Leadership Council to ensure that the Strategy sets forth aggressive,
    measurable, and attainable goals to restore the health of the
    Chesapeake Bay, a National Treasure. DON is working with the States as
    they develop their Watershed Implementation Plans. Our goal is to
    identify our nutrient and sediment sources, prioritize areas for
    nutrient and sediment reduction projects, and implement these projects
    to meet or exceed our reduction targets. DON recently sponsored a
    meeting with the Maryland Governor and EPA Administrator to partner on
    means to meet the DOD, DON, and State goals to restore the health of
    the Chesapeake Bay. We are planning a similar event with Virginia later
    this year. Through these and other conservation efforts, DON is truly
    leading by example.

    Natural Resources Conservation
        Department of the Navy natural resources program managers continue
    to provide installation Commanders with special subject matter
    expertise, products and services necessary to ensure they can test,
    train, and execute construction projects with as little environmental
    constraint as possible, while also protecting the natural resources
    under our stewardship. The basis of our conservation program centers on
    the preparation and implementation of Integrated Natural Resources
    Management Plans (INRMPs). These plans, currently in place at 89 DON
    installations with significant natural resources, integrate all facets
    of natural resources management with the installation's operational and
    training requirements. DON works closely with our Federal and State
    partners as well as other stakeholders to ensure our INRMPs remain
    current and effective. One of our primary objectives is to implement
    conservation measures to protect threatened and endangered species and
    their habitat which can help to reduce protected species related
    regulatory constraints. The Department has been very successful in
    protecting and conserving natural resources on our installations and
    near-shore areas while ensuring our installation Commanders have the
    land, sea, and airspace necessary to test and train in a realistic
    manner.
        DON has also developed and implemented a web-based tool for
    measuring the effectiveness of Navy and Marine Corps Natural Resources
    Programs and overall ecosystem health as it relates to mission
    sustainability. The tool provides leadership with the information
    necessary to focus scarce funds in the right place to protect and
    conserve valuable natural areas and habitats while also protecting
    mission integrity.

    Cultural Resources Program
        Cultural resources under the Department of Navy's stewardship
    include infrastructure, ships, and objects of our Navy and Marine Corps
    heritage; vestiges of our Colonial past; and Native American/Alaskan
    Natives/Native Hawaiian resources. We take great pride in our heritage,
    and the many cultural resources on our installations serve as reminders
    of the long and distinguished course we have charted and of those who
    lived on the lands before they were incorporated into our bases. The
    clear objective of the Department's cultural resources program is to
    balance our current and future mission needs with our stewardship
    responsibility to the American taxpayer and our desires to preserve our
    cultural heritage for future generations. The primary mechanism to
    achieve these goals is an Integrated Cultural Resources Management Plan
    (ICRMP), which remains the key mechanism for gathering information
    about an installation's history and resource inventory, assessing
    potential use/reuse candidates with our built environment and ensuring
    that our installation planners and cultural resources managers are
    working closely together to protect cultural resources while supporting
    the DON mission.
        Our installations have many success stories in which proactive
    management of cultural resources supported and reinforced the mission.
    We take very seriously our statutory obligations regarding historic
    properties. We work with the other Services, and other agencies such as
    the Advisory Council on Historic Preservation and State Historic
    Preservation Officers, tribal governments, Native Hawaiian
    Organizations, Native Alaskans, and interested members of the public,
    to develop effective and efficient ways to balance our stewardship and
    fiscal responsibilities. We are also developing a new web-based tool
    for measuring the effectiveness and efficiency of DON cultural
    resources stewardship and mission support.
        Historic buildings, which are a significant element of our cultural
    resources, are a valuable part of our portfolio and the Department has
    been able to rehabilitate historic buildings in ways that support
    mission requirements as effectively as new construction, with the added
    benefit of preserving historic property. Of particular concern is
    energy efficiency and how to retrofit systems to be more efficient
    while preserving character-defining features. In 2011, the Commandant's
    House at the Marine Barracks Washington (a national historic landmark)
    will have photovoltaic panels installed on small portions of the roof
    to help send the message out to the Marine Corps that alternative
    energy and historic preservation goals are not mutually exclusive.

    Installation Restoration Program (IRP)
        The DON continues to make significant progress remediating past
    contaminants. As of the end of fiscal year 10, the Department has
    completed cleanup or has remedies in place at 86 percent of the 3,834
    contaminated sites on active installations. The DOD goal to have
    remedies in place or responses completed by 2014 was established in
    1996 when the department had 3,256 known contaminated sites. Over the
    past 15 years the Department has identified 578 additional sites
    requiring cleanup. We have been working aggressively to achieve remedy
    in place or response complete for all sites by 2014. As of the end of
    fiscal year 2010, we are projecting 46 sites will not meet this DOD
    goal. We consider this a huge success that we have accomplished site
    cleanup at both our original inventory of sites as well as 532
    additional sites in this time period. Also, DOD expanded the universe
    of DERP eligible sites in 2008. Since that time, we have identified an
    additional 107 sites. These sites do not have established metrics, but
    we are working with DOD to establish appropriate metrics to also bring
    these sites to successful completion in the coming years.

    Munitions Response Program (MRP)
        The DON is proceeding with investigations and cleanup of Munitions
    and Explosives of Concern and Munitions Constituents at all Navy and
    Marine Corps munitions response sites. Our major focus through fiscal
    year 2010 was completing site inspections at all 330 MRP sites. We
    successfully completed 97 percent of these inspections. The 3 percent
    not inspected were because several newly discovered sites were added
    into the program late in the process. These site inspections will be
    completed in fiscal year 2011. Additional funding has also been
    obligated to address high priority sites at Vieques and Jackson Park
    Housing. DON has used the results of the completed site inspections to
    prioritize the next phases of work for all sites starting in fiscal
    year 2011. DON plans to achieve cleanup or remedies in place at all MRP
    sites (except Vieques) by fiscal year 2020.

    Camp Lejeune
        The Department remains committed to finding answers to the many
    questions surrounding the historic water quality issue at Camp Lejeune.
    Scientific/medical studies on this issue continue to investigate
    whether diseases and disorders experienced by former residents and
    workers are associated with their exposure to contaminated water at
    Camp Lejeune. We continue to fund research initiatives, including
    several ongoing Agency for Toxic Substances and Disease Registry
    (ATSDR) health studies. Additionally, the Marine Corps funded a
    congressionally-mandated National Academies National Research Council
    (NRC) review, which was released June 13, 2009. In total, the
    Department has provided approximately $24 million in funding for
    research initiatives, including over $22.9 million to ATSDR and over
    $900,000 to the National Academy of Sciences. This total includes $8.8
    million transferred on February 26, 2010 to fund ATSDR for fiscal year
    2010. In order to ensure total transparency and advance efforts to find
    answers for our marines, sailors, their families, and civilian workers,
    DON continues to provide full and timely access to all pertinent
    information that we possess on this subject.

    Marine Mammals
        The Department of the Navy is continuing its focused research and
    monitoring programs addressing marine mammals and anthropogenic sound.
    The Navy is investing over $25 million per year to continue research
    into the effects of sound on marine mammals, develop products and tools
    that enable compliance with marine mammal protection laws for navy
    training and operations, provide a scientific basis for informed
    decision making in regulatory guidance and national/international
    policy, continue research to define biological criteria and thresholds,
    and to predict location, abundance, and movement of high risk species
    in high priority areas.

                         RELOCATING THE MARINES TO GUAM

        The fiscal year 2012 budget request includes $181 million to design
    and construct facilities in support of the relocation. The projects
    provide the horizontal infrastructure (utilities, site improvements, et
    cetera) necessary to enable subsequent vertical construction and/or
    support Marine Corps operations. The Government of Japan, in its JFY-
    2011 budget (which runs April 1, 2011 through March 31, 2012) has
    requested a comparable amount of $167 million for facilities and
    design. The JFY-2011 budget request also includes $415 million in
    funding for utilities financing, pursuant to the Realignment Roadmap,
    for water and wastewater projects. This financing will be applied to
    make improvements to wastewater treatment plants off-base, and to the
    DON's water system on-base that will interconnect with Guam's water
    system. The graph at left identifies the projects each funding stream
    constructs.
        The Marine Corps relocation, along with other DOD efforts to
    realign forces and capabilities to Guam, represents a unique
    opportunity to strategically realign the U.S force posture in the
    Pacific for the next 50 years. This is a major effort and one we must
    get right. The Department of Defense recognizes Congress' concerns
    regarding execution of the Guam military realignment and is taking
    steps necessary to resolve critical issues that will allow the
    construction program to move forward.
        The Guam community has been a gracious host to military personnel
    and families for decades. As we ask the people of Guam to now host a
    new Marine Corps base, the Department recognizes that close partnership
    with the Government and people of Guam is essential so that a long-
    term, positive relationship is fostered. The effort to relocate
    thousands of marines and their family members is complex and though
    there remain issues which separate the Department and the Government of
    Guam, we are committed to working together to address issues such as
    cultural preservation, land use, and lessening the impacts on the
    community.
        As such, the Department has outlined four pillars that will guide
    the approach to the coordinated effort to execute the military
    realignment. By committing to these four pillars, the Department is
    demonstrating its willingness to listen and respond to the concerns of
    the people of Guam.
        First, the Department recognizes the added strain that the
    relocating marines and their family members will place on Guam's
    infrastructure and is committed to the pursuit of ``One Guam''.
    Improvements to quality of life on Guam will result from direct
    investments in projects to improve and upgrade civilian infrastructure.
    These projects include those which are directly related to the military
    realignment, such as upgrades to the commercial port, roads, and
    utilities systems; and those identified by the Government of Guam as
    necessary to support the community's socioeconomic needs. The
    Department has committed to work with other Federal agencies to
    advocate for support for Guam's needs so that the One Guam vision can
    become a reality.
        Second, the Department understands and supports the great emphasis
    the people of Guam place on protecting the island's precious natural
    resources. We will do our part to protect resources and achieve a
    ``Green Guam'' by developing the most energy efficient facilities
    possible and supporting Guam's efforts to develop sustainable and
    renewable energy projects. We have projects underway with the Guam
    Power Authority, Guam Waterworks Authority, University of Guam,
    Department of Energy and other Federal agencies to bring public and
    private funds to Guam for sustainable projects. We will work with the
    University of Guam's Center for Island Sustainability to develop and
    secure funding for green programs.
        Third, as discussed in further detail below, the preferred
    alternative site for the live fire training range complex on Guam that
    was identified in the Final EIS would require restricted access for
    safety reasons to the culturally-significant sites of Pagat village and
    cave when the ranges are in use. Over the past year, the people of Guam
    made it clear that our plan to provide access to the area only during
    times when the ranges were not active was unacceptable and had to be
    changed. In response, we have developed options that will ensure that
    access to Pagat village and cave will be available 24 hours per day, 7
    days per week.
        Fourth, we recognize that land is a valued and limited resource in
    Guam. In response to concerns regarding the expansion of our footprint
    on Guam, we have committed to a ``net negative'' growth in the amount
    of property controlled by DOD. This strategy means that at the
    completion of the military realignment, the Department's footprint will
    be smaller than it is today, which directly responds to longstanding
    concerns regarding land use on Guam.
        On Guam, the military realignment is viewed as a Federal Government
    action, not just a Department of Defense effort. In addition to the
    concerns noted above that are directly related to the military
    realignment, Guam's leaders and members of the community are seeking
    support from across the Federal Government to resolve several
    longstanding issues. In our role as a partner to the Government of Guam
    we have committed to advocate for Guam's needs in Washington, as
    demonstrated by the Department's support for the Guam Loyalty
    Recognition Act. A whole-of-government approach, including the
    participation of Federal agencies and Congress, is necessary to
    demonstrate that the Federal Government at large is sensitive to the
    concerns of the people of Guam as we prepare to ask them to host an
    increased military presence.
        The Government of Japan remains committed to both the realignment
    of Marine Corps forces to Guam and the Futenma Replacement Facility. Of
    the $6.09 billion Japanese share, $834 million in direct cash
    contributions have been received to date. The Government of Japan has
    also committed to making concrete progress on the Futenma Replacement
    Facility, with a formal decision on the configuration of the runway
    expected in the spring of 2011. The Department is confident in the
    progress made to date and is satisfied with Japan's commitment to these
    realignments.
        A Record of Decision for the Guam military realignment was signed
    in September 2010. The ROD included decisions on the locations of the
    Marine Corps main cantonment, family housing, aviation and waterfront
    operations, training on the island of Tinian in the Commonwealth of the
    Northern Mariana Islands, and selection of utilities and road
    improvement solutions to support the military realignment effort.
    Action was deferred on a transient CVN pier, pending additional coral
    surveys and studies under the National Environmental Policy Act; and on
    the site specific location of a live fire training range complex on
    Guam, pending resolution of the National Historic Preservation Act
    Section 106 consultation process. The first two U.S.-funded military
    construction projects were awarded following the ROD; however,
    intrusive design, construction, and award of additional projects were
    delayed pending resolution of the Section 106 consultation process. In
    March 2011 we completed the Section 106 process with the finalization
    of a Programmatic Agreement. Now that this significant milestone has
    been achieved, we will begin construction and award additional
    contracts. The Department will also consider recent input to issue a
    ROD for the live-fire training range complex on Guam.
        Partnership with the Government of Guam and the Guam community is
    central to the success of the Marine relocation. Over the past year,
    senior Department leadership has engaged the Government of Guam to
    better understand the community's concerns, identify potential
    solutions, and develop a way forward in implementing the program. From
    these discussions we now better understand concerns regarding issues
    such as access to cultural sites and the expansion of DOD's footprint.
    However, as training is essential for Marine Corps forces, the
    Department also shares Congress' concern with ensuring Marine Corps
    training requirements can be delivered on Guam. With respect to the
    preferred alternative site for location of a live fire training range
    complex in the Route 15 area--property which is not currently within
    DOD's inventory--the Department has committed to conduct training
    activities in a manner which will allow unfettered access to the Pagat
    Village and Pagat Cave historical sites should the RT 15 site be
    selected in the Record of Decision for training. Additionally, the
    Department has communicated to the Governor of Guam and the Guam
    Legislature that, following the completion of the realignment, DOD will
    have a smaller footprint than it has today. This commitment will
    directly address concerns regarding an expanding DOD footprint on Guam.
    This concept is currently in the early stage of development. Studies
    will be conducted to determine if missions can be relocated and assess
    any potentially underutilized properties. As a result of these
    discussions, the Governor of Guam has stated publicly his willingness
    to discuss land use issues with the Department. The goal is to have an
    agreement in principle with the Governor by the fall of 2011, allowing
    formal land negotiations to commence once appropriate congressional
    approval for land acquisition has been received. The Department will
    continue to update Congress on land use matters and the status of
    informal discussions with the Government of Guam.
        The Department recognizes concerns from both the public and other
    Federal agencies regarding Guam's existing and future infrastructure
    and socioeconomic needs. DOD has worked closely with both the
    Government of Japan and with Guam's utilities providers to identify
    utility system improvement projects for Japanese financing which both
    support the relocating marines and improve Guam's systems. As discussed
    earlier, in its JFY-2011 budget the Government of Japan has requested
    $415 million of its required $740 million contribution in utilities
    financing. The projects which will be financed by this funding will
    provide utility system upgrades that are critical enablers to the
    construction program. Specifically, they will provide for upgrades and
    improvements to wastewater treatment plants which will support the off-
    island workforce and future population growth associated with the
    Marine Corps realignment, as well as treatment, production and storage
    for potable water on-base. As noted in the Navy's National
    Environmental Policy Act documents, these projects are critical
    mitigations to alleviate the impact of the population increase from the
    military realignment program.
        The Department is committed to improving the quality of life for
    both the people of Guam and the military personnel who make the island
    their home. The Final EIS acknowledges that the military realignment
    will affect Guam's social services, such as education and medical
    facilities, due to the added demand on services to Guam as a result of
    potential population growth that may result from the military
    realignment. If the issues surrounding existing infrastructure and
    other major socioeconomic issues impacting Guam are left unaddressed,
    we risk creating disparity between conditions on- and off-base and
    losing the support of the people of Guam, which will adversely affect
    our ability to achieve our mission. The Department of Defense is
    committed to ensuring this does not happen, and is leading the effort
    to coordinate an interagency approach to ``One Guam''. The DOD-led,
    interagency Economic Adjustment Committee (EAC) is working with the
    Government of Guam to review socioeconomic needs both directly and
    indirectly related to the military realignment. The fiscal year 2012
    budget includes a request for $33 million in Defense-wide O&M funds to
    address projects assessed by the EAC. In addition, other Federal
    agencies' fiscal year 2012 budget requests include approximately $30
    million in funding for Guam to assist with the implementation of the
    projects requested by DOD or support other Guam infrastructure and
    financial management requirements identified by the EAC. The Department
    will continue to work with other Federal agencies to identify
    additional opportunities for Federal Government support to address
    Guam's socioeconomic needs.
        In the coming weeks and months, construction will begin, contracts
    for additional projects will be awarded, and progress will be made with
    the Government of Guam towards addressing its concerns related to land
    acquisition. Concurrently, the Department will continue to evaluate the
    total cost of the realignment based upon the refining of requirements
    and evolution of planning efforts conducted to date.

                            BRAC 2005 IMPLEMENTATION

        The Department has made significant progress during the past year,
    and to date has completed 328 of 485 realignment and closure actions as
    specified in our established business plans. The Department is on track
    to implement BRAC 2005 realignments and closures by the statutory
    deadline of September 15, 2011. Going forward, our fiscal year 2012
    budget request of $26 million enables ongoing environmental
    restoration, caretaker, and property disposal efforts at BRAC 2005
    installations.

    Accomplishments
        In total, the Department has awarded all 118 planned BRAC
    construction projects with a combined value of $2.1 billion. The final
    5 projects awarded within the last 6 months total approximately $81
    million and are on schedule for completion prior to the statutory
    deadline. Some noteworthy achievements include:

             During the past year, DON closed Naval Station
            Ingleside, TX, 5 months earlier than planned and reverted the
            property to the Port of Corpus Christi. We also closed the Navy
            Supply Corps School in Athens, GA and relocated the personnel
            and assets to Naval Station Newport, RI. By 15 September, two
            more installations, Naval Air Station Willow Grove, PA and
            Naval Air Station Brunswick, ME will be closed.
             Construction was completed in December 2010 on the
            Consolidated Investigative Agencies facility at Marine Corps
            Base Quantico, VA. This $350 million project has set the
            standard for interagency BRAC coordination and it will bring
            together the Service investigative agencies, the Defense
            Security Service and the Defense Intelligence Agency to create
            a premier law enforcement, security and intelligence center
            that will increase collaboration across DOD and leverage the
            efficiencies and synergies created by collocating the agencies
            and Services.
             The Department has invested over $400 million on
            construction and outfitting of 11 facilities to establish a
            state-of-the-art Research, Development, Acquisition, Test and
            Evaluation center for Integrated Weapon System and Armaments
            and Fixed Wing Air Platforms at Naval Air Warfare Center China
            Lake, CA. Nine of the 11 construction projects at China Lake
            are complete with the remaining two projects scheduled to
            complete this summer.

    Community Reuse Planning Efforts
        Seventeen impacted communities established a Local Redevelopment
    Authority to guide local planning and redevelopment efforts, and have
    been receiving financial support through grants and technical
    assistance from the DOD Office of Economic Adjustment. Two communities
    are still preparing their plans with submissions planned for later this
    year and the Department of Housing and Urban Development is reviewing
    submissions at six installations. At the installations where the reuse
    plans have been completed, the Department has initiated the National
    Environmental Policy Act (NEPA) documentation for disposal of those
    properties. We have completed the NEPA process at eight of those
    installations.

    Land Conveyances and Lease Terminations
        By the end of fiscal year 2010, the Department disposed of 45
    percent of the property that was slated for closure in BRAC 2005. These
    disposal actions were completed via a combination of lease transfers
    and terminations, reversions, public benefit conveyances, and Federal
    and DOD agency transfers. Of interest for fiscal year 2010 is the
    reversion of the 577-acre Main Base at Naval Station Ingleside to the
    Port of Corpus Christi. Last year we also transferred a lease interest
    of 34 acres at the Marine Corps Support Activity in Kansas City, MO,
    for use by the Department of the Army.

        The most significant action we have planned for 2011 is the
    disposal of Naval Support Activity, Athens, GA, this spring when the
    base will operationally close. This property will be conveyed to the
    University of Georgia via an Education Public Benefit Conveyance. The
    2011 Plan also includes transfer of remaining real property at Marine
    Corps Support Activity Kansas City, MO, and Naval Support Activity New
    Orleans, LA. Other significant disposals include about 1,200 acres at
    Naval Air Station Brunswick, ME, to support aviation and education
    uses.

    Naval Support Activity New Orleans, LA
        Construction for the new building that will house Headquarters,
    Marine Forces Reserve and Marine Corps Mobilization Command is almost
    complete in the future Federal City. The four floors and approximately
    411,000 square-feet of administrative space are currently having
    furniture and computer equipment installed. When finished, the building
    will be home to about 2,000 marines. A ribbon cutting ceremony is
    planned for the end of June 2011.
        To support the closure of Naval Support Activity New Orleans and
    the relocation of base operating support and tenant activities to Naval
    Air Station Joint Reserve Base New Orleans, 13 construction projects
    have been completed and the final project is targeted for completion by
    the end of March 2011.

    Naval Air Station Brunswick, ME
        The Department's largest BRAC 2005 operational action will close
    Naval Air Station Brunswick and consolidate the east coast maritime
    patrol operations in Jacksonville, FL. Runway operations in Brunswick
    ceased in February 2010. The closure ceremony will occur in May 2011.
    The runways and adjacent aviation land and facilities totaling more
    than 900 acres were approved in February 2011 for a no-cost Federal
    Aviation Administration Public Benefit Conveyance to the Local
    Redevelopment Authority. These facilities will become an executive
    airport.

    Naval Air Station Joint Reserve Base Willow Grove, PA
        In 2007, legislation was enacted directing the Department to
    transfer Naval Air Station Joint Reserve Base Willow Grove to the Air
    Force, who would then convey property to the Commonwealth of
    Pennsylvania for the operation of a Joint Interagency Installation. In
    November 2009, Governor Rendell of the Commonwealth of Pennsylvania
    informed the Secretary of Defense that the Commonwealth would no longer
    pursue the Joint Interagency Installation because of fiscal
    constraints. The closure of Naval Air Station Joint Reserve Base Willow
    Grove will again follow the BRAC disposal processes. Federal Screening
    among other DOD and Federal agencies has been completed and the Local
    Redevelopment Authority initiated its reuse planning efforts in
    February 2011.

    Navy Leased Locations, National Capital Region
        Navy awarded the remaining construction projects for the relocation
    of over 2,200 DON personnel from leased locations into DOD owned
    facilities in the National Capital Region. These remaining projects
    while on track to complete in time to meet the statutory deadline
    continue to present significant challenges due to the short
    construction duration, and complex move actions that require close
    coordination with other services and agencies.

    Joint Basing
        All 12 Joint Bases established by BRAC law have achieved full
    operational capability as of October 1, 2010. The Department is the
    supporting component for the following four bases: Joint Expeditionary
    Base Little Creek-Fort Story, Joint Region Marianas, Joint Base Pearl
    Harbor-Hickam, and Joint Base Anacostia-Bolling.

    Environmental Cost to Complete and Financial Execution
        Over the last year, we spent $16 million in cleanup at BRAC 2005
    locations. The majority of this funded environmental activities at
    Naval Air Station Brunswick, ME, Naval Weapons Station Seal Beach
    Detachment Concord, CA, and Naval Air Station Joint Reserve Base Willow
    Grove, PA. Our remaining environmental cost to complete for fiscal year
    2011 and beyond is $117 million.

    Challenges
        Completion of large construction and renovation projects and
    relocations are planned for the last 3 to 6 months of BRAC 2005
    implementation. Projects associated with the movement of DON
    organizations from leased space in the National Capital Region to DOD
    owned space are scheduled to finish September 2011. Additionally, lack
    of full funding at the beginning of fiscal year 2011 resulted in
    rearrangement of implementation plans, leaving little margin for error
    in meeting the statutory deadline across multiple recommendations.

                    PRIOR BRAC CLEANUP AND PROPERTY DISPOSAL

        The BRAC rounds of 1988, 1991, 1993, and 1995 were a major tool in
    reducing our domestic installation footprint and generating savings.
    All that remains is to complete the environmental cleanup and property
    disposal on portions of 15 of the original 91 bases and to complete
    environmental cleanup, including long term monitoring at 23
    installations that have been disposed.

    Property Disposal
        We disposed of 289 acres of real property in fiscal year 2010, for
    a total of 93 percent of real property disposed in the first four
    rounds of BRAC. In fiscal year 2010, we completed the disposal of the
    Defense Fuel Depot Point Molate to the City of Richmond, CA, using the
    authority to transfer property prior to completion of environmental
    remediation activities. This conveyance will enable City redevelopment
    of the property years sooner by incorporating the environmental
    remediation effort with the construction. We continue to use the
    variety of the conveyance mechanisms available for Federal Property
    disposal, including the Economic Development Conveyance that was
    created for BRAC properties. Ninety-one percent of the property
    conveyed has been at no consideration to the Federal Government. Our
    fiscal year 2012 budget request of $129 million will enable us to
    continue disposal actions and meet the legal requirements for
    environmental cleanup.
        With 74 percent of our remaining property requiring supplemental
    NEPA analysis and completion of environmental remediation activities,
    disposal actions will continue after fiscal year 2011. Due to changing
    redevelopment plans, we are currently undertaking Supplemental NEPA
    analyses at Naval Shipyard Hunters Point, CA and Naval Station
    Roosevelt Roads, PR. Although supplemental NEPA analysis is not needed
    at Naval Station Treasure Island, CA, the City of San Francisco is
    currently completing a state required environmental review of its
    revised reuse plan. In addition, we may need to undertake Supplemental
    NEPA analysis at Naval Air Station Alameda, CA depending on future
    reuse planning decisions by the City of Alameda.
        In fiscal year 2011, we plan to convey 627 acres at Naval Air
    Station South Weymouth, MA, under an Economic Development Conveyance.
    Other significant actions include issuing deeds for 530 acres at Marine
    Corps Air Stations El Toro and Tustin in California that are currently
    under Leases in Furtherance of Conveyance and the initiation of a
    public sale at Naval Station Roosevelt Roads, PR, for about 2,033
    acres. With the completion of these actions, we will have disposed of
    95 percent of our Prior BRAC real properties.

    Prior BRAC Environmental Cleanup
        The Department has now spent about $4.5 billion on environmental
    cleanup, environmental compliance, and program management costs at
    prior BRAC locations through fiscal year 2010. Our remaining
    environmental cost to complete for fiscal year 2011 and beyond is
    approximately $1.3 billion. This includes about $180 million cost
    growth which is due in part to additional munitions cleanup at Naval
    Air Facility Adak, AK, and Naval Shipyard Mare Island, CA, cleanup at
    Naval Air Station Moffett Field, CA, and additional long term
    monitoring program-wide. The increase is also associated with
    additional radiological contamination at Naval Station Treasure Island,
    CA, and Naval Air Station Alameda, CA.

    Naval Station Roosevelt Roads, PR
        The Commonwealth submitted an Economic Development Conveyance
    application in December 2010 requesting approximately 1,000 acres of
    the remaining property. We are currently reviewing the application and
    will soon begin formal negotiations. The remaining property will be
    sold through public auction.

    Naval Shipyard Hunters Point, CA
        DOD listed the shipyard for closure as part of BRAC 1991. The
    Department has spent more than $650 million to investigate and clean up
    contamination at Hunters Point, including 78 installation restoration
    sites and 93 radiological sites. Congress has added a total of $160
    million to the entire Prior BRAC Program over the past 3 years, and we
    have used over $100 million to accelerate the cleanup program at
    Hunters Point.
        The additional funding has increased contaminated soil disposal to
    more than 520,000 cubic yards, nearly 31,000 truckloads, through
    removal and remedial actions. For radiological contamination, we have
    received free-release for 17 impacted buildings and removed more than
    12 miles of radiological contaminated sewer and storm lines. We
    continue to utilize emerging technologies to expedite cleanup of
    groundwater plumes and have streamlined the groundwater monitoring
    program.
        The Department continues to work closely with the City of San
    Francisco for the potential early transfer of key development parcels
    within the next year. This transfer of Parcel B (59 acres) and Parcel G
    (40 acres), followed by additional transfers totaling 60 acres in 2014,
    make up close to 40 percent of the remaining land for development. With
    final Records of Decision signed for Parcel C (74 acres) and the
    anticipated utility corridors, we have made significant strides in
    readying parcels to support City redevelopment efforts.
        Naval Station Treasure Island, CA
        With adoption of new Economic Development Conveyance (EDC) language
    in the National Defense Authorization Act for Fiscal Year 2010, DON was
    able to complete negotiation of a profit participation model for the
    transfer of Treasure Island. In August 2010, then-Speaker Pelosi,
    Secretary Mabus and then-Mayor Newsom signed the term sheet and intent
    to complete an EDC Memorandum of Understanding (MOU). The formal EDC
    MOU is expected to be approved and signed by June of this year. The
    agreement guarantees $55 million to the Navy paid over 10 years with
    interest and an additional $50 million paid once the project meets a
    return of 18 percent. Then after an additional 4.5 percent return to
    investors (22.5 percent total), the Navy would receive 35 percent of
    all proceeds.
        The environmental cleanup of Treasure Island is nearing completion.
    The city has finalized its California Environmental Quality Act (CEQA)
    documentation and will submit the CEQA Environmental Impact Report and
    EDC MOU for approval by the Board of Supervisors in the summer of this
    year. At that point, we will be in position for the transfer of more
    than 80 percent of the base. The remaining cleanup includes the
    continued treatment of two small groundwater plumes and removal of low
    level radiological contamination. These projects and the remaining
    transfer are expected to be complete well before the land is needed for
    subsequent phases of the redevelopment project.

    Naval Air Station South Weymouth, MA
        Naval Air Station South Weymouth was closed by a 1995 BRAC action.
    In 2008, Navy and the Local Redevelopment Authority executed an EDC
    term sheet, but the Local Redevelopment Authority was unable to obtain
    the necessary bonds to complete the transaction. The Navy has
    subsequently revalued the property and the parties are negotiating a
    new payment structure that emphasizes Navy participation in revenue
    sharing for an EDC of 627 acres.

    Naval Air Station Moffett Field, CA
        Naval Air Station Moffett Field was transferred to NASA in 1994
    with Navy retaining environmental cleanup responsibilities for past
    Navy releases. Hangar 1, which was built in the 1930s to house the USS
    Akron and its sister ship, USS Macon, is a Navy Installation
    Restoration Program site as a result of contamination in its siding and
    interior paint leaching to the environment. Due to it being a
    contributing element to the Naval Air Station Sunnyvale Historic
    District and individual eligibility for the National Register of
    Historic Places, the Navy's environmental response, which will leave
    the hangar without siding, has generated tremendous public and
    congressional interest.
        The Navy has completed all Hangar 1 interior work and removal of
    siding is scheduled to begin in April 2011 for completion at this
    calendar year's end. NASA, as the Federal facility owner and operator,
    has committed to reusing and residing Hangar 1. They are seeking
    additional financial support for this effort.

                                  BRAC SUMMARY

        The Department is on schedule to meet the statutory requirement to
    complete the BRAC 2005 closure and realignment actions by September 15,
    2011. While the relocation of Navy organizations from leased locations
    in the National Capital Region to DOD owned space continues to present
    significant challenges, we feel we have a reasonable plan in place to
    meet this requirement.
        Although the remaining prior round BRAC installations present
    cleanup and disposal challenges, we continue to work with regulators
    and communities to tackle complex environmental issues, such as low-
    level radiological contamination, and provide creative solutions to
    support redevelopment priorities, such as innovative EDCs.

                                   CONCLUSION

        Our Nation's Sea Services continue to operate in an increasingly
    dispersed environment to support the Maritime Strategy and ensure the
    freedom of the seas. We must continue to transform and recapitalize our
    shore infrastructure to provide a strong foundation from which to
    resupply, reequip, train, and shelter our forces. With your support of
    the Department's fiscal year 2012 budget request, we will be able to
    build and maintain facilities that enable our Navy and Marine Corps to
    meet the diverse challenges of tomorrow.
        Thank you for the opportunity to testify before you today. I look
    forward to working with you to sustain the warfighting readiness and
    quality of life for the most formidable expeditionary fighting force in
    the world.

        Senator McCaskill. Thank you.
        Secretary Yonkers.

    STATEMENT OF HON. TERRY A. YONKERS, ASSISTANT SECRETARY OF THE
          AIR FORCE, INSTALLATIONS, ENVIRONMENT, AND LOGISTICS

        Mr. Yonkers. Good afternoon, Chairman McCaskill, Senator
    Ayotte, Senator Udall, and Senator Shaheen. I want to thank you
    for inviting me here today to be able to talk to you about our
    wonderful Air Force.
        I'd be remiss if I did not say thank you very much for the
    strong support that this committee has given the U.S. Air Force
    in all of these years. So, thank you very much for doing that.
        I would also be remiss if I didn't say I didn't like A-10s,
    as well. [Laughter.]
        So, we're all in, as far as the Air Force is concerned.
        A right-sized and efficient infrastructure is essential in
    enabling our total-force airmen to perform their duties while
    ensuring responsible stewardship of our fiscal resources. Our
    fiscal year 2012 budget request contains $2 billion for MILCON,
    military family housing, and BRAC; $1.4 billion of this is for
    new MILCON to ensure alignment with our new weapons system
    deliveries and strategic basing initiatives. It keeps us on
    track to eliminate the inadequate dormitories for our
    unaccompanied airmen by 2017. Our efforts to provide quality
    housing for airmen and their families also includes nearly $500
    million to sustain and modernize primarily overseas housing and
    support housing privatization in the United States continental.
        Moreover, the Air Force is on track to fully implement all
    assigned BRAC recommendations by September 2011. We had on the
    order of 400 of those assignments. To this end, we are
    requesting 125, for $4 million, to continue completing our
    legacy BRAC programs; in particular, the environmental
    cleanups.
        We have all been challenged by the Secretary to find
    efficiencies in our program areas. We have done this, and we
    are going to continue to do this. Earlier this year, I issued a
    policy that refocuses our environmental cleanup program. This
    policy moves us towards completing cleanup and closure of
    contaminated sites by leveraging innovative technologies and
    business acumen. Our new goals are to achieve completion of 75
    percent of all our active base sites by the end of 2015, and 90
    percent of all our BRAC sites by the same timeframe.
        As importantly, our cleanup decisions, going forward, are
    going to be better informed by a lifecycle cost analysis. To
    meet our aggressive goals, we're refocusing the program on a--
    fixed-price performance-based contracts with clear performance
    standards and endpoints. Starting in fiscal year 2014, we
    expect to achieve initial reductions in our program cost,
    eventually leading to at least a 30-percent program efficiency.
        On our Air Force installations, we continue to focus on
    reducing energy demand through greater energy efficiency and by
    increasing supply through renewable energy projects. In fiscal
    year 2010, the Air Force funded 100 percent of our eligible
    MILCON projects to meet Leadership in Energy and Environmental
    Design silver standards. All new buildings designed since 2007
    are 30-percent efficient or more.
        On the supply side, the Air Force is a leader among Federal
    agencies in renewable energy use, with 6.4 percent of
    electricity coming from renewable. As of last year, the Air
    Force had 85 renewable projects on its bases, producing over 70
    megawatts of power. These numbers are truly growing fast.
    Within the next few years, we expect to add 100--or, excuse me,
    1,000 megawatts of power from solar, wind, waste-to-energy, and
    biomassed energy. As Dr. Robyn said, we are engaging with the
    private sector to use their dollars and the authorities that
    you've granted us to fund these projects.
        The budget request in efficiencies described here represent
    only a small sample of our efforts to meet our environmental
    and energy security responsibilities and to increase the
    quality of life for our airmen.
        While there are certainly challenging times for everyone,
    the Air Force remains committed to fulfilling its obligation to
    fly, fight, and win like never before.
        Madam Chairman, Senator Ayotte, distinguished members of
    the committee, it's been an honor to be here before you today
    and to be able to represent our wonderful airmen and their
    families.
        Again, I want to thank you for your continued support. I am
    really looking forward to working with you. I'm ready to answer
    any questions you may have.
        [The prepared statement of Mr. Yonkers follows:]

                  Prepared Statement by Hon. Terry A. Yonkers

                                  INTRODUCTION

        The United States faces diverse and complex security challenges
    that require a range of agile and flexible capabilities. From the
    ongoing conflicts in Afghanistan and Iraq, to potential confrontation
    with aggressive state and non-state actors, to providing humanitarian
    assistance, the U.S. Air Force continues to provide capabilities across
    the range of potential military operations. As part of this effort, we
    must ensure that we have right-sized and efficient infrastructure that
    enables our most valuable resource, our Total Force airmen, to perform
    their duties, while ensuring responsible stewardship of fiscal
    resources. To maximize our contributions to the joint team, we
    structured our resource choices by balancing them across the near- and
    long-term.
        Over the last year, the Air Force has striven to deliver our
    trademark effectiveness in the most efficient way possible. We are
    focused on five priorities, which serve as a framework for this
    testimony: (1) continue to strengthen the nuclear enterprise; (2)
    partner with the joint and coalition team to win today's fight; (3)
    develop and care for our airmen and their families; (4) modernize our
    air, space, and cyberspace inventories, organizations, and training;
    and (5) recapture acquisition excellence.

                                    OVERVIEW

        Our fiscal year 2012 President's budget request contains $2 billion
    for military construction, military family housing, and Base
    Realignment and Closure (BRAC). The $1.4 billion military construction
    request represents an increase of $97 million over fiscal year 2011,
    allowing us to invest in the top priorities of the Air Force and our
    combatant commanders, even in a fiscally constrained environment. This
    request also ensures new construction is aligned with weapon system
    deliveries and strategic basing initiatives. In addition, we continue
    our efforts to provide quality housing for airmen and their families by
    dedicating nearly $500 million to sustaining and modernizing overseas
    housing, and supporting housing privatization in the continental United
    States. Our unaccompanied airmen remain a top priority; we request $190
    million to invest in dormitories, keeping us on track to meet our goal
    of eliminating inadequate housing for unaccompanied airmen by 2017.
    Finally, we also request $124 million to continue completing our legacy
    BRAC programs and environmental clean-up.
        In the course of building the fiscal year 2012 budget request, we
    applied asset management principles to ensure maximum efficiency
    without compromising the effectiveness of our installation weapons
    systems, the platforms from which we fly and fight. This was
    accomplished through the judicious funding of our sustainment
    priorities (for example spending money in the right place at the right
    time to keep our good facilities good) and using military construction
    to recapitalize existing facilities first, as a preferred alternative
    to growing our footprint.

                 CONTINUE TO STRENGTHEN THE NUCLEAR ENTERPRISE

        Since its inception, the Air Force has served as a proud and
    disciplined steward of a large portion of the Nation's nuclear arsenal.
    We steadfastly secure and sustain these nuclear weapons to deter
    potential adversaries and to assure our partners that we are a reliable
    force providing global stability. Reinvigorating stewardship,
    accountability, compliance, and precision within the nuclear enterprise
    remains the Air Force's number one priority. While we have made
    progress in this area, we have taken additional steps in the fiscal
    year 2012 budget to continue to strengthen and improve this core
    function.
        Air Force Global Strike Command achieved full operational
    capability on September 30, 2010, moving all Air Force nuclear-capable
    bombers and Intercontinental Ballistic Missiles under one command. In
    addition to ensuring that our organizations and human resource plans
    support this mission, we are also concentrating on the infrastructure
    and facilities that are crucial to our success. Air Force civil
    engineers have conducted enterprise-wide facility assessments and
    understand that a significant portion of the existing infrastructure
    will require modernization or complete replacement in the years ahead.
    Our fiscal year 2012 budget request begins to address these issues with
    $75.6 million in military construction for the nuclear enterprise,
    including a B-52 maintenance dock at Minot AFB, ND, and an addition to
    the Air Force Nuclear Weapons Center at Kirtland AFB, NM. These and
    similar projects in the years to come will ensure maximum effectiveness
    for the Air Force's most important mission.

         PARTNER WITH THE JOINT AND COALITION TEAM TO WIN TODAY'S FIGHT

        Our Air Force continues to project air, space, and cyber power to
    great effect in our conflicts in Afghanistan and Iraq, and our men and
    women make incredible contributions every day. We currently have more
    than 33,000 airmen deployed, including nearly 2,300 Air Force civil
    engineers. Nearly half of these engineers are filling Joint
    Expeditionary Taskings, serving shoulder-to-shoulder with our solider,
    sailor, and marine teammates. Due to their wide array of skills, our
    Air Force Rapid Engineer Deployable Heavy Operational and Repair
    Squadron Engineers (RED HORSE) and our Prime Base Engineer Emergency
    Force (Prime BEEF) personnel are in high demand in several theaters of
    operation.
        In addition to the contributions and sacrifices of our airmen, our
    fiscal year 2012 budget request invests $366 million in projects that
    directly contribute to today's fight. Examples include the following:

             Projects supporting our combatant commanders that will
            greatly enhance ongoing operations. These include the
            recapitalization of Headquarters, U.S. Strategic Command at
            Offutt AFB, NE, and a new Air Freight Terminal Complex at
            Andersen AFB, Guam.
             New facilities for operations and mission support. A
            new Air Support Operations Facility at Fort Riley, KS, will
            further our efforts to support Joint Terminal Attack Control
            specialists as they partner with ground forces to integrate
            airpower in Iraq and Afghanistan. Additionally, we are
            strengthening communications capabilities of combatant
            commanders with a SATCOM relay in Sigonella, Italy, and a
            Communications and Network Control Center at Nellis AFB, NV.
             Improvements at Andersen AFB, Guam. Three projects
            continue to support the ``Guam Strike'' initiative,
            consolidating operational capability for fighter and bomber
            operations at the base.

                 DEVELOP AND CARE FOR AIRMEN AND THEIR FAMILIES

        The All-Volunteer Force provides the foundation for our flexibility
    and agility. Our fiscal year 2012 budget request reflects a commitment
    to providing first-class housing, while focusing on training and
    education, and striving to improve the overall quality of life for our
    airmen and their families.
        The best airmen in the world deserve the best facilities in the
    world, and our fiscal year 2012 budget request supports that goal. We
    aim to build upon the foundation laid during the Year of the Air Force
    Family, and utilize new data such as our 2010 Dormitory Master Plan to
    ensure we effectively allocate taxpayer dollars to our most pressing
    requirements.

    Billeting
        We continue our efforts to provide quality housing for our airmen
    deployed to the U.S. Central Command theater with the fourth phase of
    the Blatchford-Preston Complex at Al Udeid AB, Qatar. This $37 million
    project will build two dormitories, raising the billeting capacity
    there to 3,332 rooms.

    Dormitories
        Housing for our unaccompanied airmen remains a top priority, and
    our Dormitory Master Plan provides valuable insight into how to
    maximize the impact of our investment. Our fiscal year 2012 budget
    request includes seven dormitory projects totaling $190 million. These
    include dorms at Travis AFB, CA; Osan AB, Korea; Eielson AFB, AK; Minot
    AFB, ND; Ramstein AB, Germany; Thule AB, Greenland; and Cannon AFB, NM.
    This investment keeps us on track to meet our 2017 goal to provide
    adequate housing for all unaccompanied airmen. We are also supporting
    our partners at Joint Base Elmendorf, AK; Joint Base San Antonio, TX;
    and Joint Base Langley-Eustis, VA, with the construction of three
    dormitories worth $193 million. These projects represent the last of
    the Joint Base military construction funds transferred to the Air
    Force.

    Training and Education
        The most professional airmen in the world grow into the world's
    best noncommissioned officers because of the investments we make in
    their education, starting from the day they enlist. We have two
    projects in this year's program totaling $78 million that address these
    areas. They include the fourth phase of the Basic Military Training
    Complex at Lackland AFB, TX, and an Education Center at Vandenberg AFB,
    CA.

    Military Family Housing
        We are carrying forward the momentum we gained during the Year of
    the Air Force Family with continued investment in building thriving
    housing communities. Our fiscal year 2012 budget request for military
    family housing is nearly $500 million. Included in this request is $85
    million to improve nearly 1,400 homes in Japan and the United Kingdom
    and an additional $405 million to fund operations, maintenance,
    utilities, and leases, and to manage privatized units for the family
    housing program.
        Housing privatization has leveraged $423 million into $6.5 billion
    in private sector financing; it is central to the success of our
    housing initiatives. At the start of fiscal year 2012, we will have
    47,700 privatized units, increasing to 52,500 by January 2012, when 100
    percent of our family housing in the United States will be privatized.

    Child Development Centers
        The final component of Caring for Airmen and Families is ensuring
    the children of our service men and women receive the same standard of
    care at installations around the world, from bases in major
    metropolitan areas to those in remote locations to those overseas. The
    American Recovery and Restoration Act allowed us to allocate $80
    million for eight new child development centers, to help ensure that
    our force has adequate child care capacity. This year, we have only one
    requirement for a Child Development Center, at Holloman AFB, NM. This
    $11 million project will get our airmen's children out of temporary,
    substandard facilities.

     MODERNIZE OUR AIR, SPACE, AND CYBERSPACE INVENTORIES, ORGANIZATIONS,
                                  AND TRAINING

        Modernizing our force to prepare for a wide range of future
    contingencies requires a significant investment. For fiscal year 2012,
    a key focus area is enabling the beddown of several new weapon systems.
    Therefore, we are requesting $233 million for a variety of military
    construction projects, including:

             Five projects to beddown our newest fighter, the F-35.
            This includes the F-35 force development and evaluation mission
            at Nellis AFB, NV, the second training location at Luke Air
            AFB, AZ, and the first operational unit at Hill AFB, UT.
             Three projects supporting our HC/EC/C-130J fleet.
            These projects include a Joint Use Fuel Cell at Davis-Monthan
            AFB, AZ, and flight simulators at Davis-Monthan and Pope AFB,
            NC.
             Three projects supporting the Pacific Regional
            Training Center at Andersen AFB, Guam. This requirement was
            driven by the relocation of the 554th RED HORSE from Korea to
            Guam in 2007, along with an increased need for expeditionary
            training in the Pacific.
             Other projects. These will support diverse mission
            areas, including C-5 training, F-22 support, the F-16 beddown
            at Holloman AFB, NM, and support operations at Barksdale AFB,
            LA, Fairchild AFB, WA, the U.S. Air Force Academy, CO, and
            Cannon AFB, NM.

                        RECAPTURE ACQUISITION EXCELLENCE

        The Air Force continues its efforts to optimize the effective use
    of taxpayer resources in the acquisition of goods and services. By
    focusing on asset management principles, we have built a culture that
    supports the warfighter by delivering the right products and services
    on time, within budget, and in compliance with all applicable laws,
    policies, and regulations. Where possible, we seek strategic sourcing
    opportunities to maximize the use of available dollars, pursuing ways
    to leverage our size as we purchase common commodities and services to
    be used across the enterprise. Our engineering and contracting
    communities continue to partner on efforts to transform the processes
    that support Air Force installation-related acquisition.

                             OTHER PROGRAMS OF NOTE

    Base Realignment and Closure Actions (BRAC)
        Completing Air Force BRAC actions remains a priority for the Air
    Force and Department of Defense. The fiscal year 2012 request includes
    $123.5 million for legacy BRAC actions at our 28 remaining former
    bases, and $1.97 million to perform program management, environmental
    restoration, and property disposal at locations closed in BRAC 2005.
    The Air Force is on track to fully implement all BRAC 2005
    recommendations by the mandated September 2011 deadline.

    Legacy BRAC
        Real Property Transformation
        The Air Force remains a Federal leader in the implementation of the
    management principles outlined in Presidential Executive Order 13327,
    Federal Real Property Asset Management. We continue to aggressively
    manage our real property assets to deliver maximum value for the
    taxpayer, improve the quality of life for our airmen and their
    families, and ensure the protection and sustainment of the environment
    to provide the highest level of support to Air Force missions. The Air
    Force is achieving these goals through an enterprise-wide Asset
    Management transformation that seeks to optimize asset value and to
    balance performance, risk, and cost over the full asset life cycle. Our
    approach is fundamentally about enhancing our built and natural asset
    inventories and linking these inventories to our decisionmaking
    processes and the appropriate property acquisition, management and
    disposal tools. Even though the BRAC 2005 round did not substantially
    reduce the Air Force's real property footprint, our current
    transformation efforts seek to ``shrink from within'' and to leverage
    the value of real property assets in order to meet our ``20/20 by
    2020'' goal of offsetting a 20 percent reduction in funds available for
    installation support activities by achieving efficiencies and reducing
    by 20 percent the Air Force physical plant that requires funds by the
    year 2020.
        BRAC Property Management
        To date, the Air Force has successfully conveyed nearly 90 percent
    of the 88,000 acres of Air Force land directed by BRAC 1988, 1991,
    1993, 1995, and 2005 with the remainder under lease for redevelopment
    and reuse, or pending final transfer. With the successful redevelopment
    of Air Force BRAC property, local communities have been able to
    increase the number of area jobs by over 45,000.
        To complete the clean up and transfer of remaining property, the
    Air Force is partnering with industry leaders on innovative business
    practices for its ``way ahead'' strategy. Of the 40 BRAC bases slated
    for closure--including BRAC 2005--the Air Force completed 23 whole-base
    transfers as of September 2010. Eleven of the remaining 17 Legacy and
    BRAC 2005 bases are targeted for transfer by the end of fiscal year
    2011, while the remaining BRAC bases (Chanute, George, McClellan,
    Wurtsmith, Williams and Galena) will transfer no later than the end of
    fiscal year 2014.
        In February 2011, I issued a memo directing accelerated site
    completion and performance based remediation (PBR) performance
    objectives. For the BRAC program, 90 percent of all sites must be
    completed by 2015 and 95 percent under a PBR by 2014. Performance based
    remediation projects and contracts represent the Air Force's best tool
    for achieving site completion in the quickest timeframe and best value
    to the Air Force, while still protective of human health and
    environment. Also included in this directive, is an initiative to
    reduce overhead and management costs to below 10 percent of program
    costs.

    Joint Basing
        The Air Force remains committed to maximizing installation
    efficiency and warfighting capability, while saving taxpayer resources
    and being the best partner we can be. The Air Force has equity in 10 of
    the 12 Joint Bases and is the lead Service for 6 of the 12. All 12
    bases achieved full operating capability on October 1, 2010. We
    anticipate that the benefits derived from this initiative will yield
    significant efficiencies and cost savings.

    Energy
        The Air Force energy vision is to reduce demand through
    conservation and efficiency, increase supply through alternative energy
    sources, and create a culture where all airmen make energy a
    consideration in everything we do. In pursuit of this vision, the Air
    Force continues as a Federal energy leader by advancing energy
    independence through coordinated efforts aimed at minimizing energy
    costs and leveraging proven technology in conservation measures and
    renewable energy development, while matching system reliability and
    critical asset security with Air Force mission requirements. These
    efforts effectively reduce dependence on commercial supply and delivery
    systems and enhance energy security for the Air Force. The Air Force is
    committed to reducing its greenhouse gas emissions and carbon footprint
    through the reduced use of fossil fuels consumed directly through
    vehicles and facilities or indirectly through consumption of fossil
    fuel-generated electricity from the national electric grids. In fiscal
    year 2012, we will continue our energy conservation efforts, which have
    already reduced facility energy use nearly 15 percent from 2003 levels.
    In fiscal year 2010, we exceeded our goals and produced or procured
    nearly 7 percent of our total facility energy from renewable sources,
    and we have led the Department of Defense as the number one purchaser
    of renewable energy for the fifth year in a row.

                                   CONCLUSION

        The Air Force remains a trusted and reliable joint partner--all-in
    to provide air, space, and cyberspace capabilities to our combatant
    commanders as they face the myriad short- and long-term security
    challenges in their areas of responsibility. Nearly two-thirds of the
    men and women serving in our Air Force today are actively supporting
    combatant commanders in their fight across the full spectrum of
    military operations from installations all over the world. Our fiscal
    year 2012 budget request balances warfighter requirements,
    recapitalization efforts, new mission beddowns, and quality of life
    requirements.
        As we have shown, it remains aligned with the fundamental
    priorities of our Air Force: (1) continue to strengthen the nuclear
    enterprise; (2) partner with the joint and coalition team to win
    today's fight; (3) develop and care for our airmen and their families;
    (4) modernize our air, space, and cyberspace inventories,
    organizations, and training; and (5) recapture acquisition excellence.
    In addition to being committed to providing and maintaining effective
    infrastructure, efficiently right-sized to support our missions and
    priorities, we are also committed to ensuring that we continue to care
    for our Total Force airmen and their families. This includes making
    good on our promise to provide first-class dormitories and housing with
    a focused determination to eliminate inadequate housing for all by
    2017. Finally, we remain committed to ensuring the judicious and
    responsible use of taxpayer resources with every decision we make.
        In so doing, we remain focused on a continual pursuit of
    efficiencies that allow us to provide our trademark delivery of
    effective air, space, and cyber power while ensuring maximum impact
    from every dollar spent. Thank you for your continuing support of our
    Nation's Air Force.

        Senator McCaskill. Thank you.
        I want to welcome all the subcommittee members here today.
    I'm so pleased that we have a great turnout. I think this is
    terrific. I hope we keep it up, because we're going to have
    some great hearings in this subcommittee.
        I want to start with the move from Okinawa to Guam,
    especially in light of the situation in Japan. Correct me if
    I'm wrong, but this decision was predicated on Japan being
    willing to spend billions and billions of dollars to make this
    work for our military. Don't you think it would be wise, at
    this moment, to do a timeout? Since we have not been able to
    get tangible progress on the new airfield replacement facility
    in Okinawa that was supposed to be part of the deal. It seems
    to me, as I review all the documents, that we're getting ahead
    of ourselves here.
        Ms. Pfannenstiel. Thank you, Chairman McCaskill. There
    are--as you pointed out, and I think as both Dr. Robyn and I
    were saying, there are a lot of moving parts here. Certainly
    the Futenma replacement facility is, in fact, something we've
    been watching and waiting for as an indication of commitment on
    the part of the Japanese before we went much farther in Guam.
        On the other hand, there are other signs of commitment.
    Right now, the U.S. Treasury has $834 million of Japanese money
    that they have invested, that they have given us to be used on
    Guam. There is another $415 million that has been proposed in
    their--this year's budget for utilities on Guam. So, there
    really has been, I think, a showing of commitment from the
    Government of Japan.
        Clearly, the events of the past week put everything in some
    kind of different place, in terms of being able to come up with
    the money. But, what we're looking at now is not getting ahead
    of where the agreement was--the international agreement--but,
    rather, allowing the construction to begin as it starts. The
    amount that we have put in the fiscal year 2012 request, the
    $181 million, is intended to begin to allow us to get started
    on some projects that, in the one case, the case of Andersen
    Air Force Base, will have an enduring value. Now, the value
    will depend on whether we end up putting the Marine air wing
    there, whether it's used for operations that are not now
    planned. It clearly gives the Air Force some flexibility if we
    don't use it for the Marines.
        The other major project is a--water projects and water
    facilities that will be needed to support the workers that will
    come. So, we're trying to stage, gradually and without moving
    too fast, the investments that will need to be made.
        Senator McCaskill. Do you think it's reasonable that this
    subcommittee, and the full committee, should see a master plan
    before we start funding?
        Ms. Pfannenstiel. I do. In fact, we are putting that
    together. There have been so many moving parts that, frankly,
    it's moved faster than we've been able to put pen to paper on
    it. We will bring in a plan of expenditures and timing and
    projects before this goes to bed.
        Senator McCaskill. Okay. I think we're going to be looking
    for that, and especially looking to see the posture of the
    Japanese Government in the aftermath of this disaster, whether
    or not this, in fact, makes sense.
        Let me talk a little bit about MILCON requirements. I'm
    just going to do this question, and then I want to move on so
    everyone has a chance to question. Then I'll come back to my
    other questions.
        Let me preface this by saying, I certainly will be the very
    first person to stand up and say our military deserves the
    best--but, we are searching everywhere in Federal spending to
    find ways to bring down the footprint of the Federal
    Government. So, when I saw that there was a $50 million fitness
    center, I thought, ``Well, this must be in a very, very
    difficult part of the world. This must be a fitness center
    someplace where there is no other access to easy and affordable
    and accessible physical training activities.'' When I find out
    that it's in Coronado, in San Diego, and that it includes a
    $7.5 million swimming pool and a $4 million recreational center
    for single sailors and close to $20 million just for the gym
    facility. I have to say, first of all, I'm anxious to hear what
    we're replacing. Certainly I want our men and women to have the
    best. But, this is the most beautiful place in the world.
    Certainly, the outdoors lends itself for exercise almost every
    day there. So, I'm trying to figure out, in these tough budget
    times, how that kind of expenditure is one that we can justify
    to the American taxpayer.
        Ms. Pfannenstiel. I do agree with you that San Diego is one
    of the most beautiful places in the world and that people do
    spend a lot of time outdoors. The reason that this facility is
    at the price that it is, is that it will have something like
    80,000 patrons. That area of San Diego, the north island of San
    Diego, is a major hub for the Navy and the Marines. So it is
    expected that this will be the central facility for that entire
    area.
        Senator McCaskill. I just want to let the word go out that
    we're going to look really carefully at all of this, and--
    because we want our men and women to have the best,
    particularly in terms of their safety and their ability to
    achieve mission and a quality of life for them and their
    families, but we have to be really careful about the
    expenditures, and justifying them.
        Senator Ayotte.
        Senator Ayotte. Thank you, Madam Chairman.
        I wanted to ask you, as a followup to my opening statement,
    Secretary Robyn, in recent years, a proliferation of earmark
    grants have been appropriated to DOD through the Office of
    Economic Adjustment (OEA) for vague general requirements. In
    part, I think that was to technically avoid being called an
    earmark. An example, $300 million for medical transportation
    infrastructure in the National Capital Region (NCR), $45
    million for reimbursement to local towns, and $250 million for
    repairs to local community schools. None of these amounts were
    included in the DOD budget requests and nor are they considered
    firm DOD requirements. All of them are added as a result of
    decreases to other DOD accounts where you might need those
    funds for the priorities of the military. So, it would seem
    logical, given the challenges that we face on a fiscal basis,
    where DOD is making these difficult decisions that we're going
    to have, to make sure we support our troops while reducing
    costs. This is of concern.
        I guess I would ask you, should the OEA be in the business
    of serving as a passthrough, almost, to improve public
    infrastructure off military bases?
        Dr. Robyn. Two of the three examples you mentioned are
    issues where there are--I think Congress will resolve them.
    Senator Webb can speak to the transportation issues around, I
    will say that DOD has added enormously to the already horrible
    congestion in the NCR. Senator Webb, Congressman Moran, Senator
    Warner are understandably concerned about that.
        I could speak to the school issue, but these are issues
    within Congress. OEA is a wonderful office. It as created by
    Robert McNamara in the 1960s to work with communities. Pease
    Air Force Base, the success of reuse at Pease, has a lot to do
    with OEA. It's a wonderful office. I don't know how to answer,
    when we are asked to carry out something like that, we do it,
    and we do it well.
        Senator Ayotte. I guess I would ask you, just on a big-
    picture basis, what do you think are the implications of doing
    things that way, as opposed to--for example, in transportation
    funding. I also have the privilege of serving on the Commerce,
    Science, and Transportation Committee that oversees
    transportation funding, and so I'm concerned that it's going to
    be a drain on your priorities, to feel that you have to serve
    this purpose, when there are other oversight committees that
    really should be the ones deciding, on a budgetary basis, where
    those funds, for example, would come from. I'm just using roads
    as an example.
        Dr. Robyn. We will implement that in a way that takes into
    account competition and creates criteria so it is not--we don't
    view it as ``an earmark.'' But, we will implement it
    responsibly.
        Senator Ayotte. But when you're given the legal language
    for--or the language in the bill itself, it seems like it is a
    way to circumvent what has been actually a decision of
    Congress, right now, on earmarks. So, I guess I would ask you
    to consider the overall priorities of making sure--we want to
    make sure that the proper committees oversee these issues, and
    also that the funds that you're given are used for your
    priorities, based on what this committee decides and what the
    overall Armed Services Committee decides.
        Thank you for your answer.
        The other question, I wanted to ask Secretary Hammack.
    We've talked quite a bit about the September 2011 deadline for
    BRAC. As you and I talked in advance of the hearing, there is
    an outstanding issue with regard to the Paul A. Doble Army
    Reserve Center in Portsmouth, NH, where we have a situation
    where, as I understand it, we'll probably be unlikely to meet
    the September 15 deadline. Could you just elaborate on where
    the status of that is at this moment?
        Ms. Hammack. Certainly. In section 2712 of the 2010 NDAA,
    it authorized us some more latitude in selection of the site,
    because the original language in the BRAC law said that it had
    to be directly adjacent to Pease, and the NDAA language allows
    us to find a location in the locality of Pease. So, with that
    legislation in the 2010 NDAA, it removed the timeline
    requirement of BRAC. So, it gave us the flexibility to evaluate
    all alternatives and find an appropriate site that helps us do
    it in an economic manner.
        Senator Ayotte. In conjunction with finding that new site,
    is the plan to actually construct a new Reserve Center in an
    alternative site?
        Ms. Hammack. Yes. The plan is to construct a Reserve Center
    and, if there is an increase in cost, to work with the Office
    of the Secretary of Defense (OSD) on reprogramming.
        Senator Ayotte. Thank you very much.
        Secretary Yonkers, I know that you're in the process of
    coming up with the criteria for strategic basing of where the
    KC-46A will be stationed. I'm sure you're aware that,
    obviously, Pease National Guard has a KC-46A there, and
    certainly, in my view, is a great location. But, more
    importantly, I wanted to ask you where that issue was right
    now, in terms of criteria, and how you anticipate the Guard and
    Active-Duty decisionmaking to go forward, of where that
    refueler will be located, and what type of criteria you're
    looking at to come forward once you do announce the criteria.
        Mr. Yonkers. Thank you for the question, Madam. You know
    that this award was just made in February, and it's a big
    program for the Air Force--billions of dollars. You also know
    that we have a strategic basing process in place. It's been in
    place about 2 years now. It was designed specifically to be
    open and transparent and to have a number of touchstones with
    the U.S. Congress as we went through it. So, we haven't veered
    from that. We intend to continue to have a transparent and an
    open process so that you can see, as we move down these
    strategic basing decisions, such things as the criteria,
    preferred locations, and the other kinds of parts to the
    process.
        I will tell you that, as we look at this, we're going to
    look at every installation in the Air Force. So, all bases,
    everything is on the table, including the Guard and the Reserve
    units and bases, as well.
        The first bird is expected to arrive, right now, in the
    2015 timeframe. So, we don't have a lot of time. If you look at
    the MILCON program that we're going to have to put into place
    in order to support the bed-down of these initial aircraft,
    that's a 2-year lead time. If you back that up another year and
    look at the National Environmental Policy Act requirements,
    that's at least 12 months, if not 18 months.
        So, I would say, within the next year, year and a half or
    so, we're going to have to sort through the criteria. We're
    going to have to start making some judgment on preferred
    alternatives and start looking at where we're actually going to
    be bedding down the aircraft. So far, ma'am, Air Mobility
    Command (AMC) is working through those criteria, so I don't
    have much definition for you other than that.
        Senator Ayotte. Thank you very much. We also had the
    opportunity to question the Secretary this morning in the Armed
    Services Committee about the issue. I would just ask that this
    clearly become a merit-based decisionmaking that looks
    strategically at what makes sense and be the most cost-
    efficient use of taxpayer funds. Because on the merits, that
    would be the way to make the decision. So, I appreciate that.
        My time is expired.
        I want to thank all the witnesses who are here for your
    service to our country.
        Senator McCaskill. Senator Shaheen.
        Senator Shaheen. Thank you, Madam Chair.
        Since Senator Ayotte and I are both from New Hampshire, we
    get to double-team you all on these concerns we have locally. I
    would just like to follow up, Secretary Hammack, on the
    concerns raised by Senator Ayotte, relative to the Reserve
    Center that's currently planned for Portsmouth. I'm aware that
    we have an alternate site and that the project is actually
    ready to go.
        What we have heard is that there are some concerns that
    because the projected cost is going to be higher than the
    original amount authorized, that there has been some
    questioning about whether that project is going to go forward.
    So, can you assure us that you've looked at that and you're
    comfortable with what's being proposed, and that it is going to
    go forward?
        Ms. Hammack. As mentioned before, we are examining all
    costs. We want to be prudent stewards of taxpayer resources, so
    we want to ensure that those incremental costs are appropriate.
    So, we are near the end of an analysis to determine whether--
    or, what the amount of the cost is that we need to ask for
    reprogramming on. So, we will be working with OSD on that. But,
    our intent is to move forward with a new Reserve Center.
        Senator Shaheen. Thank you. That's very good to hear. I
    know there's a great interest in the potential for the new
    facility to provide training for those medical personnel that
    will be so needed. So, we appreciate that.
        Secretary Pfannenstiel, we had the opportunity to have
    Secretary Mabus before us a week or so ago. One of the concerns
    that we raised with him at the time was the new Government
    Accountability Office (GAO) report that has come out that talks
    about the backlog in needed investments in our public
    shipyards. Again, Senator Ayotte and I both represent, along
    with the Maine Senators, the Portsmouth Naval Shipyard. The
    backlog there is projected to be over $500 million. So, can you
    talk a little bit about what priorities the Navy is going to
    use as you're looking at the backlog of investments that are
    needed, and how you'll make those decisions?
        Ms. Pfannenstiel. Yes, I'd be glad to. We recognize that
    this backlog needs to be addressed. We have been putting into
    the shipyards, on average in the last few years, much more than
    the minimum requirement--in some years, double the minimum
    requirement.
        In terms of Portsmouth, in particular, we do have some
    projects right now, some $47 million underway as we speak,
    another $49 million in the FYDP. So, those are headed towards
    Portsmouth. We have a $17 million repair that is supposed to be
    done, but now is being held up for the--because of the
    continuing resolution, but it would be in 2011. Then another
    $100 million in an energy project.
        Senator Shaheen. Right, we were very excited to hear about
    that.
        Ms. Pfannenstiel. So, I guess what I'm saying is that we
    have recognized that there has been this backlog, and we're
    trying to address it through a number of quite ambitious
    projects, going forward.
        Senator Shaheen. But, as you look at the backlog, not just
    at Portsmouth, but across the other three public shipyards, how
    do you prioritize those projects? Is it based on impact on
    national security? Is it based on competitiveness? How do you
    determine what gets moved forward in the queue?
        Ms. Pfannenstiel. That's an excellent question, and I think
    it goes across the entire range of the Department budget, when
    we're looking across at any one of our projects that come up.
    As we have a minimum that we need to be addressing, and where
    we go above that is--it's a decision that is programmed each
    year.
        Senator Shaheen. Thank you.
        You've all mentioned the investment in energy to try and
    make each branch of the military less dependent on foreign
    sources of fuel and more energy efficient.
        Secretary--or Dr. Robyn, can you speak to how you're
    integrating the various work that's being done by each branch?
    I was impressed to hear the Navy talking about their goal of a
    50-percent reduction by 2020. This morning we had
    representatives from the Air Force talking about what you're
    planning, Secretary Yonkers. But, how is that being integrated
    across all of the branches of the military, and how are we
    sharing what we've learned?
        Dr. Robyn. Thank you. First off, we talk continually. I
    think, for most of us, energy is our highest priority. It's a
    moment when we can do a lot. So, a lot of it is informal.
        My office sets policy, primarily. I will give you an
    example. We're currently developing guidance that will require
    the Services--and the Navy is already doing this--to meter a
    higher fraction of their buildings--for energy consumption--
    more of their buildings than they're currently doing.
        We are very data-starved. This is an area where you need to
    know how much you're consuming in order to make progress. We
    don't know that. Most of our buildings are not metered. So, I
    can set guidance. So, I can, through policy, create guidance.
        We are also leading the effort to create an energy
    information management system that cuts across the Services.
        I believe, before you got here, in my opening statement, I
    talked about an energy test bed initiative. This is, I think, a
    tremendously important effort, because no individual service
    has the incentive to make these investments. We believe that
    industry is coming up with technology, that they can't get
    commercialized, that can radically improve our energy
    performance. All the Services have the same infrastructure,
    they have the same energy challenges. So, we've taken that on
    through this testbed.
        We do the same in the environmental area; where there are
    crosscutting issues that are common across the Services, we
    make the investment. But, most of the execution is done through
    the Services.
        So, it's a combination of policy and coordination. I'm sure
    there are areas where we're guilty of duplication, but I think
    our staffs and our teams work very, very closely together in
    the energy area, because it's such a high priority, number one,
    and because resources are so scarce, and we're trying to figure
    it out together. Using private money is a key thing, figuring
    out how to do that is something we're doing collectively.
        Senator Shaheen. Thank you very much. I hope you will share
    with other agencies within government what you have learned.
        Senator McCaskill. Senator Webb.
        Senator Webb. Thank you, Madam Chairman, and
    congratulations on your newly-assumed position, and as well as
    Senator Ayotte.
        There are a lot of things that I would like to discuss as
    the year goes forward. Particularly, we just had some
    discussion on the BRAC implementation difficulties. We have a
    number of similar funding situations in Virginia, because we
    have so many military installations.
        But, what I wanted to convey today is how strongly I
    believe we need to move forward in a time-sensitive way with
    the situation on Okinawa and Guam. This has been something of a
    hot potato from one administration to another. I know,
    Secretary Pfannenstiel, you're talking about how you're
    inundated with information right now, you're behind the
    information flow. The first agreement was made in 1996--it's 15
    years ago--and we have a very tumultuous situation in Japan
    right now, which may impact the decisionmaking.
        But, when we talk about the $6 billion, we have to put it
    in the context of how the Japanese have been such a cooperative
    partner since the end of World War II. This is an issue that is
    extremely important to our relationship with Japan, as well as
    to the future of our presence in the Pacific. This is sort of a
    full-faith issue with the Japanese. A lot of people don't
    realize how much they have put into our infrastructure on
    Okinawa, as well. They pay administrative costs. I was in
    Okinawa, as a marine in 1969, and there were nothing but
    Quonset huts out there. But, the Japanese have paid for the
    types of facilities where our people have lived, hosted our
    bases. It's just not conceivable to me, given the strength of
    our alliance, but, in international legal terms, they could
    turn around and say, ``We don't want you here.'' So, they have
    stepped forward, and the administrative costs for relocating
    from Okinawa to Guam are a part of that.
        But, let's put that into the context of what's just
    happened over there. At a minimum, this is probably a $180
    billion tragedy that hit Japan, with the combinations of the
    earthquake, the tsunami, and the situation they have in their
    nuclear power program.
        But, the questions that I have, and the concerns that I
    have on Okinawa and Guam, go more to whether or not we have
    properly planned the relocation itself, in terms of military
    force structure and those sorts of things.
        As I think some of you know, I worked as a military planner
    out there in the 1970s. I either walked or drove every square
    inch of Guam, Tinian, Saipan, and went up to the training bases
    in Okinawa. I did a facilities analysis there. Force-structure
    changes, the nature of our military changes, but in islands,
    the area of an island doesn't change. The percentage of Guam,
    particularly that's in military retention areas, really hasn't
    changed.
        I went back last February, to Okinawa and to Guam. I was
    surprised at the plans that they were putting into place on
    Guam. We had some good meetings. I noticed, in your testimony,
    there--I think there was some good response to some of those
    meetings. We're going back again next month. Chairman Levin and
    I are planning to go back and meet with people out there again
    and have this discussion.
        So, point number one would be, I hope we could do a--and
    this may go to your comment, Senator McCaskill, about a
    timeout. I don't think we need a timeout, but I think we need
    to make sure that we are moving into the right structure before
    we put this forward. I don't think the 2014 goal was doable,
    either on Okinawa or Guam. I said that last year, when I came
    back.
        If nothing else, I think the last 2 weeks has again
    reinforced the importance of our military bases in Japan to the
    Japanese people. Our military people are up there right now
    assisting with the horrendous circumstances up in northern
    Japan.
        But, I really believe that we need to sit down and take a
    hard look at the planning that has been done for Guam, and,
    potentially, to look at a different way to leave the Futenma
    base on Okinawa, instead of building this mammoth structure,
    which I went out and visited last year. So, that's not going
    back to square one. Hopefully, with some real energy, maybe we
    could sit down and make sure we're doing it the right way.
        One particular point, and then I would like to hear some
    response. When I was doing the planning, all those years ago,
    no one was thinking that the marines who would be on Guam and
    Tinian, would, by and large, be a permanent change-of-station
    force. In other words, this would not have been 3-year tours.
    It would have been rotational tours. What's the difference in
    that? The difference is, we're saying we're going to put 8,000
    marines on Guam. If you put 8,000 marines, rotating from Hawaii
    or some other place, that's 8,000 marines on short tours. But,
    if you put 8,000 marines under permanent change of station down
    there, you're talking probably 23,000 people--totally different
    infrastructure with schools, hospitals, roads, et cetera.
        So, where are we on this? I asked Secretary Mabus, a couple
    of weeks ago. But, what are your thoughts here?
        Ms. Pfannenstiel. Senator, what you said is exactly what we
    have been struggling with--there are changes of circumstance.
    The 2014 date, that was originally put out as the completion
    date, looks harder and harder to achieve, when we have made the
    commitment to the people in Guam that we will not overwhelm
    their infrastructure. So to try to bring in the work crews and
    to do the work that needs to be done by 2014, seems hard to
    picture. We have agreed that we will slow down the process, as
    necessary, to avoid overwhelming the infrastructure.
        But, back to your point about, are we bringing in 8,000
    permanent marines with families? That was the original
    agreement. You're correct, that's an enormous number of people,
    given the population of Guam is 170,000. So, we need to work
    with the people of Guam. We are doing that. So, all of this has
    given us a lot to think about, a lot of changes to the way we
    were originally thinking.
        When we've been asked for a master plan, or a plan of when
    and where and how much and what projects, we've been putting
    that together. We are doing the full sum assessment of what
    makes sense on Guam, what makes sense in the Pacific. This is
    part of it. We believe that the projects that we now are
    looking at will work, either way, but we're still building to
    move the marines that we need to have on Guam. We're building
    the facilities for them to be there. The timing and the
    structure is what we are struggling with now.
        Senator Webb. Okay. I'm looking forward to going back next
    month. I think our trip is still going to be on.
        Just a couple of things I hope you would put into the
    formula when you're thinking about this is, I was surprised,
    last year, at how little Tinian was being planned on--the use
    of Tinian is--29 square miles, most of it's uninhabited. There
    would be ways to make better use of Tinian, particularly with
    ranges. But, I don't want to get into details that--the marines
    would have much better recommendations than I would. But, there
    are ways to use Tinian that really weren't being thought about
    or considered last year.
        The other is how important it is to resolve the issues on
    Okinawa in a timely way. To do so, I think, with a respect for
    what the Japanese have contributed. I don't see a lot of that
    up here. It kind of surprises me.
        Thank you, Madam Chairman.
        Ms. Pfannenstiel. Thank you.
        Senator McCaskill. Thank you, Senator Webb.
        There are many things I can say about Senator Webb. I'm
    going to miss his friendship in the Senate. But, this committee
    is really going to miss Senator Webb, because of his
    experiences and expertise, particularly in the part of the
    world we're talking about.
        I think what we're both saying, maybe in different ways,
    is, there needs to be a plan. We need to make sure the plan
    makes sense and it's clear to everyone before we begin
    investing serious amounts of money, so that we know exactly
    what the way forward is. I'll look forward to visiting with
    Senator Webb when he gets back from his trip so that, together,
    we can try to do the best job possible.
        Certainly, I think we, especially at this time, need to
    remember the special relationship we have with the Japanese
    people and what they have done for our country over the last
    decades.
        I want to talk about BRAC bid savings and where that money
    goes. There clearly is some bid savings in BRAC. Frankly, I
    want to know if there's bid savings other places, over the last
    2 years, in the MILCON budget. Do we need to talk about whether
    or not that money goes back to the Treasury to reduce our
    deficit or whether that's found money that can be spent other
    places?
        Dr. Robyn. Let me say two things. One of them I was tempted
    to say earlier, when you were talking about the health center.
    I think--we can argue--I think the current issue over bid
    savings has to do with $20 million that we would like to
    reprogram from BRAC bid savings to begin to carry out some
    short- and medium-term transportation improvements at the Mark
    Center, where we are going to have a horrendous impact on
    transportation, not just on our own employees, but on tens of
    thousands of innocent commuters. We believe that falls within
    our discretion in implementing BRAC.
        BRAC is one of those big savings things. We are going to
    realize $4 billion a year in savings from BRAC. That's the
    biggest BRAC, in terms of savings. If you take all the BRACs
    together, it's, I think, $11 billion. So, that's big. The money
    that we spend on the OEA is peanuts by comparison. The money
    that we spend on facilities and traffic improvements to better
    implement BRAC, that's small.
        I agree, every project should be justified, and we believe
    it is. We have an internal process for doing that. There will
    be savings at the end of the day. But, I want to just keep our
    eye on the ball of the huge, multibillion-dollar savings that
    BRAC is going to bring about.
        Senator McCaskill. Although it was not as large as
    projected.
        Ms. Pfannenstiel. The savings?
        Senator McCaskill. We have a $20 billion shortfall in
    projected savings that have not been realized over what was
    originally set out, in terms of BRAC savings.
        Ms. Pfannenstiel. Correct. I think what you're referring to
    is that we originally said BRAC would cost $21 billion to
    implement. You spend money upfront in order to save it later
    on, with BRAC. We estimated, for purposes of internal analysis,
    using something called the COBRA model, that the costs would be
    $21 billion. At the end of the day, it will be $35 billion,
    which, yes, that means that your savings are fewer. I could go
    into the COBRA model and why that's not accurate. But, I think
    most of that $14 billion gap, was a result of decisions by the
    Department to meet needs that they felt were not being met. So,
    rather than do a renovation, do new constructions, do a more
    fundamental renovation to better serve the mission, this BRAC
    was not about getting rid of excess capacity, it was about
    better--having our facilities better suit our mission. There
    was a decision--and, granted, it was in a different fiscal
    climate--but, to spend this money in order to have our
    facilities be better suited to meet the mission.
        Senator McCaskill. Let me get back to what my original
    question is, when we have bid savings, I think we had
    rescissions in the Federal Aviation Administration bill that
    was $340 million from the Army on BRAC bid savings, $110
    million from the Navy, and $50 million from the Air Force. I
    know there probably have been bid savings in MILCON over the
    last couple of years. The question is, should bid savings be
    allowed to be reprogrammed, or should bid savings go back to
    the taxpayers to reduce the overall pricetag, since the savings
    belong to taxpayers?
        Dr. Robyn. Let me speak to BRAC, because I honestly don't
    know how it works on MILCON. The fact that you have bid savings
    doesn't mean you spend them.
        Senator McCaskill. If you planned----
        Dr. Robyn. No, that's definitely not our policy.
        Senator McCaskill. Good.
        Dr. Robyn. Keep in mind, with respect to BRAC, the
    construction climate--the first--up until 2008, we were
    experiencing unexpected increases in construction prices. To
    make Fort Belvoir and Bethesda world class, which is what
    Congress asked us to do, midway through, we took bid savings
    and applied to that. We had to come up with a additional money
    when the construction industry was bad. Now we are seeing bid
    savings, because--one of the silver linings.
        But, no, it is not our policy to spend bid savings merely
    because they are there.
        Senator McCaskill. You don't have to answer this today,
    because I don't mean to put you too much on the spot,
    especially at your first hearing--but, I think that I would
    like to hear back from the Secretary about whether or not we
    should include in the defense authorization language that bid
    savings are returned to the Treasury. Obviously, if you need
    more money, then you come back to us and ask for it. Generally
    speaking, I think you've been given it when there's been
    shortfalls. I don't think we've ever left the military hanging
    when a project has been more expensive than anticipated. In
    fact, we could have a hearing that lasted a long, long time
    talking about how many times we've come back and added more
    money when the estimates were too low.
        Dr. Robyn. Right.
        [The information referred to follows:]

        The Department uses bid savings to offset military construction
    general reductions, offset cost overruns in other projects, and fund
    contract modifications and options. Returning bid savings to the
    Treasury would negatively impact the Department's flexibility to
    address emergent requirements such as restoration projects necessitated
    by weather related damage, cost overruns on construction projects, and
    project cost increases due to necessary project modifications or
    contractor claims. Using bid savings as a source of funding prevents
    unnecessary delays and enables project completion on schedule to
    support mission requirements.
        Additionally, the reprogramming of military construction funds is a
    formal process that requires congressional approval through the House
    and Senate Appropriations Committees.

        Senator McCaskill. I just would like the taxpayers to get
    the benefit when the estimates are too high, as opposed to it
    being reprogrammed. I won't put any of you on the spot in that
    regard, but you should--fair warning that it's coming down the
    pike.
        Let me also talk about data centers and high-performance
    computing centers at Fort Meade--$860 million. DOD is building
    a similar facility in Utah, at a cost of more than $1.5
    billion, Secretary Hammack, in the budget request; $246
    million, this year, for a facility; and next year's request is
    supposed to be $175 million. I think we have to have computing
    power and data centers. Obviously, they have to be done right,
    because it's a critical component of our national defense. But,
    are we confident that we are building these facilities at a
    comparable cost that they might be built in the civilian
    sector? Are we confident that these aren't more expensive that
    we need or more duplicative than we need? Have we done some
    lessons learned from data centers that we've built? Are those
    being incorporated in the new versions of those same types of
    facilities?
        Ms. Hammack. A lot of questions there. Let me address,
    first of all, that we do have a data center consolidation plan,
    where we intend to reduce the number of data centers we have by
    over 50 percent; could be as much as 75 percent. Part of that
    is leveraging new technology. The new technology enables us to
    do more in a smaller square footage that uses less energy.
    That--those are the key objectives of our data center program.
        [The information referred to follows:]

        As mentioned earlier, the Army's Data Center Consolidation Plan
    focuses primarily on consolidating data centers to existing Defense
    Enterprise Computing Centers (DECCs) operated by the Defense
    Information Systems Agency (DISA). While the Army Data Center
    Consolidation Plan (ADCCP) does not include building more data centers,
    the Army did consult with industry and conduct an internal Base
    Realignment and Closure audit to capture lessons learned during
    consolidation. Key lessons incorporated in the ADCCP include centrally
    managing consolidation and eliminating redundant or legacy applications
    prior to consolidation.
        The Army's decision to consolidate primarily to DECCs resulted from
    consultation with both industry and the DISA.

        Senator McCaskill. Then I hope that you can provide the
    committee some guidance as to what the plan is in that regard.
    Because, I don't want to build new ones if we're getting ready
    to consolidate, unless we have already identified that we're
    consolidating existing ones into the new ones we're building.
        I have one related question, if you all will bear with me.
    Secretary Pfannenstiel, we have a data center in Kansas City
    for the Marine Corps. We learned, very recently, frankly, not
    exactly from the Marine Corps, that there were potential plans
    to move that center, and that it would involve building a new
    building in a different location. I am trying to figure out
    what the rationale is for that move, if it is something that is
    needs-based. Because, you can't make a move--and even if
    another location is offering to bill the money, they're doing
    that with public dollars. It all comes from taxpayers
    somewhere.
        Ms. Pfannenstiel. I understand. Madam Chairman, I will have
    to take that for the record and get back to you.
        [The information referred to follows:]

        The Marine Corps is reviewing a number of locations for an IT
    Center. A decision on whether or not to relocate the information
    technology organizations will be made in the spring 2012.
        The Marine Corps is conducting a risk analysis on the cost of
    moving to a different location that includes both equipment and
    personnel. It is uncertain at this time whether the current building,
    owned by the General Services Administration, is suitable as a
    permanent solution. We have learned that the building, while having
    good potential as a permanent facility, does have some possible
    environmental and safety issues. Along with selecting the best site
    available, it is equally important to maintain and hire a qualified
    information technology staff for all our programs now and into the
    future. Other factors we are considering are the facility cost,
    workforce relocation, transition costs, and suitability of a facility
    to meet information technology security and force protection
    requirements. We welcome any additional input you may have for this
    important decision.
        We share the concerns regarding the budgetary and fiscal challenges
    confronting the Department and are committed to ensuring the
    responsible stewardship of the taxpayers' funds.

        Senator McCaskill. Okay.
        Senator Ayotte.
        Senator Ayotte. Secretary Pfannenstiel, just a brief
    followup to a question that Senator Shaheen had asked having to
    do with the Portsmouth Naval Shipyard. Secretary Mabus had
    testified before the Armed Services Committee about the Navy
    looking at moving up the P266 project to improve maintenance
    for critical Navy readiness. But also, he identified that we
    might be able to save $8 billion to do that sooner, in fiscal
    year 2012. Right now it's in fiscal year 2015. So, I obviously,
    would ask your thought on that. The Secretary seemed very open
    to that. I think that makes sense, if we can--assuming we
    move--once we move forward with the full appropriation for this
    fiscal year--please know that we're very concerned about that,
    as well--but, that you would consider moving that up.
        Ms. Pfannenstiel. I did hear that exchange, and, as I
    remember, the conclusion was that he would go back and look at
    that and see if that makes sense. So, I'll certainly do that,
    Senator.
        [The information referred to follows:]

        The Navy will continue to assess all Military Construction (MILCON)
    requirements, to include the Portsmouth Naval Shipyard Structural Shop
    Consolidation Project (P266), in future budget requests as we balance
    risk across the Navy and provide the most capability within fiscal
    constraints.
        The Navy continues to invest in the Portsmouth Naval Shipyard
    infrastructure within today's fiscally constrained environment through
    Sustainment (ST), Restoration and Modernization (RM), and MILCON. In
    fiscal year 2010, the Navy executed eight operation and maintenance
    (O&M) (ST and RM) special projects at Portsmouth Naval Shipyard (PNSY)
    with a total value of $40.9 million. In fiscal year 2011, the Navy
    planned additional special projects, valued at $17 million, to repair
    and enable certification of Dry Dock #1. However, these projects are
    currently on hold due to the Continuing Resolution. Finally, in fiscal
    year 2012, the Navy plans to invest $100.3 million in four Energy
    special projects at PNSY.

        Senator Ayotte. Thank you very much.
        In the fiscal year 2012 budget, you have $100 million for
    MILCON in Bahrain. One of the issues I just hope you will
    address is, given the unrest there, whether it makes sense to
    invest that money right now, until we know what the outcome is
    going to be.
        Ms. Pfannenstiel. Clearly, there are a lot of events in the
    world that we're waiting for the outcome. But, Bahrain is a
    very important base for us. It is the home of the 5th Fleet,
    and remains a place that, for the foreseeable future certainly,
    will be important to us. So, the dollars that we have in the
    fiscal year 2012 proposal, I would strongly support, still.
        Senator Ayotte. Okay. I just wanted to check on that, given
    the current world situation.
        Thank you very much.
        Senator McCaskill. Senator Shaheen.
        Senator Shaheen. Yes, thank you. I just have one other
    question for Secretary Hammack, actually.
        I understand the Army is soon going to announce its plans
    for Europe, whether it will leave four BCTs in Europe, as
    proposed by the Quadrennial Defense Review, or scaled down, or
    do something in between. Can you give us any insights on what
    that new force structure in Europe is going to look like?
    Obviously, the decision is going to have a large impact on
    installations, not only in Europe, but here in the United
    States.
        Ms. Hammack. That decision has not been made yet. It is
    under consideration, and we expect an announcement to be made
    by the end of this month. At least, that is the current intent.
    But, our strategy--our investment strategy in Germany is one of
    consolidation. So, in my opening statement, I mentioned that we
    have closed 91 sites over the last 5 years, and returned 28,000
    acres to the German Government. In the next 5 years, we plan to
    close another 29 sites and return 7,000 acres to the German
    Government. The sites in which we have MILCON dollars requested
    are those that we have determined to be enduring missions,
    regardless of the stationing decisions. They are locations
    where we will continue to have a presence. We desperately need
    the money for that infrastructure and to support our
    servicemen.
        Senator Shaheen. Have we heard any concerns, either from
    the Germans or our other European allies, about what's being
    discussed?
        Ms. Hammack. Any stationing decision, especially when we
    are leaving a country, we have to consider the Status of Forces
    Agreement (SOFA). So, we are complying with any required
    disclosures in the SOFA.
        Senator Shaheen. So, have we heard any concerns, as a
    result of those SOFA, from any of our allies?
        Ms. Hammack. We have heard from them that, in some of the
    bases or sites that we are closing, they would wish we would
    stay, because we are an economic engine in the local area.
        In other areas, I won't say they're glad we're leaving, but
    they have identified alternate uses for the facilities, one of
    which is to use as a university campus, because it has
    dormitories and it has classroom buildings.
        So, we are working with the local area and with the German
    Government to determine what is appropriate on our stationing
    area.
        Senator Shaheen. To what extent will those concerns of our
    allies influence our decision? Or, how are they factored in?
        Ms. Hammack. The stationing decision in Europe has been
    discussed at several NATO meetings. So, it is something that is
    being discussed with all of our allies to ensure that we are
    adequately participating in the NATO alliances.
        Senator Shaheen. Thank you.
        Thank you, Madam Chair.
        Senator McCaskill. Thank you.
        I have a pet peeve about temporary structures. One of my
    very first lessons, when I came to the Senate in the Armed
    Services Committee, had to do with something that was called a
    temporary structure, that ended up being AMC, down at Fort
    Belvoir. I took a trip down to see this temporary structure. I
    can assure you, in Missouri, this would never be called a
    temporary structure. It looked like, to me, the temporary
    structure was used to avoid MILCON, that it was just an attempt
    to do an end-round around the long and difficult process of
    obtaining the MILCON authorization. In fact, I'm confident
    that's what it was--that it was an end around MILCON.
        Now, my first question is, do any of you know of a
    relocatable structure that has been relocated?
        Ms. Hammack. I guess I'll take that one, because I know we
    have a lot of relocatables. The relocatables have been used as
    flex space to compensate for restationing decisions when we are
    awaiting MILCON projects. So quite often they are called
    ``swing space.'' I will venture to say that they haven't been
    relocated, but they have been auctioned off or disposed of, and
    the area in which they were located used for an alternate
    purpose. The fact that they did not have dense infrastructure
    as part of it made it easier to construct on that site.
        Because of our growth by 50,000 soldiers, we have had to
    use relocatable buildings, because we have not had the time or
    the ability to put together the required documents and requests
    for MILCON authorization. So, MILCON quite often follows a
    decision to utilize a relocatable building.
        Senator McCaskill. As an auditor, I'm pretty confident that
    if I had the time and the staff, I could figure out that
    relocatables cost our military a lot of money that we didn't
    need to spend. I understand your answer. But, what I'm most
    concerned about is fixing it and getting out of this very bad
    habit, that you can put up a great big building and somehow
    have a fantasy that it's temporary.
        Even worse, the building that really got my eyes wide open
    as to how this could possibly work, we were leasing it, and
    guess what we ended up doing after we leased it for 4 or 5
    years? We bought it. So, let me see if I get this straight. It
    wasn't temporary. We got around MILCON. We put it up. We paid a
    really high amount to lease it for a number of years, and then
    we turned around and bought it. I would have liked that deal on
    the other end.
        The GAO report came out and said there was not a proper
    means to collect and maintain consistent data on the number and
    cost of relocatables. The year after that, they doubled. We
    still don't have some kind of plan that can reassure this
    committee and--in our oversight function, that relocatables are
    a good value for the taxpayers.
        If we've made MILCON too hard, then let's figure out a way
    to make MILCON easier. But, let's don't waste a lot of money
    because we are going to fill in the gap until we get the MILCON
    money. It's almost like the bureaucracy has assured that we're
    going to pay twice as much, or a third more than we need to,
    for the space that we need to construct for our military
    services.
        So, I will await, with interest, a report from all of you
    about relocatables that have been relocated and any analysis
    that you have ever done about what the real cost of
    relocatables have been and whether or not they have been leased
    and eventually purchased. I'm going to continue to stay on
    this. So, you just, like, got to know, when you're getting
    ready to do one of these, ``Okay. She's going to yell about
    this.'' Because, I really do think that this is an area that
    we've wasted a lot of money.
        [The information referred to follows:]

        Dr. Robyn. The Military Services acquire relocatable facilities to
    meet viable needs that cannot be met in a timely fashion through
    military construction. Relocatable facilities are used to support
    reorganizing or relocating units until their permanent facilities are
    available, provide swing space for buildings undergoing renovation, and
    accommodate surge requirements.
        Our challenge is to ensure that relocatable facilities are acquired
    only when absolutely necessary, and that they are properly disposed of
    when they are no longer needed to meet their original purpose. My staff
    is working on improving our oversight of the use of relocatable
    facilities through the issuance of clear guidance, and the
    establishment of standard reporting requirements. The Department is
    nearing completion of a report that will provide additional detail on
    the number of relocatable facilities, where they are located, and the
    plan to replace or eliminate them.
        Ms. Hammack. In the Army, the authority to acquire relocatable
    buildings has been delegated to the Senior Commanders of HQ,
    Installation Management Command, Army Materiel Command, U.S. Army Corps
    of Engineers, Medical Command, Strategic Missile Defense Command, U.S.
    Army Reserve, and Army National Guard. These organizations have
    installation or garrison responsibilities.
        Since 2004, the Army has spent over $1 billion acquiring
    relocatable buildings, providing about 10 million square feet of
    facility space. As of the fiscal year 2012 President's budget request,
    permanent military construction has been completed or is in progress,
    to replace 1,010 relocatables (approximately 33 percent of the
    inventory). Another 582 relocatables have replacement construction
    programmed in fiscal year 2012-2016. This will result in approximately
    52 percent of the Army's inventory of relocatables being replaced with
    permanent facilities by fiscal year 2016.
        The balance of relocatable space is being examined to match
    permanent requirements with permanent facilities. The Army is
    aggressively working to ensure that these replacement projects receive
    the highest priority and that construction is completed before the 6
    year term use for relocatable facilities expires.
        Additionally, relocatable facilities supporting temporary missions
    (i.e. transitory peak military missions, deployments, military
    contingency operations, disaster relief requirements, and fielding
    exercises) do not require replacement military construction and will be
    disposed of at the expiration of the approved relocatable period. The
    Army is improving the management of relocatable buildings through
    updating its regulation, increased leadership focus, and a bottoms-up
    review on its utilization.
        Ms. Pfannenstiel. The Navy's policy on the procurement, lease, and
    use of relocatable buildings, OPNAVINST 11010.33C, states ``the use of
    relocatable buildings is not an acceptable means of providing
    facilities for long-term needs.''
        The Navy remains committed to minimizing the use of relocatable
    buildings. Navy requires additional time to conduct a full analysis of
    the inventory, including purchase and lease costs.
        Mr. Yonkers. Relocatable/Temporary Use Facility information is
    provided by the Air Force Major Commands on an annual basis. The report
    includes cost data, whether the facility is leased or owned, and the
    proposed future use or disposal plan for each facility.
        As of the 2010 Annual Comprehensive Temporary Use Facilities
    Report, the Air Force is tracking 506 relocatable/temporary facilities.
    62 facilities were removed or demolished in 2010. Of those, 52 were
    owned, 9 were leased, and 1 is a facility that has been re-leased to
    another customer in-place. The total costs reported in the 2010 report
    are $2.7 million for the owned facilities, with an average cost of
    $774,000; $1.3 million for the leased facilities, with an average cost
    of $140,000. There were no reported conversions to real property;
    however, 13 owned facilities that cost $13.8 million are identified for
    future conversion.
        Information consolidated from 2006 through 2009 reveal that 126
    temporary facilities have been removed or demolished. 84 were owned at
    cost of $2.1 million ($101,000 average), 41 were leased at a cost of
    $13.2 million ($306,000 average), 29 facilities that cost $4.0 million
    were converted to real property; all were owned, not leased prior to
    conversion. Although minor trends can be identified from year to year,
    the only overall general trend that can be inferred is an increase in
    the number of temporary facilities removed or demolished per year. The
    cost data, as collected, does not support any overall trends due to the
    widely varying type, size, and required length of service for each
    individual facility.

