    [Senate Hearing 112-845]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 112-845
     .
     MILITARY CONSTRUCTION AND VETERANS AFFAIRS, AND RELATED AGENCIES
                      APPROPRIATIONS FOR FISCAL YEAR 2013
    =======================================================================

                                    HEARINGS

                                    BEFORE A

                              SUBCOMMITTEE OF THE

                COMMITTEE ON APPROPRIATIONS UNITED STATES SENATE

                          ONE HUNDRED TWELFTH CONGRESS

                                 SECOND SESSION

                                       ON

                               S. 3215/H.R. 5854

      MAKING APPROPRIATIONS FOR MILITARY CONSTRUCTION, THE DEPARTMENT OF
       VETERANS AFFAIRS, AND RELATED AGENCIES FOR THE FISCAL YEAR ENDING
                   SEPTEMBER 30, 2013, AND FOR OTHER PURPOSES

                                   __________

                             Department of Defense
                         Department of Veterans Affairs

                                   __________

             Printed for the use of the Committee on Appropriations

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       Available via the World Wide Web: http://www.gpo.gov/fdsys/browse/
            committee.action?chamber=senate&committee=appropriations

                                   __________

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                          COMMITTEE ON APPROPRIATIONS

                       DANIEL K. INOUYE, Hawaii, Chairman
    PATRICK J. LEAHY, Vermont            THAD COCHRAN, Mississippi
    TOM HARKIN, Iowa                     MITCH McCONNELL, Kentucky
    BARBARA A. MIKULSKI, Maryland        RICHARD C. SHELBY, Alabama
    HERB KOHL, Wisconsin                 KAY BAILEY HUTCHISON, Texas
    PATTY MURRAY, Washington             LAMAR ALEXANDER, Tennessee
    DIANNE FEINSTEIN, California         SUSAN COLLINS, Maine
    RICHARD J. DURBIN, Illinois          LISA MURKOWSKI, Alaska
    TIM JOHNSON, South Dakota            LINDSEY GRAHAM, South Carolina
    MARY L. LANDRIEU, Louisiana          MARK KIRK, Illinois
    JACK REED, Rhode Island              DANIEL COATS, Indiana
    FRANK R. LAUTENBERG, New Jersey      ROY BLUNT, Missouri
    BEN NELSON, Nebraska                 JERRY MORAN, Kansas
    MARK PRYOR, Arkansas                 JOHN HOEVEN, North Dakota
    JON TESTER, Montana                  RON JOHNSON, Wisconsin
    SHERROD BROWN, Ohio

                        Charles J. Houy, Staff Director
                      Bruce Evans, Minority Staff Director
                                     ------

    Subcommittee on Military Construction and Veterans Affairs, and Related
                                    Agencies

                      TIM JOHNSON, South Dakota, Chairman
    DANIEL K. INOUYE, Hawaii             MARK KIRK, Illinois
    MARY L. LANDRIEU, Louisiana          KAY BAILEY HUTCHISON, Texas
    PATTY MURRAY, Washington             MITCH McCONNELL, Kentucky
    JACK REED, Rhode Island              LISA MURKOWSKI, Alaska
    BEN NELSON, Nebraska                 ROY BLUNT, Missouri
    MARK PRYOR, Arkansas                 JOHN HOEVEN, North Dakota
    JON TESTER, Montana                  DANIEL COATS, Indiana
                                         THAD COCHRAN, Mississippi
                                           (ex officio)

                               Professional Staff

                                Christina Evans
                                 Chad Schulken
                              Andrew Vanlandingham
                           Dennis Balkham (Minority)
                           D'Ann Lettieri (Minority)

                             Administrative Support

                                  Rachel Meyer
                          Courtney Stevens (Minority)
                                C O N T E N T S

                                  ----------

                            Thursday, March 15, 2012

                                                                       Page

    Department of Veterans Affairs...................................     1

                            Tuesday, March 27, 2012

    Department of Defense:
        Office of the Secretary of Defense...........................    51
        Department of the Army.......................................    95

                           Wednesday, March 28, 2012

    Department of Defense:
        Department of the Navy.......................................   115
        Department of the Air Force..................................   143

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

                                  ----------

                            THURSDAY, MARCH 15, 2012

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 10:03 a.m., in room SD-124, Dirksen
    Senate Office Building, Hon. Tim Johnson (chairman) presiding.
        Present: Senators Johnson, Inouye, Landrieu, Reed, Nelson,
    Murkowski, Blunt, and Coats.

                         DEPARTMENT OF VETERANS AFFAIRS

    STATEMENT OF HON. ERIC K. SHINSEKI, SECRETARY
    ACCOMPANIED BY:
            HON. ROBERT A. PETZEL, M.D., UNDER SECRETARY FOR HEALTH
            ALLISON HICKEY, UNDER SECRETARY FOR BENEFITS
            STEVE L. MURO, UNDER SECRETARY FOR MEMORIAL AFFAIRS
            HON. ROGER W. BAKER, ASSISTANT SECRETARY FOR INFORMATION AND
                TECHNOLOGY
            W. TODD GRAMS, EXECUTIVE IN CHARGE FOR THE OFFICE OF MANAGEMENT
                AND CHIEF FINANCIAL OFFICER

                    opening statement of senator tim johnson

        Senator Johnson. Good morning. This hearing will come to
    order. We meet today to review the President's fiscal year 2013
    budget request and fiscal year 2014 advance appropriation
    request for the Department of Veterans Affairs (VA).
        Secretary Shinseki, I welcome you and your colleagues, and
    I thank you for appearing before our subcommittee.
        Before we begin, I want to acknowledge the temporary
    absence of my friend and ranking member, Senator Mark Kirk.
    Senator Kirk has been a great partner as we try to provide the
    VA with the necessary funds and oversight to transform the VA
    into a modern 21st century department. In fact, I'm told that
    when his staff met with him very recently, his first question
    was, ``What progress has the VA and DOD made on electronic
    health records?'' I look forward to Senator Kirk's speedy
    return so that we can continue to work together for our
    Nation's vets.
        In order to reserve the majority of time for the questions,
    I'm going to keep my opening statement short. The overall
    discretionary budget request for the VA totals $61 billion,
    $2.5 billion over the fiscal year 2012 enacted level.
    Additionally, the submission includes $54.5 billion in fiscal
    year 2014 advance appropriations for VA medical care.
        Mr. Secretary, since taking the reins at the VA, you have
    made speeding up the disability claims process a top priority.
    The amount of time a vet has to wait to have his disability
    claim processed is one of the top complaints most elected
    officials hear from vets. Over the past 5 years, this
    subcommittee has given the Department all that it has asked for
    and more to assist in breaking through this logjam.
        Your budget this year requests an additional $145 million
    for Veterans Benefits Administration (VBA) and $128 million for
    the Veterans Benefits Management System, better known as the
    paperless claims processing system. I'm eager to hear where the
    VA is regarding deployment of the new paperless system and how
    these investments are speeding up the delivery of benefits.
        The budget request also includes $169 million for the
    development of the integrated Electronic Health Record (iEHR).
    This new system, being developed jointly with the Department of
    Defense (DOD), is envisioned to modernize the existing
    electronic health record systems at both the VA and the
    military services.
        While I am very pleased to see the VA and DOD working
    together to develop a system that will allow the two
    Departments to share electronic health information, I remain
    concerned about the lack of details accompanying the budget
    request. I will have specific questions about iEHR development
    and other topics during the question rounds.
        Again Mr. Secretary, welcome and thank you for appearing
    before the subcommittee today. I understand that yours will be
    the only opening statement. Your full statement will be
    included in the record, so please feel free to summarize your
    remarks. General Shinseki, please proceed.

                   summary statement of hon. eric k. shinseki

        Secretary Shinseki. Thank you, Mr. Chairman.
        Chairman Johnson, Senator Murkowski, other distinguished
    members of the subcommittee, thank you for this opportunity to
    present the President's 2013 budget and 2014 advance
    appropriations request for the Department of Veterans Affairs.
        Let me take a moment, Mr. Chairman, also, to note the
    absence of Ranking Member Mark Kirk and to convey to him, on
    behalf of the VA, our best wishes for his speedy recovery.
        I would also like to acknowledge in the room today veterans
    service organizations that always work very closely with us and
    have been helpful in developing, resourcing, and improving the
    programs that we provide to better serve and care for veterans,
    for their families, and for survivors.
        I would note that this subcommittee has been unwavering in
    its support for our Nation's veterans. And I say that now,
    having worked through this budget process three times, and
    having been before you. The President has clearly demonstrated
    his priority for the requirements for this Department, and you
    have supported those requests each time we've been here.
        With these 2013 budget and 2014 advance appropriations
    requests, the President once again firmly demonstrates his
    respect and sense of obligation for our Nation's 22 million
    veterans. I thank the members for your longstanding commitment
    to veterans and seek, again, your support for these requests.
        If I might, let me introduce VA leaders who are joining me
    here at the witness table. From your right going to the left,
    Roger Baker, Assistant Secretary for Information and
    Technology; then Mr. Todd Grams, our Executive in Charge of the
    Office of Management, also our Chief Financial Officer; to my
    right, Dr. Randy Petzel, Under Secretary for Health; to his
    right, General Allison Hickey, Under Secretary for Benefits;
    and finally, the Hon. Steve Muro, Under Secretary for Memorial
    Affairs.
        And Mr. Chairman, thank you for allowing me to have my
    written statement submitted for the record.
        An important transition is underway, and VA must anticipate
    its outcomes. Our troops have already departed Iraq, and their
    numbers in Afghanistan are expected to decline. VA's history
    suggests that VA's requirements, for veterans who need our care
    and services, will continue to grow long after the last
    combatant leaves Afghanistan, perhaps for another decade or
    more.
        In the next 5 years, more than 1 million veterans are
    expected to leave military service. Through September 2011, of
    the approximately 1.4 million veterans who deployed to and
    returned from Afghanistan and Iraq, some 67 percent have used
    at least one VA benefit or service, a far higher percentage
    than previous generations.
        The President's 2013 VA budget request of $140.3 billion
    provides $64 billion in discretionary funding and $76.3 billion
    in mandatory funds. Our discretionary budget request represents
    an increase of $2.7 billion or 4.5 percent over the 2012
    enacted level.
        This request would allow VA to fulfill the requirements of
    our mission: Healthcare for 8.8 million enrolled veterans,
    compensation and pension benefits for nearly 4.2 million
    veterans, life insurance covering 7.1 million Active Duty
    servicemembers and enrolled veterans at a 95-percent customer
    satisfaction rating, educational assistance for over 1 million
    veterans and family members on over 6,500 campuses, home
    mortgages that guarantee over 1.5 million servicemember and
    veteran loans with the Nation's lowest foreclosure rate, burial
    honors for nearly 120,000 heroes and eligible family members in
    our 131 national cemeteries befitting their service to our
    Nation.
        The 2013 budget request builds momentum in our three
    priorities--and you've heard me talk about these in past budget
    testimonies--increasing access to care, benefits, and services;
    eliminating the claims backlog; and ending veteran
    homelessness.
        Access--the 2013 budget request balances capital
    requirements with operating needs. It allows VA to continue
    improving access by opening new or improved facilities closer
    to where veterans live and providing telehealth, telemedicine,
    including in veterans' homes; by also fundamentally
    transforming veterans' access to benefits through a new
    electronic tool called the Veterans Relationship Management
    System; by collaborating with DOD to turn the current
    Transition Assistance Program called TAP into an outcomes-based
    training and education program that fully prepares departing
    servicemembers for the next phase of their lives; and then,
    finally, by better serving rural and women veterans.
        Of the 1 million veterans who are expected to leave the
    military over the next 5 years, we are expecting that at least
    600,000 of them will likely seek VA care, benefits, and
    services.
        Regarding the backlog, from what we can see today, fiscal
    year 2013 is likely to be the first year in which our claims
    production exceeds the number of incoming claims. The paperless
    initiative we have been developing over the past 2 years is
    critical to increasing the quality of our claims decisions and
    the speed with which we are able to process them. Processing
    speed and quality will eliminate the backlog.
        Your support of our information technology (IT) priorities
    in the past, very helpful, has been essential to delivering
    benefits, healthcare, and memorial services to our veterans. We
    approach the tipping point in ending the backlog in disability
    claims. Stability in IT funding is key to eliminating that
    backlog.
        Finally on homelessness, from January 2010 to January 2011,
    alone, the estimated number of homeless veterans declined by 12
    percent. We have momentum here, but more momentum is needed to
    end veteran homelessness in 2015.
        We are building a dynamic homeless veterans registry which
    contains over 400,000 names of current and formerly homeless
    veterans. And in the years ahead, this information will allow
    us to see, to track, to understand, and most importantly, to
    prevent veterans from falling into homelessness, and this
    budget supports that plan.

                               prepared statement

        We are committed to the responsible use of the resources
    you provide. And again, thank you for this opportunity to
    appear before this subcommittee. We look forward to your
    questions.
        [The statement follows:]
                  Prepared Statement of Hon. Eric K. Shinseki
        Chairman Johnson, distinguished members of the Senate
    Appropriations Committee, Subcommittee on Military Construction,
    Veterans Affairs and Related Agencies: Thank you for the opportunity to
    present the President's 2013 budget and 2014 advance appropriations
    requests for the Department of Veterans Affairs (VA). For the past
    three budget requests, the Congress has supported the very high
    priority that the President has placed on funding for programs that
    provide care and benefits for our Nation's 22 million veterans and
    their families. This submission seeks your support of the President's
    continued high priority support for veterans who have earned this
    Nation's respect and the benefits and services we provide.
        We meet at an historic moment for our Nation's Armed Forces, as
    they turn the page on a decade of war. Recently, the President outlined
    a major shift in the Nation's strategic military objectives--with a
    goal of a more agile, more versatile, more responsive military focused
    on the future. The President also outlined another important
    objective--keeping faith with those who serve as they depart the
    military and return to civilian life. As these newest veterans return
    home, we must anticipate their transitions by readying the care, the
    benefits, and the job opportunities they have earned and they will need
    to smoothly and successfully make this transition.
        The President's 2013 budget for VA requests $140.3 billion--
    comprised of $64 billion in discretionary funds, including medical care
    collections, and $76.3 billion in mandatory funds. The discretionary
    budget request represents an increase of $2.7 billion, or 4.5 percent,
    over the 2012 enacted level. Our 2013 budget will allow the Department
    to operate the largest integrated healthcare system in the country,
    with more than 8.8 million veterans enrolled to receive healthcare; the
    eighth largest life insurance provider covering both Active Duty
    members as well as enrolled veterans; a sizeable education assistance
    program serving over 1 million participants; a home mortgage service
    that guarantees over 1.5 million veterans' home loans with the lowest
    foreclosure rate in the Nation; and the largest national cemetery
    system that continues to lead the country as a high-performing
    organization--for the fourth time in a 10-year period besting the
    Nation's top corporations and other Federal agencies in an independent
    survey of customer satisfaction. In 2013, VA national cemeteries will
    inter about 120,000 veterans or their family members.
        The Department of Veterans Affairs fulfills its obligation to
    veterans, their families, and survivors of the fallen by living a set
    of core values that define who we are as an organization: ``I CARE''--
    integrity, commitment, advocacy, respect, and excellence--cannot be
    converted into dollars in a budget. But veterans trust that we will
    live these values, every day, in our medical facilities, our benefits
    offices, and our national cemeteries. And where we find evidence of a
    lack of commitment to our values, we will aggressively correct them by
    re-training employees or, where required, removal. We provide the very
    best in high quality and safe care and compassionate services,
    delivered by more than 316,000 employees, who are supported by the
    generosity of 140,000 volunteers.
                            stewardship of resources
        Safeguarding the resources--people, money, time--entrusted to us by
    the Congress, managing them effectively and deploying them judiciously,
    is a fundamental duty at VA. Effective stewardship requires an
    unflagging commitment to apply budgetary resources efficiently, using
    clear accounting rules and procedures, to safeguard, train, motivate,
    and hold our workforce accountable; and to assure the proper use of
    time in serving veterans on behalf of the American people.
        During the audit of the Department's fiscal year 2010 financial
    statement, VA's independent auditor certified that we had remediated
    all three of our remaining material weaknesses in financial management,
    which had been carried forward for over a decade. In terms of internal
    controls and fiscal integrity, this was a major accomplishment. We have
    also dramatically reduced the number of significant financial
    deficiencies since 2008, from 16 to 2.
        Another example of VA's effective stewardship of resources is the
    Project Management Accountability System (PMAS) developed by our Office
    of Information Technology. PMAS requires information technology (IT)
    projects to establish milestones to deliver new functionality to its
    customers every 6 months. Now entering its third year, PMAS continues
    to instill accountability and discipline in our IT organization. In
    2011, PMAS achieved successful delivery of 89 percent of all IT project
    milestones. VA managed 101 IT projects during the year, establishing a
    total of 237 milestones and successfully executing 212 of them. Of the
    25 IT projects that missed their delivery milestone date, more than
    half delivered within the next 14 days. Ensuring IT projects meet
    established milestones means that savings and delivery of solutions are
    achieved throughout development, and that veterans reap improvements
    sooner. By implementing PMAS, we have achieved at least $200 million in
    cost avoidance by stopping or improving the management of 45 projects.
        VA's stewardship of resources continues with the expansion of our
    ASPIRE dashboard to the Veterans Benefits Administration (VBA).
    Originally established in 2010 for the Veterans Health Administration
    (VHA), ASPIRE publicly provides quality goals and performance measures
    of VA healthcare. The success of this approach was reflected in its
    contribution to VHA's receipt of the Annual Leadership Award from the
    American College of Medical Quality. On June 30, 2011, VBA established
    an ASPIRE Web site at http://www.vba.va.gov/reports/aspiremap.asp for
    aspirational goals and monthly progress for 46 performance metrics
    across six business lines. The new effort expands the Department's
    commitment to unprecedented public transparency by sharing performance
    and productivity data in the delivery of veterans' benefits, including
    compensation, pension, vocational rehabilitation and employment,
    education, home loans, and insurance.
        Through the effective management of our acquisition resources, VA
    achieves positive results for veteran-owned small businesses. VA leads
    the Federal Government in contracting with service-disabled, veteran-
    owned small businesses (SDVOSB). In 2011, more than 18 percent of all
    VA procurements were awarded to SDVOSBs, exceeding our internal goal of
    10 percent and far exceeding the Governmentwide goal of 3 percent.
        Finally, VA's stewardship achieved savings in several other areas
    across the Department. The National Cemetery Administration (NCA)
    assumed responsibility in 2009 for processing First Notices of Death to
    terminate compensation benefits to deceased veterans. This allows the
    timely notification to next-of-kin of potential survivor benefits.
    Since that time, NCA has avoided possible collection action by
    discontinuing $100.3 million in benefit payments. In addition, we
    implemented the use of Medicare pricing methodologies at VHA to pay for
    certain outpatient services in 2011, resulting in savings of over $160
    million without negatively impacting veteran care and with improved
    consistency in billing and payment.
                               veterans job corps
        In his State of the Union address, President Obama called for a new
    Veterans Job Corps initiative to help our returning veterans find
    pathways to civilian employment. The budget includes $1 billion to
    develop a Veterans Job Corps conservation program that will put up to
    20,000 veterans back to work over the next 5 years protecting and
    rebuilding America. Veterans will restore our great outdoors by
    providing visitor programs, restoring habitat, protecting cultural
    resources, eradicating invasive species, and operating facilities.
    Additionally, veterans will help make a significant dent in the
    deferred maintenance of our Federal, State, local, and tribal lands
    including jobs that will repair and rehabilitate trails, roads, levees,
    recreation facilities, and other assets. The program will serve all
    veterans, but will have a particular focus on post-9/11 veterans.
                    multi-year plan for medical care budget
        Under the Veterans Health Care Budget Reform and Transparency Act
    of 2009, which we are grateful to Congress for passing; VA submits its
    medical care budget that includes an advance appropriations request in
    each budget submission. This legislation requires VA to plan its
    medical care budget using a multi-year approach. This approach ensures
    that VA requirements are reviewed and updated based on the most recent
    data available and actual program experience.
        The 2013 budget request for VA medical care appropriations is $52.7
    billion, an increase of 4.1 percent over the 2012 enacted appropriation
    of $50.6 billion. This request is an increase of $165 million above the
    2013 advance appropriations enacted by Congress in 2011. Based on
    updated 2013 estimates largely derived from the Enrollee Health Care
    Projection Model, the requested amount would also allow VA to increase
    funding in programs to eliminate veteran homelessness, fully fund the
    implementation of the Caregivers and Veterans Omnibus Health Services
    Act, support activation requirements for new or replacement medical
    facilities, and invest in strategic initiatives to improve the quality
    and accessibility of VA healthcare programs. Our multi-year budget plan
    continues to assume $500 million in unobligated balances from 2012 that
    will carryover and remain available for obligation in 2013--consistent
    with the 2012 budget submitted to Congress.
        The 2014 request for medical care advance appropriations is $54.5
    billion, an increase of $1.8 billion, or 3.3 percent, over the 2013
    budget request.
                                 priority goals
        Our Nation is in a period of transition. As the tide of war
    recedes, we have the opportunity, and the responsibility, to anticipate
    the needs of returning veterans. History shows that the costs of war
    will continue to grow in VA for a decade or more after the operational
    missions in Iraq and Afghanistan have ended. In the next 5 years,
    another 1 million veterans are expected to leave military service. Our
    data shows that the newest of our country's veterans are relying on VA
    at unprecedented levels. Through September 30, 2011, of the
    approximately 1.4 million living veterans who were deployed overseas to
    support Operation Enduring Freedom and Operation Iraqi Freedom, at
    least 67 percent have used some VA benefit or service.
        VA's three priorities--to expand access to benefits and services,
    eliminate the claims backlog, and end veteran homelessness--anticipate
    these changes and identify the performance levels required to meet
    emerging needs. The 2013 budget builds upon our multi-year effort to
    achieve VA's priority goals through effective, efficient, and
    accountable program implementation.
                   expanding access to benefits and services
        Expanding access for veterans is much more than boosting the number
    of veterans walking in the front door of a VA facility. Access is a
    three-pronged effort that encompasses VA's facilities, programs, and
    technology. Today, expanding access includes taking the facility to the
    veteran--be it virtually through telehealth, by sending mobile vet
    centers to rural areas where services are sparse, or by using social
    media sites like Facebook, Twitter, and YouTube to connect veterans to
    VA benefits and facilities. Expanding access also means finding new
    ways to break down artificial barriers so that veterans are aware of
    and can gain access to VA services and benefits. Technology is the
    great enabler of all VA efforts. IT is not a siloed segment of the
    budget, providing just computers and monitors, but rather the vehicle
    by which VA is able to extend the reach of its healthcare to rural
    America, process benefits more quickly, and provide enhanced service to
    veterans and their families.
        The 2013 budget request includes $119.4 million for the Veterans
    Relationship Management (VRM) initiative, which is fundamentally
    transforming veterans' access to VA benefits and services by empowering
    VA clients with new self-service tools. VA has already made major
    strides under this initiative. VRM established a single queue for VBA's
    National Call Centers ensuring calls are routed to the next available
    agent, regardless of geography. Call-recording functionality was
    implemented that allows agents to review calls for technical accuracy
    and client contact behaviors. VA recently deployed ``Virtual Hold ASAP
    call-back'' technology. During periods of high call volumes, callers
    can leave their name and phone number instead of waiting on hold for
    the next available operator, and the system automatically calls them
    back in turn. The Virtual Hold system has made nearly 600,000 return
    calls since November 2011. The acceptance rate for callers is 46
    percent, exceeding the industry standard of 30 percent, and our
    successful re-connect rate is 92 percent. Since launching Virtual Hold,
    the National Call Centers have seen a 15-percent reduction in the
    dropped-call rate. In December 2011, VA deployed ``Virtual Hold
    scheduled call-back'' technology, which allows callers to make an
    appointment with us to call them at a specific time. Since deployment,
    over 185,000 scheduled call-backs have already been processed.
        In December, VA deployed a pilot of its new ``unified desktop''
    technology. This initiative will provide National Call Center agents
    with a single, unified view of VA clients' military, demographic, and
    contact information and their benefits eligibility and claims status
    through one integrated application, versus the current process that
    requires VA agents to access up to 13 different applications. This will
    help ensure our veterans receive comprehensive and accurate responses.
        Key to expansion of access is the eBenefits portal--one of our
    critical VRM initiatives. eBenefits is a VA/DOD initiative that
    consolidates information regarding benefits and services and includes a
    suite of online self-service capabilities for enrollment/application
    and utilization of benefits and services. eBenefits enrollment now
    exceeds 1.2 million users, and VA expects enrollment to exceed 2.5
    million by the end of 2013. VA continues to expand the capabilities
    available through the eBenefits portal. Users can check the status of a
    claim or appeal, review the history of VA payments, request and
    download military personnel records, generate letters to verify their
    eligibility for veterans' hiring preferences, secure a certificate of
    eligibility for a VA home loan, and numerous other benefit actions. In
    2012, servicemembers will complete their servicemembers' Group Life
    Insurance applications and transactions through eBenefits. Also, 2012
    enhancements will allow veterans to view their scheduled VA medical
    appointments, file benefits claims online in a ``turbo claim'' like
    approach, and upload supporting claims information that feeds our
    paperless claims process. In 2013, funding supports enhanced self-
    service tools for the Civilian Health and Medical Program of the
    Department of Veterans Affairs (CHAMPVA) and VetSuccess programs, as
    well as the veterans online application for enrolling in VA healthcare.
        VA and the Department of Defense (DOD) have broken new ground in
    the development and implementation of the Integrated Disability
    Evaluation System (IDES). This system supporting the transition of
    wounded, ill, and injured servicemembers is fully operational and
    available to servicemembers as of October 1, 2011. Because of the
    complexity of these cases, the Veterans Benefits Administration devotes
    four times the level of staffing resources to processing IDES cases
    than claims from other veterans. VA has reduced its claims processing
    time in IDES from 186 days in February 2011 to 104 days in December
    2011. The 2013 budget requests an additional $13.2 million and 90 FTE
    to support IDES enhancements.
        The DOD/VA team is further developing programs to enhance the
    transition of all servicemembers to veteran status. Together we are
    transforming the current Transition Assistance Program (TAP) from a
    series of discrete efforts to one that uses an outcome-based approach.
    This approach will be more integrated and, once complete, will be
    mapped to the lifecycle of every servicemember, from recruitment
    through separation or retirement. In July 2011, VBA launched online TAP
    courseware, which provides the capability for servicemembers to
    complete the course without attending the classroom session. VA and DOD
    also are collaborating on a policy for implementing mandatory TAP
    participation.
        VA will improve access to VA services by opening new or improved
    facilities closer to where veterans live. The 2013 medical care budget
    request includes $792 million to open new and renovated healthcare
    facilities, including resources to support the activation of four new
    hospitals in Orlando, Florida; Las Vegas, Nevada; New Orleans,
    Louisiana; and Denver, Colorado. These new VA medical centers are
    projected to serve 1.2 million enrolled veterans when they are
    operational. This budget also includes an initiative to establish a
    national cemetery presence in eight rural areas where the veteran
    population is less than 25,000 within a 75-mile service area. In
    addition to expanding access at fixed locations, VA is deploying an
    additional 20 mobile vet centers in 2012 to increase access to
    readjustment counseling services for veterans and their families in
    rural and underserved communities across the country. These new
    specialty vehicles will expand the existing fleet of 50 mobile vet
    centers already in service by 40 percent. In 2011, mobile vet centers
    participated in more than 3,600 Federal, State, and locally sponsored
    veteran-related events. More than 190,000 veterans and family members
    made over 1.3 million visits to VA vet centers in 2011.
        The Board of Veterans Appeals (BVA) leverages video conference
    technology to increase the capability of, and access to, video hearings
    to provide veterans with more options for a hearing regarding their
    appeal. The VA is currently upgrading this video conference technology
    both at BVA and at VBA regional offices. In 2011, the number of video
    hearings increased from 3,979 to 4,355 or 9.4 percent. The Board is
    also working with VBA and VHA to allow video hearings to be held from
    more locations in the field, which will be more convenient for
    veterans. Initially, the expanded video capability will be used to
    reduce the backlog of hearings and the time veterans have to wait for
    them.
        We are working harder than ever to reach out to women veterans.
    Women represent about 8 percent of the total veteran population. In
    recent years, the number of women veterans seeking healthcare has grown
    rapidly and it will continue to grow as more women enter military
    service. Women comprise nearly 15 percent of today's Active Duty
    military forces and 18 percent of National Guard and Reserves. For the
    estimated 337,000 women veterans currently using the VA healthcare
    system, VA is improving their access to services and treatment
    facilities. The 2013 budget includes $403 million for the gender-
    specific healthcare needs of women veterans, an increase of 17.5
    percent over the 2012 level.
        VHA regularly updates its standards for improving and measuring
    veterans' access to medical care programs. In 2010, VHA implemented new
    wait time measures that assess performance meeting the new standard of
    providing medical appointments within 14 days of the desired date,
    replacing the previous 30-day desired-date standard. In 2011, 89
    percent of medical care appointments for new patients occurred within
    14 days of the desired date, an increase of 5 percentage points over
    the 2010 level of 84 percent. The President's request for 2013 ensures
    we are able to continue to improve our performance in providing this
    service.
        Access improvements are central to VHA's new patient-aligned care
    teams (PACT) model. VA views appointments as a partnership. We are
    implementing a national initiative to reduce costly no-show
    appointments. Also, veterans can manage appointments by visiting
    MyHealtheVet Web site, where they can view all of their pending
    appointments. In another effort to help veterans make and keep
    appointments, VA is implementing a pilot program that offers child care
    to eligible veterans seeking medical appointments at three VA medical
    centers in 2012 and 2013. The first of these facilities, the Buffalo
    VAMC, began providing services in October 2011. Each pilot site will be
    operated onsite by licensed childcare providers. Drop-in services will
    be offered free of charge to veterans who are eligible for VA care and
    who are visiting a medical facility for an appointment.
        VA is taking full advantage of technology to expand access to its
    medical centers. In 2008, VA established a presence on Facebook with a
    single Veterans Health Administration (VHA) page. In 2009, VA
    established the Post-9/11 GI Bill Facebook page to raise awareness
    about the implementation of this new benefit program. With over 39,000
    subscribers (or fans), this page serves as our primary real-time tool
    to communicate GI Bill news and directly interact with our clients. VA
    also launched a general VBA benefits page, which describes all of our
    services. VBA posts to its followers 7 days a week and is followed in
    18 different countries and 15 different languages. In June 2011, VA
    outlined a Department-wide social media policy that provides guidelines
    for communicating with VA online. By November 2011, VA had established
    Facebook pages for all 152 of its medical centers. This event marks an
    important milestone in our effort to transform how the Department
    communicates with veterans and provides them access to healthcare and
    benefits. By leveraging Facebook, VA continues to embrace transparency
    and engage veterans in a two-way conversation. VA currently has over
    345,000 combined Facebook fans. As of January 2012, the Department's
    main Facebook page has over 154,000 fans and its medical centers have a
    combined following of over 69,000.
                         eliminating the claims backlog
        To transform VA for the benefit of veterans, we must streamline the
    claims processing system and eliminate the claims backlog. We are
    vigorously pursuing a claims transformation plan that will adopt near-
    term innovations and break down stubborn obstacles to providing
    veterans the benefits they have earned.
        As we pursue a multi-focused approach to eliminate the claims
    backlog, workload in our disability compensation and pension programs
    continues to rise. VA has experienced a 48-percent increase in claims
    receipts since 2008, and we expect that the incoming claims volume will
    continue to increase by 4.2 percent in 2013, to 1,250,000 claims from
    1,200,000 in 2012. At the same time, veterans are claiming many more
    disabilities, with Iraq and Afghanistan veterans claiming an average of
    8.5 disabilities per claim--more than double the number of disabilities
    claimed by veterans of earlier eras. As more than 1 million troops
    leave service over the next 5 years, we expect our claims workload to
    continue to rise for the foreseeable future. In 2013, our goal is to
    ensure that no more than 40 percent of the compensation and pension
    claims in the pending inventory are more than 125 days old. While too
    many veterans will still be waiting too long for the benefits they have
    earned, it does represent a significant improvement in performance over
    the 2012 estimate of 60 percent of claims more than 125 days old,
    demonstrating that we are on the right path.
        VA is attacking the claims backlog through an aggressive
    transformation plan that includes initiatives focused on the people,
    processes, and technology that will eliminate the backlog. We are
    implementing a new standardized operating model in all our regional
    offices beginning this year that incorporates a case-management
    approach to claims processing. It establishes distinct processing lanes
    based on the complexity and priority of the claims and assigns
    employees to the lanes based on their experience and skill levels.
    Integrated, cross-functional teams work claims from start to finish,
    facilitating the quick flow of completed claims and allowing for
    informal clarification of claims processing issues to minimize rework
    and reduce processing time. More easily rated claims move quickly
    through the system, and the quality of our decisions improves by
    assigning our more experienced and skilled employees to the more
    complex claims. The new operating model also establishes an intake
    processing center at every regional office, adding a formalized process
    for triaging mail and enabling more timely and accurate distribution of
    claims to the production staff in their appropriate lanes.
        VA is increasing the expertise of our workforce and the quality of
    our decisions through national training standards that prepare claims
    processors to work faster and at a higher quality level. Our training
    and technology skills programs will continue to deliver the knowledge
    and expertise our employees need to succeed in a 21st century
    workplace. We are establishing dedicated teams of quality review
    specialists at each regional office. These teams will evaluate decision
    accuracy at both the regional office and individual employee levels,
    and perform in-process reviews to eliminate errors at the earliest
    possible stage in the claims process. Personnel trained by our national
    quality assurance staff comprise the quality review teams to assure
    local reviews are consistently conducted according to national
    standards.
        Using design teams, VBA is conducting rapid development and testing
    of process changes, automated processing tools, and innovative
    workplace incentive programs. The first design team developed a method
    to simplify rating decisions and decision notification letters that was
    implemented nationwide in December 2011. This new decision notification
    process streamlines and standardizes the development and communication
    of claims decisions. This initiative also includes a new employee job-
    aid that uses rules-based programming to assist decisionmakers in
    assigning an accurate service-connected evaluation. VBA's
    Implementation Center, established at VBA headquarters as a program
    management office, streamlines the process of innovation to ensure that
    new ideas are approved through a governance process. This allows us to
    focus on initiatives that will achieve the greatest gains.
        VA continues to promote the Fully Developed Claims (FDC) program.
    We believe utilization of the FDC program will significantly increase
    as a result of the public release last month of 68 more disability
    benefits questionnaires (DBQs), bringing the total number of DBQs
    publicly available to 71. DBQs are templates that solicit the medical
    information necessary to evaluate the level of disability for a
    particular medical condition. Currently used by Veterans Health
    Administration examiners, the release of these DBQs to the public will
    allow veterans to take them to their private physicians, facilitating
    submission of a complete claims package for expedited processing. VA
    plans an aggressive communications strategy surrounding the release of
    these DBQs that will promote the FDC program. We also continue to work
    with the VSO community to identify ways to boost FDC program
    participation and better inform and serve veterans and their advocates.
        This year VA is also beginning national implementation of our new
    paperless processing system, the Veterans Benefits Management System
    (VBMS). We are implementing VBMS using a phased approach that will have
    all regional offices on the new system by the end of 2013. We will
    continue to add and expand VBMS functionality throughout this process.
    Establishment of a digital, near-paperless environment will allow for
    greater exchange of information and increased transparency to veterans,
    our workforce, and stakeholders. Increased use of state-of-the-art
    technology plays a major role in enabling VA to eliminate the claims
    backlog and redirect capacity to better serve veterans and their
    families. Our strategy includes active stakeholder participation
    (veterans service officers, State Departments of Veterans Affairs,
    county veterans service officers, and Department of Defense) to provide
    digitally ready electronic files and claims pre-scanned through online
    claims submission using the eBenefits Web portal. VBA has aggressively
    promoted the value of eBenefits and the ease of enrolling into the
    system. The 2013 budget invests $128 million in VBMS.
                          ending veteran homelessness
        The administration is committed to ending homelessness among
    veterans by 2015. Between January 2010 and January 2011 homelessness
    declined by 12 percent, keeping VA on track to meet the goal of ending
    veteran homelessness in 2015. The VA's homeless veteran registry is
    populated with over 400,000 names of current and formerly homeless
    veterans who have utilized VA's Homeless Programs--allowing us to
    better see the scope of the issues so we can more effectively address
    them.
        In the 2013 budget, VA is requesting $1.352 billion for programs
    that will prevent and treat veteran homelessness. This represents an
    increase of $333 million, or 33 percent over the 2012 level. This
    budget will support our long-range plan to eliminate veteran
    homelessness by reducing the number of homeless veterans to 35,000 in
    2013 by emphasizing rescue and prevention.
        To get veterans off the streets and into stable environments, VA's
    Grant and Per Diem Program awards grants to community-based
    organizations that provide transitional housing and support services.
    VA's goal is to serve 32,000 homeless veterans in this program in 2013.
    Transitional housing is also provided through the Healthcare for
    Homeless Veterans program. Permanent housing is achieved with Housing
    Choice vouchers in the Department of Housing and Urban Development
    (HUD)-VA Supportive Housing (HUD-VASH) Program, and by 2013 VA plans to
    provide case management support for the nearly 58,000 HUD Housing
    Choice vouchers available to assist our most needy homeless veterans.
        Culminating 2 years of work to end homelessness among veterans, the
    Building Utilization Review and Repurposing (BURR) initiative helped
    identify unused and underused buildings and land at existing VA
    property with the potential for repurposing to veteran housing. The
    BURR initiative supports VA's goal of ending veteran homelessness by
    identifying excess VA property that can be repurposed to provide safe
    and affordable housing for veterans and their families. As a result of
    BURR, VA began developing housing opportunities at 34 nationwide
    locations for homeless or at-risk veterans and their families using its
    enhanced use lease (EUL) authority (now expired). The housing
    opportunities developed through BURR will add approximately 4,100 units
    of affordable and supportive housing to the projects already in
    operation or under construction, for an estimated total of 5,400 units.
        Although the Department's enhanced use lease authority has expired,
    the administration will work with Congress to develop future
    legislative authorities to enable the Department to further repurpose
    the properties identified by the BURR process. Beyond reducing
    homelessness among our veterans, additional opportunities identified
    through BURR may include housing for veterans returning from Iraq and
    Afghanistan, assisted living for elderly veterans, and other possible
    uses that will enhance benefits and services to veterans and their
    families.
        Of all claimants served by the Veterans Benefits Administration
    (VBA), homeless veterans represent our most vulnerable population and
    require specialized care and services. The 2013 budget requests $21
    million for the Homeless Veterans Outreach Coordinator (HVOC)
    initiative, which would provide an additional 200 coordinators
    nationwide to expedite disability claims; acquire housing and prevent
    veterans from losing their homes; expedite access to vocational
    training and job opportunities; and resolve legal issues at regional
    justice courts. These new case managers would significantly improve
    outcomes on behalf of the Nation's homeless veterans. For example, the
    initiative would improve the timeliness of disability claims decisions
    for homeless and at-risk veterans by reducing the claims processing
    times by nearly 40 percent between 2011 and 2015.
        In 2011, VHA hired 366 (or 90 percent of 407 total positions)
    homeless or formerly homeless veterans as vocational rehabilitation
    specialists to provide individualized supported employment services to
    unemployed homeless veterans through the Homeless Veterans Supported
    Employment Program. Recent initiatives to increase employment of
    veterans in Federal and other public sector jobs will help to reduce
    homelessness and also ensure their families are supported. On January
    18, 2012, VA hosted a career fair for veterans in Washington, DC. Over
    4,000 veterans attended this event to explore and apply for thousands
    of public and private sector job opportunities.
        The VA also helps veterans obtain employment with education and
    training assistance. The National Cemetery Administration (NCA) is
    helping to provide employment opportunities for homeless veterans
    through a new, paid apprenticeship training program serving veterans
    who are homeless or at risk of homelessness. The program will be based
    on current NCA training requirements for positions such as cemetery
    caretakers and cemetery representatives. Veterans who successfully
    complete the program at national cemeteries will be guaranteed full-
    time permanent employment at a national cemetery or may choose to
    pursue employment in the private sector. The Veterans Retraining
    Assistance Program is a joint effort with VA and the Department of
    Labor to provide 12 months of retraining assistance. The program is
    limited to 54,000 participants from October 1, 2012, through March 31,
    2014. Education and training assistance are preventive programs.
        Other preventive services programs include the Supportive Services
    for Veteran Families, which provides rapid case management and
    financial assistance, coordinated with community and mainstream
    resources, to promote housing stability. In time, VA will transition
    its homeless efforts primarily to prevention. Through coordinated
    partnerships with other Federal and local partners and providers, VA
    will assist at-risk veterans in maintaining housing, accessing
    supportive services that promote housing stability, and identifying the
    resources to rapidly re-house veterans and their dependents if they
    should fall into homelessness. This shift to increased preventive
    efforts will require us to be much more knowledgeable about the causes
    of veterans' homelessness, about the details of our current homeless
    and at-risk veteran populations, and about creating action plans that
    serve veterans at the individual level.
                              medical care program
        The 2013 budget requests $52.7 billion for healthcare services to
    treat over 6.33 million unique patients, an increase of 1.1 percent
    over the 2012 estimate. Of those unique patients, 4.4 million veterans
    are in priority groups 1-6, an increase of more than 64,000 or 1.5
    percent. Additionally, VA anticipates treating over 610,000 veterans
    from the conflicts in Iraq and Afghanistan, an increase of over 53,000
    patients, or 9.6 percent, over the 2012 level.
    Medical Care in Rural Areas
        The delivery of healthcare in rural areas faces major challenges,
    including a shortage of healthcare resources and specialty providers.
    In 2011, we obligated $18.8 billion to provide healthcare to veterans
    who live in rural areas. Some 3.6 million veterans enrolled in the VA
    healthcare system live in rural or highly rural areas of the country;
    this represents about 42 percent of all enrolled veterans. For that
    reason, VA will continue to emphasize rural health in our budget
    planning, including addressing the needs of Native American veterans.
    The 2013 budget continues to invest in special programs designed to
    improve access and the quality of care for veterans residing in rural
    areas. For example, in the remote, sparsely populated areas of Montana,
    Utah, Wyoming, and Colorado, VA has supported the development and
    expansion of a network-wide operational telehealth infrastructure that
    supports a virtual intensive care unit, tele-mental health services,
    and primary care and specialty care to 67 fixed and mobile sites.
    Again, IT investment is the foundation of our work in all of these
    areas.
        In rural areas with larger populations, funding supports the
    opening of new rural clinics, such as the one located in Newport,
    Oregon, which serves over 1,200 veterans. This clinic is a unique
    partnership between VA and the local Lincoln County government. The
    county government provides clinical space, equipment, and supplies,
    while VA funds the salaries for the primary care and mental health
    providers.
    Mental Healthcare
        The budget requests $6.2 billion for mental health programs, for an
    increase of $312 million over the 2012 level of $5.9 billion. VA is
    increasing outreach opportunities to connect with and treat veterans
    and their families in new, innovative ways. In April 2011, VA launched
    the first in a series of mobile smartphone applications, the PTSD
    Coach. It provides information about PTSD, self-assessment and symptom
    management tools, and information on how to get help. VA developed this
    technology in collaboration with DOD and with input from veterans, who
    let the development team know what they did and did not want in the
    application (app). As of the end of 2011, the app had just over 41,000
    downloads in 57 countries. In addition, VA is developing PTSD Family
    Coach that will complement the Coaching into Care National Call Center,
    which provides support to family members of veterans.
        In 2011, VA also launched Make the Connection, a national public
    awareness campaign for veterans and their family members to connect
    with other veterans to share common experiences, and ultimately to
    connect them with information and resources to help with the challenges
    that can occur when transitioning from military service to civilian
    society. This is an important effort in breaking down the stigma
    associated with mental health issues and treatment. The campaign's
    central focus is a Web site, www.MakeTheConnection.net, featuring
    numerous veterans who have shared their experiences, challenges, and
    triumphs. It offers a place where veterans and their families can view
    the candid, personal testimonials of other veterans who have dealt with
    and are working through a variety of common life experiences, day-to-
    day symptoms, and mental health conditions. The Web site also connects
    veterans and their family members with services and resources they may
    need.
    Long-Term Medical Care
        As the veteran population ages, VA will expand its provision of
    both institutional and non-institutional long-term care services. These
    services are designed not just for the elderly, but for veterans of all
    ages who have a serious chronic disease or disability requiring ongoing
    care and support, including those returning from Iraq and Afghanistan
    suffering from traumatic injuries. Veterans can receive long-term care
    services at home, at VA medical centers, or in the community. In 2013,
    the long-term care budget request is $7.2 billion. VA will continue to
    provide long-term care in the least restrictive and most clinically
    appropriate settings by providing more non-institutional care closer to
    where veterans live. This budget supports an increase of 6 percent in
    the average daily census in non-institutional long-term care programs
    in 2013, resulting in a total average daily census of approximately
    120,100.
                                medical research
        Medical research is being supported with $583 million in direct
    appropriations in 2013, an increase of nearly $2 million above the 2012
    level. In addition, approximately $1.3 billion in funding support for
    medical research will be received from VA's medical care program and
    through Federal and non-Federal grants. Projects funded in 2013 will
    support fundamentally new directions for VA research. Specifically,
    research efforts will be focused on supporting development of new
    models of care, improving social reintegration following traumatic
    brain injury, reducing suicide, evaluating the effectiveness of
    complementary and alternative medicine, developing blood tests to
    assist in the diagnosis of post-traumatic stress disorder and mild
    traumatic brain injury, and advancing genomic medicine.
        The 2013 budget continues support for the Million Veteran Program
    (MVP), an unprecedented research program that advances the promises of
    genomic science. The MVP will establish a database, used only by
    authorized researchers in a secure manner, to conduct health and
    wellness studies to determine which genetic variations are associated
    with particular health issues. The pilot phase of MVP was launched in
    2011. Surveys were sent to 17,483 veterans and approximately 20 percent
    of those then completed a study visit and provided a small blood
    sample. By the end of 2013, the goal is to enroll at least 150,000
    participants in the program. Like with so much of VA research, the
    impact will be felt not just through improved care for veterans but for
    all Americans, as well.
                        veterans benefits administration
        The 2013 budget request for the general operating expenses of the
    Veterans Benefits Administration (VBA) is $2.2 billion, an increase of
    $145 million, or 7.2 percent, over the 2012 enacted level. With the
    support of Congress, we have made great strides in implementing our
    comprehensive plan to transform the disability claims process. This
    budget sustains our investments in people, processes, and technology in
    order to eliminate the claims backlog by 2015. In addition, this budget
    request includes funding to support the administration of other VBA
    business lines.
    Post-9/11 and Other Education Programs
        The Post-9/11 GI Bill program provides every returning
    servicemember with the opportunity to obtain a college education. As
    expected, the Post-9/11 GI Bill program has become the most used
    education benefit that VA offers. Just as with the original GI Bill,
    today's program provides veterans with tools that will help them
    contribute to an economically vibrant and strong America. In 2013, VA
    estimates that 606,300 individuals will participate in this benefit
    program. The timeliness and accuracy of processing Post-9/11 GI Bill
    claims continues to improve. From 2010 to 2011, VA processing times for
    original and supplemental claims improved by 15 days (from 39 to 24
    days) and 4 days (from 16 to 12 days), respectively. Over the last 2
    years, VA has successfully deployed a new IT system to support
    processing of Post-9/11 GI Bill education claims. With improved
    automation tools in place, VA will be able to begin reducing education
    benefit processing staff in 2013.
    Vocational Rehabilitation and Employment
        The Vocational Rehabilitation and Employment (VR&E) program is
    designed to assist disabled servicemembers in their transition to
    civilian life and obtaining employment. The budget request for 2013 is
    $233.4 million or a 14.2-percent increase from 2012. The number of
    participants in the program increased to 107,925 in 2011 and is
    expected to grow to over 130,000 by 2013.
        VA is also expanding VR&E counseling services available at IDES
    sites to assist servicemembers with disabilities in jumpstarting their
    transition to civilian employment. In 2012, VA will assign 110
    additional counselors to the largest IDES sites, serving an additional
    12,000 wounded, ill, and injured servicemembers. Funds requested in
    2013 will support further expansion, adding 90 more counselors to the
    program.
        In 2009, VA established a pilot program called VetSuccess on Campus
    to provide outreach and supportive services to veterans during their
    transition from the military to college, ensuring that their health,
    education, and benefit needs are met. By the end of 2012, the program
    will be operational on 28 campuses. The 2013 budget includes $8.8
    million to expand the program to a total of 80 campuses serving
    approximately 80,000 veterans.
                        national cemetery administration
        VA honors our fallen soldiers with final resting places that serve
    as lasting tributes to commemorate their service and sacrifice to our
    Nation. The 2013 budget includes $258 million in operations and
    maintenance funding for the National Cemetery Administration (NCA). In
    2013, NCA estimates that interments will increase by 1,500 (1.3
    percent) over 2012. Cemetery maintenance workload will also continue to
    increase in 2013 over the 2012 levels: The number of gravesites
    maintained will increase by 82,000 (2.5 percent) and the number of
    developed acres maintained will increase by 138 (1.6 percent).
        The 2013 budget will allow VA to provide more than 89.6 percent of
    the Veteran population, or 19.1 million veterans, a burial option
    within 75 miles of their residence by keeping existing national
    cemeteries open, establishing new State veterans cemeteries, as well as
    increasing access points in both urban and rural areas. VA's first
    grant to establish a veterans cemetery on tribal trust land, as
    authorized in Public Law 109-461, was approved on August 15, 2011. This
    cemetery will provide a burial option to approximately 4,036 unserved
    Rosebud Sioux Tribe veterans and their families residing on the Rosebud
    Indian Reservation near Mission, South Dakota.
        NCA provides an unprecedented level of customer service, which has
    been achieved by always striving for new ways to meet the burial needs
    of veterans. In 2011, NCA initiated an independent study of emerging
    burial practices including ``green'' burial techniques that may be
    appropriate and feasible for planning purposes. The study will also
    include a survey of veterans to ascertain their preferences and
    expectations for new burial options. The completed study will provide
    comprehensive information and analysis for leadership consideration of
    new burial options.
                             capital infrastructure
        A total of $1.14 billion is requested in 2013 for VA's major and
    minor construction programs, an increase of 6.3 percent over the 2012
    enacted level. VA is also proposing legislation in 2013 that would
    enhance the ability of the Department to collaborate with other Federal
    Departments and Agencies, including the Department of Defense (DOD) on
    joint capital projects. This legislative proposal would allow
    appropriated funds to be transferred among Federal agencies to
    effectively plan and design joint projects when determined to be cost-
    effective and improve service delivery to veterans and servicemembers.
    Major Construction
        The major construction request in 2013 is $532 million in new
    budget authority. The major construction request includes funding for
    the next phase of construction for four medical facility projects in
    Seattle, Washington; Dallas, Texas; Palo Alto, California; and St.
    Louis (Jefferson Barracks), Missouri. Additionally, funds are provided
    to remove asbestos from Department-owned buildings, improve facility
    security, remediate hazardous waste, fund land acquisitions for
    national cemeteries, and support other construction related activities.
    Minor Construction
        In 2013, the minor construction request is $608 million. It would
    provide for constructing, altering, extending, and improving VA
    facilities, including planning, assessment of needs, architectural and
    engineering services, and site acquisition and disposition. It also
    includes $58 million to NCA for land acquisition, gravesite expansions,
    and columbaria projects. NCA projects include irrigation and drainage
    improvements, renovation and repair of buildings, and roadway repairs.
                             information technology
        The 2013 budget requests $3.327 billion for information technology
    (IT), an increase of $216 million over the 2012 enacted level of $3.111
    billion. Veterans and their families are highly dependent upon the
    effective and efficient use of IT to deliver benefits and services. In
    this day and age, every doctor, nurse, dentist, claims processor,
    cemetery interment scheduler, and administrative employee in the VA
    cannot do his or her jobs without adequate IT support. Approximately 80
    percent of the IT budget supports the direct delivery of healthcare and
    benefits to veterans and their families.
        We have made dramatic changes in the way IT projects are planned
    and managed at the VA. As described earlier in this testimony, the
    Project Management Accountability System (PMAS) has reduced risks by
    instituting effective monitoring and oversight capabilities and by
    establishing clear lines of accountability. Additionally, we have
    strengthened security standards in software development and established
    an Identity Access Management program that allows VA to increase online
    services for veterans.
        The IT infrastructure supports over 300,000 employees and about 10
    million veterans and family members who use VA programs, making it one
    of the largest consolidated IT organizations in the world. This budget
    request includes nearly $1.8 billion for the operation and maintenance
    of the IT infrastructure, the backbone of VA. A sound and reliable
    infrastructure is critical to support the VA workforce and all of our
    facilities nationwide in the effective and efficient delivery of
    healthcare and benefits to veterans. It is also critical that we
    support new facility activations, our major transformational
    initiatives, and the increased usage of VA services while maintaining a
    secure IT environment to protect veteran sensitive information.
        Improving services for veterans and their beneficiaries requires
    using advanced technologies. For example, VA will continue to utilize
    MyHealtheVet to improve access to information on appointments, lab
    tests and results, and reduce adverse reactions to medications. The
    2013 budget continues an investment strategy of funding the development
    of new technologies that will have the greatest benefit for veterans.
        The delivery of high-quality medical care to an increasing number
    of veterans is highly dependent upon adequate IT funding. VA's health
    IT investments have, and will continue, to greatly improve the delivery
    of medical care with regards to quality, patient safety and cost
    effectiveness. This includes transformation of mental health service
    delivery through IT-enabled self-help, providing data and IT analytical
    tools for VA's research community, and creating an open exchange for
    collaboration and innovation in the development of clinical software
    solutions. Additionally, initiatives focused on ``care at a distance''
    are heavily reliant on technology and require a robust IT
    infrastructure.
        The 2013 budget request for integrated Electronic Health Record
    (iEHR) is $169 million. The iEHR is a joint initiative with DOD to
    modernize and integrate electronic health records for all veterans to a
    single common platform. We must take full advantage of this historic
    opportunity to deliver maximum value through joint investments in
    health IT. When DOD and VA healthcare providers begin accessing a
    common set of health records, iEHR will enhance quality, safety, and
    accessibility of healthcare--setting the stage for more efficient,
    cost-effective healthcare systems. In 2013, we plan to leverage open
    source development to foster innovation and speed delivery for a
    pharmacy and immunization solution.
        An integral part of iEHR is the Virtual Lifetime Electronic Record
    (VLER), which is enabling VA transformation. VLER creates information
    interoperability between DOD, VA, and the private sector to promote
    better, faster, and safer healthcare and benefits delivery for
    veterans. The 2013 budget will ensure continued delivery of enhanced
    clinical and benefits information connections and build increased
    capability to support women's healthcare. Additionally, we will develop
    a modern memorial affairs system for the dynamic mapping of gravesite
    locations. The 2013 budget request for VLER is $52.9 million.
        In addition, the 2013 budget requests $92 million in the IT
    appropriation for VBMS. As noted earlier, the VBMS initiative is the
    cornerstone of VA's claims transformation strategy. It is a
    comprehensive solution that integrates a business transformation
    strategy to address people and processes with a paperless claims
    processing system. Achieving paperless claims processing will result in
    higher quality, greater consistency, and faster claims decisions.
    Nationwide deployment of VBMS is on target to begin in 2012 with
    completion in 2013.
        This budget also includes funding to transform the delivery of
    veterans' benefits. The 2013 IT budget requests $111 million for the
    Veterans Relationship Management (VRM) initiative. We will use this
    funding to improve communications between veterans and VA that occur
    through multiple channels--phone, Web, mail, social media, and mobile
    apps. It will also provide new tools and processes that increase the
    speed, accuracy, and efficiency of information exchange, including the
    development of self-service technology-enabled interactions to provide
    access to information and the ability to execute transactions at the
    place and time convenient to the veteran. In 2013, veterans will see
    enhanced self-service tools for the Civilian Health and Medical Program
    of the Department of Veterans Affairs (CHAMPVA) and VetSuccess
    programs, as well as the veterans online application for enrolling in
    VA healthcare.
                              legislative program
        VA has outlined in this budget a strong legislative program that
    will advance our mission to end veteran homelessness and help wounded
    warriors by improving our system of grants for home alterations so
    veterans can better manage disabilities and live independently. Our
    legislative proposals would also make numerous other common-sense
    changes that improve our programs, including provisions that will
    reduce payment complexities for both our student veterans and the
    schools using the Post-9/11 GI Bill.
                                    summary
        VA is the second largest Federal department with over 316,000
    employees. Our workforce includes physicians, nurses, counselors,
    claims processors, cemetery groundskeepers, statisticians, engineers,
    IT specialists, police, and educators. They serve veterans at our
    hospitals, community-based outpatient clinics, vet centers, mobile vet
    centers, claims processing centers, and cemeteries. Through the
    resources provided in the President's 2013 budget, VA is enabled to
    continue improving the quality of life for our Nation's veterans and
    their families and to completing the transformation of the Department
    that we began in 2009. Thanks to the President's leadership and the
    solid support of all members of the Congress, we have made huge strides
    in our journey to provide all generations of veterans the best possible
    care and benefits that they earned through selfless service to the
    Nation. We are committed to continue that journey, even as the numbers
    of veterans will increase significantly in the coming years, through
    the responsible use of the resources provided in the 2013 budget and
    2014 advance appropriations requests.

