[Senate Hearing 112-590, Part 1]
[From the U.S. Government Publishing Office]


                                                 S. Hrg. 112-590, Pt. 1


DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR 
               2013 AND THE FUTURE YEARS DEFENSE PROGRAM

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

                                HEARINGS

                               before the

                      COMMITTEE ON ARMED SERVICES
                          UNITED STATES SENATE

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                                   ON

                                S. 3254

     TO AUTHORIZE APPROPRIATIONS FOR FISCAL YEAR 2013 FOR MILITARY 
ACTIVITIES OF THE DEPARTMENT OF DEFENSE, FOR MILITARY CONSTRUCTION, AND 
   FOR DEFENSE ACTIVITIES OF THE DEPARTMENT OF ENERGY, TO PRESCRIBE 
   MILITARY PERSONNEL STRENGTHS FOR SUCH FISCAL YEAR, AND FOR OTHER 
                                PURPOSES

                               ----------                              

                                 PART 1

                            MILITARY POSTURE
          U.S. PACIFIC COMMAND AND U.S. TRANSPORTATION COMMAND
             U.S. EUROPEAN COMMAND AND U.S. AFRICA COMMAND
        U.S. CENTRAL COMMAND AND U.S. SPECIAL OPERATIONS COMMAND
                         DEPARTMENT OF THE ARMY
            U.S. SOUTHERN COMMAND AND U.S. NORTHERN COMMAND
                         DEPARTMENT OF THE NAVY
                      DEPARTMENT OF THE AIR FORCE
             U.S. STRATEGIC COMMAND AND U.S. CYBER COMMAND

                               ----------                              

          FEBRUARY 14, 28; MARCH 1, 6, 8, 13, 15, 20, 27, 2012




         Printed for the use of the Committee on Armed Services
    DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL 
         YEAR 2013 AND THE FUTURE YEARS DEFENSE PROGRAM--Part 1

    MILITARY POSTURE  b   U.S. PACIFIC COMMAND AND U.S. TRANSPORTATION 
 COMMAND  b   U.S. EUROPEAN COMMAND AND U.S. AFRICA COMMAND  b   U.S. 
CENTRAL COMMAND AND U.S. SPECIAL OPERATIONS COMMAND  b   DEPARTMENT OF 
  THE ARMY  b   U.S. SOUTHERN COMMAND AND U.S. NORTHERN COMMAND  b   
   DEPARTMENT OF THE NAVY  b   DEPARTMENT OF THE AIR FORCE  b   U.S. 
                STRATEGIC COMMAND AND U.S. CYBER COMMAND




                                                 S. Hrg. 112-590, Pt. 1

 
DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR 
               2013 AND THE FUTURE YEARS DEFENSE PROGRAM

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

                                HEARINGS

                               before the

                      COMMITTEE ON ARMED SERVICES
                          UNITED STATES SENATE

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                                   ON

                                S. 3254

     TO AUTHORIZE APPROPRIATIONS FOR FISCAL YEAR 2013 FOR MILITARY 
ACTIVITIES OF THE DEPARTMENT OF DEFENSE, FOR MILITARY CONSTRUCTION, AND 
   FOR DEFENSE ACTIVITIES OF THE DEPARTMENT OF ENERGY, TO PRESCRIBE 
   MILITARY PERSONNEL STRENGTHS FOR SUCH FISCAL YEAR, AND FOR OTHER 
                                PURPOSES

                               __________

                                 PART 1

                            MILITARY POSTURE
          U.S. PACIFIC COMMAND AND U.S. TRANSPORTATION COMMAND
             U.S. EUROPEAN COMMAND AND U.S. AFRICA COMMAND
        U.S. CENTRAL COMMAND AND U.S. SPECIAL OPERATIONS COMMAND
                         DEPARTMENT OF THE ARMY
            U.S. SOUTHERN COMMAND AND U.S. NORTHERN COMMAND
                         DEPARTMENT OF THE NAVY
                      DEPARTMENT OF THE AIR FORCE
             U.S. STRATEGIC COMMAND AND U.S. CYBER COMMAND

                               __________

          FEBRUARY 14, 28; MARCH 1, 6, 8, 13, 15, 20, 27, 2012

                               __________

         Printed for the use of the Committee on Armed Services


        Available via the World Wide Web: http://www.fdsys.gov/
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                      COMMITTEE ON ARMED SERVICES

                     CARL LEVIN, Michigan, Chairman

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

                   Richard D. DeBobes, Staff Director

                 Ann E. Sauer, Minority Staff Director

                                  (ii)

  
                            C O N T E N T S

                              ----------                              

                    CHRONOLOGICAL LIST OF WITNESSES
                            Military Posture
                           february 14, 2012

                                                                   Page

.................................................................
Panetta, Hon. Leon, Secretary of Defense; Accompanied by Robert 
  F. Hale, Under Secretary of Defense (Comptroller)..............    12
Dempsey, GEN Martin E., USA, Chairman, Joint Chiefs of Staff.....    26

          U.S. Pacific Command and U.S. Transportation Command
                           february 28, 2012

Willard, ADM Robert F., USN, Commander, U.S. Pacific Command.....   172
Fraser, Gen. William M., III, USAF, Commander, U.S. 
  Transportation Command.........................................   182

             U.S. European Command and U.S. Africa Command
                             march 1, 2012

Stavridis, ADM James G., USN, Commander, U.S. European Command/
  Supreme Allied Commander, Europe...............................   272
Ham, GEN Carter F., USA, Commander, U.S. Africa Command..........   324

        U.S. Central Command and U.S. Special Operations Command
                             march 6, 2012

Mattis, Gen. James N., USMC, Commander, U.S. Central Command.....   394
McRaven, ADM William H. McRaven, USN, Commander, U.S. Special 
  Operations Command.............................................   404

                         Department of the Army
                             march 8, 2012

McHugh, Hon. John M., Secretary of the Army......................   468
Odierno, GEN Raymond T., USA, Chief of Staff of the Army.........   504

            U.S. Southern Command and U.S. Northern Command
                             march 13, 2012

Fraser, Gen. Douglas M., USAF, Commander, U.S. Southern Command..   608
Jacoby, GEN Charles H., Jr., USA, Commander, U.S. Northern 
    Command/Commander, North American Aerospace Defense Command     625

                         Department of the Navy
                             march 15, 2012

Mabus, Hon. Raymond E., Jr., Secretary of the Navy...............   686
Greenert, ADM Jonathan W., USN, Chief of Naval Operations........   703
Amos, Gen. James F., USMC, Commandant of the Marine Corps........   717

                      Department of the Air Force
                             march 20, 2012

Donley, Hon. Michael B., Secretary of the U.S. Air Force.........   842
Schwartz, Gen. Norton A., USAF, Chief of Staff of the U.S. Air 
  Force..........................................................   845

             U.S. Strategic Command and U.S. Cyber Command
                             march 27, 2012

Kehler, Gen. C. Robert, USAF, Commander, U.S. Strategic Defense..   948
Alexander, GEN Keith B., USA, Commander, U.S. Cyber Command, and 
  Director, National Security Agency/Chief, Central Security 
  Service........................................................   962


DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR 
               2013 AND THE FUTURE YEARS DEFENSE PROGRAM

                              ----------                              


                       TUESDAY, FEBRUARY 14, 2012

                                       U.S. Senate,
                               Committee on Armed Services,
                                                    Washington, DC.

                            MILITARY POSTURE

    The committee met, pursuant to notice, at 9:33 a.m. in room 
SD-G50, Dirksen Senate Office Building, Senator Carl Levin 
(chairman) presiding.
    Committee members present: Senators Levin, Lieberman, Reed, 
Akaka, Nelson, Webb, McCaskill, Udall, Hagan, Begich, Manchin, 
Shaheen, Gillibrand, Blumenthal, McCain, Inhofe, Chambliss, 
Wicker, Brown, Portman, Ayotte, Collins, Graham, Cornyn, and 
Vitter.
    Committee staff members present: Richard D. DeBobes, staff 
director; Leah C. Brewer, nominations and hearings clerk; and 
Travis E. Smith, special assistant.
    Majority staff members present: Jonathan D. Clark, counsel; 
Jonathan S. Epstein, counsel; Richard W. Fieldhouse, 
professional staff member; Jessica L. Kingston, research 
assistant; Michael J. Kuiken, professional staff member; Gerald 
J. Leeling, counsel; Peter K. Levine, general counsel; Thomas 
K. McConnell, professional staff member; William G.P. Monahan, 
counsel; Michael J. Noblet, professional staff member; Roy F. 
Phillips, professional staff member; John H. Quirk V, 
professional staff member; Robie I. Samanta Roy, professional 
staff member; Russell L. Shaffer, counsel; and William K. 
Sutey, professional staff member.
    Minority staff members present: Adam J. Barker, 
professional staff member; Pablo E. Carrillo, minority 
investigative counsel; Paul C. Hutton IV, professional staff 
member; Daniel A. Lerner, professional staff member; Elizabeth 
C. Lopez, research assistant; Lucian L. Niemeyer, professional 
staff member; Christopher J. Paul, professional staff member; 
Michael J. Sistak, research assistant; and Diana G. Tabler, 
professional staff member.
    Staff assistants present: Jennifer R. Knowles, Mariah K. 
McNamara, Brian F. Sebold, and Bradley S. Watson.
    Committee members' assistants present: Jeff Greene, 
assistant to Senator Lieberman; Carolyn Chuhta, assistant to 
Senator Reed; Nick Ikeda, assistant to Senator Akaka; Ann 
Premer, assistant to Senator Nelson; Gordon Peterson, assistant 
to Senator Webb; Jason Rauch, assistant to Senator McCaskill; 
Casey Howard, assistant to Senator Udall; Lindsay Kavanaugh, 
assistant to Senator Begich; Mara Boggs, assistant to Senator 
Manchin; Ethan Saxon, assistant to Senator Blumenthal; Anthony 
Lazarski, assistant to Senator Inhofe; Lenwood Landrum, 
assistant to Senator Sessions; Tyler Stephens and Clyde Taylor 
IV, assistants to Senator Chambliss; Joseph Lai, assistant to 
Senator Wicker; Charles Prosch, assistant to Senator Brown; 
Brad Bowman and John Easton, assistants to Senator Ayotte; Ryan 
Kaldahl, assistant to Senator Collins; Sergio Sarkany, 
assistant to Senator Graham; Dave Hanke, assistant to Senator 
Cornyn; and Charles Brittingham, assistant to Senator Vitter.

       OPENING STATEMENT OF SENATOR CARL LEVIN, CHAIRMAN

    Chairman Levin. Good morning, everybody. The committee this 
morning welcomes the Secretary of Defense, Leon E. Panetta, and 
the Chairman of the Joint Chiefs of Staff, General Martin E. 
Dempsey, USA, for our hearing on the Department of Defense 
(DOD) fiscal year 2013 budget request, the associated Future 
Years Defense Program (FYDP), and the posture of the U.S. Armed 
Forces. The committee also welcomes the Under Secretary of 
Defense (Comptroller), Robert F. Hale, who has joined the 
Secretary and the Chairman at the witness table.
    Let me start by thanking all of you for your continued 
service to our Nation and to the soldiers, sailors, airmen, and 
marines here at home and in harm's way around the globe, and to 
their families. They are truly deserving of the Nation's 
affection and support.
    Your testimony today marks the beginning of the committee's 
review of the fiscal year 2013 budget request for DOD. This 
year's request includes $525 billion for the base budget and 
$88.4 billion for overseas contingency operations (OCO). The 
fiscal year 2013 base budget request is $5 billion less than 
the fiscal year 2012 enacted level of $530 billion, and the OCO 
request is $27 billion less than last year's enacted level of 
$115 billion.
    The fiscal year 2013 budget conforms with the Budget 
Control Act (BCA) that Congress passed last summer. The Senate 
approved the BCA on a bipartisan basis, with 74 Senators voting 
for it. The BCA locked in defense and non-defense discretionary 
spending caps over 10 years. The defense caps reduced projected 
defense spending by nearly half a trillion dollars over 10 
years, and DOD responded with a new strategy and a new program 
to meet the Nation's security challenges and preserve our 
military capabilities.
    The BCA also included language requiring Congress to pass 
legislation with additional far-reaching deficit reductions. If 
Congress does not come up with a deficit reduction package by 
next January, one that locks in another $1.2 trillion in 
deficit reduction over 10 years, then automatic spending cuts, 
called ``sequestration,'' will be imposed on both defense and 
non-defense programs.
    The budget the President sent us yesterday avoids 
sequestration by meeting the $1.2 trillion additional deficit 
reduction target, approximately one-half in further cuts in 
spending and one-half in additional revenues.
    The defense budget request for fiscal year 2013 not only 
conforms to the funding limits of the congressionally-mandated 
BCA, it also reflects the results of DOD's comprehensive and 
inclusive strategic review initiated by President Obama in 
April last year and the strategic guidance that resulted.
    We look forward to the witnesses' explanation of the 
process that they went through to develop the new Defense 
Strategic Guidance, their assessment of this guidance's most 
important features and potential risks relative to the current 
and anticipated strategic environment, and how this budget 
request supports its strategic priorities and manages strategic 
risk in the near- and long-terms.
    The administration has called for two more base realignment 
and closure (BRAC) rounds. In my view, however, before we 
consider another round of BRAC, DOD ought to take a hard look 
at whether further reductions in bases can be made overseas, 
particularly in Europe. While DOD has announced the removal of 
two of the four combat brigades currently stationed in Europe, 
even after the brigades are withdrawn there will still be over 
70,000 U.S. military personnel deployed in Europe. Finding 
further reductions and consolidations in our overseas force 
posture should be our first priority before another BRAC round.
    The fiscal year 2013 defense budget request reflects the 
continuing conflict in Afghanistan, but also reflects the fact 
that the process of transition has begun and continues apace. 
Afghan security forces (ASF) are assuming responsibility for 
securing the Afghan people in more and more areas throughout 
Afghanistan. Progress on security is real. A second round of 
areas to be transitioned to an ASF lead will be completed later 
this year. Then approximately 50 percent of the Afghan 
population will live in areas where ASF have the lead for 
providing security, with coalition forces playing a supporting 
role.
    I have long-pressed for ASF to move increasingly into the 
combat lead and to assume responsibility for securing more and 
more Afghan territory and communities as the size and 
capabilities of the Afghan National Army (ANA) and Afghan 
National Police (ANP) are built up. The success of our mission 
in Afghanistan depends on getting the ASF in the lead, with the 
support of the Afghan people, thereby putting the lie to the 
Taliban propaganda that the coalition is an occupying force.
    The Afghan Foreign Ministry spokesman recently made clear 
there was full agreement on transition, saying: ``We have 
always maintained that Afghan security is an Afghan 
responsibility.''
    Last June, President Obama said that the 33,000 U.S. surge 
force would be removed from Afghanistan by the end of this 
summer. That means that 68,000 U.S. troops would remain in 
Afghanistan after the drawdown of the surge. He also said that 
after the reduction of the U.S. surge force, U.S. troops will 
continue to draw down ``at a steady pace.'' Yet the fiscal year 
2013 OCO budget request now before Congress is based on an 
assumption that there are no additional reductions in the 
68,000 troop level in Afghanistan throughout all of fiscal year 
2013.
    The question that I hope our witnesses will address this 
morning is whether they expect further reductions in U.S. troop 
levels in Afghanistan during fiscal year 2013 below 68,000 and 
what associated cost savings would result. If that decision has 
not yet been made by the President, what is the timetable for 
its being made?
    I also hope Secretary Panetta will clarify his surprising 
statements earlier this month that, ``Our goal is to complete 
all of the transition to a training, advisory, and assistance 
role in 2013,'' and that he said, ``Hopefully by the mid- to 
latter-part of 2013, we will be able to make a transition from 
a combat role.''
    There are many reports about reconciliation talks with the 
Taliban. If Taliban statements are true that they will open a 
political office in Qatar, it would have the potential to be a 
positive development. I am concerned, however, by reports that 
in exchange for the opening of this office, the administration 
is considering transferring five Afghan Taliban detainees from 
the Guantanamo detention facility to Qatar. Such a significant 
step strikes me as premature and should be considered, in my 
view, only following positive discussions and not preceding 
them.
    Another concern I have regarding the progress of the 
reconciliation talks is the reported decision by the Government 
of Afghanistan to open a second channel in the dialogue with 
the Taliban that would be in Saudi Arabia. It seems to me that 
this would create the potential for confusion. The United 
States has said it is committed to an Afghan-led reconciliation 
process. That is another reason that the discussion process 
ought to be pursued through a single channel, with both the 
Afghan Government and with us, fully coordinated and 
participating together, whether it takes place in one or two 
venues.
    With respect to the realignment of U.S. marines on Okinawa, 
Senator McCain, Senator Webb, and I have advocated changes in 
the current plan in ways that support the strategic goals of 
the U.S. regional military posture while avoiding excessive and 
unsustainable costs associated with large and elaborate new 
bases. The announcement last week that the United States and 
Japan are reconsidering elements of the plan is welcome news, 
but the steps are not yet adequate.
    There are other challenges, of course. There is strong 
bipartisan determination on this committee and in Congress to 
do all we can to counter the threat that Iran poses, including 
stopping Iran from acquiring nuclear weapons. President Obama 
has focused considerable diplomatic effort towards that goal 
because, in his words, ``America is determined to prevent Iran 
from getting a nuclear weapon. And I will take no options off 
the table to achieve that goal.'' The administration is 
bringing the world together, as it should, to speak with one 
voice against Iran's nuclear ambitions.
    Relative to Egypt, the decades-old relationship between the 
United States and Egypt is under strain. In recent days, 
General Dempsey traveled to Cairo to engage the Supreme Council 
of the Armed Forces of Egypt on the very troubling decision by 
the Egyptians to charge 19 Americans and dozens of other 
individuals for operating programs in support of Egyptian civil 
society. The committee is eager to learn the findings of 
General Dempsey's visit because the decision by the Egyptians, 
if unresolved, will negatively affect funding decisions that 
Congress makes in the coming months.
    Relative to Syria, the regime of President Al-Assad is 
waging war on the people of Syria and, despite the condemnation 
of the Arab League and almost all nations, China and Russia are 
preventing the United Nations (U.N.) Security Council from 
taking any effective action. If the situation is left as it is, 
there is also a significant threat that surrounding countries 
could be severely impacted. Our witnesses will, hopefully, 
discuss options that we have to help end the slaughter, as 
limited as those options might be.
    On cybersecurity, the Defense Strategic Guidance notes that 
both state and non-state actors pose the capability and intent 
to conduct cyber espionage and the capability to conduct cyber 
attacks on the United States, with possibly severe effects on 
both our economy and our security. The Director of National 
Intelligence (DNI) in recent Senate testimony placed the 
cybersecurity threat in the top tier alongside terrorism and 
nuclear proliferation and other proliferation of weapons of 
mass destruction.
    A recent report from the National Counter-Intelligence 
Executive stated that entities operating from within China and 
Russia are responsible for the massive theft of U.S. commercial 
and military technology that could threaten our national 
security and our economy. We should let China and Russia know 
in no uncertain terms that cyber economic espionage will have 
very negative consequences for normal trade relations and other 
relations.
    Finally, in the area of personnel, DOD proposes numerous 
personnel-related reforms aimed at slowing the increase in 
personnel and health care costs, which continue to rise at 
unsustainable rates. These reforms include a significant 
reduction in military end strength over the next 5 years, other 
personnel-related reforms, and a commission to review military 
retirement benefits. I agree with General Dempsey, Admiral 
Winnefeld, the Service Chiefs, and the Services' senior 
enlisted advisers, who urged me in a letter dated January 25, 
2011, to grandfather the retirement benefits of those currently 
serving. We owe it to our servicemembers and their families to 
address any change in their compensation and benefits in a 
manner that acknowledges the commitment that we made to them 
when they volunteered to serve in our Armed Forces.
    Secretary Panetta, General Dempsey, and Mr. Hale, we look 
forward to your testimony, and I now call on Senator McCain.
    [The prepared statement of Senator Levin follows:]

                Prepared Statement by Senator Carl Levin

    This morning the committee welcomes Secretary of Defense, Leon 
Panetta, and Chairman of the Joint Chiefs of Staff, General Martin 
Dempsey, for our hearing on the Department of Defense (DOD) fiscal year 
2013 budget request, the associated Future Years Defense Program, and 
the posture of the U.S. Armed Forces. The committee also welcomes Under 
Secretary of Defense (Comptroller) Robert Hale who has joined the 
Secretary and the Chairman at the witness table.
    Let me start by thanking all of you for your continued service to 
the Nation and to the soldiers, sailors, airmen, and marines at home 
and in harm's way around the globe and to their families. They are 
truly deserving of the Nation's affection and support. I also want you 
to know that we very much appreciate the positive way you all have 
worked with this committee and the relationships you have fostered with 
our members.

                                 BUDGET

    Your testimony today marks the beginning of the committee's review 
of the fiscal year 2013 budget request for DOD. This year's request 
includes $525 billion for the base budget and $88.4 billion for 
overseas contingency operations (OCO). The fiscal year 2013 base budget 
request is $5 billion less than the fiscal year 2012 enacted level of 
$530 billion. The OCO request is $27 billion less than last year's 
enacted level of $115 billion.
    The fiscal year 2013 base budget request conforms with the Budget 
Control Act that Congress passed last summer. The Senate approved the 
Budget Control Act on a bipartisan basis with 74 Senators voting for 
it. The Budget Control Act locked in defense and non-defense 
discretionary spending caps over 10 years. The defense caps reduced 
projected defense spending by nearly half a trillion dollars over 10 
years and the Department responded with a new strategy and new program 
to meet the Nation's security challenges and preserve our military 
capabilities.
    The Budget Control Act also included language requiring Congress to 
pass legislation with additional far-reaching deficit reduction. If 
Congress does not come up with a deficit reduction package by next 
January, one that locks in another $1.2 trillion in deficit reduction 
over 10 years, then automatic spending cuts, called sequestration, will 
be imposed on both defense and non-defense programs. We need to find a 
comprehensive deficit reduction plan that will avoid these drastic and 
arbitrary cuts. The budget the President sent us yesterday avoids 
sequestration by meeting the $1.2 trillion additional defense reduction 
target--approximately one-half in further cuts in spending and one-half 
in additional revenues.

                                STRATEGY

    The defense budget request for fiscal year 2013 not only conforms 
to the funding limits of the congressionally-mandated Budget Control 
Act, it also supports the results of the Department's comprehensive, 
carefully managed, and inclusive strategic review initiated by 
President Obama in April last year and the strategic guidance that 
resulted. The requirement for a new strategic review, following so 
closely on the heels of the 2009 Quadrennial Defense Review, was driven 
in part by the fiscal crisis confronting the Nation. As former Chairman 
of the Joint Chiefs, Admiral Mike Mullen, cautioned us in August 2010: 
``The most significant threat to our national security is our debt.'' 
Senior military leaders have made it clear that updating and where 
necessary adjusting the Nation's security strategy was their first 
order of business and the budget they have sent to us this year was 
built after and to support that new Defense Strategic Guidance.
    In looking more toward the future, the new Defense Strategic 
Guidance places emphasis on potentially growing strategic challenges in 
the Asia-Pacific region, but intends to do so without ignoring the 
enduring challenges of the Middle East. Consistent with this shift, the 
Department will place more emphasis on systems that project our 
military power, assuring access and freedom of operations in any 
region. It sustains the growth in Special Operations Forces (SOF) and 
intelligence, surveillance, and reconnaissance, and increases 
investment in unmanned systems and cyberspace capabilities. The 
guidance deemphasizes stability operations in the near and distant 
future and therefore reduces the size of Army and Marine Corps ground 
forces to slightly above pre-2003 levels. Finally, as a strategic and 
operational hedge, implementation of the reductions in current 
capabilities such as end strength and force structure will be 
accomplished in a way that allows for stopping or reversing the changes 
depending on developments in the strategic environment or the emergence 
of an unforeseen crisis.
    We look forward to the witnesses' explanation of the process they 
went through to develop the new Defense Strategic Guidance, their 
assessment of this guidance's most important features and potential 
risks relative to the current and anticipated security environment, and 
how this budget request supports its strategic priorities and manages 
strategic risk in the near- and long-terms.

                      BASE REALIGNMENT AND CLOSURE

    The administration has called for two more base realignment and 
closure (BRAC) rounds. In my view, however, before we consider another 
round of BRAC, the Department ought to take a hard look at whether 
further reduction in bases can be made overseas, particularly in 
Europe. While the Department has announced the removal of two of the 
four combat brigades currently stationed in Europe, even after the 
brigades are withdrawn, there will still be over 70,000 U.S. military 
personnel deployed in Europe. Finding further reductions and 
consolidations in our overseas force posture should be our first 
priority before another BRAC round.

                          AFGHANISTAN/PAKISTAN

    The fiscal year 2013 defense budget request reflects the continuing 
conflict in Afghanistan, but also reflects the fact that the process of 
transition has begun and continues apace. Afghan security forces are 
assuming responsibility for securing the Afghan people in more and more 
areas throughout the country. Progress on security is real. The second 
round of areas to be transitioned to an Afghan security lead will be 
completed later this year. Then, approximately 50 percent of the Afghan 
population will live in areas where Afghan security forces have the 
lead for providing security, with coalition forces playing a supporting 
role.
    I have long pressed for Afghan security forces to move increasingly 
into the combat lead and to assume responsibility for securing more and 
more Afghan territory and communities, as the size and capabilities of 
the Afghan Army and police are built up. The success of our mission in 
Afghanistan depends on getting the Afghan security forces in the lead 
with the support of the Afghan people, thereby putting the lie to the 
Taliban propaganda that the coalition is an occupying force.
    The Afghan Foreign Ministry spokesman recently made clear there was 
full agreement on transition, saying: ``We have always maintained that 
Afghan security is an Afghan responsibility.''
    Last June President Obama said that the 33,000 U.S. surge force 
would be removed from Afghanistan by the end of this summer. That means 
that 68,000 U.S. troops will remain in Afghanistan after the drawdown 
of the surge.
    He also said that after the reduction of the U.S. surge force, U.S. 
troops will continue to draw down ``at a steady pace.'' Yet the fiscal 
year 2013 OCO budget request now before Congress is based on an 
assumption that there are no additional reductions in the 68,000 troop 
level in Afghanistan throughout all of fiscal year 2013. The question 
that I hope our witnesses will address this morning is whether they 
expect further reductions in U.S. troop levels in Afghanistan during 
fiscal year 2013 below 68,000 and what associated cost savings would 
result. If that decision has not been made by the President, what is 
the timetable for its being made? I also hope Secretary Panetta will 
clarify his surprising statements earlier this month that, ``Our goal 
is to complete all of [the transition to a training, advisory and 
assistance role] in 2013'' and that ``Hopefully by mid- to the latter 
part of 2013 we'll be able to make a transition from a combat role.''
    There are many reports about reconciliation talks with the Taliban. 
If Taliban statements are true that they will open a political office 
in Qatar, it would have the potential to be a positive development. I 
am concerned, however, by reports that in exchange for the opening of 
this office, the administration is considering transferring five Afghan 
Taliban detainees from the Guantanamo detention facility to Qatar. Such 
a significant step strikes me as premature and should be considered in 
my view only following positive discussions, not preceding them.
    Another concern I have regarding the progress of the reconciliation 
talks is the reported decision by the Government of Afghanistan to open 
a second channel in the dialogue with the Taliban in Saudi Arabia. It 
seems to me this would create the potential for confusion. The United 
States has said it is committed to an Afghan-led reconciliation 
process. That is another reason that the discussion process ought to be 
pursued through a single channel, with both the Afghan Government and 
the United States fully coordinated and participating together, whether 
it takes place in one or two venues.
    The wild card in the peace process is what role Pakistan will play. 
In the past few months, our relations with Pakistan have hit a low 
point. If Pakistan is committed to peace and stability in the region, 
it needs to begin by ending the safe havens in Pakistan for insurgents 
who are attacking our forces, the Afghan forces and the Afghan people. 
Pakistan cannot expect to have a normal relationship with the United 
States until it deals with the threats to us emanating from these 
militant sanctuaries for militants in Pakistan.

                  SECURITY POSTURE IN THE ASIA PACIFIC

    The Defense Strategic Guidance emphasizes the U.S. military 
presence and posture in the Asia Pacific, and rightly so. The recent 
death of North Korea's Kim Jong-il creates new uncertainties about 
possible threats to regional security, and questions about China's 
rapid military growth. Its increasing assertiveness in areas like the 
South China Sea remind us that our presence and constructive engagement 
in the region remains important to the security interests of the United 
States and the region. The committee remains keenly interested in the 
plans for U.S. force posture in the Pacific.
    With respect to realignment of U.S. marines on Okinawa, for 
example, Senator McCain, Senator Webb, and I have advocated changes to 
the current plan in ways that support the strategic goals of the U.S. 
regional military posture while avoiding excessive and unsustainable 
costs associated with large and elaborate new bases. The announcement 
last week that the United States and Japan are reconsidering elements 
of the plan is welcome news, but the steps are not yet adequate. For 
instance, there is apparently no intention to reconsider the plan to 
build the unaffordable Futenma Replacement Facility at Camp Schwab on 
Okinawa, nor does it appear that the U.S. Air Force bases in the region 
are being considered as part of the solution although they now have 
excess capacity. It is important that any changes be jointly agreed 
upon and jointly announced, and that they go far enough that a more 
viable and sustainable U.S. presence in Japan and on Guam results.

                            OTHER CHALLENGES

Iran
    There is a strong bipartisan determination on this committee and in 
Congress to do all we can to counter the threat Iran poses, including 
stopping Iran from acquiring nuclear weapons. President Obama has 
focused considerable diplomatic effort towards that goal because, in 
his own words, ``America is determined to prevent Iran from getting a 
nuclear weapon, and I will take no options off the table to achieve 
that goal.'' The administration is bringing the world together to speak 
with one strong voice against Iran's nuclear ambitions.
    The administration has sought to make clear the benefits available 
to Iran and its people if it complies with international norms and 
obligations, but also to make clear the negative consequences if it 
decides to produce nuclear weapons. Concerted, coordinated, 
international diplomatic and economic pressure will hopefully make Iran 
understand in practical terms the consequences of its actions, and will 
convince Iran not to pursue the development of a nuclear weapon.

Arab Spring
    The impact of the Arab Spring has had significant implications on 
security and stability in the region, including U.S. security 
cooperation, military-to-military relations, and counterterrorism 
cooperation. The Department's new Defense Strategic Guidance places 
considerable emphasis on partnering with foreign nations and their 
militaries on matters of mutual interest. The committee will be 
interested to hear from the Secretary and the Chairman on the impact of 
the Arab Spring, and the problems and opportunities it has created for 
our security.

Egypt
    The decades old relationship between the United States and Egypt is 
under strain. In recent days, General Dempsey traveled to Cairo to 
engage the Supreme Council of the Armed Forces on the very troubling 
decision by the Egyptians to charge 19 Americans and dozens of other 
individuals for operating programs in support of Egyptian civil 
society. The committee is eager to learn the findings of General 
Dempsey's visit because the decision by the Egyptians, if unresolved, 
will negatively affect funding decisions that Congress makes in the 
coming months.

Syria
    Finally, the regime of President Bashar-al-Assad is waging war on 
the people of Syria and despite the condemnation of the Arab League and 
almost all nations, China and Russia are preventing the U.N. Security 
Council from taking any effective action. If the situation is left as 
is, there is also a significant threat that surrounding countries could 
be severely impacted. Our witnesses will hopefully discuss options we 
have to help end the slaughter, as limited as those options might be.

                            MISSILE DEFENSE

    Given the existing and growing threat of ballistic missiles from 
nations such as North Korea and Iran, Congress has been supportive of 
efforts to develop and field effective ballistic missile defenses 
against these threats. The completion of Phase 1 of the European Phased 
Adaptive Approach (EPAA) at the end of 2011 provided an initial level 
of protection against Iran's regional missile threat to Europe, and is 
expected to be part of the North Atlantic Treaty Organization's (NATO) 
initial missile defense capability later this spring. The Department is 
continuing to develop additional EPAA capabilities to counter future 
Iranian missile threats.
    NATO and the United States continue to pursue cooperation with 
Russia on missile defense, since it could enhance our security against 
the common threat of Iranian missiles. Although this has been a 
contentious issue with Russia, a new independent study released at the 
Munich Security Conference points the way to a practical and beneficial 
approach to such cooperation, similar to the NATO approach. If there is 
U.S.-Russian cooperation on this, it would send a powerful signal to 
Iran and might help dissuade Iran from developing nuclear weapons and 
missiles to carry them.

                             CYBERSECURITY

    The Defense Strategic Guidance notes that both state and non-state 
actors possess the capability and intent to conduct cyber espionage and 
the capability to conduct cyber attacks on the United States, with 
possibly severe effects on both our economy and on our security. The 
Director of National Intelligence, in recent Senate testimony, placed 
the cybersecurity threat in the top tier, alongside terrorism and 
proliferation. A recent report from the National Counterintelligence 
Executive stated that entities operating from within China and Russia 
are responsible for the massive theft of U.S. commercial and military 
technology that could threaten our national security and economy. We 
should let China and Russia know, in no uncertain terms, that cyber 
economic espionage will have very negative consequences for normal 
trade relations.
    In addition to defending its own networks, the Department of 
Defense has an important role to play in supporting the Department of 
Homeland Security in improving the security of all government networks 
and those of the Nation's 17 designated critical infrastructure 
sectors, which includes the Defense Industrial Base, 
telecommunications, energy, transportation, and banking and finance, 
among others. The security of those networks is also vital to the 
Department of Defense, which depends on them to mobilize, deploy, and 
sustain our military forces.

                            COUNTERTERRORISM

    The Department's strategic guidance continues to place U.S. 
counterterrorism activities among its highest priorities. The United 
States has had a number of significant successes in the last year--most 
notably, operations against Osama bin Laden and Anwar al-Awlaki--and 
U.S. counterterrorism efforts are becoming more global as al Qaeda and 
its affiliates disperse to Yemen, Somalia, Iran, North Africa, and 
other prospective sanctuaries.
    The budget priorities outlined by the Department appropriately 
emphasize the capabilities possessed by Special Operations Forces to 
conduct counterterrorism, building partnership capacity, and other 
missions in support of geographic combatant commanders. The committee 
looks forward to learning more about how these forces will be utilized 
under the Strategic Guidance to meet demand for engagements with 
partner nations, particularly in the Asia Pacific, while continuing to 
counter al Qaeda and affiliated organizations elsewhere.

                               PERSONNEL

    Finally, in the area of personnel, the Department proposes numerous 
personnel-related reforms aimed at slowing the increase in personnel 
and health care costs, which continue to rise at unsustainable rates. 
These reforms include a significant reduction in military end strength 
over the next 5 years, other personnel-related reforms, and a 
commission to review military retirement benefits. I agree with General 
Dempsey, Admiral Winnefeld, the Service Chiefs, and the Services' 
senior enlisted advisors who urged me, in a letter dated January 25, 
2011, to grandfather the retirement benefits of those currently 
serving. We owe it to our servicemembers and their families to address 
any change in their compensation and benefits in a manner that 
acknowledges the commitment we made to them when they volunteered to 
serve in our Armed Forces.
    Secretary Panetta, General Dempsey, we look forward to your 
testimony.

                STATEMENT OF SENATOR JOHN McCAIN

    Senator McCain. Thank you, Mr. Chairman, and I join in 
welcoming Secretary Panetta and Chairman Dempsey to discuss the 
President's budget request for fiscal year 2013; his proposal 
to reduce the budget for DOD by $487 billion over the next 10 
years, and the impact of these reductions on FYDP for DOD.
    While the other members of this committee and I will 
continue to scrutinize these proposals, I can say today that I 
do not fully endorse this budget request. Indeed, I am 
seriously concerned about how we arrived at this point. On 
April 13, 2011, the President of the United States announced 
his intention to reduce the DOD budget by $400 billion through 
2023. However, his announcement was unsupported by any type of 
comprehensive strategic review or risk assessment. In fact, 
then-Secretary Gates testified before Congress that he only 
learned the night before about this massive proposed cut in our 
defense spending.
    Now, the President proposes $487 billion in cuts over 10 
years, and we're told that these proposed cuts are not budget-
driven, but based on a thorough strategic review of our defense 
priorities. Respectfully, this doesn't add up.
    Unfortunately, this defense budget continues the 
administration's habit of putting short-term political 
considerations over our long-term national security interests. 
In Afghanistan, our military commanders initially asked for a 
surge of 40,000 troops. The President disregarded their advice, 
sent 30,000 troops instead, and announced a date when they 
would begin withdrawing. Our commanders then recommended 
maintaining the full surge force throughout this year's 
fighting season, but the President again disregarded their 
advice and announced reductions to our force levels that the 
former Chairman of the Joint Chiefs of Staff, Admiral Mullen, 
said were more aggressive and incurred greater risks than he 
advised. Finally, in Iraq, the President disregarded the advice 
of his commanders again, dragged out negotiations with the 
Iraqi Government with no intent to maintain a presence of U.S. 
troops. Now, with the political and security situations 
unraveling, it is difficult to argue that Iraq today is, to use 
the President's phrase, ``stable and self-reliant.''
    It seems as though many of the President's most significant 
decisions about our national defense have been fundamentally 
disconnected from conditions on the ground and the advice of 
our military commanders, including commanders that the 
President himself selected. I fear that this defense budget and 
the broader plan to cut $487 billion from DOD over 10 years 
only continues this dangerous and regrettable pattern.
    By any objective assessment, the worldwide threats to our 
Nation, our interests, and our ideals are not diminishing. They 
are growing. Yet the defense budget before us would reduce the 
size of our force by more than 125,000 military personnel. It 
would jeopardize our nuclear modernization plan by making 
critical cuts to our nuclear weapons infrastructure programs. 
It would eliminate 20 percent of the Army's brigade combat 
teams (BCT), 6 Marine Corps battalions, 4 tactical air 
squadrons, 7 Air Force combat squadrons, and 130 mobility 
aircraft. Perhaps most concerning of all, in light of the 
administration's own identification of the Asia-Pacific region 
as the focus of U.S. defense strategy, this budget would 
require the Navy to reduce shipbuilding by 28 percent, to 
retire seven cruisers and two amphibious ships earlier than 
planned, to delay the next generation ballistic missile 
submarine, and to postpone the purchases of one Virginia-class 
attack submarine, two littoral combat ships, and eight high-
speed transport vessels.
    Furthermore, while this defense strategy and its related 
budget cuts clearly increase the risks to our national security 
objectives, there has been no formal risk assessment provided 
to Congress. How can we and the American people determine 
whether the additional risks associated with this strategy are 
acceptable if we do not know the specific nature of those risks 
as defined by the U.S. military?
    These cuts pale in comparison to what DOD would face under 
sequestration, an outcome that Secretary Panetta has correctly 
stated would be ``catastrophic'' for our national defense. Yet, 
here too, domestic politics are taking priority over national 
security, with the President saying he would veto an effort by 
Congress to eliminate sequestration that does not include 
raising taxes.
    Our message to you, Secretary Panetta, and to the President 
of the United States: If it is as catastrophic as you state, 
then why don't we sit down? Why doesn't the President sit down 
with us and we work out a way to avoid what you and General 
Dempsey have described as catastrophic consequences for the 
national security of this country, rather than the President 
sitting in the Oval Office and saying he'll veto any bill that 
doesn't have tax increases in it?
    In short, we have come to a critical turning point when 
decisions of the utmost importance for our national security 
must be resolved, and the consequences of those decisions, for 
better or worse, will forever shape our Nation's destiny. 
Defense spending is not what is sinking this country deeper 
into an unsustainable national debt. If we act under the 
assumption that it is, we will create something that is truly 
unaffordable, the hollowing out of the U.S. military and the 
decline of U.S. military power. We can either take the easy 
route of dramatic cuts to force structure and investments, 
which diminish our military capabilities and increase risk. Or, 
we can balance more modest and strategically-directed 
reductions in defense spending with an aggressive plan to 
address the broader cultural problems plaguing our defense 
establishment, the waste and inefficiency with which DOD buys 
goods and services under the undue influence of a 
noncompetitive military/industrial/congressional complex.
    I believe we must tackle this cultural problem head on. We 
must cut congressional earmarks and pork barrel spending on 
programs that the military does not request and does not need. 
We must have transparent and auditable financial statements, 
and we must eliminate the shameless cost overruns that 
characterize too many of our largest defense programs.
    From my review of these programs, this point is clear: The 
phenomenon of acquisition malpractice, which a senior DOD 
official publicly described just a few days ago, can be found 
in many more programs than just the Joint Strike Fighter (JSF). 
It pervades the entire major defense acquisition program 
portfolio, revealing a cultural problem in the acquisition of 
goods and services that is unsustainable. Before DOD further 
risks force structure to achieve budget savings, practices like 
this must end now.
    Now is the time to set politics aside for the sake of the 
one issue that we can all agree on is nonnegotiable to the 
future health and success of our Nation--our national defense. 
We need to start with goals, move to strategy, and allow that 
rigorous process to inform the budget we create. The 
administration's approach thus far has been too defined by 
short-term domestic political considerations. The 
administration has not led. For the sake of our national 
security, Congress should.
    Thank you, Mr. Chairman. I look forward to the testimony of 
our witnesses.
    Chairman Levin. Thank you, Senator McCain.
    Secretary Panetta.