        Dr. Robyn. Senator?
        Senator McCaskill. Yes.
        Dr. Robyn. Could I just add to your list of negatives about
    relocatables? They're real energy hogs.
        Senator McCaskill. Yes. There's another good one. Energy
    hogs.
        Let me, finally--the last question I have is for Secretary
    Yonkers about a phase IV of the dormitory complex in Qatar.
    It's my understanding that's rotational, and it's 4,900 rooms
    billeted for 6,200 folks, which means that the majority of the
    people will be in rooms by themselves. We have a number of
    airmen living in inadequate housing on a permanent basis that
    are unaccompanied, I need to hear from the Air Force about the
    policy to build housing to a 1+1 standard. Is this a change?
        Mr. Yonkers. Madam Chairman, you are catching me really
    flatfooted on this one.
        Senator McCaskill. Okay.
        Mr. Yonkers. I'll take it for the record.
        [The information referred to follows:]

        The dormitory standard used in Qatar is the U.S. Central Command
    (CENTCOM) standard--that is, rotational forces are billeted at a 2+2
    density and permanent party forces are billeted at 1+1. The total room
    requirement is based on enduring steady state requirements, post
    Operations Enduring Freedom and New Dawn. The planning factor is 2+2
    configuration for 3,000 rotational personnel, 1+1 configuration for
    3,000 steady state permanent party personnel, and 1+0 for commanders
    and chiefs. During the current contingency surge, many rooms are
    occupied 2+2.
        It is important to note that we validate the requirements at Al
    Udeid in the context of the long-term global posture dictated by the
    Commander, CENTCOM, while noting that the Air Force has conducted
    continuous operations in this region since the Gulf War in 1990/1991.
    So while we use the term rotational above, in reflection of the nature
    of the Air Expeditionary Task Forces (AETFs) that deploy to Al Udeid,
    we build support facilities for these AETFs with as much flexibility as
    possible. The Air Force has been deploying to the Mideast, and to Al
    Udeid in particular, for a very long time, and throughout that history
    we have surged many times in response to regional challenges. The key
    flexibility inherent in the 4,900-room Blatchford-Preston Complex is
    the variety of room configurations pointed out in your question. The
    4,900 rooms support the global long-term posture of 6,200 Air Force
    personnel and negate the need for costly continual recapitalization of
    temporary facilities. Those same 4,900 rooms also allow the Air Force
    to quickly surge to different room configurations handling ever larger
    number of personnel--very easily the Air Force could increase the
    number of personnel housed in a 2+2 configuration from the 3,000 above
    and increasing the overall occupancy in the complex significantly. This
    flexibility enables much more rapid response to the ever shifting
    strategic environment.
        Bottom line--we're building long-term facilities based on the
    mandated global posture . . . but we are ensuring the room sizes and
    infrastructure provided are as flexible as they can be.

        Senator McCaskill. That's great.
        Mr. Yonkers. But one-plus-one is sort of the standard for
    the Air Force. I do not know how that works out over in Qatar.
        Senator McCaskill. Okay. If you would get back to us on
    that, that would be terrific.
        I have a lot of other questions here. We will ask them for
    the record. I think the staff gave me a lot of choices here,
    and they all looked good to me, along with some that I added
    myself.
        I must admit that I am--the temporary-building thing had my
    attention very early in my career on this committee, and it has
    kept my attention, because I think it's symbolic of some of the
    issues that we have to address as we try to shrink the amount
    of money we spend, but not the quality of the military that we
    are putting on the field.
        I want to certainly give both our Senators here another
    opportunity to question, if you have anything else.
        Senator Ayotte. No, thank you, Madam Chairman.
        I would just add that I have a whole host of questions that
    I'm going to submit for the record, as well.
        So, I appreciate what all of you are doing, and your
    responses.
        Thank you.
        Senator McCaskill. The final thing I will say is that, as
    you all probably know, I have never participated in the
    earmarking process. As chairman of this subcommittee, I know
    that the entire Congress has adopted that position, for now. I
    don't know how long it will last. Maybe we've turned a corner.
    I'm hopeful, but we might not have. There are all kinds of
    assumptions that are made. Sometimes there have been budgets
    that have been submitted, knowing that there were going to be
    certain earmarks that were going to be added, and therefore,
    there was no reason for DOD to put it in the budget. Everyone
    was confident that that would get marked on as a plus-up or an
    add-on to the military's budget. Of course, we cut things to
    find room for earmarks in the Defense authorization bill and
    other places in Congress.
        So, we're going to still try to do what we've done in the
    past, and that is, find savings. It will be my goal that those
    savings go back to the Treasury. But, I did want to at least
    notify everyone that, as long as I have the honor of chairing
    this subcommittee, this subcommittee will not be turning in an
    earmarked document to the full committee.
        Dr. Robyn. Could I say--first of all, thank you very much.
    I think all of us are really excited about working with you in
    this new environment.
        I want to say something that hasn't come up. I think we all
    are also sometimes surprised at how expensive it is to do
    things, how much we have to spend to--on this--in this part of
    DOD. But, this is--we're--this is the part of DOD that, in many
    parts of it, can run more like a business. Jackie and I are
    economists; we are continually surprised at DOD's lack of use
    of the leverage of the broader commercial economy. The single
    most significant thing I think we've done in this area is to
    privatize family housing. The service is chronically
    underinvested in it. We had 200,000 units of inadequate private
    family housing. We privatized it, immediately changed the
    incentives, and it's a tremendous success story--$3 billion of
    investment by DOD, $30 billion worth of private housing, with
    the owners having the incentive to maintain it.
        So, with your help, we want to do more of that kind of
    thing. When you do competitive outsourcing, which we can no
    longer do, you create losers. So with your help, I think we can
    do this. But, I think it requires more competition, more
    outsourcing, more privatization. I think this is the climate in
    which to take advantage of that. But, it does require your
    help.
        Thank you.
        Senator McCaskill. I think maybe we could start with the
    data centers.
        Thank you all for being here today. We'll look forward to
    working with you throughout the year.
        [Questions for the record with answers supplied follow:]

                Questions Submitted by Senator Claire McCaskill

                 LANDSTUHL REGIONAL MEDICAL CENTER REPLACEMENT

        1. Senator McCaskill. Dr. Robyn, Secretary Hammack, Secretary
    Pfannenstiel, and Secretary Yonkers, this year's budget request
    contains the first increment of funding for a hospital at Rhine
    Ordinance Barracks to replace Landstuhl Regional Medical Center. The
    project would be authorized at $1.196 billion. According to the
    justification documents the Department of Defense (DOD) has provided,
    this facility will provide direct medical services to 31,000 enrolled
    beneficiaries and be the contingency casualty evacuation location for
    U.S. European Command (EUCOM), U.S. Central Command (CENTCOM), and U.S.
    Africa Command (AFRICOM). I understand our desire to build our medical
    facilities to a world-class standard, but do we really need a $1.2
    billion hospital?
        Dr. Robyn. This project consolidates Landstuhl and Ramstein medical
    capabilities into one convenient location 8 miles closer to Ramstein
    Air Base in the Kaiserslautern community. This location reduces wounded
    warrior casualty transit times to medical care from as much as 45
    minutes across public roads to less than 5 minutes on DOD controlled
    roads.
        The size and cost of the Kaiserslautern replacement medical
    facility is the minimum necessary to meet peacetime requirements while
    allowing the flexibility to meet contingency surge demands. In addition
    to the 31,000 beneficiaries supported in the immediate Kaiserslautern
    Military Community, this facility serves a catchment population (within
    a 55-mile radius) of 73,000 beneficiaries, and specialty medical
    referrals coming from another 172,000 beneficiaries located across
    EUCOM.
        The facility will comply with world-class standards and evidence-
    based design principles. The hospital's size and cost are consistent
    with newly constructed peer facilities with similar patient loads and
    requirements. The facility will include built-in capabilities to meet
    its peacetime beneficiary demands and smoothly transition to address
    contingency operations when necessary.
        The replacement project included in the fiscal year 2012
    President's budget is a cost-effective solution to the challenges and
    risks facing our servicemembers and their families. The sizeable
    peacetime beneficiary population that would rely on this facility will
    fully utilize its capabilities and capacity.
        Ms. Hammack. A military medical facility in the Kaiserslautern area
    is a strategic national asset that is precisely placed to meet the
    expectations of our citizens to provide the highest quality healthcare
    for their sons, daughters, and spouses. This recapitalized medical
    center will be perfectly located at the premier airbase supporting
    three theaters, a catchment population (within a 55-mile radius) of
    73,000 beneficiaries, and specialty medical referrals coming from
    another 172,000 beneficiaries located in the EUCOM area.
        The current facilities, created from 1950-vintage buildings, have
    served us well but are now in failing condition and unable to meet the
    demands of modern medicine. We clearly need to replace our military
    healthcare facilities in the Kaiserslautern Area. This project
    consolidates Landstuhl and Ramstein medical requirements into one
    location 8 miles closer to Ramstein Air Base. This location reduces
    wounded warrior casualty transit times to medical care from as much as
    45 minutes across public roads to less than 5 minutes on DOD controlled
    roads. The new medical facility will continue to provide a critical,
    enduring platform for maintaining the ready medical force that is
    essential to delivering the highest possible quality of care to our
    military worldwide.
        The size and cost of the Kaiserslautern replacement medical
    facility is the minimum necessary to meet peacetime requirements while
    allowing the flexibility to meet contingency surge demands. The
    facility will comply with world-class standards and evidence-based
    design principles. The hospital's size and cost are consistent with
    newly constructed peer facilities with similar patient loads and
    requirements. The facility will include built-in capabilities to meet
    its peacetime beneficiary demands and smoothly transition to address
    contingency operations when necessary.
        The replacement project included in the fiscal year 2012
    President's budget is a cost-effective solution to the challenges and
    risks facing our servicemembers and their families.
        Ms. Pfannenstiel. The Department of the Navy (DON) is not directly
    responsible for this issue, and therefore DON does not have an opinion
    or response relating to this issue.
        Mr. Yonkers. A military medical facility in the Kaiserslautern area
    is a strategic national asset that is precisely placed to meet the
    expectations of our citizens to provide the highest quality healthcare
    for their sons, daughters, and spouses. This recapitalized medical
    center will be perfectly located at the premier airbase supporting 3
    theaters, a catchment population (within a 55-mile radius) of 73,000
    beneficiaries, and specialty medical referrals coming from another
    172,000 beneficiaries located in the EUCOM area.
        The current facilities, created from 1950-vintage buildings, have
    served us well but are now too antiquated and inefficient to meet the
    demands of modern medicine. We clearly need to replace our military
    healthcare facilities in the Kaiserslautern Area. This project
    consolidates Landstuhl and Ramstein medical capabilities into one
    convenient location 8 miles closer to Ramstein Air Base. This location
    reduces wounded warrior casualty transit times to medical care from as
    much as 45 minutes across public roads to less than 5 minutes on DOD
    controlled roads. The new medical facility will continue to provide a
    critical, enduring platform for maintaining the ready medical force
    that is essential to delivering the highest possible quality of care to
    our military worldwide.
        The size and cost of the Kaiserslautern replacement medical
    facility is the minimum necessary to meet peacetime requirements while
    allowing the flexibility to meet contingency surge demands. The
    facility will comply with world-class standards and evidence-based
    design principles. The hospital's size and cost are consistent with
    newly constructed peer facilities with similar patient loads and
    requirements. The facility will include built-in capabilities to meet
    its peacetime beneficiary demands and smoothly transition to address
    contingency operations when necessary.
        The replacement project included in the fiscal year 2012
    President's budget is a cost-effective solution to the challenges and
    risks facing our servicemembers and their families. The sizeable
    peacetime beneficiary population that would rely on this facility will
    fully utilize its capabilities and capacity.

        2. Senator McCaskill. Dr. Robyn, Secretary Hammack, Secretary
    Pfannenstiel, and Secretary Yonkers, is this hospital properly sized
    for the population it will serve with a capacity to surge during
    contingency operations, or is it sized to include its surge
    requirements as part of its base standard?
        Dr. Robyn. The hospital replacement project included in the fiscal
    year 2012 President's budget is sized to serve the peacetime
    beneficiary population with the built-in ability for a limited
    expansion to address surge from medium intensity conflicts similar to
    the current Overseas Contingency Operations.
        For example, 50 of the larger medical/surgical single patient rooms
    incorporate additional headwalls (electrical, medical gases, plumbing)
    to allow these rooms to be readily converted from single to dual
    patient use during a contingency surge. This approach provides a cost-
    effective, rapid expansion capability to address emergency surge
    requirements without the need to build a stand-alone surge ward.
        Ms. Hammack. The Department has right sized the Kaiserslautern
    replacement medical facility to ensure that it is a cost effective,
    flexible solution that meets both peacetime beneficiary and warfighter
    needs. The hospital has been sized as a result of a careful analysis of
    the peacetime patient workload; detailed assessment of the new facility
    mission, beneficiaries, and contingency demands; and consideration of
    clinical practice changes and world-class principals that provide the
    best clinical outcomes for costs incurred.
        The hospital project is scoped to meet requirements of the
    peacetime population it will serve. The hospital will include 122
    inpatient beds that will address the peacetime demand, including an
    increase in the number of behavioral health beds to accommodate the
    increased workload in this clinical area. The hospital will include 198
    exam rooms to meet DOD's standard of 2 exam rooms for each full-time
    clinical staff equivalent that will provide outpatient care in the
    consolidated facility. These capacities are slightly less than the
    current capacities of 136 inpatient beds and 205 exams rooms.
        The hospital design provides flexibility to meet surge
    requirements. For example, 50 of the larger medical/surgical single
    patient rooms incorporate additional headwalls (electrical, medical
    gases, plumbing) to allow these rooms to be readily converted from
    single to dual patient use during a contingency surge. This approach
    provides a cost-effective, rapid expansion capability to address
    emergency surge requirements without the need to build a stand-alone
    surge ward.
        The replacement project included in the fiscal year 2012
    President's budget is sized to serve the peacetime beneficiary
    population with the built-in ability for a limited expansion to address
    surge from medium intensity conflicts similar to the current Overseas
    Contingency Operations.
        Ms. Pfannenstiel. DON is not directly responsible for this issue,
    and therefore DON does not have an opinion or response relating to this
    issue.
        Mr. Yonkers. The Kaiserslautern replacement medical facility
    project included in the fiscal year 2012 President's budget is sized to
    serve the peacetime beneficiary population with the built-in ability
    for a limited expansion to address surge from medium intensity
    conflicts similar to the current Overseas Contingency Operations.
        The Department has right-sized the new facility to ensure that it
    is a cost-effective, flexible solution that meets both peacetime
    beneficiary and warfighter needs. The hospital has been sized as a
    result of a careful analysis of the peacetime patient workload;
    detailed assessment of the new facility mission, beneficiaries, and
    contingency demands; and consideration of clinical practice changes and
    world-class principles that provide the best clinical outcomes for
    costs incurred.
        The hospital will include 122 inpatient beds that will address the
    peacetime demand, including an increase in the number of behavioral
    health beds to accommodate the increased workload in this clinical
    area. The hospital will include 198 exam rooms to meet DOD's standard
    of 2 exam rooms for each full-time clinical staff equivalent that will
    provide outpatient care in the consolidated facility.
        The hospital design provides flexibility to meet surge
    requirements. For example, 50 of the larger medical/surgical single
    patient rooms incorporate additional headwalls (electrical, medical
    gases, plumbing) to allow these rooms to be readily converted from
    single to dual patient use during a contingency surge. This approach
    provides a cost-effective, rapid expansion capability to address
    emergency surge requirements without the need to build a stand-alone
    surge ward.

                   OKINAWA/GUAM--FUTENMA REPLACEMENT FACILITY

        3. Senator McCaskill. Secretary Pfannenstiel, there has been a
    consistent linkage between construction of the Futenma Replacement
    Facility (FRF) and the marines moving from Okinawa to Guam. The marines
    will not begin moving until tangible progress has been made on the FRF.
    DOD has consistently defined tangible progress on the FRF as a
    signature by the Governor of Okinawa on a landfill permit needed to
    begin work on the runway. Does DOD still consider tangible progress to
    be the Governor of Okinawa's signature on the landfill permit?
        Ms. Pfannenstiel. We see tangible progress on the FRF, not as a
    single specific event, but rather as a series of steps taken roughly in
    parallel between Japan and the United States, as spelled out in our
    bilateral understandings on the realignment. As the Government of Japan
    makes progress on the FRF, the United States will take associated steps
    to move forward on Guam. There are a number of different indicators of
    this progress, starting with the decision on the runway configuration
    that we expect at the upcoming two-plus-two meeting with Japan, the
    issuance of the landfill permit, the construction of the sea wall, and
    progress on the landfill itself.
        An essential point of our realignment understanding with Japan is
    that preparations for facilities on Guam need to begin well in advance
    of the actual construction of the replacement facility at Camp Schwab.
    It is necessary to ensure that when we are satisfied with the progress
    Japan has made on the FRF, suitable facilities will be available on
    Guam to allow the phased relocation of marines from Okinawa, such that
    any relocation can be sequenced to maintain unit cohesion and
    operational readiness.

        4. Senator McCaskill. Secretary Pfannenstiel, in a best-case
    scenario, what is the time line for signature on the landfill permit?
        Ms. Pfannenstiel. It is my understanding that there may be a
    requirement for the Government of Japan to conduct some additional
    environmental analysis after a decision on the runway configuration for
    the FRF. We are encouraging the Government of Japan to take necessary
    steps to expedite the required environmental assessment work as soon as
    possible after the decision is made and to begin necessary political
    consultations so that they can gain the approval of the Okinawa
    governor for the landfill permit. This is a timeline that is ultimately
    worked out between those two parties.

                         BRIGADE COMBAT TEAMS IN EUROPE

        5. Senator McCaskill. Dr. Robyn, Secretary Hammack, Secretary
    Pfannenstiel, and Secretary Yonkers, with the end of the Cold War, we
    have seen a significant drawdown of U.S. forces in Europe. From a high
    point of approximately 331,000 in 1980 to approximately 116,200 in
    1999, we now have some 79,000 troops stationed in Europe, the bulk of
    which are in Germany, 53,900. From fiscal years 2004 to 2009, the Army
    spent approximately $1.3 billion to implement its infrastructure
    transformation and consolidation plans in Europe, the vast majority of
    which consisted of military construction (MILCON), $957.0 million.
        We were informed that on March 17, 2011, DOD would likely announce
    how many Brigade Combat Teams (BCT) it plans to base in EUCOM. DOD has
    informed this committee that the cumulative cost of having some of
    those BCTs in the United States versus keeping them in Europe is a wash
    over fiscal years 2012 to 2021. A September 2010 Government
    Accountability Office (GAO) study, however, found that the cumulative
    savings from redeploying two BCTs to the United States would be between
    $1 and $2 billion in incremental costs from fiscal years 2012 to 2021
    assuming no rotational costs. Can you please explain this discrepancy?
        Dr. Robyn. Over time the Army has improved the original cost
    estimates by gathering more detailed information and costing data. The
    cost estimates reflected in the GAO Report on Defense Planning reflect
    return dates of fiscal year 2012 for the 170th BCT and fiscal year 2013
    for the 172nd BCT. The Army cost estimates represent a more detailed
    analysis of the cost drivers for European Transformation than
    previously addressed. As stated in the analysis and the report, it is
    more expensive to operate outside of the United States due to increased
    base operations costs and increased military personnel allowances. In
    addition, while the GAO Report assumed no rotational costs, subsequent
    DOD analysis considered the cost of rotational forces that might be
    necessary to meet EUCOM Commander's requested theater mission
    requirements. Generally, rotating forces to meet overseas mission
    requirements off-sets savings derived from having brought those forward
    deployed forces back to CONUS.
        The Secretary of Defense announced in January 2011 that no action
    will occur until fiscal year 2015; the projected cost savings will be
    reduced during the 2012-2021 period as a result of the shifting
    timeline.
        Ms. Hammack. Over time the Army has improved the original cost
    estimates by gathering more detailed information and costing data. The
    cost estimates reflected in the GAO Report on Defense Planning reflect
    return dates of fiscal year 2012 for the 170th BCT and fiscal year 2013
    for the 172nd BCT. The cost estimates reflected in the report represent
    a more detailed analysis of the cost drivers for European
    Transformation than previously addressed. As stated in the analysis and
    the report, it is more expensive to operate outside of the United
    States due to increased base operations costs; increased military
    personnel allowances; and students costs. The $2 billion cost over a
    10-year period does not include the funding of rotational forces to
    meet EUCOM Commander's requested theater mission requirements. To date,
    the Army has not been able to source rotational forces. The majority
    stateside cost driver remains the MILCON required to house returning
    units.
        The Secretary of Defense announced in January 2011 that no action
    on BCTs in Europe will occur until fiscal year 2015; the projected cost
    savings will be reduced during the 2012-2021 period as a result of the
    shifting timeline.
        Ms. Pfannenstiel. DON is not directly responsible for this issue,
    and therefore DON does not have an opinion or response relating to this
    issue.
        Mr. Yonkers. This is an Army focused question and the response
    falls outside the expertise and portfolio of Air Force directorate of
    installations, environment, and logistics. Recommend question be
    forwarded to DOD or the Army.

        6. Senator McCaskill. Dr. Robyn, Secretary Hammack, Secretary
    Pfannenstiel, and Secretary Yonkers, if the ultimate decision is to
    leave three BCTs in Europe, will the fourth BCT be eliminated or will
    it be restationed in the United States?
        Dr. Robyn. DOD has not yet decided whether to eliminate this BCT or
    restation it. The Secretary directed a reduction in the Army's end-
    strength of approximately 27,000 soldiers beginning in 2015, when we
    anticipate a reduced strain on the force from our current operations.
    In light of this decision and the recent Secretary of Defense
    announcement to retain three BCTs in Europe beginning in 2015, the Army
    will conduct a thorough analysis over the next year to determine the
    overall makeup of the force. Stationing decisions will be addressed
    along with other force structure actions at the conclusion of this
    year's Total Army Analysis.
        Ms. Hammack. The Secretary directed a reduction in the Army's end
    strength of approximately 27,000 soldiers beginning in 2015, when we
    anticipate a reduced strain on the force from our current operations.
    In light of this decision and the recent Secretary of Defense
    announcement to retain three BCTs in Europe beginning in 2015, the Army
    will conduct a thorough analysis over the next year to determine the
    overall makeup of the force. Stationing decisions will be addressed
    along with other force structure actions at the conclusion of this
    year's Total Army Analysis.
        Ms. Pfannenstiel. DON is not directly responsible for this issue,
    and therefore DON does not have an opinion or response relating to this
    issue.
        Mr. Yonkers. This is an Army focused question and the response
    falls outside the expertise and portfolio of Air Force directorate of
    installations, environment, and logistics. Recommend question be
    forwarded to DOD or the Army.

        7. Senator McCaskill. Dr. Robyn, Secretary Hammack, Secretary
    Pfannenstiel, and Secretary Yonkers, what is the change in funding
    levels between DOD's original decision to leave two BCTs in Europe and
    the final decision on the number of BCTs remaining in Europe?
        Dr. Robyn. First, DOD will incur a cost increase of $568 million
    associated with retaining four brigades in Europe through fiscal year
    2015 as the 170th BCT and the 172nd BCT were scheduled to return in
    fiscal year 2012 and fiscal year 2013, respectively. This increase is
    mostly associated with military pay allowances, base operations, and
    schools. Second, DOD will realize long-term cost savings of $60
    million annually associated with retaining three brigades in Europe,
    compared to $162 million in annual cost savings under the plan to
    leave two BCTs in Europe.
        Ms. Hammack. In fiscal year 2012, Army is funded to retain the two
    BCTs in Europe. There are no MILCON dollars in the current program
    associated with the two BCTs. DOD will incur increased costs associated
    with retaining four brigades in Europe through fiscal year 2015 as the
    170th BCT and the 172nd BCT were scheduled to return in fiscal year
    2012 and fiscal year 2013, respectively. Increases in costs are mostly
    associated with military pay allowances, base operations, and schools.
    A decision to maintain three BCTs in Europe as a desired end-state will
    be less costly than the current four BCTs.
        Ms. Pfannenstiel. DON is not directly responsible for this issue,
    and therefore DON does not have an opinion or response relating to this
    issue.
        Mr. Yonkers. This is an Army focused question and the response
    falls outside the expertise and portfolio of Air Force directorate of
    installations, environment, and logistics. Recommend question be
    forwarded to DOD or the Army.

        8. Senator McCaskill. Dr. Robyn, Secretary Hammack, Secretary
    Pfannenstiel, and Secretary Yonkers, how much has it cost us to
    postpone this decision for so long?
        Dr. Robyn. DOD will incur a cost increase of $568 million
    associated with retaining four brigades in Europe through fiscal year
    2015 as the 170th BCT and the 172nd BCT were scheduled to return in
    fiscal year 2012 and fiscal year 2013, respectively.
        Ms. Hammack. It will cost the Department an additional $138
    million/year for fiscal year 2014-2015 to retain the fourth brigade in
    Germany. This amount does not consider any required overseas or
    stateside MILCON and is not offset by the cost of rotating forces to
    Germany.
        Ms. Pfannenstiel. DON is not directly responsible for this issue,
    and therefore DON does not have an opinion or response relating to this
    issue.
        Mr. Yonkers. This is an Army focused question and the response
    falls outside the expertise and portfolio of Air Force directorate of
    installations, environment, and logistics. Recommend question be
    forwarded to DOD or the Army.

                                    MAYPORT

        9. Senator McCaskill. Secretary Pfannenstiel, the Navy recently
    announced its intention to homeport a nuclear powered aircraft carrier
    in Mayport. The Future Years Defense Plan (FYDP) contains $412.6
    million in MILCON funds to make this move happen. The first significant
    project, $14.998 million for road improvements, is contained in this
    year's budget request. In these resource-constrained times, can you
    explain to me why the Navy intends to spend $412.6 million to homeport
    an aircraft carrier in Florida?
        Ms. Pfannenstiel. Strategic dispersal of aircraft carriers
    increases our operational flexibility and mitigates the risk posed by
    manmade or natural disasters to these forces and our critical nuclear
    training and maintenance infrastructure. West Coast carriers are
    dispersed among three CONUS and one Forward Deployed Naval Force
    homeports. Carrier maintenance and repair infrastructure exists in two
    West Coast locations. The East Coast carriers are not currently
    dispersed; all East Coast carriers and support infrastructure are
    consolidated within a 15-mile radius in the Hampton Roads area, placing
    them at strategic risk.
        The decision to upgrade Naval Station Mayport's operational,
    maintenance, and support facilities to homeport a nuclear-powered
    aircraft carrier will mitigate risk and ensure the Navy can meet its
    national defense obligations should Navy operations in Hampton Roads be
    disrupted. The Navy's budget submission includes $489 million in fiscal
    years 2010-2016 for the projects necessary to homeport a carrier in
    Mayport and represents the best balance of funding amongst all the
    Navy's priorities.

                            AL UDEID AIR BASE, QATAR

        10. Senator McCaskill. Secretary Yonkers, this year's budget
    request contains $37.0 million for phase four of the Blatchford-Preston
    dormitory complex at Al Udeid Air Base, Qatar. It is my understanding
    that this base is an enduring forward operating site (FOS). This means
    that all troops are stationed at Al Udeid on a rotational basis.
        It is my understanding that the stated Air Force requirement is for
    25 dormitories containing 4,900 rooms with billeting for 6,200
    personnel. I assume this means that a majority of personnel will be put
    in rooms by themselves, a 1+1 standard. Is it the Air Force's policy to
    build housing to a 1+1 standard for rotational forces?
        Mr. Yonkers. The dormitory standard used in Qatar is the CENTCOM
    standard--that is, rotational forces are billeted at a 2+2 density and
    permanent party forces are billeted at 1+1. The total room requirement
    is based on enduring steady state requirements, post Operations
    Enduring Freedom and New Dawn. The planning factor is 2+2 configuration
    for 3,000 rotational personnel, 1+1 configuration for 3,000 steady
    state permanent party personnel, and 1+0 for commanders and chiefs.
    During the current contingency surge, many rooms are occupied 2+2.
        It is important to note that we validate the requirements at Al
    Udeid in the context of the long-term global posture dictated by the
    Commander, CENTCOM, while noting that the Air Force has conducted
    continuous operations in this region since the Gulf War in 1990/1991.
    So while we use the term rotational above, in reflection of the nature
    of the Air Expeditionary Task Forces that deploy to Al Udeid, we build
    support facilities for these AETFs with as much flexibility as
    possible. The Air Force has been deploying to the Mideast, and to Al
    Udeid in particular, for a very long time, and throughout that history
    we have surged many times in response to regional challenges. The key
    flexibility inherent in the 4,900-room Blatchford-Preston Complex is
    the variety of room configurations pointed out in your question. The
    4,900 rooms support the global long-term posture of 6,200 Air Force
    personnel and negate the need for costly continual recapitalization of
    temporary facilities. Those same 4,900 rooms also allow the Air Force
    to quickly surge to different room configurations handling ever larger
    number of personnel--very easily the Air Force could increase the
    number of personnel housed in a 2+2 configuration from the 3,000 above
    and increasing the overall occupancy in the complex significantly. This
    flexibility enables much more rapid response to the ever shifting
    strategic environment.
        Bottom line--we're building long-term facilities based on the
    mandated global posture.but we are ensuring that the rooms sizes and
    infrastructure provided are as flexible as they can be.

                          AIR FORCE NUCLEAR ENTERPRISE

        11. Senator McCaskill. Secretary Yonkers, in your testimony on the
    Air Force's nuclear mission you mention that ``Air Force engineers have
    conducted enterprise-wide facility assessments and understand that a
    significant portion of the existing infrastructure will require
    modernization or complete replacement in the years ahead.'' Indeed, the
    first tranche of money, $75.6 million, is included in the fiscal year
    2012 budget request. Can you please provide a list of projects
    necessary to complete this significant modernization and replacement of
    facilities needed to support this mission?
        Mr. Yonkers. As stated in my testimony, the Air Force has recently
    completed three enterprise-wide assessments of facilities supporting
    the nuclear enterprise. These included a Weapons Storage Area (WSA)
    Assessment, a Nuclear Related Facilities (NRF) Assessment Report
    (everything that is not a WSA, launch facility or missile alert
    facility) and also the Life Extension Assessment Program to evaluate
    Launch Control facilities. We are currently analyzing the issues
    presented in that data to identify, plan and program the facility
    solutions that best meet the mission needs, i.e. is it better to
    repair/upgrade a certain facility or to replace it with a new facility.
    This analysis and resultant prioritization of projects will form the
    basis for a list of requirements that will be appropriately resourced
    in the future by the Air Force. It is important to note that many of
    the solutions will be SRM funded and therefore will not be identified
    individually in our FYDP.
        To clarify, the $75.6 million in fiscal year 2012 MILCON (four
    projects) supports the Nuclear Enterprise, but only the fiscal year
    2012 WSA Security Control facility at Whiteman AFB, MO supports the
    recapitalization of existing nuclear infrastructure. The remaining
    three fiscal year 2012 projects support the B-52 Beddown at Minot AFB,
    ND and the AF Nuclear Weapons Center at Kirtland AFB, NM.

        12. Senator McCaskill. Secretary Yonkers, how many of these
    requirements are planned in the current FYDP?
        Mr. Yonkers. None of the requirements resulting from the facility
    assessments are included in the current FYDP as these requirements were
    not indentified prior to the development of fiscal year 2012-2016 FYPD.
    We have just completed the first phase of the Nuclear Enterprise-wide
    facility assessments. This phase has identified the facilities
    deficiency such as condition, safety, security, reliability, etc. The
    next phase will provide a road map to fix these deficiencies. We are in
    the process of developing a prioritized list of facilities needed to
    upgrade the current deficiencies. This phase will identify MILCON and
    O&M requirements, funding, and year of execution. We plan to develop
    and indentify these requirements during the development of fiscal year
    2013-2017 POM and will provide you the list of the MILCON projects at
    that time.

                       HIGH PERFORMANCE COMPUTING CENTER

        13. Senator McCaskill. Dr. Robyn, Secretary Hammack, Secretary
    Pfannenstiel, and Secretary Yonkers, the President's budget request
    authorization to begin building a High Performance Computing Center at
    Fort Meade, MD, at a total cost of $860.6 million. It is my
    understanding that DOD is building a similar facility in Utah at a cost
    of more than $1.5 billion. In fact, the budget requests $246.4 million
    this year for that facility and next year's request is expected to be
    $175.2 million. While I don't question the need for computing power or
    data centers, what I question is the cost. What lessons have been
    learned about controlling costs from the recent experience in Utah and
    from experience of the private sector, which builds similarly large,
    expensive data centers itself?
        Dr. Robyn. The Utah Data Center (UDC) and the High Performance
    Computing Center (HPCC) are not as similar as they first appear. The
    primary difference between the UDC and the HPCC is the reliability
    requirements of each facility. The UDC is a Tier III (concurrently
    maintainable) facility with full backup generation capability across
    the entire campus, which allows it to operate independent of commercial
    utility power. The HPCC will only have minimal backup generation
    capabilities. The HPCC will be a high power density facility that will
    not be comparable to the civilian sector's current building approach
    for data centers. In addition, this facility is not just a repository
    for data, but the vast majority of the equipment will be used for data
    processing.
        The lessons learned from the UDC are minimal in nature at this time
    since it is still under construction. What we have learned relates
    mainly to the acquisition and design processes, but we have also
    incorporated lessons from other recent major construction projects for
    the National Security Agency/Central Security Service (NSA/CSS).
        Lessons learned from the acquisition process include partnering
    immediately with the U.S. Army Corps of Engineers (USACE) (NSA/CSS's
    Construction Agent) to identify the key tasks where senior leadership
    can assist in accelerating the lengthy approval processes and allow the
    team to run tasks in parallel. By doing this, NSA reduced a normal 2-
    year acquisition effort down to 18 months. NSA and USACE also
    determined that by conducting a two-step acquisition process, they were
    able to better focus the competition to only the most qualified
    contractors thereby streamlining the source selection review period.
        NSA was also able bring lessons learned into the design process.
    They found that by fully defining requirements early they could avoid
    scope creep during the design process. The also ensured there was quick
    response to contractor requests for information (RFI) and advocated for
    open dialogue between technical counterparts to speed up the design
    timeline.
        Ms. Hammack. The Army is not the Executive Agent for these MILCON
    projects and holds no equity. The Army's Data Center Consolidation Plan
    focuses primarily on consolidating data centers to existing Defense
    Enterprise Computing Centers (DECCs) operated by the Defense
    Information Systems Agency (DISA).
        Note: NSA as the Executive Agent has also provided an answer.
        Ms. Pfannenstiel. DON is not directly responsible for this issue,
    and therefore DON does not have an opinion or response relating to this
    issue.
        Mr. Yonkers. This question and the response falls outside the
    expertise and portfolio of Air Force directorate of installations,
    environment, and logistics. Recommend question be forwarded to DOD.

        14. Senator McCaskill. Dr. Robyn, Secretary Hammack, Secretary
    Pfannenstiel, and Secretary Yonkers, how have we incorporated these
    lessons learned into the design of these facilities?
        Dr. Robyn. The lessons learned allowed us to utilize a Design/Build
    fast-track process for the design of the Utah Data Center (UDC).
    Instead of the traditional process of obtaining complete construction
    drawings at the 35 percent, 65 percent, and 100 percent levels, this
    process breaks the design into smaller and more manageable packages
    allowing them to be reviewed and approved to start construction much
    sooner.
        The Department is still in the early stages of planning for the
    HPCC and has not yet begun the design process, but discussions continue
    between the NSA and the U.S. Army Corps of Engineers to capitalize on
    lessons learned from previous construction projects.
        Ms. Hammack. While the Army Data Center Consolidation Plan (ADCCP)
    does not include building more data centers, the Army did consult with
    industry and conduct an internal Base Realignment and Closure (BRAC)
    audit to capture lessons learned during consolidation. Key lessons
    incorporated in the ADCCP include centrally managing consolidation and
    eliminating redundant or legacy applications prior to consolidation.
        Note: NSA as the Executive Agent has also provided an answer.
        Ms. Pfannenstiel. DON is not directly responsible for this issue,
    and therefore DON does not have an opinion or response relating to this
    issue.
        Mr. Yonkers. This question and the response falls outside the
    expertise and portfolio of Air Force directorate of installations,
    environment, and logistics. Recommend question be forwarded to DOD.

        15. Senator McCaskill. Dr. Robyn, Secretary Hammack, Secretary
    Pfannenstiel, and Secretary Yonkers, I know that we have some of the
    government's most sensitive information stored in commercial
    facilities, so security cannot be the sole reason for providing this
    capability in government-owned and -operated facilities. Have you
    conducted rigorous analyses to see how we could provide these services
    more efficiently through government-owned and -operated facilities or
    by relying on the private sector?
        Dr. Robyn. Yes. The NSA's unique requirement for very high power
    density equipment disqualified the High Performance Computing Center
    facilities from lease consideration under Office of Management and
    Budget Circular A-11. Therefore, only government-owned sites were
    considered as possible locations for these facilities. A comprehensive
    study was conducted in 2010 to determine the final government-owned
    location.
        Ms. Hammack. The Army's decision to consolidate primarily to DECCs
    resulted from consultation with both industry and the DISA. In addition
    to providing the mandatory security environment, DISA DECCs enable
    interoperability across the DOD, efficient use of server and data
    storage, and built-in continuity of operations capabilities.
        Note: NSA as the Executive Agent has also provided an answer.
        Ms. Pfannenstiel. DON is not directly responsible for this issue,
    and therefore DON does not have an opinion or response relating to this
    issue.
        Mr. Yonkers. Response falls outside the expertise and portfolio of
    directorate of installations, environment, and logistics. Recommend
    question be forwarded to DOD.

                             KANSAS CITY IT CENTER

        16. Senator McCaskill. Secretary Pfannenstiel, I would like to
    highlight an issue of importance today for Missouri and Kansas. As you
    may know, the Marine Corps is considering relocating the Kansas City IT
    Center (KCITC) to another location outside of the region - and that
    location could require an entirely new building and potential personnel
    relocation. I am concerned that we could be spending our Federal
    dollars twice for this possible move. Further, it strikes me as an area
    for potential waste and duplication because even as this move is being
    considered, the Marine Corps continues to invest dollars in the KCITC
    by implementing several key IT and support programs in Kansas City and
    expanding the Kansas City workforce. While the Missouri and Kansas
    congressional delegations have expressed concerns about this issue to
    the Commandant of the Marine Corps in a letter on February 17, 2011, I
    continue to feel that we don't have adequate information from the
    Marine Corps to know what factors are going into this decision. How
    much does the Marine Corps anticipate a new building will cost?
        Ms. Pfannenstiel. We share the concerns regarding the budgetary and
    fiscal challenges confronting the Department and are committed to
    ensuring the responsible stewardship of the taxpayers' funds. We are
    working to provide all the information that the Missouri and Kansas
    congressional delegations have requested.
        The Marine Corps is reviewing a number of locations for an IT
    Center. A decision on whether or not to relocate the information
    technology organizations will be made in the spring 2012.

        17. Senator McCaskill. Secretary Pfannenstiel, how much will it
    cost to move workers and equipment to a new location?
        Ms. Pfannenstiel. The Marine Corps is conducting a risk analysis on
    the cost of moving to a different location that includes both equipment
    and personnel.

        18. Senator McCaskill. Secretary Pfannenstiel, will you have to
    duplicate the new technology at the KCITC at the new location or will
    you be able to transfer that technology?
        Ms. Pfannenstiel. The Marine Corps will make every effort to
    transfer technology or time any move to coincide with a planned
    technology refresh cycle in order to limit any duplicate spending.

        19. Senator McCaskill. Secretary Pfannenstiel, if technology needs
    to be duplicated at a new site, what is the estimated cost?
        Ms. Pfannenstiel. The Marine Corps is conducting a risk analysis on
    the cost of moving to a different location that includes both equipment
    and personnel.

        20. Senator McCaskill. Secretary Pfannenstiel, are these factors in
    your consideration whether to move?
        Ms. Pfannenstiel. It is uncertain at this time whether the current
    building, owned by the General Services Administration, is suitable as
    a permanent solution. We have learned that the building, while having
    good potential as a permanent facility, does have some potential
    environmental and safety issues. It is equally important to maintain a
    qualified information technology staff for all our programs now and
    into the future. Other factors we are considering are the facility
    cost, workforce relocation, transition costs, and suitability of a
    facility to meet information technology security and force protection
    requirements. We welcome any additional input you may have for this
    important decision.

        21. Senator McCaskill. Secretary Pfannenstiel, conversely, how much
    will it cost you to stay in Kansas City?
        Ms. Pfannenstiel. We are reviewing all costs and are conducting
    further analysis in order to support a decision from Marine Corps
    leadership.

        22. Senator McCaskill. Secretary Pfannenstiel, when will the Marine
    Corps sit down with all stakeholders and provide baseline information
    about the status of this decision and key cost considerations?
        Ms. Pfannenstiel. The Marine Corps will continue to keep all
    stakeholders involved in this process and provide information as
    necessary, including key considerations in making the final decision.
    Again, we welcome any additional input you may have for this important
    decision.

        23. Senator McCaskill. Secretary Pfannenstiel, bottom line, can the
    Marine Corps ensure that this plan is not going to lead to essentially
    duplicative Federal funding during these economically tight times? If
    so, how?
        Ms. Pfannenstiel. The Marine Corps is committed to ensuring that
    there is no duplicative funding associated with any potential move. The
    Marine Corps would phase any possible move order to mitigate any
    workforce, funding and capability gaps.
                                     ______

                   Questions Submitted by Senator Mark Udall

                  DEFENSE ENVIRONMENTAL PROTECTION INITIATIVES

        24. Senator Udall. Dr. Robyn, encroachment on our military
    installations and ranges has been and continues to be a concern for our
    military and for me. Our testing and training footprint for new weapon
    systems continues to increase. As troops returning from Iraq and
    Afghanistan begin the training reset they will require more land. For
    the Air Force, new aircraft like the F-35 may require a wider noise
    abatement zone around airfields. As BRAC 2005 is fully implemented, the
    pressure on our bases and ranges will increase. How important are
    programs like the Readiness and Environmental Protection Initiative
    (REPI) in protecting our bases and ranges now and into the future?
        Dr. Robyn. Since its first year of funding in 2005, the REPI has
    been a critical part of the Department's comprehensive Sustainable
    Ranges Initiative to protect and sustain the military operational
    footprint. Under REPI, we can ensure that our ability to test and train
    is protected through cost-share partnerships outside of our boundaries,
    rather than having to shrink our operational footprint within the
    controlled space of our fence lines. The leveraged nature of REPI
    allows DOD funds to be pooled with funds from our partners to
    accomplish more with less. Since fiscal year 2005, REPI has protected
    over 174,000 acres of buffer land in 59 locations in 23 States. DOD's
    $202.5 million investment has attracted over $261 million in partner
    contributions to protect the DOD mission from encroachment.
        Immediate proactive and protective REPI investments help avoid
    other more expensive costs, such as the need for training workarounds
    and higher future military expenses. The $100 million appropriated for
    REPI in fiscal year 2011 will allow acceleration of ongoing efforts to
    more effectively integrate REPI with other private, State and local
    government, and Federal agency programs and resources at landscape
    scales--the scale needed to fully address the long range protection of
    the DOD mission.

        25. Senator Udall. Dr. Robyn, what are your plans for establishing
    buffer zones around military installations to prevent further
    encroachment?
        Dr. Robyn. The Department is committed to protecting and sustaining
    the operational mission footprint required to maintain a trained and
    ready force. The REPI is a highly effective and cost-efficient tool to
    help us meet that commitment.
        Today, we are using REPI to work with more than 80 partners to
    protect readiness at 59 key installations and ranges in 23 States.
    Significant opportunity now exists to maximize the benefits of REPI due
    to current real estate market conditions, increasing numbers of willing
    sellers and emerging landscape-scale conservation initiatives
    benefitting key DOD installations. Going forward, we will continue to
    support and expand these partnerships and work closely with operators
    and commanders to be sure that we employ the REPI program in ways that
    deliver the maximum readiness benefit in the most economically
    efficient manner.
        Acquisition of these conservation buffers are often made in
    response to recommendations from a Joint Land Use Study. The Joint Land
    Use Studies (JLUS) program allows us to collaborate with communities
    near our installations to promote compatible zoning and development
    plans.

                           DEFENSE ENERGY INITIATIVES

        26. Senator Udall. Dr. Robyn, Secretary Hammack, Secretary
    Pfannenstiel, and Secretary Yonkers, DOD has established ambitious
    goals relating to energy efficiency. Where are you now relative to
    achieving those goals? If you are not fully on track as of today, what
    is needed to get you on or ahead of that track?
        Dr. Robyn. Although the Department is steadily improving its
    installation energy performance, we have failed to meet the energy
    intensity reduction [Energy Independence and Security Act of 2007] goal
    for the past 2 years. (Energy intensity is a measure of energy
    consumption per building square footage.) DOD reduced its energy
    intensity by 11.2 percent from 2005 to 2010, compared to the goal of 15
    percent.
        To get back on track towards achieving the efficiency goals, the
    Department is investing more to improve the energy profile of our fixed
    installations. Financing for these investments has come from annually
    appropriated funds, including MILCON, operations and maintenance, and
    the Energy Conservation Investment Program (ECIP). The Department will
    not, however, be able to close the gap solely through use of
    appropriated funds. We also plan to increase our use of third-party
    financing of energy conservation projects. This includes use of such
    vehicles as Energy Savings Performance Contracts (ESPCs) and Utility
    Energy Services Contracts (UESCs) which allow DOD to use private
    funding to finance energy conservation projects and pay for them
    through the accrued savings.
        To increase the visibility of energy investments, the Department
    has created budget exhibits for the fiscal year 2013 budget process
    which will link funding to energy impact. This will allow the
    Department to better predict future energy performance to further
    improve energy efficiency.
        Ms. Hammack. The Energy Independence and Security Act (EISA) of
    2007 requires that all Federal agencies reduce their energy intensity
    from the fiscal year 2003 baseline by 3 percent per year between fiscal
    year 2006 and fiscal year 2015 (30 percent). In fiscal year 2010 Army
    energy intensity was 8.7 percent below its 2003 baseline vs. a goal of
    a 15 percent reduction. The Army is currently working on several
    initiatives to achieve this goal. First and foremost there is guidance,
    leadership and oversight over the energy program from the highest
    levels of the Army with unprecedented attention and priority given to
    energy during the budget process. The Army's Senior Energy and
    Sustainability Council (SESC), co-chaired by the Under Secretary of the
    Army and the Vice Chief of Staff of the Army, oversees the execution of
    our Army Energy Security Implementation Strategy (AESIS). It tracks
    progress on goals, tasks, and metrics and provides senior level
    visibility to Army energy efforts.
        The Army has recently announced several new policies to standardize
    energy efficiency in Army operations. These include energy efficient
    lighting requirements, implementation of the highest building standards
    in the Federal Government and an Acquisition Policy requiring energy
    productivity to be a consideration in all Army Acquisition Programs.
    The Army is also working to improve its utilization of performance
    contracts and leverage other private investment to accelerate energy
    projects. Finally, on April 19, I will be announcing the selection of 5
    pilot Net Zero energy installations for environmental analysis under
    the National Environmental Policy Act (NEPA). These 5 installations
    will be working towards Net Zero energy status. Through conservation,
    efficiency and renewable energy measures these installations will
    strive towards the goal of producing as much energy on site as they
    consume by 2020. This initiative will help to ensure that sustainable
    practices are instilled and managed throughout the appropriate levels
    of the Army, while also maximizing operational capability, resource
    availability and well-being
        Ms. Pfannenstiel. We are on track to meet most of our energy goals.
    Throughout 2010 we demonstrated progress through an assortment of
    energy programs, partnerships, and initiatives.
        DON has reduced our shore energy intensity, compared to a 2003
    baseline, by 15.7 percent. This progress is towards a 2007 Energy
    Independence and Security Act goal mandating a 30 percent reduction in
    energy intensity by 2015. We have programmed funds in fiscal year 2012
    to continue our progress towards meeting the fiscal year 2015
    requirements.
        Mr. Yonkers. The Air Force has an ambitious goal in place to reduce
    the energy intensity of its facilities by 3 percent per year to reach
    30 percent of fiscal year 2003 levels by fiscal year 2015 and then 1.5
    percent per year to reach 37.5 percent by fiscal year 2020. By
    continuing to focus investments on proven, high-return projects since
    2005, the Air Force has reduced its energy intensity by nearly 15
    percent. However, due to limited budgets and the fact that much of the
    ``low hanging fruit''-projects may have already been addressed, the Air
    Force is concerned about meeting its energy intensity mandate beyond
    fiscal year 2012. Additionally, most investments require 2 years from
    contract award to realize measureable energy savings due to contract
    and construction lag time.
        Currently, there are 447 energy and water conservation projects in
    progress from fiscal year 2010 funding. These energy conservation
    projects include all categories of work to make existing installation
    systems more efficient. And while the Air Force continues to advance
    energy independence through coordinated efforts aimed at minimizing
    energy costs and leveraging proven technology, the most important
    commitment is toward the Air Force energy goal to make smarter
    decisions and change the culture when it comes to energy.

        27. Senator Udall. Dr. Robyn, Secretary Hammack, Secretary
    Pfannenstiel, and Secretary Yonkers, I'd like to discuss how to improve
    energy security for our military installations. True energy security
    for U.S. bases cannot be realized as long as the supply of electricity
    to key systems and operations would be disrupted if the larger energy
    supply and transmission grid were to be disrupted. What would be
    required in terms of programs, technologies, and resources to allow key
    systems and operations on our bases to continue to operate indefinitely
    on a 24/7 basis in the event of a disruption or failure of the broader
    commercial electrical power grid?
        Dr. Robyn. Our current security strategy is three-fold: (1) reduce
    demand, (2) expand supply, and (3) improve our energy resiliency.
        The energy resiliency aspect of the strategy mitigates risk of grid
    failure, and, protects critical missions on fixed installations during
    peacetime and contingency operations. The DOD has not identified a 24/
    7/365 need for power as a general requirement. For most loads, it is an
    unnecessary level of assurance. Even for critical loads, a 24/7 power
    supply may only be needed for a finite period before the mission would
    transfer to an alternate site until the commercial grid is restored.
    Instead, the Defense Critical Infrastructure Program (DCIP) is
    developing a prioritized list of critical missions, their
    vulnerabilities, and recommended mitigations. The output of this
    program will be a set of requirements that will compete for resources
    in the Defense Planning Programming Budgeting and Execution process.
    DCIP is important in identifying Defense Critical Assets and
    prioritizing those assets for protection against electric grid
    vulnerabilities.
        There also are DOD technology initiatives which could provide
    increased mission assurance at our installations. These include the
    Environmental Security Technology Certification Program (ESTCP) and
    DOD's smart microgrid initiatives. The ESTCP uses DOD facilities as
    test beds for innovative energy technologies, and allows the
    development, test and evaluation of technologies on DOD installations.
    DOD's smart microgrid initiatives include the Smart Power
    Infrastructure Demonstration for Energy Reliability and Security
    (SPIDERS) program, the Norfolk Case Study and the Twentynine Palms
    microgrid effort.
        Ms. Hammack. I agree that one of the key security concerns for our
    installations is their dependence on an aging and outdated electric
    grid. To that end the Army has announced a Net Zero initiative that is
    a holistic approach to addressing energy, water, and waste at Army
    installations. On April 19th I will announce the selection of 16 pilot
    Net Zero Installations for environmental analysis under the NEPA. Five
    installations that will strive for Net Zero energy, five for Net Zero
    waste, five for Net Zero water, and at least one that will strive to be
    Net Zero in all three categories. A Net Zero energy facility would
    produce as much energy as it consumes on an annual basis, thereby
    greatly reducing its dependence on the electric grid. Our goal is to
    have an additional 25 installations strive to be Net Zero by 2030.
        In addition to the Net Zero initiative the Army is also working on
    several projects at various installations that will have a significant
    impact on those installations dependence on the commercial transmission
    grid and prove technology that could be transferred to other
    facilities. At Fort Irwin, CA we are evaluating the environmental
    impacts of developing a 500MW solar electric generating facility that
    would produce more than enough energy to meet Fort Irwin's energy
    security needs. There are also several micro-grid projects in
    development on our facilities that will provide a more secure electric
    distribution system. One such project, called SPIDERS, at Fort Carson,
    CO which will demonstrate bi-directional power transfer or vehicle-to-
    grid (V2G) capable vehicles at U.S. installations. This is intended to
    provide ancillary grid services from the vehicle on-board batteries in
    the event of a power disruption. Finally, the Army is currently working
    to consolidate over 75 percent of its data centers over the next 5
    years, which will result in significantly lower energy demands for data
    center operations and improve security of Army information assets.
        Army efforts to reduce demand for energy through energy efficiency
    and conservation efforts, increase the use of renewable energy
    generated on base, and development of micro-grids will help to
    significantly reduce the threat of disruption from the commercial grid
    by decreasing the amount of energy from the grid needed to run our
    installations and in some cases operate completely independently of the
    grid.
        Ms. Pfannenstiel. Senator Udall, DON has taken a number of steps to
    ensure continuity of supply to our critical facilities.

             First, our Mission Assurance Division of the Naval
            Surface Warfare Center conducts mission assurance assessments
            to DON and other DOD customers. The goals of these assessments
            is to identify external and internal to the base
            vulnerabilities to our utilities and energy systems. From these
            assessments we take the necessary steps to mitigate the threat.
             All our key systems and operations are equipped with
            emergency generators to provide electrical power for short
            timeframes (several days to week's duration).
             To relieve the base's emergency power system we have
            procedures for the ships in port to disconnect from shore power
            and operate using their own equipment.
             For longer periods of power disruption we deploy our
            Mobile Utilities Support Equipment to provide generation and
            substation capacity to the critical loads. The MUSE program has
            over 140 MW of portable generation, ranging in size from 200 KW
            to 2500 KW. This equipment proved valuable in supplying power
            to critical loads following Hurricane Katrina, as well as after
            other major storms.
             Our installations are developing renewable energy
            projects on our bases and we are studying the use of micro-
            grids to allow all on base generation to operate effectively
            during a grid outage. To make renewable power effective for
            extended periods energy storage technology will need to be
            improved.

        The steps I have identified above will enable us to support
    critical requirements in the case of most grid outages. Providing
    electric power indefinitely 24/7 will be more difficult and very
    costly. To accomplish this, the following actions will be needed:

             Improved energy storage capability to maximize use of
            solar and wind renewable resources which are intermittent
             Redundant and secure sources of fuel for on base
            generators. Liquid fuel should be a drop in bio-fuel. Where
            natural gas is available, dual fuel capability of boilers and
            generators should be considered
             Secure on-base energy distribution systems that can
            survive and continue to operate after a disaster

        Mr. Yonkers. The Air Force is currently developing more explicit,
    actionable, quantifiable planning factors that can be used to both
    solve energy security challenges and help with investment decisions.
    Advanced energy independence for the Air Force is assured through
    coordinated efforts aimed at minimizing energy costs and leveraging
    proven technology in conservation measures and renewable energy
    development while assuring system reliability and critical asset
    security for critical Air Force missions. These efforts reduce
    dependence on commercial utility supply and delivery systems and
    enhance energy surety for the Air Force.
        Using the existing Defense Critical Infrastructure asset
    identification methodology, the Air Force identifies mission critical
    assets (i.e. installations, facilities, or activities). Risk
    assessments identify specific electric power related vulnerabilities,
    including those associated with the reliability of supporting
    commercial electric power, the availability of back-up electric power
    supplies, and single points of failure. The Air Force recently
    established a Critical Infrastructure Program (CIP) Working Group at
    the Headquarters Air Force level to facilitate cross-functional
    awareness and understanding of risk assessment findings and to
    coordinate Higher Headquarter functional support in programming for
    remediation or mitigation of risks not addressed at the installation or
    major command levels. The Air Force also plans to use CIP results to
    influence resource allocation decisions at the corporate level and will
    begin to track mitigation and remediation projects through completion
    or adoption of other risk mitigation measures to ensure closure.
        Energy Surety efforts were enhanced in fiscal year 2010 by striving
    to meet the Air Force goals that: (1) reduce demand through
    conservation and efficiency; and (2) increase supply through
    alternative energy sources. Facility energy reduction was 14.9 percent
    against the 2003 baseline. Furthermore, renewable energy accounted for
    6.4 percent of the total energy consumed, beating the 5 percent goal.
        The Air Force has partnered with Department of Energy (DOE) on
    energy security initiatives. In February 2010, the Air Force Civil
    Engineer adopted Sandia Labs Energy Surety Microgrid (ESM) concept as
    the definition of ``smart grid'' for our bases because it incorporates
    energy security and energy resiliency using a risk assessment
    methodology to identify secure and reliable power to support critical
    missions for extended duration, quantifies existing energy assets,
    assesses outage possibilities, and critical energy demand requirements,
    and quantifies infrastructure improvements for energy system
    performance and protection goals. They are performing ESM assessments
    at four Air Force bases: Maxwell, Kirtland, Schriever, and Vandenberg.
        In 2010, the Air Force started to analyze the effects that
    utilities privatization may have on installation energy security and to
    assess backup power requirements for mission critical functions. The
    results of the study will be used to evaluate gaps in back-up power
    requirements, redundancy, resiliency, and both utility and base power
    grid vulnerabilities. One of the deliverables of the study will be an
    Energy Security checklist assessment tool that will be used at each
    base to provide an initial Energy Security ``score'' and a means to
    identify and optimize actions that can be accomplished to improve the
    installations' Energy Security posture. During 2011 Vulnerability
    Assessments, the Air Force will assess installation plans to mitigate
    the all-hazards impact from power interruptions, written contingency
    plans for power outages, and coordination procedures with local utility
    providers.
        A DOD (including Army, Air Force, Navy, and Marine Corps) and DOE
    joint task force is examining the potential to establish Net-Zero
    Energy Installation (NZEI) initiatives at military installations. The
    Air Force Academy is our demonstration site for the Air Force. NZEI
    could make installations more energy secure in the future by reducing
    installation dependence on the commercial power grid.
        While the Air Force has a generator testing and inspection program
    in place at all installations, Major Accident Response Exercise (MARE)
    and Operational Readiness Inspection (ORI) programs do not currently
    evaluate generator performance. The AF will create a standardized
    requirements policy to address emergency generator testing for MAREs
    and ORIs, including how the base prioritizes, refuels and tests
    equipment reliability for a sustained period.
        The Air Force is looking into business models to procure all-
    electric vehicles at a more economical price point. Part of the
    assessment is to right-size the battery depending on range requirements
    and also to assess the capability of using the vehicle batteries as on-
    base energy storage to shed peak load and provide power in the event of
    outages.
        In summary, the Air Force is focusing its energy security efforts
    through increased inter-service and interagency collaboration, and
    capability improvements to reduce mission critical vulnerabilities to
    extended electric power outage and to enable better risk-informed
    decisionmaking.

        28. Senator Udall. Dr. Robyn, Secretary Hammack, Secretary
    Pfannenstiel, and Secretary Yonkers, will your current plans and
    programmed resources accomplish that? If not, are you developing plans
    and programming resources to accomplish that in the out-years?
        Dr. Robyn. The planning and programming of resources in the future
    will be important, and we are continuing to identify the technologies
    and DOD missions important in shaping our energy resiliency strategy.
        Technologies are being identified and demonstrated through the
    ESTCP, the SPIDERS program, the Norfolk Case Study and the Twentynine
    Palms microgrid effort. These efforts are integrating secure, smart
    microgrid technologies and concepts such as continuity of operation
    planning (COOP), building design considerations, metering, smart grid
    systems and load management, on site generation (e.g., generators and
    renewables) and system islanding.
        Further, specific critical missions and assets are continuing to be
    identified through the Critical Infrastructure Program (DCIP), which
    prioritizes Defense Critical Assets (DCAs). In the future, DCAs would
    warrant the greatest consideration in targeting resources to shape an
    energy security posture at our installations. These activities, both
    the technology demonstration efforts and the identification of critical
    missions under the DCIP, will provide the basis for energy resiliency
    requirements in the Defense PPBE process.
        Ms. Hammack. The Army is currently implementing the highest
    building standards in the Federal Government by adopting ASHRAE
    Standard189.1, expanding our ability to install small scale renewable
    energy projects through the ECIP program and large utility scale
    renewable energy projects by leveraging third party investment
    authorities, implementing a Net Zero strategy, and developing micro
    grid technologies that will greatly reduce our installations dependence
    on the commercial grid. These initiatives are being backed at the
    highest levels of the Army through the Senior Energy and Sustainability
    Council. Additionally, the Secretary of the Army recently announced
    that energy was one of his top priorities for the year providing the
    program with an unprecedented level of support.
        Ms. Pfannenstiel. DON's current budget across the FYDP does not
    include plans or resources to allow key systems and operations on our
    bases to continue to operate indefinitely on a 24/7 basis in the event
    of a disruption or failure of the broader commercial electrical power
    grid. In the unlikely event that the electric power grid is disabled
    indefinitely, we would operate initially using our station emergency
    capability, MUSE, renewable and ship generation. If the period without
    grid power became untenable, we would consider relocating critical
    missions and ships to other ports.
        Mr. Yonkers. The Air Force is currently developing more explicit,
    actionable, quantifiable planning factors that can be used to both
    solve energy security challenges and help with investment decisions.

        29. Senator Udall. Secretary Pfannenstiel, in many ways, what DOD
    is doing in terms of energy efficiency, biofuels, and other energy-
    related programs is a model for the Federal Government and society as a
    whole. We can use this technology to increase our energy security,
    create jobs, and reduce our consumption of foreign oil. DOD's renewable
    energy development programs should remind us of how DOD-focused
    research and development (R&D) and technology applications in other
    areas have blazed a trail for broader society-wide application.
        The Navy has been doing some very impressive work with regard to
    developing biofuels and there are some very exciting possibilities.
    They can deliver the energy density of traditional fuels. They can be
    used without any modifications to current engines or fuel systems. They
    have a lifecycle greenhouse gas level well below traditional fuels, and
    they do not depend on foreign sources of supply. As you go about
    developing new alternative fuel options for Navy missions, do you
    believe your work will create a pathway for the civilian long-haul
    fleet of planes, ships, trucks, and trains?
        Ms. Pfannenstiel. The operational use of alternative fuels used by
    the Navy and the Marine Corps will be hastened by collaborating with
    Federal agencies and private industry involved in research,
    development, and certification of alternative fuels. This increased use
    of alternative fuels is part of a bold energy agenda set forth by the
    President of the United States as he seeks to reduce the Nation's
    dependence on fossil fuels. By collaborating with the Departments of
    Energy and Agriculture, the airlines industry, research universities,
    Navy laboratories, the private sector, and others, collectively we will
    create the pathway for the greater use of alternative fuels throughout
    the transportation industry.

        30. Senator Udall. Secretary Pfannenstiel, is this just a Navy
    strategy you are working on or do you see your work as the leading edge
    of a DOD-wide and ultimately broader national strategy?
        Ms. Pfannenstiel. The President set forth a bold energy agenda and
    DOD, like other departments and agencies, is working aggressively to
    reduce its dependence on fossil fuels. Within DOD, the Secretary of the
    Navy has challenged the Navy and the Marine Corps to lead the DOD and
    the Nation in bringing about improved energy security and energy
    independence.

        31. Senator Udall. Secretary Pfannenstiel, if you see your work as
    playing a role in blazing the trail for the whole economy are you
    looking at the scale-up implications on land use and food supply that
    would result from moving your biofuel choices into the whole economy?
        Ms. Pfannenstiel. DON is closely working with the Departments of
    Energy and Agriculture to identify alternative fuel sources. We are
    very aware of the implications on land and water use and food supply
    and are committed to non-food feedstock alternative fuels. Our
    partnership with the Department of Agriculture will closely review what
    non-food crops, such as camelina, can be harvested to create this new
    supply of biofuels. We are partnering with the Department of Energy on
    research and development on biofuels derived from algae and other non-
    food sources.

        32. Senator Udall. Secretary Pfannenstiel, how are those
    considerations reflected in your future plans?
        Ms. Pfannenstiel. DON has set two priorities that illustrate the
    Department's role in investing in alternative sources of energy: energy
    security and energy independence. The Navy will achieve energy security
    by utilizing sustainable non-food feedstock sources that meet force
    sustainment functions and fulfill tactical, expeditionary and shore
    operational requirements. This allows the ability to protect and
    deliver sufficient energy to meet operational needs without impacting
    the food industry. Second, energy independence is achieved when naval
    forces rely only on energy resources that are not subject to
    intentional or accidental supply disruptions. As a priority, energy
    independence increases operational effectiveness by making naval forces
    more energy self-sufficient and less dependent on vulnerable energy
    production and supply lines.
        Additionally, advanced biofuels represent the best option for
    meeting military needs while reducing greenhouse gas emissions. The EPA
    has evaluated the life cycle greenhouse gas emissions from a number of
    advanced biofuel platforms to ensure that they do reduce emissions
    compared to petroleum.
        The Secretary of the Navy has set forth five energy goals to reduce
    DON's overall consumption of energy, decrease its reliance on
    petroleum, and significantly increase its use of alternative energy.
    DON is committed to improving our role in investing in alternative
    sources of energy for the future.
        The Secretary of the Navy's Energy Goals:

        1.  Increase Alternative Energy Use DON-Wide: By 2020, 50 percent
    of total DON energy consumption will come from alternative sources
        2.  Increase Alternative Energy Ashore: By 2020, at least 50
    percent of shore-based energy requirements will come from alternative
    sources; 50 percent of DON installations will be net-zero
        3.  Reduce Non-Tactical Petroleum Use: By 2015, DON will reduce
    petroleum use in the commercial fleet by 50 percent
        4.  Sail the ``Great Green Fleet'': DON will demonstrate a Green
    Strike Group in local operations by 2012 and sail it by 2016
        5.  Energy Efficient Acquisition: Evaluation of energy factors will
    be mandatory when awarding contracts for systems and buildings

                     PINON CANYON ENVIRONMENTAL ASSESSMENT

        33. Senator Udall. Secretary Hammack, please provide an update on
    the status of the environmental assessment for the Pinon Canyon
    Training Site in Colorado.
        Ms. Hammack. Fort Carson will meet their obligation to conduct
    National Historic Preservation Act consultations (section 106) on the
    Pinon Canyon Maneuver Site Transformation Environmental Assessment (EA)
    prior to making any potential Finding of No Significant Impact on the
    proposed action. The EA was completed in January 2011, and included
    public meetings and input. A copy of the EA can be accessed at: http://
    www.carson.army.mil/pcms/documents/2011--Final--EA.pdf

        34. Senator Udall. Secretary Hammack, would the addition of a
    combat aviation brigade at Fort Carson--which I fully support--require
    the Army to purchase additional training land?
        Ms. Hammack. No. Stationing of a Combat Aviation Brigade at Fort
    Carson does not require the purchase of additional land.
                                     ______

                   Questions Submitted by Senator Joe Manchin

                                    BAHRAIN

        35. Senator Manchin. Secretary Pfannenstiel, as you know, the Fifth
    Fleet is stationed in Bahrain, a country that is undergoing a great
    deal of turmoil right now. The National Defense Authorization Act
    (NDAA) for Fiscal Year 2011 authorized three projects in Bahrain:
    Ammunition Magazines, $89.2 million; Operations and Support Facilities,
    $60.0 million; and Waterfront Development, Phase 3, $63.8 million. The
    budget request this year contains two projects: Bachelor Enlisted
    Quarters, $55.0 million; and Waterfront Development, Phase 4, $45.1
    million.
        I recently visited Jordan and after speaking to the King, I realize
    the concerns about the stability of the governments in the region and
    also the strategic value of Bahrain as a very good ally to the United
    States. In tight fiscal times, is now the time to be investing over
    $300.0 million there?
        Ms. Pfannenstiel. Bahrain remains the location for our Naval Forces
    CENTCOM/U.S. Fifth Fleet headquarters, so it is vital to have
    facilities to enable our Navy's forward maritime presence and enable
    rapid crisis response.
        The Waterfront Development Phase IV at Naval Support Activity
    Bahrain ($45.2 million) constructs a combat vehicle warehouse, water
    storage tank, and fleet recreation facility. This project will enable
    the Navy to meet CENTCOM anti-terrorism/force protection standards as
    well as properly execute assigned missions with sufficient power, space
    and communications capability.
        The Bachelor Enlisted Quarters at Naval Support Activity Bahrain
    ($55 million) constructs secure on-base permanent party bachelor
    quarters for unaccompanied sailors.

        36. Senator Manchin. Secretary Pfannenstiel, has the Navy done any
    analysis on what would happen if the Fifth Fleet were no longer welcome
    in Bahrain?
        Ms. Pfannenstiel. There has been no change in the status of the
    relationship between COMUSNAVCENT/C5F and the Government of Bahrain.
    The Government of Bahrain continues to fully support hosting Naval
    Support Activity-Bahrain (NSA-Bahrain) and its tenant commands. The
    King and Crown Prince have stated their continuing support to the U.S.
    Navy presence in the Kingdom of Bahrain. We do not expect a change in
    the Bahraini government's attitude toward hosting NSA-Bahrain.

        37. Senator Manchin. Secretary Pfannenstiel, are plans to evacuate
    dependents and support staff up-to-date and executable?
        Ms. Pfannenstiel. DOD dependents have not been evacuated from
    Bahrain. On 15 March, DOD authorized voluntary departure from Bahrain
    of DOD dependents and non-emergency civilian personnel at government
    expense. Additionally, a `Stop Movement' order was given. This order
    prohibits dependents of military personnel executing Permanent Change
    of Station orders from traveling to Bahrain. The Authorized Departure
    (AD) of Dependents and Stop Movement order was extended to 13 May in
    accordance with Department of State actions. At the conclusion of that
    period, the overall situation in Bahrain will be reassessed to
    determine if the policy should be extended, modified or removed. As of
    01 May, of Bahrain's 710 command sponsored dependents, 82 have departed
    under AD. NSA Bahrain's Joint Reception Center (JRC) continues to
    receive questions and process applications for alternation Safe Havens
    in the United States.

                          LANDSTUHL MEDICAL FACILITIES

        38. Senator Manchin. Dr. Robyn and Secretary Hammack, I was at
    Landstuhl Regional Medical Center a few weeks ago and visited with
    wounded servicemembers, some from international forces. I toured the
    medical center and was impressed with the level of care and level of
    services available at the hospital. However, I understand that the
    floor structure in certain areas is deteriorating and failing, in fact
    a portion fell through the ceiling in the pediatric unit on the level
    below. Can you tell me about the Army's fiscal year 2012 plans to
    invest in the Landstuhl Medical facilities?
        Dr. Robyn. The Army has addressed the immediate concerns with the
    floor structure. The fiscal year 2012 plan for major repair (<$500,000)
    includes a project to repair roof insulation and a project to brace
    flooring due to settling in a crawl space.
        The Department's long-term plan for the hospital includes an fiscal
    year 2012 budget request for the first increment ($70.6 million) of
    funding for a replacement hospital at Rhine Ordinance Barracks in the
    Kaiserslautern Military Community. This project (total cost of $1.2
    billion) consolidates the Landstuhl Regional Medical Center and the
    Ramstein Air Base clinic at one convenient location 8 miles closer to
    Ramstein Air Base than the existing hospital. This location reduces
    wounded warrior casualty transit times to medical care from as much as
    45 minutes across public roads to less than 5 minutes on DOD controlled
    roads. The facility will provide direct medical services to 31,000
    enrolled beneficiaries and be the contingency casualty evacuation
    location for EUCOM, CENTCOM, and AFRICOM.
        Ms. Hammack. The Army's fiscal year 2012 budget plans to invest in
    Landstuhl Medical facilities include only two major repairs
    (<$500,000): (1) a project to repair roof insulation; and (2) a project
    to brace flooring due to settling in a crawl space.

        39. Senator Manchin. Dr. Robyn and Secretary Hammack, how would a
    year-long continuing resolution make a difference in the completion of
    this project?
        Dr. Robyn. We are requesting authorization and funds to begin this
    project in fiscal year 2012. A year-long fiscal year 2011 continuing
    resolution will not impact this project as long as the fiscal year 2012
    President's budget request is acted upon in a timely manner.
        Ms. Hammack. A year-long continuing resolution for fiscal year 2011
    has no impact on the completion of the project. The first increment is
    requested for fiscal year 2012 as part of the OSD Defense-wide MILCON
    request.

                          ALTERNATIVE ENERGY PROGRAMS

        40. Senator Manchin. Dr. Robyn and Secretary Yonkers, in recent
    testimony by the Commandant of the Marine Corps, General Amos spoke
    highly of their efforts to reduce the environmental footprint of the
    Marine Corps bases by saving energy and using alternative fuels
    including solar power for batteries. At this morning's Senate Armed
    Services Committee hearing, General Schwartz said the Air Force is
    ready to certify plane engines for alternative fuel blends but the
    challenge for the Air Force will be who will produce alternative fuels
    and where will they be able to buy it. Are there any DOD alternative
    energy projects that use coal-to-liquid fuels? If so, would you buy it
    if we could produce it?
        Dr. Robyn. The Office of the Under Secretary for Acquisition,
    Technology and Logistics is actively providing oversight on alternative
    fuels and is particularly interested in the progress of qualifying such
    fuels for use, and in their long term availability. For the answer to
    this specific question, I defer to the Air Force.
        Mr. Yonkers. For the DOD, the Defense Logistics Agency (DLA) is the
    mandated agency for purchase of bulk liquid fuels. The Air Force is
    feedstock agnostic-what the fuel is made from is not important so long
    as it has the desired performance, environmental and safety
    specifications. By going through the test and certification process,
    the Air Force is positioning itself to integrate cost competitive,
    environmentally friendly, domestically produced alternative fuel blends
    by 2016. Generally, the Air Force will not be a producer of fuel, but
    will use what the market cost competitively provides.
        Currently, over 99 percent of the Air Force fleet is certified for
    unrestricted operational use of a 50/50 synthetic fuel blend, where the
    synthetic component is produced via the Fischer-Tropsch (FT) process.
    FT synthetic fuel can be produced from coal, natural gas or biomass.
        The alternative aviation fuel certification process increases the
    types of fuel Air Force aircraft can use. Once the commercial market is
    ready, the Air Force will be position to use those fuels, as long as
    they meet the technical, environmental and economic requirements,
    including the provisions outlined in Section 526 of the Energy
    Independence and Security Act. Having the ability to use non-
    traditional aviation fuels provides the Air Force with an improved
    energy security posture and increased protection from price
    fluctuations.

        41. Senator Manchin. Dr. Robyn and Secretary Yonkers, for the
    projects that use bio-fuels, what are your concerns about your ability
    to readily buy these types of fuels and have a steady supply?
        Dr. Robyn. Again, the Office of the Under Secretary for
    Acquisition, Technology and Logistics is actively providing oversight
    on alternative fuels and is particularly interested in the progress of
    qualifying such fuels for use, and in their long term availability. For
    the answer to this specific question, I defer to the Air Force.
        Mr. Yonkers. To date, the Air Force has certified the C-17 and the
    F-16 for unrestricted operations using 50/50 blend of traditional jet
    fuel and hydrotreated renewable jet (HRJ) fuel. Certification
    activities are on-track for 2012 completion. To date, no performance or
    safety-of-flight anomalies have been determined.
        The Air Force is looking at alternative aviation fuels that are
    cost competitive, environmentally friendly and act as a ``drop-in''
    fuel with traditional JP-8. The Air Force is feedstock agnostic-what
    the fuel is made from is not important so long as it has the desired
    performance, environmental and safety specifications.
        The Air Force will not be a producer of fuel, but will use what the
    market cost competitively provides. If sufficient amounts of the fuel
    are available and meet the Air Force's technical, environmental and
    cost requirements, the Air Force will use them. The Air Force needs
    industry to start making it in a cost competitive and environmentally
    friendly manner, so it can provide the best value for the taxpayer and
    the environment.
        Additionally, producers of alternative aviation fuels have
    indicated they need long-term contracts in place to raise the capital
    to build the first plants. Air Force does not have nor need long-term
    contracting authority for fuels, as the DLA is the mandated agency for
    purchase of bulk liquid fuels for DOD. However, industry believes if
    DLA had long-term contracting authority and producers were able to
    negotiate long-term contracts, their ability to obtain favorable
    financing terms for arranging capital to build production facilities
    would improve.

                         MILITARY CONSTRUCTION PROJECTS

        42. Senator Manchin. Dr. Robyn, the National Guard and Reserves
    have been heavily dependent on earmarks for MILCON projects--in fiscal
    year 2010, $235 million in earmarks went to projects for the Air
    National Guard and $93 million to the Air Force Reserve. MILCON
    projects not only help our Guard and Reserves but also support local
    economies. What is your assessment about how our Guard and Reserve
    facilities will meet operational needs without additional support in
    the President's budget and by Members of Congress?
        Dr. Robyn. I believe that the Military Departments have appropriate
    processes in place to prioritize their MILCON requirements to meet
    operational needs across the force and incorporate changes to defense
    strategies, policies, and fiscal challenges. Further, the inclusion of
    the Reserve components within the Military Department processes ensures
    that they have a voice in setting these priorities.
                                     ______

                  Questions Submitted by Senator Kelly Ayotte

                      SHIPYARD FACILITY MODERNIZATION PLAN

        43. Senator Ayotte. Secretary Pfannenstiel, I want to note that the
    Navy has not requested any MILCON modernization funds for the
    Portsmouth Naval Shipyard in the last 10 years. It's not that the Navy
    doesn't care about shipyards, but it seems like the ones in Virginia
    and Hawaii have been getting a lot more attention in budget requests. I
    also want to note that the congressional delegations in Maine and New
    Hampshire have responded to this omission by adding a succession of
    critical projects intended to improve efficiencies and capabilities at
    the shipyard. But this is not the proper way to address critical
    shipyard needs.
        GAO released a report in November 2010, titled: ``Defense
    Infrastructure: Actions Needed to Improve the Navy's Processes for
    Managing Public Shipyards' Restoration and Modernization Needs,'' that
    cited numerous concerns with the processes used by the Navy to capture,
    assess, and prioritize facility modernization requirements for
    shipyards. This report found that the Navy's modernization requirements
    at the Nation's four public shipyards were underestimated, even though
    the Navy has stated that the backlog of facility improvements at
    Portsmouth Naval Shipyard is $513 million. GAO recommended that the
    Navy develop guidance to standardize shipyard strategic planning
    requirements, improve its process for developing shipyard restoration
    and modernization needs, and document resolution of identified quality-
    of-life issues.
        I couldn't agree more. I believe it should be a core efficiency
    initiative of the Navy to develop a long-term and consistent funding
    plan for our Nation's four public shipyards--including Portsmouth Naval
    Shipyard, and then implement projects to improve their efficiency and
    effectiveness. For example, the current FYDP for the Navy includes a
    project to consolidate structural workshops at Portsmouth. (P-266).
    This project would ultimately save the taxpayers' money by improving
    efficiency of shipyard operations and reducing the cost and duration of
    submarine maintenance. This project is currently planned for the budget
    in fiscal year 2015. Why wait so long to carry out a project that will
    save money?
        Ms. Pfannenstiel. The Navy's fiscal year 2012 budget request
    deliberately targets our shore infrastructure investments to deliver
    the greatest impact on achieving our strategic and operational
    objectives. These investments will increase our warfighting capability,
    enhance nuclear weapons security, support energy initiatives, and
    improve sailor quality of life. The Navy is continuing to invest in the
    Portsmouth Naval Shipyard infrastructure within today's fiscally
    constrained environment through Sustainment (ST), Restoration and
    Modernization (RM), and MILCON. The Navy will continue to assess all
    MILCON requirements, to include the Structural Shop Consolidation
    Project (P266), in order to balance risk across the Navy and provide
    the most capability within fiscal constraints.
        The Navy continues to invest in all four Naval Shipyards. In fiscal
    year 2010, the Navy executed eight O&M (ST and RM) special projects at
    Portsmouth Naval Shipyard (PNSY) with a total value of $40.9 million.
    In fiscal year 2011, the Navy planned additional special projects,
    valued at $17 million, to repair and enable certification of Dry Dock
    #1. Finally, in fiscal year 2012, the Navy plans to invest $100.3
    million in four Energy special projects at PNSY.

        44. Senator Ayotte. Secretary Pfannenstiel, why is this not part of
    the Navy's efficiencies initiatives and included in the budget request
    for 2012?
        Ms. Pfannenstiel. The Navy's fiscal year 2012 budget request
    deliberately targets our shore infrastructure investments to deliver
    the greatest impact on achieving our strategic and operational
    objectives. These investments will increase our warfighting capability,
    enhance nuclear weapons security, support energy initiatives, and
    improve sailor quality of life.
        The Navy will continue to assess all MILCON requirements, to
    include the Portsmouth Naval Shipyard Structural Shop Consolidation
    Project (P266), in future budget submissions in order to balance risk
    across the Navy and provide the most capability within fiscal
    constraints.

        45. Senator Ayotte. Secretary Pfannenstiel, would you agree that
    the Navy's four public shipyards are critical in maintaining fleet
    readiness and supporting ongoing operations worldwide?
        Ms. Pfannenstiel. Yes, the Navy's four public shipyards, along with
    other elements of the Navy's shore infrastructure, are all critical in
    maintaining fleet readiness and supporting ongoing worldwide
    operations.

        46. Senator Ayotte. Secretary Pfannenstiel, please describe what
    actions the Navy has taken to implement the recommendations of the GAO
    report.
        Ms. Pfannenstiel.

    Recommendation A:
        Develop guidance that lays out the requirement for the shipyard to
    develop strategic plans that address their future restoration and
    modernization needs and that reflect the seven essential elements of a
    comprehensive strategic planning framework.

    Response A:
        The Ship and Submarine Global Shore Infrastructure Plan (GSIP),
    which serves as a higher order strategic document that provides the
    context for the individual shipyard plans, is being finalized. Once the
    GSIP is finalized, NAVSEA will develop guidance to align the individual
    shipyard plans and the Depot Maintenance Infrastructure Plan (DMIP)
    with the GSIP and the 2011 Naval Shipyard Business Plan. The guidance
    will reflect the seven essential elements of a comprehensive strategic
    planning framework as laid out by the GAO report.

    Recommendation B:
        Develop and document a method for systematically collecting and
    updating the Navy's configuration and condition information, including
    establishing measurable goals and timeframes, for updating its
    processes so that the data are complete and accurate.

    Response B:
        The Infrastructure Condition Assessment Program (ICAP) is in place
    to ensure assessment of the condition of all shipyard buildings and
    waterfront structures (piers, wharfs, etc). Additionally, waterfront
    structures receive a structural inspection on a 6-year cycle. The Navy
    will add conduct a ``pilot program'' assessment of dry docks to
    evaluate the associated costs for inclusion into the ICAP process.
    Finally, the shipyard utility infrastructure is being evaluated for
    potential assessment in the next few years. Updated condition ratings
    from these inspections will be uploaded into the internet Navy
    Facilities Asset Data Store (iNFADS) annually. The Navy currently plans
    to have all waterfront infrastructure (to include dry docks) evaluated
    and relevant data systems updated by fiscal year 2013. Additionally, a
    majority of configuration (functionality) ratings are currently
    available in iNFADS, which will be updated as necessary via the ongoing
    asset evaluation program.

    Recommendation C:
        Submit documentation to the Office of the Deputy Under Secretary of
    Defense for Installations and Environment to update the replacement
    unit cost factor for dry docks, so that plant replacement value
    calculations for dry docks, and subsequent restoration and
    modernization cost calculations, more accurately reflect the shipyards'
    unique infrastructure needs.

    Response C:
        The Navy is committed to accurately reflecting the magnitude of the
    dry-dock backlog. Navy is pursuing a re-assessment of the Replacement
    Unit Cost factors, and will provide this information to DUSD(I&E).

    Recommendation D:
        Develop guidance for the shipyards to systematically collect
    information on and document corrective actions to prioritize and
    address identified quality of life issues.

    Response D:
        With workforce safety, health, and quality of life as top
    priorities, the Navy develops comprehensive restoration and
    modernization (RM) projects, based primarily upon the Infrastructure
    Condition Assessment Program (ICAP) and Asset Evaluation (AE) program
    data. These assessments and subsequent projects specifically address
    improvements for people and processes in support of the Shipyard
    mission.
        The Navy cannot address every shortfall in the desired time-frame,
    due to fiscal constraints, so Shipyard projects are evaluated and
    prioritized with all Navy RM projects in accordance with the Navy's
    shore investment strategy. Our shore investment strategy provides shore
    infrastructure that is properly sized and aligned to enable warfighting
    and Joint capabilities, minimizes the decline of critical mission-
    essential and quality of life infrastructure, and optimizes warfare
    enterprise outputs and quality of service.
        The Navy is exploring methods to collect additional information on
    shipyard Quality-of-Life and Quality-of-Service issues.

        47. Senator Ayotte. Secretary Pfannenstiel, has the Navy issued
    guidance detailing the need for shipyard strategic plans or what to
    include in them? If so, please provide a copy of that guidance.
        Ms. Pfannenstiel. This guidance has not yet been issued. The Ship
    and Submarine Maintenance GSIP will serve as a higher order strategic
    document to provide the context for individual shipyard plans and is
    being finalized. The estimated completion date is summer 2011. Once the
    GSIP is finalized, NAVSEA will complete guidance to align the facility
    and infrastructure portion of individual shipyard plans with the GSIP.
    The estimated completion date for this guidance is one month after
    completion of the GSIP. The guidance will reflect the seven essential
    elements of a comprehensive strategic planning framework.

                   AIR FORCE BASING DECISIONS FOR THE TANKER

        48. Senator Ayotte. Secretary Yonkers, noting the recent
    announcement by the Air Force concerning the award of a contract to
    build a new air refueling tanker, I am aware that the Air Force is now
    in the early stages of the Strategic Basing Process (SBP) that will
    determine where the KC-46A will be stationed. As I am sure you are
    aware, Pease Air National Guard Base in New Hampshire would be an ideal
    location for the stationing of the new tanker. Since so many of the Air
    Force air refueling tanker missions are carried out by Air National
    Guard and Air Reserve units, when will the Air Force make a decision
    about the apportionment of the new aircraft between Active and Reserve
    components?
        Mr. Yonkers. The Strategic Basing process uses criteria-based
    analysis and the application of military judgment, linking mission and
    combatant commander requirements to installation attributes to identify
    locations that are best suited to support any given mission. The
    results of this analysis will be used to inform the basing decisions
    made by the Secretary and Chief of Staff of the Air Force.
        In support of KC-46A basing decisions, Air Mobility Command (AMC),
    is developing basing criteria in a way that best quantifies both
    operational and support requirements related to KC-46A basing. Based on
    these requirements and any Total Force Enterprise Strategic Force mix
    vector, the criteria may reflect the Active Duty/Air Reserve component
    mix, as applicable. After the criteria are finalized and approved by
    the Secretary, a briefing will be made available to interested members
    of Congress and their staffs near the end of this calendar year. AMC
    will then evaluate all Air Force installations against the criteria in
    an Enterprise-Wide Look, to identify candidate bases.
        After the release of the candidate bases list, Air Force site
    survey teams will conduct detailed, on-the-ground, evaluations at each
    candidate location covering a range of operational and facility issues.
    The results of the site surveys will be briefed to the Secretary and
    Chief of Staff who will then select the preferred and reasonable
    alternatives for beddown locations.
        Once the preferred and reasonable alternatives are identified,
    environmental analysis will be conducted in accordance with the NEPA.
    The Secretary and Chief of Staff site selection decision will become
    final after the Environmental Impact Analysis Process is completed.

        49. Senator Ayotte. Secretary Yonkers, will you keep this committee
    informed of any and all developments with this important basing
    process?
        Mr. Yonkers. The Air Force strategic basing process includes
    Congressional engagement opportunities throughout the process. In the
    case of the KC-46A, Congress will be briefed after the basing criteria
    are approved by the SecAF and CSAF, the base candidate list is
    approved, and the preferred alternative (or alternatives) is/are
    designated.

                               FORT BRAGG HOUSING

        50. Senator Ayotte. Secretary Hammack, I am so concerned about the
    situation at Fort Bragg, NC, concerning the tragic, sudden deaths of 12
    infants in military housing with no apparent cause in the last few
    years. With everything else our military members and their families
    have to contend with, they should not have to worry about the safety
    and security of their kids in homes provided by the military. I realize
    that an ongoing Army Criminal Investigation Command's (ACIC) probe is
    underway of the unexplained infant deaths at Fort Bragg, so there is
    limited information available to the public.
        I do know that the Consumer Product Safety Commission (CPSC)
    conducted testing to determine whether Chinese drywall or other
    environmentally unsafe building materials might have been a cause for
    the deaths. In February 2011, CPSC determined that there was no
    evidence of toxic drywall or other environmental factors contributing
    to the infants' deaths.
        I am also aware that a team of medical, epidemiology, industrial
    hygiene, and risk communication subject matter experts assigned to the
    U.S. Army Public Health Command was deployed to Fort Bragg in December
    2010 to initiate an epidemiological consultation regarding the infants'
    deaths among residents of on-post housing. Do you expect to receive a
    report from this team?
        Ms. Hammack. Yes. The team from the U.S. Army Public Health Command
    is in the process of concluding their investigation and will issue a
    report of their findings and recommendations. The team anticipates
    completion of their report by the end of April.

        51. Senator Ayotte. Secretary Hammack, when will the results of the
    team's consultation and investigation be released publicly?
        Ms. Hammack. The U.S. Army Public Health Command's team will
    provide a final report to the Fort Bragg leadership. Given the current
    timeline for completion of the report, we anticipate information will
    be available to the public sometime in May.

        52. Senator Ayotte. Secretary Hammack, do you believe the testing
    conducted on the environmental conditions in the homes has been
    adequate and comprehensive?
        Ms. Hammack. Yes. The homes have been tested extensively by
    multiple outside experts for an extremely comprehensive list of
    potential toxins, pollutants, and other chemicals. The results of the
    thousands of tests performed on these homes indicate that there are no
    known environmental factors that contributed to or caused the
    unfortunate deaths of these infants.

        53. Senator Ayotte. Secretary Hammack, do you believe additional
    testing, such as chamber tests, would be beneficial to comfort those
    families who live with infants in Fort Bragg housing?
        Ms. Hammack. Chamber tests were, in fact, conducted. In addition to
    the extensive testing done by the Consumer Product Safety Commission,
    Ft Bragg also had a contractor analyze drywall samples from 144
    Groesbeek St and 4 Darden St using the closed-chamber off-gassing
    method discussed in recent media reports. Closed-chamber off gassing
    analyses were completed in August 2009 (144 Groesbeek St) and May 2010
    (4 Darden St). Results from these tests were negative. Both the chamber
    testing and elemental sulfur testing completed by the Consumer Products
    Safety Commission of the Bragg drywall samples did not identify the
    presence of corrosive drywall. It is clear from repeated testing of all
    homes being evaluated in the current investigation that none contain
    corrosive drywall. No additional testing is required.

                  LEASES FOR MILITARY CONSTRUCTION ACTIVITIES

        54. Senator Ayotte. Dr. Robyn, on January 16, 2007, the DOD
    Inspector General (IG) reported that the Counter Intelligence Field
    Activity (CIFA) had failed to follow the required procedures before
    spending almost $100 million to lease office space in the National
    Capital Region (NCR). The IG reported that CIFA violated ``a myriad of
    statutes,'' including the Anti-Deficiency Act and congressional
    notification and approval requirements in entering into the lease and
    using the lease to fund capital improvements to the leased space,
    including work that would be classified as MILCON.
        Does DOD have guidance or regulations in place that ensure leases
    that include capital improvements are properly reviewed and funded, and
    that the required notifications are submitted to Congress?
        Dr. Robyn. Yes. DOD guidance and regulations that address the
    acquisition of leased facilities and space include:

        (1)  In response to CIFA services contract irregularities, the
    Office of the Under Secretary of Defense (Acquisitions, Technology and
    Logistics) issued two policy memorandums in March 2007 to prevent a
    similar problem from occurring in the future. These policy memorandums
    covered contracts for services and leasing office space.
        (2)  DOD Instruction 5305.5 Space Management Procedures, National
    Capital Region provides specific guidance on the requirements and
    approval process and congressional reporting requirements for
    acquisition of lease space in the NCR.
        (3)  The Services and WHS adhere to the reporting requirements of
    title 10, United States Code 2662. Additionally, each service has real
    property instructions that govern the Acquisition, Management, and
    Disposal of Real Property and Real Property Interests. These service
    specific instructions and regulations provide detailed guidance for
    complying with all applicable statutes dealing with DOD real property.

        55. Senator Ayotte. Dr. Robyn, can you provide a description of any
    leases entered into by a military service or defense agency in the last
    3 years that included a cost for capital improvements carried out by
    the lessor as a requirement of DOD?
        Dr. Robyn. In the last 3 years, the Air Force has entered into
    three leases--one from U.S. Air Forces Europe (Izmir Air Station,
    Turkey) and two from Air Mobility Command (Fairchild AFB), which fit
    this category.
    USAFE
             Izmir Air Station, Lease Nr. TUIZ-1680
             Lease Cost: $100,000.00 annually
             Capital Improvement cost: $400,000
             Term of the Lease: 1-year, Dec 15, 2010 thru Dec 14, 2011.
             Purpose of the Lease: Provides approximately 25,000 SF of
            space for the Izmir Air Station Exchange and Commissary. The
            building they are moving from can no longer be leased due to
            Anti-terrorism/ Force Protection requirements. The lessor was
            asked to make the space ready and to amortize the cost over a
            5-year term. The project will be ready for occupancy by August
            31, 2011.
             Location (where): Izmir Air Station, Turkey
    AMC
             Port of Moses Lake, DACA67-5-11-6
             Lease Cost: $94,670.00 per month
             Capital Improvement cost: Approximately $15,000
             Term of Lease: 1-year, January 1, 2011 thru December 31, 2011
             Purpose of Lease: This lease is in effect to support
            installation total runway renovation for aircraft, vehicles,
            and support equipment necessary to conduct the 92d Air
            Refueling Wing flying operations. This includes temporary use
            of the multiuse ramp located on the Southeast side of Taxiway
            Alpha and North of Hangar #2203, located at the Grant County
            International Airport. The project should be completed by the
            end of lease.
             Location (where): Moses Lake, WA
             Measurement Use and Occupancy: Approximately 74 Acres and
            159,908 Bldgs SF
    Spokane International Airport, DACA67-5-11-5
             Lease Cost: $16,767.00 per month
             Capital Improvement cost: Approximately $48,000
             Term of Lease: 1-year, January 1, 2011 thru December 31, 2011
             Purpose of Lease: This lease is necessary to support
            installation total runway renovation for aircraft parking and
            aircraft operation for 92d Air Refueling Wing flying during
            runway close. The project should be completed by the end of the
            lease.
             Location (where): Spokane, WA
             Measurement Use and Occupancy: Approximately 25.8 Acres

        The Army, Navy and Washington Headquarters Service report that
    during the last 3 years they have not entered into a lease that
    included a cost for capital improvements carried out by the lessor as a
    requirement of DOD.