        Senator Nelson. Before I start on my questions, I want to
    recognize the chairman of the full committee first for any
    statement or questions he might have.
        Senator Inouye.

                                  CONSTRUCTION

        Senator Inouye. Thank you very much, Mr. Chairman.
        Mr. Secretary, my first question relates to the
    Department's construction budget. Would you please explain the
    construction account's various parts and why the Department
    chose to fund it in this manner?
        Secretary Shinseki. Certainly, Mr. Chairman. This budget
    that we provide strikes the right balance between our capital
    requirements in construction and our operating needs. And
    overall, this balance between major, minor construction, and
    nonrecurring maintenance programs, and even leasing programs
    are part of the equation. But for the purposes of this budget
    line, major, minor, and nonrecurring maintenance programs,
    overall, remain stable.
        This year, in 2013, we've placed emphasis on minor
    construction, which we've increased by 26 percent. But on major
    construction, the emphasis is on completing prior appropriated
    projects by the Congress for which we have been provided
    authority. And those projects provide for healthcare, memorial,
    and benefits delivery services.
        The reason we are stressing minor construction dollars in
    2013 is it's particularly helpful for us at this time to have
    money that touches more veterans; impacts a wider range of VA
    medical centers; corrects more seismic, safety, and security
    issues in less time; very agile; and with money that we can get
    out there and hospital directors can employ. So we've placed
    our emphasis on minor construction.
        Major construction, as I said is the Department being
    fiscally responsible, and focusing on completing ongoing
    projects that you've already authorized. And we need to do that
    by addressing about $6 billion in ongoing, partially funded
    projects.
        For nonrecurring maintenance, our request will fund the
    design of about 181 new nonrecurring maintenance projects that
    ultimately result in an estimated $780 million in construction.
    For 2012 and 2013, our focus for nonrecurring maintenance has
    been on safety, security, and equally importantly, correcting
    the seismic issues that have been out there for some time.
        Since 2008, VA has obligated about $7.2 billion in
    nonrecurring maintenance projects to address these priorities.
    And I think you can see where our great activity has been in
    nonrecurring maintenance and now in minor. Major construction--
    we continue to execute the plan you've authorized.

                         INFORMATION TECHNOLOGY BUDGET

        Senator Inouye. Mr. Secretary, are you planning to use part
    of the IT budget resources on the iEHR? In addition, could you
    please let us know what its status is and what portion of the
    IT budget will go towards the iEHR?
        Secretary Shinseki. Mr. Chairman, I'm happy to provide that
    update. I'm going to call, at a point, on Secretary Baker to
    provide the details of the program. I would just say that this
    is one of those projects that I have worked for 3 years now,
    first with Secretary Gates and now with Secretary Panetta.
        There is agreement between the Secretaries that a single,
    joint, common electronic health record, a platform that is open
    in architecture and nonproprietary in design, is what both
    Departments are going to develop together. We have that
    agreement. It's taken a bit of work, and now we're in the
    process of building that.
        Let me turn to Secretary Baker to provide the details of
    where we are.
        Mr. Baker. Thank you, Secretary Shinseki.
        Senator, to give you a succinct answer, about $169 million
    of the 2013 budget will go directly to the iEHR and building
    that. For 2012, we have currently 23 ongoing projects in the
    iEHR, much of which is to take the budget that we have spent in
    the past on medical and move it towards the single joint record
    with DOD. We have staffed the office, we have hired the
    director, and we're moving out on those 23 projects. So I think
    we're making good progress.
        The key thing here is the Secretaries' attention. Both
    Departments understand that the answer is yes to the joint
    electronic health record system at this point, and we're just
    defining how yes becomes reality.
        Secretary Shinseki. Mr. Chairman, if I might just close out
    on that point, in the past, this subcommittee has been
    particularly supportive on our IT priorities. And I thank you
    for that support, and I seek your support again on this issue.
        As I say, the electronic health record, all by itself, is
    important because it provides the seamlessness that we've been
    after so that a youngster serving in uniform coming to the VA
    doesn't go through this records drill, and that we have, in
    effect, all that we need. It will create this seamlessness that
    serves us in many other ways so that we get on with the
    business of also dealing with the disability claims, making
    that a more efficient process because we have the information
    we need. So the IT here is crucial to at least these two
    administrations, and the leadership here is provided by
    Secretary Baker.

                              VA/DOD COLLABORATION

        Senator Inouye. A final question, Mr. Secretary. You
    somehow alluded to this. I know you have been working with the
    Secretary of Defense on creating a seamless transition between
    DOD and VA. Would you please elaborate on the progress being
    made on the collaborative effort?
        Secretary Shinseki. Mr. Chairman, this is one of those
    areas in which in the past 3 years, both Secretaries have
    devoted considerable thought and energy to, and that is
    developing a relationship between the two Departments that
    acknowledges the obvious. Very little of what we do in VA
    originates in VA. Much of what we end up working on originates
    in DOD, and so this relationship at the secretarial level
    permeates down through our organizations, all the levels, where
    collaborative work goes on to work on important issues like the
    iEHR, but also creating the conditions that our paperless
    processing of disability claims has facilitated.
        Beyond that, we are looking at how we can better transition
    and assist with the transition of servicemembers leaving the
    military as they prepare for the next phase of their lives.
    Transition Assistance Program--we have met jointly in task
    forces to put together what we think is a good program for
    ensuring that when the uniform comes off, every servicemember
    is on a vector that will take them to success in the next phase
    of their lives. All of that planning and detail work is
    underway, and at some point we look forward to the opportunity
    to share the details of the plan with the subcommittee.
        Senator Inouye. Thank you very much.
        Thank you, Mr. Chairman.
        Senator Johnson. Thank you.

                              MEDICAL CARE BUDGET

        Mr. Secretary, I understand you have updated your fiscal
    year 2013 budget estimate for medical care and found $2 billion
    in savings which you have redirected to other initiatives and
    priorities. Given the tight fiscal environment, why are you
    asking this subcommittee for an additional $165 million over
    what the Congress provided to the VA in the 2013 advance
    appropriations?
        Secretary Shinseki. Mr. Chairman, thanks for that question.
    As we go through the budgeting process, because we are a 2-year
    cycle, we look out as far as we can, and the initial budget
    estimate is what it is. Then as we get closer to the submission
    of a budget, those numbers adjust and refine. Sometimes there
    are changes to it, and they're usually minor increases or
    reductions.
        So each year we run our actuarial projections for the
    budget estimate, and the advance appropriation request attempts
    to incorporate the most recent data. In the case of our last
    run last spring, the model did show an adjustment, a downward
    reduction of about $2 billion. Those monies were reinvested in
    programs that were funded, but more funding would have been
    helpful in strengthening the programs. And these programs, I
    would point out, were things like caregivers, improved mental
    health, expanded access for veterans, homelessness, and
    activations of our medical facilities.
        Following these reinvestments, Mr. Chairman, we found that
    we still required another $165 million to meet healthcare
    requirements of our veterans in 2013, and that's the reason
    that request is in the budget. We believe that we should apply
    the $165 million to meet the intent of the Caregivers Act, also
    to open new facilities on time, and then to fully fund our
    efforts to end veteran homelessness.

                             COST-BENEFIT ANALYSIS

        Senator Johnson. Secretary Shinseki, as you know from our
    correspondence and conversations with you, I have concerns
    about the proposal that the VA announced in December for the
    Black Hills Healthcare System. In response to the South Dakota
    delegation's January 4 letter, you said that the VA is
    currently conducting a cost comparison between new construction
    and a full renovation of the existing domiciliary building.
        This information is essential, and I found it odd that the
    cost-benefit analysis wasn't completed as the Black Hills
    proposal was formed. When does the VA anticipate completing
    this analysis, and how will the results shape the proposal?
        Secretary Shinseki. I'm going to ask Dr. Petzel to provide
    an update here.
        Dr. Petzel. Thank you, Mr. Secretary.
        Senator Johnson, I can't explain why the estimate was not
    included originally. But we are in the process now of doing a
    cost-benefit analysis and a comparison of those two
    alternatives. We will not proceed with the proposal until
    that's finished and until we've had our interactions with the
    subcommittee and with you over what that shows.
        Senator Johnson. I'm grateful that you agreed to extend the
    comment period for the stakeholders to offer feedback and
    counter proposals. I see the VA Committee has been formed in
    Hot Springs, and the community is diligently working on forming
    a counter proposal to offer to the VA. Can you provide
    assurances that this proposal will receive all due
    consideration?
        Secretary Shinseki. Certainly, Mr. Chairman. I can give you
    that assurance. This proposal was intended to begin a dialog on
    the future of how we provide safe, high-quality, accessible
    healthcare to veterans in this rural part of the country. We've
    conducted 14 community briefings now. We are willing to
    continue having those discussions, and that's part of the
    reason that we've extended the comment period to the end of
    April. I can assure you we'll take a very good look at the
    proposal and a dialog continues.

                       VA/IHS MEMORANDUM OF UNDERSTANDING

        Senator Johnson. Mr. Secretary, on March 5, 2012, the VA
    and the Indian Health Service (IHS) sent a letter to tribal
    leaders informing them of a draft agreement that outlines how
    VA will reimburse IHS and the tribes for care they provide to
    American Indian and Alaska Native vets who are eligible for VA
    healthcare. Better collaboration between the VA and IHS is
    essential to ensuring that vets that live on reservations or in
    tribal villages do not fall through the cracks and receive the
    benefits to which they are entitled.
        Can you please describe what this draft agreement
    encompasses, how the VA plans to make sure that the tribes have
    been consulted, and when a reimbursement agreement will be
    finalized?
        Secretary Shinseki. Mr. Chairman, I'm going to call on Dr.
    Petzel to answer the specifics here. But in general, let me
    just say that ensuring that our Native American and Alaska
    Native veterans have access to high-quality and safe healthcare
    the way any veteran living elsewhere would have has been a
    particular interest of mine. It is part of the reason that I
    visited Alaska and visited South Dakota, been to Montana, and
    been to Guam to get a sense of the rural aspects of what we
    face. This dialog that you're referring to is part of the
    effort to get clarity on how we can work together to achieve
    what for both of us ought to be joint objectives.
        Dr. Petzel.
        Dr. Petzel. Thank you, Mr. Secretary.
        The agreement to date has made very good progress. First of
    all, we've agreed on what sort of services are going to be
    provided, at least initially, and that's direct care, that are
    associated with the benefits that one might get if they were
    getting their care at the VA.
        The second thing is we've agreed on the eligibility
    criteria, that is, all veterans who are enrolled with the VA
    healthcare system would be eligible to receive care in an IHS
    or tribal facility.
        Third, we've decided upon how we're going to deal with
    pharmaceuticals and medications. We're going to use the VA's
    mail-out pharmacy program, which is a very efficient way of
    providing medication. And, in fact, we're looking at the IHS
    adopting our mail-out pharmacy program for all of its patients
    and all of its clients.
        And then finally, we've come to an agreement about payment
    methodologies, how the reimbursement is actually going to
    occur. There are still some issues that we need to work our way
    through. But in the meantime, we are going to begin the
    demonstration projects to prove, if you will, these concepts
    that we've described, and they will be both with IHS facilities
    and with tribal facilities across the country. In fact, it's a
    likely possibility that this will be in Alaska and this will be
    in South Dakota where we've already begun some negotiations
    with the tribes.
        Senator Johnson. Senator Murkowski.
        Senator Murkowski. Thank you, Mr. Chairman.
        I'm pleased to hear that we are making a little bit of
    progress on these memorandums of agreement. You mentioned the
    demonstration, and I understand that there is an individual
    memorandum of agreement with the tribal facilities there in
    Ketchikan with the Ketchikan Indian community. As the first one
    in the State, we would certainly encourage the Department to
    work to facilitate other such agreements. I think that they
    will be important, and I appreciate that.
        Mr. Secretary, thank you for your leadership and that of
    your team. We greatly appreciate it.
        I will tell you, Mr. Chairman, I've had the opportunity to
    be on many committees where we have interaction with our
    Secretary of the VA.
        And Mr. Secretary, I am just particularly pleased with the
    very personal attention and initiative that you have placed on
    some of the issues that face our veterans in Alaska. You have
    given me your commitment to work on the Closer to Home
    Initiative, and we have seen some real progress in that.
        You've given me your commitment to work on our backlog, and
    we have seen some forward progress. You've given me your
    commitment to work to better integrate what happens within the
    VA with IHS, and I understand how difficult that has been. But
    in that area, too, we are making some incremental progress. So
    I appreciate the good work that you have done for Alaska's
    veterans, and I look forward to continuing to work with you.
        On the issue of the Care Closer to Home, I had asked that
    there be a report to the subcommittee, to Congress, in
    implementing this initiative. And we have seen a 38-percent
    reduction in the number of veterans who are tasked to travel
    outside of the State for care. It's gone down from 545 in 2010
    to 336 in 2011. That's good progress, we think.
        But as we had an opportunity to discuss, there are still
    many who are sent outside, whether it's to Seattle or to other
    VA facilities, when there is care and specialists that are
    available within the State of Alaska. Orthopedics is one area.
    It represented more than 10 percent of the referrals outside,
    even though there's clearly many specialists available in the
    State. Cardiology is also another area where nearly 10 percent
    of the referrals went outside and where we have good quality
    care in the State.
        Can you speak to where you see the trends going in terms of
    numbers of referrals outside and the VA's goal for further
    reducing these referrals in the outlying years?

                                   REFERRALS

        Secretary Shinseki. Senator, I would just say that we have
    overall intent here, and that is to deliver high-quality, safe
    care as close to home as possible. And where we see all those
    factors being met, that is what we set out to do. We wanted to
    get a first start and sort of feel our way into what were the
    possibilities here, and I think we have demonstrated that. My
    numbers say we've reduced it by about 43 percent, so we've
    gotten good momentum.
        I'll just assure you we'll continue to look at this. We
    know what the intent here is, and where all those
    considerations are balanced, we'll decide in favor of the
    veteran being closer to home. And I'll call on Dr. Petzel if
    he's got any more specifics.
        Dr. Petzel. Thank you, Mr. Secretary.
        Just to elaborate a little bit, there are three or four
    entities that could provide the care that you're describing,
    Senator. The IHS has some absolutely phenomenally good
    facilities surrounding Anchorage and Fairbanks. Particularly,
    we're hoping that this memorandum of understanding that we have
    will not only provide for care for veterans in IHS facilities
    in a general sense, but we also want to set up separate sharing
    agreements so we can get the specialty care for veterans that
    are non-Native in those facilities. That's one.
        Two is that there are excellent private facilities. We've
    had some difficulty in coming to agreements with the private
    facilities, but we are continuing to pursue that.
        And then finally, there's the Air Force. There are
    opportunities for us to share with the Air Force that we need
    to capitalize. And from the DOD, Dr. Jonathan Woodson and I are
    going to be traveling to Alaska, probably in May, to
    specifically explore what we can be doing with the Air Force.
        I want to just reiterate what the Secretary said. We do not
    want to be sending people down to Seattle, which is a 3- to 5-
    hour ride in a plane, for care that can be delivered at a good
    price in the community. That is our goal.
        Senator Murkowski. I appreciate that. I think it's
    important that we be looking to the various alternatives that
    do exist, as you point out, the military, on the private side,
    and the very credible IHS facilities that we have out there.
        I think it is important to recognize, though, that when we
    talk about flying outside, that is a 3-hour flight, 3 hours and
    15 minutes, from Anchorage. But for many of our veterans who
    live in the rural outlying areas, it's also a 3-hour flight. It
    might be a full day trip to get from a small village to a hub
    village to Anchorage. So it's not just closer to home in the
    sense that we're not going to send outside the State, but I've
    also asked for an assessment as to how we can deliver that care
    closest to home.
        And so when we have the opportunities with these sharing
    arrangements with the IHS facilities, with the clinics that are
    in the village, to provide for a level of care, this is where
    this becomes so important, because whether it's 3\1/2\ hours to
    Seattle, or whether it's 3\1/2\ hours from Aleknagik to
    Anchorage, it still requires the veteran to leave their home.
    It still requires them to be in a big city with no family, with
    high expenses for transportation and lodging while they're
    there.
        So, again, we start the conversation by talking about the
    memorandums of agreement that are out there with IHS. And
    again, I think that this is one area where we can focus on,
    where we can truly make a difference in ensuring that good
    quality care that is affordable and reasonable is provided to
    our veterans near home.
        Thank you, Mr. Chairman.
        Senator Johnson. Senator Nelson.

                               OMAHA VA HOSPITAL

        Senator Nelson. Thank you, Mr. Chairman.
        Thank you, Secretary Shinseki and the members of your VA
    support system. The commitment that was made back in fiscal
    year 2011 in that budget, the request for the Omaha VA
    Hospital, has been and continues to be very good news for the
    thousands of veterans in Nebraska and western Iowa. The $56
    million enacted in fiscal year 2011 addressed the needs of the
    Omaha VA Hospital by providing plan and design money for what
    will be a much needed 21st century healthcare facility.
        And I understand that the plan and design of this facility
    is about 40 percent complete and is still on track to conclude
    this fall with construction to begin in fiscal year 2014. I
    think it's true--and I've often said it--that we need to be as
    good at taking care of our veterans as we are at creating them.
    And your commitment to improving the Omaha VA Hospital is just
    another example that caring for America's veterans remains one
    of the Nation's highest priorities and one of your personal
    priorities as well, and we all appreciate that very much.
        Can you speak to why the new Omaha VA Hospital facility
    continues to be a priority for the Department and why it's
    imperative as improving the care for our veterans? And I know
    Dr. Petzel has had a great deal of involvement in this as well
    and would welcome his comments as well.
        Secretary Shinseki.
        Secretary Shinseki. Let me call on Dr. Petzel to provide
    the details here, and then I'll close out.
        Senator Nelson. OK.
        Dr. Petzel. Thank you, Mr. Secretary.
        Senator Nelson, I was involved in the beginning when I was
    a network director, as you know, in that area in the initial
    planning of and decisions about building that hospital.
    Presently, we're in the second of three design phases. The
    schematic designs have been completed. We're doing what is
    called design development right now with the $56 million that
    was there for advance planning.
        And now that that has been finished, i.e., the design
    development, we're going to begin the process of developing the
    construction documents. They would be finished sometime in
    2013, which would mean that the earliest that funding for
    construction might occur would be in 2014. And of course,
    that's going to depend on what the 2014 budget looks like. But
    again, just to reiterate what the Secretary has said and what
    you have said, this is a priority for us and for the Omaha
    veterans.
        Senator Nelson. Thank you.
        Secretary Shinseki. Senator, I would just say you are
    familiar with what we are going to do, in essence, to replace
    much of the campus. What is useful there is going to be
    retained. But I know from my staff, who have visited, that
    heating, air conditioning, and electrical work are all very old
    and needed to be replaced for safety issues, if nothing else.
    It is a major project that we're committed to in terms of
    assuring that veterans in Nebraska and in the region have high-
    quality, safe access to healthcare.

                               VETERAN CEMETERIES

        Senator Nelson. And Congress needs to be a partner in this
    in making certain that the funding is available. That's why I
    say we need to be as good at caring for our veterans as we are
    at creating them. And so I hope that that will continue to be
    on track.
        Secretary Shinseki, one of the most difficult things to
    talk about is the end of life issues and finding a resting
    place for our veterans when that time comes. One year ago, you
    gave us the status of the Sarpy County National Cemetery, and
    you mentioned there were two sites at the top of your list that
    were being reviewed and that you had funding to purchase,
    design, and conduct the required studies.
        Can you comment on the current status of the Sarpy County,
    Mr. Secretary? For example, has the site been selected? Is
    there something you can tell us about that yet, or does it
    remain a bit of a non-disclosed fact?
        Secretary Shinseki. Now, let me call on Secretary Muro to
    provide an update here.
        Mr. Muro. Thank you, Mr. Secretary.
        Thank you for that question, Senator Nelson. Unfortunately,
    I can't give you the name of the location, but we are down to
    one site. We should have by the end of this month the deed and
    the sale confirmed, and we'll move forward to do the deed, or
    the transfer of the deed. We've already agreed on the price.
    Once we have the sale price set, then we'll come to the
    Secretary and sign off on it. Then we'll be able to advertise
    which site it is. It's a beautiful site. I've been on it. It
    will serve our veterans there for many years.

                              SEAMLESS INTEGRATION

        Senator Nelson. I appreciate the work that you've all done
    to get this accomplished. I know it's a site selection process
    and that there are details that, obviously, had to be worked
    out, and confidentiality was important. But I know my veterans
    back home are very interested, because they ask me when they
    come in to see me, ``Where is it going to be?'' And it's been a
    little awkward to say, ``Well, I know it is. I just don't know
    where it is.'' So it'll be nice to have that fully disclosed. I
    appreciate very much what you've been doing.
        We've had quite a bit of discussion this morning already on
    how to have seamless integration from Active Duty, Guard, and
    Reserve, into the VA system, and much work has already been
    accomplished. I know much remains to be done.
        Do we have some idea of a timeline? We don't want this to
    be the never-ending story, and I know you don't, either. But
    sometimes if we have some focus on when there might be an
    ending point to where you see integration at least beginning--
    and then is there a midpoint where there would be improvement?
    And then is there any idea of, time-wise, finality to where we
    can say we have an integrating system?
        Secretary Shinseki. Secretary Baker.
        Mr. Baker. Thank you, Senator.
        At their last meeting, the two Secretaries agreed that
    within 2 years, we would install the initial version of the
    iEHR in two facilities shared between DOD and VA. That's a
    challenge that we welcome. It means that we'll be moving out in
    certain aspects of that. We have projected the whole project to
    take between 4 and 6 years. It is a large-scale system.
        Senator Nelson. I know it is.
        Mr. Baker. Today, we serve about 15 million servicemembers
    and veterans between the two Departments, and we're talking
    about changing the underlying IT system there. On the topic of
    completely done, I would just observe that we have continually
    updated the Veterans Health Information Systems and Technology
    Architecture system known as VistA, since its introduction in
    the 1980s. So these systems, to stay up with modern healthcare
    and to ensure that we are running the best IT system at every
    hospital, require continued evolution.
        The thing we're doing different this time from the past is
    we have strong involvement of the private sector. So we'll be
    continually looking at what the best private sector approach is
    to providing these types of systems and these types of packages
    and incorporating that as well.
        Senator Nelson. I was going to suggest that. I'm glad you
    are, because, obviously, when it comes to processing claims,
    there are private sector examples that are investing
    considerable amounts of money on new technology and improving
    techniques for claim processing, which would be good to get the
    benefit of their experience without having to pay for the costs
    of achieving it yourself.
        Mr. Baker. Senator, two things to assure you of there are
    as we build our claims processing system, we're involving
    what's called commercial-off-the-shelf (COTS) software, or a
    private sector piece. They're the fundamentals of it. Because
    what we do at VBA is different from DOD there are unique parts
    of the process; for each there is what you'd call custom code
    or customization that goes into that. So it is a large-scale
    project unto itself.
        We've also gone out, Secretary Hickey and I, and looked at
    other systems to make certain we're getting any lessons learned
    we can from other insurance organizations and folks that do
    business with the VA right now. They're doing the same sort of
    things and we want to make certain that we're not going off and
    recreating the wheel, if you will, but learning as much as we
    can from what the private sector has already done in this area.
        Senator Nelson. I certainly appreciate and applaud the work
    that you're doing. When we passed the Wounded Warriors Act a
    few years ago, one of the most important points of it was to
    make certain we were achieving something seamless so that
    people don't have to start from the very beginning at the end
    of their uniformed days. And so I appreciate what you are
    already accomplishing and encourage you to continue to stay the
    course. And if you can meet those deadlines, maybe you can
    maybe even advance them with a little bit of help.
        So, thank you, Mr. Chairman.
        Senator Johnson. Senator Reed.

                         INFORMATION TECHNOLOGY BUDGET

        Senator Reed. Thank you very much, Mr. Chairman.
        Secretary Shinseki and your colleagues, thank you for your
    great service to veterans. General Shinseki, thank you for your
    great service in the Army, and I think you qualify not only as
    a head of VA but a recipient of VA programs as a disabled
    veteran. So you've seen it from both sides of the equation.
        You have made in your budget submissions IT a central part.
    My colleagues have reflected the importance of it by the
    questions they've posed on IT. And let me just follow up--there
    are so many different ways that this affects the operation of
    the VA in terms of medical records. One other operation is the
    paperless disability claims processing. I thank you for
    starting a pilot program in the Providence regional office.
        The question, I think, is giving you an opportunity just to
    expand--what would be the impact in all these areas or the most
    important impact if we were not to fully fund your request for
    IT?
        Secretary Shinseki. Senator, thanks for that question.
    Three years ago, we began this journey on ending the backlog,
    and we've worked mighty hard at it. I'd just tell you that in
    that first year, we put 900,000 claims decisions out the door,
    but we got 1 million-plus claims in.
        The following year, we put 1 million claims decisions out
    the door, and we got 1.2 million in. Last year, another--second
    year in a row, 1 million claims decisions going out the door,
    and 1.3 million, I think, coming in, which tells you that the
    backlog is not static. We are constantly getting claims
    decisions out. The challenge is the number of claims that
    continue to override our ability to manually process.
        And so we're at the tipping point. We spent the last 2
    years developing this paperless tool that, in the hands of
    folks who have been manually putting out 1 million decisions a
    year, is going to give them what they don't have right now, and
    that's the ability to leverage both speed and quality in making
    more and better of these decisions. And this is that paperless
    tool called the Veterans Benefits Management System (VBMS).
        We increased the IT budget by 6.9 percent for 2013 in order
    to ensure that VBMS would be fully fielded. In that increase is
    also the electronic health record we've been talking about. And
    so I used the comment in my opening remarks, we're at a tipping
    point, where we need to just nudge this over and see the
    benefit of the last 2 years of hard work and investment on the
    part of folks that have been doing manual work at a tremendous
    rate and also building the electronic tool that they see as
    their opportunity to dominate the numbers here.
        And we're at that tipping point in 2013, and it would be
    very important for us not to miss that opportunity to deliver
    to veterans what they've been, at least, talking to this
    Secretary about for the last 3 years, and that's to get control
    over this claims backlog.
        Senator Reed. The issues of integrated health records have
    been raised, the issues of an integrated disability evaluation
    system, the IT connection. And I wonder if you or Dr. Petzel
    have any additional comments you feel would be necessary for
    the record in either of these.
        Dr. Petzel. Thank you very much, Senator.
        Thank you, Mr. Secretary. I just want to make a point about
    the importance of IT, in general, to the work that we do in
    health. Virtually nothing any longer that's done in healthcare
    can be done without good IT support. Whether it's improving the
    connectivity you have with your patients by using telehealth,
    text messaging, the telephone, telemedicine, or taking care of
    patients in the clinic setting or in the hospital, IT is
    absolutely essential.
        I use the phrase--and I get kidded about it by the
    Secretary now and again--that it's like the bloodstream in the
    human body. I mean, you can't function, obviously, without your
    bloodstream. We cannot do healthcare without adequate IT, and
    we are on the cutting edge, and we want to remain there. It's a
    very important perspective from our point of view.
        Just one other thing about the iEHR that's fundamentally
    important, particularly from our point of view. Everything that
    happens that we take care of virtually is a result of something
    that may have gone on during the service. And having those
    service records available, being able to view them instantly,
    et cetera, would be a wonderful step forward.

                           FUTURE VETERANS HEALTHCARE

        Senator Reed. Thank you very much, doctor.
        Secretary Shinseki. Senator, if I could just close----
        Senator Reed. Yes, sir.
        Secretary Shinseki [continuing]. I said we've worked IT
    very hard in the last 3 years, and we can usually talk about it
    in terms of these various projects. But I think there's another
    metric I would like to point out to you.
        When we arrived 3 years ago, I think we executed our IT
    budget in terms of deliverables on projects that we invested in
    at about 30 percent. OK, because I think the industry average
    is about 32 percent. But we weren't getting the return on
    investment that we needed to very quickly leverage IT.
        Today, with Secretary Baker's leadership here and imposing
    a program management accountability system on our IT programs,
    if you're off budget or you're behind schedule, you're going to
    have a discussion. And if you miss those more than once, you're
    likely not to continue your project.
        Today, we execute 89 percent of our IT projects. And so I
    am very confident that when we talk about VBMS or the paperless
    disability claims process and this electronic health record, we
    have a good bit of experience to leverage here on how we do
    this.
        Senator Reed. Thank you, Mr. Secretary.
        My time is rapidly expiring, so let me just pose a
    question, and I'll communicate it in writing, too. And that is
    one of the realities here is we have some remarkable young men
    and women who have been grievously injured in Iraq and
    Afghanistan. They are in their twenties, many of them. They
    will eventually and quite quickly get into the VA system, which
    means that we are probably looking at 50 years of support, 50
    years of commitment. And at this juncture in time, everyone is
    standing up shoulder to shoulder, and we're going to do this.
        What are you doing--again, I don't want to deprive Senator
    Coats of his time. But you could think about this, and then
    I'll ask for a written response. What is in your budget that is
    going to assure these young men and women that 50 years from
    now, 40 years from now, they and their families are going to
    get the same kind of, not only support, but respect that
    they're getting today, which they justifiably assume? It's a
    big question, and I don't want to take away from the
    Senator's----
        Secretary Shinseki. Mr. Chairman, may I give about a 10-
    second response here?
        Senator Reed. Yes, sir.
        Secretary Shinseki. What I would say is, Senator, we are
    very much focused on that. And I would say that that was the
    President's charge to me when he asked me to take this job.
    One, make things better today for veterans, but transform the
    Department so that in the 21st century, down the road, veterans
    are going to continue to benefit from the programs, the
    processes, the disciplines you put in place today. And I'll
    provide a more complete written response.
        Senator Reed. And we'll get you a better question, and
    we'll ask for a complete response, and thank you.
        And thank you, Senator Coats.
        Senator Johnson. Senator Coats.

                          FORT WAYNE HEALTHCARE CENTER

        Senator Coats. Thank you, Mr. Chairman.
        Senator Reed, no problem there. That's a question for all
    of us to address and to ensure that we enable the Veterans
    Department to provide that kind of ongoing care that's going to
    be necessary.
        I say General Shinseki. I say that because I want to
    commend you for your time of service in uniform and the
    leadership that you provided. I thought it was exceptional, and
    I thank you for that. And I thank you for continuing now in a
    different uniform but still looking out for our soldiers and
    sailors and airmen and marines in the way that you have and the
    kind of leadership you're bringing to the VA. So thank you very
    much for that.
        I like to use these appropriations hearings to talk about
    the larger issues and the macro subjects. How do we continue to
    provide essential services from the Federal Government, given
    the budget constraints that we have? For me, national security
    and taking care of our veterans rises to a higher level than a
    lot of programs. And normally, I ask people, how can you do
    more with less? And of course, that applies to the VA also,
    but--bringing efficiencies.
        But it doesn't apply from the standpoint that it's on an
    equal par with a lot of other functions that perhaps could--in
    other departments that can be done better outside the Federal
    role. Clearly, this is a Federal role, and we owe our members
    of the service the very best that we can provide them. But
    having said that, the work that you're doing to bring the
    efficiencies and effectiveness to the organization and prepare
    for the future is important, and I commend you for doing all
    that.
        Now, if I could just turn to a parochial question for a
    minute--first of all, thank you for coming by my office to help
    discuss and work through this Fort Wayne situation with the
    veterans hospital there. This started way back in 2003. I
    haven't been in the Congress. I'm just sort of picking up the
    baton here from my predecessors.
        In 2009, the VA issued a letter, basically, and I quote,
    ``VA proposes to deliver quality comprehensive inpatient care
    by partnering with the local community hospitals, healthcare
    systems in Fort Wayne and South Bend, Indiana, and to
    construct, `a new primary and specialty care facility,' a
    healthcare center that would double the size of the existing
    clinic, adding many services not currently available.''
        Now, as you know, the situation is much different than
    that. We're looking at a mental healthcare facility that will
    be a 27,000 square foot annex, as opposed to a 220,000 square
    foot center for extensive outpatient services. You and I have
    discussed this. I'm just wondering for the record if you could
    give some sense of what has changed and why the decision was
    made to so dramatically alter what the commitment was back in
    2009.
        Secretary Shinseki. Let me call on Dr. Petzel, and then
    I'll close out.
        Dr. Petzel. Thank you, Mr. Secretary.
        Senator Coats, you described it accurately in terms of what
    has happened. There was a proposal for a healthcare center, an
    HCC, that was reevaluated, and based upon that reevaluation, it
    was decided that the better alternative would be to renovate
    some of the space that was in the Fort Wayne campus, to use
    some of the facilities in the community, and to build a new
    27,000 square foot mental health facility. That was based upon
    the evaluation of the demographics, where people went for care,
    how many veterans there were in the area.
        Rest assured that we are committed in Fort Wayne, as well
    as across the country, to providing the care that veterans in
    that community needed and need. That will be done with a robust
    ambulatory care center. That will be done by using some of the
    facilities that exist now and buying those, again, in the
    community that we need to. But our commitment is to provide the
    same level if not a better level of care to the residents that
    use the Fort Wayne facility now.
        Secretary Shinseki. Senator, just to close out, I think
    we're planning on this summer going to solicitation, and then
    early in 2012, February timeframe, spring timeframe, to have a
    lease award with delivery of an outpatient clinic of
    significant capability in the 2014 timeframe.

                            HOMELESS HOUSING PROGRAM

        Senator Coats. I thank you for that, and I want you to know
    I'm more than willing to work with you to help achieve the
    goals. There are budget constraints that have caused decisions
    to be made elsewhere. But I think what we want to make sure is
    that we give those veterans every full measure of service that
    they need, and to the extent we can work together to do that, I
    want to continue to do so.
        And then just real quickly, in my remaining time, the
    homeless housing program that's underway there--could you just
    give me a little bit of update in terms of where the VA stands
    with that project? I've heard from several who have submitted
    bids, and they haven't heard back. I'm just curious as to where
    we are in that review process and what the time table might be
    for that.
        Secretary Shinseki. I believe the folks who are interested
    in the bidding process are looking for the SSVF program,
    Supportive Services to Veterans' Families, and that is in the
    process now. The bids are being received. We will probably go
    to a decision this summer and announce prior to the start of
    the next fiscal year where the grants were assigned.
        We have put about $100 million on the table for what I call
    our partners, about 600 of them throughout the various
    communities, who are doing the front line work of engaging the
    homeless, including homeless veterans, and finding shelter,
    bringing them to our attention as we work on this program. So
    the bids are being received, and then we'll go through a
    scoring process sometime before the end of the summer.
        Senator Coats. OK. Thank you. My time has expired.
        Thanks, Mr. Chairman.
        Senator Johnson. Senator Landrieu.

                               MEDICAL FACILITIES

        Senator Landrieu. Thank you, Mr. Chairman.
        And, General Shinseki, welcome, and I'm sorry I couldn't be
    here earlier. I had several prior commitments. But I've
    reviewed your testimony, and I want to first thank you for your
    extraordinary service. And I know this is a real heartfelt
    passion of yours, to help our veterans--after your
    distinguished service on many battlefields to come back and
    help our veterans, to help the United States keep our
    commitment to honor their service, and--to our veterans and to
    their families.
        So I really appreciate the hard work that you do, and I
    thank you, particularly, for your focus on the rebuilding of
    the New Orleans hospital that was significantly damaged beyond
    repair in Katrina and the flooding that ensued and your
    continued commitment to work with a variety of partners in New
    Orleans and in Louisiana to rebuild that medical complex. And I
    think things are coming along pretty well there, and I'd like a
    comment in a minute.
        But the real question I want to ask you--because this is
    not coming along very well, and I need your insight. In
    addition to the hospital in New Orleans that's under
    construction, you and your agency committed to build two
    clinics, one in Lafayette, Louisiana, and one in Lake Charles.
    And in fact, this subcommittee, under the leadership of this
    chairman, allocated the funding to do so. And we were all quite
    encouraged with the--Gracie Specks, who is our new leader--
    regional leader in Alexandria.
        And just recently, Mr. Chairman, we received a letter that
    both of these clinics are going to now be delayed because of
    some errors that were made in the solicitation for bid.
        Could you please tell us how these errors were made, what
    your understanding is? And is there anything that you can do to
    get these two projects, which have the money, have been noted
    as a priority, back on track?
        Secretary Shinseki. Senator, you have my assurance that we
    are all hands on deck looking at both these projects. I'm as
    disappointed as you are with what happened here. On the one
    hand, we can take a big project like a new hospital in New
    Orleans and execute that with great precision, and then we just
    missed these two, Lake Charles and Lafayette. It got off to a
    bad contracting start and was discovered later, and now we are
    correcting that. But we are focused as I said, all of us
    focused, on this to get this as quickly executable as we can so
    that we keep our promise to the veterans in both of those
    parishes.
        Senator Landrieu. But so that I can answer the many
    questions that are coming in from constituents and, of course,
    organizations, the error was, in fact, on your side or on the
    veterans side. It wasn't on our side, was it?
        Secretary Shinseki. The error was made in our contracting
    process, and so----
        Senator Landrieu. Is there anything that this subcommittee
    can do or this Congress to give you any latitude to expedite or
    to move around this? Because the veterans have been, of course,
    waiting for a long time, and this is just--that's one question.
        The second is if we don't move around or find an expedited
    way, what is your timeframe? What does the new timeframe look
    like?
        Secretary Shinseki. I'll turn to Dr. Petzel for the
    timeframe. I would just say, Senator, we're doing everything we
    can to get this moving. And if assistance is required, I'll be
    certainly prepared to come to the subcommittee for that kind of
    help.
        This is a contracting issue right now. And so there's a
    process we have to go through. Let me call on Dr. Petzel.
        Dr. Petzel. Thank you, Mr. Secretary.
        Senator Landrieu, just a couple of points. One is that
    we're centralizing the solicitation of and the execution of
    this contract to Washington and our real property so we can be
    absolutely certain that, number one, it's done right, and,
    number two, that it's done as quickly as possible.
        The solicitation right now is expected to go out shortly,
    during 2012, and we hope that by this time in 2013 we'll have a
    lease award. And, of course, this is basically a year's delay
    in the process that you'd been told we were going to be able to
    follow previously. But we will do absolutely everything that we
    can here in Washington and out there to get this done as
    quickly as we can. If there's any possibility of shaving weeks
    or months off of it, we will take advantage of that.

                               DISABILITY APPEALS

        Senator Landrieu. OK. I really appreciate that commitment,
    and I will send that on. But I also want to just reiterate
    again if there's anything that you need this subcommittee or
    the Congress to do or change, given what was done, please let
    us know, because I think the chairman would be willing,
    understanding the details here, to make some adjustments if
    there is a necessity for that.
        And the final question--I'm sorry. I have 1\1/2\ minutes
    left. The other question I have--and I thank you very much for
    that, and I'll relay that to our folks at home. The other is
    have you all testified this morning about the lines and the
    wait time for disability appeals? Are those lines growing? Is
    the time expanding? Are we contracting either the days or
    months or years that people have to wait? Or how many veterans
    are actually in line?
        Do we have any way to measure that? Because I've been
    getting a few complaints from veterans at home about their
    appeals taking literally years to be processed.
        Secretary Shinseki. Secretary Hickey?
        Ms. Hickey. Senator Landrieu, thank you for your question.
    I will tell you that of the 1,032,000 claims that we did last
    year, on average, there's about 11.2 percent of them that we
    receive a notice of disagreement on. We resolve about half of
    those before they ever even make it into the appeals process,
    largely because a veteran brings another new piece of
    information and we're able to work that.
        But an important thing for us all to know is that we, right
    now, as part of our transformation plan, have a design team.
    That's our governance process that looks at how to improve
    processes, working specifically on the appeals management
    process. And we're testing it in Houston right now, literally
    today. We started it the first of this month. And if it proves
    successful, we have the opportunity to cut that time in half.
        Senator Landrieu. And what does your time show it is now
    for the half that you can't resolve before they go to appeal?
        Ms. Hickey. It's typically in a couple of years period of
    time, ma'am. Yes, ma'am.
        Senator Landrieu. And Mr. Chairman, I just think you have
    been wonderful, and I think this subcommittee has been very
    generous. And I think this administration has been trying to
    put more resources to this effort. But we have got to try to
    find a way to cut this down. I just think it's not right to ask
    our veterans to wait sometimes 3 and 4 years for a resolution
    of their case.
        But anyway, thank you, and I'm going to be focusing with
    you on this through this year.
        Thank you.
        Ms. Hickey. Yes, ma'am.
        Senator Johnson. Senator Blunt.

                            ST. LOUIS MEDICAL CENTER

        Senator Blunt. Thank you, Chairman.
        And I want to agree, particularly, with the last point that
    Senator Landrieu made about this waiting time. Whatever we can
    do about that should be done. I was pleased to see the
    President's budget request has an increase in this budget, as
    you and I talked about, Mr. Secretary, when you were kind
    enough to come by the office the other day.
        I've got three Missouri specific questions.
        One, Dr. Petzel, last year when you were here, we talked
    about--and on a couple of other occasions--the St. Louis
    Veterans Hospital, which was really going through some
    significant changes at the time. I wonder if you've got an
    update on that.
        Dr. Petzel. Thank you, Senator. We've made tremendous
    progress, I think, and I hope that you've had some contact and
    I know you have with the people there. We're very pleased with
    the leadership. I think that Ms. Nelson has really taken hold
    of the problems.
        Number one is that we're in the process of redoing this
    general processing unit. That should be, I think, opening up in
    the summer of 2013, perhaps earlier. There are also a series of
    other projects that are occurring to provide ease of access and
    improved care.
        The things that I'm most pleased with are what has gone on
    internally: The atmosphere of openness that Ms. Nelson has
    created; the fact that people feel free to be able to raise
    concerns, et cetera, and that those things will be listened to
    and dealt with; and then the improvement in the quality of
    care. The measures that we follow indicate that there's been
    tremendous progress in improving the general quality of care. I
    think now, when we look at patient satisfaction and employee
    satisfaction at St. Louis, it's been tremendously improved.
        Senator Blunt. And facility update--that continues?
        Dr. Petzel. Absolutely.

                          JEFFERSON BARRACKS CEMETERY

        Senator Blunt. OK. Thank you.
        On Jefferson Barracks Cemetery, my understanding is that
    within this decade, we'd run out of space there. Of course,
    that's one of our oldest military cemeteries anywhere in the
    country. It's been used for 200 years now. And I'd like to hear
    any thoughts you have on expansion, and then I'd like to keep
    updated on any discussions you're having with the county. I'm
    talking to the county executive, Mr. Dooley, about this, as
    well. I understand one of the options is the Sylvan Springs
    Park, all or part of that, as an addition to the cemetery. I
    think there's another park close that serves the community.
        The Jefferson Barracks Cemetery is just such an integral
    part of who we have always been as a Nation and how we've
    treated our veterans. Do you have any thoughts on what needs to
    happen there?
        Secretary Shinseki. We sure do. Let me call on Secretary
    Muro here to provide an update.
        Senator Blunt. Good.
        Mr. Muro. Thank you, Secretary.
        Thank you, Senator, for that question.
        Senator Blunt. Is your mike on?
        Mr. Muro. Yes, it is. I'll try and speak up some more so
    you can hear.
        We just completed construction and are in the final phase
    of the inspection of the expansion that's going to take us out
    to 2019, and we recently installed new crypts and a
    columbarium. Actually, the columbarium will take us out to
    2030. We are working with the Veterans Health Administration
    (VHA) to transfer additional land for another expansion of the
    cemetery, plus we are working with the county on that park to
    try to get that. We can keep you up to date on it.
        Senator Blunt. But you have some options in addition to
    parts of the county park property?
        Mr. Muro. Yes, we do. Adjacent to where our expansion is
    now, we have other parcels that VHA will be transferring to us
    in the future.
        Senator Blunt. And you see no problems with that happening?
        Mr. Muro. I don't. I think NCA and VHA have worked together
    on that transfer, so it shouldn't be a problem.
        Secretary Shinseki. Now, this land is part of the
    healthcare campus.
        Mr. Muro. Right.
        Secretary Shinseki. Maybe as much as 30 acres we are
    looking at.
        Senator Blunt. That would be a great solution to this, I
    would think, for a significant amount of time, if you've got
    that kind of space.
        Mr. Muro. Right.

                               OUTPATIENT CLINIC

        Senator Blunt. All right. Good. The other thing I wanted to
    discuss was our clinic in Mt. Vernon, Missouri. There's a
    discussion in the 10-year plan of community-based outpatient
    clinics of opening clinics in both Springfield and Joplin. But
    concern that the Mt. Vernon clinic, that's between the two,
    might be closed.
        It's one thing to close that clinic if these other two
    clinics are actually built. It would be a different matter, I
    think, if either one of them didn't happen. While Mt. Vernon is
    not a very big community, it's centrally located, and there are
    lots of veterans in our State, specifically in that part of the
    State.
        Can somebody give me an update on that? I'm not sure I'd
    said I was going to ask this. So, if you can, that would be
    good--if not, I'd be happy to have an update later.
        Secretary Shinseki. I'm not current on it. Let me call on
    Dr. Petzel.
        Senator Blunt. OK.
        Dr. Petzel. Actually, Senator, I'm not current on it,
    either. But we can easily find out what the plan is, and we'll
    get back to you post haste.
        Senator Blunt. That would be good if you did, and how those
    three projects would come together at some point would make a
    big difference. But that outpatient clinic in Mt. Vernon now
    serves lots of people, and I would hate to get halfway through
    a plan and find out that the other half of the plan wasn't
    going to occur.
        So if you can get back to me on how all three of those
    discussions are going and your confidence level on all of them,
    that would be helpful. And it's fine to respond to me at a
    later date.
        Secretary Shinseki. Certainly.
        Senator Blunt. Not very much later, but later than today.
        Secretary Shinseki. We'll do that.
        Senator Blunt. OK. Thank you.
        Senator Blunt. Thank you, Mr. Chairman. Thank you for the
    time.
        Senator Johnson. I have one more question.
        Mr. Secretary, the VA and DOD have agreed to work together
    on the development of a new iEHR system to be managed by a
    joint DOD-VA interagency program office. Three years ago, VA
    established the Project Management Accountability System (PMAS)
    to set accountability standards and to monitor the development
    of its projects.
        As you mentioned in your written testimony, this system has
    achieved at least $200 million in cost avoidance by either
    canceling or improving the management of 45 projects. With iEHR
    being run by the joint interagency program office and not the
    VA, how can we be assured that the PMAS accountability
    standards and project milestones will continue to be enforced?
        Secretary Shinseki. Mr. Chairman, thanks for that very,
    very important question. I'm going to call on Secretary Baker
    to describe the process that's underway here. But we are very
    much confident in our PMAS system. It's served us well, and we
    will ensure that this will be a perspective we bring to the
    discussions with DOD.
        Secretary Baker.
        Mr. Baker. Thank you, Senator. The DOD has agreed that we
    need to use the principles of PMAS to deliver the iEHR. And I
    really appreciate you noting our success in this area. As the
    Secretary said, we've delivered 89 percent of our milestones in
    2011. Most critically, that delivers new functionality for
    veterans, the new GI Bill system, delivering on the VBMS
    system, and many things in healthcare.
        And it's part of our approach to ensure that every IT $1
    that you appropriate to us is well spent for veterans. I can
    assure you that every $1 of VA funds spent on the iEHR will be
    managed under PMAS. We will certify those in our letters to
    you. And, as I said, DOD and VA have agreed that that's the way
    that we'll manage the iEHR.
        Now, there are some regulatory things relative to what DOD
    has to do as they manage their programs under DOD 5000 that
    causes a little bit of a wrestle in there. But we're working
    through those and attempting to make certain that we use the
    strong success of PMAS to help us ensure the success of the
    iEHR.