   STATEMENT OF HON. LEON E. PANETTA, SECRETARY OF DEFENSE; 
   ACCOMPANIED BY ROBERT F. HALE, UNDER SECRETARY OF DEFENSE 
                         (COMPTROLLER)

    Secretary Panetta. Thank you very much, Chairman Levin, 
Senator McCain, members of the committee. I ask that my 
statement be made part of the record and I would like to 
summarize some of the key points.
    Chairman Levin. It will be made part of the record and, by 
the way, the balance of my statement that I didn't give will 
also be made part of the record.
    Secretary Panetta. Mr. Chairman and members of the 
committee, I appreciate the opportunity to appear before you to 
discuss the President's budget request for fiscal year 2013. 
Let me begin, as always, by thanking you for the support that 
you provide to servicemembers and to our military families. 
These brave men and women, along with DOD's civilian 
professionals who support them, have done everything asked of 
them and more, during more than a decade of war. I want to 
thank you for the support that you have given them in the past, 
the present, and hopefully in the future.
    The fiscal year 2013 budget request for DOD was the product 
of an intensive strategy review that was conducted by the 
senior military and civilian leaders of DOD, with advice and 
guidance of the President. The total request represents a $614 
billion investment in national defense that includes $525.4 
billion for DOD's base budget and $88.5 billion in spending to 
support our troops in combat.
    The reasons for this review are clear. First, the United 
States is at a strategic turning point after a decade of war 
and after very substantial growth in defense budgets.
    Second, with the Nation confronting a very large debt 
problem and deficit problem in this country, Congress passed 
the BCA of 2011, imposing a reduction in the defense budget of 
$487 billion over the next decade. We at DOD decided to step up 
to the plate, and that this crisis provided us an opportunity 
to establish a new strategy for the force that we would need in 
the future. That strategy has guided us in making the budget 
decisions and choices that are contained in the President's 
budget.
    The fact is, we are at an important turning point that 
would have required us to make a strategic shift probably under 
any circumstances. The U.S. military's mission in Iraq has 
ended. While we still have a tough fight on our hands in 
Afghanistan, 2011 marks significant progress in reducing 
violence and transitioning to an Afghan-led responsibility for 
security, and we are on track to complete this transition by 
the end of 2014 in accordance with our Lisbon commitments.
    Having just returned from the North Atlantic Treaty 
Organization (NATO) ministerial, I can assure you that all of 
the NATO nations are in line with the strategy that we are 
approaching with regards to Afghanistan. We are in a 
transition. We are transitioning security to Afghan forces, and 
our hope is that as we make the final transition in 2014, that 
they can take the lead on combat operations. We will be there. 
We'll be in support. We'll be combat-ready to support them 
through that process. I want to assure you that NATO is fully 
in agreement with the strategy that we are moving in in 
Afghanistan.
    Last year, in addition, the NATO effort in Libya also 
concluded with the fall of Qadafi, and successful 
counterterrorism efforts have significantly weakened al Qaeda 
and decimated its leadership.
    But despite what we have been able to achieve, unlike past 
drawdowns when threats have receded, the United States still 
faces a very complex array of strategic challenges across the 
globe. We are still a Nation at war in Afghanistan. We still 
face threats to our Homeland from terrorism. There is a 
dangerous proliferation of lethal weapons and materials. The 
behavior of Iran and North Korea continue to threaten global 
stability. There is continuing turmoil and unrest in the Middle 
East, from Syria to Egypt to Yemen and beyond. Rising powers in 
Asia are testing international rules and relationships, and 
there are growing concerns about cyber intrusions and attacks.
    Our challenge is to meet these threats, to protect our 
Nation and our people, and at the same time, meet our 
responsibility to fiscal discipline. This is not an easy task.
    To build the force we need for the future, we developed a 
new Defense Strategic Guidance that consists of five key 
elements.
    First, the military will be smaller and leaner, but we want 
a military that is agile, flexible, ready, and technologically 
advanced.
    Second, we will rebalance our global posture and presence 
to emphasize Asia Pacific and the Middle East, because those 
areas represent the threats for the future.
    Third, for the rest of the world, we need to build 
innovative partnerships and strengthen key alliances and 
partnerships from Europe to Latin America to Africa.
    Fourth, we will ensure that we have the capability to 
quickly confront and defeat aggression from any adversary, any 
time, anywhere.
    Fifth, this can't just be about cuts. It also has to be 
about protecting and prioritizing key investments in technology 
and new capabilities, as well as our capacity to grow, adapt, 
and mobilize as needed.
    We've developed this new Defense Strategic Guidance before 
any final budget decisions were made, in order to ensure that 
the decisions that are here, the choices we made, reflect the 
new defense strategy. While shaping the strategy, we didn't 
want to repeat the mistakes of the past. Our goals are to 
maintain the strongest military in the world, to not hollow out 
the force, to take a balanced approach to budget cuts by 
putting everything on the table, and to not break faith with 
our troops and their families.
    Throughout this review, we also wanted to make sure that 
this was an inclusive process. General Dempsey and I worked 
closely with the leadership of the Services and the combatant 
commanders and consulted regularly with Members of Congress. As 
a result of these efforts, DOD is strongly unified behind the 
recommendations that we are presenting today.
    Consistent with the BCA, this budget reflects in the next 5 
years a savings of $259 billion. That's compared to the budget 
plan that was submitted, obviously, to Congress last year.
    We think this is a balanced and complete package that 
follows the key elements of the strategy and adheres to the 
guidelines that we established. The savings come from three 
broad areas.
    First, efficiencies. We have redoubled our efforts to 
discipline the use of taxpayers' dollars, and that has yielded, 
we hope, about one-quarter of the targeted savings that we have 
in this package.
    The second area is force structure and procurement reforms 
and adjustments. We've made strategy-driven changes in both 
force structure and procurement programs to achieve roughly 
half of the savings in this package.
    Finally, on compensation. We've made modest but important 
adjustments in personnel costs to achieve some very necessary 
cost savings in this area. This area represents about one-third 
of our budget, but here it accounted for little more than 10 
percent of the total reduction that we've presented.
    Let me walk through each of these areas. First of all, with 
regards to disciplining defense dollars, if we're going to 
tighten up the force then I, like Senator McCain, believe very 
strongly that we have to begin by tightening up the operations 
of DOD. We have to reduce excess overhead, eliminate waste, and 
improve business practices across DOD.
    The fiscal year 2012 budget proposed more than $150 billion 
in efficiencies, and we continue to implement those changes. 
But we also identified another $60 billion in additional 
savings over 5 years through measures like streamlining support 
functions, consolidating information technology enterprise 
services, rephasing military construction (MILCON) projects, 
consolidating inventory, and reducing service support 
contractors.
    As we reduce force structure, we also have a responsibility 
to provide the most cost-efficient support for the force. For 
that reason, the President will request Congress to authorize 
the BRAC process for 2013 and 2015. As somebody who went 
through the BRAC process in my own district, I recognize how 
controversial this process is for Members and for 
constituencies. Yet, it is the only effective way to achieve 
needed infrastructure savings.
    To provide better financial information, we are also 
increasing our emphasis on audit readiness and accelerating key 
timelines. In October 2011, I directed DOD to accelerate 
efforts to achieve fully auditable financial statements. We 
were mandated to do it by 2017; what I have ordered is that we 
move that up to 2014.
    But efficiencies alone are not enough to achieve the 
required savings. Budget reductions of this magnitude require 
that we make adjustments to force structure and procurement 
investments. The choices that we made have to fit the five 
elements of the strategy that we developed for the future 
military force.
    First, we knew that coming out of these wars, as I said, 
the military would be smaller, but our approach to 
accommodating these reductions has been to take this as an 
opportunity to fashion an agile and flexible military that we 
need for the future. That highly networked and capable joint 
force consists of an adaptable and battle-tested Army that 
remains our Nation's force for decisive action, capable of 
defeating any adversary on land, and at the same time being 
innovative about how it deploys its forces; a Navy that 
maintains forward presence and is able to penetrate enemy 
defenses; a Marine Corps that remains a middleweight 
expeditionary force, with reinvigorated and amphibious 
capabilities; an Air Force that dominates air and space and 
provides rapid mobility, global strike, and persistent 
intelligence, surveillance, and reconnaissance (ISR); and a 
National Guard and Reserve that continue to be ready and 
prepared for operations when needed.
    To ensure this agile force, we made a conscious choice not 
to maintain more force structure than we could afford to 
properly train and equip. If we do it the other way, we 
guarantee a hollow force. We wanted a force structure that we 
could effectively train and maintain.
    We are implementing force structure reductions consistent 
with the new Defense Strategic Guidance for a total savings of 
$50 billion over the next 5 years. The adjustments include, as 
was pointed out, a resizing of the Active Army from 562,000 to 
490,000 soldiers by 2017. This will transition down in a 
responsible way.
    We'll gradually resize the Active Marine Corps from about 
202,000 to 182,000. We'll reduce and streamline the Air Force's 
airlift fleet. We'll retire some aging C-5As and C-130s. But at 
the same time, we'll maintain a fleet of 275 strategic 
airlifters and 318 C-130s, a fleet that will be more than 
capable of meeting the airlift requirements of the new 
strategy.
    The Navy will protect our highest priority and most 
flexible ships, but we also will retire seven lower priority 
Navy cruisers. The reason we're doing that is that these 
cruisers have not been upgraded with ballistic missile defense 
capability and would require significant repairs. That's the 
reason the Navy chose to do that.
    Second, the New Strategic Guidance made clear that we must 
protect our capabilities needed to project power in Asia 
Pacific and the Middle East. To this end, the budget maintains 
the current bomber fleet, it maintains the aircraft carrier 
fleet at a long-term level of 11 ships and 10 air wings, it 
maintains the big-deck amphibious fleet, and it restores Army 
and Marine Corps force structure in the Pacific after the 
drawdown from Iraq and as we draw down in Afghanistan, while 
continuing to maintain a strong presence in the Middle East. 
Our goal is to expand our rotational presence in both areas.
    The budget also makes selected new investments to ensure we 
develop new capabilities to project power in key territories 
and domains. We're going to put $300 million to fund the next 
general Air Force bomber. We're putting $1.8 billion to develop 
the new Air Force tanker, $18.2 billion for the procurement of 
10 new warships, including 2 Virginia-class submarines, 2 
Aegis-class destroyers, 4 littoral combat ships, 1 joint high-
speed vessel, and 1 CVN-21-class aircraft carrier. We're also 
investing $100 million to increase cruise missile capacity of 
future Virginia-class submarines.
    Third, the strategy makes clear that, even as Asia Pacific 
and the Middle East represent the areas of growing strategic 
priority, the United States will continue to work to strengthen 
its key alliances, to build partnerships, to develop innovative 
ways, such as rotational deployments, to sustain our presence 
elsewhere in the world.
    To that end, we make key investments in NATO and other 
partnership programs. We're putting $200 million in fiscal year 
2013 and nearly $900 million over the next 5 years on the NATO 
alliance Ground Surveillance System, one that was just approved 
by the NATO ministerial in this last meeting; $9.7 billion in 
fiscal year 2013 and about $47 billion to develop and deploy 
missile defense capabilities that protect the U.S. Homeland and 
strengthen regional missile defenses as well.
    The new strategy envisions a series of organizational 
changes to boost efforts to partner with other militaries. 
We're allocating a U.S.-based brigade to the NATO response 
force and will rotate U.S.-based units to Europe on a regular 
basis for training and exercises, increasing the opportunities 
as well for Special Operations Forces (SOF) to advise and 
assist our partners in other regions.
    Fourth, the United States must have the capability to fight 
more than one conflict at a time. But we are in the 21st 
century and we have to use 21st century capabilities. That's 
the reason this budget invests in space, in cyber space, in 
long-range precision strike, and in the continued growth of 
SOF, to ensure that we can still confront and defeat multiple 
adversaries even with the force structure reductions that I've 
outlined earlier.
    It also sustains the nuclear triad of bombers, missiles, 
and submarines to continue to ensure that we have a safe, 
reliable, and effective nuclear deterrent. Even with some 
adjustments to force structure, the budget sustains a military 
that I believe is the strongest in the world: an Army of more 
than 1 million Active and Reserve soldiers with 18 divisions, 
approximately 65 BCTs, and 21 combat aviation brigades; a naval 
force of 285 ships, the same size force that we have today, 
that will remain the most powerful and flexible naval force on 
Earth; a Marine Corps with 31 infantry battalions, 10 artillery 
battalions, and 20 tactical air squadrons; and an Air Force 
that will continue to ensure air dominance, with 54 combat-
coded fighter squadrons and the current bomber fleet.
    Lastly, we can't just, as I said, cut. We have to invest. 
We have to leap ahead of our adversaries by investments in the 
latest technologies. That's why this budget provides $11.9 
billion for science and technology (S&T). It includes $2.1 
billion for basic research. It provides $10.4 billion to 
sustain the continued growth in SOF. It provides $3.8 billion 
for unmanned air systems and it invests $3.4 billion in cyber 
activities.
    At the same time, the New Strategic Guidance recognizes the 
need to prioritize and distinguish urgent modernization needs 
from those that can be delayed, particularly in light of 
schedule and cost problems. Therefore, the budget has 
identified $75 billion in savings over 5 years resulting from 
cancelled or restructured programs. Some examples: $15.1 
billion in savings from restructuring the JSF, by delaying 
aircraft purchases so that we can allow more time for 
development and testing; $1.3 billion in savings from delaying 
development of the Army's ground combat vehicle due to 
contracting difficulties; $4.3 billion in savings from delaying 
the next generation of ballistic missile submarines by 2 years 
for affordability and management reasons.
    In addition, we terminate selected programs: the Block 30 
version of Global Hawk, which has grown in cost to the point 
that it is simply no longer cost-effective; the weather 
satellite program, because we can depend on existing 
satellites, resulting in a savings of $2.3 billion.
    All of this requires that we have to have and maintain the 
ability to mobilize and to regrow the force if we have to. That 
means we need to maintain a capable and ready National Guard 
and Reserve. One of the things we are doing is that the Army is 
going to retain more mid-grade officers and noncommissioned 
officers so they'll be there with the experience and structure 
we need if we have to move quickly to regrow the force. The 
Reserve component has demonstrated its readiness and importance 
over the past 10 years of war and we must ensure that it 
remains available, trained, and equipped to serve in an 
operational capacity when necessary.
    Another key part of preserving our ability to quickly adapt 
and mobilize is maintaining a strong and flexible industrial 
base. I'm committed to make sure that our budget recognizes 
that industry is our partner in the defense acquisition 
enterprise. We have to maintain a base if we're going to be 
able to mobilize and be prepared in the future.
    Finally, with regards to our most important element of our 
strategy and our decisionmaking process: our people. This 
budget recognizes that they, far more than any weapons system 
or technology, are the great strength of the U.S. military. One 
of the guiding principles in our decisionmaking process was 
that we must try to keep faith with our troops and their 
families. For that reason, we've determined to protect family 
assistance programs, to sustain these important investments in 
this budget that serve our troops and their families, and 
continue to make efforts to ensure that these programs are 
responsive to their needs.
    Yet, in order to build the force needed to defend the 
country under existing budget constraints, the growth in costs 
of military pay and benefits must be put on a sustainable 
course. This is an area of the budget that has grown by nearly 
90 percent since 2001, about 30 percent above inflation, while 
end strength has only grown by 3 percent. So this budget 
contains a road map to try to address those costs in military 
pay and health care and retirement in ways that we believe are 
fair, transparent, and consistent with our fundamental 
commitments to our people.
    On military pay, there are no pay cuts. We've created 
sufficient room to allow full pay raises in 2013 and 2014. 
However, we will provide more limited pay raises beginning in 
2015, giving troops and their families fair notice and lead 
time before changes take effect.
    The budget devotes about $48, almost $50 billion to health 
care costs. It's a big part of our budget, an amount that has 
more than doubled over the last decade. In order to continue to 
control the growth of these costs, we're recommending increases 
in health care fees, in copays and deductibles that are to be 
phased in over 4 to 5 years. None of these fee proposals would 
apply to Active-Duty servicemembers and there will be no 
increases in health care premiums for families of Active-Duty 
servicemembers under this proposal.
    We also feel that it's important to address the military 
retirement costs as well. What we urge is the establishment of 
a commission with authority to conduct a comprehensive review 
of military retirement. But we have made clear, the President 
and DOD, that the retirement benefits of those who currently 
serve should be protected by grandfathering their benefits.
    Members of the committee, putting this together, this kind 
of balanced package, has been difficult, and at the same time 
it has been an opportunity to try to think about what force do 
we need now and what force do we need in the future. I believe 
we, the Service Chiefs, the combatant commanders, have 
developed a complete package to try to address our threats for 
the future and to try to ensure that we achieve our strategic 
aims.
    As a result, the fiscal year 2013 request is balanced, it 
keeps America safe, and we think it sustains U.S. leadership 
abroad. Please take a look at each of the individual parts of 
this plan. I encourage you to review this entire budget. This 
has to be a partnership. But I ask you also to bear in mind the 
strategic tradeoffs that are inherent in any particular budget 
decision. This is a zero sum game. There is no free money here. 
The need to balance competing strategic objectives is taking 
place in a resource-constrained environment. We'll need your 
support and partnership to implement this vision of the future 
military.
    I know these are tough issues. This is the beginning, it's 
not the end of this process. But make no mistake, the savings 
that we are proposing are significant and broad-based and will 
impact all 50 States. But this is what Congress mandated on a 
bipartisan basis, that we reduce the defense budget by almost 
half a trillion dollars. We need your partnership to do this in 
a manner that preserves the strongest military in the world. 
This will be a test for all of us of whether reducing the 
deficit is about talk or about action.
    Let me be clear. You can't take a half a trillion dollars 
out of the defense budget and not incur additional risks. We 
believe they are acceptable risks, but they are risks. We're 
going to have a smaller force. We'll depend on the speed of 
mobilization. We have to depend on ingenuity in terms of new 
technologies for the future, and very frankly, when you go 
through this there is no margin for error.
    This is why Congress must do everything possible to make 
sure that we avoid sequestration. We are more than prepared to 
work with Congress to try to develop an approach that will 
detrigger sequestration. This approach would subject DOD to 
another $500 billion in additional cuts that would be required 
to take place in a meat-axe approach. We are convinced that it 
would result in hollowing out the force and inflicting severe 
damage to our national defense.
    So the leadership of DOD, both military and civilian, is 
unified behind the strategy we've presented, behind this 
budget, and behind the need to avoid sequestration.
    I look forward to working closely with you in the months 
ahead. This is going to be a tough challenge, but it's what the 
American people expect of its elected leaders, to be fiscally 
responsible in developing the force for the future, the force 
that can defend the country, the force that supports our men 
and women in uniform, and a force that is and always will be 
the strongest military in the world.
    Thank you, Mr. Chairman.
    [The prepared statement of Secretary Panetta follows:]

               Prepared Statement by Hon. Leon E. Panetta

    Chairman Levin, Senator McCain, members of the committee, I 
appreciate the opportunity to appear before you to discuss the 
President's budget request for fiscal year 2013.
    Let me begin by first thanking you for your support for our 
servicemembers and our military families. These brave men and women, 
along with the Department's civilian professionals who support them, 
have done everything asked of them and more during more than a decade 
of war.

                        DEFENSE STRATEGY REVIEW

    The fiscal year 2013 budget request for the Department of Defense 
(DOD) was the product of an intensive strategy review conducted by the 
senior military and civilian leaders of the Department with the advice 
and guidance of President Obama. The total request represents a $614 
billion investment in national defense--including a $525.4 billion 
request for the Department's base budget, and $88.5 billion in spending 
to support our troops in combat.
    The reasons for this review are clear: first, the United States is 
at a strategic turning point after a decade of war and substantial 
growth in defense budgets. Second, with the Nation confronting very 
large debt and deficits, Congress passed the Budget Control Act of 
2011, imposing limits that led to a reduction in the defense budget of 
$487 billion over the next decade.
    Deficit reduction is a critical national security priority in and 
of itself. We at the Department decided that this crisis presented us 
with the opportunity to establish a new strategy for the force of the 
future, and that strategy has guided us in making the budget choices 
contained in the President's budget. We are at an important turning 
point that would have required us to make a strategic shift under any 
circumstances. The U.S. military's mission in Iraq has ended. We still 
have a tough fight on our hands in Afghanistan, but over the past year 
we have begun a transition to Afghan-led responsibility for security--
and we are on track to complete that transition by the end of 2014, in 
accordance with our Lisbon commitments. Last year, the North Atlantic 
Treaty Organization (NATO) effort in Libya also concluded with the fall 
of Qadhafi. Successful counterterrorism efforts have significantly 
weakened al Qaeda and decimated its leadership.
    But despite what we have been able to achieve, unlike past 
drawdowns when threats have receded, the United States still faces a 
complex array of security challenges across the globe: We are still a 
nation at war in Afghanistan; we still face threats from terrorism; 
there is dangerous proliferation of lethal weapons and materials; the 
behavior of Iran and North Korea threaten global stability; there is 
continuing turmoil and unrest in the Middle East; rising powers in Asia 
are testing international relationships; and there are growing concerns 
about cyber intrusions and attacks. Our challenge is to meet these 
threats and at the same time, meet our responsibility to fiscal 
discipline. This is not an easy task.
    To build the force we need for the future, we developed a new 
Defense Strategic Guidance that consists of these five key elements:

         First, the military will be smaller and leaner, but it 
        will be agile, flexible, ready, and technologically advanced.
         Second, we will rebalance our global posture and 
        presence to emphasize Asia-Pacific and the Middle East.
         Third, we will build innovative partnerships and 
        strengthen key alliances and partnerships elsewhere in the 
        world.
         Fourth, we will ensure that we can quickly confront 
        and defeat aggression from any adversary--anytime, anywhere.
         Fifth, we will protect and prioritize key investments 
        in technology and new capabilities, as well as our capacity to 
        grow, adapt and mobilize as needed.

                  STRATEGY TO FISCAL YEAR 2013 BUDGET

    We developed this new Defense Strategic Guidance before any final 
budget decisions were made to ensure that the budget choices reflected 
the new defense strategy.
    While shaping this strategy, we did not want to repeat the mistakes 
of the past. Our goals were: to maintain the strongest military in the 
world, to not ``hollow out'' the force, to take a balanced approach to 
budget cuts, to put everything on the table, and to not break faith 
with troops and their families. Throughout the review we made sure this 
was an inclusive process, and General Dempsey and I worked closely with 
the leadership of the Services and combatant commanders, and consulted 
regularly with Members of Congress.
    As a result of these efforts, the Department is strongly united 
behind the recommendations we are presenting today. Consistent with 
title I of the Budget Control Act, this budget reflects $259 billion in 
savings over the next 5 years and $487 billion over the next 10 years 
compared to the budget plan submitted to Congress last year. Under the 
5 year budget plan, the base budget will rise from $525 billion in 
fiscal year 2013 to $567 billion in fiscal year 2017. When reduced war-
related funding requirements are included, we expect total U.S. defense 
spending to drop by more than 20 percent over the next few years from 
its peak in 2010, after accounting for inflation.
    This is a balanced and complete package that follows the key 
elements of the strategy and adheres to the guidelines we established. 
The savings come from three broad areas:

         First, efficiencies--we redoubled efforts to make more 
        disciplined use of taxpayer dollars, yielding about one quarter 
        of the target savings;
         Second, force structure and procurement adjustments--
        we made strategy-driven changes in force structure and 
        procurement programs, achieving roughly half of the savings; 
        and
         Finally, compensation--we made modest but important 
        adjustments in personnel costs to achieve some necessary cost 
        savings in this area, which represents one third of the budget 
        but accounted for a little more than 10 percent of the total 
        reduction.

    Changes in economic assumptions and other shifts account for the 
remainder of the $259 billion in savings. Let me walk through these 
three areas, beginning with our efforts to discipline our use of 
defense dollars.

                MORE DISCIPLINED USE OF DEFENSE DOLLARS

    If we are to tighten up the force, I felt we have to begin by 
tightening up the operations of the Department. This budget continues 
efforts to reduce excess overhead, eliminate waste, and improve 
business practices across the department. The more savings realized in 
this area, the less spending reductions required for modernization 
programs, force structure, and military compensation.
    The fiscal year 2012 budget proposed more than $150 billion in 
efficiencies between fiscal year 2012 and fiscal year 2016, and we 
continue to implement those changes. This budget identifies about $60 
billion in additional savings over 5 years. Across the Military 
Services, new efficiency efforts over the next 5 years include:

         The Army proposes to save $18.6 billion through 
        measures such as streamlining support functions, consolidating 
        information technology enterprise services, and rephasing 
        military construction projects;
         The Navy proposes to save $5.7 billion by implementing 
        strategic sourcing of commodities and services, consolidating 
        inventory, and other measures; and
         The Air Force proposes to save $6.6 billion by 
        reducing service support contractors and rephasing military 
        construction projects.

    Other proposed DOD-wide efficiency savings over the next 5 years 
total $30.1 billion, including reductions in expenses in the Office of 
the Secretary of Defense and the Defense agencies.
    Additionally, we are continuing the initiative to improve the 
Department's buying power by seeking greater efficiency and 
productivity in the acquisition of goods and services. We are 
strengthening acquisition support to the warfighter, executing 
acquisitions more efficiently, preserving the industrial base, and 
strengthening the acquisition workforce. This budget assumes that these 
policies produce savings of $5.3 billion over the next 5 years.
    In terms of military infrastructure, we will need to ensure that 
our current basing and infrastructure requirements do not divert 
resources from badly needed capabilities.
    As we reduce force structure, we have a responsibility to provide 
the most cost efficient support for the force. For that reason, the 
President will request that Congress authorize the Base Realignment and 
Closure process for 2013 and 2015. As someone who went through BRAC, I 
realize how controversial this process can be for members and 
constituencies. Yet, it is the only effective way to achieve 
infrastructure savings.
    Achieving audit readiness is another key initiative that will help 
the Department achieve greater discipline in its use of defense 
dollars. The Department needs auditable financial statements to comply 
with the law, to strengthen its own internal processes, and to reassure 
the public that it continues to be a good steward of Federal funds. In 
October 2011, I directed the Department to emphasize this initiative 
and accelerate efforts to achieve fully auditable financial statements. 
Among other specific goals, I directed the Department achieve audit 
readiness of the Statement of Budgetary Resources for general funds by 
the end of calendar year 2014, and to meet the legal requirements to 
achieve full audit readiness for all Defense Department financial 
statements by 2017. We are also implementing a course-based 
certification program for defense financial managers in order to 
improve training in audit readiness and other areas, with pilot 
programs beginning this year. We now have a plan in place to meet these 
deadlines, including specific goals, financial resources, and a 
governance structure.
    These are all critically important efforts to ensure the Department 
operates in the most efficient manner possible. Together, these 
initiatives will help ensure the Department can preserve funding for 
the force structure and modernization needed to support the missions of 
our force.

        STRATEGY-DRIVEN CHANGES IN FORCE STRUCTURE AND PROGRAMS

    It is obvious that we cannot achieve the overall savings targets 
through efficiencies alone. Budget reductions of this magnitude require 
significant adjustments to force structure and investments, but the 
choices we made reflected five key elements of the Defense Strategic 
Guidance and vision for the military.

    1.  Build a force that is smaller and leaner, but agile, flexible, 
ready and technologically advanced

    We knew that coming out of the wars, the military would be smaller. 
Our approach to accommodating these reductions, however, has been to 
take this as an opportunity--as tough as it is--to fashion the agile 
and flexible military we need for the future. That highly networked and 
capable joint force consists of:

         an adaptable and battle-tested Army that is our 
        Nation's force for decisive action, capable of defeating any 
        adversary on land;
         a Navy that maintains forward presence and is able to 
        penetrate enemy defenses;
         a Marine Corps that is a ``middleweight'' 
        expeditionary force with reinvigorated amphibious capabilities;
         an Air Force that dominates air and space and provides 
        rapid mobility, global strike and persistent ISR; and
         National Guard and Reserve components that continue to 
        be ready and prepared for operations when needed.

    To ensure an agile force, we made a conscious choice not to 
maintain more force structure than we could afford to properly train 
and equip. We are implementing force structure reductions consistent 
with the new Defense Strategic Guidance for a total savings of about 
$50 billion over the next 5 years.
    These adjustments include:

         Gradually resizing the Active Army to 490,000, 
        eliminating a minimum of 8 BCTs and developing a plan to update 
        the Army's brigade structure;
         Gradually resizing the Active Marine Corps to about 
        182,100, eliminating 6 combat battalions and 4 Tactical Air 
        squadrons;
         Reducing and streamlining the Air Force's airlift 
        fleet by retiring all 27 C-5As, 65 of the oldest C-130s and 
        divesting all 38 C-27s. After retirements, the Air Force will 
        maintain a fleet of 275 strategic airlifters, and 318 C-130s--a 
        number that we have determined is sufficient to meet the 
        airlift requirements of the new strategy, including the Air 
        Force's commitment for direct support of the Army;
         Eliminating seven Air Force Tactical Air squadrons--
        including five A-10 squadrons, one F-16 squadron, and one F-15 
        training squadron. The Air Force will retain 54 combat-coded 
        fighter squadrons, maintaining the capabilities and capacity 
        needed to meet the new Defense Strategic Guidance; and
         Retiring seven lower priority Navy cruisers that have 
        not been upgraded with ballistic missile defense capability or 
        that would require significant repairs, as well as retiring two 
        dock landing ships.

    The strategy review recognized that a smaller, ready and agile 
force is preferable to a larger force that is poorly trained and ill-
equipped. Therefore, we put a premium on retaining those capabilities 
that provide the most flexibility across a range of missions. We also 
emphasized readiness. For fiscal 2013, the Department is requesting 
$209 billion in the base budget for Operation and Maintenance, the 
budget category that funds training and equipment maintenance among 
other aspects of operations. That represents an increase of 6 percent 
compared to the enacted level in 2012, even though the overall base 
budget will decline by 1 percent. Striking the right balance between 
force structure and readiness is critical to our efforts to avoid a 
hollow force, and we will continue to focus on this area to ensure that 
we make the right choices.

    2.  Rebalance global posture and presence to emphasize Asia-Pacific 
and the Middle East

    The strategic guidance made clear that we must protect capabilities 
needed to project power in Asia-Pacific and the Middle East. To this 
end, this budget:

         Maintains the current bomber fleet;
         Maintains the aircraft carrier fleet at a long-term 
        level of 11 ships and 10 air wings;
         Maintains the big-deck amphibious fleet; and
         Restores Army and Marine Corps force structure in the 
        Pacific after the drawdown from Iraq and as we drawdown in 
        Afghanistan, while maintaining persistent presence in the 
        Middle East.

    The budget also makes selected new investments to ensure we develop 
new capabilities needed to maintain our military's continued freedom of 
action in face of new challenges that could restrict our ability to 
project power in key territories and domains. Across the Services, this 
budget plan requests $1.8 billion for fiscal year 2013, and a total of 
$3.9 billion over the next 5 years, for enhancements to radars, 
sensors, and electronic warfare capabilities needed to operate in these 
environments.
    Other key power projection investments in fiscal year 2013 include:

         $300 million to fund the next generation Air Force 
        bomber (and a total of $6.3 billion over the next 5 years);
         $1.8 billion to develop the new Air Force tanker;
         $18.2 billion for the procurement of 10 new warships 
        and associated equipment, including 2 Virginia-class 
        submarines, 2 Aegis-class destroyers, 4 Littoral Combat Ships, 
        1 Joint High Speed Vessel, and 1 CVN-21-class aircraft carrier. 
        We are also requesting $100 million to develop the capability 
        to increase cruise missile capacity of future Virginia-class 
        submarines;
         $2.2 billion in fiscal year 2013 for the procurement 
        of an additional 26 F/A-18E/F Super Hornet aircraft;
         $1.0 billion in fiscal year 2013 for the procurement 
        of 12 EA-18G Growler aircraft, the Navy's new electronic 
        warfare platform that replaces the EA-6B; and
         $38 million for design efforts to construct an Afloat 
        Forward Staging Base planned for procurement in fiscal year 
        2014. This base can provide mission support in areas where 
        ground-based access is not available, such as counter-mine 
        operations, Special Operations, and ISR.

    3.  Build innovative partnerships and strengthen key alliances and 
partnerships

    The strategy makes clear that even though Asia-Pacific and the 
Middle East represent the areas of growing strategic priority, the 
United States will work to strengthen its key alliances, to build 
partnerships and to develop innovative ways to sustain U.S. presence 
elsewhere in the world.
    To that end, this budget makes key investments in NATO and other 
partnership programs, including:

         $200 million in fiscal year 2013 and nearly $900 
        million over the next 5 years in the NATO Alliance Ground 
        Surveillance system. This system will enable the Alliance to 
        perform persistent surveillance over wide areas in any weather 
        or light condition;
         $9.7 billion in fiscal year 2013, and $47.4 billion 
        over the next 5 years, to develop and deploy missile defense 
        capabilities that protect the U.S. Homeland and strengthen 
        regional missile defenses. The request includes the Phased 
        Adaptive Approach that is being deployed first in Europe and is 
        designed to protect NATO allies and forces from ballistic 
        missile threats; and
         $800 million for the combatant commanders exercise and 
        engagement program. Jointly with the State Department, we will 
        also begin using the new Global Security Contingency fund that 
        was established at our request in the fiscal year 2012 
        legislation.

    The new strategy also envisions a series of organizational changes 
that will boost efforts to partner with other militaries. These 
include:

         Allocating a U.S.-based brigade to the NATO Response 
        Force and rotating U.S.-based units to Europe for training and 
        exercises;
         Aligning an Army BCT with each regional combatant 
        command to foster regional expertise; and
         Increasing opportunities for Special Operations Forces 
        to advise and assist partners in other regions, using 
        additional capacity available due to the gradual drawdown from 
        the post-September 11 wars.

    4.  Ensure that we can confront and defeat aggression from any 
adversary--anytime, anywhere

    The strategic guidance reaffirmed that the United States must have 
the capability to fight more than one conflict at the same time. Still, 
the strategic guidance recognizes that how we defeat the enemy may well 
vary across conflicts.
    This budget invests in space, cyberspace, long range precision-
strike and the continued growth of Special Operations Forces to ensure 
that we can still confront and defeat multiple adversaries even with 
the force structure reductions outlined earlier. It also sustains the 
nuclear triad of bombers, missiles and submarines to ensure we continue 
to have a safe, reliable and effective nuclear deterrent.
    Even with some adjustments to force structure, this budget sustains 
a military that is the strongest in the world, capable of quickly and 
decisively confronting aggression wherever and whenever necessary. 
After planned reductions, the fiscal year 2017 joint force will consist 
of:

         An Army of more than 1 million Active and Reserve 
        soldiers that remains flexible, agile, ready and lethal across 
        the spectrum of conflict, with 18 divisions, approximately 65 
        Brigade Combat Teams, 21 Combat Aviation Brigades and 
        associated enablers;
         A Naval battle force of 285 ships--the same size force 
        that we have today--that will remain the most powerful and 
        flexible naval force on earth, able to prevail in any combat 
        situation, including the most stressing anti-access 
        environments. Our maritime forces will include 11 carriers, 9 
        large deck amphibious ships (although we should build to 10 
        such ships in fiscal year 2018), 82 guided missile cruisers and 
        destroyers, and 50 nuclear powered attack submarines;
         A Marine Corps that remains the Nation's expeditionary 
        force in readiness, forward deployed and engaged, with 31 
        infantry battalions, 10 artillery battalions and 20 tactical 
        air squadrons; and
         An Air Force that will continue to ensure air 
        dominance with 54 combat coded fighter squadrons and the 
        current bomber fleet, with the Joint Strike Fighter in 
        production and the next generation bomber in development. Our 
        Air Force will also maintain a fleet of 275 strategic 
        airlifters, 318 C-130s and a new aerial refueling tanker.

    5.  Protect and prioritize key investments, and the capacity to 
grow, adapt, and mobilize

    The force we are building will retain a decisive technological 
edge, leverage the lessons of recent conflicts and stay ahead of the 
most lethal and disruptive threats of the future.
    To that end, the fiscal year 2013 budget:

         Provides $11.9 billion for science and technology to 
        preserve our ability to leap ahead, including $2.1 billion for 
        basic research;
         Provides $10.4 billion (base and OCO) to sustain the 
        continued growth in Special Operations Forces;
         Provides $3.8 billion for Unmanned Air Systems by 
        funding trained personnel, infrastructure, and platforms to 
        sustain 65 USAF MQ-1/9 combat air patrols with a surge capacity 
        of 85 by fiscal year 2016. We slowed the buy of the Reaper 
        aircraft to allow us time to develop the personnel and training 
        infrastructure necessary to make full use of these important 
        aircraft. We also protected funding for the Army's unmanned air 
        system Gray Eagle;
         Invests $3.4 billion in cyber activities, with several 
        initiatives receiving increased funding relative to last year. 
        The scale of cyber threats is increasing and we need to be 
        prepared to defeat these threats, mitigate the potential 
        damage, and provide the President with options to respond, if 
        necessary. We are investing in full spectrum cyber operations 
        capabilities to address the threats we see today and in the 
        future. The Department is also pleased to see progress being 
        made in Congress regarding cyber legislation and is supportive 
        of the bipartisan legislation being introduced by Senators 
        Lieberman and Collins; and
         Provides $1.5 billion to fund the Department's 
        Chemical and Biological Defense program.