                   ANTI-TERRORISM/FORCE PROTECTION STANDARDS

        56. Senator Ayotte. Dr. Robyn, in the aftermath of September 11,
    DOD revised and strengthened facility standards for anti-terrorism and
    force protection (AT/FP). Part of the revisions to Unified Facilities
    Criteria (UFC) 4-010-01 was to establish minimum AT/FP standards for
    leased space in the NCR that support DOD personnel. Since then, DOD has
    worked diligently to invest in new facilities and leases to ensure that
    DOD personnel were protected in facilities meeting the new standards.
        In 2009, DOD granted temporary relief to the specific requirement
    that all lease renewals executed after September 30, 2009, must comply
    with the enhanced DOD minimum AT/FP criteria for buildings that house
    DOD employees. Further, you were directed to develop, in coordination
    with GSA, a detailed plan of action to acquire UFC AT/FP compliant
    leased-facility space that will enable all DOD employees occupying
    leased facilities in the NCR to be located in AT/FP compliant space.
    What is the status of that plan?
        Dr. Robyn. The temporary relief from full compliance with DOD
    antiterrorism (AT) standards for buildings applied only to leases in
    the National Capital Region (NCR) that were affected by BRAC 2005
    recommendations. Other leases were unaffected.
        The Washington Headquarters Services (WHS), as the leasing agent
    within the NCR, developed a plan in cooperation with the General
    Services Administration (GSA) to have all DOD tenants in the NCR in AT
    compliant space between 2011 and 2016 by utilizing the following
    strategy:

             Retain approximately 2.8 million square feet of space
            in 54 locations that are compliant.
             Retain approximately 2.4 million square feet of space
            in 22 locations that are not currently compliant, but by
            reducing DOD's footprint in each building to below 25 percent
            of the usable square feet, they would become AT compliant.
             Return approximately 4.5 million square feet of non-
            compliant space in 47 buildings to GSA and vacate approximately
            350 thousand square feet of space leased by the Army Corps of
            Engineers
             Acquire approximately 2.5 million square feet of space
            of new, AT compliant space through GSA.

        WHS has held off implementing the lease acquisition part of the
    plan pending the outcome of a comparative assessment of AT standards
    for leased space. An outcome of this assessment could alter the
    Department's process for conducting AT risk assessments. The assessment
    is ongoing, with a completion targeted for late summer.

        57. Senator Ayotte. Dr. Robyn, can you provide an estimate of the
    approximate square footage and number of DOD personnel in leased space
    in the NCR that do not comply with current AT/FP standards?
        Dr. Robyn. DOD occupies approximately 8,979,279 square feet of
    leased space in the NCR. We estimate that approximately 6,224,217
    square feet square feet out of the total leased space is not UFC ATFP
    compliant space. We further estimate that 31,121 DOD personnel are
    housed in the non-compliant space.

        58. Senator Ayotte. Dr. Robyn, are you in the process of
    reassessing AT/FP standards for leased space? If so, what is the goal
    of the assessment?
        Dr. Robyn. Yes, DOD is now undertaking a comparative assessment of
    AT standards for leased space, with the goal of determining whether DOD
    will continue to use its own AT building standards, or will adopt the
    AT criteria established for the Federal Government at large developed
    by the Interagency Security Committee. The assessment is ongoing, with
    a decision targeted for late summer 2011.

        59. Senator Ayotte. Dr. Robyn, is DOD committed to ensuring a
    consistent standard of protection for its personnel working in leased
    space in the NCR?
        Dr. Robyn. Yes, DOD is committed to ensuring a consistent standard
    of protection for all of its personnel. However, a consistent standard
    of protection does not necessarily equate to a uniform level of
    protection across the board. The existing DOD standard recognizes
    differences in mission sensitivity and threat for different DOD tenant
    organizations that could result in varying levels of protection, all
    within a consistent standard. This is also the case with the security
    criteria developed by the Interagency Security Committee (ISC) for the
    rest of the Federal Government.

                    NATIONAL GUARD READINESS CENTERS REPORT

        60. Senator Ayotte. Secretary Hammack, the Senate Armed Services
    Committee last year directed the Secretary of the Army to report to
    this committee no later than February 1, 2011, on the results and
    recommendations of an independent study to review the conditions of
    3,000 readiness/reserve centers (formerly known as armories) for the
    Army National Guard over all 54 States/territories. These readiness
    centers in local communities serve as the primary facilities to support
    unit training as well as State operations. The committee is aware that
    40 percent of the Army National Guard (ARNG) facilities are over 50
    years old and about 40 percent of readiness centers do not adequately
    meet requirements for the support of training for the full range of
    mission essential tasks. Can you provide an update on the status of
    this report?
        Ms. Hammack. The office of the Assistant Secretary of the Army
    (Installations, Energy, and Environment) provided a written response to
    the chairman and ranking member on 18 March 2011. In summary, The Army
    National Guard reviewed the requirement and estimated a national study
    of this scope and scale will require resources beyond those available
    under a Continuing Resolution (P.L. 111-242).

        61. Senator Ayotte. Secretary Hammack, do you have any issues or
    concerns with the reporting requirement that this committee should be
    aware of?
        Ms. Hammack. The only concern is that an assessment of the cost of
    the study shows that is requires funding that is not currently in the
    budget.

        62. Senator Ayotte. Secretary Hammack, when will the report be
    provided to this committee?
        Ms. Hammack. The Army National Guard is eager to begin work on this
    study once funds become available and expects it will take a year to
    complete.

                 COSTS OF U.S. MILITARY FORCE POSTURE IN EUROPE

        63. Senator Ayotte. Dr. Robyn, on the issue of our U.S. force
    posture in Europe, the pending announcement of a change in the number
    of Army BCTs to be stationed in Europe for the time being raises
    questions about the certainty of our numbers of our forces over the
    long-term and which bases will endure in Europe. The Secretary of
    Defense announced as part of the budget release for 2012 that the Army
    plans to reduce 15,000 to 20,000 personnel starting in 2015, which is
    consistent with many of our NATO partners, who are also making drastic
    cuts to their military budgets and size of their forces to respond to
    tough fiscal times.
        With this as a backdrop, the President's budget for 2012 includes a
    request for authorization of $1.2 billion to construct a new medical
    center in Germany near Ramstein Air Force Base to replace the aging
    Landstuhl medical center. I know how important Landstuhl is to our
    military, serving as the first stop for extensive care for our severely
    wounded personnel evacuated from Afghanistan. As such, I support the
    construction of a world-class medical center to ensure the best care
    possible.
        This committee's staff has raised concerns with DOD on the size of
    the facility given the dynamic state of force structure in Europe and
    the hope at some point, we will no longer be fighting in the Middle
    East. Are you confident that the size and cost of the facility has been
    reviewed to ensure we are spending over a billion in taxpayers' funds
    in an efficient and effective manner?
        Dr. Robyn. Yes, the size and cost of the Kaiserslautern replacement
    medical facility is the minimum necessary to meet peacetime
    requirements while allowing the flexibility to meet contingency surge
    demands. In addition to the 31,000 beneficiaries supported in the
    immediate Kaiserslautern Military Community, this facility serves a
    catchment population (within a 55-mile radius) of 73,000 beneficiaries,
    and specialty medical referrals coming from another 172,000
    beneficiaries located across EUCOM.
        The facility will comply with world-class standards and evidence-
    based design principles. The hospital's size and cost are consistent
    with newly constructed peer facilities with similar patient loads and
    requirements. The facility will include built-in capabilities to meet
    its peacetime beneficiary demands and smoothly transition to address
    contingency operations when necessary. This project is a cost-effective
    solution to the challenges and risks facing our servicmembers and their
    families. The sizeable peacetime beneficiary population that would rely
    on this facility will fully utilize its capabilities and capacity.

        64. Senator Ayotte. Dr. Robyn, can you provide the analysis and
    modeling that was conducted by DOD to develop the scope and cost for
    this medical center?
        Dr. Robyn. I defer to the Tricare Management Activity, Office of
    the Assistant Secretary of Defense for Health Affairs to respond to
    this question as they are responsible for program and project
    development for the initiative.

        65. Senator Ayotte. Dr. Robyn, on the issue of costs for
    maintaining forces in Europe, do you have an estimate of the costs
    incurred by DOD to carry out the announcement today on maintaining Army
    brigades in Europe?
        Dr. Robyn. It will cost the Department $138 million/year for
    fiscal year 2014-2015 to retain four brigades in Europe as the 170th
    BCT and the 172nd BCT were scheduled to return in fiscal year 2012 and
    fiscal year 2013, respectively. Increases in costs are mostly
    associated with military pay allowances, base operations, and schools.
    However, DOD will still realize long-term cost savings associated with
    retaining only three brigades in Europe while maintaining our
    commitment to NATO and our allies.

        66. Senator Ayotte. Dr. Robyn, please provide an estimate of the
    costs to keep installations open and to bring all the facilities at
    that installation up to an adequate standard.
        Dr. Robyn. When two Brigades were programmed for return from
    Europe, the Army planned to close both Bamberg and Schweinfurt,
    Germany. Since a third Brigade will now remain, if one or both of these
    communities must be kept open facilities investments will be required.
    The requirements for MILCON and other Operations and Maintenance
    facilities investments will be considered during the stationing
    analysis and decision processes.

                          NAVAL OPERATIONS IN BAHRAIN

        67. Senator Ayotte. Secretary Pfannenstiel, I realize that the
    events in Bahrain are extremely fluid at this point and the future of
    our critical naval presence at Manama is more a question for the
    Department of State (DOS) and General Mattis at CENTCOM. But the budget
    request for fiscal year 2012 for the Navy includes an authorization of
    $100 million for MILCON at Manama in addition to $252 million provided
    over the past 2 years. I've been told that these funds are not intended
    to support new missions at Manama, but to replace and relocate existing
    facilities. What is the Navy's plan for the use of these funds?
        Ms. Pfannenstiel. The PB12 budget includes six MILCON projects in
    Bahrain over the FYDP to ensure Fleet operational capability. For 2012,
    the budget request includes two projects: Bachelor Quarters/Phase 2
    ($55 million) and Waterfront Development/Phase 4 ($45.2 million). These
    projects do not replace or relocate existing facilities. These projects
    support new operational requirements.

        68. Senator Ayotte. Secretary Pfannenstiel, given the uncertainty
    in that country, wouldn't it be prudent to defer these MILCON
    investments until we have a better understanding of the future of our
    forces and their families stationed in Bahrain?
        Ms. Pfannenstiel. Bahrain remains the location for our Naval Forces
    CENTCOM/U.S. Fifth Fleet headquarters, so it is vital to have
    facilities to enable our Navy's forward maritime presence and enable
    rapid crisis response. The PB12 budget includes six MILCON projects in
    Bahrain over the FYDP to ensure Fleet operational capability. The Navy
    will adjust future budget requests if operational conditions change.

             FEDERAL FACILITIES AGREEMENT AT TYNDALL AIR FORCE BASE

        69. Senator Ayotte. Dr. Robyn and Secretary Yonkers, cleanup at DOD
    Superfund sites is routinely conducted under the terms of a Federal
    Facilities Agreement with the Environmental Protection Agency (EPA). I
    understand that DOD has concluded such agreements for all but a handful
    of its Superfund sites. That said, I was concerned to learn that DOD's
    negotiations with EPA over cleanup at Tyndall Air Force Base, Florida,
    which had been ongoing for more than a year have reached a stalemate
    and that EPA has now withdrawn from negotiations and is threatening
    enforcement action against DOD. What is the status of negotiations with
    EPA at Tyndall Air Force Base?
        Dr. Robyn. The Office of the Deputy Under Secretary of Defense
    (Installations & Environment) defers to the Department of the Air Force
    for this QFR response because the Air Force exercises active oversight
    of this issue.
        Mr. Yonkers. In March 2011, EPA responded to a December 2010 Air
    Force proposal by stating that it considered negotiations closed on the
    Federal Facility Agreement (FFA) for Tyndall and is considering ``other
    options.'' The Air Force is not aware of what options EPA is
    considering but is willing to continue discussions at any time.
        In the interim and in order to take whatever action is necessary to
    protect human health and the environment, consistent with applicable
    authorities and requirements, the Air Force decided to press ahead
    expeditiously with cleanup of known releases following the provisions
    of the FFA template agreed to by DOD and EPA in February 2009. The FFA
    template also includes actions to provide for suitable public
    involvement, which the Air Force will implement, and the Air Force will
    continue to request EPA review and approval on various documents as
    provided in the template.

        70. Senator Ayotte. Dr. Robyn and Secretary Yonkers, could an
    enforcement action by EPA at Tyndall impact the ability to conduct
    military training there and over the Gulf of Mexico?
        Dr. Robyn. The Office of the Deputy Under Secretary of Defense
    (Installations & Environment) defers to the Department of the Air Force
    for this QFR response because the Air Force exercises active oversight
    of this issue.
        Mr. Yonkers. Yes. For example, an enforcement action that mandated
    specific actions (e.g., a study to determine if there is a release) for
    a specific area on a range (e.g., an area that included targets) be
    completed by a specific date could limit or conflict with training
    schedules.

        71. Senator Ayotte. Dr. Robyn and Secretary Yonkers, what sort of
    training and how many units use Tyndall's facilities?
        Dr. Robyn. The Office of the Deputy Under Secretary of Defense
    (Installations & Environment) defers to the Department of the Air Force
    for this QFR response because the Air Force exercises active oversight
    of this issue.
        Mr. Yonkers. There are many units throughout DOD and foreign forces
    that use the ranges at Tyndall Air Force Base, an Air Education and
    Training Command (AETC) facility. The primary mission activity at
    Tyndall AFB (TAFB) is the training and evaluation of personnel and
    weapons. The 325th Fighter Wing (FW) conducts academic and hands-on
    training for F-15 Eagle pilots to fly in air superiority roles.
    Training is directed to pilots who have never flown a fighter aircraft,
    experienced pilots converting to, or requalifying in, the F-15 and
    those who will become instructors in the F-15. Currently, the 1st, 2nd,
    and 95th Fighter Squadrons perform the flying training operations of
    the wing. The 43rd Fighter Squadron was recently stood up and now
    trains pilots for the F/A-22 Raptor. Additionally, the 325th Air
    Control Squadron trains air battle managers in the U.S. Air Force.
        The 53rd Weapons Evaluation Group (WEG) conducts air-to-air Weapon
    Systems Evaluations Programs, overseeing flight operations and recovery
    of full-scale (QF-4) and subscale (BQM-34 and MQM-107) drone targets.
    The Air Force, Air National Guard, Navy, Canadian Air Defense Force
    units, and other foreign military forces come to Tyndall to fire their
    missiles at realistic targets over the Gulf of Mexico. It also supports
    Weapons Instructor Course air-to-air formal training syllabi and
    conducts William Tell, the tri-annual worldwide air-to-air weapons
    meet, at Tyndall. The 53rd WEG includes four squadrons; three of these
    squadrons are located at TAFB. They include the 81st Test Support
    Squadron (TSS), the 82nd Aerial Targets Squadron (ATRS), and the 83rd
    Fighter Weapons Squadron (FWS).
        Detachment 1, 823rd Red Horse Squadron (RHS), mission is to provide
    agile combat support training to Active Duty, Air National Guard, and
    Air Force Reserve civil engineer, services, and personnel teams so that
    they can construct, operate, and maintain forward operating bases for
    deployed forces.
        The 372nd Training Squadron, Detachment 4 provides worldwide and
    local training on F-15 aircraft systems and support equipment.
    Customers include all active duty, Air National Guard, and Reserve
    units operating F-15 Eagle aircraft.
        The Noncommissioned Officer (NCO) Academy is a part of Air
    University with the establishment of the College for Enlisted
    Professional Military Education. The Academy has graduated more than
    24,110 students since its origin in March 1957.

        72. Senator Ayotte. Dr. Robyn and Secretary Yonkers, is it limited
    to just those units stationed at Tyndall, or could this possibly impact
    a wider number of DOD units?
        Dr. Robyn. The Office of the Deputy Under Secretary of Defense
    (Installations & Environment) defers to the Department of the Air Force
    for this QFR response because the Air Force exercises active oversight
    of this issue.
        Mr. Yonkers. Any unit, whether stationed at Tyndall or not, that
    uses the operational ranges at Tyndall could be impacted. For example,
    units from the Air National Guard, Navy, Canadian Air Defense Force
    units, and other foreign military forces come to Tyndall to fire their
    missiles at realistic targets over the Gulf of Mexico.
        The inclusion of operational ranges, in their entirety, in an
    agreement that would subject the range's total acreage to cleanup
    processes and regulatory enforcement is unprecedented for the DOD.
    Installations on the National Priorities List (NPL) with Federal
    Facility Agreements (FFA) could be approached to add any operational
    ranges to the agreement. In addition, those installations on the NPL
    that have FFA negotiations ongoing could be expected to include them.
    Thus all units that are on and/or use ranges on NPL installations could
    be affected.

        73. Senator Ayotte. Dr. Robyn and Secretary Yonkers, what are DOD
    and the Air Force doing to try to resolve the issue?
        Dr. Robyn. The Office of the Deputy Under Secretary of Defense
    (Installations & Environment) defers to the Department of the Air Force
    for this QFR response because the Air Force exercises active oversight
    of this issue.
        Mr. Yonkers. After multiple discussions through 2010 and several
    OSD/AF proposals that matched the template agreed upon by OSD and EPA
    in 2009, on March 1, 2011 EPA stated that it considered negotiations on
    the Federal Facility Agreement closed. The Air Force is willing to
    continue negotiations at any time to complete the interagency agreement
    required by the Comprehensive Environmental Response, Compensation and
    Liability Act. The Air Force's first priority is to ensure the
    protection of the communities on and surrounding Tyndall AFB by
    continuing with the cleanup of known releases in an efficient and
    effective manner. We will continue frequent and transparent
    communication with EPA Region 4 in every aspect of the cleanup process.

                       INSTALLATIONS RESTORATION PROGRAM

        74. Senator Ayotte. Dr. Robyn, Secretary Hammack, Secretary
    Pfannenstiel, and Secretary Yonkers, I understand that cleanup of
    hazardous substances other than munitions at active installations is
    conducted under the Installations Restoration Program and that DOD's
    goal is to have a remedy in place or response complete at all its
    active installation cleanup sites by 2014. Are you on track for meeting
    the 2014 goal?
        Dr. Robyn. As of the end of fiscal year 2010, the Department is on
    track to achieve its remedy in place or response complete goal at 99.6
    percent of its 19,865 Installation Restoration Program sites on active
    installations by the end of fiscal year 2014.
        Ms. Hammack. The Army will achieve the fiscal year 2014 Remedy in
    Place (RIP) or Response Complete (RC) goal for more than 99.5 percent
    of its 10,894 Installation Restoration Program sites on active
    installations.
        Ms. Pfannenstiel. As of the end of fiscal year 2010, the Department
    has completed cleanup or has remedies in place at 86 percent of the
    3,834 contaminated sites on active installations. The DOD goal to have
    remedies in place or responses completed by the year 2014 was
    established in 1996 when the department had 3,256 known contaminated
    sites. The Department has identified 578 additional sites requiring
    cleanup over the past 15 years. We have been working aggressively to
    achieve remedy in place or response for all sites by 2014, but have
    reached the limits of possibility. As of the end of fiscal year 2010,
    we are projecting 46 sites will not meet this DOD goal, but will by
    2017. We consider this a huge success that we have accomplished site
    cleanup at both our original inventory of site as well as 532
    additional sites in this time period.
        Mr. Yonkers. Air Force will have a remedy in place or response
    complete at 99.5 percent of its 6651 active installation cleanup sites
    by 2014. Approximately 32 sites are projected to miss the 2014 goal.

        75. Senator Ayotte. Dr. Robyn, Secretary Hammack, Secretary
    Pfannenstiel, and Secretary Yonkers, is your budget for environmental
    restoration in the fiscal year 2012 request sufficient to meet this
    goal?
        Dr. Robyn. Yes. The budget for environmental restoration in the
    fiscal year 2012 request is sufficient to achieve the goal of remedy in
    place or response complete at all active Installation Restoration
    Program sites by fiscal year 2014. Funding is not the issue for the few
    sites that will not achieve the fiscal year 2014 goal. The sites that
    will not meet the fiscal year 2014 goal are sites with complex cleanup
    requirements.
        Ms. Hammack. Yes. The fiscal year 2012 budget is sufficient for
    meeting the Army's environmental restoration requirements, and funding
    is not the source of the complications that have prevented a few sites
    from meeting the fiscal year 2014 Remedy in Place/Response Complete
    goal.
        Ms. Pfannenstiel. The DON fiscal year 2012 budget for the
    Environmental Restoration, Navy account is sufficient to meet the
    projections described in question 74. Additional funds would have
    limited impact on the 46 site projected to extend past 2014. The
    extended schedules for these sites is driven by the date of site
    discovery and time required to complete regulatory processes and
    community engagement, not lack of funding.
        Mr. Yonkers. Yes, the budget is sufficient. The AF is projecting to
    have remedy in place or response complete at 99.5 percent of its site
    by fiscal year 2014. The 32 sites that may miss the goal are due to
    complex site conditions and a funding increase will not expedite the
    cleanup.

        76. Senator Ayotte. Dr. Robyn, Secretary Hammack, Secretary
    Pfannenstiel, and Secretary Yonkers, if you have sites that will lag
    behind, describe why the goal cannot be achieved on time.
        Dr. Robyn. The Department projects that 80 active Installation
    Restoration Program sites will not achieve the goal to have a remedy in
    place or response complete by fiscal year 2014. There are two primary
    reasons these sites will miss the goal. First, some of these sites have
    complex cleanup requirements that will take several years to complete.
    Second, over the past 2 years DOD discovered 67 new sites. It will take
    time to move these sites through the cleanup phases and achieve the
    goal.
        Ms. Hammack. There are various challenges which we expect to cause
    48 of 10,894 sites to miss the fiscal year 2014 Remedy in Place/
    Response Complete goal. At several of these sites, the releases to the
    environment were discovered more recently and response actions are
    still under way. It takes time for the Army to complete the
    investigations, remedy selection, and remedy implementation steps,
    while still including regulatory and public consultation requirements.
    Additionally, technical challenges are being experienced at some sites
    with contaminants that pose particular treatment complications and
    difficult geologic settings. The feasibility studies to confirm the
    effectiveness of remedial approaches are more extensive, and it is time
    consuming to implement these more complex remedies.
        Ms. Pfannenstiel. As described above, the extended schedules for
    these sites is driven by the date of site discovery and time required
    to complete regulatory processes and community engagement, not lack of
    funding. DON is going to far exceed the goal based on the initial site
    inventory from 1996 when the 2014 goal was established.
        Mr. Yonkers. The Air Force projects that 32 sites will miss the DOD
    fiscal year 2014 goal. These are complex sites where investigations are
    taking longer than the AF had expected. We are working closely with the
    regulatory agencies to expedite the investigations and to put remedies
    in place. This is critical, as in some cases regulators are slow or
    decline to coordinate/approve cleanup documents which in turn may slow
    cleanup or if the AF proceeds without regulator participation, the AF
    becomes vulnerable to objections from regulators after cleanup is
    underway or complete. For example, negotiations between the AF and EPA
    over the governing Federal Facilities Agreement at Tyndall AFB are
    stalled. As a result, the AF, while inviting EPA participation,
    anticipates cleanup will proceed without EPA support.

        77. Senator Ayotte. Dr. Robyn, Secretary Hammack, Secretary
    Pfannenstiel, and Secretary Yonkers, I understand that cleanup of all
    of DOD's military munitions and their components at both its active and
    inactive sites is a huge undertaking and that cleanup is a long-term
    undertaking and liability that may take decades and cost billions. What
    is your estimate of the extent of the cleanup required under the
    Military Munitions Response Program (MMRP) and how long do you estimate
    it will take to complete the cleanup?
        Dr. Robyn. The Department has nearly 4,500 MMRP sites in its
    inventory, with an estimated cost to complete cleanup, including long-
    term management (LTM), of $15.2 billion. The Department projects that
    it will complete cleanup, with the exception of LTM, at:

             95 percent of MMRP sites on active installations by
            the end of fiscal year 2021.
             95 percent of MMRP sites on Legacy BRAC installations
            by the end of fiscal year 2018.
             95 percent of MMRP sites on BRAC 2005 installations by
            the end of fiscal year 2016.

        The Department is in the process of completing site inspections
    (SI) at MMRP sites on Formerly Used Defense Site properties. Once the
    Department completes the remaining SIs, it will have a better
    understanding of the cleanup requirements associated with these sites.
        Ms. Hammack. DOD established goals for the active Sites, Legacy
    BRAC and BRAC 2005 MMRP. The Army has 1,528 of these MMRP sites with an
    estimated cost to complete of $13.8B.

             The Army will achieve approximately 99.7 percent of
            the fiscal year 2020 Response Complete (RC) goal for Active
            MMRP sites.
             Legacy BRAC MMRP completed 58 percent of its fiscal
            year 2009 RC goal. The Legacy BRAC MMRP is projected to achieve
            RC by 2030, however, any installation that had sites that
            presented an imminent and substantial endangerment to human
            health or safety or the environment have been addressed.
             The BRAC 2005 MMRP is projected to meet its RC goal of
            fiscal year 2017.
             The DOD has not established an MMRP RC goal for the
            Formerly Used Defense Site (FUDS) Program for which the Army is
            the Executive Agent. Munitions response actions at FUDS are
            more complex, given that DOD no longer controls the property
            and often there are other responsible parties involved in the
            property's restoration. The Army expects to achieve RC for all
            MMRP sites in the FUDS inventory in about 50 years.

        Ms. Pfannenstiel. DON has identified a total of 330 munitions
    response sites to date. We currently have achieved remedies in place or
    response complete at of these sites (37 percent). We are on track to
    achieve 100 percent remedies in place or response complete by 2021.
        Mr. Yonkers. Given the known parameters and setting the goal as
    site completion, our planned estimated cost at this time is $1.2
    billion; however, this estimate does not include water ranges and
    operational ranges. The Air Force expects to complete the preliminary
    site assessments by 2011, to complete 90 percent of our responses by
    2018, and to complete 95 percent of our responses by 2021. If the EPA
    sets cleanup standards for additional munitions constituents, or
    tightens standards for the cleanup of constituents that are already
    regulated, the cost will increase and the scheduled cleanup will be
    delayed.

        78. Senator Ayotte. Dr. Robyn, Secretary Hammack, Secretary
    Pfannenstiel, and Secretary Yonkers, DOD has planned for years to shift
    resources to the MMRP when cleanup of other hazardous substances at
    active installations is complete. Now, however, there are enormous
    fiscal pressures on the budget. Is such a shift of funding priority
    going to survive budgetary pressures?
        Dr. Robyn. Yes. Despite budgetary pressures, the Department expects
    that funding will be sufficient to switch resources to the Military
    Munitions Response Program when cleanup of other hazardous substances
    at active installations is complete.
        Ms. Hammack. The Army expects that there will be sufficient funds
    appropriated for necessary response actions at MMRP sites that pose an
    unacceptable risk or hazard to human health or safety or the
    environment. The Army will continue to seek funding to address these
    requirements.
        Ms. Pfannenstiel. All programs are experiencing budgetary
    pressures. However, DON is still planning to shift resources to the
    MMRP when cleanup of other hazardous substances at active installations
    is complete.
        Mr. Yonkers. My goal is to achieve clean up of all contamination
    (hazardous substance and Military Munitions) and bring the Air Force
    land back to full mission use. I feel confident that we will maintain
    sufficient funding to carry on the cleanup in an expeditious manner
    even under the severe budgetary pressure. We continue to create
    efficiencies and opportunities in our Defense Environmental Restoration
    Account (DERA) and BRAC program. AF policy signed Feb 2011 refocuses
    the AF's DERA and BRAC cleanup program from meeting intermediary
    cleanup milestones to accelerating site completion. Using a
    performance-based restoration approach to address this new focus is
    just one example of the AF's use of efficiencies to maximize the use of
    available funding.

        79. Senator Ayotte. Dr. Robyn, Secretary Hammack, Secretary
    Pfannenstiel, and Secretary Yonkers, I understand that DOD has been
    pursuing technology that could vastly decrease the cost of unexploded
    ordnance (UXO) cleanup and much more rapidly result in turning land
    back over to States and communities for productive use. What can you
    tell me about this technology and your efforts to gain its acceptance
    by regulators and the contractor community which does cleanup work?
        Dr. Robyn. The Department is supporting the Unexploded Ordnance
    (UXO) Live Site Demonstration Project, which uses a classification
    technology that assists in discriminating UXO from scrap. The
    Department is working to demonstrate that the technology is effective
    at actual munitions response sites of varying degrees of complexity.
    This technology is particularly important because the Department wastes
    an extraordinary amount of time and money unearthing harmless scrap.
    With this new technology, we will be able to focus on removing only
    those items we deem to be harmful. The Defense Science Board has
    indicated this could reduce our UXO cleanup costs by 75 percent. We are
    working with EPA's Federal Facilities Restoration and Reuse Office, the
    Environmental Council of States, and the Association of State and
    Territorial Solid Waste Management Officials to ensure environmental
    regulators are familiar with the technology and can give it their
    support at future munitions response site cleanups. We are also working
    with the National Association of Ordnance Contractors and the U.S. Army
    Corps of Engineers to identify and resolve contracting disincentives to
    the use of innovative technologies as a whole in DOD's environmental
    cleanup program.
        Ms. Hammack. The DOD has invested $89 Million in developing
    munitions response technologies over the last several years. Although
    these technologies are advancing significantly, the next generation
    technologies are not yet fully mature. DOD, its contractors, and most
    regulators, understand that there is no single technology that will
    support the varying conditions (e.g., geology, different munitions-
    related activities that occurred, the variety of munitions used, the
    physical differences and varying land uses) found within a given
    munitions response site (MRS) and across all MRS. Metal detection and
    characterization technologies that are better able to discriminate
    between scrap metal and munitions related items have gone through the
    demonstration and ESTCP validation process. Although this technology is
    commercially available, its use has been limited and has received
    varying levels of regulatory acceptance.
        Ms. Pfannenstiel. DON is not directly responsible for this issue,
    and therefore DON does not have an opinion or response relating to this
    issue.
        Mr. Yonkers. OSD is the lead for Un-exploded Ordnance (UXO) cleanup
    technology development, and I must refer you to them for the answer on
    cost savings should UXO discrimination techniques prove promising.
        Although OSD is the lead for UXO technology development, we support
    their effort and have provided funding to OSD to help their development
    effort. We will be working closely to implement these technologies on
    the AF installations to reduce our cleanup cost. In addition I would
    like to point out that we are also investing in a number of
    technologies that promote good stewardship of active bombing and
    gunnery ranges. Good stewardship is a top priority within the AF and
    responsible management of range lands will enable future efforts should
    DOD decide to close and transfer these lands for commercial use. Many
    of our AF Research Labs work closely with the U.S. Army Corps of
    Engineers, Strategic Environmental Research and Development Program
    (SERDP), and the ESTCP to test and validate UXO and range clearance
    processes. This includes UXO discrimination techniques and use of
    robotics for the safety of UXO personnel. DOD has been pursuing such
    technology for over a decade; partnering with industry through the
    SERDP/ESTCP venues. The primary issue with UXO clearance technology
    always comes down to safety of DOD or UXO contract personnel.
        Another organization the AF works closely with is the UXO Center of
    Excellence (UXOCOE) who is responsible for centrally coordinating DODs
    UXO research and engineering detection and neutralization technology
    efforts to ensure that required technology needs are met, while at the
    same time avoiding duplication and ensuring efficiencies within DOD.

                                   BRAC SITES

        80. Senator Ayotte. Dr. Robyn, Secretary Hammack, Secretary
    Pfannenstiel, and Secretary Yonkers, where does DOD stand on cleanup of
    its legacy BRAC sites, those that were closed under BRAC rounds before
    2005?
        Dr. Robyn. The Department is working aggressively to complete the
    cleanup of legacy BRAC sites. By the end of 2010, the Department, in
    cooperation with State agencies and the U.S. EPA, had completed cleanup
    activities on 81 percent of the Installation Restoration Program sites,
    and it is now monitoring the results. For the Military Munitions
    Response Sites, the comparable figure is 67 percent.
        Using existing authorities, the Department is able to transfer the
    remaining sites to a redevelopment authority while cleanup continues,
    if the community is interested.
        Ms. Hammack. The Army legacy BRAC program has completed cleanup at
    1,847 (91 percent) of 2,035 environmental sites at 118 installations
    that closed during BRAC rounds in 1988, 1991, 1993, and 1995. The
    estimated cost to complete cleanup (including compliance costs) at the
    remaining 188 sites is $1,008 million. This includes long-term
    management with a target completion date of 2030.
        Ms. Pfannenstiel. DON has now spent about $4.5 billion on
    environmental cleanup, environmental compliance, and program management
    costs at prior BRAC locations through fiscal year 2010. Our remaining
    environmental cost to complete fiscal year 2011 and beyond is
    approximately $1.3 billion. At the end of fiscal year 2010, DON has
    disposed of 93 percent of Prior BRAC properties and has 12,353 acres
    remaining for disposal.
        Mr. Yonkers. Of 1,950 legacy BRAC environmental sites, the Air
    Force has achieved site completion at 1,092 (56 percent). The Air Force
    goal is to complete 75 percent of all BRAC environmental sites by the
    end of 2012, and 90 percent by the end of 2015.
        Of the original 87,000 acres excessed in legacy BRAC, 78,000 acres
    (90 percent) have been transferred. Final legacy BRAC whole base
    property transfer is scheduled for fiscal year 2014. The Air Force has
    supported expeditious community reuse and redevelopment of property
    that is not available for immediate conveyance with long-term leases in
    furtherance of conveyance. These leases allow the communities to begin
    redevelopment efforts in advance of receipt of the property by deed,
    further enhancing economic recovery.

        81. Senator Ayotte. Dr. Robyn, Secretary Hammack, Secretary
    Pfannenstiel, and Secretary Yonkers, where do we stand on cleanup of
    the 2005 BRAC sites?
        Dr. Robyn. The Department is working aggressively to complete the
    cleanup of BRAC 2005 sites. By the end of 2010, the Department, in
    cooperation with State agencies and the EPA, had completed cleanup
    activities on 40 percent of the Installation Restoration Program sites,
    and it is now monitoring the results. For the Military Munitions
    Response Sites, the comparable figure is 39 percent.
        Using existing authorities, the Department is able to transfer the
    remaining sites to a redevelopment authority while cleanup continues,
    if the community is interested.
        Ms. Hammack. The Army has completed cleanup at 71 (54 percent) of
    155 environmental sites at 18 installations closing under BRAC 2005
    that have cleanup requirements. The cost to complete cleanup (including
    compliance costs) at the remaining 71 sites is $398 million. This
    includes long-term management with a target completion date of 2017.
        Ms. Pfannenstiel. DON has spent about $170 million on environmental
    cleanup, environmental compliance, and program management costs at BRAC
    2005 locations through fiscal year 2010. Our cost to complete remaining
    environmental cleanup for fiscal year 2011 and beyond is $117 million.
    At the end of fiscal year 2010, DON has disposed of 45 percent of BRAC
    2005 properties and has 10,131 acres remaining for disposal.
        Mr. Yonkers. Of 81 BRAC 05 environmental sites, the Air Force has
    achieved site completion at 56 (69 percent). The Air Force goal is to
    complete 75 percent of all BRAC environmental sites by the end of 2012,
    and 90 percent by the end of 2015. Six of our eight BRAC 05
    installations will have all environmental sites completed before 15
    September 2011. The remaining 2 installations have 23 sites including
    groundwater cleanup that will continue beyond September 2011.
        To date, 164 (23 percent) of the original 700 BRAC 05 acres have
    been transferred, which includes the whole base transfer of the former
    General Mitchell Air Reserve Station (ARS), WI. Final BRAC 05 whole
    base transfer is scheduled for fiscal year 2013.

        82. Senator Ayotte. Dr. Robyn, Secretary Hammack, Secretary
    Pfannenstiel, and Secretary Yonkers, when do you think all BRAC sites
    will be cleaned up and turned over--when are we done?
        Dr. Robyn. Using existing authorities, the Department is able to
    transfer the remaining sites to a redevelopment authority while cleanup
    continues, if the community is interested. Therefore, when all of the
    BRAC sites will be turned over will depend on the communities' interest
    and ability to redevelop the properties.
        The Department projects that it will complete cleanup at 95 percent
    of the hazardous waste sites on Legacy BRAC installations by the end of
    fiscal year 2018; at all Military Munitions Response Program (MMRP)
    sites on Legacy BRAC installations by the end of fiscal year 2042; at
    all hazardous waste sites on BRAC 2005 installations by the end of
    fiscal year 2041; and at all MMRP sites on BRAC 2005 installations by
    the end of fiscal year 2017.
        Ms. Hammack. The Army BRAC Environmental Program projects that RIP/
    RC will be achieved at Army installations closing under the BRAC 2005
    by fiscal year 2017. Legacy BRAC installations are projected to achieve
    RIP/RC by 2030.
        Ms. Pfannenstiel. The majority of sites are scheduled to have an
    environmental remedy in place by fiscal year 2015. Long term
    monitoring, however, will continue to fiscal year 2040 and beyond for
    sites such as groundwater plumes, landfills, and sites with restricted
    use.
        Most sites are also scheduled to be transferred by fiscal year 2015
    with the last installations scheduled to be transferred in fiscal year
    2020.
        Mr. Yonkers. The Air Force goal is to complete 90 percent of all
    legacy BRAC environmental sites by the end of 2015. We are unable to
    provide of a definitive time when the last of the cleanups will be
    completed. For example, groundwater cleanup is complex and completion
    could take decades.
        Final legacy BRAC whole base transfer is scheduled for fiscal year
    2014. Of the original 87,000 acres excessed in legacy BRAC, 78,000
    acres (90 percent) have been transferred. The Air Force retains
    responsibility to complete environmental remediation on any open sites
    at the time of transfer.

        83. Senator Ayotte. Dr. Robyn, on the issue of the 2005 round of
    BRAC, as you may know, DOD is required by law to complete all actions
    resulting from the 2005 BRAC round by September 15, 2011. As of this
    date only 6 months away from the statutory deadline, DOD has
    accumulated hundreds of millions of dollars in savings due to the
    economic downturn, and as opposed to returning those funds to the
    General Treasury, is now considering spending those funds on additional
    projects that do not directly support the BRAC moves. From a fiscal
    responsibility perspective, has DOD established a policy to determine
    which additional projects can be funded from the BRAC account?
        Dr. Robyn. It is not the Department's policy to fund additional
    support facilities simply because bid savings are available. As you are
    aware, however, the BRAC statute gives the Department the authority and
    flexibility to reprogram funds within the BRAC account in furtherance
    of implementation, and we have used this flexibility to ensure that
    BRAC recommendations are implemented efficiently and effectively. For
    example, the Department increased funding for construction projects to
    address the unfavorable market conditions that existed earlier in the
    implementation period. We also used this authority to apply savings to
    offset cost growth due to unexpected site conditions and to address the
    concerns of Congress regarding the quality of facilities being built at
    the new Walter Reed National Military Medical Center at Bethesda.

        84. Senator Ayotte. Dr. Robyn, will every support facility on a
    military installation that may have an impact from a BRAC move
    supporting incoming personnel be eligible for improvements or
    replacement using BRAC funds?
        Dr. Robyn. Throughout the six-year implementation process, the DOD
    Components have made decisions to fund projects that they felt were
    necessary to support BRAC implementation. My office has reviewed these
    decisions regularly and found them to be both prudent and fully within
    the authority provided by the BRAC statute.

        85. Senator Ayotte. Dr. Robyn, according to current policy, can the
    Services continue to identify and award new MILCON projects indirectly
    supporting functions right up to the BRAC statutory completion date?
        Dr. Robyn. There are some direct and indirect infrastructure
    projects where some elements of construction will continue after
    September 15, 2011. The Department is working diligently to ensure we
    satisfy our BRAC legal obligations, even if some construction continues
    past the deadline.

        86. Senator Ayotte. Dr. Robyn, does the Office of the Secretary of
    Defense (OSD) have an estimate of the impact of funding projects from
    the BRAC account that are not directly supporting the relocating
    function will have on total 2005 BRAC expenditures and projected
    savings?
        Dr. Robyn. The costs and savings associated with the projects are
    imbedded within the $35B implementation cost and $4 billion annual
    savings generated by BRAC 2005. This represents the combined effort of
    the 222 recommendations that the Department is executing. We do not
    have an explicit break out of projects deemed ``direct'' or indirect''
    within each recommendation.

        87. Senator Ayotte. Secretary Hammack, in April 2010, the Army
    notified Congress of its intent to use BRAC bid savings to award a
    MILCON project to construct an eating establishment that would be run
    by a contracted vendor in support of Army Material Command (AMC)
    Headquarters at Redstone Arsenal, Alabama. Both the Senate Armed
    Services Committee and the Senate Appropriations Committee expressed
    concerns with using BRAC MILCON funds for this purpose and asked the
    Army to consider the use of proceeds from a non-appropriated fund
    contract for the operation of other eating establishments at Redstone
    Arsenal to fund the construction of the AMC eatery. Please provide an
    update on the status of this project.
        Ms. Hammack. The Army issued a conditional award to Aramark, the
    only offeror for a combined Missile Defense Agency (MDA)/AMC project,
    in late January and we have been in negotiations with them since that
    time. Our approach bundled the operation of the MDA cafeteria and a
    small coffee shop with a Public Private Venture (PPV) to fund, design,
    construct and operate the AMC Cafeteria without executing the MILCON
    project. When negotiations are complete and the required Congressional
    approval is received for the PPV project, we expect construction to be
    complete in 10 months.

        88. Senator Ayotte. Secretary Hammack, can you provide the
    justification, a collective bargaining agreement in this case, that was
    used to justify the need to build a dedicated cafeteria next to the new
    AMC headquarters building?
        Ms. Hammack. The current bargaining agreement requires us to
    negotiate if we change any work conditions of the bargaining employees;
    food service would be included in that category. Thus, since we are
    able to provide hot lunch options on site today at Belvoir, we would
    have to negotiate with the union if we were not able to provide that
    option at Redstone Arsenal. The following is a quote from the Federal
    Labor Relations Authority (FLRA).
        ``FLRA precedent states that bargaining proposals related to food
    services and prices concern conditions of employment. The FLRA
    concluded that the precedent applied to these proposals, so they were
    within the duty to bargain.''
        While there are other food service facilities in operation on
    Redstone Arsenal, they are not in close proximity, they currently
    operate near capacity, and some are located in secure facilities that
    preclude access to AMC employees. There are also food service
    facilities off of the installation, but delays getting on and off post
    make their use an unattractive option that would reduce worker and
    organizational productivity.

                        CAMP LEJEUNE WATER CONTAMINATION

        89. Senator Ayotte. Dr. Robyn and Secretary Pfannenstiel, there is
    a long history of mistrust between people who believe they were exposed
    to harmful chemicals that resulted in adverse health impacts due to the
    drinking water contamination at Camp Lejeune, NC, and the U.S.
    Government. As required by the Superfund law, the Agency for Toxic
    Substances Disease Registry (ATSDR), which falls under the Department
    of Health and Human Services, has been studying the possible adverse
    health impacts at Camp Lejeune since 1993.
        What is the Navy doing to work with the ATSDR to complete their
    studies of the contamination of the water system at Camp Lejeune and
    any possible adverse health impacts that resulted from it?
        Dr. Robyn. The Office of the Deputy Under Secretary of Defense
    (Installations & Environment) defers to DON for this QFR response
    because the DON staff exercises active oversight of the issue.
        DON response: The DON remains committed to taking care of marines,
    sailors, their families, and civilian workers. At Camp Lejeune, that
    means seeking answers to the many questions surrounding the historic
    water quality issue.
        Since 1991 the DON has provided more than $27 million in funding to
    support scientific research and health initiatives on this issue to
    investigate whether diseases and disorders experienced by former
    residents and workers are or are not associated with their exposure to
    contaminants in the water at Camp Lejeune. Of this funding, more than
    $26 million has been provided to ATSDR.
        In addition, the DON has spent thousands of hours and more than $2
    million collecting information for past and ongoing health and research
    initiatives. Our information collection and sharing initiatives, which
    included a base-wide document search of Camp Lejeune, are unique in
    their breadth and scope. In 2010, the DON and ATSDR formed the Camp
    Lejeune Data Mining Technical Work Group (CLDMTWG) in a joint effort to
    complete the ongoing data discovery and collection process and ensure
    ATSDR possesses all relevant data and information needed for their
    health activities. In a March 2011 status update DON and ATSDR leads
    for the CLDMTWG agreed that: Pursuant to the Charge and the goals of
    the Workgroup, the two agency leads are confident that the Workgroup
    has successfully created an accurate and complete inventory. Further,
    the continued efforts of the Workgroup members have ensured that ATSDR
    representatives have received full access to all relevant information
    identified in the inventory.
        Ms. Pfannenstiel. The DON remains committed to taking care of
    marines, sailors, their families, and civilian workers. At Camp
    Lejeune, that means seeking answers to the many questions surrounding
    the historic water quality issue.
        Since 1991 the DON has provided more than $27 million in funding to
    support scientific research and health initiatives on this issue to
    investigate whether diseases and disorders experienced by former
    residents and workers are or are not associated with their exposure to
    contaminants in the water at Camp Lejeune. Of this funding, more than
    $26 million has been provided to ATSDR.
        In addition, the DON has spent thousands of hours and more than $2
    million collecting information for past and ongoing health and research
    initiatives. Our information collection and sharing initiatives, which
    included a base-wide document search of Camp Lejeune, are unique in
    their breadth and scope. In 2010, the DON and ATSDR formed the CLDMTWG
    in a joint effort to complete the ongoing data discovery and collection
    process and ensure ATSDR possesses all relevant data and information
    needed for their health activities. In a March 2011 status update DON
    and ATSDR leads for the CLDMTWG agreed that: Pursuant to the Charge and
    the goals of the Workgroup, the two agency leads are confident that the
    Workgroup has successfully created an accurate and complete inventory.
    Further, the continued efforts of the Workgroup members have ensured
    that ATSDR representatives have received full access to all relevant
    information identified in the inventory.

        90. Senator Ayotte. Dr. Robyn and Secretary Pfannenstiel, what is
    the Navy and the Marine Corps doing to ensure former marines, Navy
    personnel, and civilian employees and their families that they are
    committed to finding out the truth and doing what is right on this
    issue?
        Dr. Robyn. The Office of the Deputy Under Secretary of Defense
    (Installations & Environment) defers to DON for this QFR response
    because the DON staff exercises active oversight of the issue.
        DON response: The welfare of our marines, sailors, and their
    families has been, and always will be a top priority for DON. We
    continue to work diligently to identify and notify individuals who may
    have been exposed to the past water contamination. The Marine Corps
    operates a comprehensive outreach and notification program, which
    includes a call center and online registry, direct notification by
    letter, and supplemental notification through the media. To date the
    Marine Corps has collected more than 168,000 names and sent out well
    over 200,000 direct notifications.
        DON also continues to seek answers to the many questions
    surrounding the historic water quality issue at Camp Lejeune. Since
    1991 the DON has provided more than $27 million in funding to support
    scientific research and health initiatives on this issue. These health
    initiatives include work by the ATSDR and the National Academies,
    National Research Council.
        Ms. Pfannenstiel. The welfare of our marines, sailors, and their
    families has been, and always will be a top priority for the DON. We
    continue to work diligently to identify and notify individuals who may
    have been exposed to the past water contamination. The Marine Corps
    operates a comprehensive outreach and notification program, which
    includes a call center and online registry, direct notification by
    letter, and supplemental notification through the media. To date the
    Marine Corps has collected more than 168,000 names and sent out well
    over 200,000 direct notifications.
        DON also continues to seek answers to the many questions
    surrounding the historic water quality issue at Camp Lejeune. Since
    1991 the DON has provided more than $27 million in funding to support
    scientific research and health initiatives on this issue. These health
    initiatives include work by the ATSDR and the National Academies,
    National Research Council.

        91. Senator Ayotte. Dr. Robyn and Secretary Pfannenstiel, how long
    do you think it will take to complete all the studies that ATSDR has
    ongoing?
        Dr. Robyn. The Office of the Deputy Under Secretary of Defense
    (Installations & Environment) defers to DON for this QFR response
    because the DON staff exercises active oversight of the issue.
        DON response: ATSDR currently has four research initiatives planned
    or underway (water modeling, a birth defects and childhood cancer
    study, a health survey, and a mortality study). ATSDR has projected
    that these studies will be completed by 2013. Additionally, ATSDR is
    considering a cancer incidence study contingent upon the results of the
    health survey.
        Ms. Pfannenstiel. ATSDR currently has four research initiatives
    planned or underway (water modeling, a birth defects and childhood
    cancer study, a health survey, and a mortality study). ATSDR has
    projected that these studies will be completed by 2013. Additionally,
    ATSDR is considering a cancer incidence study contingent upon the
    results of the health survey.

        92. Senator Ayotte. Dr. Robyn and Secretary Pfannenstiel, I
    understand there have been some disputes in the past on ATSDR. Has the
    Navy agreed to fund all of ATSDR's requested studies?
        Dr. Robyn. The Office of the Deputy Under Secretary of Defense
    (Installations & Environment) defers to DON for this QFR response
    because the DON staff exercises active oversight of the issue.
        DON response: ATSDR is funded by DON through a negotiated annual
    plan of work (APOW). ATSDR has been fully funded ($3.921 million) by
    DON for fiscal year 2011. The APOW for fiscal year 2012 will be
    negotiated later this fiscal year.
        Ms. Pfannenstiel. ATSDR is funded by DON through a negotiated APOW.
    ATSDR has been fully funded ($3.921 million) by DON for fiscal year
    2011. The APOW for fiscal year 2012 will be negotiated later this
    fiscal year.

        93. Senator Ayotte. Dr. Robyn and Secretary Pfannenstiel, has the
    Navy and the Marine Corps turned over to ATSDR all the necessary
    historical materials about the water system and testing of the water to
    inform ATSDR's studies?
        Dr. Robyn. The Office of the Deputy Under Secretary of Defense
    (Installations & Environment) defers to DON for this QFR response
    because the DON staff exercises active oversight of the issue.
        Ms. Pfannenstiel. ATSDR has had access to information under DON
    control since their Public Health Assessment began in 1991. Since 1991,
    DON has assisted ATSDR's work by searching for, collecting, and
    providing pertinent documents. By 2000, DON shifted its focus to
    consolidating and archiving these documents, and in 2005 DON provided a
    database of such documents to ATSDR. In 2005, DON also contracted with
    Booz Allen Hamilton to provide comprehensive, transparent document
    search and collection covering all Camp Lejeune areas and facilities in
    an effort to fully identify the universe of information potentially
    related to the historic drinking water issue. ATSDR provided input on
    search parameters and has always had access to these documents as well.
    In a joint effort to complete the ongoing data discovery and collection
    process and ensure ATSDR possesses all relevant data and information
    needed for their health activities, the DON and ATSDR formed a CLDMTWG.
    In a joint March 2011 memo, DON and ATSDR leads for the CLDMTWG agreed
    that: Pursuant to the Charge and the goals of the Workgroup, the two
    agency leads are confident that the Workgroup has successfully created
    an accurate and complete inventory. Further, the continued efforts of
    the Workgroup members have ensured that ATSDR representatives have
    received full access to all relevant information identified in the
    inventory.

        94. Senator Ayotte. Dr. Robyn and Secretary Pfannenstiel, why has
    it taken so long to ensure ATSDR had all the data that was available?
        Dr. Robyn. The Office of the Deputy Under Secretary of Defense
    (Installations & Environment) defers to DON for this QFR response
    because the DoN staff exercises active oversight of the issue.
        Ms. Pfannenstiel. DON has always been committed to assisting ATSDR
    by providing information necessary for their health initiatives at Camp
    Lejeune. ATSDR has had access to information under DON control since
    their Public Health Assessment began in 1991. Since 1991, DON has
    assisted ATSDR's work by searching for, collecting, and providing
    pertinent documents. By 2000, DON shifted its focus to consolidating
    and archiving these documents, and in 2005 DON provided a database of
    such documents to ATSDR. In 2005, DON also contracted with Booz Allen
    Hamilton to provide comprehensive, transparent document search and
    collection covering all Camp Lejeune areas and facilities in an effort
    to fully identify the universe of information potentially related to
    the historic drinking water issue. ATSDR provided input on search
    parameters and has always had access to these documents as well. This
    has included numerous ATSDR site visits, interviews, meetings, and
    document requests. As ATSDR's information needs have evolved over the
    years, the DON's data management efforts have evolved to meet those
    needs. The DON has spent thousands of hours and more than $2 million
    collecting information for past and ongoing health and research
    initiatives. Our information collection and sharing initiatives, to
    include a base-wide document search of Camp Lejeune, are unique in
    their breadth and scope. In 2010, DON and ATSDR recognized that it was
    important to make an additional final effort to ensure ATSDR had all of
    the data and information needed for their health initiatives at Camp
    Lejeune. This led to the establishment of the CLDMTWG, a joint effort
    between DON and ATSDR to complete the ongoing data discovery and
    collection process and ensure ATSDR possesses all relevant data and
    information needed for their health activities. In a March 2011 status
    update DON and ATSDR leads for the CLDMTWG agreed that: Pursuant to the
    Charge and the goals of the Workgroup, the two agency leads are
    confident that the Workgroup has successfully created an accurate and
    complete inventory. Further, the continued efforts of the Workgroup
    members have ensured that ATSDR representatives have received full
    access to all relevant information identified in the inventory.

                    SERVICE SUPPORT FOR SCHOOL CONSTRUCTION

        95. Senator Ayotte. Dr. Robyn, the budget request for 2012 and the
    FYDP includes over $3 billion to modernize aging elementary, middle,
    and high schools operated by DOD Education Activity (DODEA). I
    wholeheartedly support the Secretary's priority to ensure that the
    schools owned by DOD meet world-class standards for the benefit of our
    military families.
        This committee directed in last year's defense bill by requiring
    the Secretary of Defense ``to establish a formal process whereby the
    best practices and design innovations in public and private school
    construction can be incorporated into the design of DODEA schools. The
    Secretary shall ensure that the process encourages the use of
    sustainable designs, green building systems, acoustics management,
    student safety/security, and interactive technology to create a
    positive learning environment for children and an efficient teaching
    environment for faculty.'' How is DOD complying with this requirement?
        Dr. Robyn. In April of this year, DODEA established a formal
    process whereby the best practices and design innovations in public and
    private school construction can be incorporated into the design of
    DODEA schools. In addition to the emphasis on sustainability and energy
    conservation, the process will also focus on advances in education,
    curriculum delivery, and innovative uses of technology. Final facility
    specifications will result in schools that are flexible and adaptable,
    allowing DODEA to adjust to new and innovative ways to deliver
    instruction in a positive learning environment for children and an
    efficient teaching environment for faculty.

        96. Senator Ayotte. Dr. Robyn, is DOD committed to the
    establishment of standards for DODEA schools that will result in world-
    class education facilities for the children of military personnel?
        Dr. Robyn. DODEA is committed to production of new school facility
    design standards. In April of this year, a symposium, including
    participation by public and DODEA school educators, university faculty,
    and private sector architects and engineers, established a formal
    process whereby the best practices and design innovations in public and
    private school construction can be incorporated into the design of
    DODEA schools. This process will take into consideration innovations in
    education, curriculum delivery, use of technology, and requirements for
    sustainability and energy conservation. Final facility specifications
    will result in design standards for world-class education facilities to
    support the children of our military personnel.

        97. Senator Ayotte. Dr. Robyn, will the best practices and design
    innovations identified in the process be incorporated into the plans
    for new schools authorized by Congress in the 2011 defense bill?
        Dr. Robyn. DODEA is in the process of identifying best practices
    and design innovations that can be incorporated in fiscal year 2011.
    The fiscal year 2011 construction contract solicitations will be
    revised, to the extent possible and within budgets, to allow the
    maximum inclusion in fiscal year 2011 school construction.

        98. Senator Ayotte. Dr. Robyn, Secretary Hammack, Secretary
    Pfannenstiel, and Secretary Yonkers, DODEA will be carrying out a $3
    billion construction and renovation effort over the next 4 years that
    will require the cooperation of effort and resources from each Service
    to assist with the selection and improvement of sites for each school.
    As you may know, DODEA will only be responsible for the construction of
    the school, playgrounds, and athletic fields. Any roads or utilities
    needed at the site are a funding responsibility of the base. Are the
    Services offering adequate land and resources to support DOD's
    construction efforts?
        Dr. Robyn. With any large, complex program, it is not unexpected to
    encounter challenges. When DOD committed to the aggressive
    recapitalization of over 130 schools valued at more than $3.8 billion,
    many of the replacement projects did not have specific sites
    identified. As DODEA and the Military Departments worked out the
    location options for the replacement schools, consistent with
    installation master plans, new requirements (e.g., roads, utilities)
    emerged necessitating additional funding. Where funds were available,
    the Military Departments provided the resources needed to keep the
    school projects on schedule. In a few cases, projects were moved back
    in the queue to allow the Department to program resources needed to
    make a complete and usable project.
        Ms. Hammack. Yes. With the exception of one planned school at USAG
    Stuttgart, there are no infrastructure issues with DODEA planned
    construction on Army installations. DOD Dependents Schools-Europe
    (DODDS-E), USAREUR, IMCOM-Europe, and EUCOM decided to include
    infrastructure costs in the project scope for the school at Boeblingen
    Training Area, USAG Stuttgart, to ensure project synchronization.
        Ms. Pfannenstiel. Yes. DON is supporting DODEA in its construction
    program. In addition to the provision of a site, several of our
    military housing privatization projects have included construction of
    schools for DODEA operation.
        Mr. Yonkers. The Air Force is offering adequate land and resources
    to support DODEA construction efforts.

        99. Senator Ayotte. Dr. Robyn, Secretary Hammack, Secretary
    Pfannenstiel, and Secretary Yonkers, do any of the projects planned for
    construction in fiscal year 2011 or fiscal year 2012 have problems with
    siting or utilities? If so, can you describe the problems and remedies?
        Dr. Robyn. I am not aware of any projects in fiscal year 2011 or
    fiscal year 2012 that have siting or utilities issues; however there is
    one fiscal year 2010 project, the elementary school at Boeblingen
    Training Area, which encountered some infrastructure challenges on the
    building site. The Army is working the DODDS-E to resolve the issue.
        Ms. Hammack. The Army is not aware of any problems for projects in
    those fiscal years. However, we are working cooperatively with DODDS
    and EUCOM to resolve an issue for a fiscal year 2010 project for an
    elementary school at the Boeblingen Training Area, USAG Stuttgart.
        Ms. Pfannenstiel. There are no problems associated with the siting
    or utilities at Navy/Marine Corps installations in the fiscal year
    2011/2012 DODEA construction program (Camp Lejeune, New River,
    Quantico, and Dahlgren).
        Mr. Yonkers. There are no siting or utility issues associated with
    fiscal year 2011/12 DODEA construction projects.

                     EARMARKS FOR NON-DEFENSE REQUIREMENTS

        100. Senator Ayotte. Dr. Robyn, in recent years, a proliferation of
    earmarked grants have been appropriated to DOD through the Office of
    Economic Adjustment for vague requirements (to preclude technically
    being called an earmark) like $300 million for medical transportation
    infrastructure in the NCR, $45 million for reimbursements to local
    towns, and $250 million for repairs to local community schools. None of
    these amounts are included in DOD budget requests nor are they
    considered firm DOD requirements. All of them are added as a result of
    decreases to other DOD accounts. So, it would seem logical that in
    these times of fiscal austerity where DOD is making hard decisions
    about savings and efficiencies, there would be strong opposition to
    congressional efforts to fund them from DOD accounts. But there isn't,
    and it's very troubling. Should DOD assume funding responsibility for
    improvements to public facilities and infrastructure that historically
    have been funded by other agencies?
        Dr. Robyn. The Department understands that neither the $300 million
    for medical transportation infrastructure nor the $250 million for
    schools located on military installations (both funded through fiscal
    year 2011 appropriations) are earmarks, as defined by Congress. While
    these programs (local roads and schools) are local responsibilities,
    they do have significant effects on the quality of life of military
    personnel and their families. DOD will execute them as directed.

        101. Senator Ayotte. Dr. Robyn, in the case of funds to improve
    schools not owned by DOD, it is true that in some cases, local school
    districts specifically voted to steer funds away from schools on bases
    supporting military children with the expectation that Federal funds
    would eventually be provided? If true, why would DOD want to reward
    that type of behavior?
        Dr. Robyn. The Department is unaware of any Local Education Agency
    purposefully allowing the education environment for these students to
    deteriorate in anticipation of Federal funding. We know there are a
    number of public schools located on military installations that service
    mostly military children. Our recent assessment of these schools
    indicates some have significant condition and capacity deficiencies and
    Local Education Agencies have not been able to generate the revenue
    required to recapitalize these facilities in spite of fair efforts to
    do so.

        102. Senator Ayotte. Dr. Robyn, could DOD's support for Federal
    funding to improve these schools invite in additional requests for
    billions to support the other hundreds of schools?
        Dr. Robyn. While anything is possible, we prefer not to speculate
    what Local Education Agencies would do. Our recent inventory indicates
    there are approximately 160 public schools located on military
    installations. The majority are well maintained and recapitalized with
    only a fraction lacking the resources to invest beyond general
    operations and maintenance to remedy serious condition and/or capacity
    problems. Since these schools service mostly military children, the
    Department is a stakeholder in ensuring the most serious problems are
    remedied. However, over the long term, states and Local Education
    Agencies must remain in the lead to find innovative solutions.

        103. Senator Ayotte. Dr. Robyn, why wouldn't every school district
    in the country then stop funding school improvements supporting
    military children, knowing that DOD would eventually step in?
        Dr. Robyn. The Department is unaware of a situation where a Local
    Education Agency has made a conscious decision to ignore its
    responsibility to operate and maintain its public schools, regardless
    of school location.

                        ECONOMIC DEVELOPMENT CONVEYANCES

        104. Senator Ayotte. Dr. Robyn, DOD recently issued a proposed
    regulation implementing its revised Economic Development Conveyance
    (EDC) authority for BRAC properties. I believe the Services are meeting
    with you this week to discuss implementation of the revised policy. As
    you know, EDCs are intended to facilitate the disposal of property to a
    local redevelopment agency (LRA) with some sort of consideration
    received by the Government as compensation. How much compensation has
    historically been the focus of negotiations between DOD and the LRA,
    just like a purchase of a house for you and me. The buyer has an idea
    of what the property is worth and so does the seller, both based on
    county or bank appraisals. But the revised policy you have issued would
    delete the requirement to establish estimated fair market through a
    government appraisal, which is a consistent requirement for other
    property disposal actions of the Federal Government. Why would DOD no
    longer require a fair market appraisal in order to inform government
    representatives?
        Dr. Robyn. The proposed regulation deletes the requirement to
    conduct--but does not prevent--an appraisal. In fact, the proposed
    regulation directs the Military Departments to gather any information
    they need to conduct an informed negotiation such as an appraisal,
    market analysis, construction estimate, or real estate pro forma. An
    appraisal may not be an appropriate tool to use in all circumstances
    because other information may better help the parties understand the
    potential value of a property. Elimination of the requirement to
    determine Fair Market Value and related appraisal requirements should
    expedite the conveyance process and remove a common source of conflict
    and delay between the community and Department.

        105. Senator Ayotte. Dr. Robyn, how will DOD know what the property
    is worth?
        Dr. Robyn. The proposed regulation specifically allows the Military
    Departments to obtain and use any information deemed appropriate to
    conduct an informed property disposal negotiation to include a market
    analysis, construction estimates, real estate pro forma, and appraisal.
    It is difficult to identify the exact value of property at closing
    installations due to redevelopment uncertainties and differences in 20-
    30 year projected costs and revenues. The proposed regulation offers
    the Department the flexibility to gather information it needs to
    conduct a negotiation--the same type of information a private landowner
    would use for similar transactions.

        106. Senator Ayotte. Dr. Robyn, is it DOD's intent to dispose of
    more BRAC property for no cost or less than fair market value? If
    so,why?
        Dr. Robyn. No. The Department's intent is to dispose of property as
    quickly as possible to support local economic development and job
    creation. Some urban properties may have current or future value
    potential, while others, particularly in rural or isolated areas, may
    not. The Department and communities should share in that value as well
    as support local economic development and job creation.

        107. Senator Ayotte. Dr. Robyn, part of the costs ($30 billion as
    of 2011) associated with implementing the 2005 BRAC round was to be
    offset with proceeds gained from the conveyance or sale of DOD land.
    These funds were required by law to be applied to environmental
    remediation actions to clean up BRAC sites. Doesn't the adoption of
    back-end financing deals undercut your source of front-end land revenue
    needed to clean up sites for disposal?
        Dr. Robyn. No. The Department does not assume any revenue from the
    sale of BRAC property because a projection would be very speculative.
    Clean-up budgets are independent from revenue and sale proceeds. Any
    money derived from sales should expedite the clean up, but not be the
    primary source of funds to meet remediation obligations.

        108. Senator Ayotte. Dr. Robyn, what is the estimate in lost
    revenue to the Services from the changes in policy?
        Dr. Robyn. The Department does not anticipate revenue loss. In many
    communities, the current real estate market is depressed and suffers
    from low demand and inadequate financing, which makes it difficult to
    determine current property value. The Department may achieve more
    return by taking a share of future revenue rather than a sale at
    current market conditions. This approach assists local economic
    development and job creation, and if successful, may increase the total
    revenue to the taxpayer over time.

        109. Senator Ayotte. Dr. Robyn, how will DOD compensate for this
    lost revenue?
        Dr. Robyn. The Department does not anticipate revenue loss.

                                OKINAWA AND GUAM

        110. Senator Ayotte. Secretary Pfannenstiel, regarding U.S. MILCON
    on Guam to support the relocation of 8,000 marines and their families
    from Okinawa, I notice that the Navy scaled back the request for funds
    in 2012 by almost $300 million for Guam construction from what was
    planned last year for 2012. This is in addition to the $320 million we
    deferred in fiscal year 2011.
        One of the projects planned last year for 2012 that is not in the
    current budget request is $148 million to purchase private land on Guam
    for training ranges for the marines. We have heard testimony in other
    hearings that consistent access to adequate training ranges on Guam is
    considered a show-stopper by the Marine Corps.
        Considering that ``the goal is to have an agreement in principle
    with the Governor by the fall of 2011, allowing formal land
    negotiations to commence once appropriate congressional approval for
    land acquisition has been received,'' why was this project for land
    acquisition stricken from the 2012 budget request if you need the
    authorization starting in the fall of 2011?
        Ms. Pfannenstiel. Based on the lack of a Programmatic Agreement
    under the National Historic Preservation Act (NHPA), the lack of a
    Record of Decision (ROD) selecting the final site for the live fire
    training range complex, and other factors, the budget request for
    fiscal year 2012 was re-evaluated and it was determined that budgeting
    for land acquisition to support a live fire training range complex
    would be premature.

        111. Senator Ayotte. Secretary Pfannenstiel, considering your
    commitment to conduct training activities in a manner which will allow
    unfettered access to the Pagat Village and Pagat Cave historical sites,
    what is the plan to meet the training range requirements for the Marine
    Corps on Guam?
        Ms. Pfannenstiel. Developing an achievable plan for delivering
    required training capabilities on Guam to support the realignment of
    Marine Corps forces from Okinawa is a priority. Option A at the Route
    15 area remains the preferred alternative for the location of a live
    fire training range complex. Should Option A be selected in the Record
    of Decision for training, the Department has committed to conduct
    training activities in a manner which will allow unfettered access to
    the Pagat Village and Pagat Cave historical sites. This commitment,
    which was made in the Programmatic Agreement, can be kept without
    compromising Individual Training Standards (ITS) for Marines on Guam.
    Regarding the timing for land acquisition, our focus is on ensuring
    training ranges are in place by the time relocating units will need
    them.

        112. Senator Ayotte. Secretary Pfannenstiel, when will you be sure
    that the Marine Corps has adequate land for their ranges?
        Ms. Pfannenstiel. The preferred alternative site for a live-fire
    training complex, which is along Route 15 on the eastern side of Guam,
    is non-DOD property. Should the Department select this alternative in a
    supplemental Record of Decision, which is slated for mid-summer at the
    earliest, it would involve the acquisition of approximately 1,090 acres
    of non-DOD lands.
        Our focus is on ensuring that the training range complex is in
    place to support the relocation of Marine Corps forces. Accordingly, we
    are currently developing an updated notional timeline to support
    potential acquisition of lands along Route 15 that adequately considers
    necessary property studies and surveys, informal discussions with Guam
    concerning possible acquisition, and submission of required MILCON
    budget submissions for land acquisition.
        If the Record of Decision selects the preferred alternative, then
    the Department believes that the area will fulfill the Marine Corps'
    mission. At that time, informal land discussions will begin with Guam,
    and the Department will have a more complete understanding of the
    feasibility of land acquisition.

        113. Senator Ayotte. Secretary Pfannenstiel, do you agree that we
    should resolve this issue before awarding construction contracts for
    the site work on the Marine Corps base?
        Ms. Pfannenstiel. The projects appropriated in fiscal year 2010,
    those authorized for appropriation in fiscal year 2011, and those
    requested in fiscal year 2012 are necessary to enable subsequent
    vertical construction and to support Marine Corps operations. Waiting
    to begin MILCON projects until after training range land acquisition
    issues are resolved would create a significant bottleneck in Guam's
    limited construction capacity by delaying a large volume of site
    preparation and other preliminary development necessary to support
    follow-on vertical construction of the new Marine Corps base. The force
    flow of Marines to Guam will be based upon the availability of
    requisite facilities and infrastructure. Therefore, a delay in the
    early horizontal construction stage of the program will potentially
    delay the Marines' ability to relocate from Okinawa in fulfillment of
    our international agreement.

        114. Senator Ayotte. Secretary Pfannenstiel, why are we commencing
    work without resolving significant issues with the Government of Japan
    over the relocation of MCAS Futenma?
        Ms. Pfannenstiel. An essential point of our realignment agreement
    with Japan is that relocation of Marine Corps forces from Okinawa to
    Guam is dependent upon tangible progress in the construction of the
    FRF. To support this realignment effort, construction of facilities on
    Guam must begin well in advance of the actual construction on the FRF.
    Japan has shown commitment to the realignment by moving forward with
    significant upland construction at Camp Schwab to support the FRF,
    design plans for the FRF, and by transferring money to the U.S.
    Treasury to support construction of utilities and infrastructure on
    Guam for the relocating Marine Corps forces. Likewise, the United
    States must now reciprocate by moving forward with construction on
    Guam.
        The projects appropriated in fiscal year 2010, those requested in
    fiscal year 2011, and those requested in fiscal year 2012 are necessary
    to enable subsequent vertical construction and to support Marine Corps
    operations. Waiting to begin MILCON projects until completion of the
    FRF would create a significant bottleneck in Guam's limited
    construction capacity by delaying a large volume of site preparation
    and other preliminary development necessary to support follow-on
    vertical construction of the new Marine Corps base. Therefore, a delay
    in the early horizontal construction stage of the program will
    potentially delay the Marines' ability to relocate from Okinawa in
    fulfillment of the international agreement.

        115. Senator Ayotte. Secretary Pfannenstiel, do we run the risk of
    never finishing or using the construction we have started, resulting in
    another congressional scandal of running utilities to nowhere?
        Ms. Pfannenstiel. The projects appropriated in fiscal year 2010,
    those authorized for appropriation in fiscal year 2011, and those
    requested in fiscal year 2012 are necessary to enable subsequent
    vertical construction and to support Marine Corps operations. The
    execution plan is designed to avoid creating a significant bottleneck
    in Guam's limited construction capacity by delaying a large volume of
    site preparation and other preliminary development necessary to support
    follow-on vertical construction of the new Marine Corps base. The force
    flow of Marines to Guam will be based upon the availability of
    requisite facilities and infrastructure. Therefore, a delay in the
    early horizontal construction stage of the program will potentially
    delay the Marines' ability to relocate from Okinawa in fulfillment of
    our international agreement with Japan.
        The marines relocating to Guam will utilize capabilities being
    developed at Apra Harbor and Andersen Air Force Base and, should the
    Marine Corps relocation not move forward, this capability would provide
    the Air Force with some flexibility as it could be used for operations
    that are not currently planned. However, the U.S. and Government of
    Japan remain committed to the realignment and are thus taking the steps
    necessary to begin execution.

        116. Senator Ayotte. Secretary Pfannenstiel, in your written
    testimony you stated, ``the Department will also consider recent input
    to issue a record of decision (ROD) for the live-fire training range
    complex on Guam.'' When will that ROD be issued?
        Ms. Pfannenstiel. The Department is currently reviewing all
    materials related to the siting of a live-fire training range complex
    and completing the necessary due diligence and consideration before
    issuing a Record of Decision. It is anticipated that the Record of
    Decision for live-fire training will be available mid-summer at the
    earliest.

        117. Senator Ayotte. Secretary Pfannenstiel, noting your commitment
    to a ``net negative'' growth in the amount of property controlled by
    DOD on Guam, approximately how many acres of land not owned by DOD will
    have to be acquired? Can you describe what existing DOD lands DOD has
    identified as available for disposal to result in a smaller footprint?
        Ms. Pfannenstiel. The Record of Decision (ROD) issued in September
    selected the Former FAA property, currently not in DOD's inventory, for
    family housing. However, the ROD made no decision regarding the
    location for a live-fire training range complex. The preferred
    alternative site for a live-fire training complex, which is along Route
    15 on the eastern side of Guam, is also non-DOD property. Real estate
    studies are ongoing; however, the approximate acreage required to
    execute the selected site for housing and the preferred alternative
    site for training ranges is about 1,800 acres.
        Should the Record of Decision for training select the preferred
    alternative site at Route 15, successful acquisition of the Route 15
    property is a priority so that Marine Corps training requirements can
    be met on Guam. The Net Negative concept is currently in the early
    stages of development and specific parcels available for disposal have
    not yet been identified. The Department is also assessing the
    feasibility of utilizing existing DOD property to limit the need for
    additional land. As part of these assessments, we will look to identify
    mission that could be relocated to free up land to meet the Net
    Negative commitment.

        118. Senator Ayotte. Secretary Pfannenstiel, your testimony notes
    that studies will be conducted to determine if missions can be
    relocated in order to free up land for disposal. Shouldn't Congress
    defer any construction on Guam until the studies are complete?
        Ms. Pfannenstiel. The projects appropriated in fiscal year 2010,
    those requested fiscal year 2011, and those requested in fiscal year
    2012 are necessary to enable subsequent vertical construction and to
    support Marine Corps operations. Waiting to begin MILCON projects until
    land acquisition issues are resolved would create a significant
    bottleneck in Guam's limited construction capacity by delaying a large
    volume of site preparation and other preliminary development necessary
    to support follow-on vertical construction of the new Marine Corps
    base. The force flow of Marines to Guam will be based upon the
    availability of requisite facilities and infrastructure. Therefore, a
    delay in the early horizontal construction stage of the program will
    potentially delay the Marines' ability to relocate from Okinawa in
    fulfillment of our international agreement.

                   HOUSING FOR U.S. FORCES STATIONED IN KOREA

        119. Senator Ayotte. Secretary Hammack, I have a question about the
    plan to support the stationing of military families in Korea to
    accompany 28,000 military forces assigned there under the new policy
    for up to 3 years. On September 23, 2010, the Secretary of Defense
    directed United States Forces Korea and the Services to proceed with
    full tour normalization for Korea, as affordable, but not according to
    any specific timeline. I understand that DOD is still in the process of
    developing a plan and cost estimate by March 31, 2011, for the
    construction of facilities and infrastructure to support the families.
    Along those lines, the Army has been working for 3 years on a plan for
    housing at Camp Humphreys to support the families that are already
    stationed in Korea.
        Two years ago at a similar hearing, the Army representative
    testified that the first phase of a public/private partnership for the
    construction and operation of housing was scheduled to begin
    construction of a total of 2,427 units in the fall of 2009 and begin
    occupancy in the fiscal year 2011 and fiscal year 2012 timeframe to
    coincide with unit moves under the Yongsan Relocation Plan. The second
    phase was planned to begin construction in the fall of fiscal year 2011
    with occupancy and lease up in fiscal year 2013 to fiscal year 2014.
    The total development budget was estimated to be approximately $1.3
    billion. Please provide an update on the progress of this housing
    initiative.
        Ms. Hammack. The Humphreys Housing Opportunity Program (HHOP) Phase
    1 (1,400 homes) was approved by the Secretary of Defense on September
    23, 2010. The private partner Humphreys Family Communities (HFC) began
    final consultations with bond rating agencies, Korean developers and
    Republic of Korea government officials in December 2010. HFC
    anticipates completion with the rating agencies and a financial closing
    in the summer 2011.

        120. Senator Ayotte. Secretary Hammack, what is the current plan
    and cost estimate for the construction of 2,427 housing units?
        Ms. Hammack. On September 23, 2010, the Secretary of Defense
    approved a two-phase plan to provide family housing in support of the
    Yongsan Relocation Plan (YRP). Phase 1 will provide 1,400 homes thru a
    private partnership referred to as HHOP with an estimated development
    budget of $770 million. Phase 2 will provide 1027 homes using MILCON or
    an extension of HHOP. Phase 2 construction cost is estimated at $625
    million.

        121. Senator Ayotte. Secretary Hammack, which DOD account will the
    costs of housing construction be funded from?
        Ms. Hammack. Phase 1 housing construction is financed by the
    Republic of Korea and a private developer. Phase 2 construction will be
    thru MILCON or private finance.

                                TREASURE ISLAND

        122. Senator Ayotte. Secretary Pfannenstiel, the former Naval
    Station Treasure Island was closed in 1993. Of the total 535 acres of
    the island in the middle of the San Francisco Bay, 247 acres were
    determined suitable for transfer in 2006. Currently, the Local
    Redevelopment Agency operates the island under a cooperative agreement
    with the Navy bringing in $7 to $10 million in annual lease revenue.
        Starting in 2007, the Navy negotiated with the City of San
    Francisco to transfer the island under an economic development
    conveyance. The Navy estimated the fair market value of the property to
    range from $185 million to $275 million depending on the economic
    conditions. The city estimated the worth of the island at about $22
    million. Both sides were at an impasse, resulting in efforts by
    Congress to force a resolution through directive legislation.
        Last year, the Navy announced a deal with the city that would set
    aside a fair market value, relying instead on a series of payments to
    the Navy over time based on certain financial benchmarks. As you stated
    in your testimony, the Navy would receive $55 million with interest
    paid over 10 years. The Navy would then be eligible for subsequent
    payments of net cash flow up to $50 million after a private developer
    had achieved an 18 percent cumulative unleveraged internal rate of
    return (IRR) and 35 percent of net cash flow after the developer has
    achieved a cumulative 22.5 percent return. If the developer does not
    achieve these financial returns, the Navy will not receive the
    payments. Under this arrangement, how confident are you that the Navy
    will receive any additional compensation beyond the $55 million?
        Ms. Pfannenstiel. DON is confident that the Economic Development
    Conveyance terms for Naval Station Treasure Island will return a fair
    value to the Navy. As you noted, DON and the City of San Francisco were
    at an impasse on the determination of fair market value. This was
    primarily due to the inherent difficulty in cost and revenue
    projections over a 20 year development timeline in an uncertain housing
    market. Legislation in the National Defense Authorization Act for
    fiscal year 2009 allowed for a share of project revenues as
    consideration for Economic Development Conveyances. This legislation
    provided the impetus to construct consideration that guaranteed a
    payment to DON and allowed for unlimited participation in project
    profits. This structure ensures that if the project is successful as
    projected in the DON appraisal, the Navy will receive its fair market
    value.

        123. Senator Ayotte. Secretary Pfannenstiel, when do you expect
    that the Navy will start receiving payments above and beyond the $55
    million over 10 years?
        Ms. Pfannenstiel. Consideration above and beyond the guaranteed
    payment will be determined by project performance. DON will receive the
    first $50 million after the project reaches an Internal Rate of Return
    (IRR) of 18 percent. Once the project reaches this IRR threshold, DON
    receives all net cash flow until the $50 million is paid. At that
    point, the project must reach an additional 4.5 percent return for a
    total of 22.5 percent and DON would receive 35 percent of all net cash
    flow. Utilizing the current Pro Forma and development schedule, 18
    percent IRR and additional payments to DON occur in year 10 or about
    the same time as the last guaranteed payment.

        124. Senator Ayotte. Secretary Pfannenstiel, how will the Navy
    verify the financial returns of the developer?
        Ms. Pfannenstiel. The Economic Development Conveyance terms contain
    a number of controls to ensure that all project costs and revenues are
    transparent and all aspects of the project are subject to audit and
    reporting requirements. There are four aspects of the deal where DON
    will verify project accounting. First, the City is required to submit
    an annual accounting specific to calculations of the Internal Rate of
    Return (IRR) and determination of DON payments. Second, the City is
    required to submit annual audited financial statements for the entire
    project. Third, DON has the right to conduct our own audit of project
    financials. Under this scenario, any discrepancy must be corrected and
    a discrepancy greater than 5 percent would require the City to pay all
    costs of the DON audit. Finally, DON will receive copies of any audit
    conducted by the City under the terms of the City's development
    agreement with Lennar.

        125. Senator Ayotte. Secretary Pfannenstiel, shouldn't the Navy
    insist on an independent accounting firm and audits to validate the
    cash flows and to protect the Navy's interests?
        Ms. Pfannenstiel. DON believes that the process established in the
    Economic Development Conveyance protects DON interests. DON has the
    right to hire its own independent firm to validate cash flow and audit
    books. We feel that this direct relationship of a firm hired by DON is
    in the best interest of DON and provides the best opportunity to
    validate cash flows and protect Navy interests.

        126. Senator Ayotte. Dr. Robyn, is this agreement consistent with
    the policy being established by DOD for economic development
    conveyances?
        Dr. Robyn. Yes.

        127. Senator Ayotte. Dr. Robyn, are you comfortable with the Navy
    risking payments to the U.S. Treasury based on the performance and
    bookkeeping of a developer years after turning over the deed to the
    property?
        Dr. Robyn. The Department views the Navy's agreement as an
    opportunity to share in future development profits while benefiting the
    taxpayer. The Navy is a partner in the development and has the
    opportunity for unlimited revenue if the project is successful. In the
    current real estate and finance environment, projected value of
    property is extremely speculative and inherently risky. The Navy has
    crafted an agreement that aligns incentives and interests of all
    parties creating a win-win scenario for the City, the developer, and
    the U.S. Treasury.

        128. Senator Ayotte. Dr. Robyn, knowing that the funds received by
    DOD for disposed properties are used to fund environmental clean-up
    actions at other BRAC sites, why would you be willing to delay by many
    years receipt of those proceeds?
        Dr. Robyn. The Department does not assume any revenue from property
    sales when creating clean-up budgets. The Department only uses funds
    from the sale of BRAC property to accelerate existing cleanup
    operations. Additionally, these revenue-sharing agreements were
    specifically authorized by the National Defense Authorization Act for
    fiscal year 2010 as a way of quickly transferring BRAC property to the
    communities for job-creation purposes. These authorized revenue sharing
    agreements have several benefits besides providing funds to supplement
    clean-up budgets. Not only do they reduce operations and maintenance
    costs, they also support quicker reuse and assist community economic
    recovery and job creation.

                              DEFENSE ACCESS ROADS

        129. Senator Ayotte. Dr. Robyn, the Defense Access Roads (DAR)
    Program allows DOD to collaborate with the Department of Transportation
    for the use of MILCON funds to construct or improve roads in local
    communities that have been impacted by a military basing decision. The
    criteria used by DOD to assess the validity of projects have been the
    subject of much scrutiny and criticism over the years. You mention in
    your written statement that you plan to revise the DAR funding
    criteria. When will you issue the revisions?
        Dr. Robyn. The Military Service and DLA Transportation Engineering
    Program regulations contain the DAR criteria. Revising the criteria
    will require coordination within the Department as well as with the
    Federal Highway Administration. Our intention is revise the criteria by
    the end of summer.

        130. Senator Ayotte. Dr. Robyn, can you describe what changes you
    propose for the criteria?
        Dr. Robyn. Our intention is to revise the criteria to address
    impacts in urban areas in a manner similar to that suggested by the
    National Academy of Sciences report. The final form and details of the
    change will result from coordination within DOD and with the Federal
    Highway Administration.

        131. Senator Ayotte. Dr. Robyn, the budget request for fiscal year
    2012 includes a project for $4 million to improve an intersection in
    and around Marine Corps Base Quantico. Does this project meet the DAR
    criteria currently in use by DOD? If so, how?
        Dr. Robyn. The fiscal year 2012 President's budget request includes
    a certified DAR Program project at the intersection of Telegraph Road
    and Route 1. The project was certified under the existing doubling of
    traffic eligibility criterion. The consolidation of multiple
    intelligence, security and investigative organizations will relocate
    personnel to the west side of Marine Corps Base, Quantico, VA. The
    personnel increases will double traffic volumes and the number of
    vehicles making turns leading to and from Route 1 at Telegraph Road
    since it is a primary access from the public road system to the
    Quantico facilities.

                  INVESTMENT LEVELS FOR MILITARY CONSTRUCTION

        132. Senator Ayotte. Dr Robyn, noting that DOD still uses a goal of
    90 percent to budget operations and maintenance (O&M) funding to
    sustain our facilities, does DOD currently have any guidance issued to
    the Military Services that would establish benchmarks or minimum goals
    for the levels of investment needed annually to recapitalize aging
    facilities and infrastructure? If not, how can we know whether the
    President's budget request for MILCON in 2012 is funded at a level that
    adequately addresses the needs of DOD to replace or modernize
    deteriorated facilities?
        Dr. Robyn. While the DOD continues to explore an affordable and
    quantitative method for determining benchmarks for recapitalizing our
    large facility inventory, currently the DOD has not established a goal
    associated with facility recapitalization. The Department's Planning,
    Programming, Budgeting, and Execution (PPBE) process provides the basis
    for fiscal decisionmaking that is predicated on priorities derived from
    strategic objectives. The PPBE process revisits these priorities
    annually, which includes what facilities require construction or repair
    to correct known deficiencies. The resulting decisions by the Secretary
    and Deputy Secretary on investment levels for all programs are based on
    an informed decision process.

        133. Senator Ayotte. Dr. Robyn, are you concerned that the
    decreases in Services' budgets for MILCON projects to replace current
    facilities over the past 3 years is leading to a strain on O&M accounts
    that are used to maintain these deteriorated facilities?
        Dr. Robyn. The decrease in MILCON funding over the past 3 years is
    largely the result of BRAC, Global Defense Posture, and Grow-the-Force
    programs coming to a close. The DOD Components continue to recapitalize
    their facilities using both MILCON and operations and maintenance
    funds.

                         GUARD AND RESERVE REQUIREMENTS

        134. Senator Ayotte. Dr. Robyn, Secretary Hammack, Secretary
    Pfannenstiel, and Secretary Yonkers, do you believe the President's
    budget request for 2012 for each of the Services adequately funds the
    construction needs of Guard and Reserve Forces?
        Dr. Robyn. I believe that the President's fiscal year 2012 budget
    request adequately funds the most pressing balance of Active and
    Reserve component construction needs.
        Ms. Hammack. Yes. The President's budget request provides an
    equitable distribution of resources within the established priorities
    of the Army and provides the Army Reserve and the Army National Guard
    with $1.1 billion (MCAR program is $281 million and the MCNG program is
    $774 million). However, as with the Active component funding, the
    Reserve component funding is currently sufficient to address only the
    most critical requirements needed to continue the momentum required to
    meet readiness goals; it makes only a slight dent in the significant
    backlog of construction/modernization projects for readiness centers.
        Ms. Pfannenstiel. Yes, we remain committed to supporting the
    infrastructure needs of our Navy Reserve as we balance risk across the
    Navy to provide the most capability within fiscal constraints. The
    Navy's fiscal year 2012 budget request includes $26.0 million to
    construct an Armed Forces Reserve Center at Pittsburgh, PA, and a
    Marine Corps Reserve Training Facility at Memphis, Tennessee.
    Additionally, $18 million has been realigned to the Department of the
    Army to construct a Joint Navy, Marine Corps, and Army Reserve Complex
    at Indianapolis, IN.
        Mr. Yonkers. Yes. The Air Force utilizes a scoring model for its
    projects, which scores new mission and current mission projects. This
    scoring model prioritizes the MILCON program, with the most critical
    and urgent requirements ranking at the top. We follow that initial
    prioritization with a specific evaluation for ANG and AFRC support and
    make specific adjustment as necessary to ensure adequate component
    support. The ANG and AFRC have competed fairly and scored well in this
    process in 2012. In effect, the most pressing MILCON requirements, for
    both the active Duty and the Air Reserve components, were included in
    the fiscal year 2012 President's budget request.

        135. Senator Ayotte. Dr. Robyn, Secretary Hammack, Secretary
    Pfannenstiel, and Secretary Yonkers, how are Guard and Reserve
    requirements addressed in the prioritization process of MILCON projects
    for each of the Services?
        Dr. Robyn. The Military Departments use separate processes for
    prioritizing their MILCON requirements. Each of the Military
    Departments' processes includes consideration of the Guard and Reserve
    requirements when prioritizing their MILCON projects. I will defer to
    the Military Departments to provide specific information on how the
    Guard and Reserves are incorporated in their respective MILCON
    prioritization processes.
        Ms. Hammack. The Reserve components fully participate in the Army
    MILCON prioritization process. MILCON projects are reviewed in detail
    and prioritized using the overall priorities of the Army, i.e., Grow
    the Army (GTA), Global Defense Posture Realignment Army Modular Force
    (AMF), Modernization of Legacy Facilities, Training Support, and
    Strategic Readiness.
        Ms. Pfannenstiel. DON assesses all requirements in order to balance
    risk across the Navy and Marine Corps, and provide the most capability
    within fiscal constraints. We remain committed to supporting our Naval
    Reserve. DON's fiscal year 2012 budget request includes $26.0 million
    to construct an Armed Forces Reserve Center in Pittsburgh, PA, and a
    Marine Corps Reserve Training Facility in Memphis, TN. Additionally,
    $18 million has been realigned to the Department of the Army to
    construct a Joint Navy, Marine Corps, and Army Reserve Complex in
    Indianapolis, IN.
        Mr. Yonkers. The Air Force utilizes a scoring model for its
    projects, which scores new mission and current mission projects. New
    mission requirements are primarily driven by the beddown location and
    acquisition timing of the new weapon system-these factors are
    determined through the Air Force's strategic basing process. So for new
    mission requirements, should a Air National Guard (ANG) or Air Force
    Reserve Command (AFRC) base be selected as a beddown location, their
    MILCON requirements would be funded as part of the beddown process (as
    funding within a given year permits). For current mission projects, our
    scoring model prioritizes the MILCON program, with the most critical
    and urgent requirements ranking at the top. We follow that initial
    prioritization with a specific evaluation for ANG and AFRC support and
    make specific adjustment as necessary to ensure adequate component
    support. The ANG and AFRC have competed fairly and scored well in this
    process in 2012. In effect, the most pressing MILCON requirements, for
    both the Active Duty and the Air Reserve components, were included in
    the fiscal year 2012 President's budget request.

        136. Senator Ayotte. Dr. Robyn, Secretary Hammack, Secretary
    Pfannenstiel, and Secretary Yonkers, are you concerned that the
    prioritization process may result in a disadvantage for Guard and
    Reserve projects?
        Dr. Robyn. The military departments reassess their prioritization
    processes annually to ensure operational requirements across the force
    incorporate recent changes to defense strategies, policies, and fiscal
    challenges. Further, the inclusion of the Reserve components within the
    Military Department processes ensures they are not disadvantaged.
        Ms. Hammack. We are always reviewing our business rules to ensure
    the Department makes the best use of our limited resources. The current
    MILCON prioritization process does not disadvantage the Guard or Army
    Reserve. We are vigilant that any future changes to the current process
    also support equity across the components.
        Ms. Pfannenstiel. No, DON remains committed to supporting our Naval
    Reserve. DON assesses all requirements in order to balance risk across
    the Navy and Marine Corps, and provide the most capability within
    fiscal constraints. DON's fiscal year 2012 budget request includes
    $26.0 million to construct an Armed Forces Reserve Center in
    Pittsburgh, PA, and a Marine Corps Reserve Training Facility in
    Memphis, TN. Additionally, $18 million has been realigned to the
    Department of the Army to construct a Joint Navy, Marine Corps, and
    Army Reserve Complex in Indianapolis, IN.
        Mr. Yonkers. No, our process ensures that the Guard and Reserves
    projects are at no disadvantage when compared to the Active Air Force
    requirements.

                        ENCROACHMENT ON AIR FORCE RANGES

        137. Senator Ayotte. Secretary Yonkers, I am concerned that the
    proliferation of energy production initiatives as a result of national
    efforts to expand the use of renewable energy sources must be
    compatible with other national priorities, such as providing our
    military forces with safe and adequate training ranges free from
    encroachment or obstruction. We passed legislation last year that would
    establish a clearing house in DOD to assess permit requests from
    private entities in an expedited manner for their potential impact on
    national security and military training. How prevalent is this concern
    of encroachment on Air Force training ranges?
        Mr. Yonkers. OSD has developed a clearing house process based on
    legislation and is actively employing that clearing house process.
        We are becoming increasingly aware of the potential impacts
    renewable energy projects have upon our training and test and
    evaluation ranges. For example, wind turbines can impact the
    performance of radar through shadowing, creation of false targets and
    loss of real targets. The Air Force continues to study the potential
    operational impacts of development and the potential mitigation
    strategies to overcome the impacts. We currently have efforts underway
    to assess impacts to air-traffic-control radar and our ability to
    improve performance through optimization and/or upgrade.
        The Department must carry out its national security missions
    effectively with careful attention to the safety of the general public
    and Department personnel. The presence of wind turbines and other
    energy infrastructure in the vicinity where these military missions
    occur has the potential to impact the effectiveness of such missions
    and thus military readiness.
        As operational requirements at different locations vary, the
    particular characteristic of a wind farm may present a challenge in one
    location but not others. Consequently, potential impacts on readiness
    due to any particular proposed wind farm development need to be
    evaluated on a case-by-case basis. Where possible impacts to readiness
    could occur it is important to ensure that appropriate measures to
    mitigate risk are identified and implemented.
        Also, many of the potential impacts are similar to those that can
    be posed by other tall objects such as radio antennas, cell phone
    towers, and buildings proposed for construction in the vicinity of
    Department sites and facilities. The Air Force has developed and
    employed, for many years, strategies and mitigation techniques to
    effectively address those possible impacts.
        The potential impacts to readiness are generally categorized into
    the following areas: (1) Overflight and Obstruction, (2) Security, (3)
    Electromagnetic Signature, and (4) Environment. Potential impacts to
    flying safety are considered in the area of over-flight where
    obstructions may be introduced. Potential security issues during and
    after development are addressed near installations or where the
    Department conducts operations. Potential impacts related to the
    electromagnetic signature associated with wind turbines must be
    evaluated. Finally, possible impacts related to the responsibilities of
    the Air Force with regard to environmental stewardship should be
    considered.

        138. Senator Ayotte. Secretary Yonkers, what is at stake for the
    Air Force?
        Mr. Yonkers. The Air Force conducts its operations in shared space
    throughout the United States. Much of the operating space used to test
    and train our people and equipment was established over 60 years ago.
    As population and other types of development occur in these once-remote
    areas, we must ensure that impacts to mission are considered in any
    development decisions. The Air Force's ability to conduct timely
    training and testing to support mission requirements could potentially
    be at risk. The Air Force attempts to engage developers early to
    identify mutually acceptable outcomes and avoid undesirable impacts to
    our missions associated with ranges, installations and airspace.
    Working with the DOD Energy Siting Clearinghouse, the AF established
    processes for addressing projects already submitted to the Federal
    Aviation Administration and Bureau of Land Management (BLM). Throughout
    the process, the AF attempts to communicate with developers, local,
    State, and governmental agencies on potential encroachment impacts on
    the mission and mitigate when possible.