                         ADDITIONAL COMMITTEE QUESTIONS

        Senator Johnson. I would like to thank Secretary Shinseki
    and those accompanying him for appearing before this
    subcommittee today. We look forward to working with you this
    year.
        For the information of members, questions for the record
    should be submitted by the close of business on March 23.
        [The following questions were not asked at the hearing but
    were submitted to the Department for response subsequent to the
    hearing:]
                  Questions Submitted to Hon. Eric K. Shinseki
                   Questions Submitted by Senator Tim Johnson
                    claims backlog: timely processed claims
        Question. In fiscal year 2013, the VA is requesting $2.16 billion
    for VBA's administrative costs and claims processors. The subcommittee
    has consistently supported the Department in efforts to reduce not only
    the claims wait time, but also the claims backlog by providing all, and
    in some cases, more money than was requested. Yet the number of days a
    vet must wait to have a claim processed is still unacceptably high.
        I know that you have made this one of the VA's top priorities, but
    when can we expect the process to become more efficient? More
    importantly, when will vets in our home States start seeing more timely
    processed claims?
        Answer. VA shares the sense of urgency evident in your question and
    is doing all it can to expedite the claims process for our veterans. VA
    is committed to--and actively pursuing--comprehensive improvements to
    the processes and systems veterans use to access our benefits and
    services. The Veterans Benefits Administration (VBA) has developed a
    comprehensive transformation plan that we are currently implementing.
    The plan includes a series of integrated people, process, and
    technology initiatives designed to improve veterans' access to benefits
    and services, eliminate the claims backlog, and achieve our goal of
    processing all claims within 125 days with 98-percent accuracy in 2015.
        Before reviewing VA's progress in implementing the transformation
    plan, it is important to understand the complex factors that have
    contributed to the growth in the disability claims workload and its
    impact on the timeliness of claims processing. In August 2010, VA
    published its final regulation establishing new presumptions of service
    connection for three disabilities associated with agent orange
    exposure: Ischemic heart disease, Parkinson's disease, and hairy cell
    and other chronic B-cell leukemias. As a result of these new
    presumptions, VA devoted significant resources in fiscal year 2011 to
    processing approximately 231,000 claims received for these three
    disabilities. VA's 13 resource centers were dedicated exclusively to
    readjudicating over 90,000 previously denied claims for these three
    conditions. This readjudication is required by the order of the U.S.
    District Court for the Northern District of California in Nehmer v.
    U.S. Department of Veterans Affairs, 712 F. Supp. 1404, 1409 (N.D. Cal.
    1989).
        Additionally, over 50,000 claims received after the decision to
    establish the new presumptive conditions was announced, but before the
    effective date of the final regulation implementing the decision, were
    also subject to Nehmer review. As a result of these Nehmer reviews, VA
    has as of June 19 awarded more than $3.6 billion in retroactive
    benefits for the three new presumptive conditions to nearly 131,000
    veterans and their survivors.
        The complexity of the Nehmer claims processing significantly
    reduced decision output throughout fiscal year 2011. Although VBA is
    nearing completion of the Nehmer workload, a residual impact on claims
    processing timeliness continues into this fiscal year. While the focus
    on processing these complex claims slowed the processing of other
    veterans' claims, this decision was the right thing to do for Vietnam
    veterans and their survivors, who in many cases have waited years to
    receive the benefits they earned through their service and sacrifice.
        There are a number of other factors that significantly contribute
    to VA's dramatically increasing claims inventory. They include:
      --Growing Claims Volume.--Over the last 4 years, annual disability
            claims receipts, representing all generations of veterans,
            increased 48 percent, from 888,000 in 2008 to 1.3 million in
            2011.
        --VA anticipates receiving 1.2 million claims in 2012 and 1.25
                million claims in 2013.
      --Greater Claims Complexity.--Veterans now claim greater numbers of
            disabilities--and the nature of the disabilities (e.g., post-
            traumatic stress disorder, combat injuries, diabetes and its
            complications, and environmental diseases) is becoming
            increasingly more complex.
        --Last year, veterans who served in Iraq and Afghanistan identified
                an average of 8.5 disabilities per claim package.
        --Veterans of earlier eras identified far fewer disabilities per
                claim package (e.g., World War II veterans claimed 2.5
                disabilities and gulf war veterans claimed 4.3
                disabilities).
        Even with the unprecedented workload increases, VA has achieved a
    15-percent increase in output over the last 4 years, completing over 1
    million disability claims in each of the past 2 years. VA plans to
    process a record 1.4 million compensation claims in 2013, with
    increasing production levels to continue each year as VA aggressively
    works to transform the delivery of benefits and services.
        This year VBA is beginning national implementation of its new
    operating model and paperless and rules-based processing system, the
    Veterans Benefits Management System (VBMS). VBMS is a comprehensive
    solution that integrates a business transformation strategy with a
    paperless claims processing system resulting in higher quality, greater
    consistency, and faster claims decisions. VBMS will move VBA's
    internal, paper-based process to an automated system that integrates
    streamlined claims processes, rules-based processing, and Web-based
    technology. The new operating model and VBMS are being deployed using a
    phased approach that will have all regional offices operating under the
    new model and using VBMS by the end of 2013. We will continue to add
    and expand VBMS functionality throughout this process. The fiscal year
    2013 budget submission includes $128 million for VBMS.
        Earlier this year, VBA implemented three nationwide
    transformational initiatives that will result in meaningful
    improvements in the service we provide to our clients. They include:
      --Disability benefits questionnaires to change the way medical
            evidence is collected. Veterans now have the option of having
            their private physicians complete a standardized form that
            provides the medical information necessary to process their
            claims, avoiding the need for a VA examination. These
            questionnaires have the potential to reduce processing time and
            improve quality.
      --Simplified notification letters streamline and standardize the
            communication of claims decisions and increase decision output.
            Veterans receive one simplified notification letter in which
            the substance of the decision, including a summary of the
            evidence considered and the reason for the decision are
            rendered in a single document. This initiative also includes a
            new employee job-aid that uses rules-based programming to
            assist decisionmakers in assigning an accurate service-
            connected evaluation.
      --Dedicated teams of quality review specialists at each regional
            office. These teams are evaluating decision accuracy at both
            the regional office and individual employee levels, and perform
            in-process reviews to eliminate errors at the earliest possible
            stage in the claims process. The quality review teams are
            comprised of personnel trained by our national quality
            assurance Statistical Technical Accuracy Review (STAR) staff to
            assure local reviews are consistently conducted according to
            national STAR standards.
        These transformational initiatives are being deployed using a
    phased approach that will have all regional offices operating under the
    new model and using VBMS by the end of 2013. We will continue to add
    and expand VBMS functionality throughout this process.
        The new operating model includes the following components:
      --Intake Processing Center.--Enabling quick, accurate claims triage
            (getting the right claim, in the right lane, the first time).
      --Segmented Lanes.--Improves the speed, accuracy, and consistency of
            claims decisions by organizing claims processing work into
            distinct categories, or lanes, based on the amount of time it
            takes to process the claim.
      --Cross-Functional Teams.--Reducing rework time, increasing staffing
            flexibility, and better balancing workload by facilitating a
            case-management approach to completing claims.
        VA is making the investments necessary to transform VA to meet the
    needs of our veterans and their families. We would welcome the
    opportunity to provide a briefing on VBA's transformation progress at
    your convenience.
                      claims process: accuracy and quality
        Question. While VA should be very focused on speeding up the
    process, I do not believe it should neglect accuracy and quality of
    claims processed. How is the VA's transformation of the claims process
    taking into account quality, and how do you currently evaluate a claims
    processor's performance?
        Answer. VA agrees. As discussed in the response to question 1, the
    people, process, and technology initiatives included in VBA's
    transformation plan (including the new rules-based and paperless claims
    processing system, our new operating model, quality review teams,
    disability benefits questionnaires, and redesigned processes such as
    simplified notification letters) will help VA achieve our goals for
    timely and accurate benefits delivery. In addition, the national-level
    Challenge training provides a standardized curriculum for all new
    claims processors to help ensure high quality and productivity.
    Challenge training is an 8-week training program for new rating veteran
    services representatives that provides classroom instruction and
    supervised case work that allows for immediate feedback on their
    review. Veteran service representatives go through a 4-week training
    program that will provide each student with the skills necessary to
    complete the development phase of the claims process.
        VBA has negotiated national performance standards with our labor
    partners for all claims processors (i.e., veterans service
    representatives, rating veterans service representatives, and decision
    review officers). These standards include performance elements that
    measure quality of work, productivity, and customer service.
                      veterans benefits management system
        Question. Part of your strategy deals with modernizing the VA and
    developing a paperless claims processing IT system. As you mentioned in
    your testimony, the system, known as the Veterans Benefits Management
    System (VBMS) is currently being tested and is expected to begin
    deployment this year. Has the VA developed clear criteria to determine
    whether the pilot has met the goals of the project? If so, what do you
    anticipate the impact of the nation-wide rollout will be on improving
    the timeliness of the claims processed, and when do you believe we will
    see tangible results?
        Answer. The fiscal year 2013 budget includes $128 million to
    support VBMS development and deployment. VBA has developed an
    evaluation plan with clear criteria for each phased deployment of VBMS,
    which stated specific goals and metrics for determining success. The
    overarching goal for VBMS phase 1 (November 2010-May 2011) was the
    development and testing of software, and ensuring claims could be
    processed in an electronic environment. The criteria for success were
    the ability to enter claims into an electronic system and the ability
    to process the claims to completion.
        The goal for VBMS phase 2 (May 2011-November 2011) was to further
    strengthen the capability for VA to process veterans' claims in an
    electronic environment by expanding the functionality developed in
    phase 1 and increasing the number of sites, users, claims, and claim
    types. The criterion for success was the ability to process multiple
    claim types with increased system usage.
        In August 2011, VA identified several transformation initiatives
    focused on integrating people, process, and technology. These
    transformation initiatives are designed to enable the strategic vision
    for improved benefits delivery. VBMS is a component of the technology
    solution which will enable disability compensation claims to be
    completed within VA's goal of 125 days, at 98-percent accuracy by the
    end of 2015.
        National deployment of VBMS began in July 2012 and will follow a
    prescribed deployment schedule, which integrates with VA's overall
    business transformation efforts. During the period immediately
    following VBMS national deployment, VA expects minimal timeliness
    improvements as regional offices adjust to new processes and a new
    system. However, regional offices will see tangible results as they
    work through their existing inventory of paper-based claims and
    transition to an electronic environment complemented by improved
    business processes.
                                     ______

                    Question Submitted by Senator Jack Reed
              budget: support veterans with services and benefits
        Question. One of the realities we face as a result of more than 10
    years of fighting in Iraq and Afghanistan is that we now have some
    remarkable young men and women, many of them in their twenties, who
    have been grievously injured. They'll enter the VA system, and may need
    many decades of support. We have to be prepared to honor our commitment
    to care for these veterans.
        How does your budget assure these young men and women that many
    years from now they and their families will get the same kind of
    support, respect, and care that they're getting today? How are we
    planning and investing in programs now to make sure we don't fall short
    in the future?
        Answer. The VA is committed to providing veterans and other
    eligible beneficiaries timely access to high-quality health services.
    VA's healthcare mission covers the continuum of care providing
    inpatient and outpatient services, including pharmacy, prosthetics, and
    mental health; long-term care in both institutional and non-
    institutional settings; and other healthcare programs, such as CHAMPVA
    and readjustment counseling. To meet VA's focuses, this budget provides
    the resources required to fund the following initiatives: Ending
    homelessness among our Nation's veterans, creating new models of
    patient-centered care, expanding healthcare access, improving mental
    health, improving the quality of healthcare, and establishing world-
    class health informatics capability.
        VA's budget development process requires VA to submit its medical
    care budget for 2 years in each budget submission under the Veterans
    Health Care Budget Reform and Transparency Act of 2009 (Public Law 111-
    81). This allows the administration to review the initial advance
    appropriations request during the development of the next budget. As
    part of this process, VA produces budget estimates for more than 80
    percent of its medical program using a sophisticated actuarial model
    that estimates the healthcare services requirements for enrolled
    veterans. Each year VA updates the model estimates to incorporate VA's
    most recent data on healthcare utilization rates, actual program
    experience, and other factors, such as economic trends in unemployment
    and inflation. The model also incorporates data and estimates of the
    population of eligible and enrolled veterans by age, gender, and
    geographic location. By updating the model's inputs and revisiting the
    assumptions that underlie the actuarial projections each year, VA is
    able to produce budget and workload (i.e., enrollees) estimates that
    not only reflect the projected medical demands of currently enrolled
    veterans, but also incorporates the projected demands of veterans in
    future years.
                                     ______

                    Questions Submitted by Senator Mark Kirk
                             information technology
    iEHR Budget Request
        Question. Mr. Secretary, the VA agreed in March 2011, along with
    the Department of Defense, to develop an integrated Electronic Health
    Record (iEHR) for use by both Departments. Last year, the Department of
    Veterans Affairs was given $73.42 million to begin development on the
    integrated Electronic Health Record. In 2013, you are requesting $169
    million to continue the development of this joint program.
        Are you on track to spend all of last year's appropriation for this
    program, and if not, do you still need the $169 million requested this
    year?
        Answer. Yes, the Integrated Program Office is on plan to spend all
    of last year's appropriation. The President's 2013 budget request is
    critically important to ensuring continued progress toward developing
    the iEHR.
    Electronic Service Bus Contract
        Question. What are the financial and scheduling impacts of the
    recent set back regarding the electronic service bus's contract? When
    do you expect the contract will be re-awarded?
        Answer. The DOD/VA IPO has assessed the impact of the contract stop
    on the development of iEHR enterprise service bus and determined that
    impact will be minimal. With that said, the contract has now been re-
    awarded. Specific information regarding the financial implications of
    the cancellation of the initial contract award cannot be released at
    this time due to potential legal issues related to the termination of
    the contract.
               claims processing: meeting goals and accuracy rate
        Question. Mr. Secretary, claims processing is a recurring concern
    for this subcommittee, and in spite of additional personnel and funding
    committed to fixing this problem, the backlog continues to grow. This
    subcommittee is interested in the Department's roll out of the Veterans
    Benefits Management System, its expected impact on the current claims
    backlog, and the outcome of ongoing pilot programs. In your 2013
    request, you are asking for $2.2 billion for claims processing, which
    is $146 million above the 2012 enacted level.
        Would you provide us with an update as to how the Department is
    doing in meeting the goals of all claims receiving a quality decision,
    with a high accuracy rate of 98 percent, in no more than 125 days?
        Answer. As we replied to Chairman Johnson and Senator McConnell, VA
    shares the sense of urgency evident in your question and is doing all
    it can to expedite the claims process for our veterans. VA is committed
    to--and actively pursuing--comprehensive improvements to the processes
    and systems veterans use to access our benefits and services. VBA has
    developed a comprehensive transformation plan that includes a series of
    rigorously integrated people, process, and technology initiatives
    designed to improve veterans' access to benefits and services,
    eliminate the claims backlog, and achieve our goal of processing all
    claims within 125 days with 98-percent accuracy in 2015.
        Before reviewing VA's progress in implementing the transformation
    plan, it is important to understand the complex factors that have
    contributed to the growth in the disability claims workload and the
    impact of that growth on the timeliness of claims processing. In August
    2010, VA published its final regulation establishing new presumptions
    of service connection for three disabilities associated with agent
    orange exposure: Ischemic heart disease, Parkinson's disease, and hairy
    cell and other chronic B-cell leukemias. As a result of these new
    presumptions, VA devoted significant resources in fiscal year 2011 to
    processing approximately 231,000 claims received for these three
    disabilities. VA's 13 resource centers were dedicated exclusively to
    readjudicating over 90,000 previously denied claims for these three
    conditions. This readjudication is required by the order of the U.S.
    District Court for the Northern District of California in Nehmer v.
    U.S. Department of Veterans Affairs, 712 F. Supp. 1404, 1409 (N.D. Cal.
    1989).
        Additionally, over 50,000 claims received after the decision to
    establish the new presumptive conditions was announced, but before the
    effective date of the final regulation implementing the decision, were
    also subject to Nehmer review. As a result of these Nehmer reviews, VA
    has as of June 19 awarded more than $3.6 billion in retroactive
    benefits for the three new presumptive conditions to nearly 131,000
    veterans and their survivors. The complexity of the Nehmer claims
    processing significantly reduced decision output throughout fiscal year
    2011.
        Although VBA is nearing completion of the Nehmer workload, a
    residual impact on claims processing timeliness continues into this
    fiscal year. While the focus on processing these complex claims slowed
    the processing of other veterans' claims, this decision was the right
    thing to do for Vietnam veterans and their survivors, who in many cases
    have waited years to receive the benefits they earned through their
    service and sacrifice.
        There are a number of other factors that significantly contribute
    to VA's dramatically increasing claims inventory. They include:
      --Growing Claims Volume.--Over the last 4 years, annual disability
            claims receipts, representing all generations of veterans,
            increased 48 percent, from 888,000 in 2008 to 1.3 million in
            2011.
        --We anticipate receiving 1.2 million claims in 2012 and 1.25
                million claims in 2013.
      --Greater Claims Complexity.--Veterans now claim greater numbers of
            disabilities--and the nature of the disabilities (e.g., post-
            traumatic stress disorder, combat injuries, diabetes and its
            complications, and environmental diseases) is becoming
            increasingly more complex.
        --Last year, veterans who served in Iraq and Afghanistan identified
                an average of 8.5 disabilities per claim package.
        --Veterans of earlier eras identified far fewer disabilities per
                claim package (e.g., World War II veterans claimed 2.5
                disabilities and gulf war veterans claimed 4.3
                disabilities).
        Even with the unprecedented workload increases, VA has achieved a
    15-percent increase in output over the last 4 years, completing over 1
    million disability claims in each of the past 2 years. VA plans to
    process a record 1.4 million compensation claims in 2013, with
    increasing production levels to continue each year as VA aggressively
    works to transform the delivery of benefits and services.
        This year VBA is beginning national implementation of its new
    operating model and paperless and rules-based processing system, the
    Veterans Benefits Management System (VBMS). VBMS is a comprehensive
    solution that integrates a business transformation strategy with a
    paperless claims processing system resulting in higher quality, greater
    consistency, and faster claims decisions. VBMS will move VBA's
    internal, paper-based process to an automated system that integrates
    streamlined claims processes, rules-based processing, and Web-based
    technology. The new operating model and VBMS are being deployed using a
    phased approach that will have all regional offices operating under the
    new model and using VBMS by the end of 2013. We will continue to add
    and expand VBMS functionality throughout this process. The fiscal year
    2013 budget submission includes $128 million for VBMS.
        Earlier this year, VBA implemented three nationwide
    transformational initiatives that will also result in meaningful
    improvements in the service we provide to our clients. They include:
      --Disability benefits questionnaires to change the way medical
            evidence is collected. Veterans now have the option of having
            their private physicians complete a standardized form that
            provides the medical information necessary to process their
            claims, avoiding the need for a VA examination. These
            questionnaires have the potential to reduce processing time and
            improve quality.
      --Simplified notification letters streamline and standardize the
            communication of claims decisions and increase decision output.
            Veterans receive one simplified notification letter in which
            the substance of the decision, including a summary of the
            evidence considered and the reason for the decision are
            rendered in a single document. This initiative also includes a
            new employee job-aid that uses rules-based programming to
            assist decisionmakers in assigning an accurate service-
            connected evaluation.
      --Dedicated teams of quality review specialists at each regional
            office. These teams are evaluating decision accuracy at both
            the regional office and individual employee levels, and perform
            in-process reviews to eliminate errors at the earliest possible
            stage in the claims process. The quality review teams are
            comprised of personnel trained by our national quality
            assurance Statistical Technical Accuracy Review (STAR) staff to
            assure local reviews are consistently conducted according to
            national STAR standards.
        These transformational initiatives are being deployed using a
    phased approach that will have all regional offices operating under the
    new model and using VBMS by the end of 2013. We will continue to add
    and expand VBMS functionality throughout this process.
        The new operating model includes the following components:
      --Intake Processing Center.--Enabling quick, accurate claims triage
            (getting the right claim, in the right lane, the first time).
      --Segmented Lanes.--Improves the speed, accuracy, and consistency of
            claims decisions by organizing claims processing work into
            distinct categories, or lanes, based on the amount of time it
            takes to process the claim.
      --Cross-Functional Teams.--Reducing rework time, increasing staffing
            flexibility, and better balancing workload by facilitating a
            case-management approach to completing claims.
        VA is making the investments necessary to transform VA to meet the
    needs of our veterans and their families. We would welcome the
    opportunity to provide a briefing on VBA's transformation progress at
    your convenience.
                         non-recurring maintenance cuts
        Question. Mr. Secretary, within your construction request non-
    recurring maintenance (NRM) continues its downward trend. For 2013, you
    received $710.5 million in advance appropriations, $158.3 million less
    than your current estimate for 2012 and $1.3 billion less than the 2011
    actual expenditures. You request only $464.6 million in your advance
    appropriation for 2014.
        With such cuts to the non-recurring maintenance accounts, how do
    you expect to maintain your Department's facilities at their optimal
    level?
        Answer. The non-recurring maintenance (NRM) requirements are
    considered each year as part of the SCIP. This process integrates
    capital requirements that are funded from three separate appropriations
    (the major construction appropriation, minor construction
    appropriation, and NRM in the medical facilities appropriation). It
    produces a balanced capital investment strategy.
        VA does an engineering-based review of the condition of all of its
    buildings on a rotating basis every 3 years. This results in the
    development of VISN-level projects that are annually reviewed and
    ranked for the overall capital investment process. VA sets the funding
    level of the NRM program as part of the determination for the overall
    budget during the final deliberation process.
        Developed first in the fiscal year 2012 budget process, SCIP is a
    VA-wide planning tool to evaluate and prioritize capital infrastructure
    needs for the current budget cycle and for future years. SCIP
    quantifies the infrastructure gaps that must be addressed for VA to
    meet its long-term strategic capital targets. These targets include
    providing access to veterans, ensuring the safety and security of
    veterans and VA employees, and leveraging current physical resources to
    benefit veterans.
        VA has dedicated approximately 30 percent for NRM projects in the
    2013 capital budget request. The 2013 NRM request is $710 million. The
    $464.6 million for fiscal year 2014 represents the initial fiscal year
    2014 advance appropriation request, which will be updated, as
    appropriate, with the submission of the 2014 President's budget
    submission in February 2013. Within the spending targets established in
    the President's 2013 budget request, VA's allocation for capital
    projects, including NRM projects, is one that:
      --Emphasizes completing prior appropriated projects that provide
            healthcare, memorial, and benefits delivery services to
            veterans;
      --Impacts more VAMCs and corrects more seismic, safety, and security
            issues in less time through a focus on minor construction
            projects;
      --Completes a large number of grandfathered projects, attacking and
            reducing the capital backlog; and
      --Recognizes the importance of alternative strategies to traditional
            capital approaches to meet overall needs, such telemedicine,
            extended hours, mobile clinics, and fee basis contract care.
        VA will continue to update this plan in order to capture changes in
    the environment, including evolving veteran demographics, newly
    emerging medical technology, advances in modern healthcare delivery and
    construction technology, and increased use of non-capital means (when
    appropriate) in a continuous effort to better serve veterans, their
    families, and their survivors.
                              veterans jobs corps
    Timeline for Authorization Language
        Question. In his State of the Union address, the President
    announced the creation of a Veterans Jobs Corps program. Congress has
    not yet seen any suggested bill language from the White House or from
    your Department on this new program. The President estimates this
    program will cost $1 billion over 5 years.
        What is your timeline for working with Congress to create the
    legislation required to authorize this program?
        Answer. VA officials briefed staff from VA's authorization
    committees in March and April on the Veterans Job Corps initiative. In
    addition, legislation has been introduced by House and Senate
    congressional members that include provisions that align with
    components of the administration's proposal. Those bills can serve as a
    focus of discussion. VA looks forward to continuing to work with
    Congress on this proposal.
    Impact in Future Budgets
        Question. The administration has stated the funding for this new
    program will come from mandatory accounts, and therefore will not cut
    into the discretionary budget you have already put together for 2013.
    At a time when our discretionary spending is restrained, how you are
    working with the administration to ensure the creation of such a
    program will not impact other important accounts in future budgets?
        Answer. The Veterans Job Corps initiative, which requires
    legislative authorization and funding from Congress, would provide
    employment opportunities for veterans from all eras, but focus on post-
    9/11 veterans VA, in consultation with a Federal Steering Committee
    composed of policy officials representing implementing Federal
    agencies, will select projects for funding based on selected criteria.
    The projects will be implemented through contracts to businesses,
    cooperative agreements and grants to non-Federal entities, and by
    directly hiring a small number of veterans for positions. VA will serve
    as the lead for the Federal Steering Committee, which will be composed
    of policy officials representing implementing Federal agencies,
    including United States Department of Agriculture (USDA), the
    Department of Interior (DOI), National Oceanic and Atmospheric
    Administration (NOAA) at Department of Commerce, and the Department of
    Defense (DOD) Army Corps of Engineers (ACOE).
        In September the administration put forward the American Jobs Act
    together with a plan for deficit reduction that had a net savings of $4
    trillion. The administration is willing to work with Congress to draw
    on that list to find a mutually acceptable funding source for options.
    Although VA will lead the Federal Steering Committee, funding for the
    initiative will not come from VA's budget.
    Program Redundancy
        Question. Is the Department working to ensure this new program is
    not creating unnecessary redundancy, as you already have on-going
    programs which provide job training and job placement for veterans?
        Answer. As proposed, VA would coordinate the Veterans Job Corps
    (VJC) initiative through a Federal Steering Committee that would
    evaluate competing proposals from implementing Federal agencies. VA
    would be authorized to transfer funding to those agencies for approved
    projects.
        VA is working to ensure the VJC does not create any redundancies
    with other VA benefit programs. The VJC will complement VA's existing
    educational and training benefits and vocational rehabilitation and
    employment programs. VA plans to use it to strengthen and enhance
    current veterans benefits and services in a number of areas.
                               enhanced use lease
    Additional Authority
        Question. Mr. Secretary, I understand the Department is facing a
    situation where you may have excess capacity at many sites. Last year
    this subcommittee endorsed the administration's effort to dispose of
    unneeded Federal real estate. I believe the Department should use every
    avenue available to manage its real estate portfolio at an optimal
    level. Enhanced use leasing is one way for the Department to leverage
    your underutilized assets in support of the Department's mission.
        If you had additional enhanced use lease (EUL) authority would you
    be able to encourage private sector development on current excess
    properties?
        Answer. Yes. The Department's EUL authority expired on December 31,
    2011, and has not been reauthorized by Congress. There were projects
    that could not be awarded prior to the December 31, 2011, expiration
    date representing housing facilities, mixed-use developments, and
    campus realignments and other mission compatible developments. All of
    these potential EUL projects would repurpose as many as 210 buildings
    on more than 1,000 acres of land.
        VA remains committed to this important program and will continue to
    seek the authority to effectively leverage and manage its inventory of
    underutilized properties. The administration will work with the
    Congress to develop future legislative authorities to enable the
    Department to further repurpose its underutilized properties using
    similar third-party development public-private partnerships. VA
    anticipates submitting a revised proposal that will enhance benefits
    and services to veterans and their families in the near future.
    Better Manage Real Estate
        Question. What does the Department need from this subcommittee to
    better manage your real estate?
        Answer. On December 31, 2011, VA's EUL authority expired; however,
    VA remains committed to this important program and continues to seek
    the authority to effectively leverage and manage its inventory of
    underutilized properties.
        The expiration of this authority limits VA's ability to reduce
    underutilized/vacant inventory and also limits its ability to realize
    operational and maintenance cost savings that would result from the
    reduced inventory. As a direct result of the EUL program, VA has
    repurposed more than 6 million square feet of property. Reauthorization
    of this valuable tool is critical to continued success in managing our
    real property portfolio.
                                     ______

                 Questions Submitted by Senator Mitch McConnell
                               veteran population
        Question. The VA estimates that over a million current Active Duty
    military personnel will return as veterans over the next 5 years.
    Successfully accommodating this large influx of veterans into the VA
    system is of deep concern to my constituents and to me. What specific
    steps are the VA taking in this regard?
        Answer. Veteran healthcare delivery needs are assessed based on the
    VA Enrollee Health Care Projection Model (EHCPM) projections and on
    criteria such as existing and planned points of service (both VA and
    non-VA), access standards, market penetration, cost effectiveness,
    waiting times, and other unique factors (such as whether rural or
    minority veterans will be particularly benefited) using the VHA Health
    Care Planning Model (HCPM). The HCPM provides a standard 10-step study
    methodology to proactively evaluate the comprehensive healthcare needs
    of veterans in Veterans Integrated Service Network (VISN) markets, and
    develop strategies to meet those needs. The HCPM uses a live portal for
    systematic data analysis and data entry. The appropriate data sources
    are built into the portal to maximize the time VISNs spend in analysis
    versus data gathering. Healthcare delivery plans resulting from the
    assessment identify the mix of services to be provided, the sites and
    modalities for delivering services, and inform space requirements for
    capital planning.
        VA is also pursuing a goal to process disability claims in fewer
    than 125 days with 98-percent accuracy by the end of 2015. Efforts
    underway to accomplish these goals will position VA to proactively
    adapt to the projected influx in servicemembers and veterans disability
    benefit claims. VA is building and deploying new electronic systems and
    technological solutions that support decreased processing times while
    increasing quality, such as the Veterans Benefits Management System,
    eBenefits, and the Veterans Lifetime Electronic Record to decrease the
    time it takes to obtain claims-supporting documentation.
        Streamlining claims forms and application processes ensures
    returning servicemembers and veterans experience transparency in the
    claims process. When combined, these efforts expand VA's outreach
    opportunities and provide servicemembers with improved access to
    electronic claims records.
        VA is taking steps to eliminate the claims backlog by developing
    solutions that reduce processing times through programs such as the
    fully developed claims program, fast track, and disability benefits
    questionnaires. VA's pre-discharge programs, Benefits Delivery at
    Discharge and Quick Start, are also undergoing enhancements, while VA
    and DOD continue to refine the Integrated Disability Evaluation System.
    VA continues to pilot new programs focused on decreasing claims
    processing times with innovative ideas like cross-functional teams,
    which increase claim development speed and accuracy by creating a team
    structure that encourages internal knowledge-sharing. A core element of
    VA's preparation for the influx of claims is the new operating model
    and paperless and rules-based processing system, the Veterans Benefits
    Management System (VBMS). The fiscal year 2013 budget submission
    includes $128 million for VBMS.
                                 mental health
        Question. I have heard from Vietnam War-era veterans who are
    concerned that they are being neglected by post-traumatic stress
    disorder (PTSD) specialists and are instead being discharged to primary
    care specialists for their mental health needs. I would like
    reassurance from the VA that it will be accommodating the mental health
    needs of our pre-9/11 veterans as well as those who have recently
    returned from overseas.
        Answer. VA is committed to providing the highest quality mental
    healthcare to veterans of all eras of service and recognizes that it is
    never too late to receive evidence-based treatment for conditions such
    as PTSD.
        VA is in the midst of a transformation to the Patient Centered
    Medical Home model, known as the Patient Aligned Care Team (PACT). The
    team provides primary care services and, in addition to primary care
    providers, includes a broader group of professionals such as mental
    health clinicians. This interdisciplinary care team model links
    treatment planning and delivery of treatment for all of the veteran's
    problems, rather than separating PTSD care from the overall clinical
    understanding and care of the veteran.
        The Primary Care-Mental Health Integration (PCMHI) staff provides
    onsite mental health expertise to the rest of the team. This support
    includes consultative advice, patient follow-up, and direct clinical
    care. Many veterans receive all of their mental healthcare within the
    PACT by mental health professionals. Others are referred into specialty
    mental healthcare if they have need of more intensive or specialized
    care.
        Many veterans who have been effectively treated in specialty mental
    health clinics and whose symptoms have stabilized can be returned to
    the care of the PACT, with the continued support of the mental health
    experts in the PCMHI program.
        In addition to PACT, VA is pioneering the use of telemedicine to
    insure quality treatment resources reach rural and highly rural
    veterans. Many of these veterans are Vietnam-era veterans. More than
    half of the 49,000 patients currently using the telemedicine program
    are receiving mental health services for conditions such as PTSD and
    depression.
        The Uniform Mental Health Services Handbook (UMHSH) requires all
    facilities to provide evidence-based therapies for PTSD in outpatient
    settings and requires a PTSD Clinical Team (PCT) or PTSD specialists.
    However, specialty treatment for PTSD is not limited to the PCT. VA has
    trained over 4,400 clinicians in specialty PTSD treatments. Many of
    these clinicians provide treatment in general mental health clinics or
    in primary care, working in tandem with PCMHI clinics.
        VA continues outreach efforts to veterans of all deployments. For
    example, the Make the Connection campaign, www.maketheconnection.net,
    has a feature that allows veterans to personalize their experience on
    the site by specifying the era in which they served. For example, a
    visitor to the site can specify: ``male, Vietnam War, Army, exposed to
    combat.'' These filters will produce resources for needs most often
    associated with this cohort of veterans including videos of same era
    veterans speaking to common problems, conditions, and routes to care.
                                 medical staff
        Question. I have been informed that no new medical staff have been
    hired to meet the increasing demands on the VA medical clinic in
    Owensboro, Kentucky. Are there any plans to add additional staff or
    offer rotating, specialized medical services at the clinic? If not, why
    not?
        Answer. The Owensboro, Kentucky, community-based outpatient clinic
    (CBOC) is in compliance with staffing guidelines for a CBOC caring for
    2,676 veterans, when a third primary care physician came on board in
    early June 2012. With the new physician, current staffing includes
    three primary care providers, a nurse manager, a dietician, four
    registered nurses, four licensed practical nurses, three medical
    support assistants, a full-time social worker and part-time
    psychiatrist.
                        lexington, kentucky construction
        Question. Please provide me with an update on plans for the VA
    outpatient clinic and nursing home in Lexington, Kentucky.
        Answer. Description of Project.--The proposal is to construct a new
    healthcare facility on the Leestown campus to replace the 85-plus-year-
    old structures. This would provide the space, parking, and modern
    facilities to do the following:
      --Move and consolidate many specialty services to the new location on
            the Leestown campus, allowing the downtown campus, adjacent to
            the University of Kentucky Medical Center, to focus on the
            inpatient needs of its patient base. This decompression of the
            inpatient campus would allow VA to continue the conversion of
            multi-patient rooms to private rooms. This initiative is a
            proven strategy toward reducing infection rates and improving
            patient satisfaction scores by increasing patient privacy and
            reducing noise levels.
      --Replace the current community living center (CLC) with modern
            space, equipped with private, home-like rooms for veterans
            needing nursing home care.
      --Replace the current residential rehabilitation beds with modern
            space similar to CLC.
      --Stagger hiring of additional personnel to provide the services
            needed (estimated at 40 FTE per year growth for the next 10
            years).
      --Re-utilize the historic buildings on the campus for other, more
            appropriate uses, such as enhanced use lease arrangement or
            addressing veteran homelessness.
        Notification to Congress was made for the Lexington, Kentucky
    Clinical Realignment Project to use advanced planning funds in the
    fiscal year 2013 budget (see volume 4, page 6-3). The planning funds
    will first be used for development of a comprehensive master plan. VA
    awarded the architect/engineer contract for master planning efforts in
    June 2012. Funding for the project will be considered in a future
    budget.
                       louisville, kentucky construction
        Question. Please provide me with an updated timeline for the final
    site selection, ground breaking and construction phases for the new
    Robley Rex VA Medical Center in Louisville, Kentucky.
        Answer. The following information is current as of June 28, 2012.
    The public meeting for VA's programmatic environmental assessment (PEA)
    for the selection of a site for the new Louisville VAMC took place on
    April 18, in Louisville, Kentucky. The meeting was held at a middle
    school located within the immediate vicinity of the top-preferred site,
    Brownsboro Road. Approximately 200-250 people attended the meeting,
    including staff from congressional members' offices, and the local
    media. The attendees were briefed on National Environmental Policy Act
    (NEPA) findings for both preferred site options and had an opportunity
    to provide comments and questions. The public comment period ended
    April 29.
        VA completed its environmental due diligence by issuing the final
    programmatic environmental assessment (PEA) and finding of no
    significant impact (FONSI) for the preferred site, Brownsboro Road, on
    June 15, 2012. VA anticipates executing an offer to sell with the
    landowner by the end of June 2012. Closing is scheduled to take place
    in July/August 2012. The ground breaking and construction phases for
    Louisville are dependent on availability of future construction
    funding.
                                 claims backlog
        Question. I consistently hear from Kentucky veterans about the
    length of time it takes the VA to settle a claim. What steps are the VA
    taking to reduce the average waiting time for a claim to be settled and
    generally to reduce the backlog of claims? What, if any, additional
    legislative authority might the VA need to reduce its turnaround time?
        Answer. As we replied to Chairman Johnson and Senator Kirk, VA
    shares the sense of urgency evident in your question and is doing all
    it can to expedite the claims process for our veterans. VA is committed
    to--and actively pursuing--comprehensive improvements to the processes
    and systems veterans use to access our benefits and services. VBA has
    developed a comprehensive transformation plan that includes a series of
    rigorously integrated people, process, and technology initiatives
    designed to improve veterans' access to benefits and services,
    eliminate the claims backlog, and achieve our goal of processing all
    claims within 125 days with 98-percent accuracy in 2015.
        Before we discuss our progress in implementing the transformation
    plan, it is important to understand the complex factors that have
    contributed to the growth in the disability claims workload and the
    impact of that growth on the timeliness of claims processing. In August
    2010, VA published its final regulation establishing new presumptions
    of service connection for three disabilities associated with agent
    orange exposure: Ischemic heart disease, Parkinson's disease, and hairy
    cell and other chronic B-cell leukemias. As a result of these new
    presumptions, VA devoted significant resources in fiscal year 2011 to
    processing approximately 231,000 claims received for these three
    disabilities. VA's 13 resource centers were dedicated exclusively to
    readjudicating over 90,000 previously denied claims for these three
    conditions. This readjudication is required by the order of the U.S.
    District Court for the Northern District of California in Nehmer v.
    U.S. Department of Veterans Affairs, 712 F. Supp. 1404, 1409 (N.D. Cal.
    1989).
        Additionally, over 50,000 claims received after the decision to
    establish the new presumptive conditions was announced, but before the
    effective date of the final regulation implementing the decision, were
    also subject to Nehmer review. As a result of these Nehmer reviews, VA
    has as of June 19 awarded more than $3.6 billion in retroactive
    benefits for the three new presumptive conditions to nearly 131,000
    veterans and their survivors. The complexity of the Nehmer claims
    processing significantly reduced decision output throughout fiscal year
    2011.
        Although the VBA is nearing completion of the Nehmer workload, a
    residual impact on claims processing timeliness continues into this
    fiscal year. While the focus on processing these complex claims slowed
    the processing of other veterans' claims, this decision was the right
    thing to do for Vietnam veterans and their survivors, who in many cases
    have waited years to receive the benefits they earned through their
    service and sacrifice.
        There are a number of other factors that significantly contribute
    to VA's dramatically increasing claims inventory. They include:
      --Growing Claims Volume.--Over the last 4 years, annual disability
            claims receipts, representing all generations of veterans,
            increased 48 percent, from 888,000 in 2008 to 1.3 million in
            2011.
        --We anticipate receiving 1.2 million claims in 2012 and 1.25
                million claims in 2013.
      --Greater Claims Complexity.--Veterans now claim greater numbers of
            disabilities--and the nature of the disabilities (e.g., post-
            traumatic stress disorder, combat injuries, diabetes and its
            complications, and environmental diseases) is becoming
            increasingly more complex.
        --Last year, veterans who served in Iraq and Afghanistan identified
                an average of 8.5 disabilities per claim package.
        --Veterans of earlier eras identified far fewer disabilities per
                claim package (e.g., World War II veterans claimed 2.5
                disabilities and gulf war veterans claimed 4.3
                disabilities).
        Even with the unprecedented workload increases, VA has achieved a
    15-percent increase in output over the last 4 years, completing over 1
    million disability claims in each of the past 2 years. VA plans to
    process a record 1.4 million compensation claims in 2013, with
    increasing production levels to continue each year as VA aggressively
    works to transform the delivery of benefits and services.
        This year VBA is beginning national implementation of its new
    operating model and paperless and rules-based processing system, the
    Veterans Benefits Management System (VBMS). VBMS is a comprehensive
    solution that integrates a business transformation strategy with a
    paperless claims processing system resulting in higher quality, greater
    consistency, and faster claims decisions. VBMS will move VBA's
    internal, paper-based process to an automated system that integrates
    streamlined claims processes, rules-based processing, and Web-based
    technology. The new operating model and VBMS are being deployed using a
    phased approach that will have all regional offices operating under the
    new model and using VBMS by the end of 2013. We will continue to add
    and expand VBMS functionality throughout this process. The fiscal year
    2013 budget submission includes $128 million for VBMS.
        Earlier this year, VBA implemented three nationwide
    transformational initiatives that will also result in meaningful
    improvements in the service we provide to our clients. They include:
      --Disability benefits questionnaires to change the way medical
            evidence is collected. Veterans now have the option of having
            their private physicians complete a standardized form that
            provides the medical information necessary to process their
            claims, avoiding the need for a VA examination. These
            questionnaires have the potential to reduce processing time and
            improve quality.
      --Simplified notification letters streamline and standardize the
            communication of claims decisions and increase decision output.
            Veterans receive one simplified notification letter in which
            the substance of the decision, including a summary of the
            evidence considered and the reason for the decision are
            rendered in a single document. This initiative also includes a
            new employee job-aid that uses rules-based programming to
            assist decisionmakers in assigning an accurate service-
            connected evaluation.
      --Dedicated teams of quality review specialists at each regional
            office. These teams are evaluating decision accuracy at both
            the regional office and individual employee levels, and perform
            in-process reviews to eliminate errors at the earliest possible
            stage in the claims process. The quality review teams are
            comprised of personnel trained by our national quality
            assurance Statistical Technical Accuracy Review (STAR) staff to
            assure local reviews are consistently conducted according to
            national STAR standards.
        These transformational initiatives are being deployed using a
    phased approach that will have all regional offices operating under the
    new model and using VBMS by the end of 2013. We will continue to add
    and expand VBMS functionality throughout this process.
        The new operating model includes the following components:
      --Intake Processing Center.--Enabling quick, accurate claims triage
            (getting the right claim, in the right lane, the first time).
      --Segmented Lanes.--Improves the speed, accuracy, and consistency of
            claims decisions by organizing claims processing work into
            distinct categories, or lanes, based on the amount of time it
            takes to process the claim.
      --Cross-Functional Teams.--Reducing rework time, increasing staffing
            flexibility, and better balancing workload by facilitating a
            case-management approach to completing claims.
        VA is making the investments necessary to transform VA to meet the
    needs of our veterans and their families. We would welcome the
    opportunity to provide a briefing on VBA's transformation progress at
    your convenience.
                       dependents indemnity compensation
        Question. As I understand it, VA Dependents Indemnity Compensation
    (DIC) claims had previously been decided at the local and State level,
    but are now, in the case of Kentucky, decided in Milwaukee, Wisconsin.
    This has reportedly resulted in much longer wait times for veterans'
    spouses and dependents to receive their claims. What caused the initial
    decision to relocate that DIC claims processing office and what steps
    are the VA taking to reduce the time it takes to make final DIC claims
    decisions?
        Answer. In previous studies VA identified that consolidation of
    field structure can allow VBA to assign the most experienced and
    productive adjudication officers and directors to consolidated offices;
    facilitate increased specialization and as-needed expert consultation
    in deciding complex cases; improve the completeness of claims
    development, the accuracy and consistency of rating decisions, and the
    clarity of decision explanations; improve overall adjudicative quality
    by increasing the pool of experience and expertise in critical
    technical areas; and facilitate consistency in decisionmaking.
        In January 2002, VBA consolidated pension maintenance work at three
    regional offices--St. Paul, Minnesota; Philadelphia, Pennsylvania; and
    Milwaukee, Wisconsin. In fiscal year 2004, the pension maintenance
    centers completed over 200,000 pension maintenance actions. In addition
    to consolidating pension maintenance, VBA also consolidated in-service
    dependency and indemnity compensation claims at the Philadelphia
    regional office. These claims are filed by survivors of servicemembers
    who die while in military service. VBA consolidated these claims as
    part of its efforts to provide expedited service to these survivors,
    including servicemembers who died in Operations Enduring Freedom and
    Iraqi Freedom.
        VBA considers the processing of survivor claims a high priority.
    The objective of the DIC claims consolidation process is to improve
    accuracy, timeliness, and administration of these benefits.
        In 2011, processing of DIC claims was impacted by the shift in
    overall VA resources needed to process the approximately 231,000 agent
    orange presumptive claims affected by the Nehmer court decision. This
    readjudication affected claims processing timeliness in all areas.
        In an effort to increase the timeliness with which VBA processes
    these DIC claims VBA has initiated a targeted review of DIC cases
    pending nationwide. Field offices are conducting a concentrated review
    of DIC cases to identify and process cases ready for decision.
        VA is also reviewing DIC procedures to maximize operational
    efficiencies and analyzing performance data to identify areas needing
    improvement. Additionally, VA is exploring transformational changes
    that will reduce development and decision time.
                               veterans outreach
        Question. Constituents have communicated to me that the VA has
    difficulty locating and communicating with veterans who do not have
    access to computers and the Internet. What efforts has the VA
    undertaken to reach this group of veterans? Is there legislative
    authority that could be provided to the VA to improve its performance
    in this respect?
        Answer. VBA uses a variety of methods to reach out to veterans and
    beneficiaries including face-to-face interviews, outreach events,
    telephone contact (via the National Call Centers), printed materials,
    stand-downs, National Veterans Service Organization conferences, social
    media, and Web services. Outreach activities are planned and designed
    to ensure information is provided to the right beneficiary at the right
    time using the right delivery method.
        VA has maximized the use of mass mailings to reach veterans on
    significant changes in legislation. Examples of these include additions
    of new presumption conditions for former prisoners of war and agent
    orange presumptions for Vietnam veterans. VA is currently in the
    planning stages of determining the feasibility of a direct mailing to a
    considerable population of veterans and survivors who may be eligible
    for Aid and Attendance or Housebound benefits.
        VA ROs are encouraged to collaborate with VA medical centers,
    community-based outpatient clinics, vet centers, other Federal
    partners, and community and local organizations that can facilitate the
    distribution of information on benefits and services.
        VA also partners with Veterans Service Organizations and State and
    county Department of Veterans Affairs offices to assist with outreach
    efforts. In addition, VA makes a concentrated effort to partner with
    faith-based organizations in local communities to reach veterans by
    conducting panels, seminars, and workshops.
        The National Cemetery Administration (NCA) uses a multi-tiered
    approach to communicate with veterans and their families. Through the
    annual surveys of next of kin, NCA knows there is a preference for
    print media, as opposed to electronic or social media, to convey
    information regarding its benefits. Therefore, NCA has an active
    outreach program as well as a partnership with funeral directors who
    act as a liaison with families making burial decisions.
        NCA actively participates in both national and local outreach
    activities. NCA representatives participate in Veteran Service
    Organization, professional, and other stakeholder conventions and
    conferences at the national level, including American Legion, VFW, DAV,
    AARP, and the National Funeral Directors Association (NFDA). Memorial
    Service Network representatives and national cemetery staff members
    participate in local outreach events. In 2011, NCA conducted 3,178
    local and national outreach events and reached approximately 450,200
    people.
        To support the partnership with funeral directors, the Under
    Secretary for Memorial Affairs has participated in an NFDA Webinar and
    has spoken at the organization's annual conference. NCA is actively
    developing a funeral director kit that supports NCA's strategic plan to
    educate and empower veterans and their families through outreach and
    advocacy. Funeral director kits will use pre-existing content as well
    as newly developed videos to increase awareness of and access to
    information about VA national cemeteries and NCA's burial benefits and
    services. These kits will complement the publications (brochures, fact
    sheets, newsletters, flyers, local news articles, and television news
    reports) that NCA currently produces or supports.
        VHA uses multiple mechanisms to reach out to veterans. The
    following are examples of those mechanisms:
      --Interagency Health Affairs is reaching out to veterans working in
            military-heavy career paths through partnerships with their
            employers. At recent national conferences for border security,
            law enforcement executives and fire employees, VA educated
            employers and veterans on VA benefits.
      --VA is partnering with Federal and local agencies to educate
            veterans, their families, and communities on VA benefits;
            including the Department of Health and Human Services, the
            Department of Housing and Urban Development, and the Department
            of Agriculture.
      --VA partners with the Yellow Ribbon Reintegration Program (YRRP) a
            DOD-wide effort to support National Guard and Reserve
            servicemembers and their families with events featuring
            information on benefits and referrals throughout the entire
            deployment cycle (before, during, and after deployments).
      --VA reaches veterans at post-deployment health reassessment (PDHRA)
            events, where staff may conduct briefings, staff table top
            information displays, enroll veterans in the VA healthcare
            system and arrange follow-up appointments at VA medical centers
            and vet centers. The PDHRA is a healthcare screening for all
            National Guard and Reserve servicemembers returning from
            deployment.
      --VA's participation in Individual Ready Reserve (IRR) Musters to
            inform IRR reservists of their enhanced VA health and dental
            benefits and to sign them up for VA healthcare. VA typically
            mails an application for VA healthcare in advance to those
            reservists who are not enrolled in VA healthcare. VA works
            jointly with DOD at these IRR Musters, held year-round
            throughout the United States, to reach this population.
                                    pharmacy
        Question. Constituents have informed me that many VA pharmacies are
    short on medical supplies, particularly supplies that assist veterans
    who are paraplegic or quadriplegic. What can be done to improve the
    stocking of VA pharmacies to minimize reliance on shipping
    complications? What can be done to communicate to veterans about when
    these supplies arrive? Is there legislative authority that could be
    provided to the VA to improve its performance in this respect?
        Answer. VA, like its private sector counterparts, is affected by
    national shortages of pharmaceuticals. This is a national, and in some
    cases, a global problem that is not limited to VA. VA staff members
    utilize all the tools at their disposal to mitigate the impact these
    shortages can have on veterans' drug therapy. For example, in a few
    cases, VA has had to temporarily reduce the quantities of drugs it
    supplies for individual prescriptions from 90-day supplies to 30-day
    supplies until adequate supplies are once again available. In extreme
    cases of national or global shortages, VA has had to change from using
    one drug to using another which is not in short supply.
        VHA is also aware of instances where it could not provide some
    medical/surgical supply items in a timely manner due to a lapse in the
    Federal Government's Federal supply schedule (FSS) contract. In such
    instances, the shortages of supplies are not believed to be
    significantly impacted by delays in shipping completed orders. It is
    believed to be due primarily to delays in acquiring the products via
    alternate sources of supply when they are no longer on the FSS, which
    is a simplified, expedited acquisition process. VA takes all reasonable
    steps to ensure that follow-on FSS contracts are awarded in a timely
    manner. When product delivery to a patient is delayed and VA records
    suggest a patient may run out, it is usual practice to contact the
    patient and work out a substitute product or an emergency delivery.
                               medical equipment
        Question. I am informed by constituents that there is, apparently,
    a discrepancy as to quality of certain medical equipment that is
    provided to veterans. I am told this is particularly acute with respect
    to motorized wheelchairs depending on whether a patient receives a
    wheelchair through a clinic versus a spinal cord medical center. What
    accounts for this reported discrepancy? What can be done to fix it? Is
    there legislative authority that could be provided to the VA to improve
    its performance in this respect?
        Answer. Any discrepancies that are perceived to exist with regard
    to wheelchairs prescribed by a clinic (e.g., physical medicine and
    rehabilitation) versus a spinal cord injury (SCI) center are likely the
    result of the severity of disability and medical needs of the veteran;
    not due to different standards of quality of medical equipment across
    facilities. Patients with SCI typically require wheelchairs with more
    advanced options (e.g., motorized, tilt in space, power recline,
    advanced seating systems) than what may be medically indicated for a
    non-SCI patient. Individuals will see certain wheelchairs that are
    uniquely equipped for veterans with SCI or other severe disabilities,
    but are not medically indicated for other patients.
        Medical devices, assistive technologies, and/or adaptive equipment
    are provided by VA throughout the continuum of care, ranging from
    specialized regional rehabilitation centers (e.g., SCI, polytrauma, and
    blind rehabilitation), to comprehensive outpatient clinics at major
    hospitals, and community-based outpatient clinics. In all clinical
    settings, each veteran receives a comprehensive clinical evaluation and
    individualized plan of care. Specific recommendations for medical
    equipment, when medically indicated, are based upon each veteran's
    individual needs and prescribed care plan. The veteran's clinical team
    recommends and orders the appropriate product, and provides the
    necessary counseling and training to the patient.
        VA continually strives to set the professional standard for
    excellence to ensure that veterans have access to high-quality power
    wheelchairs that meet or exceed industry standards. VA national
    contracts for power wheelchairs and scooters require that all products
    be objectively tested and compliant with Rehabilitation and Engineering
    Society of North America standards to ensure that devices are reliable
    with respect to safety, durability, design, and performance. Over 400
    VA clinical providers also completed a 16-hour online course on
    ``Fundamentals of Wheelchair Seating and Mobility'' recently
    coordinated by the University of Pittsburgh in collaboration with
    Paralyzed Veterans of America.
                             mental health vacancy
        Question. Constituents have informed me that several important
    mental health positions at the VA hospital in Lexington, Kentucky,
    remain unfilled. With many veterans suffering from post-traumatic
    stress disorder (PTSD) and traumatic brain injuries (TBI), mental
    health treatment through the VA is of great importance to our veterans
    and of deep concern to me. Why have these positions remained unfilled
    and when do you expect them to be filled?
        Answer. On May 11, 2012, Lexington VA Medical Center (VAMC) has 12
    mental health (MH) vacancies. These positions include both social
    workers and psychologists. Eleven of the positions are in some phase of
    active recruitment. Of these, three positions are pending selection.
    The remaining two positions have been posted. One position was posted
    on May 18, 2012, and closed May 29, 2012. The position was filled on
    June 29, 2012. These positions were modified to meet the needs of our
    veterans. New position descriptions and advertisements are being
    developed. Additionally, Lexington VAMC will receive funding to hire an
    additional 15 MH clinicians and 4 MH support staff. Preparatory work is
    being accomplished to ensure immediate recruitment of these positions.
    Mental health and social work leadership are working together to review
    existing and planned resources and matching those to meet the needs of
    our veterans.
                veterans integrated service network allocations
        Question. Veterans in central Kentucky have conveyed to me their
    concerns that VA facilities in Lexington, Kentucky, are apparently
    often targeted for funding cuts over regions in other States that are
    part of the VA's Mid South Healthcare Network (VISN 9). What is being
    done to ensure that any VISN 9 budgetary constraints do not
    disproportionately affect facilities in one region over another? What
    steps is the VA taking to ensure that Lexington, Kentucky's VA
    facilities receive the proper attention and investment they deserve?
        Answer. Since fiscal year 2009, VISN 9 has used the Veterans
    Equitable Resource Allocation (VERA) model as a budget methodology to
    distribute funding to VISN 9 medical centers. This model identifies the
    correct funding level for a facility. The Louisville VAMC has been
    fully funded at that VERA distribution but the Lexington VAMC has
    received significantly more than its allocated amount in order to
    continue its operations. Additional funding is required because
    Lexington's operational costs have increased over the past several
    years at a rate above their growth in unique patients. The VERA model
    ensures that Lexington VAMC receives the proper attention and
    investment they deserve. Resources are allocated equitably to the
    networks and spending is focused on the highest priority veterans.
    Allocations are also adjusted for geographic differences in labor
    costs.

                              SUBCOMMITTEE RECESS

        Senator Johnson. This hearing is recessed.
        [Whereupon, at 11:24 a.m., Thursday, March 15, the
    subcommittee was recessed, to reconvene subject to the call of
    the Chair.]