    At the same time, the strategic guidance recognizes the need to 
prioritize and distinguish urgent modernization needs from those that 
can be delayed--particularly in light of schedule and cost problems. 
Therefore this budget identifies about $75 billion in savings over the 
Future Years Defense Program (FYDP) resulting from canceled or 
restructured programs. Key modifications and associated savings over 
the FYDP include:

         $15.1 billion in savings from restructuring the Joint 
        Strike Fighter by delaying aircraft purchases to allow more 
        time for development and testing;
         $1.3 billion in savings from delaying development of 
        the Army's Ground Combat Vehicle due to contracting 
        difficulties;
         $2.2 billion in savings from curtailing the Joint Land 
        Attack Cruise Missile Defense Elevated Netted Sensor System due 
        to concerns about program cost and operational mobility;
         $4.3 billion in savings from delaying the next 
        generation of ballistic missile submarines by 2 years for 
        affordability and management reasons; and
         $0.8 billion in savings from delaying selected Army 
        aviation helicopter modernization for 3 to 5 years.

    We will also terminate selected programs, including:

         The Block 30 version of Global Hawk, which has grown 
        in cost to the point where it is no longer cost effective, 
        resulting in savings of $2.5 billion;
         Upgrades to High Mobility Multipurpose Wheeled 
        Vehicles; we will focus our modernization resources on the 
        Joint Light Tactical Vehicle, resulting in savings of $900 
        million; and
         The weather satellite program, because we can depend 
        on existing satellites, resulting in savings of $2.3 billion.

    We have also invested in a balanced portfolio of capabilities that 
will enable our force to remain agile, flexible and technologically 
advanced enough to meet any threat. We will ensure that we can 
mobilize, surge, and adapt our force to meet the requirements of an 
uncertain future. To that end, ground forces will retain the key 
enablers and know-how to conduct long-term stability operations, and 
the Army will retain more mid-grade officers and noncommissioned 
officers. These steps will ensure we have the structure and experienced 
leaders necessary should we need to re-grow the force quickly.
    Another key element is to maintain a capable and ready National 
Guard and Reserve. The Reserve component has demonstrated its readiness 
and importance over the past 10 years of war, and we must ensure that 
it remains available, trained, and equipped to serve in an operational 
capacity when necessary. We will maintain key combat support 
capabilities and ensure that combat service support capabilities like 
civil affairs are maintained at a high readiness level. We will also 
leverage the operational experience and institute a progressive 
readiness model in the National Guard and Reserves in order to sustain 
increased readiness prior to mobilization.
    In keeping with the emphasis on a highly capable reserve, this 
budget makes only relatively modest reductions in the ground-force 
Reserve components. Over the next 5 years, the Army Reserve will be 
sustained at 205,000 personnel, the Army National Guard will marginally 
decrease from 358,200 to 353,200 personnel, and the Marine Corps 
Reserve will sustain an end-strength level of 39,600 personnel. The 
Navy Reserve will decrease from 66,200 to 57,100 personnel over the 
next 5 years. Over the same span, the Air Force Reserve will decrease 
from 71,400 to 69,500 personnel, and the Air National Guard will 
decrease from 106,700 to 101,200 personnel.
    Another key part of preserving our ability to quickly adapt and 
mobilize is a strong and flexible industrial base. This budget 
recognizes that industry is our partner in the defense acquisition 
enterprise. A healthy industrial base means a profitable industrial 
base, but it also means a lean, efficient base that provides good value 
for the taxpayers' defense investments and increases in productivity 
over time.

              ENSURING QUALITY OF THE ALL-VOLUNTEER FORCE

    Now to the most fundamental element of our strategy and our 
decision-making process: our people. This budget recognizes that they, 
far more than any weapons system or technology, are the great strength 
of our U.S. military. All told, the fiscal year 2013 budget requests 
$135.1 billion for the pay and allowances of military personnel and 
$8.5 billion for family support programs vital to the well-being of 
servicemembers and their families.
    One of the guiding principles in our decisionmaking process was 
that we must keep faith with our troops and their families. For that 
reason, we were determined to protect family assistance programs, and 
we were able to sustain these important investments in this budget and 
continue efforts to make programs more responsive to the needs of 
troops and their families. Yet in order to build the force needed to 
defend the country under existing budget constraints, the growth in 
costs of military pay and benefits must be put on a sustainable course. 
This is an area of the budget that has grown by nearly 90 percent since 
2001, or about 30 percent above inflation--while end strength has only 
grown by 3 percent.
    This budget contains a roadmap to address the costs of military 
pay, health care, and retirement in ways that are fair, transparent, 
and consistent with our fundamental commitments to our people.
    On military pay, there are no pay cuts. We have created sufficient 
room to allow for full pay raises in 2013 and 2014 that keep pace with 
increases in the private sector. That means for 2013, we propose a pay 
increase of 1.7 percent for servicemembers. However, we will provide 
more limited pay raises beginning in 2015--giving troops and their 
families fair notice and lead time before changes take effect. Let me 
be clear: nobody's pay is cut in this budget nor will anyone's pay be 
cut in the future years of this proposal.
    This budget devotes $48.7 billion to health care costs--an amount 
that has more than doubled over the last decade. In order to continue 
to control the growth of these costs, we are recommending increases in 
health care fees, co-pays and deductibles to be phased in over 4 to 5 
years. None of the fee proposals in the budget would apply to Active-
Duty servicemembers, survivors of servicemembers who died on Active 
Duty, or retirees who retired due to disability. Most of the changes 
will not affect the families of Active-Duty servicemembers--there will 
be no increases in health care fees or deductibles for families of 
active-duty servicemembers. Those most affected will be retirees--with 
the greatest impact on working-age retirees under the age of 65 still 
likely to be employed in the civilian sector. Even with these changes, 
the costs borne by retirees will remain below levels in most comparable 
private sector plans--as they should be.
    Proposed changes include:

         Further increasing enrollment fees for retirees under 
        age 65 in the TRICARE Prime program, using a tiered approach 
        based on retired pay that requires senior-grade retirees with 
        higher retired pay to pay more and junior-grade retirees less;
         Establishing a new enrollment fee for the TRICARE 
        Standard/Extra programs and increasing deductibles;
         Establishing a new enrollment fee for the TRICARE-for-
        Life program for retirees 65 and older, also using a tiered 
        approach;
         Implementing additional increases in pharmacy co-pays 
        in a manner that increases incentives for use of mail order and 
        generic medicine; and
         Indexing fees, deductibles, pharmacy co-pays, and 
        catastrophic caps to reflect the growth in national health care 
        costs.

    We also feel that the fair way to address military retirement costs 
is to ask Congress to establish a commission with authority to conduct 
a comprehensive review of military retirement. But the President and 
the Department believe that the retirement benefits of those who 
currently serve should be protected by grandfathering their benefits. 
For those who serve today I will request there be no changes in 
retirement benefits.

                 FULLY SUPPORTING DEPLOYED WARFIGHTERS

    The costs of Overseas Contingency Operations (OCO) are funded 
separately from the base budget in a stand-alone fiscal year 2013 
request of $88.5 billion. That funding level represents a decrease of 
$26.6 billion from the fiscal year 2012 enacted level.
    This year's OCO request, which ensures that deployed troops have 
all the financial resources they need to conduct their challenging 
missions, primarily supports operations in Afghanistan but also 
requests relatively small sums for the Office of Security Cooperation 
in Iraq (OSC-I) and the repair or replacement of equipment redeploying 
from Iraq.
    Our fiscal year 2013 OCO request includes funding for added 
personnel pay and subsistence for deployed forces; communications; 
mobilizing Reserve component units; transportation; supplies; 
deployment and redeployment of all combat and support forces; force 
sustainment; and sustainment and replenishment of war reserve stocks.
    For fiscal year 2013 we request $5.7 billion in funding for the 
Afghan National Security Forces (ANSF). It is critically important that 
we maintain sufficient financial support to ANSF so that they can 
ultimately assume full security responsibility across Afghanistan.
    Much tough fighting lies ahead in Afghanistan, but the gradually 
improving situation permits the remainder of the U.S. surge force to 
redeploy by the end of September 2012, leaving 68,000 U.S. troops in 
Afghanistan at that time. The fiscal year 2013 OCO request assumes a 
continued level of about 68,000 troops in Afghanistan. While future 
changes in troop levels may be implemented during fiscal year 2013, 
those decisions will be based on advice from field commanders about 
conditions on the ground.
    In Iraq, OCO funding supports continued security assistance and 
cooperation with Iraqi Security Forces through the OSC-I in the areas 
of common interest, including counterterrorism, counter-proliferation, 
maritime security, and air defense. This funding is critical for the 
U.S. to strengthen its long-term partnership with Iraq. Additionally, 
to ensure that U.S. forces redeployed from Iraq are ready and equipped 
for future operations, this funding replenishes equipment and stocks 
for these forces.

                           A BALANCED PACKAGE

    Members of the committee: putting together this balanced package 
has been a difficult undertaking and, at the same time, an important 
opportunity to shape the force we need for the future. I believe we 
have developed a complete package, aligned to achieve our strategic 
aims. We have achieved buy-in from the Service Secretaries, the Service 
Chiefs, combatant commanders, and the senior enlisted leaders of the 
Department.
    Our strategy review preceded and guided the budgeting process. This 
strategy-first approach enabled the Department to balance strategic 
priorities, place individual budget decisions within a broader 
strategic context, and ultimately, to guide us in making some tough 
choices.
    As a result, the fiscal year 2013 request is a carefully balanced 
package that keeps America safe and sustains U.S. leadership abroad. As 
you take a look at the individual parts of this plan, I encourage you 
to do what the Department has done: to bear in mind the strategic 
trade-offs inherent in any particular budget decision, and the need to 
balance competing strategic objectives in a resource-constrained 
environment.
    Each decision needs to be judged on the basis of the overall 
strategy that it supports, recognizing that unwinding any one piece 
puts our whole package in jeopardy. The bottom line is that I believe 
there is little room for modification to preserve the force and 
capabilities we believe are needed to protect the country and fulfill 
assigned missions.
    Ultimately that means we will need your support and partnership to 
implement this vision of the future military. I understand how tough 
these issues can be, and that this is the beginning and not the end of 
this process. Make no mistake: the savings we are proposing will impact 
all 50 States. But it was this Congress that mandated, on a bi-partisan 
basis, that we reduce the defense budget, and we need your partnership 
to do this in a manner that preserves the strongest military in the 
world. This will be a test of whether reducing the deficit is about 
talk or action.
    My hope is that now that we see the sacrifice involved in reducing 
the defense budget by almost half a trillion dollars, Congress will be 
convinced of its important responsibility to make sure that we avoid 
sequestration. That would be a doubling of the cuts, another roughly 
$500 billion in additional cuts that would be required to take place 
through a meat-axe approach, and that we are convinced would hollow out 
the force and inflict severe damage on our National defense.
    So the leadership of this department, both military and civilian, 
is united behind the strategy that we have presented, and this budget. 
I look forward to working closely with you in the months ahead to do 
what the American people expect of their leaders: be fiscally 
responsible in developing the force for the future--a force that can 
defend the country, a forced that supports our men and women in 
uniform, and a force that is, and always will be, the strongest 
military in the world.

    Chairman Levin. Thank you, Secretary Panetta.
    General Dempsey.

STATEMENT OF GEN MARTIN E. DEMPSEY, USA, CHAIRMAN, JOINT CHIEFS 
                            OF STAFF

    General Dempsey. Thank you, Chairman Levin, Senator McCain, 
distinguished members of the committee. Thank you, as always, 
for this opportunity to discuss the President's defense budget 
proposal for fiscal year 2013. This budget represents a 
responsible investment in our Nation's security. At its core, 
it is an investment in people, the sons and daughters of 
America who serve this Nation in our military. Allow me to open 
with a few words about them and what they have accomplished.
    The last 10 years of war have been among the most 
challenging in our Nation's military history. Through it all, 
the joint force has persevered and it has prevailed. Our 
families have stood with us deployment after deployment after 
deployment and so have you. Together, we have fulfilled our 
solemn vow to protect and defend America, her citizens, and her 
interests.
    As I sit with you today, our service men and women remain 
globally engaged. They are deterring aggression, developing 
partners, delivering aid, and defeating our enemies. They stand 
ready, strong, and swift in every domain, every day.
    I had the privilege to be with a few of them while 
traveling to Afghanistan and Egypt this past week. As always, I 
witnessed extraordinary courage and skill--in the young 
soldiers just off patrol in the deep snows of the Hindu Kush, 
in the men and women of the NATO training mission managing the 
development of the Afghan National Security Forces (ANSF), and 
the brave and vigilant Marine Corps security detachment in our 
embassy in Cairo, and in the superb junior airmen who flew us 
to the right place at the right time.
    They exemplify a professional military with a reliable 
record of performance. In just the past year, for example, we 
further crippled al Qaeda. We helped protect the Libyan people 
from near-certain slaughter, while affirming NATO's important 
role beyond the borders of Europe. We brought to a close more 
than 20 years of military operations in and over Iraq and, like 
we did in Iraq, we are steadily transitioning responsibility 
for security onto Afghan shoulders. We also helped Japan 
recover from a perfect storm of tragedy and destruction.
    Of course, these were just the most visible 
accomplishments. Behind the scenes and beneath the surface, we 
defended against cyber threats, sustained our nuclear deterrent 
posture, and worked with allies and partners to build capacity 
and to prevent conflict across the globe. We continue to 
provide this Nation with a wide range of options for dealing 
with the security challenges that confront us.
    An increasingly competitive and uncertain security 
environment demands that we be alert, responsive, adaptive, and 
dominant. This budget helps us do that. It's informed by a real 
strategy that makes real choices. It maintains our military's 
decisive edge and our global leadership. Moreover, it ensures 
we keep faith with the true source of our military strength, 
and that is our people.
    With this in mind, allow me to add a few additional 
comments to those of the Secretary. First, this budget should 
be considered holistically. I caution against viewing its 
programs in isolation because it represents a comprehensive and 
carefully devised set of decisions. It achieves balance among 
force structure, modernization, pay, and benefits. Changes that 
are not informed by this context risk upending the balance and 
compromising the force.
    Second, this budget represents a way point, not an end 
point, in the development of the joint force we will need for 
2020 and beyond. It puts us on a path to restore versatility at 
an affordable cost. Specialized capabilities, once on the 
margins, become more central, even while we retain conventional 
overmatch. It builds a global and networked joint force that is 
ably led and always ready.
    Third, this budget honors commitments made to our military 
families. It does keep faith with them. There are no freezes or 
reductions in pay. There's no lessening in the quality of 
health care received by our Active-Duty servicemembers and 
medically wounded veterans.
    That said, we cannot ignore the increasing costs of pay and 
benefits. To manage costs, we need pragmatic reform. All of 
this can be done in a way that preserves our ability to recruit 
and retain America's talented youth.
    Finally, all strategies and the budgets to resource them 
carry risk. This one is no different. In my judgment, the risk 
lies not in what we can do, but in how much we can do and how 
often we can do it. This budget helps buy down that risk by 
investing in our people and in the joint capabilities they most 
need.
    To close, thank you. Thank you for keeping our military 
strong. Thank you for taking care of our military families, for 
supporting those who serve and who have served and who will 
serve. I know you share my pride in them. I look forward to 
your questions.
    [The prepared statement of General Dempsey follows:]

            Prepared Statement by GEN Martin E. Dempsey, USA

    Chairman Levin, Senator McCain, and distinguished members of the 
committee, it is my privilege to update you on the state of the United 
States' Armed Forces and to comment on the President's budget proposal 
for fiscal year 2013. The context for this year's posture testimony is 
unique. Our military has transitioned many of our major operations, and 
we have a new Defense Strategic Guidance that sets priorities. We are 
also facing real fiscal constraints and an increasingly competitive 
security environment. The President's proposed fiscal year 2013 defense 
budget accounts for these realities. It provides a responsible 
investment in our Nation's current and future security.

                       GLOBAL MILITARY OPERATIONS

    Today our Armed Forces stand strong. We are proud of the 
performance and accomplishments of our men and women in uniform over 
the past year. They have carried out far-ranging missions with much 
success. They have defended our Homeland, deterred aggression, and kept 
our Nation immune from coercion. Despite a decade of continuous combat 
operations, our troops and their families remain resilient.
    U.S. Forces-Iraq recently completed its mission. More than 20 years 
of military operations in and over Iraq came to conclusion. The 
security of Iraq is now the responsibility of the Iraqi people, 
leaders, and security forces. We have transitioned to a normal 
military-to-military relationship. Diplomats and civilian advisors are 
now the face of the United States in Baghdad. To be sure, Iraq still 
faces challenges to the country's future. But as we look to that 
future, we will continue to build ties across Iraq to help the people 
and institutions capitalize on the freedom and opportunity we helped 
secure.
    In Afghanistan, we are seeing the benefits of the surge in combat 
forces begun in early 2010. The security situation is improving. By 
nearly every measure, violence has declined. The Taliban are less 
capable, physically and psychologically, than they were 2 years ago. 
Afghan and International Security Assistance Forces (ISAF) have 
maintained persistent pressure on insurgent groups and have wrested the 
initiative and momentum from them in much of the country. But these 
groups remain determined, and they continue to threaten the population 
and the government. Combat will continue.
    Key to long-term stability in Afghanistan is the development of the 
Afghan National Security Forces (ANSF). In 2011, the Afghan National 
Army grew by 18 percent. The Afghan National Police grew by 20 percent. 
These forces, combined with the nascent but ever more capable Afghan 
Local Police, are steadily assuming responsibility for Afghan security. 
The process of transition began in July, and today, after nearly 
completing the second of five ``tranches'' of transition, Afghan 
security forces are now responsible for the day-to-day security of 
almost half of Afghanistan's population. Developing the ANSF, degrading 
insurgent capabilities, and turning over responsibilities have allowed 
us to begin a measured draw down of our forces in Afghanistan. We have 
withdrawn over 10,000 of the surge troops and will withdraw the 
remaining 23,000 by the end of this summer. By that time, we expect the 
ANSF to achieve their initial operating capability and to be 
responsible for securing nearly two-thirds of the Afghan population. 
They are on track to meet the goal of assuming full lead for security 
by the end of 2014.
    Sustaining progress in Afghanistan requires dealing with some 
significant challenges. The ANSF and other national and local 
government institutions require further development. Corruption remains 
pervasive and continues to undermine the capacity and legitimacy of 
government at all levels. Insurgent sanctuaries in Pakistan remain 
largely uncontested. Ultimately, much more work remains to achieve the 
political solutions necessary to end the fighting in Afghanistan.
    Our military has been vigilant and active in other areas and with 
other missions to keep America and our partners safe. We decapitated al 
Qaeda and pushed this terrorist network decidedly closer to strategic 
defeat through the successful special forces operation targeting Osama 
bin Laden. We supported NATO in its U.N. mission to protect civilians 
in Libya allowing them to end Muammar Qaddafi's tyrannical rule. We 
responded quickly to the devastating earthquakes and tsunami that 
struck Japan, saving lives and acting on our commitment to this key 
ally. We fended off cyber intrusions against our military's computer 
networks and systems. We helped counter aggression and provocation from 
Iran and North Korea.

                          A TIME OF TRANSITION

    While our military continues to capably and faithfully perform this 
wide array of missions, we are currently in the midst of several major 
transitions. Any one of them alone would be difficult. Taken together, 
all three will test our people and our leadership at every level.
    First, we are transitioning from a war-time footing to a readiness 
footing. With the end of our operations in Iraq and Libya and the 
ongoing transition of security responsibilities in Afghanistan, our 
troops are steadily returning home. From a peak of more than 200,000 
troops deployed to combat 2 years ago, we have fewer than 90,000 today. 
This shift cannot lead us to lose focus on ongoing combat operations. 
But, it does mean we must give attention to restoring our readiness for 
full spectrum operations. We need to reset and refit, and in many cases 
replace, our war-torn equipment. We need to modernize systems 
intentionally passed over for periodic upgrading during the last 
decade. We must retrain our personnel on skills used less often over 
the last decade. We will have to do all of this in the context of a 
security environment that is different than the one we faced 10 years 
ago. We cannot simply return to the old way of doing things, and we 
cannot forget the lessons we have learned. As described in the 
Department's recently released strategic guidance, we should adjust our 
missions, our posture, and our organizational structure in order to 
adapt to ever evolving challenges and threats.
    Second, our military is transitioning to an era of more constrained 
resources. The days of growing budgets are gone, and as an institution 
we must become more efficient and transparent. We must carefully and 
deliberately evaluate trade-offs in force structure, acquisition, and 
compensation. We must make the hard choices, focus on our priorities, 
and overcome bureaucratic and parochial tendencies. In sum, we must 
recommit ourselves to being judicious stewards of the Nation's 
resources.
    Third, tens of thousands of our veterans--and their families--are 
facing the transition to civilian life. Many enlistments are coming to 
their normal conclusion, but we are also becoming a leaner force. As we 
do this, we must help our veterans find education opportunities, 
meaningful employment, and first-class health care. We must pay 
particular attention to those bearing the deepest wounds of war, 
including the unseen wounds. We must help those who have given so much 
cope with--and where possible, avoid--significant long-term challenges 
such as substance abuse, divorce, depression, domestic violence, and 
homelessness. Addressing these issues is not the exclusive 
responsibility of the Services or veterans organizations. How we 
respond, as a military community and as a Nation, conveys our 
commitment to our veterans and their families. It will also directly 
affect our ability to recruit and retain our Nation's best in the 
future.
    I have outlined several priorities for the Joint Force to help us 
anticipate and navigate the challenges these transitions present. We 
will maintain focus on achieving our national objectives in our current 
conflicts. We will begin creating the military of our future--the Joint 
Force of 2020. We will also confront what being in the Profession of 
Arms means in the aftermath of war. Above all else, we will keep faith 
with our military family. In doing all these things, we will provide an 
effective defense for the country and strengthen the military's 
covenant of trust with the American people.

                        A RESPONSIBLE INVESTMENT

    The President's fiscal year 2013 Department of Defense base budget 
of $525 billion and overseas contingency operations (OCO) budget of $88 
billion represent a responsible investment in our Nation's security. 
The decisions underlying them flow from the strategic guidance the 
Department of Defense issued last month. This guidance set priorities 
for assessing our programs, force structure, and spending in the 
context of a persistently dangerous and increasingly competitive 
security environment. With those priorities in mind, the budget 
proposal strikes an appropriate and necessary balance between 
succeeding in today's conflicts and preparing for tomorrow's 
challenges. It accounts for real risks and real fiscal constraints, 
marrying versatility with affordability.
    The tradeoffs were complex, and the choices were tough. They will 
produce $259 billion in savings over the next 5 years and a total of 
$487 billion over the next 10 years. They will not lead to a military 
in decline. Rather, this budget will maintain our military's decisive 
edge and help sustain America's global leadership. It will preserve our 
ability to protect our vital national interests and to execute our most 
important missions. Moreover, it will keep faith with the true source 
of our military's strength--our people.
    The merits of this budget should be viewed in the context of an 
evolving global security environment and a longer term plan for the 
Joint Force. Coming on the heels of a decade of war, this budget begins 
the process of rebalancing our force structure and our modernization 
efforts and aligns them with our strategy. Essentially, we are 
developing today the Joint Force the Nation will need in 2020, and our 
plans to build this force will unfold over the course of several budget 
cycles. This budget is the first step--a down payment. If we fail to 
step off properly, our recovery will be difficult, and our ability to 
provide the Nation with the broad and decisive military options will 
diminish.
    It is worth addressing head-on some of the major changes we are 
planning as we adapt to changing global opportunities and challenges. 
Just as this budget must be viewed in the context of a broader plan, 
these changes must be viewed in the context of our evolving force. They 
represent a comprehensive, carefully devised package of decisions that 
strikes a fine balance. They are not, and cannot be viewed as, 
individual, isolated measures. In all cases, needed capabilities are 
preserved or, when necessary, generated, through one or several 
programs.
    This budget will make critical investments in our future force. 
Certain specialized capabilities, once on the margins, will move to the 
forefront. Networked special operations, cyber, and Intelligence, 
Surveillance, and Reconnaissance will become increasingly central. The 
results will be a Joint Force that is global and networked, that is 
versatile and innovative, and that is ably led and always ready. This 
force will be prepared to secure global access and to respond to global 
contingencies. We will be a military that is able to do more than one 
thing at a time--to win any conflict, anywhere.
    Particular attention will be placed on our anti-access/area-denial 
capabilities. The proliferation of technology threatens our unfettered 
access to the global commons--access that is fundamental to global 
commerce and security. As we rebalance our global posture to emphasize 
the Asia-Pacific region and the Middle East, we are adjusting our 
operating constructs and the systems we employ. This includes divesting 
some outdated ships, planes, and equipment as well as investing in new 
programs. We will also commit to our partnerships and to helping 
develop our partners' security capabilities.
    Similarly, this force will place added focus on our military's 
cyber defense capabilities. The threats to the average American's day-
to-day life and our military capabilities that emanate from cyber space 
have evolved faster than many could have imagined. We must adapt to 
these threats with similar adroitness and capacity. This budget allows 
for us to expand many of our nascent cyber capabilities and to better 
protect our defense networks. Similarly, bipartisan cyber legislation 
being introduced in Congress is a good first step in developing 
protection for our Nation's critical infrastructure. With much work to 
be done, we look forward to working with agencies across the government 
and with our allies and partners to confront this broad range of 
emerging threats.
    While some additional capabilities for our Joint Force will be 
needed, others will not. The Joint Force of the future will be leaner 
than today's. We will no longer be sized for large scale, prolonged 
stability operations. As a result, we expect to draw down the Army from 
562,000 to 490,000 by the end of fiscal year 2017, and the Marine Corps 
from over 202,100 to 182,100 by the end of fiscal year 2016. Some of 
this reduction was planned several years ago when Congress authorized 
temporary end strength increases to support our operations in Iraq and 
Afghanistan.
    But in making ourselves leaner, we will not make the mistakes of 
previous draw downs. We will not retain organizational structures that 
lack the people, training, and equipment necessary to perform the tasks 
we expect from them. We will be realistic about the organizations we 
keep, while also maintaining our ability to reconstitute and mobilize 
forces. We will still be able to respond to any large scale 
mobilization against us. To do this, the Joint Force will retain 
capacity in our Reserve components and our industrial base should they 
be required to surge. We will maintain the Army Reserve end strength at 
205,000 and reduce the Army National Guard by only 5,000 down to 
353,200. The Marine Corps Reserves will be retain their current 
strength.
    Another major concern among our troops, their families, retirees, 
and with the American public is military compensation and benefits. I 
want to make it clear that cuts in spending will not fall on the 
shoulders of our troops. There are no proposed freezes or reductions in 
pay. There is no change to the high quality health care our Active-Duty 
members and medically retired Wounded Warriors receive. But we cannot 
ignore some hard realities. Pay and benefits are now roughly one third 
of defense spending. Pay will need to grow more slowly in the future. 
We are also proposing a commission to review of military retirement. To 
control the growth of healthcare costs, we are also recommending 
changes to TRICARE. These adjustments include modest, new or phased-in 
increases in health care fees, co-pays, and deductibles largely for our 
retirees--but not our Active-Duty servicemembers. Even with these 
increases, TRICARE will remain one of the finest medical benefits in 
the country.
    Overall, these proposed changes value both the demands of military 
service and our duty to be good stewards of the Nation's fiscal 
resources. They will sustain the recruitment, retention, and readiness 
of the talented personnel we need. Most importantly, they will sustain 
our enduring commitment to our troops and their families--we must never 
break faith with them. I want to note, however, that keeping faith with 
our service men and women is not just about pay and benefits. It is 
also about ensuring we remain the best trained, best equipped, and best 
led force on the planet.
    The last, and perhaps most critical issue, is risk. This budget and 
the strategy it supports allow us to apply decisive force 
simultaneously across a range of missions and activities around the 
globe. They mitigate many risks, but they accept some as well, as all 
strategies must. The primary risks lie not in what we can do, but in 
how much we can do and how fast we can do it. The risks are in time and 
capacity. We have fully considered these risks, and I am convinced we 
can properly manage them by ensuring we keep the force in balance, 
investing in new capabilities, and preserving a strong Reserve 
component. We can also compensate through other means, such as 
effective diplomacy and strong partnerships. I believe that these risks 
are acceptable and that we will face greater risk if we do not change 
from our previous approaches.

                               CONCLUSION

    In the upcoming year, our Armed Forces will build on the past 
year's achievements, adapt to emergent challenges, seize new 
opportunities, and continue to provide for our common defense. We will 
continue to face threats to our security, whether from aggressive 
states or violent terrorist organizations. But our military will be 
ready for them, and our response will be a source of pride for the 
American people. In all of our efforts, we will aim to maintain 
strength of character and professionalism--at the individual and 
institutional level--that is beyond reproach.
    As we embark on this critical new course, we will need Congress' 
support to help us build the Joint Force the Nation needs and to 
strengthen our relationship with the American people. As I stated 
before, this budget and the choices that underlie it should be 
understood in the context of the comprehensive, carefully balanced, 
multi-year plan they support. These choices were tough. Some decisions 
will be controversial. But they call for an investment that allows our 
force to take the steps necessary to ensure our Nation's defense for 
years to come. We ask Congress to support this budget and, more 
importantly, to avoid the deep and indiscriminant cuts that 
sequestration would impose.
    I thank this committee, and the entire Congress, for all you have 
done to support our men and women under arms and their families. Your 
resolute attention to their needs and to our security has been both 
invaluable and greatly appreciated.