        139. Senator Ayotte. Secretary Yonkers, much of the land used for
    Air Force training ranges is under the control of the BLM. What can be
    done to improve coordination with BLM on the assessment of the impact
    on military training as a result of private initiatives that propose to
    use BLM land?
        Mr. Yonkers. The Air Force and BLM over the course of many years
    have fostered a long standing working relationship acting as
    Cooperating Agencies on NEPA actions. This relationship is based upon
    Council on Environmental Quality regulations to invite agencies to act
    as a Cooperating Agency if the agency has jurisdiction by law or
    special expertise with respect to the proposal.
        In order to improve the coordination between the Air Force and BLM
    on assessments of private initiatives that propose to use BLM land that
    could impact Air Force training ranges, the Air Force believes that
    being brought into the process at the initial planning stages, as a
    Cooperating Agency, would foster better communication. Early engagement
    between the Air Force, BLM and the private third parties, that are
    proposing these initiatives, would help in the identification of
    potential issues that could hinder the planning efforts as the proposal
    moves through the planning and implementation stages.

        140. Senator Ayotte. Secretary Yonkers, what other measures can
    Congress undertake to provide you the tools needed to work with
    developers of private lands whose initiatives may result in a
    detrimental impact to military training?
        Mr. Yonkers. In conjunction with the Department of Homeland
    Security and the Federal Aviation Administration, DOD will continue to
    work through the National Security Staff's sub-Interagency Policy
    Committee on the Air Domain to identify other measures that may become
    necessary. We expect the establishment of both an early voluntary
    consultation process for wind developers and a longer notification
    requirement for the FAA's Obstruction Evaluation/Airport Airspace
    Analysis will be effective. The Department of Energy, the Department of
    Commerce, and the Department of the Interior are also participating in
    the process.
                                     ______

                 Questions Submitted by Senator Saxby Chambliss

                               MILITARY ARTIFACTS

        141. Senator Chambliss. Secretary Hammack, the 2005 BRAC round
    directed transfer of three U.S. Army Training and Doctrine Command
    schools to Forts Benning, Lee, and Sill. There are significant
    collections of military artifacts that represent the technological and
    tactical evolution of tanks, artillery, and air defense. These
    collections support the training missions that are relocating due to
    BRAC. The Army requested MILCON to construct storage facilities for
    these artifacts at Forts Benning, Lee, and Sill in the fiscal year 2011
    budget request but no funding was authorized.
        I understand there are several options for moving forward on these
    projects, the most feasible of which are: (1) lease off-post facilities
    to allow for storage of the artifacts, Army training, and public
    access; (2) fund the original MILCON projects as planned; and (3)
    modify the original MILCON projects to allow for public access. Of the
    issues at stake here--providing for Army training, preserving Army
    artifacts, and educating the public about Army history--how does the
    Army prioritize these issues?
        Ms. Hammack. The Army's first priority is the preservation of its
    historical artifacts in accordance with Federal statute (American
    Antiquities Act of 1906, 16 U.S.C. 431-433, National Historic
    Preservation Act of 1966, 16 U.S.C. 470). Failure to preserve the
    artifacts will lead to failure of all other artifact-supported Museum
    missions. The second priority is Soldier Training in Military History
    and Heritage and practical instruction to develop skills such as
    critical thinking and foreign materiel identification. The third
    priority is educating the public about the Army's rich heritage of
    service and its role in national development, which is closely related
    to the Soldier Training mission and esprit de corps.

        142. Senator Chambliss. Secretary Hammack, equipment is being moved
    to support the relocation of Army schools. Approximately what
    percentage of the artifacts moved or to be moved is being moved from
    public museums?
        Ms. Hammack. The Air Defense Artillery Museum, the Armor Museum,
    and the Ordnance Museum were all open to public visitation at their
    former locations at Fort Bliss, Fort Knox, and Aberdeen Proving Ground
    respectively. The educational exhibits were open to the public during
    operating hours. Researchers could make appointments to see artifacts
    that were in storage or to study the archival and library holdings.
        Of the total collection of the U.S. Army Air Defense Artillery
    Museum, about 95 percent is moving from Fort Bliss, TX to Fort Sill,
    OK. Of the macro artifacts in the original collection, over three
    quarters are moving from Fort Bliss, TX to Fort Sill, OK. 100 percent
    of the museum's library and archival holdings are moving from Fort
    Bliss, TX to Fort Sill, OK.
        Of the total collection of the National Armor and Cavalry Museum,
    over three quarters is moving from Fort Knox, KY to Fort Benning, GA.
    Of the macro artifacts in the original collection, over two thirds are
    moving from Fort Knox, KY to Fort Benning, GA. About 98 percent of the
    museum's library and archival holdings are moving from Fort Knox, KY to
    Fort Benning, GA.
        Of the total collection of the U.S. Army Ordnance Museum, about 90
    percent is moving from Aberdeen Proving Ground, MD to Fort Lee, VA. Of
    the macro artifacts in the original collection, over three quarters are
    moving from Aberdeen Proving Ground, MD to Fort Lee, VA. Approximately
    95-98 percent of the museum's library and archival holdings are moving
    from Aberdeen Proving Ground, MD to Fort Lee, VA.

        143. Senator Chambliss. Secretary Hammack, will the museums from
    which the artifacts are being moved remain open?
        Ms. Hammack. Organizations that replaced the Ordnance, Armor, and
    ADA schools have existing museum programs and these replaced the three
    school museums. They are in the process of standing up at all three
    losing locations:
        The Aberdeen Proving Ground Museum will focus on the history of APG
    and Communications Electronics Command.
        The George S. Patton Museum of Leadership at Fort Knox will focus
    on Army Accessions Command to include the history of commands or units
    associated with Fort Knox from 1918 to the present, Army leadership,
    Army recruiting history, and the history of the Reserve Officers
    Training Corps. The ADA Museum at Fort Bliss is being replaced by the
    1st Armored Division Museum, which combined with the Fort Bliss Museum
    will focus on the history of Fort Bliss from 1848 to the present and on
    the history of the 1st Armored Division.

        144. Senator Chambliss. Secretary Hammack, is it correct that one
    of the advantages of the leasing option would be that the public could
    access the artifacts?
        Ms. Hammack. Yes, however, where the leasing option is available,
    it will lead to split operations for the museum staff at locations that
    could be miles apart. Requests for access to portions of the artifact
    collections that are not located in the leased facilities will meet
    with stricter scrutiny than is currently practiced, due to constraints
    on staff operations across multiple artifact repositories.
        The leasing option is not available to the Air Defense Artillery
    Museum at Fort Sill, so that course of action does not ensure public
    access to any Air Defense Artillery artifacts. Available commercial
    properties in Lawton, OK were unsatisfactory. They either did not meet
    the minimum square footage requirements, or they were in poor condition
    and located in unsafe districts not conducive to public visitation.
    Currently, about 50 percent of the macro artifacts are in on-post
    warehouses that can be modified for public access with funding.
        The leasing option currently considered for the Ordnance Museum at
    Fort Lee will enable public access to most of the tanks, artillery, and
    vehicles in the collection, however, the small arms collection and
    other micro artifacts will be stored on Fort Lee warehouses and not
    accessible. 90 percent of the Ordnance Museum's inert munitions and
    small arms collections will be restricted to on-post by appointment
    research requests only, due to the nature of the security regulations
    governing the management of these types of collections.
        The leasing option currently considered for the Armor Museum at
    Fort Benning will enable the balance of the museum's tanks, vehicles,
    and archives to be available to the public however, the storage of the
    micro artifact collection in the basement of the National Infantry
    Museum makes that portion of the collection inaccessible to the public.

        145. Senator Chambliss. Secretary Hammack, the locations receiving
    the artifacts--Forts Benning, Lee, and Sill--have never had public
    access to these artifacts. How do you judge the public expectation for
    their ability to access these artifacts?
        Ms. Hammack. There have been many newspaper articles and television
    news programs in the communities surrounding Forts Benning, Lee, and
    Sill anticipating the arrival of the respective museum collections.
    Army staff have emphasized to the press that the soldier training
    mission is paramount to the three museums, but the public expectation
    has been that the local communities would benefit from the museums'
    arrival. Columbus, GA, has shown great interest in the educational
    opportunities that the Armor Museum offers. These include science,
    physics, history and math applications for elementary through high
    school curricular, and internship programs at the college level. Along
    with the National Infantry Museum and the Civil War Naval Museum, the
    addition of the Armor Museum collection would create the largest museum
    venue in the South. The Lawton, Oklahoma media expect the Air Defense
    Artillery collection to be co-located in the vicinity of the Field
    Artillery Museum and Fort Sill Museum and see the complex to be the
    largest of its kind in that region of the country. The Petersburg and
    Richmond, Virginia media have portrayed the arrival of the Ordnance
    Museum as an enhanced cultural attraction to the area. The U.S. Army
    Ordnance Collection joined with the current U.S. Army Quartermaster
    Museum, Woman's Army Museum and the Petersburg National Parks Service
    Unit would provide the second largest cultural venue on the east coast
    for American Military History outside of the Mall in Washington, DC.
        Interest in the three museums extends well beyond the local
    community to national and international audiences. Recent media, email,
    and telephone inquiries to the museums show a widespread concern among
    researchers and the general public over the fate of the artifacts,
    future access to the collections, and exhibits for tours and research.
        DOD activities have also expressed concern over the inability to
    continue joint educational programs and research within the collections
    if they are divided between off-post leased spaces and on-post deep
    storage facilities. If the individual collections are subdivided
    between on-post and off-post leased facilities, the logistics of
    research trips will be greatly complicated. The three museums'
    contributions to educational and research programs of the U.S. Navy EOD
    In-Country Exploitation Team, CIA, DIA, Army Research Laboratory, as
    well as organizations of our allies such as the joint Anglo-American
    Armor Board, are in jeopardy while the collections' long-term
    preservation arrangements remain in limbo.

        146. Senator Chambliss. Secretary Hammack, can you explain how the
    leasing option might facilitate fundraising by private foundations and
    how the Army could legally support that?
        Ms. Hammack. I cannot predict how the leasing option might affect
    fundraising by private foundations. Private organizations must,
    however, conduct their fundraising operations in Army leased facilities
    in the same manner as they do in Army owned museum facilities. To date,
    fundraising that supports a state-of-the-art museum facility and
    exhibit gallery has been the result of key drivers--determined and
    talented private organization leadership, accessibility to the
    collection, the subject matter of the museum, and location near a
    metropolitan center.

        147. Senator Chambliss. Secretary Hammack, is it possible that the
    lease option could hurt private fundraising?
        Ms. Hammack. As previously stated, I cannot predict the effect of
    the leasing on fundraising by private foundations.

        148. Senator Chambliss. Secretary Hammack, can you explain why
    these MILCON projects were not requested in BRAC MILCON accounts, and
    did the Army General Counsel concur with this decision and judge it to
    be in compliance with the BRAC law?
        Ms. Hammack. The Army deliberately included these projects,
    categorized as BRAC enablers, in the MILCON, Army (MCA) request. While
    BRAC is funding the move of the artifacts, indoor and outdoor storage
    mitigations were available at gaining locations to house the artifacts
    until such time as MILCON could be programmed to consolidate the
    collections at a single location accessible to the trainees. The Army
    General Counsel posed no objection with the decision to fund these
    projects with MCA.

        149. Senator Chambliss. Secretary Hammack, as the Army addresses
    this issue, I encourage you to explore all viable options and perform
    your due diligence. However, before you irretrievably commit to one or
    more of these options, can I get your assurances that the Army will
    first brief me and the committee's stakeholders?
        Ms. Hammack. The Army remains committed to open and transparent
    dialogue with Congress. We will continue to apprise you and the
    committee stakeholders of our progress and intentions related to this
    issue.

        150. Senator Chambliss. Secretary Hammack, I believe our goal here
    should not simply be to reach a solution that is feasible, but to
    achieve the right solution for the Army and the Nation. For that
    reason, I want to make sure the alternatives have a solid business case
    analysis and take into consideration all the various stakeholders--the
    Army, the public, and the foundations seeking to build private museums,
    and of course the taxpayers. If your due diligence shows that a MILCON-
    funded solution is the most appropriate route, will the Army take this
    into consideration in a possible future budget request?
        Ms. Hammack. The Army will consider including storage facilities in
    future requests as required and if there is an adequate level of
    Congressional support for such projects.

        151. Senator Chambliss. Secretary Hammack, will you engage the non-
    Army stakeholders-- particularly the local communities and the private
    foundations seeking to build museums--to make sure you properly
    understand their interests, concerns, and desires before recommending a
    final course of action?
        Ms. Hammack. The staffs of the Army museums have engaged their
    respective private foundations on the challenges facing the Museum
    Operations Support Facilities. The appropriate Army organizations will
    engage with the local communities to gauge their interests, concerns
    and desires in regards to public access to the historical artifacts of
    the Air Defense Artillery, Armor, and Ordnance Museums.

                         DOD FORCE STRUCTURE IN EUROPE

        152. Senator Chambliss. Secretary Hammack, Secretary Gates
    mentioned several months ago that he believes we have excess force
    structure in Europe and stated that DOD would work with our allies to
    determine the precise force structure and timing. Do you have an update
    on where that process stands?
        Ms. Hammack. As of the March 17, 2011, hearing date, the answer is:
    The Army has and continues to reduce its footprint in Europe while
    consolidating remaining forces and infrastructure. U.S. military
    posture in Europe is important to our National security and global
    strategic interests, and it allows the United States to maintain
    critical relationships with our allies and partners, and promotes
    continued stability throughout the region. As part of the Secretary of
    Defense's announcement on excess force structure in Europe, U.S. Army
    Europe has been reduced to a three-star level command. This
    streamlining of the command is commensurate with the current and future
    level of Army forces in Europe, and is consistent with Army Service
    Component Command structure worldwide. The Army is currently awaiting
    the final OSD decision on the future disposition of forces in Europe.
        Update: However, since that date, DOD announced that the Army would
    retain three BCTs in Europe beginning in 2015. In light of this recent
    decision and the previous Secretary of Defense announcement to reduce
    the Active component Army end strength by 27,000 Soldiers, the Army
    will conduct a thorough analysis over the next year to determine the
    overall makeup of the force. Stationing decisions will be addressed
    along with other force structure actions at the conclusion of this
    year's Total Army Analysis.

                                  FORT STEWART

        153. Senator Chambliss. Secretary Hammack, Fort Stewart was one of
    the bases slated to receive an additional brigade as part of the Grow
    the Army plan. That decision was later reversed but not before the
    community invested tens of millions of dollars preparing to receive the
    additional brigade and soldiers. As you look to make a basing decision
    on any future brigades, my hope is you would heavily weigh three
    criteria in strategic priority: power projection; training capacity;
    and available infrastructure. I believe Fort Stewart excels in all
    these criteria and I know that the community would welcome any
    additional force structure the Army wishes to place there. In these
    times of geopolitical uncertainty and fiscal crisis, if we get this
    basing decision wrong, it could prove costly not only monetarily but
    most importantly in our soldiers' lives. I have also heard that the
    Army may be standing up or growing a new field artillery brigade. Is
    that correct, and if so, can you provide the status of that force
    structure action?
        Ms. Hammack. As of the March 17, 2011 hearing date, the answer is:
    I understand and appreciate that communities surrounding Fort Stewart
    have spent considerable time, effort, and money in anticipation of the
    activation and stationing of the 46th BCT at Fort Stewart. To support a
    possible decision by the Secretary of Defense on force structure in
    Europe, the Army is updating the 2007 Grow the Army Military Value
    Analysis (MVA). The MVA assesses installations on growth capacity,
    ability to support power projection, ability to support training, and
    the well-being of soldiers and their families, and provides the Army's
    leadership a rank-ordered assessment of installations that would best
    support the stationing of Army units. Fort Stewart will be given every
    consideration in any stationing action as the Army continues to review
    and analyze possible future force structure and operational adjustments
    to develop a versatile and balanced force. This analysis will be in the
    context of potential impacts as a result of the Secretary of Defense
    announcement to reduce the Active component Army end strength by 27,000
    soldiers beginning in 2015. Any basing decisions on field artillery
    units and BCTs will be addressed along with other Force Structure
    decisions as part of this year's Total Army Analysis results which will
    be integrated into the Army fiscal year 2014 budget submission.
        Update: However, since that date, DOD announced at the Army would
    retain three BCTs in Europe beginning in 2015. In light of this recent
    decision, a stationing decision for BCTs, to include the disposition of
    the heavy brigade, will be addressed along with the 27,000 end strength
    reduction, and other force structure actions at the conclusion of this
    year's Total Army Analysis.

                    ASSESSMENT AT THE AIR LOGISTICS CENTERS

        154. Senator Chambliss. Secretary Yonkers, I realize the focus of
    this hearing is not on depots, but one depot-related environmental
    issue that I wanted to bring up which we discussed in my office a few
    weeks ago is in regards to Occupational Safety and Health
    Administration (OSHA) and the inspections they have performed recently
    at the Air Logistics Centers (ALC). I am concerned and I know you are
    also concerned about OSHA's approach and their flagging the ALCs for
    violations that do not seem to be based on a clear standard and that do
    not have any apparent negative effect on the workforce. I would
    appreciate your thoughts on this issue, the approach you recommend for
    engaging OSHA, and your recommendation for holding the ALCs to a
    reasonable standard of safety and health without hampering their
    ability to carry out their mission, which is to deliver combat ready
    aircraft to the warfighter.
        Mr. Yonkers. OSHA identified some shortfalls in execution of our
    processes which we have aggressively addressed at all our ALC. Eighteen
    of the 39 OSHA citations regarded compliance with hexavalent chromium,
    lead or cadmium standards--many specifically addressed surface
    contamination. Except for ``eating surfaces'' in the cadmium standard,
    there are no promulgated analytical standards for surface contamination
    based on adverse employee health effects. The current stand is ``as
    free as practicable'' from contamination.
        OSHA inspectors are currently citing our units based on
    contamination presence as evidence of not meeting the ``as free as
    practicable'' standard. This interpretation is causing our units to
    make costly process changes which adversely affect our production cycle
    times.
        We have a duty to protect our workers. We have provided interim
    guidance to the ALC regarding housekeeping and industrial hygiene to
    address the contamination issues. The USAF School of Aerospace
    Medicine, Wright Patterson Air Force Base, OH, has studied the
    contamination levels noted by OSHA and cannot substantiate an ingestion
    health hazard. We are finalizing formal guidance to our ALCs on
    housekeeping/industrial hygiene and verification processes. In the
    interim, we will contest citations issued based on contamination
    presence without a substantiated health risk.
        This OSHA action is a policy issue which must be worked by the OSD,
    not each of the Services or defense agencies. Preliminary interaction
    with OSHA is complete. OSD will meet with OSHA Compliance Directorate
    in the near future to discuss the way forward.

        [Whereupon, at 4:36 p.m., the subcommittee adjourned.]

    DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR
                   2012 AND THE FUTURE YEARS DEFENSE PROGRAM

                                  ----------

                            WEDNESDAY, MAY 18, 2011

                               U.S. Senate,
                  Subcommittee on Readiness and
                                    Management Support,
                                   Committee on Armed Services,
                                                        Washington, DC.

                 THE CURRENT MATERIEL READINESS OF U.S. FORCES

        The subcommittee met, pursuant to notice, at 10:09 a.m. in
    room SR-232A, Russell Senate Office Building, Senator Claire
    McCaskill (chairman of the subcommittee) presiding.
        Committee members present: Senators McCaskill, Udall,
    Shaheen, Inhofe, Chambliss, and Ayotte.
        Committee staff members present: Leah C. Brewer,
    nominations and hearings clerk; and Jennifer L. Stoker,
    security clerk.
        Majority staff members present: Peter K. Levine, general
    counsel; John H. Quirk V, professional staff member; Russell L.
    Shaffer, counsel; and William K. Sutey, professional staff
    member.
        Minority staff member present: Lucian L. Niemeyer,
    professional staff member.
        Staff assistants present: Hannah I. Lloyd and Breon N.
    Wells.
        Committee members' assistants present: Tressa Guenov,
    assistant to Senator McCaskill; Christopher Kofinis, assistant
    to Senator Manchin; Patrick Day, assistant to Senator Shaheen;
    Anthony Lazarski, assistant to Senator Inhofe; Clyde Taylor IV,
    assistant to Senator Chambliss; and Brad Bowman, assistant to
    Senator Ayotte.

        OPENING STATEMENT OF SENATOR CLAIRE McCASKILL, CHAIRMAN

        Senator McCaskill. Good morning, everyone. I will begin
    with an opening statement, and then turn to my colleague
    Senator Ayotte for her opening statement, and then we will take
    your testimony. I appreciate you all being here today.
        The Subcommittee on Readiness and Management Support meets
    this morning to hear testimony on the materiel readiness of our
    military. Today, we'll hear from Lieutenant General Mitchell
    Stevenson, Deputy Chief of Staff, Logistics, for the Army; Vice
    Admiral William Burke, Deputy Chief of Naval Operations for
    Fleet Readiness and Logistics; Lieutenant General Loren Reno,
    Deputy Chief of Staff for Logistics, Installations, and Mission
    Support for the Air Force; and Lieutenant General Frank Panter,
    Deputy Commandant for Installations and Logistics for the
    Marine Corps. I welcome you all and thank you, not only for
    your testimony, but for your contributions and service to our
    Nation.
        After almost a decade of combat operations, we have
    significant gaps in our materiel readiness accounts. While I
    want to support the Services with every possible resource, I
    also want to ensure that we do a better job at matching up
    funding to requirements. For this reason, I continue to be
    concerned by the longstanding failure of the military
    departments to fully fund our maintenance requirements. At a
    time when we already have significant equipment backlogs, the
    continuing lack of full funding can only increase the scope of
    the problem. It's a classic case of pay now or pay dearly
    later.
        As a result of our decade-long military operations in Iraq
    and Afghanistan, both the Army and the Marine Corps face
    significant military readiness issues, particularly with regard
    to nondeployed units. The Army has said it will need 2 to 3
    years of reset funding beyond the end of combat operations,
    while the Marine Corps has said it will face a $5 billion bill
    for reset and an additional $5 billion bill to reconstitute the
    force, yet have only allocated $250 million in the fiscal year
    2012 budget to address this looming funding request.
        The Navy and the Air Force also face significant backlogs
    in maintenance and repair of equipment. For example, because
    the Navy has failed to fully fund their depot maintenance
    accounts over the past few years, we currently have a $367
    million maintenance backlog.
        Similarly, the Air Force has failed to fund their readiness
    accounts, at 83 percent in fiscal year 2011 and 84 percent in
    fiscal year 2012. This inadequate funding has resulted in a
    significant backlog of aircraft in great need of repair.
        Last year in the committee, we attempted to address this
    problem by adding $532 million to address unfunded requirements
    for ship depot maintenance, aircraft depot maintenance, and
    spare parts identified by the Chief of Naval Operations, and
    $337 million for unfunded requirements for weapon system
    sustainment that were identified by the Air Force Chief of
    Staff.
        I hope that we will hear from our witnesses today whether
    their depots are operating at capacity or could repair
    equipment faster and enhance unit readiness if any additional
    funding were available.
        I hope we will hear from each of our witnesses today what
    steps they plan to take to address these backlogs of deferred
    maintenance and reset requirements and ensure that all of our
    units, not just deployed units, reach the level of readiness
    that we need and expect. This effort will undoubtedly require a
    long-term strategy which extends beyond fiscal year 2012, and
    probably even beyond the scope of Future Years Defense Program
    (FYDP).
        Finally, as I have said at our previous hearings, I do not
    believe there is anything the Department of Defense (DOD) is
    doing that it cannot do better. I do not believe there is any
    part of the budget that should be off limits as we look for
    savings. While we are not about to cut funds that are needed to
    support forces engaged in ongoing military operations, I am
    convinced there are things that we can, and should, do better.
        In this regard, I am particularly concerned about the
    extent that we have become reliant upon contractors to provide
    logistics support for these operations. As the Commission on
    Wartime Contracting recently concluded, there are too many
    areas in which the contractors have become the default option.
    I recognize that our witnesses today are not contracting
    experts, but you are responsible for providing logistics
    support, including contractor support, for ongoing military
    operations.
        As I understand it, the military departments are
    responsible for: ensuring that operational contract support
    requirements are identified and integrated into the operation
    plans; ensuring that contractor management plans are
    incorporated into operation plans; ensuring that contract
    oversight processes and manpower requirements to execute
    oversight are incorporated into operation plans; integrating
    identified contract requirements into training simulations,
    mission rehearsals, and exercises; ensuring that military
    personnel outside the acquisition workforce who are expected to
    have acquisition responsibility, including oversight
    responsibility, are, in fact, properly trained; determining
    requirements and qualifications for contracting officer
    representatives (CORs), making sure that the corps are properly
    trained and certified; and collecting and distributing
    operational contract support lessons learned.
        I intend to ask our witnesses today what actions they and
    the Services they represent have taken, and plan to take, to
    carry out these important responsibilities.
        I look forward to the testimony of our witnesses, and I now
    turn to Senator Ayotte for any opening remarks that she might
    have.

                   STATEMENT OF SENATOR KELLY AYOTTE

        Senator Ayotte. Thank you, Chairman McCaskill, for calling
    this important hearing on the materiel and logistical readiness
    of our Armed Forces.
        I want to also welcome Senator Inhofe here, as well.
        I also thank the witnesses for appearing before our
    subcommittee today, and for your service to our country, and
    for all of those that are serving beneath you.
        I believe it was Napoleon who first observed that, in
    warfare, while the amateurs discussed tactics, the
    professionals discussed logistics. Our committee has no greater
    role than ensuring our military personnel are properly equipped
    to succeed in their missions. In tough fiscal times, with
    decreasing budgets across all Federal agencies, it is
    especially important to review department resource decisions
    regarding logistics programs to understand their impact on
    readiness. We need to be clear about what risks to the force we
    are willing to assume in the short term, and in the future,
    based on the declining availability of resources. While the
    Pentagon must relentlessly pursue efficiencies and eliminate
    waste--and I certainly agree with the statements made by the
    Chairman--we must devote sufficient resources for weapon system
    sustainment, prepositioned stocks, equipment accounts, and
    depot operations. Given the current state of world affairs,
    tasking our warfighters to do more with fewer resources is
    going to extend the strain on the force, resulting in longer
    deployments and shorter amounts of downtime needed to allow our
    troops and their families to recuperate, units to train, and
    equipment to be reset.
        I look forward to receiving the details from the witnesses
    on the risks associated with each of the department's
    efficiency initiatives in the 2012 budget request affecting
    logistics. We also need to remember that the Services have
    already assumed risks, for years, in certain aspects of
    readiness, such as facility maintenance and adequate training
    for all aspects of roles and missions. For example, the
    Department of the Navy recently estimated that they already
    have a backlog of over $3.5 billion for estimated costs of
    facility repairs at their four public shipyards alone, and
    almost $40 billion in other shore infrastructure requirements.
    Another example all Services have acknowledged in their
    testimony this year, is that the readiness of nondeployed
    forces has been sacrificed in order to ensure the readiness of
    forces deployed to Iraq and Afghanistan. This mortgaging of the
    nondeployed forces' readiness to ensure the readiness of those
    deploying to Iraq and Afghanistan has undercut our Nation's
    preparedness for a variety of contingency missions. We've
    already seen how those have risen. For example, adequately
    equipping deploying forces has often left units stationed back
    home, particularly in the Reserve and Guard units, without the
    equipment they need to train for their next deployment or to
    carry out stateside missions. Too often, we hear of units
    seeing equipment for the first time in theater, or at the last
    minute, in their final predeployment training. I wonder just
    how much longer we can continue to defer maintenance in
    training before we start to see the signs of a hollow force. We
    need to hear, from our witnesses, how they are addressing these
    issues.
        Finally, the witnesses have all stated, in written
    testimony, that over 10 years of persistent conflict has taken
    a toll on military readiness and the availability of equipment.
    They have stated, as well, that years of dedicated funding for
    reset and reconstitution will be required after our forces come
    home in order to restore adequate levels of readiness across
    the full spectrum of operations. I look forward to hearing
    detailed information from the witnesses on what supplies,
    equipment, and levels of activity in our depots and shipyards
    are needed to reset our forces. In addition, this committee
    needs to hear from our witnesses regarding the amounts of
    resourcing that will be needed in the next 5 years to restore
    the levels of full-spectrum readiness necessary to preserve our
    national security. While we must reduce Federal spending in all
    areas to restore the fiscal health of this country, we must not
    lose sight of our sacred vow to fully equip, train, and support
    those who defend our Nation and keep us safe.
        I thank the witnesses in advance for their candid views on
    these matters, and look forward to a productive hearing on this
    topic.
        Thank you, Chairman McCaskill.
        Senator McCaskill. Thank you very much.
        I will now turn to our witnesses. I know you are aware of
    how much we want you to give us information, but then, at the
    same time, we tell you not to talk for too long. So, we're
    hopeful that you all can keep your comments to about 5 minutes.
    Obviously, all of your statements have been available to us,
    have been reviewed, and will be placed in the record. We look
    forward to your testimony. We'll begin with you, Lieutenant
    General Stevenson.

     STATEMENT OF LTG MITCHELL H. STEVENSON, USA, DEPUTY CHIEF OF
                      STAFF, LOGISTICS, U.S. ARMY

        General Stevenson. Chairman McCaskill and Ranking Member
    Ayotte, as you asked, I will not read my opening statement, but
    rather just ask that it be accepted into the record. What I'd
    like to do now is just highlight a few points from that
    statement.
        First, in terms of the materiel readiness of the Army, as
    you acknowledged, we certainly have our challenges. But, I
    would argue that we are more ready today than we have been in a
    long time in a lot of areas. I can elaborate on that, if you'd
    like, in my upcoming testimony. This is in no small measure to
    the amount of unwavering support we get from Congress to keep
    us well funded.
        In Iraq and Afghanistan, we are on track and, in some
    cases, ahead of schedule. In the drawdown from Iraq, we've been
    getting pretty decent marks from the Government Accountability
    Office (GAO), in that regard. I can talk about that later, if
    you'd like, as well.
        Our readiness posture in Afghanistan is actually quite
    strong, and getting stronger every day. Just this morning, I
    had an update on materiel readiness in Afghanistan of all of
    our forces. In all but one case, we are at or above the 90-
    percent goal that we set for ourselves in terms of readiness.
        Here at home, we've improved our ammunition readiness. It's
    stronger than it's ever been, that I can remember. We're
    reconstituting our Army prepositioned stocks. Like everyone in
    the DOD, as you pointed out, we logisticians are focused on
    being better stewards of our taxpayers' dollars. An example of
    that is a pretty aggressive property accountability campaign
    that mandates a culture of supply discipline.
        Our depots and arsenals remain quite busy, though. As a
    result of the drawdown in Iraq, the workload is declining.
    Having said that, as you point out, it is still the case that
    we will require reset funding for 2 to 3 years after operations
    finally end.
        Your support has made us ready.
        I look forward to your questions.
        [The prepared statement of General Stevenson follows:]

              Prepared Statement by LTG Mitchell H. Stevenson, USA

        Chairman McCaskill, Ranking Member Ayotte, members of the
    subcommittee, on behalf of all soldiers, Army civilians, and their
    families, I appreciate the opportunity to appear before this
    subcommittee.
        As the Secretary and the Chief of Staff of the Army have testified,
    the war is not over yet, and we remain in an era of persistent conflict
    facing an uncertain and increasingly complex strategic environment. To
    that end, I continue to be impressed by the work of Army Soldiers and
    Civilians. I have visited them as nearby as Fort Lee, VA, and as far
    away as Bagram, Afghanistan, and I can say without equivocation that
    the Army's sustainment system, and the personnel who make it work, is a
    well-tuned enterprise capable of supporting a versatile and adaptable
    Army.
        As I appear before you today, the Army is seamlessly moving
    supplies and equipment out of Iraq to multiple destinations, while
    simultaneously supporting complex military operations in the land-
    locked country of Afghanistan, with its treacherous terrain and poor
    infrastructure. We have utilized our prepositioned stocks several
    times, most recently to aid our allies in Japan, and after each usage,
    quickly rebuilt them to be ready for the next requirement--Army
    prepositioned stocks (APS) are doing precisely what they are intended
    to do. Our depots, arsenals, and ammunition plants have surged to keep
    the warfighter on the front lines stocked with the best and most
    reliable equipment and supplies. On top of all this, we are working to
    get even better: the Army's soldiers and civilians are pursuing
    cutting-edge technologies in operational energy, improving efficiencies
    and accountability. Because of these efforts, your Army is more
    prepared to meet operational challenges than it ever has been--a state
    of readiness that I think will improve even more in the coming years.
        Of course, such a feat would not have been possible without the
    support of Congress. Speaking on behalf of the Army, let me just
    acknowledge that this subcommittee's commitment to our men and women in
    uniform has been instrumental to our success, and we are committed to
    being good stewards of the resources you have authorized us.

                              RESPONSIBLE DRAWDOWN

        The Army is currently drawing down our presence in Iraq. As part of
    this effort, we will redistribute over 3.4 million pieces of equipment,
    redeploy more than 143,000 U.S. military personnel, and transfer or
    close 505 Forward Operating Bases. These bases were supported by 22
    Supply Support Activities (the Army equivalent of a Walmart store),
    containing a total of over 135,000 lines of repair parts, 21,000 short-
    tons of common-use supplies, and 34,000 short-tons of ammunition. As
    part of our drawdown effort, we have already retrograded roughly 2.3
    million pieces of equipment, and have only 74 Forward Operating Bases
    still in place. This is, as you would imagine, no small task. Based on
    results of reviews by both the Army Audit Agency and the Government
    Accountability Office, I am pleased to report that we are currently on
    track or ahead of schedule in every measurable area, and I am confident
    we will complete this mission on time, and do so responsibly.
        Since the beginning of the Iraq drawdown process, the Army has had
    clearly defined, coordinated, and synchronized plans and policies for
    the redistribution and retrograde of materiel. Our first priority for
    any piece of equipment no longer required in Iraq is to fill
    requirements in Afghanistan. After we meet those needs, some equipment
    redeploys home with units for unit level Reset; the remainder is sent
    directly to industrial base facilities for national level Reset. Upon
    completion of Reset, we distribute this equipment in accordance with
    Army priorities to fill unit equipment authorizations in the active
    Army, Army National Guard, and Army Reserve, or to restock APS. Also we
    are using Congressionally granted authorities to provide varying types
    of equipment to Iraqi and Afghan Security Forces to help build up their
    minimum essential capabilities. Finally, we are working with State and
    local governments to provide them the opportunity to claim certain
    pieces of excess, non-standard equipment.

                      SUPPORTING OPERATIONS IN AFGHANISTAN

        While our efforts to draw down successfully and responsibly in Iraq
    have been noteworthy, what makes it even more remarkable is that this
    drawdown in Iraq is being accomplished while concurrently supporting
    combat operations in Afghanistan. As many of you who have traveled to
    these places know, the challenges a soldier faces in Iraq are not
    always the same as he or she faces in Afghanistan. In Afghanistan, a
    land-locked country with poor infrastructure, we are put to the test
    every day to find new and better ways to sustain the warfighter, both
    in moving supplies into theater, and then also in successfully
    delivering it to soldiers in remote locations under austere and
    dangerous conditions. The Army, working in conjunction with our
    partners in U.S. Central Command and U.S. Transportation Command
    (TRANSCOM), use multiple modes of transportation to get the soldier
    what he or she needs on the battlefield. Critical and sensitive
    equipment, such as communications equipment, ammunition, repair parts,
    and weapons are delivered by air, while the remainder of the equipment
    is generally delivered by ground. In some cases, the poor to non-
    existent roadway infrastructure and the high risk of enemy activity
    require us to resupply remote military outposts by airdrop. Recently,
    the Army and Air Force conducted the largest ever resupply of fuel when
    they dropped approximately 20,000 gallons of JP8 fuel for Wasa K'wah,
    an outpost that has not had ground convoys resupply it in nearly 3
    years.

                                INDUSTRIAL BASE

        While supporting the war effort, the Army has relied heavily on our
    organic industrial base, which has operated at historically high rates,
    the highest since the Vietnam War. In fiscal year 2011, the Army
    expects to Reset approximately 116,000 items at our depots (including
    1,000 Mine Resistant Ambush Protected (MRAP) vehicles). Army rotary
    wing aircraft continue to operate at up to six times non-combat usage
    levels; and many tactical wheeled vehicles have similar and, in some
    cases, even higher tempo of operations (OPTEMPO). Yet our maintenance
    facilities have enabled the Army to maintain operational readiness of
    equipment in theater at rates of over 90 percent for ground, and 75
    percent for aviation equipment. Our current equipment readiness rates
    are a good indicator that we are meeting our requirements, but the Army
    continues to look for ways to keep improving. With our efforts in Iraq
    winding down, we are pursuing strategies that will sustain capabilities
    in the long-term, both in terms of workforce and facilities.
        The Army, with the help of Congress, needs to make the right
    choices to maintain the critical capabilities of depots and arsenals in
    the future. The fiscal year 2012 President's budget request is a good
    step forward in transitioning from a reliance on overseas contingency
    operations (OCO) funding to the standard base budget. This will allow
    us to better ensure that depots sustain core capabilities as we draw
    down from the high wartime OPTEMPO. Additionally, given all the new
    equipment brought into the inventory as we have conducted operations in
    Afghanistan and Iraq, we need to adapt our depot programs to
    accommodate the latest systems. A good example of that is the work we
    are doing right now in establishing a competency for repair of MRAPs at
    Red River Army Depot, and route clearance equipment at Letterkenny Army
    Depot.
        I know the industrial base is an issue of importance to this
    subcommittee. As part of the National Defense Authorization Act for
    Fiscal Year 2009, Congress required an independent study on the
    capability and efficiency of the Department of Defense (DOD) depots.
    Prior to this study, the Army was already working to address many of
    its key elements. The Army has instituted a ``portfolio review''
    process to provide overarching analysis and recommendations to posture
    us even more effectively for the future--we are using this process to
    comprehensively assess the organic industrial base and consider options
    to sustain ready and relevant depots, arsenals, and ammunition plants
    for the 21st century. In addition, we had already been working hard to
    ensure we had a well thought out industrial base strategy, and were
    meeting our core requirements in our maintenance depots.

                           ARMY PREPOSITIONED STOCKS

        Like the industrial base, our Army Prepositioned Stocks (APS)
    program must be maintained to meet the need of future contingency
    operations. The APS program is doing exactly what it was created to do,
    which is to give our combatant commanders access to strategically
    placed equipment to enable a rapid response to contingencies. As an
    example, we have issued and reconstituted our APS-5 set in Southwest
    Asia several times in order to meet operational requirements in both
    Afghanistan and Iraq. To help restore APS, the Army has requested $679
    million in Base funding and $288 million in OCO funding in the fiscal
    year 2012 budget request. Our current focus is the reconstitution of a
    fully operational APS-3 Army Strategic Flotilla I Infantry Brigade
    Combat Team (BCT), APS-3 Army Strategic Flotilla III Sustainment
    Brigade, APS-3 Army Strategic Flotilla IV Theater Opening/Port Opening
    Package, APS-4 Heavy BCT, APS-5 Sustainment Brigade, APS-5 Heavy BCT,
    and APS-5 Infantry Battalion. With your continued support, the Army is
    committed to completely restoring our prepositioned stocks, a task we
    expect to accomplish by the year 2015. The APS program supports our
    National Military Strategy by positioning critical warfighting stocks
    afloat and ashore worldwide which provides combatant commanders maximum
    strategic flexibility and operational agility.

                               OPERATIONAL ENERGY

        Access to energy is also an important function of readiness. The
    Army purchased just over $1 billion worth of fuel in Afghanistan during
    fiscal year 2010. Operational Energy represents a complex set of
    challenges and opportunities for us. It requires synchronization across
    the Army and with joint and other external organizations. In terms of
    sustaining our operations in theater, it is critically important that
    we manage our energy resources in order to maximize our overall combat
    effectiveness. That means our approach to managing fuel and energy
    requires a comprehensive approach--no single solution (process/
    procedural change, technology-insertion, or otherwise) can address the
    challenges we face across the full spectrum of operations. In addition,
    it is important to note that Operational Energy is inextricably linked
    to the management of water and other resources.
        There are several system initiatives underway for Army Operational
    Energy, with energy efficiency improvement of Army base camps
    representing one of the best opportunities to reduce, and more
    intelligently manage, energy and water usage. The Army is taking a
    systems approach to demand reduction of both energy and water--this
    includes the use of energy-efficient shelters, micro-grids and
    renewable power and water reuse systems.
        To support our focus on energy savings, the Army developed a tool
    to estimate the Fully Burdened Cost of Fuel (FBCF) and made it
    available to all of the DOD, so that it can be used to estimate the
    FBCF for specific types of equipment, different types of units, and
    various locations throughout the world. Reducing our demand for energy
    will take fuel convoys off the road and save lives.

                                  EFFICIENCIES

        As part of the overall Army efficiency initiatives, we logisticians
    are looking at ways to reduce the need for taxpayers' dollars without
    adversely affecting current or future readiness. The Army is partnering
    with TRANSCOM to consolidate shipments and use more efficient modes of
    transportation. We are also saving money by accelerating the completion
    of chemical demilitarization activities. By reducing War Reserve Stocks
    for Allies Ammunition Stockpile in Korea, we are saving money on the
    associated storage and maintenance costs--we are currently reducing
    that stockpile by 32,000 short tons per year. The Army is also becoming
    more efficient by using bar code technology to reduce processing times
    and improve inventory management for Organizational Clothing and
    Individual Equipment, along with an entire suite of initiatives aimed
    at streamlining supply operations across the board for this gear.

                          EQUIPMENT ON HAND READINESS

        The Army is also taking actions to improve our equipment on hand
    readiness and to ensure we do a better job of reporting the true
    capability of our modular force. The logistics, readiness and equipping
    staffs are conducting a thorough review of all the Army's equipping
    requirements to ensure we have the right capabilities in the right
    quantities reflected in our authorization documents. Taking advantage
    of the experience and advice of our combat-experienced commanders, we
    are validating and where appropriate, adjusting our requirements. This
    allows us to redistribute on hand equipment so that we can make maximum
    use of the dollars Congress provides.

                                  STEWARDSHIP

        Property Accountability is the foundation of good stewardship and a
    top priority of the Army's leadership. The Army is adapting its
    corporate equipment accountability policies and processes to support
    Army Force Generation and streamline its procedures. We have placed
    increased emphasis on stewardship by publishing orders that mandate
    that all Army Commands, Army Service Component Commands, and Direct
    Reporting Units account for everything, account for and redistribute
    excess, and educate leaders at every level to reestablish a culture of
    supply discipline. The Army's Property Accountability Campaign is a
    highly visible, enduring effort that enables the Army to make prudent
    use of its resources and enhance its readiness.

                              AMMUNITION READINESS

        Over the past 9 years of war, the Army has steadily improved its
    ammunition readiness while supporting our deployed forces. Our forward
    positioned forces can fully support their missions, while maintaining
    their stocks at the highest readiness levels. The Army's ability to
    flex to support missions and operations has vastly improved since 2003,
    when we came out of our post Cold War hiatus on ammunition production.
    We continue to monitor our ammunition readiness closely, working in
    conjunction with the other Services, to ensure that the DOD is able to
    supply a highly trained force when and where they are needed.

                                   CONCLUSION

        Army logisticians work tirelessly to make sure that the Army is
    ready whenever called upon; and we continue to improve on our readiness
    every day. We are simultaneously meeting our goals of drawing down in
    Iraq while supporting the needs of the warfighters in Afghanistan. In
    addition to these military operations, the Army has executed multiple
    humanitarian assistance and disaster relief missions in which it has
    provided support in the aftermath of events such as the earthquake in
    Haiti, the flood in Pakistan, and the earthquake and tsunami in Japan.
    Here at home, we are determining the best ways to respond to future
    contingencies by supporting our industrial base facilities,
    strategically placing equipment and supplies across the globe in
    prepositioned stocks, fully supporting deployed forces with critical
    ammunition and other supplies, and pursuing new initiatives in
    operational energy. As mentioned throughout my testimony, Army
    logisticians are also looking at ways to become more efficient. We
    believe we are successfully addressing current challenges and working
    to posture our equipment, policies, industrial base, and people so that
    we can be ready for the future. I would like to thank the subcommittee
    again for their support and look forward to your questions.

        Senator McCaskill. Thank you.
        Lieutenant General Panter.

       STATEMENT OF LT. GEN. FRANK A. PANTER, JR., USMC, DEPUTY
     COMMANDANT FOR INSTALLATIONS AND LOGISTICS, U.S. MARINE CORPS

        General Panter. Chairman McCaskill, Senator Ayotte, and
    other distinguished members of the subcommittee, thank you for
    the opportunity to speak to you about the materiel readiness of
    the U.S. Marine Corps. On behalf of all the marines and their
    families, thank you for your unwavering support.
        I would respectfully request my written statement be
    submitted for the record.
        I just returned from Afghanistan yesterday. I had the
    privilege to travel with our Commandant of the Marine Corps and
    our Sergeant Major of the Marine Corps. We observed the marines
    and sailors in the Regional Command Southwest. That's the area
    were the U.S. Marine Corps is operating in Afghanistan--a
    pretty tough neighborhood. I'd like to share with you just a
    couple of stories, what I saw while I was there.
        There's no other way to put it. It is pretty eye-watering
    to observe your marines and sailors professionally performing
    their assigned missions in a very harsh environment. It was 105
    degrees while we were there. They're doing it without
    complaint. We saw things like young captains, lieutenants,
    staff sergeants, and gunnery sergeants planning and conducting
    convoy operations to resupply outlying forward operating bases.
    These convoys range in size from 17 vehicles, roughly, to as
    high as 70 or 80 vehicles, with as many as 140 personnel
    assigned to them. These are, essentially, combat patrols and
    they're dangerous.
        We watched a section of the light armored vehicle battalion
    return from a route interdiction mission in Southern Helmand
    Province. These marines have been out from their forward
    operating base since late February. They hadn't had showers.
    They'd been living off of meals ready-to-eat. But, they were in
    high spirits and motivated.
        It was pretty impressive to see them come back to the
    forward operating base, and watch them immediately turn to
    maintaining their equipment, accounting for their equipment,
    repairing their equipment.
        I had a chance to watch our doctors operate on wounded
    marines. I saw one doctor operating on a marine that had been
    shot in the neck, and he saved his life.
        The stories go on and on. The bottom line is that they're
    in a dangerous environment. These stories represent any of my
    brothers at arms sitting at the table. The leadership that's
    being shown by our young warriors is just simply amazing.
    Bottom line, you have the right to be proud of your marines
    forward-deployed.
        As you mentioned, our equipment abroad has been stressed
    over the last almost 10 years of combat. Our readiness ratings
    at our home station are not what we would like for it to be. We
    continue to globally source equipment to respond rapidly to
    emerging treats in the Middle East, and elsewhere in the globe,
    throughout the Marine Corps.
        I'd be more than happy to answer your questions related to
    our planning for reset and reconstitution.
        In closing, I'd like, again, to thank you, on behalf of our
    brave and dedicated marines and their families, for your
    continued support and your past support. The U.S. Marine Corps
    stands ready to fulfill our role as ``America's Expeditionary
    Force-in-Readiness.'' And with your support, we will continue
    to respond appropriately.
        Thank you.
        [The prepared statement of General Panter follows:]

              Prepared Statement by Lt. Gen. Frank A. Panter, USMC

        Chairman McCaskill, Ranking Member Ayotte, members of the
    subcommittee, thank you for the opportunity to provide you a report on
    how the Marine Corps is sustaining the force. Despite high operational
    tempo, your marines are resilient, motivated, and performing superbly
    in combat, maritime security, humanitarian assistance and disaster
    relief missions around the globe.\1\
    ---------------------------------------------------------------------------
        \1\ CMC Posture Statement, pp. 1-2.
    ---------------------------------------------------------------------------
        Today, partnered with the U.S. Navy, we have roughly 32,000 marines
    forward deployed and forward engaged around the world. This past year
    alone, our afloat forces conducted humanitarian assistance missions in
    Pakistan, Haiti, and the Philippines; recaptured the pirated ship
    Magellan Star, rescuing its crew from Somali pirates; and partnered
    with allied forces in engagement missions in the Pacific Rim, Latin
    America, Africa, and Eastern Europe.
        Even as we speak today, your U.S. Marine Corps is supporting
    disaster relief operations in Japan as the result of the recent
    devastating earthquake and tsunami while concurrently supporting
    Operations Odyssey Dawn and Enduring Freedom.
        The Marine Corps is keenly aware of the fiscal realities
    confronting our Nation. During these times of constrained resources,
    the Marine Corps remains committed to being the best stewards of scarce
    public funds. We maintain a longstanding tradition in Congress as the
    DOD's ``Penny Pinchers.'' Our institutionalized culture of frugality
    positions us as the ``best value'' for the defense dollar. For
    approximately 8.5 percent of the annual Defense budget, the Marine
    Corps provides the Nation 31 percent of its ground operating forces, 12
    percent of its fixed wing tactical aircraft, and 19 percent of its
    attack helicopters.
        The Marine Corps' continued success as ``America's Expeditionary
    Force-in-Readiness'' is completely dependent on continued congressional
    investment in our marines, their families, the reset and modernization
    of our equipment, and the training of the Marine Air Ground Task Forces
    (MAGTF) for future security environments. On behalf of all marines,
    their families, and our civilian marines, thank you for your unwavering
    support.

                            ROLE OF THE MARINE CORPS

        As our commandant recently testified, the role of the U.S. Marine
    Corps affords three strategic advantages for our Nation:

             We are a versatile ``middleweight'' force capable of
            response across the range of military operations;
             We have inherent speed and agility that buys time for
            our Nation's leaders; and
             We possess an enabling and partnering capability in
            joint and combined operations.

        To enable these strategic advantages, the commandant identified
    four enduring priorities aligned with the 2010 National Security
    Strategy:

        (1)  Continue to provide the best trained and equipped Marine units
    to Afghanistan;
        (2)  Rebalance our Corps, posture it for the future, and
    aggressively experiment with and implement new capabilities and
    organizations;
        (3)  Better educate and train our marines to succeed in distributed
    operations and increasingly complex environments; and
        (4)  Keep faith with our marines, sailors, and our families.\2\
    ---------------------------------------------------------------------------
        \2\ CMC Posture Statement, pp. 2-4.

                           OPERATION ENDURING FREEDOM

        We have made tremendous progress in Afghanistan and this clearly
    remains our number one priority. At present, there are more than 20,000
    marines deployed in Afghanistan. The gains that we have achieved in
    Helmand Province are the result of the outstanding leadership,
    professionalism, and bravery of our young marines and their leaders on
    the ground. We will continue to provide forces to Afghanistan capable
    of full spectrum combat and counterinsurgency operations, while
    balancing our capabilities to meet the other tasks the Nation will ask
    of us in the future. We have provided, and will continue to provide,
    the best possible training and equipment for our marines to further
    capitalize on the current successes in Afghanistan.
        Marine units operating in Afghanistan have the highest state of
    readiness for equipment, personnel, and training. Through congressional
    support, we continue to receive funds for the rapid fielding of
    urgently needed items to support the Afghanistan effort. The Mine
    Resistant Armor Protected (MRAP) vehicles and the MRAP All Terrain
    Vehicles provide superb force protection as our marines continue to
    reclaim ground previously controlled by the Taliban. In December 2010,
    we deployed a reinforced Tank Company to complement our efforts in
    Regional Command Southwest to further exploit our hard-earned
    achievements in this highly contested region.

                           GROUND EQUIPMENT READINESS

        As the commandant testified in his statement before Congress in
    March, our equipment abroad and at home stations has been heavily taxed
    in nearly a decade of constant combat operations.\3\ We continue to
    globally source equipment for Afghanistan, and to meet other equipment
    requirements as we rapidly respond to emerging threats in the Middle
    East and elsewhere around the globe. The requirement to fully resource
    deployed forces, often in excess of our tables of equipment, has
    resulted in redistribution of assets from nondeployed forces and
    strategic programs to meet these requirements. The result is a reduced
    availability of equipment essential to outfit and train our nondeployed
    units. The supply rating of units at home station that are not in pre-
    deployment training hovers around 65 percent. When we surged forces
    into Afghanistan, we sent almost half of the required equipment
    directly from Iraq to Afghanistan without full reset actions. Success
    in Afghanistan has stressed our equipment readiness posture due to the
    following factors:
    ---------------------------------------------------------------------------
        \3\ CMC Posture Statement, p. 4.

             The harsh environment and tempo of operations in
            theater through nearly a decade of combat have accelerated wear
            and tear.
             The enemy's weapon of choice in Afghanistan (as it was
            in Iraq)--the improvised explosive device--has greatly
            accelerated wear and tear on our vehicles due to the increased
            weight of vehicle armor.
             The greatly distributed nature of current operations
            has shown us that our legacy tables of equipment were
            inadequate. As a result, the type and number of ground
            vehicles, radios, and other major end items has significantly
            increased. For example, in our infantry battalions, the number
            of tactical vehicles has almost doubled while the number of
            radio sets has grown sevenfold.

                                     RESET

        The decision to rapidly build combat power in Afghanistan forced us
    to delay our original plans to reset the Corps. We estimate that our
    reset requirements have increased as a direct result of the shift of
    equipment from Iraq to support the surge of forces in Afghanistan.
    While we have adjusted our original reset plan, we continually seek to
    synchronize Marine Corps reset efforts to ensure we effectively and
    efficiently reset equipment to support follow-on combat operations.
    Major elements of our ongoing reset plan are:

             Better integrating our Ground Combat Tactical Vehicle
            Strategy as part of an overall Ground Equipping Strategy. These
            efforts are informing the Reset and Reconstitution resource
            allocation decisions for the Marine Corps.
             Maximizing sources of repair in the Central Command
            area of responsibility to sustain our equipment in theater by
            tapping into joint capabilities such as the great support
            provided by the U.S. Army Material Command and the Defense
            Logistics Agency.
             Aggressively repairing equipment at our depots and
            distributing to fill shortfalls for established priorities.
             Disposing of equipment deemed beyond economical repair
            or no longer needed in our inventory.

        The commandant stated that the price tag for reset is $10.6
    billion, of which $3.1 billion has been requested in fiscal year 2011,
    and $2.5 billion in fiscal year 2012. The remaining $5 billion will be
    needed upon the completion of our mission in Afghanistan.\4\ This
    funding will provide depot level maintenance of equipment; procurement
    of combat vehicles, major weapons systems, and engineering equipment;
    replacement of ammunition; and related expenditures.
    ---------------------------------------------------------------------------
        \4\ CMC Posture Statement, p. 12.
    ---------------------------------------------------------------------------
        Reconstitution of Equipment. As we implement the changes identified
    in lessons learned from nearly 10 years of combat and from our force
    structure review, we will continue to assess modernization requirements
    for equipment to meet our post-Afghanistan posture. Our initial
    estimate of costs to modernize equipment sets to support future
    operations is $5 billion, which is completely separate from our reset
    costs. We have begun to address our reconstitution shortfall,
    requesting $253 million in fiscal year 2012 for new equipment
    procurement.\5\
    ---------------------------------------------------------------------------
        \5\ CMC Posture Statement, p. 12.
    ---------------------------------------------------------------------------
                            PREPOSITIONING PROGRAMS

        The current MPF program is composed of a fleet of 16 ships divided
    into 3 Maritime Prepositioning Squadrons (MPSRON) located in the
    Mediterranean Sea, Indian Ocean (Diego Garcia), and Pacific Ocean (Guam
    and Tinian). When completely loaded, Marine Corps prepositioning
    vessels today carry more than 26,000 pieces of major equipment
    including tanks, wheeled tactical vehicles, and howitzers, as well as
    the necessary supplies to support our expeditionary force.
        We continue to rotate the MPSRONs through our scheduled maintenance
    cycles at our Blount Island complex in Florida. Our MPSRONs reset
    efforts will ensure the ships are loaded with the most capable and
    modern equipment available in order to support the full range military
    operations. While there are some critical shortages, the readiness
    trend lines remain high and our Maritime Preposition Force remains a
    viable option for the Nation when needed to support contingencies plans
    throughout the globe.
        The Department of the Navy is currently funding the full Maritime
    Prepositioning Force (MPF) program of 16 ships through fiscal year
    2012. However, the Department of the Navy POM-13 efficiency approved by
    the Secretary of Defense places six ships in Reduced Operating Status
    (ROS) beginning in fiscal year 2013. This equates to savings of
    approximately $500 million across the Future Years Defense Plan but
    implementation of this new strategy needs additional analysis. The
    Marine Corps will continue to optimize its MPF program to remain a
    responsive and relevant warfighting capability to Geographic Combatant
    Commander requirements.
        With the deferring of MPF-Future (MPF-F), the Marine Corps and Navy
    have focused on an interim solution to enhance current MPF with three
    new programs of ships to enable future seabasing concepts. The addition
    of three Mobile Landing Platforms (MLP) and three Auxiliary Dry Cargo/
    Ammunition ships (T-AKEs) to the MPSRONs, coupled with existing Large,
    Medium-Speed, Roll-On, Roll-Off (LMSR) cargo ships, will enable the
    MPSRONs to conduct at-sea, sea-state three, selective offload of
    vehicles, personnel, and equipment without complete reliance on fixed
    ports. The introduction of MLPs, Auxiliary Dry Cargo/Ammunition ships
    (T-AKEs), and LMSRs provide the Navy and Marine Corps team a
    substantial step in enhancing our current sea-basing capabilities. It
    is important to note that these programs are not just strategic war
    reserve. Marine Corps prepositioning programs support forward-deployed
    training exercises, theater engagement and, with the amphibious ships
    of the U.S. Navy, the steady state requirements of the combatant
    commanders.

                               ENERGY INITIATIVES

        For installations, we have a diverse and balanced portfolio
    including photovoltaic, wind and landfill gas generated renewable
    power. In 2012, the Marine Corps plans to invest over $200 million in
    installations energy. Over 90 percent of that will be invested on
    efficiency projects to decentralize heating plants, upgrade HVAC
    systems, retrofit lighting fixtures/controls, and improve building R-
    values (insulating properties) to reduce energy consumption.
        Up to 10 percent of the investment will support additional
    renewable energy sources. Our overall energy investments over the next
    3 years will enable the Marine Corps to meet the requirement to reduce
    Energy Intensity by 30 percent by 2015. To date, we have cut Energy
    Intensity by 10 percent. All facilities being constructed by the Marine
    Corps adhere to the most stringent energy standards in the construction
    industry and are certified to a minimum standard of LEED Silver. Many
    of our recent projects have been certified to LEED Gold and Platinum.
        While our primary objectives for installation energy initiatives
    are environmentally and fiscally focused, for our deployed units, the
    safety and well-being of our marines and sailors in combat are our
    critical goals. We consider reducing energy consumption on the
    battlefield as a force protection issue in that it reduces the
    logistics burden to sustain forces in the field. Additionally, energy
    efficiency makes us more expeditionary by extending operational range
    and reducing reliance on logistical support.
        The Marine Corps is experiencing success in a number of
    expeditionary energy initiatives. Our current initiatives in
    Afghanistan center in Helmand Province and include solar battery
    chargers for portable radios, photovoltaic arrays (towed and land
    arrayed) for static combat outposts, and solar thermal powered tent
    lighting. We have purchased 200 shelter liners for our standard Base-X
    dome tents. These liners will raise the R-value of our tents from R-1
    to approx R-3. These improvements should pay for themselves in fuel
    saved in less than 1 year on the battlefield.

                                FUTURE READINESS

        In fulfilling the commandant's priorities, we are seeking to
    rebalance the Corps, posture for the future, and aggressively
    experiment with and implement new capabilities and organizations. The
    2010 Quadrennial Defense Review and the 2010 National Security Strategy
    identify the necessity of overcoming irregular threats and enabling
    forces that are globally available, yet regionally focused. Today,
    Geographic Combatant Commanders continue to register a need for forward
    deployed amphibious forces capable of operating across the spectrum of
    military engagements, from countering irregular threats to conducting
    security cooperation, from engaging in regional deterrence to providing
    crisis response.
        In recognition of this shifting landscape, last fall the U.S.
    Marine Corps conducted a rigorous force structure review. The outcome
    of this review is a post-Afghanistan Marine Corps comprised of an
    optimum mix of capabilities to fulfill our role as America's
    Expeditionary Force in Readiness. This review addressed Marine Corps
    capabilities, cost, and readiness relative to operational requirements
    of the combatant commanders. The result is a strategically mobile,
    middleweight force, ideally suited for forward presence and crisis
    response. We will be light enough to leverage the capacity and
    flexibility of our amphibious ships, but heavy enough to carry the day
    when we get there. This optimum mix of people and equipment entails
    reorganization of our force and a modest reduction in personnel. As we
    make these adjustments, we will keep faith with our marines, sailors,
    and their families to ensure that personnel are successful in their
    transition back to civilian status. Achieving this future posture will
    of course require continued dialogue with and the support of Congress.

                                    SUMMARY

        Your Navy and Marine Corps team offers an impressive forward
    deployed and forward engaged capability in the defense of our Nation.
    It provides an immediate response to contingencies and supports the
    combatant commanders in setting conditions for follow-on forces as
    required.
        On behalf of your brave and dedicated marines, I offer again our
    sincere appreciation for your past and continued support. The U.S.
    Marine Corps stands ready to fulfill our role as ``America's
    Expeditionary Force-in-Readiness,'' and with your support, we will
    respond rapidly and capably when called upon for future contingencies.

        Senator McCaskill. Lieutenant General Reno.

      STATEMENT OF LT. GEN. LOREN M. RENO, USAF, DEPUTY CHIEF OF
     STAFF FOR LOGISTICS, INSTALLATIONS, AND MISSION SUPPORT, U.S.
                               AIR FORCE

        General Reno. Good morning, Chairman McCaskill, Senator
    Ayotte, other distinguished members of the subcommittee. Thank
    you for the opportunity to discuss the materiel readiness of
    your Air Force.
        As Secretary Donley previously stated, passing a fiscal
    year 2011 Defense Appropriations bill is essential to avoiding
    severe disruptions to readiness. On behalf of the Air Force, I
    thank you for your hard work in resolving this situation.
        Agile combat support underpins all Air Force core functions
    and plays a central role in our ability to create, protect, and
    sustain air and space forces. This is a challenging task, given
    over 20 years of constant combat operations.
        From the development and training of airmen, maintaining
    and supporting weapon systems, and regaining acquisition
    excellence, agile combat support enables the Air Force to
    remain a mission-focused and highly capable force across the
    full spectrum of military operations.
        Permit me to highlight the following areas: the fiscal year
    2012 budget and Air Force efficiencies, joint support to the
    warfighter, personnel readiness, nuclear deterrence operations,
    and weapon system sustainment and readiness.
        Within the Air Force's fiscal year 2012 budget request is
    $33.8 billion for agile combat support. This represents a
    careful balance of resources among the Air Force core functions
    necessary to implement the President's national security
    strategy and an extraordinary effort to ensure America gets the
    maximum value out of every dollar.
        Last year, the Secretary of Defense directed the Services
    to identify $100 billion in efficiencies in overhead and
    support, and move it to warfighting and readiness. Our fiscal
    year 2012 budget supports that efficiency initiative and
    incorporates over $33 billion in efficiencies across the FYDP.
    The savings will be shifted to higher-priority combat
    capability as we reduce our overhead costs, improve business
    practices, and eliminate excess, troubled, or lower-priority
    programs.
        Our airmen continue to inspire us with their dedication and
    service, serving proudly alongside their Army, Marine, Navy,
    and Coast Guard teammates. With airmen at 135 locations
    worldwide, nearly 37,000 forward-deployed and more than 57,000
    forward-stationed, the Air Force fully supports the joint
    fight. The airmen that form the logistics chain have provided
    world-class support to the joint and coalition team in
    Operation Iraqi Freedom (OIF), Operation New Dawn, Operation
    Enduring Freedom (OEF), and most recently, Operations Tomodachi
    and Odyssey Dawn.
        Continued and sustained high operations has reduced our
    personnel readiness. Since 2003, we have seen a steady, but
    slow, decline in reported readiness indicators. At present, 22
    career fields are stressed. However, there are a number of
    programs in place to bolster manning in these career fields, as
    well as to mitigate potential negative effects on our airmen
    and their families.
        We continue to provide two of the three arms of the
    Nation's nuclear deterrence with steadfast excellence,
    precision, and reliability. To that end, we have taken positive
    steps in the fiscal year 2012 budget to continue improving this
    core function.
        The mission capability of the airlift and refueling fleet
    remains high, at 82.7 percent, while meeting robust and dynamic
    operational requirements. Mission capability of the fighter-
    bomber fleet is adequate, at 74 percent. Overseas contingency
    funding (OCO), the fiscal year 2012 President's budget request,
    and efficiencies combine to enable us to meet in excess of 84
    percent of our weapon system sustainment requirements. The
    professionalism and dedicated work of our airmen ensure our
    aircraft inventory is ready.
        In closing, the Air Force is prepared for today's
    operations and tomorrow's uncertainties despite fiscal
    challenges and high operations tempo (OPTEMPO). With the
    uncompromising commitment to Air Force core values, the Air
    Force remains ready to provide global vigilance, reach, and
    power for America.
        Chairman McCaskill, Senator Ayotte, and distinguished
    members of the subcommittee, it's an honor to be here before
    you today. Thank you for your service and continued strong
    support of our airmen and their families.
        I have submitted a written statement for the record, and I
    look forward to your questions.
        [The prepared statement of General Reno follows:]

               Prepared Statement by Lt. Gen. Loren M. Reno, USAF

                                  INTRODUCTION

        The United States continues to confront a dynamic international
    environment requiring the military to remain strong and agile in the
    face of a diverse range of threats. Along with our joint partners, the
    Air Force defends and advances the interests of the United States by
    providing unique core function capabilities required to succeed in
    today's fight and future conflicts. Underpinning the work of all Air
    Force Core Functions are the capabilities inherent in Agile Combat
    Support (ACS). ACS is the ability to create, protect, and sustain air
    and space forces across the full spectrum of military operations,
    spanning the entire set of our diverse functional capabilities. The
    fiscal year 2012 budget request of $33.8 billion for ACS impacts our
    entire Air Force--from the development and training of airmen,
    maintaining and supporting weapon systems, and regaining acquisition
    excellence. ACS enables the Air Force to remain a mission-focused and
    highly capable force; a difficult task given over 20 years of constant
    combat operations.

                           SUPPORTING THE WARFIGHTER

        Our enduring commitment to readiness and the joint fight is
    evidenced by the nearly 37,000 forward deployed, and more than 57,000
    forward stationed airmen at 135 locations worldwide. These Airmen
    contribute to the fight in a variety of ways by fulfilling traditional
    roles as Air Liaison Officers, Combat Control Teams, Combat
    Communications and Battlefield Weather personnel, as well as non-
    traditional roles supporting Joint Expeditionary Taskings as Provincial
    Reconstruction Teams, Ground Convoy Operators and Agricultural
    Development Teams. The many outstanding Airmen that form the
    ``logistics chain''--maintainers, security forces, vehicle operators,
    explosive ordnance disposal teams, engineers, aerial porters, and
    others have enabled the Air Force to conduct more than 45,000 sorties
    supporting Operations Iraqi Freedom/New Dawn, and almost 101,000
    sorties supporting Operation Enduring Freedom, deliver over 1.78
    million passengers and 712,000 tons of cargo, and employ almost 2,580
    short tons of munitions.
        The full impact of agile combat support cannot be expressed by mere
    statistics of tonnage moved and sorties generated. ACS covers virtually
    every aspect of joint and coalition operations and one example of our
    support to the entire joint and coalition team is Basic Expeditionary
    Airfield Resources (BEAR). BEAR includes virtually everything the joint
    warfighter might need for airfield operations in an austere environment
    such as shelters, generators, hygiene kits, and airfield matting. A
    recent example of how BEAR was used is when the 49th Materiel
    Maintenance Group at Holloman Air Force Base, NM, and the Army's
    Surface Deployment and Distribution Command rapidly packed and shipped
    BEAR assets to Afghanistan. This movement equated to 14,550 short tons
    of equipment enabling the set of 15 housing encampments supporting
    8,250 personnel. Additionally, the Air Force has transferred 22 BEAR
    sets to the Army and Marine Corps to support the stand-up of Forward
    Operating Bases throughout Afghanistan as well as two BEAR sets to the
    Navy to support the initial stand-up of detainee operations at
    Guantanamo Bay, Cuba. These tremendous efforts exemplify our unmatched
    Agile Combat Support--not just to Air Force units--but also to our
    joint and coalition partners.

                            PERSONNEL AND READINESS

        With Air Force personnel deployed to more than 135 locations
    worldwide on an average day, we rely heavily on the total force. Of the
    37,000 forward deployed airmen, nearly 30,000 are continuing on a
    rotating basis to contribute to operations in the U.S. Central Command
    (CENTCOM) area of responsibility (AOR), including 10,000 airmen in
    Afghanistan. An additional 57,000 total force Airmen are forward
    stationed overseas providing capabilities in direct support of our
    combatant commander requirements. From home stations here in the United
    States, approximately 216,000 Total Force airmen also provide daily
    support to combatant commanders' worldwide operations.
        This level of activity reflects our commitment to provide Global
    Vigilance, Reach, and Power in today's joint fight. However, this high
    operations tempo (OPTEMPO) has also had some detrimental effects on our
    overall readiness. Readiness for full spectrum military operations is a
    challenge for our combat air forces and some other limited-supply/high-
    demand units. Since 2003, we have seen a slow but steady decline in
    reported readiness indicators. Our OPTEMPO since 2001 has produced
    lower deploy-to-dwell ratios for high-demand skills. At present, 16
    enlisted and 6 officer career fields are ``stressed''. However there
    are a number of programs in place to bolster manning in these career
    fields, as well as mitigate potential negative effects on our Airmen
    and their families.
        Regardless, the readiness of the Mobility Air Forces (MAF) remains
    high while meeting robust and dynamic operational requirements. Our
    airlift fleet continues to provide strategic airlift as well as theater
    and direct support airlift missions moving personnel and a wide variety
    of equipment and supplies. MAF assets continue to directly support our
    Joint and coalition partners, achieving a mission capable (MC) rate of
    82.7 percent despite a 350 percent increase in hourly utilization
    within the AOR. Stateside, MAF fleet MC and aircraft availability (AA)
    rates have steadily improved over the last few years, attaining current
    rates of 78 percent and 65 percent, respectively. These improvements
    are attributed to initiatives such as the C-5 Reliability Enhancement
    and Re-Engining Program and the C-130 Avionics Modernization Program.
        The readiness of Combat Air Forces (CAF) aircraft is adequate
    despite challenges from accumulating hours on our fleet faster than
    envisioned when the aircraft were first fielded. We're now flying the
    oldest Air Force fleet in our history as a result of 20 years of
    continuous combat operations. The average age of all CAF aircraft is
    21.3 years. Our CAF aircraft fleet has shown a slight decline in MC and
    AA rates of 3 percent and 4.5 percent, respectively over the past 5
    years, settling at 75 percent and 65.5 percent for fiscal year 2011. In
    the AOR, the current MC rate is 84 percent. This is to be expected due
    to the focus on warfighter support. To offset these challenges, we are
    conducting full-scale structural and durability tests and engineering
    analysis to assess the longevity of our CAF fleets. These actions to
    extend and modernize the legacy fleet as a bridge to 5th generation
    capabilities are not considered replacement actions. The F-16 Service
    Life Extension Program is one example of the ongoing efforts to
    mitigate fighter force challenges.
        In the logistics arena, we've improved funding to Weapon System
    Sustainment (WSS); however, sustainment challenges continue as we field
    new weapon systems and balance contract versus organic sources of
    repair. To address these readiness issues, we must keep aircraft
    recapitalization and procurement programs on track while continually
    managing our force to ensure we maintain the right numbers and mix of
    skills in our highly tasked and highest priority mission areas. The
    dedicated work and professionalism of our Airmen ensure our aircraft
    inventory is ready, despite extensive use in contingency operations and
    increases in fleet service life. Notwithstanding these challenges,
    modernization and recapitalization of our aircraft remains a very high
    priority.

                        FISCAL YEAR 2012 BUDGET OVERVIEW

        For fiscal year 2012, the Air Force is requesting $150 billion in
    our baseline budget and $16 billion in the Overseas Contingency
    Operations (OCO) supplemental appropriation. Our budget request
    represents a careful balance of resources among the Air Force core
    functions necessary to implement the President's national security
    strategy, and an extraordinary effort to ensure America gets the
    maximum value out of every dollar.
        Last year, the Secretary of Defense directed the Services to
    identify $100 billion in efficiencies in overhead and support, and move
    it to warfighting and readiness. Our fiscal year 2012 budget supports
    the Office of the Secretary of Defense efficiency request and
    incorporates over $33 billion in efficiencies across the Future Years
    Defense Program (FYDP). The savings will be shifted to higher priority
    combat capability as we reduce overhead costs, improve business
    practices and eliminate excess, troubled or lower priority programs. As
    we consider how we can achieve efficiencies, the Air Force is looking
    across the enterprise, thinking broadly and creatively across business
    areas--from our organizational structures, to reducing fuel and energy
    consumption, to improving depot and supply-chain business processes and
    sustaining weapons systems.
        Specifically in the logistics area and weapon systems sustainment,
    we conducted an end-to-end review of over 5,500 sustainment tasks,
    resulting in a reduction of $1.2 billion in requirements. We also
    looked at supply chain management processes which led to expanding the
    use of strategic sourcing, the consolidation of accounts, and
    reductions in manpower and overhead. Finally, we standardized
    requirements using improved collaboration and supportability reviews to
    increase planning accuracy and on-time depot performance. To date, our
    efforts have yielded $3 billion in efficiencies over the FYDP and will
    allow the Air Force to fund WSS at 85 percent, including funding in the
    OCO budget, in fiscal year 2012.
        In the energy area, the Air Force continues as a Federal energy-
    conscious leader by advancing energy independence by reducing aviation
    fuel use, installation energy intensity, and vehicle fleet petroleum
    consumption. Our fiscal year 2012 budget request includes over $550
    million for energy initiatives and focuses on reducing energy
    consumption through enhanced efficiencies. We are already making
    significant reductions in aviation fuel use through the implementation
    of demand reduction initiatives adopted from commercial industry best
    practices. As we recapitalize our mobility fleets, we expect an annual
    savings of nearly 70 million gallons of fuel.
        The Air Force is also committed to reducing greenhouse gas
    emissions and carbon footprint through the reduced use of fossil fuels
    consumed directly through vehicles and facilities and indirectly
    through consumption of fossil fuel-generated electricity from the
    national electric grids. From replacing outdated heating/air-
    conditioning systems, to using energy efficient light bulbs, to working
    with local communities to build large solar arrays and wind turbines on
    installations, we are utilizing practical and innovative solutions to
    meet our goal of reducing energy intensity by 30 percent by 2015.
        In fiscal year 2012, we will continue our energy conservation
    efforts, which have already reduced facility energy intensity nearly 15
    percent from 2003 levels. In fiscal year 2010, we exceeded our
    renewable goals and produced or procured nearly 7 percent of our total
    facility energy from renewable sources, and we continued to lead the
    Department of Defense as the number one purchaser of renewable energy
    for the fifth year in a row. To reduce our use of vehicle fleet
    petroleum on our installations, we maintain over 7,000 flex fuel and
    hybrid vehicles and over 1,800 low-speed vehicles. The Air Force has
    made significant progress and is committed to further energy
    efficiencies wherever we can find them.
        Realization of cost-savings initiatives like the ones mentioned
    above will allow the Air Force to reallocate funding to modernize and
    recapitalize weapons systems, improve capabilities, and enhance
    warfighter operations, especially in the current fiscally constrained
    environment.

                         NUCLEAR DETERRENCE OPERATIONS

        Continuing to strengthen our nuclear enterprise remains the number
    one Air Force priority. Toward that end, we have taken positive steps
    within the fiscal year 2012 budget request related to this core
    function.
        The Air Force Nuclear Weapons Center continues to pursue vital and
    deliberate sustainment of the nuclear enterprise through efforts such
    as the Air Force Comprehensive Assessment of Nuclear Sustainment
    process. ICBM modernization and sustainment includes ongoing programs
    to replace aging support equipment such as weapons load trailers,
    electronic systems test sets, weapons storage, and security systems. In
    addition to these important efforts, we are strengthening positive
    inventory control and accountability for Nuclear Weapons Related
    Materiel by creating improved visibility and performing semi-annual
    inventories. We're also refining the inspection process by using a
    self-assessment philosophy, examining the scope and size of the
    inspections, and performing rigorous root cause analysis of all major
    write-ups.
        Beyond nuclear weapon system sustainment and modernization, the Air
    Force is focusing on human capital as we carefully balance requirements
    for our limited, intensively scrutinized, high-demand airmen in the
    nuclear field. We've instituted changes to improve the long-term
    professional fitness of our most precious resource--our airmen. Our
    airmen must be trained, educated, and experienced through professional
    development initiatives designed to create the capabilities and culture
    this critical mission demands, and our Nation deserves. The Nuclear
    Enterprise Human Capital Execution Plan seeks to improve the
    development and retention of Airmen with appropriate experience and
    critical skills. Our new approach to managing enlisted talent will give
    us the capability to evaluate airmen in the nuclear field and provide a
    deliberate process for developing them.

                                   CONCLUSION

        Air Force personnel, weapon systems, equipment, and organizations
    are prepared for today's operations and tomorrow's uncertain
    challenges, despite fiscal challenges and high operations tempo. With
    an uncompromising commitment, the Air Force remains ready to provide
    Global Vigilance, Reach, and Power for America.

        Senator McCaskill. Thank you.
        Vice Admiral Burke.

    STATEMENT OF VADM WILLIAM R. BURKE, USN, DEPUTY CHIEF OF NAVAL
      OPERATIONS FOR FLEET READINESS AND LOGISTICS (N4), U.S. NAVY

        Admiral Burke. Yes, ma'am. Chairman McCaskill, Senator
    Ayotte, and distinguished members of the Readiness and
    Management Support Subcommittee, it is my honor to participate
    in today's hearing, representing the Navy men and women--Active
    Duty, Reserve, and civilian--who work to ensure our Navy is
    ready to deliver the full range of capabilities we possess to
    defend the Nation. On their behalf, I also want to express our
    great appreciation for the work of this committee in support of
    their service. I would add my thanks on completing the fiscal
    year 2011 Appropriations bill. That was key to our readiness.
        As I discussed in my written testimony, readiness is a
    function of both capability and capacity, and my goal is
    finding the most effective balance to deliver readiness today
    and in the future. Both components are impacted by how we
    acquire new platforms and systems, how we accomplish
    significant upgrades on major systems, and how we sustain the
    current force and its existing capabilities. My responsibility
    is the sustainment of our current force, including Navy shore
    infrastructure. We must deliver the expected service life of
    our current warfighting platforms to provide the future
    capacity to meet the Nation's needs. Our shore infrastructure
    must support our warfighting platforms and our sailors.
        For fleet sustainment programs in the Navy's fiscal year
    2012 budget, we focus first on supporting our deployed forces
    in the current fights and then on achieving the expected
    service life of all of our platforms. Ashore, we focused on
    those projects that provide the greatest return on investment
    in supporting the warfighter and on those providing quality
    services for our sailors and their families. Because of the
    impact of energy consumption on both current affordability and
    future readiness, we continue our investment in reducing energy
    consumption and supplementing fossil fuels with renewable
    sources ashore, afloat, and in the air.
        The President's budget for fiscal year 2012 balances risk
    across the entire Navy program to achieve the strongest current
    and future readiness outcomes.
        Again, I appreciate the opportunity to be with you today,
    and look forward to discussing the Navy's sustainment programs
    with you.
        Thank you.
        [The prepared statement of Admiral Burke follows:]

                Prepared Statement by VADM William R. Burke, USN

        Madam Chairman McCaskill, Senator Ayotte, and distinguished members
    of the Senate Armed Services Committee, Readiness and Management
    Support Subcommittee, it is an honor for me to be with you today
    representing the over 600,000 men and women of the U.S. Navy, Active,
    Reserve, and civilians. Their dedicated service helps ensure the
    security of this Nation every day. Today, as always, our Navy is
    deployed globally with over half the Fleet at sea and more than 24,000
    personnel serving in the U.S. Central Command (CENTCOM) area of
    responsibility (AOR). Ashore, Navy personnel are supporting our
    deployed warfighters, and sailors and their families, at facilities
    worldwide.
        The readiness of the Navy to provide the warfighting resources
    needed by our combatant commanders (CCDRs) is a function of both combat
    capability and force capacity. Achieving the required levels of each
    requires a fine balance between acquiring the right force structure
    along with new warfighting capabilities, and properly sustaining
    existing capabilities and platforms to achieve their expected service
    life. The Navy has sustained its focus on ensuring our front line
    warfighters have the resources they need to accomplish their planned
    operations--and that is reflected in a continued high state of
    readiness of our deployed forces in their key mission areas.
        The President's budget for fiscal year 2012 provides the balanced
    funding necessary for the Navy to support today's force while
    developing the future capabilities and capacity necessary to continue
    to execute Navy missions in support of the National Military Strategy.
    Navy programming continues to be informed by our Maritime Strategy--``A
    Cooperative Strategy for 21st Century Seapower'' (CS21). Since its
    publication in 2007, CS21 has provided a clear and enduring vision of
    the core capabilities the Navy must provide for the Nation. Based upon
    this foundation, the Chief of Naval Operations provides annual guidance
    on his principal focus areas for executing the Maritime Strategy--which
    have become enduring imperatives. They are:

             Build the Future Force. In recent testimony before
            this committee, Secretary Mabus and Admiral Roughead outlined
            our plans to build the Navy required to deliver our core
            capabilities into the future. The Navy budget submission
            balances these plans with acceptable risk across all our
            requirements to deliver a Navy program that most effectively
            employs the resources entrusted to us.
             Maintain Warfighting Readiness. The CCDRs demand for
            the capabilities delivered by Navy forces continues to grow.
            Concurrently, we continue to reset in stride to deliver our
            Global Force Management (GFM) commitments while taking
            proactive steps to improve the readiness of our forces,
            particularly our surface ships.
             Develop and Support our Sailors, Navy Civilians, and
            Families. We continue to expand our capabilities to support our
            sailors and families. The service and sacrifice of our
            returning warfighters, particularly our wounded warriors and
            their families, place a special obligation upon us, one we will
            not shirk.

        My testimony today centers on the second of the CNO's focus areas,
    and the contribution of Navy readiness accounts in maintaining our
    warfighting readiness. The fiscal year 2012 budget provides the
    resources to deliver Navy units ready today, and to sustain our ships,
    aircraft, equipment, and supporting capabilities to be ready for
    tomorrow.

                             NAVY UNITS-READY TODAY

        Global trends in an uncertain world portend an increased demand for
    sea power. The safety and economic interests of the United States, its
    allies and partners rely upon the unimpeded trade and commerce that
    traverse the world's oceans. U.S. vital national interests are tied,
    therefore, to a secure maritime environment, which places global
    responsibilities on our Naval forces. The fiscal year 2012 budget,
    including Overseas Contingency Operations (OCO) funding, supports Navy
    operations across this broad spectrum of responsibilities. Our
    readiness and operational support programs will meet the anticipated
    CCDR demand for Navy forces within force structure constraints and
    provide surge forces in support of operational plans, with an
    acceptable level of risk.

    Afloat Operations
        The Fleet Response Plan (FRP) remains the foundation for Navy force
    generation, and has proven to optimize returns on training and
    maintenance investments. It enhances sailor proficiency, and ensures
    units and task groups are trained and certified in defined, progressive
    levels of employability to meet both deployed presence and surge
    requirements in support of potential operation plan execution. The
    exact FRP Operational Availability (Ao) required each year depends on
    the projected GFM plan for the year plus surge requirements. Because of
    current OPTEMPO demands, our next-to-deploy forces are reaching
    deployed readiness levels later in the FRP cycle, resulting in some
    risk to our surge capacity at any given time.
        Ship Operations
        The fiscal year 2012 budget (including OCO) provides the Ship
    Operations account with funding for an average ship's OPTEMPO of 58
    steaming days per quarter (deployed) and 24 steaming days per quarter
    (nondeployed). This OPTEMPO enables the Navy to meet FRP training/
    certification requirements with acceptable risk. Measures, such as
    increased use of simulators, concurrent training and certification
    events while underway, and the judicious use of fuel, are used to
    mitigate risk. While the Navy met all GFM commitments in fiscal year
    2010, including the operational requirements in support of Operation
    Iraqi Freedom (OIF)/Operation New Dawn (OND) and Operation Enduring
    Freedom (OEF), we continue to experience high OPTEMPO globally.
    Sustainment of this OPTEMPO remains dependent upon the receipt of OCO
    or similar supplemental appropriations.
        Air Operations (Flying Hour Program)
        The Flying Hour Program (FHP) account provides for the operation,
    maintenance, and training of 10 Navy carrier air wings, 3 Marine Corps
    air wings, Fleet Air Support (FAS) squadrons, training commands,
    Reserve Forces, and various enabling activities. The fiscal year 2012
    budget (including OCO) resources the FHP account to achieve Training-
    rating (T-rating) levels of T2.3 for Navy and T2.0 for the Marine
    Corps. With this funding, Tactical Aviation squadrons conduct strike
    operations, provide flexibility in dealing with a wide range of
    conventional and irregular threats, and provide long range and local
    protection against airborne surface and sub-surface threats. FAS
    squadrons provide vital fleet logistics and intelligence. The Chief of
    Naval Air Training trains entry-level pilots and Naval Flight Officers,
    and Fleet Replacement Squadrons provide transition training in our
    highly capable, advanced Fleet aircraft. Reserve component aviation
    provides adversary and logistics air support; makes central
    contributions to the counter-narcotics efforts; conducts mine warfare;
    and augments Maritime Patrol, Electronic Warfare, and Special
    Operations support.
        The Navy is increasing the use of simulation to reduce nondeployed
    flying hours and is continuing to invest in new simulators. We are also
    investing in improvements to existing simulators to enable further
    reductions in aircraft flying hours while maintaining requisite
    training levels for deployed operations.

    Shore Operations
        Shore infrastructure supports and enables operational and combat
    readiness. It is an essential element to the quality of life and
    quality of work for our sailors, Navy civilians, and their families.
    Continued high operational demand has led the Navy to take deliberate
    risk in Shore Readiness programs to resource our critical warfighting
    needs.
        To meet critical mission requirements with today's available
    resources, the Navy is targeting our shore investments to have the
    greatest impact on warfighting readiness and the quality of life of our
    sailors and their families. We are focusing sustainment and restoration
    efforts on barracks and mission-critical facilities such as shipyards,
    airfields, hangars, piers and dry docks. Likewise, we are directing
    capital investments ashore toward the recapitalization of critical Navy
    assets and the construction and modernization of new mission and
    warfighter support facilities. Despite today's fiscal and operational
    challenges, the Navy continues to support air and port operations and
    key shore initiatives such as nuclear weapons security, bachelor
    housing, family services and shore energy initiatives.
        Family Readiness Programs and Child and Youth Programs
        The Navy's Family Readiness programs enhance mission readiness by
    assisting commanding officers, sailors, and their families in managing
    the demands of the military lifestyle. Our Navy Child and Youth
    Programs provide high-quality educational and recreational programs for
    Navy children ages 6 weeks through 18 years in multiple venues. All
    programs are operated in accordance with the Military Child Care Act
    and are DOD-certified and nationally accredited. This year, we will
    complete our 7,000-space expansion and meet the Office of the Secretary
    of Defense (OSD) goal of providing childcare to meet at least 80
    percent of the potential need of our military population.
        Bachelor Housing
        Our Bachelor Housing program currently focuses on two goals: (1)
    providing Homeport Ashore housing for our junior sea-duty sailors by
    2016; and (2) attaining the OSD goal of 90 percent ``adequate'' (Q1/Q2)
    bachelor housing. The Homeport Ashore program will complete a new
    barracks for 1,000 sailors at Naval Base Coronado this year, and the
    final three Homeport Ashore construction projects are programmed in
    fiscal year 2013 and fiscal year 2014. At the same time, the Navy
    increased our efforts to improve the condition of our existing
    barracks. The fiscal year 2012 budget requests $195 million per year
    across the Future Years Defense Program (FYDP) to bring 90 percent of
    our bachelor housing inventory to ``adequate'' condition by 2022.
        Family Housing
        Navy Family Housing supports the Navy's readiness by providing
    sailors and their families the opportunity for suitable, affordable and
    safe environments in community, privatized, or Navy-owned housing. The
    fiscal year 2012 Family Housing budget includes $75 million for family
    housing improvements, planning, and design. Our investments across the
    FYDP will enable Navy to meet OSD's target of bringing 90 percent of
    our family housing inventory into ``adequate'' (Q1/Q2) condition by
    2015. The Navy has privatized 97 percent of our CONUS and Hawaii family
    housing inventory. We continue to perform enhanced oversight of our
    privatized housing portfolio and ensure Navy sailors and their families
    continue to benefit from quality housing and services.
    ensuring the navy is ready for tomorrow (navy platforms, equipment, and

                            SUPPORTING CAPABILITIES)

        Sustaining the capital assets of the current force is essential to
    building the future Navy. Using the proven engineered maintenance
    planning of the carrier and submarine forces, the Navy is investing in
    improvements in surface ship maintenance processes to enhance long-term
    surface ship material readiness. Investment in future F/A-18 service
    life extension will assist in managing strike-fighter force structure
    until sufficient F-35 resources are available in the Fleet. Supporting
    capabilities are also funded to ensure a ready Navy in the future.

    Ship Maintenance
        Keeping our ships in acceptable operating condition is vital to
    their ability to accomplish assigned missions and reach their expected
    service life (ESL), a key factor in the Navy's 30-Year Shipbuilding
    Plan. Surface ships, aircraft carriers and submarines currently in
    commission comprise approximately 70 percent of the ships that will be
    in service in 2020. Reaching ESL requires an integrated engineering
    approach to plan, fund, and execute the right maintenance.
        In 2009, Navy Fleet Commanders recognized significant deficiencies
    in surface ship material readiness and commissioned a review, known as
    the Fleet Review Panel for Surface Readiness, to fully investigate the
    causes and propose corrective action. Initiatives are currently
    underway to reverse the identified negative readiness trends, including
    an increase of 1,105 billets for optimally manned ships in fiscal year
    2012, and increasing manning at our Regional Maintenance Centers (RMCs)
    by 400 sailors and 385 civilian personnel across the FYDP. Navy is
    reopening the Intermediate Maintenance facilities in Norfolk and
    Mayport, providing maintenance support and valuable sailor skill
    training.
        We have also expanded the Surface Ship Life Cycle Management
    Activity into the Surface Maintenance, Engineering Planning Program
    (SURFMEPP). This activity is re-establishing the engineered
    requirements and Class Maintenance Plans (CMPs) necessary for surface
    ships to reach their ESL. Using the CMP and individual ship life-cycle
    maintenance plan, SURFMEPP is building a Baseline Availability Work
    Package (BAWP) for each scheduled availability, and then tracking the
    completion of all required maintenance actions. NAVSEA is conducting an
    independent technical review of the CMPs to verify they account for all
    individual ship life-cycle maintenance plan requirements. SURFMEPP
    provides the Navy with centralized surface ship life-cycle management
    and discipline in defining maintenance and modernization requirements.
    The result is better use of available maintenance dollars to achieve
    long-term readiness and achieve surface ship ESL.
        The fiscal year 2012 budget (including OCO) resources the ship
    maintenance account to 94 percent. This funding level represents the
    best balance between current force readiness and building the future
    force within available top line funding. Although we will defer $367
    million of maintenance, primarily in the Surface Force, the work
    accomplished by SURFMEPP enables us to mitigate risk by scheduling and
    completing the most critical maintenance in fiscal year 2012. We are
    also able to better understand the impacts and accurately track the
    deferred maintenance that must be accomplished in the future.
        The Navy is committed to the right level of ship maintenance at the
    most efficient cost but remains dependent upon the receipt of OCO or
    similar supplemental appropriations to fund ship maintenance
    requirements. We continue efforts to reduce the total cost of ownership
    of the Fleet, as we have done with SSN 688 and SSN 774 class
    submarines, through the analysis of engineered technical requirements
    and assessment of recently completed availabilities. The cyclic nature
    of ship and submarine depot availabilities from year to year continues
    to cause variations in budget requests and annual obligation levels.
    Budget years with multiple ship-docking availabilities increase
    required funding.
        Surface ship availabilities are conducted almost exclusively in the
    private sector. Nuclear submarine and aircraft carrier availabilities
    are primarily conducted in the public sector, with selected
    availabilities completed by nuclear capable private shipyards. Whenever
    practical, maintenance is performed in the ship's homeport to minimize
    the impact on our sailors and their families. The Navy recognizes that
    maintenance organizations need a stable and level workload to maximize
    efficient execution. We level the workload to the maximum extent
    practicable within operational constraints.

    Aviation Maintenance
        The Aviation Depot Maintenance account ensures operational aviation
    units have sufficient Ready for Tasking (RFT) aircraft to accomplish
    assigned missions. The fiscal year 2012 budget request (including OCO)
    resources the Aviation Depot Maintenance account to 95 percent of
    requirement, and funds the repair and overhaul of 742 airframes and
    2,577 engines. The shortfall results in a projected backlog of 23
    airframes and 162 engines, which is moderate, but acceptable risk and
    below our 1 year red-line backlog of 100 airframes and 340 engines.''
    The Naval Aviation Enterprise (NAE) AIRSpeed strategy continues to
    deliver cost-wise readiness by focusing efforts to reduce the cost of
    end-to-end resourcing, increase productivity, and improve the
    operational availability of aircraft. This strategy provides a robust
    capability to use efficiencies to manage the highest priority
    requirements.

    Navy Expeditionary Forces
        Expeditionary Navy forces support global missions that expand and
    enhance CCDR capabilities by deploying security, construction,
    logistics and training units. NECC's cost effective capabilities are
    expected to remain in demand supporting OND/OEF missions and CENTCOM's
    long-term, steady state security posture. The fiscal year 2012 budget
    supports major expeditionary capabilities in the following areas:

             Explosive Ordnance Disposal (EOD): Provide Brigade/
            Battalion-level HQ elements or Platoons and Mobile Support
            Teams executing Joint EOD operations in multiple theaters, as
            well as supporting Carrier Strike Group and Amphibious Ready
            Group deployments around the world.
             Maritime Expeditionary Security Forces (MESF): Provide
            force protection for high value assets, including maritime
            infrastructure protection in the CENTCOM and Pacific Command
            (PACOM) AORs. MESF forces also provide landward and seaward
            security for Global Partnership Station operations, and
            Embarked Security Teams for Operation Vigilant Mariner.
             Naval Construction Force: The Seabees provide
            construction services for Theater Security Cooperation efforts,
            disaster response, and build partner capacity. Alongside the
            USMC, they led surge forces into Afghanistan, and currently
            provide a Regimental Headquarters controlling a Joint force of
            more than 3,000 personnel executing hundreds of projects as
            well as four Naval Mobile Construction battalions in support of
            OEF. In addition, the Seabees continue direct support to other
            CCDRs, such as PACOM's Combined/Joint Special Operations Task
            Force-Philippines. They provided infrastructure support to
            relief efforts in Haiti, including reconstruction of port
            facilities.
             Additional expeditionary forces supported by the
            fiscal year 2012 budget include the Naval Expeditionary
            Logistics Support Group, Riverine Forces, Mobile Diving and
            Salvage Units, the Maritime Civil Affairs Security and Training
            Command, and the Navy Expeditionary Intelligence Command. The
            multiple capabilities of each of these organizations are highly
            valued by the CCDRs.