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

                                  ----------

                            TUESDAY, MARCH 27, 2012

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

                             DEPARTMENT OF DEFENSE

                       Office of the Secretary of Defense

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

                    OPENING STATEMENT OF SENATOR TIM JOHNSON

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

                    SUMMARY STATEMENT OF HON. ROBERT F. HALE

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

                               PREPARED STATEMENT

        In conclusion, Mr. Chairman, we believe that our overall
    budget request, including military construction and family
    housing, is prudent and balances the needs of the armed forces
    with the Nation's economic situation. We request your support
    for our proposals.
        That concludes my statement. Dr. Robyn will have an opening
    statement. Dr. Lavoy will not. But then we will all three be
    available to answer your questions.
        [The statement follows:]
                   Prepared Statement of Hon. Robert F. Hale
        Mr. Chairman, members of the subcommittee, thank you for the
    opportunity to discuss the Military Construction and Family Housing
    portion of the fiscal year 2013 budget for the Department of Defense.
        As always, your support is essential if America's all-volunteer
    force is to have the infrastructure and facilities needed to ensure our
    national security and to carry out its missions around the world.
        To put the Military Construction and Family Housing requests into
    context, I will begin with a brief summary of the President's budget
    for the entire Department--with a focus on the portions of the Defense
    budget that most affect Military Construction and Family Housing. Then
    I will highlight a few key financial issues related to facilities.
            base budget and overseas contingency operations requests
        Mr. Chairman, the Department's request for fiscal year 2013 seeks
    $525.4 billion in discretionary budget authority. Adjusted for
    inflation, that is a reduction of 2.5 percent, the third consecutive
    year of real decline in the Defense budget. In the years beyond fiscal
    year 2013, the budget will grow modestly, enough to keep up with
    inflation and in some years a bit more.
        In addition, for Overseas Contingency Operations, we are asking for
    $88.5 billion in fiscal 2013, a reduction of $26.6 billion below the
    fiscal enacted amount of $115.1 billion in fiscal year 2012. This
    proposed budget reflects the withdrawal of combat troops from Iraq last
    December, as well as savings due to operational progress in Afghanistan
    and the beginning of the transition to Afghan responsibility for their
    security.
        Our overall budget is consistent with the provisions of title I of
    the Budget Control Act of 2011. However, our request does not assume
    the sequestration specified in title III. If enacted, the President's
    budget would provide a basis for halting sequestration, while ensuring
    the maintenance of a strong national defense.
        To reach the base funding requested in this budget, and to be
    consistent with the Budget Control Act of 2011, we reduced defense
    funding for fiscal year 2013-2017 by a total of $259 billion compared
    to last year's plan. Our budget reductions were shaped by a new
    strategy for defense and by three key principles related to that
    strategy:
      --More disciplined use of resources;
      --Reductions in forces and investment consistent with the strategy;
            and
      --Support for the All-Volunteer Force but also a review of military
            compensation.
        We achieved $60 billion in savings--about one-quarter of the total
    required reduction--through more disciplined use of Defense resources.
    Our proposals include reducing expenses in the Office of the Secretary
    of Defense and the Defense Agencies, continued efforts to cut back on
    IT expenses, and improved buying practices. Of particular interest to
    this subcommittee, we rephased Military Construction projects in view
    of planned force structure cuts.
        Our new national security strategy provides additional
    opportunities for savings through force structure reductions. By the
    end of fiscal year 2017, the Army will eliminate a minimum of eight
    brigade combat teams, the marines will disestablish six battalions and
    four tactical air squadrons, the Air Force will eliminate seven
    tactical air squadrons and a number of mobility aircraft, and the Navy
    will retire nine ships.
        In short, we are planning for a force that is smaller and leaner,
    with ground forces that are no longer sized for large, prolonged
    stability operations. We are reducing Active Duty end strength by
    102,400 between the end of fiscal year 2012 and the end of fiscal year
    2017. These reductions mostly affect ground forces. The new 5-year
    budget plan calls for an end strength reduction of about 72,000 Army
    soldiers and about 20,000 marines by fiscal year 2017. This will result
    in an Army of 490,000 soldiers and a Marine Corps of 182,100 marines.
    Reductions in the Navy and Air Force will be substantially smaller. By
    fiscal year 2017, we will also reduce end strength in the Reserve
    components by 21,500, resulting in a total Reserve force of 825,600,
    with Navy Reserve and Air Force National Guard components experiencing
    the greatest Reserve force reductions.
        These reductions in force structure require that we consolidate our
    infrastructure. We are, therefore, asking Congress to authorize two new
    rounds of the Base Realignment and Closure (BRAC) program, one in
    fiscal year 2013 and the other in fiscal year 2015.
        The Department's shift to a smaller, leaner force increases the
    need to ensure that our forces are ready and agile. That puts an
    emphasis on Special Operations forces, which are increasing in size. We
    will also maintain the current size of our bomber and carrier forces,
    which can essentially self-deploy. Readiness concerns led us to
    increase our Operation and Maintenance budget, which will increase by 6
    percent in our request even as our overall budget falls by one percent.
        Another goal is to rebalance our forces towards the Asia-Pacific
    and Middle East regions. Of particular interest to this subcommittee,
    we have made a commitment to enhance U.S. military presence in
    Australia on a rotational basis and are discussing options to improve
    security cooperation with the Philippines. We will also forward deploy
    a number of littoral combat ships in Singapore and three patrol craft
    in Bahrain. Since we do not expect to fight alone, our fiscal year 2013
    budget continues to invest in strong alliances.
        We must plan for other investments in high-priority initiatives.
    That does not mean that we will spend as much as we planned last year,
    but investments will be substantial even in these difficult times.
    Specifically, we will invest substantially in our Special Operations
    forces, unmanned aerial systems, and cybersecurity.
        At the same time, we are making judicious reductions in key weapons
    where those cuts are consistent with our new strategy and good
    management. Compared with last year's plans, we are reducing funding by
    $15.1 billion over the next 5 years for the Joint Strike Fighter, and
    we are cutting shipbuilding by $13.1 billion with an emphasis on
    cutbacks in support ships. We will terminate six weapons programs
    including the Global Hawk Block 30 program--a program that is no longer
    cost-effective as a replacement for the U-2 aircraft. Instead we will
    extend the life of U-2 planes.
        Turning to the All-Volunteer Force (AVF), we will continue to
    support many programs--family support, healthcare, and others--that
    nurture the AVF. At the same time, we cannot ignore the growth in
    military pay and benefits--up almost 90 percent since 2001 (about 30
    percent more than inflation) while net end strength grew only 3
    percent.
        Obviously, we need a military compensation system that is
    commensurate with the stress in military life. That means we cannot
    simply copy the civilian system. We have to be sure that we have a
    system that allows us to attract and retain the people we need. And we
    are committed to ensuring that no one's pay is cut.
        However, we found it necessary to slow growth in pay and benefits
    to avoid overly large cuts in force structure and modernization. We are
    proposing changes that will save about $30 billion over the Future
    Years Defense Plan (FYDP) or slightly more than 10 percent of our $259
    billion savings target.
        Our budget for fiscal year 2013 includes a pay raise for the
    military that is consistent with the Employment Cost Index (ECI). We
    will propose a raise in 2014 that is consistent with the ECI but, in
    later years, we will propose raises that are lower in order to control
    personnel costs. Restricting changes to future years will provide
    servicemembers and their families with time to plan. Adjustments to pay
    raises will lead to savings of $16.5 billion over the FYDP.
        For military healthcare, we are proposing increases in TRICARE
    Prime enrollment fees, using a tiered approach with higher fees for
    higher ranking retirees earning greater retired pay and lower increases
    for more-junior retirees earning lower retired pay. That's for Prime,
    the HMO version of TRICARE. For TRICARE Standard/Extra, which are the
    fee-for-service options, we will ask Congress to enact a new enrollment
    fee and higher deductibles. We will also ask for a new enrollment fee
    in the TRICARE for Life program--for retirees 65 and over--again using
    a tiered approach. And we will continue to increase pharmacy co-pays,
    aimed at encouraging people to order by mail and to use generic-brand
    prescriptions. Medically retired members, their families, and survivors
    of members deceased while on Active Duty would be exempt from these
    benefit adjustments.
        We are also asking Congress to set up a Military Retirement
    Modernization Commission that will have the time and staff to look at
    this complicated area of military compensation and to make
    recommendations. We envision a process much like those followed by past
    BRAC commissions. The administration believes in full grandfathering to
    protect the benefits for current retirees and those serving in the
    military at the time of enactment.
                    military construction and family housing
        The Military Construction and Family Housing portion of this budget
    supports the various objectives I just noted. For fiscal year 2013, we
    are asking for $11.2 billion for Military Construction and Family
    Housing.
        Of the $11.2 billion requested, $9.1 billion is for Military
    Construction. This request will provide operational and training
    facilities and supporting infrastructure. It also continues to
    recapitalize aging facilities--beginning with those with the greatest
    needs--and to modernize DOD facilities to support the U.S. military and
    their families, including dependent schools, dorms and barracks, and
    medical facilities.
        The fiscal year 2013 budget includes $0.5 billion for BRAC-related
    environmental clean-up and caretaker costs and $1.7 billion for
    construction, operation, and maintenance of Government-owned family
    housing worldwide. This investment will help to provide and maintain
    quality, affordable housing for U.S. military personnel and their
    families stationed in locations lacking adequate rental housing.
                                selected issues
        I would like to complete my testimony by saying a few words from
    the Comptroller's standpoint about several specific Military
    Construction issues.
        This budget rephases Military Construction funding for each of the
    Military Departments. As a result, between fiscal year 2012 and fiscal
    year 2013, Military Construction funding has been reduced by 17 to 63
    percent, depending on the Military Department. We must determine what
    bases and installations will experience force structure reductions and
    avoid unneeded Military Construction projects at those facilities. The
    only exception to this rephasing is in the Defense-wide Military
    Construction accounts. They grow by about 6 percent, reflecting support
    for high-priority improvements in hospitals and DOD dependents'
    schools.
        As I mentioned earlier, the Department seeks two new rounds of BRAC
    in fiscal year 2013 and fiscal year 2015 in order to reduce excess
    infrastructure. The change in force structure and fiscal constraints
    make it imperative for the Department to close and realign unnecessary
    military installations, and we can only do this effectively using BRAC
    authority. An internal working group is refining the Department's goals
    for BRAC and deciding how to manage our preparation for BRAC 2013.
        Another issue involves the relocation of marines from Okinawa to
    Guam. Consistent with the DOD strategic goal of rebalancing our global
    posture, Guam remains an essential part of our larger Asia-Pacific
    strategy. The United States and Japan have begun official discussions
    to adjust our current posture plans. This includes reviewing the unit
    composition and number of marines who will relocate to Guam and
    delinking progress on the Futenma Replacement Facility (FRF) from the
    relocation of marines to Guam. However, both countries remain committed
    to the construction of the FRF. We will continue to consult with
    Congress as these discussions progress. Pending further definition of
    our plan, the fiscal year 2013 budget request includes $51 million for
    construction of a parking ramp on Andersen Air Force Base and continued
    planning and design efforts.
        Other initiatives in the Asia-Pacific area include the rotational
    presence of U.S. Marines and Air Force personnel in Australia and
    forward deployment of littoral combat ships in Singapore. Neither
    involves infrastructure funding in fiscal year 2013. Funds for the
    deployment to Singapore are programmed in the FYDP. While no funding
    request is planned in the FYDP for the United States rotational
    presence in Australia, we will continue planning efforts such as
    environmental studies and facility assessments.
        Lastly, we recently announced changes in U.S. troops stationed in
    Europe. These include inactivation of force structure associated with
    the Army's V Corps headquarters and two heavy brigades, an A-10
    aircraft squadron, an Air Control squadron, and various enablers. These
    changes notwithstanding, the United States will maintain a strong
    presence in Europe to support our Article 5 commitments and to meet the
    full range of 21st century challenges. There will be a greater emphasis
    on joint exercises and training to enhance interoperability for
    coalition operations, as well as new capabilities such as missile
    defense.
                                   conclusion
        In conclusion, I believe that the fiscal year 2013 budget is
    prudent, given the needs of the Armed Forces and the Nation's economic
    situation. The budget supports a reasonable and responsible Military
    Construction and Family Housing program. I request your support.
        Again, Mr. Chairman, members of the subcommittee, thank you for
    your strong support of the men and women of the Department of Defense.
    That concludes my statement. I welcome your questions.

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

                         STATEMENT OF DR. DOROTHY ROBYN

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

                               PREPARED STATEMENT

        Thank you very much, and I look forward to your questions.
        [The statement follows:]
                    Prepared Statement of Dr. Dorothy Robyn
        Chairman Johnson, Senator Kirk and distinguished members of the
    subcommittee: Thank you for the opportunity to present the President's
    fiscal year 2013 budget request for the Department of Defense programs
    to support installations, facility energy and the environment. My
    testimony covers four topics: International and domestic basing,
    including the Department's request for authorization of two new rounds
    of base realignment and closure; our management of the built
    environment, including the programs that support military construction,
    family housing, and sustainment and recapitalization; our strategy for
    managing facility energy to reduce costs and improve installation
    energy security; and our management of the natural environment,
    including the programs that support environmental conservation and
    restoration, environmental technology and compatible development.
             the global picture: international and domestic basing
        To project power globally, the Department must have the right mix
    of forces and facilities at strategic locations. My office supports the
    Department's strategic security objectives by ensuring that decisions
    about basing of troops and facilities are the product of joint planning
    and rigorous analysis. We also seek to reduce our installation
    footprint wherever possible.
                     rebasing marines from okinawa to guam
        The United States is rebalancing its global posture to reduce its
    presence in certain regions and enhance it in others. As the recent
    United States-Japan joint statement made clear, the United States and
    Japan are strongly committed to strengthening our robust security
    alliance, which is dedicated to the security of Japan and to the
    maintenance of peace and security in the Asia-Pacific region. The
    United States has conducted a strategic review of its defense posture
    in Asia in order to achieve a more geographically distributed,
    operationally resilient and politically sustainable force structure.
    Japan has welcomed this initiative.
        Based on that review, the development of Guam as a strategic hub,
    with an operational Marine Corps presence including marines relocated
    from Okinawa, remains an essential part of the Alliance's Asia-Pacific
    Strategy. The United States and Japan have begun official discussions
    to adjust our plans as set forth in the 2006 Realignment Roadmap. In
    particular, we propose to delink the movement of marines to Guam and
    the resulting land returns south of Kadena from progress by Japan on
    the Futenma Replacement Facility (FRF) near Camp Schwab. We remain
    committed to mitigating the impact of U.S. forces on Okinawa and to
    construction of the FRF as the only viable way forward. That said, we
    believe the two sides must invest in the Futenma facility in the near-
    term, to ensure both safety and combat readiness.
        The President's fiscal year 2013 budget request includes $51
    million for construction to support the Marine relocation to Guam. Our
    request includes another $139.4 million for Guam civilian
    infrastructure to address population growth there, of which $106.4
    million is for Guam water and wastewater infrastructure capital
    improvements such as water treatment plant modifications, supply well
    improvements and provision of backup power at wastewater pump stations.
                          base realignment and closure
        After a decade of war the United States is at a strategic turning
    point. With changes in strategy come changes--in this case reductions--
    in force structure. Simply stated, the cuts in force structure that we
    are implementing must be accompanied by cuts in supporting
    infrastructure, including military bases. Absent a process for closing
    and realigning bases, the Department will be locked in a status quo
    configuration that does not match its evolving force structure,
    doctrine and technology. Given the high cost of our infrastructure,
    moreover, if we retain bases that we do not need, we will be forced to
    cut spending on forces, training and modernization.
    Overseas Basing Review
        The Department's request for additional rounds of BRAC comes at a
    time when we are looking aggressively at where we can close bases
    overseas--particularly in Europe. (Although domestic closures require
    legislative authority, overseas closures do not.)
        We have already made significant reductions in our European
    footprint. Since 2003, the Department has returned more than 100 sites
    in Europe to their respective host nations, and we have reduced our
    personnel by one-third. Between fiscal year 2012 and fiscal year 2015
    the Army alone will close 23 additional sites as previously announced.
        With the recently announced force structure changes in Europe, we
    can do more to consolidate our infrastructure with the goal of reducing
    long-term costs while still supporting our operational requirements and
    strategic commitments. First, we can reduce the number of discrete
    installation sites we maintain in Europe. We have more than 300 such
    sites--ranging from small communications posts to robust Main Operating
    Bases--of which about 200 house most of our activities. Second, we can
    eliminate excess support infrastructure such as warehouses,
    administrative space and housing. The infrastructure located off-base
    presents a particularly attractive target for consolidation. Third, we
    can take advantage of the capacity made excess by force structure
    changes to accommodate new functions.
        My office has undertaken the first step in this process: We are
    working with the EUCOM theater commander, his component commanders and
    Service leadership here in Washington to measure the capacity of all of
    our European installations. This inventory will allow us to analyze how
    much capacity can be shed and where. With the goal of long-term cost
    reduction, we will assess the costs and savings of each proposed action
    and identify those with the highest payback. We anticipate having
    preliminary options for the Secretary to review by the fall.
    Domestic Basing: The Need for BRAC
        Even a significant reduction of our footprint overseas will not
    achieve the needed cuts to overall infrastructure--hence our request
    for a parallel, BRAC process. It makes sense to look at our domestic
    and overseas bases at the same time, moreover, so that the two reviews
    can inform one another. The Department took this approach in 2004-2005,
    and it would be no less useful now given the major strategic
    realignment underway. Let me briefly summarize the case for BRAC.
        First, the same strategic and fiscal factors that compel
    consolidation overseas require it here. In addition to the global
    posture shifts discussed above, we are shaping a joint force for the
    future that, while agile and technologically advanced, will be smaller
    and leaner across the board. The Army is reducing force levels by
    72,000, the Marine Corp is resizing to 182,000 Active Marines, and the
    Air Force is eliminating approximately 300 aircraft over 5 years. We
    are also delaying, restructuring and canceling modernization programs.
    To adjust to these strategic changes, and to eliminate the excess
    capacity that results from reductions in force structure, the
    Department will need to close and realign installations in the United
    States as well as Europe.
        Moreover, the overhead cost to maintain, sustain and protect bases
    is high. In recent years we have spent about $40 billion a year on
    facilities construction, sustainment and recapitalization. Other costs
    associated with operating military installations (e.g., air traffic
    control, religious services and programs; payroll support; personnel
    management; morale, welfare, and recreation services; and physical
    security) have averaged about $15 billion a year. If we retain bases
    that are excess to need, we will be forced to cut spending on forces,
    training and modernization.
        Second, the statutory commission process provided by BRAC is the
    only fair, objective and proven method for eliminating excess domestic
    infrastructure and reconfiguring what remains. BRAC provides for a
    sound, thorough and transparent analytical process, based on a 20-year
    force structure plan developed by the Joint Staff; a comprehensive
    inventory of installations by the Department to ensure a thorough
    capacity analysis; and defined selection criteria that place priority
    on military value. The requirement to look at every installation means
    DOD must consider a broad range of approaches, not just the existing
    configuration; and the transparency of the process facilitates
    independent review by the commission and affected communities. Most
    important, the requirement that the President and Congress accept or
    reject the Commission's recommendations on an ``all-or-none'' basis
    insulates BRAC from political interference.
        Third, the savings from BRAC are real and substantial. Of all the
    efficiency measures that the Department has undertaken over the years,
    BRAC is perhaps the most successful and significant. The first four
    rounds of BRAC (1988, 1991, 1993, and 1995) are producing a total of
    about $8 billion in annual recurring savings, and the comparable figure
    for BRAC 2005 is $4 billion. This amount ($12 billion) represents the
    additional costs that the Department would incur every year for base
    operating support, personnel and leasing costs had we not had BRAC.
    These annual savings, or avoided costs, are equivalent to what the
    Department would spend to buy 300 Apache attack helicopters, 124 F/A-
    18E/F Super Hornets or four Virginia class submarines.
        Understandably, some have questioned the specifics of our savings
    calculations, and critics have pointed to the 2005 round as evidence
    that BRAC does not produce the hoped for savings--or at least not in a
    reasonable timeframe. I will respond to these criticisms in more detail
    tomorrow when I testify before the House Armed Services Committee's
    Subcommittee on Readiness, but let me say this here: The 2005 round
    took place during a period of growth in the military, and it reflected
    the goals and needs of that time. Because the focus was on transforming
    installations to better support forces--as opposed to saving money and
    space--it is a poor gauge of the savings that the Department can
    achieve through another BRAC round. The prior BRAC rounds--which
    reduced capacity and paid off in 2 to 3 years--represent a better gauge
    of the savings potential of future BRAC rounds.
    Joint Basing
        A significant action under BRAC 2005 that my office has championed
    is the consolidation of 26 installations into 12 Joint Bases. This
    action responded to persistent internal and external criticism that
    base support was duplicative. The Department also felt that joint
    operation would enhance the military value of Service-unique
    installations, making them a DOD-wide asset.
        The creation of a Joint Base is complex. The commander must merge
    diverse, service-specific financial systems, management structures,
    operating procedures, and staffs, so as to jointly manage functions
    ranging from facilities sustainment to mail delivery to the provision
    of family support services. Considering the size of many of our
    installations, such a consolidation is equivalent to the merger of two
    corporations. As with corporate mergers, moreover, the cultural
    differences are often the hardest to bridge.
        I chair a flag-level group (the Senior Joint Base Working Group,
    SJBWG) that has met regularly for the last 3 years to oversee the
    implementation and operation of Joint Bases. The SJBWG created the
    initial framework for joint basing, including a body of policy guidance
    (Joint Base Implementation Guidance) and a collaborative governance
    structure (Joint Management Oversight Structure). Throughout the
    process, the SJBWG made key strategic decisions.
        First, to hold the lead Service accountable, the SJBWG created a
    comprehensive set of Common Output Level Standards, or COLS. Previous
    efforts to create Joint Bases had encountered strong resistance because
    of concerns by one Service that another Service would not provide
    adequate base support--i.e., that it would adopt a ``lowest-common-
    denominator'' approach to installation management. To allay this fear,
    the SJBWG led an exhaustive effort to define a COLS metric for every
    relevant aspect of base support--274 COLS in all.\1\ Significantly, in
    every case the SJBWG opted for the highest standard used by any of the
    Services as the COL standard for Joint Bases. Although this ``highest-
    common-denominator'' approach allayed the fears that had doomed joint
    basing in the past, it did so at a price: Installation support costs
    for the Joint Bases have gone up by 6 percent on average. However, we
    expect the savings from consolidation to offset this. Moreover, COLS
    give the Department a solid basis for estimating and budgeting for
    installation support requirements--a best practice that we hope to
    apply to all military bases.
    ---------------------------------------------------------------------------
        \1\ For example, one COLS metric specifies the maximum height that
    grass on an installation can reach before it must be cut. In addition
    to defining the underlying metric (grass height, measured in inches),
    the SJBWG selected the actual value (standard) for that metric to which
    the Joint Bases as a whole would be held.
    ---------------------------------------------------------------------------
        Second, the SJBWG opted to give the Joint Bases a transition period
    to merge their organizations before asking them to achieve a savings
    target.\2\ This represents a conscious decision by the Services to
    defer the near term savings from joint basing in order to increase the
    odds that it will succeed in the long run. It is directly analogous to
    the Department's approach to traditional BRAC actions, which often
    require an up-front investment in order to achieve the long-term
    savings.
    ---------------------------------------------------------------------------
        \2\ Specifically, Joint Base commanders were given leeway to adjust
    resources within their portfolios, for fear that premature staff
    reductions could compromise the design and implementation of their new
    organizational constructs. Ironically, the Joint Bases have had to
    function with a large number of civilian vacancies largely because of
    the Services' backlog of personnel actions.
    ---------------------------------------------------------------------------
        Joint Bases represent a fundamental change in our approach to
    installation management. Although these bases have been operating for
    only a short time, we are already beginning to see the expected
    economies of scale from consolidation. For example, by combining its
    recycling operations, Joint Base McGuire-Dix-Lakehurst is avoiding $1
    million in facility and equipment costs and $200,000 a year in contract
    costs. Less expected, however, is that our Joint Bases are proving to
    be incubators for innovation, as the commanders, faced with
    inconsistent Service rules and requirements, adopt new, cross-cutting
    business processes. For example, at Joint Base San Antonio, the
    commander standardized security procedures and created a single chain-
    of-command across the three facilities that make up the installation,
    thus facilitating cooperation with State and local law enforcers.
        I have had the opportunity to meet personally with most of the
    Joint Base Commanders. They get it. They see ``jointness'' not just as
    a more efficient and effective way to support the installation missions
    on their bases but as a superior way to support the soldiers, sailors,
    airmen and marines learning to fight together. I strongly believe their
    ability to transcend traditional practices and develop innovative
    solutions to long-standing inefficiencies will position us for future,
    Department-wide reforms.
                         managing our built environment
        The President's fiscal year 2013 budget requests $11.2 billion for
    Military Construction (MILCON) and Family Housing--a decrease of
    approximately $3.5 billion from the fiscal year 2012 budget request.
    This decrease primarily reflects the declining budget environment and
    the Services' decision to defer facility investments at locations that
    may be impacted by changes in force structure.

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

                             military construction
        We are requesting $8.5 billion for ``pure'' military construction--
    i.e., exclusive of BRAC and Family Housing. This addresses routine
    needs for construction at enduring installations here and overseas and
    for specific programs such as the NATO Security Investment Program and
    the Energy Conservation Investment Program. In addition, we are
    targeting three priorities.
        First and foremost are the operational missions. Our fiscal year
    2013 budget requests $3.5 billion to support operations and training
    requirements, including a second Explosives Handling Wharf at Kitsap,
    Washington; communications facilities in California and Japan that are
    needed for operations in the Pacific region; specialized facilities for
    Special Operations forces at various global locations; and range and
    training facilities for ground forces at several Army installations.
        Second, our budget request continues the recapitalization of DOD-
    owned schools as part of the 21st Century Schools Initiative. We are
    requesting $547 million to replace or renovate 11 schools that are in
    poor or failing condition, primarily at enduring locations overseas. By
    the end of fiscal year 2018, more than 70 percent of the DOD-owned
    schools will have been replaced or undergone substantial renovation.
    The new buildings, intended to be models of sustainability, will
    provide a modern teaching environment for the children of our military
    members.
        Although it is not part of the military construction budget, the
    fiscal year 2013 budget also requests $51 million to construct,
    renovate, repair or expand schools that, while located on military
    installations, are operated by Local Education Agencies (LEA). This
    request represents a third year of funding for LEA schools (Congress
    set aside $250 million for LEA schools in fiscal year 2011 and again in
    fiscal year 2012, in response to concerns about poor conditions and
    overcapacity). The request is part of DOD's proposed budget for the
    Office of Economic Adjustment (OEA), which Congress designated to
    execute the LEA school funding it provided. OEA is working with other
    parts of the Department and giving priority to those schools with the
    most serious deficiencies.
        Third, the fiscal year 2013 budget request includes $1 billion for
    21 projects to upgrade our medical infrastructure. By modernizing our
    hospitals and related facilities, we can improve healthcare delivery
    for our servicemembers and their families, and enhance our efforts to
    recruit and retain personnel. The fiscal year 2013 request provides the
    next increment of funding to replace the William Beaumont Army Regional
    Medical Center in Texas ($207 million) and the Landstuhl Regional
    Medical Center in Germany ($127 million). It also provides for
    continued improvement of the medical research facilities that support
    our chemical-biological mission.
                        family and unaccompanied housing
        The Services rely largely on privatization to provide family
    housing on U.S. bases. As I have said many times, privatization of
    family housing--where the Services partner with the private sector to
    generate housing built to market standards--is the single most
    effective reform my office has carried out. Prior to privatization, the
    Services' chronic underinvestment in their facilities had created a
    crisis, with almost 200,000 of the Department's family housing units
    rated ``inadequate.'' Privatization leveraged the power of the
    commercial market to serve our needs. With an investment of
    approximately $3.6 billion, the Services have generated $29.7 billion
    in construction to build new and renovate existing family housing
    units. The Services also transferred responsibility for maintenance,
    operation and recapitalization for 50 years to (private) entities that
    have an incentive to maintain the housing so as to attract and retain
    military tenants. My office works closely with the Office of Management
    and Budget to ensure that the relevant Federal budget policy continues
    to support this much-heralded success story.

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

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

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

        The fiscal year 2013 budget request includes $8.7 billion for
    sustainment, which is the single most important investment we make to
    keep our facilities in good working condition. Sustainment includes
    regularly scheduled maintenance and repair and replacement of facility
    components.
        Our policy calls for the Services to fund sustainment at no less
    than 90 percent of the requirement generated by DOD's Facilities
    Sustainment Model, which uses industry benchmarks to estimate the
    annual cost of regularly scheduled maintenance and repair for different
    types of facilities. Nevertheless, for fiscal year 2013, as was the
    case in fiscal year 2012, the Navy and Air Force are funding
    sustainment at only 80 and 82 percent of their requirement,
    respectively. Thus, our budget request funds sustainment DOD-wide at
    only 84 percent of the FSM-generated estimate.
        The fiscal year 2013 budget requests $5.3 billion for
    recapitalization, a reduction of $2.5 billion from last year.
    Recapitalization (restoration and modernization) serves to keep the
    inventory of facilities modern and relevant, extend the service life of
    individual facilities and restore capability lost due to man-made or
    natural causes. The reduction in recapitalization funding reflects an
    overall decrease in both O&M- and MilCon-funded replacement and
    renovation projects.
        A final category of investment (one not shown in the table) is
    demolition, which allows the Services to eliminate facilities that are
    excess to need or no longer cost effective to repair. Our fiscal year
    2013 budget request includes $123 million in operations and maintenance
    funding, which will allow us to demolish 5 million square feet of
    facilities. With this funding, we will reach our formal goal,
    established in fiscal year 08, to eliminate over 62 million square feet
    by fiscal year 2013. We are also working with the Services to identify
    facilities that could be repurposed--for example, the use of barracks
    as administrative space.
                      ongoing initiatives to reduce costs
        Finally, I would like to mention three ongoing initiatives designed
    to improve the Department's management of the built environment. The
    first initiative has to do with the Department's anti-terrorism/force
    protection (AT) standards, which impose certain minimum requirements on
    all buildings and add as much as 9 percent to the cost of leased space
    and new construction. The rest of the Federal Government uses a
    somewhat different approach, based on the Interagency Security
    Committee (ISC) standards, which were developed by a 21-agency group
    led by the Department of Homeland Security and issued in updated form
    in April 2010. The ISC standards reflect the risk to an individual
    building, including its size, location, mission criticality and
    symbolism.
        To evaluate the two approaches, my office looked first at leased
    space. Working closely with the General Services Administration (GSA),
    which is responsible for incorporating AT standards into its leases, we
    commissioned an expert analysis that compared the scope, cost and
    effectiveness of the DOD standards versus the ISC standards for six DOD
    leases in the National Capital Region. Based on that expert analysis,
    an internal DOD working group, led by the Office of the Under Secretary
    of Policy and the Joint Staff, is evaluating the merits of adopting the
    ISC process for leased space. Once the Department has made a decision
    on whether to alter DOD's AT standards with respect to leased space, we
    will pose the same question for on-base buildings.
        Second, my office is looking at how to promote innovation and
    efficiency in the construction industry--in particular, military
    construction. The U.S. construction industry is plagued by high costs
    and low productivity growth as a result of low investment in research
    and development, a fragmented industry structure and other factors.
    Moreover, some data suggest that the Federal Government's construction
    costs are higher than those of the private sector for comparable
    facilities. Finally, the contractual incentives for Federal
    construction projects lead to a focus on reducing ``first costs''--the
    cost of constructing a building--as opposed to the much larger costs
    associated with building ownership and operations (life cycle costs).
        We are working with the GSA to identify ways that the two largest
    Federal customers for construction (DOD and GSA) can incentivize
    behavior on the part of construction firms that will lead to more
    innovation and lower costs, including life cycle costs. Two areas offer
    promise. We are looking at accelerating requirements for the use of new
    technologies, such as building information modeling (BIM), which can
    improve the efficiency and reduce the cost of the construction process
    as well as and lead to lower life cycle costs for the buildings
    themselves. In addition, we are looking at alternative contracting
    methods, such as ones that reward contractors based on how well they
    meet the owner's objectives (e.g., optimal energy efficiency).
        Third, we are analyzing the effect that investments in energy
    efficiency and sustainability have on the long-term cost of owning and
    operating our buildings. Building on past studies, we are working with
    the National Research Council to understand the impact of the
    requirement that DOD facilities be built to certain sustainability
    standards--namely, LEED (Leadership in Energy and Environmental Design)
    Silver or an equivalent standard and/or the five principles of High
    Performance Sustainable Buildings, as well as consensus based standards
    such as the American Society of Heating, Refrigeration and Air
    Conditioning Engineers (ASHRAE) 189.1. The study will help us invest
    smartly in our buildings to reduce the total cost of ownership while
    increasing mission effectiveness.\3\
    ---------------------------------------------------------------------------
        \3\ The study will also meet the requirement to report to Congress
    on the return on investment from using consensus standards such as
    ASHRAE 189.1.
    ---------------------------------------------------------------------------
                            managing our energy use
        Facility energy is important to the Department for two reasons.\4\
    The first is cost. With more than 300,000 buildings and 2.2 billion
    square feet of building space, DOD has a footprint three times that of
    Wal-Mart and six times that of GSA. Our corresponding energy bill is $4
    billion annually--roughly 10 percent of what DOD spends to maintain its
    installation infrastructure. There are non-monetary costs as well:
    Although facility energy represents only 20-25 percent of DOD's energy
    costs, it accounts for nearly 40 percent of our greenhouse gas
    emissions.
    ---------------------------------------------------------------------------
        \4\ Facility energy refers to the energy (largely electricity) used
    to operate the buildings on DOD's 500+ fixed military installations in
    the United States and overseas. It also includes the fuel used by DOD's
    approximately 200,000 non-tactical vehicles. Facility energy is
    distinct from operational energy--largely fuel used for mobility
    (military aircraft, ships and tanks) and by the generators that produce
    power on our forward operating bases.
    ---------------------------------------------------------------------------
        Second, facility energy is key to mission assurance. Our military
    installations here at home support combat operations more directly than
    ever before, and they serve as staging platforms for humanitarian and
    homeland defense missions. DOD installations are almost entirely
    dependent on a commercial power grid that is vulnerable to disruption
    due to aging infrastructure, weather related events and (potentially)
    direct attacks. According to the Defense Science Board, DOD's reliance
    on a fragile grid to deliver electricity to its bases places critical
    missions at risk.\5\
    ---------------------------------------------------------------------------
        \5\ ``More Fight-Less Fuel,'' Report of the Defense Science Board
    Task Force on DOD Energy Strategy, February 2008.
    ---------------------------------------------------------------------------
        The Department's facility energy strategy is designed to reduce
    costs and improve the energy security of our fixed installations. It
    has four elements: Reduce the demand for traditional energy through
    conservation and improved energy efficiency; expand the supply of
    renewable and other distributed (on-site) generation sources; enhance
    the energy security of our installations directly (as well as
    indirectly, through the first two elements); and leverage advanced
    technology.
    Reduce Demand
        First and most important, we are reducing the demand for
    traditional forms of energy through conservation and improved energy
    efficiency. The Department's fiscal year 2013 budget includes more than
    $1.1 billion for energy conservation investments--up from $400 million
    in 2010. Almost all of that funding is designated for energy efficiency
    improvements to existing buildings.\6\
    ---------------------------------------------------------------------------
        \6\ Of the $1.1 billion, $968 million is in the Military
    Components' operations and maintenance accounts, to be used for
    sustainment and recapitalization projects aimed at energy efficiency,
    including improved lighting, high-efficiency HVAC systems, double-pane
    windows, energy management control systems and new roofs. Another $150
    million is for the Energy Conservation Investment Program (ECIP), a
    MilCon fund that my office distributes to the Services for specific
    projects (see discussion below). Only about $35 million of ECIP's
    budget will go for investments in distributed and renewable energy as
    opposed to energy efficiency and water conservation.
    ---------------------------------------------------------------------------
        In addition to their own funding, the Services are using third-
    party financing tools, such as Energy Savings Performance Contracts
    (ESPCs) and Utility Energy Service Contracts (UESCs), to improve the
    energy efficiency of their existing buildings. In response to the
    President's memo calling on the Federal Government to initiate $2
    billion worth of these performance-based contracts over the next 2
    years, the Department has as its own goal to execute roughly $465
    million in ESPCs and UESCs in fiscal year 2012 and $718 million in
    fiscal year 2013.
        In addition to retrofitting existing buildings, we are taking
    advantage of new construction to incorporate more energy-efficient
    designs, material and equipment into our inventory. Currently, all new
    construction projects must meet the LEED Silver or an equivalent
    standard and/or comply with the five principles of High Performance
    Sustainable Buildings. This year my office will issue a new
    construction code for high-performance, sustainable buildings, which
    will govern all new construction, major renovations and leased space
    acquisition. This new code, which will draw on ASHRAE 189.1, will
    accelerate DOD's move toward efficient, sustainable facilities that
    cost less to own and operate, leave a smaller environmental footprint
    and improve employee productivity.
        As DOD strives to improve its energy efficiency, accurate, real-
    time facility energy information is becoming essential. Although we
    collect a massive amount of data, we lack the standardized processes
    and integrated systems needed to systematically track, analyze and
    benchmark our facility energy and water use and the related costs. The
    absence of usage and cost data reduces the efficiency of our existing
    facility operations, and it limits our ability to make the right
    investments in new, efficiency-enhancing technology and tools.
        To fill this gap, my office has been leading the development of an
    Enterprise Energy Information Management system (EEIM) that will
    collect facility energy data in a systematic way. The EEIM will also
    provide advanced analytical tools that allow energy professionals at
    all levels of the Department both to improve existing operations and to
    identify cost-effective investments.
        I will also be issuing an updated policy on the metering of DOD
    facilities; in addition to lowering the threshold for buildings that
    must be metered, the policy will address the types of meters that can
    be used and establish guidelines for determining when advanced meters
    make financial sense. No less important, the policy will help ensure
    that installed meters can securely deliver data to the energy
    professionals in the field. As an example, Naval District Washington
    has developed an innovative approach that uses a secure network to
    integrate data on energy usage with information on building management
    so as to allow for active management of facility energy. We would like
    to see this approach or one like it deployed throughout the Department.
    Expand Supply of On-Site Energy
        Second, DOD is increasing the supply of renewable and other
    distributed (on-site) sources of energy on our installations. On-site
    energy is critical to making our bases more energy secure. Together
    with the kind of smart microgrid and storage technologies discussed
    below, it allows a military base to maintain its critical operations
    ``off-grid'' for weeks or months if necessary.
        DOD's installations are well situated to support solar, wind,
    geothermal and other forms of distributed energy. In response to a
    congressional directive, my office commissioned a study of the
    potential for solar energy development on military installations in the
    Mojave and Colorado Deserts in California and Nevada. The year-long
    study looked at seven military bases in California and two in Nevada.
    It found that, even though 96 percent of the surface area of the nine
    bases was unsuited for solar development because of military
    activities, the presence of endangered species and other factors, the
    solar-compatible area on four of the California bases was nevertheless
    large enough to support the generation of 7000 megawatts (MW) of solar
    energy--equivalent to the output of seven nuclear power plants.\7\
    ---------------------------------------------------------------------------
        \7\ ICF International, Solar Energy Development on Department of
    Defense Installations in the Mojave and Colorado Deserts (January
    2012). http://www.serdp.org/News-and-Events/News-
    Announcements/Program-News/DOD-study-finds-7-000-megawatts-of-solar-
    energy-potential-on-DOD-installations-in-Mojave-Desert
    ---------------------------------------------------------------------------
        The study also confirmed the logic of the approach the Department
    is already taking for large-scale renewable energy projects--namely,
    third-party financing. (Third-party financing makes sense because
    private developers can take advantage of tax incentives that are not
    available to Federal agencies.) In September, the Army established its
    Energy Initiatives Task Force to work with the private sector to
    execute 10+ MW projects at Army installations. The Army hopes to
    develop around one gigawatt of renewable energy on its installations by
    2025, and it has projects underway at Fort Bliss, TX, and White Sands
    Missile Range, NM. The Navy has used the Title 10 authority in Section
    2922a to contract for renewable energy development in California,
    including a 3 MW landfill gas facility at Marine Corps Air Station
    Miramar, a 14 MW solar photovoltaic (PV) array at Naval Air Weapons
    Station China Lake, and a 1 MW solar PV array at Marine Corps Air
    Ground Combat Center Twentynine Palms. The Air Force is using the title
    10 authority in Section 2667 to lease non-excess land for the
    development of large-scale renewable projects, the first of which is
    under negotiation at Edwards Air Force Base.
        My office is working closely with the Department of Interior (DOI)
    to identify and overcome impediments to the execution of renewable
    energy projects on public lands withdrawn for military purposes (many
    of the sites identified in the ICF study are on ``withdrawn land'').
    Where renewable energy development is compatible with the military
    mission, these lands offer a significant opportunity to improve our
    energy security while lowering the cost of energy. However, we must
    first overcome the policy and authority challenges posed by this unique
    construct whereby DOD uses and manages land under the administrative
    jurisdiction of DOI.
    Enhance Security
        The first two elements of our facility energy strategy contribute
    indirectly to installation energy security; in addition, we are
    addressing the problem directly. A major focus of my office is smart
    microgrid technology. Smart microgrids and energy storage offer a more
    robust and cost effective approach to ensuring installation energy
    security than the current one--namely, back-up generators and (limited)
    supplies of on-site fuel. Although microgrid systems are in use today,
    they are relatively unsophisticated, with limited ability to integrate
    renewable and other distributed energy sources, little or no energy
    storage capability, uncontrolled load demands and ``dumb'' distribution
    that is subject to excessive losses. By contrast, we envision
    microgrids as local power networks that can utilize distributed energy,
    manage local energy supply and demand, and operate seamlessly both in
    parallel to the grid and in ``island'' mode.
        Advanced microgrids are a ``triple play'' for DOD's installations.
    Such systems will reduce installation energy costs on a day-to-day
    basis by allowing for load balancing and demand response. They will
    also facilitate the incorporation of renewable and other on-site energy
    generation. Most important, the combination of on-site energy and
    storage, together with the microgrid's ability to manage local energy
    supply and demand, will allow an installation to shed non-essential
    loads and maintain mission-critical loads if the grid goes down.
        The Installation Energy Test Bed, discussed below, has funded 10
    demonstrations of microgrid and storage technologies to evaluate the
    benefits and risks of alternative approaches and configurations.
    Demonstrations are underway at Twentynine Palms, California; Fort
    Bliss, Texas; Joint Base McGuire-Dix-Lakehurst, New Jersey; Fort Sill,
    Oklahoma; and several other installations.
        Although microgrids will address the grid security problem over
    time, we are taking steps to address near-term concerns. Together with
    the Assistant Secretary of Defense for Homeland Defense and Americas'
    Security Affairs, I co-chair DOD's Electric Grid Security Executive
    Council (EGSEC), which works to improve the security, adequacy and
    reliability of electricity supplies and related infrastructure key to
    the continuity of critical defense missions. In addition to working
    across DOD, the EGSEC works with the Departments of Energy and Homeland
    Security. The three agencies recently created an Energy Surety Public
    Private Partnership (ES3P) to work with the private sector. As an
    initial focus, the ES3P is collaborating with four utilities in the
    National Capital Region to improve energy security at mission critical
    facilities.
        Finally, my office is updating the DOD Instruction on
    ``Installation Energy Management'' (DODI 4170.11), which provides
    guidance to installation commanders and energy managers on a range of
    energy security and energy efficiency matters. For example, we are
    updating the requirements for fuel distribution plans to ensure that
    emergency generators can operate for a sufficient time.
    Leverage Advanced Technology
        As the discussion of microgrids illustrates, one of the ways DOD
    can lower its energy costs and improve its energy security is by
    leveraging advanced technology. Technology has been DOD's comparative
    advantage for 200 years, as evidenced by the military's leadership in
    the development of everything from interchangeable machine made parts
    for musket production to the Internet. This advantage is no less
    important when it comes to facility energy.
        To leverage advanced technology relevant to facility energy, 3
    years ago my office created the Installation Energy Test Bed, as part
    of the existing Environmental Security Technology Certification Program
    (ESTCP). The rationale is straightforward. Emerging technologies offer
    a way to cost effectively reduce DOD's facility energy demand by a
    dramatic amount (50 percent in existing buildings and 70 percent in new
    construction) and provide distributed generation to improve energy
    security. Absent outside validation, however, these new technologies
    will not be widely deployed in time for us to meet our energy
    requirements. Among other problems, the first user bears significant
    costs but gets the same return as followers. These barriers are
    particularly problematic for new technologies intended to improve
    energy efficiency in the retrofit market, which is where DOD has the
    greatest interest.
        As the owner of 300,000 buildings, it is in DOD's direct self-
    interest to help firms overcome the barriers that inhibit innovative
    technologies from being commercialized and/or deployed on DOD
    installations. We do this by using our installations as a distributed
    test bed to demonstrate and validate the technologies in a real-world,
    integrated building environment.\8\ Projects conduct operational
    testing and assessment of the life cycle costs of new technology while
    addressing DOD unique security issues. For example, the Test Bed is
    doing a demonstration of an advanced control system that could increase
    boiler efficiency by 10 percent; if the technology proves out, DOD can
    deploy it on thousands of boilers and see a meaningful energy savings.
    More generally, by centralizing the risk and distributing the benefits
    of new technology to all DOD installations, the Test Bed can provide a
    significant return on DOD's investment.
    ---------------------------------------------------------------------------
        \8\ The approach is similar to one that ESTCP has used since 1995
    to demonstrate innovative environmental technologies on DOD sites and
    in doing so help them transition to the commercial market. As discussed
    in section IV below, ESTCP has a strong track record of reducing DOD's
    environmental costs.
    ---------------------------------------------------------------------------
        The Test Bed has about 70 projects underway in five broad areas:
    Advanced microgrid and storage technologies, such as the project at
    Twentynine Palms; advanced component technologies to improve building
    energy efficiency, such as advanced lighting controls, high performance
    cooling systems and technologies for waste heat recovery; advanced
    building energy management and control technologies; tools and
    processes for design, assessment and decisionmaking on energy use and
    management; and on-site energy generation, including waste-to-energy
    and building integrated systems. (See the next section for additional
    detail.)
    Progress on Goals
        In 2011, the Department made progress in its performance with
    respect to facility energy and water although it fell short of its
    statutory and regulatory goals for energy.
      --DOD reduced its energy intensity by 2 percent--a meaningful
            improvement but less than the 3 percent needed to meet the
            annual goal. Overall, DOD has reduced its energy intensity by
            13.3 percent since 2005, compared to the cumulative goal of 18
            percent.
      --With respect to the renewable energy goal (produce or procure 25
            percent of all electricity from renewable sources by 2025), DOD
            lost ground, going from 9.6 percent to 8.5 percent. The drop
            was partly the result of a policy decision to buy fewer
            Renewable Energy Credits.\9\ It also reflected a decline in the
            output of the 270 MW geothermal facility at China Lake.
    ---------------------------------------------------------------------------
        \9\ The purchase of renewable energy credits (RECs) is an
    alternative to the actual development of renewable energy; DOD has
    decided to meet the goals by adding supply on its installations as
    opposed to buying RECs.
    ---------------------------------------------------------------------------
      --DOD continued to reduce its consumption of petroleum, reaching a
            cumulative reduction of 11.8 percent since 2005--just shy of
            the 12 percent goal.
      --DOD reduced its potable water intensity (measured as consumption
            per gross square foot) by 10.7 percent from 2007 to 2011--well
            above the goal of 8 percent.
                        fiscal year 2013 budget request
        The President's fiscal year 2013 budget request includes funding
    for the ESTCP Installation Energy Test Bed as well as the Energy
    Conservation Investment Program (ECIP).
                          installation energy test bed
        The budget request includes $32 million in fiscal year 2013 for
    energy technology demonstrations under ESTCP.\10\ ESTCP began these
    demonstrations--now known as the Installation Energy Test Bed--as a $20
    million pilot in 2009. Seeing its value, the Department continued to
    fund the Test Bed on an annual basis the $30 million level. Starting
    this year, we have funded the test bed, as an RDT&E line, across the
    FYDP. Although a modest investment, the Test Bed is a high leverage
    program that the Department believes will produce major savings.
    ---------------------------------------------------------------------------
        \10\ As discussed in section IV, we are also requesting $43.9
    million for ESTCP for environmental technology demonstrations. These
    two demonstration programs appear as separate lines under ESTCP in the
    fiscal year 2013 budget.
    ---------------------------------------------------------------------------
        ESTCP awards funds based on rigorous competition. The process
    begins with a solicitation to firms and others to identify emerging
    technologies that would meet installation needs. The response has been
    huge: The 2012 solicitation drew 600 proposals from leading companies
    in the building energy sector, small startups with venture capital
    funding and the major DOE labs. The proposals are reviewed by teams
    made up of technical experts from inside and outside of DOD along with
    Service representatives familiar with the installations' needs; winning
    proposals are matched up with a Service and an installation at which to
    demonstrate the technology. ESTCP has funded about 70 projects, and the
    fiscal year 2010 projects will begin reporting results this year.
        The timing for an Energy Test Bed is ideal--one reason the response
    from industry has been so strong. The Federal Government has invested
    significant resources in energy R&D, largely through DOE, and the
    private sector is making even larger investments as evidenced by the
    growth of venture capital backing for ``cleantech.'' As a structured
    demonstration program linked to the large DOD market, the Test Bed can
    leverage these resources for the military's benefit.
                     energy conservation investment program
        The fiscal year 2013 budget requests $150 million for ECIP, $15
    million above the fiscal year 2012 appropriation. ECIP has a long
    history of producing savings for the Services, and we have reoriented
    the program to give it even greater leverage.
        ECIP traditionally has funded small projects that promised a
    significant payback in reduced energy costs, and the Services relied
    heavily on it to achieve their energy goals. In keeping with DOD's
    focus on energy, last year we began to reshape the role that ECIP
    plays--from one of funding the Services' routine energy projects to one
    of leveraging their now-larger investments in ways that will produce
    game-changing improvements in energy consumption, costs or security.
    Two other changes are worth noting. To encourage long-term planning, we
    are requiring the Services to build a 5-year program of projects that
    they want to get funded through ECIP. To encourage them to put forward
    their best ideas, we are replacing formula-funding with competition. In
    fiscal year 2013, we incorporated competition but guaranteed each
    service a minimum level of funding. Beginning in fiscal year 2014, we
    will award the funds based purely on competitive merit.
                            environmental management
        The Department has long made it a priority to protect the
    environment on our installations, not only to preserve irreplaceable
    resources for future generations, but to ensure that we have the land,
    water and airspace we need for military readiness. Over the last 10
    years, the Department has invested more than $40 billion in its
    environmental programs, and our steady level of expenditure has
    produced quality results. In the President's fiscal year 2013 budget,
    we are requesting $3.97 billion to continue the legacy of excellence in
    our environmental programs. While this is below the fiscal year 2012
    request, the reduction reflects management efficiencies and improved
    technology rather than any decline in effort.