    Chairman Levin. Thank you so much, General.
    Mr. Hale, do you have any opening comments to make?
    Mr. Hale. No, sir, thank you.
    Chairman Levin. Okay, let's have a 7-minute round. I doubt 
that we'll get to a second round, but if there is any time 
after our first round, because I expect a good turnout, we will 
try a very short second round.
    General Dempsey, let me start with you. Do you and each of 
the Joint Chiefs of Staff fully support the new Defense 
Strategic Guidance?
    General Dempsey. Yes, Senator, we do.
    Chairman Levin. Do you and each of the Joint Chiefs of 
Staff fully support the President's fiscal year 2013 budget 
request?
    General Dempsey. Yes, Senator, we do.
    Chairman Levin. Now, can you tell us why?
    General Dempsey. Because we addressed it in the order in 
which you just presented it. Faced with the reality of a new 
fiscal environment, we took a look at our strategy and we made 
what we thought were important adjustments to it, not just 
based on the new fiscal reality, but also based on the lessons 
of 10 years of war and where we thought the security 
environment would take us in the out-years.
    I'm an advocate of looking beyond this particular budget 
submission, out to 2020, and we did that, with not only the 
Service Chiefs, but also with the combatant commanders. Then, 
having decided on what adjustments to make to our strategy, we 
built a budget to support it. So for that reason, we support 
it.
    Chairman Levin. General, you made reference to the risks 
that are increased when there are budget reductions. Would you 
expand on that, as you did in your prepared testimony, as to 
whether those risks are acceptable and why?
    General Dempsey. As I said, Senator, every strategy incurs 
risks because there's never--at least I've never in my 38 years 
experienced any strategy that was completely unconstrained. So 
I think it's important to note that there's always risk in 
every strategy and in every budget to support it.
    There's two kinds of risk we deal with. One is risk to our 
missions: Can we accomplish the tasks given to us by the 
national command authority for freedom of access, to defeat our 
enemies, to deter aggression? Then the other is risk to force, 
which gets at a phrase that would be familiar to you in terms 
of operations tempo: How much can we ask of the All-Volunteer 
Force in terms of its deployments and redeployments and 
redeployments?
    In both cases, we assess the risk to mission and the risk 
to force. We have found that there are portions of our 
capabilities that are more stressed. Again, that's not anything 
new to us. What we've been doing now for the past month and 
will continue to do is to look for ways to mitigate those 
risks.
    But we're very confident, because we've worked this 
collaboratively, that we can mitigate risks by adapting lessons 
from the last 10 years of war, new emerging capabilities. I've 
mentioned two notable ones to you in the past, special 
operating forces and cyber. The integration of all those and 
the interdependence of the joint force is what allows us to 
mitigate the risk to our operations plans and to do so at a 
sustainable rate.
    But there are risks, because there is always uncertainty in 
the future.
    Chairman Levin. Now to both of you: The OCO funding level 
of $88.4 billion is based on the assumption that there will be 
68,000 U.S. troops in Afghanistan for all of fiscal year 2013. 
You reiterated that, Secretary Panetta, in your opening 
statement. Now, that assumes that there will be no further 
drawdown of U.S. forces from Afghanistan during the 12 months 
after the 33,000 U.S. surge forces are withdrawn by the summer 
of this year. That's what the budget assumes.
    But last June, when the President announced the plans for 
the drawdown of the U.S. surge forces, he also said that after 
reduction of those surge forces, ``Our troops will continue to 
come home at a steady pace, as ASF move into the lead.''
    First, General Dempsey, are we on track to complete the 
withdrawal of the 33,000 U.S. surge force this summer?
    General Dempsey. Yes, sir, we are. If I could just 
elaborate a bit, General Allen's already reduced the force by 
10,000. I don't yet have his plan for the reduction of the 
additional 23,000, but in a visit with him last week he assured 
me that he would have that plan to us by about the 1st of 
April.
    Chairman Levin. Do you continue to support the President's 
decision to withdraw the U.S. surge force by the end of the 
summer?
    General Dempsey. I do and will continue to do so, unless 
General Allen comes back in to me and tells me we're incurring 
too much risk. But my own personal observation at this point is 
yes.
    Chairman Levin. Secretary Panetta, how do you square the 
fiscal year 2013 OCO funding assumption that the troop level of 
68,000 will remain in Afghanistan through fiscal year 2013 with 
the President's statement that U.S. troops will continue to 
draw down after this summer ``at a steady pace as ASF assume 
the lead for security''?
    Secretary Panetta. Mr. Chairman, as the President stated, 
we'll continue that process. But at this point, no decisions 
have been made as to how that will take place, because we're 
focusing, obviously, on the drawdown of the surge. The number 
that we have there is, frankly, a target number in order to 
support the OCO funding that we would need for the future.
    Chairman Levin. Will the decision be made as to when 
reductions will be made from the 68,000 level--and that level, 
again, is going to be reached by the end of this summer. When 
will that decision be made on further reductions after the 
68,000 level is achieved?
    Secretary Panetta. I think the target right now is 
obviously to focus on the reduction of the surge. As General 
Dempsey pointed out, we haven't received the plan from General 
Allen as to how we'll complete the reduction of 23,000. Once 
we've done that and we've learned the lessons from that, I 
think then we would apply it to deciding the next steps with 
regards to further reductions.
    Chairman Levin. That will be done by the end of the summer 
as currently contemplated?
    Secretary Panetta. Right.
    Chairman Levin. So when would the next decision be made on 
reductions beyond the surge reductions?
    Secretary Panetta. I suspect we'll begin that discussion 
process in the latter part of this year.
    Chairman Levin. Begin it or make a decision by the end of 
the year?
    Secretary Panetta. I assume we'll begin it, and if we're 
fortunate, we'll be able to make that decision. But the first 
thing is to discuss the lessons that we've learned and what we 
should apply and what level of force are we going to need for 
2013.
    Chairman Levin. Do you assume there will be further 
reductions beyond the 68,000 during fiscal year 2013?
    Secretary Panetta. Again, no decisions have been made.
    Chairman Levin. You assume that there will be.
    Secretary Panetta. I assume that, in line with what the 
President said, we'll continue to make transitions downward.
    Chairman Levin. Would there be savings then from any 
additional reductions below 68,000?
    Secretary Panetta. Will there be savings? Of course. 
Whatever we decide to do, it will achieve some savings.
    Chairman Levin. Senator McCain.
    Senator McCain. I thank the witnesses again.
    General Dempsey, were you asked by the administration to 
perform a risk assessment to our national security interests as 
a result of these cuts?
    General Dempsey. I have been asked and it's also codified 
in the National Defense Authorization Act (NDAA) that I perform 
a Chairman's risk assessment annually.
    Senator McCain. Is that forthcoming?
    General Dempsey. I have completed it. DOD has it, and they 
are required to submit with it a risk mitigation strategy.
    Senator McCain. So we have not received your risk 
assessment yet?
    General Dempsey. You have not, sir.
    Senator McCain. I want to return just for a second. 
Secretary Panetta, you again talk about the cataclysmic effects 
of sequestration. We are in total agreement. I hope in your 
meetings with the President that you will urge him to sit down 
with us and see if there are ways that we can avoid the effects 
of this.
    Have you made any plans yet to comply with the effects of 
sequestration in 2013?
    General Dempsey. No, we haven't.
    Senator McCain. In your view, Secretary Panetta, is Iraq a 
stable and self-reliant nation?
    Secretary Panetta. Iraq is a nation that has the capability 
to govern and secure itself. Does it continue to face risks in 
that process? Does it continue to face challenges in that 
process? It certainly does.
    Senator McCain. Do we still have U.S. military forces 
operating in Iraq?
    Secretary Panetta. We have a small number that are assigned 
there, approximately, I believe the number we're looking at is 
about 600 military and civilians that are assigned to the 
security operations there.
    Senator McCain. General Dempsey, I know you just returned 
from Egypt. All Americans are concerned about the events there 
concerning Americans who have had to move to the U.S. embassy 
in order to preserve their safety and security. We realize the 
absolute criticality of our relationship with Egypt and the 
role that Egypt plays in the Middle East. What advice, what 
recommendation, do you have as to how the U.S. Government 
should be handling this very, very tough situation?
    General Dempsey. Senator, I had planned this trip to Egypt 
before the nongovernmental organization crisis, and it is a 
crisis, occurred. So when I met with Field Marshal Tentawi, 
General Annan, and General Mwafi, the key leaders with whom we 
interact and have interacted for decades, I explained to them 
that I was coming there to talk to them about our military-to-
military relationship, about Syria, about Lebanon, about the 
Sinai, but that I couldn't do that because we had this issue 
that was an impediment to that. I spent about a day and a half 
in conversation with them, encouraging them in the strongest 
possible terms to resolve this so that our military-to-military 
relationship could continue.
    Senator McCain. The result of those conversations?
    General Dempsey. I am convinced that potentially they were 
underestimating the impact of this on our relationship. When I 
left there, there was no doubt that they understood the 
seriousness of it.
    But I'd like to add, Senator, I know of the amendment 
that's being proposed to break our military relationship and 
cut off all aid, and I think my personal military judgment is 
that would be a mistake.
    Senator McCain. I want to assure you that we are discussing 
that and ways to certainly avoid that action at this time. But 
I hope you explain to the rulers, who are the military and 
leftovers from the Mubarak regime, that this situation is 
really not acceptable to the American people. Our relationship 
with Egypt is vital, but the fact is that the welfare of our 
citizens is even more vital.
    General Dempsey. We completely agree, sir, and I did make 
that clear.
    Senator McCain. General, would you think it's a good idea 
to trade five high-ranking Taliban as a, ``confidence-building 
measure'' to move the negotiations with the Taliban forward?
    General Dempsey. I have some issues with the 
reconciliation, but generally speaking I'm in support of 
reconciliation. But I am concerned about our ability to 
maintain vigilance and control of those individuals. So I am 
supportive of reconciliation.
    Senator McCain. I don't know of any living person who 
isn't.
    General Dempsey. I join that group.
    Senator McCain. Does that mean that you, at this particular 
moment in time, would support the trade or the release to 
Qatar, understanding that under very loose security conditions, 
would be advisable at this time?
    General Dempsey. Sir, the Secretary has some certification 
requirements by law, and I'm supportive of the Secretary of 
Defense's approach to that and supportive of his effort to 
ensure we have those certifications.
    Senator McCain. Again I ask, with respect, for your opinion 
as to whether you think it's a good idea or not at this time?
    General Dempsey. Yes, I do.
    Senator McCain. Do you agree that it's a good idea, 
Secretary Panetta?
    Secretary Panetta. Absolutely no decisions have been made 
along this line. I can tell you this, that, based on the law 
that's passed by Congress, I have to certify that anybody who 
leaves Guantanamo cannot wind up going back to the enemy, and I 
have to be convinced that those kinds of protections are in 
place before I certify that anything like that happens. I have 
made very clear that unless I am convinced that in this kind of 
situation those steps are taken to ensure that these 
individuals do not wind up going back to the battlefield, I'm 
not going to certify that kind of transfer.
    Senator McCain. Even though approximately a quarter of 
those who have been released in the past have gone back into 
the fight.
    What is the progress of our negotiations with the Afghan 
Government, President Karzai, on a long-term security 
agreement, which we failed to reach in Iraq? What are the 
prospects of that and what are you expecting, and can you give 
us a timeframe?
    Secretary Panetta. We are continuing to work with President 
Karzai and our counterparts in Afghanistan to try to develop 
and agree on a strategic agreement. There are two areas that we 
still have difficulties with, one of which involves the 
transfer of detention facilities. The other involves night-time 
raids. We continue to try to see if we can work out some kind 
of compromise on those issues.
    As far as the basic agreement, I think most of the 
elements, frankly, are in place. So I'm confident that, 
hopefully within the next few weeks, we'll be able to reach 
some kind of agreement.
    Senator McCain. I thank you. I thank the witnesses. I would 
just add a comment. General, when the enemy thinks you're 
leaving, it's very unlikely in my study of history that they're 
ready to make an agreement, and they certainly have that 
impression throughout that part of the world.
    I thank you, Mr. Chairman.
    Chairman Levin. Thank you, Senator McCain.
    Senator Lieberman.
    Senator Lieberman. Thanks, Mr. Chairman.
    Mr. Secretary, General Dempsey, Mr. Hale, good morning and 
thank you for your service and your testimony.
    As I look at the budget that's been submitted and I hear 
your testimony today, it seems to me that in this budget the 
U.S. military and our national security are being asked to pay 
the price for the fiscal irresponsibility of our government 
over the last decade. The budget that you've submitted to us 
certainly in its bottom line is one that you were mandated to 
submit by the BCA that Congress adopted and the President 
signed last summer. But I must say as one member of this 
committee, one Member of the U.S. Senate, that as I look at 
what you have had to do to meet the bottom line requirements of 
the BCA, it represents, in my opinion, unacceptable risk to our 
national security, without proportionate changes in the threats 
that we face around the world.
    This budget for the coming fiscal year would represent an 8 
percent reduction in spending beneath what was planned in the 
5-year defense plan for the coming year, a 9 percent reduction 
for the 5 years. It, as we've discussed, would require the 
reduction of our Army and Marine Corps by 125,000 personnel. It 
would call for the termination or delay of several, in my 
opinion, critical defense equipment systems.
    It's hard for me to conclude that there's any reason you 
would make such a recommendation other than the fact that 
you're required by law to do it. In other words, what drives 
this presentation is the budgetary pressure, as I said, the 
accumulated weight of the fiscal irresponsibility of our 
government over the last decade, and the specific requirement 
of the BCA, not the threat environment in the world.
    Mr. Secretary, as you said, and I agree, this morning: 
``The United States still faces a complex array of security 
challenges across the globe. We're still a nation at war in 
Afghanistan. We still face threats from terrorism. There's 
dangerous proliferation of lethal weapons and materials. The 
behavior of Iran and North Korea threaten global stability. 
There's continuing turmoil and unrest in the Middle East. 
Rising powers in Asia are testing international relationships 
and there are growing concerns about cyber intrusions and 
attacks,'' said by you, Mr. Secretary, this morning.
    I agree with all that, and I think in that context my 
conclusion, I state again, is that there's always risk, but 
that the risk involved in this budget is unacceptable. 
Therefore, I believe that we have to have the political courage 
both in facing the budget for fiscal year 2013 and the threat 
of sequestration to work together across party lines and with 
the President and the administration to reduce the impact of 
these proposed cuts. We have to do it responsibly.
    We either have to find savings elsewhere or we have to have 
the political guts to raise revenues to pay for an adequate 
defense to, in my opinion, fulfill our constitutional 
responsibility to provide for the common defense.
    You have complied with the BCA in making this budget 
recommendation to us, but in my opinion, if we accept it, we're 
not fulfilling our responsibility under the Constitution to 
provide for the common defense. So I hope we can work together 
to essentially alter what we required you to do in the BCA and 
to do it in a fiscally responsible way.
    There is risk here and I appreciate, General Dempsey, that 
in response to Senator McCain's question, you said that you'd 
be preparing a Chairman's risk assessment for us. The Defense 
Strategic Guidance that DOD did, issued in January, really is 
the equivalent of a follow-on to a Quadrennial Defense Review 
(QDR). In the QDR, of course, we require a Chairman's risk 
assessment.
    I hope, Mr. Chairman, Senator McCain, that we don't act on 
this request and that the Appropriations Committees don't act 
on a budget request for DOD, before we get your risk 
assessment, because I think it's that important.
    But for now, since, Mr. Secretary, you said quite directly, 
with the directness that we've come to expect of you, that 
there is risk here, inevitably. You can't cut this much money 
out of the defense budget without risk. So I wanted to ask you 
and General Dempsey in advance of the formal report, what are 
the two or three top risks that you are concerned about that 
this budget places on our military and on our national 
strategy?
    Secretary Panetta. Senator, first of all, I'm abiding by 
the law, the law that was passed by Congress that required the 
reductions that we've proposed. I think, just to your comment, 
we have tried to step up to the plate and do our duty here. I 
think in weighing how you address this issue, you also have to 
take into consideration the national security threat that comes 
from the huge deficits and the huge debt that we're running. 
We're running a debt now that's comparable to our gross 
domestic product (GDP). At some point, Congress and the 
President have to address that larger issue. What I'm doing 
here is basically doing my part, as dictated by Congress.
    With regards to the threats, as I said, you can't take a 
half a trillion dollars out of the defense budget and not incur 
some risks. The main concerns that I see are that we are going 
to have a smaller force, and when you have a smaller force the 
ability to move that force where you have to is not going to be 
as easy as it would be with a larger force, the ability to move 
quickly, to be agile, to be able to deploy them. I think we can 
do it under the plan we've presented, but it clearly is an 
additional risk.
    The risk of mobilizing if we face a serious crisis and we 
have the need to mobilize, our ability to mobilize quickly, to 
pull the force together, as we had to do, frankly, after 
September 11, our ability to be able to do that and respond 
quickly and be able to deploy that force involves some risks. I 
think we've designed the way to do that by keeping a strong 
Guard and a strong Reserve, but nevertheless, that's an 
additional risk.
    We depend an awful lot on technology here. I think 
technology is very important, but our ability to develop that 
technology, to make sure that it works, to make sure that we 
have that leap-ahead capability, is something that involves 
some risks.
    Lastly, as I said, when you shave the budget by a half a 
trillion dollars, it leaves very little margin of error.
    Senator Lieberman. Right.
    Secretary Panetta. That, I think, is probably the biggest 
risk of all.
    General Dempsey. If I have time, Senator, I'd like to 
respond, because I will preview my risk assessment for you. I 
did not assess unacceptable risk in my assessment, and I don't 
believe this budget incurs unacceptable risk. I will tell you 
that I am prepared to say that sequestration would pose 
unacceptable risk, and here's why it's important to note.
    It's pretty clear. There's physics involved. In this budget 
we have decided to off-ramp a certain number of service men and 
women, and we've about maxed out our ability to do that with 
the proper dignity and respect to the force. So 10,000, 15,000 
a year is about as many as you can ask to leave and still have 
enough influence on how they do that.
    That's maxed out right now. It's pretty clear to me that 
we're going to have some challenges with infrastructure and 
changes to it, whether this committee and others agree with our 
recommendation for BRAC. So if we fix those two variables in 
sequestration, I can't ask soldiers, sailors, airmen, and 
marines to leave quicker than they're going to leave, and I 
can't touch infrastructure--sequestration leaves me three 
places to go to find the additional money: operations, 
maintenance, and training. That's the definition of a hollow 
force.
    Senator Lieberman. I thank you both for your answers. 
They're helpful to me. With all respect, I consider this budget 
to represent unacceptable risk to our national strategy, and I 
hope members of this committee across party lines will work 
together to reduce that risk in a fiscally responsible way.
    Thanks, Mr. Chairman.
    Chairman Levin. Thank you, Senator Lieberman.
    Senator Inhofe.
    Senator Inhofe. Thank you, Mr. Chairman.
    Let me just get on the record, Secretary Panetta, that 
there will be some of us at this table, and I'd be one of them, 
that would be opposing another BRAC round, really for two 
reasons: one, I think we've reduced our force, our capability, 
to an unacceptable level, and to bring our infrastructure down 
to meet what I consider to be as a member of this committee an 
unacceptable level, I think, is something I would not want to 
do.
    Then the second thing is, the problem we're facing right 
now is really an immediate problem. Everything is on fire. 
We're trying to put out the biggest fires. I'm going from 
memory now, but as I recall, all these BRAC rounds--and I've 
been here since the very first one--you lose money in the first 
5 years. So it's not going to really gain anything in terms of 
that. So there's going to be opposition up here.
    Secretary Panetta, I saw you on television on 60 Minutes, 
and I didn't envy you when you had to answer the question, to 
stop and think about how many combat operations there are, and 
you started counting on your fingers. So it is something that 
we've been talking about here. It is something very serious.
    But when you talk about the budget, I just want to get in 
here, so that--now that we have the President's new budget, we 
keep hearing about inheriting deficits and all of this. During 
the 8 years of President Bush, and these are the Office of 
Management and Budget's (OMB) figures, it was right at $2 
trillion. This President in his budget that he's proposed is 
$5.3 trillion in just 4 years. So, obviously, you're talking 
about just a huge amount of money.
    I saw in this morning's Washington Post they're talking 
about everything is growing in government, except--there it 
is--the military. I agree with the statements of the two 
previous speakers, that this is supposed to be our number one 
concern up here, defending our country.
    So anyway, I just would like to not press the thing. It's 
already been talked about enough on risk. But I only ask the 
question: When you actually meet with the Chairman and you come 
up with your risk assessment, when did you say that would be?
    Secretary Panetta. I anticipate it will be over here by the 
end of the month.
    Senator Inhofe. Okay.
    One of the commands that doesn't get a lot of attention is 
U.S. Africa Command (AFRICOM), and we remember that was divided 
into three commands. I think everyone in this room knows that 
we have done the right thing. However, I look at it as the 
forgotten command. It doesn't seem to get the attention.
    One of the things about AFRICOM is it gets its resources 
from the U.S. SOF that are in Europe, and right now, excepting 
the fact that as the pressure gets on in the Middle East, a lot 
of the terrorism, the potential terrorism, is going down 
through Djibouti and the Horn of Africa and spreading out 
there, so one of the great things that's happening with AFRICOM 
is the SOF are training the Africans.
    The number breaks down to about one SOF guy or gal is going 
to be responsible for 100 forces. I've seen this down there. I 
know it's happening. So the question I'd ask you, do you think 
there are impacts by moving out of the U.S. European Command 
(EUCOM) some of the SOF insofar as Africa is concerned?
    Secretary Panetta. First, I agree with you on the benefits 
of having an AFRICOM focused on those issues on that continent. 
Actually, we source our requirements into Africa and elsewhere 
through a global force management process. So it tends to be 
that European SOF have a particular habitual relationship, but 
there could be SOF and, for that matter, general purpose forces 
employed in Africa.
    We move the force around where it's needed. So I don't 
think the issue you described there with EUCOM will have any 
effect on Africa.
    Senator Inhofe. I'm glad to hear that. I appreciate that.
    This is an issue that no one's talked about yet and I don't 
know why I've been so close to it, but a good friend of mine, 
Specialist Christopher D. Horton, was killed over there. In 
fact, I was supposed to be meeting with him in Afghanistan a 
month later, but he was killed. His wife, Jane Horton, has 
worked for me and we've become very sensitive to the redacted 
investigation reports to families.
    I've talked to General Odierno about this. We've made 
progress on this. But I'm hoping that you will help us continue 
with that, because we have some of them--in the case of one of 
them, it went all the way from May 2010 until just about a week 
ago. I'd like to have some special attention given to that 
issue. The families of Specialist Augustus J. Vacari and Second 
Lieutenant Jered W. Ewy were killed in July 2011 and I think 
they should have their reports. So we're making progress, but 
I'm hoping that that's something that, with all these problems 
we're dealing with, that you'll be aware of and want to be of 
some help.
    General Dempsey. Could I just respond briefly, Senator?
    Senator Inhofe. Yes.
    General Dempsey. I'm very aware of that, and in fact, as 
you recall, I was at Specialist Horton's funeral with you. I 
just want to make two points. One is, this is the first 
conflict in which we've done a collateral investigation on 
every death, the first time in the history of warfare. We've 
learned the hard way, it's very resource intensive and it's 
important to get it right.
    The timeline on which these investigations are provided to 
families has been gradually improving and is the same, it's 
important to note, for Active, Guard, and Reserve. So it's not 
that the Active families get the investigation done faster than 
the Guard and Reserve. It's just a very challenging task, one 
which we're addressing.
    Senator Inhofe. Yes, I understand that. We went back and 
checked between the Active and the regular component and that's 
right.
    My question actually is meant to be a compliment, because 
we're making great progress on that.
    General Dempsey. Well, then, I withdraw my comments. 
[Laughter.]
    Senator Inhofe. In looking at the reset, we're going to be 
looking at a real problem after having gone through this for 12 
years, and it's going to be--my concern is that it comes from 
the right sources, that it's not going to come from the base 
budget. Is it your intention to have this come from the OCO 
when this time is before us? Do you think it will have a 
deteriorating effect on the base budget, on the reset, the cost 
of reset?
    General Dempsey. That's exactly why the OCO bill tends to 
be as high as it is, because we're not just looking at the cost 
of current operating forces. It's the recapitalization 
challenge we face beyond that. Is that a fair statement, Bob?
    Mr. Hale. Yes.
    Senator Inhofe. The last thing, because my time has 
expired, I had occasion to go down to Fort Worth and see the 
progress, what's happening right now with the F-35. There have 
been a lot of delays and I would just hope that we have a 
commitment from the two of you to progress on that program, 
because that's a very needed platform that we will be pursuing.
    Secretary Panetta. Senator, we need a fifth generation 
fighter. The F-35 represents that fifth generation fighter. 
We're committed to it. We just want to make sure it's done 
right.
    Senator Inhofe. Thank you.
    Chairman Levin. Thank you, Senator Inhofe.
    Senator Reed.
    Senator Reed. Thank you very much, Mr. Chairman.
    Thank you, Mr. Secretary, General Dempsey, Mr. Hale. We've 
talked a lot, and I think appropriately so, about the risks to 
the national security of the United States. But those risks are 
mitigated, not simply by what's done in the DOD budget; it's 
also mitigated by what's done in the Department of State (DOS) 
budget, the Department of Homeland Security (DHS) budget, TSA, 
the FBI, a whole host of agencies that contribute directly and 
indirectly to the national security of the United States.
    We've talked about the sequester, but to simply shift those 
costs in a potential sequester without additional revenue, 
strictly do it by cutting more, will invariably catch the FBI, 
DHS, TSA, contracting, and other functions that might not be in 
the purview of DOD, but significantly contribute to the risk 
that we run as a Nation. Is that an accurate perception, Mr. 
Secretary?
    Secretary Panetta. Oh, absolutely. I think, Senator, 
national security is dependent on all of the things you just 
cited, but frankly, it's dependent on more. We're talking about 
sequester on defense, but sequester also takes place on the 
domestic side of the budget. Very frankly, our national 
security is dependent not just on the national defense side of 
that ledger; it's dependent on the quality of life that we 
provide for our citizens. So all of that could be impacted 
through sequester.
    Senator Reed. One other aspect of this whole debate, as has 
been pointed out, has been, particularly with respect to those 
platforms that you've decided are not affordable at this 
juncture. But I would presume--and, General Dempsey, you might 
comment--that one of your calculations is not just the number 
of platforms, but the capability of platforms. As you've made--
particularly when it comes to both aviation platforms and 
ships, that you and your colleagues have made careful 
calculations about increased capabilities with those remaining 
ships versus what you'd have to do with the airplanes; is that 
accurate?
    General Dempsey. It is accurate, Senator. We mapped the 
budget decisions to the strategies. Fundamentally, are we going 
to deliver the strategy we've described, given the decisions 
we're about to make.
    As we've talked for years, we are moving toward platforms 
that are both more capable, but also multi-role. So for 
example, the A-10, and by the way, the uniform I wear, I'm a 
huge advocate of the A-10, the Warthog, because it provides 
close air support. But we're at a point where we think it's 
prudent to force ourselves into a more multi-role capability in 
that regard.
    So we did, we mapped the decisions to the strategy.
    Senator Reed. Thank you very much.
    One of the other aspects that's been brought up, and I 
think it goes to my initial question about the broader scope of 
national security, is that proactive engagement. I think one of 
the lessons of the last few years, proactive engagement is very 
helpful to us. Had we been more engaged in some countries, we 
might have mitigated the dangers we faced in the last decade.
    When you talk about your meeting in Egypt, when you talk 
about your multiple meetings in Pakistan, when you talk about--
a lot of that is, one might argue, just as critical to national 
security, but is not measured in terms of brigades or lift, 
airlift, et cetera. It goes also to the issue of special 
forces, not so much in their counterterrorism mission, but in 
their training and their collaboration mission.
    Can you comment on, General Dempsey, on how this budget 
will encourage proactive engagement at every level?
    General Dempsey. We've accepted as a core competency of all 
the Services building partner capacity. So when you have a 
chance to have Ray Odierno in here, for example, he'll talk 
about his desire to meet our strategy by taking general purpose 
forces who have been completely consumed in Afghanistan and who 
will be less consumed now and applying them in that role, a 
regionally aligned brigade, for example. So AFRICOM has a U.S. 
Army brigade in the Army Force Generation readiness cycle that 
can deploy in any number of ways, as headquarters, or it can 
send teams, it can reorganize itself, to go and engage nations 
in the particular combatant where it might be needed.
    So I think this budget does that and it is one of the ways 
that we are mitigating risk, as you suggest.
    Senator Reed. Mr. Secretary, you suggested and I think you 
said that one of the fastest growing areas of cost in your 
budget is personnel costs, particularly health care costs. 
You're looking at a very tight budget this year. I think even 
if we're able to settle some of our political fights up here, 
the idea of the defense growing at the rate it grew over the 
last decade is not within anyone's purview.
    At some point, if you don't take effective steps with 
respect to personnel costs, it becomes so big, in my view, that 
it eats into what is the great risk General Dempsey sees in 
sequestration: it all comes out of operations, maintenance, and 
training, and suddenly you have a force that is there, but it's 
not capable.
    Do you have a notion of sort of how much time we have left 
before this, these uncontrolled, unless we take steps, these 
costs eat up all of the operations and maintenance?
    Secretary Panetta. As I mentioned, this is an area of the 
budget that's grown by 90 percent, and it consumes now close to 
half of the defense budget. Right, Bob?
    Mr. Hale. About a third.
    Secretary Panetta. About a third, about a third of the 
defense budget is in the compensation area. The problem is at 
that rate of growth that's going on, it's moving more and more 
into these other key areas of the defense budget and crowding 
them out. So if compensation is not touched, if we don't 
control the costs of growth in the compensation area, what it 
means is that we're going to have to take it out of force 
structure, we're going to have to take it out of training, 
we're going to have to take it out of other systems, and it's 
going to mean that ultimately we won't have a balanced approach 
to dealing with the defense savings that we need to deal with.
    So even in talking with members, in talking with the 
generals, in talking with the chiefs, they acknowledge that, as 
tough as this is--and it is tough, because it affects, 
obviously, troops and their families and retirees--but if we 
don't begin the process of developing some kind of cost control 
in the out-years and limiting the growth that's taking place, 
then we're going to pay a very high price within the next few 
years.
    Senator Reed. Is that your conclusion, General Dempsey?
    General Dempsey. Senator, it is. We talk a lot about 
keeping faith and oftentimes that's equated to how many dollars 
we're putting in a soldier's, sailor's, airman's, or marine's 
pocket. But it's a lot more than that. Keeping faith is making 
sure they're the best trained, best equipped force on the 
planet. To do that, we have to balance the budget against all 
of the various levers we have to pull.
    Senator Reed. Thank you, gentlemen.
    Chairman Levin. Thank you, Senator Reed.
    Senator Wicker.
    Senator Wicker. Thank you very much, Mr. Chairman. I want 
to thank both of our witnesses for their service.
    Secretary Panetta, I want to ask you about the David 
Ignatius article from February 2. Let me just read the way it 
begins: ``Defense Secretary Leon Panetta has a lot on his mind 
these days, from cutting the defense budget to managing the 
drawdown of U.S. forces in Afghanistan. But his biggest worry 
is the growing possibility that Israel will attack Iran over 
the next few months. Panetta believes there is a strong 
likelihood that Israel will strike Iran in April, May, or June, 
before Iran enters what Israelis describe as a `zone of 
immunity' to commence building a nuclear bomb.''
    Mr. Secretary, did Mr. Ignatius accurately characterize 
your view and would you like to comment on that?
    Secretary Panetta. No, I usually don't comment on 
columnists' ideas about what I'm thinking. Usually it's a 
dangerous game to get into.
    But let me just express my thoughts, that Iran is of great 
concern. We have common cause with Israel, we have common cause 
with the international community with regards to the concerns 
about Iran. We have made very clear that they are not to 
develop a nuclear weapon. We have made very clear that they are 
not to close the Straits of Hormuz. We've also made very clear 
that they are not to export terrorism and try to undermine 
other governments.
    Those are areas that concern us, and it concerns the 
international community. As a result of that, the international 
community has taken strong steps on sanctions, on economic and 
diplomatic areas to bring pressure on Iran and to isolate them. 
I guess my preference, my view, is that we ought to keep the 
international community together in applying that kind of 
pressure.
    Senator Wicker. Do you believe there's a strong likelihood 
that Israel will strike Iran in April, May, or June?
    Secretary Panetta. I think, as the President has suggested, 
we do not think that Israel has made that decision.
    Senator Wicker. Were you mischaracterized? Did you have a 
conversation with Mr. Ignatius?
    Secretary Panetta. As I said, the comments that are 
included in a column about what I'm thinking or what I'm 
possibly worried about is up to the columnist.
    Senator Wicker. But did he interview you?
    Secretary Panetta. We talked, but we talked about a lot of 
things, frankly.
    Senator Wicker. Okay. Were you trying to send some sort of 
signal to the international community, either to Iran or 
Israel?
    Secretary Panetta. No.
    Senator Wicker. So you do not have a position as to whether 
it is likely that Israel will make such an attack this spring?
    Secretary Panetta. I do not.
    Senator Wicker. All right. Thank you for clearing that up. 
I will say that there were no quotation marks in that column, 
but it did sound a whole lot like a quote.
    As I understand it in the budget, in compliance with the 
BCA, Mr. Secretary, there's half a trillion dollars worth of 
cuts. If we had the sequestration, that would be another half a 
trillion. Now, what was your conversation with the 
administration, with OMB, within DOD, about submitting a budget 
that doesn't comply with the statute, because sequestration is 
the law of the land right now as I understand it?
    Did you consider submitting a budget that outlined the 
catastrophic results if sequestration does go into effect? Then 
what is your strategy to, as you say, detrigger, to work with 
this Congress to detrigger sequestration, which is the law of 
the land, you will acknowledge?
    Secretary Panetta. It is. Obviously, our approach was to 
deal with what the BCA had provided in terms of targeted 
savings in the defense budget. We frankly developed the 
strategy that we presented to based on really trying to lay out 
a strategy about where our force structure needed to be between 
now and 2020 and do it in a responsible way to protect our 
military force and to be able to respond to the threats that 
are out there.
    Sequestration has this, frankly, mindless formula that's 
already built into it, that basically cuts across the board. 
It's not as if we can take sequestration and make sense out of 
the damn thing. The fact is, it's going to happen the way it's 
supposed to happen, through this kind of mindless formula 
that's there.
    So our approach, frankly, was to not pay any attention to 
it. If it's going to take place in January 2013--and I hope 
that's not the case--then it will take place under its mindless 
procedure. But I don't think we ought to try to bring some kind 
of common sense to what is a crazy process.
    Senator Wicker. Let me underscore what Senator Lieberman 
said, that this budget makes us worry about risks. I understand 
what General Dempsey said, that he believes that there are 
risks, but they're not unacceptable. But the sequestration 
would prove unacceptable, and I hope there's a strategy to get 
that through.
    Thank you, Mr. Secretary, for mentioning the industrial 
base. We're at 8.3 percent unemployment right now. Undoubtedly 
the President is going to send a spending bill to Congress 
which he believes and the administration believes will create 
more jobs. It makes no sense to me, at a time when there's an 
effort to create more jobs with other spending, to cut defense 
spending, which gives us the twofer of protecting the country 
and protecting the industrial base, which is a whole lot of 
Americans out there working to provide us with the 
infrastructure we need.
    It is a fact, is it not, that this budget will have an 
adverse effect on our industrial base? Is that not right, Mr. 
Secretary?
    Secretary Panetta. We've taken a lot of steps to try to 
protect against that happening, because as I've said, we 
absolutely have to protect our industrial base and those 
industries that support the defense budget. We can't afford to 
lose any more. So for that reason, we've designed an approach 
that will keep them in business with regards to the systems 
that we're trying to develop for the future.
    Senator Wicker. Albeit with fewer industrial manufacturing 
jobs.
    Secretary Panetta. I understand that, and that does have 
some impact.
    Senator Wicker. Thank you very much.
    Chairman Levin. Thank you, Senator Wicker.
    I've asked Senator Akaka if he would yield 1 minute of his 
time to me and he's graciously said he would, because I want to 
clarify this issue of the budget and sequestration. As I read 
the budget which was submitted to us, there is additional $3 
trillion in deficit reduction above the trillion that has 
already been taken, which would, if this budget were adopted as 
submitted, avoid sequestration totally.
    Now, half of the additional $3 trillion is in revenue 
increases, including, as the President's budget says, tax 
reform, including the expiration of tax cuts for single 
taxpayers making over $200,000, married couples making over 
$250,000, by adoption of the Buffett rule. Then the budget 
document says that the President is offering a detailed set of 
specific tax loophole closures and measures to broaden the tax 
base that, together with the expiration of the high income tax 
cuts, would be more than sufficient to hit the $1.5 trillion 
target, which means if this budget were adopted and the revenue 
were included--and the revenue represents about half of the 
additional deficit reduction--you avoid sequestration.
    Is that your understanding?
    Secretary Panetta. Yes, my understanding is that in the 
President's budget there is a plan, obviously, to provide for 
the kind of additional deficit reduction that the country 
needs. But obviously, if it were adopted it would de-trigger 
sequestration.
    Chairman Levin. Okay, because that's not been stated here 
this morning, but I think it's very, very important. I tried to 
say it in my opening statement, but I don't know that I said it 
clearly enough. The budget that was submitted to us says it 
very clearly. That's the strategy. Whether Congress adopts it 
or not is a different issue, but sequestration can be avoided 
and hopefully will be, and the President has submitted his way 
to avoid it in his budget document.
    Senator Wicker. Mr. Chairman, I thank you for clarifying 
that, and I do look forward to the President's budget being 
brought to the Senate floor for an up or down vote.
    Chairman Levin. Thank you. I think the Republican 
alternative will also be brought to the Senate floor, if there 
is one. We look forward to seeing an alternative budget as 
well.
    So much for that. Back to Senator Akaka.
    Senator Akaka. Thank you very much, Mr. Chairman.
    Aloha to Secretary Panetta and General Dempsey, and thank 
you so much for your leadership and all you do for our country. 
Mr. Secretary, my aloha to Sylvia, too. I notice that the PGA 
Tour was just at Pebble Beach. Had you chosen a different path 
than you're on now, you could have been at home in Carmel 
playing in the Pro-Am with your friends. But no, your 
dedication to continue serving our country puts you before us 
today. That says a lot, a lot about you and who you are. I've 
known you, as we know, since we served together in the House.
    In all seriousness, I really appreciate your dedication and 
your hard work, Mr. Secretary. I add my appreciation to the 
brave men and women of the Armed Forces who lead and their 
families for their service and sacrifice.
    Secretary Panetta, it is impossible to overstate the 
importance of our military engagement in the Asia-Pacific 
region. It's obvious that there are many challenges in this 
area, given the new focus on this vital region. If you look at 
continuing developments in the Pacific, our conventional 
adversaries are advancing and it is critical we maintain our 
superiority in the region.
    Given the many demands on the defense budget, as you 
mentioned, and the unique mission and environment we have in 
the region, my question to you is, how does DOD's fiscal year 
2013 budget impact our military readiness in the Pacific 
region?
    Secretary Panetta. That's obviously a primary concern for 
us, because we do believe that it is important to maintain a 
strong presence in the Pacific. For that reason, we maintain 
the 11 carriers in the Navy in order to ensure that we have 
sufficient forward presence. There's nothing like a carrier to 
be able to allow for quick deployment in that area, and that 
will give us a great capacity to be able to show our force 
structure in the Pacific.
    In addition to that, we're going to maintain, obviously, a 
military presence. We already have one in Korea, but we're 
going to maintain an additional rotational presence with our 
Marines throughout that area. We've just developed an agreement 
with Australia to do a rotational presence there. We're working 
with the Philippines on hopefully a similar arrangement there 
as well.
    In addition to that, obviously, we have our air bases and 
the forward deployed air assets that will give us the 
capability to cover that area as well. So we feel very good 
about the force structure that we have in this budget and our 
ability to maintain a real presence in the Pacific.
    Senator Akaka. Thank you.
    General Dempsey, the United States has been attempting to 
engage China with military-to-military exercises and other 
cooperative opportunities, including humanitarian and disaster 
relief operations, and you've done well. General, how do you 
foresee these efforts at engagement proceeding as the U.S. 
focuses resources in the Pacific?
    General Dempsey. I think the strategy is actually quite 
sound. By the way, it's important to note we never left the 
Pacific, so the idea of rebalancing ourselves globally is just 
that, it's rebalancing. It's not a light switch on or off or a 
pivot. That word got ahead of me a bit.
    We're rebalancing our strategy and we're doing that based 
on the trends, demographic trends, economic trends, and 
military trends. In so doing, we do have the opportunity to 
increase our engagement with the People's Republic of China, 
because there are many things with which we have a common 
interest. They've been working with us in the Gulf of Aden on 
counter-piracy for some time.
    We've had military-to-military engagement. It hasn't been 
as consistent as we'd like it. We have a chance, I think, now 
in the coming months to reemphasize it. I think that will 
assist us in implementing our strategy. So this is an 
opportunity for us, Senator, and we intend to take it.
    Senator Akaka. Thank you.
    Mr. Secretary, I am a true believer in our Special Forces. 
Having visited the SEALs conducting training operations, I have 
seen firsthand the talent and dedication of our Special Forces 
personnel. Special Forces units are likely to do more in the 
future. I want to make sure that as an end result, as end 
strength numbers are reduced, that the career fields--they 
could be fields in communications and logistics as well--which 
support and help the Special Forces complete their missions are 
not reduced to a point which could limit the overall readiness 
of Special Forces units.
    General, can you share any thoughts also on this?
    General Dempsey. I can, sir. To your point, one of the 
lessons of the last 10 years or certainly among the lessons of 
the last 10 years is that the SOF have demonstrated their 
versatility and their capabilities, not just in the 
counterterror realm, but also in the building partner capacity, 
security force assistance.
    One of the things we've been talking about with the Service 
Chiefs is finding a new paradigm where we will partner 
differently with SOF to give us greater capability, synergy. 
The sum is greater than the individual parts. We're working on 
that. The Army, for example, is working on habitual 
relationships of the enablers you're talking about--lift, 
medical, communications.
    So I can assure you there will be no degradation to our 
Special Operations community. But I also want to assure you we 
cannot put all of our eggs in that basket because, as I've said 
in previous testimony, SOF are just that, they're special. If 
we go too far in that direction, then the conventional force 
becomes the special and the SOF no longer have that capability. 
So we just have to find the right balance, and we're working on 
it.
    Secretary Panetta. Senator, there's no question that 
Special Forces--through their agility and their ability to 
deploy quickly, represent a very important force for the 
future. They've been very effective, as we know, in terms of 
terrorism. But as the General has pointed out, they've also 
been very effective at developing partnerships with other 
countries, working with them, doing exercises, providing 
advice. They have a great capability there.
    So I think the kind of force we're looking at, obviously, 
as the General has pointed out, is to maintain a strong Army 
that can confront a land enemy and be able to defeat that enemy 
in a land war, but at the same time develop the kind of 
rotational capability, using Special Forces, using the Marines, 
using elements of the Army as well, to be able to have a 
presence elsewhere in the world. That would give us the best of 
all things.
    Senator Akaka. Thank you very much.
    Chairman Levin. Thank you, Senator.
    Secretary Panetta. By the way, Senator, I should point out 
that we are increasing our Special Operations. I think the 
numbers, we're going to increase them by 3,000. We're putting 
about $10.4 billion more along those lines.
    Chairman Levin. Thank you, Senator Akaka.
    Senator Brown.
    Senator Brown. Thank you, Mr. Chairman.
    Mr. Chairman, since you brought up the budget, certainly 
I'm looking forward to voting again on the President's budget. 
It's been over 1,000 days since the Senate's put out a budget. 
I and the American people would like that to be different and 
have that come up at some point.
    That being said, I have, with 7 minutes, a lot of other 
questions. I'm going to submit some for the record. Mr. 
Secretary, one of them I will be discussing is the Global Hawk 
Block 30 program. I'm going to be asking about the cost 
comparisons between the U-2 and the Global Hawk, have they been 
reviewed, particularly as it relates to sustainment? Can the U-
2 alone provide the ISR necessary in order to meet the 
operational requirements? That will be one of them.
    In addition, I live in an innovative State, Massachusetts, 
and we have an innovative base, Hanscom, in dealing with the 
cybersecurity threat. I agree with the chairman--before we talk 
about any BRAC closures, I would hope that we would continue to 
work on the cybersecurity emphasis on areas and bases like 
Hanscom, because I think that is the next real area where we 
need to focus on, as referenced in your earlier testimony.
    Taking it a step further, the Air Force has proposed 
restructuring its civilian workforce to the tune of about 
16,000 civilian contracted employees. I would ask that you keep 
in mind these restructuring efforts as it affects the small 
businesses, as Senator Wicker and others have referenced and 
you referenced in your comments. It affects, obviously, 
Hanscom, Westover, and other bases throughout the country. I 
know Senator Ayotte and I are deeply concerned about that.
    One of the observations I made as I served in Afghanistan 
this summer was, obviously, the drawdown. I have felt that we, 
if we do it thoughtfully and methodically, can transfer 
authority and control over to the Afghans, but if we do it too 
quickly, we're going to be in deep trouble and we'll lose all 
those benefits that we had.
    One of the things that I referenced and acknowledged 
through speaking and meeting with all the generals and with 
General Allen, is the fact that we have so many audits going on 
right now, without referencing any particular directorate, one 
general had 75 audits going on at once. So I said to him: ``How 
can you actually expect to do the drawdown, as General Allen's 
doing, and then continue to do your mission, keep our soldiers 
safe and secure, and then complete the audits?'' He says: ``We 
can't; something has to give.''
    So, General Dempsey and Mr. Secretary, I would ask you to 
seriously look at that. If we're going to be doing this 
drawdown, we absolutely need to address these audit issues, 
there's so much duplication right now, and it's just, I think, 
some agencies justifying their existence. So I'm hoping you can 
comment on that issue.
    General Dempsey. I won't comment on them justifying their 
own existence, because they'll audit me if I do that and I 
don't want to go there. [Laughter.]
    Senator Brown. I hear you.
    General Dempsey. But I share your concern, sir. I've been 
on the receiving end of it, and there is clearly a need to be 
auditable because the Nation is investing incredible resources. 
But it has gotten a bit out of control, and my J-8 and the 
Under Secretary for Policy are both working to squeeze those 
audits to make sure they're not redundant, because some of them 
are redundant. They're absolutely duplicates. If you read them, 
which I have, you'll see they're the same exact thing. There 
has to be a central location or a central effort to do that, 
because the troops can't do their jobs and work 24/7 on audits 
and then go expect to perform the mission, which is obviously 
very serious.
    That being said, in Iraq, with obviously us being out of 
there, is it accurate that we now have over 100,000 civilian 
contractors there doing the job that ultimately our soldiers 
did? In fact, if that is so, is the cost two to three times 
more than what we were paying our soldiers? If that is the 
case, where is that money coming from?
    Secretary Panetta. Go ahead.
    General Dempsey. Thanks, sir. [Laughter.]
    I don't have the exact numbers. At one time towards the end 
of the calendar year, I was tracking those numbers on a daily 
basis.
    Senator Brown. It's substantial.
    General Dempsey. Oh, it is substantial, sir.
    Senator Brown. We're paying two to three times more, and 
we're paying two to three times more than we were paying the 
average soldier.
    General Dempsey. In some functions we are paying more. 
Security force or security details are more expensive, but 
other places, logistics, transportation, we're not paying as 
much as you would normally pay a soldier.
    But we have that information, if you place that question in 
the record.
    Senator Brown. Yes, I'd like to do that and get that for 
the record, because I'd like to know where that money is coming 
from and how that's being worked into the budget.
    [The information referred to follows:]

    The 2010 Quadrennial Defense Review acknowledged that contractors 
are part of the total force, providing an adaptable mix of unique skill 
sets, local knowledge, and flexibility that a strictly military force 
cannot cultivate or resource for all scenarios, permitting our nation 
to concentrate military resources on those areas which are inherently 
governmental. Contractors provide a broad range of supplies, services, 
and critical logistics support in many capability areas, while reducing 
military footprint and increasing the availability and readiness of 
resources.
    Currently, there are 10,967 contractors on the Department of 
Defense (DOD) contracts in Iraq. Of that, private security contractors 
make up 2,991, 84 percent of which are third country nationals (TCN) 
that earn, on average, lower salaries than U.S. servicemen. The average 
TCN security contractor earns $17,751 per guard, per year. In 
comparison, pay and benefits (annual composite rate) for an E-5 is 
$76,381.
    DOD funds to support these contracts are requested in the Overseas 
Contingency Operations budget.