    Environment
        Our Navy continues to engage in comprehensive and robust
    environmental planning for at-sea training and operating areas to
    ensure environmental stewardship while carrying out the national
    defense mission. To date, we have completed documentation for 11 at-sea
    testing, training, and combat certification areas, and anticipate
    completing documentation for an additional four areas over the next
    year. We are always preparing for the next round of at-sea
    environmental planning.
        The Navy continues to maintain the world's foremost marine mammal
    research program to ensure science-based protective measures for Navy
    activities at sea. These measures allow the Navy to be both a good
    steward of our Nation's marine environment and a mission-ready global
    force for good.

    Energy
        Because energy is as vital to our mission as the systems it fuels,
    we are actively pursuing the Secretary of the Navy's energy goals to
    increase combat capability and reduce reliance on fossil fuel from
    foreign sources through greater conservation, efficiency and the use of
    alternative energy sources. We continue to make great progress toward
    these energy goals, laying the foundation for reduced energy
    consumption and increased use of alternatives.
        Fuel consumption has a powerful impact on our forces and force
    structure, both in terms of the resources required to transport fuel
    and the sailors whose duty it is to protect this logistics tail. On the
    operational side, we are currently testing and evaluating technologies
    that will make our existing ships and aircraft more efficient,
    enhancing combat capability and reducing overall fuel consumption. The
    fiscal year 2012 budget includes funding to begin implementing many of
    these technologies in the Fleet, including efficient lighting, anti-
    fouling hull and propeller coatings, improved engineering plant
    controls, and route optimization software. We also continue research
    and development of technologies that will be implemented in future
    years, such as a hybrid-electric drive for the DDG-51 class and engine
    efficiency modifications for the F-35.
        In addition, we have taken major steps forward with our alternative
    fuel test and certification program. In April 2010, we flew an F/A-18
    ``Green'' Hornet beyond the sound barrier on a 50/50 blend of petroleum
    fuel and biofuel produced from the camelina plant. In October 2010, we
    conducted a full-power demonstration of the Riverine Command Boat-
    Experimental using a biofuel blend produced from algae. The following
    month, we flew an MH-60S Seahawk helicopter on the camelina-based jet
    fuel blend. Navy also recently completed the first test of a maritime
    gas turbine engine, using a 50/50 biofuel blend. Completion of the test
    and certification process will ultimately allow us to demonstrate a
    ``Green Strike Group'' in late fiscal year 2012.
        We are focusing our energy investments ashore to increase the
    energy security of critical assets, improve the energy efficiency of
    our infrastructure, and develop promising technologies. Specifically,
    we will increase the energy security of our Pacific Missile Range
    Facility in Hawaii and replace antiquated steam plants at three bases
    with modern and efficient energy systems. We are transforming our
    energy culture and behavior using enabling systems, with our new
    advanced metering infrastructure and secure system technologies to
    provide greater energy consumption transparency, efficiency
    opportunities, and control. Our strategy is to focus first on
    efficiency to enable compliance with legal mandates, while increasing
    our energy security and making progress toward alternative energy
    goals.
        Finally, along with developing and implementing new technologies,
    we will drive energy awareness education in afloat and ashore training
    to capitalize on the gains we have made and magnify the effect of our
    future efforts. Changing our culture to value energy as a strategic
    resource depends on every sailor's commitment to the accomplishment of
    the Secretary's goals.

    Total Ownership Cost Optimization
        Building and sustaining a capable, yet affordable Fleet is one of
    the CNO's highest priorities. Optimizing the Fleet's total cost of
    ownership is a critical component of meeting that goal. The Navy
    defines total ownership cost as the total life cycle cost of a system
    from concept, research and development, production, and sustainment
    through disposal, including the total supporting infrastructure that
    plans, manages and executes that program over its life cycle.
        In execution, we seek to maximize performance and retain
    flexibility while controlling total ownership cost. However, we must
    also balance required performance with sufficient flexibility to
    adequately respond to changes in our battle space. We employ a broad
    spectrum of contracting tools and procedures to craft, award, and
    administer contractual vehicles to incentivize total ownership cost
    efficiencies. The following contracting tools are being used to control
    total ownership cost in the sustainment arena:

             Performance based logistics contracts for sustainment
            logistics aligns contractor incentives with Navy performance
            objectives. This optimizes system readiness while keeping cost
            in check.
             Strategic sourcing and commonality approaches lead to
            ``buying smarter'' (and more affordably) through consolidated
            purchasing, reductions in technical specification variability,
            and tailored performance work statements.

        One common characteristic of these contracting strategies is the
    long-term nature of their required funding. The Navy is focused on
    developing sustainment strategies early in order to identify the proper
    contract type, clearly define performance requirements, and develop a
    clear understanding between government and industry regarding required
    performance standards. These efforts ensure equitable risk and
    performance measures resulting in the right performance for the right
    price.

                                   CONCLUSION

        Together with the U.S. Marine Corps and the broader joint force,
    our long-term allies, and newer partners, the Navy remains ready to
    defend our Nation, and the common interests of the community of
    nations, from those countries or other actors who would seek to harm
    us. In the fiscal year 2012 budget, we have balanced our resources to
    sustain Navy readiness today within acceptable risk in each of the core
    capabilities defined in our Maritime Strategy, while building the
    capacity to sustain the Navy of the future. We appreciate the
    committee's consideration of our budget request and thank you again for
    your support of the Navy's mission and particularly for your commitment
    to the welfare of our sailors, their families, and our Navy civilians.

        Senator McCaskill. Thank you very much.
        I want to welcome the other members who are here today. I
    especially want to acknowledge that Senator Inhofe is here. As
    the former chair of this subcommittee, I appreciate your
    valuable contributions, because of the expertise that you've
    developed over the years in this area.
        Obviously, I'm glad to see both Senator Udall and Senator
    Shaheen.
        Let me start.
        First on the efficiencies program. I think it's great what
    Secretary Gates has done in terms of identifying $78 billion in
    the Pentagon and $100 billion across the branches. I am a
    little worried about some of the ways the money is going back
    in. Let me drill down on the Air Force. You're planning to
    spend more than half of your savings, from the efficiency
    effort, on operation and maintenance (O&M). You are a little
    bit different than the other branches in that regard--$2.2
    billion in fiscal year 2012 and $17.4 billion over the FYDP,
    all on O&M. Clearly, this was not in your budget, as you
    originally drew it up. I'm particularly curious about the $165
    million on something called ``administration,'' and $104
    million for something called ``other servicewide activities.''
    Could you explain what that $269 million actually represents,
    in more specific detail than just those categories?
        General Reno. Chairman McCaskill, I don't have the detail
    on that line item, but I will be happy to provide it for the
    record.
        [The information referred to follows:]

        A portion of the Air Force efficiencies was aligned to support
    increased costs of day-to-day operations such as pay and allowances,
    fuel and weapon system requirements. The $269 million for
    administration and service wide activities covers civilian pay pricing
    impacted by updated workyear costs. The Air Force supported these types
    of increased costs through savings generated by efficiencies.

        General Reno. I would add though that in addition to the
    O&M requirements that we have, we have found significant
    savings and efficiencies in our weapon system support areas; in
    fiscal year 2012, $605 million, where we have streamlined the
    tasks and processes, we have reviewed requirements, and have
    made depot improvements. These would provide efficiencies that
    we can then put back into the Air Force to support operations.
        Senator McCaskill. I think the efficiencies effort is
    great. It's just the putting-back-in part that I'm a little
    worried about. If this is, in fact, O&M money that was not in
    your budget when you put it together last summer, and it's gone
    back in as O&M money, I want to make sure that the money that's
    coming back in from the efficiencies is actually going to a
    priority that can be clearly stated and not just into some grab
    bag category, like administration or other servicewide
    activities.
        The goal here is to spend less money. Obviously, the first
    goal is to have a military that is the best in the world, and
    ready and capable of doing whatever we've asked them to do,
    which, by the way, they have done, and you have done, in a
    spectacular fashion. But, we also want to save money. So, if
    this money is going back in, in a way that I don't think
    reflects what we're trying to get accomplished here, I think we
    need to identify it as quickly as possible, and save that
    money.
        Let me go to COR questions. GAO has reported that the units
    continue to deploy to Afghanistan without designating CORs,
    without designating them ahead of time, that the COR function
    is still often an additional duty for personnel with other
    responsibilities, and CORs often lack technical knowledge and
    training needed to oversee contracts.
        Now, it's frustrating to me, because, as a brand-spanking-
    new Senator, I went to Iraq--right out of the auditor's
    office--and looked at the Logistics Civil Augmentation Program
    (LOGCAP) and looked at what was going on in Iraq. It was clear
    to me that the COR was just somebody who was just handed a
    clipboard. It was a low man on the totem pole. They were not
    performing oversight functions. They were filling a niche on a
    sheet, but they weren't getting trained. They didn't understand
    their oversight responsibilities. They weren't empowered to
    even do oversight within the units. So, it's really concerning
    to me that now, some years later, after we know the kind of
    money that walked out the door on contracting in Iraq--and
    while we still are struggling with problems with contracting
    dollars walking out the door and not being accountable for
    them, that we still are not designating these CORs, and not
    training them and not lifting up that particular expertise
    within the culture of the military. I'd like any of you to
    respond to that. What is your role in establishing
    qualifications for CORs and ensuring they're appropriately
    trained? If you could each briefly address that.
        General Stevenson. Yes, ma'am. We think we're improving. I
    don't know the date of the GAO report you're referring to, but
    we've taken a number of steps to improve how we're performing
    there.
        First of all, we have a number of places you can get the
    COR training from. We teach it internal to the Army. It's
    taught at the Defense Acquisition University. It's taught
    online. It is our requirement that we've issued to all the
    forces deploying, that they figure out how many CORs they'll
    require before they deploy, get them trained before they
    deploy, so that the COR can report to the contracting officer,
    satisfy the contracting officer that they do know--they have
    been trained, and obtain their certification there from the
    contracting officer.
        We have almost 1,000 trained CORs downrange now. We've
    taken--in a number of cases, we--there are certain specialties
    in the Army that tend to always end up being a contracting
    officer. I'll give you a couple of examples.
        Dining facility sergeants, the sergeants that run our
    dining facilities here in the States, often are the ones who
    are overseeing the contract for running dining facilities. So,
    we just have made that a part of their course. As they become a
    dining facility sergeant, they get a week's worth of COR
    training.
        We do the same thing with maintenance warrant officers,
    with supply warrant officers, and others, in an attempt to
    populate the Army with people who already have this training
    and don't have to go through some sort of special rigmarole to
    get downrange.
        I won't sit here and tell you we're perfect and that we're
    meeting our requirements exactly, but we're focused on it, and
    think we're improving.
        Senator McCaskill. Anyone else want to briefly address
    that?
        General Panter. Yes, ma'am. Chairman McCaskill, our problem
    is, of course, smaller in scale and in scope, because of our
    size. I do know that those contracting officers that we have
    embedded on those Marine Corps staffs are closely aligned with
    the commanding officers, and they get plenty of oversight from
    the commander; that is not lacking, there, at all.
        Our staff noncommissioned officers (NCOs) are, I think,
    appropriately trained. But, just to show you size and scope of
    our effort relating to contractors in theater, there's 477
    contractors that are actually deployed in direct support of the
    second MEF forces. Now, that doesn't count third-nation folks
    that are used to pick up trash and things like that. But I
    would make the point that the primary contracting officer is
    closely aligned with that commander, and therefore has to
    report. He gets oversight, on a daily basis, from either the
    commanding officer or XO. That's all I would say about it.
        Thank you.
        General Reno. Chairman McCaskill, the contracting business
    is out of my lane. But, I will tell you that the contracting
    officers and NCOs that we send downrange are fully trained and
    experienced. They are properly warranted, and they receive the
    oversight, in connection to the on-scene, on-ground commander,
    that they should receive.
        I would tell you, of six officer career fields that we have
    that are stressed, this is one of them. That's bad news, on the
    one hand. On the other hand, it shows you the level of
    experience that they have, as they go back again and again.
        Senator McCaskill. Thank you. Thank you.
        I will now turn questioning over to Senator Ayotte.
        Senator Ayotte. Thank you, Chairman McCaskill.
        I have an overall question for all of the witnesses. This
    really cuts to the heart of our responsibility, so if you need
    to take it for the record, I understand. Has any unit deployed
    overseas at a contingency location, particularly in
    Afghanistan, provided an urgent needs request for supplies or
    for an equipment item, in the past year, that has not been
    satisfied in a timely manner?
        General Stevenson. As you would imagine, we get quite a few
    operational needs statements from units. I think we do a pretty
    good job of satisfying them. But, they continue to come as new
    requirements develop.
        We focus on this every week. There's a meeting with the
    folks in Afghanistan, as well as Iraq, where they tell us what
    their top 10, top 20 priorities are. We work to satisfy them.
    But, I'm certain that we've not satisfied every wish list of
    every unit. I can assure you, though, that critical things they
    need for warfighting are being met and they're being filled.
        Senator Ayotte. That is one of the things that I want to
    make sure that we have a full understanding on in this
    committee. I have a whole series of follow-ups on it. But
    really, the bottom line is wanting to make sure that we're
    fulfilling all of our responsibilities when there is a request
    made for equipment that is needed for our troops. We have to
    have a strong understanding of how that's happening in theater,
    whether you're meeting their needs, and also, if there are
    concerns from that end.
        So, what I'd like to do is just give you all that question,
    in six parts. I would hope that you could all get back to this
    committee in detail on those so that we can be sure, if there
    are any areas we need to address right away, that we're
    fulfilling that function to make sure that we're helping you
    get our troops what they need. Given what we're asking from
    them at the moment, it is important.
        [The information supplied by the witnesses appears as an
    answer to Senator Ayotte's question for the record (see
    question 58).]
        General Reno. Ranking Member Ayotte, could I just give you
    one short example that gets at what I think you're talking
    about?
        Senator Ayotte. Yes.
        General Reno. It was last year when we saw the requirement
    came from Afghanistan, in particular--to field a uniform that
    would give better camouflage protection outside the wire, the
    terrain in Afghanistan being different than it is in Iraq and
    other places. Working with the Army and the Army Program
    Executive Officer (PEO) office, as lead, we've co-fielded the
    OEF camouflage-pattern uniform, and the Army has been putting
    their soldiers in it. We have been putting our airmen in it who
    are outside the wire. This gives increased camouflage
    protection. It is a lighter-weight uniform. It gives the airmen
    and the soldiers what they need. But, this is an example of the
    way that we rapidly respond to requirements that come from the
    theater.
        Senator Ayotte. Very good. I appreciate that. I will submit
    my question for the record, just because it's fairly detailed.
    I want to make sure that I have a full picture of what's
    happening in theater. I know that that is a top priority for
    all of you in making sure that our troops get what they need.
        I wanted to ask you about logistics support of operations
    in Afghanistan, so this is probably a appropriate question for
    General Stevenson or General Panter. Without the support of the
    logistics community, obviously, our men and women fighting on
    the front lines wouldn't be able to do what they're doing and
    have the successes that they have had. For years, the southern
    supply route into Afghanistan, through Pakistan, has been
    plagued by instability and repeated attacks. In fact, I just
    got a headline today of another one, unfortunately, on NATO
    troops. Also, pilferage, stealing supply of convoys, and I know
    that we've been able to add two additional supply routes
    through central Asia and the Baltics.
        Just for perspective, what percentage of our U.S. supplies
    are currently being trucked through Pakistan? Particularly, I
    think this is important to bring up, in light of the
    discussions we're having about our relationship with Pakistan
    at this time.
        General Stevenson. Yes, ma'am. Currently, it's about 40
    percent of the total supplies shipped into Afghanistan, on the
    surface, that don't fly in, come through Pakistan; the other 60
    percent, from the north. We're taking a number of steps to deal
    with potential problems there, and potential disruption of that
    supply line. As a matter of fact, ongoing today, there's a
    sitdown strike going on outside the port that our trucks are
    not able to get through. It's going to probably last a couple
    of days. Not uncommon; we've dealt with this before. But as you
    point out, this is problematic for us.
        The goal is to get to 75 percent from the north. We're not
    there yet. That was a goal established by the U.S.
    Transportation Command commander to his staff, and, working
    with us, we're trying to get there.
        We're sending nothing that is what we consider sensitive on
    the ground. No ammunition flows on the ground. No high-tech
    military gear--we even flew the mine resistant ambush protected
    all-terrain vehicles into theater, rather than send them and
    potentially subject them to pilferage.
        We have created what we call ``theater-provided
    equipment.'' It's a pool of equipment that just stays in
    Afghanistan so that as a unit rotates out each year, it doesn't
    have to drag out its equipment, and the new unit has to bring
    in its own. We just keep the equipment there. Now, as you would
    imagine, that creates a second problem that we have to deal
    with, which is, after about 2 or 3 years, that we have to do
    something significant to refurbish that equipment. We're doing
    that. But, the idea is, keep things off that ground lock.
        The last point I'll mention, that we're now experimenting
    with, is the notion of sending things, surface, to a friendly
    country. This is an open hearing, so I'd rather not get into
    the details--but, a friendly country in the Mideast, and then
    just flying over from there using C-17s. It takes advantage of
    the inexpensiveness of surface movement, but avoids that entire
    trip into Pakistan. We've just done that with two Brigade
    Combat Teams that have flown in and flowed out. We're happy
    with it. It's a bit more expensive, but, in the long run, we
    think--and we're doing a business case analysis--we think that
    it will be cheaper in the longrun, because we avoid all the
    pilferage and problems with that.
        Senator Ayotte. Just to be clear, as a follow-up, if all of
    those supply routes were to suddenly be shut down--Pakistan,
    Afghanistan--what type of long-term impact would that have on
    our mission?
        General Stevenson. I'll start out, and then ask the others
    to chime in.
        Initially, we'd probably last several weeks before we had
    any significant impact. We, just this year, upped the fuel
    stockage that we have on the ground, to 45 days of supply. So,
    we have 45 days of fuel on the ground to withstand these kinds
    of disruptions. We've increased the amount of materiel we fly.
    We'd increase our airdrop, which is already pretty high. We'd
    try to flow more in from the north than we are today. It is
    longer and more expensive, so there's some downside to using
    that route.
        I honestly believe we'd overcome it. I don't think it would
    stop our operations in Afghanistan, but it would certainly be a
    challenge.
        Senator Ayotte. My time is expired.
        I appreciate your answer on that. I'll look forward to
    asking you some additional questions in the next round. Thank
    you.
        Senator McCaskill. Senator Shaheen.
        Senator Shaheen. Thank you, Chairman McCaskill.
        General Reno, I just wanted to give you a postscript to
    your anecdote about the camouflage uniforms, because I was in a
    company in New Hampshire recently--Velcro USA. One of the
    things they described was that they are actually doing
    camouflage Velcro for those uniforms, because of the testing
    that shows that it makes a difference, if the Velcro is not
    also camouflaged, in terms of being able to be picked out when
    the soldiers are on the ground. So, thank you for that quick
    turnaround.
        General Reno. Thank you, Senator. It's the great support of
    the Army and PEO Soldier that made that possible.
        Senator Shaheen. Thank you.
        Admiral Burke, like Senator Ayotte, who represents the
    Portsmouth Naval Shipyard--I wanted to go back to your comments
    about making maintenance a bigger priority, and taking care of
    what we have. A GAO report came out in November cited several
    troubling examples of underfunding for maintenance at our
    shipyards. They gave several examples at the Portsmouth Naval
    Shipyard: plywood boards replacing broken windows, mold that
    had been painted over because leaks hadn't been fixed, those
    sorts of things. I wonder if you could talk about the effort to
    address the issues that have been raised in that GAO report.
    Specifically, as I understand, your written testimony states
    that, ``Continued high operational demand has led the Navy to
    take deliberate risk in shore readiness programs to resource
    warfighting needs.'' Can you elaborate on what some of those
    risks are? Is that what we're talking about--the kinds of
    underfunding for maintenance at our shipyards that have been
    affected? What do we need to do to address those challenges?
        Admiral Burke. Yes, ma'am. Specifically with shipyards, the
    requirement is that we put 6 percent funding back into
    shipyards for maintenance and upgrades, et cetera, based on a
    3-year running average of the volume of work that they've done.
    We look at it as a one-shipyard concept. So, we look at that
    across the board, if you will.
        In the case of that requirement, we've met that requirement
    every year since 2007. If you were to break it--and once again,
    I said we do this--we look at it as a one-shipyard concept--
    but, if you break it down, and you look at it by individual
    yards, in the case of Portsmouth, we've met it--we've met that
    6-percent number every year since 2008.
        In the fiscal year 2012 budget, there's 22 percent going to
    Portsmouth. So, we're well above that 6 percent requirement. We
    average nearly 10 percent across all shipyards in 2012. We meet
    that with military construction (MILCON) restoration and
    modernization funding, capital equipment expenditures, and
    minor property.
        So, pretty significant effort, in the last few years, to
    address that backlog, and specifically--and I'm--it's just--
    we're not cooking the books, here, on Portsmouth Shipyard. It
    just works out that, this year, a number of projects made it to
    the top of the list on Portsmouth. I think you're going to be
    pretty pleased with what you see from your perspective.
        Senator Shaheen. Yes, well, so noted. We did notice that
    there's a bump in 2012. We appreciate that and think that it's
    critical, because of the backlog in maintenance that needs to
    be done there.
        Admiral Burke. But, if you'd allow me, I'll address your
    larger point, I think, of maintenance.
        Senator Shaheen. Please.
        Admiral Burke. As it was pointed out earlier by Chairman
    McCaskill, I think that it is a pay-me-now or pay-me-later.
    It's probably a pay-me-now or pay-me-more-later situation. So,
    it's just a case where we can afford to not change our oil
    today, because we won't have the engine seize up tomorrow. It
    will seize up at some point if we don't do the maintenance
    because we're trying to push more money into the operating
    forces. But, we must get back to addressing that at some point.
    So, I think that's the challenge we have.
        Certainly, in the shore is where we've taken most of the
    risk. We are not putting as much money in sustainment as we
    know we should be putting in, and I hope that that is a short-
    term issue that we will address in the longer term.
        Senator Shaheen. Good. I would agree. I hope that's the
    case, as well.
        Several of you mentioned energy use as part of your
    remarks, and I wonder if you could speak to the kinds of
    efficiencies that you're looking at, in terms of energy use,
    and what coordination is going on between branches as you're
    looking at that energy use. General Stevenson, maybe you want
    to start off.
        General Stevenson. Yes, ma'am. In terms of the last part of
    your question, the coordination that's going on, we're very
    much watching what the Air Force is doing, with regard to
    aircraft energy, fuel, because we intend to use that same
    technology that comes from that work, in our helicopter fleet.
        We're doing a number of things across the board, both
    tactically and operationally--like in Afghanistan and Iraq--as
    well as back home, here in the States. We have an Army Energy
    Council that's personally led by the Secretary of the Army.
    It's important enough that he personally chairs it. That
    happens quarterly. I sit in on those with him. We have to
    report on various tasks that he's assigned to us. We have a
    number of net-zero installations that we are just now starting,
    with a goal that, by 2020, they'll be producing as much energy
    as they consume. By 2030, we hope to have that up to another
    couple of dozen energy installations. We have 126 renewable
    energy projects ongoing.
        Then, lastly, I'll just mention, because I know you're
    pressed for time. We're trying to reduce demand for energy.
    That is, as we buy new equipment--we have a procurement that's
    ongoing on the ground combat vehicle--we hope that one day
    we'll replace the HMMWV with a joint light tactical vehicle.
    Those new pieces of equipment will have significantly more
    stringent miles-per-gallon requirements than do their
    predecessors.
        Senator Shaheen. Thank you.
        My time is expired, Chairman McCaskill.
        Senator McCaskill. Thank you.
        Senator Inhofe.
        Senator Inhofe. Thank you, Chairman McCaskill. You pointed
    out, initially, that when the Republicans were a majority, I
    was the chairman of this subcommittee, and I've always
    considered this to be perhaps the most significant one, because
    the readiness is what it's all about.
        I see problems that I kind of put back in the perspective
    of the 1990s, when I did chair this. I see a lot of the
    problems that are much more serious than they were at that
    time.
        Now, I have to say this about these meetings. One of the
    reasons that I spend so much time actually in Iraq and
    Afghanistan and places like that is because--I don't mean this
    personally to you guys, but by the time we get some kind of
    testimony here, with all the media out there--you get kind of
    rosy in your interpretation as to what we have.
        Here's the problem with that: There are a lot of people
    that I serve with, in the U.S. Senate, who don't hold defending
    America as high a priority as I do. For those who are wanting
    to cut back on the military spending, all they do is point to
    testimony here--``Well, they don't have any problems at all.
    They said everything's fine now.'' I remember back when I was
    in the Army, we had 9 percent of the gross domestic product
    (GDP) spent on defending America, General Stevenson. Up until
    the last budget, I believe, before this current administration,
    it was 4.7 percent of the GDP.
        I remember when Rumsfeld came in for his first confirmation
    hearing, I told him that in my last year on the House Armed
    Services Committee, we had someone testify, at that time, that,
    in 10 years, we'd no longer need ground troops. Are you
    listening, General Panter? That's what they said. It was back
    in 1993, 1994. So, I said to Rumsfeld, ``You're going to have
    to make determinations as to what you're going to do today to
    be where we want to be 10 years from now. You're going to be
    surrounded by a lot of real smart generals, but they're going
    to be wrong, because there's no way in the world you can say
    what our needs are going to be.''
        Now, the question is this. It's not a question, really, but
    an observation. The American people assume our kids going into
    battle have the best of everything; and they don't. In order to
    get there, what would your recommendation be? Rumsfeld
    responded. He said, ``Well, for the last 100 years, our average
    percentage of GDP to defend America--average for 100 years--5.7
    percent.'' Now, it's down to 3.5 percent, with the goal of
    getting down to 3 percent. Now, I see that as a problem. This
    is a readiness hearing. When I think about the age of some of
    the stuff that we're dealing with right now--the Abrams, the
    Bradley fighting vehicles, the Paladin--I'm very thankful that
    the Paladin Integrated Management program is there, and we're
    now going to advance that. But really, the Paladin technology,
    that was World War II. We went through these things like we
    were supposed to have the upgraded capabilities, and those
    programs that we get a big investment going in it, and then we
    slow it down. So, we're dealing with a lot of old stuff. It has
    to take its toll.
        Let me throw in one other thing, too, and that's end
    strength. Right now, we're talking about cutting back--what?
    20--some 20,000 marines and 49,000 soldiers. We've been running
    a dwell-to-BOG ratio of 2 to 1--actually, 3 to 1, and we're not
    even at 2 to 1 yet. We are in the Army, but not in the Marines.
        So, combine all those things. It has to, to me, translate
    into an increase in risk. You mentioned maintenance. Deferred
    maintenance is the first thing that goes--and you all know
    that--when you're strapped. When we go over there and say, ``We
    need more body armor and these things,'' we come back and we
    get that. Then what suffers? It's maintenance, deferred
    maintenance, and you said it very well, Admiral Burke, you
    said, ``You pay now or you pay a lot more later.''
        So, in light of that, do any of you have any comments to
    make, in terms of how this affects risk, in terms of readiness?
        General Panter. Sir, if I may start off with----
        Senator Inhofe. Yes. Are the marines still using the
    retreads?
        General Panter. Not so much anymore, sir. Over the last few
    years, we've gotten better.
        We do have some challenges, and I will not paint a rosy
    picture. We have identified the fact that, when the time comes,
    we'll need the support of Congress to reset our equipment sets.
    That's a requirement to the tune of about $5 billion, as
    Chairman McCaskill alluded to earlier.
        We have a reconstitution piece, as well. We have learned
    that our legacy TEs, in both Iraq and Afghanistan, are not
    satisfactory. For example, a infantry company today has the
    same command-and-control capability that a infantry battalion
    had in the early 1990s. Our radio assets that are in our units,
    the requirements for those have increased, as well as ground
    tactical equipment. We need to--after this thing is over--after
    Afghanistan, we need to address those issues. That's part of
    the $5 billion in reconstitution that I mentioned earlier.
        Now, trying to keep our heads above water, because,
    Senator, about 50 percent of the equipment that we currently
    have in Afghanistan came right out of Iraq, when we drew down
    in Iraq and we shipped----
        Senator Inhofe. Exactly. Yes.
        General Panter.--that equipment over, that added to the
    stress of that equipment.
        Senator Inhofe. To the personnel.
        General Panter. To the personnel, most definitely.
        What we could, we did bring back to our depots to reset
    that OIF equipment. That continues, and that should be
    completed later this year.
        We do have continuing deliveries of equipment that were
    part of previous-year contracts. Those deliveries continue on,
    which gives us some degree of relief.
        We're attempting to repair forward and refresh that
    equipment as best as we can. In fact, I'm asking Army Materiel
    Command to help us out in that endeavor, and to mature their
    capability within Afghanistan so we can hit the refresh button
    on that equipment.
        For the Marine Corps, we have a equipment rotation plan
    that we----
        Senator Inhofe. Yes. I'm really trying to get to how all
    this affects risk. We know what risk is.
        General Panter. Sure.
        Senator Inhofe. You know what the risk is. In terms of end
    strength, in terms of the age of the equipment, in terms of
    everything we've been talking about here, which is the
    percentage of the GDP that is going to--do you have any comment
    to make about how that affects readiness?
        General Panter. Yes, sir.
        Senator Inhofe. Is there a price? There's a price we have
    to pay for all that stuff.
        General Panter. Exactly. If we don't get help from Congress
    to reset our equipment when we pull out of Afghanistan, we are
    at risk to respond to contingencies.
        Senator Inhofe. That's good. That's good.
        Any very brief comment about that, General Stevenson?
        General Stevenson. Sir, I agree. As you noted in my earlier
    statement, that I think that we are in better shape today than
    we've been in a long time. I honestly believe that. It's not
    all rosy. We have issues. But, we've been very well funded.
    We've gotten--our reset--every dollar we've asked for, in
    reset, we've gotten.
        Senator Inhofe. Okay.
        General Stevenson. It's reset that's eliminating a lot of
    that risk.
        Senator Inhofe. Chairman McCaskill, if I might, I'd like to
    ask one last question to General Reno.
        Yes, I don't agree with that, but I do feel that, when
    you're looking at the deferred maintenance--there's another
    area, also, that goes, and that is in spare parts. I have to
    say this, Chairman McCaskill, about General Reno. He possesses
    a character that is very rare in his side of the table and our
    side of the table, both. It's called humility. He was the
    commander there at Tinker Air Force Base, and, I think,
    probably one of the best--the best commander we've ever had
    there.
        General Reno. Thank you, Senator.
        Senator Inhofe. But, let me just say this about General
    Reno, because I think it's very important. When you are backed
    up on spare parts--and we're talking about the KC-135s, all the
    stuff that's going through there--you--I understand up to 4,000
    spare parts are always identified as being critical and on
    backorder. Then I have a statement, that's too long for me to
    read right now, but it comes from Tinker Air Force Base and
    addresses your choices. When you run out of a part and you have
    it on jacks, you have a choice of either dropping it down,
    taking 5 or 6 days out of the work week and--or cannibalizing
    it and hoping that it gets there in time. Could you just make
    one comment about the critical nature of our spare parts
    inventory? I think whatever you say about that particular
    operation is true in the rest of the operations, also.
        General Reno. Thank you, Senator. The choices available
    when a part is not available are not good. None of them are
    good. It's either inefficient or delayed or waiting. None of
    the choices are good if the part is not available. The parts
    have to be--you have to have the requirement right. That's a
    joint problem--a joint solution with the Defense Logistics
    Agency (DLA) and the Air Force. We have to get the procurement
    right. That is, shortening the timeline on the acquisition lead
    time and the production lead time. We have to get the delivery
    right so that there's perfect order fulfillment and so that the
    customer wait time is absolutely minimized. But, whether at an
    ALC, a depot, or in the field, if the part's not available,
    there are no good choices.
        Senator Inhofe. Chairman McCaskill, the other question I'm
    going to ask him will be for the record, but it will address
    the somewhat arbitrary 50/50. I'll ask a specific question
    about that on your ALC, as well as the rest of them.
        Thank you, Chairman McCaskill.
        Senator McCaskill. Senator Chambliss.
        Senator Chambliss. Thanks, Chairman McCaskill.
        Following up on that, General Reno, what are we going to do
    about this parts issue? I had a visit with General McMahon, at
    Robins, just last week, and obviously this is one of the issues
    we continue to work. But, tell me what your thoughts are, where
    we're going, here. How are we going to improve this
    availability issue?
        General Reno. Thank you, Senator. General McMahon is doing
    a terrific job.
        Senator Chambliss. He is.
        General Reno. I would start by telling you that our Chief
    of Staff, General Schwartz, has had an eyeball-to-eyeball
    conversation with the director of DLA, so there is no ambiguity
    in where he stands and what we need as an Air Force.
        Second, the Air Force Materiel Command commander has met
    twice in the last year with the DLA director to not only lay
    out what our needs and requirements are, but to track the
    progress. I meet with the DLA director bimonthly, and members
    of his staff and mine get together even more often than that.
    It's getting the right requirement. It's getting the right
    procurement. It's getting the right delivery and continuing in
    the proper engagement, and holding them accountable.
        Senator, I would tell you, the DLA has a long record,
    almost 50 years, of excellence in wholesale supply. As a result
    of the the Base Realignment and Closure (BRAC) 2005, they are
    now in the retail supply business. It's different. They are
    adjusting to it, and we are holding them accountable.
        It's not all bleak. The C-5, for example, which you are
    very familiar with, enjoys the best support it's had in years.
    It has the highest mission-capable rate that it's had in 7
    years. It has the highest aircraft availability rate it's had
    in 6 years. It has the lowest--not-commissioned--not-capable-
    for-supply--not-mission-capable-for-supply parts--the lowest
    rate in 20 years. So, there are some good things that are
    happening, but as DLA gets into the retail supply, we
    absolutely have to have what we have signed them up to do.
        Senator Chambliss. The delays in delivery are concerning to
    all of us. It's happening at all three of our ALCs, and it
    looks like this is the big issue. Of course, we made the
    change, a couple of years ago, to try to improve efficiency and
    save money. All that's well and good. But, if it's not going to
    work, then we have to figure out what direction we need to go
    in. But, I appreciate your commitment to it, and General
    Schwartz's commitment, to making sure we get this issue solved.
        General Panter, you note, in your written statement, that
    the Marine Corps equipment, both at home and abroad, has been
    heavily taxed in a nearly decade of constant combat operations.
    You also note that the requirement to fully resource deployed
    forces has resulted in a redistribution of assets from
    nondeployed forces and strategic programs to meet these
    requirements. None of this is surprising, obviously, given the
    OPTEMPO of the last decade. The Marines have done a tremendous
    job, both with your combat units and your reset effort. Your
    contributions will be critical to our success. However, the
    situation you lay out, with respect to availability of
    equipment and supply rating of units at home, is somewhat
    troubling.
        Specifically regarding reset, as you just alluded to a
    minute ago, you note that reset requirements increased as a
    direct result of the shift of equipment from Iraq to support
    the surge forces in Afghanistan. This is also understandable.
        Regarding how you will address your reset shortfall, you
    mentioned several actions, including, and I quote,
    ``aggressively repairing equipment at our depots and
    distributing to fill shortfalls for established priorities.''
    What do you mean by that last phrase of ``distributing to fill
    shortfalls''? If that means outsourcing work, where's it going
    to go?
        General Panter. Sir, relating to fulfilling established
    shortfalls, by direction of our Commandant, we have a priority
    list that we fill. It's a listing of units that are racked and
    stacked according to what the priority or the needs are.
        For example, anything forward in Afghanistan--of course,
    they're top-tier folks, they get what they need. Their
    readiness ratings hover at 92, 93 percent, as you know.
        Next thing that would come up in the priority stacking or
    rating would be units that are preparing to deploy the theater.
    We attempt to ensure that those units, as mentioned earlier,
    don't see this equipment for the first time as they train to go
    forward. So, those readiness--readiness rating of the units
    that are on deck, ready to deploy, is fairly high.
        The outsourcing piece that you mention, it is--we're not
    there, on outsourcing. Right now, we're not leveraging
    outsourcing to fulfill the needs that we have.
        Is that the basis of your question, Senator, or did I miss
    the mark here?
        Senator Chambliss. Let me just continue on a little bit.
    So, is it my understanding you're not looking at outsourcing
    now.
        General Panter. Yes, sir. The capacity at our depots right
    now--we can meet our requirement, as we know it. Now, when the
    day comes--and I'll use the analogy ``the pig and snake''--when
    we come out of Afghanistan, that is a consideration; and to
    leverage other Services' depots, as well. It may well be, if we
    have the resources to get this equipment reset as quickly as
    possible, we might have to consider outsourcing.
        Senator Chambliss. If I understand what you're saying,
    you're not at that point now. Based upon the priorities that
    you just alluded to, both the depots are doing the work that
    needs to be done right now. That appears to be the case for the
    immediate future.
        General Panter. Yes, sir, that's correct. Both depots are
    roughly on a shift, shift-and-a-half workload.
        Senator Chambliss. Yes, okay.
        General Reno, I want to discuss one other issue with you. I
    mentioned the Occupational Safety and Health Administration
    (OSHA) issues to Mr. Yonkers, but, there again, it seems like
    OSHA may be holding our depots to arbitrary standards, and to
    standards that really have no relevancy. We have real issues
    with OSHA that General McMahon is working through, and looks
    like we're on track to get those resolved. But, if we're not
    careful, this is going to absolutely hamstring our ability to
    carry out our mission.
        What's your perspective on OSHA's role? How can we ensure
    that the depots are not subjected to arbitrary regulations that
    do not affect the safety and health of the workforce?
        General Reno. Senator, we absolutely care about the safety
    and welfare of our workforce. That is paramount. We do not push
    back on that at all. There were 36 findings that OSHA gave us
    under General McMahon's leadership. Thirty-three of those have
    already been responded to. Another will be responded to in
    June; the final two, in October. So, he has moved out smartly
    on those.
        As far as the grasp or the extent of OSHA's involvement in
    what we do, compared to what they do with others, I would tell
    you that the Assistant Secretary of the Air Force, Mr. Yonkers,
    is personally engaged and involved in this. This is something
    that we are involved in and we are pursuing. But, we want to
    first make sure that our people are being taken care of. We
    don't push back on that at all, sir.
        Senator Chambliss. Yes. Obviously, that is a priority, and
    the Air Force has always done a good job with that. We've never
    had a significant issue with OSHA before. That's why it's
    puzzling to me as to why we're encountering these somewhat
    major issues right now. Frankly, they appear to be inhibitors
    to getting the job done, and not for the right reasons. It's
    not safety and health of the employees that is the issue with
    these OSHA issues. So, we look forward to continuing the
    dialogue with you and Mr. Yonkers, with respect to that.
        General Reno. Thank you, Senator.
        Senator McCaskill. Thank you, Senator Chambliss.
        I talked about--in the opening statement, about this
    committee, last year, adding money on maintenance and reset. I
    can look at the Air Force as an example. You report that, for
    fiscal year 2012, your budget will only cover 84 percent of the
    needed aircraft repairs. Last year's provided only 83 percent
    of the needed aircraft repair money.
        It appears to the committee that you are underfunding reset
    and maintenance, and I'm trying to figure out why. Is it
    because you can't absorb any more of the funding, in terms of
    what your capabilities are?
        General Stevenson. Ma'am, you're looking at me, so I'll----
        Senator McCaskill. Any of you--whenever I ask one of these
    open-ended questions, everybody looks down like I'm about to
    pass the plate in church. [Laughter.]
        General Stevenson. I'll take the first shot. We're not
    underfunding reset and maintenance. We have the reset money we
    require, and we're thankful for it. You'll note our reset
    request this year in 2012 is lower than it's been in previous
    years. It's a function of not having our large mechanized
    forces deployed in Iraq. It's a function of leaving that
    equipment that's in Afghanistan there for longer than just a
    year's rotation.
        When we finally bring it all out of Iraq, by the end of
    this year, and in Afghanistan, whenever--we're looking at about
    a 20 to 25 billion liability, in terms of reset. We're hopeful
    that you'll continue to provide the reset dollars that we need
    for it. Up to now, it's been great.
        Senator McCaskill. Okay.
        General Stevenson. We've--and we don't have capacity
    issues.
        Senator McCaskill. Marines?
        General Panter. Yes, ma'am, very similar to the United
    States Army. Now, we have had a challenge this--Chairman
    McCaskill, about moving the OCO into base; and we've gotten
    better at that. For example, in fiscal year 2010, it was right
    at $92 million, and in 2012, we have $207 million in the base.
    That's a constant challenge, though.
        Relating to what General Stevenson said, though, we're
    doing okay now, but it's yet to come. That's our concern, when
    we do start to withdraw.
        Senator McCaskill. Because your reset is 10 billion, right?
        General Panter. Pardon, ma'am?
        Senator McCaskill. You've acknowledged $5 billion at the
    end of combat, an additional $5 billion to reconstitute the
    force.
        General Panter. That's correct. Now, in 2011, we asked for
    $3.1 billion; we got $2.9 billion. In 2012, we're asking for
    $2.5 billion plus the liability of $5 billion when we draw
    down.
        Senator McCaskill. Okay.
        General Reno. Chairman McCaskill, the reset is different
    for the Air Force than it is for the ground forces. Our
    recurring maintenance is done at our ALCs, and we bring all
    that aircraft back for that depot-level maintenance. With the
    OCO request for $2.9 billion, $2.2 billion of which is weapon
    system sustainment, we are funded at 80 percent. With the
    efficiencies that we've gained, in fiscal year 2012, of $605
    million, it takes us above 84 percent. It's going to be closer
    to 85 percent, though that number is a moving target, as we get
    closer to fiscal year 2012. But, that level of funding, ma'am,
    will preserve the combatant commander support and will give us
    balanced legacy and new system support. We do not have capacity
    issues.
        Senator McCaskill. Okay.
        Vice Admiral Burke?
        Admiral Burke. Yes, ma'am. We also are a little different
    from the ground forces, because of our capital ships. In ship
    maintenance, we count on about $1 billion of supplemental
    funding. Some portion of ship maintenance can be attributed to
    today's ops, so we think that's--or, today's higher ops, so we
    think that's reasonable; the same sort of approach for
    aviation. So, we are reliant on supplemental funding to address
    some of those basic requirements.
        Senator McCaskill. Okay.
        General Stevenson, I would love to know what our LOGCAP
    costs are, compared to Iraq. Now, I know that it's hard to do
    apples to apples, because it's a completely different
    environment with a lot of different supply challenges that we
    have in Afghanistan that were not as--such a heavy lift--pardon
    the expression--in Iraq. But, as you look at per-soldier, in
    terms of logistical support, when you're looking at food and
    laundry and all of the things that we're using LOGCAP for, it
    was--I will use an unladylike term--but, it was the Wild West,
    in terms of LOGCAP, in Iraq, for many years, in terms of the
    money that was being spent and the lack of accountability. I'd
    be curious if anybody has done an analysis what our per-soldier
    cost is, in terms of logistics under LOGCAP IV, as compared to
    III, II, and I. Because I think that might tell us if, in fact,
    we are distributing lessons learned. I'm sure that you don't
    have that off the top of your head. If you do, I'll dance a
    jig. But, I'm happy to take that for the record. But I'd love
    to see that comparison.
        General Stevenson. Yes, ma'am, you're right, I'm going to
    have to take it for the record. It is less than in Iraq. But, I
    don't have the specifics. I'll provide that to you.
        [The information referred to follows:]

        The Logistics Civil Augmentation Program (LOGCAP) IV acquisition
    strategy was developed specifically to implement lessons learned under
    LOGCAP III. Most notably, with the award of the LOGCAP IV contracts,
    the program realized the establishment of a competitive base of LOGCAP
    contractors, an improved two-tiered award fee structure, and
    standardized performance work statements. Further refinements designed
    to increase responsiveness to warfighter requirements, preserve the
    benefits of competitively established pricing, promote effective cost
    control, and minimize administrative burden were incorporated into the
    LOGCAP IV Afghanistan task orders. These refinements are providing
    material improvements to the way we contract for LOGCAP services, and
    we continue to collect and evaluate lessons learned as we strive to
    achieve continuous improvement on the program.
        As Senator McCaskill noted, comparing costs between LOGCAP III and
    LOGCAP IV presents significant challenges. To do so would require a
    comprehensive analysis. Major obstacles derive both from substantially
    differing and extraordinarily fluid operational conditions and
    requirements, and fundamental structural differences between the LOGCAP
    III and LOGCAP IV contracts.
        A reliable baseline from which to compare the Iraq LOGCAP III and
    Afghanistan LOGCAP IV contracts is not readily available. We can state
    at a high level that the Iraq and Afghanistan task orders are being
    executed to different requirements, and under substantially different
    operating conditions. We would have to perform a rigorous analysis to
    identify the specific differences and the comparability of the two sets
    of costs. To answer your question, we would have to consider the
    possibility of comparing the LOGCAP III and LOGCAP IV task orders in
    Afghanistan. Our objective in this regard was to attempt to limit, the
    variability of the conditions under which the contracts were performed.
        I can discuss some of the most easily identified obstacles we
    encountered in our efforts to compare costs under LOGCAP III and LOGCAP
    IV task orders in Afghanistan.
        Troop Uplift: Rapid growth in Afghanistan LOGCAP IV operations
    started in late September 2008 to support troop uplift in the south
    area of responsibility. An increase in troop strength, accompanied by
    extreme fluidity in requirements led to rapid growth in Afghanistan
    LOGCAP IV operations. The troop uplift contributed to an increase in
    contractor commercial procurements due to shortfalls in the Federal
    Supply System (schedule and availability). Additional equipment leasing
    was required to make up for government furnished equipment from Iraq
    that did not materialize.
        Unavailable MILAIR: LOGCAP III utilized 100 percent MILAIR for all
    intra-theater travel. National Command Element (NCE)/Combined Joint
    Task Force (CJTF) 101 required that LOGCAP IV contractors provide their
    own air assets within theater.
        ``Ring Route'' Services: LOGCAP III had 33 Forward Operating Bases
    (FOBs) that were serviced by ring route where the LOGCAP III contractor
    did not have an enduring presence; support was provided by a team
    traveling from FOB to FOB. For LOGCAP IV, the NCE (CJTF 101) required
    that that FOBs be fully supported by site.
        Performance Work Statement (PWS): Differences between the LOGCAP
    III and LOGCAP IV performance work statements exist both in structure
    and requirements. Also each Contractor's unique approach to performance
    of the individual PWS requirements and each contractor's internal
    accounting policies present inherent cost variations at the PWS level.
        Levels of Service/Maintenance: The majority of facilities on LOGCAP
    III supported bases had minimal Operations and Maintenance (O&M) and a
    large percentage of facilities were not on routine maintenance by
    LOGCAP. Additionally, the LOGCAP IV contractor was required to provide
    O&M services to facilities that had received minor to no maintenance
    under LOGCAP III.
        These obstacles are the most easily identified, but are by no means
    a comprehensive listing of the variations that would have to be taken
    into account when attempting to compare costs between the LOGCAP III
    and LOGCAP IV task orders in Afghanistan. A full business case analysis
    would be necessary to derive any reliable conclusions from a broad
    based comparison of LOGCAP cost per soldier. Given the continuing pace
    of change in LOGCAP requirements, it is highly unlikely that a stable
    baseline suitable for such a comparison will exist in the foreseeable
    future.
        The most reliable estimate of the difference in costs between
    LOGCAP III and LOGCAP IV at this time is the 9 percent savings figure
    developed by the U.S. Army Central (ARCENT) J8 and validated by the
    Army Cost and Economic Analysis Center for use in the Iraq Base Life
    Support (BLS) business case analysis. In support of the business case
    analysis for Iraq BLS, the ARCENT J8 developed an estimated LOGCAP III
    to IV savings figure based on a comparison of incurred costs under
    LOGCAP III with a composite of the proposed prices for selected similar
    services under LOGCAP IV. The best data available at the time was the
    O&M costs from six LOGCAP III task order cost reports in Afghanistan.
    The cost reports from the six task orders were compared to the average
    Fluor and DynCorp band pricing from LOGCAP IV awards. The supported
    populations under LOGCAP III per task order were compared to similar
    band sizes under LOGCAP IV. The comparison did not include any
    construction or engineering activities as those costs were unknown at
    the time. The estimate did not include any contractor unique costs such
    as Overhead, General and Administrative, or Fees. The 9 percent savings
    figure was validated by the Army Cost and Economic Analysis Center. In
    our opinion, this remains the most reliable estimate of the difference
    in costs between LOGCAP III and LOGCAP IV.
        Notwithstanding the challenges associated with developing a
    reliable comparison of costs between LOGCAP III and LOGCAP IV, as we
    noted in our 10 December 2009 response to the inquiry regarding
    concerns about the LOGCAP IV task order strategy for Afghanistan, the
    following mechanisms were built into the Afghanistan task orders.
        Service Price Matrix: Included in both LOGCAP Afghanistan task
    orders are service price matrices that can be independently executed
    over the life of the task orders. The competitive pricing established
    at time of award sets the budget from which the contractor manages its
    costs. The budgets also set the cost base from which fees are
    calculated. While under a cost reimbursement contract the contractor
    will be reimbursed for its allowable costs determined reasonable and
    allocable to the task order. The budgets are only adjusted in the event
    of a recognized change in accordance with a unique change management
    clause I will discuss later on.
        Keeping the fee base under control is a crucial element in
    controlling overall costs under a cost type contract. The establishment
    of the competitively based price matrix in tandem with a disciplined
    approach used to manage changes has provided a substantial incentive
    for the contractor to control costs. Under a cost type contract, the
    contractor does not earn more profit simply for spending more money; it
    is only when the fee base is expanded that the contractor increases its
    returns. As experienced under the LOGCAP IV task orders, the fee base
    has only been adjusted under circumstances dictated in the change
    management clause of the contract. Indeed, the task order in the north
    has stopped earning base fee due to an apparent cost overrun status. By
    keeping the fee base under control the contractor is incentivized to
    minimize the incurred cost to protect its profit margin. This effect is
    accentuated by the fact that the Federal Acquisition Regulation
    precludes contractors from recovering interest expenses.
        Change Management Clause: Second in the task order control
    mechanism has been a structured approach to change management. The
    Afghanistan task orders contain a clause that clearly establishes what
    constitutes a change or modification requiring an equitable adjustment
    under the contract. The foundation of the clause is a population based
    mechanism for acknowledging a change has occurred. To date, the Army
    has recognized and is in the process of negotiating an equitable
    adjustment due to the uplift of forces experienced after the award of
    the task orders. The population trigger works both ways; when the
    drawdown occurs negotiations will commence to adjust the fee base
    downward.
        Award Fee Criteria: The third element is the award fee structure.
    Cost/Schedule Management and Cost Control are separate and unique
    factors under the award fee clause making up 40 percent of the
    contractors score. This provides further incentive for the contractor
    to engage in prudent operations under the task order. Biweekly cost
    reports are submitted to the government with a required analysis by the
    contractor explaining substantial variances. The contracting officer
    systematically tracks incurred costs against the service price matrix
    budgets. Performance against the award fee criteria is briefed to the
    Award Fee Evaluation Board. Poor performance and inadequacies in
    business systems results in reduced award fee determinations. To date,
    two Award Fee Boards have been held for each of the task orders.
        Incurred Cost Audits: Under a cost reimbursable contract the
    contract awarded value does not establish the cost of the task order.
    The actual determination of the allowable costs incurred under the task
    order is not until contract closeout after a formal DCAA audit of the
    direct costs and indirect costs and the negotiation/settlement of the
    final costs. Therefore, the government gets multiple ``bites of the
    apple'' on cost type task order awards based on conducting audits
    during contract performance and monitoring of cost control activities.
    Presently, the LOGCAP definitization team is working closely with DCAA
    Auditors in negotiating adjustments to the LOGCAP task orders.

        Senator McCaskill. If there is an analysis that has been
    done about why it is less--I'm looking for: Is it the
    competitive process that has helped? Is it more contract
    oversight? I'm looking for some good news, here, where I can
    feel good that we are at least headed the right direction, in
    terms of logistical contracts and the huge burden they've been,
    in terms of these contingencies.
        Let me ask about the LMI depots study. It came out in
    February, and I am curious if any of you have any take on those
    recommendations and findings that you would like to put on the
    record at this time.
        General Reno. Chairman McCaskill, I have read the report.
    While I agree with many of the recommendations that LMI makes,
    we have not had opportunity to fully vet that with DOD, and
    intend to.
        The one that I would differ with is their recommendation
    for combining the statute with regard to 50/50 and Core. I
    don't think that's advisable. I think we gain flexibility by
    keeping those separate, as they are now. I would provide other
    comments after we have a chance to review that with the other
    Services and OSD.
        [Additional information referred to follows:]

        The one recommendation that I differ with is combining the 50/50
    and Core statutes. I don't think that is advisable because we gain
    flexibility by keeping the statutes separate, as they currently are
    right now. As stated earlier, we have not been able to fully vet the
    Air Force's viewpoints on LMI's recommendations with the Office of the
    Secretary of Defense (OSD) and the other Services. A cross-service team
    will soon be formed through the OSD Maintenance Executive Steering
    Committee to review the report and make recommendations on any
    statutory, policy, and organizational structure changes.

        Senator McCaskill. Okay. Anyone else on LMI?
        General Panter. Yes, ma'am. There are some things we agree
    with and some things we don't agree. We agree with
    strengthening the Core determination process; there's goodness
    in that. The recommendation that sustainment policies must be
    closely linked to depot maintenance activities--agree with
    that. We agree with some of the conclusions about why the depot
    workload has decreased--newer equipment, rapidly fielding UUNS,
    and things like that.
        Things we don't agree with, much like my friend Loren
    mentioned, is the consolidation aspect. We think that distracts
    from our flexibility. There are secondary issues involved with
    that, such as the Services' relationship with the local
    community. That was a major, I think, disagreement with the
    study.
        Thank you.
        General Stevenson. Pretty much ditto. We generally agree
    with the findings. There are a couple of findings in there, we
    don't care for. One is the notion of improving our reporting,
    because we think we report pretty well right now. The other is
    the independent commission that they suggested be set up. We
    don't think that's necessary.
        But, what we find is that many of the things that are in
    that report are things we already have done or are doing. So,
    we agree.
        Senator McCaskill. Okay. My time is up. I will probably
    take one more round, after Senator Ayotte.
        Senator Ayotte. Thank you, Chairman McCaskill.
        Admiral Burke, I just wanted to follow up on Senator
    Shaheen's question with regard to the shipyards, and, in
    particular, Portsmouth Naval Shipyard. Admiral Roughead
    testified before the Armed Services Committee earlier this year
    about consolidation of a maintenance workshops project that has
    been proposed at the shipyard. I had a chance to go to the
    shipyard and really look at what this would do, in terms of
    efficiency and reduce cost at the shipyard. One of the things
    that Admiral Roughead said, that if we moved the consolidation
    project up two phases right now, consolidate them into one--the
    P266 into one--then--and put them in 2012--we would save $8
    million by doing that. I think that demonstrates two things.
    Number one, often, when we put maintenance off, it ends up
    costing us more in the long run, instead of looking at the big
    picture and making the decisions upfront. Then, I wanted to ask
    you, in particular, about--right now, you've--the Navy has
    proposed that this project occur, again, in a phased approach
    in 2015, even though we would save $8 million by consolidating
    it and doing it sooner, in 2012. So, could you tell me what the
    thought process was there, in putting it in 2015, and why we
    wouldn't be better off moving it into 2012 to save that $8
    million that the Admiral has identified?
        Admiral Burke. Yes, ma'am. First, I've gone back and looked
    at the project. We don't think we'd save $8 million. We think
    we'd save $3 million. So, an update on the numbers.
        Senator Ayotte. So the number that was given to us
    previously isn't the number that----
        Admiral Burke. I think we've gone back and looked at it,
    and we see that if you did phase 1 alone, it would be almost
    $12 million; phase 2 alone would be a little over $8 million.
    That's a total of $20.5 million. If you did both phases
    together, it'd be $17.2 million. So that's a savings of $3.3
    million if they were done concurrently.
        Now, that has nothing to do with whether you move it up or
    not. So, maybe I'm missing the point of your question.
        Senator Ayotte. As I understand it, the way it's currently
    proposed, it's a phased approach. Is that right?
        Admiral Burke. It is. It's in 2015 and 2016, I believe,
    so----
        Senator Ayotte. Right. So, we're not, number one--actually,
    one of the reasons why we would want to move it up is because
    the sooner we get the efficiencies gained from actually
    consolidating the workshops--probably--I haven't--having been
    there--is that we will be able to more efficiently perform
    maintenance. That, in turn, will have cost savings, in terms of
    how we maintain the submarines. So, obviously, that number's
    not included in the $3.3 million.
        Admiral Burke. That's right.
        Senator Ayotte. So, that would be one of the reasons I
    could see of moving it up. But, just wanted to understand why,
    even though you know you could save money, you would still
    phase it in, rather than just doing it together.
        Admiral Burke. I think we'll look at the opportunity to put
    them together. When I've asked the question about, ``Could they
    be done concurrently?'' the answer that I've gotten is yes. So,
    it would seem to me that they ought to be done together. I
    would agree with you.
        Senator Ayotte. I would like to, obviously, hear further
    about what the reasoning was for moving it to 2015, as opposed
    to doing it sooner. So, if you want to get back to me on that,
    I'd appreciate it--or, unless you know now.
        Admiral Burke. Well, I'll be happy to get back to you on
    it.
        [The information referred to follows:]

        The Navy assesses all military construction requirements as we
    balance risk across the Navy and provide the most capability within
    fiscal constraints. The Portsmouth Naval Shipyard Structural Shop
    Consolidation Project (P266), while executable in fiscal year 2012, is
    currently programmed in fiscal year 2015. The Navy will continue to
    assess the Portsmouth Naval Shipyard Structural Shop Consolidation
    Project as we target our shore infrastructure investments to deliver
    greatest impact on achieving our strategic and operational objectives.

        Admiral Burke. I assume it was just placing it amongst a
    bunch of other MILCON projects, as well. But, I'll get back to
    you with a good answer----
        Senator Ayotte. Thank you very much, Admiral.
        Admiral Burke.--one that you might like. [Laughter.]
        Senator Ayotte. An answer I like, that would be even
    better. I appreciate it.
        I wanted to ask, also, General Stevenson, about our Guard
    and Reserve, because, with the conflicts that we've been
    involved in, in Iraq and Afghanistan, they're an operational
    force now, as how we traditionally envisioned our Guard and
    Reserve. The most recent National Guard and Reserve equipment
    report identified nearly a--$4.1 billion in significant major
    item shortages that were identified just for the Army National
    Guard. Obviously, this could apply in other contexts, as well,
    in any other services.
        Can you tell me what you estimate the shortfall to be for
    the National Guard? Also, could you address for me--both what
    I'm seeing and what I have just heard from our Guard--is that
    often the Guard has outdated equipment, versus the Active
    Forces. Just one example, in New Hampshire, the Active
    component's fielding M-4 carbine with M-68 close-quarter
    optics, and the New Hampshire Guard is still using the M-16
    with the iron sights. So, could you address for me just what
    we're doing? We're asking so much more of them. We need to make
    sure that they have what they need--the readiness, and also,
    with the important missions that they carry for us on the
    homeland front, as well.
        General Stevenson. You're right, in years past, the Guard
    and the Army Reserve have suffered lesser-quality equipment--in
    some cases, shortages of equipment, outright--than the Active
    component has. Under the Army Force Generation Model, which we
    using today, as I'm sure you know, that will not work. The
    Reserve component has to be equipped as good as the Active
    component, and we're committed to that. Matter of fact, I just
    talked, yesterday, with General Carpenter, who's the acting
    director of the Army Guard, and--because I had noticed, in his
    testimony last month, that he was pretty pleased with the
    amount of equipment fills they're starting to see happening in
    the Guard. I asked him, ``Are you still comfortable that the
    equipment is flowing, your shortages are being addressed?'' He
    said, ``Absolutely. The equipment is coming in droves.'' In the
    TOE--the way we organize our units--a rifle company in the
    Guard has the same equipment as a rifle company in the active.
    So, if they're authorized M-4s in the active, they'll be
    authorized them in the Guard, and they should have them. If
    they don't have them today, it's probably a function of, ``We
    have those weapons being used downrange for other reasons.''
        We have a lot of equipment in use in Afghanistan that
    doesn't exactly match the way units are organized. I'll give
    you an example.
        Today, our aircraft crews, we equip with an M-9 pistol. The
    pilots--the crews in Afghanistan want to carry M-4s in addition
    to their pistol, because if their aircraft goes down, they want
    to be able to fight.
        Senator Ayotte. Absolutely.
        General Stevenson. Absolutely logical. We've given them the
    M-4s. But, to give them the M-4s, somebody else is short, back
    here in the continental United States. We'll get that fixed.
    But, it's just a short-term problem.
        Senator Ayotte. Does anyone else want to add on this issue?
        General Reno. Ranking Member Ayotte, the Air Force Air
    National Guard, about 102,00 strong, fly the same aircraft that
    we do Active Duty--fifth-generation fighter F-22, F-15, as
    you're very well aware, F-16s, tankers, airlift, C-17s. So, we
    use the same equipment.
        Senator Ayotte. I'm certainly familiar with that. What I've
    heard the feedback on is, there's much more at the ground troop
    level, of making sure that we're prepared, given what we're
    asking them to do.
        General Panter. Senator, if I just may add--now, the
    quantity of equipment is, of course, different, because we give
    our Reserves training sets to train on. But, there's not
    sufficient Active Duty Marines at that site location to
    maintain a full-up table of equipment. So, there is a
    difference in quantity.
        But, like General Stevenson mentioned, as these units get
    ready to deploy and they go through their predeployment
    training and all the workup packages, they get the same
    equipment as our Active-Duty Forces.
        Thank you.
        Senator Ayotte. Thank you very much.
        With the latitude of the Chairman, I have one other
    question. That is about the Maritime Prepositioning Force
    Program changes, and I would address that to General Panter and
    Admiral Burke. I had a chance to go over to the Pentagon, about
    a week ago, and receive a briefing on readiness from the Army
    and the Marines. One of the issues that I noticed was that the
    Navy plans to place 6 ships of the 3-squadron/16-ship total
    maritime prepositioning forces for the Marine Corps into
    reduced operating status, beginning in fiscal year 2013, and--
    in the Mediterranean--and wanted to get two things. General
    Panter, one, you said, in your testimony, that that needs
    additional analysis. I'm concerned, given what we see happening
    right now in that area of the world, that that reduced
    operating status, which I understand was part of the efficiency
    initiative recommended--and probably was recommended before
    we--any of us could have predicted, maybe, some of the
    activities that are occurring in that area of the world--wanted
    to get, General Panter, what your view is on that.
        Then, Admiral Burke, yours as well, in understanding what
    went into that thinking of really reducing that prepositioning
    in the Mediterranean.
        General Panter. Would you like for me to start, ma'am?
        Senator Ayotte. Yes, General. Thank you.
        General Panter. Okay. Two or three points on this thing.
    Anytime that you don't have that Maritime Prepositioning
    Squadron (MPSRON), that maritime preposition, in our view,
    geographically located, which--and you were briefed on it--
    that's the intent, up to--if they're not in the maintenance
    cycle, to have them forward-deployed. You quickly would have to
    question, ``Okay, if they're not in the geographical area, how
    much longer would it take to get them there?''
        Second point would be the opportunity to train with this
    particular MPSRON in the U.S. European Command (EUCOM) and U.S.
    Africa Command (AFRICOM) areas of responsibility. If you have
    them tied up to the pier, you might have a missed opportunity
    related to that.
        But, of all this, one of the major concerns we have is just
    assembling the ammunition requirements. That's a long process
    if that capability is not associated with the MPSRON. For
    example, it takes 18 million pounds--there's a 18-million-
    pounds requirement for class 5 associated with these MPSRON.
    That equates to roughly 600 tractor trailers that come
    throughout the United States, continental United States, to put
    this package together. That takes time. That's roughly 35 to 42
    days to put that together, if you had to start from a cold
    start. So, to aggregate that capability with this MPSRON that's
    in reduced operating status is a concern for us.
        Senator Ayotte. What do you think is the impact on
    readiness in that area of the world?
        General Panter. Well, I--it, logically, would have to
    translate to, potentially, a slower response time in support of
    the COCOMs.
        Senator Ayotte. In AFRICOM?
        General Panter. In AFRICOM and EUCOM.
        Senator Ayotte. EUCOM.
        General Panter. And EUCOM.
        Senator Ayotte. We've seen quite a bit of activity in that
    area.
        General Panter. There has been.
        Senator Ayotte. Right.
        General Panter. Yes, ma'am.
        Senator Ayotte. So, Libya, Tunisia, other areas.
        General Panter. Exactly.
        Senator Ayotte. Thank you.
        General Panter. Yes, ma'am.
        Senator Ayotte. Admiral?
        Admiral Burke. I think I can see your chart there that you
    have--you recognize that there are two other MPSRONs that are
    active, one in the Western Pacific, one in U.S. Central
    Command. Then, we had--we have, today, the one in EUCOM that
    we're talking about.
        I think the calculus that went into this was that we are
    more likely to need those maritime prepositioning ships, which
    are used for a high-end engagement--they would--they are part
    of the Amphibious Assault Force in the two theaters that we
    plan to keep them in. These--we have not had a situation where
    we have needed all three of them, in some period of time, in--
    and I hate to say it--forever--but, for about the 20 years that
    we looked at. However, they have been used frequently as single
    ships, or two ships, in humanitarian assistance operations. As
    a matter of fact, some of them were used in Haiti. Having them
    located on the East Coast in a reduced operating status, where
    they can get underway in 5 days, allows them to be able to
    respond to both the U.S. Southern Command; to some degree,
    EUCOM; and to the west coast of Africa, for humanitarian
    assistance operations.
        The ammunition issue that General Panter mentioned is a
    challenging one that we're working on. But, one of the options
    is to keep much of that ammo on a--afloat on a TAKE--part of
    the prepositioning ship squadron. As far as maintenance, we've
    paid for the additional maintenance to keep those ships ready
    even while they're in port.
        So, I think it comes down to a question of, what is the
    likelihood of using these craft? What is the consequence of not
    having them ready immediately? There are few situations that
    we've come to, in the last 20 years, where you would need them
    as immediately as one--or, as you would--or, more immediately
    than the ROS-5 status. So, we felt like it was a reasonable
    approach to put those ships into the ROS-5 and be able to do
    the job that we think we need to do, and that we can do, and
    save over $400 million a year.
        Senator Ayotte. Admiral, when was this decision made? Can
    you tell me? Just give me a sense of when this was proposed.
        Admiral Burke. We, in the Navy, teed it up in February of
    last year.
        Senator Ayotte. Right.
        Admiral Burke. Well before the efficiencies came out, and
    it was a decision made jointly by the Navy and the Marine
    Corps.
        Senator Ayotte. I think we could probably almost take up a
    whole hearing on this, so I'm going to defer to the chairman.
    I'm very concerned about this decision, and particularly in
    light of the activities that we see happening in that area. You
    have Libya, you have Tunisia, you have, obviously, the African
    nations there that--some of them are this hotbed of terrorist
    activity, in many instances. So, I'm concerned that this was a
    decision more focused on money. We all want to save money, but
    this is one where I would like to gather further information,
    and concerned about where it puts our strategic readiness in
    that area of the world.
        Thank you.
        Senator McCaskill. Thank you, Senator Ayotte.
        I think it's important that we get all the information, in
    terms of the decisionmaking process, in that regard. I do also
    know that, while we have had new activity that has popped up,
    in terms of the public knowing about hotbeds of terrorism in
    Africa, clearly, I think that you all were well aware of the
    significant stresses that we saw in Africa in those areas as
    these decisions were being made. I think we do need to drill
    down and make sure that the decision was not made prematurely,
    as it relates to what's going on in today's environment, and I
    think the line of questioning is appropriate. We need to get
    that information for the record and so that we can brief the
    full committee on it.
        I want to also kind of say ``me, too,'' on Senator Ayotte's
    questions on the reset funding for the Guard and Reserve
    compared to the Active Force. I also have concerns that we are
    paying attention to that because as she said, we have never,
    ever used our Guard and Reserve in the way that we have over
    the last decade. I know that many of them are gasping, in terms
    of their reset capabilities, and want to make sure that I said
    my ``me, too, ditto'' on the Guard and National Reserve.
        Let me ask about the Arsenal Support Program Initiative
    (ASPI). I'm concerned about this ASPI. It started out as a
    pilot program. It basically has been funded by earmarks, $80
    million worth of earmarks. The return on investment has been
    less than 2 percent. GAO has weighed in on this. The
    Congressional Research Service has weighed in on this. It
    appears to me that this program has given cheap rent to local
    development groups, and, in one instance, provided a hardware
    store at Rock Island. We're not going to do earmarks anymore,
    at least we're being told, I hope, that we're not doing
    earmarks anymore. I'm still a little cynical about different
    ways earmarks are being handled. I looked at the House markup,
    and I'm a little confused about all the amendments and the
    vague language associated with the amendments. Looks like, to
    me, that a duck is a duck is a duck. It looks like to me the
    House of Representatives is engaged in earmarking in the
    Defense authorization bill, and just trying to pretend like
    they're not, and it infuriates me.
        But, now that you know how I really feel about it, this
    ASPI thing looks like a place where we can cut back on money
    we're spending. It looks like to me that we need to put up a
    white flag on the ASPI, and say, ``This is not a good use of
    taxpayer dollars.'' But, I would love your input on that,
    General Stevenson.
        General Stevenson. Yes, ma'am. I'm familiar with the
    discomfort about the ASPI program. I've read the GAO report. It
    was an effort to try to reduce operating costs for our
    arsenals. Unlike the depots, which have a legislated Core
    requirement and a legislated 50/50 requirement, there is no
    legislation that covers our arsenals. I think we need some.
    Because, these arsenals are very critical to our ability to
    support our forces--particularly the Army, but others Services,
    as well--for their wartime needs. I mean, the only place in
    this country where you can build a main gun tube to a tank or a
    howitzer is at Watervliet Arsenal. So, we need them to be
    viable. Using this program which has allowed us to bring in
    outside entities onto the Arsenal, charge them rent and help
    reduce the overhead. Because, if they weren't there, the
    overhead costs would be spread on solely the work they are
    getting internal to the Army, which makes their rates very
    high; I mean, upwards of $300 an hour. So, when the program
    managers see that, they say, ``I'm not taking my work to the
    Arsenal. I can get it done cheaper from some outside agency.''
        So, it's a conundrum that we're in. We have to solve it.
    ASPI may not be the solution. But, we have to make our arsenals
    more competitive, if you will, so that they enjoy work in
    peacetime, so that they're--when we need them in wartime,
    they're ready.
        Senator McCaskill. I get it is a problem. We want to make
    them less expensive, because we have to hold on to them. Maybe,
    we need to reinvigorate what the ASPI program is. Maybe it
    hasn't been marketed appropriately. But, it looks like to me
    we've spent a lot of money and haven't gotten much return on
    that. Although I guess the argument can be made that 2
    percent's better than nothing. But, it is only 2 percent. So,
    in your organization, you can task people to come up with ideas
    that could lessen the load for the arsenals in a way that might
    be a little more fiscally straightforward, and maybe not
    through earmarking processes, then we are certainly willing to
    take a look at that and see if there's something we can put in
    the Defense authorization bill that would help that along.
        Finally, I just want to say that I went to Lake City Army
    Ammunition Plant last Friday, in Independence. I know the Army
    submitted an $80 million reprogramming request, because General
    Chiarelli noticed real problems there. I have to tell you, I
    couldn't agree more with General Chiarelli, in terms of the
    quality work environment and the work that needs to be done
    there. I think if most Americans met and talked to the men and
    women who are working at that plant around the clock, I think
    they would not like the working conditions that they are in. I
    think it would make them very uncomfortable that we are relying
    on these men and women to the extent that we are for our
    warfighters, and that they are being asked to work in these
    conditions.
        So, I certainly agree that the $80 million is something
    that is probably needed for efficiencies and for a quality work
    environment. I don't like reprogramming, obviously; you're
    never going to get me all excited about the idea that we're
    reprogramming $80 million. Why wasn't this in the long-range
    planning? Are we missing other facilities out there, where we
    are not taking a hard look at whether or not folks are working
    in conditions that we would expect to see in a movie about the
    1940s?
        General Stevenson. I don't think we are now, but probably
    true that we weren't paying enough attention to quality work
    environment, as opposed to the production output capability of
    our ammunition plants. As you probably heard when you visited,
    we've put a half a billion dollars into Lake City since 2003.
    It's not enough. There needs to be more and Lake City's not
    alone. We have an ammunition plant just south of here in
    Radford, VA--a very important ammunition plant. It's had a lot
    of investment but it needs more.
        We're going to make those investments. You're going to see
    those in the 2012, 2013--in our next POM submission, you'll see
    the requirements for those. But, we're anxious to get started
    now. That was the purpose of the reprogramming request. We very
    much appreciate the support to that.
        Senator McCaskill. Okay.
        Anything else, Senator Ayotte?
        Senator Ayotte. No, thank you, Chairman McCaskill. I do
    have some additional questions that I'll submit for the record,
    thank you.
        Senator McCaskill. I think you all can expect more
    questions for the record.
        We really appreciate your time and your service to our
    Nation.
        Thank you all very much.
        The hearing is adjourned.
        [Questions for the record with answers supplied follow:]

                Questions Submitted by Senator Claire McCaskill

                    GOVERNMENT ACCOUNTABILITY OFFICE REVIEW

        1. Senator McCaskill. Lieutenant General Stevenson, Lieutenant
    General Panter, Lieutenant General Reno, and Vice Admiral Burke, the
    Government Accountability Office (GAO) has conducted a series of
    reports on each Services' depot strategic plans and noted that the
    Services lacked a clear and comprehensive depot maintenance strategic
    plan that focuses on capital investment in facilities and equipment,
    implementation of a methodology to revitalize and resource organic
    depot facilities, public-private partnerships, workforce planning and
    development, and the integration of logistics enterprise planning
    systems. Given the significant role the organic depot maintenance
    facilities have played in resetting equipment that previously returned
    from theater, to what extent have the Services updated or revised their
    depot maintenance strategic plans to address current and future reset
    requirements, the type and mix of equipment expected to return for
    reset, equipping priorities, declining reset funds for operations and
    maintenance, and the impact of contractor support work to reset
    equipment?
        General Stevenson. The Army has recently completed an Organic
    Industrial Base (OIB) Strategic Plan that establishes the necessary
    management framework needed to ensure the Army retains a relevant OIB
    to meet future contingency operational requirements. Our past Reset
    mission clearly demonstrates that we must maintain an OIB that is
    capable of surging rapidly, is forward deployable, and is both
    efficient and effective.
        As current overseas operations begin to wind down, the Army's OIB
    enterprise must adjust to a changing operational and fiscal
    environment. In order to manage the eventual reduction in depot
    maintenance requirements the Army has developed four overarching
    strategic pillars that must be implemented to ensure the Army's OIB
    retains the necessary core competencies and capacities to meet future
    contingency operations, as described below:

            - Modernization: The need to ensure our Army depots are
            modernized with new technology, training, and plant and
            equipment at the same rate that the Army modernizes its weapon
            systems. Critical to this pillar are actions ongoing that
            better align and document sustainment requirements with the
            acquisition strategies for new weapon systems.
            - Capacity: The actions necessary to document the core
            competencies and the minimum number of Direct Labor Hours
            (DLHs) necessary to sustain the identified core competencies at
            each facility. The identified workload supporting core
            competencies will form a basis for capacity and capability
            assessments to ensure our organic depots are sized correctly.
            - Capital Investment: The actions necessary to develop a
            capital investment strategy that focuses the Army's capital
            investment funding to improve each depots core competencies and
            capabilities. This ensures that the Army is investing in
            capabilities that contribute to a facilities core mission set
            to enable world class depot operations.
            - Resource Alignment: The Army's ongoing process to prioritize
            depot maintenance funding so that depot workload which
            contributes to sustaining the depots core competencies are
            funded across the FYDP. This pillar has been completed and was
            implemented beginning in POM 11-15.

        The focus on core capabilities provides the Army's OIB enterprise
    the mechanism to ensure Army depot workforces and infrastructures are
    aligned and sized properly and remain a ready, responsive, and flexible
    source of support during future contingency operations. This process
    provides a basis to determine the appropriate funding required to
    sustain depot core requirements which, in turn, ensures that the Army's
    industrial base retains the technology, knowledge, skills and abilities
    needed to sustain our critical warfighting equipment throughout the
    system's life-cycle.
        Army depots have been increasingly called upon to deploy skilled
    workers and establish forward critical depot capabilities into theaters
    of operation to conduct Reset maintenance and other logistics services.
    Our depots have met this challenge by being responsive and adaptive to
    the demands of a global force engaged in persistent conflict. These
    requirements and challenges will continue for the foreseeable future,
    and so the Army's OIB strategy requires that our depots be multi-
    purpose and multi-use and structured to provide the required
    capabilities and capacities to satisfy future peacetime and wartime
    needs.
        General Panter. The Marine Corps recognizes that the depots are key
    to resetting the force, and we have an integrated strategy to ensure
    the depots' continued success. Key components of this strategy are
    described below:

             The Marine Corps depots operate the Capital Investment
            Plan (CIP) in accordance with financial management regulations.
            In addition, Marine Corps depots are compliant with published
            CIP policy and timelines, completion requirements and other
            mandated performance metrics in order to enhance the overall
            execution of CIP. The depots continually monitor the CIP
            requirements with other stakeholders to align needs with
            capability and capacity and to ensure infrastructure and
            related financing is in place at least 6-12 months prior to the
            requirement to support incoming workload.
             Public-Private Partnering (PPP): Since 2008, the
            footprint for PPP partnering with the Marine Corps depots
            continues to increase. Examples of such partnering are the
            Tunner workload with the Defense Reutilization Service and the
            repair of secondary items with Raytheon.
             The 2008 Marine Corps Strategic Plan, published on the
            OSD website, has an objective known as ``Workforce
            Revitalization'' for sustaining a highly capable, mission ready
            maintenance workforce.
             Workforce planning: The current Human Capital Plan
            (HCP) supporting the depots is both flexible and agile in order
            to readily respond to the needs of our customers. The HCP is
            designed in four segments for hiring strategies:

          1.  Permanent personnel: The depots retain about 70 various
    skills sets on a permanent basis in order to sufficiently produce
    baseline/routine peacetime workload.
          2.  Personnel to support surge workload using commercial
    contractors: In order to augment the workforce to support surge
    requirements such as our warfighting engaged customer, the HCP includes
    multiple commercial contracts where terms of the contract are built on
    the basis of ensuring readily available journey level skill sets to
    augment/decrease the workforce within 24-48 hours.
          3.  Personnel to support surge and specialty (temporary) customer
    needs: For some of the necessary skills, the depots have partnership
    agreements with the local community colleges and universities that will
    allow personnel with special or unique skills to be on board within
    very reasonable timeframes.
          4.  Personnel hired as temporary/term government employees: The
    depots have partnered with local Human Resource Offices in order to
    ensure that direct hiring authority can be expeditiously executed to
    bring in surge personnel in the most efficient and cost effective
    manner, filling voids in skill sets necessary to support customer
    workload.

        Other workforce strategies include the utilization of overtime/comp
    time and increased shifts to accommodate customer needs. We also
    recognize that, as Operation Iraqi Freedom (OIF) and Operation Enduring
    Freedom (OEF) conclude, depot workload will decline, and we are
    preparing for this transition.
        General Reno. The Air Force is in the final stages of updating its
    Depot Strategy and is addressing the concerns highlighted in past GAO
    reports. The report recommended the Air Force revise the Depot
    Maintenance Strategic Plan to more clearly address all elements needed
    for a results-oriented plan. The Air Force agreed to explicitly address
    the Office of the Under Secretary of Defense's direction and framework
    for future challenges and demonstrate clear linkages to the Department
    of Defense's (DOD) Depot Maintenance Strategic Plan.
        The Air Force requires a robust depot Maintenance, Repair, and
    Overhaul (MRO) capability to support its air, space and cyberspace
    force of the 21st century. This capability relies on a seamless
    integration of public and private sector competencies, achieved through
    an increased reliance on public-private partnering on new and existing
    weapon systems. The Air Force continues to maintain and improve its
    ``world-class'' organic MRO operations by ensuring they are sized to
    support a spectrum of operations, i.e. peace, contingencies,
    humanitarian operations, and war. This effort requires maintaining
    current infrastructure investments at a sustained level of investment
    that is appropriate and commensurate with private industry. It also
    requires continuous investment in the Air Force's organic depot
    maintenance workforce.
        The Air Force continually resets equipment as it returns or is
    rotated back from theater using Overseas Contingency Operations (OCO)
    funding. For Weapon System Sustainment (WSS), Resource Management
    Decision 700 directed the Air Force to develop a plan to fund the
    baseline at 80 percent of requirements by fiscal year 2016. This
    requirement is being considered in the Air Force plan for the fiscal
    year 2013 Program Objective Memorandum and will require increased
    baseline funding to sustain enduring WSS requirements when OCO funding
    ceases.
        The Air Force Depot Maintenance Strategy provides for:

        (a)  professional, skilled workforce;
        (b)  improved maintenance throughput and quality;
        (c)  sustained world class infrastructure;
        (d)  transformed processes;
        (e)  postured strategic enterprise workload capabilities;
        (f)  leveraged partnerships with the private sector;
        (g)  continued viable industrial base, and;
        (h)  compliance with policy and law.

        Admiral Burke. Navy ship and submarine class maintenance
    requirements are continuously updated based on current material
    condition and maintenance issues (e.g., superstructure cracking),
    capturing changes ``in stride'' resulting from OPTEMPO changes. Naval
    Shipyard capacity and capability, including workforce, tools,
    equipment, parts and infrastructure capacity, are sized to accomplish
    the maintenance requirements of assigned ships and submarines as part
    of the annual programming and budgeting process. Naval Shipyards
    periodically update their strategic plans to reflect the capacity and
    capability necessary to address the Fleet maintenance requirement which
    includes that resulting from OCO; shipyard workforce and infrastructure
    are commensurately adjusted.
        Naval Aviation has been able to absorb the depot requirements
    driven by OCO with minimal increase in permanent personnel or
    facilities. Navy has adopted an Integrated Maintenance Concept with
    Planned Maintenance Intervals for aircraft based on calendar months,
    and as such the scheduling of these events has not been altered by
    current operations. Aircraft inductions will continue for scheduled
    maintenance events based on fixed induction dates, allowing Navy to
    budget, plan, and execute the events without having to establish a
    stand-alone ``reset'' program. The engine and component depot work is
    driven by flight hours and environmental exposure which have only seen
    a slight (less than 7 percent overall) increase in workload since the
    beginning of operations. This workload has been absorbed by the normal
    depot workforce through overtime or augmentation by contractor support;
    both of which are temporary and can be returned to normal operations in
    a short timeframe. Last December, Commander Fleet Readiness Centers
    promulgated an fiscal year 2011-2017 Strategic Plan embedded in which
    are goals, objectives and initiatives designed to address Naval Air
    Systems Command's strategic priorities of current readiness, future
    capability, and people.

        2. Senator McCaskill. Lieutenant General Stevenson, Lieutenant
    General Panter, Lieutenant General Reno, and Vice Admiral Burke, to
    what extent have the Services assessed the affects of reset on the
    baseline budgets, competing demands to reset equipment to meet unit
    readiness goals, the preservation of core capabilities, and the risk
    level organic depot maintenance facilities may be able to accommodate
    in order to complete reset workload requirements?
        General Stevenson. The Army assesses annually the affects of Reset
    on baseline budgets, competing demands to reset equipment to meet unit
    readiness goals, the preservation of core capabilities and the risk to
    organic depots to complete reset workload requirements. Workload
    requirements, both base and OCO, are forecasted and planned across the
    industrial base to ensure that the equipping needs of units are met
    within the Army Force Generation (ARFORGEN) cycle while reducing any
    risk. Army uses this information to assess competing demands to repair
    equipment in support of unit readiness goals. Additionally, this
    information informs our ability to meet core requirements with both
    Reset and base program workloads. Total workload is assessed to ensure
    that depots have the capability to meet both Reset and base
    requirements. Risk is mitigated through prioritization of requirements
    and the contracting of work beyond depot capabilities.
        General Panter. Mindful that OCO resources are diminishing, we are
    moving more depot maintenance costs into baseline budgets. In fiscal
    year 2010, we had $92 million in our baseline for depot maintenance -
    our baseline request for depot maintenance in fiscal year 2012 is $207
    million. From a `peace time' perspective-prior to OCO supplemental--in
    the fiscal year 2001-2004 timeframe our depot maintenance baseline
    requests averaged $107 million per year. Factoring for inflation, we
    are much closer to that level of funding today. When we begin to
    conclude OEF activities and determine our new depot maintenance
    demands, we are unlikely to revert to a pre-September 11 OPTEMPO. We
    believe the requested baseline provides a sufficient foundation on
    which to make informed adjustments in funding in the out years.
    Nonetheless, our confidence in the posture of our baseline depot
    maintenance funding in fiscal year 2012 and beyond assumes that OEF
    reset will be funded with OCO dollars in line with stated intent of
    both the administration and Congress. However, mindful of the austere
    nature of present fiscal conditions, we are watching this assumption
    closely.
        As we look beyond OEF, we are developing the core capabilities of a
    Middleweight Force. The results of these efforts (including our Force
    Structure Review Group, Lighten the MAGTF initiative, Table of
    Equipment reviews, and others) will shape the decisions on what
    equipment to reset and how best to reconstitute the force so that we
    are postured to respond across the range of military operations. The
    processes in motion to define our post-OEF force will inform our
    decisions to smartly program acquisitions to modernize the force.
        When the Marine Corps withdraws from Afghanistan, we will quickly
    return mission capable equipment sets to operating forces and strategic
    programs in order to ensure our ability to decisively respond to future
    missions. This will require the full use of our organic depots, as well
    as the strategic use of commercial repair sources to rapidly reset the
    equipment that has sustained significant wear throughout the war. Our
    organic maintenance depots have the flexibility to surge capacity to
    meet the needs of the Marine Corps.
        General Reno. The Air Force is addressing equipment reset budgeting
    by two strategies. First, Weapons System Sustainment (WSS), during the
    fiscal year 2012 President's budget build, the Air Force was directed
    via Resource Management Decision 700 to develop a plan to fund the
    baseline at 80 percent of requirements by fiscal year 2016. This plan
    requires increased baseline funding to sustain enduring WSS
    requirements when OCO funding ceases. Without this restoration to
    baseline funding, WSS will experience significant risk resulting in
    deferred depot-level maintenance and possible aircraft groundings.
        The second budget strategy affects assets such as vehicles (i.e.,
    forklifts, trucks, etc) and equipment (i.e., aerospace ground
    equipment, generators, etc). When repair or replacement is needed, OCO
    funds are used. If the Air Force can't repair an asset in-theater, or
    an asset has exceeded its useful life, we dispose of that asset. OCO
    funds are still required for replacement of needed vehicle and
    equipment items until all such assets are reset. Once these assets are
    returned to peacetime use, the Air Force's baseline budget is
    sufficient to fund peacetime replacement and sustainment at required
    levels. However, if OCO ceases before all equipment is reset, the Air
    Force will assume some level of risk in readiness.
        The competing affects of reset to meet unit readiness goals are
    minimal. The Air Force continuously monitors environmental factors on
    deployed equipment, use rate, and failure rates. Air Force organic
    depot maintenance requirements for aircraft and engines are calendar
    driven or operating hour-based. Consequently, the depot maintenance of
    these systems is ongoing; the items return from deployment to the depot
    when maintenance schedules dictate. This process is carefully managed
    for all large equipment items to ensure unit readiness is continuously
    maintained. In so far as support equipment, the AF prioritizes asset
    use in-theater to ensure unit readiness goals are met.
        As for preservation of core capabilities, the Air Force identifies
    core requirements early in the acquisition process utilizing the Depot
    Source of Repair (DSOR) process. The DSOR process identifies core
    capabilities required by 10 U.S.C. Sec. 2464 for the program office and
    candidate depot. This ensures all parties understand the requirement to
    develop and maintain capabilities necessary to sustain the weapon
    systems. The program office works with the depots to stand up the core
    capability and the depot maintains the capability at a level to support
    the mission.
        Admiral Burke. Navy maintenance decisions are driven by class
    maintenance plans and schedules. Navy resets in stride after each
    deployment, and therefore expects minimal impact on depot maintenance
    facilities resulting from the drawdown of operations. However, Navy
    depots are still dependent on OCOs funding, with only 79 percent of the
    ship maintenance requirement and 87 percent of the aviation depot
    maintenance requirement funded in the base budget. Core depot
    capabilities should be unaffected by the reset, and are assessed
    biennially, in accordance with DOD Instruction 4151.20 and Section 2464
    of Title 10 U.S.C.

                        OVERSEAS CONTINGENCY OPERATIONS

        3. Senator McCaskill. Lieutenant General Stevenson, Lieutenant
    General Panter, Lieutenant General Reno, and Vice Admiral Burke, with a
    drawdown of current operations on the horizon and related reductions in
    separate contingency funding, the baseline budgets for DOD and the
    Services are likely to have substantial requirements placed on them in
    the future. To what extent are the Services planning to include funding
    that is considered OCO funding into their baseline budget?
        General Stevenson. The Army has conducted a comprehensive
    assessment of OCO requirements to identify potential ``enduring''
    requirements that should shift to the base budget in future years. This
    analysis is updated every year as part of the budget development.
        The Operation and Maintenance, Army (OMA) OCO to Base in fiscal
    year 2011 was $965.5 million and fiscal year 2012 is $1.2 billion. A
    subset of this is Depot Maintenance with $353 million in fiscal year
    2012. We anticipate that as fewer units are deployed, the requirements
    for home station training and support will grow in the future.
        General Panter. The Marine Corps is continuously working to
    identify programs that originated in OCO and are currently funded in
    OCO but that we anticipate becoming an enduring requirement (i.e. one
    that will be maintained after OCOs are ceased). As an example, our
    Depot Maintenance OCO request has decreased significantly over the past
    four budget cycles. This decrease is in part due to a conscious effort
    to fund the correct level of enduring depot requirements within our
    baseline budget.
        General Reno. The Air Force has been reviewing all OCO funded
    requirements to determine those that will be enduring when OCO funding
    is no longer available. As the Air Force builds the fiscal year 2013
    Program Objective Memorandum, every opportunity is being taken to move
    enduring requirements to the baseline.
        Admiral Burke. In fiscal year 2012 budget submission, the Navy
    proposed migrating items totaling $651 million to the base budget. They
    include:

             Flying Hours support costs, which funds civilian
            personnel, transportation of equipment, travel, and simulator
            support, increases from 61 percent to 90 percent to fund
            enduring requirements in the baseline. No longer leveraged on
            OCO. (OMN $180 million)
             Flying Hours Program Cost per Hour and MV-22 (OMN $83
            million)
             USNS Mercy/Comfort medical support funding (OMN $5
            million)
             OCO portions of Family Readiness programs (OMN $4
            million)
             EOD and Counter IED (OMN $9 million)
             Navy Manpower and Personnel Systems and Navy Standard
            Integrated Personnel System (OMN $9 million)

        The Navy continues to re-evaluate enduring OCO requirements in
    other areas of the budget for migration to the base budget in future
    years.

        4. Senator McCaskill. Lieutenant General Stevenson, Lieutenant
    General Panter, Lieutenant General Reno, and Vice Admiral Burke, to
    what extent are the Services able to fund the reset of equipment
    returning from operations in Afghanistan from the base budget when OCO
    funding ceases?
        General Stevenson. The Army base budget request funds workload
    sufficient to sustain Core depot maintenance competencies. Over the
    past two budget submissions, the Army has been increasing the base
    depot maintenance budget (and decreasing the OCO RESET request) to
    restore our capability to fund Core out of the base. We do expect that
    equipment returning from the current OCOs will require more resources
    for reset than we will have in the base budget due to damage from the
    harsh operating conditions. The Army will request OCO funds, separate
    from the base budget, for this portion of reset. The Army also expects
    that the some level of OCO funding will be required for 2-3 years after
    the return of forces.
        General Panter. The Marine Corps would be unable to fund reset
    requirements from within our base budget. Reset is a direct cost of the
    wars in Iraq and Afghanistan and can only adequately be funded through
    supplemental OCO funding.
        The Marine Corps is heavily reliant on OCO funding to sustain
    current operations in Afghanistan and around the globe. The Marine
    Corps will continue to need this critical funding until reset is well
    underway, post-conflict. A lack of sufficient resources to repair and
    recapitalize equipment used after years of sustained combat operations
    could jeopardize the long-term readiness of the force. Accomplishing
    reset from within the Marine Corps' top-line budget in a time of fiscal
    austerity would likely put Marine Corps modernization and investment
    programs at risk.
        General Reno. The Air Force is addressing equipment reset budgeting
    with two overarching strategies dictated by the nature of the equipment
    affected. First, for WSS, the Air Force is developing a plan to restore
    the baseline by fiscal year 2016. This plan requires increased baseline
    funding to sustain enduring WSS requirements when OCO funding ceases.
        The second strategy for resetting equipment affects assets such as
    vehicles and generators. Resetting occurs as each piece of equipment
    completes its mission in Afghanistan. Using a forklift as an example,
    the Air Force will either dispose of the forklift or repair and
    redeploy it to meet other Air Force mission requirements. The Air Force
    will continue to require OCO funding to repair or replace equipment
    items like this until all such equipment is reset. At that time, the
    Air Force's baseline funding for these types of equipment is sufficient
    to fund peacetime replacement and sustainment at required levels.
        Admiral Burke. The Navy will be unable to fund the reset of
    equipment returning from operations in Afghanistan from within our
    baseline accounts. If OCO funding is not appropriated as requested in
    fiscal year 2012, the Navy will only be able to fund 79 percent of the
    ship maintenance requirement and 87 percent of the aviation depot
    maintenance requirement from the baseline budget.