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

                           environmental conservation
        In order to maintain access to the land, water and airspace needed
    to support our mission needs, the Department continues to manage
    successfully the many threatened and endangered species found on our
    lands. (Military installations are home to more than 400 threatened and
    endangered species, about 40 of which are found only on our
    installations.) DOD develops and implements detailed Installation
    Integrated Natural Resource Management Plans (INRMPs) in coordination
    with the U.S. Fish & Wildlife Service (USFWS) and its State
    counterparts. These plans help us avoid critical habitat designations--
    thereby maintaining our flexibility to carry out mission activities--
    while providing equal or greater protection for endangered species.
        To preserve mission readiness while complying with the Endangered
    Species Act, we must prepare for new requirements. The USFWS is
    required to evaluate 251 ``candidate'' species for potential listing on
    the Federal Endangered Species List by 2017. The Services have
    identified some 60 of these as species sufficiently present on our
    bases that a listing could impact mission activities. We are
    establishing a partnership with USFWS to share management and
    scientific data and discuss natural resource management actions that
    can benefit these species. We are also working with the Services to
    ensure they are actively managing the candidate species that pose the
    greatest risk to mission, including making the appropriate changes to
    their INRMPs.
        In addition to natural resources, the Department is responsible for
    thousands of archaeological sites, historic buildings and other
    cultural resources. DOD owns or manages the Nation's largest inventory
    of Federal historic properties and continues to use many of these
    historic properties to meet mission requirements. Use of these
    properties allows DOD to retain significant cultural resources for
    future generations. In addition, many older buildings have features
    that are now considered ``green,'' such as high ceilings to encourage
    air circulation, large windows to provide maximum natural light and
    operational shutters to reduce heat gain.
        The Department is requesting $378 million in fiscal year 2013 for
    environmental conservation, which includes $213 million in recurring
    funds for ongoing activities and $165 million in non-recurring funds
    for one-time projects directed at threatened and endangered species,
    wetland protection, or other natural, cultural and historical
    resources.
                           environmental restoration
        The Defense Environmental Restoration Program provides funds for
    two types of environmental cleanup. The Installation Restoration
    Program (IRP) manages the cleanup of hazardous substances, pollutants
    and contaminants--things that cause human health concerns. The Military
    Munitions Response Program (MMRP) manages the cleanup of unexploded
    ordnance and discarded military munitions--things that may explode. The
    cleanup occurs at three types of locations: Active military bases,
    bases closed through the BRAC process, and other Formerly Used Defense
    Sites (FUDS).
        By the end of 2011, the Department, in cooperation with State
    agencies and the U.S. Environmental Protection Agency, completed
    cleanup activities on 78 percent of IRP sites and is now monitoring the
    results. For MMRP sites, the comparable figure is 40 percent. The
    Department determines the order of cleanup for both IRP and MMRP sites
    on the basis of risk: By cleaning up the ``worst first,'' we reduce our
    long-term liability and expedite the return of properties to productive
    reuse.
        Our cleanup program is mature enough that we can begin to envision
    completion. We are approaching 2014, by which time we have committed to
    have a remedy in place (RIP) or response complete (RC) for every
    cleanup site. In anticipation of reaching that milestone, we are
    developing the next major goal for our environmental cleanup program.
    We have established as goals to achieve RC at 90 percent of our active
    installations in 2018 and at 95 percent in 2021. The sites that remain
    will be the most complex ones, and we will need to conduct another
    review of the cleanup program when we reach that point.
        We are requesting $1.8 billion for fiscal year 2013 to clean up IRP
    and MMRP sites. This includes $1.42 billion for ``Environmental
    Restoration,'' which encompasses active installations and FUDS sites,
    $318 million for ``Legacy BRAC Environmental'' and $73 million for
    ``BRAC 2005 Environmental.'' While these figures represent reductions
    from fiscal year 2012, we have not reduced our commitment to the
    program, as evidenced by our ambitious goals for achieving 95 percent
    RC over the next decade. Rather, the cut to Environmental Restoration
    is attributable to program reforms and reorganized oversight of the
    FUDS program by the Corps of Engineers. In addition, we have
    temporarily reduced investments in the MMRP portion of our program,
    anticipating validation of a major new cleanup approach able to detect
    and characterize unexploded ordinance (see the discussion below). We
    expect the MMRP request to increase once the new technology is
    validated and put into wider use. Finally, the BRAC investments are
    decreasing because we are making progress completing the much smaller
    number of BRAC sites.
                              pollution prevention
        For fiscal year 2013, the DOD is requesting $110 million for
    pollution prevention efforts. DOD's approach to pollution prevention
    has many elements: Recycling, reducing the use of hazardous materials
    and developing safer alternatives to them, eliminating the use of
    ozone-depleting substances, purchasing environmentally preferable
    products, and ensuring that DOD activities do not adversely impact the
    nation's air, water and land resources.
        DOD is working to incorporate sustainable practices into
    acquisition and maintenance operations of military systems and into the
    day-to-day operations of our installations. By designing systems or
    practices such that waste (hazardous or non-hazardous) is minimized or
    eliminated, we reduce the overall cost of operations over the long
    term. For operational systems that are well past the design phase, the
    pollution prevention program funds initiatives that will, for example,
    change maintenance practices or find alternatives for toxic substances
    used to prevent corrosion.
        With its limited budget, DOD's pollution prevention program has
    emphasized cost-effective investments that lower lifecycle costs and
    improve efficiency. These investments continue to pay dividends. In
    fiscal year 2011, the Department diverted 4.1 million tons or 64
    percent of our solid waste from landfills, avoiding approximately $148
    million in landfill disposal costs. We generated over 4 million tons of
    construction and demolition debris, diverting more than 77 percent of
    that debris to reuse and recycle. Additionally, the Department realized
    a 4-percent reduction in Toxic Release Inventory reportable releases in
    2010 compared to 2009.
                            environmental compliance
        Clean water and air are essential to the health and well-being of
    our communities and ecosystems. The Department continues to maintain a
    high level of compliance with environmental laws and regulations. For
    example, the Department provides safe drinking water to the 3.4 million
    men, women, and children working and living on our military
    installations. Our fiscal year 2013 budget requests $1.4 billion for
    environmental compliance--$103 million below last year's request. This
    decrease reflects the fact that the Department has completed many one-
    time repairs and upgrades to infrastructure, such as hazardous waste
    storage facilities, underground storage tanks, and waste water
    treatments facilities.
                            environmental technology
        A key part of DOD's approach to meeting its environmental
    obligations and improving its performance is its pursuit of advances in
    science and technology. The Department has a long record of success
    when it comes to developing innovative environmental technologies and
    getting them transferred out of the laboratory and into actual use--on
    our installations, in our depots and in the very weapon systems we
    acquire.
        To accomplish this, the Department relies on two closely linked
    programs--the Strategic Environmental Research and Development Program
    (SERDP) and the Environmental Security Technology Certification Program
    (ESTCP). SERDP is DOD's environmental science and technology program;
    its mission is to address high priority cross-service environmental
    requirements and develop solutions to the Department's most critical
    environmental challenges. As one of the only R&D programs aimed at
    reducing DOD operating costs, SERDP has allowed Department to avoid
    spending billions of dollars for environmental cleanup, environmental
    liability and weapons system maintenance. ESTCP's mission is to
    transition technology out of the lab. It does this by demonstrating the
    technology in a real-world setting, such as a clean-up site on a
    military installation or at an aircraft maintenance depot. This
    ``direct technology insertion'' has proven key to getting regulators
    and end users to embrace new technology.
        A decade ago, SERDP and ESTCP took on a challenge--developing
    technologies that could discriminate between scrap metal and hazardous
    UXO (``beer cans and bombs''). Current clean-up methods lack that
    ability--their false-positive rate is 99.99 percent. As a result,
    contractors must dig up hundreds of thousands of metal objects in order
    to identify and remove just a few pieces of UXO. Because this process
    is so labor-intensive, it is very expensive: The estimated cost to
    clean up UXO on known DOD sites is more than $14 billion. However, as I
    reported last year, 10 years of investment by SERDP and ESTCP have
    yielded technologies that can discriminate between UXO and harmless
    metal objects with a high degree of reliability. This is a remarkable
    achievement and one that many clean-up experts thought was impossible.
        ESTCP has initiated live-site demonstrations to acquire the data
    needed to validate, gain regulatory approval for and fully transition
    these technologies into the field. Beginning in fiscal year 2011, we
    accelerated these demonstrations so that the technology would be ready
    by 2015, when the Services undertake major UXO clean-up efforts. We
    have conducted demonstrations on seven sites exhibiting diverse
    conditions, and the results show that on most sites the new
    technologies can distinguish the metallic scrap 70-90 percent of the
    time.
        The challenges to implementing new technology go beyond
    demonstration of technical success, however. For these new UXO
    technologies to get deployed, our key partners--commercial cleanup
    firms, State and Federal regulators, and DOD contracting experts--must
    all be comfortable with what represents a fundamentally new approach to
    UXO cleanup (e.g., with the current technology, DOD pays contractors
    for each hole they dig up). Toward that end, my office is engaging with
    each group to work through its concerns. For example, contractors want
    to be sure they can recoup their investment in expensive new equipment;
    and regulators want to provide for management of the residual risk
    (i.e., any UXO found after the cleanup is complete). The interactions
    to date have been promising: All of our partners appear committed to
    adopting the new technologies once we have answered their concerns.
    State regulators are particularly supportive because they recognize
    that DOD will be able to clean up UXO sites sooner.
        The fiscal year 2013 budget request includes $65.3 million for
    SERDP and $43.9 million for ESTCP for environmental technology
    demonstrations. (The budget request for ESTCP includes an additional
    $32 million for energy technology demonstrations, as discussed in
    section III above.) Of the $43.9 million requested for ESTCP
    environmental technology demonstrations, $14 million will go to support
    the UXO live-site technology demonstrations.
        The fiscal year 2013 budget request for Environmental Technology
    overall is $220 million. In addition to SERDP and ESTCP, this includes
    funding for the Services' environmental research and development. The
    Services' investments focus on Service-unique environmental technology
    requirements and complement the larger, cross-Service SERDP and ESTCP
    investments. SERDP and ESTCP work closely with the Services to
    coordinate and leverage their investments.
                             compatible development
        Encroachment is a growing challenge to the military mission,
    particularly test and training. Sprawl, incompatible land use and other
    forms of encroachment put the Department's test and training missions
    at risk and reduce military readiness. For example, lights from
    developments near installations reduce the effectiveness of night
    vision training, and land development that destroys endangered species
    habitat causes those species to move onto less developed military
    lands, resulting in restrictions on the type, timing and frequency of
    test and training. I want to highlight three efforts I oversee that are
    designed to deal with this challenge.
               readiness and environmental protection initiative
        The Readiness and Environmental Protection Initiative (REPI) is a
    key tool for combating the encroachment that could negatively impact
    the operations of our bases. Under REPI, the Department partners with
    conservation organizations and State and local governments to preserve
    buffer land around our installations and ranges. The preservation of
    buffer land allows the Department to avoid much more costly
    alternatives, such as training workarounds or investments to replace
    existing testing and training capability. Through its unique cost-
    sharing partnerships, REPI directly leverages the Department's
    investments one-to-one. In the current real estate market, where
    property is more affordable and there are a great may willing sellers,
    REPI is a particularly good investment.
        REPI's utility can be enhanced by looking beyond the immediate
    vicinity of installations and leveraging it across a regional
    landscape. For example, the airspace in and around Eglin Air Force Base
    has become increasingly crowded as new missions drive testing and
    training requirements. To avoid saturating the airspace, the Air Force
    is looking at the possibility of conducting missions across the entire
    gulf coast region (lower Alabama, Mississippi and the Florida
    Panhandle) in an effort called the Gulf Regional Airspace Strategic
    Initiative (GRASI). REPI can help GRASI achieve its goals by conserving
    key areas well outside Eglin--effectively expanding the training space
    available to Eglin and other installations in the region. This strategy
    will allow the Air Force to expand capacity at a fraction of what it
    would cost to acquire additional installations and build permanent
    infrastructure. Further, REPI hopes to take advantage of its unique
    authority by leveraging funding from environmental organizations that
    have a similarly ambitious plan to conserve lands in this region,
    providing an opportunity to meet compatible military and environmental
    goals at reduced cost for each stakeholder.
        The President's fiscal year 2013 budget requests $50.6 million for
    REPI.
             office of economic adjustment's compatible use program
        OEA's Compatible Use Program provides direct assistance to
    communities to help them prevent and/or mitigate development that is
    incompatible with nearby military operations. OEA provides technical
    and financial assistance to State and local governments to undertake a
    Joint Land Use Study (JLUS) in cooperation with the local military
    installation.
        A JLUS serves as a powerful tool to bring a military installation
    and the surrounding community together to identify and address
    compatible use issues, develop a set of compatibility guidelines and
    implement specific measures to ensure the long-term viability of the
    military mission. The kinds of implementation measures that come out of
    a JLUS include: Conservation buffers; aviation easements; the
    establishment of military influence areas with associated limits on
    development; the incorporation of sound-attenuation measures into
    building codes; requirements for disclosure of military activities
    (e.g., aircraft noise) in real estate transactions; ordinances to limit
    lighting that would interfere with night vision training; the transfer
    of development rights; and local development review procedures that
    ensure military input.
        OEA has more than 70 JLUS projects currently underway, and they
    provide a useful complement to REPI's efforts. For example, through the
    JLUS process, military and stakeholder communities may identify an
    issue for which a REPI project may provide resolution.
                            renewable energy siting
        Although most transmission and renewable energy projects are
    compatible with the military mission, some can interfere with test,
    training and operational activities. Until recently, the process by
    which DOD reviewed projects and handled disputes was opaque, time-
    consuming and ad hoc, resulting in costly delays. Spurred in part by
    Congress, DOD created the DOD Siting Clearinghouse to serve as a single
    point of contact within the Department on this issue and to establish a
    timely and transparent review process. The goal is to facilitate the
    siting of energy projects while protecting test, training, and
    operational assets vital to the national defense.
        The results are impressive: To date, the Clearinghouse has overseen
    the evaluation by technical experts of 506 proposed energy projects;
    486 of these projects, or 96 percent, have been cleared, having been
    found to have little or no impact. These 486 projects represent 24
    gigawatts of potential energy from wind, solar and geothermal sources.
    The 20 projects that have not been cleared are undergoing further
    study, and we are working with industry, State and local governments,
    and Federal permitting and regulatory agencies to identify and
    implement mitigation measures wherever possible.
        In addition to reviewing projects, the Clearinghouse has conducted
    aggressive outreach to energy developers, environmental and
    conservation groups, State and local governments, and other Federal
    agencies. By encouraging developers to share project information, we
    hope to avert potential problems early in the process. We are being
    proactive as well in looking at regions where renewable projects could
    threaten valuable test and training ranges.\11\ The Clearinghouse is
    working with DOE, DHS, and the Federal Aviation Administration to model
    the impact of turbines on surveillance radars, evaluate alternative
    mitigation technologies, and expedite fielding of validated solutions.
    ---------------------------------------------------------------------------
        \11\ DOD is conducting a study to identify areas of likely adverse
    mission impact in the region that is home to China Lake and Edwards Air
    Force Base in California, and Nellis Air Force Base and the Nevada Test
    and Training Range in Nevada. These installations are the Department's
    premier sites for test and evaluation and require a pristine
    environment clear of interference. The results of the study will be
    used to inform stakeholders of areas where the Department is likely to
    oppose the siting of wind turbines and solar towers.
    ---------------------------------------------------------------------------
        Finally, the Clearinghouse is taking advantage of section 358 of
    the fiscal year 2011 NDAA, which allows DOD to accept voluntary
    contributions from developers to pay for mitigation. The Clearinghouse
    and the Navy recently negotiated an agreement that provides for the
    developer to pay the cost to mitigate the impact of wind turbines on
    the precision approach radar on a runway at Naval Air Station (NAS)
    Kingsville, Texas. The agreement facilitates the continued growth of
    wind energy generation along the Texas Coastal Plain while providing
    for the safety of student pilots at NAS Kingsville and NAS Corpus
    Christi. We believe there will be many other situations in which a
    developer is willing to pay the relatively small cost of mitigation in
    order to realize the much larger value of the project; section 358 is
    an extremely useful, market-based tool that allows us to negotiate
    those win-win deals.
                                   conclusion
        My office takes seriously our mission to strengthen DOD's
    infrastructure backbone--the installations that serve to train, deploy
    and support our warfighters. Thank you for your strong support for the
    Department's installation and environment programs and for its military
    mission more broadly. I look forward to working with you on the
    challenges and opportunities ahead.

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

                                 SEQUESTRATION

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

                          BASE REALIGNMENT AND CLOSURE

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

                                OVERSEAS BASING

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

                       AIR NATIONAL GUARD AND AIR RESERVE

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

        Based on the current fiscal environment, the Air Force budget
    balanced reductions with the need to maintain a more capable force.
        While cost savings are part of the decisionmaking process, the most
    important factor is the Air Force's ability to provide the capabilities
    required by the new Defense Strategic Guidance, ``Sustaining U.S.
    Global Leadership: Priorities for 21st Century Defense.'' This new
    strategy directs the services to build a leaner, more flexible, and
    technologically advanced force. As a result, the Air Force is
    rebalancing our Total Force to match the capability and capacity
    requirements of the new guidance. The proposed Reserve component force
    structure reductions were determined using a deliberate and
    collaborative process which leveraged careful analytical review of
    warfighting scenarios consistent with the new strategic guidance. Two
    decades of military end strength and force structure reductions in our
    Active Duty component have changed the Active and Reserve component
    mix, and achieving the appropriate Active and Reserve component mix is
    critical to sustaining Air Force capabilities for forward presence and
    rapid response, as well as meeting high rate rotational demands with a
    smaller force.
        Air Force analysis, based on scenarios consistent with the new
    Defense Strategic Guidance, resulted in a reduced requirement for
    tactical combat aircraft and intra-theater airlift. The analysis
    identified a preference for multi-role aircraft to provide the most
    flexible capability within each scenario. As a result, A-10 retirements
    were selected in lieu of other combat aircraft and the Air Force made
    the difficult choice to retire five A-10 squadrons totaling 102 A-10
    aircraft.
        As mission demands evolve and resource constraints emerge, the Air
    Force will continue to leverage the collective talent and experience of
    our Air Force Reserve and Air National Guard partners to provide the
    most effective and efficient air, space, and cyberspace power for the
    Nation.

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

                          BASE REALIGNMENT AND CLOSURE

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

                                   HOSPITALS

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

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

                          BASE REALIGNMENT AND CLOSURE

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

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

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

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

        Senator Murkowski. Thank you, Mr. Chairman.

                         ADDITIONAL COMMITTEE QUESTIONS

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

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

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

                    Questions Submitted to Dr. Dorothy Robyn
                   Questions Submitted by Senator Tim Johnson
        Question. Dr. Robyn, according to your written testimony, DOD is
    reshaping the Energy Conservation Investment Program (ECIP) to focus on
    larger investments that produce ``game-changing'' improvements in
    energy consumption. What constitutes a ``game-changing'' improvement,
    and are there any in the fiscal year 2013 budget request?
        Answer. Game-changing improvements are intended to leverage the
    Services' larger investments in energy to create synergistic effects on
    the energy consumption, utilities cost or energy security of a
    particular installation. The six overarching program objectives for
    this concept are:
      --Dramatically change the energy consumption at an individual
            installation or Joint Base;
      --Implement a technology validated in a demonstration program
            sponsored by the DOD such as the Environmental Security
            Technology Certification Program (ESTCP);
      --Integrate multiple energy savings, monitoring, and renewable energy
            technologies to realize synergistic benefits;
      --Integrate distributed generation or storage to improve energy
            security and supply resilience for critical loads;
      --Implement an energy security plan at a given installation
            especially when such an investment entails partnering with the
            Department of Energy; and
      --Maximize contribution towards a Service's or installation's energy
            intensity, renewable energy and water consumption reduction
            goals put forth in the Department's Strategic Sustainability
            Performance Plan.
        In the fiscal year 2013 program, there are two projects which could
    be considered game-changing on a small scale. A 1.0 MW solar microgrid
    at Fort Hunter Liggett, California, incorporates distributed renewable
    energy production to improve energy security and provide reliable
    energy supply for critical loads on the base. This project is also a
    critical element in the Army's efforts to make Fort Hunter Liggett one
    of its net-zero energy bases, integrating multiple technologies to help
    it maximize its contribution to the Army's strategic energy plan. A
    combined heat and power plant in Quantico, Virginia, similarly creates
    reliable distributed generation to improve energy security on base. The
    plant also contributes to the base's energy intensity goals by
    efficiently reusing the waste heat that is generated by the plant.
        Question. Dr. Robyn, you note that in fiscal year 2014, DOD will
    replace ECIP formula funding with competitive, merit based funding.
    What criteria will you use to determine which projects have the most
    merit? Are you taking steps to make sure the services are aware of
    these criteria and that the process is transparent?
        Answer. The Department issues annual ECIP guidance to the Services
    to establish priorities, processes and criteria for their project
    submissions. The criteria used for fiscal year 2013 ECIP project
    selection are identified in the table below. Before issuing guidance to
    the Services for their fiscal year 2014 ECIP submissions, we intend to
    conduct a series of working group meetings with ECIP stakeholders from
    the DOD services and agencies to refine these criteria and our
    evaluation process.
                    Questions Submitted by Senator Mark Kirk
                                energy security
        Question. Dr. Robyn, under your leadership the Department of
    Defense has done an outstanding job advocating energy efficient and
    alternative energy projects, but there is one aspect of the new energy
    program that I am concerned about and that is energy security. Our
    power grids are indispensable to the operational missions of our bases
    and a cyber attack on a grid that makes the base go dark could prove
    disastrous. I applaud the focus on renewable sources of energy but I do
    not see the same focus on energy security.
        Is the focus on renewable energy more of a priority that energy
    security?
        Answer. Energy security is the primary reason we are pursuing
    renewable energy development, since it provides an independent energy
    source for our installations. Due to the intermittent nature of most
    renewable energy, however, we must combine these projects with
    microgrids and energy storage technologies.
        The combination of on-site energy and storage, together with the
    microgrid's ability to manage local energy supply and demand, will
    allow an installation to shed non-essential loads and maintain mission-
    critical loads if the grid goes down. DOD had made the development of
    advanced micogrids a major priority. Towards this end, the
    Environmental Security Technology Certification Program (ESTCP) is
    pursuing a wide range of technology and innovation efforts. ESTCP has
    funded 10 demonstrations of microgrid and storage technologies to
    evaluate the benefits and risks of alternative approaches and
    configurations.
        Question. There are several microgrid demonstration projects
    underway at this time and I would like to know if you plan to
    incorporate microgrid technology into your energy programs to ensure
    greater energy security. Do you have any thoughts on this technology
    yet?
        Answer. A major focus of my office is advanced, or ``smart,''
    microgrid technology. Smart microgrids and energy storage offer a more
    robust and cost effective approach to ensuring installation energy
    security than the current one--namely, back-up generators and (limited)
    supplies of on-site fuel. Although microgrid systems are in use today,
    they are relatively unsophisticated, with limited ability to integrate
    renewable and other distributed energy sources, little or no energy
    storage capability, uncontrolled load demands, and ``dumb''
    distribution that is subject to excessive losses. By contrast, we
    envision microgrids as local power networks that can utilize
    distributed energy, manage local energy supply and demand, and operate
    seamlessly both in parallel to the grid and in ``island'' mode.
        Advanced microgrids are a ``triple play'' for DOD's installations.
    First, they will facilitate the incorporation of renewable and other
    on-site energy generation. Second, they will reduce installation energy
    costs on a day-to-day basis by allowing for load balancing and demand
    response--i.e., the ability to curtail load or increase on-site
    generation in response to a request from the grid operator. Most
    important, the combination of on-site energy and storage, together with
    the microgrid's ability to manage local energy supply and demand, will
    allow an installation to shed non-essential loads and maintain mission-
    critical loads if the grid goes down.
        The Installation Energy Test Bed, discussed below, has funded 10
    demonstrations of microgrid and storage technologies to evaluate the
    benefits and risks of alternative approaches and configurations. We are
    working with multiple vendors so as to ensure that we can capture the
    benefits of competition. Demonstrations are underway at Twentynine
    Palms, California (General Electric's advanced microgrid system); Fort
    Bliss, Texas (Lockheed Martin); Joint Base McGuire-Dix-Lakehurst, New
    Jersey (United Technologies); Fort Sill, Oklahoma (Eaton); and several
    other installations.
        In addition to funding technology demonstrations, my office has
    commissioned three studies from outside experts. First, Massachusetts
    Institute of Technology's Lincoln Laboratory is reviewing all of the
    Department's work on microgrids from a technical standpoint, and its
    report will be completed in May. In addition to helping us understand
    the range of ongoing activity, Lincoln Lab's work will serve to
    classify different microgrid architectures and characteristics and
    compare their relative cost-effectiveness. Second, a private
    organization is just beginning a financial analysis of the
    opportunities for installations to use smart microgrids and other
    energy security technologies (on-site generation, load management,
    stationary energy storage and electric vehicle-to-grid) to generate
    revenue. Although some installations engage in demand response even
    with their existing energy systems (typically, a base agrees to use
    backup generators on a few peak demand days in return for a payment
    from the local utility), advanced microgrid and storage systems will
    create opportunities for much more sophisticated and lucrative
    transactions. Third, Business Executives for National Security (BENS),
    a nonprofit, is analyzing alternative business models for the
    deployment of microgrids on military installations. As part of that
    analysis, which will be completed this summer, BENS is looking at the
    appropriate scale and scope for an installation microgrid (e.g., Should
    it stop at the fence or include critical activities in the adjacent
    community?) and at the impediments to widespread deployment.
                                energy security
        Question. What are you doing to ensure energy security,
    particularly cybersecurity, is part of the Services plan for energy
    projects?
        Answer. The Department is pursuing use of microgrid technology,
    combined with on-site energy generation, to improve the energy security
    of its fixed installations. Our installations rely almost completely on
    the U.S. electric grid for power. Since the grid is vulnerable to cyber
    threats, use of microgrids must be cyber secure to provide reliable
    backup in the face of a cyber threat. The Department will use existing
    standards, such as National Institute of Standards and Technology
    (NIST) and DOD Information Assurance Certification and Accreditation
    Process (DIACAP), to ensure its microgrids are protected from
    everything that can prevent critical applications from satisfying their
    intended requirements, including insider and outsider misuse, malware
    and other system subversions, physical damage, and environmental
    disruptions. The application of existing recognized approaches to DOD
    microgrids, such as NIST's Guidelines for Smart Grid Cyber Security,
    will ensure that the Department is able to meet today's cyber threat
    challenges.
        These approaches are being used in the DOD's Environmental Security
    Test and Certification Program's (ETCPs) microgrid demonstration
    projects. ESTCP has funded 10 demonstrations of microgrid and storage
    technologies to evaluate the benefits and risks of alternative
    approaches and configurations. The Department is also testing the
    adequacy of these standards for cybersecurity in the Smart Power
    Infrastructure Demonstration for Energy Reliability and Security
    (SPIDERS) program. This effort is investigating cyber protection of
    industrial control systems and integration of distributed generation
    with renewable energy sources, including conducting exercises to test
    performance against cyber threats. SPIDERS will provide a replicable
    cybersecurity template when employing microgrids at DOD installations.
                              rock island arsenal
        Question. In May 2011, the G-4 Director for Maintenance Policy,
    Programs, and Process briefed me on the Army's ongoing Organic
    Industrial Base Policy Review. Since then, the Army continues to refuse
    requests to provide updates on that strategy refresh. The fiscal year
    2012 budget that the committee supported contained MILCON that the Army
    requested to expand capacity at Army organic industrial base (OIB)
    facilities. While the fiscal year 2013 contains limited MILCON at
    organic industrial facilities, we remained concerned about the absence
    of a strategy.
        Could you please outline the Army's strategy for work-loading its
    organic industrial base to a sufficient level to ensure it remains
    viable to meet future wartime needs, and specifically the Joint
    Manufacturing and Technology Center Rock Island Arsenal?
        Answer. The Army's workload will decline in the future because of
    the drawdown from current contingency operations. Linking the depots
    and arsenals, including the Rock Island Arsenal Joint Manufacturing and
    Technology Center, with the critical items they repair and manufacture
    will be the first step in establishing a sound baseline to determine
    required capability, capacity, capital investment requirements, and
    workload. This will allow both the depot maintenance and arsenal
    manufacturing competencies to remain complementary with private
    industry, and support the Army's action to right size the Government-
    owned maintenance and manufacturing base and encourage more public-
    private partnerships.
        The Army is assessing ways to maintain critical skill sets at
    organic facilities like Rock Island Arsenal by:
      --Exploring Foreign Military Sale opportunities to manufacture
            components for foreign nations;
      --Investing in organic facilities infrastructure to ensure
            modernization with advanced technological capabilities;
      --Encouraging organic facilities to partner with commercial firms to
            meet future requirements; and
      --Encouraging involvement with the programs managers at the beginning
            of the acquisition process to ensure consideration of organic
            facility capabilities when economically feasible.
        The Army will designate critical items to be manufactured at
    facilities based on manufacturing economies or unique manufacturing
    capabilities such as those at Rock Island Arsenal. This sustains
    efficient and cost-effective facilities. In such cases, the Army will
    identify the type of work and resources needed to sustain the
    capability and capacity and will develop an implementation strategy to
    do so.
        Further, the Army has taken a number of steps to ensure that our
    organic facilities are postured to support requirements by identifying
    and prioritizing core requirements; sizing the facilities,
    infrastructure, and workforce to meet and sustain those core
    requirements; and using proven practices like Lean Six Sigma to ensure
    that its organic facilities maintain their core competencies and
    capabilities to meet future requirements.
        The Army's will ensure that the Army's OIB, including Rock Island
    Arsenal, remains viable and relevant by investing in new technology;
    providing training and plant equipment to support the modernization of
    Army weapon systems; identifying and aligning core competencies and
    resources to support current and future surge requirements; investing
    to maintain state-of-the-art capabilities and quality of work
    environment standards; and prioritizing funding to achieve the desired
    end state--viable and relevant OIB facilities.
        Question. To date, there has been no substantive joint-service
    work-loading of the Arsenal. What steps is the Army taking to engage
    the other services and expand access to its industrial base facilities,
    specifically Rock Island Arsenal? Please be specific and offer a
    timeline.
        Answer. The Army is working to ensure that the capabilities of the
    Army manufacturing arsenals are known and provided to all Department of
    Defense (DOD) Program Managers. This helps maintain the viability of
    the Army manufacturing arsenals and the unique capabilities of these
    arsenals to support the national security interests of the United
    States. We are encouraging the DOD Program Managers to compete or
    partner with commercial manufacturing sources for weapon system
    assembly, sub-assembly, and component manufacturing workloads.
    Partnering between the arsenal and commercial section should occur if
    it's economical to do so or if it's needed to support a unique,
    necessary capability of the arsenal.
        Workloads in all Army organic industrial base facilities are
    projected to decline at moderate rates through fiscal year 2015 as
    operational requirements are reduced in Iraq and Afghanistan.
    Throughout this period and beyond, the Army's arsenals will continue to
    be designated as Centers of Industrial and Technical Excellence (CITE)
    for maintenance and repair; for example, Rock Island Arsenal Joint
    Manufacturing Technology Center is designated as a CITE for Mobile
    Maintenance Systems.
        Question. Are there any studies, reviews, and/or activities
    underway within the Army that could lead to the closure of the Joint
    Manufacturing and Technology Center Rock Island Arsenal? Please list
    all studies, reviews, and/or activities; the responsible USG/Army
    entity; and the final decision maker for each.
        Answer. We know of no study that specifically recommends the
    closure of the Joint Manufacturing and Technology Center Rock Island
    Arsenal. The Secretary of Defense has requested Base Realignment and
    Closure (BRAC) legislation in order to give the Department of Defense
    (DOD) a tool for reshaping and right-sizing its infrastructure.
    Potential closures or realignments of any Army installation would be
    considered as part of this process.
        In 2011, the Secretary of the Army directed the Army Materiel
    Command and the Assistant Secretary of the Army for Acquisition,
    Logistics and Technology to conduct a study on the optimization of
    materiel development and sustainment. The study will examine ways to
    improve the Army materiel and sustainment processes and institutions
    and is currently on-going.
                                     ______

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

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

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

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

                 SUMMARY STATEMENT OF HON. KATHERINE G. HAMMACK

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

                               PREPARED STATEMENT

        In closing, I want to thank you for the opportunity to
    appear before you today and for your continued support for our
    Army soldiers, families, and civilians. I look forward to your
    questions.
        [The statement follows:]
      Prepared Statement of Hon. Katherine G. Hammack; Lieutenant General
        Michael Ferriter; Major General Timothy J. Kadavy; and Tad Davis
                                  introduction
        Chairman Johnson, Senator Kirk and members of the subcommittee, on
    behalf of the soldiers, families and civilians of the United States
    Army, I want to thank you for the opportunity to present the Army's
    Installation Management Community fiscal year 2013 Military
    Construction budget request.
        The Army's fiscal year 2013 Military Construction budget request
    supports an Army in transition while still at war. We understand the
    fiscal challenges faced by the Nation. Through efforts like the Army
    Facility Strategy 2020, the Army Family Covenant, the Army Community
    Covenant, and the Army Energy Enterprise, the Installation Management
    Community is focused on providing the facilities to support a trained
    and ready land force. We continue to be careful stewards of both the
    fiscal and environmental resources provided to the Army.
        Over the past 4 years, the Army, with the support of the Congress,
    has regained balance, restoring strategic flexibility for the Nation.
    Continued support of the Congress will ensure the Army remains manned,
    trained, equipped and ready for all challenges and to protect America's
    interests at home and abroad. The subcommittee's commitment to our
    soldiers, families, and civilians and support of the Army's military
    construction program is deeply appreciated. The Army's strength is its
    soldiers--and the families and army civilians who support them. They
    are and will continue to be the centerpiece of our Army. America's Army
    is the strength of the Nation.
                                    overview
        The Army's fiscal year 2013 President's budget requests $3.6
    billion for Military Construction (MILCON), Army Family Housing (AFH),
    and Base Realignment and Closure (BRAC). This request is $1.7 billion
    less or a 32-percent reduction from the fiscal year 2012 request. The
    $3.6 billion request represents 3 percent of the total Army budget. Of
    the $3.6 billion requested, $1.9 billion is for the Active Army, $614
    million is for the Army National Guard, $306 million is for the Army
    Reserve, $186 million is for BRAC, and $535 million is for AFH. In
    addition and in support of Army installations and facilities the
    President's budget requested $9.0 billion for Base Operations Support
    (BOS) and $1.17 billion for environmental programs.
        The 32-percent reduction in this budget request reflects the new
    fiscal reality that we are facing as a Nation. The Budget Control Act
    of 2011 combined with the pending strategic decisions on Army end-
    strength reductions and force structure and stationing across the
    country required the Army to review the facility investments necessary
    to sustain an All Volunteer Army. This MILCON budget request reflects
    the investments required in training, maintenance, operations, and
    quality of life facilities to preserve the all volunteer force.
                          army facility strategy 2020
        As we shape the Army of 2020 through a series of strategic choices
    over the coming months and years, the Installation Management Community
    looks to implement its Army Facility Strategy 2020 (AFS 2020) to
    provide quality, energy efficient facilities in support of the Force.
    AFS 2020 provides a strategic framework to manage facilities at Army
    installations and is integrated with Army Systems and Force Structure
    decisions. AFS 2020 proposes a more cost-effective and efficient
    approach to facility investments that reduces unneeded footprint, saves
    energy by preserving more efficient facilities, consolidates functions
    for better space utilization, demolishes failing buildings and uses
    appropriate excess facilities as lease alternatives while meeting
    future Force drawdown as a 2020 objective.
        AFS 2020 incorporates a facility investment strategy using MILCON
    funding to build out critical facility shortages; MILCON and Operation
    & Maintenance-Restoration & Modernization (O&M R&M) funding to improve
    existing facility quality; O&M Sustainment funding to maintain existing
    facilities; and O&M Demolition and Disposal funding to eliminate
    failing excess facilities. Investments from MILCON and O&M funding will
    support facilities grouped in the following categories: Global Defense
    Posture Realignment; Redeployment/Force Structure; Modularity;
    Barracks; Recapitalization/Deficit; and Ranges and Training Facilities.
    The fiscal year 2013 budget request begins the implementation of the
    AFS 2020 Facility Investment Strategy (FIS) by building out shortfalls
    for barracks, maintenance facilities, ranges, and Reserve component
    facilities.
                        fiscal year 2013 budget request
                          military construction, army
        The Active Army fiscal year 2013 Military Construction, Army (MCA)
    budget request is for $1,923,323,000 (for appropriation and
    authorization of appropriations) to support the Army facility
    investment strategy. There are no requests for construction in Germany
    as we reassess our force structure in that country. The MCA budget has
    been further reduced by deferring projects that could be impacted by
    the Total Army Analysis (TAA). Upon completion of the TAA, future MCA
    budget requests will be rebalanced to meet the needs of a realigned
    force.
        Barracks Buyout ($401 Million/21 Percent).--The fiscal year 2013
    budget request will provide for 1,180 new permanent party barracks
    spaces that will meet Department of Defense ``1+1'' construction
    standard and contribute to the reduction of inadequate permanent party
    barracks and deficits. The locations of these projects are at Joint
    Base San Antonio, Texas; Wheeler Army Air Field and Schofield Barracks,
    Hawaii; and Camp Ederle, Italy. The fiscal year 2013 request will also
    provide our soldiers 2,280 new training barracks spaces that meet
    applicable standards. The locations of these projects are at Fort
    Jackson, South Carolina; Fort Lee, Virginia; and Fort Leonard Wood,
    Missouri. The total barracks buyout investments will provide 3,460
    spaces at seven installations.
        Global Defense Posture Realignment ($128 Million/7 Percent).--The
    fiscal year 2013 budget request includes two projects that support
    forward deployed forces in the Pacific Theater: $45 million for a
    battalion complex at Army Garrison Humphreys in South Korea and $18
    million for a vehicle maintenance facility in Sagami, Japan. The
    request also includes $65 million for two mission projects for units
    currently stationed at Fort Leonard Wood, Missouri in temporary or
    failing structures.
        Modularity ($301 Million/16 Percent).--The fiscal year 2013 budget
    requests $78 million to support a critical strategic communication
    facility required by the Army's Network Enterprise Technology Command
    in its continuous pursuit of improved command and control,
    communication and intelligence linkages between Combatant Commanders
    and the National Command Authorities. Another $128 million supports
    barracks and mission facilities for unaccompanied soldiers at Fort
    Campbell, Kentucky and Joint Base Lewis-McChord, Washington. The
    remaining $95 million will provide aircraft maintenance hangers for the
    Combat Aviation Brigade at Fort Drum, New York.
        Redeployment/Force Structure ($165 Million/9 Percent).--The fiscal
    year 2013 budget request includes $30 million for infrastructure
    necessary to support six Special Operations Command (SOCOM) buildings
    programmed in fiscal years 2012 and 2013. Senate Report 104-116
    accompanying the Military Construction Appropriation Bill, 1996,
    prohibited the inclusion of infrastructure improvements in SOCOM
    Defense Wide MILCON budget requests and Senate Report 104-116 directed
    the military departments responsible for supporting the special
    operations forces to provide installation infrastructure as well as
    other common support facilities. The request includes $107 million to
    support the fielding of the Gray Eagle units at Fort Bragg, North
    Carolina; Fort Campbell, Kentucky; Fort Hood, Texas; Fort Riley,
    Kansas; and Fort Stewart, Georgia. As a result of the Energy
    Independence and Security Act of 2007 and Executive Order, the
    remaining $28 million replaces failing heating systems with ground
    source heat transfer systems at Fort Benning and Fort Gordon, Georgia.
        Recapitalization/Deficit: ($572 Million/30 Percent).--The fiscal
    year 2013 budget request includes 11 projects with investments of $94
    million for operations facilities, $202 million for operational support
    facilities and $276 million for institutional support projects.
    Included in the $202 million is $91 million for a waste water treatment
    plant at Joint Base Lewis-McChord, Washington. Joint Base Lewis-McChord
    must recapitalize this plant to meet the more stringent Puget Sound
    effluent standards and avoid escalating environmental violations. Also
    included is $93 million to support the upgrade of the Army's aging
    critical industrial base facilities located at Corpus Christi Army
    Depot, Texas; Joint Base McGuire-Dix-Lakehurst, New Jersey; and the
    Military Ocean Terminal Concord, California. The two institutional
    support projects are the Cadet Barracks at the United States Military
    Academy for $192 million and the expansion of the Arlington National
    Cemetery for $84 million. The Cadet Barracks will provide 325 modern
    two-person rooms for the future leaders of the Army, eliminating
    current overcrowding. The expansion of the Arlington National
    Cemetery's Millennium Site will provide hallowed burial grounds for
    soldiers, sailors, airmen, and marines beyond 2025.
        Ranges and Training Facilities ($232 Million/12 Percent).--The
    fiscal year 2013 budget request includes $160 million for training
    ranges to support multiple weapon systems and $72 million in digital/
    simulations training facilities. The Army ranges and training
    facilities are used by all components of the Army to achieve mission
    combat readiness. The current ranges do not meet the quantity required
    by training demands and/or require modernization to meet current
    weapons qualification standards.
        Other Support Programs ($124 Million/6 Percent).--The fiscal year
    2013 budget request includes $65 million for planning and design of MCA
    projects and $34 million for the oversight of design and construction
    of projects funded by host nations. As executive agent, the Army
    provides oversight of host nation funded construction in Japan, Korea,
    and Europe for all Services. The fiscal year 2013 budget also requests
    $25 million for unspecified minor construction to address unforeseen
    critical needs.
                   military construction, army national guard
        The Army National Guard fiscal year 2013 MILCON budget request of
    $613,799,000 (for appropriation and authorization of appropriations) is
    focused on Modularity, Recapitalization/Deficit, Ranges and Training
    Facilities, Barracks, and other support programs.
        Modularity ($227.2 Million/37 Percent).--The fiscal year 2013
    budget request is comprised of 15 projects, which include nine
    Readiness Centers/Armed Forces Reserve Centers, two Combined Support
    Maintenance Shops, two Army Aviation Support Facilities, one Field
    Maintenance Shop, and one Refill Station Building.
        Recapitalization/Deficit ($310.5 Million/51 Percent).--The Army
    National Guard budget requests 18 projects to replace failing,
    inefficient facilities. There is one Maneuver Area Training & Equipment
    Site, four Regional Training Institutes (RTI), five Readiness Centers/
    Armed Forces Reserve Centers, two Operations Readiness Training
    Complexes, three Field Maintenance Shops, one Taxiway, Ramp & Hangar
    Alterations, one Unit Training Equipment Site, and one RTI enlisted
    barracks. These projects will provide modernized facilities to enhance
    the Guard's operational readiness.
        Ranges and Training Facilities ($34.4 Million/5 Percent).--The
    fiscal year 2013 budget request includes four projects which will
    support the Army National Guard's training of its operational force.
    These funds will provide the facilities soldiers require as they train,
    mobilize, and deploy. Included are one Live Fire Shoot House, one
    Combined Arms Collective Training Facility, one Urban Assault Course,
    and one Scout Reconnaissance Range.
        Other Support Programs ($41.7 Million/7 Percent).--The fiscal year
    2013 Army National Guard budget request includes $26.6 million for
    planning and design of future projects and $15.1million for unspecified
    minor military construction to address unforeseen critical needs.
        Special Program Considerations.--The Army National Guard requests a
    technical correction to the scope of the fiscal year 2010 North Las
    Vegas, Nevada Readiness Center. Due to technical errors, the DD form
    1391 did not reflect the correct size for two line items and omitted
    one line item from what was presented to Congress. The Readiness Center
    should read 68,593 square feet (SF) vice 65,347 SF, and the unheated
    equipment storage area read 10,000 SF vice 4,800 SF. In addition 25,000
    SF unheated vehicle storage must be added. All changes in scope can be
    executed within the appropriated amount of the project.
                      military construction, army reserve
        The Army Reserve fiscal year 2013 MILCON budget request for
    $305,846,000 (for appropriation and authorization of appropriations) is
    for Recapitalization/Deficit; Ranges and Training Facilities, Barracks,
    and other support programs.
        Recapitalization/Deficit ($258.8 Million/85 Percent).--The fiscal
    year 2013 Army Reserve budget request includes $258.8 million for
    facilities that prepare our soldiers for success in current operations.
    The construction of six new Army Reserve Centers, one Armed Forces
    Reserve Center, and one Operational Readiness Training Complex will
    provide modernized training classrooms, simulations capabilities, and
    maintenance platforms that support the Army force generation cycle and
    the ability of the Army Reserve to provide trained and ready soldiers
    for Army missions when called. The construction of one Equipment
    Concentration Site will enhance maintenance, equipment training set and
    storage capacity at Fort McCoy, Wisconsin. In addition, the request
    includes a new Central Issue Facility and a consolidated Dining
    Facility at Fort McCoy. The construction of these two facilities will
    provide modern, technologically advanced and energy efficient
    facilities, as well as demolish eight failing World War II-era wood
    structures.
        Ranges and Training Facilities ($15.9 Million/5 Percent).--The
    budget request includes three ranges that enable soldiers to hone their
    combat skills. Two ranges will be constructed at the Devens Reserve
    Forces Training Area, Massachusetts, and one will be constructed at
    Joint Base McGuire-Dix-Lakehurst, New Jersey, to support Reserve
    component soldiers in the northeastern part of the country.
        Barracks Buyout ($4.3 Million/1 Percent).--The budget request
    includes an Unaccompanied Personnel Housing (UPH) barracks project for
    permanent party soldiers assigned to Fort Hunter-Liggett, California.
        Other Support Programs ($26.8 Million/9 Percent).--The fiscal year
    2013 Army Reserve budget request includes $15.9 million for planning
    and design of future year projects and $10.9 million for unspecified
    minor military construction to address unforeseen critical needs.
                              army family housing
        The Army's fiscal year 2013 budget request for $534,692,000 (for
    appropriation and authorization of appropriations) is for the Army's
    investment in and operation of its worldwide inventory of family
    housing assets. The Army relies first on the local economy to provide
    housing for our soldiers. When housing on the economy is not available,
    the Army provides housing by various means including Government-owned,
    privatized, and leased housing. The Army has successfully privatized 98
    percent of on-post housing assets inside the United States, while
    overseas we primarily house families in Army-owned and leased quarters.
        Residential Communities Initiative (RCI).--In 1999, the Army began
    privatizing housing assets and the RCI continues to provide quality
    housing that soldiers and their families and senior single soldiers can
    proudly call home. The Army leverages appropriated funds and existing
    housing by engaging in 50-year partnerships with nationally recognized
    private real estate development, property management, and home builder
    firms to construct, renovate, repair, maintain, and operate housing
    communities.
        RCI Family housing is at 44 locations, with a projected end state
    of over 85,000 homes--98 percent of the on-post Family housing
    inventory inside the United States. Initial construction and renovation
    investment at these 44 installations is estimated at $12.7 billion over
    a 3- to 14-year initial development period, which includes the Army's
    contribution of close to $2.0 billion. From 1999 through 2012, our
    partners have constructed 27,497 new homes, and renovated another
    23,025 homes.
        The RCI program for Senior Unaccompanied Housing includes four
    installations for a total of 1,394 accommodations for senior single
    soldiers in grade Staff Sergeant and above including officers at
    locations where there is a deficit of adequate accommodations off post.
    The four locations are Forts Irwin, Drum, Bragg, and Stewart.
                        army family housing construction
        AFH Construction ($4.6 Million/1 Percent).--The Army's fiscal year
    2013 Family Housing Construction request is $4.6 million for planning
    and design of future projects to continue our significant investment in
    our soldiers and their families. This supports our goal to improve
    Army-owned housing and eliminate our remaining inadequate inventory at
    enduring overseas installations.
                         army family housing operations
        AFH Operations ($530 Million/99 Percent).--The fiscal year 2013
    budget request includes $530.1 million for: Operations, Utilities,
    Maintenance and Repair, Leased Family housing, and management of RCI.
    This request supports over 16,000 Army-owned homes, in the United
    States and in foreign countries, as well as almost 7,500 leased
    residences and provides Government oversight of more than 83,000
    privatized homes.
        Operations ($102.9 Million).--The operations account includes four
    sub-accounts: management, services, furnishings, and a small
    miscellaneous account. All operations sub-accounts are considered
    ``must pay accounts'' based on actual bills that must be paid to manage
    and operate the AFH-owned inventory.
        Utilities ($88.1 Million).--The utilities account includes the cost
    of delivering heat, air conditioning, electricity, water, and
    wastewater support for owned or leased (not privatized) Family housing
    units. The overall size of the utilities account is decreasing in
    proportion to the reduction in supported inventory due to RCI.
        Maintenance and Repair ($109.5 Million).--The maintenance and
    repair account supports annual recurring projects to maintain and
    revitalize AFH real property assets. Since most Family housing
    operational expenses are fixed, maintenance and repair is the account
    most affected by budget changes. This funding ensures that we
    appropriately maintain housing so that we do not adversely impact
    soldier and family quality of life.
        Leasing ($203.5 Million).--The Army leasing program is another way
    to provide soldiers and their families adequate housing. The fiscal
    year 2013 budget request includes funding for a total of 7,490 housing
    units, including 250 existing section 2835 (``build-to-lease''--
    formerly known as 801 leases), 1,478 temporary domestic leases in the
    United States, and 5,762 leased units overseas.
        Privatization ($26.0 Million).--The privatization account provides
    operating funds for management and oversight of privatized military
    family housing in the RCI program. RCI program costs include: Civilian
    pay, travel, and contracts for environmental and real estate functions;
    training; real estate and financial consultant services, and oversight
    to monitor compliance and performance of the overall privatized housing
    portfolio and individual projects.
                          base realignment and closure
    BRAC 2005
        The Army met its BRAC obligations within the 6-year implementation
    window on September 15, 2011. The implementation of BRAC 2005 enabled
    the Army to reshape the infrastructure supporting the Operating Force,
    the Generating Force and the Reserve component transforming how the
    Army, trains, deploys, supplies, equips, cares for and garrisons its
    soldiers, families, and civilians. BRAC 2005 closed 12 installations,
    387 Reserve component sites, realigned 53 installations and/or
    functions at an investment of almost $18 billion which included 329
    major construction projects. The completion of those recommendations,
    combined with the efficiencies achieved in the completion of the other
    Army BRAC recommendations, generates almost $2 billion in annual
    recurring savings. BRAC 2005 relocated three (3) four-star and five (5)
    three-star headquarters to multi-use installations that support the
    missions of those headquarters, six (6) Joint and Army Training Centers
    of Excellence, a Human Resources Center of Excellence, seven (7) Joint
    bases, four (4) Joint mobilization sites, and two (2) Joint technical
    and research facilities. It transformed the Army's industrial base,
    medical infrastructure and authorized 125 multi-component Armed Forces
    Reserve Centers and realigned the Army Reserve command and control
    structure. The Army has also conveyed an unprecedented 47 percent of
    its 70,311 BRAC 2005 total excess acreage as of January 2012. The
    remaining focus for BRAC 2005 is to dispose of the balance of excess
    property.
        The Army fiscal year 2013 budget request for BRAC 2005 is
    $106,219,000. The funding request includes $48.4 million to support
    facility caretaker requirements. In fiscal year 2013, the Army will
    continue environmental closure, cleanup and disposal of BRAC
    properties. These activities will continue efforts previously ongoing
    under the Army Installation Restoration Program and will ultimately
    support future property transfer actions. The budget request for
    environmental programs is $57.8 million, which includes management of
    munitions and explosives of concern as well as hazardous and toxic
    waste restoration activities. The timely execution of environmental
    restoration projects in fiscal year 2013 at several industrial sites,
    such as Riverbank Army Ammunition Plant, California, Lone Star Army
    Ammunition Plant, Texas and Kansas Army Ammunition Plant, Kansas is
    critical to transferring property back into productive re-use and job
    creation.
    BRAC 1990
        The Army is requesting $79,863,000 in fiscal year 2013 for prior
    BRAC rounds. The request includes $4.5 million for caretaking
    operations and program management of remaining properties and $75.4
    million for environmental restoration to address environmental
    restoration efforts at 280 sites at 36 prior BRAC installations. The
    funds requested in fiscal year 2013 are needed to keep planned clean-up
    efforts on track, particularly at Forts Ord, California; McClellan,
    Alabama; Wingate, New Mexico; Devens, Massachusetts; and Savanna Army
    Depot, Illinois. The Army has disposed of 178,357 acres (85 percent of
    the total acreage disposal requirement of 209,291 acres), with 30,934
    acres remaining. Similar to BRAC 2005, prior BRAC also produces
    recurring savings which the Army estimates at nearly $1 billion
    annually.
    Future BRAC
        The Department of Defense is requesting BRAC authority in 2013 and
    2015. In BRAC 2005, the National Guard and Reserve benefited greatly
    through consolidation of facilities into joint readiness centers. On a
    3-to-1 basis, the Army closed and returned land and buildings to local
    communities, consolidating onto military or other lands. The benefit to
    the local communities and Army was both economic and operational. We
    anticipate that there could be similar efficiencies in a future BRAC
    round. Additionally, with the anticipated end-strength reduction, BRAC
    could facilitate realignment of leased facilities onto installation
    facilities vacated due to TAA. Although no analysis has been completed,
    further study could identify other opportunities to gain efficiencies
    and reduce costs.
                                     energy
        The Army is the largest facilities energy user in the Federal
    Government. To maintain an effective readiness posture as energy costs
    escalate, the Army has implemented a comprehensive Energy and
    Sustainability program based on culture change, increased energy
    efficiency, and development of renewable and alternate sources of
    energy. Reducing energy use at Army facilities is mission critical,
    operationally necessary and financially prudent.
        Army installations and facilities require secure and uninterrupted
    access to energy. Dependence on fossil fuels and a vulnerable electric
    power grid jeopardizes the security of Army installations and mission
    capabilities. Investment in renewable energy and energy efficient
    technologies will help ensure the Army can meet mission requirements
    today and into the future. The Army evaluates every single energy
    investment opportunity to determine its long-term benefits for the
    Army. For investments on our installations we examine projects based on
    positive return on investment and demonstrated cost savings over its
    lifetime. We also expect projects to make positive contributions to
    energy security and improve the quality of life experienced by soldiers
    and their family members.
        Since fiscal year 2003 the Army has reduced its installation energy
    consumption by 13.1 percent while its total number of Active soldiers
    and civilians has increased 20 percent. In addition, the Army has
    adopted the highest building code in the Federal Government, ASHRAE
    189.1 which will reduce energy and water consumption on average 40
    percent annually in our new construction program and in existing
    facilities that undergo major renovations.
        In fiscal year 2013 the Army's Installation Energy budget totals
    $1.453 billion and includes $50 million from the Department of Defense
    (DOD) ``Defense-Wide'' appropriation for the Energy Conservation
    Investment Program (ECIP), $343 million for Energy Program/Utilities
    Modernization program, $1,053 million for Utilities Services, and $7.1
    million for installation related Science and Technology research and
    development. The Army conducts financial reviews, business case and
    life cycle cost analysis and return on investment evaluations for all
    energy initiatives.
        The Army's fiscal year 2013 allocation of the ECIP program, $50
    million, includes seven renewable energy projects, six energy
    conservation projects, one water project, and two Energy Security
    projects. In accordance with DOD guidance, fiscal year 2013 project
    submissions are divided into four categories: Renewable Energy; Energy
    Conservation; Water, and Security. Effective with fiscal year 2013,
    ECIP has established a new funding category to capture a project's
    contribution to enhancing water and/or grid security. The Army is
    taking a strategic look at requirements, including a thorough project
    validation and prioritization process, to develop an ECIP Future Years
    Defense Program to fund additional requirements should such an
    opportunity arise.
        The Utilities Services account pays all Army utility bills and is
    used to finance the repayment of Utilities Privatization, Energy
    Savings Performance Contracts (ESPCs) and Utilities Energy Service
    Contracts (UESCs). ESPCs and UESCs allow the Army to implement energy
    efficiency improvements through the use of private capital, repaying
    the contractor for capital investments over a number of years out of
    the energy cost savings.
        Reducing consumption and increasing energy efficiency are among the
    most cost effective ways to improve installation energy security. The
    Army funds many of its energy efficiency improvements through the
    Energy Program/Utilities Modernization program account. In addition to
    funding O&M project execution, this account enables planning and
    developing of third party financed renewable energy initiatives such as
    the Energy Initiatives Task Force ($29 million) and integrated holistic
    design strategies for managing resources on Army installations such as
    the Net Zero Initiative ($2.2 million).
        The Army is moving forward to address the challenge of Energy and
    Sustainability to ensure the Army of tomorrow has the same access to
    energy, water, land, and natural resources as the Army of today. Our
    energy goals include a 30-percent reduction in facilities energy
    intensity by 2015 from the 2003 baseline; generation of 25 percent of
    energy from renewable resources by 2025; reduction in petroleum use in
    non-tactical equipment by 20 percent by 2015; and elimination of the
    use of fossil fuel generated energy in newly constructed buildings by
    2030.
        In fiscal year 2011, the Army announced two key initiatives, the
    Net Zero Initiative and the Energy Initiatives Task Force (EITF). These
    initiatives will make the Army a leader in sustainable practices and
    use of renewable energy. The Net Zero Installation initiative is
    advancing an integrated approach and will improve the management of
    energy, water, and waste. Net zero installations will consume only as
    much energy or water as they produce and eliminate solid waste to
    landfills, and when fully implemented, will establish Army communities
    as models for energy security, sustainability, value, and quality of
    life. Seventeen installations have been identified for this effort,
    with plans to reach Net Zero by 2020.
        The EITF strengthens Army Energy Security and Sustainability by
    developing a comprehensive capability to plan and execute cost-
    effective large-scale renewable energy projects by leveraging private
    sector financing. The EITF will serve as a one-stop shop and augment
    installation staff for the development of renewable energy projects
    greater than 10 MW on Army installations to obtain secure, sustainable,
    and affordable energy from a diversity of sources. The EITF is
    currently evaluating 12 projects at 8 installations to determine
    whether they are worthy of further development and has identified
    further opportunities at 21 installations.
        The Army is incorporating cost effective Energy Efficient Measures
    into the MILCON Program. The Army has implemented energy efficiency
    requirements into all new facilities construction, renovation and
    modernization requirements.
        The Army is committed to contributing to our Nation's energy
    security by reducing our dependence on foreign oil. In the Army,
    ``Every Soldier is a Power Manager'' and energy is a consideration in
    every aspect of how we do business. We are committed to advancing
    energy security by changing our doctrine, our behavior, and our
    technological advancement throughout all aspects of our enterprise. We
    will build on our past accomplishments and ensure our soldiers and
    civilians wisely employ the resources entrusted to them.
                                  environment
        The Army fiscal year 2013 Environmental program provides $1.17
    billion in support of current and future readiness. The environmental
    program includes Army Working Capital Fund, BRAC 2005 and Prior BRAC,
    and Army O&M programs. This program ensures an adequate environmental
    resource base to support mission requirements, while maintaining a
    sound environmental compliance posture. Additionally, it allows Army to
    execute environmental aspects of re-stationing, Global Defense Posture
    Realignment and BRAC while increasing programmatic efficiencies, and
    addressing the Army's past environmental legacy.
        As a land-based force, our compliance and stewardship sustains the
    quality of our land and environment as an integral component of our
    capacity to effectively train for combat. We are committed to meeting
    our legal requirements to protect natural and cultural resources and
    maintain air and water quality during a time of unprecedented change.
    We are on target to meet DOD goals for cleaning up sites on our
    installations, and we continue to manage environmental compliance
    requirements despite operating in a constrained resource environment.
                   sustainment, restoration and modernization
        The Army continues its commitment to fund sustainment at 90 percent
    of the OSD Facilities Sustainment Model (FSM) requirement. The Army
    views 90-percent sustainment funding as the absolute bedrock of proper
    facilities stewardship, and is an essential objective of the Army
    facilities investment strategy. The Army has chosen not to take risk in
    the sustainment of our facility inventory valued at $329 billion. In
    keeping with the Army Facility Investment Strategy (FIS), the Army has
    increased its investment in facility restoration through the O&M
    Restoration and Maintenance account. This will fully restore trainee
    barracks, enable progress toward energy objectives and provide
    commanders with the means of restoring other critical facilities.
    Facilities are an outward and visible sign of the Army's commitment to
    providing a quality of life for our soldiers, families, and civilians
    that is consistent with their commitment to our Nation's security.
                            base operations support
        The Army's fiscal year 2013 Base Operations Support (BOS) request
    is $9.0 billion and is consistent with our fiscal year 2012 BOS budget
    request. The Army's fiscal year 2013 BOS strategy continues to
    prioritize funding for Life, Health and Safety programs and Army Force
    Generation (ARFORGEN) requirements ensuring soldiers are trained and
    equipped to meet demands of our nation at war. Army remains committed
    to its investment in Army Family Programs and continues to evaluate its
    services portfolio in order to maintain relevance and effectiveness.
    Army will meet the challenge of day-to-day requirements by developing
    more efficient service delivery or adjusting service levels while
    managing customer expectations. These efforts will encourage program
    proponents to evaluate policies, seek alternative and find innovative
    solutions to meet these challenges. The Army is committed to developing
    a cost culture for increasing the capabilities of BOS programs through
    an enterprise approach. Additionally, the Army will continue to review
    service delivery of its soldier, family, and civilian programs to
    ensure the most efficient and effective means of delivery are realized.
                                   conclusion
        The Army's fiscal year 2013 installations management budget request
    is a balanced program that supports the Army in transition while at
    war, supports our soldiers, families, and civilians, and recognizes the
    current fiscal reality. The Army Facility Strategy 2020 and facilities
    investment strategy will be accomplished through the Congress'
    continued commitment to timely and sustained funding of the military
    construction, BRAC and family housing budget request.
        In closing, thank you again for the opportunity to appear before
    you today and for your continued support for our soldiers, families,
    and civilians.