    Senator Brown. In terms of the reverse, General Dempsey, in 
terms of the understanding of the term ``reversibility,'' it's 
a general concept designed to ensure the total force stays 
prepared for unexpected contingencies as the Active component 
inevitably gets stronger. How does the Guard and Reserve work 
in? I know you referenced it briefly, but I would think, 
obviously being in the Guard, that you would get more valuable 
dollars, more bang-for-the-buck, so to speak?
    Is there an effort, a real sincere effort, to push a lot of 
the training responsibilities, mobilization, et cetera, to the 
Guard and Reserves?
    General Dempsey. This effort, the new strategy and the 
budget to support it, has caused each Service to relook at how 
they balance across components--Active, Guard, and Reserve. 
I'll give you an example why that's an important conversation. 
Senator McCain in his opening comment cited that we were 
reducing 20 percent of the BCTs in the Army. That's true for 
the Active component brigades, but if you look at the totality 
of BCTs, which after this change will be 68, then the 8 is 
really an 11 percent degradation or decline in BCTs.
    So your point is an important one. We have to look at what 
this total force and the joint force provide, not strictly what 
we're doing to any one of them, and we are doing that.
    Senator Brown. I would ask you to pay particular attention 
to the Air Guard and take a look at moving some missions into 
the Guard portfolio, because you do get a better bang-for-the-
buck, I would argue.
    The other big elephant in the room, aside from 
sequestration, is the fact that we have approximately 1 million 
servicemembers expected to join the veterans ranks in the next 
5 years, and unemployment among young veterans is very high, 
and it's high also in the Guard and Reserves. Is there a 5-year 
plan to meet the expected demand, and how are we working with 
the Department of Veterans Affairs (VA) to address these 
important issues?
    Secretary Panetta. Senator, you've raised a very important 
point, because as we go through these additional drawdowns we 
absolutely have to make sure that a support system is out there 
as our men and women come back from service. We are working 
with the VA in a number of areas, number one to try to provide 
a jobs pool so that these veterans will have the opportunity to 
get jobs in the private sector.
    Second, we're working with the VA to try to improve the 
seamless approach, so that when it comes to health care and 
benefits, that people can move without long delays, without a 
lot of bureaucracy, from coverage under the defense budget to 
coverage under the veterans budget.
    In addition to that, we're providing a lot of counseling 
and support systems by all of the Services to make sure that 
these families are supported once they come out so that they 
can readjust. If they want to go into education, the education 
benefits are provided. If they want to get a job, jobs are 
provided. If they want to go into small business, we provide 
the small business loans to assist them.
    So there is a pretty solid package. We have to continue to 
work at it and make sure that it's working and that it's 
meeting the need. But we are very concerned that we have that 
support system for these troops when they get out.
    Senator Brown. I'd be eager to offer my assistance on those 
very real issues. It's something that we've been working on in 
Massachusetts for a very, very long time and have some real 
knowledge about that issue.
    Mr. Chairman, I'm presuming we'll have an opportunity to 
add questions for the record and there will be a time allotted 
to do so, the response?
    Chairman Levin. Yes, there will be questions that are asked 
for the record, and we'll ask our witnesses to promptly 
respond.
    Senator Brown. Thank you.
    Chairman Levin. Thank you, Senator Brown.
    Right after Senator Nelson's turn, we're going to take a 5-
minute break. Senator Nelson.
    Senator Nelson. Thank you, Mr. Chairman.
    Thank you, gentlemen, for your service. Currently, progress 
is being made toward the new U.S. Strategic Command (STRATCOM) 
headquarters at Offutt in Nebraska, a new command and control 
complex for STRATCOM. Now, the entire project has been 
authorized, but because of the nature of this project DOD will 
have to request phased-in or incremental funding as we move 
along over a multi-year construction project.
    Much has been said about cyber today. Mr. Secretary and 
General Dempsey, could you explain the basis for, the need for 
a new headquarters dealing with almost every aspect of our 
military, defense and offense? Mr. Secretary?
    Secretary Panetta. Senator, we think it's extremely 
important because STRATCOM is obviously extremely important to 
defending the Homeland. In order to defend the Homeland, you 
have to develop the capabilities that we're facing right now, 
and cyber obviously is one of those areas. Our ability to 
develop the latest technology, the latest abilities in order to 
not only defend ourselves, but understand what that threat is 
about, is extremely important. We have to be able to develop 
the kind of communications systems that are the state-of-the-
art, so that they can deal with quick communications.
    In that area, any time we face a threat there is an 
immediate response that has to take place and has to take place 
quickly and effectively. Frankly, we need good systems in order 
to make sure that happens. So for all those reasons, it's 
important to our future that we develop that kind of capability 
there.
    Senator Nelson. It's safe to say that what the internal 
components are within the structure would be equally important 
as the structure itself. In other words, it's going to be a 
high tech complex to be able to deal with the modern challenges 
we have.
    General Dempsey?
    General Dempsey. Without talking about the structure 
itself, I will tell you that the Service Chiefs, combatant 
commanders, and I have begun a series of strategic seminars to 
look at ways to better integrate, to learn lessons, and to 
ensure that we can deliver our strategy with the force that 
this budget will provide.
    We know we can. We're looking at now how do we mitigate 
change. One of the emerging insights I'll share with you is 
that any regional conflict in the future--and we're looking out 
in this budget to 2017. So in 2017, any regional conflict will 
impact in the continental United States, in the Homeland, 
without a doubt. That is to say, the Homeland is no longer a 
sanctuary in 2017.
    Therefore, commands like U.S. Cyber Command (CYBERCOM) and 
STRATCOM become more important in that environment.
    Senator Nelson. Thank you.
    I have a lot of concerns about our presence in Iraq. We've 
had questions raised about the number of contract employees 
there, contractors. I also understand that DOS is now in a lead 
role trying to decide what the mission is in Iraq. We have the 
largest embassy in the world and it's growing, physically 
growing, but we don't have an established mission.
    I know that part of this will be DOS, but I assume that DOD 
also has a vital role in establishing that mission.
    Secretary Panetta, might you fill us in on what progress is 
being made to establish a mission? It seems like we have the 
cart before the horse here, but perhaps you can help us.
    Secretary Panetta. Frankly, I think DOD has a pretty good 
plan there that we're implementing. We have about eight sites 
that we're located in. We're working with foreign military 
sales (FMS) that are being provided to the Iraqis. We're 
providing training. We're providing support. It's both DOD and 
contract individuals that are working in those sites. It's 
pretty limited, but it's very helpful to the Iraqis in terms of 
their ability to develop security for the future.
    In addition, we're open to continuing to discuss with them 
additional opportunities, particularly with regards to other 
operations, going after al Qaeda, et cetera, that we think are 
important to continue as well.
    So I think we feel pretty good about the mission that we're 
performing right now there.
    General Dempsey. Yes, absolutely, sir. We've built the 
Office of Security Cooperation-Iraq based on the capabilities 
that the Iraqi Government wanted us to support them, how they 
wanted to be supported, notably with the program of record for 
FMS and then institution-building. We have our resources mapped 
to those functions, and I'm very confident that we have the 
Office of Security Cooperation sized about right for now.
    If they were to choose to expand our relationship in any 
way, we could do so.
    Senator Nelson. There seems to be room within that 
structure to expand, because of the size of the structure. I 
don't mean to minimize the necessity of having the presence in 
Iraq, but it seems like the structure is going to be more than 
adequate to take care of our needs. When I emphasize ``more 
than adequate,'' it's consistent with the DOD Inspector 
General's criticisms or observations about the size of the 
structure and continuing to expand without a stated mission. I 
hope we can get where we feel like we can state what that 
mission ultimately is.
    I'd like to turn to Iran for just a minute. It seems like 
every time we check any of the news today Iran is involved in 
it--questions about Iran engaging in terrorist activities in 
two locations around the world in the last day or so, the plot 
to take out the Saudi Ambassador to the United States, Mr. Al-
Jubeir. You said, Secretary Panetta, on 60 Minutes, it's a red 
line for us and it's a red line obviously for the Israelis if 
they have the ability to deliver a nuclear weapon with a 
missile. What are your opinions about that, if you might be 
able to enlighten us a bit more?
    Secretary Panetta. As I said, we have a number of concerns 
here that we worry about with regards to Iran. Those are 
concerns that we share not just with the Israelis but with the 
entire international community. As the President himself has 
stated, we will not tolerate an Iran that develops a nuclear 
weapon, and yet they continue, obviously, to try to improve 
their nuclear enrichment capabilities. That's something that 
concerns us a great deal.
    They continue to threaten the possibility of closing the 
Straits of Hormuz, and we have made very clear that that is a 
red line for us, that that Strait is extremely important to 
free commerce and to shipping and to the shipping lanes, and 
would have a huge economic impact if that were to happen. That 
too is unacceptable and not tolerable for the United States.
    We're concerned about Iran and the spread of terrorism, the 
fact that they seek to undermine legitimate governments around 
the world. That too concerns us. We think that the approach of 
the international community to apply sanctions, to apply 
diplomatic pressure, is having an impact. It has isolated Iran. 
It's made very clear to them that they have to change their 
behavior. I think that we need to keep that pressure on. That's 
an important effort. I think the international community is 
unified in that effort, and I guess my hope would be that we 
could all stick together in ensuring that we continue to 
isolate Iran and make very clear to them that they should 
choose to join the international community, the rules and the 
laws and the regulations of the international community, and 
become part of that family. If they choose otherwise, then--
that would have serious implications.
    Senator Nelson. Our concern is more than just about their 
nuclear capacity, although that is a very important part. But 
are the actions that they're taking beyond being pesky, in 
terms of what they are intending to do?
    Secretary Panetta. It's far beyond being pesky. It's 
deliberately supplying equipment and arms to others to engage 
in terrorist activity, and that too concerns us very much.
    Senator Nelson. Thank you.
    Thank you, Mr. Chairman.
    Chairman Levin. Thank you, Senator Nelson.
    We'll take a short break.
    [Recess from 11:46 a.m. to 11:56 a.m.]
    Chairman Levin. We'll come back to order.
    Senator Portman has yielded to Senator Graham, and then 
we'll put Senator Portman back in his order when he returns. 
Senator Graham.
    Senator Graham. If we could earmark, I would help Ohio. So 
I just want to let Rob know I appreciate this very much. 
[Laughter.] I have to run.
    Secretary Panetta, do you believe it's a viable strategy 
for the United States to try to contain a nuclear-armed Iran?
    Secretary Panetta. Yes, indeed.
    Senator Graham. The idea of containment. Shouldn't we 
prevent them from getting a nuclear capability, not contain 
them?
    Secretary Panetta. It's not just contain, but it's 
obviously doing everything we can to prevent them from 
developing.
    Senator Graham. Right. I guess my question more correctly 
asked is, if they get a nuclear weapon, do you think the idea 
of containment is a way to go? Should we prevent them versus 
containing them?
    Secretary Panetta. No, I think we have to prevent them.
    Senator Graham. Because if they got a nuclear weapon the 
damage is done. Other nations follow suit. Terrorists are more 
likely to get the material. So the Secretary of Defense's view 
is that the idea of containing a nuclear-armed Iran is not the 
way to go; the idea is to prevent them from doing it. 
Hopefully, we can do it through sanctions and diplomatic 
engagement. I hope we can.
    Okay, China. General Dempsey, there are a lot of media 
reports that the Chinese routinely, the People's Liberation 
Army (PLA), engages in cyber attacks of our business and 
national security infrastructure. Do you believe that is a 
reality of the 21st century?
    General Dempsey. I believe someone in China is hacking into 
our systems and stealing technology and intellectual property, 
which at this point is a crime. I can't attribute it directly 
to the PLA.
    Senator Graham. Let's say if we could find that the PLA was 
involved in hacking into our defense infrastructure, would you 
consider that a hostile act by the Chinese?
    General Dempsey. I would consider it to be a crime. I think 
there are other measures that could be taken in cyber that 
would rise to the level of a hostile act.
    Senator Graham. What would they be?
    General Dempsey. Attacking our critical infrastructure.
    Senator Graham. That could be a hostile act?
    General Dempsey. I think so.
    Senator Graham. Allowing us to respond in kind?
    General Dempsey. In my view that's right, yes, sir.
    Senator Graham. So I'm going to have lunch with the Vice 
President of China in about 20 minutes. So what do you want me 
to tell him? [Laughter.]
    General Dempsey. Happy Valentine's Day. [Laughter.]
    Senator Graham. All right, okay. I'll do that.
    Chairman Levin. By the way, Senator Graham, in my opening 
statement I made it very clear that the cyber espionage going 
on from China has to stop and it's mighty serious stuff. So you 
can pass along, if you would, that comment as well.
    Senator Graham. All right. Would you consider it a hostile 
act?
    Chairman Levin. I sure would.
    Senator Graham. Okay, I would, too.
    Chairman Levin. But Happy Valentine's Day. [Laughter.]
    Senator Graham. It ought to be an interesting lunch. 
[Laughter.]
    Secretary Panetta, in 2014 the game plan is to transition 
to Afghan security force control; they're in the lead, is that 
correct?
    Secretary Panetta. That's correct.
    Senator Graham. We'll have a training mission, we'll be 
providing intelligence gathering, providing capabilities they 
are not quite yet capable of doing, like airlift; is that 
correct?
    Secretary Panetta. That's correct.
    Senator Graham. Do you support the concept of a follow-on 
force past 2014 that's part of a strategic partnership 
agreement, that would have a military footprint post-2014 that 
would allow American air power to remain in Afghanistan along 
with special forces units, at the Afghans' request? Do you 
think that is in our national security interest to consider 
such a follow-on force?
    Secretary Panetta. I believe, as the President has stated, 
that we have to have an enduring presence in Afghanistan. We 
need to, obviously, discuss what those missions are, but I 
think clearly counterterrorism operations is one of those 
missions. Training and advising is one of those missions. 
Providing the right enablers is one of those missions. 
Obviously providing air support is one of those missions as 
well.
    Senator Graham. So you would agree with the concept that 
post-2014 if we had a configuration of American forces with 
adequate air power to assist the Afghan security forces, plus a 
Special Forces component, the Taliban days are over in terms of 
military conquest?
    Secretary Panetta. That ought to be the goal.
    Senator Graham. I think that ought to be the goal and I 
think you could do this with 15,000 or 20,000 troops, with 
several air bases spread throughout the country. To a war-weary 
public: We have air bases everywhere. If we leave Afghanistan 
and the issue is in doubt about the future of the Taliban, we 
will regret it. If we leave Afghanistan in a way to create a 
certainty about the Taliban's future, I think we can hold our 
heads up high.
    Do you think Iran is watching what we're doing in 
Afghanistan?
    Secretary Panetta. I would think without question.
    Senator Graham. General Dempsey, what is your biggest 
concern and your best hope about Iraq?
    General Dempsey. I'll start with the best hope, and that is 
that they appear to be committed to resolving the contentious 
issues among them politically, not through violence, with the 
exception of a few of the violent extremist organizations which 
remain there.
    My biggest concern is that they could potentially come to a 
decision that they no longer need our help. They might look 
elsewhere. That's why our Office of Security Cooperation there 
remains a very vital part of our strategy.
    Senator Graham. Do you see the security situation in Iraq 
getting worse or better?
    General Dempsey. I see it as being in a form of stasis 
right now. I think it is what it is for the foreseeable future, 
with of course the potential for it, based on some political 
decisions they might make, with increasing tension, for example 
in the Arab-Kurd region.
    Senator Graham. When it comes to the military budget, I 
don't see DOD as a job creator for America. That's one of the 
benefits, but I don't think we should view DOD as a way to just 
create jobs to deal with unemployment. I think we should have a 
robust defense capability to defend our values. So in that 
light, I do believe it's appropriate to reduce defense 
spending, and I do believe it's appropriate to consider another 
round of BRAC, as hard as that is for my colleagues. So just 
count me in in the process of having to make hard decisions, 
even in the defense area.
    When it comes to TRICARE premiums, is it sustainable--is 
the mandatory spending part of the budget sustainable without 
reform?
    Secretary Panetta. No.
    Senator Graham. So the question for the country is, if I 
don't get courtmartialed in the next couple of years and get to 
be a retired colonel and receive my TRICARE benefits when I'm 
60, it is okay to ask a guy like me to pay more. They haven't 
been adjusted since the 1990s, is that correct?
    Secretary Panetta. That's correct.
    Senator Graham. General Dempsey, you're willing to pay 
more?
    General Dempsey. I am, sir.
    Senator Graham. I guess the point is that we're so far in 
debt, no one group is off the table. It's hard to ask those 
who've done the most to secure our freedom to give more, but 
I'm willing to do it. To the retired community, I'm willing to 
grandfather the current system, but I'm also willing to look 
outside the box, because if we don't do something in terms of 
health care growth and entitlement, retiree benefits, you're 
going to compete the retired force with operational needs, and 
that's just not where we want to go.
    So thank you both. I don't know if $487 billion is the 
right number, but I'll work with you to get a number that is 
robust.
    One last question. Do you see a scenario in the next decade 
where 100,000 American troops could be involved over a 
sustained period of time? If you do, how would reducing the 
Army and the Marine Corps by 125,000 affect those operations?
    General Dempsey. First of all, I don't know the answer to 
that, sir. But I think we wouldn't want to shape a future where 
we completely ignored the possibility.
    The force we're building on the fiscal year 2013 to 2017 
budget is capable, we assess, of stability operations, long-
term stability operations or prolonged conflict, up to a force 
of about 50,000. The other 50,000 would have to come out of the 
Guard and Reserve.
    Chairman Levin. Thank you, Senator Graham. You have my 
proxy at lunch, by the way. [Laughter.]
    Senator Webb.
    Senator Webb. Thank you, Mr. Chairman.
    Mr. Secretary, General, first let me just say that as 
somebody who spent 5 years in the Pentagon, one of them as a 
serving Marine and the other as a defense executive, I 
appreciate all of the work that's gone into this presentation. 
We're going to have our disagreements, but, having sat on the 
Defense Resources Board for 4 years, I know how much effort has 
gone into what you brought over here.
    There are already reports--I was back in my office--on the 
discussion to slash the Army and the Marine Corps. I think for 
the record we ought to point out that what we're looking at 
here is historically consistent with the end point of sustained 
ground operations. In fact, if my numbers are correct, if you 
go back to the pre-September 11 military and look at 2017, 
which you're projecting in your testimony, Secretary Panetta, 
the Army is going to be about 9,000 higher than it was pre-
September 11 and the Marine Corps is going to be again about 
9,000 higher than pre-September 11.
    So I look forward to working with you on a lot of different 
issues, and some on which we may have disagreement. But again, 
I have great respect for all of the energy that's gone into 
this, preparation of this budget.
    I want to talk about basing in the Pacific. Chairman Levin 
mentioned this in his opening comments. Chairman Levin, Senator 
McCain and I have spent a great deal of effort on this. I 
agree, General Dempsey, with what you said. I don't see a pivot 
here. I think we've always been there, we've always needed to 
be there. I've been speaking for many years about the need for 
us to reconfigure our presence in a way not that downsizes or 
not that confronts or attempts to contain China, as some people 
are saying, but just as a way to strengthen our alliances and 
our presence out there.
    There's a strong strategic dynamic in the region. There's 
also a very important and potentially volatile political 
dynamic in Japan if we don't get this right and if we don't get 
it right soon. This has been going on for more than 15 years. 
We can't kick the can down the road--I'm not asking for your 
comment on this, but this is more along the lines of getting 
your bank statement. There are a couple things that are due to 
us and they're very important in our consideration. One is the 
reporting requirement that is scheduled to come out of the 
independent study that was mandated by the NDAA. There's a 90-
day period for which the bill was signed, which I think was 
December 31, for the study to come to the Secretary of Defense 
and then the Secretary of Defense would have up to 90 days, not 
necessarily mandated, to report to us on this independent 
evaluation of the basing structure.
    It's very important. It's going to happen at the same time 
that there are environmental statements and other issues taking 
place on Okinawa about the basing system there. I'm very 
interested in getting this study and seeing if we can't move 
forward in a very timely way to resolve this.
    The other one is the Marine Corps laydown. I have spoken 
with the Assistant Commandant about the numbers that they're 
using. I support this transition in concept. I've had many 
conversations with the Marine Corps and with others about this 
earlier. But we do need to see it. We need to see the laydown. 
It's again a part of the NDAA.
    The question that I actually have in this short period of 
time relates to the evolving situation in Syria. General, I 
would like to ask if you might characterize for us, for lack of 
a better term, the on-the-ground opposition that now exists to 
the Syrian regime? What proportion of this is domestic? What 
proportion is foreign? What are your observations?
    General Dempsey. My observations, Senator, are that it is a 
much different situation than we collectively saw in Libya. I 
think that's an important point to make, because we don't have 
as clear an understanding of the nature of the opposition. 
We're working in the intelligence community to develop it. But 
there are some significant differences vis-a-vis Syria. There 
is a chemical and biological warfare threat. There's a very 
significant integrated air defense system, a very credible 
military.
    We're watching the trend lines on their military to see if 
they are still under the control of the regime. There's also 
huge regional implications, big players and actors who have 
vested interests there. So this is one where we have to not 
only understand what's happening on the ground, but also look 
at the regional context in which we're dealing.
    Of course, we will, when asked, provide options to the 
national command authority. But this is a very different 
challenge.
    Senator Webb. First let me reiterate that I had serious 
concerns about the Libyan operation and the nature in which the 
President exercised unilateral authority. But on the Syrian 
situation, do you have any indication about the makeup of the 
on-ground opposition to the regime, how much of it is domestic 
and how much of it is in fact not?
    General Dempsey. As I sit here today, the Free Syrian Army, 
which is generally speaking the centerpiece of the opposition, 
is for the most part domestic, although we also know that other 
regional actors are providing support for it. That complicates 
the situation.
    Senator Webb. There were reports over the weekend that al 
Qaeda has been involved as a part of the opposition. Do you 
have any confirmation of that?
    General Dempsey. No confirmation. I saw the same report.
    Senator Webb. But have you discounted it?
    General Dempsey. No, not at all. Syria is an issue of a 
Sunni majority rebelling against an oppressive Alawite Shia 
regime. All of the players--this is what I mentioned a moment 
ago--in the region it seems have a stake in this. So those who 
would like to foment a Sunni-Shia standoff--and you know who 
they are--are all weighing in in Syria. It is the last 
remaining piece in the puzzle of what you and I probably months 
ago would have described as the Arab Spring, but this is a very 
important moment in the region and all the players are weighing 
in.
    Senator Webb. Thank you, General. Thank you, Mr. Secretary.
    Thank you, Mr. Chairman.
    Chairman Levin. Thank you, Senator Webb.
    Senator Portman.
    Senator Portman. Thank you, Mr. Chairman.
    Mr. Secretary and General Dempsey, thank you for being here 
this morning.
    I told Secretary Panetta that I was going back and forth 
between the Senate Budget Committee and this committee. It's 
been interesting because I'm really seeing two different points 
of view and really world views. I commend both of you today and 
your comments about the need for us to deal with the 
unsustainable growth on the entitlement or mandatory side of 
the spending. In response to your question from Senator Graham, 
is the mandatory spending for the military sustainable, you 
gave a simple answer, no.
    I will tell you, to be honest, having just engaged in the 
Senate Budget Committee about the President's budget, which was 
submitted yesterday, it not only adds another $12 trillion to 
our debt, taking it up to over $25 trillion, but it really 
takes the pass on any of the tough decisions that have to be 
made on the biggest part of the budget and the fastest growing 
part of the budget, and that's the entitlements side.
    It actually grows, under their own numbers, from about 64 
percent of our total budget now--this would be Medicare, 
Medicaid, Social Security, interest on the debt. That grows 
from 64 percent now, so the largest part of our budget, to 78 
percent during the 10-year window of the President's budget and 
yet there is no mention of Social Security, no reforms.
    On Medicare, the only reform I can see on the beneficiary 
side happens after the next term of whoever's President, and 
that's on some slight means testing changes.
    So my concern is exactly what you have outlined today, and 
I quote you from your overview document, where you said: ``Our 
growing national debt, if not addressed, will imperil our 
prosperity, hurt our credibility and influence around the 
world, and ultimately put our national security at risk.''
    General Dempsey, you talked about that during your 
nomination hearing last year, and I again appreciate the 
approach you have taken. I'm very concerned that if we continue 
down the path that has been outlined we will all be here many 
more hearings like this one, talking not about how to improve 
our national security, but instead talking about how budgets 
have been crowded out by unsustainable practices elsewhere in 
our government and we simply can't afford the force we know we 
need.
    So, with that, if I could focus on two things in terms of 
the defense budget, because I do think there is room, despite 
my concern about the bigger budget crowding out defense, within 
defense to find savings. Two areas I want to touch on quickly 
if I could are personnel and the area of procurement.
    On the personnel side, I appreciate the fact that you both 
again have focused on compensation, health care benefits. 
You've proposed a retirement review. These are all tough 
issues. I think we all agree that our men and women in uniform 
are our single greatest asset and we need to be very cautious 
on the personnel side.
    On the other hand, we need to be sure that we are not 
crowding out, even within the defense budget, the need for us 
to be sure that we have adequate resources for operations and 
maintenance.
    So I would ask you this. When you look at what you have 
proposed, in essence you've taken out one issue to a commission 
on the retirement issue, again a very delicate issue, and you 
have some suggestions on changing compensation in the military 
health system here, although I would suggest more would have to 
be done to meet your own criteria you've laid out.
    My question to you is, is there a more holistic approach 
here, in that this does relate to retention and obviously our 
ability to attract the great professional force that we have 
now?
    General Dempsey. We thought about bundling these issues 
together into, as you described it, a holistic look at pay, 
compensation, health care, and retirement. The chiefs and I 
were of the opinion that we wanted to address the issue we saw 
before us that we knew had to be changed, and that was pay, 
compensation, and health care, but take the time to study the 
impact of retirement change, because one of the things we're 
concerned about is, although it's counterintuitive, you know 
that about 70 percent of the force retires--not retires, but 
separates before retirement, but 100 percent of the force, when 
asked, even at the 5-year mark of their career, will say to 
you: Don't screw around with my retirement or I may not stick 
around, even though they know that the chances of them actually 
retiring is only about 30 percent.
    So there's a psychological factor with retirement benefits 
here that we don't fully understand yet. We want to take some 
time to understand what the impact of retirement reform would 
be on both recruitment and retention. That's why we all felt, 
the chiefs and I, that we should separate these.
    Senator Portman. Secretary Panetta, any thoughts with 
regard to this, given your background on the budget issues?
    Secretary Panetta. I think it's important, as a former OMB 
Director that I was, that we have to approach this budget based 
on the fact that there's no holy ground here. You have to look 
at everything and you have to question everything. We 
approached it on that basis.
    We talked about allowances, we talked about pay, we talked 
about pay raises, we talked about all the health care areas. We 
looked at a number of those areas. We felt we have to take a 
step to make sure that compensation is part of the answer to 
what we have to achieve here in savings. For that reason, we 
selected the areas that we looked at.
    I think it's important that all of this has to relate to 
what it means to the soldier, the uniformed man or woman who is 
there on the battlefield. How do we make sure that we provide 
the benefits that are necessary to attract the very best? 
Frankly, we have the very best operating on behalf of the 
United States today. How do we do that, how do we maintain that 
benefit base that's important, but at the same time, understand 
that we have to control these costs in the out-years?
    That was the dilemma that we had to confront. We think we 
approached it in the right way. Is there more that can be done? 
Probably.
    Senator Portman. I know that members of the committee know 
this, but maybe for someone watching, this is an increasing 
part of your budget, just as it is for the Federal budget, as I 
mentioned, if you look at your percent of spending on TRICARE, 
for instance, as a percent of your overall budget.
    So as one member of the committee--and I think I speak for 
a lot of other colleagues, including at least one I heard speak 
earlier--we look forward to working with you on that and trying 
to be supportive.
    On procurement, we don't have time to go into it because my 
time is up. But just again, to focus on competition, the need 
for us maybe to spend a little more upfront to be sure we have 
a competitive process because it'll save so much over time. I 
look forward to maybe a follow-up question in writing in that 
regard.
    Thank you, Mr. Chairman, and thank you, gentlemen.
    Chairman Levin. Thank you, Senator Portman.
    Senator McCaskill.
    Senator McCaskill. Thank you, Mr. Chairman.
    Thank you all for your service to our country. As some of 
you know, I have spent a lot of time working on contracting 
issues as a member of this committee and other committees. I 
don't need to tell you what a huge piece of your budget 
contracting represents. The Project on Government Oversight 
released a report last year that is the first in-depth analysis 
that's been done in a while about the cost of personal services 
contracts as compared to the costs of a Federal employee.
    That study showed that we are paying contractors 1.83 times 
more than the government pays Federal employees, and that's 
including taking into account the benefits package that goes 
along with the personnel costs of hiring a Federal employee.
    I think there's been an awful lot of talk around the Senate 
about freezing Federal employees' salaries and cutting the 
number of Federal employees, but there's been very little real 
difficult work of trying to hold down the cost of personal 
services contracts.
    Secretary Panetta, with the reductions of DOD personnel 
contained in this budget, what are you doing to ensure that 
reducing--because what's happened over the years is, while 
we've tried to hold the line on Federal employees, contracting 
has just ballooned. You are by far number one in that. Number 
two is DHS. So I'd like you to address that if you could, 
either you or Mr. Hale.
    Secretary Panetta. Senator, you've provided tremendous 
leadership on this issue, and it is of great concern to me 
personally because it is an area that has expanded 
dramatically. Almost everywhere I go in my new capacity, I see 
contract employees obviously providing a lot of services. Some 
of them are very important and they perform a very important 
role. Some of them I question whether or not we could perform 
the same role and be able to do it at a smaller price.
    We did look at this area as part of our efficiency approach 
to trying to see if we could gain some savings, and I'd like to 
ask our Comptroller to speak to that.
    Mr. Hale. Just briefly, I think you know, Senator 
McCaskill, we had an initiative a couple of years ago to in-
source jobs where it was cost-effective. We are still looking 
at where it's cost-effective. I think with these budget 
cutbacks we're looking at what the right mix is. Probably both 
contractors and civil servants are going to come down over the 
next few years in our budget.
    We have to try to find the right mix. I don't claim we have 
an easy formula, but I think we are looking at it in that 
context, which is the right one: What's the most cost-effective 
way that we can get the work done?
    Senator McCaskill. We're going to have a hearing on this in 
the Subcommittee on Contracting Oversight of the Homeland 
Security and Governmental Affairs Committee, and what I will be 
looking forward to seeing is what kind of strict analysis is 
DOD embracing to get a handle on contract employees versus 
full-time Federal employees? Because it surprised me when I got 
here that not only do we not know how many contractors there 
were in Iraq, we didn't know how many contractors there were 
sitting in government buildings within 5 miles of where we're 
sitting right now. That is a huge problem, that the contractors 
just became task orders, as opposed to keeping a handle on how 
this monster got out of hand.
    We also are going to have some legislation coming from the 
Wartime Contracting Commission that finished its work. I will 
look forward to direct input from you about the legislation 
that we will be hopefully filing this week, and we will be 
working with this committee to try to get some of its 
provisions included in the defense authorization.
    As I look at Afghanistan, $16 billion GDP, $2 billion of 
that is not from us. That is a huge impact on that country. As 
some of you are aware, I've also been looking at the way that 
the Commanders' Emergency Response Program (CERP) funds have 
been used over there in terms of infrastructure and how for the 
first time in the budget there was actually an infrastructure 
fund embedded in the budget coming from the military to do the 
things that traditionally the DOS had always done. That is, 
large infrastructure. It was like CERP on steroids, is 
essentially what the infrastructure fund was.
    I'm going to quote what the Counterinsurgency Advisory and 
Assistance Team (CAAT) said. The CAAT, which provided a report 
directly to General Allen, found that the CERP was not 
achieving counterinsurgency goals. I'm going to quote this 
report:

          ``Current incentives promote spending CERP funds 
        without sufficient accountability. There is no system 
        for determining what projects are likely to advance 
        counterinsurgency effects and no apparent desire to 
        objectively evaluate whether counterinsurgency 
        objectives were achieved. Commanders at various ends of 
        the spectrum are judged by the amount of funds 
        committed, obligated, or spent over actual measures of 
        effectiveness. This situation is not only wasteful, but 
        allows for corruption, insurgent resource capture, and 
        delegitimization of the Afghan state. We retain primary 
        responsibility for project success or failure while the 
        host government and population are spectators.''

    I know that CERP has been something that has been held near 
and dear, and now the Afghanistan Reconstruction Fund is an 
outgrowth of that because we've gotten beyond fixing window 
fronts to large highway construction projects, without the kind 
of rigorous analysis in terms of sustainability. As we drop off 
the cliff in Afghanistan in terms of what we're giving this 
country of GDP, aren't we creating a scenario that a lot of 
this money is going to go into the category that it went into 
in Iraq, and that is, a lot of wasted taxpayers' dollars on 
Afghanistan infrastructure?
    Secretary Panetta. Senator, I'll have a general comment on 
the actual use of those funds, but let me say this. I share the 
concern that you've indicated. As we do draw down and as we 
turn over these responsibilities to the Afghans, one of the 
issues that we have to think long and hard about is the 
sustainability of these efforts.
    For example, in the Afghan force that takes over and 
provides the principal security for the country, what is the 
level that we need? Is it sustainable? Can this country provide 
the support system that it has to? What kind of economic base 
is that country going to have for the future? The issues that 
you've raised all relate to that question. What are we looking 
at in terms of the future of this country and can it sustain 
itself?
    That's going to be something we're going to have to give a 
lot of consideration to. Not only the United States, but 
obviously all of our NATO allies have to take a hard look at 
what we do to try to sustain this country in the future if 
we're going to be successful there.
    General Dempsey. I'll just add, Senator, I first of all 
hope we don't drop off a cliff. One of the things we've been 
discussing is the glide slope in every sense. It's our glide 
slope, it's the ANSF glide slope. It's our funding glide slope.
    If we do drop it off a cliff, it will have the result you 
just predicted. That's the reason that I would suggest we can't 
fall off a cliff in Afghanistan. We have to transition this 
thing responsibly.
    As for whether they have the capacity to deal with all of 
this, that has been--I've done this in several countries around 
the world, to include Iraq most recently, and that is always 
the most difficult part of these missions, is building the 
capacity, the capability and then the capacity, to--it's really 
institution-building. It's pretty easy to build infantry 
battalions. It's pretty easy to partner with them and embed 
with them. But the institution that sits above it all has to be 
developed.
    I would suggest to you that we've made some pretty 
significant progress in that regard since about 2008, and it is 
part of our strategy going forward. But I share your concerns. 
I'm not sure that I share the understanding of all of the 
results of that study you just cited, because depending on when 
it was done and who did it and where they did it, it could have 
a very different outcome other places. I'd suggest to you that 
we owe you some information on that going forward.
    Senator McCaskill. I have to tell you, I think that some of 
the stuff that we've built in Afghanistan, we can go ahead and 
build the stuff, we can hire the people to build it, our know-
how can provide the leadership to build it, and I think it's 
been like wishful thinking that the institutional capacity of 
this country will catch up. We have a power generation facility 
in Afghanistan that's sitting there as an expensive extra power 
generator because they can't even use it, and it was hundreds 
of millions of dollars of American taxpayers' money.
    That kind of stuff, we just can't afford to do that. I have 
a modernization to move some of this money back to the United 
States for infrastructure, and I think it's important that we 
do that because of the needs of this country, and the real 
problem that a lot of this money for security purposes is 
ending up in the bad guys' hands, and we know that. There's 
been way too many instances that we've found it.
    So I appreciate the more information you can give me about 
what kind of rigor you're bringing to the sustainability 
equation, because I can't find that rigor and I've looked for 
it.
    Thank you, Mr. Chairman.
    Chairman Levin. Thank you, Senator McCaskill.
    Senator Ayotte.
    Senator Ayotte. Thank you, Mr. Chairman.
    General Dempsey, Secretary Panetta, Mr. Hale, thank you for 
your leadership during very challenging times for DOD.
    I appreciate very much that we need to find savings in 
defense in a way that does not undermine our national security, 
no question. But please count me out when it comes to BRAC, and 
here's why. I want to echo concerns that Secretary Panetta 
himself, having gone through this process, raised before the 
House committee in October, where, Mr. Secretary, you said:

          ``I went through BRAC. I know that all the dollars 
        that people looked for huge savings in BRAC, and yet 
        they didn't take into consideration the cleanup, they 
        didn't take into consideration all the work that had to 
        be done. They didn't take into consideration all the 
        needs that had to be addressed. In many cases it wound 
        up costing more. In fact, the recent Government 
        Accountability Office report found that it cost us for 
        the 2005 BRAC round 67 percent more than we estimated, 
        and in fact we're not going to see any savings from the 
        2005 round until 2018, 13 or 14 years down the line. So 
        I have serious questions whether we save any money from 
        a BRAC process. Particularly at a time when we're still 
        making decisions about our global posture and our 
        force, end strength of our forces, I don't think it's 
        the right time for a BRAC process where we may not save 
        a dime, frankly. That's what really concerns me at the 
        end of the day.''

    I want to ask you, Secretary Panetta, about our 
reengagement rate at Guantanamo. Director Clapper testified, I 
believe it was last year or in the spring, that our 
reengagement rate of those who had been released from 
Guantanamo Bay was 27 percent. Do you know what the number is 
now, and has that percentage of 27 percent getting back into 
the fight gone up?
    Secretary Panetta. I think 27 percent was over the long 
period stretching back into the last administration, where most 
of the individuals were transferred. I believe under the ones 
that have been transferred under this administration that it's 
less. I can't remember the exact percentage.
    Senator Ayotte. But overall it's been--whatever 
administration released it, Director Clapper said the overall 
reengagement rate is 27 percent; is that correct?
    Secretary Panetta. That's true, and I think that number is 
correct. I'll get back to you on the specifics.
    [The information referred to follows:]

    Data regarding the reengagement rate of former Guantanamo Bay 
detainees is collected and distributed by the Office of the Director 
for National Intelligence (ODNI). In March 2012, ODNI released updated 
public statistics on detainee reengagement for all detainees 
transferred from Guantanamo Bay through December 29, 2011: Out of the 
total 599 Guantanamo detainees transferred, 95 or 15.9 percent are 
confirmed to have reengaged in terrorist or insurgent activity, and an 
additional 72 or 12 percent are suspected of so reengaging.