        5. Senator McCaskill. Lieutenant General Stevenson, Lieutenant
    General Panter, Lieutenant General Reno, and Vice Admiral Burke, what
    challenges do the Services expect to face with resetting equipment when
    OCO funding ceases?
        General Stevenson. We have consistently requested that OCO
    supplemental continue until the end of hostilities plus 2-3 years to
    ensure that all equipment returning from contingency operations can be
    Reset and returned to units to support future contingency operations.
    It is absolutely critical that we invest in restoring equipment
    readiness to ensure it is reliable and capable to support the needs of
    our Nation.
        Without this resourcing, the Army would be challenged to meet the
    incremental cost of war with base budgets that are at peacetime
    resourcing levels. We would have to take risk on the maintenance and
    modernization of equipment which, over time, would result in lower
    readiness and increase Operations and Sustainment (O&S) costs.
        General Panter. Two pressing challenges relate to how the Marine
    Corps will reconstitute its equipment to meet future needs and how
    readiness will impact future combat operations. During the past 8 plus
    years of sustained combat operations, the Marine Corps has experienced
    a steady increase in operational tempo. Wartime usage rates have been
    4-9 times higher than pre-September 11 peacetime rates, while normal
    peacetime operations continue. These increased equipment usage rates
    now constitute the new normal as equipment sets have experienced
    accelerated wear and tear in the harsh operating environments of Iraq
    and Afghanistan.
        Prior to the decision to increase the Marine Corps force size to
    support a surge in Afghanistan, reset budget trends were in alignment
    with projected reset requirements and timelines. However, the surge
    resulted in a significant shift of equipment from Iraq to Afghanistan,
    impacting the planned reset for that equipment. Therefore, reset
    actions initially forecasted to be completed in fiscal year 2012 were
    deferred due to operational necessities. A consequence of this reset
    deferment is that the Marine Corps has accepted considerable risk to
    the long-term readiness of its equipment. Foregoing reset actions now
    (e.g. field or depot-level maintenance) will result in higher than
    normal wash-out rates and more costly depot repairs when the equipment
    is eventually able to be reset. If OCO funding ceases prior to
    completion of reset efforts then the Marine Corps' modernization
    efforts will be severely impacted.
        General Reno. The Air Force is addressing equipment reset budgeting
    with two overarching strategies dictated by the nature of the equipment
    affected. First, WSS, the Air Force was directed during the fiscal year
    2012 President's budget build, via Resource Management Decision 700, to
    develop a plan to fund the baseline at 80 percent of requirements by
    fiscal year 2016. This plan requires increased baseline funding to
    sustain enduring WSS requirements when OCO funding ceases. Without this
    restoration to baseline funding, WSS will experience significant risk
    resulting in deferred depot-level maintenance and possible aircraft
    groundings.
        The second strategy for resetting equipment affects assets such as
    vehicles and generators and occurs as each piece of equipment becomes
    excess to operations in Afghanistan. Using a forklift as an example,
    the Air Force will either dispose of the forklift or repair and
    redeploy it to meet other Air Force mission requirements. The Air Force
    will continue to require OCO to fund replacement of needed equipment
    items like this until all such equipment is reset. At that time, the
    Air Force's baseline funding for these types of equipment is sufficient
    to fund peacetime replacement and sustainment at required levels.
    However, if OCO ceases before all equipment is reset, the Air Force
    will assume some level of risk in readiness.
        Admiral Burke. Navy capital intensive platforms (ships/aircraft)
    reset in stride after each deployment, however, they remain dependent
    on OCOs funding, with only 79 percent of the ship maintenance
    requirement and 87 percent of the aviation depot maintenance
    requirement funded in the base budget. Navy platforms and expeditionary
    equipment readiness will decrease if OCO funding ceases at the current
    baseline funding levels. Additionally, Navy estimates it will also
    require OCO funding for reset of expeditionary equipment for about 2
    years following the return of equipment from OIF/OEF to complete depot
    maintenance.

        6. Senator McCaskill. Lieutenant General Stevenson, Lieutenant
    General Panter, Lieutenant General Reno, and Vice Admiral Burke, how
    will the maintenance depots determine the ``new normal'' budget since
    they have relied on contingency funds for several years?
        General Stevenson. The Army has aligned its budget process and
    resource prioritization to support ARFORGEN depot maintenance
    requirements. Additionally, fleet readiness and core requirements are
    synchronized and constitute the majority of the future depot
    maintenance budget requirements. The process allows the Army to look
    forward as it considers Base and Reset requirements in a synchronized
    fashion across the 5 Year Defense Plan.
        Army depot maintenance priorities are based on ARFORGEN equipping
    needs to support training, readiness and deployment requirements. The
    Army's depot maintenance requirements and repair programs reflect the
    size and composition of our fighting force, the age of our equipment
    fleets and the technological advances made over the last decade. As a
    result, the Army's depot maintenance requirements determination process
    has evolved and incorporates fleet management strategies synchronized
    with modernization strategies; expands Post-Production Software Support
    for a net-centric battlefield; and sustains non-standard equipment that
    has been rapidly procured and is now being designated as enduring.
        These efforts enable a synchronized Army depot maintenance budget
    that is forward looking, tied to ARFORGEN and ensures the Army's
    industrial base remains a critical and viable sustainment strategy
    supporting the ``new normal''.
        General Panter. The Marine Corps Equipment Maintenance Program has
    historically relied on contingency funding to fund both Home Station
    (Baseline) and OIF/OEF requirements. In an effort to right-size the
    baseline, the Marine Corps has increased baseline funding to support
    the OSD Depot metric of funding 80 percent of the total depot
    maintenance requirements. The increase in baseline funding is reflected
    in the fiscal year 2012-2013 equipment maintenance budget.
        Changes in the Marine Corps brought on by the Force Structure
    Review Group (FSRG) and Ground Combat Tactical Vehicles Strategy (GCTV)
    will lead to new equipment sets. We will be revalidating our
    maintenance strategies for equipment to forecast probable equipment
    returns over the long-term horizon. The Enterprise Level Maintenance
    Program (ELMP) will involve the entire Marine Corps enterprise to
    better define the requirement.
        General Reno. During the fiscal year 2012 President budget build,
    the Air Force was directed via Resource Management Decision 700 to
    develop a plan to migrate all remaining WSS funding from OCO to the
    baseline budget by fiscal year 2016. This plan will require increased
    baseline funding to sustain enduring WSS missions once OCO funding
    ceases. Without OCO-to-baseline funding migration, WSS will experience
    significant risk resulting in deferred depot-level maintenance and
    possible aircraft groundings.
        Admiral Burke. Depot maintenance workload and funding roughly
    tracks the operational tempo for ships and aircraft. The Navy expects
    that as ground forces depart the CENTCOM AOR, Navy operations for ships
    and aircraft will continue at close to current optempo levels to ensure
    regional stability in an area of vital economic interest to the United
    States and does not expect significant changes in depot workload for
    ships and aircraft. Navy has been working to establish the proper
    balance between the ``new normal'' baseline and contingency funding.

        7. Senator McCaskill. Lieutenant General Stevenson, Lieutenant
    General Panter, Lieutenant General Reno, and Vice Admiral Burke, what
    are the depots' plans to manage workload as current operations draw
    down and how will DOD plan for any decreases in maintenance
    requirements when these operations end?
        General Stevenson. The Army has taken a number of steps to ensure
    the health of the depots in a future era of declining budgets.
        Our primary focus ensures that our depots maintain their Core
    competencies and capabilities to meet future requirements. This
    strategy requires that Core competencies are identified, and our
    facilities and workforce are sized to meet and sustain those Core
    competencies.
        We are developing and executing an Industrial Base Strategy that
    ensures ARFORGEN requirements are met with ready equipment; supports
    the integration of comprehensive fleet management and sustainment
    strategies; and integrates the sustainment of non-standard equipment.
        We have made significant changes in how we view and prioritize Core
    requirements in the 5 Year Defense Plan budget process. Core
    requirements are now identified and highlighted as critical
    requirements to be funded, thereby enabling the Army to successfully
    transition from wartime to a peacetime footing.
        Our depot workforce management remains flexible and responsive to
    meet the Nation's requirements through working multiple-shifts and
    hiring additional temporary personnel. This provides the flexibility to
    adjust personnel strength as the workload requires and avoids
    unnecessary turbulence in the permanent workforce.
        General Panter. The size of the workforce is constantly adjusted to
    meet workload requirements. This includes increasing or decreasing
    term, temporary and contract employees as the workload requirements ebb
    and flow. To best utilize taxpayer dollars, the workload requirement is
    continually assessed and the workforce sized appropriately. This
    includes workforce reductions when requirements have decreased.
        As projected through fiscal year 2013, the Marine Corps is
    beginning to right size the workforce in order to meet the expected
    workload. The Marine Corps executed a build-up in support of the war
    with an anticipated post-war downsizing. The build-up consisted of
    contractors, temporary worker's and term workers so adjustments could
    be made as changes in workload requirements occurred.
        General Reno. The depots manage their staff levels per 10 U.S.C.,
    Sec. 2472. which requires that employees shall be managed solely on the
    basis of the available workload and the funds made available for such
    depot-level maintenance and repair. Therefore the depots are
    continually reviewing their budgets and manning levels to ensure they
    are in compliance with the law.
        Admiral Burke. Navy ship and submarine class maintenance
    requirements are continuously updated based on current material
    condition and maintenance issues (e.g., superstructure cracking),
    capturing changes ``in stride'' resulting from OPTEMPO changes. Naval
    Shipyard capacity and capability, including workforce, tools,
    equipment, parts and infrastructure capacity, are sized to accomplish
    the maintenance requirements of assigned ships and submarines as part
    of the annual programming and budgeting process. As the ship and
    submarine maintenance requirement changes, shipyard workforce and
    infrastructure is commensurately adjusted.
        Naval Aviation has been able to absorb the depot requirements
    driven by OCO with minimal increase in permanent personnel or
    facilities. Naval Aviation has adopted an Integrated Maintenance
    Concept with Planned Maintenance Intervals for aircraft based on
    calendar months vice material condition, and as such the scheduling of
    these events has not been altered by the current operations. Aircraft
    inductions will continue for scheduled maintenance events based on
    fixed induction dates which allows Navy to budget, plan, and execute
    the events without having to establish a stand-alone ``reset'' program.
    The engine and component Depot work is driven by flight hours and
    environmental exposure. These areas have seen a slight (less than 7
    percent overall) increase in workload since the beginning of
    operations. This workload has been absorbed by the normal depot
    workforce through overtime or augmentation by contractor support; both
    of which are temporary and can be returned to normal operations in a
    short timeframe.

        8. Senator McCaskill. Lieutenant General Stevenson, Lieutenant
    General Panter, Lieutenant General Reno, and Vice Admiral Burke,
    several years of OCO have created higher-than-ever levels of
    maintenance requirements which have caused increased expenditures. DOD
    and the private sector have ramped up to meet these requirements, in
    the near term, to reset equipment and weapon systems. What are the
    maintenance implications of lessons learned in supporting the OCO and
    reset operations that will affect the future of DOD maintenance?
        General Stevenson. There are several major implications from
    lessons learned in supporting OCO that will affect the future of DOD
    maintenance. The ability of our industrial facilities to adapt to the
    surge and ebb of Reset workloads underscores the importance of Core to
    sustain the right skill sets. The flexibility of our workforce using
    permanent, temporary and contracted labor has enabled our OIB to
    respond as needed. Moreover, the investment in our facilities provides
    the right capacity to achieve the outcomes realized.
        The Depot Level Reset Repairs, especially those constituting full
    recapitalization or rebuild, have reduced future maintenance
    liabilities for systems which otherwise would be approaching the end of
    their life-cycles and therefore would be more expensive to maintain. In
    addition, wartime experience has refined fleet management strategies
    for many systems and adjusted our supply chains accordingly.
        The Army optimizes repair expenditures based on maintenance lessons
    learned during OCO. We can forecast the expenses associated with
    deploying and Resetting specific pieces of equipment.
        General Panter. The Marine Corps conducts annual capacity and
    capability analysis to ensure preparedness to execute planned and
    budgeted/funded customer workload at its maintenance depots. There are
    many dynamic variables that affect requirements for reset. For example,
    the Marine Corps had a well planned OIF reset strategy and plan in
    place, but world events caused significant modification to the plan as
    the Marine Corps surged personnel and equipment into Afghanistan.
        The Marine Corps' depots have routinely responded to lessons
    learned from previous wars and aligned themselves to readily meet the
    needs of their customers for reset of warfighting equipment. While the
    level and scope of capability required to execute reset remains
    unknown, the flexibility of the depots' HCP already incorporates the
    ability to acquire skilled personnel within short timeframes. The
    buildup is considered temporary.
        In addition, the depot is undergoing investment projects which will
    be able to support either continual warfare or reset. Until decisions
    are made on the eventual OEF draw down phasing, velocity and Force
    structure and size; the depots will not be able to fully determine
    throughput requirements. However, as in past wars, the depots have
    proven their ability to quickly respond to these needs.
        General Reno. OCO and reset operations have not significantly
    impacted the way we do maintenance. The Air Force's depot maintenance
    requirements for aircraft and engines are very structured and calendar-
    based or operating hour-based. For this reason, the depot maintenance
    of these systems has been ongoing. The aircraft or engines return from
    the Area of Responsibility to the depot when the maintenance schedule
    dictates. This process ensures the right assets receive the required
    depot maintenance at the right time and enables the Air Force to
    execute its logistics campaign strategy for future engagements.
        Admiral Burke. Navy ship and submarine class maintenance
    requirements are continuously updated based on current material
    condition and maintenance issues, capturing changes ``in stride''
    resulting from OPTEMPO changes, and ensuring ships can reach their
    expected service life. Consequently, there are no significant
    implications from supporting OCO and reset operations. Naval Shipyard
    capacity and capability, including workforce, tools, equipment, parts
    and infrastructure capacity, are sized to accomplish the maintenance
    requirements of assigned ships and submarines, as part of the annual
    programming and budgeting process.
        During OCO operations, Naval Aviation has been able to absorb the
    scheduled depot requirements driven by OCO with minimal increase in
    permanent personnel or facilities. Forward deployed Contract
    Maintenance Teams (CMTs) were added to assist Sailors and Marines with
    day-to-day maintenance requirements, along with an increased pool of
    fly-away artisans to ensure expeditious depot-level repair while in the
    field. Navy expects to draw down both the CMTs and size of the fly-away
    teams as we return to normal peacetime flying operations.

        9. Senator McCaskill. Lieutenant General Stevenson, Lieutenant
    General Panter, Lieutenant General Reno, and Vice Admiral Burke, DOD
    has acquired millions of dollars in tactical non-standard equipment to
    address the evolving threat in Iraq and Afghanistan, including the
    enemy's use of improvised explosive devices (IED). To what extent are
    you considering this nonstandard equipment purchased by Joint IED
    Defeat Organization (JIEDDO) and others to meet urgent warfighters'
    needs as equipment that should be added as standard equipment to unit
    requirements?
        General Stevenson. JIEDDO currently develops and equips counter-IED
    capabilities in response to joint urgent warfighter needs. Proven
    fielded capabilities are sustained by JIEDDO for a maximum of 2 years
    then transferred to the Services for sustainment. JIEDDO and the
    Services develop an annual Transfer/Transition (T2) list utilizing
    JIEDDO's Transition Working Group (TWG). Headquarters Department of the
    Army (HQDA), Deputy Chief of Staff, G-3/5/7, serves as the Army lead to
    the TWG and works with JIEDDO to integrate/transfer proven CIED
    capabilities to the Army after 2 years of JIEDDO funding. Transferred
    capabilities are sustained in the G-3/5/7's annual OCO funding request
    until the Army decides which proven materiel/non-materiel capabilities
    will be recommended to become enduring through the Capabilities
    Development for Rapid Transition (CDRT) process.
        The Army instituted the CDRT process in 2004 to identify
    nonstandard equipment and (later) non-materiel solutions developed by
    JIEDDO and others that the Army should incorporate throughout the force
    as enduring. The CDRT process was also developed to significantly
    reduce the time it takes to field selected enduring capabilities to the
    operational force. To date, 18 of 86 (21 percent) JIEDDO initiatives
    were transferred to the Army and identified as enduring in CDRT.
    Enduring capability examples include: Battlefield Forensics Training,
    Husky Mounted Detection System (HMDS) and Greendart. Additionally, the
    CDRT process has selected 54 of 556 (10 percent) capabilities purchased
    by other agencies as enduring. Examples include: Common Remotely
    Operated Weapons System (CROWS) and Command Post of the Future (CPOF).
        The CDRT process does not bypass the JCIDS process for materiel
    systems, but leverages a provision in Chairman of Joint Chiefs of Staff
    Instruction (CJCSI) 3170.01 that provides for a military utility
    assessment enabling entry into the process at a later stage if a system
    has performed successfully. The Joint Staff and the Army have
    interpreted this provision to apply to nonstandard systems performing
    well in an operational environment.
        Capabilities identified as enduring are transitioned into new or
    existing acquisition programs. These enduring capabilities are assigned
    to a U.S. Army Training & Doctrine Command combat developer, and an
    Assistant Secretary of the Army (Acquisition, Logistics, and
    Technology) materiel developer.
        General Panter. Nonstandard equipment purchased by the JIEDDO with
    U.S. Marine Corps (USMC) equity is submitted to the Marine Corps Combat
    Development Command (MCCDC) for consideration for transfer or
    termination. The Marine Corps published a Marine Corps Administration
    Publication in October 2009 that outlines the procedures to determine
    viability of the equipment (MARADMIN 0595/09). In accordance with this
    MARADMIN, the initiative is submitted to the Capability Development
    Integration Board (CDIB) for processing through the Urgent Universal
    Needs Statement (UUNS) Process. The equipment is validated by the
    operating forces through the Marine Component of Central Command
    (MARCENT) and voted on by members of the CDIB. If the system is
    acceptable to the CDIB, it sends a memo to the Marine Corps
    Requirements Oversight Council (MROC) for approval and funding
    decision.
        Two systems that have transferred successfully to the Marine Corps
    are Counterbomber and Keyhole. Counter Suicide Bomber Capability
    ``DRAGON-VISION'' combines video tracking and an active, non-imaging
    radar to interrogate human torsos for anomalies. KEYHOLE is a Counter-
    IED Reconnaissance, Surveillance, & Target Acquisition (C-IED-RSTA)
    Kit. This initiative provides Marine Corps snipers enhanced detection
    equipment, increases force protection and reduces the enemy's ability
    to emplace IEDs.
        General Reno. The Air Force has used much of the Joint Improvised
    Explosive Device Defeat Organization (JIEDDO) fielded equipment in
    association with Mine Resistant Ambush Protected (MRAP) Vehicle program
    and Counter-IED operations supporting Joint Task Force Paladin and
    Joint Task Force Troy. The majority of this equipment is fielded and
    currently accounted for on theater provided equipment accounts, which
    are managed by the Air Force, Army, or Central Command. The Air Force
    is transitioning MRAPs from vehicle management to weapon systems
    management and in that process is identifying multiple JIEDDO funded
    systems to be considered as standard MRAP equipment and accounted for
    on Air Force property records as a program of record.
        The Air Force is not considering adding nonstandard JIEDDO
    purchased equipment fielded to Joint Task Force Paladin in Afghanistan
    and Joint Task Force Troy in Iraq to Air Force property records and
    that are picked up as a program of record.
        Admiral Burke. Equipment purchased by JIEDDO or others to meet
    urgent warfighter needs are reviewed/evaluated for potential to fill a
    capability gap, provide enhancement to legacy systems and/or be
    addressed within requirements of planned development programs to meet
    future warfighter needs. Examples are: (1) Specific components from EOD
    Dismounted Tool Suite (JUON CC-0402) were added to force's equipage
    list; and (2) Non-Line-of-Sight (NLOS) capability for robots (JUON CC-
    0412) has been incorporated within the capabilities development
    document for Advanced EOD Robotic System (AEODRS) program.

        10. Senator McCaskill. Lieutenant General Stevenson, Lieutenant
    General Panter, Lieutenant General Reno, and Vice Admiral Burke, to
    what extent has DOD identified future maintenance and other sustainment
    costs for these items that will have to be funded in the future?
        General Stevenson. The Army's Capability Development Rapid
    Transition (CDRT) process along without the System Acquisition Life
    Cycle process ensures that systems that are enduring are considered for
    future maintenance and other sustainment costs. Items that are enduring
    will transition to a Program of Record and will be included in the
    Army's Base budget requests.
        General Panter. Through the JIEDDO, Special Equipment Items (SEI)
    were purchased as a result of Urgent Universal Needs Statements (UUNS);
    therefore, there was no initial long-term sustainment requirement
    planning conducted. However, items identified as standard equipment to
    unit requirements will be put through the DOTMLPF process in order to
    determine overall sustainment cost requirements.
        In the interim, these items will continue to be sustained by OCO
    funds, while we collect historical data from similar systems and
    current data from these unique items to determine projected sustainment
    costs.
        General Reno. The Air Force is transitioning MRAP vehicles from
    vehicle management to weapon systems management. We are also in the
    beginning stages of working the maintenance and sustainment transition
    plans and cost estimates to move MRAP vehicles from a joint program to
    a Service-sustained program. At this time, maintenance and sustainment
    costs have yet to be determined.
        Admiral Burke. The Navy takes a holistic approach when adding
    equipment to a Table of Allowance (TOA) and coordinates across
    stakeholders to plan for resourcing and programming sustainment costs.
    Further, when equipment is transferred from JIEDDO or through other
    urgent warfighter needs processes, coordination takes place between the
    Program Offices and the resource sponsors to ensure program sustainment
    funding is in place.

                             WORKING CAPITAL FUNDS

        11. Senator McCaskill. Lieutenant General Stevenson, Lieutenant
    General Panter, Lieutenant General Reno, and Vice Admiral Burke, GAO
    has done some great work on the Services' Working Capital Funds, more
    specifically the Army and Air Force. I recently drafted a letter to
    examine the Marine Corps next. How do we do a better job at managing
    cash on hand and carryover issues?
        General Stevenson.
    DWCF Cash
        Managing cash on hand is a very complex task as reflected by GAO
    audit coverage. The Department is currently conducting a cash study,
    which was directed by the National Defense Authorization Act (NDAA) for
    Fiscal Year 2011. The Army supports this cash study and anticipates the
    review will provide recommendations and best business practices that
    will further improve cash management.
    Carryover
        The Army continues to work aggressively to meet production
    schedules and minimize carryover by using higher than normal overtime,
    multiple shifts, and contractors in the workforce. In addition, senior
    leaders are working intensively to eliminate production roadblocks. The
    Army will continue to push to accomplish as much workload as possible
    so that carryover is minimized. It should be noted, however, that the
    later in the fiscal year that the appropriations bill is passed, the
    more likely it is that there will be carryover issues.
        General Panter. The Marine Corps readily accepts, appreciates and
    welcomes any help, assistance, and/or guidance that the GAO can provide
    to help achieve more effective and efficient depot operations.
        With respect to managing cash on hand and how the MC can do a
    better job: The Marine Corps depots have struggled to maintain the 7-10
    day on hand cash levels. However, beginning this fiscal year, as a
    result of a 2 year tiger team analysis of revenue and outlay patterns,
    we managed to establish a level of stability and compliance with the on
    hand cash levels.
        The tiger team continues to work elements of operations affecting
    cash and employing performance metrics aimed at ensuring cash is
    managed by activity.
        Managing carryover for the depots has also been a struggle. The
    timeframe required to complete a heavy workload in support of home-
    station training requirements and sustain OEF operations, including the
    additional hours required to repair heavily damaged weapon systems, has
    impacted the ability of the depots to comply with the elements of a
    peace time designed carryover threshold metric.
        In 2008, the same tiger team approach for cash was applied to
    carryover. As a result, organizational problems such as timely fiscal
    job closure, pursuing customer order reductions for closed workload,
    and working with DFAS to track and clear problematic system errors were
    addressed. The tiger team review of these issues and other systemic and
    customer behavioral elements (i.e. customer financing needs, statement
    of work comprehensiveness and funding availability) produced results in
    2009 when we achieved a historic 4.9 million direct labor hours and
    $589 million in revenue and were only $38 million over the carryover
    ceiling.
        In fiscal year 2010, we continued this progress with basically the
    same level of direct labor hours (4.5 million) and revenue ($580
    million) and were only $19 million above the ceiling. The team
    continues its work today by closely monitoring performance metrics and
    stakeholder coordination to help reduce carryover. In many cases,
    carryover has been exacerbated by late funding and Continuing
    Resolution Funds (CRFs). While the Marine Corps worked hard to obtain
    funding, other services or accounts were delayed. Regardless, the
    depots accepted work because it needed to be done.
        General Reno.
    Carryover
        In fiscal year 2010, Headquarters Air Force and Air Force Materiel
    Command (AFMC) began implementing actions to improve the accuracy of
    Air Force Working Capital Fund (AFWCF) carryover budgets. First, the
    Air Force began including OCO-funded orders in the fiscal year 2012
    AFWCF budget. Second, we requested and received approval from the
    Office of the Under Secretary of Defense Comptroller (OUSD(C))
    Revolving Funds to use an alternative outlay rate for software
    maintenance workloads when calculating the allowable amount of
    carryover. We requested the alternative outlay rate because software
    work is fully funded upfront but requires years to complete, and in
    many cases, requires the procurement of hardware from vendors. The
    alternative outlay rate is expected to reduce future variances between
    budgeted and actual allowable carryover. Third, AFMC is taking steps to
    improve workload and budget forecasts. Specifically, in December 2010,
    AFMC developed a process which improves coordination between
    organizations that affect the performance of depot maintenance work
    (i.e., systems program office, maintenance wings, and supply chain
    managers). To accommodate workload requirement changes, this initiative
    includes an approval process to adjust future budgets and workload
    estimates. The Air Force expects these changes will improve on-time
    aircraft and missile performance and reduce variances between budgeted
    and actual carryover.
        Additionally, the Air Force implemented the following GAO
    recommendations into the AFWCF budget process. First, we will compare
    budgeted carryover that is over or under the allowable amount to the
    actual amount to identify the difference and reasons for the
    differences, and consider these trends in developing future budget
    estimates on carryover. Next, we will compare budgeted orders to actual
    orders to identify the differences and reasons for the differences and
    consider them when developing future years' budget estimates on new
    orders received from customers. Finally, we will compare the forecasted
    workload requirements (i.e., number of hours of depot maintenance work
    to be performed) to the actual work accomplished and consider these
    trends in developing future years' depot maintenance workload
    requirements.
    Cash
        The DOD cash management policy is to maintain the minimum cash
    balance necessary to meet both operational requirements and
    disbursement requirements in support of capital programs. Thus cash
    levels should be maintained at 7 to 10 days of operating cost plus 6
    months of capital disbursements. Cash generated from operations is the
    primary means of maintaining adequate cash levels. The AFWCF generates
    cash by setting revenue rates to recover full costs to include prior
    year losses, accurately projecting workload, and meeting established
    operational goals. In the event workload or operational performance
    differs from budget and drives cash levels outside the target range,
    Working Capital Fund organizations are permitted, with permission of
    the Director of OUSD(C) Revolving Funds, to direct out-of-cycle rate
    adjustments or surcharges at any time during fiscal years to restore
    cash to targeted levels. In fiscal year 2010, as a result of increased
    workload associated with the surge, the Transportation Working Capital
    Fund was able to: (a) reduce rates by $243 million; (b) relieve the Air
    Force of funding the Airlift Readiness Account for $315 million;, and
    (c) waive the cash recovery funding requirement of $663 million. These
    actions returned over $1 billion to the Services and AFWCF ended the
    fiscal year with $945 million, 8 days of cash. This type of proactive
    cash management is employed to maintain sufficient cash levels within
    AFWCF.
        Additionally, we are collaborating with OUSD(C) Revolving Funds on
    the working capital funds cash study required by section 1402 of the
    NDAA for Fiscal Year 2011 and look forward to the resulting findings
    and cash management process improvement opportunities.
        Admiral Burke. Currently the Department's Navy Working Capital Fund
    (NWCF) cash balance is aligned with the 7-10 days operations, plus 6
    months Capital Investment Program (CIP) outlay metric. Section 1402 of
    HR 6523 EH directed DOD to conduct a study on cash balances, which is
    ongoing. The Office of Revolving Funds, OUSD(C), is the lead for this
    action.

        12. Senator McCaskill. Lieutenant General Stevenson, Lieutenant
    General Panter, Lieutenant General Reno, and Vice Admiral Burke, do we
    need a war-time versus peace-time policy?
        General Stevenson. We currently believe there is no need for a
    separate wartime versus peacetime policy pertaining to the cash
    requirement computation. This computation takes into consideration the
    level of workload at industrial facilities as well as the level of
    demands placed on the supply system. Currently, the Army Working
    Capital Fund philosophy is to maintain a ``cash corpus'' to cover
    current disbursements and future capital expenditure by budgeting for 7
    to 10 days of operating cash which keeps us in compliance with the
    Antideficiency Act.
        As directed by the NDAA for Fiscal Year 2011, DOD is conducting an
    independent review of each working capital fund within DOD to ascertain
    the appropriate cash corpus required to maintain good financial
    management of the funds. The Army supports this cash study and
    anticipates the review will provide recommendations and best business
    practices that will further improve cash management. The 7- to 10-day
    metric could be adjusted based on the results of this study.
        General Panter. Absolutely. In particular, any way to encourage
    more timely release of supplemental funding to appropriated customers
    in order to adequately execute their war time requirements would be
    extremely helpful. In addition, a carryover policy with more relaxed
    over-the-threshold metrics would help to support both the depot and the
    combatant commanders. The heavy workload in support of home-station
    training requirements and OEF operations, including the additional
    hours required to repair heavily damaged weapon systems, do not readily
    align with peacetime or static operations.
        General Reno. The AFWCF executes orders from customers that are
    both peace-time and war-time funded. The customers have applied Office
    of Management and Budget (OMB) guidance to define these requirements.
    The OMB guidance ``Criteria for War/Overseas Contingency Operations
    Funding Requests'', dated July 2010, was provided to assist DOD in
    deciding if requirements should be funded with OCO funding. The Air
    Force accepts this guidance as sufficient policy to distinguish peace-
    time and war-time requirements. Thus, AFWCF customer orders are based
    on the above referenced OMB guidance.
        Admiral Burke. DOD generally prepares a peace-time budget. However,
    following the events of September 11, 2001, enhanced security and force
    protection requirements are now permanent parts of peace-time budgets.

        13. Senator McCaskill. Lieutenant General Stevenson, Lieutenant
    General Panter, Lieutenant General Reno, and Vice Admiral Burke, is 7
    to 10 days enough of a window for combat operations?
        General Stevenson. We currently believe 7 to 10 days of cash is
    enough of a window for combat operations, but the Department is
    conducting a cash study as directed by the NDAA for Fiscal Year 2011.
    The Army supports this cash study and anticipates the review will
    provide recommendations and best business practices that will further
    improve cash management. Based on the results of this study, the 7 to
    10 day metric could be adjusted.
        General Panter. While it is possible that 7 to 10 days may not be
    enough in a costly war, expanding the on hand days of cash may cause
    more problems than what the Services are already experiencing. It is
    our belief that employing the tiger team process improvement metrics,
    working with DFAS on collections and systemic problems, working with
    contracting officers on viable outlay schedules, and working internal
    and external performance operations related to billings and revenue
    collections, the 7 to 10 day level should be sufficient.
        General Reno. Yes. The current range of 7 to 10 days of cash is
    sufficient for combat operations. Although AFWCF disbursements may
    increase during combat operations, AFWCF collections also increase
    which tends to negate the effects of the increased disbursements on the
    cash balance (reflecting higher customer demand).
        Additionally, the Air Force is collaborating with the Office of the
    Under Secretary of Defense Comptroller Revolving Funds on a working
    capital funds cash study required by Section 1402 of the NDAA for
    Fiscal Year 2011. The legislation directs the performance of a study on
    working capital fund cash balances to determine a sufficient
    operational level of cash that each revolving fund of (DOD should
    maintain in order to sustain a single rate or price throughout the
    fiscal year. The study will also provide an up-to-date perspective on
    cash requirements since it takes into account existing DOD practices.
        Admiral Burke. Navy Working Capital Fund (NWCF) activities are not
    involved in combat operations, but provide support to readiness and
    combat operations. Hence, there is no impact on the 7-10 day cash
    metric.

        14. Senator McCaskill. Lieutenant General Stevenson, Lieutenant
    General Panter, Lieutenant General Reno, Vice Admiral Burke, how do we
    balance a decline in combat operations with decreasing work orders and
    cash on hand?
        General Stevenson. As combat operations decline, we expect to see
    overall customer orders decline within the Army Working Capital Fund.
    The supply management business will be impacted most immediately as
    operating units return to home station or demobilize, placing fewer
    demands for spare parts on the supply system. The industrial operations
    business will continue to reset and recapitalize equipment returning
    from theater over a period of years but at reduced levels from wartime
    highs.
        In anticipation of a decline in combat operations, the supply
    management business has not been replenishing inventory sold over the
    past several years on a one-for-one basis. Buying less inventory than
    sold helps preserve cash on hand as supply system orders decline. To
    minimize the impact of reduced workload on our depots, the Army has
    identified critical core requirements that must be resourced to support
    capabilities for future contingencies. In addition, the Army is
    examining fleet strategies and whether other equipment items should be
    put through depot maintenance to sustain readiness and help maintain
    efficient depot workload levels. These actions also help preserve cash
    on hand.
        General Panter. Both cash on-hand and work orders are relative to
    points in time as well as the performance metrics for such timeframes
    (i.e. as outlay/disbursing rates change, so does on hand cash level
    requirements). Not to oversimplify a multifaceted and somewhat
    difficult management process, the Marine Corps Working Capital Fund
    depots align their budget, finance and execution with customer demand.
    As such, if workloads decrease due to a decline in customer work
    orders, adjustments are made for personnel and other support utilizing
    the current temporal contractual and other hiring terms that include
    the agility and flexibility to readily respond to customer change in
    demand. As the change in demand completes in execution; so does on hand
    cash calculations. These are balanced with continual attention to
    performance metrics and proactive and reactionary strategies as we work
    with stakeholders for compliance and support as necessary.
        As point of note, even with an eventual decline in combat
    operations, we anticipate depot maintenance work will continue at least
    2 years after the war and funding will be needed.
        General Reno. Declining combat operations does not necessarily
    result in reductions in orders or cash on hand. As a result, AFWCF
    activities work closely with customers in projecting requirements for
    our products and services. This collaboration is critical to the AFWCF
    correctly budgeting for customer demand whether the operations tempo is
    increasing, decreasing or steady. The process enables the AFWCF
    activities to plan for volume and mix changes in both maintenance and
    supply chain requirements. As a result, we ensure revenue rates are set
    to recover our operating costs and to maintain sufficient cash on hand,
    commensurate with the level of orders projected.
        Admiral Burke. Although a decline in combat operations may
    negatively impact some workload, the cash metric requirement (7-10 days
    operations plus 6 months Capital Investment Program (CIP) outlays)
    remains applicable, even if calculated on a smaller base of workload.
    NWCF depots formulate their annual operating budgets using information
    obtained from customers about changes in workload levels and schedules,
    so that adjustments can be made to NWCF workforce, production support,
    and infrastructure elements in a timely manner.

                            DEPOT MAINTENANCE REPORT

        15. Senator McCaskill. Lieutenant General Stevenson, Lieutenant
    General Panter, Lieutenant General Reno, and Vice Admiral Burke, in the
    past 5 years, what steps have depots taken to ensure core capabilities
    will be maintained in a post-reset environment?
        General Stevenson. The Army has taken a number of steps to ensure
    the Army depots play an integral role in the depot core requirements
    determination and sustaining workload processes in a post-reset
    environment. The Army acknowledges that an effective core depot process
    is essential to the goal of developing and sustaining a relevant OIB.
    Thus, the core depot process is the centerpiece of the Army's recently
    developed OIB strategy.
        As current overseas operations begin to wind down, the Army's OIB
    enterprise must adjust to a changing operational and fiscal
    environment. In order to manage the eventual reduction in depot
    maintenance requirements the Army has developed four overarching
    strategic pillars that are being implemented to ensure the Army's OIB
    retains the necessary core competencies and capacities to meet future
    contingency operations, as described below:

             Modernization: The need to ensure our Army depots are
            modernized with new technology, training and plant and
            equipment at the same rate that the Army modernizes its weapon
            systems. Critical to this pillar are actions ongoing that
            better align and document sustainment requirements with the
            acquisition strategies for new weapon systems. Key to this is
            recent policy that requires the development to conduct a Core
            Logistics Analyses (CLAs) by Milestone B and Core Depot
            Assessments (CDAs) by Milestone C to identify core requirements
            early on in the development cycle of a weapon system.
             Capacity: The actions necessary to document the core
            competencies and the minimum number of DLHs necessary to
            sustain the identified core competencies at each facility. The
            identified workload supporting core competencies will form a
            basis for capacity and capability assessments to ensure our
            organic depots are sized correctly. The Army has taken action
            over the past 2 years to identify and correct core capability
            shortfalls in our organic depots to include, OH-58D, Bradley
            Fighting Vehicle, Stryker and M88A1/A2.
             Capital Investment: The actions necessary to develop a
            capital investment strategy that focuses the Army's capital
            investment funding to improve each depots core competencies and
            capabilities. This ensures that the Army is investing in
            capabilities that contribute to a facilities core mission set
            to enable world class depot operations. The CIP Plan identifies
            the facilitization requirements to establish core capabilities
            at organic depots such as facility upgrades, plant equipment,
            tooling, access to technical data, workforce training, and
            other facilitization requirements are planned, funded, and
            implemented.
             Resource Alignment: The Army's ongoing process to
            prioritize depot maintenance funding so that depot workload
            which contributes to sustaining the depots core competencies
            are funded across the FYDP. This pillar has been completed and
            was implemented beginning in POM 11-15.

        The focus on core capabilities provides the Army's OIB enterprise
    the mechanism to ensure Army depot workforces and infrastructures are
    aligned and sized properly and remain a ready, responsive, and flexible
    source of support during future contingency operations. This process
    provides a basis to determine the appropriate funding required to
    sustain depot core requirements which, in turn, ensures that the Army's
    industrial base retains the technology, knowledge, skills and abilities
    needed to sustain our critical warfighting equipment throughout the
    system's life-cycle.
        General Panter. The Core Capabilities requirements for all the
    Services are currently calculated on a bi-annual basis to ensure Depots
    operate proficiently through adequate equipment, facilities, and skill
    sets that enable them to meet Core requirements. The amount of volume
    based on past Reset requirements could be well above Core requirements
    (e. g., war related reset requirements could be part of the `above
    Core' requirements).

             The Marine Corps recognized opportunities for
            improvement in the Core Determination process and initiated a
            study in fiscal year 2009 to identify/rectify the gaps/voids/
            weaknesses in the process.
             The study expanded to include both halves of the core
            scenario:

                     Industrial Depot Maintenance Core Logistics
                    Capabilities Determination
                     Acquisition Core Determination (designation of
                    new weapons systems as core or non-core)

             Gaps/voids/weaknesses were identified.

                     12 Industrial (5 process related, 7 policy
                    related)
                     5 Acquisition (1 process related, 4 policy
                    related)

             COAs to resolve were selected.
             Actions ongoing

                     Development of Automated Systems to resolve
                    process issues
                     Policy review/rewrite to resolve policy issues

        Marine Corps depots are engaged in continuous process improvements
    in the facilities which support the maintenance of our equipment. This
    is done by investing an average of 6 percent of working capital funds
    toward these type of improvements. Additionally, the Marine Corps has
    leveraged greater capacity from the U.S. Army to yield more efficient
    returns on select platforms such as the M-1 tank that receives depot
    level maintenance at Anniston Army Depot.
        General Reno. The Air Force identifies core requirements early in
    the acquisition process utilizing the Depot Source of Repair (DSOR)
    process. The DSOR process identifies the core logistics capabilities
    required by 10 U.S.C., Sec. 2464 for the program office and the
    candidate depot. This ensures that all parties understand the
    requirement to develop and maintain those capabilities necessary to
    sustain the weapon systems. The program office works with the depots to
    stand up the core capability and the depot maintains the capability at
    a level to support the Air Force mission. The organic depot maintenance
    requirements for aircraft and engines are very structured and calendar
    or operating hour-based. The Air Force has continually reset equipment
    as it has returned or rotated back from theater using OCO funding. For
    WSS, Resource Management Decision 700 directed the Air Force to develop
    a plan to fund the baseline at 80 percent of requirements by fiscal
    year 2016. This plan requires increased baseline funding to sustain
    enduring WSS requirements when OCO funding ceases.
        Admiral Burke. In the past 5 years, the Navy has focused on
    becoming more efficient and effective in delivering our products to the
    Fleet. Naval Aviation has continued with a distributed maintenance
    philosophy, and in some areas has co-located depot artisans with
    intermediate level maintainers to interdict and repair components close
    to the flight line. This saves turn-around-times (TAT), cost, sparing
    requirements, and improves the knowledge and skills of our military
    maintainers. The Navy has centralized the Capital Investment Program
    (CIP) and initiated a CIP Working Group that is responsible for
    improving the process, managing the portfolio, and acquiring
    replacement machinery, tools, information technology systems, and minor
    construction to maintain the Fleet Readiness Center's capabilities.
        Navy ship and submarine class maintenance requirements are
    continuously being updated, based on current material condition and
    maintenance issues (e.g., superstructure cracking), and capturing
    changes ``in stride'', resulting from OPTEMPO changes. Naval Shipyard
    capacity and capability, including workforce, tools, equipment, parts,
    and infrastructure capacity, are being sized to accomplish the
    maintenance requirements of assigned ships and submarines, as part of
    the annual programming and budgeting process. As the ship and submarine
    maintenance requirement changes, shipyard workforce and infrastructure
    are also adjusted based on the long-range workload projections and
    facilities plans that support them.

                             WORKING CAPITAL FUNDS

        16. Senator McCaskill. Lieutenant General Stevenson, Lieutenant
    General Panter, Lieutenant General Reno, and Vice Admiral Burke, to
    what extent have the Services conducted periodic reviews of their
    organic depot maintenance facilities to ensure that they have the
    necessary skills and capabilities needed to reset equipment in a timely
    manner and respond to the Services' rapid change in force structure and
    equipping requirements related to Service equipping strategies and
    modernization goals?
        General Stevenson. The Army monitors organic maintenance
    facilities' performance, capabilities and infrastructure at both the
    Headquarters Army Materiel Command (HQAMC) and Headquarters Department
    of the Army (HQDA) levels. This is an ongoing process that occurs and
    is integrated within the Army's overall Industrial Base management
    process. The following are examples of forums used:

             HQAMC conducts weekly production reviews that provide a
            complete overview of the health of the OIB to include
            financial, productivity, safety and workload execution.
             HQDA conducts a quarterly Depot Maintenance Corporate Board
            that provides strategic guidance and direction for the Army's
            depot maintenance efforts and ensures that the depot
            maintenance enterprise complies with all Army policies,
            regulations, and guidance.
             HQDA Capability Integrated Process Teams that are chartered to
            strengthen and resolve policy issues, resolve core capability
            and workload issues and ensure Army OIB stakeholders are
            informed and implement the core depot process correctly.

        The Army Working Capital Fund Capital Investment Strategy (CIS) is
    also a key enabler to improving the effectiveness and efficiency of our
    industrial base facilities. CIS recommends investment in the depot and
    arsenal infrastructure, ensuring facilities maintain technological
    capability and currency. In fiscal year 2010, the Army invested $167
    million in depots and arsenal projects; an additional $155 million is
    programmed for fiscal year 2011 and fiscal year 2012.
        Future planning incorporates the experience gained in the Reset of
    equipment redeployed from Iraq and Afghanistan. This planning is
    informing current and future investments in the infrastructure and the
    workforce. The Army is committed to a modernized industrial base
    infrastructure that is resourced to sustain current and future core
    capability requirements.
        General Panter. The depots have a strategic plan in place to ensure
    they have the capability and capacity to execute current and future
    workloads. This includes 5-year and 20-year plans for infrastructure
    considerations for industrial facilities in order to facilitate mid and
    long-term workload forecasts. The Capital Investment Program (CIP)
    addresses planning, budgeting, procurement, and management-in-use for
    all capital assets. CIP uses the Strategic Plan to reinvest and develop
    projects for new equipment, minor construction and IT programs to meet
    the needs of our operating forces. To maintain skills and capabilities,
    the depot teams, along with civilian counterparts and academia, ensure
    the depots have the skills and capabilities for the 21st century. The
    Strategic Plan along with the 5-year plan is a fluid document. The
    depots routinely analyze the workload requirements for the current year
    and the next 2 fiscal years to determine the skill sets and quantities
    of each specialized skill set needed to execute the scheduled workload.
    This analysis is conducted twice annually, and each time a major change
    in workload occurs.
        General Reno. The Air Force reviews core capabilities every 2 years
    to determine if the correct skills and capabilities exist within our
    organic depots to support core requirements. Force structure is
    continuously reviewed to ensure the correct skills are at the depots
    and adjusted to funds available for depot maintenance and repair
    efforts, per 10 U.S.C., Sec. 2472.
        Admiral Burke. The Navy ``resets in stride'' after each deployment.
    Thus, a significant upward trend in workload at the conclusion of
    operations is not expected. However, Navy does perform core analysis
    biennially, in accordance with DOD instruction, to ensure that we have
    ready and controlled maintenance resources available when needed. Navy
    also has a well-established, rigorous, model-based process for
    determining maintenance requirements and associated /capability
    required to accomplish those requirements.
        Maritime: Ship and submarine class maintenance requirements are
    continuously updated, based on current material condition and
    maintenance issues, thereby capturing any changes in ship maintenance
    resulting from changes in operational tempo. Naval Shipyard capacity
    and capability, including workforce, tools, equipment, parts, and
    infrastructure capacity, are sized to accomplish the maintenance
    requirements of assigned ships and submarines, as part of the annual
    programming and budgeting process.
        Aviation: We will continue to induct aircraft for scheduled
    maintenance events, based on fixed period end dates which allow us to
    budget, plan, and execute without having to establish a stand-alone
    ``reset'' program. The engine and component Depot work is driven by
    flight hours and environmental exposure. These areas have seen a slight
    (less than 7 percent overall) increase in workload since the beginning
    of operations. This workload has been absorbed by the normal Depot
    workforce through overtime or augmentation by contractor support; both
    of which are temporary and can be returned to normal operations in a
    short timeframe.

        17. Senator McCaskill. Lieutenant General Stevenson, Lieutenant
    General Panter, Lieutenant General Reno, and Vice Admiral Burke, what
    were the results of those reviews?
        General Stevenson. In accordance with the Army's industrial base
    management process, the Army assesses, prioritizes and funds the
    necessary changes needed to address any noted deficiencies and/or
    shortfalls. For example, since fiscal year 2010 the Army has
    established a Core depot capability for the OH-58 Kiowa Warrior at
    Corpus Christi Army Depot (CCAD), the Stryker family of vehicles at
    Anniston Army Depot (ANAD), the Bradley Fighting Vehicle A3
    Configuration at Red River Army Depot (RRAD) and the M88A1 and M88A2 at
    ANAD.
        The Army Materiel Command has also developed a 1-n list of all
    required capital improvements across various appropriation types to
    include Military Construction, Army (MCA), Army Working Capital Fund
    (AWCF) and Procurement Army (PA). This prioritized list identifies all
    of the projects in categories addressing issues related to Quality Work
    Environment, Safety, Security, Mission and Production. As a result, the
    Tier 1 projects have been funded for all AWCF CIP and PAA funded work.
    The Army continues to prioritize the MCA funded projects based on
    criticality and need.
        We recently laid out an industrial base capability portfolio review
    for the Vice Chief of Staff of the Army that identified the risk
    associated with our capital improvement process and provided
    recommendations to minimize risk.
        General Panter. These reviews have resulted in new civilian
    partnerships which have decreased turnaround time to our customers.
    These reviews also allowed the depots to increase/decrease manpower in
    specific skill sets and modernize equipment to match/support the
    planned workload. Partnerships with local academia expanded the skill
    sets needed and refined equipment planning needed to support new assets
    brought in by our customers. Lastly, key Capital Investments have
    allowed us to reinvest in our facilities to better meet the needs of
    our operating forces.
        General Reno. The results of the core capability reviews helped the
    Air Force prioritize the 6 percent investment in our depot
    infrastructure as required by 10 U.S.C. Sec. 2476. The reviews were
    also major contributors to the Depot Source of Repair decisions used to
    determine organic and contact sustainment.
        Admiral Burke. Navy's latest core capabilities determination report
    continues to reflect a stable core workload. This aligns with the
    Navy's overall maintenance strategy to reset in stride. Maintenance
    decisions are driven by class maintenance plans and schedules to
    achieve ship and aircraft expected service life.

        18. Senator McCaskill. Lieutenant General Stevenson, Lieutenant
    General Panter, Lieutenant General Reno, and Vice Admiral Burke, what
    types of employees (permanent, temporary, contractor) currently make up
    the depot workforce?
        General Stevenson. Depots hire a combination of permanent,
    temporary, and contractor personnel to make up the depot workforce.
        Depots align their permanent direct labor workforce to meet core
    skill requirements. Temporary and contractual employees are added to
    offset the surge requirements which cause the spike in workload as a
    result of the war efforts.
        General Panter.

                   Marine Depot Maintenance Command (Albany):
    Permanent Civilians........................................          789
    Temporary Civilians........................................           11
    Term Civilians.............................................          497
                                                                ------------
      Total Civilians..........................................        1,297
                                                                ------------
    Contractors................................................          737
                                                                ------------
      Total....................................................        2,034

                   Marine Depot Maintenance Command (Barstow):
    Permanent Civilians........................................          854
    Temporary Civilians........................................            2
    Term Civilians.............................................          213
                                                                ------------
      Total Civilians..........................................        1,069
                                                                ------------
    Contractors................................................          203
                                                                ------------
      Total....................................................        1,272

        General Reno. There are 24,694 Federal DOD civilian employees, 56
    temporary workers, and 1,021 depot onsite contract augmentees as part
    of the Air Force depot maintenance workforce. These are the total
    numbers from the three Air Force depots; Warner Robins-Air Logistics
    Center, Robins Air Force Base, GA; Oklahoma City-Air Logistics Center,
    Tinker Air Force Base, OK; and Ogden-Air Logistics Center, Hill Air
    Force Base, UT.
        Admiral Burke.

    ------------------------------------------------------------------------
                    FRC                   Military    Civilian   Contractors
    ------------------------------------------------------------------------
    FRCSE..............................          33       3,084          367
    FRCSW..............................          38       2,547          694
    FRCE...............................          42       3,293          221
                                        ------------------------------------
      Totals...........................         113       8,924       1,282
    ------------------------------------------------------------------------
    TOTAL OF ALL: 10,319
    The above data is a snapshot of on board personnel as of 6/9/2011.
      Totals for Military and Civilians obtained from Monthly Muster report
      and the ``1532'' report for civilians.

        19. Senator McCaskill. Lieutenant General Stevenson, Lieutenant
    General Panter, Lieutenant General Reno, and Vice Admiral Burke, how
    will the depots manage this mix of workers as current operations draw
    down?
        General Stevenson. The combination of temporary and contract
    employees allows our depot workforce management to remain flexible and
    responsive to meet the Nation's requirements through working multiple-
    shifts, overtime and the additional hiring of a temporary workforce.
    Depots can quickly adjust the temporary workforce to the actual
    workload and avoids unnecessary turbulence in the permanent workforce.
    This flexibility eliminates further risk of future lay-offs,
    inefficiencies and increased cost of depot operations.
        General Panter. The Marine Corps will drawdown contractors first,
    followed by temporary and term workers. In the out years, Marine Corps
    Logistics Command is planning to maintain their permanent workforce at
    85 percent of projection, filling 15 percent with contractors in order
    to provide flexibility and the ability to acquire unique skill sets
    without exceeding the size and cost of the permanent workforce.
        General Reno. Air Force Materiel Command determines the amount of
    depot workforce required to perform the anticipated work as part of
    their planning process on an annual basis. They monitor and manage the
    workforce during the year of execution to deal with planning variances.
    If less work is planned, the workforce will be adjusted. Reducing
    civilian overtime work hours represents the most responsive reduction
    in capability that can be accomplished. Next would be to reduce the
    number of depot contract workers and temporary workforce employees.
    Additionally there are a number of management tools that the Air Force
    could employ to adjust the permanent workforce including normal
    attrition, the Volunteer Early Retirement Authority or Volunteer
    Separation Incentive Payment, or reduction-in-force following the
    appropriate approval processes.
        Admiral Burke. Navy expects that operations for ships and aircraft
    will not drop significantly as ground forces are reduced in CENTCOM.
    Therefore, Navy does not anticipate a large decrease in depot
    maintenance hours in its depots. Through long-range planning efforts,
    Navy will forecast the changes with sufficient lead time to manage the
    workforce through normal workforce management practices.

        20. Senator McCaskill. Lieutenant General Stevenson, Lieutenant
    General Panter, Lieutenant General Reno, and Vice Admiral Burke, how do
    the Services ensure that the organic depot maintenance facilities are
    resetting the right equipment at the right time for the warfighters,
    given the challenges the Services face in maintaining visibility over
    equipment assets at any given time?
        General Stevenson. The Army has developed a requirements generation
    process that identifies equipment that will require repair or
    replacement upon completion of deployed operations. The Army's process
    identifies Reset requirements 18 months before the beginning of the
    fiscal year the equipment is expected to return. Requirements are
    reviewed and realigned prior to execution based on actual operational
    conditions and specific types and density of returning equipment. This
    has been successful formula for our Reset program but is always subject
    to change due to operational decisions that impact the return of
    equipment from the CENTCOM AOR.
        Additionally, the Army utilizes a coordinated staff process that
    integrates Retrograde, Reset, and Redistribute (R3) to ensure equipment
    is repaired and returned to units in support of their next train-up and
    deployment cycle. We have visibility of equipment shortages and
    synchronize equipment production (acquisition and depot repair) and
    transfers to ensure that industrial base is resetting or providing the
    right equipment at the right time to warfighters to meet their ARFORGEN
    requirements.
        General Panter. In support of the warfighter, each year the Marine
    Corps conducts a deliberate planning process to identify, validate, and
    set requirements for our depot maintenance program as part of our
    Enterprise Lifecycle Maintenance Planning (ELMP) process. All major
    commands within the Marine Corps participate in this planning process.
    Each weapon system that has a designated depot maintenance strategy
    receives an in-depth analysis to ensure our depot maintenance
    requirements are aligned with each weapon system's lifecycle management
    strategy and the operational requirements of the Marine Corps. Through
    the ELMP process, the Marine Corps continually seeks to synchronize our
    reset efforts to effectively and efficiently prepare for follow-on
    combat operations.
        Equipment accountability and visibility are always major
    challenges, particularly in a combat environment. Throughout the entire
    period that the Marine Corps has been engaged in OCOs, we have
    encountered accountability and visibility challenges. To meet these
    challenges, we have issued updated accountability policy from our
    headquarters; employed our Field Supply and Maintenance Analysis Office
    (FSMAO) in regularly inspecting and analyzing home station and deployed
    unit supply and maintenance accounts; used advanced MAGTF Logistics
    Support Systems to meticulously track and account for our equipment;
    and initiated fielding of our Global Combat Support System-Marine
    Corps, the system that will become the Corps's chief Enterprise
    Resource Planning (ERP) tool and accounting system. All of these
    techniques, coupled with our ELMP process and continuous engagement
    with deployed units, enable us to mitigate visibility challenges and
    reset the right equipment at the right time.
        General Reno. The organic depot maintenance requirements for
    aircraft and engines are very structured and calendar-based or
    operating hour-based. For this reason, the depot maintenance of these
    systems has been ongoing. The aircraft or engines return from the Area
    of Responsibility to the depot when the maintenance schedule dictates.
    This process ensures the right assets have the required depot
    maintenance accomplished at the right time. The Air Force's scheduled
    depot maintenance process ensures we have visibility of our assets.
        Admiral Burke. Naval Aviation airframe depot maintenance is
    calendar based to ensure that the force is continuously maintained and
    reset in stride. The Fleet Readiness Centers (FRCs) perform the work
    according to a master induction schedule developed by Naval Air Systems
    Command in close coordination with the Fleet. The Resource Allocation
    Management Program (RAMP) is used to track each aircraft and all
    upcoming maintenance requirements to determine what needs to be placed
    in work. This planning directs the depots to perform the right work at
    the right time necessary to maintain future readiness levels. The FRCs
    continually update the maintenance status of work. In Naval Aviation,
    engine depot maintenance is demand driven based upon flight hours and
    engine reliability. The Fleet monitors engine inventories and directs
    engines that require depot level repair to the appropriate repair
    facility to ensure engine pool levels are maintained at CNO approved
    readiness levels.
        The Navy Expeditionary Combat Enterprise maintains visibility of
    construction engineering support equipment through the Construction,
    Automotive and Specialized Equipment Management Information System.
    Combatant and small craft visibility is maintained through Naval Sea
    Systems Command Craft and Boat Support System. These management systems
    track data and location of all rolling stock and boats from cradle to
    grave, whether equipment is undergoing refurbishment at a depot,
    intermediate facility, or the unit level. Further, these systems
    maintain accountability of equipment in theater supporting the war
    effort. Resetting the right equipment at the right time is accomplished
    through condition based inspections, evaluation of maintenance records,
    and adhering to established maintenance plans.

        21. Senator McCaskill. Lieutenant General Stevenson, Lieutenant
    General Panter, Lieutenant General Reno, and Vice Admiral Burke, do the
    depots have assets onsite that they do not have the funds to induct
    into maintenance? If so, will the fiscal year 2012 budget enable them
    to induct this workload?
        General Stevenson. Army Depots do not have any critical assets
    onsite that require funding for induction. The Army resourcing
    prioritization effort ensures that the most critical requirements are
    addressed to support the warfighter's requirements.
        Fiscal year 2012 budget requests address the Army's requirements.
        General Panter. No. Currently, all onsite assets scheduled for
    induction into maintenance are funded.
        General Reno. There have been no assets onsite that we have not
    inducted due to lack of funds. The Air Force has sufficient funds to
    induct workload into maintenance for fiscal year 2011; however, there
    is a need to realign funding between two budget activities to cover
    higher than anticipated maintenance requirements in our mobility
    portfolio. Additionally, the Air Logistics Centers just completed a
    long range workload review (fiscal year 2012 and fiscal year 2013) and
    no funding disconnects were identified.
        Admiral Burke. The Aircraft Depot Maintenance account is expected
    to end fiscal year 2011 with zero unfunded airframe and engine
    maintenance assets/requirements at the depots. Additionally, the fiscal
    year 2012 budget is properly resourced with baseline and anticipated
    OCOs funding to meet required scheduled maintenance inductions.

        22. Senator McCaskill. Lieutenant General Stevenson, Lieutenant
    General Panter, Lieutenant General Reno, and Vice Admiral Burke, what
    impact will the uncertainty of future increased combat operations,
    particularly in Afghanistan, have on future maintenance budgets?
        General Stevenson. We expect minimal impact on maintenance budget
    requests due to the uncertainty of future increased combat operations
    particularly in Afghanistan. We expect operations, particularly in
    Afghanistan, to decrease in the future. However, if there is an
    unforeseen increase in combat operations, there will be a corresponding
    increase in our future maintenance budget. This increase will be
    reflected in all of our OCO requirements--Sub-Activity Group (SAG) 135,
    which supports Left Behind Equipment (LBE) and in-theater repair and
    SAG 137, which supports the Reset of equipment upon its return.
        As operational decisions are made, the Army adjusts its request for
    funding in subsequent submissions accordingly, up or down. For example,
    operational uncertainty may cause an increase in forces and subsequent
    increase in future Reset requirements or delay equipment available for
    Reset, thereby decreasing requirements in a given year.
        Our OCO submission considers the equipment that will be left
    behind, equipment that will deploy and subsequently return, the current
    operational environment, equipping concepts, Operational Tempo
    (OPTEMPO) and equipment that will be repaired or replaced. This process
    has been effective in identifying our requirement for the last 9 years
    in spite of the uncertainty related to combat operations.
        Future operational uncertainty along with the incremental cost of
    war will require the Army to submit supplemental funding requests for
    2-3 years after hostilities end to ensure equipment readiness is
    restored for all equipment that returns from operations in Afghanistan
    and Iraq.
        General Panter. Our goal is to properly align our depot maintenance
    requirements with the current and planned equipment life cycle
    management strategies and projected combat operations. As we balance
    the depot maintenance requirements in support of current combat
    operations with the requirements planning for future combat operations,
    the uncertainty of combat operations and extent of equipment damage in
    Afghanistan will continue to impact the accuracy and completeness of
    our maintenance budgets. Not knowing when the equipment will return
    makes budget submissions problematic.
        This reduced budget accuracy and completeness results in a
    potential disparity between requested funds and executed funds. We
    experienced this in the recent past (e.g., plan for retrograde of
    equipment in fiscal year 2010 did not occur).
        Additionally, we anticipate depot maintenance work will continue at
    least 2 years after the war and funding will be needed.
        General Reno. The uncertainty of future combat operations becomes
    problematic for depot workload during execution years. Depot budgets
    are built 2 years in advance based on projected, funded workloads as
    determined by customer requirements. For example, aircraft Programmed
    Depot Maintenance (PDM) is calendar driven. However, there may be
    increased corrosion or wear discovered during PDMs due to combat
    missions. These unknown requirements, which are not budgeted for, are
    absorbed by the AFWCF and included in future year rates. This process
    drives budget increases after combat operations have ceased until the
    involved systems have cycled through PDM.
        Admiral Burke. The Navy is forward deployed and constantly prepared
    for a range of contingency operations that may arise. While it is
    impossible to speculate the fiscal impact of any future contingency
    operation, small or short duration operations should have little impact
    on future maintenance budgets. However, larger or longer duration
    operations would require increasing the maintenance budget with
    increased baseline funding or a supplemental appropriation.

                                ARMY RESET PLANS

        23. Senator McCaskill. Lieutenant General Stevenson, to what extent
    has the Army developed a comprehensive reset strategic plan to
    determine how it intends to address current and future reset
    requirements amid declining reset funds, increased repair costs at
    organic depot maintenance facilities, costs factors for in-theater
    maintenance equipment that will remain in Afghanistan, and the
    requirements needed to fund the repair of this equipment under the base
    budget along with other competing repair requirements?
        General Stevenson. The Army submits an annual request for OCO
    funds. The OCO submission reflects our best projection of funds
    necessary for current Reset requirements that will sustain acceptable
    readiness levels across the Army, while taking into consideration the
    dynamics outlined in your question--declining funds, repair costs at
    depot and in theater and subsequent transition of equipment to
    sustainment. Analysis of future Reset requirements is conducted to
    determine the Army's total Reset liability based on equipment densities
    in the theater of operations and is used as a management tool to
    develop future OCO requests.
        Our OCO requests also cover the maintenance and sustainment of
    equipment in theater, which consists of equipment that deployed with a
    unit and Theater Provided Equipment (TPE).
        The level of OCO support the Army has received fully funds
    currently projected Reset requirements. As the drawdown in Iraq comes
    to a close and operational conditions change on the ground, the Army's
    Reset requirements will also decline. The Army reviews its Reset
    requirements during mid-fiscal year to leverage and redirect OCO
    funding across Reset requirements. This comprehensive review enables
    the Army to make maximum use of the Reset OCO funds provided to meet
    evolving operational requirements.
        Our depots are operating at peak levels of production and
    efficiency; levels which have not been seen since the Vietnam era. As a
    result, our depot rates have remained stable in most cases. The
    productivity of our depots has allowed us to conduct analyses based on
    Repair Cycle Times and the type(s)/densities of equipment that remain
    in theater and determine that OCO funds will be required to reset our
    equipment for 2-3 years after the cessation of hostilities.

        24. Senator McCaskill. Lieutenant General Stevenson, to what extent
    has the Army assessed the costs to reset equipment that remains in
    theater, the type of reset repair capability needed to repair this
    equipment upon return, and how this equipment will address unit
    shortfalls and readiness goals, ARFORGEN, force modernization for both
    Active and Reserve units, and modularity priorities?
        General Stevenson. The Army assesses the annual cost to Reset
    equipment remaining in-theater based on the size of equipment pools in
    Afghanistan, troop levels, and the operational tempo. The estimate
    considers the type of reset repair capability needed to Reset the
    equipment upon its return, the expected condition of the equipment upon
    its return, and the deployment duration and use of the equipment. The
    Army has adequate capacity at our installations and depots to repair
    the equipment within 2-3 years after the cessation of hostilities.
        The output from our Reset process is prioritized to address unit
    equipment-on-hand (EOH) shortfalls to meet ARFORGEN readiness goals.
    Reset is also synchronized with the Army's equipment modernization
    strategies to ensure that we are upgrading equipment to meet the Army's
    overall modernization goals.
        The Army has made significant strides, thanks to the support of
    Congress, to meet ARFORGEN readiness requirements. Current Army
    estimates indicate that EOH levels will achieve 92 percent for the
    aggregate Army (Active component - 93 percent; Army National Guard - 92
    percent; and U.S. Army Reserves 90 percent) by the end of October 2012.

        25. Senator McCaskill. Lieutenant General Stevenson, has the Army
    conducted any recent studies or reviews on the costs to fund and
    maintain reset beyond the end of OCO, and if so, what were the results
    or lessons learned from those studies or reviews?
        General Stevenson. In 2010, the Army participated in an OSD study
    to forecast Equipment Reset requirements. The results of that study
    indicated the Army will continue to need OCO funding as long as forces
    are in conflict plus 2-3 years to ensure all equipment is Reset upon
    return. The Army learned three lessons that have influenced our OCO
    funds management: (1) There is a significant amount of difficulty
    associated with projecting future Reset requirements given the unknowns
    of war; (2) A degree of flexibility is needed given our ability to
    project equipment conditions and Reset requirements 18 months prior to
    equipment return from theater in light of unforeseeable operational
    demands; and (3) Base programs are not adequately resourced to support
    the incremental costs of war.
        There is a direct correlation between the time of submission and
    the accuracy of our budget submissions. The greater the time between
    our submission and actual execution the less accuracy in our budget
    requests. Conversely, the shorter the time between our budget
    submission and it's execution the greater the accuracy of our budget
    requests. As a result, the Army periodically reviews and updates it
    submissions and adjusts its Reset program throughout the year to ensure
    that requirements are aligned with available resources.
        If OCO funding ends before hostilities then the Army would be
    forced to take risks in the scope of Reset efforts and in the readiness
    of equipment in order to balance the incremental costs of war with its
    peacetime requirements.

                        ARMY UNIT EQUIPMENT REQUIREMENTS

        26. Senator McCaskill. Lieutenant General Stevenson, as the pace of
    overseas operations declines, the Army is resetting equipment and
    rebuilding the readiness of its forces. Two documents--the Modification
    Tables of Organization and Equipment (MTOE), and the Table of
    Distribution and Allowances (TDA)--provide the basic personnel and
    equipment requirements against which on-hand personnel and equipment
    are measured in determining unit readiness. Given that during our
    operations in Iraq and Afghanistan, U.S. Central Command (CENTCOM)
    repeatedly requested force capabilities that did not align well with
    Army MTOEs. What actions is the Army taking to review and update unit
    requirements so that they better reflect the needs of the combatant
    commands (COCOM)?
        General Stevenson. The Table of Organization and Equipment (TOE) is
    a doctrinally based organizational model that establishes the
    requirements baseline for our modular formations. The Modified Table of
    Organization and Equipment (MTOE) allocates Army equipment and
    personnel to address TOE requirements and serves to synchronize the
    delivery of manning and equipping solutions in support of ARFORGEN. The
    Army annually reviews MTOEs to ensure they adapt to reflect lessons
    learned from war and provide the required capabilities to support our
    soldiers in combat. The Army recently initiated an assessment of Army
    MTOEs to review those factors causing low equipment on-hand readiness
    reporting. This assessment will identify other unit-owned equipment
    that may be recommended for inclusion on the MTOE or Consolidated Table
    of Allowance (CTA) as a new capability or as an Authorized Substitute
    or In-Lieu-Of item for a currently documented capability, and recommend
    removal of equipment identified as obsolete. An Army Staff review team
    is conducting assessments with unit leaders at Army unit locations and
    will provide a final report and recommendations to the Army leadership
    in November 2012.

        27. Senator McCaskill. Lieutenant General Stevenson, given that
    billions of dollars in equipment reset and reconstitution funds will be
    needed to rebuild the readiness of our forces, it is important that we
    sharply scrub our unit requirements and that this be completed
    sufficiently ahead of the budget process so that we use our funds
    smartly. To what extent will you be able to complete your update of
    unit equipment requirement documents (MTOEs and TDAs) in sufficient
    time to be considered in the development of the fiscal year 2013 budget
    request?
        General Stevenson. The Army reviews its MTOEs and TDAs at some
    level every year. Those routine processes are ongoing. In addition, at
    the request of the Chief of Staff, Army and Vice Chief of Staff, Army,
    an Army Staff review team is conducting MTOE assessments on site at
    select Army installations and will provide a final report to Army
    leadership in November 2012. In the interim, the results of these
    assessments have already resulted in adjustments to Army MTOEs.
    Finally, the Army is vigorously executing its ``Line Item Number (LIN)
    Validation'' process, which assesses individual LINs and recommends
    retention or removal from MTOEs. For fiscal year 2011, LIN Validation
    has already resulted in the removal of approximately 500 LINs from Army
    MTOEs for a wide variety of reasons. Likewise, action is being taken to
    remove equipment identified as obsolete. All of these actions result in
    adjusted MTOEs and TDAs for Army units which affect the fiscal year
    2013 budget.

                      AIRCRAFT CONDITION-BASED MAINTENANCE

        28. Senator McCaskill. Lieutenant General Stevenson, I'm very
    concerned with aviation readiness in Afghanistan, as our helicopters
    are under high demand and flying well beyond their anticipated flying
    hours. The Army is currently engaged in an effort to install digital
    source collectors (DSC) on its manned aircraft (AH-64 A, AH64 D, CH-47
    D, CH-47 F, MH-47 G, UH-60 A, UH-60 L, UH-60 M, MH-60 L, MH-6, and OH-
    58 D) in order to conduct Condition-Based Maintenance (CBM). The DSCs
    are being installed on all new production utilizing procurement
    appropriations. However, the funding of the transmission, storage, and
    analysis of the data is minimally funded and heavily leveraged with OCO
    funding at this point. An Army Acquisition, Logistics, and Technology
    (AT&L) report released this month cited; ``there is clear evidence that
    CBM+ technologies and procedures have avoided at least three
    catastrophic Class A accidents that would have resulted in the total
    loss of the aircraft.'' What are the Army's plans to fit all manned
    aircraft with DSCs by the end of the fiscal year 2013 (October 1, 2013)
    when the Product Improvement Pilot Program (PIPP) is set to sunset?
        General Stevenson. By the end of fiscal year 2013 we will have
    completed installing digital source collectors on 89 percent of the
    manned aviation fleet (3180 aircraft of the a 3572 fleet) leveraging
    the PIPP authorization. Completion of the entire fleet will not occur
    before fiscal year 2019, using procurement appropriations, due to a
    combination of fielding schedules and the materiel solution that is
    still in development for the CH-47F aircraft.

        29. Senator McCaskill. Lieutenant General Stevenson, will the Army
    be requesting an extension of the PIPP beyond fiscal year 2013? If so,
    why?
        General Stevenson. No, the Army has no plans to request an
    extension to the current PIPP authority. The Army has taken advantage
    of the current authority and is in the process of completing an
    assessment of the Aviation Pilot Program. As requested by the current
    legislation the Army will provide a report and recommendation to
    Congress in fiscal year 2012. At that time the Army will provide a
    recommendation to discontinue the authority or to make it permanent.

        30. Senator McCaskill. Lieutenant General Stevenson, what are the
    Army's plans to appropriately fund the transmission, storage, and
    analysis of the data that are important to improving maintenance
    efforts, decreasing maintenance and spare part costs, and increasing
    readiness?
        General Stevenson. The Army programs the resources to support
    Condition-Based Maintenance (CBM) functions, such as CBM data storage,
    analysis and transmission, within the normal budget cycle, as part of
    Central Supply Activities (CSA). The fiscal year 2012 President's
    budget request is sufficient to meet our CBM data storage, analysis and
    transmission critical requirements. The long-term strategy for CBM data
    transmission, storage and analysis includes the integration of
    actionable logistics data in a future increment of the Global Combat
    Service Support-Army (GCSS-A). The engineering unique CBM data
    transmission and storage requirements to enable weapon system
    performance analyses are separately funded from the GCSS-A.

        31. Senator McCaskill. Lieutenant General Stevenson, what are the
    outcomes/results of the condition-based maintenance effort thus far in
    terms of readiness, cost-savings, etc.?
        General Stevenson. Army Aviation's outcomes/results of Condition-
    Based Maintenance in terms of benefits to date include a 3.8 percent to
    12.4 percent reduction in Non-Mission Capable Maintenance rate, a 5
    percent to 8 percent increase in fleet readiness, and a 1 percent to 4
    percent reduction in Maintenance Test Flight Hours. These results have
    increased our combat power, reduced maintenance cost and have provided
    critical information that avoided catastrophic failures during flight.

        32. Senator McCaskill. Lieutenant General Stevenson, what is the
    overall goal of the CBM effort in the Army?
        General Stevenson. The overall goal of Condition-Based Maintenance-
    Plus (CBM+) is to increase combat power by performing maintenance and
    supply functions based upon evidence of need. The four CBM program
    objectives to meet this goal are to decrease the maintenance burden,
    increase platform availability and readiness, enhance safety, and
    reduce Operations and Support costs. This process is enabled by using
    Digital Source Collectors (DSC) that record data such as vibration,
    heat and engine starts, as an indicator of future or impending failure.
    The data collected is used to revise our maintenance processes at the
    field and sustainment levels of maintenance. For example the Black
    Hawk's oil cooler bearing is prescribed to have 1,250 flying hours of
    life. Using CBM monitoring and data, the bearing may remain on the
    aircraft for as long as 3,200 hours, thus reducing unnecessary
    maintenance and replacing parts that still have a useful life.

                            ARMY PREPOSITIONED STOCK

        33. Senator McCaskill. Lieutenant General Stevenson, as contingency
    operations in Iraq decline, the Services have begun reconstituting
    their prepositioned equipment. At the same time, the Services have
    begun to review future requirements for their prepositioned stocks. I
    understand that DOD also intends to include prepositioned stock in some
    of its Department-wide strategy planning, and has a number of
    initiatives underway to improve the mobility system, responsiveness to
    forces, and effectiveness of prepositioned capabilities. Given that
    billions of dollars in equipment reconstitution funds are at stake in
    restoring our preposition stocks, to what extent is DOD working with
    the Services to develop and integrate a Department requirement for
    prepositioned stocks that is based on a Department-wide strategy?
        General Stevenson. Currently TRANSCOM and DLA are co-leading a
    study directed by the Vice Chairman of the Joint Chiefs of Staff,
    titled the Comprehensive Materiel Response Plan (CMRP). The purpose of
    the CMRP is to develop a comprehensive plan for DOD materiel
    positioning and distribution to support the full range of military
    activities and identify opportunities for improvement of the global
    materiel, storage, transportation, and distribution network. The CMRP
    is leveraging the work completed during other studies, most notably the
    OSD CAPE Global Prepositioned Materiel Capability Study (GPMCS). Along
    with the DOD-wide studies, the Army is also constantly reviewing our
    own prepositioning strategy to identify efficiencies and improve
    capabilities.

        34. Senator McCaskill. Lieutenant General Stevenson, to what extent
    is the Army assessing which of the many pieces of nonstandard equipment
    that were purchased to meet urgent warfighters' needs should be added
    to the prepositioned stock sets?
        General Stevenson. To a great extent. All non-standard equipment
    the Army has procured is being systematically reviewed as part of the
    Army's Capabilities Development for Rapid Transition (CDRT) process.
    One of the possible outcomes for materiel going thru CDRT is to be
    selected for stockage in APS. Probably the best example of nonstandard
    equipment being selected for APS is the MRAP--in fact, the majority of
    the total MRAP vehicle population will be positioned into global APS
    sets. Other non-standard equipment that has been identified for
    sourcing to APS includes: Single Channel Anti-Jam Man-Portable (SCAMP)
    terminals, Counter Radio Electronic Warfare 2 (CREW2) systems with Duke
    V2 and CREW Vehicle Receiver Jammer (CVRJ), and various commercial off-
    the-shelf (COTS) items for U.S. Army North.

        35. Senator McCaskill. Lieutenant General Stevenson, what
    additional reset and sustainment resources will be needed to add these
    stocks?
        General Stevenson. The only resources required at this time is the
    continuation of the OCOs reconstitution funding necessary to reset
    equipment that will fill the remaining APS sets in accordance with the
    approved 2015 Strategy.

        36. Senator McCaskill. Lieutenant General Stevenson, are these new
    requirements accounted for in the Army's Prepostioned Stock Strategy
    (PSS) 2015?
        General Stevenson. Currently, new requirements in our APS sets
    include Mine Resistant Ambush Protection (MRAP) vehicles, Long-Term
    Armor Strategy (LTAS) Tactical Wheeled Vehicles, and Counter Measure
    Electronic Warfare equipment. The Army continues to modernize its APS
    stocks in accordance with Modified Table of Organization and Equipment
    (MTOE) authorization changes and Army priorities. APS modernization
    changes have been planned for and programmed as requirements into the
    Army's Program Objective Memorandum (POM) 13-17.

        37. Senator McCaskill. Lieutenant General Stevenson, the Army's
    plans to meet its PPS by reconstituting its prepositioned stocks around
    the world by 2015. However, most of the procurement funding and about
    half of the operations and maintenance (O&M) funding for prepositioned
    stocks is programmed for fiscal year 2014, after most of the equipment
    sets are scheduled for reconstitution. How is the Army going to meet
    its 2015 plan without securing funding sooner?
        General Stevenson. The Army is counting on the reset of theater
    retrograded equipment from Operation New Dawn (OND) and OEF in order to
    fill its APS strategic requirements. As for Operations and Maintenance
    (O&M) funds, most of the equipment will come to our APS inventory from
    depot stocks or procurement already purchased using previous year's OPA
    funding. Warehoused APS equipment will require minimal Care of Supplies
    in Storage (COSIS) for the first 3 years of storage. The exception
    being equipment stored outside in Southwest Asia (APS-5). We have
    adequately programmed for the O&M funding in Program Objective
    Memorandum (POM) 13-17 to support the COSIS requirements of our planned
    2015 APS sets.

                      ARMY REQUIREMENTS OVERSIGHT COUNCIL

        38. Senator McCaskill. Lieutenant General Stevenson, you
    participate in the Army Requirements Oversight Council (AROC), the
    Configuration Steering Boards (CSB), and the Capability Portfolio
    Reviews (CPR). With the goal of reducing long-term life-cycle costs and
    improving sustainment efforts, are you satisfied with your position and
    feel you have enough of a say?
        General Stevenson. Yes, I am satisfied that I have the opportunity
    to advise and influence the sustainment efforts in this process through
    the various forums. The G-4 plays a critical role in identifying and
    validating sustainment requirements, and suggests trade-offs that
    should be considered in reducing life-cycle costs and/or improving
    sustainment efforts.
        The Army uses the results of the Army Cost Position for AROC, CSB,
    and CPR Executive Leader decision support venues, and the G-4 actively
    pursues opportunities to influence those Sustainment-related portions
    of the Army Cost Positions. By energetically leading a Sustainment and
    Operations & Maintenance cost management culture, The Army sets and
    enforces Total Ownership Cost management standards, using Sustainment
    costs to integrate with all OMA Stakeholders.

                           NAVAL SHIPYARD MAINTENANCE

        39. Senator McCaskill. Vice Admiral Burke, to what extent has OCO
    increased the Navy's operational tempo and associated maintenance for
    readiness of its ships?
        Admiral Burke. Fiscal year 2010 Global Force Management
    commitments, including the operational requirements in support of OIF/
    OND and OEF, resulted in a high global OPTEMPO.
        Ship maintenance requirements are based on ship class maintenance
    plans which are continuously updated based on ship condition and
    current maintenance issues. Although it is difficult to relate an
    individual maintenance action to increased OPTEMPO, there is a direct
    relationship between OPTEMPO and wear on rotating equipment and in the
    crew's ability to perform self maintenance.
        Sustainment of the current high level of global commitments exceeds
    available base budget funding and remains dependent upon OCO or similar
    supplemental appropriations.

        40. Senator McCaskill. Vice Admiral Burke, to what extent have the
    Navy's four public shipyards planned for or responded to any increased
    ship maintenance resulting from OCO (in terms of shipyard workforce,
    tools, equipment, parts and infrastructure capacity)?
        Admiral Burke. Ship and submarine class maintenance requirements
    are continuously updated based on current material condition and
    maintenance issues, thereby capturing any increased ship maintenance
    resulting from OCO in the overall requirement. Naval Shipyard capacity
    and capability, including workforce, tools, equipment, parts and
    infrastructure capacity, are sized to accomplish the maintenance
    requirements of assigned ships and submarines as part of the annual
    programming and budgeting process.
        Since the Naval Shipyards are sized to accomplish the full workload
    requirement for assigned ships and submarines, they have fully planned
    to accomplish any increased maintenance resulting from OCO.

        41. Senator McCaskill. Vice Admiral Burke, shipyard officials have
    provided GAO with examples of how degraded infrastructure affected
    efficiency and effectiveness of their workforce and led to increased
    costs stemming from using workarounds, working overtime, or sending
    workers to different shipyards in order to keep their fleet maintenance
    schedules. To what extent are the Navy's four public shipyards' assets
    and workforce currently being utilized, and to what extent have the
    shipyards planned to address any efficiency/productivity issues that
    require improvements to shipyard infrastructure (e.g. constructing new
    or replacement mission critical assets, such as drydocks)?
        Admiral Burke. Naval Shipyard capacity and capability, including
    workforce, tools, equipment, parts and infrastructure capacity, are
    sized to accomplish the maintenance requirements of assigned ships and
    submarines as part of the annual programming and budgeting process.
        Shipyards use the One Shipyard concept to focus on cost, schedule,
    and quality through standardizing processes, sharing resources among
    public shipyards, and partnering with private shipyards to meet their
    resource requirements.
        Shipyard workforce capacity and capability is reviewed monthly, and
    a quarterly review meeting is held to assess and adjust workforce
    needs. To deal with the changes in workload that occur in the year of
    execution, the Navy has several workforce strategies, including the One
    Shipyard concept, the use of the Naval Reserve Force (SURGEMAIN)
    workforce, additional contracting, and the use of overtime to augment
    the Shipyards' capacity
        Infrastructure at the Naval Shipyards is almost fully utilized. For
    instance, in fiscal year 2011, the drydock utilization rate is 94
    percent for the 18 drydocks at the Shipyards. The Navy continues to
    plan and invest to address Naval Shipyard infrastructure efficiency and
    productivity issues using MILCON and O&M Restoration and Modernization
    (RM) investments. U.S.C., title 10, section 2476, requires that the
    Navy invest a minimum of 6 percent of the average of the previous 3
    years of intermediate and depot maintenance revenue into the shipyard
    recapitalization program. The Navy has provided investments of 9.5
    percent, 9.9 percent, and 15.6 percent in fiscal year 2008 through
    fiscal year 2010, respectively, and is planning to invest 9.9 percent
    in fiscal year 2011.
        The buildings and facilities of the four Naval Shipyards are
    primarily configured for WWII-era ship construction vice modern ship
    depot maintenance repair processes for nuclear ships and submarines.
    While ship maintenance processes have improved, the layout of the
    shipyards limits improvements on cost and schedule performance, and
    thus, improvements to operational availability. The continual
    improvement in ship maintenance processes, evolving maintenance
    strategies, longer ship operating cycles, and the advent of future
    platforms, presents opportunities to recapitalize, reconfigure, and
    modernize the Naval Shipyards to support future workload and gain
    efficiency.

        42. Senator McCaskill. Vice Admiral Burke, to what extent has the
    Navy planned for a potential change in its fleet's overall composition
    or size (i.e., less growth than currently projected), and what are the
    associated impacts on workforce utilization and total infrastructure
    capacity across its four public shipyards?
        Admiral Burke. The Navy has not developed contingency plans for
    alternate force structures and remains committed to building and
    sustaining the force structure required to support the Maritime
    Strategy. If fiscal constraints require force structure changes, the
    shipyards' workforce and infrastructure would also be adjusted
    consistent with the resulting maintenance requirements.

               ISSUES WITH AIR FORCE AND DEFENSE LOGISTICS AGENCY

        43. Senator McCaskill. Lieutenant General Reno, the Air Force
    Logistics Centers (ALCs) have expressed frustration over the Defense
    Logistics Agency's (DLA) inability to deliver some parts on time to the
    ALCs. DLA achieves a 94 percent fill rate for spare parts; however,
    that remaining 6 percent can occasionally ground an aircraft. We are
    told that some parts can take well over a year to arrive at the ALCs
    and DLA will not order parts until the aircraft reaches an ALC. As a
    result, the Air Force is sometimes forced to cannibalize a part off of
    a newly arrived aircraft to repair another aircraft that is in the
    hanger. What is your view of DLA's track record on delivering parts to
    the Air Force's ALCs?
        General Reno. DLA does do a good job on the majority of the orders
    and there are opportunities to improve parts support to the Air
    Logistics Centers to decrease cannibalizations and reduce aircraft
    delivery delays to the operational customer. DLA orders parts based on
    current inventory posture, any outstanding sales orders, and the
    forecasted demand. However, improvements in collaboration and alignment
    of supportability measurements will help close gaps.
        For example, the Air Force measures support at the hands of the
    mechanic. Does the mechanic get a part when they ask for it? The Air
    Force calls this Issue Effectiveness. If the part is not available, how
    long do they wait? The Air Force calls this Customer Wait Time. By
    contrast, DLA measures how often a part releases from network storage
    sites, including material released immediately to customers. However,
    this measure is broad and includes material from all classes of supply
    not just material used for repair. DLA calls this Material
    Availability, which does not capture the transportation time between
    release and delivery to the mechanic.
        These dissimilar metrics highlight some institutional differences
    that the Air Force and DLA are working to understand so we can
    collectively improve support to the warfighter. The Air Force is not
    dissatisfied with a 94 percent fill rate, but better collaboration will
    improve supportability at the ALCs. Engagements such as Air Force/DLA
    Service Day, Air Force Materiel Command/DLA Summit, and continuous
    Crosstalk Forums and Integrated Process Improvement Teams are all tools
    the Air Force and DLA leverage to constantly evaluate and improve
    performance levels.

        44. Senator McCaskill. Lieutenant General Reno, do you think that
    significant changes are needed?
        General Reno. Yes, we must continue to work closely with DLA to
    make sustainable improvements in processes, policies, and procedures to
    improve depot maintenance. First, we need DLA's help to define and
    adopt customer-facing metrics and measure all process, policy, and
    procedural improvement initiatives based on their impact to retail
    customer support. Once we establish those metrics, we must work
    together to define and resource our future requirements. DLA's
    inventory models and supply chain strategies can then be utilized to
    accommodate both high demand (low risk) items and the equally important
    low demand (higher risk) items. This is an important point as depot
    maintenance will sometimes use low-demand, sometimes technically
    obsolete items in their repair operations.
        Finally, given marketplace and vendor uncertainty, we must make a
    concerted effort to synchronize the DLA supply chain with Air Force
    repair operations. In any production environment, we must partner with
    DLA to plan and execute better to keep our demand and supply chains in
    synch. We will continue to partner with DLA on these strategies through
    engagements such as Air Force/DLA Service Day, Air Force Materiel
    Command/DLA Summit, Crosstalk Forums and Integrated Process Improvement
    Teams.

        45. Senator McCaskill. Lieutenant General Reno, one initiative, the
    High Velocity Maintenance (HVM), has shown promise by identifying
    needed parts several months in advance, often while the aircraft is
    still deployed. What is your view of the HVM program and what is the
    Air Force plan, if any, to continue or expand HVM?
        General Reno. Improving aircraft availability is a constant
    objective for the Air Force. The HVM concept will improve sustainment
    predictability and our objectives are new policy and new metrics that
    will drive better behaviors. To accomplish this, we are using a phased
    implementation approach with three pilot projects (C-130, B-1, F-22),
    and are offloading best practices to all aircraft as we go. The C-130
    HVM program achieved initial operational capability, as scheduled, in
    March 2011. Based on input from our operational customers, Warner
    Robins Air Logistics Center (ALC), GA, directed that efforts
    concentrate on integrating successful HVM tenets (i.e., known aircraft
    condition, standard work, tools/parts available when needed) across all
    scheduled programmed depot maintenance aircraft. The evidence shows the
    value of the HVM tenets and we are making plans to translate lessons
    learned from the three pilots to the rest of the Air Force Materiel
    Command sustainment community. Due to the outstanding progress, Warner
    Robins ALC, GA accelerated their projected full operational capability
    date from fiscal year 2016 to fiscal year 2012.

        46. Senator McCaskill. Lieutenant General Reno, it is my
    understanding that depots are not included in targets and goals for
    energy efficiency. Why are they exempt?
        General Reno. The Federal mandated goals for energy reduction are
    for building facility energy. Federal facilities can be excluded in
    accordance with the Guidelines Establishing Criteria for Excluding
    Buildings from the Energy Performance Requirements of Section 543 of
    the National Energy Conservation Policy Act as Amended by the Energy
    Policy Act of 2005 (dated January 27, 2006).
        Department of Energy guidance allows and recommends the exclusion
    of process energy that is not influenced by conventional building
    energy conservation measures. While not all facilities on a depot
    installation are excluded, depot buildings impacted by process energy
    can be categorized as excluded structures. To incorporate the Air Force
    vision ``Energy consideration in all that we do,'' the Air Force
    continues to encourage and investigate the reduction of energy for all
    processes, even if a process is excluded from the mandated reduction
    goals.
        Although not mandated by Congress, the Air Force is exploring ways
    to decrease energy used for processes and in maintenance facilities.
    For example, at one paint facility at Robins Air Force Base, GA,
    process improvements yielded a $400,000 per year savings. The Air Force
    is currently developing a task force to look more closely at this
    across the Air Force.
                                     ______

                  Questions Submitted by Senator Kelly Ayotte

                               SHIPYARD WORKLOADS

        47. Senator Ayotte. Vice Admiral Burke, I have a question about the
    Navy's process for determining shipyard assignments for major work.
    Portsmouth Naval Shipyard is conducting the first in class availability
    on the USS Virginia. After this availability is complete, it is my
    understanding that the next Virginia-class submarine availability at
    Portsmouth is not scheduled until fiscal year 2016. The next three
    Virginia-class submarine availabilities are at Pearl Harbor Hawaii,
    even though the first one was conducted at Portsmouth Naval Shipyard
    and resulted in a trained and ready shipyard workforce. In fact, I have
    heard that the workers at Portsmouth are being asked to fly out to
    Hawaii to train the Pearl Harbor workforce. How does the Navy manage
    the flow of work to the shipyards in order to maintain a consistent
    level of effort and a workforce operating at maximum efficiency?
        Admiral Burke. The Navy manages the assignment of submarine depot
    availabilities to one of its four public shipyards by first looking at
    the shipyard closest to a submarine's homeport, to avoid the cost and
    disruption of homeport changes on crew members and their families. If
    the local homeport shipyard is not available, due either to capacity or
    capability (e.g., nuclear refueling, dry-dock size, etc.), then the
    availability is scheduled at a shipyard that has both the capacity and
    capability to execute it.
        The next three Virginia-class availabilities are on submarines
    homeported in Pearl Harbor, HI. Pearl Harbor Naval Shipyard and
    Intermediate Maintenance Facility (PHNSY and IMF) has the capacity and
    has been assigned to execute these availabilities.
        Virginia-class submarines are being homeported in both Groton, CT
    and Pearl Harbor, HI. Consequently, the Navy needs both Portsmouth
    Naval Shipyard (PNSY) and PHNSY and IMF to develop expertise in
    maintaining this submarine class. To maximize shipyard efficiency, the
    Navy shares knowledge and experience between depots, and for that
    reason, PNSY personnel are being assigned to support PHNSY and IMF on
    the next Virginia-class availability. Similarly, PHNSY and IMF
    knowledge and experience from their Virginia-class availabilities will
    be transferred to PNSY prior to Portsmouth's next Virginia-class
    availability.

        48. Senator Ayotte. Vice Admiral Burke, are any Atlantic fleet
    Virginia-class availabilities being done at Pearl? If so, why?
        Admiral Burke. No, the Virginia-class depot availabilities
    scheduled across the FYDP at Pearl Harbor Naval Shipyard and
    Intermediate Maintenance Facility are for Pearl Harbor homeported
    submarines.

        49. Senator Ayotte. Vice Admiral Burke, what, if any, Virginia-
    class work is being done at Norfolk Shipyard?
        Admiral Burke. Norfolk Naval Shipyard (NNSY) is not currently
    scheduled to conduct any Virginia-class submarine depot level
    maintenance. NNSY does provide Virginia-class submarines built at
    Newport News Shipbuilding with intermediate level maintenance support
    prior to each submarine's relocation to its assigned homeport.

        50. Senator Ayotte. Vice Admiral Burke, in terms of taking
    advantage of and maintaining the Virginia-class expertise that has been
    created at Portsmouth Naval Shipyard, what is the impact of a potential
    gap of 4 years between Virginia-class availabilities at Portsmouth?
        Admiral Burke. With a 4 year gap between Virginia-class
    availabilities at Portsmouth Naval Shipyard, Portsmouth may lose some
    of its expertise in dealing with Virginia-class unique systems and
    system interoperabilities. For the most part though, the Virginia-class
    consists of the same type of parts and systems found on all submarine
    (e.g., valves, hydraulics, high and low pressure air, seawater,
    freshwater, motors, pumps, electrical distribution, tanks and voids,
    air-conditioning and refrigeration plants, torpedo tubes, weapons
    systems, habitability systems, steering gear, antennas, hull, nuclear
    propulsion plant, etc.).
        Since Portsmouth Naval Shipyard will be working at capacity on Los
    Angeles-class availabilities over the next 4 years, the Navy is
    confident that Portsmouth will maintain its proficiency at executing
    submarine availabilities. Additionally, Portsmouth will be able to
    leverage the experience gained by Pearl Harbor from their conduct of
    four consecutive Virginia-class availabilities.

        51. Senator Ayotte. Vice Admiral Burke, can the Navy please provide
    the Virginia-class availabilities schedule for the rest of the Future
    Years Defense Plan (FYDP)? I am interested in when and where the
    availabilities will be conducted.
        Admiral Burke. The Virginia-class depot availability schedule
    across the FYDP is as follows:

    ------------------------------------------------------------------------
                                         Fiscal Year
                Submarine                   Start             Shipyard
    ------------------------------------------------------------------------
    USS Texas........................            2012   PHNSY&IMF
    USS Hawaii.......................            2015   PHNSY&IMF
    USS North Carolina...............            2016   PHNSY&IMF
    USS Missouri.....................            2016   PHNSY&IMF
    USS New Hampshire................            2016   PNSY
    USS New Mexico...................            2017   PNSY
    ------------------------------------------------------------------------

                   REPLACEMENT OF AGING AIR REFUELING TANKERS

        52. Senator Ayotte. Lieutenant General Reno, I am pleased that the
    Air Force will soon be able to start replacing its Eisenhower era KC-
    135 air refueling tankers with the KC-46A. I know that that the 157th
    Air Refueling Wing at Pease Air National Guard Base has been flying 50-
    year-old KC-135s with an average of 20,000 flying hours for over 17
    years. Despite the fact that they have done a magnificent job to keep
    their mission capable rates above 72 percent, they look forward to the
    new tanker. I am aware that the Air Force will soon establish the
    strategic basing criteria as the first stage in a transparent process
    to determine the initial operational locations for the new tanker. How
    much of the decision will be based on an analysis of the wear and tear
    of the existing airframes?
        General Reno. The Air Force Strategic Basing process links mission
    and combatant commander requirements to installation attributes to
    identify locations that are best suited to support any given mission.
    Wear and tear on existing weapon systems is not considered in Strategic
    Basing decisions.

        53. Senator Ayotte. Lieutenant General Reno, when do you expect the
    first KC-46As to be delivered to operational units?
        General Reno. I expect the first production KC-46A to be delivered
    in 2016.

        54. Senator Ayotte. Lieutenant General Reno, have you identified
    any troubling trends or maintenance concerns with the aircraft?
        General Reno. We have not identified troubling trends or
    maintenance concerns with the B-767 at this time. Currently, the KC-46A
    is in its development phase. The Air Force will participate in all
    design reviews to ensure our maintenance requirements are met and will
    monitor test and evaluation activities for trends.