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

                STATEMENT OF LIEUTENANT GENERAL MICHAEL FERRITER

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

                  STATEMENT OF MAJOR GENERAL TIMOTHY J. KADAVY

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

                             STATEMENT OF TAD DAVIS

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

                              NET ZERO INITIATIVE

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

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

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

       ARMY NATIONAL GUARD AND RESERVE MILITARY CONSTRUCTION REQUIREMENTS

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

                              FORCE RESTRUCTURING

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

                              EUROPEAN FACILITIES

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

                          ARLINGTON NATIONAL CEMETERY

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

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

                       PRIVATIZED FAMILY HOUSING PROJECTS

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

                         ADDITIONAL COMMITTEE QUESTIONS

        Senator Johnson. I would like to thank all of our witnesses
    for appearing before this subcommittee today. We look forward
    to working with you this year. For the information of members,
    questions for the record should be submitted by the close of
    business on April 17.
        [The following questions were not asked at the hearing but
    were submitted to the Department for response subsequent to the
    hearing:]
                Questions Submitted to Hon. Katherine G. Hammack
                   Question Submitted by Senator Tim Johnson
                            army privatized housing
        Question. Secretary Hammack, what effect will the planned reduction
    in Army force structure have on the Army's privatized family housing
    projects?
        Do you anticipate that the financial viability of any privatized
    housing projects will be jeopardized, or that certain projects will be
    forced to rely on waterfall occupancy to remain viable?
        Which if any projects are at risk?
        Answer. The impact of possible future Army restructuring decisions
    may generate deficits or surplus housing at some Army installations.
    The Army is carefully reviewing and considering major new housing
    investments, only approving actions that align with known decisions.
        We are working to gather more facts as the situation develops and
    can't provide an absolute answer at this time. On average, 35 percent
    to 40 percent of assigned personnel live in installation housing and
    the majority of our Residential Communities Initiative (RCI) projects
    maintain significant waiting lists of perspective tenants so any impact
    would be minimal. Currently, of the over 85,000 homes currently in the
    Army RCI program, approximately 3 percent are occupied by personnel
    under a waterfall agreement.
        None of the Army RCI projects are currently at risk of failure due
    to Army stationing activities. Any projected or actual occupancy
    shortfalls are immediately addressed through a collective effort
    between all stakeholders including HQDA (Headquarters, Department of
    the Army), the installation and the RCI partner to determine an
    effective strategy to increase demand.
                                     ______

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

                              SUBCOMMITTEE RECESS

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

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

                                  ----------

                           WEDNESDAY, MARCH 28, 2012

                                           U.S. Senate,           Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 10:02 a.m., in room SD-138, Dirksen
    Senate Office Building, Hon. Tim Johnson (chairman) presiding.
        Present: Senators Johnson, Nelson, Pryor, Tester,
    Murkowski, and Coats.

                             DEPARTMENT OF DEFENSE

                             Department of the Navy

    STATEMENT OF HON. JACKALYNE PFANNENSTIEL, ASSISTANT
                SECRETARY FOR ENERGY, INSTALLATIONS AND
                ENVIRONMENT
    ACCOMPANIED BY:
            MAJOR GENERAL JAMES KESSLER, COMMANDER, MARINE CORPS
                INSTALLATIONS COMMAND/ASSISTANT DEPUTY COMMANDANT FOR
                INSTALLATIONS AND LOGISTICS (FACILITIES)
            REAR ADMIRAL DAVID BOONE, DIRECTOR, SHORE READINESS DIVISION,
                DEPUTY CHIEF OF NAVAL OPERATIONS (FLEET READINESS AND
                LOGISTICS)

                    OPENING STATEMENT OF SENATOR TIM JOHNSON

        Senator Johnson. Good morning. This hearing will come to
    order.
        We meet today to discuss the President's fiscal year 2013
    budget request for military construction (MILCON) and family
    housing for the Departments of the Navy and the Air Force.
        I would note, for the benefit of our witnesses that
    although my Ranking Member Senator Mark Kirk temporarily is
    absent, I am told that he is making good progress toward
    recovery, and I look forward to his return to the subcommittee.
    In the interim, I will make sure that his interests are
    represented in all matters that come before this subcommittee.
        I am pleased to welcome our first panel of witnesses from
    the Navy, Secretary Jackalyne Pfannenstiel, Assistant Secretary
    of the Navy; Major General James Kessler, Assistant Deputy
    Commandant for Installations and Logistics; and Rear Admiral
    David Boone, Director, Navy Shore Readiness Division.
        This year's military construction and family housing budget
    for the Navy and Marine Corps is $1.8 billion. This represents
    a 19-percent reduction in funding for Active Forces military
    construction from the fiscal year 2012 enacted level, but an
    88-percent increase in Navy Reserve funding. Although the Navy
    Reserve funding went from small to middling, $26 million to
    $49.5 million, in these difficult economic times, I am pleased
    to see any increase in funding for the Reserve forces.
        The Navy's MILCON budget request encompasses several
    important and evolving mission requirements, including the
    relocation of marines from Okinawa to Guam and the continued
    buildup of facilities in Djibouti. I look forward to discussing
    these initiatives with our witnesses today.
        Again, thank you all for coming. We look forward to your
    testimony. Madam Secretary, I understand that you will be
    offering the only opening statement. Your full statement will
    be entered into the record, so I encourage you to summarize it
    to leave more time for questions. Please proceed.

                SUMMARY STATEMENT OF HON. JACKALYNE PFANNENSTIEL

        Ms. Pfannenstiel. Chairman Johnson, Senator Tester, I am
    pleased to appear before you today to provide an overview of
    the Department of Navy's investment in shore infrastructure.
        I regret the absence of Senator Kirk. We wish him well and
    hope he is back with us soon.
        The Department's fiscal year 2013 budget request includes
    $13 billion for investment in military construction, facilities
    sustainment, restoration and modernization, previous rounds of
    base realignment and closure (BRAC), family housing,
    environmental restoration, and base-operating support.
        The military construction request of $1.8 billion supports
    our Combatant Commanders, new war-fighting platforms and
    missions, facility recapitalization, and servicemember quality-
    of-life initiatives for the Navy and Marine Corps.
        Military construction projects in Bahrain and Djibouti
    support high-priority missions in the region, enhance our
    forward presence and provide stability for United States
    interests. Two projects in Spain support the forward-deployed
    naval forces, and a project in Romania supports the European-
    phased base adaptive approach infrastructure.
        Equally important are military construction programs that
    invest in support facilities with joint strike fighter and MV-
    22B, infrastructure improvements, training and education
    facilities, and the safety and security of nuclear weapons in
    the United States.
        I would specifically like to emphasize that we remain
    committed to establishing an operational Marine Corps presence
    on Guam. We know Congress has concerns regarding the execution
    of the Guam military alignment and we are taking the necessary
    steps to address them and move the program forward.
        The United States Government is currently meeting with the
    Government of Japan to discuss adjustments to the 2006
    realignment roadmap agreement. As Secretary Panetta has
    testified, Guam is an important part of the United States
    effort to reposture our forces in the Pacific. We believe the
    adjustments being discussed will address execution concerns,
    increase our flexibility and strengthen our presence in the
    region.
        This is an important year for the Guam realignment. We will
    continue to work with you and our partners on Guam and in Japan
    as more information becomes available.
        As for the 2005 round of BRAC, the Department met our legal
    obligations by the statutory deadline of September 15, 2001,
    and successfully implemented all required realignment and
    closure actions.
        For BRAC 2005 installations our fiscal year 2013 budget
    request of $18 million enables our ongoing environmental
    restoration, caretaker and property disposal efforts.
        For the prior BRAC rounds, our fiscal year 2013 budget
    request of $147 million will enable us to continue disposal
    actions for the remaining 7 percent of real property and meet
    the legal requirements for environmental cleanup.
        The Department fully supports the Secretary's proposal for
    additional rounds of BRAC to assess and improve the alignment
    of our shore infrastructure with our force structure.
        Finally, we intend to meet the energy goals set forth by
    Congress and the Secretary of the Navy. We recognize that
    energy is a critical resource for maritime, aviation,
    expeditionary, and shore missions. We must strengthen our
    energy security and reduce our vulnerability to price
    escalations and volatility.
        With this in mind, the Navy and Marine Corps continue to
    reform how we produce, procure and use energy. Our budget
    request includes $1 billion in fiscal year 2013 and $4 billion
    across the fit-up that is to be invested in initiatives that
    provide energy independence and security as well as valuable
    tactical benefits and efficient facility restoration.
        To help meet Congress' renewable-energy goals and our own
    goal of producing 50 percent of our shore energy from
    alternative sources, we're developing a strategy for large-
    scale, renewable power projects on naval installations where
    we'll use existing third-party financing mechanisms, such as
    power-purchase agreements, joint ventures and enhanced-use
    leases, to avoid adding cost to rate payers.
        Currently, our bases support about 300 megawatts of
    renewable energy, 270 of which is produced by a geothermal
    plant at China Lake. We have awarded contracts for three
    similar projects in the southwest and are finalizing a solar
    contract for Hawaii.
        The three existing purchase-power agreements at China Lake,
    29 Palms and Barstow will save the Department $20 million over
    20 years. In each instance, we'll be paying less per kilowatt
    hour from day 1 than we would for conventional power.

                               PREPARED STATEMENT

        In closing, your support of the Department's fiscal year
    2013 budget request ensures that we can 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 answering any questions you may have.
        [The statement follows:]
    Prepared Statement of Hon. Jackalyne Pfannenstiel; Major General James
                     Kessler; and Rear Admiral David Boone
        Chairman Johnson, Representative Kirk, and members of the
    subcommittee, I am pleased to appear before you today to provide an
    overview of the Department of Navy's (DON) 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 2013 budget request includes a $13.0 billion investment in
    our installations, a decrease of $0.3 billion from last year.
        The fiscal year 2013 military construction (Active and Reserve)
    request is $1.8 billion. Although significantly less than the fiscal
    year 2012 request of $2.5 billion, it represents continued investment
    enhancing Combatant Commander's capabilities, improving servicemember's
    quality of life, supporting mission requirements, continued emphasis on
    energy security, and recapitalizing aging infrastructure.
        The fiscal year 2013 family housing request of $480 million
    represents a 2-percent increase from the fiscal year 2012 request. The
    Navy and Marine Corps continue to invest in housing, including both the
    recapitalization of our overseas housing, and additional privatization
    to recapitalize inadequate housing in the United States. Having
    privatized virtually 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.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Our BRAC program consists of environmental cleanup and caretaker
    costs, as well as property disposal costs for prior round BRAC and BRAC
    2005 locations. We do not foresee 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 2013 in the amount of $147 million. The fiscal year 2013
    BRAC 2005 budget request of $18 million supports ongoing environmental
    restoration, caretaker costs, and property disposal efforts. The
    Department has completed implementation of the BRAC 2005
    recommendations. The DON fully supports the Secretary's proposal for
    two additional rounds of BRAC to improve alignment of our shore
    footprint with our force structure.
        Our fiscal year 2013 request for base operating support (BOS) is in
    excess of $7.0 billion. The BOS program finances the operation of our
    DON shore infrastructure worldwide including programs that support
    ship, aviation, and combat operations, public safety, security,
    installation management, housing and quality of life for both Active
    and Reserve components. To maximize the impact of our BOS funding, we
    continue to pursue and realize more cost effective ways of providing
    base support functions.
        Finally, the Department's budget request invests $1.0 billion in
    fiscal year 2013, and $4.0 billion across the Future Years Defense Plan
    (FYDP), to support the DON's aggressive energy goals to increase energy
    security and reduce dependency on fossil fuels.
                             military construction
        The DON's fiscal year 2012 military construction program requests
    appropriations of $1.8 billion, including $105 million for planning and
    design and $17 million for Unspecified Minor Construction.
        The active Navy program totals $918 million and includes:
      --$176 million to fund eight Combatant Commander projects:
        --At Camp Lemonnier, Djibouti: A Joint operations center, a cold
                storage warehouse, containerized living/work units, and a
                fitness center;
        --In Souda Bay: An aircraft parking apron and an intermodal access
                road; and
        --In Bahrain: A bachelor quarters and dining facility.
      --$146 million to fund Quality of Life initiatives including:
        --A bachelor quarters at Naval Base Coronado, California, in
                support of the Chief of Naval Operations' Homeport Ashore
                initiative;
        --A training barracks at Naval Air Station Oceana, Virginia;
        --A bachelor quarters in Okinawa, Japan;
        --A dining facility at Naval Air Station Meridian, Mississippi; and
        --A fitness center at Naval Support Activity South Potomac,
                Virginia.
      --$280 million to fund: The second increment of a second explosives
            handling wharf at Naval Base Kitsap, Washington.
      --$284 million to fund 12 projects to achieve initial or final
            operational capability requirements for new systems and new
            missions:
        --A general purpose warehouse and high explosive magazine at Naval
                Station Rota, Spain;
        --An Aegis Ashore missile defense complex at Naval Support Facility
                Romania;
        --A Broad Area Maritime Surveillance (BAMS) mission control
                facility at Naval Air Station Jacksonville, Florida;
        --A BAMS maintenance training facility at Beale Air Force Base,
                California;
        --An H-60S simulator training facility at Naval Base Coronado,
                California;
        --An EA-18G flight simulator facility at Naval Air Station Whidbey
                Island, Washington;
        --A Littoral Combat Ship training facility at Naval Base San Diego,
                California;
        --Drydock electrical distribution upgrades for CVN78 at Norfolk
                Navy Shipyard, Virginia;
        --A cruiser/destroyer training facility at Naval Support Activity,
                South Potomac in Virginia;
        --A combat system engineering building at Naval Weapons Station
                Earle, New Jersey; and
        --A BAMS operational facility at an overseas location.
      --$32 million to fund additional critical Navy priorities:
        --A strategic systems evaluation lab consolidation at Naval Weapons
                Station Seal Beach, California, and
        --Communications infrastructure at Naval Support Facility, Diego
                Garcia.
        The active Marine Corps program totals $664 million and includes:
      --$18 million for the construction of unaccompanied housing at Naval
            Weapons Station Yorktown, Virginia, for the consolidation of
            the Marine Corps Security Force Regiment;
      --$13 million to provide quality of life facilities such as a mess
            hall at Quantico;
      --$31 million to construct student billeting for the Basic School in
            Quantico, Virginia;
      --$83 million to build infrastructure to support ingress/egress
            access at Marine Corps installations. These projects include
            road improvements, main gate improvements, anti-terrorism force
            protection posture improvements, and correct safety issues.
            These projects will have a direct effect on the quality of life
            of our marines along with alleviating both on-base and off-base
            community concerns;
      --$394 million to fund projects enhancing operational capability such
            as those needed for the MV-22 aircraft at Camp Pendleton,
            Hawaii, Miramar, and Yuma; Joint Strike Fighter at Beaufort and
            Iwakuni; and operational units in New River, Cherry Point, and
            Yorktown;
      --$53 million to provide training facilities at Camp Pendleton, Camp
            Lejeune, Beaufort, and Iwakuni;
      --$47 million for land expansion for MAGTF large-scale training
            exercises at 29 Palms;
      --$26 million for the second increment of the North Ramp Parking
            project at Anderson Air Force Base to support the relocation of
            marines to Guam.
        The Navy and Marine Corps Reserve Military Construction
    appropriation request totals $47 million and includes a Transient
    Quarters at Naval Air Station Joint Reserve Base New Orleans,
    Louisiana, a Commercial Vehicle Inspection Site at Naval Air Station
    Joint Reserve Base Fort Worth, Texas, a Joint Navy and Marine Corps
    Reserve Center at Des Moines, Iowa, a Marine Corps Reserve Training
    Center at Yuma, Arizona, and a Vehicle Maintenance Facility at
    Brooklyn, New York.
                             facilities management
    Facilities Sustainment, Restoration and Modernization (SRM)
        The Department of Defense (DOD) uses a Facilities Sustainment Model
    to calculate lifecycle facility maintenance and repair costs. The model
    uses industry-wide standard costs for various types of buildings and
    geographic areas and is 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 2013 budget request funds sustainment at 80 percent
    and 90 percent of the model's recommended levels for the Navy and
    Marine Corps, respectively. To maximize support for warfighting
    readiness and capabilities, the Navy has requested overall facilities
    sustainment at 80 percent of the DOD model level. To enhance the
    quality of education at our premier institutes of higher learning, we
    will continue to fund the Naval Academy, Naval War College, and Naval
    Postgraduate School at 100 percent of this model. Additionally, the
    Navy has targeted the allocation of sustainment funds to increase the
    sustainment and maintenance of unaccompanied housing. The Navy has
    minimized operational impacts and ensured the safety of our sailors and
    civilians by prioritizing maintenance and repair efforts for facilities
    that directly affect mission operations such as piers, hangars, and
    communications facilities, as well as unaccompanied housing and family
    support centers. The Marine Corps will maintain sustainment funding at
    90 percent of the model. Even this strong commitment will result in
    some facilities degradation. The Marine Corps will continue to
    prioritize and target facilities that directly affect mission
    operations for full sustainment.
        Restoration and modernization provides major upgrades of our
    facilities. In fiscal year 2013, the Department of the Navy is
    investing $0.6 billion of Military Construction, and $1 billion of
    Operation and Maintenance funding into restoration and modernization of
    existing facilities.
                                  naval safety
        Protecting the Department's sailors, marines, and civilian
    employees and their dependents remains one of our highest priorities. I
    consider continual, marked improvement in our safety performance to be
    essential to maintaining the highest state of operational readiness for
    our Navy and Marine Corps team. During fiscal year 2011, DON once again
    achieved record-setting mishap rate reductions in numerous key mishap
    categories.
        The Department continues to be a world-class safety organization,
    where, in step with civilian industry leaders, no avoidable mishap or
    injury is considered acceptable. In benchmarking against the Nation's
    largest, safest, and most productive commercial industries, we have
    recognized that our top initiative must be the development and
    deployment of a state-of-the-art Risk Management Information System or
    RMIS. RMIS will dramatically expand the quality and quantity of data
    available, improve DON safety information management and analysis,
    simplify reporting, enhance unit-level access to safety information,
    and automate unit-level safety program management. RMIS is a high
    priority for funding in our fiscal year 2014 budget.
        Using fiscal year 2002 as a baseline, the Secretary of Defense
    established a goal for each Military Service and DOD Agency to achieve
    a 75-percent reduction in key mishap rates by the end of fiscal year
    2012. By the end of fiscal year 2011, both the Navy and the Marine
    Corps achieved mishap rate reductions which exceeded the DOD-wide
    average reduction in each of the three primary mishap categories being
    tracked by the Office of the Secretary of Defense. The three mishap
    categories and associated reductions from the fiscal year 2002 mishap
    rate baseline are depicted below:

    ----------------------------------------------------------------------------------------------------------------
                                                                  USN reduction    USMC reduction   Average DOD-wide
                          Mishap category                              (%)               (%)          reduction (%)
    ----------------------------------------------------------------------------------------------------------------
    Private Motor Vehicle Fatality Rate \1\...................                60                47                39
    Aviation Class A Flight Mishap Rate \2\...................                49                42                39
    Civilian Total Lost Day Rate \3\..........................                43                47                39
    ----------------------------------------------------------------------------------------------------------------
    \1\ Rate is number of deaths per 100,000 military members.
    \2\ Rate is number of mishaps per 100,000 flight hours. A Class A Aviation Flight Mishap occurs when there was
      intent for flight and greater than $2 million damage, total loss of an aircraft, a fatality, or an injury
      resulting in total permanent disability.
    \3\ Rate is days lost per 100 persons per year (more of a FECA case management than safety metric).

        I am committed to sustained, continuous improvement and our hard
    work is paying dividends. At the end of fiscal year 2011, the
    Department achieved the lowest on- and off-duty fatality rates ever
    recorded in our history. Similarly, for the first time we achieved the
    lowest ever fatality rates for on-duty, private motor vehicle and off-
    duty/recreational mishaps in the same year. On the civilian side, over
    the past 10 years, the Department has witnessed declines in civilian
    total and lost time case rates of 39 percent and 36 percent,
    respectively. These reductions are in line with annual Presidential
    injury and illness rate reduction requirements.
        I am pleased to report that the Department of the Navy is the proud
    owner of nearly half of all Department of Defense OSHA VPP (Voluntary
    Protection Program) Star sites, and we recently recognized three OCONUS
    installations in Japan as VPP Star equivalent sites. Implementation of
    safety management systems, such as VPP, will be an important tool for
    our continued improvement in Department-wide safety results.
                                     energy
        The Department of the Navy is committed to implementing an energy
    program that enhances our national security by reducing our dependence
    on imported fossil fuels. Its platform is that energy security is
    national security. The energy program is comprehensive--it involves
    both Services and contains initiatives to reduce energy demand and
    provide alternative forms of energy supplies on shore, afloat, in the
    air, and in theater.
        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.
    Goals and Initiatives
        The program for which fiscal year 2013 funding is sought will
    exceed 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.
        The Secretary of the Navy has set five aggressive department-wide
    goals to reduce DON's overall consumption of energy, decrease its
    reliance on petroleum, and 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.
        The goals are:
      --By 2020, 50 percent of total DON energy will come from alternative
            energy resources;
      --By 2020, DON will produce at least 50 percent of shore-based energy
            requirements from alternative resources and 50 percent of
            Department installations will be net-zero;
      --DON will demonstrate a Green Strike Group in local operations by
            2012 and sail the Great Green Fleet by 2016;
      --By 2015, DON will reduce petroleum use in commercial vehicles by 50
            percent; and
      --Evaluation of energy factors will be used when awarding contracts
            for systems and buildings.
        A myriad of investments and activities will be directed to meeting
    the Secretary's goals. Principally, they will be geared toward
    behaviors and technologies that will reduce the Navy and Marine Corps'
    overall requirements for energy and technologies that can provide
    adequate substitutes for fossil-based energy. Two significant
    initiatives will be:
      --The development of a biofuel alternative to the liquid fuels used
            in ships, tanks, and tactical vehicles. To meet the goal of 50
            percent of total DON energy from alternative energy, the DON
            has partnered with the DOE and USDA to collectively pool $510
            million to spark development of the commercial advanced
            alternative fuels industry. The DON is using authorities
            provided by the Defense Production Act (DPA) title III for its
            contribution. This effort will help to obtain the 8 million
            barrels of biofuel needed by 2020. The alternative fuel must be
            available at prices competitive with the conventional petroleum
            fuels being replaced; it must not have negative consequences
            for the food chain; and it must be a ``drop-in'', that is, not
            requiring infrastructure or operational changes.
      --Development of a gigawatt of renewable energy generation on DON
            installations. Pursuant to meeting the 50 percent shore energy
            goal, the Secretary has directed the establishment of a task
            force to facilitate the production of large-scale renewable
            power where possible on the bases. This development will use
            existing third-party financing mechanisms such as power
            purchase agreements, joint ventures and enhanced use leases.
            The projects will cost no more over their life than
            conventional energy sources.

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    Funding
        The Department has budgeted $1.0 billion in fiscal year 2013 and
    approximately $4.0 billion across the FDYP for operational and shore
    energy initiatives. The strategy for executing these initiatives
    focuses on reducing our dependence on petroleum, lowering our energy
    cost, and complying with Federal legislation and energy mandates.
        The funding sources are:
        O&M Navy.--Projects would include propeller coatings, in-port ship
    energy conservation, Advanced Metering Infrastructure, combustion
    system improvements, Aviation & Maritime training in support of best
    practices for energy conservation (ENCON) and facility energy audits
    and facility energy efficiency upgrades.
        O&M Marine Corps.--Projects would include completion of energy
    audits, shelter liners, advanced power systems, renovated HVAC system
    to increase efficiency, and completed SMART metering projects.
        National Defense Sealift Fund (NDSF)/Other Procurement Navy.--
    Projects would include Shipboard Lighting Upgrades, shore power
    management/monitoring systems, ship engine automation upgrades.
        Research, Development, Test, and Evaluation.--Projects would
    include undersea power systems, energy storage and power management,
    the shipboard energy dashboard, water purification technologies, man-
    portable electric power units, and energy storage and distribution.
    Achievements
        The Department is on track to meet its goals, and throughout 2011,
    we demonstrated progress through an assortment of energy programs,
    partnerships, and initiatives. This past summer, the Blue Angels flew
    all six planes on biofuels during their 2-day air-show at NAS Patuxent
    River.
        Since flying the F/A18, dubbed ``The Green Hornet'', at MACH 1.7 in
    2010 as part of the test and certification process using a 50-50 blend
    of Camelina based JP-5, the Department has also successfully conducted
    test and certification on the MH-60 Seahawk helicopter, AV-8B Harrier,
    E-A6B Prowler, MQ-8B Fire Scout, T-45C Goshawk, MV-22 Osprey, ran a
    Riverine Command Boat, Landing Craft Air Cushion (LCAC), Landing Craft
    Utility (LCU), 7m Rigid Hull Inflatable Boat (RHIB), the ex-USS Paul F.
    Foster, and an Allison 501K turbine generator. The DON also partnered
    with Maersk to run a large merchant ship on renewable biofuel. These
    tests represent milestones necessary to meet the 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 is currently deployed to the
    Pacific region on its maiden operational deployment. The Navy is
    continuing to move forward with installation of a similar system on new
    construction guided missile destroyers and to look at the feasibility
    of retrofitting the fleet with these systems in the course of routine
    shipyard availabilities.
        Additional energy initiatives, such as propeller and hull coatings,
    were undertaken to make the existing inventory of ships more energy
    efficient. Stern flaps will also assist in reducing energy consumption,
    as will some combustor modifications and systems to monitor ship-wide
    energy use. Energy conservation programs were also put in place for
    both ships and aircraft to educate and incentivize the Fleets to reduce
    energy consumption and identify inefficient activities for improvement.
    The future Navy will use advanced materials on propellers, energy
    storage and power management systems, and advanced propulsion
    technology to make warships more efficient while allowing them to meet
    their combat capability.
        Last year, the Marines tested equipment that could be deployed on
    battlefields at their Experimental Forward Operating Bases (ExFOB) at
    Twenty-Nine 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. This year's ExFOB will concentrate on wearable electric
    power systems and lightweight man-portable water purification systems.
    By deploying these technologies, the Marines have proven that energy
    efficiency means combat effectiveness and increased safety for our
    deployed servicemembers as fewer convoys are needed to resupply fuel.
        In addition to these tactical and platform applications, the DON
    has 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. We have awarded
    three projects under our Solar Multiple Award Contracts (MAC) in the
    Southwest (SW) and are finalizing a similar solar MAC for Hawaii. One
    of the SW solar MAC awards will provide 13.8 MW of solar power at NAWS
    China Lake. This project will save the Department $13 million over 20
    years while also providing security from electric grid outages. The
    Hawaii solar MAC will install 28 MW of solar PV on DON installations
    including covering the runway on Ford Island with PV thus recreating
    the look of the runway as seen from the air. We are also looking at
    developing our wind resources, exploring Waste to Energy projects and
    developing ocean power technology at all DON installations.

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        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 built to LEED Silver
    standards per the 2012 NDAA.
        DON continues to explore 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. The Naval Postgraduate School has
    added an energy program to its curricula and we are partnering with the
    National Defense University to pilot two culture change demonstrations.
    The pilots, at MCB Camp Lejeune and NAVSTA Mayport, will focus on
    raising the energy awareness of civilian and military personnel.
        The Department 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 Interior, the Department of Agriculture, 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.
                         relocating the marines to guam
        On February 8, 2012, the U.S. Government and Government of Japan
    acknowledged that they were meeting to discuss potential adjustments to
    the 2006 Realignment Roadmap. Both Governments remain committed to the
    establishment of an operational Marine Corps presence on Guam. We
    believe that the adjustments to the Guam force laydown that are being
    considered will be responsive to congressional concerns, while also
    maintaining and enhancing peace and security in the Asia Pacific
    region, one of two regions emphasized in the January 2012 Defense
    Strategic Guidance. Bilateral discussions have only just begun and I
    expect that more information will be available in the next couple of
    months. The Department will keep Congress informed of these discussions
    and, upon a final decision on the Guam laydown, will provide you with
    updates on our planning, programming, and execution strategies for
    implementing any adjustments.
        The fiscal year 2013 budget request includes $26 million to
    construct facilities in support of the relocation of marines from
    Okinawa to Guam. The project funds the second increment of a facility
    necessary to support the relocating aviation element and, upon
    completion of both increments, will provide aircraft parking apron,
    taxiways, lighting, wash racks and supporting utilities at Andersen Air
    Force Base. This project supports the relocating aviation element and
    is required regardless of the final force laydown on Guam. In its
    Japanese fiscal year (JFY) 2012 budget (which runs April 1, 2012,
    through March 31, 2013), the Government of Japan has requested $8
    million in design funds for its direct cash contribution. The JFY-2012
    budget request also includes $83 million in funding for utilities
    financing, pursuant to the Realignment Roadmap, for water and power
    projects.
        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. In December 2011, the Government of Japan delivered an
    Environmental Impact Statement to the Governor of Okinawa, a necessary
    precursor to the signing of the landfill permit. Further progress on
    the Futenma Replacement Facility and future Japanese financial
    contributions to the Guam realignment will be discussed in detail
    during ongoing bilateral negotiations.
        A Record of Decision (ROD) for the Guam military realignment was
    signed in September 2010. The first military construction contracts
    were awarded following the ROD. Construction activity funded by both
    the United States and Government of Japan at Apra Harbor and Andersen
    Air Force base is now ongoing.
        In response to public concerns regarding access to cultural sites
    near the preferred alternative site for the live-fire training range
    complex, a decision on the location for the live-fire training range
    complex was deferred in the September 2010 ROD. In January 2011, the
    DON committed that training activities would be conducted in a manner
    such that access to these sites would remain available 24 hours per
    day, 7 days per week as is currently available today. The DON has
    evaluated options to satisfy this commitment while fully meeting the
    training requirements of the relocating marines. It was determined that
    a Supplemental Environmental Impact Statement (SEIS) would be necessary
    prior to making a final decision on the location of the live-fire
    training range complex. Litigation regarding the live-fire training
    range complex was dismissed in December 2011 following the Navy's
    commitment to prepare the SEIS.
        A Notice of Intent was published on February 9, 2012, which
    formally began the SEIS process. The SEIS is expected to take
    approximately 2 years to complete. Upon completion of the SEIS and the
    selection of a location for the training range complex, the DON will
    work with the Government of Guam and any affected private land owners
    in order to secure property necessary to meet training requirements.
        Guam remains an essential part of the United States' larger Asia-
    Pacific strategy, which includes developing the island as a strategic
    hub and establishing an operational Marine Corps presence. The
    Department of Defense recognizes Congress' concerns regarding execution
    of the Guam military realignment as outlined in the fiscal year 2012
    National Defense Authorization Act (NDAA) and is taking steps necessary
    to resolve critical issues that will allow the construction program to
    move forward. The United States and Japan are continuously looking for
    more efficient and effective ways to achieve the goals of the
    Realignment Roadmap. Both countries remain committed to maintaining and
    enhancing a robust security alliance, and the United States remains
    committed to enhancing the United States-Japan Alliance and
    strengthening operational capabilities while significantly reducing the
    impact of U.S. bases on the Okinawan people.
                                    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.
      --Military Construction.--Military construction (MILCON) will
            continue to be used where PPV authorities do not apply (such as
            overseas), or where a business case analysis shows that a PPV
            project is not feasible.
        Our fiscal year 2013 budget includes $102 million in funding for
    family housing improvements (including planning and design). This
    request provides for the revitalization of approximately 200 Navy and
    Marine Corps housing units in Japan and Guam and the second phase of
    privatization in the Pacific Northwest, involving almost 900 homes. The
    budget request also includes $378 million for the operation,
    maintenance, and leasing of remaining Government-owned or controlled
    inventory.
        The Navy and Marine Corps privatized family housing inventory
    consists of over 63,000 homes. With over 90 percent of the housing
    stock privatized, our focus, and my priority, continues to be the
    oversight of the Department's privatized housing portfolio to ensure
    that the public/private ventures are financially viable and self-
    sustaining, that our private partners meet their obligations under the
    governing business agreements and that residents are satisfied with
    both their housing and the services they receive.
        Surveys continue to reflect steady, significant improvement in
    reported resident satisfaction. Where issues have been identified, the
    Department has worked with the partners to resolve them as quickly as
    possible. We have taken, or are taking, a number of actions to further
    strengthen our oversight. These include:
      --Identifying and flagging key indicators (e.g., number and type of
            service calls, response times);
      --Identifying common issues and trends identified in comments
            provided along with resident surveys;
      --Increasing and reinforcing resident awareness of the Services' role
            in privatized housing and advocacy for members and their
            families; and
      --In conjunction with the partners, developing a risk communications
            plan to respond to resident concerns.
    Unaccompanied Housing
        Our budget request includes over $133 million in funding for the
    construction of unaccompanied housing and student quarters to support
    over 1,000 single sailors and marines. This includes a $76 million
    unaccompanied housing project at Naval Base Coronado, California, 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 Navy remains on track to provide housing
            ashore for all junior single sailors, assigned to sea duty, by
            2016.
      --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 recently completed Commandant's BEQ initiative,
            almost 90 percent of the Marine Corps' unaccompanied housing is
            now considered adequate.
                                  environment
        In fiscal year 2013, 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.
        The relative distribution of environmental funding across the
    environmental program areas, as displayed within the chart [below],
    remains stable.

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        While fulfilling its national security mission, DON continues to be
    a Federal leader in environmental management by focusing our resources
    on achieving specific environmental protection goals and proactively
    managing emerging environmental issues. The Department continues its
    commitment to environmental compliance, stewardship, and responsible
    fiscal management that support mission readiness and sustainability. In
    this regard, DON is continuing efforts to integrate sound environmental
    policies and long-term cost considerations into the early stages of the
    acquisition process to achieve cleaner, safer, more energy-efficient
    and affordable weapons, materials, processes, and technologies across
    the naval enterprise.
    Compliance--Sustainability
        The Department's environmental budget will ensure continued
    compliance with existing regulations, while also smartly investing in a
    more agile and sustainable Navy and Marine Corps. Sustainability is
    seen by DON as a means of supporting our mission while also reducing
    lifecycle costs. DON has instituted many policies and practices
    implementing sustainability tenets including retrofitting/constructing
    buildings to optimize energy and water use, adopting goals for
    renewable energy use and stormwater management on facilities, and
    conducting integrated solid waste management.
        As an example, to reduce afloat solid waste, Naval Supply Systems
    Command (NAVSUP) has several packaging initiatives underway. These
    include two programs (Plastics Removal In Marine Environment (PRIME)
    and Waste Reduction Afloat Protects the Sea (WRAPS)) that reduce the
    amount of solid waste generated at sea and encourage use of
    environmentally friendly products. Under these programs, NAVSUP is
    working with the General Services Administration (GSA) to identify
    items that can be shipped with reduced packaging that is free of
    plastics and is implementing a reusable water bottle pilot project.
    NAVSUP is also working with GSA on industry packaging strategies that
    shift the mindset from point of sale packaging to e-commerce packaging
    that features recyclable boxes that are easy to open and free of excess
    materials such as hard plastic clamshell cases, plastic bindings, and
    wire ties.
    National Ocean Council
        The National Ocean Council (NOC) is a Cabinet-level body
    established by Executive Order in July 2010 which includes a mandate
    for the use of spatial planning as a tool to maximize compatible use.
    Including the Department of the Navy (DON), there are 27 Federal
    agencies and offices tasked to develop a comprehensive national ocean
    policy which uses ecosystem based management and coastal and marine
    spatial planning as foundational building blocks. The DON is
    extensively engaged in supporting the President's NOC goals while
    working to ensure our current operating areas remain accessible within
    the comprehensive national ocean policy: For the first time
    comprehensive spatial planning is being conducted in the Exclusive
    Economic Zones (EEZs) including the western Pacific, Alaska and the
    Arctic, the Gulf of Mexico, and the Caribbean. 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, serving as the Federal co-lead for the South
    Atlantic Regional Planning Body, and participating in developing
    Coastal and Marine Spatial Plans for each of the nine identified
    regions.
        The Department participates in numerous interagency ocean-policy
    working groups formed under the NOC. The Department of the Navy also
    participated in developing the NOC Implementation Plan, which was
    released to the public in January 2012. To foster more effective
    Federal engagement with tribal governments regarding coastal and marine
    spatial planning, DON is coordinating delivery during 2012 of the DOD
    Tribal Communications and Coastal and Marine Spatial Planning courses
    to participants from all four military services plus the President's
    Council on Environmental Quality, the U.S. Coast Guard, National
    Oceanic and Atmospheric Administration, and Bureau of Ocean Energy
    Management.
    Chesapeake Bay
        After issuing the Chesapeake Bay Strategy in May 2010, the
    Department 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 continues 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.
    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 access,
    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 integrate natural
    resources management with the installation's operational and training
    requirements as well as address the needs of our Federal and State
    partners and other stakeholders to ensure our INRMPs remain current and
    effective. A primary objective of our INRMPs is to implement
    conservation measures which protect threatened and endangered species
    and their habitat as required by the Endangered Species Act, which can
    help to reduce or eliminate the need to designate critical habitat on
    DON property. 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.
        A recent noteworthy accomplishment involved the installation of a
    living shoreline at Naval Support Activity Panama City, Florida. The
    Navy partnered with the Florida Department of Environmental Protection
    to restore approximately 2,800 feet of shoreline. This shoreline was
    restored by establishing 175 separate reefs created from recycled
    oyster shells obtained from local restaurants and plantings of
    approximately 22,000 donated marsh grasses. This living shoreline is a
    natural substitute for the typical hardened sea wall or rip rap that
    would otherwise be necessary to address years of erosion from natural
    and manmade causes. This enduring project was supported by 2,840
    volunteer hours, both military and civilian, who worked together to
    provide this living shoreline which will support interactive
    educational opportunities provided by the Navy.
    Cultural Resources Conservation
        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
    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.
        To increase awareness of many of the Nation's cultural resources
    under the stewardship of DON, this past year, the Marine Corps began
    the development of a poster series, titled ``Defending Our Cultural
    Heritage,'' that celebrates and educates the public on Marine Corps
    stewardship of cultural resources. The initial four posters in this
    series highlight the National Historic Landmarks under Marine Corps
    stewardship, as well as the partnership initiative with the Advisory
    Council on Historic Preservation, the National Park Service, and the
    State Historic Preservation Offices in the four States represented by
    these posters.
    Installation Restoration Program (IRP)
        The DON continues to make significant progress remediating past
    contaminants. At the end of fiscal year 2011, the Department had
    completed cleanup or has remedies in place at 86 percent of the 3,909
    contaminated sites on active installations. We are projecting that all
    but 46 of these sites will be cleaned up or have remedies in place by
    2014. These remaining sites will be subject to newly established DOD
    metrics to drive 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 2011 was initiating remedial investigations and completing site
    inspections for newly identified sites. Of the 361 sites in the
    program, site inspections have been completed at 99 percent of these
    sites, with only one remaining. This site had a removal action underway
    that was necessary prior to the start of the investigation. Additional
    funding was also obligated to address high-priority sites at Vieques,
    Puerto Rico. DON is using the results of the completed site inspections
    to prioritize the next phases of work. DON plans to achieve cleanup or
    remedies in place at 99 percent of MRP sites by fiscal year 2020, with
    the remaining five sites reaching remedy in place by fiscal year 2024.
    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
    decisionmaking 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.
        Using our improved scientific knowledge developed from our
    research, the Navy has started a second round of environmental
    documentation focused on marine mammal and sound issues. Phase II
    Environmental Impact Statements will include all of the spatial areas
    covered by Phase I, plus increased coverage to include parts of the
    global commons.
                              compatible land use
        The Department of the Navy has an aggressive program to promote
    compatible use of land adjacent to our installations and ranges, with
    particular focus on limiting incompatible activities and protecting
    important natural habitats. 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. The
    program has proven to be successful in leveraging Department of Defense
    and Department of Navy resources.
        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 2011, the Marine Corps acquired
    restrictive easements over 3,349 acres. REPI and Marine Corps funds
    totaled $3.4 million while the encroachment partners provided $3.6
    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 restrictive easements for 33,862
    acres of land with $50.8 million of REPI and Marine Corps funding.
    Encroachment partners have contributed $55.7 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.
        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 off-shore
    energy exploration and wind development play a crucial role in our
    Nation's security and are not necessarily mutually exclusive activities
    with military training. Therefore, we are engaging with the other
    Services, the Office of the Secretary of Defense, 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 degrade
    the ability of naval forces to achieve the highest value from training
    and testing.
                              brac implementation
    BRAC 2005 Implementation
        The Department met its legal obligations by the statutory deadline
    of September 15, 2011, and successfully implemented all required
    realignment and closure actions as specified in our established
    business plans. Going forward, our fiscal year 2013 budget request of
    $18 million enables ongoing environmental restoration, caretaker, and
    property disposal efforts at BRAC 2005 installations.

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        BRAC 2005 provided an important opportunity to improve operational
    efficiencies, reduce excess infrastructure, add Joint Bases, and
    produce savings. In total, the Department led 33 recommendations which
    involved 484 realignment and closure actions and 118 BRAC construction
    projects. We invested our dollars to build state-of-the-art facilities
    which vary in function from administrative to industrial to research
    and development that are necessary to support our warfighters.
        During the past year, DON closed Naval Air Station Brunswick,
    Maine, Naval Air Station Joint Reserve Base Willow Grove, Pennsylvania,
    and the Naval Support Activity New Orleans, Louisiana, along with a
    number of Navy Marine Corps Reserve Centers. The Department established
    the Marine Corps Support Facility in the first-of-its-kind Federal City
    New Orleans. We led the effort and completed the relocation of five DOD
    Investigative, Counterintelligence and Security agencies to Marine
    Corps Base Quantico. The Department 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, California.
        By the end of fiscal year 2011, the Department disposed of 52
    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, Federal and
    DOD agency transfers, and an Economic Development Conveyance (EDC). Of
    interest for fiscal year 2011 is the conveyance of 1,133 acres at Naval
    Air Station Brunswick to several recipients using various real estate
    authorities supporting economic redevelopment of the community and
    public uses, such as education and parks.
        For 2012, the Department will continue its disposal efforts at
    Brunswick with another 1,593 acres planned for conveyance. The 2012
    Plan also includes transfer of remaining real property at Naval Station
    Ingleside, Texas, Marine Corps Support Activity Kansas City, Missouri,
    and Naval Support Activity New Orleans, Louisiana. Other significant
    disposals include completing all disposal actions at five smaller
    facilities.
        Naval Support Activity New Orleans, Louisiana.--Construction for
    the new building that houses Headquarters, Marine Forces Reserve and
    Marine Corps Mobilization Command was completed in June 2011.
        Naval Air Station Brunswick, Maine.--The Department's largest BRAC
    2005 operational action closed Naval Air Station Brunswick and
    consolidated the East Coast maritime patrol operations in Jacksonville,
    Florida. Runway operations in Brunswick ceased in February 2010. The
    closure ceremony occurred in May 2011. The disposal of NAS Brunswick
    has been a stunning success story to support the reuse and economic
    redevelopment of the base and mid-coast Maine. Almost 1,200 of the
    base's 3,400 acres have already been disposed. This includes 750 acres
    of runway and aviation facilities to start a private airport before the
    base even closed, and almost 300 acres through an EDC. This EDC was
    transferred at fair market value with Navy receiving a portion of the
    mixed use redevelopment proceeds for the next 20 years. Smaller
    conveyances have also been made to the local community college for
    classroom facilities and to the Town of Brunswick for parks and
    recreation reuse.
        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, Maine, Naval Weapons Station Seal Beach
    Detachment Concord, California, and Naval Air Station Joint Reserve
    Base Willow Grove, Pennsylvania. Our remaining environmental cost to
    complete for fiscal year 2012 and beyond is $189 million.
    Prior BRAC
        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 14 of the original 91 bases and to complete
    environmental cleanup, including long-term monitoring at 26
    installations that have been disposed.
        We disposed of 839 acres of real property in fiscal year 2011, for
    a total of 93 percent of real property disposed in the first four
    rounds of BRAC. In fiscal year 2011, we completed the disposal of
    nearly 400 acres at the former Naval Air Station Barbers Point, Hawaii,
    to the City and County of Honolulu via a National Parks Service-
    sponsored public benefit conveyance. This will allow the City and
    County of Honolulu to develop much needed parks, ball fields, and
    preserve open space in the rapidly developing Kalaeloa area of Oahu. 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 2013 budget request of $147 million will
    enable us to continue disposal actions and meet the legal requirements
    for environmental cleanup.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        With 64 percent of our remaining property requiring supplemental
    National Environmental Policy Act (NEPA) analysis and completion of
    environmental remediation activities, disposal actions will continue
    after fiscal year 2012. Due to changing redevelopment plans, we are
    finalizing Supplemental NEPA analyses at Naval Shipyard Hunters Point,
    California, and recently completed efforts at Naval Station Roosevelt
    Roads, Puerto Rico.
        In fiscal year 2012, we have already conveyed nearly 600 acres at
    Naval Air Station South Weymouth, Massachusetts, and over 1,000 acres
    at Naval Station Roosevelt Roads via EDCs. Other significant actions
    include the initiation of a public sale at Naval Station Roosevelt
    Roads, Puerto Rico, for about 2,033 acres and the initial impending
    conveyance of property at Naval Station Treasure Island via an EDC.
    With the completion of these actions, we will have disposed of 96
    percent of our Prior BRAC real properties.
        The Department has now spent about $4.6 billion on environmental
    cleanup, environmental compliance, and program management costs at
    prior BRAC locations through fiscal year 2011. Our remaining
    environmental cost to complete for fiscal year 2012 and beyond is
    approximately $1.36 billion. This includes about $150 million cost
    growth which is due in part to additional radiological contamination at
    Naval Air Station Alameda, California, Naval Station Puget Sound,
    Washington, and Naval Station Treasure Island, California. The increase
    is also associated with ground water cleanup at sites at Naval Air
    Station Moffett Field, California, and additional investigation and
    remediation at Naval Shipyard Mare Island, California.
    BRAC Summary
        The Department met its legal obligation 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 require some effort, we
    expect to be fully complete this spring.
        For the Prior BRAC installations, we transferred 1,041 acres at
    Naval Station Roosevelt Roads, Puerto Rico, and 557 acres at Naval Air
    Station South Weymouth, Massachusetts, to the respective Local
    Redevelopment Authorities. Additionally, we are working with the Naval
    Station Treasure Island Local Redevelopment Authority to complete the
    first transfer of property required for the construction of the Oakland
    Bay Bridge. 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 Economic Development
    Conveyances with revenue sharing.
                                   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 re-
    supply, re-equip, train, and shelter our forces. With your support of
    the Department's fiscal year 2013 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 war fighting readiness and
    quality of life for the most formidable expeditionary fighting force in
    the world.

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

                                OVERSEAS MILCON

        Secretary Pfannenstiel, the Navy's Future Years Defense
    Plan (FYDP) includes a $300-million wedge from fiscal years
    2015 to 2017 for unspecified Pacific engagement military
    construction. The administration has indicated that its pivot
    to the Pacific region includes rotating United States forces to
    Australia, Singapore, and the Philippines. Will that require
    the construction of new bases overseas? What is the purpose of
    the $300-million wedge for Pacific engagement?
        Ms. Pfannenstiel. Senator, I will take the specifics on the
    wedge, the $300 million, for the record. Perhaps General
    Kessler will answer some of what will be happening during that
    timeframe as we rotate to the Pacific.
        General Kessler. Thank you, Mr. Chairman. While some of the
    specifics are not yet available, the intent for that money is
    to invest in infrastructure necessary to support the presence,
    both in the Western Pacific and in the Indian Ocean, focused on
    regional cooperation, stability, and humanitarian assistance in
    disaster-relief requirements.
        And it is important, I think, to note that these funds are
    separate from our requirements for Guam.
        Ms. Pfannenstiel. Admiral Boone, did you want to add to
    that?
        Admiral Boone. Yes, ma'am. Mr. Chairman, the Navy has
    multiple projects planned in the coming years to support the
    Department's emphasis on the Asia Pacific region, like the
    forward stationing the littoral combat ships in Singapore. So
    for programming considerations, we included this wedge to give
    a current rough estimate of what these projects may cost in the
    out-years.
        Of course, we will refine these estimates in future budget
    submissions as we determine our strategic lay-down
    infrastructure requirements and availability of host-nation
    support in the Pacific.

                                MILCON PLANNING

        Senator Johnson. Secretary Pfannenstiel, when do you expect
    firm decisions to be made on the number and mix of marines that
    will be relocated to Guam, a revised timetable for the move and
    a revised MILCON cost estimate? Do you expect that master plan
    for Guam reflecting these decisions to be available by the time
    the fiscal year 2014 budget is submitted? If not, when will it
    be available?
        Ms. Pfannenstiel. Mr. Chairman, even as we speak,
    discussions are ongoing between the United States Government
    and the Government of Japan to resolve many of those issues
    that you have raised, the structure of the Marine contingent on
    Guam, the timing, and the cost.
        Once the agreement is reached with the Government of Japan,
    we will need, most likely, to redo our environmental analysis
    for Guam. That's a couple-of-years process. And until you have
    completed that, it's hard to know with specifically what the
    construction requirements will be.
        However, having said that, we are hopeful we can reach
    preliminary agreement with the Government of Japan within the
    next couple of months, make an announcement thereof and begin
    the environmental work that is needed.
        Senator Johnson. Secretary Pfannenstiel, the Navy's fiscal
    years 2013 through 2017 FYDP reflects a 25-percent decrease in
    MILCON funding below the FYDP submitted with the fiscal year
    2012 budget. Given the new requirements imposed on the Navy by
    the Pacific realignment, does this mean that the Navy plans to
    defer or eliminate previously programmed projects? If so, will
    this impact projects that had been planned for bases in the
    United States?
        Ms. Pfannenstiel. Fundamentally, the reduction in the
    MILCON request is because of the completion of the Grow the
    Force for the Marine Corps. Past FYDP estimates were designed
    to increase the capacity for a 202,000-member Marine Corps.
    That now, of course, has been completed, and we're ramping the
    other way, having completed the construction that's necessary.
    That's really the driver of the reduction going forward.

                          MARINE CORPS PACIFIC LAYDOWN

        Senator Johnson. General Kessler, the United States and the
    Government of Japan have begun official talks to address the
    2006 Realignment Roadmap for Okinawa and Guam. Notably, this
    includes delinking the construction of the Futenma replacement
    facility from the Guam relocation. In anticipation of the Guam
    and Okinawa realignments, funding for restoring or replacing
    aging facilities at the current Marine Corps Air Station in
    Futenma has been very limited.
        If there are further delays constructing the Futenma
    replacement facility, what are the requirements and what is the
    timeline for facility investments in Marine Air Station Futenma
    to maintain mission readiness?
        General Kessler. Thank you, Mr. Chairman. Yes, sir, you're
    absolutely correct that the delinking of the Futenma
    replacement facility has taken place. And as a result of that,
    we've been able to, I think, continue to make very necessary
    progress on some of the other strategic elements of the Defense
    Policy Review Initiative.
        As a result of that, what that has allowed us to do is to,
    as we revisit the facility needs at Marine Corps Air Station
    Futenma, is to recognize that there is still a requirement for
    Marine aviation elements of III Marine Expeditionary Force to
    be able to operate out of Marine Corps Air Station Futenma.

                                OVERSEAS MILCON

        So we are looking right now, sir, at what those
    requirements are, not as much in terms of MILCON, but more in
    terms of sustaining the existing facilities that are there to
    ensure that those facilities are not only safe, but
    operationally capable to support the air wing in Okinawa.
        Senator Johnson. Admiral Boone, the Navy is requesting
    $89.4 million in fiscal year 2013 for military construction at
    Camp Lemonnier in Djibouti. With the recent increase in the
    base's special operations missions, facilities at Camp
    Lemonnier are currently overcrowded.
        Given the funding request, the increase in mission and the
    limited space, when do you anticipate having a master plan to
    chart and organize a well-developed way forward? Does the
    current footprint at Camp Lemonnier have the potential to meet
    our long-term operational needs or will additional land be
    required?
        Admiral Boone. Thank you, Mr. Chairman. Major General
    Faulkenberry, who is the J4 for the United States Africa
    Command, testified about a month ago on their requirements as a
    Combatant Command (COCOM) imposed on Djibouti, and there have
    been some significant changes.
        Together with the other COCOMs that utilize that
    footprint--the U.S. Transportation Command, U.S. Special
    Operations Command, and U.S. Central Command--we are
    integrating those requirements and anticipate by this summer,
    August, we will have a master plan to present to you.
        Senator Johnson. Senator Tester.
        Senator Tester. Yes, thank you, Mr. Chairman, and I want to
    thank all of you for being here today, and the people that you
    represent. Thank you for your service to this country.
        First of all, even though Montana doesn't have a huge naval
    presence, I will say that the work that you folks are doing in
    energy we can be a part of with biofuels and other things.
        And I want to thank you for the work that you're doing and
    the goals that you have to help this country become more energy
    independent. We all understand that the more energy independent
    we are the more secure we are. So thank you in that work.