    Senator Ayotte. That would be great. I just want to know if 
the overall reengagement rate, regardless of who released them, 
has increased at all.
    The reason I asked is, in follow-up to Senator McCain's 
question earlier about what we've heard could be the 
administration's potential release of five Guantanamo prisoners 
in exchange to the Taliban, I just wanted to raise concerns 
about it on a couple of fronts. Number one, as I see it, 
according to the Wall Street Journal and the Washington Post, 
of these five people--let's be clear. If these reports, public 
reports, are accurate, we're talking about individuals who, 
senior-most Taliban commander in northern Afghanistan, someone 
who is an alleged war criminal in his role for the massacre of 
Shiite Afghans. Two of them are potentially involved in killing 
of a Central Intelligence Agency (CIA) operative, an American 
CIA operative. Of the remaining three, one is alleged to have 
helped smuggle weapons in to attack U.S. troops and is loyal to 
the Haqqani network, another one is directly associated with 
Osama bin Laden and Mullah Omar and then the final one may 
belong to al Qaeda and his release has been called highly 
problematic.
    All five of these individuals were characterized by the 
administration in 2010, if these reports are accurate about who 
these individuals are, all five of them were deemed by this 
administration in 2010 ``too dangerous to transfer, but not 
feasible for prosecution.''
    I know that you have to certify, Secretary Panetta. Two 
years later, is there something changed about these individuals 
that we're unaware of? My follow-up would be, as I understand 
the administration's plan, this is in exchange for goodwill 
from the Taliban. If we are going to release five, if these 
reports are the case, these public reports of who these 
individuals are, dangerous individuals who could get back and 
reengage with our troops, and who aren't just soldiers, they 
appear to be leaders among the Taliban and Haqqani networks, 
that if we were to release them in exchange for a measure of 
goodwill, it seems to me that, why aren't we getting a 
ceasefire if we're going to put out people that are so 
dangerous?
    So two questions to you: First, has something changed from 
2010 of the assessment of these five individuals in terms of 
being too dangerous to release? Second, do you think this is a 
good deal if we're only going to get a goodwill gesture from 
the Taliban?
    Secretary Panetta. Let me reemphasize that absolutely no 
decisions have been made with regards to reconciliation. There 
have been some discussions, but the conditions for 
reconciliation have been made very clear, that the Taliban has 
to lay down their arms, they have to renounce al Qaeda, they 
have to recognize the constitution in Afghanistan. As far as I 
know, none of those conditions have been met at this point, and 
obviously would be part of the discussions.
    As to whether or not as part of whatever these discussions 
involve that there was a transfer as part of that, under my 
obligations as Secretary, I have to certify that these 
individuals will not return to the battlefield, and I have to 
be convinced that steps are taken to ensure that that does not 
happen. Until I am assured that that's the case, I'm not going 
to certify.
    Senator Ayotte. I appreciate that, Mr. Secretary. These are 
very dangerous individuals if they are as they've been reported 
by the Washington Post and Wall Street Journal, and in 
particular to transfer them for a so-called goodwill gesture. I 
appreciate your list of conditions of a ceasefire, laying down 
of arms, and I obviously am very concerned to transfer these 
individuals at all, given how dangerous they have been in the 
past.
    Frankly, we haven't always been right about this. We've 
been 27 percent wrong, whatever administration we're in. In 
fact, Mullah Zakir was assessed as a medium risk--these guys 
are all high risk--a medium risk, and he was released, and he's 
now leading the Taliban forces fighting the U.S. Marines in the 
Helmand Province.
    So we do our best in these situations, but as a prior 
prosecutor the best predictor of future behavior is usually 
prior behavior, and these guys aren't good. So I appreciate 
your looking at this certification very carefully.
    Thank you all for being here today.
    Chairman Levin. Thank you, Senator Ayotte.
    Senator Udall.
    Senator Udall. Thank you, Mr. Chairman.
    Good morning, gentlemen. I'm sure you'd rather spend 
Valentine's Day with any group other than the Senate Armed 
Services Committee, so thanks for being here.
    It's apparent that the fiscal challenges that DOD faces are 
those that we face across the Federal budget. We've had a 
respite given, the end of the war in Iraq. But unfortunately, 
more broadly--and I'm not speaking to DOD, but I'm speaking 
more broadly--we've mismanaged our finances across the board, 
and we've put ourselves in a pretty tough, I would say even 
unacceptable, financial position.
    If you look at our history, we've leveraged our economic 
and military strength to accomplish our goals, and we can't 
effectively project our power abroad if we're weak at home. 
Then we've also undercut our domestic and strategic goals by 
managing our finances so poorly.
    You both know in spades that we have to carefully strike a 
balance between fiscal responsibility and strategic capability. 
We can't hollow out the force, we can't eat our seed corn. We 
have to get this right.
    Fortunately, I think we have a lot of history to guide us, 
and we have to make sure that we incorporate the lessons 
learned from our successes and both our failures. As a mountain 
climber, I always learned more when I was on the mountains I 
didn't climb as the ones I was successfully summitting.
    But, General, in that spirit I wanted to turn to the 
summary that I've heard that DOD has affirmed its commitment to 
Department-wide research and development programs and the 
continued development of alternative energy technologies. DOD's 
always been an innovator and military research has created a 
number of products that we now consider essential to everyday 
civilian life.
    At the same time, there are concerns that there are 
operational needs that need to be addressed now. Can you 
discuss the thinking behind this focus on the future and how 
that decision affects current operations and those that might 
be just over the horizon?
    General Dempsey. On the issue of energy, operational 
energy, I can.
    Senator Udall. Certainly on energy, but then even more 
broadly, too--medical advances. I know you have a long list.
    General Dempsey. We do, sir. In terms of looking out to 
Joint Force 2020, that's exactly why we want to project 
ourselves out and then look back and find our way forward. This 
budget is the first step in that.
    I will use operational energy as an example. We lose 
soldiers, marines, notably airmen and soldiers, on the roads of 
Afghanistan going from forward operating base (FOB) to FOB, on 
resupply missions and so forth. So to the extent we can create 
autonomous or semi-autonomous in terms of energy consumption, 
power and energy, organizations, net zero in terms of their 
consumption of power and energy, we'll actually save lives and 
become a lot more agile because we won't be as tied to some 
kind of traditional linear line of communications.
    So we're all in. The Army has five installations--one of 
them is Fort Carson, CO, by the way--where we're trying to 
receive a net zero energy situation. But that's kind of the 
garrison environment.
    Operationally, we're trying to do the same thing with our 
tactical units. Every Service, frankly, is working on this 
diligently and I think this budget reflects that.
    Senator Udall. There have been some compelling stories 
about what the marines are doing in theater, on the front lines 
at the FOBs. As your predecessor put it well, saving energy 
saves lives. So I commend you for what you're doing. I look 
forward to working with you in this important area as we move 
forward.
    Mr. Secretary, if I could turn to you. Congress, as I think 
you're aware, worked with DOD to establish an Operationally 
Responsive Space (ORS) Office within the Air Force to rapidly 
field small responsive satellites that are tactical in nature 
and tasked by the combat commanders in the field. That's in 
comparison to the large national systems that take somewhere 6 
to 8 years and literally billions of dollars to field.
    As I understand it, in fiscal year 2013 DOD is proposing to 
abolish the ORS Office, zero its budget from $111 million last 
year, and integrate whatever capability is left into the Space 
and Missile System Center. Can you explain DOD's thinking here, 
when the first satellite they launched was judged by U.S. 
Central Command (CENTCOM) to be successful? ORS-1 started 
sending images back to them in the fall of 2011, almost 3 years 
to the day after the program was started.
    One additional question. Is there a possibility that this 
decision puts the cart before the horse? I assume the budget 
was probably put together before CENTCOM started using the 
system. Can you explain the reasoning here?
    Secretary Panetta. Senator, let me have Bob Hale talk to 
that.
    Senator Udall. Great.
    Mr. Hale. Senator, what we've done, as you said, is 
terminate the program office, but not the commitment to ORS 
initiatives. It'll be put into Space Command, where it can be 
looked at in the broader context. We think that's the right 
decision, as opposed to focusing on one particular approach, 
but to look more broadly at this initiative. There are a lot of 
ways to do it. We need to find a cost effective way. So I think 
that's our approach.
    Senator Udall. I look forward to working with you to make 
sure we continue to get this right. We talked about smaller, 
agile forces on the front lines and this is in a way a form of 
doing that, but in space.
    Let me turn to Iraq and Afghanistan. We've ended our 
mission in Iraq. We're drawing down our surge forces in 
Afghanistan. We've proposed reducing end strength in all four 
Service branches, substantially reducing the number of 
aircraft, ships, and Army BCTs. After all that and more, when 
adjusted for inflation, the DOD budget for 2017 will still be 
at almost exactly the same level as it was in 1986. That's the 
height of the Reagan-era buildup against the Soviets.
    Can you talk about the major reasons why we're spending the 
same amount of money for a smaller force?
    Secretary Panetta. Senator, what we have here is that $487 
billion was in the planned DOD budget over the next 10 years, 
and that included, obviously, a lot of what we've had to reduce 
in terms of the budget looking forward. So overall, make no 
mistake about it, even though the defense budget shows a slight 
increase between now and 2017, the bottom line when you add 
what we had proposed in our budget plus the amount that would 
be involved in terms of the war costs, we're going to be going 
down pretty dramatically, by about 20 percent, which is 
comparable to what we've seen in past drawdowns.
    So this budget bites. But at the same time, by virtue of 
what we've done we've made it much tighter. Obviously, we've 
had to take down the force structure. We've had to make cuts in 
ships and planes and in other areas, space, as you said. But 
the bottom line is we think we have a sustainable budget that 
will take us to the kind of force we're going to need in order 
to meet the threats that are out there in the world.
    Senator Udall. Thank you, Mr. Secretary. Thank you, General 
Dempsey, for your service.
    Chairman Levin. Thank you, Senator Udall.
    Senator Collins.
    Senator Collins. Thank you, Mr. Chairman.
    I'm sure at this point in the hearing, Secretary Panetta, 
that you're contemplating what Danny Akaka said to you and 
wondering about your career choice. But we do appreciate your 
service and indeed the service of all of you.
    General Dempsey, I want to bring up with you an issue that 
really troubles me. Since May 2007, Afghan security forces have 
killed 70 American and allied troops and wounded many more, 
over 100 more, in 45 separate attacks. One of those killed was 
a Maine soldier, Private First Class Buddy McLain.
    I'm so disturbed by the frequency of these attacks. It 
raises questions about our vetting process. It raises concerns 
among our troops when here they're risking their lives to train 
and assist these Afghan troops, only to have some of them turn 
on them and kill them.
    It's my understanding that a CENTCOM red team report 
concluded that there was a crisis of distrust that permeated 
both the Afghan national security troops that we're training 
and our own troops as well. So here they're being sent out on 
joint missions, they're training side by side, but they don't 
trust each other.
    Unless steps are taken to stop these attacks on our troops 
by the Afghan security personnel, that level of trust that is 
so necessary for a successful strategy is going to be 
extraordinarily difficult to achieve. After all, these are the 
very security forces that we're depending on to take over from 
us so that we can come back home.
    So I would ask you, what is being done to address this very 
serious and destructive problem?
    General Dempsey. Thanks, Senator. Yes, I'm well aware of 
this issue. In fact, I just recently briefed the President on 
it, who shares your concern. As you say, it's actually 47 
instances. About 11 of them were related to infiltration or 
self-radicalization. The remainder were issues of personnel. 
It's stress, it's tribal. It's not related to Taliban influence 
or ideological issues. That's an important point. It doesn't 
make it any better, but it makes it more understandable.
    The other thing I want to mention is, it's not just what we 
call--it's not just them attacking us. They're attacking each 
other, and probably at a rate of about three times. So we are 
interested in this. We have an eight-step vetting process that 
includes--I don't have the entire thing memorized, but it 
includes things like letters from tribal elders, biometrics, 
training, indoctrination, and then the embedding of 
counterintelligence agents, both United States and coalition, 
but also Afghans themselves.
    Recently, because of this recent issue with the French you 
may recall, President Karzai and the Ministry of Interior, 
Bismillah Khan, agreed to embed some counterintelligence agents 
in throughout the Afghan National Army in order to try to get 
after this.
    So we're seized with it. It is tragic and we are taking 
steps to improve it. We are not going to get it to zero. It's 
the nature of this kind of conflict.
    Senator Collins. It's one thing to tell a family that's 
lost a loved one that they did so in support of the Afghan 
people to help them have a secure country and to make our 
national security better. But it's so different to try to 
console a family that has lost a son or daughter as a result of 
Afghan security force members killing them. I just think it's a 
terrible problem, and the seeming frequency of it is really 
disturbing.
    I realize we're never going to get to zero, but there are 
too many incidents.
    Secretary Panetta. Senator, if I could, I share your 
concern deeply. I just returned from the NATO ministerial, 
where obviously the French were very concerned, having lost 
some of their troops to this situation. What we did at the NATO 
ministerial was to task General Allen to report back on the 
steps that are being taken. Before this, he had actually taken 
some of the steps that General Dempsey recommended. They are 
moving aggressively to try to do a better review of those that 
are going into the Afghan army, better checks, better 
background checks, in order to ensure that these incidents are 
cut back.
    I would say that, even though no killings this way are in 
any way justifiable, that it still remains not something that 
is something that's endemic. It is sporadic, but nevertheless, 
we have to address it and make sure it doesn't happen.
    Senator Collins. Thank you. I would ask that your offices 
keep me informed as you do try to improve the process.
    Secretary Panetta, I share a lot of the concerns that my 
colleagues have expressed about some of the cuts in the budget, 
particularly those that affect shipbuilding and the size of our 
fleet. It seems inconsistent to say that we're going to focus 
on the Asia Pacific area and yet not seek to get to what for 
years has been the absolute minimum goal of 313 ships.
    I am pleased, however, that the budget request indicates 
that DOD intends to seek a multi-year procurement plan for the 
DDG-51 destroyers between now and 2017. First of all, do you 
support that plan, and do you see that as helping to produce 
the kinds of efficiencies that will lead to a lower cost per 
unit?
    Secretary Panetta. Absolutely. I think that's extremely 
important. Two things are important. We want to maintain--we 
have 285 ships now. We want to be at 285 ships in 2017. In the 
next 5 years, our hope is to gradually move up to 300 ships by 
2020. So we're clearly intent on having a Navy that is fully 
capable to project that forward presence that we're interested 
in.
    Second, I think we have to do it in order to protect our 
economic base. We have to have a strong industrial base here 
that supports DOD, and for that reason my instructions are to 
do everything possible, not only to obviously get better 
competition and better savings, but to make sure that we keep 
our industrial base busy serving our needs.
    Senator Collins. That is so important, because once that 
industrial base is gone, you never get it back. Once those 
trained workers go into other fields, you've lost them forever, 
and that would greatly weaken our capabilities. I agree.
    Thank you for that response.
    Thank you, Mr. Chairman.
    Chairman Levin. Thank you, Senator Collins.
    Senator Hagan.
    Senator Hagan. Thank you, Mr. Chairman.
    General Dempsey, Secretary Panetta, and Mr. Hale, thank you 
for your service, and it is good afternoon now. Thank you for 
your leadership, particularly during this time.
    Improvised Explosive Device (IED) proliferation is a key 
concern of mine and it certainly has been for quite a while. I 
support anything that we can do to counter IEDs and obviously 
protect our troops, and I also support anything we can do to 
improve the detection rates and interdict the flow of caches of 
ammonium nitrate.
    Reportedly, last year in Afghanistan IEDs caused over half 
of U.S. military deaths, and IEDs will continue to pose an 
enduring threat to our military men and women. I believe we 
need an enduring capability to counter this threat. However, we 
have to ensure that our countermeasures effectively deal with 
the types of IEDs that we face now and in the future, along 
with the environments that they'll likely be utilized in, and 
our efforts must be geared toward countering IEDs in any 
locale.
    My figures show that we've spent approximately $17 billion 
on various counter-IED initiatives and equipment, not counting 
the $45 billion spent on mine-resistant ambush protected (MRAP) 
vehicles. I see these, our young soldiers, all the time with 
loss of limbs. We host wounded warrior luncheons in my office. 
I see them at the airports. I really want to do everything 
possible we can to counterdict the IEDs.
    But at the same time, we're spending billions of dollars to 
fight a technology that currently is costing the enemy tens of 
dollars. So I'm wondering, how do we figure out how to alter 
this investment ratio? What investments will DOD make in 
developing effective IED countermeasures in order to protect 
our troops and at the same time avoid restricting their freedom 
of movement?
    General Dempsey. Senator, the IED challenge is the enemy's 
asymmetric tool. I think you're correct in stating that it has 
been the biggest killer on the battlefield and is likely to 
remain so. That'll be true, I think, by the way, wherever we're 
deployed. I think we are so capable that they will find ways to 
attack us, and typically now that's through IEDs.
    The next challenge, by the way, will be precision rockets 
and missiles. But we'll get to that one.
    To your point about IEDs, the way we're trying to address 
the cost ratio is by expanding--and we have been doing this--
the aperture. So it's not just about trying to find 
technological means to defeat the device. Defeating the device 
is important--under-armor improvement kits, MRAP, as you say, 
mine detection, deep penetration radars, or ground-penetrating 
radars. But it's also training to identify signatures, and I'll 
explain that briefly in a second, and then also attacking the 
network.
    So you have to do all three. You have to identify 
signatures, and that is to say the components, the chemicals, 
and then find ways to identify those components and attack the 
supply chain. Then it's attacking the network. That includes 
the financiers and includes those who emplace. Then finally, 
it's defeating the device.
    We've gotten actually quite good at it, but again this is 
the enemy's principal munition that he uses against us and it 
does continue to incur casualties. So we just have to stay with 
it. I don't have any better answer than that.
    Secretary Panetta. If I could, Senator, follow up a little 
bit on that?
    Senator Hagan. Okay, yes, please.
    Secretary Panetta. Probably one of the best things that was 
developed was the MRAP, and it has saved a lot of lives and it 
was done on an expedited basis. So it's a good example, 
frankly, of trying to produce something needed by our fighting 
men and women on a fast basis. We're continuing to, obviously, 
do that kind of research, to try to develop the best ways to 
try to protect our young men and women.
    I agree with you, anybody who's seen the results of an IED 
has to shudder at the devastating wounds that result from that.
    The other piece of this, though, relates to the supply 
network for these IEDs. In some ways that relates to the safe 
haven in Pakistan that continues to supply a lot of this. That 
is an area that we believe we've urged the Pakistanis to 
address it. We think that whole issue needs to be addressed if 
we're going to be effective at trying to cut back on these.
    Senator Hagan. That was actually my next question, and I 
know we've discussed this before: What is DOD doing to put 
pressure on Pakistan's network of the distribution of ammonium 
nitrate?
    Secretary Panetta. We have made very clear to them where 
these threats emanate from. We've identified locations. We've 
directed them to specific sites. We've urged them to take 
steps. In some cases they have. In some cases they wind up 
there too late. But we're continuing to impress upon them that 
they have to be part of the answer to dealing with this issue.
    Senator Hagan. I think that would help tremendously, and 
hopefully lowering the number of the IEDs that are placed.
    Secretary Panetta, I also wanted to thank you for lifting 
the Marine Corps variant of the JSF off probation. The decision 
I believe is essential for the Marine Corps to operate and to 
move seamlessly from the sea ashore and in the air. It's also 
key to preserving the strategic value of our amphibious 
capabilities. Airlift capable of short takeoff and vertical 
landing (STOVL), a great example is when the F-15 fighter pilot 
crashed in Libya and these airplanes were able to, I believe 
within about 90 minutes, take off from a large-deck amphibious 
ship, rescue the pilot, and have him back on board. So 
obviously there is a critical need.
    I also understand that the original JSF procurement was 
currently planned at 2,443 aircraft, and in light of the new 
Defense Strategic Guidance and budget, the JSF program perhaps 
is looking at being restructured, which may include fewer 
aircraft spread out over a longer timeframe. According to 
Deputy Secretary of Defense Ashton Carter, DOD will slow its 
approach to full rate production of aircraft.
    Do we have a projected timeline to complete the necessary 
testing and implementation of developmental changes in order to 
start buying the aircraft in higher quantities, and how is DOD 
conveying this to the defense industrial base, which Senator 
Collins was just talking about?
    Secretary Panetta. We think it's extremely important to get 
these fifth generation fighters out there as soon as we can. 
Obviously, it's taken time. There's been a lot of testing. 
They've had to readjust. The STOVL is the best example of that. 
There were five areas that were identified that put it on 
probation. They dealt with all five areas. It's tested well. 
Now, we're basically into software testing right now, and one 
of the reasons we wanted to slow it is to make sure that we 
knew what the problems were and we could get ahead of it, 
rather than go ahead producing these things and costing even 
more if we're catching up with some of the problems.
    So we think we've set the right timeframe. I think our hope 
is that by, what, 2017, we'll begin to produce these planes?
    Mr. Hale. We're buying them now, some tests. But they will 
be operational aircraft as well. We've just slowed the ramp, so 
we don't buy so many and then have to fix them later, which is 
very expensive. So we're buying them now. We'll buy 29 aircraft 
in fiscal year 2013, and I don't have in my head the number in 
2017, but it will be substantially higher than that. We've just 
slowed down the ramp.
    Senator Hagan. My time for questions is over, but I did 
want to emphasize that I think it's critically important that 
DOD continue to invest in S&T programs and the research and 
development initiatives. These are the seeds that we need to 
plant and nurture in order to ensure that our military remains 
the best and most technologically advanced in the world, 
especially when dealing with the emerging threats. I just don't 
think we can emphasize enough the need for research and 
development.
    Thank you, Mr. Chairman.
    Chairman Levin. Thank you, Senator Hagan.
    Senator Cornyn.
    Senator Cornyn. Thank you, Mr. Chairman.
    Gentlemen, thank you for being here. You have my respect 
and admiration.
    You also have a very difficult job, which we've talked a 
little about. But let me just start with a quote from the DNI, 
James Clapper, who 2 weeks ago said: ``Never has there been in 
my almost 49-year career in intelligence a more complex and 
interdependent array of challenges than we face today. 
Capabilities, technologies, know-how, communications, and 
environmental forces aren't confined by borders and can trigger 
transnational disruptions with astonishing speed, as we have 
seen.''
    I doubt you would disagree with his comments. I don't know 
anybody who would.
    But the challenge we're all struggling with--and Senator 
Lieberman, among others, has expressed this--is our heartfelt 
desire to have the mission determine the budget and not the 
budget the mission. You are, of course, constrained by law that 
Congress passes and that the President signs, so we realize 
that this is our responsibility. Your responsibility is to try 
to minimize risks and to maximize our national security, given 
the money appropriated by Congress.
    I appreciate, General Dempsey, your talking about looking 
beyond the budget window to long-term risk. But let me talk 
about a near-term risk and something that's already been 
alluded to here. That is, Secretary Panetta, you and others, 
have made statements that there are certain red lines with 
regard to Iran--such as blockading the Straits of Hormuz, 
building a nuclear weapon. Iran is important to us, it's 
important to the region, but it's an existential threat to 
Israel, our ally. I don't believe they're going to wait on 
anyone else in determining what determines their right to 
continue to exist and their people's security.
    Of course, Iran's already been killing Americans in 
Afghanistan and Iraq in a low-grade war against the United 
States and other NATO allies. But if Iran is hit by Israel, 
what sort of retaliation would you anticipate against not only 
Israel, but other countries in the region and American 
personnel in the Middle East?
    Secretary Panetta. The General suggests that we ought to 
look at a closed session to really address all the implications 
of what that may or may not mean. Obviously, we're very 
concerned about it. We're looking at all of the implications 
and consequences that could result. But it really involves 
intelligence and we should do that in closed session.
    Senator Cornyn. I respect your judgment on that, Secretary 
Panetta and General Dempsey, and I look forward to further 
briefings on that.
    But it strikes me that, we're not saying we're cashing the 
peace dividend, but we are certainly making disproportionate 
cuts to DOD and our national security expenditures. My view is 
that this is the number one responsibility the Federal 
Government has--a lot of other things that we do, we could put 
off or do without. But this is it; this is the most important 
thing that the Federal Government does. There are very real, 
not long-term but near-term, potentialities that could embroil 
not only the United States, but the Middle East and our allies, 
in a full-fledged war that would have dire economic 
consequences to our country and obviously to our allies. More 
than economic, also matters of life and death and existence.
    Secretary Panetta. Senator, without getting into the 
particulars, let me just assure you that we have very strong 
capabilities in place to deal with any circumstances that could 
develop in that region. We feel fully prepared for whatever 
might take place.
    Senator Cornyn. I'm confident you've done everything that 
you know how to do to prepare and our military and DOD has as 
well. It will not be without cost. It will not be without 
casualties. It will not be without serious consequences, is my 
only point.
    So it troubles me, at a time when our national security 
apparatus is asked to do more with less, in a world that's 
getting more dangerous, not less dangerous, that we have a 
budget that unfortunately engages in--I guess the most 
charitable words I can use is ``phantom savings''--phantom 
savings. Some might call it budgetary gimmicks and the like.
    For example, the so-called trillion dollars in savings from 
a drawdown in operations in Afghanistan and Iraq that are not 
currently planned, which have been funded by borrowed money in 
the past 10 years, and which really represent--here's one 
headline in the National Journal, it says: ``Pentagon budget 
revives war spending voodoo.'' Like I said, I think ``phantom 
savings'' is the most charitable thing I've seen.
    It just strikes me as extraordinarily dangerous at a time 
when the risk is deadly serious to have a budget proposal which 
makes a trillion dollars in savings on expenditures that we 
never anticipated spending in the first place. At the same 
time, I will grant you, we don't know what the risks will be in 
the future.
    Let me close on this item. It's a little more concrete. It 
appears from my reading of the budget that there is a decrease 
of about 50 percent in the budget for training and equipping of 
Afghan security forces from 2012 to 2013.
    I'd like first, a confirmation that my reading is correct; 
and second--Mr. Hale is nodding that it's correct, so I will 
just ask you, if our withdrawal from Afghanistan is conditioned 
on the ability of the Afghans to defend themselves and maintain 
stability there, how is a cutting of the budget by 50 percent 
from 2012 to 2013 consistent with that?
    General Dempsey. I'll take that one, Senator. The ANSF fund 
was front-loaded when we had to develop a lot of their 
infrastructure. We front-loaded the purchase of a lot of their 
equipment. What you're seeing in this budget is that most of 
the capital investments, in our terms, have been made in the 
previous years.
    So the reduction is a reflection that we have what we need, 
and most of the fund now is for replenishment and training and 
operations. But the simple answer to your question is we front-
loaded the investments, the capital investments.
    Senator Cornyn. In terms of size of the force and 
capability, do you see that getting larger or maintaining the 
status quo?
    General Dempsey. We are committed to building the Afghan 
security forces out to 352,000, 195,000 of which is the army. 
That will be completed here within the next 90 to 120 days. We 
have not yet decided how long we'll keep it at that size, but 
that's a question we're looking at as we determine how to get 
from here to 2014 and deliver the Lisbon objectives.
    Senator Cornyn. Thank you very much.
    Secretary Panetta. I might just add, Senator, to follow up 
on that, one of the things that was important in 2011 was that 
not only were we able to reduce the level of violence and 
weaken the Taliban, but one of the important things that took 
place is that the Afghan army really stepped up and started 
taking over real responsibility in terms of security.
    In the areas that we've transitioned so far--and we're in 
the second tranche of those transitions--the Afghan army is 
doing a very good job at taking over security. We just have to 
make sure we continue to train them, we continue to make them 
capable to be able to take that responsibility.
    General Dempsey. Mr. Chairman, could I respond?
    Chairman Levin. If you can do it quickly.
    General Dempsey. I will, very quickly.
    Chairman Levin. Very quickly.
    General Dempsey. That National Journal article, I don't 
ascribe to its conclusions because I've been so involved in the 
process. Some of the changes we made definitely will have an 
effect on our base budget. Some of those effects will be 
mitigated in the near-term by OCO. That's what he's talking 
about, that we've papered over the problem. But I don't accept 
that.
    The Army in particular has 10,000 to 12,000 non-deployable 
soldiers directly resulting from the repeated deployments, and 
we're going to pay that bill out of OCO because it is related 
to OCO.
    Senator Cornyn. We don't know what sort of unexpected 
challenges and threats our country will face in the future, is 
my point.
    General Dempsey. We do not, sir, and I accept that. But 
that's what contingency funds are for.
    Chairman Levin. Thank you, Senator Cornyn.
    Senator Gillibrand, to be followed by, according to my 
list, Senator Shaheen, Senator Blumenthal, Senator Manchin.
    Senator Gillibrand. Thank you, Mr. Chairman.
    Thank you, Mr. Secretary. Thank you, General Dempsey. I 
appreciate your service. Thank you, Mr. Comptroller, as well.
    I understand you touched earlier today on the value of the 
Guard and Reserves and how important their service has been, 
serving shoulder to shoulder in both Afghanistan and Iraq. With 
regard to your Air Force restructuring strategy, about half the 
cuts have come out of the Guard, even though they only 
represented about a third of the costs. I believe the Vice 
Chairman of the Joint Chiefs did a report talking about 
managing budget issues, and actually made the point that Guard 
and Reserves provide capabilities at a lower cost than would be 
the case were the Nation to rely solely on full-time forces.
    So I have a concern about the decisionmaking with regard to 
the Air National Guard, and specifically because of the assets 
that New York has. Obviously, we all have specific assets and 
strategies and resources in our States that we think are 
particularly important for our national security. But one thing 
that a lot of our bases and assets have is this National Guard 
and Reserve component that has been so effective in both Iraq 
and Afghanistan.
    So I would like to urge you to look at that restructuring 
to see if there are cost savings by maintaining particularly 
Air Force National Guard and Reserve components as they are, 
whether it's Zebruski or whether it's in Niagara. Those are 
important aspects.
    The second issue that I want to highlight with regard to 
New York specifically is the cyber mission that we do. We do 
such an important mission for cyber security and cyber defense 
in Rome, Rome Labs, that has been vital, I think, in being at 
the cutting edge of both technology and research and 
development.
    One thing that I want to bring your attention to is what 
makes New York so good at doing some of this is the public-
private partnerships that have developed with the private 
sector. A lot of the DOD contracts are being done by private 
developers, researchers, scientists, that have developed as a 
hub in all these areas across New York. We have the nanotech 
center in Albany, we have Rome Labs, we have throughout western 
New York a lot of research and development that will very much 
complement the work that the military is doing.
    I understand that there will be interest in consolidations 
and cutting, but you will lose that synergy, that effort 
towards collaboration and clustering that is so important in 
the high tech sector, and I don't want you to underestimate how 
valuable that is for the military.
    Then last, just to speak to these particular assets in New 
York, we are 100 percent staffed. We have no environmental 
issues. We have a workforce and communities that are so 
dedicated to the mission that the armed services have placed on 
these men and women, that you will lose some of that enormous 
benefit to the extent you have to consolidate or restructure.
    We would love to gain missions, particularly with the 
National Guard and Reserve training, with unmanned aircraft and 
with cyber. So I wanted to just give you that background.
    Secretary Panetta. Senator, there are just a couple of 
things and then I'll yield to the General. First of all, on 
cyber, we are making increased investments there of about $3.4 
billion and even more in the out-years, because we think cyber 
is extremely important. So obviously partnering with the 
private sector is extremely important, and being able to 
develop the technological capability that we're going to need 
to have for the future, so I think that's important to 
remember.
    Second, with regards to the Air Reserve, I understand the 
concerns. The Air Force made the decisions. Some of these 
planes in the past have come out of the Active-Duty Force and 
that's one of the reasons they tried to look at where some of 
the reductions could be made based on the age of these planes, 
as well as their capabilities. But they are trying to do 
whatever they can to mitigate against those impacts, because 
again we do need to depend on the Reserves to be there. They've 
responded in dramatic fashion over these last few years every 
time we've called upon them to come forward and take their 
place alongside other fighting men and women in the 
battlefield, and they've done a great job.
    We want to be able to maintain that for the future. But 
that was the reason some of these cuts were made in those 
areas.
    General Dempsey. The only thing I'd add, you mentioned 
cyber and I want to mention for the record that we strongly 
support the Lieberman-Collins-Rockefeller legislation, to get 
us in the proper place in dealing with the cyber threat, which 
is significant and growing, as well as the Senator Feinstein 
amendment to that legislation. So I'd like to say that.
    Then I'd also say, I'm one of your constituents and how 
about them Giants? [Laughter.]
    Senator Gillibrand. Go Giants! [Laughter.]
    Thank you all for your service.
    I wanted to make sure that there's nothing else that you 
need in the cyber bill as well, that you have reviewed it, and 
that it is providing the assets and resources that you need to 
enhance your mission.
    Secretary Panetta. I think the General is correct, that the 
bill that I know is being put together by Senator Lieberman and 
others reflects all of the issues that we think are important 
to address. So we'll continue to work, however, with the Senate 
and with Congress to make sure that if a bill does emerge it 
addresses our concerns about trying to make this country better 
prepared to deal with the cyber issues that are growing every 
day.
    Senator Gillibrand. I would request that you look at the 
legislation with an eye towards making sure you have all the 
authorities that you need to support this growing mission, and 
also the resources necessary to do adequate recruitment, 
because obviously we want the strongest pipeline for cyber 
defense that we could create and the flexibility to bring in 
the talent that you're looking for. We want to make sure that, 
whether it's civilian talent or through the normal course, we 
want to make sure you have the flexibility and ability to 
recruit, train, and keep the best and brightest to do that.
    Last, if I have time, Mr. Chairman, it's a very separate 
issue, but one I feel very strongly about, that I would like 
your commitment. I've heard you already speak to the issue of 
sexual assault in the military and the ability of the military 
to respond effectively to those concerns, to allegations, and 
to making sure we have the best fighting force we can have. 
That means that we create the right protocols and the right 
ability for women to be able to report such incidents and to be 
heard on those issues.
    I'd like your comments, your views on that, and I would 
like to work with each of you on developing stronger 
protections for our women who are serving.
    Secretary Panetta. Senator, we look forward to working with 
you on this issue.
    You've provided great leadership on this issue, and it's an 
area that concerns me greatly, that the incidents of sexual 
assault have grown. Frankly, my concern is that we have to be 
able to take action in these situations.
    I announced a series of steps to try to improve our 
response to sexual assault. One of the most important things is 
to make sure that the command structure responds to these 
situations, because the longer they take to respond, it 
inhibits the ability to bring a case, and that's what has hurt 
us in being able to move aggressively in most of these cases.
    So we need to do a broad education effort to make sure that 
the command structure understands how important it is to 
respond in these situations. We also need a legislative package 
and I would like to work with you in trying to address the 
legislative needs that we're going to need in order to really 
be able to get this problem in control.
    Senator Gillibrand. Thank you, Mr. Secretary.
    Chairman Levin. Thank you, Senator Gillibrand.
    Senator Shaheen.
    Senator Shaheen. Thank you, Mr. Chairman.
    Thank you, Secretary Panetta, General Dempsey, and Mr. 
Hale, for your commitment and your stamina. We appreciate it.
    I want to begin actually where you began, Mr. Secretary, 
that Congress must do everything possible to avoid 
sequestration, because I certainly agree with that. I share the 
concerns we've heard expressed from my colleagues. I'm not 
going to ask you to respond to this, but I would certainly hope 
that we in Congress would do what you have been willing to do, 
and that is to put everything on the table and put aside our 
posturing and come to some agreement that addresses the long-
term debt and deficits of this country.
    It is inexcusable that we are in this position now with you 
and all of the men and women who are serving in defense and in 
our military and across the Federal Government not knowing what 
we're going to do because we have been unable to act.
    So I would like to start with where Senator Gillibrand left 
off, and that is with the Guard and Reserve. I was very 
pleased, Mr. Secretary, to see in your statement that you 
talked about continuing a National Guard that is equipped and 
ready. I know that the decision to transition our Guard and 
Reserve units from a strategic reserve to an operational 
reserve required a significant investment and a change in 
strategy.
    So, General Dempsey, I wonder if you could speak to the 
original rationale for that transition?
    General Dempsey. I think it's important to roll back the 
tapes, maybe all the way back to 1973, when, coming out of the 
Vietnam war, there were no Joint Chiefs at the time, but the 
Service Chiefs all realized that one of the problems we had 
during that conflict was we really never got the American 
people involved because it was borne on the back of the Active 
component, with very little reliance upon the Guard and 
Reserve.
    So we built a structure that not only allows for the 
utilization of the Guard and Reserve, but it makes it 
absolutely necessary. So the question is not will we use the 
Guard and Reserve, because fully a third of the capabilities 
necessary at any given time to do anything reside in the Guard 
and Reserve.
    So we are committed to it. What we've found in this 
conflict as we went forward, we relearned a lot of those 
lessons. We made some pretty significant investments and the 
Guard and Reserve and the Active component have never been 
closer.
    Now, as we go forward, of course, and as the demand goes 
down, that's going to put some--and the budget goes down--
strain on that relationship. You've seen some of that already.
    But I can tell you that each Service has a plan in terms of 
the rotational readiness of its formations, that they will 
include the Guard and Reserve in that rotation. So the entire 
Guard will never be operational, any more than the entire 
Active component is always operational. But I think you can 
feel secure in the knowledge that we understand and will work 
toward this goal in a rotational readiness cycle.
    Senator Shaheen. I appreciate that. As we look forward this 
year, I know that the Air Force is going to be making some 
initial decisions on where to base the new KC-46 tankers, and I 
would hope that the Air Force and DOD will take a look and 
ensure that at least some of those aircraft are based at Guard 
bases around the country. I have one particular in mind, but 
I'll let you draw your own conclusions.
    But can I ask you, is there a commitment on the part of DOD 
to base some of those new tankers at Guard facilities?
    Secretary Panetta. I think the Air Force is looking at a 
whole set of options in order to make sure that we mitigate 
whatever cuts have been made and make use of the facilities 
that are out there with the National Guard and Reserve. I can 
assure you that they'll be in consideration.
    [The information referred to follows:]

    The Department of Defense will make use of the National Guard and 
Reserve facilities, consistent with operational needs. Regarding where 
to base the KC-46 tankers, I will reiterate that these facilities will 
be in consideration.