        55. Senator Ayotte. Lieutenant General Reno, do you anticipate
    having to invest in system upgrades to the KC-135 in the interim before
    the transition to KC-46As? If so, can you describe what upgrades will
    be needed?
        General Reno. A variety of sustainment modifications are currently
    underway or planned for the KC-135 through 2040+ as we transition to
    the KC-46As. Current modifications include:

        (a)  Global Air Traffic Management, which replaces multiple
    avionics components to meet worldwide civil airspace access mandates;
        (b)  Block 45, which replaces the digital flight director,
    autopilot, radar altimeter and multiple analog engine gauges with an
    electronic multi-function display;
        (c)  a Mode-S upgrade to the transponder to enable access to
    worldwide civil airspace;
        (d)  a Mode-5 upgrade to the existing transponder to meet DOD-
    mandated requirements for enhancements to the Identification, Friend or
    Foe system;
        (e)  a Very High Frequency/Instrument Landing System Antenna
    modification which will replace the existing antenna due to
    obsolescence, and;
        (f)  an Auxiliary Power Unit (APU) Oil Cooler modification which
    adds an oil cooler to the APU to prevent hot oil temperature shutdowns
    in the area of responsibility.

        Planned future modifications will also include a variety of minor
    Acquisition Category III and low cost modifications to address
    maintenance discrepancies and parts obsolescence or symptoms common to
    aging aircraft. Safety modifications will be addressed as required.
    Additionally, Programmed Depot Maintenance will continue and include
    items such as rewiring, refurbishment of control surfaces, replacement
    of other primary structures, and other maintenance efforts to keep the
    aircraft viable through 2040+. Other potential upgrades will be vetted
    via the Air Force requirements process for validation, prioritization,
    and approval.

        56. Senator Ayotte. Lieutenant General Reno, finally, has the Air
    Force determined what manpower will be required to maintain the KC-46A
    at the base level?
        General Reno. The 2010 Manpower Estimate for the KC-135 Replacement
    Aircraft was submitted in accordance with the reporting requirements of
    Title 10, U.S.C., Sec. 2434. Required changes to the existing manpower
    requirements baseline will be accomplished through appropriate manpower
    programming actions.

        57. Senator Ayotte. Lieutenant General Reno, will routine
    maintenance be performed by Air Force personnel or by contractors?
        General Reno. For up to the first 5 years, the KC-46A will be
    maintained by Interim Contractor Support (ICS). Beyond the ICS period,
    the plan (which is subject to additional studies) is primarily for
    organic maintenance at the operational bases as well as the Air Force
    depots.

                   SUPPLIES AND EQUIPMENT FOR THE WARFIGHTER

        58. Senator Ayotte. Lieutenant General Stevenson, Lieutenant
    General Panter, Lieutenant General Reno, and Vice Admiral Burke, I have
    a question that cuts to the heart of this committee's top priority to
    support the warfighter. Has any unit deployed overseas at a contingency
    location, particularly in Afghanistan, provided an urgent needs request
    for supplies or an equipment item in the past year that has not been
    satisfied in a timely manner? If so, can you describe the supply or
    equipment item in detail?
        General Stevenson. Yes. Units sometimes deploy overseas with
    unsatisfied urgent needs requests. The Army endeavors to always meet
    the continuous and steady-stream of warfighter generated Operational
    Need Statements (ONS) and Joint Urgent Operational Need Statements
    (JUONS) for either emerging technologies or additional equipment.
    Commanders regularly and justifiably request immediate sourcing of ONS/
    JUONS to mitigate risk or provide a tactical edge based on new battle
    space, expanded scope of operations, or changes in enemy tactics. By
    way of context, HQDA receives ONS/JUONS for over 200 separate items
    every week, and at times, these can be very short notice requests. For
    example, Robots were requested thru an ONS for a new capability to
    combat the enemy's ever evolving Improved Explosives Device (IED)
    threat against dismounted patrols. In response to the ONS, the Army
    identified and deployed an operationally ready solution that was in
    testing, the Small Unmanned Ground Vehicle (SUGV) 320 man-portable
    robot. The Army used an existing contractual vehicle to procure these
    SUGV 320 robots as a commercial off-the-shelf (COTS) solution, and we
    also re-allocated resources to procure additional robots to meet future
    requests for Afghanistan. With the continued resourcing support of
    Congress, we can and will meet ONS and JUONS in the near and long term,
    and retain resourcing flexibility to provide equipping solutions to
    mitigate identified capability gaps. This process may not be always
    immediate, but will and does provide enduring material solutions for
    the operational benefit and safety of our soldiers in a quick a manner
    as possible.
        General Panter. The Marine Corps Urgent Needs Process is proving
    highly effective at meeting the urgent needs of Marines in combat. The
    clearest indication of this success is the increase of urgent need
    statement requests from 2008 until present. The Marine Corps processed
    38 requests in 2008, 35 in 2009, the number increased to 63 in 2010,
    and 22 have been processed so far this year. In the end, our commanders
    do not have the time to use a process that does not provide the desired
    results.
        The Marine Corps Urgent Needs Process is not focused on providing
    specific supply or equipment items; however, it is centered on quickly
    providing solutions to problems. Increasingly, these solutions are not
    available ``off the shelf'', but require a degree of rapid development
    and integration. Virtually every capability we are now delivering has
    never been acquired before.
        The objective of the Urgent Needs Process is ``to respond to urgent
    warfighting capability needs by providing the best available solutions
    to mission-critical capability gaps in a timeframe acceptable to
    operating force commanders''. The needs of our commanders are being
    satisfied through the Marine Corps Urgent Needs Process.
        General Reno. Air Force Central (AFCENT) is the Air Force lead to
    support to the combatant commander in Central Command. Neither I nor
    AFCENT/A4 is aware of any delays in support of urgent needs requests
    for supplies or equipment in this Area of Responsibility.
        Admiral Burke. The answer is ``no.'' Navy units deploying overseas
    to a contingency location, including Afghanistan, embark with the
    required levels of equipment and supplies. Urgent requests for supplies
    and equipment are responded to in a timely manner, and the means exist
    to timely respond and accurately track completion.
        In addition, for CSGs and ESGs in the 5th Fleet, due to their
    allowances and the transportation routes to and within, no major
    support issues have been reported. Cargo movement into Afghanistan is
    acceptable.

        59. Senator Ayotte. Lieutenant General Stevenson, Lieutenant
    General Panter, Lieutenant General Reno, and Vice Admiral Burke, has
    the inability to meet the request been caused by a lack of acquisition
    resources, a constricted manufacturing or supply pipeline, or some
    other factor? Please explain.
        General Stevenson. The inability to meet warfighter requested
    delivery dates can and has been caused by all the factors you have
    mentioned. For example, in support of the operational needs for a
    Persistent Threat Detection and Surveillance System (PTDSS), the
    Department was required to re-program funding to the appropriate
    funding line. While we received excellent support at all echelons thru
    the process, these actions require a detailed analysis and requirements
    validation process to ensure the best possible solution is provided to
    our warfighters. An example of a constricted manufacturing base is the
    OEF Camouflage Pattern (OCP) uniform. There are a limited number of
    American textile companies (which we are restricted to by the Berry
    Amendment) that can produce and supply these uniforms, and because of
    this, the Army ended up phasing in the fielding over a longer period of
    time than the warfighter would have preferred. An example of a
    constricted supply pipeline is SPARK II Minerollers. We have engaged in
    an aggressive effort to ship SPARK II Minerollers to theater; however,
    despite overcoming inter-theater shipping limitations, intra-country
    shipping challenges have adversely impacted our our ability to get them
    distributed within Afghanistan as fast as we would have liked. This is
    a tough business requiring detailed coordination--Congress has always
    supported our requests for appropriate levels of funding for materiel
    solutions in support of our warfighters' urgent requests, and we do our
    best to get what is required to them as quickly as possible.
        General Panter. For the Tactical Handheld Biometrics the required
    capability was not available off the shelf due to technological
    readiness levels. This was exacerbated by the requirement to be
    compatible with the existing biometrics architecture which included a
    proprietary algorithm for the capture, processing, and storage of iris
    images. Recent steps to solve this urgent warfighter need were met with
    vendor protest after a materiel solution was selected.
        For the Stand-off Suicide Bomber Detection the required capability
    was not available off the shelf due to technological readiness levels.
    Several COTS/NDI systems were provided quickly, but none have fully
    closed the gap. Efforts are ongoing to meet the full requirement
    through the integration of several distinct capabilities.
        General Reno. AFCENT is the Air Force lead to support to the
    combatant commander in Central Command. Neither I nor AFCENT/A4 is
    aware of any delays in support of urgent needs requests for supplies or
    equipment in this Area of Responsibility.
        Admiral Burke. N/A. Navy units deploying overseas to a contingency
    location, including Afghanistan, embark with the required levels of
    equipment and supplies. Urgent requests for supplies and equipment are
    responded to in a timely manner, and the means exist to timely respond
    and accurately track completion.

        60. Senator Ayotte. Lieutenant General Stevenson, Lieutenant
    General Panter, Lieutenant General Reno, and Vice Admiral Burke, have
    any of you heard of concerns that some equipment coming out of Iraq has
    been sent direct to Afghanistan in a deteriorated condition as opposed
    to going through depot maintenance first? If so please explain and
    provide details.
        General Stevenson. Equipment being redistributed out of Iraq to
    Afghanistan did not go thru ``depot maintenance'' first. However, where
    possible, all this equipment was routed thru Kuwait to be inspected and
    to ensure it was in a fully mission capable condition before it was
    onward moved to Afghanistan. In some instances, due to urgency of need,
    that was not possible, and yes, there were isolated reports of non-
    mission capable equipment being sent directly from Iraq to Afghanistan.
    However, those issues have long since been overcome. Our deployed
    equipment has generally met or exceeded our operational readiness
    standards for the last 9 years of the war, 90 percent for ground and 75
    percent for air, in both OND and OEF.
        General Panter. No, Headquarters Marine Corps has not received
    official reports concerning equipment coming out of Iraq and being sent
    directly to Afghanistan being in a deteriorated condition. Limited
    Technical Inspections (LTIs) were conducted on all equipment being
    transferred from OIF to OEF. Equipment deemed serviceable was sent
    directly to Afghanistan while equipment determined to be less than
    mission capable was retrograded from theater or received maintenance
    repair actions in order to bring it to mission capable status prior to
    being deployed to OEF.
        General Reno. AFCENT is the Air Force lead to support to the
    combatant commander in Central Command. Neither I nor AFCENT/A4 is
    aware of any equipment going directly to Afghanistan from Iraq in a
    deteriorated condition.
        Admiral Burke. No, I have not heard of such concerns. The Navy goes
    to great effort to ensure that all equipment sent to Afghanistan is
    fully functional and capable of operating in the projected operational
    environment. Equipment being transferred from Iraq is thoroughly
    cleaned, inspected, and has all necessary upgrades or improvements
    installed and tested prior to being sent to the Afghanistan AOR.
    Equipment held in the CENTCOM theater undergoes a condition-based
    inspection and analysis, and if deemed necessary, is sent to a depot-
    level maintenance facility for repair or refurbishment, prior to being
    sent to Afghanistan.

        61. Senator Ayotte. Lieutenant General Stevenson, Lieutenant
    General Panter, Lieutenant General Reno, and Vice Admiral Burke, do any
    of you have any concerns about the serviceability or condition of any
    equipment being sent to Afghanistan?
        General Stevenson. The Army is confident that the serviceability
    and condition of equipment being sent to Afghanistan is fully mission-
    capable. If transferred from Iraq to Afghanistan the equipment is
    inspected and repaired in theater prior to transfer. If the equipment
    is deployed from a unit's home station it has been reset to 10/20 +
    Delayed Desert Damage and Degradation (4D) standard, with all effects
    of any 4D removed.
        Our deployed equipment has generally met or exceeded our
    operational readiness standards for the last 9 years of the war; 90
    percent for ground and 75 percent for air.
        General Panter. Currently, the Marine Corps has no concerns about
    serviceability or condition of equipment being sent to Afghanistan.
        General Reno. AFCENT is the Air Force lead to support to the
    combatant commander in Central Command. Neither I nor AFCENT/A4 has
    concerns about the serviceability and condition of equipment being sent
    to Afghanistan.
        Admiral Burke. No, Navy goes to great effort to ensure that all
    equipment sent to Afghanistan is both functional and capable of
    operating in the projected operational environment. Equipment held in
    the CENTCOM theater undergoes a condition-based inspection and
    analysis, and if deemed necessary, is sent to a depot-level maintenance
    facility for repair or refurbishment, prior to being sent to
    Afghanistan.

        62. Senator Ayotte. Lieutenant General Stevenson, Lieutenant
    General Panter, Lieutenant General Reno, and Vice Admiral Burke, do any
    of you anticipate any supply or equipment shortfalls in the next 12
    months that we need to address?
        General Stevenson. We do not anticipate any significant supply or
    equipment shortfalls in the next 12 months. As we execute the drawdown
    of supplies and materiel from Iraq, we anticipate fewer demands and
    have proven processes in place to redistribute this equipment and
    supplies against other validated theater and Army requirements. We will
    continue to manage our equipment and supply needs closely as we have
    successfully demonstrated over the past 10 years in supporting our Army
    at war, and we hope to continue to enjoy the tremendous support we have
    received year after year from Congress.
        General Panter. No., The Marine Corps has experienced shortfalls in
    certain critical pieces of equipment which were mitigated through
    Service level prioritization initiatives (HQMC's Strategic Ground
    Equipment Working Group (SGEWG) actions) that give priority to the
    Marine units in theater and then those units training for deployment to
    OEF. Currently, there are no supply or equipment shortfalls for the
    foreseeable future (in the next 12 months [through June 2012]) that
    requires congressional level assistance.
        General Reno. The Air Force does not anticipate any major supply or
    equipment shortfalls in the next 12 months; however, as part of the
    Chief of Staff's fiscal year 2012 Unfunded Priorities List (UPL), we
    submitted two items to enhance logistics and maintenance sustainment.
        The Air Force requested replacement of 75 A-10 maintenance testers
    that are used to troubleshoot avionics and weapons functionality. The
    testers will provide greater strike capability and aircraft situational
    awareness. We also requested replacement munitions for those assets
    that were expended as part of Operation Odyssey Dawn.
        Admiral Burke. With respect to unit/operational support, the answer
    is ``no.'' The integrated priority lists, and the budgeting and
    execution processes have proven sufficient to address requirements and
    shortfalls for OCOs. Although continued Congressional support is always
    appreciated, no issues have been identified that would merit such
    intervention.
        With respect to fleet readiness and logistics programming, we
    highlight the response to a request from the House Armed Services
    Committee Ranking Member by the Chief of Naval Operations, which
    identified U.S. Navy fiscal year 2012 unfunded requirements of $684
    million for aviation spares and ship depot maintenance. The CNO noted
    that ``although these unfunded requirements are not of a higher
    priority than anything contained in the Navy's fiscal year 2012 budget
    submissions, these accounts are stressed by increased operational
    tempo.'' The ship depot maintenance account funds naval shipyard and
    private sector maintenance of surface ships and submarines, and the
    fiscal year 2012 unfunded component ($367 million) would restore 44
    deferred surface ship non-docking availabilities. The fiscal year 2012
    aviation spares unfunded component ($317 million) would provide
    aviation spares support for over 3,700 individual Fleet aircraft. The
    primary cost drivers for shortage in aircraft spares and repair parts
    are MV-22, EA-18G, F/A-18-E/F, and MH-60R/S. Congressional assistance
    and consideration of these accounts would be most appreciated.

        63. Senator Ayotte. Lieutenant General Stevenson, Lieutenant
    General Panter, Lieutenant General Reno, and Vice Admiral Burke, based
    on an assessment of current conditions, are you aware of any changes we
    need to make to the budget request for 2012 to allow resources to be
    more efficiently and effectively applied to the most critical
    warfighters' needs?
        General Stevenson. We do not require any changes to the fiscal year
    2012 budget request to meet critical warfighter needs. Should any new
    requirements emerge in the near future, we will ensure congressional
    staffs are made aware of them immediately.
        General Panter. The following changes to the fiscal year 2012
    budget would provide the greatest impact to warfighter needs:

             Fiscal Year 2012 Unfunded Requirements List

                     Enterprise Land Mobile Radar (E-LMR) ($45.0
                    million PMC) - Provides the network infrastructure
                    ``backbone'' to complement first responder capabilities
                    at various locations. Also enhances training range
                    safety by expanding coverage over a broader area, and
                    FCC radio frequency issues at MCAS Yuma. Restores
                    funding marked from fiscal year 2011 OCO as a
                    ``baseline requirement'' but not added to the fiscal
                    year 2011 baseline.
                     Secondary Fire Suppression Phase II for LVSR,
                    MTVR ($17.0 million PMC) - Emergent requirement to
                    extinguish secondary vehicle fires. Procures aqueous
                    fire suppression systems for 1,104 MTVRs and LVSRs
                    deployed in OEF that operate outside Forward Operating
                    Bases.
                     Chemical/Biological/Nuclear Incident Response
                    Force (CBRN/CBIRF) ($1.0 million PMC/$8.5 million OMMC)
                    - Emergent requirement based on lessons learned in
                    Japan. Upgrades Incident Response Force equipment/
                    capability with new technology insertion devices,
                    protective suits, replacement respirators, extended
                    operation filters, and unified command suites.

             Medium Tactical Vehicle Replacement Realignment (MTVR)
            Request - The Marine Corps has forwarded a request to the
            Congressional Appropriations and Armed Services committees
            regarding approximately $298 million in PMC OCO funds that were
            no longer required to purchase MTVR vehicles and has requested
            that those funds be realigned as follows:

                     $148 million for Logistics Vehicle System
                    Replacement vehicles
                     $82 million for Expeditionary Energy
                    Requirements (advanced power sources, mobile power
                    equipment, energy efficient tent liners and lights)
                     $70 million for Command and Control Equipment
                    (data distribution systems and digital technical
                    control)

        General Reno. No changes to the fiscal year 2012 President's budget
    (PB) request are needed. The fiscal year 2012 PB request represents the
    best possible balance between mission requirements and risk within the
    authorized funding levels.
        Admiral Burke. The Navy would request the Senate's support for the
    two items on the CNO's unfunded priority list: an additional $367
    million for ship maintenance and an additional $317 million for
    aviation spares support.

     REDUCED READINESS RATES AND OUTDATED EQUIPMENT FOR NATIONAL GUARD AND
                                 RESERVE UNITS

        64. Senator Ayotte. Lieutenant General Stevenson, the Reserve
    component continues to face reduced readiness rates as a result of
    shortfalls in equipment. In the most recent National Guard and Reserve
    Equipment Report, nearly $4.1 billion in significant major item
    shortages were identified for the Army National Guard (ARNG) alone.
    What do you estimate to be the total shortfall in National Guard
    equipment and modernization requirements?
        General Stevenson. The Army continues in its efforts to address the
    ARNG equipment and modernization shortfall. With the help of Congress,
    over $31 billion has been appropriated for procurement of ARNG
    equipment from fiscal year 2007-fiscal year 20l1. As stated in the
    fiscal year 2012 National Guard and Reserve Equipment Report, the total
    ARNG equipment shortfall was $25.2 billion as of September 30, 2010.
    The Army has requested an additional $3.5 billion for ARNG equipment in
    the fiscal year 2012 President's budget.
        As a result of significant investment to improve the ARNG's
    equipping posture, the Army projects the ARNG will have 92 percent of
    its EOH at the beginning of fiscal year 2012.

        65. Senator Ayotte. Lieutenant General Stevenson, to what degree
    are equipment shortfalls among the National Guard impacting the ability
    of units to properly train and maintain readiness for potential
    contingencies?
        General Stevenson. The impacts of equipment shortfalls for ARNG
    training and readiness have been significantly reduced. The portion of
    ARNG units that now meet minimum standards of readiness increased 17
    percent in the past year. ARNG units are now equipped to a level
    comparable to active units, except for modernization, where the ARNG
    slightly trails the Active component. Progress is clearly reflected in
    the effort it takes to equip an ARNG unit for deployment now, versus in
    previous years: the amount of equipment redistributed in fiscal year
    2010 was down by 87 percent from the historical average to 3,826
    pieces. In addition, equipment on-hand for several categories of
    equipment important to the ARNG domestic response mission (water
    purification, HMMWVs, heavy cargo trucks, and fuel haulers) has doubled
    for ARNG units since 2005.
        One readiness challenge involves training on equipment only
    available in theater, at a mobilization station, or fielded just prior
    to mobilization (i.e., Warfigther Information Network-Tactical
    equipment which provides mobile satellite communication, ground-based
    network capabilities, and MRAP vehicles). ARNG readiness issues from
    equipment shortages will be mitigated through future programmed
    deliveries.

        66. Senator Ayotte. Lieutenant General Stevenson, what is being
    done to ensure that the Reserve component is provided proportional and
    concurrent fielding with its Active component colleagues?
        General Stevenson. The Army's objective is to ensure the Reserve
    component is provided proportional and concurrent equipment fielding
    with its Active component (AC) counterparts through policy, equipping
    conferences, EOH and requirements analysis, the Reserve component
    payback program, Transparency Program and the equipping Program
    Objective Memorandum development process.
        The Army's Equipping Strategy establishes EOH readiness Aim Points
    for units as they progress through the ARFORGEN process. These goals
    apply equally to all three components--Active, Reserve, and ARNG. The
    Army holds equipping conferences twice each year to finalize equipment
    distribution plans. These conferences are attended by each Army
    component and the Army commands that support the combatant commanders.
        At the end of March 2009, the aggregate Army EOH was 78 percent
    (6.37 million out of 8.11 million), the AC 80 percent (3.1 million out
    of 3.9 million), the ARNG 77 percent (2.45 million out of 3.19 million)
    and the U.S. Army Reserves (USAR) 80 percent (.82 million out of 1.02
    million). Based on procurement plans developed in collaboration with
    the ARNG and USAR, by the end of October 2012, the aggregate Army EOH
    is projected to be 92 percent (8.34 million out of 9.04 million); 93
    percent (3.40 million out of 3.66 million) for AC, 92 percent (2.66
    million out of 2.90 million) for ARNG and 90 percent (.89 million out
    of 1.0 million) for USAR.
        In September 2010, the ARNG equipment modernization levels were at
    72 percent, an 18 percent improvement from September 2008; USAR was at
    67 percent, a 12 percent improvement; and the AC was at 74 percent, a
    12 percent improvement. Modernization will continue to improve for all
    Army Components and is projected to be 74 percent (+2 percent) for the
    ARNG, 68 percent (+1 percent) for the USAR and 77 percent (+3 percent)
    for the AC by October 2012.
        The Army conducts detailed analyses to determine if the
    distribution of equipment is proportional to the distribution of
    requirements for each of the Army's components. These analyses are
    conducted twice each year in coordination with the ARNG and USAR, and
    is used as part of the Army's equipping conferences.
        The Army is committed to equipping soldiers going into harm's way
    with the most capable systems. This strategy applies to Reserve
    component units as well as Active component units and is designed to
    modernize the Reserve components comparative to the Active component.

        67. Senator Ayotte. Lieutenant General Stevenson, does the National
    Guard have adequate facilities to properly store and maintain the
    equipment they are receiving?
        General Stevenson. The ARNG has a 2.4 million square foot deficit
    in maintenance facilities nationwide. Additionally, 40 percent of the
    Readiness Centers in the ARNG inventory are over 50-years-old. These
    Readiness Centers accommodate just half of the capacity for equipment
    and personnel of today' s ARNG units. The Army's equipment requirements
    have grown with Army modernization over the last 50 years, and the
    current facilities do not meet the requirements to store modern
    equipment. To address this issue the Army and ARNG have agreed that
    beginning in fiscal year 2015, the Guard should receive about 20
    percent of the Military Construction Total Obligation Authority based
    on the ARNG's real estate inventory and attributes.

                                   ARMY RESET

        68. Senator Ayotte. Lieutenant General Stevenson, despite billions
    of dollars invested in reset, Army readiness continues to remain
    stagnant. Ready units are consumed as quickly as they can be produced.
    While I understand this is a function of significant demand abroad, I
    am concerned that any meaningful decrease in demand will likely be
    followed quickly by a decrease in the availability of OCO dollars. With
    this said, I am very disappointed that the Army agreed to forfeit over
    $1.0 billion in funding requested in the fiscal year 2011 OCO account
    for equipment reset because it was requested in the wrong account, as
    opposed to aggressively pursuing a reprogramming to fund other critical
    unfunded equipment reset priorities this year. Do you have reset
    requirements that you could have used the funding for?
        General Stevenson. No. Following the end of fiscal year 2010, the
    Army assessed its Reset requirements for fiscal year 2011 (which were
    built over a year prior). After careful review, it was determined that
    O&M Reset, in-theater maintenance, and procurement Reset were fully
    supported in our revised request. We could not reprogram the dollars
    because they had not been appropriated yet (we were under a continuing
    resolution) and we had no critical unfunded equipment reset
    requirements.
        Nonetheless, the support for the Army's Reset requirements has
    resulted in the restoration of equipment readiness to support current
    and future contingencies. Our equipment operational readiness has been
    generally maintained at 90 percent for ground and 75 percent air for
    the last 9 years, a direct result of the Reset investment.

        69. Senator Ayotte. Lieutenant General Stevenson, do you have a
    similar problem in the fiscal year 2012 budget request?
        General Stevenson. At this point we do not anticipate having any
    excess Reset dollars in our fiscal year 2012 Reset request.
        However, it is always possible to have operational decisions that
    impact the return of equipment in a given fiscal year that impact our
    actual Reset workload and subsequent funding posture. As these fact-of-
    life situations occur, we will keep Congress informed on their affect
    and impact on our resourcing requirements.

        70. Senator Ayotte. Lieutenant General Stevenson, given that you
    have repeatedly stated that it will be 2 to 3 years following the
    conclusion of operations in Iraq and Afghanistan before the Army can be
    fully reset, I can't help but envision a gap between reset requirements
    and available funding in the out-years. Are you confident that
    sufficient resources will be available through at least 2016 or 2017,
    as would be required to reset forces returning from Afghanistan under
    the current timeline?
        General Stevenson. With the support of Congress, we will have
    sufficient resources available through 2017 to ensure that the
    equipment returning is repaired or replaced to support future
    contingencies.
        Forces are ramping down in both Iraq and Afghanistan and, as a
    result, our OCO requirements are decreasing.
        If there is a gap we will have to prioritize our requirements to
    address the most critical items and take risks in restoring or
    sustaining our equipment since our peacetime budgets do not adequately
    address the incremental costs to repair or replace equipment as a
    result of operations in a harsh demanding environment for an extended
    period of time.
        Ensuring that our equipment is ready for the next contingency is
    absolutely critical. As we have learned from history, the equipment
    that you have at the end of a conflict is usually the same equipment
    that you must use to fight the next conflict. Maintaining our equipment
    to a high readiness standard ensures that we are able to respond to any
    contingency.

                          CONDITIONS OF NAVY SHIPYARDS

        71. Senator Ayotte. Vice Admiral Burke, GAO released a report late
    last year that detailed actions needed to improve the Navy's processes
    for managing public shipyards' restoration and modernization needs. The
    report noted that ``The Navy has not issued guidance detailing the need
    for shipyard strategic plans or what to include in them.'' We also
    received data from the Navy that details a $3.5 billion backlog of
    facility repair requirements at the four shipyards as of the end of
    fiscal year 2010. In response to these alarming trends, working with my
    colleagues, I've drafted legislation for the Readiness and Management
    Support Subcommittee mark this year that will require the Secretary of
    the Navy to develop an investment strategy to address the inadequate
    facilities and infrastructure at our shipyards. Based on current
    funding over the next 5 years, will this backlog be reduced or continue
    to grow?
        Admiral Burke. The Navy anticipates that the shipyard facility
    recapitalization backlog will continue to grow as high operational
    demands and rising costs continue to cause the Navy to take risk in
    shore readiness, specifically in the sustainment, restoration, and
    modernization of our shore infrastructure.

        72. Senator Ayotte. Vice Admiral Burke, can you describe how the
    Navy prioritizes shipyard facility restoration and modernization
    requirements?
        Admiral Burke. With workforce safety, health, and quality of life
    as top priorities, the Navy develops comprehensive restoration and
    modernization (RM) projects, based primarily upon the Infrastructure
    Condition Assessment Program (ICAP) and Asset Evaluation (AE) program
    data.
        We cannot address every shortfall in the desired timeframe due to
    fiscal constraints, so shipyard projects are evaluated and prioritized
    with all Navy projects. Our shore investments are prioritized to best
    enable warfighting and Joint capabilities, minimize the decline of
    critical mission-essential and quality of life infrastructure, and
    optimize warfare enterprise outputs and quality of service.

                   FUTURE CAPABILITIES OF MAINTENANCE DEPOTS

        73. Senator Ayotte. Lieutenant General Stevenson, Lieutenant
    General Panter, Lieutenant General Reno, and Vice Admiral Burke, DOD
    operates 17 major depot activities, employing more than 77,000
    personnel and expending more than 98 million DLHs annually with the
    mission to provide a ready and controlled source of organic depot
    maintenance for most major military weapon systems. Congress recently
    received a report from the LMI Consulting Group on the effectiveness
    and efficiency of these depots.
        The report concluded that the increased demand over the past 9
    years, which increased DOD's organic depot maintenance workload by 50
    percent, will not be sustained as our Nation reduces its involvement in
    OCO. Also, reductions in the overall defense budget, and a likely
    elimination or large reduction in war-supplemental funding could
    further reduce depot activity. In fact, the report noted an alarming
    fact that the Army and Marine Corps budget for over 80 percent of their
    depot workload from the OCO accounts, as opposed to the base budget
    requested by the President each year. Does this reliance on the OCO
    concern you?
        General Stevenson. The Army's reliance on OCO is declining as our
    base depot maintenance budget is restored. As a result, our current
    reliance on OCO does not concern me at this time. Army's base depot
    maintenance funding levels have increased from $1.1 billion in fiscal
    year 2010 to $2.1 billion in fiscal year 2012 and have been sized to
    cover our Core requirements.
        We have taken a number of steps to ensure that the depots are
    postured to support Army base requirements in a post war environment
    through our Industrial Base Strategy which identifies and prioritizes
    Core requirements; sizes our organic base facilities and workforce to
    meet and sustain those core competencies; and uses proven practices
    like Lean Six Sigma to ensure that our maintenance depots maintain
    their core competencies and capabilities to meet future requirements.
        We do expect equipment returning from the current OCOs will require
    more resources for reset than we will have in the depot maintenance
    base budget due to damage from the harsh operating conditions. The Army
    will request OCO funds, separate from the base budget, for this portion
    of reset. The Army also expects that the some level of OCO funding will
    be required for 2-3 years after the return of forces.
        General Panter. Yes, while we have financed our overall Depot Level
    Maintenance Program with a heavy reliance on OCO funding, we are moving
    more into the baseline as we work through the budget process. We are
    positioned to bring our costs down as workload from the war diminishes.
        General Reno. Reliance on OCO funding is a concern, since the Air
    Force's WSS portfolio currently requests approximately $2 billion a
    year in OCO funding. For this reason, the Air Force is developing a
    plan to fund the baseline at 80 percent of requirements by fiscal year
    2016. Because historic funding levels, with OCO, have proven sufficient
    in meeting enduring mission requirements, this plan requires increased
    baseline funding to sustain enduring WSS requirements when OCO funding
    ceases.
        Admiral Burke. In general, the LMI report shows a relatively stable
    Navy workload, even after a projected drawdown of operations in Iraq
    and Afghanistan. Navy strategy is to ``reset in stride'', so that our
    ships and aircraft reach their expected service life. Navy is concerned
    about the continuing reliance on OCO to fund base requirements, but is
    working with OSD to correct this challenge. If OCO funding is not
    appropriated as requested in fiscal year 2012, the Navy will only be
    able to fund 79 percent of the ship maintenance requirement and 87
    percent of the aviation depot maintenance requirement from the base
    budget.

        74. Senator Ayotte. Lieutenant General Stevenson and Lieutenant
    General Panter, Lieutenant General Reno, and Vice Admiral Burke, do the
    plans for your respective Services over the next 5 years include a
    return of depot operations funding back into the base budget at levels
    that will maintain an adequate workload?
        General Stevenson. Yes, the Army has initiated an OIB Strategy that
    is designed to ensure a relevant OIB is sustained in order to meet
    future contingency requirements. As a result, the Army has taken action
    to ensure that our depot core competencies are identified and that the
    workload necessary to sustain our core competency requirements is
    requested in the budgets. The Army will continue to balance depot
    maintenance funding with other Army priorities to ensure that the Army
    can meet current and future core requirements. These actions ensure
    that organic base facilities and workforces meet and sustain core
    competencies; provide a ready and controlled source of technical
    ability, expertise, and resources; and execute depot-level maintenance
    effectively and efficiently.
        General Panter. Yes, The Marine Corps has increased baseline
    funding for the Marine Corps Equipment Maintenance Program as reflected
    in the current fiscal year 2012-2013 budget submission. The increase in
    funding, as mandated by the OSD Depot metric of funding 80 percent of
    the total depot maintenance requirements, properly aligns baseline
    funding with projected baseline requirements.
        General Reno. Yes. During the fiscal year 2012 Presidents budget
    build, the Air Force was directed via Resource Management Directive 700
    to develop a plan to migrate WSS OCO-to-baseline funding by fiscal year
    2016. We are developing the plan as part of the fiscal year 2013
    Program Objective Memorandum process. The plan will require increases
    in baseline funding to sustain enduring WSS missions when OCO funding
    ceases. Without OCO-to-baseline funding migration, WSS will experience
    significant risk resulting in deferred depot-level maintenance and
    possible aircraft groundings.
        Admiral Burke. The Navy continues to evaluate a transition of depot
    maintenance to the baseline budget. In the fiscal year 2012 baseline
    submission, the Navy will be able to fund 79 percent of the ship
    maintenance requirement and 87 percent of the aviation depot
    maintenance requirement.

        75. Senator Ayotte. Lieutenant General Stevenson, Lieutenant
    General Panter, Lieutenant General Reno, and Vice Admiral Burke, what
    are your responses and opinions of the LMI Study?
        General Stevenson. The Army agrees with many of the recommendations
    in the LMI report and believes them to be aligned with the Army's
    overall OIB Strategy. We agree that the statutory framework could be
    improved with regard to a clearer definition of depot maintenance. We
    also support the need to establish a closer link between the
    acquisition and sustainment policies.
        However, some of the recommendations are not new initiatives. For
    example, the Army has already made significant improvements to the Core
    process and completed a draft OIB Strategy that will ensure sustainment
    of a relevant and responsive OIB into the future.
        We disagree with improving depot maintenance reporting and
    establishing an independent commission to look at inefficiencies. The
    Army's reporting process is sound and we are actively pursuing
    efficiencies across DOD as well within our own service. The Army
    believes that current issues and inefficiencies can be addressed
    through a series of facilitated forums, such as the Maintenance
    Executive Steering Committee (MESC). Such forums would allow the
    Services to share best practices and allow DOD to adopt the practices
    that are applicable across the Services. The Marine Corps and Navy
    officials also agreed that existing bodies such as the MESC could
    address these issues.
        Finally, we feel that this is an important study of a very complex
    issue. The report raises a number of issues that could have financial,
    organizational, legislative (i.e., recommendation to combine statutes
    such as 50/50 and core), and readiness implications. We look forward to
    addressing these concerns as we move forward in this endeavor.
        General Panter. The Marine Corps greatly respects the efforts of
    the LMI study. While there are portions of the study that the Marine
    Corps agrees, there are portions with which the Marine Corps disagrees
    such as the implied suggestion that a Joint Depot Maintenance Command
    would streamline the depot maintenance process and simply reduce
    overhead and create more efficient business practices.
        Regarding LMI's observation on Depot Reliance on OCO funding,
    budget proposals for POM 12 have begun to increase baseline figures to
    meet estimated funding requirements for post-OEF sustainment levels.
        General Reno. We believe the Logistics Management Institute (LMI)
    study identified key issues that must be resolved. We will work with
    Office of the Secretary of Defense (OSD) to jointly address the
    necessary changes to ensure the Air Force has a ready and controlled
    source of technical competence and resources necessary to ensure
    effective and timely response to mobilizations, national defense
    contingency situations, and other emergency requirements. Some of the
    focus areas will be:

        (1)  strengthening the core assessment,
        (2)  including software in the depot maintenance definition, and
        (3)  retaining both the 50/50 and core laws and developing a
    methodology to align core consistent with 50/50 implementation.

        Admiral Burke. The LMI Study contains some good recommendations,
    but Navy does not agree with all the recommendations. The Navy does not
    see value in establishing an independent commission to review
    governance structures. The Services are capable of working directly
    with OSD to address these types of issues. Additionally, some of the
    additional reporting requirement recommendations do not add value.
    There is value in the recommendations to strengthen both the
    acquisition and the ``core'' determination processes. However, we must
    be mindful of increasing reporting requirements, rather than improving
    the reporting requirements which are already present.

        76. Senator Ayotte. Lieutenant General Stevenson, Lieutenant
    General Panter, Lieutenant General Reno, and Vice Admiral Burke, do you
    believe Congress needs to clarify what the report called ``an ambiguous
    statutory framework for depot maintenance, including a definition that
    is subject to interpretation''?
        General Stevenson. We agree that the statutory framework (title 10,
    U.S.C., section 2460) could be improved to clarify the definition of
    software maintenance and the reporting exceptions for 50/50.
        Title 10, U.S.C., section 2460, which defines depot maintenance,
    provides an ambiguous definition of depot-level software maintenance,
    stating that the term depot maintenance ``includes (1) all aspects of
    software maintenance classified by DOD as of July 1, 1995''. As
    reported in the recently published LMI Future Depot Capability Study,
    there is no source documentation dated July 1, 1995. Thus, we support
    LMI's recommendation that Section 2460 be amended to include a
    comprehensive definition of depot-level software maintenance for use by
    all of the military services. The Office of the Deputy Assistant
    Secretary of Defense for Maintenance Policy & Programs (ODASD(MP&P))
    has recently developed a DOD-wide definition of depot maintenance
    software.
        Section 2460 also provides the following exceptions to the
    definition of depot maintenance: ``(b) Exceptions. - (1) The term does
    not include the procurement of major modifications or upgrades of
    weapon systems that are designed to improve program performance or the
    nuclear refueling of an aircraft carrier. A major upgrade program
    covered by this exception could continue to be performed by private or
    public sector activities. (2) The term also does not include the
    procurement of parts for safety modifications. However, the term does
    include the installation of parts for that purpose.''
        We support the definition of depot-level maintenance as amended in
    HR 1540 as follows:
              ``(a) In General.-In this chapter, the term ``depot-level
            maintenance and repair'' means (except as provided in
            subsection (b)) the processes of material maintenance or repair
            involving the overhaul, upgrading, rebuilding, testing,
            inspection, and reclamation (as necessary) of weapon systems,
            equipment end items, parts, components, assemblies, and
            subassemblies. The term includes--

                      (1) all aspects of software maintenance;
                      (2) the installation of parts or components for
                    modifications; and
                      (3) associated technical assistance to intermediate
                    maintenance organizations, operational units, and other
                    activities.

              (b) Exception.-The term does not include the nuclear
            refueling of an aircraft carrier.''

        The above definition is adopted from DOD Instructions (DODI)
    4151.20, titled ``Depot Maintenance Core Capabilities Determination
    Process''.
        General Panter. The current Title 10, Section 2464 definition of
    depot maintenance, as well as the definition of depot software
    maintenance, is open to interpretation. Although it allows flexibility
    in recording and reporting, it also creates inconsistency in how and
    what the Services consider depot maintenance and depot software
    maintenance.
        General Reno. The Air Force agrees with the Logistics Management
    Institute's (LMI) recommendation that Congress and DOD should reexamine
    all the depot-related statutes and guidance to determine what revisions
    are required. The Air Force looks forward to working with Congress and
    DOD to help strengthen the statutory framework for depot maintenance.
        Admiral Burke. The Navy does not have challenges interpreting the
    statutory framework for depot maintenance. However, efforts to better
    define depot maintenance should consider Service unique requirements.
    For example, the nuclear refueling of aircraft carriers is currently
    excluded from the statutory definition of depot-level maintenance (10
    U.S.C. 2460). This exclusion should be sustained, given that a large
    single project, which can only be accomplished at a single yard
    (Huntington Ingalls), can cause an unintended imbalance in the mix of
    workload between the public and private sector, and impact Navy's
    ability to comply with public vs. private sector workload requirements.

        77. Senator Ayotte. Lieutenant General Stevenson, Lieutenant
    General Panter, Lieutenant General Reno, and Vice Admiral Burke, do you
    believe that acquisition decisions could be better connected to
    considerations of the organic depot system? If so, how are you
    incorporating life cycle maintenance and depot considerations into
    acquisitions decisions?
        General Stevenson. The Army has made great strides over the past
    several years developing policy and processes that better link the
    acquisition decisions with the organic depot system and future life-
    cycle support. Our assessment of the necessary linkages is an evolving
    process and not yet complete.
        Current Army policy requires that fleet management and sustainment
    strategies be integrated early in the acquisition development process
    to ensure DOD organic depots and industry are considered as sources of
    repair. This is called the depot source of repair (DSOR) or source of
    repair analysis decision process.
        We have taken several steps in the past 2 years to ensure
    acquisition decisions are better connected to our organic depots. These
    steps include:

             Strengthened emphasis on Program Manager (PM),
            initiation and completion of the DSOR process, working closely
            with Army Materiel Command (AMC) Life Cycle Management Command
            (LCMC) Integrated Materiel Management Center (IMMC) and Depot
            logisticians. The DSOR decision serves as the critical
            component of the future sustainment strategy for the weapons
            system and is made at or before Milestone C in the acquisition
            process.
             Emphasized the need to complete CLAs NLT Milestone B
            ((i.e., by the end of the Technology Development Phase) and
            CDAs NLT Milestone C. The CLA and CDA identifies the weapon
            system and component core requirements, the technical data and
            plant and equipment needed to conduct depot level repair. Core
            requirements are those depot support requirements measured in
            annual DLHs performed at our organic depots that are necessary
            to sustain warfighting weapon systems.

        The Army has implemented an integrated acquisition process that
    considers the Army depots early in the life-cycle. This is done through
    coordination between the AMC LCMC IMMC and Depot logisticians and the
    PM's staff. AMC logisticians are now assisting PMs in completing their
    CLA, CDA, and DSOR analyses as required.
        General Panter. The Marine Corps recognizes and normally acts in
    accordance with the Integrated Defense Acquisition, Technology, and
    Logistics Life Cycle Management System, which calls for the
    consideration of organic depot capabilities during the Technology
    Development Strategy portion of the acquisition process. This is done
    prior to the Milestone A decision; however, due to the rapid
    acquisition of some of our major weapon systems such as the MRAP and
    LVSR, the maintenance considerations have been deferred and the gap
    filled by the use of Contractor Logistics Services and Warranties.
        General Reno. The Air Force requires a core analysis at Milestone A
    to facilitate the linkage between the acquisition community and the
    logistics community. This core analysis is part of the depot source of
    repair process incorporating 10 U.S.C. Sec. 2464 (Core) and 10 U.S.C.
    Sec. 2466 (50/50) and provides the program office with a point of
    contact at the Air Force-assigned organic depot. This process links the
    subject matter expertise at the Air Logistics Centers to the program
    office to ensure depot considerations are incorporated in the life
    cycle sustainment plan.
        Admiral Burke. The Navy does believe that acquisition decisions
    could be better connected to both life cycle maintenance and organic
    depot system considerations. An enabler would be a clear and accurate
    Maintenance Plan developed earlier in the acquisition lifecycle.
        To promote the need for early planning, the Navy has developed
    Strategic Planning Imperatives for Industrial Depot Maintenance (SPI
    for IDM). The SPI for IDM identifies key planning activities to help
    Program Managers develop the industrial depot maintenance portion of
    their overall sustainment plan.
        The main focus of the planning effort, in accordance with DODI
    5000.02, is initiation of the industrial depot maintenance planning
    processes and procedures early in the acquisition lifecycle. The
    continuous analysis will result in actual decisions being made as early
    as possible in the lifecycle. When the program becomes stable and
    available information has matured to the appropriate level, the final
    Core Determination (Title 10 U.S.C. 2464) and Depot Source of Repair
    decision processes can be performed.

                  CHANGES TO NAVY FLEET MAINTENANCE OPERATIONS

        78. Senator Ayotte. Vice Admiral Burke, in a recent interview, the
    Secretary of the Navy, Ray Mabus, signaled that the Navy needs to steer
    away from the fleet response plan, with its short-notice ``surge''
    deployments, in favor of a more predictable schedule with enough down-
    time for maintenance and personnel. Yet, in your written testimony, you
    state that: ``the fleet response plan remains the foundation for Navy
    force generation, and has proven to optimize returns on training and
    maintenance investments.'' You go on to admit that the high intensity
    of operations has increased the risk of nondeployed forces being ready
    for new assignments on short notice, such as the recent operation in
    Libya. How is the Navy steering away from the fleet response plan?
        Admiral Burke. While Navy remains committed to the principles of
    the Fleet Response Plan (FRP), the current pace of deployed operations
    is not sustainable. FRP was designed to provide surge capacity to
    respond to emergencies. The use of that extra capacity has become
    common and many battle groups have deployed twice in the same
    operational cycle stressing ships and crews.
        Navy is working with OSD to develop a more sustainable balance
    between training, maintenance and PERSTEMPO versus the worldwide demand
    for our forces, to ensure we can both meet demand and reach expected
    service life for our platforms.
        Navy global presence will remain important as current operations
    wind down, but returning to a more predictable deployment schedule will
    be essential to resetting the material condition of our Fleet.

        79. Senator Ayotte. Vice Admiral Burke, what is the Navy doing to
    establish a more predictable schedule for ship maintenance?
        Admiral Burke. The Navy's maintenance schedules are driven first by
    operational schedules and then by the availability and capacity of the
    industrial base to complete the work, when the ships are available.
    Ship maintenance schedules are developed years in advance working in
    conjunction with operational planners. The vast majority of scheduled
    depot availabilities occur as scheduled. The Navy is working closely
    with the combatant commanders to ensure maintenance issues are
    considered as part of the Request for Forces process that should limit
    churn and provide even more predictability to the ship maintenance
    schedules.

                        AFLOAT MAINTENANCE AND READINESS

        80. Senator Ayotte. Vice Admiral Burke, the Navy has proposed an
    efficiency initiative to move 2,200 sailors from ashore jobs to afloat
    jobs to perform ship maintenance. Secretary Mabus described it as:
    ``some of the preventive maintenance you can do afloat.'' As the top
    logistician for the Navy, how efficient is it for the Navy to perform
    ship maintenance while afloat?
        Admiral Burke. Having Sailors perform maintenance that is within
    organization level capability is both efficient and effective. When
    sailors perform routine preventative and corrective maintenance, they
    gain greater in-depth knowledge of their equipment, develop a stronger
    sense of ownership and pride in its condition and appearance, and
    maintain their equipment in better working order. The increased skill
    level and sense of ownership directly impacts the readiness of deployed
    ships and submarines operating far from intermediate and depot repair
    facilities by enabling the crew to perform critical at-sea repairs when
    needed, in lieu of returning to port, and reduces reliance on overseas
    maintenance organizations or fly away repair teams.
        It is also more efficient for intermediate and depot repair
    facilities to conduct the more complex maintenance for which they are
    better suited instead of performing organizational level preventative
    and corrective maintenance; organizational level maintenance does not
    require the same level of experience, controls or oversight that
    intermediate and depot repair facilities are designed to provide.
        Additionally, by conducting maintenance when needed by sailors
    afloat, ships are in better operational condition when arriving for
    depot availabilities, thereby reducing the net maintenance requirement
    and ultimately the cost of maintaining the Fleet.

        81. Senator Ayotte. Vice Admiral Burke, wouldn't it be more
    efficient and effective for ashore crews or the shipyards to accomplish
    all maintenance items at one time as opposed to requiring a ship's crew
    to assume responsibility for certain items?
        Admiral Burke. No, sailors must perform preventive and corrective
    maintenance while deployed in order to maximize their ship's
    operational readiness.
        When sailors perform routine preventative and corrective
    maintenance they gain a greater in-depth knowledge of their equipment,
    develop a stronger sense of ownership and pride in its condition and
    appearance, and maintain their equipment in better working order. The
    increased skill level and sense of ownership directly impacts the
    readiness of deployed ships and submarines operating far from
    intermediate and depot repair facilities by enabling the crew to
    perform critical at-sea repairs when needed, in lieu of returning to
    port, and reduces reliance on overseas maintenance organizations or
    fly-away repair teams.
        It is also more efficient for intermediate and depot repair
    facilities to conduct the more complex maintenance for which they are
    better suited instead of performing organizational level preventative
    and corrective maintenance; organizational level maintenance does not
    require the same level of experience, controls or oversight that
    intermediate and depot repair facilities are designed to provide.
        Additionally, by conducting maintenance when needed by sailors
    afloat, ships are in better operational condition when arriving for
    depot availabilities, thereby reducing the net maintenance requirement
    and ultimately the cost of maintaining the Fleet.

        82. Senator Ayotte. Vice Admiral Burke, isn't the Navy just
    transferring workload from an ashore force to a ship's crew?
        Admiral Burke. Workload is not being transferred from ashore to
    ship's crew. Increased shipboard manpower is being provided to improve
    damage control/firefighting readiness, safety of navigation,
    preservation, material readiness, and underway watch standing. These
    additional personnel will perform preventive and corrective maintenance
    and more efficiently distribute the workload.

        83. Senator Ayotte. Vice Admiral Burke, how does this affect the
    ship's readiness and effectiveness while deployed?
        Admiral Burke. Increasing the billets on ships will restore the
    workforce necessary to support damage control/firefighting readiness,
    safety of navigation, preservation, material readiness, and underway
    watch standing for the ship's crew, both while deployed and in
    homeport. When sailors perform preventative and corrective maintenance
    assigned to them, they gain a greater in-depth knowledge of their
    equipment, develop a stronger sense of ownership and pride in its
    condition and appearance, and thereby maintain the equipment in better
    working order. The increased skill level and sense of ownership
    directly impacts the readiness of deployed ships and submarines by
    enabling the crew to perform critical at-sea repairs while operating
    far from intermediate and depot repair facilities, in lieu of returning
    to port. This in turn reduces reliance on overseas maintenance
    organizations, contracted facilities, and fly away repair teams.

        84. Senator Ayotte. Vice Admiral Burke, does this mean that ships
    will deploy without the full maintenance schedule being accomplished,
    thus reducing ship readiness?
        Admiral Burke. No, prior to deployment, Navy vessels are given a
    pier-side availability period to prepare for deployment. During that
    availability, emphasis is given to clearing corrective maintenance
    items and grooming communications, combat systems, engineering,
    electronic and aviation systems, in order to ensure the highest
    possible reliability during deployment.

                      AIR FORCE WEAPONS SYSTEM SUSTAINMENT

        85. Senator Ayotte. Lieutenant General Reno, in the area of
    aircraft maintenance and sustainment, the Air Force realized during
    preparation of the 2012 budget that it was $7 billion short through the
    next 5 years. In response, Air Force leaders approved a $4 billion
    increase to sustain 400 new airframes and existing legacy weapon
    systems, while looking for efficiencies to address the remaining $3.0
    billion. The Air Force then initiated an end to end analysis to more
    accurately define aircraft maintenance requirements and link them to a
    readiness metric. The result of these changes is that the fiscal year
    2012 funding will support 84 percent of validated requirements vice an
    originally planned 80 percent of requirements. Have any of the
    efficiencies proposed by the Air Force actually resulted in a validated
    savings? If not, what confidence do you have that they will?
        General Reno. WSS savings have been identified and validated for
    fiscal year 2012. In fiscal year 2012, $605 million in WSS efficiencies
    were identified and submitted in the fiscal year President's budget
    cycle. The Air Force is committed to providing the warfighter with the
    same capability levels while achieving these efficiencies. To this end,
    metrics have been developed to track efficiencies as they are realized
    during the year of execution.

        86. Senator Ayotte. Lieutenant General Reno, since the requirements
    to safely maintain an aircraft over its lifespan are a matter of
    engineering and physics, which are difficult to reduce through
    efficiencies, is the Air Force in reality reducing maintenance efforts
    on each aircraft in order to respond to decreased funding levels?
        General Reno. For fiscal year 2012, WSS efficiencies represent $605
    million of the $3 billion WSS FYDP bogey. These efficiencies were
    identified via a thorough review of sustainment requirements using a
    three-pronged approach. First, there was a review of Aircraft and
    Missile Requirements where savings were realized from hour reductions
    for organic Programmed Depot Maintenance (PDM) packages. Second, a deep
    dive scrub of over 5000 sustainment tasks for WSS was accomplished
    resulting in the consolidation of mishap/battle damage funding
    management and reductions in PDM schedules based on a transition from
    hours/calendar driven inspections to requirements driven inspections.
    Lastly, a review of depot and supply chain processes was accomplished.
    Overall, these actions did result in minor reductions to maintenance
    efforts for some aircraft; however, they also included increased
    maintenance efforts for other aircraft. Finally, and most importantly,
    all recommended changes in maintenance efforts were only accepted after
    thorough engineering analysis and safety risk assessments.

        87. Senator Ayotte. Lieutenant General Reno, in the past 5 years,
    what has historically been the percentage of aircraft maintenance
    requirements funded each year?
        General Reno. Prior to 2007, there was no Centralized Asset
    Management office serving as the Executive Agent for WSS programming
    and execution. Therefore there is no consolidated WSS requirements data
    available prior to that period. In fiscal year 2007, WSS was funded at
    76 percent of the total requirement with baseline funding and 95
    percent including OCO funding. In fiscal year 2008, WSS was funded at
    73 percent of the total requirement with baseline funding and 90
    percent including OCO funding. In fiscal year 2009, WSS was funded at
    72 percent of the total requirement with baseline funding and 92
    percent including OCO funding. In fiscal year 2010, WSS was funded at
    69 percent of the total requirement with baseline funding and 84
    percent including OCO funding. In fiscal year 2011, WSS was funded at
    65 percent of the total requirement with baseline funding and 82
    percent including OCO funding. For fiscal year 2012, WSS is programmed
    at 70 percent of the total requirement with baseline funding and 85
    percent including OCO funding.

        88. Senator Ayotte. Lieutenant General Reno, are we taking a risk
    for the 16 percent of maintenance requirements that go unfunded each
    year?
        General Reno. The 16 percent unfunded requirement risk is primarily
    being assumed in areas with limited impact to near-term readiness, such
    as software, sustaining engineering and technical orders. This risk is
    further mitigated by the annual, enterprise-wide prioritization of
    requirements to ensure the highest priority systems are funded in the
    year of execution. For our currently defined force structure, historic
    funding levels including OCO funds, have proven sufficient in meeting
    combatant commander mission requirements; however, sustained WSS
    funding at less than these levels, or loss of OCO funds, may lead to
    increased risk of aircraft groundings.

        89. Senator Ayotte. Lieutenant General Reno, is this risk
    compounded each year?
        General Reno. Without careful management and oversight, the risk
    associated with unfunded WSS requirements can grow significantly from
    year to year. The Air Force, however, strives to minimize and mitigate
    this risk by assuming it in areas with limited impact to near-term
    readiness, such as software, sustaining engineering and technical
    orders. This risk is then further mitigated by the annual, enterprise-
    wide prioritization of requirements to ensure the highest priority
    systems are funded in the year of execution. Any remaining unfunded
    requirements are then revalidated and reprioritized before being
    included in the following year's Program Objective Memorandum
    requirements.

                    AIR FORCE COMPETITION FOR ENGINE REPAIRS

        90. Senator Ayotte. Lieutenant General Reno, the Air Force recently
    saved maintenance funds by increasing competition in the KC-10 Extender
    Logistics Support program for engine spare and repair parts at Port San
    Antonio, TX. Given the Weapons Systems Acquisition Reform Act (WSARA)
    of 2009, section 805 of the 2010 NDAA, and the evolving DOD
    efficiencies initiatives, what else is the Air Force doing to help
    facilitate competition in the sustainment of major weapons systems?
        General Reno. The Air Force is more conscientious given reduced
    budgets and long-term sustainment of weapons system platforms. As such,
    the Air Force is taking a cohesive approach that looks at both our
    legacy platforms and our new platforms in terms of data rights and
    ownership. Where our legacy platforms did not include full ownership of
    data rights, thus limiting competition, the Air Force has initiated a
    business case analysis. The analysis will determine which data rights
    are required to organically support the sustainment of our legacy major
    weapons systems. Where new platforms are established, the Air Force is
    taking a proactive planning approach by determining what type of data
    rights are required for both acquisition and sustainment. This approach
    will lend itself to greater competition at various milestones
    throughout the acquisition and sustainment lifecycles.

        91. Senator Ayotte. Lieutenant General Reno, can the lessons
    learned of lowering O&M costs through competition with the KC-10
    Extender be applied to other airframes and engines?
        General Reno. Yes, the KC-10 engine overhaul is an example where
    competition realized cost savings. The KC-10 engine program was able to
    do so because of two key conditions. First, the KC-10 engine is a
    commercial derivative. This condition typically ensures a robust
    industrial base with several vendors capable of performing the overhaul
    work. The second is that the Air Force owned the data rights to the
    necessary maintenance overhaul manuals. Government ownership of this
    data enabled the Air Force to broadly compete the overhaul work. The
    combination of a robust industrial base and government ownership of the
    maintenance data created the opportunity to realize cost savings. The
    Air Force is committed to open competition, and in cases where these
    conditions exist, the Air Force actively pursues this strategy and the
    opportunity to achieve cost savings.

        92. Senator Ayotte. Lieutenant General Reno, what options are
    available to the Air Force to expand or increase competition in life
    cycle sustainment costs?
        General Reno. The Air Force requires the use of a competitive
    strategy prior to each milestone for each Acquisition Category program.
    Each competitive strategy is included in the Life Cycle Management Plan
    and addresses how the program will obtain technical data, computer
    software and documentation, and associated intellectual property rights
    necessary for operation, maintenance, long-term sustainment and
    competition. In order to reduce lifecycle costs, the Air Force conducts
    should-cost analyses and continues to pursue open architecture
    initiatives to achieve design stability, mature technologies, and
    affordable solutions. The Air Force is also requiring more frequent re-
    competes of knowledge-based services, and service contracts valued at
    more than $1 billion are required to include productivity improvements
    and cost efficiency objectives. The Air Force is committed to utilizing
    competition to the greatest extent possible to maximize savings for the
    taxpayer.

                         READINESS OF NONDEPLOYED UNITS

        93. Senator Ayotte. Lieutenant General Panter, Marine Corps
    readiness for nondeployed units continues to erode year-to-year even
    though Congress has authorized an expansion of Marine Corps end
    strength to the current 202,000 level and has funded billions of
    dollars for equipment reset, consistent with the President's and the
    Marine Corps' requests. Despite these substantial investments, the
    Marine Corps has not seen the erosion of nondeployed readiness
    stabilize or start to improve. Since the Marine Corps considers
    themselves America's September 11 force, this is a matter of great
    concern. In recent weeks, we have seen unanticipated, early deployment
    of the Marine Corps in support of Libyan operations, as well as for
    humanitarian and recovery operations for Japan. In some cases, full
    combat readiness across the entire spectrum of conflict is not
    essential such as for operations in support of a humanitarian mission
    in Japan. But in other cases, such as in support of the Libyan
    operations, exactly what combat skills may be called for is much harder
    to judge. Why have Marine Corps readiness rates for nondeployed forces
    not started to level off and then improve given the investment in end
    strength and equipment?
        General Panter. Despite significant investment in both end strength
    and equipment, the Marine Corps has not realized significant
    improvement in the readiness of nondeployed forces because of a steady
    increase in Marine Corps global commitments since 2005.
        In June 2005, the Marine Corps active duty end strength was
    approximately 177,000. At that time, the Marine Corps had approximately
    25 percent of its operating forces forward-deployed in support of OIF
    and other combatant commander requirements. With a deployment-to-dwell
    ratio for many Marine units less than 1:1, sustaining that level of
    commitment came at a tremendous cost to the individual and collective
    readiness and welfare of Marines and their families. Marine units were
    in a constant cycle of ``deploy-train-deploy'' within a highly
    compressed time period. Today, the Marine Corps active duty end
    strength is approximately 202,000 with around 25 percent of the
    operating forces consistently deployed. This represents an aggregate
    increase in combatant commander demand for Marine forces. Simply put,
    the Marine Corps is ``doing more with more [resources]''. A critical
    difference between now and 2005 is that with a larger force and more
    resources, the Marine Corps is able to better sustain current
    commitments based on increasing combatant commander demand, which is
    greater than is was 5 years ago. In 2005, the deployment-to-dwell ratio
    was often less than 1:1, now the deployment-to-dwell ratio for most
    units is approaching 1:2.

        94. Senator Ayotte. Lieutenant General Panter, if the current pace
    of combat operations in Afghanistan continues, how much lower do you
    expect nondeployed unit readiness rates to decline?
        General Panter. It is difficult to precisely forecast future
    readiness based on current conditions; however, after nearly 10 years
    of combat operations, we can draw some basic conclusions. Sustaining
    current operations around the globe has reduced the aggregate readiness
    of the nondeployed force. A generally consistent figure is that
    anywhere from 60-65 percent of the nondeployed force--Active and
    Reserve--report degraded levels of readiness. This figure fluctuates
    based on scheduled rotations of units to and from Afghanistan. It is
    also affected by the extent to which the Marine Corps must commit
    forces to new requirements, such as crisis response. Another consistent
    figure is that the Marine Corps has approximately 24-28 percent of its
    operating forces end strength deployed at any given time. To sustain
    such a large forward-deployed presence, the Marine Corps must commit
    most of the nondeployed force to training to relieve those forces which
    are deployed. The Marine Corps can sustain this commitment under
    current conditions for as long as the Nation requires, acknowledging
    that the readiness of the nondeployed force will not significantly
    improve until reconstitution of the force is well underway (post-OEF).
        Equipment supply is a resource area of particular concern and is
    the primary readiness detractor for the nondeployed force. Lack of
    equipment due to sustainment of current operations impacts the ability
    of nondeployed forces to respond to potential contingencies. Equipment
    shortfalls also make it more difficult for nondeployed units to train
    to core skills earlier in their predeployment training cycle in
    preparation for OEF or other combatant commander requirements. The
    commitment of a seventh infantry battalion and its associated equipment
    to Afghanistan earlier this year has further strained the ground
    equipment available to nondeployed forces.

        95. Senator Ayotte. Lieutenant General Panter, how would you
    describe the level of risk for operations other than those in
    Afghanistan?
        General Panter. The Marine Corps is responding to the Nation's
    demands with a unique combination of expeditionary land-based and
    amphibious forces, but such commitment comes at a cost to the readiness
    of nondeployed units. Sustaining current operations has reduced the
    aggregate readiness of the nondeployed force. Strategically, low levels
    of readiness for the nondeployed force increases risk in the timely and
    successful execution of crisis response and major contingency
    operations (war plans). If the Marine Corps were required to respond to
    a second major contingency, the Marine Corps could respond, but would
    face significant challenges in forming a fully resourced and cohesive
    MEF-level MAGTF to meet war plan timelines. For a smaller scale crisis
    or contingency, readiness levels of the nondeployed force would affect
    the Marine Corps' ability to respond, but to a lesser degree. For
    example, over the past 18 months, the Marine Corps had successfully
    responded to crises in Haiti, Pakistan, Korea, Egypt, Libya, Japan, and
    Yemen. It would be inherently more difficult to respond to a second
    major contingency while sustaining current global and OEF requirements.

                       RESET COSTS AND DEFERRED EXPENSES

        96. Senator Ayotte. Lieutenant General Panter, the Commandant has
    testified that the bill for reset of Marine Corps units will be about
    $10.6 billion. Whether OCO wartime funding will be available after our
    withdrawal from Afghanistan as planned in 2014 is not known at this
    time. If such wartime funds are not available, substantial amounts of
    funding for war-related expenses may be required from within the base
    budget for DOD. Yet, the amount requested for reset of Marine Corps
    equipment in fiscal year 2012 is only $2.5 billion, less than the $3.1
    billion requested for fiscal year 2011. The Commandant has said that
    there will be about $5 billion in additional reset costs that won't be
    addressed until after marines have withdrawn from Afghanistan. Isn't
    there something Congress can do to get ahead of this reset curve now,
    while wartime funds are available?
        General Panter. Fiscal year 2012 funding is adequate to support
    depot maintenance and WSS for deployed and nondeployed units. The
    Marine Corps' $2.5 billion request in fiscal year 2012 for reset is
    directly related to the repair and replacement costs of OCOs in Iraq
    and Afghanistan. In many ways our ability to conduct reset in fiscal
    year 2012 is constrained by the lack of equipment that has returned for
    reset actions. The equipment redeployed from Iraq to Afghanistan in
    support of the 2009 surge included most of our deployed medium tactical
    fleet, the majority of our Mine Resistant Armor Protected (MRAP) fleet,
    light armored reconnaissance vehicles, other hard-to-move equipment
    items, and many theater-specific items. This same equipment comprises a
    significant portion of the Marine Corps' total reset liability. Thus
    much of our reset requirement will remain deferred as long as this
    equipment continues to be employed in Afghanistan. Moreover, as long as
    the war continues, our future costs for reset will grow accordingly.

        97. Senator Ayotte. Lieutenant General Panter, is there no more
    capacity left in either civilian industry or the Marine Corps depot
    system that would allow us to repair or replace more war-damaged
    equipment now?
        General Panter. Our organic maintenance depots have the flexibility
    to expand with the needs of the Marine Corps. We are able to increase
    capacity at our depots, as well as contract with commercial sources to
    rapidly repair war-damaged equipment. The Marine Corps is capitalizing
    on this capability with the Principal End Item (PEI) Rotation program
    to cycle war-damaged equipment through the depots, and return fully
    mission capable equipment to the warfighter. However, because the
    Marine Corps transferred large quantities of equipment retrograded from
    Iraq to support the increased footprint in Afghanistan; most of the
    equipment in need of depot repair is still in theater. Our ongoing
    operational requirements and the transit times associated with cycling
    equipment have allowed the depots to operate at a steady state, without
    huge surges in demand.
        When the Marine Corps withdraws from Afghanistan, we must quickly
    return mission capable equipment sets to operating forces and strategic
    programs in order to ensure our ability to decisively respond to future
    missions. This will require the full use of our organic depots, as well
    as the strategic use of commercial repair sources to rapidly reset the
    equipment that has sustained significant wear throughout the war.

                                 RECONSTITUTION

        98. Senator Ayotte. Lieutenant General Panter, separate and apart
    from reset needs, the Marine Corps has discovered through nearly a
    decade of combat that its unit specific Tables of Equipment needed
    major revisions for today's decentralized combat. This has meant, for
    example, far more radio equipment and ground combat vehicles for each
    unit than had been authorized in the Tables of Equipment that existed
    prior to September 11. These reconstitution costs for modernized
    equipment sets are currently estimated to be at least $5 billion in
    addition to the $10.6 billion in reset costs. Yet, in the fiscal year
    2012 budget, equipment reconstitution is funded at only $253 million.
    At that rate, it would take 20 years to buy $5 billion in new
    equipment, drawing the time out for so long that it is almost certain
    the equipment bought at the start of the process would have to be
    replaced due to obsolescence before completing the updates to all
    Marine Corps units. Why are such pressing needs for new equipment
    funded at so low a rate?
        General Panter. The reconstitution requirement of $5 billion is an
    amount entirely separate from our reset costs. This requirement is
    specifically related to table of equipment shortfalls; therefore, if
    funded, it will directly contribute to increased nondeployed readiness
    levels. While we have begun to address our reconstitution shortfall by
    requesting $253 million in fiscal year 2012 for equipment procurement,
    the Marine Corps has many equipment deficiencies (as evidenced by the
    degraded state of nondeployed Marine Corps unit readiness) that
    additional funding could be applied against immediately. However, the
    Marine Corps will responsibly execute only the funds necessary to
    reconstitute the force to meet projected future operational
    requirements.
        Efforts to Close the Gap: to close this reconstitution gap, we are
    developing the core capabilities of a Middleweight Force in the post-
    OEF era. The results of these efforts (including our Force Structure
    Review Group, Lighten the MAGTF initiative, Table of Equipment reviews,
    and others) will shape the decisions on what equipment to reset and how
    best to reconstitute the force so that we are postured to respond
    across the range of military operations. The processes in motion to
    define our post-OEF force will inform our decisions to smartly program
    our acquisitions to modernize the force in the near future.

        99. Senator Ayotte. Lieutenant General Panter, how does the Marine
    Corp plan to get ahead of the curve for modernization of its Tables of
    Equipment since clearly units can't wait 20 years for new gear that we
    know will be needed in combat based on the experiences of the last 10
    years?
        General Panter. Our OCO experiences have shown us that our legacy
    20th century tables of equipment (T/E) have become simply inadequate
    with the demands of the modern battlefield. The projected estimate for
    reconstituting our T/E--as previously stated--is $5 billion over fiscal
    year 2012-fiscal year 2015. As the force structure review is
    implemented, we will continue with a deliberate assessment of the
    modernization requirements for equipment that optimizes our post-
    Afghanistan posture. Our Service Reconstitution Strategy will guide the
    identification of emerging requirements for refining the capabilities
    of the Middleweight Force, our support to the combatant commanders, our
    Service level prioritization, and resource allocation decisions. We
    will continue to satisfy equipment requirements across the Enterprise
    with both reset actions and needed investments in reconstituting T/Es.

                           LPD-17 CLASS-WIDE PROBLEMS

        100. Senator Ayotte. Lieutenant General Panter, the Navy's LPD-17,
    San Antonio class, has been plagued with materiel readiness problems
    throughout its history such that the lead ship has spent far more time
    being repaired since its delivery to the Navy than it has spent
    deployed with embarked marines. Is the Marine Corps satisfied with the
    progress that is being made to correct the materiel readiness problems
    with the San Antonio class LPDs?
        General Panter. The materiel readiness issues confronting the LPD-
    17 class are significant; however, all indications are that the
    resources and policy changes that the Navy has implemented to address
    these issues are producing good results. The positive results of San
    Antonio's recent sea trials demonstrate that the changes the Navy has
    instituted are working, and should soon restore the ship to full
    operational status.
        Efforts to remediate problems with the LPD-17 class have addressed
    other factors which contributed to the obvious materiel shortcomings.
    These efforts include significant, program-wide changes in oversight,
    training, and quality assurance means that will enable the class to
    achieve combat readiness as quickly and safely as possible. We
    anticipate that San Antonio, and the sister ships of her class, will
    prove valuable and dependable additions to the amphibious fleet.

        101. Senator Ayotte. Lieutenant General Panter, what is the level
    of risk to the Marine Corps if the LPD-17s continue to have class-wide
    problems that make them unreliable or unable to deploy to support
    operational missions?
        General Panter. Persistent non-availability of the LPD-17 class
    vessels may have a significant impact on the Marine Corps' ability to
    perform its amphibious mission and satisfy global demand for Marine
    Forces. LSD-17 non-availability, coupled with the planned
    decommissioning of older LPD class vessels, will result in a net
    aggregate shortfall in the number of ships that are available to
    perform missions globally. As currently planned, the older LPD class
    vessels, including USS Cleveland and USS Ponce, will decommission prior
    to a replacement ship being commissioned. Delayed delivery schedules
    and class-wide materiel issues with the LPD-17 class ships, coupled
    with a continued aggressive decommissioning schedule, jeopardize our
    ability to support the demand of combatant commanders.

                  COORDINATION WITH SPECIAL OPERATIONS COMMAND

        102. Senator Ayotte. Lieutenant General Stevenson, Special
    Operations Forces (SOF) are heavily dependent on enabling support from
    the Army to conduct operations around the world. As U.S. forces draw
    down from Iraq and eventually Afghanistan, the demand for SOF is likely
    to remain steady. As such, U.S. Special Operations Command (SOCOM) is
    in the initial stages of creating a force generation model based on the
    ARFORGEN cycle to increase predictability in deployments as well as
    improve coordination between the Army and SOCOM for joint pre-
    deployment training and the provision of materiel support. What role is
    the Army playing in assisting SOCOM to develop this new force
    generation model to ensure enabling personnel and equipment are
    available and properly synchronized?
        General Stevenson. The Army continues to support the development of
    SOCOM's force generation model, also known as SOFORGEN, by coordinating
    with SOCOM to incorporate the tiered support construct and create SOCOM
    requirements in the Global Force Management process. The tiered support
    construct accounts for organic growth to Special Operations Forces
    (Tier I), specific support of enablers under operational control to
    SOCOM (Tier II), and general support enablers allocated to the theater
    commanders (Tier III).
        The Army and SOCOM are composing a memorandum of agreement that
    will formalize the alignment of SOFORGEN and ARFORGEN for enablers in
    support of SOF current demands for OEF, OND, and future emerging
    events. Future planning is on going with Total Army Analysis (TAA) and
    Rules of Allocation (ROA) to establish regionally aligned brigades with
    an understanding of SOF requirements in support of Geographic Combatant
    Commanders.

                          NAVY SURFACE SHIPS READINESS

        103. Senator Ayotte. Vice Admiral Burke, I understand that the Navy
    recognizes that it needs to improve maintenance on its surface ships to
    repair problems that have developed over the last several years in
    surface ship materiel readiness. However, the Navy's budget request
    shows funding for ship maintenance declining from 100 percent of
    projected requirements in 2010 to 97 percent in the 2011 request and 94
    percent in the 2012 budget request. The total amount of ship
    maintenance funding is going down, from $7.5 billion in 2010, to $7.3
    billion in the 2011 request, and $7.2 billion in the 2012 request.
    Equally troubling is the amount of annual deferred maintenance is
    increasing from $0 in 2010 to $172 million in 2011, and $367 million in
    the 2012 budget request.
        Since funding for maintenance on submarines and aircraft carriers
    is traditionally protected, this downward trend in funding looks like
    it could fall more heavily on the Navy's surface combatants. Why does
    the Navy's budget not reverse the upward trend of deferred maintenance?
        Admiral Burke. Even though the percentage of the Ship Maintenance
    requirement funded has fallen, the baseline maintenance budget request
    has actually increased from $4.3 billion in fiscal year 2010 to $4.9
    billion in fiscal year 2012. This increase is a reflection of the
    Navy's commitment to funding the surface ship maintenance requirement.
    Additionally, investments being made in the Surface Maintenance
    Engineering Planning Program (SURFMEPP), and enhanced assessments of
    our surface ships provides us with more insight on how to best manage
    risk and ensures that deferred work will be properly documented and
    tracked for completion in future availabilities. Navy remains committed
    to sustaining the force structure required to implement the Maritime
    Strategy.
        The Navy's total budget submission reflects the best balance of
    risk and available resources across the Navy portfolio.

        104. Senator Ayotte. Vice Admiral Burke, is the Navy's 2012 budget
    request consistent with its goals of improving surface ship readiness?
        Admiral Burke. Navy's combined fiscal year 2012 baseline and OCO
    budget submissions fund 94 percent of the projected depot ship
    maintenance requirements necessary to sustain global presence
    requirements, and continue to improve overall surface ship readiness.
    This represents the best balance of risk and available resources across
    the Navy portfolio.

        105. Senator Ayotte. Vice Admiral Burke, how much risk is the Navy
    taking on in terms of surface ship readiness with its current year
    budget submission?
        Admiral Burke. Navy's combined fiscal year 2012 baseline and OCO
    budget submissions fund 94 percent of the projected depot ship
    maintenance requirements necessary to sustain global presence
    requirements. The resultant shortfall of $367 million equates to
    deferral of surface ship availabilities in order of priority. First
    deferred would be 34 surface ship non-docking availabilities, followed
    by 3 surface ship docking availabilities, and lastly by the private
    sector portion of seven Carrier Incremental Availabilities. This
    represents the best balance of risk and available resources across the
    Navy portfolio.
        Additionally, Navy has made investments in the past several budget
    cycles in the SURFMEPP and enhanced assessments of our surface ships.
    These investments have provided additional insights on how to best
    manage risk and ensure deferred work is properly documented and
    completed in future availabilities.

                           NAVY EXPEDITIONARY FORCES

        106. Senator Ayotte. Vice Admiral Burke, your statement makes
    mention of Navy Expeditionary Forces--a unique naval capability whose
    forces have been around since World War II. Expeditionary Navy forces
    support global missions that expand and enhance combatant commander's
    capabilities by deploying security, construction, logistics, explosive
    ordnance disposal (EOD), divers, and riverine forces. Your statement
    describes Navy Expeditionary Combat Command's (NECC) cost effective
    capabilities and force structure as an ``enduring mission'' which is
    heavily engaged in today's wars and there is a growing requirement for
    them in the future. Given that, would you please describe why nearly 60
    percent of NECC's budget is in the supplemental OCO budget and not in
    the baseline budget which is preferred by Congress and this committee?
        Admiral Burke. Navy Expeditionary Combat Command (NECC) has been
    heavily involved in support of operations in both Iraq and Afghanistan,
    exceeding programmed baseline levels of support. NECC's force is
    comprised of 51 percent mobilized reservists on a rotational basis to
    support the war effort. NECC's mission is clearly enduring, but due to
    the high operational tempo in theater, it requires significant amounts
    of OCO funding. Congress recognized this by moving $192.8 million from
    the NECC baseline budget to OCO in the fiscal year 2011 DOD
    Appropriations Bill.

                                NAVAL READINESS

        107. Senator Ayotte. Vice Admiral Burke, as you recall, the only
    priority that the Chief of Naval Operations (CNO) identified as
    unfunded in last year's budget submission was ship depot maintenance.
    Recently, there have been several amphibious and other combatant ships
    which have needed additional time and funding while they were
    undergoing shipyard maintenance--in some cases, keeping them from
    meeting their operational deployments. What is the Navy doing to ensure
    we get our ships through their shipyard periods on cost and on time?
        Admiral Burke. The investments made in the past several budget
    cycles in surface ship life cycle maintenance include enhanced
    assessments to improve our understanding of ship material condition,
    and establishment of the SURFMEPP to provide the Navy with centralized
    surface ship life cycle maintenance management, including engineered
    class maintenance plans, availability planning, and a formal work
    deferral process.
        The combination of enhanced assessments and a disciplined
    availability planning and execution process will minimize the impacts
    associated with discovery of unplanned repairs during execution, and
    result in better use of available maintenance funding to achieve
    surface ship expected service life and long-term readiness.

        108. Senator Ayotte. Vice Admiral Burke, to what extent does the
    2012 budget request fully fund the Navy's current requirement for ship
    depot maintenance?
        Admiral Burke. Navy's combined fiscal year 2012 baseline and OCO
    budget submissions fund 94 percent of the projected depot ship
    maintenance requirements. This will defer $367 million of maintenance,
    primarily in the Surface Force.

        109. Senator Ayotte. Vice Admiral Burke, to what extent does the
    2012 budget capture depot maintenance volume that has accumulated from
    chronic underfunding over time?
        Admiral Burke. The fiscal year 2012 budget (including OCO)
    resources the ship maintenance account to 94 percent of the total
    requirement. This includes all known deferrals from prior scheduled
    availabilities for ships that are scheduled for a maintenance
    availability during fiscal year 2012. This funding level represents the
    best balance between current force readiness and building the future
    force within available top line funding.

               MODERNIZING THE SURFACE FLEET AND FLEET READINESS

        110. Senator Ayotte. Vice Admiral Burke, without going into
    specific ship readiness levels, which gets into a classified area,
    there have been recent press reports describing Service-wide problems
    with preventive maintenance, surface-ship firefighting systems,
    corrosion, hull cracking, communication systems failures, steering and
    anchoring issues that made the ship unfit, and in some cases prevented
    ships from getting underway on time. In your view, how is ship
    readiness trending over the past 5 years, and what specific problems
    have been found?
        Admiral Burke. Recent indications are that the negative trend in
    ship readiness has been arrested and we may be starting to see some
    improvement. Data from the Board of Inspection and Survey shows failure
    rates hovering around 10 percent for most of the last 5 years, but in
    2010, the rate was reduced to 4 percent. Since a single year of
    performance does not represent a trend, Navy will continue to monitor
    surface ship readiness into the future.
        Specific problems identified included surface ship and intermediate
    maintenance center manning, accuracy of the class maintenance plans and
    material condition assessments, and formality of the maintenance
    planning and execution process. Corrective actions have been initiated
    for each identified problem, including increasing shipboard and
    Regional Maintenance Center (RMC) billets to improve organic shipboard
    and intermediate maintenance capability and capacity, and provide
    valuable sailor skill training. In addition, the Intermediate
    Maintenance Facility in Mayport is being reopened to provide waterfront
    maintenance support.
        Navy has partnered with the American Bureau of Shipping (ABS) to
    conduct detailed surveys of all surface ship classes using ABS
    standards. Navy also established the Surface Warfare Enterprise
    Assessment Program, supported by technical experts from the RMCs, to
    conduct ship material condition assessments.
        The SURFMEPP was established to provide centralized surface ship
    life cycle maintenance planning. Most surface ship Class Maintenance
    Plans have been updated and significant resources have been added to
    annual ship maintenance budgets, specifically targeted at surface ship
    maintenance. To ensure those resources are effectively used, SURFMEPP
    prepares Baseline Availability Work Packages for scheduled
    availabilities and then tracks the completion of all required
    maintenance actions.
        Navy also established the Senior Leadership Oversight Council to
    provide executive level control over surface force readiness concerns,
    and is confident that the steps taken will ultimately improve surface
    ship readiness.

        111. Senator Ayotte. Vice Admiral Burke, what is the Navy doing to
    correct these deficiencies and reverse this trend?
        Admiral Burke. Initiatives are currently underway to reverse
    negative surface ship readiness trends, including increasing shipboard
    and RMC billets to improve organic shipboard and intermediate
    maintenance capability and capacity and valuable sailor skill training.
    In addition, the Intermediate Maintenance Facility in Mayport is being
    reopened to provide waterfront maintenance support.
        Navy has partnered with the ABS to conduct detailed surveys of all
    surface ship classes, using ABS standards. Navy also established the
    Surface Warfare Enterprise Assessment Program, supported by technical
    experts from the RMCs, to conduct ship material condition assessments.
        The SURFMEPP was established to provide centralized surface ship
    life cycle maintenance planning. Most surface ship class maintenance
    plans have been updated and significant resources have been added to
    annual ship maintenance budgets, specifically targeted at surface ship
    maintenance. To ensure those resources are effectively used, SURFMEPP
    prepares Baseline Availability Work Packages for scheduled
    availabilities and then tracks the completion of all required
    maintenance actions.

                OPERATIONS AND SUPPORT AND JOINT STRIKE FIGHTER

        112. Senator Ayotte. Lieutenant General Reno, last year U.S. Navy
    Naval Air Systems Command (NAVAIR) effectively determined that the
    Marine Corps and the Navy's versions of the Joint Strike Fighter (JSF)
    may end up being too expensive to operate. Specifically, it found that,
    with each flight-hour possibly costing about $31,000 in 2029, compared
    with about $19,000 per flight hour for current F/A-18 Hornets and AV-8B
    Harriers, the operating cost associated with the Navy's versions of the
    JSF may be considerably higher than the costs to operate the legacy
    aircraft they are intended to replace. Has the Air Force reviewed and
    independently validated NAVAIR's analysis. If so, do you agree with its
    finding on the expected operating costs of the JSF? If so, what is your
    sense of what this could mean for the viability of the Air Force's JSF
    program and the kind of mix we can expect in terms of the Air Force's
    future strike fighter force?
        General Reno. The Air Force has reviewed NAVAIR's analysis and
    determined that the operating costs for all three of the JSF variants
    are higher than originally estimated. OSD CAPE also conducted an O&S
    cost estimate for JSF and their estimate is consistent with the
    previous Air Force and Navy cost estimates. These estimates also
    demonstrated that the operating costs of the Air Force's F-35A
    Conventional Take-Off and Land variant will be less than the Short
    Take-Off and Vertical Land and Carrier JSF variants. The Air Force is
    currently working with our Sister services, the JSF Joint Program
    Office, and the prime contractor, Lockheed Martin, in an aggressive
    effort to review the JSF sustainment strategy in order to assess means
    to reduce total life cycle costs. This should result in recommendations
    to reduce costs by the end of the year.
        While the Air Force expects the operating costs for our F-35A fleet
    to be higher than our legacy F-16 fleet it is intended to replace, the
    5th generation capabilities of the JSF will allow our warfighters to
    operate and succeed in Anti-Access/Area Denied environments, which our
    legacy fleet will not be able to do against tomorrow's advanced
    threats. Because of these fifth generation capabilities, the F-35
    remains a key enabler to guarantee and maintain air dominance for the
    foreseeable future.

        113. Senator Ayotte. Lieutenant General Reno, to what extent is
    NAVAIR's assessment (and the Air Force's validation of that assessment)
    reflected in the Air Force's current budget proposal?
        General Reno. The Air Force's fiscal year 2012 budget proposal is
    in line with the NAVAIR assessment and is consistent with OSD guidance
    to fund the program to the OSD CAPE estimate.

                        F-22 RAPTOR SUSTAINMENT STRATEGY

        114. Senator Ayotte. Lieutenant General Reno, this committee has
    concerns about the cost associated with operating and sustaining the F-
    22 Raptor. I understand that we just signed a cost-reimbursable
    contract with Lockheed Martin that will get us 1 year of sustainment
    for the F-22 for about $1.2 billion. What is the overall sustainment
    strategy for the F-22 program going forward and, in particular, to what
    extent will that strategy use competition (or the option of
    competition) to drive down costs?
        General Reno. The F-22 sustainment strategy is based on the
    Performance Based Logistics concept/contract mechanism in which the
    prime contractor is incentivized to maximize fleet availability while
    reducing ownership costs across the life cycle of the aircraft. This
    support strategy includes all elements of support for the aircraft,
    trainers, and engines. It includes base and depot level maintenance,
    product support, support engineering, field support, configuration
    control and technical data, and training services. Adjustments to this
    methodology are made as the weapon system matures.
        The F-22 Program Office is currently surveying its portfolio of
    sustainment programs--both products and services--to determine the most
    cost effective options for future product and support services,
    including organic, open competition, or sole source basis from the
    original equipment manufacturer to avoid additional ``pass through or
    markup'' costs by a single prime integrator. The program office will
    conduct a cost-benefit analysis on candidate projects to determine
    whether the net savings associated with in-sourcing, competing, and/or
    procuring directly from the original equipment manufacturer justify
    accepting the additional risks associated with pursuing the new
    procurement strategy.

        115. Senator Ayotte. Lieutenant General Reno, I understand that a
    preponderance of F-22 Raptors came out of production with structural
    defects that are significantly limiting its service life. That as a
    result, the Air Force has initiated a Structures Retrofit Program (SRP)
    that is intended to extend the service life of those aircraft--163 of
    them, in total--to reach 8,000 flight hours (their original intended
    service life). Can you give me a sense of what kind of items need to be
    retrofitted to help extend the F-22's service life to 8,000 flight
    hours?
        General Reno. You are correct. During production, ongoing analysis
    identified a number of structural retrofits required to meet the full
    8,000 hour design life. The SRP performs structural treatments and
    installs structural modifications to bring the F-22 up to its full
    service design life of 8,000 hours.
        The SRP will modify internal F-22 structural components such as
    lugs, bushings, line pass-through holes, spars, attachment flanges, and
    hinges. These SRP modifications are being made to reduce or more
    effectively distribute internal stresses in the F-22 structure in order
    to meet design life.
        The wing attachment lugs are a prime example of an item modified by
    the SRP. The attachment points are subject to high stress and usage
    analysis and testing showed they were prone to crack, limiting aircraft
    service life. The SRP program treated these locations with glass bead
    peening and laser shock wave peening to prevent crack initiation in the
    structure, which extended the service life.

        116. Senator Ayotte. Lieutenant General Reno, what is the total
    cost of this retrofit program?
        General Reno. The total funding for the SRP is $343.7 million. The
    SRP began in fiscal year 2006 and is planned to complete in 2016.

        117. Senator Ayotte. Lieutenant General Reno, what effect will this
    disturbing development have on maintaining the operational availability
    of these aircraft?
        General Reno. The impact of the SRP on operational availability is
    minimal and the SRP is carefully managed to minimize impact to the
    fleet. Each aircraft is individually managed for insertion into SRP
    modifications to ensure the flying hour restrictions are not over-
    flown. Additionally, SRP modifications are scheduled concurrently with
    other ongoing scheduled maintenance at the depot level to minimize
    downtime and the maintenance burden on operational wings.

        118. Senator Ayotte. Lieutenant General Reno, what is the
    inspection and installation burden of the retrofit program on the
    legacy fleet of F-22s?
        General Reno. The inspection and installation burden for the SRP on
    operational F-22 wings is minimal. SRP modifications are scheduled
    concurrently with other ongoing scheduled maintenance at the depot
    level to minimize downtime and the maintenance burden on operational
    wings. SRP actually decreases the long-term inspection burden on the F-
    22 fleet by repairing structures that previously required inspections.

                         SERVICE LIFE EXTENSION PROGRAM

        119. Senator Ayotte. Lieutenant General Reno, last year, General
    Schwartz told this committee about the plan to survey the F-16 fleet in
    detail to determine what kind of service life extension program (SLEP)
    might be necessary, especially given the delays in the F-35A.Where does
    that effort stand?
        General Reno. The details of F-16 SLEP are still being refined. In
    April 2011, the Air Force awarded a contract for a Full Scale
    Durability Test on an F-16 Block 50, the results of which will inform
    us on how to proceed with our SLEP efforts. Additionally the fiscal
    year 2012 President's budget commits Research, Development, Test, and
    Evaluation funds for the Air Force to study both structural SLEP
    requirements as well as avionics enhancements, including an Active
    Electronically Scanned Array radar, new Center Display Unit, Integrated
    Broadcast System and new ALQ-213 electronic warfare suite. Finally, we
    expect continued refinement of F-16 SLEP details in response to F-35A
    program performance.

        120. Senator Ayotte. Lieutenant General Reno, what have you learned
    so far about the health of the F-16 fleet?
        General Reno. The Air Force aggressively manages the F-16 fleet,
    incorporating information from the Fleet Viability Board, baseline
    engineering design, Full-Scale Durability Tests, and the latest
    recorded flight data to ensure maximum F-16 sustainability and
    viability. The Air Force plans to sustain the F-16 Block 25-32 fleet to
    a planned 10,800 Equivalent Flying Hours (EHF) and the F-16 Block 40/
    50s are expected to remain structurally viable though 8,000 EFH.
    Improved structural analysis techniques indicate the F-16 is
    experiencing lower flight stresses than originally estimated. This will
    allow them to reach higher actual flight hours within their certified
    service life limit before structural modifications are required. To
    ensure the Air Force addresses structural unknowns in the F-16 fleet,
    we will fund a 5-year Full Scale Durability Test on the F-16 Block 40/
    50 fleet beginning fiscal year 2012 to identify structural issues that
    might limit service life. Actionable results from this testing will be
    available in fiscal year 2016.

        121. Senator Ayotte. Lieutenant General Reno, is there a similar
    program planned for the A-10 Warthog?
        General Reno. The A-10 has gone through several Service Life
    Extension Programs (SLEPs) starting in 2002. Along with SLEP, the A-10
    is replacing the thin-skin wings with new wings starting this year. The
    Air Force is also investigating the need to replace the remaining
    thick-skin fleet with new wings in order to sustain the aircraft to the
    2040 timeframe.
        Most recently, the A-10C Aircraft Scheduled Structural Inspection
    2014 (SSI 2014) was developed. In order to satisfy extended service
    life goals of the A-10 fleet, a restructure of critical components
    within the fuselage is necessary. SSI 2014 includes the following
    repairs: upper longeron strap replacement, crown skin and turtle deck
    skin modification, upper longeron modification at Fuselage Station (FS)
    268, lower auxiliary longeron modification at FS 405, electrical trough
    reinforcement at FS 365, and fuel cell drain hole modification. This
    will start in fiscal year 2014 using Air Force Operations and
    Maintenance (3400) funding and will give the A-10 the capability to
    reach Required Service Life projections of 16,000 flying hours.

                          FULL SPECTRUM TRAINING MILE

        122. Senator Ayotte. Lieutenant General Stevenson, in its fiscal
    year 2012 budget request, the Army began using a new metric to budget
    for its training activity to conduct Full Spectrum Operations.
    According to the Army, the Full Spectrum Training Mile, vice the Tank
    Mile, provides the ``right representative sample size of units and
    equipment that more accurately measures training activity across the
    Army.'' Will you please explain how the Army arrived at the Full
    Spectrum Training Mile and how this metric will increase its ability to
    more accurately capture training requirements and program funding and
    equipment accordingly?
        General Stevenson. To prepare soldiers for deployments in various
    operational environments, the Army transitioned its combined arms
    training strategies, ground and air, from training for major combat
    operations to training for full spectrum operations in fiscal year
    2012. Full spectrum operations training prepares Army forces to conduct
    offense, defense, and stability or civil support operations
    simultaneously for assigned missions at any point along the spectrum of
    conflict from stable peace to general war.
        In support of full spectrum operations training, Army executed a
    full spectrum training mile pilot program in fiscal year 2011 with the
    goal of transitioning away from the tank mile in fiscal year 2012. The
    full spectrum training mile measures training activity in terms of a
    composite average of miles driven by select equipment and type of unit
    in accordance with ARFORGEN. The tank mile was a good indicator of the
    training activity required to prepare soldiers for major combat
    operations, but the full spectrum training mile metric more accurately
    captures variable requirements that are due to changes in the training
    strategy, force structure, and adjustments made for deployed units. The
    full spectrum training mile is more representative of the key units and
    equipment that conduct full spectrum operations training and consume
    operational tempo (OPTEMPO) resources.

        123. Senator Ayotte. Lieutenant General Stevenson, do you
    anticipate this new metric will lead to changes in resourcing
    requirements?
        General Stevenson. Changing the metric alone does not change the
    resource requirement. Requirements that are reflected in the new metric
    change based on changes to the Army's force structure, training
    strategy, or unit deployments.

        124. Senator Ayotte. Lieutenant General Stevenson, how will this
    metric address and measure the unique missions of ARNG units,
    particularly in support of State missions?
        General Stevenson. The full spectrum training mile metric addresses
    a broader mission set that includes civil support operations training,
    which supports the State missions conducted by the ARNG. In part, the
    full spectrum training mile is used to describe the level of training
    activity in approved unit-level training strategies. The training
    strategies are designed to enable units to train on fundamental tasks
    associated with full spectrum operations, i.e., offense, defense, and
    stability operations (or civil support operations if the unit is to be
    employed in the continental United States (CONUS)). The level of
    training activity in approved unit-level training strategies is
    sufficient to enable ARNG units to prepare for civil support operations
    that include riot control, law enforcement and emergency (incident)
    response.

                          ARMY BODY ARMOR ACQUISITION

        125. Senator Ayotte. Lieutenant General Stevenson, there have been
    several reports over the last couple of years conducted by the DOD
    Inspector General (IG) and the GAO that have been critical on issues
    relating to quality control and testing of body armor by the Army--
    including most recently a January 2011 DOD IG report that stated the
    Army did not consistently enforce ballistic testing requirements for
    several contracts to produce interceptor body armor and vest
    components. What steps has the Army taken in response to these reports
    to improve testing and quality assurance protocols to ensure our
    soldiers have safe and reliable personal protective equipment?
        General Stevenson. The recent DOD IG and GAO recommendations
    support the Army's efforts to improve testing and quality assurance to
    ensure soldiers receive safe and reliable protective equipment. Some of
    the key changes the Army has instituted in body armor testing are as
    follows:

             To verify that there is no degradation in body armor
            performance over time, beginning in 2008, Program Executive
            Office (PEO) soldier developed and deployed Nondestructive Test
            Equipment (NDTE) systems to detect internal cracks to body
            armor plates. The December 2009, All Army Activities Message
            358-2009, requires that ballistic plates are scanned prior to
            deployment and rescanned during a soldier's mid-tour leave. The
            plates identified as having cracks or internal flaws are
            removed from inventory.
             In 2009, the Army made the decision to move body armor
            testing from National Institute of Justice (NIJ) Ballistic
            Laboratories to the Army Test and Evaluation Command (ATEC).
            The testing at ATEC provides direct governmental oversight of
            all aspects of body armor testing.
             A common standard in body armor testing is now in
            place across the DOD. The Office of the Director, Operational
            Test and Evaluation (DOT&E) standardized First Article Testing
            (FAT) for hard body armor by issuing a standard protocol for
            ballistic testing on April 27, 2010. The protocol establishes
            statistically-derived test methods and standard testing
            references, protocols, and procedures. The Army began using
            this protocol on May 4, 2010.