                             DOMESTIC MILCON ASSETS

        I have a question that revolves around the $13 billion, and
    maybe this is a question for you, Jackalyne, or anybody. Your
    assets and how they're spread out domestically and around the
    world, can you give me an idea on what percentage are domestic
    assets in the United States versus foreign assets?
        Ms. Pfannenstiel. What percent of our bases are domestic?
        Senator Tester. Yes.
        Ms. Pfannenstiel. I can tell you that between the Navy and
    Marine Corps we have about 100 bases. General Kessler, do you
    know how many of the Marine Corps bases are overseas?
        General Kessler. I----
        Senator Tester. You can get back----
        Ms. Pfannenstiel. Yes, let me get back to you----

        [The information can be found at http://www.acq.osd.mil/ie/
    download/bsr/bsr2011baseline.pdf]

        Senator Tester. I'm actually----
        Ms. Pfannenstiel. That's an easy enough number----

                         FOREIGN-DOMESTIC MILCON SPLIT

        Senator Tester. The next question is the question that I
    really want to find the answer to and is you set aside $13
    billion for your installations. Is that evenly split between
    foreign and domestic bases, No. 1? And if it's not, tell me
    why.
        Ms. Pfannenstiel. Let me offer the fact that of the $1.8
    billion MILCON dollars----
        Senator Tester. Yes.
        Ms. Pfannenstiel. About 30 percent of the MILCON dollars
    are, in fact, for overseas investments. And those are very
    specifically COCOM investments, as Admiral Boone was talking
    about, specific needs in Djibouti, in Rota, in Romania. So
    they're both COCOM and new, new platform investments. So a
    large part of that.
        In terms of the base-operating support dollars----
        Senator Tester. Right.
        Ms. Pfannenstiel. Those are spread depending on any
    agreement we might have with host nations.
        Senator Tester. I've got you. But from a MILCON standpoint,
    if what I heard you say is correct, 30 percent is going to
    foreign bases, 70 percent stays domestic. Yes, I see some heads
    nodding.
        And that split actually will depend upon the answer to the
    first question. And I don't really have a problem; however,
    it's split. I just want a justification. If more of it's going
    to domestic, what are we doing differently? And if more of it's
    going foreign, why do we need that investment?
        Thank you, guys. And we'll get that. If you can get that to
    me, that'd be great. Thank you for being here today. Appreciate
    it, and keep up the good work.
        Ms. Pfannenstiel. Thank you, Senator.
        Senator Johnson. Senator Coats.
        Senator Coats. Mr. Chairman, thank you.
        Madam Secretary, thank you for your testimony, and general,
    and admiral. Appreciate hearing from you.
        I've got three quick questions. Try to get it in my 7-
    minute time limit here.
        First, with recent announcement about looking more toward
    the Western Pacific in terms of locating some facilities, we
    already know that there's going to be a rotating Marine
    contingent up North West Australia.
        Recently, the White House announced that--and the military
    announced that there would be some shifting, more naval
    presence in that part of the world, particularly, again, in
    Australia.
        Have you had an opportunity to factor in what kind of cost
    that might incur in terms of MILCON facilities that might be
    needed to accommodate this new direction? I know it's very
    early in the process, but where are you on that?

                          OVERSEAS MILCON REQUIREMENTS

        Ms. Pfannenstiel. I think you made exactly the right point.
    It's early in the process. On some of these, we do have some
    requirements built in. For example, for Guam, we anticipate
    some expenses, as well as some of what Admiral Boone mentioned.
        In Singapore, for example, where we know there is a
    movement, a lot of the specifics will depend on further
    development of the Pacific posture.
        Senator Coats. General, anything you want to add to that?
        General Kessler. Yes, sir. Thank you. And I agree with
    everything Ms. Pfannenstiel just said. It is a bit early to
    know the details that are specific to the Defense Policy Review
    Initiative adjustments. We know, in general terms, that we'll
    have roughly 5,000 marines on Guam, so we know, in general
    terms, what some of those things are. The specifics are yet to
    be worked out.
        But in addition to that, we also have other movements that
    aren't necessarily directly related to that. For example, we
    have two MV-22 squadrons and one Marine light attack helicopter
    (HMLA) squadron going to Hawaii. So we have some MILCON
    projects that are planned to accommodate the arrival of those
    squadrons.
        So there is, in some of the areas of our adjustment of our
    footprint in the Western Pacific some pretty good detail, and
    those exhibits, obviously, accompany the requests for MILCON.
    Those that are still being worked out with the negotiations,
    the bilateral negotiations, now we just don't have those
    details.
        Senator Coats. Specific to the rotational effort we're
    going to have--I think it's a conjunction with the
    Australians--are we just taking advantage of their facilities
    as part of that effort or do we have to construct new----
        General Kessler. You are correct, sir. We will be looking
    to colocate on an existing Australian facility. That is one of
    those areas where we don't know, at this time, the specific
    details of any potential MILCON. We've got to take a look to
    see if that's going to be necessary. It is not our plan at this
    time, though, to establish a wholly separate Marine Corps
    installation in North West Australia.
        Senator Coats. And admiral, I think there's some discussion
    now about a greater naval presence in that particular region of
    the world. Does that conjure up any kind of significant MILCON
    for the Navy?
        Admiral Boone. Thank you, Senator. As the general stated,
    the first piece is establishing what the force-structure
    requirements are and whether it's a permanent station or
    rotational forces. And that question drives, to a great extent,
    the impact on an installation and what the requirement is, and
    we're certainly working through that.
        The other piece that's critically important is once we
    determine where we would desire to be stationed out of, the
    host-nation agreements that we work through to establish what
    the relationship is critically important. So all that's being
    worked now, and so we'll definitize it as we sort through that.

                     BUDGET CONTROL ACT IMPACTS AND PLAN B

        Senator Coats. Madam Secretary, given the Budget Control
    Act that was passed by the Congress last August and the
    automatic sequester that takes place if we don't make
    adjustments before the end of the year, have you factored in--
    do you have a plan B in terms of how does that affect MILCON
    going forward, because it's across-the-board cuts, so, if it
    goes into effect.
        Ms. Pfannenstiel. Yes, Senator. We do not yet have a plan
    B. We understand, as you do, that it would be an across the
    board, although again, even that is relatively uncertain at the
    time.
        We know perhaps, as others have told you that it could have
    catastrophic effects, depending on how it's applied. And so no,
    we have not yet developed our plan B.
        Senator Coats. I'd urge you to do so. I think there's
    bipartisan interest in trying to adjust that, but we don't
    always succeed in reaching our goals here. So it might be good
    to have something on the shelf, at least know what your impact
    on your particular----
        Ms. Pfannenstiel. Yes, absolutely. Thank you.
        Senator Coats. Last question, and this is a parochial one.
    We have a joint Navy-Army base in the middle of Indiana. It is
    on a lake, but it's not on an ocean, and so it's kind of
    foreign--I think it's a little familiar to the Army, but it's a
    little foreign to the Navy.
        But the Naval Surface Warfare Center there does some
    extraordinary work, but there's also a whole host of
    contractors that are working there doing special ops,
    electronic warfare, some really amazing things. I just wanted
    to bring it to your attention. Love to have you come and visit
    it.
        You will see water if you go, but you'll also see a 6,400-
    acre base that employs a lot of engineers and highly skilled
    people, along with military doing some really special and
    interesting things, particularly important to the kind of
    future warfare that we're potentially looking at, all the
    electronics going on there.
        And so offer to any of the three of you an invitation to
    visit that facility. We just don't want it to be overlooked
    because it's landlocked. And with BRAC coming up and so forth,
    I think the value of that ought to be understood by all those
    in the business of making decisions.
        Ms. Pfannenstiel. Thank you, Senator. I will see if I can
    get out there. I'd love to.
        Senator Coats. Good. We'll give you a good visit. I think
    you'll enjoy it. That's open to the two of you also.
        Mr. Chairman, thank you.

                            GUAM MILCON REQUIREMENTS

        Senator Johnson. Secretary Pfannenstiel, the fiscal year
    2012 National Defense Authorization Act (NDAA) prohibits the
    Navy from obligating funds in Guam provided by the Government
    of Japan until certain roadmap conditions are met.
        Accordingly, I was recently informed that the Navy is
    canceling $455 million in Japanese-funded contract
    solicitations for four projects in Guam. Are there any
    additional projects that have been placed on hold or canceled
    in accordance with this language?
        Once the realignment roadmap agreement is reached, do you
    anticipate that these Japanese contributions will still be
    available for obligation?
        Ms. Pfannenstiel. First, Mr. Chairman, on the cancellation
    of the contracts, what that was was some bids that had been
    received under the Japanese-funded contracts. And the bids were
    expiring and we could either extend them, continue to extend
    them and, in some cases, they had already been extended--or
    close the bids, cancel those bids and then go back out.
        In terms of other contracts that will be canceled, I don't
    know of any that have been awarded or bids that have been
    solicited that would need to be canceled.
        The deeper question of when will we meet the conditions of
    the NDAA and therefore be able to move forward, we're working
    to meet those conditions now. We would hope to do so in the
    near future such that the condition will be lifted and we can
    move ahead.
        As for whether the Japanese dollars will be available to
    us, that's part of the negotiation that is ongoing with the
    Government of Japan.

                         ADDITIONAL COMMITTEE QUESTIONS

        Senator Johnson. Thank you for your participation in this
    panel, and you may be excused.
        Ms. Pfannenstiel. Thank you, Mr. Chairman.
        [The following questions were not asked at the hearing but
    were submitted to the Department for response subsequent to the
    hearing:]
               Questions Submitted to Hon. Jackalyne Pfannenstiel
                   Questions Submitted by Senator Tim Johnson
                       u.s. naval rotations to australia
        Question. Secretary Pfannenstiel, in the subcommittee's hearing
    with the Department of Defense (DOD), the Department indicated that the
    Australians are interested in a U.S. Naval rotational presence. How
    would such a rotational presence be structured, and what MILCON needs
    would be required?
        Answer. The Department of the Navy (DON) is still developing how we
    will specifically support the Department of Defense's emphasis on the
    Asia-Pacific region in the future. As we determine our strategic
    laydown, infrastructure requirements and availability of host nation
    support, DON's infrastructure investments, including military
    construction, will be defined and included in future budget
    submissions. The Department of Navy will continue to inform your staff
    on the structure of the Naval rotational presence and the development
    of the MILCON requirements.
                                 camp lemonnier
        Question. Secretary Pfannenstiel, the mission requirements of Camp
    Lemonnier have shifted over the past several years, and this has
    impacted the types of military construction we have undertaken at the
    base. Do you expect the mission to continue to shift? If so, are the
    requested and planned projects adaptable to our changing needs? What is
    the status of acquiring additional land to expand the footprint of Camp
    Lemonnier?
        Answer. Although it is always challenging to meet evolving
    requirements, Navy continues to work closely with applicable Combatant
    Commanders to perform necessary master planning efforts and ensure
    facilities can meet current and future infrastructure requirements. All
    four projects in Navy's fiscal year 2013 budget request support a wide
    range of operations at Camp Lemonnier and serve functions that are
    required independent of mission changes.
        We continue to investigate and evaluate the need for additional
    land and will include this information in the updated Camp Lemonnier
    Master Plan, which will be submitted to the Congressional Defense
    Committees by August 31, 2012.
                                     ______

                    Questions Submitted by Senator Mark Kirk
                     africom involvement in camp lemonnier
        Question. Ms. Pfannenstiel, our staffs have been working
    unsuccessfully for over 2 years with your staff trying to lockdown a
    construction master plan for Camp Lemonnier. I know the Navy is the
    executive agent for the camp and is responsible for the construction
    plans, and I also know the operational requirements from the Combatant
    Commands, most especially AFRICOM, change at a rapid rate, making this
    task seemingly impossible.
        Department of Defense doctrine dictates that the executive agent
    must provide support for the Combatant Commands, but I would like to
    ask about the unique nature of this particular location. Camp Lemonnier
    is vital to our national security and is used by four different
    commands, and as such may deserve special consideration.
        Ms. Pfannenstiel, in light of the special circumstances and
    uniqueness of Camp Lemonnier, would it be helpful to all concerned if
    the Secretary of Defense directly tasked the AFRICOM Commander to
    assume more responsibility for the camp since it is in its Area of
    Responsibility (AOR)? For example, the AFRICOM Commander, in
    consultation with the Department of the Navy, shall direct and sign a
    Construction Master Plan for Camp Lemonnier? Your thoughts on this
    would be most appreciated.
        Answer. No. The roles and responsibilities of Combatant Commanders
    and Services are clearly defined by law and Department of Defense
    policy. At this time we do not believe an exception for Camp Lemonnier
    is necessary.
        Although it is always challenging to capture evolving requirements
    in a concise Master Plan, Navy continues to work closely with
    applicable Combatant Commanders to perform necessary master planning
    efforts.
        We have nearly completed the extensive facilities planning effort
    to support current and emerging Combatant Commander requirements at
    Camp Lemonnier. We intend to submit an updated Camp Lemonnier Master
    Plan, to the Congressional Defense Committees by August 31, 2012.
                                    bahrain
        Question. Ms. Pfannenstiel, the Secretary of Defense has announced
    that as part of the new force posture realignment in the Middle East
    new or additional combat ships will be stationed in Bahrain, a very
    important location for U.S. forces. Would you please tell us what the
    MILCON requirements will be for these additional combat ships and any
    other missions you might be putting at our facilities in Bahrain?
        Answer. [A response was not provided.]
                         General/Flag Officer Quarters
        Question. Ms. Pfannenstiel, the Navy reports only nine flag office
    quarters will exceed the $35,000 annual cost cap, but the most
    noteworthy flag officer quarters exceeding this amount is in Naples,
    Italy. Villa Nike is an 11,322 square foot house and the operating
    budget request for this house in 2013 is $433,500 ($84,800 for
    management services, $116,200 for utilities, and $232,500 for
    maintenance and repair).
        Ms. Pfannenstiel, would you please provide the justification for
    the Villa Nike property at Naples, Italy; any alternatives that would
    be more economical to the taxpayer; and a detailed list of expenses,
    particularly the $84,000 cost for ``management services'', $88,000 for
    china and furniture, and any other projects that justify the $433,500
    annual cost?
        Answer. [A response was not provided.]
                                     ______

                  Questions Submitted by Senator Daniel Coats
                            milcon decision process
        Question. In recent years the Navy has changed how it makes
    decisions on funding for military construction projects as well as the
    process for deciding what gets input to the Future Years Defense Plan
    (FYDP). How has this impacted the major commands like the Naval Sea
    Systems Command, Space and Naval Warfare Systems Command, and Naval Air
    Systems Command and their requests for new facilities? Who is making
    the decision and does the activity/installation command have any say or
    ``vote'' in the process?
        Answer. Prior to our fiscal year 2010 budget, the MILCON process
    used a bottom-up, advocacy-based shore investment strategy.
        Today, the Navy uses a deliberate, capabilities-based process that
    holistically integrates warfare enterprises' and providers'
    requirements. This new process prioritizes required capabilities and
    ensures they are provided at the proper time. It converts the Chief of
    Naval Operations' (CNO's) guidance into an analytical and objective
    model that accounts for Strategic Alignment and Guiding Principles;
    Mission Dependency; and Facility Conditions. As a result, our MILCON
    program ensures support of fielding new systems/platforms, critical war
    fighting requirements, Quality of Life/Quality of Service initiatives,
    and infrastructure recapitalization.
        The Systems Commands, like all other Navy commands, absolutely have
    a voice in the MILCON process. The CNO ultimately makes decisions by
    balancing risk across the Navy to provide the most capability within
    fiscal constraints.
                            capability consolidation
        Question. Has the Navy considered consolidation of capabilities of
    mission areas, such as electronic warfare, to move more work to
    facilities that have the capability and capacity to receive increased
    workload and personnel?
        Answer. The Navy continually seeks out and evaluates opportunities
    to improve delivery to the warfighter through efficiency and cost
    improvements, while ensuring that national security needs and statutory
    requirements are met.
                        environmental permitting process
        Question. The Navy stood up Commander, Naval Installations Command
    (CNIC) in 2004 and regionalized the facility maintenance and base
    ownership functions. This has resulted in a command that does not have
    a direct tie to the mission of Working Capital Funded (WCF) commands
    like NSWC Crane and does not appear to appreciate the full impact
    regionalization has had, or can have, on the mission of supporting the
    warfighter with the tools needed to perform their role. An effort is
    underway to force Working Capital Funded commands to relinquish control
    of environmental permits for hazardous operations and processes to the
    CNIC/NSA host command. There is growing concern about the financial
    impact as well as the mission impact of this methodology. How does a
    Working Capital Funded activity ensure the proper permits are
    maintained, and processes monitored, to allow them to perform their
    required functions? How do you justify the additional cost to Working
    Capital Funded customers of having someone else control and monitor the
    permits?
        Answer. CNIC and NAVFAC resource and manage complex environmental
    programs at over 70 installations world-wide with a track record of
    maintaining high-quality environmental compliance programs, despite
    current fiscal challenges. Commander, Navy Installations Command (CNIC)
    was established and authorized to improve shore installations
    management to mission tenants across the Navy. NAVFAC, CNIC, and
    Installation Commanders fully understand the importance of maintaining
    environmental compliance. This responsibility includes legal compliance
    at the installation and successfully performing environmental
    compliance functions to support all tenants, including many Working
    Capital Funded commands.
        In most situations, the Commanding Officer of the host command is
    responsible for obtaining and maintaining required permits and as the
    permit owner is responsible for ensuring compliance with all permit
    conditions. The host command coordinates permit conditions with all
    affected tenant commands and ensures that responsibilities related to
    environmental and natural resources program permits are addressed in
    host/tenant agreements. The Installation Commanding Officer has a
    number of forums and opportunities to communicate, to coordinate and to
    interface with tenant organizations' leadership so all understand
    requirements and expectations.
        The planned realignment of permits at Crane is based on a careful
    and detailed study of responsibilities that was mutually performed by
    the installation, NAVFAC, and NSWC Crane. The financial impacts of
    realigning environmental support at Crane have been carefully analyzed
    jointly by the installation, NAVFAC, and NSWC Crane and will not add
    costs to NSWC Crane customers.
                            davis-bacon requirements
        Question. If Davis-Bacon was waived, how much money would it save
    the Department of the Navy's MILCON program?
        Answer.\1\ The Department of the Navy does not expect any savings,
    principally because our installations reside primarily where the
    prevailing wages paid by contractors are at or above the D-B rates. The
    likely effects on bids on DON construction in other locations are
    unknown but are estimated to be minimal because bid savings are driven
    more by broader economic conditions within the industry, such as
    availability of resources, material prices, prices for capital, design
    considerations, acquisition methods, and competition.
    ---------------------------------------------------------------------------
        \1\ The response was approved by Mr. Roger Natsuhara.
    ---------------------------------------------------------------------------
                                     ______

               Questions Submitted to Major General James Kessler
                   Questions Submitted by Senator Tim Johnson
                        usmc force structure realignment
        Question. Major General Kessler, it is my understanding that under
    the revised plans for relocating 8,700 marines from Okinawa, a
    contingent will be based in Hawaii. How many marines will be moving to
    Hawaii? Are there currently adequate facilities in Hawaii for these
    additional marines and/or their families?
        Answer. According to the United States (U.S.)-Government of Japan
    (GOJ) Joint Statement of the Security Consultative Committee dated
    April 27, 2012, the United States plans to locate Marine Air-Ground
    Task Forces (MAGTF) in Hawaii, along with Okinawa and Guam. The Joint
    Statement also acknowledged that the United States informed GOJ that
    U.S. Marines will move to Hawaii to enhance operational capability
    there. However, detailed force structure moves and numbers have not
    been decided. A final decision on the number of marines potentially
    moving to Hawaii will be informed by a full planning analysis that
    would evaluate, among other topics, environmental, cultural resources,
    socioeconomic, off-base infrastructure, and facility impact. Detailed
    relocation numbers will be announced after completion of planning
    analysis.
                                usmc relocation
        Question. Major General Kessler, can you add specifics regarding
    where the rest of the marines will be going and whether they will be
    accompanied or unaccompanied tours?
        Answer. A final decision on lay down of Marine forces in the
    Pacific has not been determined.
                          Department of the Air Force

    STATEMENT OF HON. TERRY A. YONKERS, ASSISTANT SECRETARY
                FOR INSTALLATIONS, ENVIRONMENT, AND
                LOGISTICS
    ACCOMPANIED BY:
            KATHLEEN I. FERGUSON, DEPUTY ASSISTANT SECRETARY OF THE AIR
                FORCE FOR INSTALLATIONS
            MAJOR GENERAL WILLIAM H. ETTER, DEPUTY DIRECTOR, AIR NATIONAL
                GUARD
            MAJOR GENERAL JAMES JACKSON, DEPUTY CHIEF, AIR FORCE RESERVE

        Senator Johnson. I'm pleased to welcome our second panel of
    witnesses, Secretary Terry Yonkers, Assistant Secretary of the
    Air Force for Installations, Environment and Logistics; Ms.
    Kathleen Ferguson, Deputy Assistant Secretary of the Air Force
    for Installations; Major General William Etter, Deputy
    Director, Air National Guard; and Major General James Jackson,
    Deputy Chief, Air Force Reserve.
        This year's military construction and family housing budget
    request by the Air Force is frankly astonishing, a full 67
    percent below fiscal year 2012. The request for Active
    component MILCON is only $388 million as compared to $1.3
    billion last year. I'm confident that the requirements haven't
    dropped that much.
        I understand that the Air Force has taken what it considers
    to be a deliberate pause in military construction in light of
    the current budget constraints. But I'm concerned that MILCON
    funding, especially investments in current mission
    requirements, is being used to offset investments in other
    areas, such as weapons systems.
        MILCON is a very small part of the overall defense budget,
    but to our military members and their families, it is a very
    important investment. We recognize that MILCON investment in
    new mission requirements is critical, but it should not come at
    the expense of displacing urgent current mission requirements
    to be placed in inadequate or failing facilities.
        I'm especially concerned with the fiscal year 2013 MILCON
    request for the Air Force Reserve. The request of $10.9 million
    funds only one project. Considering the importance of
    supporting a total integrated force, it is disturbing to me
    that the MILCON request for the Air Force Reserve is barely 2
    percent of the total Air Force military construction request.
        I understand that times are tough, but I believe that
    adequate funding for military construction for Active as well
    as Reserve components is vital to the well-being of our troops
    and their families.
        I thank our witnesses for coming today and will look
    forward to your testimony. Your full statements will be entered
    into the record, so I encourage you to summarize them to leave
    more time for questions.
        Secretary Yonkers, please proceed.

                       STATEMENT OF HON. TERRY A. YONKERS

        Mr. Yonkers. Thank you, Mr. Chairman and Senator Tester.
    Good morning and thanks for having us here today to be able to
    talk to you about our Air Force installation military
    construction programs and to say thank you again to this
    subcommittee for your unwavering support of our airmen and
    their families.
        Our fiscal year 2013 budget request responds to two main
    drivers, the Budget Control Act that the Congress put into
    place last year, and of course, the new strategic defense
    policy the President and Secretary Panetta announced in
    January.
        As we prepared the fiscal year 2013 budget, we looked
    across the entire Air Force portfolio and made some very
    difficult decisions to achieve the Air Force's share of that
    $487 billion in the Budget Control Act.
        In our installations and military construction portfolios,
    we're focusing on investments in the critical infrastructure
    needed to sustain our installations and the quality-of-life
    improvements for our airmen and their families.
        We're requesting funding to meet the Combatant Commanders
    most critical facility requirements and most urgent facility
    modifications to bed down and sustain new weapons systems, such
    as the joint strike fighter, MQ-9 remotely piloted aircraft
    (RPA) and the standup of an additional B-52 squadron at Minot
    Air Force Base in North Dakota.
        We are ever cognizant of the smart investments that will
    drive down our cost of doing business. And we're requesting
    over $300 million this budget year to reduce our energy
    footprint by demolishing old, inefficient buildings and
    upgrading heating, ventilation, and cooling (HVAC) and other
    high-energy-use systems, investments that will have tangible
    payback across the Future Years Defense Program.
        Across our energy program, we're requesting $530 million in
    fiscal year 2013, the $215 million I already mentioned and $315
    million more in science and technology to develop more energy-
    efficient jet engines and to complete our certification of the
    aircraft to fly on alternative fuels.
        Our fiscal year 2013 budget contains $3.9 billion for
    military construction, family housing and facilities
    sustainment, restoration and modernization. For military
    construction we are, in fact, requesting $442 million, which is
    $900 million less than fiscal year 2012.
        We're channeling our limited resources to fund our most
    urgent Combatant Commander needs, our most pressing new mission
    work in continuing our efforts to take care of our airmen. This
    deliberate pause in our program is prudent in light of force
    structure decisions stemming from the new defense strategic
    guidance.
        For this year, we have made a deliberate effort to build
    only where existing capacity is not available or where the
    cost-benefit analysis validates demolishing aging facilities
    and construction of more efficient and functional replacements.
        In our fiscal year 2013 budget request, we are also
    continuing to emphasize first-class housing and strive to
    improve the overall quality of life for our airmen. Our new
    2012 to 2016 dormitory master plan will guide our future
    investments for sustaining existing facilities and
    recapitalizing those which are inadequate.
        As we progress through 2012, we are nearing completion of
    our efforts to privatize family housing in the continental
    United States and to renovate family housing overseas,
    especially in Japan.
        Our fiscal year 2013 budget request for military family
    housing is $580 million. The funding is going to be used to
    improve more than 400 homes and infrastructure, such as
    utilities and water and sewer systems at a couple of Japanese
    bases.
        On September 15, 2011, the Air Force successfully completed
    its BRAC 2005 realignment and closure program on time and
    within the original $3.8 billion budgeted that was approved by
    Congress. The upfront BRAC investment is now resulting in $1.4
    billion in annual savings to the Department.
        With that being said, I must say that the BRAC 2005 fell
    short in terms of reducing the Air Force's excess installation
    capacity. The 2004 Secretary of Defense report provided to
    Congress showed that the Air Force was 24 percent over capacity
    and would expect similar findings if we conducted that analysis
    today.

                               PREPARED STATEMENT

        So that is my opening remarks. I want to thank, again, the
    subcommittee for your support of our airmen and their families.
    And I look forward to any questions that you may have.
        [The statement follows:]
                  Prepared Statement of Hon. Terry A. Yonkers
                                  introduction
        The United States is in the midst of a deliberate evolution in the
    role of the military in achieving our national interests. This
    evolution is shaped by a dynamic geo-strategic environment, uncertain
    economic circumstances, and the diffusion of regional centers of
    influence. In order to effectively deal with this new paradigm, the
    Department of Defense issued new Strategic Guidance which focuses our
    limited resources on deterring and defeating aggression across all
    domains, maintaining a safe and effective nuclear deterrent, and
    protecting the homeland, while reducing the quantity of our forces to
    ensure the quality of our force.
        The United States Air Force plays an integral role in this refined
    guidance, and we have taken care to protect the distinctive
    capabilities we provide every day to our Joint, Interagency, and
    Coalition partners. These enduring capabilities include control of air,
    space, and cyberspace; providing global intelligence, surveillance, and
    reconnaissance; rapidly moving people and materiel around the planet;
    and holding targets at risk--anytime and anywhere.
        Difficult decisions were made to achieve the Air Force's share of
    the $487 billion in defense savings mandated by the Budget Control Act
    of 2011. These decisions fell into five broad categories: Force
    Structure, Readiness, Modernization, More Disciplined Use of Defense
    Dollars, and Taking Care of Our People. These five focus areas were
    integral to the allocation of the resources entrusted to us by the
    taxpayer.
        Within the portfolio of Installations, Environment, & Energy we
    focused investments in critical installation facilities and
    infrastructure and quality of life improvements for our airmen and
    families; reducing our energy footprint by demolishing old, energy
    inefficient buildings and upgrading HVAC and other high energy use
    systems and continuing to build on our excellence in environment,
    safety, and occupational health across our Air Force.
        The Air Force is striving to identify opportunities and initiatives
    in each of the above areas that will enable us to maximize the impact
    of every dollar we are given with an eye of every investment have a
    return on those dollars. We are reevaluating how we can improve the way
    we manage our military construction, housing, real estate,
    environmental, and energy portfolios by centralizing these functions
    and services into a single Field Operating Agency. By doing so, we are
    substantially reducing manpower and overhead costs, streamlining
    processes and decisionmaking and centralizing program management and
    accountability under one agency.
        As funding for military construction becomes more austere we have
    made a deliberate effort to build only where existing capacity is not
    available or where the cost-benefit analysis validates demolishing
    aging facilities in lieu of more efficient and functional replacements.
    Since 2008, we have demolished 23 million square feet of building space
    with an estimated savings of $184 million. Furthermore, we are re-
    evaluating our policies and contracting mechanisms in the areas of
    military construction and environmental cleanup with the objective of
    reducing construction and environmental costs.
        As we work our way through the current fiscal challenges the Air
    Force is committed to charting a path that fulfills the promises made
    to the American people today and in the future while staying true to
    our airmen and their families.
                                 installations
    Military Construction
        Our fiscal year 2013 President's budget request contains $3.9
    billion for military construction, military family housing, and
    facility sustainment, restoration, and modernization. For military
    construction we request $442 million, $900 million less than fiscal
    year 2012. This deliberate pause in our program is prudent in light of
    force structure decisions stemming from the new Defense Strategic
    Guidance.
        Our most critical projects are captured in this request and align
    with our priorities of continuing to strengthen the nuclear enterprise,
    partnering with the Joint and Coalition team to win today's fight,
    developing and caring for our airmen and their families, modernizing
    our air, space, and cyber inventories, organizations, and training, and
    recapturing acquisition excellence. Removal of the C-27 program is one
    example of how force structure decisions have affected our fiscal year
    2013 military construction program and the corollary elimination of
    facilities that would otherwise be needed to support the C-27 aircraft
    here in the continental United States.
        We are accepting minor risk by electing to wait a year to fund
    current mission requirements, channeling the limited funds we have
    requested to fund Combatant Commander and new mission needs--especially
    facilities needed to bed-down the Joint Strike Fighter. And while we
    strove to fund our Active, Guard, and Reserve components in accordance
    with their equity in built infrastructure, the combination of austere
    funding and how the components derived their priorities led to a small
    shortfall in the Air Force Reserve.
        We continue to stay focused on the needs of our airmen and their
    families and are requesting nearly $500 million to sustain and
    modernize our overseas housing, while supporting housing privatization
    here in the United States. Unaccompanied airmen, likewise remain a top
    priority and we are requesting $118 million to build new dormitories or
    upgrade existing dorms to the Air Force standard--keeping us on track
    to meet our goal of eliminating inadequate housing for unaccompanied
    airmen by 2017.
        Finally, we request restoration and modernization funding at 90
    percent of historical levels, and sustainment funding at slightly over
    80 percent of the OSD model. For the first time in the Air Force,
    restoration and modernization funds will be centrally managed giving us
    the ability to prioritize new requirements across the enterprise while
    improving our ability to forecast where sustainment dollars should be
    invested to minimize risk in infrastructure maintenance and emergency
    repairs. This ``Asset Management'' approach to facility and
    infrastructure management is adopted from industry best practices--
    where industry has realized double digit savings. We expect to achieve
    similar results and are confident that by centralizing our management
    we can sustain our air bases on the dollars we have requested in this
    budget.
    Continue To Strengthen the Nuclear Enterprise
        The Air Force boasts a legacy of stewardship for two-thirds of the
    Nation's Nuclear Triad, providing security and maintenance for the
    weapons that enable a safe and effective deterrent. Accordingly, our
    number one priority remains the strengthening of the nuclear
    enterprise, with a continued focus on reliability, accountability, and
    compliance from the men and women who fly the bombers and man the
    missile silos in a state of constant vigilance. The fiscal year 2013
    budget request supports the stand-up of an additional B-52 squadron at
    Minot Air Force Base, North Dakota, with a $4.6 million munitions
    equipment maintenance facility addition.
    Partner With the Joint and Coalition Team To Win Today's Fight
        The Air Force continues to be an indispensable member of the Joint
    team as our airmen make significant contributions in controlling the
    domains of air and space, providing unprecedented advantages in
    intelligence, surveillance, and reconnaissance, moving people and cargo
    around the world, and providing the ability to hold at risk any target
    on Earth. We currently have more than 35,000 airmen deployed, including
    nearly 2,300 Air Force civil engineers. In particular, 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 the recognized experts in providing
    installation engineering and airfield capabilities to the warfighter.
    Red Horse assets are in high demand by Combatant Commands in deployed
    locations.
        Our fiscal year 2013 budget request invests $193.3 million in
    projects that support our Joint partners around the world. Examples
    include:
      --Projects Supporting Our Combatant Commanders That Will Greatly
            Enhance Ongoing Operations.--This includes the recapitalization
            of Headquarters, United States Strategic Command at Offutt Air
            Force Base, Nebraska.
      --New Facilities for Operations and Mission Support.--An expanded air
            support operations facility at Fort Stewart, Georgia, will
            allow us to consolidate personnel on the same installation as
            their Joint partners, enabling the synergistic effects of
            training, working, and living together.
      --Intelligence, Surveillance, and Reconnaissance Facilities.--The new
            MQ-9 maintenance hangar at Holloman Air Force Base, New Mexico,
            will provide adequate cover to work on this sensitive aircraft
            under any weather condition or any hour of the day--ensuring
            the training needs of aircrews are met.
    Develop and Care for Airmen and Their Families
        The all-volunteer force is the foundation of the capabilities we
    contribute to the defense of the Nation. In our fiscal year 2013 budget
    request we continue to emphasize providing first-class housing and
    striving to improve the overall quality of life for our airmen and
    their families. Our new 2012-2016 Dormitory Master Plan will guide our
    future investments for sustaining existing facilities and
    recapitalizing those which are inadequate.
    Billeting
        As part of our basing efficiencies initiative, we propose
    construction of a $17.6 million transient contingency dormitory to
    house personnel supporting rotational aircraft transiting through
    Europe. This project, when coupled with the elimination of the host
    nation maintenance contract and real property consolidation, has a
    payback period of only 2 years.
    Dormitories
        The Air Force continues to place a high priority on quality housing
    for our unaccompanied airmen. Our fiscal year 2013 budget request
    includes two dormitory projects totaling $42.5 million. One of these
    projects is located at Joint Base San Antonio, Texas, replacing an
    inadequate facility with severe infrastructure problems and
    historically high sustainment costs. The other, at Thule Air Base,
    Greenland, replaces an inadequate 58-year-old building and is also the
    lynchpin of consolidation efforts at Thule that will provide a payback
    in 3 years. This initiative will reduce energy use by 35 percent and is
    estimated to save $20 million annually.
    Military Family Housing
        As we progress through 2012, we are nearing completion of our
    efforts to privatize family housing in the continental United States.
    This allows us to deliver high-quality homes to our members faster than
    ever before, and at significant savings to the taxpayer. Our fiscal
    year 2013 budget request for military family housing is $580 million.
    Included in this request is $84 million to improve 400 homes and
    upgrade infrastructure in Japan, as well as nearly $500 million to fund
    operations, maintenance, utilities, and leases, and to manage
    privatized units for the family housing program.
    Modernize Our Air, Space, and Cyberspace Inventories, Organizations,
            and Training
        Even in the face of declining budgets, we must continue to
    modernize our force to meet the Nation's requirements. Although the
    pace and scope of this modernization will slow, we must protect
    programs that are critical to future warfighter needs. Our fiscal year
    2013 request continues to invest in the beddown of new weapons systems.
    We request $93.5 million for a variety of military construction
    projects, including:
      --Three Projects To Continue the Bed Down of Our Newest Fighter, the
            F-35.--These projects provide facilities at Hill Air Force
            Base, Utah, for the first operational F-35 unit, which is
            scheduled to begin receiving aircraft in 2015.
      --Three Projects Supporting Our HC/C-130J Fleet.--These projects
            include a fuel systems maintenance hangar at Little Rock Air
            Force Base, Arkansas, and flight simulators at Little Rock Air
            Force Base and Moody Air Force Base, Georgia.
      --Other Projects.--These will support diverse mission areas,
            including F-22 support at Tyndall Air Force Base, Florida, F-16
            training at Aviano Air Base, Italy, and the overseas basing
            efficiencies discussed previously, which are projected to save
            up to $120 million across the FYDP.
    Base Realignment and Closure
        On September 15, 2011, the Air Force completed its 2005 Base
    Realignment and Closure (BRAC) program on time and within its original
    $3.8 billion budget. This up-front Air Force BRAC investment has
    resulted in $900 million in annual savings to the Department of Defense
    that are being reinvested in emerging missions starting in fiscal year
    2013. During the 6-year implementation period of BRAC 2005, the Air
    Force implemented 64 base closure commission recommendations affecting
    122 installations, closing 7 installations and realigning 63 others.
        Even so, BRAC 2005 fell short of the Air Force goal to reduce
    overhead and operational costs by reducing excess installation
    capacity. Today, 7 years later with almost 500 fewer aircraft in the
    inventory, the Air Force continues to maintain large amounts of excess
    infrastructure that is costing hundreds of millions of dollars each
    year--dollars that we need to invest in other areas. The Air Force has
    over 24 percent excess installation capacity (DOD's 2004 Report to
    Congress). This excess capacity can only be effectively eliminated by
    closing installations. As such, we fully support the Secretary of
    Defense's request for two more rounds of base closures in 2013 and 2015
    to right-size our infrastructure and reduce our overhead and operating
    costs. We need Congress' help and support--we can't do BRAC if you're
    not in our corner on this. Without the ability to consolidate and close
    bases, the Air Force will be forced to make harder choices in the
    future that will degrade our ability to invest in those assets that
    directly affect our ability to defend this Nation.
    Joint Basing
        As the Air Force emerges from its first full year of joint basing,
    we remain committed to providing superior and standardized installation
    support to our sister Services. Efficiencies were always expected from
    consolidation of the Joint Bases--this year we will realize a small
    return of that investment--about 500 personnel across those Joint Bases
    for which the Air Force has operational responsibility. We continue to
    assess our processes and information systems, services support, and
    other key areas to garner greater savings from our Joint Bases. In
    fiscal year 2011, we met 88 percent of the Office of the Secretary of
    Defense (OSD) Tri-Service standards, and will continue to increase the
    effectiveness in which we provide installation support while lowering
    costs in fiscal year 2013.
    Encroachment Management
        The Air Force has taken a leadership role in developing
    encroachment management and compatible land use policies--and
    coordinating these efforts with communities around our installations.
    As a follow-on to the Nevada Forum, in January 2011, the Air Force on
    behalf of OSD, hosted a key interagency meeting aimed at finding ways
    to ``clear'' renewable energy projects that had no or little impact to
    military operations. Those efforts culminated in a cross-functional
    team and the DOD's Siting Clearinghouse policy and subsequent Air Force
    policy. In the last year we reviewed and ``cleared'' 486 Energy
    Projects.
    Privatized Housing
        We remain committed to providing quality housing to our airmen and
    their families. Under the housing privatization initiative, $485
    million in Government funding has garnered $7.85 billion in private
    sector funding thus far, providing quality homes to our airmen and
    their families much more quickly than our standard military
    construction process. Approximately 41,500 units at 48 bases have been
    privatized to date, which is 76 percent of our housing inventory in the
    continental United States (CONUS), Alaska, and Hawaii. In addition,
    more than 37,000 inadequate units have been eliminated. Our goal is to
    privatize all CONUS housing by closing the remaining four privatization
    projects in 2012, which will result in 53,800 privatized homes across
    the Air Force portfolio.
    Enhanced Use Leasing
        The Air Force continually seeks to improve our stewardship of real
    estate assets and to leverage appropriated dollars with investments
    from the private sector. With the authorities provided to execute
    enhanced use leases (EUL), we're pursuing innovative ways to leverage
    our unused real estate to return value from our installations. The Air
    Force has set a goal of unlocking $5 billion in net present value from
    EULs through fiscal year 2020. In pursuit of this goal, we've executed
    nine leases with a net present value of $233 million and are close to
    completing a comprehensive survey of all Air Force installations to
    identify non-excess real estate assets that could be put to use to
    generate revenue to meet installation requirements.
        As we pursue EULs our intent is to extract the greatest value
    possible for the asset, and in the current environment renewable energy
    projects provide significant opportunities. Today, the Air Force is
    actively pursuing 11 projects valued at about $700 million, 7 of which
    are related to renewable energy. We've identified another 21
    opportunities and have developed a set of initiatives to determine
    where market demand aligns with our available assets to create
    additional EUL opportunities.
                                     energy
        Energy and energy security is the corner stone of the Air Force's
    ability to maintain global vigilance, reach, and power at home and
    abroad. The Air Force defines energy security as ``having assured
    access to reliable supplies of energy and the ability to protect and
    deliver sufficient energy to meet operational needs.'' To enhance its
    energy security, the Air Force has developed a three-part strategy:
      --Reduce energy demand through conservation and efficiency;
      --Increase renewable and alternative energy sources; and
      --Ensure the culture of the Air Force recognizes the necessity and
            criticality of energy to its operations.
        We have set a number of aggressive goals across our entire
    portfolio--goals that, if met, will help us avoid over $1 billion a
    year (based on today's energy prices) and improve energy security for
    our critical assets.
    Budget Impact
        The Air Force is the largest single consumer of energy in the
    Federal Government and as energy costs increase and budgets decrease,
    this means that energy is consuming a greater proportion of the Air
    Force budget. In fiscal year 2010, the Air Force spent $8.2 billion for
    fuel and electricity, an amount that increased to $9.7 billion in
    fiscal year 2011 due primarily to the increased cost of crude oil.
    Ironically, our demand for both fuel and electricity was down over the
    same period.
        At our installations, the Air Force spent more than $1 billion for
    facility energy in both fiscal year 2010 and fiscal year 2011. However,
    as a result of the initiatives put in place over the last 8 years, the
    Air Force avoided over $250 million in additional facility energy costs
    in fiscal year 2011 alone.
        In the fiscal year 2013 President's budget, the Air Force is
    requesting more than $530 million for aviation, infrastructure, and
    RDT&E energy initiatives to reduce energy demand, improve energy
    efficiency, diversify supply, and improve mission effectiveness.
    Included in this request is $215 million for energy conservation
    projects on Air Force installations, a continuation of the nearly $800
    million we have invested in such projects over the last 4 years.
    Energy Conservation
        Overall, our focus is to reduce our energy footprint across all
    operations. While we have reduced our overall facility energy
    consumption since fiscal year 2003 by nearly 20 percent, and reduced
    energy intensity by more than 16 percent, installation energy costs
    have increased by 32 percent over that same period. The Air Force is on
    track to reduce its energy intensity by 37.5 percent by 2020 and
    increase its renewable energy use to reach 25 percent by 2025.
        As a result of our energy conservation efforts, we have
    cumulatively avoided over $1.1 billion in facility energy costs since
    2003 that can be redirected to better enable warfighters to complete
    their missions. Investments we are making in fiscal year 2012 to
    improve our facility energy efficiency and reduce our energy
    requirement are expected to start generating savings in fiscal year
    2014, and the majority are expected to payback before or just shortly
    after the FYDP.
        The Energy Conservation Investment Program (ECIP) is a critical
    element of the Air Force's strategy to improve the energy performance
    of its permanent installations. In fiscal year 2011, we completed 15
    ECIP projects at a cost of under $20 million. The Air Force estimates
    these projects will save more than 253,000 million British thermal
    units (MBTUs) annually and nearly $54 million over the life of the
    projects. We have submitted six projects to OSD for inclusion in the
    fiscal year 2012 ECIP program. If funded, these projects will save over
    213 billion BTUs.
        The Air Force is also looking to reduce demand by building in
    smarter ways, including maximizing energy efficiency and using
    environmentally friendly materials, and identifying and demolishing 20
    percent of our old, unnecessary, and high-energy use facilities by
    2020.
    Renewable Energy
        The Air Force is looking to improve its energy security and
    diversify its energy supply through increased use of renewable energy.
    In fiscal year 2011, more than 6 percent of the electrical energy used
    by the Air Force was produced from renewable sources. Moving forward,
    our goal is to develop more than 1,000 megawatts (MW) of renewable
    power, including more than 600MW from solar, on our installations by
    2016. By making the most of private sector knowledge, technology, and
    financing, we plan to improve our energy security by capitalizing on
    underutilized land on our installations to develop those projects.
    Currently, the Air Force has 131 operational renewable energy projects
    and another 50 under construction across a wide variety of renewable
    energy sources, including 8.7MW from wind energy, 26.2MW from solar,
    and 2.4MW from waste-to-energy projects.
        In fiscal year 2011, the Air Force had 46 projects funded through
    the MILCON appropriation with at least one renewable energy component,
    such as solar photovoltaic systems or cool roof attributes.
        The Air Force is not just limiting its efforts to renewable energy
    projects, but is also incorporating alternative fueled ground vehicles
    into our fleet. With the support of other private and public
    stakeholders, the Air Force is currently working to develop an all
    plug-in electric vehicle fleet at Los Angeles Air Force Base,
    California. When the initiative is completed later this year, Los
    Angeles Air Force Base will be the first Federal facility to replace
    100 percent of its general-purpose vehicle fleet with plug-in electric
    vehicles. By working with OSD and our Sister Services, we have
    identified 15 other potential locations where such vehicles will
    support the mission and improve our energy security. We will use the
    lessons learned at Los Angeles Air Force Base to continue to refine the
    business case and operational analyses to determine where best to
    employ electric vehicles.
    Third-Party Financing
        While the Air Force has made considerable progress to reduce our
    energy demands and increase our energy diversity, there is still more
    to do. The Air Force is aggressively pursuing a third-party financing
    approach for both renewable and energy conservation projects.
        Direct Air Force renewable energy project funding through Air Force
    capital sources is rarely cost-effective when compared to commercial
    utility rates. To address this, the Air Force is using existing
    authorities, such as EULs and Power Purchase Agreements, to attract
    private industry to develop renewable energy projects on underutilized
    land on Air Force installations. The Air Force is anticipating third-
    party investments could reach more than $1 billion over the next 5
    years to construct on-base renewable projects, while we plan to invest
    only $5-$8 million for renewable projects over the same period. The Air
    Force has set a goal to identify $5 billion worth of EULs and over half
    of this value will be energy EULs.
        The Air Force is reinvigorating third-party financing to fund
    energy conservation projects through energy savings performance
    contracts (ESPC) and utility energy service contracts (UESC). The Air
    Force is targeting over $260 million in potential ESPCs and UESCs over
    the next 2 years. While the Air Force did not award any third-party
    financed projects in fiscal year 2011, we anticipate awarding six such
    projects in fiscal year 2012 that would save approximately 1.1 million
    MBTUs, and are evaluating three projects for fiscal year 2013.
                                 environmental
        Our environmental programs are designed to provide the mission-
    ready people, infrastructure, and natural resources necessary to meet
    today's and tomorrow's mission requirements. The Air Force is committed
    to conducting our operations in an environmentally responsible way;
    meeting all environmental standards and legal obligations applicable to
    these operations; planning future activities to consider environmental
    and community impacts, and minimize them where practicable; eliminating
    pollution from activities wherever and whenever we can; cleaning up
    environmental damage resulting from past activities; and responsibly
    managing our irreplaceable natural and cultural resources in a
    sustainable manner. To address these commitments, the Air Force's
    fiscal year 2013 President's budget request seeks just over $1.1
    billion for our environmental programs.
        In meeting our environmental commitments, the Air Force is re-
    emphasizing improved efficiency and effectiveness as necessary outcomes
    for program management and for a host of process improvement efforts we
    have underway. Following are only a few examples of the initiatives we
    are championing.
    Environmental Restoration
        Our fiscal year 2013 President's budget request seeks $529 million
    for cleanup of active installations, and $115 million for cleanup of
    BRAC installations. We established our cleanup program in 1984 to
    cleanup former hazardous waste disposal sites on active and BRAC
    installations. Our past focus was on completing investigations and
    getting remedial actions in place--many of which were designed to
    operate for decades. In early 2011, we put into place a new policy and
    new metrics--one that shifts the goal from remedy-in-place to closing
    sites; from one that tolerated decades to complete the cleanup to one
    that rewards innovative technologies that get the job done in 8-10
    years; from one that was cost-plus to one that is fixed price and
    performance based and incentivizes contractors to develop innovative
    ways to get to site closure; and to one that considers the total
    lifecycle cost informed by a solid business case analysis.
        Our new goals are to achieve accelerated completion of 90 percent
    of Air Force BRAC cleanup sites and 75 percent of non-BRAC sites by
    2015, in order to place the emphasis on bringing the program to
    closure. Through the use of improved performance-based contracting,
    coupled with this new policy, we are cleaning up sites three times
    faster, with lifecycle cost-savings as much as 19 percent, and it is
    our expectation this will go even higher as we mature this contracting
    approach. By using this approach, we're not only closing sites faster,
    we're eliminating land use restrictions, while still being fully
    protective of human health and environment.
        We continue to work with State and Federal regulators on
    socializing this new approach. We have received positive feedback from
    many of the regulators on the overarching goal to finish cleanup, but
    there are historical concerns with the execution of performance-based
    contracts that we are addressing.
    Environmental Quality
        Our fiscal year 2013 President's budget request seeks $469 million
    in Environmental Quality funding for compliance, environmental
    conservation, pollution prevention, and environmental technology
    investment. As in our cleanup program, we are refocusing our efforts to
    streamline and more effectively manage our Environmental Quality
    program activities. One example is how we've changed our approach in
    our National Environmental Policy Act (or NEPA) program. Every decision
    we make is backed by environmental analyses--with major efforts and
    cost going into the development of Environmental Impact Statements
    (EISs) and Environmental Assessments (EAs). As we looked at how to
    become more efficient in all our functional areas, we found that over
    time our NEPA process had become stagnant and bureaucratic. We had
    migrated away from the Council on Environmental Quality Guidance that
    emphasizes clear, concise, and analytical analyses rather than
    encyclopedic documents. On average, EISs were taking 3\1/2\ years to
    complete and EAs half that time. Our decisionmaking process was being
    crippled by such tasks as elaborate internal reviews and steps that
    added very little value to the quality of the analysis.
        In September 2010, we issued a policy to refocus our NEPA process.
    The policy emphasizes use of performance-based contracts to incentivize
    contractors to provide quality environmental analyses that are fully
    compliant with the spirit and intent of NEPA, that are aimed at better
    decisionmaking. Likewise, to refocus our internal reviews the policy
    sets goals for completion of EISs in 12 months and EAs in 6 months. To
    execute the new policy the Air Force established a NEPA center of
    excellence to standardize the Air Force approach to NEPA management and
    contracting and to provide reach back to major commands and
    installation NEPA professionals. Results to date are very promising;
    our first contract actions are hitting the 12-month and 6-month
    schedules and we're doing this without sacrificing quality.
        We also have some initiatives underway that will change how the Air
    Force manages waste. Pollution prevention and waste minimization
    provide great potential to realize efficiencies while at the same time
    sustaining the Air Force mission, maintaining a safe and healthy
    workplace for our people, and improving the environment in which we
    live. This year, we are establishing pollution prevention and waste
    minimization goals; we will use our environmental management system to
    achieve these goals; and we fully expect to see our operations become
    more efficient, more protective of the workforce, while realizing cost-
    savings. We are also striving to change how our culture considers waste
    and the environment. The Air Force believes that ``green'' is a smart
    way to do business. Simply put: Green is money; green is innovation;
    green is safety; and green is good stewardship.
        Our pollution prevention initiative provides a great segue to
    something the Air Force is very excited about. We are embarking on an
    aggressive initiative to transform how the Air Force manages energy,
    water, green house gas production, and solid waste. This year, we are
    rolling out a net zero policy for the Air Force. This initiative will
    strengthen the Air Force's commitment to supporting the Air Force's
    operational mission by leading in energy and environmental management.
    We will do this by complying with legal requirements, reducing
    unacceptable risk to operations from energy-related considerations and
    environmental impacts, by continuously improving energy and
    environmental management practices to be more effective and efficient,
    and to ensure sustainable management of the resources we need to
    adequately fly, fight, and win into the future. There is no question
    that responsible and prudent stewardship of the natural and other
    resources with which we are entrusted is of great importance to
    national and economic security.
        Working together with regulatory agencies, other Federal partners,
    and industry experts, the Air Force is continuously innovating and
    adopting best practices to lessen the environmental impact of its
    operations while helping the Air Force maintain its mission-ready
    posture and capabilities.
                                   conclusion
        Our fiscal year 2013 budget request satisfies our most pressing
    needs while supporting the greater good of the Nation's fiscal
    security. It stays true to the fundamental priorities of our Air Force:
      --Continue to strengthen the nuclear enterprise;
      --Partner with the Joint and Coalition team to win today's fight;
      --Develop and care for our airmen and their families;
      --Modernize our air, space, and cyber inventories, organizations, and
            training; and
      --Recapture acquisition excellence.
        We continue to mature our use of centralized asset management
    principles to mitigate accepted risk in facilities funding. Our total
    force airmen and their families can rest assured that they are cared
    for as we strive to eliminate inadequate family housing by 2018 and
    privatize housing in the United States by 2013.
        Finally, we continue to think about the taxpayer with every dollar
    we spend. Our commitment to continued efficiencies, a properly sized
    force structure, and right-sized installations, combined with steadfast
    stewardship of our energy resources and environment, will enable us to
    provide our trademark support to the Joint fight without imposing
    fiscal hardship on the Nation.