    Senator Shaheen. Thank you. I appreciate that.
    I would also like to go back to BRAC, which a number of my 
colleagues have addressed, and I share many of the concerns 
that have been expressed. I know, Secretary Panetta, that 
you've said you've seen just about every side of the BRAC 
process. Can you commit to providing us with a comprehensive 
assessment of the savings from the 2005 round, and I assume if 
you're looking at 2013 and 2015, that you also have estimates 
of savings in those two rounds, and that we would also see 
those as we're looking at a decision about what to do about the 
next BRAC round?
    Secretary Panetta. I'll be happy to give you what 
information we have with regards to the past BRAC rounds, and 
obviously some ideas about what we would do in terms of future 
rounds.
    As I said, I've been through the process. Frankly, I don't 
wish the process on anybody, having been through it, because it 
is tough. 25 percent of my local economy was hit by virtue of a 
BRAC closure. But we did use it as an opportunity to develop a 
college-university campus there and it's proved very successful 
as a reuse.
    I think the issue is it did cost a lot more than anybody 
anticipated, but the fact is, we are achieving in the long-run 
significant savings as a result of that. That's number one. 
Number two, I don't know of any other way to deal with the kind 
of infrastructure savings we have to achieve here as a result 
of reducing the force without going through that kind of 
process. That's the problem I have. It's the most effective way 
of trying to address that issue.
    Senator Shaheen. Certainly in New Hampshire we've seen both 
sides of the issue, because Pease Air Force Base was the first 
base closed in the country. Fortunately, it's doing very well 
now. The Portsmouth Naval Shipyard, which is on the border 
between New Hampshire and Maine, was actually removed from the 
last round by the commission because of their effectiveness.
    One concern I have as we look going forward, particularly 
with respect to our public shipyards, is that there's a real 
backlog of projects that need to be done at those shipyards. 
Obviously, the Portsmouth shipyard is not alone in that. They 
have been producing, I think, very well despite that backlog. 
They just delivered the USS San Juan attack submarine 8 days 
ahead of schedule, despite some of the challenges with that.
    Senator Collins and Senator Ayotte and I had a 
modernization in last year's defense authorization bill that 
asks DOD to produce a shipyard modernization plan to address 
these shortfalls. I hope that DOD will take that very seriously 
and produce that, because as we're looking at our security 
going forward, those public shipyards are a critical part of 
that.
    Secretary Panetta. Senator, as I stated before and I'll say 
again, we absolutely have to maintain the industrial base we 
have, and the shipyards in your area, the other shipyards we 
deal with, are extremely important to our ability to respond to 
the needs that we have. So we're going to do everything 
possible to work with you, not only to increase, obviously, the 
competitive nature of trying to achieve savings, but also to 
try to do what we can to provide those upgrades.
    Senator Shaheen. Thank you.
    A final question. Secretary Panetta, one of the concerns 
that we've heard in a number of reports over recent years has 
been the challenge of attracting people with the backgrounds 
that we're going to need, with science, technology, 
engineering, and math subjects, to be able to continue to do 
the jobs that are critical to our defense establishment. I 
wonder if either you or General Dempsey could address what 
strategy we have for trying to attract those young 
professionals when the private sector is offering them so many 
more attractive monetary rewards.
    Secretary Panetta. Initially I shared the same concern. I 
know when I went out to the National Security Agency and when I 
look at the people that are involved in that area, not only at 
my past agency, but other agencies as well, I have to tell you 
we are attracting some very bright, capable, young people to 
those jobs. They're very interested, they're very capable, and 
with the investment we're making in cyber, I'm absolutely 
convinced we're going to be able to attract the talent to be 
able to make that work.
    Senator Shaheen. I think our challenge as a Nation is to 
get enough young people engaged in those subjects, so we're 
training the people we need.
    General Dempsey?
    General Dempsey. I think the Service Chiefs will have a 
view on this as well, and it's actually exacerbated by the fact 
that--and I think you and I have actually had this 
conversation--only about one out of every four American young 
men and women can qualify to get into the military, either 
based on education or physical issues or issues of making 
really stupid Facebook posts in their youth or something.
    So we are all competing, as you say, academia, corporate 
America, and the military, for the same 25 percent of the 
population. So the answer has to be to get after education in 
this country as well, it seems to me.
    Senator Shaheen. I totally agree.
    General Dempsey, I was very disappointed to hear you 
mention the Giants. You're fortunate that all the other New 
England members of this committee have gone. [Laughter.]
    General Dempsey. My condolences, ma'am. [Laughter.]
    Senator Shaheen. Thank you.
    Chairman Levin. Thank you, Senator Shaheen.
    Senator Blumenthal.
    Senator Blumenthal. Just in fairness, General Dempsey, and 
as a New Englander, I interpreted your remark more as an 
expression of battlefield admiration than an endorsement. So I 
think you're still on fair ground. [Laughter.]
    I want to thank all of you for your extraordinarily 
effective and persuasive explanation of the President's budget 
and thank you for your patience in answering our questions so 
effectively.
    I want to begin with a subject that the President certainly 
emphasized, which is undersea warfare capability, and note the 
slipping, postponing, delaying, whatever the correct term is, 
of a submarine construction, one submarine from 2014 to 2018. I 
have heard from Electric Boat and indeed within the Navy about 
the cost savings that can be realized if we stay on schedule 
and build two submarines every year. I wonder if there is a 
possibility for considering and perhaps your hearing our views 
on that issue, Secretary Panetta?
    Secretary Panetta. This is all about, obviously, having to 
reduce the budget by half a trillion dollars. We have to look 
really closely at affordability and cost efficiencies. If 
anybody comes forward with a better idea as to how to save 
money, I'm more than open to listen to it.
    Senator Blumenthal. I think we may come forward if you'd be 
willing to consider it.
    Secretary Panetta. Absolutely.
    Senator Blumenthal. I would appreciate it.
    Let me go to what you have really very convincingly said is 
the military's greatest asset, which is its people, and you've 
been discussing it very movingly and inspiringly, most recently 
to Senator Shaheen, talking about keeping faith and providing 
many of the men and women, our warfighters who are going to be 
coming back from Iraq and Afghanistan, with jobs and transition 
assistance, which has been expanded under the most recent 
legislation on veterans to be approved by this Congress, an 
amendment that I offered in a separate bill.
    I want to focus on what can be done to aid those veterans 
before they leave the service to more effectively transition 
into civilian employment, because as they come back if they 
enter the Guard or Reserve, to have an unemployment rate which 
is vastly higher, that is, right now in Connecticut, double the 
general rate in Connecticut, 15.5 percent as compared to 8.2 
percent, will simply be a profound deterrent to anyone going 
into the Armed Forces. If that is going to be the kind of 
hurdle they face coming out of the service, it will defeat your 
best efforts to recruit the brightest and most capable.
    Secretary Panetta. Senator, this is a problem that I worry 
about a great deal. Frankly, it's one of the risks involved as 
we reduce the budget by this level, is how to ensure that we 
take care of those that are returning. We already have a 
backlog and we're going to be pumping anywhere from 12,000 to 
14,000 a year as we go through these drawdowns.
    I think it is extremely important that we be able to 
provide the services as these men and women come back to really 
be able to counsel them, to gather them, to make sure they're 
aware of the job opportunities, to make sure they're aware of 
the education opportunities, to make sure they're aware of the 
funds that are available to help them transition, to make sure 
that their families are cared for as well, as we make that 
transition.
    This has to be a package approach. Each Service now does it 
in their own way. They do it pretty effectively. But I think we 
have to make very clear that nobody should fall through the 
cracks.
    Senator Blumenthal. I know the Marine Corps has been doing 
it more effectively. I've talked to General Amos about----
    Secretary Panetta. They do a great job.
    Senator Blumenthal.--his very, very effective work. I 
wonder if--and you may already be doing it--there's some 
servicewide approach building on the best models and best 
practices, would be appropriate.
    Secretary Panetta. We are looking at that.
    General Dempsey. If I could add, Senator, there are more 
initiatives on this issue than we possibly have time to 
discuss. As the Secretary mentioned earlier, we're trying to 
team ever more closely with the VA to do this. We're starting 
to take a view that transition begins when you enter a Service, 
not in the last 6 weeks before you leave it.
    But the other thing I want to mention here is some of this 
can be legislated, some of this can be made a matter of policy, 
but this is one of those issues that will be best solved from 
the bottom up when corporate America reaches out to embrace the 
returning veterans.
    By the way, a lot of them are. I can't tell you how many 
times I'll go to some conference or something and someone will 
tell me that they have a new initiative to hire 10,000 
veterans. So I think it's a matter of merging what can be done 
at the governmental level, but also what needs to be done at 
the grassroots level to help this out.
    Senator Blumenthal. I would agree with you, General 
Dempsey, that corporate America is stepping forward more often 
and more effectively. But I don't believe I'm telling you 
anything you haven't heard before in saying that there's still 
a lot of employers who look at somebody who's in the National 
Guard or the Reserves and who say, not explicitly, but think to 
themselves: This person's going to be gone for a year or more 
if he or she is deployed, and better to hire someone I know I 
can count on to be on the job without interruption.
    That is discrimination. It's illegal if it can be proved, 
but it has to be surmounted as a matter of practice implicit in 
some of the employers. I believe that we need more effective 
measures for enforcement to counter that approach, because it 
will undermine your best efforts, which I admire, to attract 
the best and most capable to the Guard and the Reserve.
    So I'm not asking for your comment, but I hope that perhaps 
we can work together on the initiatives that we don't have time 
to discuss here.
    Just one last question. The IEDs that all too often are 
maiming and killing our warfighters, I wonder whether there are 
new initiatives there that perhaps we can discuss, if not here, 
at some other point, because I've been interested in it and 
appreciated Secretary Carter's very important work in 
accelerating delivery of the so-called biker shorts and the 
groin protective gear, and also the work that I hope is being 
done to discourage the Pakistanis from permitting the 
fertilizer and ammonium calcium nitrate from crossing the 
border and going into these roadside bombs.
    Secretary Panetta. Yes, Senator. I know that your time is 
short on this round, but I'd just assure you that we are seized 
with this. Our relations with Pakistan have been somewhat 
challenged. They're improving, and this is one of the points of 
friction between us that we have to get at.
    Senator Blumenthal. Thank you very much and I appreciate 
your answers to my questions. I want to associate myself with 
the remarks made by Senator Gillibrand and your remarks about 
the problem of sexual assault within the military, but also the 
issue of suicides, which we will not have time to discuss 
today, perhaps I can follow up with you on.
    Thank you.
    Chairman Levin. Thank you, Senator Blumenthal.
    Senator Manchin.
    Senator Manchin. First of all, I want to commend the three 
of you for your endurance. I know you've been through this 
before, and a lot of the questions have probably been touched 
on that I wanted to ask, but I wanted to go over a few things, 
if I may.
    First of all, the most defining moment in my short Senate 
career was when Admiral Mullen sat there and the question was 
asked to him, ``what's the greatest threat the United States of 
America faces?'' I thought I would hear some type of a military 
response, whether it was al Qaeda, whether it was North Africa, 
or China building up their military. He didn't even hardly 
hesitate. He came right back and said that ``the deficit and 
debt of this Nation is the greatest security risk.'' I know you 
all realize that and take it serious, too, and I know we've 
talked about it, Mr. Secretary.
    I'm looking everywhere I can to cross over the aisle in a 
bipartisan way to find out how we can make this financial, the 
wherewithals that we have financially, but also get our 
financial house in order. I know that we talked about cutting 
back, and everybody--I don't know of anybody in here, Democrat 
or Republican, that does not support a strong military.
    But everybody's afraid of the political ramification if 
they say one thing. I can only say this to you, that with the 
growth of the contractors in the military--when I looked at 
just the period of time, maybe 10 years, and the support of 
contractors--and I'm not talking about the manufacturing base 
of contracting, and I wanted to maybe mention, if you would, as 
I get done with this question, about Buy America and how we can 
do more in America to make sure that we are supporting the 
manufacturing base.
    But with that being said, in a simplistic way I believe 
that we could strengthen the military or men and women in 
uniform by reducing the contractors who are doing the same. I 
hear an awful lot of them that tell me that. I see them in the 
airports, and I ask every one of them that are private 
contractors that are going back to Afghanistan, and I stop and 
I talk to them. I introduce myself. Were most of you previous 
military? Yes. Would you have stayed in the military if not for 
the large paychecks that you might be able to get from the 
contractors? Yes, we would have if this option wasn't there.
    So I can't figure this one out. Then it'll dovetail into 
the whole thing I'm going to talk to, which I know everybody's 
talked about, how do we best use our National Guard? We're all 
extremely proud, but I can give you examples of how we say--but 
first of all, the purpose of contracting. Can't we cut the 
amount of contractors that we have that are doing the same jobs 
as military without facing political ramifications of you're 
cutting the military? I'm not going to vote to cut the 
military, but I will cut the contractors, sir.
    Secretary Panetta. Senator, this is an area that we're 
paying attention to in the efficiencies that we're looking at, 
which are going to be about $60 billion. This is one of the 
areas that we are looking at, contract services, number of 
contracts that are provided, in order to determine where we can 
achieve savings.
    Any ideas you have, recommendations along these lines, 
we're more than happy to listen to. This is a big job, going 
after $487 billion in savings. So I'm willing to look at any 
area necessary.
    Senator Manchin. Mr. Secretary, there was a report--I want 
to make sure of this--that $12 million a day for the past 10 
years in Iraq and Afghanistan has been wasted, misspent, 
whatever, by contractors. I think that report was given to you, 
too. So there's many areas.
    But I'm just saying, wherever a uniformed person can do it, 
why--I know we're cutting 100,000 troops. That concerns me. If 
anything, I'd rather cut 200,000 contractors and keep the 
100,000 uniforms and use the support of our National Guard.
    I will say this, that they touched on the veterans, all of 
us. To me, in the private sector you do the best job of 
providing the training for a military person, their discipline, 
their ability to come out and they can do it. Why is our 
unemployment so high, and what are we doing wrong? We started a 
caucus, I started it with Senator Kirk, and it's ``Hire a 
Vet.'' I have two vets in my office and we're looking for more 
good vets. We always do.
    How do we do this to prepare to get them back in? I know 
that the Senator from New York touched on that quickly.
    Secretary Panetta. I think, and I'll let the General expand 
upon this, but we really are--look, part of the problem is the 
economy, the overall economy. These kids are coming back and 
they go back home, and most of these local economies are having 
tough economic times, and you suddenly pour some of these young 
men and women back into their communities and there aren't jobs 
for the people that are there, much less for these young people 
that are coming back.
    Having said that, we really have had some impressive 
efforts by the private sector because of the reasons you 
suggested. These are kids who are disciplined. They usually 
have a capability and a talent that is extraordinary that can 
be used. Most of the private sector people I talk to really 
want to have these kinds of individuals as part of their 
workforce.
    More and more of these individuals are now coming forward. 
We've set up a web site where we list the jobs that are 
available in the private sector. More of these private sector 
individuals are committing themselves to hire our vets as they 
come back. So there is an important effort going forward, but a 
lot of it obviously depends on an economy that has to recover 
as well.
    Senator Manchin. I think, first of all, I want to commend 
all of you for working with our office so close on this new 
caucus. As I just previously mentioned, we just started it, 
``Hire a Vet.'' We would like to even expand on that with you. 
If we would know who's cycling out and what skill sets, so we 
could network better, we think there's ways that we could 
improve on this and work together. So I appreciate that and 
we'll be very close.
    General Dempsey, my final question would be to you. I 
talked about the National Guard. In West Virginia we've been 
very blessed by having a highly rated National Guard, one of 
the best in the Nation. A lot of people get a lot of good 
training, and I'm so proud of them. We saved DOD $27 million 
this year alone. If these small town facilities were fully 
tasked, we could do that, we think DOD could save $250 million 
a year.
    We're talking about things that basically is refurbishing 
generators, the Humvees, tents, tire assemblies, these are 
things that we have been able to do at tremendous cost savings. 
I'm sure other Guards are doing them also. Is there a way that 
we can network more of that to use our Guard? We've proven that 
the savings in just a couple of our little facilities were 
quite substantial. I don't know how we can expand on that.
    General Dempsey. I don't either, sitting here today with 
you, Senator. But certainly we all, to include the Service 
Chiefs, who really are the leaders of their particular Guard--
you're going to have General--I'm not throwing him under the 
bus here, but you're going to have General Odierno here later 
in the week, and I think he would be eager to understand that 
and see if we can take advantage of it.
    Clearly, anything we can do to in-source, and I mean 
Active, Guard, and Reserve--is effort well spent.
    Senator Manchin. Yes. The other thing, it gives the 
training to the person we're trying to cycle back into the 
private sector, so it has a twofold purpose.
    I think you all realize the sensitivity of what we're 
dealing with here, trying to make sure that we give you what is 
needed to keep this safe and free. On the other hand, the 
responsibility, when General Mullen said our greatest threat is 
basically our own finances, so we're taking all that serious. 
We need your help, and we think contracting--if we can downsize 
the contracting, reinforce the military and people in uniform, 
I think you'll have us all on both sides. You might be able to 
bridge the gap that we can't bridge.
    Secretary Panetta. Senator, if I could just comment. Look, 
I think DOD has stepped up to the plate. What we've proposed 
here is real, it's well thought out. We've done a strategy to 
back up our decisions, and all of that's contained in our 
recommendations.
    But I really would urge you and others to engage in the 
broader discussion that has to take place with regards to how 
we reduce the deficit. That has to include a number of areas 
that, unfortunately, have not been on the table, that have to 
be on the table if we're ever going to confront the debt crisis 
that faces this country. This can't just fall on the backs of 
defense. Other areas have to be considered if we're going to be 
able to effectively reduce the deficit.
    Senator Manchin. There's a group of us in a bipartisan 
effort that are looking at ways that--and we know it takes 
everything, getting the money that we're not receiving now that 
should be paid in revenues, and also make sure we get fraud, 
waste, and abuse, and run more efficiently. So I think you're 
going to find quite a few of us on both sides willing to meet 
with you, sir.
    Thank you so much. I appreciate all your service.
    Chairman Levin. Thank you, Senator Manchin. As I mentioned 
before, I hope all of us will take a look at the proposals in 
the budget in front of us to raise an additional $3 trillion 
for deficit reduction. It's in the budget that came in 
yesterday, but it seems a lot of us are unaware of that. Half 
of that is revenue increases. Upper income tax increases, 
restoring their bracket, the millionaires tax, a number of 
other revenue measures, are in this request. I was surprised by 
so many of our colleagues here today talking about the need for 
deficit reduction and the importance of avoiding 
sequestration--which I think, by the way, is a bipartisan 
goal--were unaware of the fact, because I don't think the 
administration, frankly, has done a good job of focusing on 
what's in their own budget in terms of deficit reduction. It 
meets the $1.5 or $1.2 trillion goal.
    Senator Manchin. Mr. Chairman, we've had this discussion 
and we can raise the revenues without raising taxes, by closing 
the loopholes----
    Chairman Levin. Exactly right.
    Senator Manchin.--changing our corporate laws, changing and 
making sure there's a fairness. If the American people think 
that we're putting fairness to the system, I'll guarantee you 
they're behind us 1,000 percent.
    Chairman Levin. They are. It's amazing, when you look at 
public opinion polls they say that we have to include revenues 
in deficit reduction. We can do it without raising taxes on 
middle income Americans.
    Senator Manchin. We can cut spending, too, sir.
    Chairman Levin. We can cut spending, too. The balance in 
this budget that has been given to us yesterday is about 50 
percent additional cuts and about 50 percent additional 
revenues. But frankly, I don't think the administration in its 
rollout yesterday focused on the fact that this would avoid 
sequestration. This budget, if we adopted it, avoids 
sequestration. It does it because finally they're talking about 
additional revenues.
    Now, they've talked about it in the administration, but now 
they've put it in their budget. We had Republican colleagues 
today talking about avoiding sequestration, and when I pointed 
out this budget that was given to us avoids sequestration 
because there's additional revenues in it, what they were 
saying is, well, they hope they can vote on it. Well, my answer 
to that is we also ought to have a Republican alternative, if 
there is one, so we can see exactly what the options are in 
that regard.
    So we've had silence on the revenue side from our 
Republican colleagues, and it's that silence which needs to be 
corrected by the administration, frankly. I would hope that 
there would be greater focus on what's in the budget relative 
to the revenues which will help us avoid sequestration. We all 
want to avoid sequestration.
    I think that you are interested in having a bite to eat. We 
thank you very, very much, and we thank your staffs.
    We will stand adjourned.
    [Questions for the record with answers supplied follow:]

               Questions Submitted by Senator Carl Levin

                         NONSTANDARD EQUIPMENT

    1. Senator Levin. Secretary Panetta and General Dempsey, the 
Department of Defense (DOD) has acquired millions of dollars in 
tactical nonstandard equipment to address the evolving threat in 
Afghanistan (and previously in Iraq), including the enemy's use of 
improvised explosive devices (IED). To what extent are you considering 
this nonstandard equipment purchased by Joint IED Defeat Organization 
(JIEDDO) and others to meet urgent warfighter needs as equipment that 
should be added as standard equipment to unit requirements?
    Secretary Panetta. DOD has established and utilized processes, such 
as Army G-3 Capabilities Development for Rapid Transition and Joint 
Improvised Explosive Device Defeat Organization Transition, Transfer, 
Terminate Process, to review and transfer equipment and capabilities 
for service sustainment. A significant amount of equipment (e.g., body 
armor, CREW, Counter-Rocket, Artillery and Mortar, radios, et cetera) 
is already transitioning to the Services and the standardized equipment 
list. Supporting these efforts, DOD is conducting two separate but 
related studies to identify and review counter-improvised explosive 
capabilities, including nonstandard equipment that are appropriate to 
sustain. The studies will also serve to identify a plan to transition 
the necessary capabilities funded by overseas contingency operations 
(OCO) to programs of record. These ongoing studies will inform DOD's 
development of the President's budget for fiscal year 2014.
    General Dempsey. The Office of the Secretary of Defense (OSD), the 
Joint Staff, and the JIEDDO work closely with the Services to identify 
which of the nonstandard equipment purchased to meet urgent warfighter 
needs should be added as standard equipment. JIEDDO assists in the 
process by conducting monthly meetings with the Services and Joint 
Staff to identify if a JIEDDO-funded program should be transitioned, 
transferred, or terminated based on Service and Joint Staff 
requirements. This year-long process culminates in direction to the 
Services from the Deputy Secretary of Defense to assume responsibility 
for JIEDDO initiatives identified for transfer or transition.

    2. Senator Levin. Secretary Panetta and General Dempsey, to what 
extent has DOD identified future maintenance and other sustainment 
costs for these items that will have to be funded in future base 
budgets?
    Secretary Panetta. The Deputy Secretary of Defense directed the 
Under Secretary (Comptroller)/Chief Financial Officer to study enduring 
activities funded through the OCO portion of DOD's budget. This study, 
co-led by the Director, Cost Assessment and Program Evaluation, is in 
process. The study is to inform DOD's decisions regarding, among other 
items, the approach to fund enduring equipment needs.
    General Dempsey. The Deputy Secretary of Defense directs the 
Services to assume responsibility for JIEDDO funded programs and 
equipment in one of two categories: transferred or transitioned. A 
transferred program is a proven counter-improvised explosive device (C-
IED) capability that is not assessed to be an enduring capability for 
the Joint Force, but one that requires sustainment for the current 
conflict. Maintenance and sustainment costs are shifted from JIEDDO to 
the appropriate Service to be funded using OCO funds. A transitioned 
program is assessed as an enduring capability for the Joint Force and 
ownership, management, funding, and future development becomes a base 
capability of the appropriate Service and is requested in the 
President's budget.
    As part of a larger effort by the DOD, the Joint Staff has 
initiated a review of the C-IED portfolio to identify enduring 
requirements. This review will be used to inform Services as they 
prepare future budgets in the context of DOD's new Defense Strategic 
Guidance.

    3. Senator Levin. Secretary Panetta and General Dempsey, what are 
the plans for placing these estimated requirements into the Services' 
budgets for fiscal year 2013 and beyond?
    Secretary Panetta and General Dempsey. The Joint Staff, Services, 
and JIEDDO are conducting a comprehensive C-IED portfolio review to 
determine which of the nonstandard equipment programs established by 
JIEDDO are enduring and should become Programs of Record. This review 
will inform the Services as they incorporate C-IED capabilities into 
their respective budgets for fiscal year 2014 and beyond.

                  AFGHANISTAN DISTRIBUTION CHALLENGES

    4. Senator Levin. Secretary Panetta and General Dempsey, in a 2011 
report to Congress, the Government Accountability Office (GAO) found 
that although U.S. Transportation Command (TRANSCOM) has established 
some processes for oversight, it does not have full oversight of the 
distribution of supplies and equipment to the warfighter in 
Afghanistan. In addition, DOD has taken some steps to mitigate 
challenges in distributing materiel to forces operating in Afghanistan, 
however DOD continues to face challenges in distributing materiel to 
forces operating in Afghanistan including: (1) a lack of adequate 
radio-frequency identification information to track all cargo 
movements; (2) no common operating picture for distribution data and 
integrated transportation systems; (3) complex customs clearance 
processes in Afghanistan and Pakistan that delay shipments; (4) limited 
information on incidents of pilferage and damage of cargo; and (5) 
ineffective tracking and management of cargo containers. To what extent 
has DOD assessed the impact of supply challenges on unit and equipment 
readiness?
    Secretary Panetta and General Dempsey. While DOD acknowledges that 
challenges remain in the distribution of supplies and equipment, these 
challenges have not led to any degradation with respect to supplies or 
equipment readiness. As GAO's report indicates, DOD has made great 
strides in improving distribution operations in Afghanistan. It is 
important to note that GAO's audit occurred during the recent surge of 
30,000 additional U.S. forces in Afghanistan. Remarkably, U.S. Forces-
Afghanistan was simultaneously able to increase ration stocks from 30 
to more than 60 days and fuel stocks from 30 to 45 days of supply on 
hand. This unprecedented growth reflects a robust supply network, not 
hampered by delivery timelines. Further evidence of DOD's logistics 
resiliency is demonstrated by the fact that in spite of our main supply 
route (Pakistan road networks) being closed since November 26, 2011, 
our flexible system has allowed us to actually increase on-hand stocks 
and sustain our troops at a very high rate of readiness. DOD is 
striving to ensure that we meet these distribution challenges in the 
most timely, efficient, and effective manner in order to ensure the 
best possible support to all of our U.S. Armed Forces personnel.

    5. Senator Levin. Secretary Panetta and General Dempsey, to what 
extent has DOD improved its visibility over equipment and supplies in 
Afghanistan?
    Secretary Panetta and General Dempsey. DOD is engaged in ongoing 
efforts to improve visibility over equipment and supplies in 
Afghanistan. Steps we have taken in the last 18 months include:

    1.  Leveraging the use of Radio Frequency Identification (RFID) 
tags for tracking cargo and providing In Transit Visibility (ITV) and 
Asset Visibility (AV). RFID remains the backbone of our tracking 
capability.
    2.  Developed, refined, and fielded tools, such as the Integrated 
Data Environment/Global Transportation Network Convergence, Battle 
Command Sustainment Support System-Nodal Management, and the U.S. 
Central Command (CENTCOM) Logistics Common Operating Picture, to 
provide commanders down to the tactical level with a comprehensive ITV 
picture.
    3.  TRANSCOM is developing a contractual means to implement the use 
of commercial Active Tracking and Intrusion Detection (ATID) devices on 
Pakistan and Afghanistan road networks. The ATID devices will provide 
near-real-time tracking of containerized unit cargo and equipment 
thereby improving ITV and AV on containerized shipments transiting to 
and from Afghanistan via Pakistan.
    4.  Improved pre-deployment training on the proper methods for 
preparing and installing RFID tags.
    5.  Developed procedures to identify non-compliance with RFID 
policy/directives so that the responsible commanders can be notified 
and corrective action initiated.

    As a result of these steps, the visibility that we have over our 
equipment and supplies in Afghanistan has improved.

    6. Senator Levin. Secretary Panetta and General Dempsey, to what 
extent has DOD developed a common operating picture to improve its 
processes for tracking equipment and supplies in Afghanistan?
    Secretary Panetta. DOD has improved its capability to track 
equipment and supplies by developing, refining, and fielding tools such 
as CENTCOM's Logistics Common Operating Picture (LOGCOP), the BCS3-NM, 
and other automated information technologies (i.e., RFID/Active 
Tracking Intrusion Detection). These improved tools provide 
comprehensive ITV of critical DOD assets to commanders and staffs at 
all levels of command.
    General Dempsey. We have reemphasized to commanders at all levels 
the importance of maintaining visibility over equipment and supplies 
transiting Afghanistan. We have improved their capability to track 
equipment and supplies by developing, refining, and fielding tools such 
as CENTCOM's LOGCOP and the BCS3-NM. These improved tools provide a 
comprehensive ITV and AV picture to commanders and staffs at all levels 
of command.

    7. Senator Levin. Secretary Panetta and General Dempsey, to what 
extent is DOD anticipating throughput challenges in Pakistan that would 
limit DOD's ability to remove equipment from Afghanistan?
    Secretary Panetta and General Dempsey. Although loss of access to 
the Pakistan ground transportation routes has not adversely affected 
U.S. military operations in Afghanistan to date, sole reliance on the 
Northern Distribution Network (NDN) and air/multi-modal cargo 
operations would affect DOD's ability to efficiently drawdown equipment 
and significantly increase costs. Increased NDN usage would maximize 
its capacity and, although cargo would continue to move, transit times 
would increase. Reliance on the NDN and air/multi-modal movement also 
places U.S. Forces and objectives in Afghanistan at significant risk 
due to the uncertainties associated with the nations that U.S. cargo 
transits. Politically, any one or a combination of countries that 
comprises the NDN could halt or impede cargo movement for any reason. 
The physically fragile critical infrastructure and weather-dependent 
routing along the NDN can create chokepoints, causing congestion and 
disruptions and further limiting NDN capacity. Finally, delays in 
retrograde can create labor and space problems in terms of securing, 
storing, and maintaining equipment in Afghanistan that would otherwise 
move out of the theater. Multiple transit routes would provide DOD the 
most flexibility and save money and time.

    8. Senator Levin. Secretary Panetta and General Dempsey, to what 
extent has DOD developed alternatives to the Pakistan routes to be able 
to remove equipment from Afghanistan?
    Secretary Panetta and General Dempsey. DOD began to move U.S. cargo 
to Afghanistan on the NDN in 2009, with established routes utilizing 
existing commercial infrastructure through Russia and the Baltic, 
Caucasus, and Central Asian states. Current efforts to expand the NDN 
include obtaining permission and agreements as necessary to conduct 
reverse transit and movement of wheeled armored vehicles. The first 
proofs of principle executing retrograde transit began in early 2012. 
Additional multi-modal routes have been added to relieve pressure on 
the ground distribution system and further increase the velocity of 
cargo departing Afghanistan.

    9. Senator Levin. Secretary Panetta and General Dempsey, what 
challenges remain in developing these alternatives?
    Secretary Panetta and General Dempsey. Cost and operational 
requirements to achieve retrograde velocity to support the projected 
2014 drawdown timeline are key factors in considering the alternatives 
to the Pakistan ground transportation routes (i.e., NDN and air/multi-
modal). The monthly overall transportation cost to distribute 
sustainment cargo, redeploy combat forces, and retrograde materiel is 
expected to increase by more than two-thirds due to the Pakistan ground 
transportation routes closure. In addition to higher costs, the NDN's 
operational drawbacks include longer transit times due to longer 
distances and lower cargo velocity due to transit restrictions.

                   CHANGES IN EQUIPMENT RESET FUNDING

    10. Senator Levin. Secretary Panetta and General Dempsey, Congress 
has aggressively supported DOD's equipment reset funding requests 
throughout our operations in Iraq and Afghanistan. DOD has recently 
announced plans to reduce the Army and Marines Corps force structure by 
100,000 troops. While the proposed budget does not specifically call 
for any offsetting reduction in equipment reset funding, it would seem 
logical that with a smaller force we might not have as large a 
requirement to reset equipment. To what extent is it important to 
maintain current funding level for the reset of equipment, despite the 
planned reduction of 100,000 Army and Marine Corps troops?
    Secretary Panetta and General Dempsey. The level of reset funding 
is set by aligning the required Modified Table of Organization and 
Equipment (MTOE) to the programmed force structure and by the type and 
condition of equipment returning from operations in a given year. As 
the Services reduce Active Duty end strength by 103,000 personnel, 
units will be identified for deactivation. The deactivated unit's MTOE 
equipment will be redistributed throughout the Services. This should 
reduce the number of items needed to be reset. However, if we fail to 
fully fund the reset required for the programmed force structure, we 
would face serious equipment shortfalls as current inventories are used 
up, expended, damaged, or worn out, and not replaced and repaired in a 
timely manner. These shortfalls would have a direct impact on unit 
readiness levels.
    Precise reset requirements are dependent on many variables, 
including equipment condition upon return; we cannot predict exactly 
what total reset costs will be at this point. However, we do know that 
the high operating tempo and harsh environments of Afghanistan and Iraq 
have a substantial deteriorating effect on equipment.

    11. Senator Levin. Secretary Panetta and General Dempsey, if DOD 
believes it necessary to retain the same level of reset funding, what 
is the rationale for this decision?
    Secretary Panetta and General Dempsey. Precise reset requirements 
are dependent on many variables, including equipment condition upon 
return; we cannot predict exactly what total reset costs will be at 
this point. However, we do know that the high operating tempo and harsh 
environments of Afghanistan and Iraq have a substantial deteriorating 
effect on equipment.
    The level of reset funding is set by aligning the required MTOE to 
the programmed force structure and by the type and condition of 
equipment returning from operations in a given year. As the Services 
reduce Active Duty end strength by 103,000 personnel, units will be 
identified for deactivation. The deactivated unit's MTOE equipment will 
be redistributed throughout the Services. This should reduce the number 
of items needed to be reset. However, if we fail to fully fund the 
reset required for the programmed force structure, we would face 
serious equipment shortfalls as current inventories are used up, 
expended, damaged, or worn out, and not replaced and repaired in a 
timely manner. These shortfalls would have a direct impact on unit 
readiness levels.

    12. Senator Levin. Secretary Panetta and General Dempsey, GAO has 
previously reported that the Military Services tend to build their 
reset budget requirements simply on the basis of the equipment it 
anticipates will actually return to the United States in the next year, 
rather prioritizing or targeting its reset requirements to address 
equipment shortages or other needs. To what extent do you believe 
opportunities exist to better focus the requirements for equipment 
reset, so that reset dollars go farther to meet equipment shortages, 
and better address our home stationed unit readiness rates?
    Secretary Panetta and General Dempsey. To better focus the 
requirement for equipment reset, DOD considered the MTOE required for 
the programmed force structure and the type and condition of equipment 
returning from operations in a given year.
    The Services also fully consider the future requirement for the 
equipment before DOD makes the reset funding request. Equipment reset 
is integrated with equipment modernization objectives, long-term 
support, and strategic investment plans.

    13. Senator Levin. Secretary Panetta and General Dempsey, the 
administration has called for renewed attention on the Pacific region 
and the emerging threats there. To what extent do the reset 
requirements in this budget recognize and take into account this shift 
and perhaps the different numbers and types of equipment we should be 
resetting to improve our readiness to address conflicts in that region?
    Secretary Panetta and General Dempsey. DOD's budget request aligned 
the programmed force structure to the new Defense Strategic Guidance, 
which addresses the Pacific region focus. Reset requirements were then 
aligned to MTOE requirements for that force structure and the type and 
condition of equipment returning from operations in a given year, while 
accounting for a wide spectrum of potential future challenges, many of 
which are anticipated in the Pacific area of operations.

    14. Senator Levin. Secretary Panetta and General Dempsey, last year 
Congress gave the Army $20 million to begin the competition process for 
the Humvee capitalization effort known as the Medium Expanded Capacity 
Vehicle program. However, DOD's fiscal year 2013 budget request plans 
to terminate that program and commit to the Joint Light Tactical 
Vehicle (JLTV) program with the Marine Corps. Without pushing the 
merits of either program, to what extent do we need to lock into some 
strategy on our future equipment needs to effectively plan and 
economically budget to meet defense strategic equipping goals?
    Secretary Panetta and General Dempsey. Given the current fiscal 
environment, this was one of many situations where limited resources 
drove the need to prioritize areas of overlapping capabilities. The 
commitment to the JLTV was based on an analysis of alternatives and 
Joint Requirements Oversight Council (JROC) deliberation, which 
included consideration of the Medium Expanded Capacity Vehicle program 
and other modernization options. The JROC reviewed tactical wheeled 
vehicles from a holistic portfolio perspective to ensure that the 
correct programs were being pursued to support the national strategy.

                           OVERALL READINESS

    15. Senator Levin. Secretary Panetta and General Dempsey, DOD's new 
Defense Strategic Guidance, released in January 2012, as well as the 
accompanying document, ``Defense Budget Priorities and Choices,'' make 
a number of statements which have implications for the readiness of the 
force. For example, the strategic guidance states that, ``it (the 
guidance) is intended as a blueprint for the Joint Force that will help 
guide decisions about force size and shape over subsequent program and 
budget cycles.'' It also notes that, ``DOD will manage the force in 
ways that protect its ability to regenerate capabilities that might be 
needed to meet future, unforeseen demands.'' What are the specific 
capabilities that DOD believes it will be able to regenerate?
    Secretary Panetta and General Dempsey. Since September 11, our 
forces have developed many specialized skills and capabilities--
language and culture, rule of law, security force assistance. DOD 
invested heavily in developing and expanding the supply of these skills 
and intends to make sure that those investments aren't inadvertently 
lost as we downsize. Also, the current and anticipated security 
environment indicates that the demand for this mission set will persist 
at some level, further emphasizing the need to ensure that ground force 
capabilities developed over the last decade for counterinsurgency, 
irregular warfare, counterterrorism, and security force assistance, and 
partnership engagement remain viable.
    The recent strategic review made clear that a smaller, ready, and 
agile force is preferable to a larger force that is poorly trained and 
ill-equipped. Therefore, we put a premium on retaining capabilities 
that provide flexibility across a range of missions and that require a 
long time to generate--in terms of training, equipping, et cetera. 
Additionally, other specialized capabilities, often associated with 
ground forces, stability operations, counterinsurgency (COIN), security 
force assistance (SFA), building partnership capacity (BPC), et cetera, 
and most gained over the last decade of conflict, must be carefully 
managed. We may reduce our capacity in skill sets where we expect a 
reduced demand and experience indicates retraining can occur quickly. 
These kinds of skills will need to be retained (the Services are 
analyzing), although at lower capacity, by keeping the right number of 
experienced people balanced between the Active component and Reserve 
component, and the right training curricula and infrastructure to 
rebuild these capabilities in a timely manner when needed.

    16. Senator Levin. Secretary Panetta and General Dempsey, given 
DOD's plans to reduce force structure and decisions to terminate 
certain weapons systems, platforms, et cetera, or delay procurement, 
how does it expect to be able to regenerate these capabilities and does 
it have specific plans that project how long it would take to achieve 
such regeneration?
    Secretary Panetta and General Dempsey. The Services are shaping 
their future force structure in ways that protect their ability to 
maintain and regenerate capabilities when needed to meet future, 
unforeseen demands, maintaining intellectual capital and rank structure 
that could be called upon to expand key elements of the force. For 
those critical skill sets, there will be a need to keep on hand some of 
the specialized infrastructure (people, facilities, training 
curricula), or seed corn, that will enable a new capability to be 
developed in a timely manner. Keeping experienced mid-grade officers 
and noncommissioned officers (NCO) will also be key. The seed corn and 
the experience will need to be properly balanced between the Active and 
the Reserve components.

    17. Senator Levin. Secretary Panetta and General Dempsey, in 
particular, given the current state of personnel readiness, 
particularly in the Army, how does DOD propose that it will be able to 
regenerate Active component end strength and in what timeframes?
    Secretary Panetta. Regenerating Active component end strength is 
generally a function of the particular forces being requested and the 
time in which the forces are needed. As the Services draw down, each 
will analyze their missions--considering the likelihood of need for 
various capabilities and the time required to regenerate while taking 
into account industrial base and the Reserve component availability--
and make decisions accordingly.
    Specifically, it is vital that the Army maintain a strong cadre of 
noncommissioned and mid-grade officers to form the core of new 
formations when needed. We are also making investments in Army Special 
Operations Forces (SOF) to increase their capabilities and provide more 
options to the President. It will also require a strong, ready, and 
accessible Army National Guard and Army Reserve Forces.
    General Dempsey. The new Defense Strategic Guidance released in 
January 2012, notes that since we cannot predict how the strategic 
environment will evolve with absolute certainty, we need to manage the 
force in ways that protect its ability to regenerate capabilities 
should they be needed to meet future, unforeseen demands. The strategy 
also notes that we need to retain intellectual capital and rank 
structure that can be utilized to expand key elements of the force. The 
Army is examining strategies, policies, and investments that would 
posture the Army to slow down and reverse drawdowns of Army end 
strength and formations, and regenerate end strength over the course of 
a number of years in response to a future crisis.
    This will involve reexamining the mix of elements in the Active and 
Reserve components, maintaining a strong National Guard and Army 
Reserve, retaining a healthy cadre of experienced noncommissioned and 
midgrade officers, and preserving the health and viability of the 
Nation's defense industrial base.

                          REBUILDING READINESS

    18. Senator Levin. Secretary Panetta and General Dempsey, in the 
past, this committee, GAO, and others have called for DOD to develop a 
plan for rebuilding readiness that clearly identifies requirements, 
prioritizes these requirements, and ties them to resources. DOD has 
typically pointed to its budget request to reflect such a plan. Given 
the current readiness levels of each of the Services and plans to 
reduce the force structure and end strength, to what extent has DOD and 
the Services developed plans and established priorities for rebuilding 
readiness?
    Secretary Panetta. DOD is committed to helping the Services 
maintain adequate readiness to fight the current fight and respond to 
contingencies across a broad spectrum of conflict. The Services have 
worked to achieve a balance among their manpower, training, and 
equipment requirements given anticipated force structure changes, 
evolving military strategies, and emerging resource constraints. Those 
decisions on the future force will be reflected to the extent possible 
in the President's budget fiscal year 2014 submission. Achieving that 
balance will require ongoing evaluation over the next several budget 
cycles.
    We have addressed full-spectrum training requirements in the 
current budget. However, as we implement the new Strategic Defense 
Guidance, the processes we have established will closely monitor 
whether our current training strategies are sufficient to meet these 
requirements and adjust as necessary. For example, as we decrease pre-
deployment training for the current fight, COIN, we will increase the 
use of time, ranges, and resources to train for full-spectrum 
operations.
    General Dempsey. OSD, the Joint Staff, and the Services continue 
working on programs focused on maintaining and rebuilding readiness. 
The Services are reviewing priorities in the context of the new Defense 
Strategic Guidance to ensure their resources are focused on the most 
critical readiness issues. Key aspects of this planning include 
resetting and reconstituting the force, refining force generation 
models, prioritizing resources, and determining capabilities gaps and 
associated mitigation options. A key component to the viability of 
these planning efforts is predictability in resourcing which is 
directly affected by the passage of appropriation legislation.

