[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

                               __________

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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.

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    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.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    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.

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    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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