        126. Senator Ayotte. Lieutenant General Stevenson, are you
    confident that the Army has appropriate measures in place to ensure the
    safety and reliability of its body armor inventory?
        General Stevenson. Yes, I am confident that body armor issued to
    our soldiers and in our current inventory is safe and reliable. The
    U.S. Army, based on the DOT&E body armor standard test protocol,
    conducts rigorous and extensive testing of body armor to ensure that it
    meets U.S. Army standards and contractual requirements, and is safe for
    use by soldiers in combat. The U.S. Army developed and performs a
    comprehensive test strategy which encompasses FAT and Lot Acceptance
    Testing (LAT). During FAT, the plates are subjected to and must pass
    tests in various extreme operating environments, and must also pass
    both Ballistic Limit testing (provides an indication of safety margin
    in the protection) and Resistance to Penetration test (no penetration
    of a selected threat round). Resistance to Penetration testing is also
    performed during LAT to verify that the product which passed FAT
    maintains its demonstrated quality level.
        Beginning in 2008, PEO soldier developed and deployed
    Nondestructive Test Equipment (NDTE) systems to detect internal cracks
    to body armor plates to verify that there is no degradation in body
    armor performance over time. It is Army policy that all ballistic
    plates be scanned prior to deployment and rescanned during a soldier's
    mid-tour leave. As of 30 April 2011, 2.7 million plates had been
    through the NDTE scanning process and 5.0 percent (135,010 plates)
    failed the inspection process due to wear and tear of soldiers' using
    the plates in combat. Plates identified as having cracks or internal
    flaws are removed from inventory.
                                     ______

                 Questions Submitted by Senator James M. Inhofe

                            SPARE PARTS SUPPLY CHAIN

        127. Senator Inhofe. Lieutenant General Reno, consider the
    following points regarding spare parts:

             Our ALCs are suffering from a lack of spare parts;
             A missing or delayed part creates delays, drives up
            costs, and impacts readiness;
             Up to 4,000 spare parts are always identified as being
            critical but on back order up to 6 months; and
             The transfer of supply chain management to the DLA is
            the source of some of the spare-parts shortfalls. How well is
            the DLA adapting to its role as the manager of the Air Force's
            supply chain?

        General Reno. DLA is adapting to their new role-better now than at
    the start. Though nearly 92 percent of all orders are filled
    immediately from DLA stock, there is still room to improve on this
    performance. Production and demand have increased over the past 2
    years. There are process changes required on both the Air Force and DLA
    sides to get proper support of the Air Force's supply chain. Through
    collaborative demand and supply chain processes, I believe DLA has the
    ability to use both demand based and non-demand based models to
    accommodate the full spectrum of Air Logistics Center requirements.
        The Air Force and DLA must work to synchronize our demand and
    supply chains. Where possible, the Air Force must stabilize its ALC
    production requirements to allow for improved demand planning. Where
    the requirement is inherently unstable, we need DLA's help to define
    and source requirements to minimize acquisition lead times.
        Finally, I believe Air Force and DLA should work together to
    develop customer-facing metrics and measure all process, policy, and
    procedural improvement initiatives based on their impact to retail
    customer support, and we are.

        128. Senator Inhofe. Lieutenant General Reno, how is ineffective
    supply chain management affecting the ability of Air Force depots to
    maintain our fleet?
        General Reno. We see impacts in several ways. First, the lack of
    spare parts causes delays in maintenance work, which ultimately means
    the aircraft owners have to wait longer to get an aircraft back from
    depot. A secondary effect is that maintenance managers have to shuffle
    work assignments and move mechanics to supportable work. Then managers
    must backtrack to complete tasks that were delayed for parts. Next,
    part shortages force our maintainers to take parts from one aircraft
    and reinstall them on another to meet availability targets--an act we
    call cannibalization. This adds lead time, creates waste, and increases
    wear/tear to our parts--ultimately decreasing the reliability of our
    spares. It also frustrates our mechanics because they see the act as
    doing twice the work for one task. During the delay, there is an
    increased administrative workload for determining why the parts were
    not available, attempting to procure the required parts as quickly as
    possible, and attempting to prevent future stock-outs on critical
    items. This administrative work detracts from employees' primary
    responsibilities and makes our organizations less efficient and
    effective.

        129. Senator Inhofe. Lieutenant General Reno, what fleets are most
    impacted by this shortfall?
        General Reno. We see significant impact on all organic supported
    weapon systems, but specifically the A-10, B-1, B-52, C-5, F-15, F-15E,
    and F-16 at our operational bases and the C-130, F-15/F-15E, F-16, and
    the KC-135 at our depots. We have not seen the trend in contractor
    supported weapon systems that are not bound to buy consumables through
    the DLA. Additionally, we have felt the impact in landing gear and the
    F108, F101, T33, F100, and F110 engines.

        130. Senator Inhofe. Lieutenant General Reno, what programs are
    being piloted to help our Air Force work through this challenge?
        General Reno. The Air Force Global Logistics Support Center's Long-
    Term Strategic Plan has three focus areas that we believe will help the
    Air Force work through the spare parts challenge and significantly
    improve the supply chain as a whole. The first focuses on supply and
    demand planning by improving our requirements and forecast activities,
    increasing asset availability and ensuring collaboration with the DLA.
        The second focus area addresses efforts to improve sourcing.
    Through implementation of our Commodity Sourcing Program and the use of
    Strategic Sourcing, we will continue to leverage spending across
    commodity groups, reducing lead times, and become more responsive to
    changes in customer requirements. In addition, our Supplier Relations
    Management Program is aimed at improving collaboration and
    communication between us and our Top 10 commercial suppliers. This
    program affords us the opportunity to make joint process improvements,
    where both the Air Force and the supplier see reduced cost and improved
    performance.
        Finally, our Depot Supply Chain Management focus area looks at
    improving supply support to depot maintenance. By implementing a
    supportability process that looks ahead of need, we can identify
    impacts and begin to work mitigation actions well ahead of an actual
    parts impact to depot production. Additionally, our teams are looking
    to identify root causes and implement solutions for many of the
    recurring parts problems facing the supply chain through our Continuous
    Process Improvement programs. We continually pursue and collaborate
    with DLA to ensure our initiatives are aligned to improve supply chain
    support.

                        CORE AND 50/50 DEPOT MAINTENANCE

        131. Senator Inhofe. Lieutenant General Reno, consider the
    following points regarding depot maintenance:

             Depot maintenance involves the repair, overhaul, and
            upgrade of military systems and equipment as well as the
            subsystems and reparable components that make up these systems;
             It is performed in either military depots or
            contractor facilities but is sometimes performed at military
            bases by government civilians or contractor personnel.
             The amount of depot maintenance work done by the
            public and private sectors is governed by 10 U.S.C. 2466;
             The statute states that not more than 50 percent of
            the funds made available in a fiscal year to a military
            department or a defense agency for depot-level maintenance and
            repair can be used by the private sector;
             Core refers to a depot maintenance capability that is
            government-owned and operated (including government personnel
            and government-owned and government-operated equipment and
            facilities maintained by DOD) to ensure a ready and controlled
            source of technical competence and resources necessary for
            effective and timely response to a mobilization, national
            defense contingencies, or other emergency requirements; and
             Non-core workload is workload that is not needed to
            support core capability requirements and therefore can be
            performed by either the public or private sector.

        What role do core and 50/50 play in maintaining our national
    security?
        General Reno. The core statute is in place to ensure that during a
    time of crisis, if needed, the government can maintain tasked weapons
    systems without private sector help. The 50/50 statute's main role is
    to ensure a strong and robust OIB while preserving both the private and
    public sectors.

                             CONTRACTOR MAINTENANCE

        132. Senator Inhofe. Lieutenant General Reno, budget pressures have
    pushed some in DOD to hedge towards contractor maintenance in a search
    for savings and efficiencies. How would you quantify any kind of
    efficiencies that the Air Force might gain by transitioning to more
    contractor maintenance?
        General Reno. Each weapon system Life Cycle Management and Product
    Support plan is considered on a case-by-case basis. Depending on the
    size or complexity of the program, the Program Executive Officer or the
    Milestone Decision Authority is ultimately responsible for deciding on
    the best business case to support a weapon system.
        The Air Force has not used sustainment strategy as a platform to
    claim efficiency savings. The Air Force conducts Business Case Analysis
    (BCA) in accordance with 10 U.S.C. and the OSD guidance contained in
    the April 2011 DOD Product Support BCA Guidebook. The decisions are
    based on best value derived from the BCA. The Depot Source of Repair
    decisions are validated every 3 years in accordance with Air Force
    Instruction 63-101, Acquisition and Sustainment Life Cycle Management.
    The only consideration that impacts making the best value decision is
    meeting the requirement contained in the 10 U.S.C. Sec. 2466, which
    limits the depot-level workload awarded to non-government entities to
    no more than 50 percent of the entire workload.

        133. Senator Inhofe. Lieutenant General Reno, how would you
    quantify the increased risk of doing so?
        General Reno. Having sole source contractor supported systems
    without a competitive market or the ability to compete is not
    desirable. Having the ability to compete does reduce risk. In most
    cases, neither the organic nor commercial industry base possesses all
    the resources, infrastructure, nor the skills to accomplish the
    sustainment functions for most defense systems. A Product Support BCA
    typically considers both all organic or all contract alternatives, as
    well as, alternative analysis focusing on using the best blend of
    organic and industry capabilities to arrive at a best value solution
    and reduce risks.
        When performing a BCA, program offices are required to compare the
    identified risks associated with each potential support strategy. The
    risks are prioritized according to their potential implications for
    meeting the program's objectives.

        134. Senator Inhofe. Lieutenant General Reno, what is the cost-
    benefit analysis?
        General Reno. A Product Support BCA typically considers both an all
    organic or all contractor alternative. In addition, for each of the
    product elements required for sustainment, the alternative analysis
    focuses on using the best blend of organic and industry capabilities to
    arrive at a best value solution.
        When performing a BCA, program offices are required to compare the
    identified risks associated with each potential support strategy. The
    risks are prioritized according to their potential implications for
    meeting the program's objectives. The Program Manager considers risk
    associated with both contract and organic maintenance when assessing
    the weapon system support strategy.

                     WEAPON SYSTEM SUSTAINMENT EFFICIENCIES

        135. Senator Inhofe. Lieutenant General Reno, the Air Force has
    identified a $7 billion shortfall in WSS. It was made up by a $4
    billion plus-up and a $3 billion efficiency bogey. The Air Force says
    the savings gained through efficiencies enable it to fund 85 percent of
    the requirements in fiscal year 2012. First, I am concerned about
    funding our requirements at 85 percent. Second, I am concerned about
    some of the things we are calling efficiencies such as postponing or
    realigning PDMs or postponing aircraft upgrades. This all comes down to
    risk management--we do not have enough money to do all the things we
    need to do; therefore, we need to manage risk. What is the risk level
    of funding sustainment requirements at 85 percent?
        General Reno. The unfunded requirement risk is primarily being
    assumed in areas with limited impact to near-term readiness, such as
    software, sustaining engineering and technical orders. This risk is
    further mitigated by the annual, enterprise-wide prioritization of
    requirements to ensure the highest priority systems are funded in the
    year of execution.

        136. Senator Inhofe. Lieutenant General Reno, what percentage of
    funding makes weapons system sustainment unsustainable?
        General Reno. For our currently defined force structure, historic
    funding levels including OCO funds have proven sufficient in meeting
    combatant commander mission requirements; however, sustained Weapon
    System Sustainment funding at less than these levels, or loss of OCO
    funds, may lead to increased risk of aircraft groundings.

                             DEFERRING MAINTENANCE

        137. Senator Inhofe. Vice Admiral Burke, the Navy is deferring $367
    million of maintenance in order to mitigate risk by ensuring you are
    able to complete the most critical maintenance in fiscal year 2012. The
    Secretary of Defense is placing six Maritime Prepositioning Force (MPF)
    ships in Reduced Operating Status (ROS) beginning in fiscal year 2013
    to save $500 million over the FYDP. When do we get to the point where
    these cost-savings measures begin to impact our readiness?
        Admiral Burke. The President's fiscal year 2012 budget provides the
    balanced funding necessary for the Navy to support today's force, while
    developing the future capabilities and capacity necessary to continue
    to execute Navy mission in support of the National Military Strategy.
    The funding requested for Navy readiness accounts represents the best
    balance between current force readiness and building the future force
    within available top line funding.
        Based on recommendations from the Fleet Review Panel for Surface
    Readiness, investments we have made in the past several budget cycles
    in SURFMEPP Activity and enhanced assessments of our surface ships, the
    Navy has more insight on how to manage the risk and ensure the deferred
    work is properly documented and completed in future availabilities.
        We believe that placing the six MPF ships in ROS starting in fiscal
    year 2013 is reasonable, based on the change in war-time planning and
    the future security environment.
        The Navy carefully monitors readiness trends and will adjust
    readiness funding in future budget submissions, if the scope of
    operations is different than predicted, or if ship material condition
    does not continue to improve.

        138. Senator Inhofe. Vice Admiral Burke, how much maintenance can
    we defer?
        Admiral Burke. The cumulative amount of maintenance that can be
    deferred without impacting current operations or the expected service
    life of the platform varies from year to year based on the age and
    individual materiel condition of the ships, current operations and the
    next available opportunity to conduct the maintenance. The recent stand
    up of the SURFMEPP has improved the Navy's ability to assess the risk
    of individual ship maintenance deferrals, track deferred work to ensure
    it gets completed, and optimize deferral decisions in a budget
    constrained environment.

        139. Senator Inhofe. Vice Admiral Burke, how many MPF ships can we
    do without?
        Admiral Burke. All 20 MPF ships in the DOD-approved restructuring
    plan are required, based on risk assessment and analysis from the
    Maritime Preposition Study. The Under Secretary of Navy directed a
    Department of the Navy Maritime Prepositioning Study, as part of
    Secretary of Defense (SECDEF) POM-12 Efficiency Initiative, using
    current operation plans and Defense Planning Scenarios. The changes to
    the status and composition of the Maritime Prepositioning Squadrons do
    not reflect a diminution of Navy and Marine Corps valuation of
    prepositioning.

        140. Senator Inhofe. Vice Admiral Burke, where does the money come
    from after we again kick the can down the road?
        Admiral Burke. The President's fiscal year 2012 budget provides the
    balanced funding necessary for the Navy to support today's force, while
    developing the future capabilities and capacity necessary to continue
    to execute the Navy's mission in support of the National Military
    Strategy. The funding requested for the Navy's ship maintenance account
    represents the best balance possible in fiscal year 2012 between
    current force readiness and building the future force within available
    top line funding.
        Future budgets will be balanced based on the then current knowledge
    of Fleet condition and required future capabilities and capacity in
    support of updates to the National Military Strategy. The Navy is
    confident that surface ship in-service engineering program
    improvements, taken in response to the Fleet Review Panel of Surface
    Force Readiness, will provide better life cycle management and
    discipline in defining future maintenance requirements, specifically
    including the impact of deferred maintenance, to inform future
    programming and budgeting decisions.

        141. Senator Inhofe. Vice Admiral Burke, is there some large
    increase in defense spending on the horizon that will enable all the
    Services to recap, reset, and modernize?
        Admiral Burke. Navy does not anticipate any large increase in
    defense spending in the near future.

                                  END STRENGTH

        142. Senator Inhofe. Lieutenant General Stevenson and Lieutenant
    General Panter, I am concerned by Marine Corps and Army plans for
    reductions in end-strength. The Army plans to reduce by 49,000
    soldiers, and the Marine Corps plans to reduce by as many as 20,000
    marines. In the meantime, operations tempo has remained steady. Forces
    removed from Iraq by the Marines Corps have been deployed to
    Afghanistan. The Marines Corps has added a battalion landing team
    stationed off of the coast of Libya. Despite plans to the contrary,
    most people predict that we will have a requirement for tens of
    thousands of boots-on-the-ground (BOG) in Iraq and Afghanistan for at
    least the next 10 years.
        The Army announced that they have achieved their 2:1 dwell-to-BOG
    ratio, but have also announced that their final goal is 3:1. The Marine
    Corps has not yet reached a 2:1 dwell-to-BOG ratio, and their training
    readiness for their designed mission has suffered because of it. We
    have spent billions of dollars to shore up Marine Corps readiness, but
    their overall readiness has dropped every year. Afghanistan is
    acknowledged as the reason why the Marine Corps cannot maintain
    equipment readiness and also the reason that they cannot maintain
    training readiness for their preferred mission as a middle-weight
    contingency force. Are your Services' current end strengths adequate to
    simultaneously sustain current operations and maintain your desired
    readiness level?
        General Stevenson. The Army's current end strength is adequate to
    sustain current operations while maintaining requisite readiness
    levels. As we face anticipated budget reductions and direction to plan
    for personnel reductions, the Army will plan to reduce its end-strength
    and restructure its force mix consistent with reductions in OCO
    commitments and in conjunction with the needs of the Department and the
    combatant commanders. Our intent is to arrive at the right mix of
    capabilities to meet current demands as well as future challenges,
    within budgetary constraints. Based on the current strategic guidance
    and projected future requirements, the Army can maintain its 2:1 dwell
    to boots-on-the-ground ratio and have sufficient troops to respond to
    unforeseen events. The adoption of more positive ratios and shorter
    BOG/deployment periods remain the Army's goals and can be achieved for
    current and projected force demand consistent with current strategic
    guidance. We are conducting deliberate analysis now to develop a plan
    to meet the proposed 27,000 reductions to ensure that our operational
    capability is minimally affected. We are also working closely with the
    Joint Staff in their strategic review to ensure our analysis is
    consistent with their ongoing efforts. As part of this plan, and
    throughout this process, we will continuously monitor our readiness
    levels to ensure we remain able to meet the Nation's and our soldiers'
    needs.
        General Panter. The Marine Corps' current end strength is adequate
    to sustain current operations, under current conditions, for as long as
    the Nation requires, acknowledging such a commitment comes at a cost to
    the readiness of its nondeployed forces. The Marine Corps does not
    intend to begin reduction of overall end strength until after the
    drawdown of our current footprint of approximately 22,000 marines in
    Afghanistan. Therefore, the Service will remain prepared to respond to
    crises and maintain its commitment to Afghanistan between now and 2014.
    After drawdown from Afghanistan begins, the nearly 22,000 troops that
    the Service recovers will be sufficient to offset an end strength
    reduction of 15,000 personnel and enable the Marine Corps to remain
    prepared to respond to emergent crises.

        143. Senator Inhofe. Lieutenant General Stevenson and Lieutenant
    General Panter, General Chiarelli said at an AUSA conference that: ``I
    believe we have to have a balance in our equipment accounts and our
    personnel accounts to make sure that we have an Army that we need, but
    that Army must be well-equipped.'' Are we cutting end strength because
    there is no requirement for the additional forces or are we cutting end
    strength because there isn't enough in the budget to recap and
    modernize our forces given the current force levels?
        General Stevenson. The Army's plan to reduce its end-strength is
    consistent with reductions in OCO commitments and in conjunction with
    the needs of the Department and the combatant commanders. We are
    conducting deliberate analysis and developing a plan that ensures the
    proposed reductions have minimal impact on our operational capability.
    We are working closely with the Joint Staff to ensure our analysis is
    consistent with their ongoing efforts. As part of this plan, and
    throughout this process, we will continuously monitor our readiness
    levels to ensure we remain able to meet our mission requirements.
        General Panter. The Marine Corps is meeting and will meet those
    requirements validated through DOD's global force management process
    and approved by the Secretary of Defense. In the fall of 2010, the
    Marine Corps conducted a Force Structure Review (FSR) to evaluate and
    refine the organization, posture, and capabilities required of the
    Marine Corps as America's Expeditionary Force in Readiness in a post-
    OEF security environment. The FSR convened to develop the optimum
    organization, posture, and capabilities of the Marine Corps and to
    affirm its role within the joint force in a complex and uncertain post-
    OEF-Afghanistan security environment that is going to be further
    challenged by fiscal constraints. The post-OEF Marine Corps will
    continue to provide the ``best value'' in terms of capability, cost,
    and readiness relative to the operational requirements of the combatant
    commanders. The FSR addressed 21st century challenges confronting the
    Nation and built on the Marine Corps' historic role as the Nation's
    crisis response force. The results of that effort provide for a
    strategically mobile force optimized for forward-presence and rapid
    crisis response, with the capability and capacity to operate across the
    range of military of military operations.

                            COST OF AGING EQUIPMENT

        144. Senator Inhofe. Lieutenant General Stevenson, Lieutenant
    General Panter, Lieutenant General Reno, and Vice Admiral Burke, OCO
    funding for equipment reset (fixing and replacing damage and wear from
    war) is being pushed into the base budget. This has two detrimental
    effects: (1) it hides the cost of the war; and (2) it pushes force
    research and development (R&D) and modernization out of the base
    budget. This puts us in the position where we will reach a capability
    gap when we will have to retire systems in order to pay to develop and
    procure their replacements.
        Our fleets are significantly older based on when they were first
    designed and fielded with some dating back to the 1950s. The inventory
    of Abrams, Palidins, and Bradleys, designed some 30 years ago, are on
    their 4th and 5th modernization program. Marine Corps aviation average
    an age of 22 years, bombers 34 years old, Air Force fighters 27 years
    old, tanker 46 yrs old, etc. The Air Force is flying the oldest fleet
    of aircraft in its history. What impact does sustaining aging equipment
    have on our ability to procure new equipment?
        General Stevenson. Reset of equipment that has been operating as
    part of OIF/OND/OEF is a true cost of war. The Army has and will
    continue to request Reset funding for that equipment as part of
    supplemental or OCO requests, not our base budget. We will continue to
    need Reset funding for 2 to 3 years after hostilities cease.
        The Army's fiscal year 2012 budget request strikes a balance
    between current and future needs and provides the basis for an
    affordable equipping strategy over time. In support of the overall
    effort to develop the right force design and force mix, the Army must
    develop and field a versatile and affordable mix of equipment to enable
    soldiers and units to execute full-spectrum operations and to maintain
    our decisive advantage over any enemy may encounter. To do this, we
    must continually examine whether it makes more sense to sustain aging
    equipment, or to invest in new, on a case-by-case basis, because in the
    end, we know that the Nation can only afford to devote a finite amount
    of its resources on its Army. To help get at this very complex
    question, the Secretary of the Army directed Capability Portfolio
    Reviews to holistically examine the requirements that drive capability
    development, acquisition and sustainment to determine if current and
    proposed programs were aligned to meet key national and defense
    strategies and Army plans.
        The Army uses incremental modernization to deliver new and improved
    capabilities to the force by leveraging mature technologies, shortening
    development times, planning growth potential and integrating increments
    of those capabilities that give us the greatest advantage in the future
    while hedging against uncertainty. In addition to expanding or
    improving capabilities by developing and fielding new technologies, the
    Army will continue to upgrade, improve and recapitalize existing
    capabilities while simultaneously divesting those capabilities deemed
    redundant, not cost-effective or no longer required. By modernizing in
    an incremental manner, instead of purchasing equipment in quantities
    large enough to equip the entire force, the Army is able to provide the
    most relevant versions of capabilities available to units prior to
    deployment and then provide units in follow-on rotational cycles
    improved or more relevant versions, once available.
        General Panter. The impact of sustaining aging equipment on our
    ability to procure new equipment varies depending on the type of
    equipment.

    Intelligence:
        The majority of our intelligence acquisition programs of record are
    comprised of commercial off-the-shelf (COTS) and government off-the-
    shelf (GOTS) equipment and software. Refreshing and maintaining this
    equipment is critical, due to technology quickly becoming obsolescent
    and due to the harsh operational environment in which this equipment is
    employed. Likewise, it is critical that funds be available for the
    modernization of intelligence equipment. This is particularly relevant
    in the fields of signals intelligence electronic warfare (SIGINT/EW),
    Counter-Intelligence, and the processing/analysis of large volumes of
    data and intelligence. Efforts to sustain aging intel equipment tend to
    have a negative impact on our ability to procure new equipment because
    less funds are then available for the new equipment. Also, intel
    equipment becomes obsolescent fairly quickly vis-a-vis other types of
    equipment. Thus, investment in new procurement is generally preferred
    over sustainment.

    Tactical Communications:
        Tactical Communication Modernization (TCM) maintenance costs have
    been covered mostly under OCO for the past several years. As OCO
    funding diminishes, the TCM base budget OMMC must increase from approx
    $2 million per year to approx $10 million per year. So far, requests
    for increased OMMC have been denied for TCM. This will lead to OMMC
    shortfalls starting in fiscal year 2013 which will negatively impact
    our ability to maintain radio AAOs. The impact of maintenance costs on
    Research and Development (R&D) is minimal. The Joint Tactical Radio
    System (JTRS) program is already conducting all R&D for service radio
    requirements through fiscal year 2025.
        The impact of sustainment costs on the Marine Corps' ability to
    procure new equipment is significant. If additional OMMC is not
    approved, the TCM line will have OMMC deficits of $7-$10 million per
    year through the FYDP. These OMMC deficits will slow the procurement of
    new systems to replace over 130,000 radios, many of which reach end of
    life cycle starting in fiscal year 2018. The effect of reduced AAO's
    due to Force Structure Review (FSR) results on system life cycle is not
    yet determined. We will likely be able to dispose of older systems
    first and gain a year in life cycle deadlines for AAOs.

    Vehicles:
        The Marine Corps' inventory of medium and heavy tactical vehicles
    is relatively new. With the planned quantity reductions currently in
    place, the Marine Corps should see minimal impact in those fleets. The
    light armored vehicles (LAVs) and Abrams have retained relevance and
    extended services life through OCO funded upgrades and modifications;
    thus, the impact to these vehicles has been limited.
        The Amphibious Assault Vehicle (AAV) fleet requires consistent and
    aggressive Inspect and Repair Only As Needed (IROAN), in combination
    with a Service Life Extension program (SLEP), to maintain relevance and
    readiness into the next decade. This platform did not benefit from OCO
    resourced upgrades. The IROAN costs run about $425,000 per vehicle and
    running 100 vehicles per year through the process would cover the fleet
    in 10 years. The planned SLEP is budgeted to extend 392 vehicles at
    $1.5 million per vehicle and is needed to sustain the fleet. These
    investments impact modernization and have been accounted for in our
    plans.
        The light tactical vehicle fleet will also need selective but
    consistent IROAN to maintain readiness into the next decade as we
    reduce our quantities by roughly 20 percent to 19,000 vehicles. Our
    HMMWV A2s have are an average of 9 years; selective IROAN at $85,000/
    vehicle would extend that fleets life to 2020. The Expanded Capacity
    HMMWVs (ECV), with kits and upgrades partially resourced through OCO,
    have an average age of 4 years. Selective IROAN of that fleet at $115k
    each would extend that fleet's life to 2025. In conjunction with the
    Army we are evaluating the utility and return on investment associated
    with a HMMWV Recap. The results of that evaluation will inform our
    plans to modernize portions of the light fleet through the Joint Light
    Tactical Vehicle program.
        General Reno. In the constrained fiscal environment we operate in,
    requirements for new equipment must be balanced against the sustainment
    of our existing equipment. Continuing to maintain the legacy systems
    necessary to support our current mission is essential. However,
    continuing to pay for sustainment of systems that are no longer
    essential to mission execution reduces available funds for equipment
    recapitalization, modernization, and new development. For example
    sustainment costs for the MRAP vehicle are estimated at $457 million
    across the FYDP. The long-term Air Force need for MRAP is still under
    review. The associated funding could be better applied to updating the
    existing Air Force tactical vehicle fleet.
        Admiral Burke. To the extent that ships and aircraft are maintained
    and operated as planned to meet their Expected Service Lives (ESLs),
    there is no impact on the Navy's ability to procure new equipment.
    Recent experience with surface ships, however, has shown that not
    performing the necessary planned maintenance increases costs over time
    and impacts achievement of platform ESL.

        145. Senator Inhofe. Lieutenant General Stevenson, Lieutenant
    General Panter, Lieutenant General Reno, and Vice Admiral Burke, have
    we reached the point with any of our current equipment that the BCA
    recommends we procure new equipment but, due to a lack of funds, we are
    forced to sustain the existing equipment?
        General Stevenson. Yes, the following three programs are examples
    where BCA suggests the procurement of new equipment, but for which we
    will instead sustain existing equipment given funding constraints and
    higher priorities. First example is engineering equipment. Without
    current fiscal constraints and higher priorities, the Army would
    replace our 621B Scrapers, Deployable Universal Combat Earthmovers,
    Airborne Graders, D7 Dozers, and 613B Airborne Water Distributor/
    Scrapers. However, to keep these older equipment items serviceable, the
    Army executes a Service Life Extension Program to recondition it to
    near zero operating hours/miles. The second example is satellite
    communications terminals. Due to lack of funds to pure fleet the force
    with Phoenix Terminals, the Army made a conscious decision to reduce
    cost and upgraded existing AN/TSC-85 and 93s SATCOM terminals, thereby
    extending the life of these capabilities. The third example is field
    kitchens, in which the Army is currently procuring the modernized
    Assault Kitchen (AK) at unit cost of $53,400 to replace the Kitchen,
    Company Level, Field Feeding (KCLFF). The AKs are funded at minimum
    sustainment rate and full-fielding across the Army will not be met
    until 2022. Due to this fielding gap and lack of funds, the Army must
    sustain the existing KCLFF.
        General Panter. Depending on the size and priorities of future
    budgets, there is a potential for reaching that point in the near
    future. For example, some LID transportation programs that will require
    out-year funding include the MTVR Trailer, PLS Trailer for the LVSR,
    Flatrack Refueler Capability, and the P-19 Crash Fire Rescue vehicle.
        General Reno. Yes, but the Air Force doesn't deliberately keep a
    tally on equipment in this situation (where a business case says
    replace versus sustain).
        The business case and mission case coexist. Combat mission success
    and equipment capability are the first measures of merit. Cost is
    always a factor in decisionmaking.
        An analysis of alternatives is mandatory early in equipment
    procurement planning and helps to determine the `mission case' and
    `business case' options such as buying commercially available
    equipment, designing a new military-specific product, modifying
    existing equipment, or extending the service life of existing
    equipment.
        Much later on in the product life cycle, a fielded piece of
    equipment in the sustainment phase is condemned if the one-time repair
    cost reaches 75 percent of the purchase price. Rather than fixing an
    old piece of equipment at great expense, the Air Force looks for
    options to replace it with new equipment. If no affordable options
    exist, we are forced to retain existing equipment with high sustainment
    cost.
        Specific examples where the Air Force is extending the service life
    of existing equipment, due to mission needs, include flightline air
    conditioners that cool aircraft during maintenance operations, Materiel
    Handling Unit (MHU) 196 and 204 Trailers used for loading weapons on
    aircraft, and MHU 110 and 141 trailers used for transporting munitions.
        Admiral Burke. Navy has not reached the point where equipment is
    maintained solely due to a lack of funding to procure new equipment.

        146. Senator Inhofe. Lieutenant General Stevenson, Lieutenant
    General Panter, Lieutenant General Reno, and Vice Admiral Burke, how
    will the Services' inability to develop and procure new aircraft and
    vehicles affect our military readiness 10 years from now?
        General Stevenson. We do have some concerns about some of our older
    weapons systems, such that the BFV, OH-58D and Paladin, and in each
    case, are taking appropriate steps to modernize. The Army, on the
    average, meets or exceeds Army readiness standards for our current
    fleets, and I anticipate that we will continue to do so, but in order
    to do that, we will continue to require the generous support of
    Congress in support of our Reset program. Reset funding will need to
    continue for 2 to 3 years post conflict, to ensure that we sustain our
    high readiness levels into the future.
        The fiscal year 2012 Army base budget provides funding for new
    procurement, rebuild, overhaul, and upgrade of the current fleets, and
    grows future capabilities through research and development efforts.
    This budget enables the Army to continue its efforts to balance the
    force with the most modern capabilities available, integrating new
    materiel capability to ensure our soldiers always enter a fight
    overmatching any enemy, while remaining fiscally judicious and
    responsible to the Nation's current economic requirements.
        Regardless of new procurement programs, the Army continuously
    addresses the materiel capability gaps and safety concerns of the
    existing fleets through upgrade programs and modernization efforts.
    These are often developed as solutions to issues identified during the
    current combat operations and maintain the technological superiority of
    our existing fleets.
        Recognizing the significance of Army Aviation and the effects of
    the high operational tempo in current combat operations, we are
    modernizing three of the four primary helicopters: the CH-47 Chinook,
    UH-60 Blackhawk, and AH-64 Apache, and continue to sustain and upgrade
    the Army's fourth helicopter, the OH-58D Kiowa Warrior, while we
    complete an analysis of alternatives for the Armed Aerial Scout,
    intended as the Kiowa Warrior's replacement. The combination of
    remanufacturing and new procurement of our existing helicopter fleet is
    the most cost effective modernization strategy. This will have a
    positive effect on future readiness by decreasing the average aircraft
    age (both years and flight hours).
        General Panter. The Marine Corps has successful procured new
    vehicles for a portion of its tactical vehicle fleet, and has extended
    and upgraded a portion of its combat vehicle fleet.
        The Marine Corps fully fielded the Marine Tactical Vehicle
    Replacement system and is in the process of fielding the Logistic
    Vehicle System Replacement. Each program has a service life of 22
    years.
        The LAVs and Abrahams have been upgraded and modified, thereby
    retaining relevance while extending the economic service life out to at
    least 2025; thus, there would likely be no impact to readiness if our
    planned ongoing depot activities are resourced. We face challenges in
    two areas of our fleet, which could impact readiness if the challenges
    are not properly addressed.
        First, the Amphibious Assault Vehicle fleet will need a consistent
    and aggressive IROAN program, in combination with a Service Life
    Extension program, to maintain relevance and readiness into the next
    decade. The planned SLEP is budgeted to extend 392 vehicles at $1.5m
    per vehicle and is needed to sustain the fleet out to 2026. These
    investments impact modernization, but have been balanced with readiness
    in our investment planning.
        Second, the light tactical vehicle fleet will need selective but
    consistent IROAN to maintain readiness into the next decade. The
    technical challenge is maintaining readiness for the up-armored half of
    the light fleet (Expanded Capacity HMMWVs) that must operate over its
    design rating of 12,100 lbs gross vehicle weight, reducing readiness.
    The ECV, with kits and upgrades partially resourced through OCO, have
    an average age of 4 years. Selective IROAN of that fleet at $115,000
    each will extend that fleet's life to 2025. To maintain readiness in
    the long term we are working with the Army to evaluate the utility and
    return on investment associated with a HMMWV Recap program. The results
    of that evaluation will inform our plans to maintain readiness while
    modernizing portions of the light fleet through the Joint Light
    Tactical Vehicle program.
        The V-22 Osprey is on the last year of its first 5-year multi-year
    procurement plan, culminating in the procurement of 245 of the 360
    aircraft in the program of record by fiscal year 2012. 215 have been
    procured to date. A second multi-year procurement plan is in work with
    the Assistant Secretary of the Navy for Research, Development, and
    Acquisition to buy out the program of record. The Marine Corps is
    taking delivery of over 30 aircraft per year, with nearly 130 currently
    active in the Fleet. The Marine Corps has 10 active tiltrotor
    squadrons, 7 of whom have completed their transition from CH-46E to MV-
    22B. The East Coast tiltrotor squadrons have 10 highly successful V-22
    deployments to their credit--3 to Iraq, 3 to Afghanistan, and 4 on
    amphibious shipping as Marine Expeditionary Units. Deployments to
    Afghanistan and the MEUs continue to date.
        The H-1 Upgrades program is also in the midst of delivering new
    aircraft to the fleet. fiscal year 2011 inclusive, 131 of the 349
    (program of record) H-1 Upgrades aircraft are on contract, and to date
    the Marine Corps has accepted delivery of 43 UH-1Ys and 16 AH-1Zs.
    Procurement of these aircraft continues at a consistent rate through
    fiscal year 2019. Five operational squadrons have converted to the UH-
    1Y and the first squadron transition to the AH-1Z is well underway.
    Delivered aircraft are already in the fight; the UH-1Y has conducted
    sustained combat operations in OEF since November 2009, and both the
    AH-1Z and UH-1Y deploy with the 11th Marine Expeditionary Unit in fall
    2011. Readiness of H-1 Upgrades aircraft has been high.
        The CH-53K program, currently in development, has been meeting and/
    or exceeding OSD benchmarks since fiscal year 2007. Assembly of the
    program's Ground Test Vehicle began in January 2011, and the program's
    first flight is on schedule for CY 2013. The program has been a model
    for aircraft development.
        General Reno. The deferred procurement of new aircraft has the
    potential to impact military readiness 10 years from now. There have
    been acquisition and modernization delays in several aircraft programs.
    These delays will result in a postponed acquisition of improved
    capabilities and an increase in aircraft age for the affected mission
    systems. Increased aircraft age has the potential to impact aircraft
    availability and drive higher sustainment cost. Required warfighting
    capacity will be maintained through selective modernization and service
    life extension of current platforms. Potential effects of aircraft
    aging have been thoroughly studied and can be mitigated through regular
    operations and maintenance activities and modification programs.
        Admiral Burke. Navy development and procurement plans are focused
    on sustaining readiness to deliver required forces and capabilities for
    the long term. For the Navy, the long service life of our capital
    assets requires a balance between proper life-cycle maintenance of
    current assets, procurement of new platforms, and investing in
    capability modernization of existing platforms. The budget submission
    for fiscal year 2012 and the FYDP provides the most effective current
    and future readiness balance considering each of these elements. If
    sustained, Navy development and procurement programs will support
    future readiness requirements.

                              STRATEGIC READINESS

        147. Senator Inhofe. Lieutenant General Stevenson, Lieutenant
    General Panter, Lieutenant General Reno, and Vice Admiral Burke, our
    military has been continuously engaged in combat operations for a
    decade. Our forces are operating near the limits of their capacity to
    meet the demands of ongoing major operations in Iraq, Afghanistan,
    Libya, and Japan, in addition to operations to maintain peace and
    deterrence ashore, afloat, and in the skies worldwide. While fighting
    the immediate conflicts, we face strategic risks elsewhere from Iran,
    North Korea, and others. Defense spending, while growing, has not kept
    pace with our conflicts. In 1962, total defense spending made up 9.0
    percent of gross domestic product (GDP).
        In 2010, total defense spending, including OCO, made up 4.7 percent
    of GDP. Current conflicts have, understandably, impacted our readiness.
    The cost of the war in terms of readiness is reflected in the Services'
    budgets:

             The Army budget contains $967 million to replenish
            their prepositioned stocks;
             Budgets for the Air Force contain money for extending
            the life of aircraft that are accumulating flight hours faster
            than expected; and
             The Marine Corps will need more than $10 billion to
            repair war-damaged equipment.

        In the meantime, we have failed to modernize our forces:

             Air Force bombers--34 years old on average;
             Air Force fighters--27 years old on average;
             Surveillance aircraft--30 years old on average;
             Abrams tanks, Paladin artillery, and Bradley Fight
            Vehicles--designed some 30 years ago, are on their fourth and
            fifth modernization program; and
             Marine Corps aviation--22 years old on average.

        What is the overall trajectory of the readiness of your Services?
        General Stevenson. The Army is in better shape today than we have
    been in a long time. Through the strong, unwavering support of
    Congress, we have received the funding we need for Reset--and this
    eliminates a lot of our risk. Having Reset fully funded enables us to
    not only ensure our equipment is brought back to the Army ``10/20''
    maintenance standard, but also allows us to take the necessary
    maintenance actions to eliminate ``delayed desert damage.'' Since 2002,
    our investment in Reset has had a dramatic impact on operational
    readiness rates of equipment on-hand, enabling the Army to maintain
    rates at 90 percent and 75 percent for ground and aviation equipment,
    respectively. Having said that, we do have concerns. With regard to
    Reset, we will need Reset to continue to be fully funded, for 2 to 3
    years beyond the end of major OCOs, and we know that is getting
    increasingly difficult to assure. Another concern is whether or not we
    will get the support of Congress in funding our Combat Vehicle
    Modernization Strategy. This strategy consists of a comprehensive
    modernization plan for our entire fleet of combat vehicles, and
    features as its centerpiece the development, production and fielding of
    the Ground Combat Vehicle to replace the Bradley Infantry Fighting
    Vehicle. A companion need, equally as important, is the need to invest
    in The Network. We have thought thru our modernization requirements
    deliberately, and through a series of Capability Portfolio Reviews,
    chaired by the VCSA and overseen by the Under Secretary of the Army,
    across the entirety of the Army's hardware requirements, thru the FYDP,
    and beyond. We will continue to submit the requirements we need in our
    investment accounts, and in the meanwhile, ensure that that equipment
    that we do have is maintained in a high a state of readiness as
    possible, to ensure we can respond to the Nation's needs. With the
    drawdown in Iraq, and eventual lessening of the commitment of forces in
    Afghanistan, following a rigorous Reset, this will only get better.
        General Panter. The overall trajectory of Marine Corps readiness is
    that the readiness of deployed forces is and will remain high, while
    the overall readiness of the nondeployed force is degraded and will
    remain so for as long as the Marine Corps sustains current
    requirements.
        OCO in Iraq, Afghanistan, and elsewhere have placed an
    unprecedented demand on ground weapons systems, aviation assets, and
    support equipment. Marine Corps equipment has experienced accelerated
    wear due to many years of sustained combat operations in exceedingly
    harsh operating environments. In many cases, the result is that
    operational demand has far exceeded peacetime equipment usage rates or
    items have been destroyed or damaged beyond economical repair. Marine
    Corps legacy aircraft supporting operational missions are consuming
    service life at a rate up to three times faster than scheduled.
    Averaged across the entire aviation inventory, the Marine Corps is
    consuming aircraft service life at a rate 1.85 times faster than
    planned. This means the majority of the Marine Corps' legacy aviation
    platforms are nearing the end of their service lives.
        It is vital the Marine Corps reset its equipment to serviceable
    condition and modernize legacy platforms to achieve the necessary
    levels of readiness to posture itself for the future. The Marine Corps'
    experiences in combat operations over the last decade have shown legacy
    20th century ground tables of equipment are inadequate for the modern
    battlefield. With regard to aviation, new and modern aircraft with low
    average ages and robust service life projections will be critical to
    supporting future Marine Corps and joint operations. Reset and
    modernization of ground equipment and aviation platforms will be
    absolutely essential to reversing what has been an overall downward
    trajectory of MAGTF readiness for the nondeployed force. Congress'
    continued support and investment is needed to reset equipment and
    reconstitute/modernize the force to meet combatant commander
    requirements and correctly posture the Marine Corps for the future
    security environment. This will require multi-year support beyond the
    completion of combat operations.
        General Reno. Readiness for full spectrum military operations is a
    challenge for our combat air forces and some other limited-supply/high-
    demand aviation units. Since 2003, there has been a slow but steady
    decline in reported readiness indicators. Air Force operations tempo
    since 2001 has produced lower dwell-to-deploy ratios for high-demand
    skills. At present, 19 enlisted and 9 officer career fields are
    ``stressed.'' We have improved funding to weapons systems sustainment;
    however, sustainment challenges continue as we field new weapon systems
    and balance contract versus organic (blue-suit Air Force) sources of
    repair. To address these readiness issues, we must keep aircraft
    recapitalization and procurement programs on track and continue
    managing our force to ensure the right numbers and mix of skills in our
    highly tasked and highest priority mission areas. Our ability to
    project Global Vigilance, Reach, and Power is constrained by the
    increasing costs to design and build platforms in a particularly
    challenging budget environment. Our fiscal year 2012 President's budget
    request reflects the difficult choices that will allow the Air Force to
    provide the necessary capability, capacity, and versatility required to
    prevail in today's wars, prevent and deter conflict, prepare to defeat
    adversaries and succeed across the range of potential military
    operations-while preserving and enhancing the All-Volunteer Force. The
    Air Force must continue to modernize and recapitalize our aircraft
    inventory to remain effective against global and regional competitors
    as they continue to modernize and improve their own air defense
    capabilities and harden valued targets.
        Admiral Burke. The overall readiness trajectory of the Navy has
    been on a slight downward trend since 2007. Since the Navy is a
    traditional rotational force, the standing practice of reset-in-stride
    has resulted in a more steady readiness profile. However, the overall
    pace of operations has impacted both Navy personnel and equipment,
    reduced the readiness of nondeployed forces, and driven mission-
    tailored training for some deploying forces. Navy is addressing
    deficiencies in surface ship maintenance planning, crew size, and
    training now, but to achieve the expected service life of ships and
    aircraft over the long-term, operational demand and force structure
    must be rebalanced.

        148. Senator Inhofe.  Lieutenant General Stevenson, Lieutenant
    General Panter, Lieutenant General Reno, and Vice Admiral Burke, how
    would you quantify the readiness risks that your Services are accepting
    by operating under the current top-line budget?
        General Stevenson. Operating under the current top-line budget
    impacts our Nation's strategic flexibility but does not create undue
    risk to current operations. Our current equipment readiness rates, over
    90 percent for ground and 75 percent for aviation in theater, are a
    good indicator that we are meeting our requirements. As we go forward,
    we will smartly manage the reduction and change in size and composition
    as the demand for OCO changes. The Army conducted comprehensive
    capability portfolio reviews and terminated, reduced, or deferred
    training and equipment programs that represented the lowest priority
    requirements or had declining relevance or unneeded redundancy. We will
    sustain our warfighting capabilities to prevail, even as we increase
    our ability to prevent conflict. The Army continues to ensure forces
    retain their full spectrum operational readiness and important
    modernization programs as we apply efficiency efforts across our
    equipping, training, manning, and other title 10 functions.
        General Panter. The Marine Corps is responding to the Nation's
    demands with a unique combination of expeditionary land-based and
    amphibious forces, but such commitment comes at a cost to the readiness
    of its nondeployed units. Sustaining current operations has reduced the
    aggregate readiness of the nondeployed force. Strategically, low levels
    of readiness for the nondeployed force increases risk in the timely and
    successful execution of crisis response and major contingency
    operations (war plans). If the Marine Corps were asked to respond to a
    second major contingency, the Marine Corps could respond, but would
    face significant challenges in forming a fully resourced and cohesive
    MEF-level MAGTF without delays to war plan timelines. For a smaller
    scale crisis or contingency, readiness levels of the nondeployed force
    would affect the Marine Corps' ability to respond, but to a lesser
    degree. For example, over the past 18 months the Marine Corps has
    successfully responded to crises in Haiti, Pakistan, Korea, Egypt,
    Libya, Japan, and Yemen. It would be much more difficult to respond to
    a second major contingency while sustaining current global and OEF
    requirements.
        The reality is that the Marine Corps is heavily reliant on OCO
    funding to sustain current operations in Afghanistan and around the
    globe. The Marine Corps will need this funding until reset is well
    underway, post-conflict. Lack of sufficient resources to repair and
    recapitalize equipment used after years of sustained combat operations
    could jeopardize long-term readiness of force. Accomplishing reset from
    the Marine Corps' top-line budget, in a time of fiscal austerity, will
    likely put Marine Corps modernization programs at risk.
        General Reno. Sir, the Air Force is meeting current requirements
    and committed to future readiness. We employ a number of analytical
    tools to target resources at key readiness requirements. Current Air
    Force readiness assessment is based on the Global Status of Resources
    and Training System for resources, Air Expeditionary Force Reporting
    Tool for individual and unit readiness, and the Defense Readiness
    Reporting System for capabilities-based assessment. When looking at
    data collected over the past decade regarding our equipment, training,
    as well as our personnel's readiness to perform the Nation's full-
    spectrum of missions, we see that our overall readiness has been
    trending downward since 2003. Our long-term readiness concerns focus on
    aging weapon systems and high operations tempo. Although we continue to
    meet combatant commander requirements, operations tempo continues to
    take a toll and many of our aircraft are increasingly unavailable due
    to required maintenance. Consequently, modernization and
    recapitalization remain priorities. A unit's readiness to conduct all
    title 10 missions decreases during deployment. Units preparing to
    deploy focus training on expected theater wartime missions. The
    requirement to focus on the specific mission tasks for Iraq and
    Afghanistan creates strategic risk in terms of units' readiness,
    availability, and proficiency to perform other types of full-spectrum
    missions. We assume increased strategic risk with high deploy-to-dwell
    units and personnel serving in career fields frequently deployed. Short
    nondeployed windows reduce training opportunities. While we remain
    fully committed to winning today's fight as our top priority, we
    continually monitor and assess our resources so that we implement
    decisions necessary to mitigate strategic risks to readiness.
        Because of budgetary constraints for the foreseeable future, the
    rapid expansion and proliferation of advanced technology and weapon
    systems, and the anti-access and area-denial strategies that those
    weapons counter, we face a reality requiring more disciplined spending,
    efficiency, innovation, and inter-service integration and
    interoperability. In the short term, we will continue to see greater
    demand for Air Force capabilities in relatively uncontested
    environments. In the future, however, we are more likely to encounter
    the global proliferation of precision weapons, coupled with an
    increasing requirement for long-range strike and intelligence,
    surveillance, and reconnaissance (ISR) in areas guarded by increasingly
    capable, agile defenses.
        While our current plans mainly focus on near-term threats, to hold
    risk at acceptable levels we must work hard at developing and refining
    longer-term capabilities, and be mindful of the likelihood of more
    challenging budgetary constraints. For example, to reduce risk while
    conducting operations in opposed-network environments, we must improve
    our approach to electronic warfare. We have to acknowledge the
    challenges of long distance operations and the proliferation of
    sophisticated defenses, and advance our capability to conduct long-
    range penetrating strike and persistent ISR.
        The growing threat of precision ballistic and cruise missiles
    compels us to increase the resilience of our bases and logistics, and
    explore ways to reduce logistics demand. To lower risk in the space and
    cyber domains, we need to continue to pursue space situational
    awareness and the space protection program to ensure access and
    attribution in that increasingly contested, congested, and competitive
    domain; and to continue actions that ensure security and freedom of
    action within the cyber domain.
        Admiral Burke. The readiness risks that the Navy is accepting are
    quantified and reported in the Quarterly Readiness Report to Congress
    (QRRC), submitted by OSD. The Navy's submission to the QRRC contains a
    general risk assessment, overall readiness ratings for the Navy, and
    specific readiness data for personnel, equipment, supply, training, and
    ordnance. Also, the Navy's submission describes specific risks in
    meeting mission essential tasks that are coordinated with Navy
    component commanders in the various COCOMs. The specific data and risk
    assessments in the QRRC, and other briefings, are classified.
        The aforementioned data is also a component of the Navy's input to
    the annual Chairman's Risk Assessment, submitted by the Chairman of the
    Joint Chief of Staff in February of each year.

                           ALTERNATIVE ENERGY SOURCES

        149. Senator Inhofe. Lieutenant General Stevenson, Lieutenant
    General Panter, Lieutenant General Reno, and Vice Admiral Burke, all
    the Services are actively pursuing ways to reduce reliance on fossil
    fuel from foreign countries through greater conservation, efficiencies,
    and use of alternative energy sources. The initiatives range from
    continuing the certification of all military aircraft to fly on a 50/50
    blend of fuel--a project I started back in 2002 as an advanced concept
    technology development program. The Services are also working with wind
    generation, photovoltaic, landfill gas, flex fuel, and hybrid engines.
    Have the Services looked at the BCA of the cost of different energy
    sources based on location of their installation vice one-size-fits-all
    for a mandated energy policy?
        General Stevenson. While preliminary studies do exist as to what
    technologies are feasible in certain geographic locations, the Army
    does not have detailed BCA of the cost of different energy sources
    based on installation location. The Army does not have one-size-fits-
    all policy for developing renewable energy projects that requires the
    use of one technology over another. Appropriate due diligence is
    necessary before making decisions about where to develop and deploy
    potential renewable energy projects. Key considerations include the
    cost of the project, return on investment, states with good policy and
    demand for renewable power, sufficient land, state incentives,
    economics of state utility market and any potential effects the project
    would have on the installations mission. In an era of constrained
    budgets it is critical that renewable energy projects developed by the
    Army and its partners provide the greatest possible benefit at an
    appropriate cost. Like the other Services, the Army is certifying our
    mainline air platforms to operate on the 50/50 bio fuel blend. The goal
    of completion is scheduled for the end of fiscal year 2013. The Army's
    tactical/combat ground platforms will complete certification by the end
    of fiscal year 2014.
        General Panter. Absolutely. All major consumers of energy, which
    certainly includes the DOD and the Marine Corps, have a role to play in
    supporting the development and utilization of alternative sources of
    energy to offset the traditional forms of energy they currently
    consume. As established in the recently signed U.S. Marine Corps
    Expeditionary Energy Strategy and Implementation Plan, the Marine Corps
    is committed to pursuing alternative energy solutions for our
    installations/facilities, our vehicle fleets, and our contingency
    operations, consistent with the Secretary of the Navy's goals.\1\
    ---------------------------------------------------------------------------
        \1\ Per page 23 of the Expeditionary Energy Strategy and
    Implementation Plan: ``By 2020, we will increase the amount of
    alternative energy consumed at installations to 50 percent of total
    energy consumption. Through the combination of aggressive demand
    reduction and on-installation renewable energy production, we will
    transform half of our installations into net-zero energy consumers.''
    ---------------------------------------------------------------------------
        On our installations, we evaluate each and every project on a case-
    by-case basis and carefully assess the projects with respect to:

        (1)  mission execution,
        (2)  real estate and encroachment issues,
        (3)  environmental and cultural resource requirements, as well as
        (4)  economics and costs.

        As directed by the Energy Policy Act of 2005 \2\ and the NDAA of
    2007,\3\ the Marine Corps has actively taken steps to identify and
    implement viable renewable energy projects.\4\ Of note is a project at
    MCLB Albany which will utilize landfill gas located two miles away from
    the Base to produce 1.9 MWs of ``renewable'' electricity to support the
    Maintenance Center, where we rebuild and repair ground combat/support
    equipment. This is being accomplished through an $18.8 million Energy
    Savings Performance Contract (ESPC) with Chevron Energy Solutions to
    install the needed infrastructure and equipment.
    ---------------------------------------------------------------------------
        \2\ Energy Policy Act 2005 (EPAct 2005):

         Defines ``renewable energy'' as electric energy generated
    from solar, wind, biomass, landfill gas, ocean (including tidal, wave,
    current, and thermal), geothermal, municipal solid waste, or new
    hydroelectric generation capacity achieved from increased efficiency or
    additions of new capacity at an existing hydroelectric project.
         Requires the Secretary of Energy to ensure that, to the
    extent economically feasible and technically practicable, the following
    amounts of the total electricity consumed by the Federal Government
    come from renewable energy:

           Not less than 3 percent in fiscal years 2007-2009
           Not less than 5 percent in fiscal years 2010-2012
           Not less than 7.5 percent in fiscal year 2013 and
    thereafter

         Provides a bonus to Federal agencies by allowing them to
    double count renewable energy if it is produced onsite and used at a
    Federal facility.

        \3\ NDAA of 2007;

         Produce or procure not less than 25 percent of the total
    quantity of electric energy it consumes within its facilities and in
    its activities during fiscal year 2025 and each fiscal year thereafter
    from renewable energy sources (as defined in section 203(b) of the
    Energy Policy Act of 2005).
         Produce or procure electric energy from renewable energy
    sources whenever the use of such renewable energy sources is consistent
    with the considerations specified in Title 10 Section 2911.
        \4\ Current onsite facilities renewable energy generation capacity:
         Current Production (over 1 MW):

           Twentynine Palms: 2.5 MW Photovoltaic
           Camp Pendleton: 2.2 MW Photovoltaic
           Barstow: 1 MW Wind Turbine

         Under Construction/Planned (over 1 MW):

           Albany: 1.9 MW Landfill Gas Turbine
           Camp Pendleton: 8.4 MW Photovoltaic
           Camp Lejeune: 8.1 MW Photovoltaic
           Twentynine Palms: 6.3 MW Photovoltaic
           San Diego: 1.3 MW Photovoltaic
           Miramar: 3.0 MW Landfill Gas Power Purchase Agreement

        Potential advantages of renewable energy sources such as biomass,
    geothermal, solar, wind, and ocean include:

         Reliable power supplies and fuel diversification, which
    enhance energy security for individual facilities.
         Supplementary power for peak-use periods.
         Reduced greenhouse gas emissions associated with energy
    use.
         Lower risk of fuel spills in environmentally sensitive
    locations.
         Increased price stability in an uncertain energy economy.
    ---------------------------------------------------------------------------
        At this time, the Marine Corps is involved in multiple initiatives
    with the Naval Facilities Engineering Command and Department of Energy
    National Laboratories to identify and assess opportunities that offer
    the best potential in-terms of utilizing cost effective renewable
    generation technologies on our installations.
        General Reno. The Air Force uses an enterprise perspective to meet
    its energy policy goals based on the location and requirements of its
    installations. To ensure it makes the best use of taxpayer funds, the
    Air Force invests its available energy dollars primarily in energy
    efficiencies due to the better savings to investment ratios and the
    high cost of renewable energy.
        The Air Force is taking a balanced approach between Air Force-
    focused investments to reduce energy intensity and leveraging the
    renewable energy market through third party investment to increase
    energy resiliency and redundancies. This approach enables the Air Force
    to identify, prioritize, and develop renewable energy projects before
    working with private industry using third party investments to develop
    the projects. The Air Force has a Renewable Energy Game Plan which
    identifies approximately 40 projects for fiscal years 2011-2013
    totaling more than 1,000 megawatts. A key factor in making decisions
    regarding a project relates to the cost of energy at that particular
    installation, as state or Federal initiatives can enhance the financial
    viability of the project.
        Admiral Burke. The Navy does not use a one-size-fits-all approach
    for mandated energy policy. As an example, in fiscal year 2012, the
    Navy will invest $579 million in a portfolio of more than 150 unique
    facility recapitalization, research, and process improvement projects
    across our installations that were selected using a comprehensive
    energy Return on Investment (ROI) framework and analytical tool. This
    holistic portfolio will enable the Navy's achievement of the multitude
    of shore energy legal mandates and DOD/Navy goals, while balancing the
    financial and non-financial benefits of the energy projects.
        In 2009, the Navy analyzed our energy consumption and facility data
    at the enterprise, installation, building, and component level, based
    on asset class, interdependencies, age, size, accessibility, and other
    relevant attributes. Our analysis validated each Navy installation has
    a specific set of opportunities and challenges related to energy supply
    and consumption. These challenges and opportunities are driven by a
    number of factors, including mission requirements, energy costs,
    availability, and reliability of energy supply, environmental
    conditions, as well as state and local regulations.
        As a part of the Navy's Shore Energy Strategy, each installation
    will have individual energy goals and a tailored plan to achieve them,
    based on an iterative, rigorous modeling process using industry
    benchmarks. This approach allows installations to scope projects
    multiple ways: by building, building type/mission, and/or technologies.
    Coupled with the ROI analytical tool, this will allow for the
    prioritization of investment of projects to meet the goals.

        150. Senator Inhofe. Lieutenant General Stevenson, Lieutenant
    General Panter, Lieutenant General Reno, and Vice Admiral Burke, we
    know the cost of diesel, gas, and JP-8 has increased dramatically over
    the past 3 years which has impacted all of your operating budgets. How
    has the cost of using alternative fuels and energy sources impacted
    your operating budgets?
        General Stevenson. The Army uses ES5 and bio-diesel (B20) on our
    installations to support our Non-Tactical Vehicle (NTV) fleets, where
    available. Using ES5 and bio-diesel has not increased our costs any
    more than standard fuel costs have increased. The standard price paid
    from the operations account for ES5 and bio-diesel is about the same as
    we pay for standard gasoline or diesel fuel.
        The Army has made significant progress to improve the Army NTV
    fleet of more than 80,000 vehicles by reducing the number of large
    vehicles, transitioning the fleet to hybrid, plug-in hybrids and all-
    electric vehicles. These efforts will result in the reduced reliance on
    foreign sources of oil. Currently, over 40 percent of the NTVs in the
    Army fleet are clean and green.
        The Army is in the process of qualifying tactical equipment to
    operate on alternative jet fuels, both hydro-treated renewable and
    synthetic based. This effort is in the RDT&E phase so the significant
    cost of developmental fuels has not impacted operating budgets.
        General Panter. Consistent with the information we reported in the
    Federal Automotive Statistical Tool (FAST), which is a Department of
    Energy and Office of Management and Budget web database designed to
    facilitate Federal agencies to meet all non-tactical motor vehicle
    fleet management data reporting requirements, the Marine Corps spent
    $93,975 more on E85 than it would have on gasoline in fiscal year 2010.
    However, compared to diesel fuel, we realized savings of $39,950 and
    $1,081,998 on Compressed Natural Gas and B20 biodiesel, respectively.
        This calculation is based on gas gallon equivalents and factors out
    variations between fuels such as energy content per gallon. The Marine
    Corps considers the extra money spent on E85 to be an acceptable
    expense in order to comply with Executive Orders 13423 and 13514, as
    well as the Energy Independence and Security Act of 2007 and Energy
    Policy Acts of 1992 and 2005.
        In order to achieve these petroleum reduction and alternative fuel
    use increase mandates, the Marine Corps must reduce petroleum
    consumption in light duty vehicles in addition to the medium and heavy
    duty vehicles. The only affordable alternative fuel light duty vehicles
    available in appropriate quantities are Flex Fuel vehicles that operate
    on gasoline or ethanol. As a result, the Marine Corps intends to
    continue its investments in ethanol infrastructure and ethanol fuels.
        General Reno. At this time, the Air Force is not using alternative
    aviation fuel on an operational basis. The alternative aviation fuel we
    purchased has been for test and evaluation purposes only. Once the
    fleet is certified for unrestricted operations using an alternative
    fuel blend, the Air Force is committed to ensuring any alternative
    aviation fuel purchasers are cost competitive with traditional JP-8.
        Admiral Burke. The cost of alternative fuels is not currently
    impacting Navy operations accounts given the fuels are still in
    development and only being used for small scale testing and
    certification of biofuels which are primarily funded by R&D. The Navy's
    first major use of alternative fuels will come in 2016 with the sailing
    of the great green fleet which will require 80K barrels of fuel.
                                     ______

                 Questions Submitted by Senator Saxby Chambliss

                            SUPPLY CHAIN MANAGEMENT

        151. Senator Chambliss. Lieutenant General Stevenson, Lieutenant
    General Panter, Lieutenant General Reno, and Vice Admiral Burke, GAO
    produced a number of reports in recent years about the cost to the DOD
    of problems with its supply chain management system. A January 7, 2011,
    GAO report stated: ``Since 1990, we have identified DOD supply chain
    management as a high risk area due in part to ineffective and
    inefficient inventory management practices and procedures, weaknesses
    in accurately forecasting demand for spare parts, and challenges in
    achieving widespread implementation of key technologies aimed at
    improving asset visibility. These factors have contributed to the
    accumulation of billions of dollars in spare parts that are excess to
    current requirements.'' The DOD, in both its 2006 and 2010 Quadrennial
    Defense Review (QDR) reports, has also spoken of the need to address
    this challenge. The 2006 report said that ``the use of active and
    passive radio frequency identification (RFID) technologies will play a
    key role in achieving DOD's vision for implementing knowledge-enabled
    logistics support to the warfighter through automated asset visibility
    and management.'' What actions is DOD taking to improve asset
    visibility, reduce costs, and improve accuracy and efficiency in
    delivery of needed supplies to warfighters?
        General Stevenson. The Department has recently developed the DOD
    Comprehensive Inventory Management Improvement Plan (CIMP) which
    addresses the 7 January 2011 GAO report findings and recommendations.
    The Army worked closely with the Office of the Deputy Assistant
    Secretary of Defense for Supply Chain Integration in the development of
    the CIMP and we are well underway in implementing the various
    initiatives outlined in the plan to improve our inventory management
    practices, enhance spare parts demand forecasting and improve asset
    visibility. I will highlight a few.
        The Army is pursing multiple efforts to improve inventory
    management practices. One is a reduction of excess stocks through a
    detailed review process by eliminating those items with no demands in
    the past 2 years. This effort will reduce our storage costs and
    inventory management requirements. Another is the centralization of our
    field level inventory stockage determination processes under the Army
    Materiel Command, who will ensure those items stocked in our Supply
    Support Activities (SSAs) are the right demand supported readiness
    enablers, in the right quantities, to keep combat systems operational
    and in the fight. Third, the Army Materiel Command is aggressively
    working to reduce excess procurements on-order before they are
    delivered from industry which prevents us from building up unnecessary
    inventory.
        To improve spare parts demand forecasting accuracy, we are working
    with the DLA to develop a new Demand Data Exchange process to improve
    the accuracy of Army repair depot parts forecasts. This will reduce
    repair lead-times and more quickly provide critical assets to the
    warfighter. In addition, the Army is developing national-level forecast
    accuracy metrics as part of the DOD CIMP implementation effort that
    will ensure we procure the right repair parts in the right quantities.
    Finally, in the area of Organizational Clothing and Individual
    Equipment (OCIE), we are changing our software to incorporate a Reorder
    Point and Requisition Objective algorithm into our Central Issue
    Facilities that will streamline what they stock, how many of each item
    and when the CIF will reorder items. This will enable DLA to be more
    predictive in Army OCIE requirements as well as improve our own
    internal Army CIF management processes. Finally, the Army has initiated
    several studies to address demand forecasting in order to see where we
    can improve and how. We know we still have work to do in this area and
    have put a focused level of attention to it.
        Finally, the Army is also implementing a number of new technologies
    to improve asset visibility of those assets in transition and in
    storage. For example, we are employing active RFID today at our
    overseas SSAs and piloting use of passive RFID at two of our stateside
    installation level SSAs. We are also testing the use of commercial
    satellite technology to provide ``real time `` and reliable data to
    identify and track Army cargo--especially in areas such as Afghanistan.
    We are also implementing Individual Unique Identification (IUID)
    technologies to track individual items throughout their lifecycle on a
    worldwide basis. This capability will reside within our new Global
    Combat Support System-Army, which begins fielding in fiscal year 2014.
    The Army is also an active participant in the DLA In Storage Visibility
    (ISV) program which provides inter-service visibility and accessibility
    of excess spare parts on a localized basis which increases supply chain
    efficiencies and effectiveness.
        These are a few examples of supply chain management initiatives and
    process changes underway in the Army to ensure we operate more
    efficiently, improve our demand forecasting and enable asset visibility
    in order to ensure responsive and efficient support to our warfighters.
        General Panter. The Marine Corps currently uses in-transit
    visibility (ITV) down to the tactical level in the OEF theater of
    operations leveraging active RFID and utilizing the Automated Manifest
    System-Tactical (AMS-TAC), portable RFID interrogators and Warehouse to
    Warfighter-Last Tactical Mile kits. We are also looking at ways to
    combine the utility of both RFID and IUID. Blount Island Command is
    currently utilizing passive RFID in combination with IUID to more
    accurately and efficiently account for principal end items on board the
    Maritime Prepositioning Ships and in the maintenance cycle ashore.
        The Marine Corps is actively engaged in implementing IUID which
    will:

        (a)  Provide improved item accountability and visibility to enhance
    operational planning,
        (b)  Lower the total life-cycle costs of items acquired and
    managed,
        (c)  Provide item visibility regardless of the weapon system or who
    owned the item,
        (d)  Provide item data needed for top-level logistics and
    engineering analysis,
        (e)  Facilitate issuance of a clean financial audit opinion as
    required by the 1990 Chief Financial Officers' Act by providing an
    accurate data source for determining value and accountability of
    property and equipment,
        (f)  Improve access to historical item life cycle information from
    system design to disposal.

        General Reno. The memorandum from the Under Secretary of Defense
    for Acquisition, Technology, and Logistics, ``Lead Proponent for RFID
    and related Automatic Identification Technology (AIT),'' dated
    September 26, 2006, appointed the U.S. Transportation Command
    (TRANSCOM) as the functional lead to implement RFID and AIT in the DOD
    supply chain.
        To date, two TRANSCOM working groups, the Supply Chain Operations
    Team (focused on Distribution) and the In-Transit Team (focused on
    Materiel Management), have been established to improve asset
    visibility, reduce costs, and improve accuracy and efficiency in
    delivering needed supplies to warfighters. The Air Force is actively
    participating in both working groups as the team develops a centralized
    approach for using asset visibility technologies.
        As part of the overall DOD effort, the Air Force has implemented
    AIT at key nodes in the supply chain to improve asset visibility and
    improve accuracy in delivery of supplies. In support of in-transit
    visibility, the Air Force operates a worldwide network of active RFID
    readers enabling each shipping function with the capability to
    commission (write) active RFID tags. We are also using passive RFID in
    combination with barcodes to provide positive inventory control of key
    sensitive assets. In conjunction with the TRANSCOM Supply Chain
    Operations Team, the Air Force is assessing the cost benefit of using
    passive RFID to trace depot level reparables.
        Admiral Burke. The Department of the Navy (DON) actively employs a
    multi-faceted approach to leverage various capabilities to support
    enhanced asset visibility--In Storage Visibility (ISV), item
    identification, and aid in reducing the total lifecycle cost of
    ownership. This coordinated approach is based on: (1) the application
    of the appropriate technology to meet requirements; (2) the use of
    actionable implementation plans; and (3) the adherence to DON/DOD
    policy and guidance to ensure standardization within and across the
    enterprise. The process of improving item identification accuracy
    begins as items are marked at time of initial acquisition and induction
    into DON accountability records as required by OUSD(AT&L) RFID Policy
    dated 3 June 2004 entitled, ``RFID Mandatory on All Solicitations for
    Delivery of Material on/after 01 January 2005.'' Within the DON supply
    chain, AIT is being inserted at specific logistics nodes (i.e.,
    warehouse inventory and asset management) and between nodes (i.e.,
    transportation management) to effect a more comprehensive, accurate,
    and timely end-to-end visibility and accountability trail.
        Efforts are jointly coordinated with OSD and TRANSCOM (Distribution
    Process Owner for DOD AIT). Currently, Navy Logistics initiatives are
    focused around four key supply chain components:

             Passive RFID (pRFID) enablement of the end-to-end Navy
            Repairables supply chain - an effort to improve In-Transit and
            Asset Visibility of the $11 billion Navy Repairables program
            from the consumption to maintenance induction cycle at the
            Navy's largest repairables sites.
             2D Bar Code enablement of Naval Ordnance supply chain
            to improve In-Transit and Asset Visibility for the Navy's $34
            billion conventional ordnance inventory by implementing
            automated 2D bar code transaction processing at over 1,000 Navy
            sites worldwide.
             Wireless Bar Code enablement of Navy ERP Warehouse and
            Inventory Management Operations to wirelessly enable all
            warehouse and inventory management business processes at sites
            that are being converted to Navy ERP System in fiscal years
            2011 and 2012.
             Navy-wide sustainment of active RFID (aRFID) programs
            at almost 200 Navy field activities in support of COCOM in-
            theatre material movement requirements for bulk material
            shipments (e.g., sea vans, 43L pallets).

        152. Senator Chambliss. Lieutenant General Stevenson, Lieutenant
    General Panter, Lieutenant General Reno, and Vice Admiral Burke, as one
    example, I understand Tobyhanna Army Depot has instituted asset
    tracking technologies that are accomplishing these objectives. What
    steps are being taken system wide to improve asset visibility and
    supply chain management?
        General Stevenson. The Army has made significant progress towards
    meeting the 2006 QDR objective to enhance the use of active and passive
    RFID technologies. Examples of how the Army is currently using
    automated identification technology (AIT) and an explanation of the
    Army's enterprise-level solution for expanding and integrating the use
    of AIT is as follows:
        Tobyhanna Army Depot, cited in the question, is a good example of
    how AIT is being used to track assets and improve resource management
    at our repair depots. Tobyhanna uses active RFID tags and a network of
    nearly 100 interrogators and location sensors to track the movement and
    location of weapon system parts throughout the facility. The depot uses
    this information, combined with continuous scheduling process
    improvements, to improve its daily operations. The depot also uses RFID
    tags for its test, measurement and diagnostic equipment (to quickly
    locate items for required calibration and loss prevention) and for its
    materiel handling equipment (to locate and recover equipment that is
    due for maintenance inspection or to redistribute equipment where
    needed).
        In the field and at the installation level, the Army is
    implementing several AIT capabilities to enable the automated transfer
    of data vice relying on manual entry of data--this not only saves time
    for the soldier, but also reduces the errors associated with the manual
    entry of data. For example, the Army employs active RFID today in all
    shipments to its overseas supply support activities (SSAs), and is
    initiating passive RFID at two stateside installation level SSAs. The
    Army is also testing the use of commercial satellite technology to
    provide ``real time `` and reliable data to identify and track Army
    cargo--especially in areas such as Afghanistan. Finally, the Army is
    also implementing IUID technologies to track individual items
    throughout their lifecycle on a worldwide basis.
        Many of these AIT capabilities are being standardized within the
    Global Combat Support System-Army (GCSS-Army), which begins fielding in
    fiscal year 2014. GCSS-Army is a state-of-the-art ERP program that
    links the data, systems and processes within the GCSS-A with those of
    the Army's operational national level logistics and financial systems.
        The Army is also taking system wide steps to improve its supply
    chain management (SCM) operations by working closely with the Office of
    the Deputy Assistant Secretary of Defense for Supply Chain Integration
    in implementing its Comprehensive Inventory Management Plan (CIMP). The
    plan is focused on improving inventory management practices, enhancing
    repair parts demand forecasting and improving asset visibility. As part
    of the CIMP, the Army is reducing excess stocks through a detailed
    review process by eliminating those items with no demands in the past 2
    years--this effort will reduce storage costs and inventory management
    requirements. Additionally, the Army Materiel Command (AMC) is
    aggressively working to reduce excess procurements on-order before they
    are delivered from industry, which prevent the build up of unnecessary
    inventory. In addition, the Army is developing national-level forecast
    accuracy metrics as part of the DOD CIMP implementation effort that
    will ensure procurement of the right repair parts in the right
    quantities.
        The Army also has multiple system-wide SCM improvement initiatives
    independent of the CIMP effort. One is the centralization of the field
    level inventory stockage determination process under the AMC, who will
    ensure those items stocked forward in Supply Support Activities are the
    right demand supported readiness enablers, in the right quantities, to
    keep combat systems operational and in the fight. Another is the work
    ongoing with the DLA to improve repair parts demand forecasting
    accuracy by developing a new Demand Data Exchange process to improve
    the accuracy of Army repair depot parts forecasts. This will reduce
    repair lead-times and more quickly provide critical assets to the
    warfighter. In addition, the Army is working closely with DLA to ensure
    selective stockage of large, heavy or bulky items in DLA forward
    distribution depots required to responsively sustain our forward
    deployed forces, with surface replenishment, thus avoiding the
    transportation costs associated with moving these items by air.
        In summary, these are a few of the SCM and asset visibility
    improvement efforts underway in the Army. The keystone of our holistic
    approach is completing the integration and fielding of the GCSS-Army,
    financial, and national level logistics ERP systems. This major
    systemic improvement is enabling the Army to plan for and implement
    significant asset visibility and SCM enhancements--these changes will
    help the Army to reduce overall costs while improving the delivery of
    needed supplies to the warfighter.
        General Panter. A most recent USMC review of the ``Draft DOD AIT
    Implementation Plan (IP) For Distribution Operations Policy'' validates
    our commitment and contributes to supporting the DOD level integration
    and synchronization of AIT distribution. This regulation identifies and
    provides oversight of the proponent activities, supporting agency
    responsibilities and the affected technologies that support global
    distribution operations. While systems are not specifically spelled out
    due to Service AIS architecture, the principle of using IUID and active
    and passive RFID in support of evolving DOD AIT efforts is a constant.
    USMC is supporting the use all three practices to achieve an overall
    goal of obtaining in-transit and total asset visibility and
    accountability of Marine Corps equipment.
        The below provides examples of USMC AIT efforts/actions:

    IUID:
        The USMC is currently supporting OSD IUID marking requirement by
    marking applicable equipment. Marine Corps Logistics Command (MCLC) has
    implemented efforts to inspect all newly procurement items and to place
    marks/labels on previously procured and legacy equipment.

    Passive RFID (pRFID):
        MCLC's Automated Information Data Capture (AIDC) initiative is a
    Congressionally sponsored MARCORSYSCOM supported endeavor to automate
    the receipt, issue, and inventory all materials/items stored within the
    USMC wholesale supply activities. This initiative provides real-time
    visibility and accountability of equipment, thus contributing to supply
    chain velocity.

    Active RFID (aRFID):
        The USMC is in full compliance with the DOD employment of active
    RFID ISO global contingency operations. We employ PDKs, warehouse to
    warfighter kits, and other fixed interrogators to facilitate DOD-wide
    ITV/TAV efforts/actions.

    GCSS-MC:
        The Marine Corps is beginning the total force implementation of
    Global Combat Support System-Marine Corps which will provide real time
    demands submission, status and tracking as well as advanced supply
    chain planning functionality which will facilitate better forecasting
    and inventory positioning. The system will allow for Service wide
    visibility of all assets as well as their state of readiness.
        General Reno. The DOD has taken the initial steps by identifying
    TRANSCOM as the lead functional proponent to implement RFID and AIT in
    the DOD supply chain.
        The Air Force is actively participating in the TRANSCOM Supply
    Chain Operations Team's efforts to develop an enterprise wide approach
    for using asset visibility and supply chain management technologies.
        Within the Air Force, we have implemented several AIT capabilities
    aimed at automating base supply, transportation, munitions, and
    maintenance management data. By utilizing mobile wireless hand-held
    terminals with bar code and RFID capability, we are improving inventory
    data collection and accuracy, while reducing the time required to
    complete inventories.
        Another example of where the Air Force has used AIT to improve
    asset visibility and supply chain management is in the Nuclear Weapons
    Related Materiel area. AIT has improved the visibility and the command
    and control of these critical assets across the nuclear enterprise.
        The Air Force is also partnering with the DLA to develop an AIT
    pilot project that will enhance visibility of depot level reparables as
    they move through the supply chain.
        Admiral Burke. Improving asset visibility and the effectiveness of
    the supply chain is predicated on improving the value of logistical
    information (i.e., availability, quality, timeliness and integrity).
    Navy is leveraging the functional strengths of AIT through careful
    application of the right technology to facilitate improved logistical
    information management. The implementation of Navy ERP will enhance
    Navy's ability by integrated business management capability that
    modernizes and standardizes Navy business operations, provide
    unprecedented management visibility across the enterprise, and increase
    the effectiveness and efficiency of the Navy's support for the
    warfighter with improved forecasting and total asset visibility. The
    DON challenge is not only to insert AIT into the supply chain, but work
    in conjunction with numerous supply chain Automated Information Systems
    (AIS) owners to integrate AIT generated data into the existing supply
    chain data architecture providing improved logistics situational
    awareness to warfighters and logisticians alike.
        AIS owners (e.g., Navy ERP, Ordnance Information System) support
    integration of AIT generated information into their organic data
    streams. Navy works closely with elements of OSD, TRANSCOM, DLA, and
    the other Services and Agencies to ensure effective communications
    exist to minimize duplication of effort, wasteful expenditure of
    resources and improve optimization of the value of resulting AIT
    enabled logistical information.
        To meet these challenges, the Navy has placed greater emphasis on
    developing an enterprise approach towards AIT insertion into Navy
    systems. An enterprise approach is designed to better support the DON
    and DOD end-to-end supply chains and subsequent warfighter support. The
    Navy approach is focused around four key systems and their respective
    supply chains:

             eRMS - electronic Retrograde Management System
             TARP - Technical Assistance for Repairables Processing
             OIS - Ordnance Information System
             Navy ERP SAP WM - Systems Application and Products
            Warehouse Management
             AMS-TAC - Automated Manifest System, Tactical

        AIT enablement of these four systems has been placed into
    production environments in varying degrees of maturity and completion.
    As these systems continue to mature the Navy may further expand AIT
    insertions into other Navy systems.
        Additionally, section 328 of the NDAA for Fiscal Year 2010
    established a formal requirement for the Secretary of Defense to submit
    ``a comprehensive plan for improving the inventory management systems
    of the Military Departments and the DLA with the objective of reducing
    the acquisition and storage of secondary item inventory that is excess
    to requirements.'' The overall objective of the plan is a prudent
    reduction in current inventory excesses as well as a reduction in the
    potential for future excesses without degrading material support to our
    customers.
        Navy is currently coordinating with all services and working
    directly with the Office of Secretary of Defense (OSD) to develop and
    fulfill the requirements of the Comprehensive Inventory Plan and
    detailed sub-plans to fulfill the requirements of Section 328 of the
    NDAA.

        153. Senator Chambliss. Lieutenant General Stevenson, Lieutenant
    General Panter, Lieutenant General Reno, and Vice Admiral Burke, are
    there additional actions that can reduce costs, lessen manpower
    demands, reduce surplus inventories and lost items, and improve
    delivery to needed supplies to forward deployed forces?
        General Stevenson. Yes, the Army has implemented numerous
    initiatives to reduce costs, lessen manpower demands, reduce surplus
    inventories, reduce lost items and improve delivery of needed supplies
    to our forward deployed forces. I will highlight a few things the Army
    is doing and pursuing.
        In efforts to reduce costs and surplus inventories, we have
    undertaken an aggressive effort to reduce excess stocks by eliminating
    those items with no demands in the past 2 years. We have also
    centralized our field level inventory stockage determination processes
    under the Army Materiel Command to ensure the repair parts we stock
    forward in our Supply Support Activities are the right demand supported
    readiness enablers, in the right quantities, to keep combat systems
    operational and in the fight. Both these efforts reduce storage costs
    and handling requirements while enhancing the support we provide to our
    warfighters. In addition, we are working closely with the DLA to ensure
    we selectively stock large heavy or bulky items in DLA forward
    distribution depots required to responsively sustain our forward
    deployed forces, with surface replenishment, thus avoiding the
    transportation costs associated with moving these items by air.
        To lessen manpower demands, we are implementing several
    technologies such as IUID and barcode scanners to enable the automated
    transfer of data vice relying on manual entry of data. This not only
    saves time for the soldier, but also reduces the errors associated with
    the manual entry of data. The Army is also employing radio frequency
    technology to track shipments of supplies and equipment and exploring
    the use of satellite tracking technology in efforts to reduce pilferage
    and lost cargo. With regard to accountability, the Army has launched
    the Army Property Accountability Campaign to ensure that every item is
    posted to record, thus providing accurate accountability and visibility
    of supplies and materiel at every level throughout the Army. This
    campaign applies not only to theater but also to those units who have
    redeployed to home station. This is being accomplished through the
    emphasis of the Command Supply Discipline Program at every level of
    command.
        Each of these initiatives are designed to improve the delivery of
    needed supplies to our forward deployed forces and have reduced
    customer wait times, lowered air transport expenses, and lessened
    storage and handling requirements. Also, we are shifting more cargo to
    the expanded Northern Distribution Network in order to reduce the risk
    of theft and pilferage that occurs over the Pakistan routes and to
    ensure we deliver needed supplies to our forward deployed forces.
        In summary, these are a few examples of some of the initiatives and
    actions being taken in the Army to ensure we reduce costs, lessen
    manpower demands, reduce surplus inventories and lost items, and
    improve delivery of needed supplies to forward deployed forces.
        General Panter. Yes. An integrated and transparent supply chain
    will enable the Services to maintain only the inventory they need to
    operate and maintain a high state of readiness. The Marine Corps
    implementation of GCSS-MC will allow service wide visibility of
    inventory availability. We are also working with DLA in more closely
    aligning their logistics capability with our own. This will have the
    net effect of reducing Marine Corps inventory on hand, with the
    associated requirements for personnel and space. We are currently
    reviewing and revising our policies, training and systems to create a
    more visible and integrated supply chain to more effectively support
    the warfighter in a deployed environment.
        General Reno. Yes. There are three areas we believe we can expand/
    exploit across the Services and to DLA. First, the Air Force's
    inventory optimization technique(s) maximizes weapon system/customer
    support while minimizing cost. We have seen these ``bang for the buck''
    models reduce cost, inventory, and improve support in our core
    logistics processes (e.g. repair, procurement, distribution, and
    inventory).
        Next, continued implementation of a Service-led Commodity Sourcing
    Program, backed up with a comprehensive Spend Analysis, allows a
    Service to take advantage of price breaks, leverage spend with
    suppliers, reduce lead times, and be more responsive to changes in
    customer requirements. It is important to note, these commodity
    strategies are difficult to develop and are best led by the Service who
    has engineering control and the experience with the product, commodity,
    or system to be supported.
        Finally, the Services operate in a dynamic environment and need a
    dynamic, responsive supply chain to deal with the ever-changing
    priorities and mission requirements. Further development of methods and
    decision support tools that create ``sense and respond'' supply chain
    capabilities--essentially focusing on responsiveness in the face of
    changing priorities--is critical to our ability to reduce manpower,
    cost, and footprint while meeting the mission.
        Admiral Burke. The Navy is continually reviewing initiatives that
    address Total Ownership Costs (TOC) and increase efficiencies. These
    are addressed within the Navy N4 Strategic Plan and my staff is engaged
    in efforts such as TRANSCOM's Strategic Network Optimization, Navy
    Logistics Integration (NLI) efficiencies, the Affordability Initiative
    Process, and the Stock Positioning Steering Group. Current policy
    regarding the outfitting of spares for weapons systems utilize
    validated models to attain readiness goals while minimizing end item
    stock on hand, and attaining the lowest cost possible. Activities are
    also using continuous process improvement tools such as Lean 6 Sigma to
    improve supply and maintenance efficiencies at the unit level, reducing
    TOC, and lessening the requirement for large amounts of stock on hand.
        In addition, a robust maintenance strategy is essential to minimize
    the TOC of Navy platforms and ensure that these assets meet their
    expected service life. Crucial to executing any maintenance strategy is
    a clear understanding of the current condition of each asset and a
    detailed plan for properly maintaining and logistically supporting the
    equipment.

                  RADIO FREQUENCY IDENTIFICATION TECHNOLOGIES

        154. Senator Chambliss. Lieutenant General Stevenson, Lieutenant
    General Panter, Lieutenant General Reno, and Vice Admiral Burke, in the
    last decade both passive and active RFID technologies have progressed
    greatly, with many government and nongovernment studies showing great
    cost savings in asset and personnel management and tracking. What steps
    are being taken by your agency to incorporate these technologies and/or
    calculate true overall cost savings that would result from their
    incorporation?
        General Stevenson. The Army uses RFID as part of a suite of AIT.
    The use of both active and passive RFID technology provides
    accountability and visibility benefits in asset tracking. RFID
    technology enables tracking and management of Army supplies and
    equipment end-to-end. Army orders mandate the use of active RFID
    tagging on all containers, aerial pallets, and equipment outside the
    Continental United States in support of OND and OEF.
        The use of the active RFID allows supply chain managers at all
    levels to know what is inbound. Additionally, historical data obtained
    from RFID tag reads allows supply chain managers to make decisions on
    resource allocation to mitigate bottlenecks. Two operational examples
    include:

        (1)  tag reads showed that containers were queuing at the entrance
    to bases in Afghanistan. Theater managers instituted 24 hour entry
    control point operations, requested additional materiel handling
    equipment and established secure container holding yards to call
    forward containers based on capability to handle thereby reducing
    queuing.
        (2)  Volume at some supply support activities was too low to
    rapidly build ``unit-pure'' containers as units drew down in Iraq. Data
    obtained from tag reads gave managers the information to direct
    consolidation of low volume containers, consolidate the containers in
    theater and onward move them to supply activities.

        These actions reduce the volume of inventory in the supply pipeline
    and increase efficiency.
        The Army has initiated use of passive RFID to manage large volumes
    of like items, specifically body armor and parachutes. This allows
    commanders to rapidly inventory and segregate items by size without
    conducting a visual inventory. Additionally, the passive RFID component
    of the Parachute Tracking System allows commanders to segregate chutes
    that were packed by a specific parachute rigger in the event of a
    malfunction. This is a potential life saving capability, exponentially
    increasing the ability to rapidly and accurately segregate the chutes.
    Finally, while investment in passive RFID for use in tactical supply
    activities has been deemed to have an insufficient return on
    investment, the Army is piloting the use of passive RFID at
    installation-level supply activities at Forts Bragg and Irwin.
        General Panter. The Marine Corps has implemented and used active
    RFID for 7 years. We have seen the increased nodal visibility of
    supplies moving across the transportation pipeline. The benefit to
    active RFID is cost avoidance; we no longer requisition a supply item
    multiple times to ensure its delivered within the required timeframe
    since active RFID allows us to track the item through the supply
    pipeline. Our ERP solution (GCSS-MC) will also be implementing passive
    RFID technology as a part of future development efforts. We anticipate
    that passive RFID will also play a role in increased visibility.
        General Reno. The Air Force, along with the other military
    departments, is actively participating in the AIT governance structure
    led by the TRANSCOM. The Air Force focus is to work within the
    governance structure to identify, validate, and implement capabilities
    that can improve retail and wholesale business processes, meet
    overarching DOD supply chain objectives, as well as potential methods
    to determine cost savings.
        Additionally, as part of TRANSCOM's Supply Chain Operations Team,
    we're also partnering with the DLA to develop an AIT pilot project to
    enhance visibility of depot level reparables as they move through the
    supply chain.
        Admiral Burke. The TRANSCOM Concept of Operations and the
    associated Implementation Plan forms the foundation for overall DOD
    active (aRFID) and passive (pRFID) implementations and operation across
    the DOD, including the DON. The Navy is fully compliant with the
    TRANSCOM installation plan to include initial pRFID and aRFID systems
    installed at multiple locations in CONUS and Hawaii. These sites
    support new acquisition and repairable supply chains (aRFID and pRFID),
    contingency operations using Portable Deployment Kits and Early Entry
    Deployment Support Kits (aRFID), and a personnel tracking pilot at
    Naval Shipyard Pearl Harbor HI (pRFID). In compliance with TRANSCOM
    requirements, the Navy has developed a series of strategic level
    performance metrics designed by TRANSCOM to support the calculation of
    Return on Investment (ROI) across the DOD supply chain with ongoing
    information collection. Current TRANSCOM performance metrics are:

        a.  pRFID - Percent of total shipments tagged using pRFID
        b.  pRFID - Percent read rate of pRFID tagged shipments
        c.  pRFID - Receiving process Productivity improvement
        d.  pRFID - Time between physical and logical shipment receipt
    using pRFID
        e.  pRFID - Logistics Response Time for all Issue Priority groups
        f.  pRFID - Order Variability (Logistics Response Time segmented by
    Issue Priority group)
        g.  pRFID - Discrepancy Handling Time/Frustrated Freight
        h.  pRFID - Value of shipment losses
        i.  aRFID - Percent read rate of aRFID tagged shipments
        j.  aRFID - Percent of aRFID tags reused

        155. Senator Chambliss. Lieutenant General Stevenson, Lieutenant
    General Panter, Lieutenant General Reno, and Vice Admiral Burke, it is
    my understanding that there are differences in the functionality and
    cost of active and passive RFID technology. Has the DOD reviewed and
    compared the value, costs, and benefits of each of these technologies
    in the management of the DOD's supply chain, and if so, what
    conclusions have you reached?
        General Stevenson. Yes, the Army has reviewed and compared the
    value, costs, and benefits of each of these technologies in the
    management of the Army supply chain. The comparative cost of active and
    passive RFID tags are significant ($57.00 for active vice $.10 for
    passive), but the use of both technologies provide benefits to the
    Army.
        Each technology has its own pros and cons. Active RFID tags hold
    relatively large amounts of data; are continuously powered, and are
    normally used when a longer tag read distance is desired. Passive RFID
    requires strong Radio Frequency signals from an interrogator, and the
    signal strength equates to a shorter range for passive tags than for
    active tags. Both technologies are beneficial depending on the type of
    function needed. Due to the volume of activity at Army tactical Supply
    Support Activities (SSA), instrumenting them for use of passive RFID
    has not been found to be cost effective; however, at the installation
    SSA, there may be sufficient volume to provide an appropriate return on
    investment--in order to prove that out, two Army installation SSAs are
    currently piloting the use of passive RFID. Additionally, use of
    passive RFID appears to show promise with tracking the Army's parachute
    inventory.
        With the natural progression of new technology on the commercial
    market, the Army is exploring the use and benefits of satellite
    technology to provide `real time' and reliable data to identify and
    track Army cargo. The integrated capability of satellite and RFID
    technology with sensor and security monitoring capabilities will
    provide a single source of data sharing across all DOD logistics
    systems. In July 2011, the Army, in coordination with TRANSCOM, will
    test the use of satellite tags on over 200 unit containers moving from
    a CONUS installation to a theater of operation.
        General Panter. Yes we have. Within the DOD supply chain, we see
    the value of both. Since implementing active RFID 7 years ago, we have
    increased the visibility of supplies in the transportation/distribution
    pipeline. With the DOD migration to a commercial standard for active
    RFID technology, increased competition will reduce our overall costs
    while continuing to maintain nodal visibility. We also see the value of
    passive RFID technology. Once our ERP solution is fully developed and
    fielded, we believe passive RFID technology will also increase
    visibility.
        General Reno. The DOD has taken the initial steps by identifying
    TRANSCOM as the lead functional proponent to implement RFID and AIT in
    the DOD supply chain. As result, TRANSCOM has established two working
    groups to determine how and where to implement the available technology
    and balance efficiencies with mission effectiveness. The Air Force is
    an active participant in this effort.
        Admiral Burke. The measured insertion of AIT into the DON supply
    chain is valuable in enhancing the quality of support to COCOMs. The
    Navy has worked in cooperation with TRANSCOM, as the DOD Distribution
    Process Owner, and other component services to optimize the use of both
    active and passive RFID (aRFID and pRFID) by standardizing how each is
    used throughout the DOD supply chain. The result is a cost effective
    blending of aRFID and pRFID technology across item, package, container
    and vehicular levels in support of COCOM Total Asset Visibility and ITV
    requirements. Essentially, pRFID has been effective at the Package,
    Transport Unit and Unit Load Levels while aRFID has been effective at
    the Container Level.
        The Navy has effectively applied aRFID at sites such as FISC
    Norfolk Ocean Terminal Container Freight Station, Navy Non-Self
    Deployers (Unit Movers), the aircraft engine community, the ordnance
    community, and Navy Exchange Command. The Navy's aRFID use is in
    compliance with TRANSCOM concept of operations and associated
    implementation plan, and as directed by COCOMs to meet ITV requirements
    for sea vans, engine containers, 463L air cargo pallets, and
    prepositioned material. pRFID is effectively applied at the package,
    case, and pallet levels where inexpensive passive tags satisfy asset
    visibility demand requirements. This combination provides a cost
    effective solution to logistics challenges presented by today's
    environment and those anticipated in the future.
        Analysis of pRFID metric data such as Logistics Response Time
    indicates the supply chain benefits from the insertion of pRFID through
    improved asset identification and visibility. Additional causative
    research is required to quantify the degree of impact such insertion
    has had and is anticipated to have in the future. Comprehensive cost/
    benefit analysis for aRFID and pRFID is dependent upon continued RFID
    implementations to more fully enable larger segments of the DON supply
    chain with RFID technology. Implementations continue toward achieving
    that goal. Expected quantified benefits include labor savings related
    to improvements in automating inventory reporting and potential
    inventory cost avoidance related to reductions in lost or misidentified
    material.
        The Navy considers the continued deployment of AIT into the supply
    chain to be cost effective and valuable.

        [Whereupon, at 11:50 a.m., the subcommittee adjourned.]