        Senator Johnson. Thank you, Mr. Secretary.
        General Etter, please proceed.
        General Etter. Yes, sir. Chairman Johnson, Senator Tester,
    thanks for having us here today. I'm honored to be here before
    you today representing over the 106,000 dedicated men and women
    of our Nation's Air National Guard.
        The Air National Guard's military construction priorities
    for fiscal year 2013 include bedding down new missions and
    facilitating mission changes to provide the best possible
    environment to support both the training and deployment of our
    guard airmen.
        Our four major projects in the fiscal year 2013 President's
    budget request allow for the conversion of two weapons systems,
    conversion of a facility at Kirtland Air Force Base, New
    Mexico, for incoming intelligence mission and construction of
    the building of the first simulator in Cheyenne, Wyoming.
        These projects are mission essential and would help ensure
    the men and women of your Air National Guard will continue to
    protect both the Nation and their local communities.
        In addition, there are four MILCON projects previously
    funded by Congress that we request to be rescoped and
    reauthorized and executed in the same locations. The first of
    these four projects is at Fort Wayne, Indiana. Four-million
    dollars were appropriated in fiscal year 2012 for Air National
    Guard MILCON to convert the facilities of F-16s for the A-10.
    The 122nd Fighter Wing is now programmed to convert to MC-12s.
        We request your support in keeping these funds available to
    bed down the 122nd's new mission and provide appropriate
    operations and maintenance facilities for this MC-12.
        The second project is at Nashville, Tennessee. The 118th
    Airlift Wing had been programmed to bed down the intelligence
    squadron and a C-130 flying training unit. Subsequently, the
    wing was designated to convert to an intelligence group, a
    cyberwarfare group and a remotely piloted aircraft remote split
    operations unit.
        Congress appropriated $5.5 million in fiscal year 2011 to
    Air National Guard MILCON for the intelligence-squadron
    conversion and for the C-130 training units. We request your
    support to keep these funds available to provide operations
    facilities for the new missions just assigned.
        The third project is at Otis Air National Guard Base in
    Massachusetts. At Otis Air National Guard Base in Massachusetts
    the 102nd Intelligence Wing had expected to bed down a
    component numbered Air Force (CNAF) augmentation unit.
        Congress appropriated $7.8 million in fiscal year 2012 to
    Air National Guard MILCON to provide facilities for this unit.
    However, the Air Force has determined that the CNAF unit is no
    longer needed. It will not be assigned to Otis.
        We request your support in keeping these funds available to
    construct the facilities to consolidate remaining functions at
    Otis in the most efficient campus environment possible.
        The fourth project is at Martin State in Maryland. At
    Martin State Airport near Baltimore, Maryland, the 175th Wing
    had been programmed to convert to C-27 aircraft. Congress
    appropriated $4.9 million in fiscal year 2012 to Air National
    Guard MILCON to provide a squadron operations facility for the
    inbound C-27s.
        The Air Force has determined that the unit will instead
    convert to an intelligence, surveillance, and reconnaissance
    group and a network warfare squadron while continuing to host
    A-10 attack aircraft.
        We request your support to keep the funds available to
    provide operations facilities for the new cyber and
    intelligence missions just assigned.
        Thank you for inviting me here today. Thank you for your
    service to the Nation and your support of the Air Force and its
    Reserve components. I look forward to your questions, Mr.
    Chairman.
        Senator Johnson. Thank you. General Jackson.
        General Jackson. Mr. Chairman, Senator Nelson, and Senator
    Tester, thank you very much for your invitation today. Just a
    few brief opening remarks and then we'll be happy to entertain
    your questions.
        I appreciate the opportunity to appear before you today,
    obviously, and to discuss the state of the Air Force Reserve,
    and particularly our military construction program.
        First, I'd like to take a moment to thank this subcommittee
    for the tremendous support we've received in past military
    construction appropriations. Your generous support allows us to
    continue to meet the needs of the combatant commander and the
    Nation with a viable operational and strategic Air Force
    Reserve. Thank you.
        During budget formulation this year, the Air Force total
    force, the Air National Guard and the Air Force Reserve, again
    applied asset-management principles to ensure maximum
    efficiency, building only where infrastructure was required.
        As a part of the broader Air Force strategy, we are also
    taking a deliberate pause in funding for current mission
    projects. The total force MILCON request ensures construction
    is closely aligned with weapons system deliveries and strategic
    base initiatives.
        The Air Force Reserve MILCON budget request for fiscal year
    2013 is a $10.9 million request. This request funds only one
    mission project, as you know, the construction of a regional C-
    130 flight simulation facility at Niagara Falls Air Reserve
    Station in New York, home of the 911th Airlift Wing.
        It provides planning and design funds needed to prepare for
    the fiscal years 2014 and 2015 programs, along with some minor
    construction funding. They'll be used to accomplish urgent and
    compelling projects which cost less than $2 million.
        Mr. Chairman and members of this subcommittee, I take great
    pride in the fact that when our Nation calls on the Air Force
    Reserve, we are trained and ready to go to the fight. Your
    support enabled us to contribute and be proud members of the
    total Air Force team. We are a strategic reserve leveraged
    every day for an operational use, and we thank you very much
    for your support.
        Senator Johnson. Thank you, General Jackson.
        Secretary Yonkers, Ellsworth Air Force Base is scheduled to
    activate a new MQ-9 Reaper operation mission this spring.
    Drones are an increasingly important component of American
    military power, and it seems reasonable to expect the Air
    Force's drone fleet to increase over the next decade. As the
    Air Force reviews its force structure, is it examining whether
    to increase Ellsworth Air Force Base's role in drone
    operations?
        Mr. Yonkers. Thank you, Senator. As you know, we're going
    in our unmanned aerial vehicle RPA program to 65 combat air
    patrols. It is a growth industry for us. I think it's
    recognized across the Department of Defense as a very important
    role, an asset for intelligence, surveillance, and
    reconnaissance, and where it eventually goes is yet to be
    determined.
        In terms of specifics for Ellsworth Air Force Base, it is
    going to support five combat air patrols in the future. And I'd
    like to see if either one of the other panel members would have
    comments with regards to your specific roles at South Dakota.
        General Etter. Yes, sir. From the Air National Guard
    there's no specific change to Ellsworth Air Force Base at this
    time.
        Senator Johnson. Ms. Ferguson, last November, the Air Force
    selected a company to carry out its final housing organization
    plan, the Northern Group Housing Initiative, which includes
    Ellsworth Air Force Base.
        Could you give me an update on where we are with Northern
    Group Housing as well as what type of oversight the Air Force
    will provide to ensure that our servicemen and women receive
    quality housing under this program?
        Ms. Ferguson. Mr. Chairman, thank you for that question. I
    appreciate the patience of you and your staff as we've worked
    our way through the Northern Group. As you know, it's taken us
    quite a long time to get there.
        We are happy to announce we are in final negotiations with
    our selected privatized contractor, Balfour Beatty, and we are
    anticipated to close that project by the end of this fiscal
    year, by the end of September.
        Senator Johnson. General Etter and General Jackson, the Air
    National Guard and the Air Force Reserve offer this country
    tremendous value for a relatively small investment. Guard and
    Reserve units have served admirably in Iraq and Afghanistan,
    and after a decade of war, it is important that we continue to
    make MILCON investments that will preserve the unit
    cohesiveness and ability to fight future missions.
        The fiscal years 2013 through 2017 FYDP shows Guard and
    Reserve MILCON decreasing by a combined 17 percent below the
    estimates in the fiscal year 2012 FYDP. Given current funding
    constraints and the uncertain budget outlook for the future,
    what are the key military construction challenges and
    priorities that the Guard and Reserve face over the next 5
    years? General Etter.
        General Etter. Mr. Chairman, thank you for that
    categorization. We are proud of the service of our Guard and
    Reserve component.
        We have difficult times. We need to make very informed and
    intelligent choices here as we move forward. New mission is
    currently our priority and it will probably remain so for the
    next couple of years, and then, at some point in time, we'll,
    of course, have to go back to our existing missions to catch
    up.
        But at this point in time, the new missions and the changes
    that have occurred with the fiscal year 2013 are probably going
    to drive our decisions for the next couple of years.
        Senator Johnson. General Jackson, as I indicated in my
    opening statement, I'm very disappointed with the meager budget
    request for the Air Force Reserve. This is not the first time
    that the Air Force Reserve has been, in my opinion, short
    changed in the budget process.
        I hope this year is an exception, but even in the best of
    times, the Air Force Reserve MILCON budget is not robust. What
    is the current quality rating, on average, for Air Force
    Reserve facilities and what is the current rehabilitation rate?
        General Jackson. Mr. Chairman, thank you very much for the
    question. As you mentioned, and General Etter did also, the Air
    Force takes a total force look at all the requirements for
    military construction. We bring our projects to the table, and
    some of those, to be honest, do not score out very well because
    they're a current mission or because there are training
    requirements.
        So we support the process that's in place, and we believe
    that going into next year, as you mentioned, Mr. Chairman, we
    should have a better look and a capability to go ahead and
    increase our MILCON percentage there.
        As for the recapitalization rate, sir, it's approximately
    $1.25 billion to go ahead and recapitalize the Air Force
    Reserve Command infrastructure, and we're monitoring that very
    closely.
        Our A-7 has gone out to every location, done a focus study
    on every single one of our locations to make sure we know where
    the priorities are, and we're taking those scarce resources and
    applying those, as required, to those priorities, sir.
        Senator Johnson. Secretary Yonkers, the Air National Guard
    provides 35 percent of the Air Force's capability with 6
    percent of the budget. The Air Force Reserve provides 20
    percent of the Air Force capability with only 4 percent of the
    total Air Force budget.
        The Guard and Reserve are truly the work horses of the Air
    Force. Are you comfortable with the share of the fiscal year
    2013 Air Force MILCON budget request directed to the Guard and
    Reserve?
        Mr. Yonkers. Sir, as we talked about in our opening
    remarks, we did make some hard choices in fiscal year 2013 to
    try to balance the requirements across the Air Force in our
    enterprise.
        Next year and the following years in the FYDP we are going
    to be returning to a more robust military construction program,
    $1.5 billion in 2014, the same in 2015, going to almost $2
    billion in 2016.
        So, at this point in time, given the constraints that we
    have and looking at the distribution of $442 million to meet
    primary mission requirements, I am comfortable with where we
    are.
        Senator Johnson. Secretary Yonkers, the Air Force FYDP
    includes a $215-million wedge between fiscal years 2014 and
    2016 for specific resiliency initiative. Can you explain what
    this program is, where the funding would be used and what types
    of projects it would fund?
        Mr. Yonkers. Similar to the response that the Navy gave,
    this is an operations plan that is yet evolving. The wedge is
    to look at the possibilities, but until such time as that game
    plan comes together, sir, we haven't got any specifics for you.
        Senator Johnson. Is this program linked to the Air Force
    expansion plans at Anderson Air Force Base in Guam?
        Mr. Yonkers. Sir, for the most part, the Guam strike
    projects that we funded in the past and the one in the fiscal
    year 2012 budget for the fuel maintenance hangar are apart from
    the resiliency part of the Pacific laydown.
        Senator Johnson. Senator Tester.
        Senator Tester. I'll defer to the good Senator from Alaska
    and then go after her.
        Senator Murkowski. Mr. Chairman, thank you, and thank you
    to my colleague. I appreciate it. I know we're all trying to be
    in two different places at once, so, gentlemen, Ms. Ferguson,
    thank you for being here.
        I want to ask questions about the status as it relates to
    the proposal at Eielson moving the F-16 squadron. I would ask,
    Secretary Yonkers, for a clear statement in terms of what the
    Air Force plan is for Eielson Air Force Base, how many
    positions will be eliminated when that plan is fully
    implemented?
        Mr. Yonkers. Ma'am, right now, there's actually two things
    that are going on with regards to personnel across the Air
    Force. One is the 9,900 military reduction, but the other part
    of it is the Resource Management Decision (RMD) 703, which got
    at the civilian force. For the civilians at Eielson Air Force
    Base, there's about 41 of those positions that are going to be
    reduced as a matter of the RMD 703. For the move of the F-16s
    from Eielson Air Force Base to Joint Base Elmendorf-Richardson,
    that composition, in terms of military, is about 630 or 640
    personnel.
        Senator Murkowski. Six-hundred and thirty. What is the
    business justification for moving the Aggressor squadron from
    Eielson Air Force Base to Joint Base Elmendorf-Richardson, and
    ultimately, putting Eielson Air Force Base in a warm-basing
    status?
        Mr. Yonkers. There's still, ma'am, a viable KC-135 mission
    that will be remaining at Eielson Air Force Base, and the force
    protection, civil engineering, maintenance, control tower, and
    other functions that are associated with a robust mission will
    stay resident at Eielson Air Force Base.
        The justification or the rationale for moving the
    Aggressors from Eielson Air Force Base to Joint Base Elmendorf-
    Richardson was a cost-savings justification.
        Senator Murkowski. Talk to me a little bit about the cost-
    savings. Have we identified how much will actually be saved,
    where that comes from, whether it's in personnel reductions or
    from infrastructure cost reductions?
        Mr. Yonkers. It'll be a little bit of both, but it's
    primarily going to come from personnel, and we're looking at
    about $165 million across the FYDP in savings by consolidating
    one jet fighter squadron now at Eielson Air Force Base down to
    Joint Base Elmendorf-Richardson.
        Senator Murkowski. We've been trying to get some
    understanding in terms of how this tabletop exercise was
    conducted, and what specifically was used in terms of data, how
    reliable that data was and whether or not it was any different
    than that which was used back in 2005 when Eielson Air Force
    Base, again, was considered under that BRAC round. Can you give
    me some more details on that tabletop exercise?
        Mr. Yonkers. I can give you some, and I'll ask Ms. Ferguson
    to embellish here. The analytics that went behind it, ma'am,
    were looked at--a number of different things, certainly, in
    terms of the consolidation of the one fighter wing into Joint
    Base Elmendorf-Richardson.
        We looked at personnel. We looked at base-operating
    support. We looked at some of these other service functions
    that I've talked about. And when you do the analytics, it comes
    out that it is actually more efficient to move the Aggressors
    from Eielson Air Force Base to Joint Base Elmendorf-Richardson,
    and as I mentioned, about $165 million savings across the FYDP
    as a result of doing----
        Senator Murkowski. But, again, was there any data that was
    different this go-around in this tabletop exercise than what we
    saw back in 2005?
        Mr. Yonkers. I would like to defer to Ms. Ferguson. She was
    in the building when that study was done.
        Ms. Ferguson. Okay. We'd like to take that for the record.
    I don't think either one of us was actually in the analytical
    phase of this, but we'll take that back and----
        [The information follows:]
                            2005 Table Top Exercise
        Senator, thank you for your question. The Air Force's 2005 BRAC
    recommendation called for the realignment of the F-16 Aggressors to
    Nellis Air Force Base whereas the move in the Air Force's recent force
    structure announcement relocates the F-16 Aggressors to Joint Base
    Elmendorf-Richardson (JBER), where they will be located with the 3rd
    Wing. The F-16 Aggressors will support air-to-air training for the F-22
    Raptors assigned to Joint Base Elmendorf-Richardson and will continue
    to support RED FLAG-Alaska exercises. The movement of the F-16
    Aggressors will garner efficiencies by reducing maintenance supervision
    overhead and support base functions.

        Senator Murkowski. I'd be curious to know because it was--
    again, we're looking at this and saying this is exact same
    exercise that we saw back in 2005. It was rejected. Now, it's
    before us. So I am trying to drill down and discern whether
    there is something new that we have learned. So if we can get
    that information, I would appreciate that.
        The site survey team is going to be coming up to the State
    in April, going to the interior to validate the information
    that apparently was generated during this tabletop exercise.
    But there seems to be some ambiguity in terms of what the site
    survey team's mission actually is. Some think that it's an
    effort to validate both the short-term and the long-term plans
    for Eielson Air Force Base.
        Others say it's simply to figure out how to implement the
    short-term plan for Eielson Air Force Base, which is moving the
    Aggressors there to Joint Base Elmendorf-Richardson. Can you
    tell me what exactly the mission of the site survey team is?
        Mr. Yonkers. Ma'am, as I understand it, the site survey
    team was going to look at the more focused move of the F-16s to
    Joint Base Elmendorf-Richardson. But based on your comments and
    observations, it seems prudent to me that we take a broader
    look, and I'm going to have that conversation with the folks
    out at the Pacific Air Forces.
        Senator Murkowski. I would appreciate that a great deal.
    I've had an opportunity to sit and visit with many of the
    leaders within the interior community there. Of course, they're
    very engaged in this, and we have asked for a level of
    discussion when the members of the site survey team come.
        The mayor of the Fairbanks North Star Borough has requested
    a meeting with the survey team to basically share some relevant
    information on local issues. Can you think of any reason why
    you should not be able to accommodate that meeting?
        Mr. Yonkers. I think we can accommodate it, but we'd like
    to accommodate it with the wing commander who has had that
    long-term relationship with those community leaders as sort of
    being a focal point for those discussions.
        Senator Murkowski. So the wing commander with the local
    mayor?
        Mr. Yonkers. They have a close relationship. And that's
    part of the function and role and responsibility of the wing
    commander is that outreach and having that discussion with
    local civic leaders on all issues affecting that airbase.
        Senator Murkowski. And I do understand that he is that
    liaison, but I also recognize that our wing commanders are
    there for very brief periods and then they move on. We
    appreciate all the good work that they do, but if there is any
    way to include a meeting with the mayor of the Fairbanks North
    Star Borough so that he can share, again, some of these very
    local issues that I think are relevant I would certainly
    encourage that.
        And we will wait for further information from you and Ms.
    Ferguson.
        And again, I thank my colleague my colleague from Montana.
    Thank you, Mr. Chairman.
        Senator Johnson. Senator Tester.
        Senator Tester. Yes, thank you, Mr. Chairman. And thank you
    all for being here, and thank you for the people that you
    represent. Thank you for your service.
        I will echo what I told the Navy folks. Thank you for your
    work on energy. I think it's critically important work. I think
    it's good work. I think Montana can help in that work.
        We've got a facility--we've got a university 100 miles away
    from the facilities in Great Falls. Montana State University-
    Northern is doing some great work in biofuels. I encourage you
    to utilize them when you need them.
        I also want to thank particularly you, Mr. Yonkers and
    General Etter, for meeting with the Central Montana Defense
    Alliance, taking time out of your busy day. Those are great
    supporters of our installations in Great Falls, and they're
    great supporters of the military. So I thank you for taking
    time out for that.
        I am appreciative of the fact that myself and members of
    the Great Falls community were able to welcome the Air Force
    announcement of a C-130 mission for the State of Montana. While
    I oppose the loss of the F-15 fighter mission, I'm thankful the
    Air Force worked with myself and Senator Baucus to identify a
    new mission that's particularly well suited for Montana,
    particularly, we have airmen with a world-class reputation.
        This fleet of C-130s, as you well know, placed in Great
    Falls would ensure that we have those Montana airmen play a
    critical role. They are a great asset to our Nation's defense.
    It would also help the State, the region and the country better
    address critical and urgent disaster response.
        And I look forward to work with you to make sure the
    mission conversion happens in an efficient, a timely manner,
    and that the Montana Air National Guard is able to maintain its
    status as one of the best in the country.
        Secretary Yonkers, in carrying out the Air Force's proposal
    of restructuring, I believe it's critical we start now. Before
    we can get those planes on the ground, we need to compete
    necessary design work and we need to get funds flowing to
    address any construction needs that are needed up there. Could
    you give me an idea when the C-130s will arrive in Great Falls,
    Montana?
        Mr. Yonkers. General Etter can give you a lot more of the
    specifics, but we have accommodated, in the fiscal year 2013
    budget request, I think it's about $27 million to look at doing
    modifications, as necessary, to accommodate the eight C-130Hs
    that are planned to be there.
        Senator Tester. Major General.
        General Etter. Yes, Senator, we're looking at fiscal year
    2014. Of course, we'd like to do that as early as possible, but
    we're still in the planning stages, so I'm unable to commit to
    an exact order. But we do know that we need to do that to
    dovetail in, as one mission draws down that another mission
    comes up. Of course, we need time to send folks to school.
        Additionally, we've stood up an operations execution
    working group, which is a number of people from all around the
    country to make sure that we address not only the MILCON
    issues, but also those of training, conversion, new facilities,
    and sequencing.
        Senator Tester. Okay. When will you have a time for the C-
    130s' arrival? When will that be set into stone? The point you
    make is absolutely correct. If there's a huge mission gap
    between the F-15s leaving, the C-130s leaving, we are in
    trouble. You've said when the F-15s are leaving. When will you
    know the C-130s are coming?
        General Etter. Sir, I think we can do that within 90 days
    and get back to you. And of course, we know when the last
    mission changed there was going to be a little bit wider point
    of time between the two aircraft, and I don't believe that'll
    be a factor this time. But we'll get back to you within 90
    days, hopefully earlier than that, sir.

        [The information was not available at press time.]

        Senator Tester. Thank you very much.
        The timetable--you talked about $27 million available for
    construction. When do you anticipate that to start? The
    conversion construction, because it's--there are different--I
    don't have to tell you guys that, you know.
        Mr. Yonkers. I think, going back to General Etter's point,
    when the specifics are laid down with regards to the arrival of
    the aircraft, we'll define the requirement better than we have
    right now, and then look at how we sequence that construction
    project, so that when those airplanes show up, there's no hang-
    up with regards to where we're going to put them or how we're
    going to take care of them.
        Senator Tester. Okay. We're talking March 2012 right now,
    potentially 2 years from now. Right now, those planes could be
    on the ground, potentially. Do you plan on starting the
    military construction conversion upon their announcement within
    the 90 days? When do you plan on starting it?
        Mr. Yonkers. Do you want to address that?
        General Etter. Yes, sir. There is definitely a possibility
    that this is moving so fast that the hangar will not be done
    before the first aircraft arrives. That said, they do have
    hangars where they can nose in the aircraft and stuff like
    that, sir.
        So we know that we need to move forward with this quickly,
    but it's not a fiscal year 2013 MILCON project at this time.
    Therefore, we would be in fiscal year 2014 to try to do that
    design and construction.
        Senator Tester. The $27 million is adequate for fiscal year
    2013 to get the job done for this year--for that year?
        General Etter. Sir, I believe that's a fiscal year 2014
    number, not a fiscal year 2013 number.
        Senator Tester. Okay. Okay. What is in the fiscal year 2013
    budget?
        General Etter. This particular construction project is not
    in the fiscal year 2013 budget, sir.
        Senator Tester. Okay. So we don't anticipate any conversion
    going in the next fiscal year.
        General Etter. We have started conversions in the past
    without the MILCON being completely finished, and I believe
    that we would track down that. So if it's okay, I could get you
    a detailed plan on how we get from A to B.
        Senator Tester. I would really like that a lot.
        General Etter. Yes, sir.
        Senator Tester. Thank you. I want to talk about
    intercontinental ballistic missiles (ICBMs) for a second. There
    are challenges facing the Air Force and the Defense Department
    and a number of ways we could achieve savings when it comes to
    a nuclear arsenal. I think ICBMs--it's the wrong direction to
    go. I think the most cost efficient, we get some great airmen
    on the ground. Are there any changes to the ICBM portion of
    this budget that require military construction dollars?
        Mr. Yonkers. Sir, the plan for the ICBM portion of the
    triad is fully funded in the FYDP for construction and the
    other modifications that need to be made.
        Senator Tester. Okay. So this budget does not apply to
    those changes to the ICBM portion. We're talking about
    potentially idling 30 ICBM over three bases. That's not in this
    budget?
        Mr. Yonkers. As I understand it, and you're way out of my
    swim lane here, those discussions and how those weapon warheads
    are going to be allocated are yet in discussion. So, at this
    point in time, I couldn't give you a definitive answer.
        Senator Tester. We need to catch the swimmer that's in that
    lane, and so if you could give us that name that'd be great.
        One last question, and then I'll boogey on here. The Air
    Force continues to consider alternative missions you guys
    talked about, RPAs, but the fact is there are alternatives--
    leave the RPAs out of it. There are alternatives particular to
    a proposal by the Council of Governors in regard to C-130s,
    which has been an interesting debate over the last 2 weeks. As
    far as the Council of Governors' proposal, can you update me
    where we're at in that process? Go ahead.
        Mr. Yonkers. I can give you a little bit, and then, General
    Etter, if you want to embellish. This is something that
    Secretary Panetta said that he would take under consideration.
    So as far as I know, he is still taking that under
    consideration.
        Senator Tester. Okay. Go ahead, Major General.
        General Etter. Yes, sir. I could probably expand just a
    small amount on that. There's been three meetings subsequent to
    that between representatives of the Council of Governors,
    adjutant generals, and the top four leaders of the United
    States Air Force. These discussions are still ongoing. I don't
    know when there will be a conclusion to that, but they're still
    active and ongoing at this time, sir.
        Senator Tester. Okay. One last question. Given the cost of
    permanently stationing C-130s overseas, would it not make more
    sense to bring those C-130s back to--you can say yes.
        Mr. Yonkers. I'd like to take it for the record, but I'll
    tell you--in the specifics--but the European assets that we
    have over there serve definite missions with regards to
    airlift.
        So, as you all know, we're looking at a BRAC-like European
    reduction in the overall facility footprint over there, and
    those discussions and that work is still continuing as well.
        [The information follows:]
                                C-130 Stationing
        Senator, thank you for your question. While cost-savings are part
    of the decisionmaking process, the most important factor is the Air
    Force's ability to provide the capabilities required by the new Defense
    Strategic Guidance.
        There is only one squadron of C-130s remaining in Europe and they
    provide support to two combatant commanders: U.S. European Command and
    U.S. Africa Command. These aircraft are critical to our overseas
    engagement strategy and provide valuable intra-theater support training
    to NATO and our Eastern Europe and African partners. The Air Force does
    maintain special operations C-130s in Europe, but these aircraft are of
    a specialized nature and are used in Africa, Europe, and the Middle
    East.

        Senator Tester. I want to thank you very much for your
    service, once again.
        Thank you for the flexibility, Mr. Chairman.
        Senator Johnson. Senator Nelson.
        Senator Nelson. Thank you, Mr. Chairman. And welcome to our
    panelists today. Thank you for your service and for the men and
    women in uniform all across our world.
        Secretary Yonkers, I think we've had this conversation
    before, but not before this subcommittee. As you know,
    currently, progress is being made toward constructing a new
    command-and-control complex for United States Strategic Command
    (USSTRATCOM) with military construction funds requested by the
    President and authorized and appropriated by this Congress for
    the fiscal year 2012.
        The mission of USSTRATCOM is at the forefront of our
    national security, and as the command and control of our
    nuclear enterprise, USSTRATCOM plays an important role. As
    America complies with a new START Treaty, it's imperative that
    our nuclear command-and-control node have all the support and
    resources that it needs to carry out its mission.
        And as you know as well, the entire project has been
    authorized, but because of the nature of this project, size
    just alone, the Defense Department will have to request phased
    or incremental funding for construction funds until the project
    is complete.
        Secretary Panetta has visited the current headquarters, and
    knows that the facility's shortcomings put at risk the mission
    and personnel, and that a continued acceleration of the
    construction of the new headquarters is in the best interest of
    our national security.
        In this time of constrained budgets, hard choices have to
    be made within the Department of Defense. And I know this is
    one of those hard choices, but one that I believe we all agree
    protects our strategic missions for cyber, missile defense,
    nuclear command-and-control now and the future, where these
    threats will not likely dissipate, certainly not any time soon.
        Originally, the project was scheduled to receive
    incremental funding over a 3-year period. Last year, however,
    the $150 million requested for the project was cut to $120
    million requiring that the funding be spread out over 4 years
    as opposed to 3 years. Is the full $161-million request for
    fiscal year 2013 actionable on the project for the year?
        Mr. Yonkers. Sir, as you noted, the project was
    reconfigured last year and now is in 4 years as opposed to 3.
        And as far as the $161.0 million that's in the fiscal year
    2013 budget, it is executable. But as we talked about before,
    we're still waiting to fine-tune this.
        With the Army Corps of Engineers about ready to make that
    award in the next several weeks, what we're looking for from
    the award winner will be their sequencing of how they think
    they're going to proceed with the construction of that project.
        And so we'll have a much better feel, in a few weeks, as to
    how that will actually get executed. But right now, we think
    we've got the game plan pretty well marked out.
        Senator Nelson. Okay. I hope we can continue to work toward
    funding at that level. I do understand awarding the contract,
    but if it's executable within that budget sequencing will be
    important, but we want to make sure that as much of the $161-
    million allocation will be used during this timeframe. Is that
    fair?
        Mr. Yonkers. It's fair, sir.
        Senator Nelson. Turning to BRAC, one of everyone's favorite
    subjects in Washington, the budget is asking for two more
    rounds. Obviously, the economy is slow. A lot of the progress
    made is fragile, and I am very concerned about it being
    reversible as well.
        The last round of BRAC took place in 2005, and the changes
    it implemented were only completed this past fall. Your request
    seeks authorization for the first BRAC in 2013 to be followed
    by another in 2015. And reportedly, the two new rounds of
    closures could reap savings in 5 to 8 years, but would have a
    great cost up front to move personnel, equip it, and the
    overall costs of shutting down and associated environmental
    impacts.
        In Europe, we're eliminating two heavy brigades, and some
    of those missions and personnel will need to be relocated if
    bases are closed. Relocation of those missions and personnel
    back in the United States might make sense.
        So wouldn't it make most sense to look at our bases
    globally first, not just here at home, to see what the needs
    are going to ultimately be here at home with any closure or
    realignment of overseas bases?
        Mr. Yonkers. Sir, it does make sense, and we are looking at
    it globally. And the Department of Defense, led by Dr. Dorothy
    Robyn's team, has already made two trips to Europe to start
    that view of what is or what can be done over in the European
    Theater.
        As you know, the Air Force has taken one squadron of A-10s
    out of Spangdahlem Air Base, Germany. There is more that can be
    done over there, and we're going to take a look at that.
        We hoped that if the Congress were to approve a 2013 BRAC
    round we would do this in parallel. The driver here obviously
    is we're spending a lot of money on infrastructure that we
    don't need, and so does it make sense to continue those
    expenditures when we've got a lot of other things that we could
    spend that money on?
        Senator Nelson. One of the things we always want to pursue
    is reassessment of our needs as circumstances change.
        Now, in the fiscal year 2012 NDAA, there was a provision
    that would require an independent study on these overseas
    basing decisions in the presence of overseas forces. The study
    is designed to look at the location.
        Ms. Ferguson, is there any indication for that independent
    study as to what should be accomplished in terms of needs on
    our overseas bases?
        Ms. Ferguson. Senator Nelson, my understanding is those
    will be looked at as part of a study. The Office of the
    Secretary of Defense (OSD) is leading that effort in accordance
    with the NDAA. And our anticipation is they will look at those
    things, as Mr. Yonkers pointed out, in concert as well with the
    ongoing visits that OSD, Acquisition, Technology, and
    Logistics, and the services are accomplishing overseas.
        Senator Nelson. If we don't have the study completed at the
    moment, so that we don't know what the recommendations are
    going to be, but we're moving forward with a budget request; is
    the cart before the horse here? Can it be done parallel?
        Do we know what time the study will be accomplished or will
    we be appropriating within the budget for something that we
    don't have the study accomplished for to tell us where the
    money would be spent?
        Ms. Ferguson. We believe that it will all be tied together,
    that the OSD study will be done in time and would help inform
    the force structure requirements and what would be required in
    the continental United States (CONUS).
        Senator Nelson. Is there a date when we can expect and have
    a pretty sufficient guarantee that the study will be done? A
    date? Timeline? Secretary Yonkers?
        Mr. Yonkers. Sir, I haven't seen a timeline. I know that it
    was required in the NDAA this year to perform that study, and I
    know that we are moving ahead on it.
        Senator Nelson. But I always worry about a study that's not
    done, in anticipation we're going to authorize and/or
    appropriate money on the assumption of what the study's going
    to say before we have the actual conclusions of the study, if
    you follow my linear approach to it.
        Mr. Yonkers. I see your observation, sir.
        Senator Nelson. Okay. All right. I hope you'll keep that in
    consideration as we move forward. Thank you.
        And thank you, Mr. Chairman.
        Senator Johnson. Senator Pryor.
        Senator Pryor. Thank you, Mr. Chairman, and thank you for
    hosting this hearing today.
        And Secretary Yonkers, I would like to start with you. But
    first, I want to thank General Jackson and General Etter for
    coming into the office in recent weeks to talk about one of the
    things I want to talk to you about today. That is my concern
    that during the process of creating this budget the National
    Guard and Reserve components were perhaps at the table, but
    perhaps not listened to when it came to some of the priorities
    for funding.
        And one of those in particular that touches my State is the
    funding for A-10s and moving the A-10s, or some of the A-10s,
    out of the National Guard system.
        We have the 188th in Fort Smith, Arkansas, and they have
    this winning combination there. Of course, they have very well-
    trained personnel, and they're phenomenal in all the things
    that they've done, but they also have great facilities. They
    have great air space, which I know is a premium, but in the
    area where they are located, they're over some national forests
    and they have this great training space over very mountainous
    terrain.
        Additionally, something that you just cannot find anywhere
    else is they have the National Guard Training Center there just
    off the end of the runway at Fort Chaffee. And so not only do
    National Guard units from all over the country train in Fort
    Chaffee, Arkansas, but the Navy Seals and many others train
    there as well.
        So it's just an unbeatable combination, and I'm very
    concerned that all of this was not taken into consideration
    when it came time to make decisions on the budget.
        So let me start with questions about that. The numbers I've
    seen indicate that it is cheaper to fly and train and house the
    A-10s in the National Guard as opposed to the Active Duty. I've
    asked repeatedly for a cost analysis used by the Air Force, and
    there's been reluctance on behalf of the Air Force to share the
    cost analysis with me. I'm not sure I understand why, and I'd
    ask you if you've seen the cost analysis? I'd like for you to
    share it with the subcommittee and with my office.
        Mr. Yonkers. Sir, I haven't seen any of the cost analysis.
    Again, it's something that I would typically not look at. I
    mean, I'd look at the military construction and that part of
    those decisions.
        I think when you look at the A-10s, and again, we're taking
    about one-third of them out of the inventory. And the idea
    here, as we went through the budget considerations, was to pull
    out those aircraft, whether they were heavy-lifters, fighters,
    et cetera, that were the oldest and the most expensive for us
    to operate and maintain.
        Senator Pryor. And that's what's hard for us to know, if we
    don't know the cost analysis, if we don't know the real
    numbers.
        Also, this is something else I'd be very interested in
    getting from someone at the Department of Defense and the Air
    Force, I'd like the amount of construction money that will have
    to follow these moves. And it sounds like, based on what you're
    saying and the way I read the numbers, it sounds like the
    airplanes would move in fiscal year 2013, but I'm not sure
    there's sufficient construction money to have the planes go
    somewhere and be housed properly somewhere in 2013. Do you know
    the answer to that?
        Mr. Yonkers. It's part of the deliberate pause. I mean, we
    went through the force structure considerations and weren't
    quite sure how that was going to work out with regards to the
    military construction. So that's part of the reason that we
    only looked at new mission in the military construction program
    this year.
        We should catch up next year when we start looking at where
    the implications of those particularly Guard and Reserve were
    in the force structure announcements that were made just a few
    weeks ago.
        Senator Pryor. And I understand that we are in a shrinking-
    budget environment. I completely get that and appreciate that.
        At the same time, one of the reasons why I'm so interested
    in the cost analysis is because I'm curious about how there can
    be real savings here. If you can house and train and maintain
    the aircraft in a National Guard facility cheaper than you can
    in Active Duty, and you have to pay some construction cost in
    the out-years, it's hard for me to understand where the savings
    are coming from.
        So if you could help provide any sort of cost analysis or
    put in a good word with whoever might have that information, I
    think it's important that this subcommittee see that.
        Mr. Yonkers. Sir, we'll look at that and see what we can
    get you. I think you need a full explanation, though, of
    everything that went into the logic here.
        I mean, part of it, and I'll defer to, again, to General
    Etter, but a lot of this had to do with trying to balance the
    total force and looking at things such as dwell times.
        I think the chief had talked in terms of the objective for
    Guard and Reserve to be a dwell of about 1 point--a 1-to-4 or a
    1-to-5. They have their day jobs. So, being on station 6 months
    and home for 2 or 2\1/2\ years was something that would ease
    that burden on the employers that they work for, and also for
    the Active Duty. But I'll see if General Etter has something he
    wants to add to this.
        General Etter. Sir, I think Secretary Yonkers described
    this correctly that it was a balance between cost and the dwell
    to deploy time. So I think you categorized that correct, sir.
        Senator Pryor. Like I said, I'd still like to see the
    numbers to satisfy my curiosity about how much we'd actually be
    saving there.
        Let me ask about BRAC. I know you've had several questions
    about BRAC. I haven't done an exhaustive survey of our
    colleagues in the Senate, but my impression is that there's not
    a lot of enthusiasm for a BRAC round. And if there is, it would
    be probably structured more along the lines of doing an
    overseas BRAC first and then a domestic BRAC second.
        We can talk about that and have that discussion, and I'm
    sure that you all will need to be talking to lots of Senators
    about that because there's not a lot of support for that right
    now, for the BRAC as you propose it right now.
        But back on the A-10s, I don't understand the sequence
    there if you're making decisions about A-10, C-130s, all these
    other things that we're making decisions on in this budget, and
    then if you're also, at the same time, asking for a BRAC. It
    seems inconsistent or incompatible because it's almost like
    you're making BRAC-type decisions before there is a BRAC.
        And what if BRAC comes back and tells you something totally
    different and says, no, you need to restructure it this other
    way. And now we've lost 1 year and have all the wasted spending
    and wasted time. So why is the idea to do all these changes now
    and then have a BRAC?
        Mr. Yonkers. Let me see if I can respond to you. First of
    all, the Budget Control Act was a player here, and certainly
    the new defense strategy, as we looked across what has changed
    in the last year or so and looking at how we would go to war
    with one major effort and trying to halt any aggressors in
    another location.
        That balanced out what we thought we needed with regards to
    the fighter force, with regards to the airlift and with regards
    to the other assets. So our fiscal year 2013 budget was based
    primarily on that new defense strategy and those changing
    requirements independent of BRAC.
        When we looked at where we ended up after BRAC 2005--and
    you will recall that we actually had put on a couple of
    installations to foreclose that the commission changed and so
    we didn't go down that path, but when you look at that and look
    at the analysis that was done at the end of--or that 2005
    timeframe, we had 24-percent excess capacity in the continental
    United States.
        And so now, after 7 years, we've taken almost 500 airplanes
    out of the inventory, from the combat air forces reduction that
    went into place 3 or 4 years ago, as well as what is in the
    fiscal year 2013 proposal, and we're going to have fewer
    aircraft, which begs the question how do you sustain or how do
    you continue to sustain the same facility footprint that you
    have with fewer aircraft?
        Senator Pryor. Let me also make this point, and I know
    Senator Tester asked good questions a few moments ago and had
    to leave, but I do share a concern that he sort of raised, but
    I want to be clear on it.
        For example, the C-130 is going to Montana and they may not
    have the proper facilities up there, which apparently they
    don't. The BRAC process moves forward and they look at Montana
    and they say, we need to get rid of these airplanes here,
    because they don't have the proper facilities, and it's going
    to be a lot more expensive to put them here than it is
    elsewhere, so let's move those planes somewhere else.
        So it seems to me that could be a huge wasted effort, and
    not to mention that you're getting expectations up in Montana.
    It could be a huge wasted effort. And so that's why I question
    the sequencing of how you're doing this. I understand the
    Budget Control Act and I get all that, but I am not sure that
    it all makes sense. That's one of the reasons why I think
    there's quite a bit of reluctance in the Senate on a BRAC round
    this time.
        And plus, in addition to that, you take a community like
    Montana or Fort Smith, Arkansas, and some of these things may
    change later. In a BRAC round you actually get some financial
    support through the whole BRAC process to help that community
    adjust after the fact.
        Whereas, if you just do what you're doing now, you don't
    get that, and whether it goes through a BRAC or whether it's
    just a decision at the Pentagon, it still hurts that community
    and there's a void in that community that they just don't have
    much of a chance to fill.
        Mr. Yonkers. Sir, if I could respond, I spent 6 years
    standing up the base realignment and closure office in the Air
    Force back in 1990, and I've looked at the first 88, 91, 93,
    and 95 rounds of BRAC. They were painful for definitely the
    communities, painful for Members of Congress and painful for
    the Air Force and the other services that had to go through
    those----
        Senator Pryor. We lost an airbase in one of those----
        Mr. Yonkers. But I think when you look at the financial
    situation that we're in, we're having to make some really
    difficult choices here. And the longer we delay on implementing
    or approving a BRAC, the more those expenses pile up. And so
    that was part of the reason for trying to execute something in
    2013 or get a 2013 BRAC round started. The idea was with 2015
    to make the adjustments, if there were any needed to be done,
    as a follow-on to it.
        So, I mean, this is part of the logic. It's not something
    that any of us, I think, look forward to, but under the
    financial considerations today, it's one of the options I think
    we have to consider.
        Senator Pryor. Mr. Chairman, I way exceeded my time, but
    just one last point. I think that is one reason why you're
    seeing some reluctance. Obviously, there are political reasons
    too, but some reluctance in the Senate, in the committee, and
    in the subcommittee specifically, because we don't have the
    data and analysis to look inside those numbers to understand
    the savings and all the things we're talking about. We all
    agree that we're going to have to find savings. It's hard for
    us to agree if we only are working with a little part of the
    information, not the whole picture. So thank you, again. Thank
    you, Mr. Chairman.
        Senator Johnson. I would like to thank all of our witnesses
    for appearing before this subcommittee today. We'll look
    forward to working with you this year.

                         ADDITIONAL COMMITTEE QUESTIONS

        For the information of members, questions for the record
    should be submitted by the close of business on April 18.
        [The following questions were not asked at the hearing, but
    were submitted to the Department for response subsequent to the
    hearing:]
                  Questions Submitted to Hon. Terry A. Yonkers
                   Question Submitted by Senator Tim Johnson
        Question. Secretary Yonkers, the Air Force Future Years Defense
    Plan (FYDP) includes a $215 million wedge between fiscal year 2014 and
    2016 for a ``Pacific Resiliency'' initiative. Can you explain what this
    program is, where the funding would be used, and what types of projects
    it would fund? Is this program linked to the Air Force expansion plans
    at Anderson Air Force Base on Guam?
        Answer. Pacific Resiliency refers to the ability to mitigate risk
    to operational plans and contingency responses by providing resiliency
    through various measures to include hardening, distributed basing,
    passive/active defense capabilities, and pre-positioned equipment
    throughout the Pacific area of responsibility. Early phases of this
    initiative provided money to harden two hangars on Guam. Future
    projects around the Pacific theater include hardening POL systems,
    increasing bulk fuel storage locations, aircraft parking aprons, and
    fuel hydrants. The remaining phases are not necessarily tied to Guam,
    nor are they linked to other programs such as Guam Strike or the Marine
    relocation to Guam.
                                     ______

                    Question Submitted by Senator Mark Kirk
                     energy conservation investment program
        Question. Secretary Yonkers, I am concerned that the Air Force
    participation in the Energy Conservation Investment Program is
    disproportionately lower than that of the other services.
        Can you offer your opinion as to why the Air Force did not compete
    well in the OSD selection process for ECIP funds?
        Answer. The Air Force consistently receives approximately $30
    million in Energy Conservation Investment Program (ECIP) from the
    Office of the Secretary of Defense (OSD) per year, and is postured to
    execute ECIP much more aggressively through design-build, if OSD can
    increase the Air Force share of ECIP funding. Given the traditional
    conservation focus of ECIP, an increase of $10 million to $20 million
    per year would significantly help the Air Force meet Federal energy
    intensity and water intensity reduction goals. Additionally, under the
    new OSD grading criteria ECIP funding can also help the Air Force meet
    Federal renewable energy goals.
                                     ______

                   Question Submitted by Senator Daniel Coats
        Question. If Davis-Bacon was waived, how much money would it save
    the Department of the Air Force's MILCON program?
        Answer. The Air Force does not collect cost differentials,
    attributable to Davis-Bacon Act (DBA) wages, between the Government and
    the private sector. The cost differential will be different based on
    location (i.e., area wages, cost of living, and union status) and the
    economy (i.e., when the economy is strong and overall prices high, the
    DBA impact is less. When the economy is weak and overall prices low,
    the relative DBA construction cost impact increases). While we cannot
    conclusively determine the monetary savings if Davis-Bacon were waived,
    we investigated the cost associated with the ``Labor Statute Clauses''
    (to include Davis-Bacon Act, Project Labor Agreements, and Payroll
    Reporting Burden). We estimate the cost increase for Labor Statute
    Clauses when compared to commercial facility equivalent costs are an
    average of approximately 6 percent across the Air Force's military
    construction portfolio.

                             CONCLUSION OF HEARINGS

        Senator Johnson. This hearing is recessed.
        [Whereupon, at 11:34 a.m., Wednesday, March 28, the
    hearings were concluded, and the subcommittee was recessed, to
    reconvene subject to the call of the Chair.]

           LIST OF WITNESSES, COMMUNICATIONS, AND PREPARED STATEMENTS

                                  ----------
                                                                       Page

    Baker, Hon. Roger W., Assistant Secretary for Information and
      Technology, Department of Veterans Affairs.....................     1
    Boone, Rear Admiral David, Director, Shore Readiness Division,
      Deputy Chief of Naval Operations (Fleet Readiness and
      Logistics), Department of the Navy, Department of Defense......   115
        Prepared Statement of........................................   118

    Coats, Hon. Daniel, U.S. Senator From Indiana, Questions
      Submitted by........................................87, 113, 141, 169

    Davis, Tad, Chief Executive Officer of the Army Reserve Command,
      Department of the Army, Department of Defense..................    95
        Prepared Statement of........................................    97
        Statement of.................................................   106

    Etter, Major General William H., Deputy Director, Air National
      Guard, Department of the Air Force, Department of Defense......   143

    Ferguson, Kathleen I., Deputy Assistant Secretary of the Air
      Force for Installations, Department of the Air Force,
      Department of Defense..........................................   143
    Ferriter, Lieutenant General Michael, Assistant Chief of Staff
      for Installation Management and Commanding General, Army
      Installation Command, Department of the Army, Department of
      Defense........................................................    95
        Prepared Statement of........................................    97
        Statement of.................................................   104

    Grams, W. Todd, Executive in Charge for the Office of Management
      and Chief Financial Officer, Department of Veterans Affairs....     1

    Hale, Hon. Robert F., Under Secretary (Comptroller), Office of
      the Secretary of Defense, Department of Defense................    51
        Prepared Statement of........................................    54
        Questions Submitted to.......................................    86
        Summary Statement of.........................................    52
    Hammack, Hon. Katherine G., Assistant Secretary of the Army
      (Installations, Energy, and Environment), Department of the
      Army, Department of Defense....................................    95
        Prepared Statement of........................................    97
        Questions Submitted to.......................................   112
        Summary Statement of.........................................    96
    Hickey, Allison, Under Secretary for Benefits, Department of
      Veterans Affairs...............................................     1

    Jackson, Major General James, Deputy Chief, Air Force Reserve,
      Department of the Air Force, Department of Defense.............   143
    Johnson, Hon. Tim, U.S. Senator From South Dakota:
        Opening Statement of.....................................1, 51, 115
        Questions Submitted by...............34, 88, 91, 112, 139, 142, 168

    Kadavy, Major General Timothy, Deputy Director of the Army
      National Guard, Department of the Army, Department of Defense..    95
        Prepared Statement of........................................    97
        Statement of.................................................   106
    Kessler, Major General James, Commander, Marine Corps
      Installations Command/Assistant Deputy Commandant for
      Installations and Logistics (Facilities), Department of the
      Navy, Department of Defense....................................   115
        Prepared Statement of........................................   118
        Questions Submitted to.......................................   142
    Kirk, Hon. Mark, U.S. Senator From Illinois, Questions Submitted
      by...........................................38, 87, 89, 92, 140, 168

    Lavoy, Dr. Peter, Principal Deputy Assistant Secretary for Asian
      and Pacific Security Affairs, Office of the Secretary of
      Defense, Department of De-
      fense..........................................................    51
        Questions Submitted to.......................................    91

    McConnell, Hon. Mitch, U.S. Senator From Kentucky, Questions
      Submitted by...................................................    42
    Muro, Steve L., Under Secretary for Memorial Affairs, Department
      of Veterans Affairs............................................     1
    Murray, Hon. Patty, U.S. Senator From Washington, Questions
      Submitted by...................................................    86

    Petzel, Hon. Robert A., M.D., Under Secretary for Health,
      Department of Veterans Affairs.................................     1
    Pfannenstiel, Hon. Jackalyne, Assistant Secretary for Energy,
      Installations and Environment, Department of the Navy,
      Department of Defense..........................................   115
        Prepared Statement of........................................   118
        Questions Submitted to.......................................   139
        Summary Statement of.........................................   116

    Reed, Hon. Jack, U.S. Senator From Rhode Island, Question
      Submitted by...................................................    37
    Robyn, Dr. Dorothy, Deputy Under Secretary for Installations and
      Environment, Office of the Secretary of Defense, Department of
      Defense........................................................    51
        Prepared Statement of........................................    59
        Questions Submitted to.......................................    88
        Statement of.................................................    57

    Shinseki, Hon. Eric K., Secretary, Department of Veterans Affairs     1
        Prepared Statement of........................................     4
        Questions Submitted to.......................................    34
        Summary Statement of.........................................     2

    Yonkers, Hon. Terry A., Assistant Secretary for Installations,
      Environment, and Logistics, Department of the Air Force,
      Department of Defense..........................................   143
        Prepared Statement of........................................   145
        Questions Submitted to.......................................   168
        Statement of.................................................   144

                                 SUBJECT INDEX

                                  ----------

                         DEPARTMENT OF VETERANS AFFAIRS

                                                                       Page

    Additional Committee Questions...................................    34
    Budget: Support Veterans With Services and Benefits..............    37
    Capital Infrastructure...........................................    13
    Claims:
        Backlog......................................................    44
            Timely Processed Claims..................................    34
        Process: Accuracy and Quality................................    36
        Processing: Meeting Goals and Accuracy Rate..................    38
    Construction.....................................................    15
    Cost-Benefit Analysis............................................    18
    Department of Defense (DOD)/VA Collaboration.....................    17
    Dependents Indemnity Compensation (DIC)..........................    46
    Disability Appeals...............................................    30
    Eliminating the Claims Backlog...................................     9
    Ending Veteran Homelessness......................................    10
    Enhanced Use Lease (EUL).........................................    41
    Expanding Access to Benefits and Services........................     6
    Fort Wayne Healthcare Center.....................................    27
    Future Veterans Healthcare.......................................    26
    Homeless Housing Program.........................................    28
    Indian Health Service (IHS)/VA Memorandum of Understanding.......    19
    Information Technology (IT)......................................14, 38
        Budget.......................................................16, 25
    Jefferson Barracks Cemetery......................................    32
    Legislative Program..............................................    15
    Lexington, Kentucky Construction.................................    43
    Louisville, Kentucky Construction................................    44
    Medical:
        Care:
            Budget...................................................    18
            Program..................................................    11
        Equipment....................................................    48
        Facilities...................................................    29
        Research.....................................................    12
        Staff........................................................    43
        Health.......................................................    43
            Vacancy..................................................    48
    Multi-Year Plan for Medical Care Budget..........................     6
    National Cemetery Administration (NCA)...........................    13
    Non-Recurring Maintenance (NRM) Cuts.............................    40
    Omaha VA Hospital................................................    22
    Outpatient Clinic................................................    33
    Pharmacy.........................................................    48
    Priority Goals...................................................     6
    Referrals........................................................    20
    Seamless Integration.............................................    23
    St. Louis Medical Center.........................................    31
    Stewardship of Resources.........................................     5
    Veteran:
        Cemeteries...................................................    23
        Population...................................................    42
    Veterans:
        Affairs (VA):
            DOD Collaboration........................................    17
            IHS Memorandum of Understanding..........................    19
        Benefits Administration (VBA)................................    12
            Management System (VBMS).................................    36
        Integrated Service Network (VISN) Allocations................    49
        Job Corps.................................................... 6, 40
        Outreach.....................................................    46

                             DEPARTMENT OF DEFENSE

                       Office of the Secretary of Defense

    Additional Committee Questions...................................    86
    Air National Guard and Air Reserve...............................    79
    Base:
        Budget and Overseas Contingency Operations Requests..........    54
        Realignment and Closure (BRAC).......................60, 75, 81, 82
    Budget Request, Fiscal Year 2013.................................    69
    Buildup of Forces on Guam........................................    87
    Compatible Development...........................................    73
    Energy:
        Conservation Investment Program (ECIP).......................    70
        Security.....................................................89, 90
    Environmental:
        Compliance...................................................    72
        Conservation.................................................    70
        Management...................................................    70
        Restoration..................................................    71
        Technology...................................................    72
    Global Picture: International and Domestic Basing, the...........    60
    Facilities Sustainment and Recapitalization......................    64
    Family and Unaccompanied Housing.................................    63
    Fiscal Year 2013 Budget Request..................................    69
    Hospitals........................................................    81
    Installation Energy Test Bed.....................................    69
    Managing Our:
        Built Environment............................................    63
        Energy Use...................................................    66
    Military Construction (MILCON)...................................    63
        And Family Housing...........................................    56
    Office of Economic Adjustment's Compatible Use Program...........    73
    Ongoing Initiatives To Reduce Costs..............................    65
    Overseas Basing..................................................    78
    Pacific Engagements..............................................    92
    Pollution Prevention.............................................    71
    Readiness and Environmental Protection Initiative................    73
    Rebasing Marines From Okinawa to Guam............................    60
    Renewable Energy Siting..........................................    74
    Rock Island Arsenal..............................................    90
    Selected Issues..................................................    56
    Sequestration....................................................    75

                             Department of the Army

    Additional Committee Questions...................................   112
    Arlington National Cemetery (ANC)................................   111
    Army:
        Facility Strategy 2020.......................................    97
        Family Housing (AFH).........................................   100
            Construction.............................................   100
            Operations...............................................   101
        National Guard and Reserve Military Construction Requirements   109
        Privatized Housing...........................................   112
    Base:
        Operations Support...........................................   104
        Realignment and Closure (BRAC)...............................   101
    Budget Request, Fiscal Year 2013.................................    98
    Davis-Bacon Act..................................................   113
    Energy...........................................................   102
    Environment......................................................   103
    European Facilities..............................................   110
    Fiscal Year 2013 Budget Request..................................    98
    Force Restructuring..............................................   110
    Military Construction (MILCON):
        Army.........................................................    98
            National Guard...........................................    99
            Reserve..................................................   100
    Net Zero Initiative..............................................   107
    Privatized Family Housing Projects...............................   112
    Sustainment, Restoration and Modernization (SRM).................   103

                             DEPARTMENT OF DEFENSE

                             Department of the Navy

    Additional Committee Questions...................................   139
    AFRICOM Involvement in Camp Lemonnier............................   140
    Bahrain..........................................................   140
    Base Realignment and Closure (BRAC) Implementation...............   130
    Budget Control Act Impacts and Plan B............................   138
    Camp Lemonnier...................................................   140
    Capability Consolidation.........................................   141
    Compatible Land Use..............................................   130
    Davis-Bacon Requirements.........................................   142
    Domestic MILCON Assets...........................................   136
    Energy...........................................................   121
    Environment......................................................   127
    Environmental Permitting Process.................................   141
    Facilities Management............................................   120
    Foreign-Domestic MILCON Split....................................   136
    General/Flag Officer Quarters....................................   141
    Guam MILCON Requirements.........................................   139
    Housing..........................................................   125
    Marine Corps (USMC):
        Force Structure Realignment..................................   142
        Pacific Laydown..............................................   135
        Relocation...................................................   142
    Marines to Guam, relocating the..................................   124
    Military Construction (MILCON)...................................   119
        Decision Process.............................................   141
        Planning.....................................................   134
    Naval Safety.....................................................   120
    Navy's Investment in Facilities, the.............................   118
    Overseas MILCON (O&M)..........................................133, 135
        Requirements.................................................   137
    United States (U.S.) Naval Rotations to Australia................   139
    Department of the Air Force......................................   143
    2005 Table Top Exercise..........................................   157
    Additional Committee Questions...................................   168
    C-130 Stationing.................................................   162
    Energy Conservation Investment Program (ECIP)....................   168
    Energy...........................................................   149
    Environmental....................................................   150
    Installations....................................................   146

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