    19. Senator Levin. Secretary Panetta and General Dempsey, 
specifically, has DOD assessed the manning, equipping, and training 
priorities for a smaller force, and are these priorities reflected in 
its fiscal year 2013 funding request?
    Secretary Panetta. Yes. The budget decisions represented in the 
fiscal year 2013 funding request aligns our investments to the five 
major tenets of our strategy:

         Rebalance force structure and investments toward the 
        Asia-Pacific region and the Middle East region while sustaining 
        key alliances and partnerships in other regions.
         Plan and size forces to be able to defeat a major 
        adversary in one theater while denying aggression elsewhere or 
        imposing unacceptable costs
         Protect key investments in the technologically advance 
        capabilities most needed for the future, including countering 
        anti-access threats.
         No longer size Active Forces to conduct large and 
        protracted stability operations while retaining the expertise 
        of a decade of war.
         To the extent possible, structure major adjustments in 
        a way that best allows for their reversal or for regeneration 
        of capabilities in the future if circumstances change.

    There are many examples in the request, and listed in the Defense 
Budget Priorities and Choices document that accompanies the new Defense 
Strategic Guidance: maintaining current bomber and aircraft carriers 
fleet; retiring some of our oldest aircraft; protecting SOF and 
Unmanned Aerial Systems; COCOM Engagement and Exercises; Global 
Security Contingency Funding; protecting Reserve component readiness; 
sustaining critical segments of the industrial base; and funding for 
wounded warriors and transitioning veterans.
    General Dempsey. Yes. The new Defense Strategic Guidance set 
priorities for assessing our programs, force structure, and spending in 
the context of the current and forecast security environment. With 
those priorities in mind, the budget proposal strikes an appropriate 
and necessary balance between succeeding in today's conflicts and 
preparing for tomorrow's challenges. It accounts for real risks and 
real fiscal constraints, and begins the process of rebalancing and 
aligning our force structure and modernization efforts with our new 
strategy.

    20. Senator Levin. Secretary Panetta and General Dempsey, the new 
Defense Strategic Guidance and related defense priorities call for 
rebalancing toward the Asia-Pacific region and puts heavy reliance on 
unmanned systems and SOF. Given that DOD plans to reduce the size of 
the Army and the Marine Corps, does the new strategy require more 
reliance on the Air Force and Navy? If so, how will this shift in focus 
be reflected in the fiscal year 2013 and future budget requests?
    Secretary Panetta. All Services will play integral roles in 
addressing future U.S. security challenges across all domains. The Army 
and Marine Corps grew in order to better meet the demands of operations 
in Iraq and Afghanistan. As those conflicts wind down, some reductions 
in ground forces are appropriate.
    The nature of the future strategic environment will require even 
greater flexibility and agility in projecting power to accomplish the 
Nation's security objectives. Increasing operational focus on enhanced 
presence, power projection, freedom of action, and deterrence in the 
Pacific and Middle East, will require a range of mutually reinforcing 
joint activities in these regions to accomplish priority missions.
    To this end, over the Future Years Defense Program (FYDP), DOD will 
fund the next-generation bomber and aerial refueling aircraft. 
Additionally, the Navy will invest in a design for Virginia-class 
submarines that will allow them to carry significantly more cruise 
missiles and potentially provide an undersea conventional prompt strike 
capability. The future years budgets also invest resources in 
increasing stocks of our most capable cruise missiles, purchasing 
advanced maritime patrol aircraft, upgrading avionics and 
communications systems in our current bomber fleet, and enhancing 
capabilities in space, cyber, electronic warfare, missile defense, and 
intelligence, surveillance, and reconnaissance (ISR) systems that will 
be particularly well-suited to operations in the Middle East and Asia-
Pacific regions.
    General Dempsey. The end strength for ground forces has grown over 
the past 10 years due to high operating tempo and extended contingency 
operations. As these operations draw down, we are adjusting the size 
and composition of the Joint Force to meet the anticipated threat in 
the new strategy.
    As we rebalance our global posture to emphasize the Asia-Pacific 
region and the Middle East, we are adjusting our operating constructs 
and the systems we employ. The new strategy requires increased emphasis 
on improving joint operational access capabilities as well as programs 
that address the proliferation of technology that threatens our access 
to global commons. Similarly, cyber threats have evolved faster than 
many could have imagined, so this budget request has an added focus on 
our military's cyber capabilities. The sourcing of these increasingly 
important capabilities spans all components.

    21. Senator Levin. Secretary Panetta and General Dempsey, more 
specifically, how will resources be divided among the Services?
    Secretary Panetta. DOD undertook a comprehensive review to develop 
a revised defense strategy and accompanying investment priorities over 
the coming decade. We made disciplined decisions based on our 
assessment of future global challenges, key missions that we must be 
ready to execute, and essential capabilities that we need to perform 
those missions. The development of the fiscal year 2013 budget was 
truly a strategy-driven process.
    The fiscal year 2013 DOD budget reflects tough decisions that will 
preserve the strongest military in the world. We made appropriate and 
selective cuts in overall capacity and force structure while sustaining 
or increasing investments in key capability areas, including SOF, ISR, 
long-range strike assets, as well as space and cyber systems, among 
others, to preserve a ready, agile, flexible, and capable force.
    Decisions on allocating resources are grounded in a careful 
assessment of operational needs of the Joint Force working as an 
integrated whole to ensure that we have the necessary capabilities to 
accomplish assigned missions.
    General Dempsey. This budget must be viewed in the context of a 
broader strategy to achieve the Joint Force of 2020 and represents an 
integrated, carefully devised package of decisions that should not be 
viewed as individual, isolated measures.
    Excluding OCO funding, there are no major shifts expected in 
resources among the Services--the emphasis will be on shifting the 
priority of the resources to capabilities such as cyber and anti-
access/area denial, not on individual Services.

    22. Senator Levin. Secretary Panetta and General Dempsey, given 
current readiness of the Air Force and the Navy, has DOD assessed their 
ability to support this shift in focus?
    Secretary Panetta. Yes. In the future, our Services will generally 
be smaller, but each will develop future force structure that maintains 
the agility, flexibility, and readiness to engage a full range of 
contingencies and threats. And, as described in DOD's recently released 
strategic guidance, we are adjusting missions, posture, and 
organizational structure in order to adapt to ever evolving challenges 
and threats.
    One way in which the Air Force is posturing itself for the future 
in light of the strategic guidance is through pursuit of the Air-Sea 
Battle (ASB) concept in partnership with its sister Services. The ASB 
concept will guide the Services as they work together to maintain a 
continued advantage against the global proliferation of advanced 
military technologies and capabilities. ASB will leverage military and 
technological capabilities and is guiding us to develop a more 
permanent and better institutionalized relationship between the 
Military Departments that will ultimately shape our Service 
organizations, inform our operational concepts, and guide our materiel 
acquisitions.
    Providing the Nation offshore options to deter, influence, and win 
in an era of uncertainty is one of the primary contributions of the 
U.S. Navy. We keep the Fleet forward through a combination of 
rotational deployments, Forward Deployed Naval Forces, and forward 
stationing. We will rely on these basing constructs and strategic 
partnerships overseas that provide places for rest, repair, refuel, and 
resupply which enable forward presence without increases to the Fleet's 
size.
    General Dempsey. Yes. DOD continues to meet global demands while 
simultaneously conducting a thorough analysis of future force 
requirements to successfully implement the new strategy. The Services 
are updating their programs and metrics to evaluate current and future 
force structure requirements, modernization efforts, force generation 
capacity, and the resources required to maximize capabilities in 
support of the strategic priorities. DOD has established a forum that 
will consider any cross-cutting department management decisions to 
ensure DOD actions are substantive, synchronized, and coordinated 
across the defense enterprise.

    23. Senator Levin. Secretary Panetta and General Dempsey, does DOD 
plan to reassess its current operational plans and the types of 
scenarios that it will plan for in the future? If so, did DOD take into 
account the current readiness levels of the Services?
    Secretary Panetta. The President approves the Contingency Planning 
Guidance every 2 years, per statutory requirements. DOD frequently 
assesses its operational plans to ensure that they are realistic and 
that they cover the range of plausible challenges DOD may face. Those 
plans on which we place highest priority undergo a detailed review 
process to examine force availability and readiness against the 
combatant commanders' intent for phasing a specific contingency, the 
capability of DOD to project the required force, and competing demands 
across the globe. Both General Dempsey and I are involved deeply in 
this critical review process.
    General Dempsey. The Joint Staff is working with OSD to reassess 
the operational and contingency plans directed in the Joint Strategic 
Capabilities Plan. Our shift to rebalance priorities to the Asia-
Pacific region may require the Services and combatant commands refine 
or develop plans to meet the new guidance. We are accounting for the 
Services' current and projected readiness as we review planning 
requirements and potential scenarios.

    24. Senator Levin. Secretary Panetta and General Dempsey, what kind 
of risk assessment did DOD perform, including in terms of the current 
force's ability to support the shift in strategic direction?
    Secretary Panetta. The new Defense Strategic Guidance and the 
decisions in the fiscal years 2013 to 2017 FYDP were informed by risk 
considerations. Although there are inherent risks in any defense 
strategy, I believe the risks associated with the new Defense Strategic 
Guidance are manageable and acceptable.
    DOD took several steps to assess and mitigate risk. Preliminary 
insights from the 2012 Chairman's Risk Assessment (CRA) were 
instrumental in the development of DOD's strategic guidance. More 
broadly, during the strategic review, we addressed risk through 
wargaming, scenarios, trends analysis, and other processes. DOD's risk 
mitigation plan (submitted March 2012) underscores active mitigation 
efforts for the specific risks identified in the CRA.
    Spending reductions of the magnitude directed by the 2011 Budget 
Control Act (BCA) require difficult choices that result in additional 
risk in some areas. For example, by reducing overall end strength and 
aggregate force structure, we are accepting greater risk in undertaking 
future prolonged large-scale conventional or stability operations.
    But we will mitigate that risk by protecting our ability to 
regenerate capabilities as needed--the reversibility principle. This 
includes maintaining intellectual capital and rank structure that could 
be called on to expand key elements of the force, ensuring our Reserve 
component is well-equipped and well-trained, and preserving the health 
and viability of the Nation's defense industrial base.
    The Joint Force we are shaping, although smaller and leaner, will 
be agile, flexible, and ready to confront and defeat aggression 
anywhere in the world. It will have the capability to surge, mobilize, 
and regenerate forces and capabilities, enabling us to balance risk 
appropriately across the full range of military missions and to counter 
any future threats.
    General Dempsey. The 2011 CRA which provided the initial baseline 
assessment for the Comprehensive Defense Review (CDR) and the analysis 
for the 2012 CRA were executed in parallel. During that review, we 
conducted an assessment of the nature and magnitude of the strategic 
and military risks associated with successfully executing the missions 
called for under the current National Military Strategy as required by 
Title 10. This assessment leveraged both combatant command and Service 
perspectives, as well as independent Joint Staff analysis. Multiple 
risk perspectives provided an opportunity to balance the ongoing 
operational risks with the force's ability to address future 
challenges. Accordingly, the risk assessment provided a reasoned basis 
for our enduring emphasis on the broader Middle East and the increased 
strategic emphasis on Asia and the Pacific while helping us to focus 
additional effort on specific future capabilities like cyber and Joint 
Operational Access.

    25. Senator Levin. Secretary Panetta and General Dempsey, what 
analysis did DOD do to support the notion of slowing the pace of 
building new ships and accelerating the retirement of some existing 
ships, including examining various cost-benefit alternatives?
    Secretary Panetta. The underlying analysis that informs the 
President's budget for fiscal year 2013 force structure was the 
strategic review conducted by DOD in the summer and fall of 2011. 
During this review, DOD evaluated, among other things, the Joint 
Forces' presence, surge, and shaping demands. For the Navy, the review 
identified the number of ships and aircraft required to sustain a 
forward presence capable of deterring potential adversaries and 
providing options for immediate crisis response while also ensuring 
sufficient capacity to execute combatant commanders' plans.
    The analysis used to inform the decision to accelerate the 
retirement of older cruisers and amphibious ships was predicated on the 
need to balance the cost to upgrade and repair less capable older ships 
with the cost to procure newer more capable ships. Over the past 10 
years, the Fleet has deployed more frequently and sometimes for longer 
than planned. Consequently, maintenance and repair have sometimes been 
deferred. The life cycle costs of maintaining and repairing ships to 
achieve expected service life is normally less expensive than buying 
new ships. However, the average age of the Fleet is increasing due to 
the high annual procurement rates of the 1980s and 1990s. With an eye 
toward sustaining the Fleet's readiness and its capacity and capability 
to fight and win at sea, DOD decided to decommission some older, less 
capable ships in advance of their expected service life in order to 
invest in newer, more capable ships.
    General Dempsey. Specific resourcing decisions were made through a 
comprehensive strategic review that included detailed analysis by the 
Joint Staff, the Services, and OSD. Cost reductions from the early 
retirement of some ships will allow DOD to invest in new technology and 
ships that specifically address the threats targeted by the 
administration's new strategy.

                           OPERATIONAL ENERGY

    26. Senator Levin. Secretary Panetta and General Dempsey, in 2009, 
to address congressional concerns over DOD's heavy reliance on 
petroleum-based fuels to sustain operations on the battlefield in 
locations such as Afghanistan, GAO recommended that the combatant 
commanders and the Military Services establish requirements and 
guidelines for fuel demand management at forward-deployed locations 
within their areas of responsibility (AOR). Also, GAO recommended that 
DOD's operational energy strategy should establish incentives for 
commanders of forward deployed locations to promote fuel demand 
reduction at their locations, as well as identify a viable funding 
mechanism for pursuing fuel reduction initiatives. While we are aware 
that the combatant commands are documenting operational energy 
capability gaps, what is the status of combatant commands including 
CENTCOM formally incorporating requirements related to fuel demand 
management at forward-deployed locations into policy and guidance?
    Secretary Panetta. The combatant commands, including CENTCOM, are 
establishing requirements related to fuel demand management at forward-
deployed locations into their policy and guidance. On June 7, 2011, 
Commander, International Security Assistance Forces (COMISAF) issued 
policy guidance directing commanders to take ownership of unit fuel 
demand and make energy-informed decisions in their operations. In 
October 2011, CENTCOM revised its Contingency Base Camp Development 
Standard Regulation 415-1 to integrate fuel demand management best 
practices. On December 11, 2011, the new COMISAF issued a policy 
memorandum that built upon existing guidance and stated that 
``operational energy equates exactly to operational capability.''
    This policy and guidance has produced tangible fuel demand 
management improvements while capturing critical lessons learned for 
application in other combatant commands. The June 2011 COMISAF 
requirements memorandum resulted in several power generation and 
distribution improvements across Afghanistan. For example, the Army's 
Logistical Contract Augmentation Program (LOGCAP) Program Management 
Office established an Energy Savings Initiative Policy to engage 
contractors in fuel demand reduction efforts. This effort has reduced 
the fuel requirement in Afghanistan by one million gallons per year.
    General Dempsey. The combatant commands, including CENTCOM, are 
establishing policy and guidance related to fuel demand management at 
forward-deployed locations. In June 2011, COMISAF, issued policy 
guidance directing commanders to take ownership of unit fuel demand and 
make energy-informed decisions in their operations.
    The June 2011 COMISAF requirements memorandum resulted in several 
power generation and distribution improvements across the Combined 
Joint Operating Area in Afghanistan. Also, in June 2011, the Army's 
LOGCAP Program Management Office released its Energy Savings Initiative 
Policy to engage contractors in fuel demand reduction efforts.

    27. Senator Levin. Secretary Panetta and General Dempsey, what has 
DOD done to incentivize commanders and units that effectively reduce 
fuel consumption?
    Secretary Panetta. DOD's primary incentives to reduce fuel 
consumption are mitigating operational risk and enhancing combat 
capability. These fundamental incentives have led the Army and Marine 
Corps to achieve substantial reductions in fuel consumption by deployed 
units. DOD also oversees targeted incentive programs such as the Navy's 
Incentivized Energy Conservation Program, which recognizes naval 
vessels that reduce shipboard fuel consumption. The Navy also has a 
similar program for its aviation units called the Navy Air-Energy 
Conservation Program. In addition, the Air Force's Air Mobility Command 
aviation fuel efficiency incentives program provides high-performing 
Mobility Air Force wings financial awards for demonstrating the largest 
gains in energy efficiency.
    General Dempsey. Incentives in fuel consumption reduction are 
mitigating operational risk, thereby enhancing combat capability. DOD 
oversees targeted incentive programs such as the Navy's Incentivized 
Energy Conservation Program awards to naval vessels that best apply the 
program's training to reduce shipboard fuel consumption. The Navy has a 
similar program for its aviation units, the Navy Air-Energy 
Conservation Program. In addition, The Air Force's Air Mobility Command 
aviation fuel efficiency incentives program recognizes high-performing 
Mobility Air Force wings that demonstrate the largest gains in energy 
efficiency.

    28. Senator Levin. Secretary Panetta and General Dempsey, how does 
DOD plan to track fuel consumption at its forward-deployed locations?
    Secretary Panetta. The primary fuel management goal at forward-
deployed locations is to ensure our forces have a reliable, steady 
supply of fuel. The Defense Logistics Agency-Energy tracks fuel 
supplies to forward operations for that purpose, taking into account 
the full range of incidents and factors, including seasonal and 
cultural, that can affect fuel availability.
    In addition, DOD is taking steps to improve data on fuel 
consumption at forward locations for the purposes of managing demand. 
The Defense Operational Energy Board, co-chaired by the Assistant 
Secretary of Defense for Operational Energy Plans and Programs and the 
Joint Staff Director for Logistics, has chartered a task group to 
develop a baseline of operational energy consumption to inform energy 
performance metrics. DOD will apply these metrics to measure and manage 
improvements in energy security for the warfighter. Each of the 
Military Services has taken steps to improve their data collection on 
fuel consumption in military operations as well.
    General Dempsey. The Defense Operational Energy Board, co-chaired 
by the Assistant Secretary of Defense for Operational Energy Plans and 
Programs and the Joint Staff Director for Logistics, chartered a task 
group to develop a baseline of operational energy consumption to inform 
energy performance metrics. DOD will apply these metrics to measure and 
manage improvements in energy security for the warfighter.
    DOD is working to employ new systems to automate data collection 
down to the tactical level. The Army is undergoing limited fielding of 
the Tactical Fuel Manager Defense (TFMD) program at several Afghanistan 
bases. TFMD tracks fuel consumption by the individual piece of 
equipment to improve fuel efficiency.

    29. Senator Levin. Secretary Panetta and General Dempsey, in the 
National Defense Authorization Act (NDAA) for Fiscal Year 2012, this 
committee put into law that the Chairman of the Joint Chiefs of Staff 
shall designate a senior official to be responsible for operational 
energy plans and programs and be responsible for coordinating with the 
Assistant Secretary to implement initiatives. What progress has been 
made to date to establish this operational energy element within the 
Joint Staff, and how do you anticipate the Joint Staff will assist the 
Services on decreasing their reliance on fuel in current and future 
military operations?
    Secretary Panetta. In August 2011, the Chairman of the Joint Chiefs 
of Staff designated the Director for Logistics (DJ-4) as Joint Staff 
point of contact for operational energy plans and programs.
    I also recently signed DOD's Operational Energy Strategy 
Implementation Plan, which established the Defense Operational Energy 
Board, co-chaired by the Assistant Secretary of Defense for Operational 
Energy Plans and Programs (ASD(OEPP)) and DJ-4. I chartered the board 
to reduce energy demand, expand supply, and balance requirements. The 
board provides a mechanism for reviewing, synchronizing, and supporting 
department-wide operational energy policies, plans, and programs.
    General Dempsey. In August 2011, the Chairman of the Joint Chiefs 
of Staff designated the Director for Logistics, DJ-4, as Joint Staff 
point of contact for operational energy plans and programs.
    The Defense Operational Energy Board, co-chaired by the ASD(OEPP) 
and DJ-4, recently published their implementation plan to reduce energy 
demand, expand supply, and adapt the future force. The board provides a 
mechanism for reviewing, synchronizing, and supporting department-wide 
operational energy policies, plans, and programs.

    30. Senator Levin. Secretary Panetta and General Dempsey, with the 
additional leadership provided by the Joint Staff on operational energy 
efforts, what significant changes should we expect regarding how DOD 
plans and currently manages fuel demand and energy challenges in 
current and future war time scenarios?
    Secretary Panetta. DOD is following through on the changes to DOD 
force planning, requirements development, and acquisition processes 
Congress directed in the John Warner NDAA for Fiscal Year 2009. My 
expectation is that the work of the new Defense Operational Energy 
Board and DOD's Operational Strategy Implementation Plan will drive 
significant changes in how DOD plans and programs. We see operational 
energy, particularly demand reduction, becoming an increasingly 
important requirement for our forces because of the inherent 
vulnerability of fuel storage and logistics lines of communication and 
the growth of anti-access/area denial (A2/AD) capabilities to threaten 
them. The recent Joint Operational Access Concept states that DOD 
should ``decrease the logistical appetite of joint forces in all 
classes of supply, but especially in fossil fuels,'' to decrease the 
risk of these A2/AD threats.
    General Dempsey. DOD is following through on the changes to DOD 
force planning, requirements development, and acquisition processes 
directed by Congress in the 2009 NDAA. We believe operational energy 
demand reduction is becoming an increasingly important requirement for 
our forces due to the inherent vulnerability of fuel storage and 
logistics lines of communication, and the growth of A2/AD capabilities 
that threaten them.

    31. Senator Levin. Secretary Panetta and General Dempsey, have 
there been discussions on including specific energy efficiency 
strategies into strategic planning documents?
    Secretary Panetta. The recently signed Operational Energy Strategy 
Implementation Plan includes specific targets that direct changes to 
policy, doctrine, and combatant command activities. The Defense 
Operational Energy Board established a task group to review relevant 
DOD policies and develop a prioritized roadmap for including strategies 
to reduce operational demand, assure supply, and adapt the future 
force. As overarching strategic planning documents are reviewed, the 
board will provide a focal point for coordinating across the defense 
components.
    General Dempsey. The recently signed Operational Energy Strategy 
Implementation Plan includes specific targets that direct changes to 
policy, doctrine, and combatant command activities. The Defense 
Operational Energy Board established a task group to review relevant 
DOD policies and develop a prioritized roadmap for including strategies 
to reduce operational demand, assure supply, and adapt the future 
force.

           DEFENSE INDUSTRIAL BASE AND SCIENCE AND TECHNOLOGY

    32. Senator Levin. Secretary Panetta, the new Defense Strategic 
Guidance stated that DOD will ``make every effort to maintain an 
adequate industrial base and our investment in science and technology 
(S&T).'' DOD's budget for S&T activities decreased from $12.3 billion 
in fiscal year 2012 to $11.9 billion in this year's request. While it 
appears S&T was spared draconian cuts in an attempt to make a 
commitment in our seed corn for the future, I'd like to better 
understand what explicit steps DOD is taking. Are there specific areas 
DOD is increasing its S&T investments in?
    Secretary Panetta. The fiscal year 2013 President's budget request 
for DOD S&T is $11.861 billion, which represents a modest decline of 
$386 million compared to the fiscal year 2012 President's budget 
request of $12.247 billion. This is a decline of 4.73 percent, when 
adjusted for inflation. Within this budget request, DOD decided to 
strongly support sustainment of Basic Research. While a decline of just 
under 5 percent in the S&T program does have an impact, it is 
manageable and reasonable when taken in the context of the overall DOD 
budget decline of 7.01 percent, adjusted for inflation. Specific areas 
where DOD is increasing its S&T investments include promising 
technologies to counter other nations' development of A2/AD 
capabilities, cyber operations, autonomy, human systems, electronic 
warfare, and counter weapons of mass destruction (WMD). S&T funds have 
also been aligned with the Office of Management and Budget (OMB) and 
Office of Science and Technology policy priorities in advanced 
manufacturing, Army medical research, advanced robotics capabilities, 
advanced training technologies, and clean energy programs. Across the 
FYDP (fiscal year 2013 to fiscal year 2017), DOD has increased funding 
for high speed kinetic strike ($353 million), electronic warfare/cyber 
($195 million), offensive cyber operations ($400 million) and cyber 
communications ($382 million). We believe this budget represents a 
reasonable reprioritization of the DOD S&T program.

    33. Senator Levin. Secretary Panetta, are there areas that are 
facing reductions?
    Secretary Panetta. S&T funding declined 4.73 percent against 
inflation in the fiscal year 2013 President's budget request, with 
reductions occurring in all components. While the funding went down, we 
believe we are able to manage the risk. Specific technical areas with 
greater risk in the Army include: military engineering technology 
development for installations and field operations; applied 
topographical research for geospatial products; and weapons, munitions, 
missile, and rocket technology development for small precision 
munitions, such as mortars. Navy reductions were smaller than the other 
Military Departments and included technology development to improve 
logistics operations and sustainment. Within the Air Force, additional 
risk was accepted in the following areas: laser protection for anti-
access standoff munitions and for aircraft pilot visors; novel 
navigation techniques for non-permissive environments; space precision 
navigation and timing; trusted systems for avionics devices; and 
advanced airborne networked and wide-band communications. Funding 
reductions also occurred in the following Defense-wide technology 
areas: National Defense Education Program; human, social, cultural, 
behavior modeling; Joint Experimentation; Joint Capability Technology 
Demonstrations; biomaterials technologies; machine intelligence; 
cognitive computing; command, control and communication systems; and 
advanced electronics. Although the reductions are numerous, most are 
below $20 million in magnitude, and funding for DOD's highest priority 
technology programs was protected.

    34. Senator Levin. Secretary Panetta, is the DOD laboratory 
enterprise facing any potential base realignment and closure (BRAC) 
facility and workforce reductions?
    Secretary Panetta. BRAC enables DOD to reconfigure its 
infrastructure to match the demands of leaner, more flexible forces to 
accommodate our changing strategic emphasis. It is an important tool 
for DOD to use to make the tough fiscal choices necessitated by current 
budget challenges. If Congress does authorize the requested BRAC 
rounds, DOD will undertake the BRAC rounds in accordance with the 
statutory directive to consider all installations equally and make 
decisions based on 20-year force structure plan and statutory selection 
criteria, which give primary consideration to military value. In this 
context, DOD will examine all its missions and functions, including the 
laboratory enterprise.

    35. Senator Levin. Secretary Panetta, what specifically is DOD 
doing to maintain an adequate industrial base?
    Secretary Panetta. DOD is taking responsible steps to ensure that 
the defense industry can support our warfighters' needs, now and in the 
future. DOD's primary mechanism for supporting the industrial base is 
through the programs that buy the defense industry's products. DOD 
chooses what to purchase based on warfighter requirements, but DOD can 
sometimes adjust program schedules or capitalize on synergies across 
programs to sustain critical industrial base capabilities. In 
exceptional cases, in certain niches, when current programs will not 
support the minimum sustaining rate that a niche supplier needs to 
provide a critical product or service, DOD also uses its industrial 
base investment resources like the Defense Production Act Title III 
authority and the Manufacturing Technology Program to ensure the 
continued health of the selected parts of the defense industry. These 
rare interventions should only occur in areas where DOD is highly 
likely to need a product in the future, where the product would be hard 
and expensive to obtain after a hiatus, and where affordable and 
innovative approaches are available to use to retain the producers in 
the interim. Additionally, DOD is doing a continuous, systematic, fact-
based review of the defense industrial base, led by the Under Secretary 
of Defense for Acquisition, Technology and Logistics, called the 
Sector-by-Sector, Tier-by-Tier (S2T2) project. The S2T2 process, which 
is still ongoing, will identify critical and fragile niches in the 
industrial base that need additional monitoring. Combined, all of these 
efforts help to preserve the dynamic qualities of the industrial base 
that supply our warfighters with their technological edge.

    36. Senator Levin. Secretary Panetta, what is the definition of 
adequate?
    Secretary Panetta. In the context of the defense industrial base, 
``adequate'' means sufficient to provide the capabilities that our 
warfighters need, including maintaining our technological edge. An 
adequate industrial base has the capability to produce top-class 
equipment at reasonable cost today, and an adequate industrial base 
constantly adapts and invests in future capability.

    37. Senator Levin. Secretary Panetta, according to DOD's statement 
of defense budget priorities, ``some domestic manufacturers have key 
skills in the design and manufacture of military systems that cannot be 
duplicated elsewhere in the economy or regenerated quickly. In support 
of the strategic guidance's tenet of reversibility, this budget plan 
sustains, where possible, these segments of the industrial base. 
However, the industrial base will require careful monitoring in the 
future.'' What defense-unique industrial skills in design and 
manufacture are at greatest risk of loss given the administration's 
budget?
    Secretary Panetta. The defense industrial base is very diverse, and 
some sectors and tiers of the industrial base are in stronger positions 
financially and technically than others. DOD cannot support all parts 
of the industrial base equally. Some areas that DOD currently views as 
``at risk'' may appropriately decline as new technologies and the 
evolving strategic situation change our acquisition requirements. Even 
in the areas that DOD does need to sustain, we will take advantage of 
competition whenever we can, and we will invest in forward-leaning, 
pro-innovation efforts rather than preserving a static, backward-
looking industrial base.
    DOD is expanding its systematic investigation to identify critical 
and fragile niches that require especially close monitoring, but we 
already know of some areas of emphasis. For example, production in the 
aircraft sector is fairly robust, but for the first time in decades DOD 
does not have an ongoing tactical aircraft design effort, so we are 
examining creative and efficient ways to stimulate design capabilities 
there. In the production realm, demand for some strategic systems and 
space launch is relatively low at present, but we know that it will 
return in the future, so we are closely monitoring and investing to 
sustain and enhance production capability in solid rocket motors. Over 
time, DOD will make responsible choices with our industrial base 
efforts, we will rarely single out specific products or suppliers for 
support, and we will continuously update and adapt the list of niches 
that we monitor to reflect the changing industrial and strategic 
environments.

    38. Senator Levin. Secretary Panetta, which acquisition programs 
will be given the highest priority in ensuring reversibility?
    Secretary Panetta. DOD continues to apply ``reversibility'' to 
ensure DOD maintains the ability to regenerate, mobilize, and adapt our 
capabilities to ensure options for an uncertain future. The concept 
applies to our people, our Active-Reserve component balance, our 
posture, our partnerships, and our industrial base. As we establish 
priorities for acquisition programs, we aim to preserve select 
capabilities and critical skills within the industrial base to ensure 
we maintain skill sets vital to our ability to regenerate and adapt to 
changing threats. DOD's S2T2 initiative is assisting the Military 
Services in identifying critical industrial capabilities and skill sets 
that are at risk. Our decision calculus will be based upon a 
combination of many factors, including shocks or evolutions in the 
strategic, operational, economic, and technological spheres.
                                 ______
                                 
           Questions Submitted to Senator Joseph I. Lieberman

                    NORTH KOREAN NUCLEAR DETERRENCE

    39. Senator Lieberman. Secretary Panetta and General Dempsey, I am 
skeptical of DOD's apparent optimism that it will no longer be called 
on to conduct large-scale stability operations and worried about the 
consequences of declaring that we do not need to prepare for them. I 
believe it is important to note that DOD never actually sized the 
ground forces for large-scale stability operations, resulting in the 
severe dwell-to-boots-on-the-ground ratios that our soldiers have faced 
in recent years. It is in light of this skepticism that I am deeply 
concerned about the speed and depth of the reductions in ground force 
end strength envisioned in this budget request. Could you describe the 
specific risks you envision as a result of this decision and how you 
will mitigate them?
    Secretary Panetta. The new Defense Strategic Guidance states that 
our forces will retain the expertise, operational lessons learned, 
institutional knowledge, and specialized capabilities required for 
stability operations.
    In any defense strategy there are inherent risks; we believe the 
ones in this strategic guidance are manageable and acceptable. While 
U.S. forces will retain the capacity to undertake stability and 
counterinsurgency operations on a more limited scale, we are accepting 
greater risk in undertaking prolonged, large-scale stability 
operations. To mitigate that risk we will retain expertise, operational 
lessons learned, institutional knowledge, and specialized capabilities 
required for stability operations. Further, we will ensure that we have 
the ability to mobilize and regenerate forces should our assessments of 
the future scale of stability operations prove inaccurate.
    General Dempsey. You are correct that the Active component was not 
sized to conduct large-scale prolonged stability operations in the 
past; this will carry over to the future. If a large scale force is 
needed, risk will exist, as it has in the past, to the Active component 
until Reserve Forces can be recalled and trained to accomplish the 
mission. To help mitigate the risk, we will continue to rely on the 
battle-tested Reserve and Guard components of the Joint Force to 
provide the strategic and rotational depth should the Nation require us 
to execute a large-scale prolonged stability operation. We further 
mitigate operational risk to this mission by ensuring that we size the 
Active component to conduct limited counterinsurgency and other 
stability operations if required. Institutionally, we will mitigate 
risk by retaining the hard-won knowledge and experience in our force 
through retention of key leaders and emphasis on full-spectrum 
training. We mitigate risk with regard to future challenges by 
maintaining the right pace of reductions. If we go too fast, experience 
shows we will not do a good job of retaining key people and skills. 
Finally, the most comprehensive risk mitigation activity is a 
deliberate, comprehensive reset of the Joint Force. If we have fully 
trained and ready forces, and we do not exceed the current pace of 
reductions, I am confident that we can maintain military risk to that 
mission at an acceptable level.

    40. Senator Lieberman. Secretary Panetta and General Dempsey, while 
the new Defense Strategic Guidance states that ground forces will not 
be sized for large-scale stability operations, it also lists 
``stability and counterinsurgency operations'' as one of the ``primary 
missions'' of the U.S. military. Why won't the ground force be sized to 
conduct one of its ``primary missions?''
    Secretary Panetta. Stability and counterinsurgency operations are 
primary missions of the U.S. Armed Forces. With the transition of 
security responsibility in Afghanistan to the Afghan National Security 
Forces (ANSF) in 2014, and with sufficient time for U.S. forces to 
reset, we can reduce some capacity in the force for prolonged, large-
scale stability operations. U.S. forces will still retain expertise, 
operational lessons learned, institutional knowledge, and specialized 
capabilities required for stability operations, as well as the capacity 
to undertake stability and counterinsurgency operations on a more 
limited scale. Further, we will ensure that we have the ability to 
mobilize and regenerate forces if necessary.
    General Dempsey. It is important to note that stability operations 
and counterinsurgency will continue to be primary missions for the 
Joint Force. Mission sets are rarely binary--``high end'' or ``low 
end''. Missions are generally multi-faceted and tend to cross the full 
spectrum of operations. While we will increase emphasis on projecting 
power we are not forsaking our hard-won proficiencies in stability 
operations and counterinsurgency. The total ground force will be sized 
to conduct its primary mission, and we will rely on the battle tested 
Reserve and Guard components of the Joint Force to provide the 
strategic and rotational depth for all missions.

    41. Senator Lieberman. Secretary Panetta and General Dempsey, how 
can the force be prepared to conduct this particular ``primary 
mission'' without the necessary manpower?
    Secretary Panetta. U.S. forces will retain sufficient capacity to 
undertake limited counterinsurgency and stability operations, if 
required. We will also seek to operate alongside coalition forces, 
whenever possible. Recognizing the uncertainties of the international 
environment, we will ensure that we have the ability to mobilize and 
regenerate forces if a larger-scale stability operation becomes 
necessary in the future.
    General Dempsey. The force will have the necessary manpower 
resident in the total Joint Force--Active and Reserve.

    42. Senator Lieberman. Secretary Panetta and General Dempsey, the 
new Defense Strategic Guidance and fiscal year 2013 budget request 
emphasize investments in SOF. However, SOF personnel are drawn from 
general-purpose forces that are slated for reductions, and SOF units 
rely heavily on general-purpose forces for support. As General Dempsey 
has previously stated, ``The SOF can only be special if there's a 
conventional force that allows them to conduct their operations and 
shape the environment.'' What are the risks to SOF that will result 
from decisions to shrink general-purpose forces so significantly? For 
example, the fiscal year 2013 budget request calls for SOF by 3,000 
personnel, while cutting general-purpose ground force end strength. 
This reduction will impact the pool of personnel SOF can draw from. How 
can SOF grow without sacrificing standards with a smaller pool of 
manpower to draw from?
    Secretary Panetta. The remaining programmed growth for SOF is 
primarily focused on enhancing the organic combat support/combat 
service support capability in SOF units to provide increased 
capabilities in those areas, reducing the requirement for General 
Purpose Force (GPF) support to conduct forecasted operations. For long-
duration and large-scale operations, GPF support is necessary, and the 
Department is currently undertaking a range of different analyses to 
identify GPF support requirements for SOF, such as logistics and 
intelligence personnel, and to mitigate potential risks to SOF 
operations associated with reductions in the GPF.
    There is no requirement or expectation to change SOF's exacting 
selection standards, even if the pool from which to draw those 
individuals is reduced. GPF reductions will mean that a greater 
percentage of the overall force is actually resident in the special 
operations community and that we manage our force carefully in order to 
maintain the requisite talent pool. We must continue efforts to sustain 
the SOF that we already have most effectively. The Service component's 
continued support of robust, SOF-focused retention initiatives will 
have a positive impact on the retention behavior and readiness of our 
SOF personnel. The Department is working closely with U.S. Special 
Operations Command (SOCOM) to analyze force preservation challenges 
carefully.
    General Dempsey. Recently, the annual SOF manpower growth of 3-5 
percent we have sustained has not diluted the force or outpaced the 
required training and support structure. SOCOM has done a magnificent 
job of adjusting their processes to maintain the quality of SOF 
operators and support personnel during this current era of SOF growth. 
As an example, Special Forces soldiers (officers and enlisted) are 
drawn from the ranks of the Army's GPF; with the exception of 
relatively small number of 18Xs recruited ``off the street.'' Any 
future growth of SF will occur during a general reduction in Army end 
strength. SF will be recruiting from a smaller pool of candidates, just 
as all SOCOM components do. SOCOM will not compromise standards in 
selecting and training future SOF operators. It is vital to maintain 
the high standards that have been adopted by SOCOM's components since 
we have asked and continue to ask SOF operators to conduct National 
Level Missions in strategically sensitive environments. the Assistant 
Secretary of Defense (Special Operations/Low-Intensity Conflict 
(ASD(SO/LIC)) will work with the Service Secretaries (through OSD) to 
ensure that Commander, SOCOMs Special Operations Forces manpower needs 
are represented.
                                 ______
                                 
             Questions Submitted by Senator Daniel K. Akaka

                     SEXUAL ASSAULT IN THE MILITARY

    43. Senator Akaka. Secretary Panetta, DOD has taken a number of 
positive steps to address the very serious issue of sexual assault in 
our military. Over the holidays, you announced two new policies that 
provide greater support for the victims of sexual assault. What action 
is DOD taking to protect the men and women who so bravely protect us?
    Secretary Panetta. We are committed to doing everything we can to 
prevent sexual assault in the first place, provide all necessary care 
and services to victims of sexual assault, and ensure our commanders 
hold offenders appropriately accountable. Our new Expedited Transfer 
policy gives servicemembers who file unrestricted reports of a sexual 
assault an option to request quick transfer from their unit or 
installation to avoid harassment and separate them from the alleged 
perpetrator. For victims who made an unrestricted report we now require 
sexual assault documentation be retained for up to 50 years, making it 
easier for veterans to file a claim with the Department of Veterans 
Affairs (VA). For victims who file restricted reports, certain 
documentation must be retained for 5 years. In addition, we believe we 
have developed a set of initiatives that fundamentally change the way 
DOD deals with this problem. Some of the steps that we will work with 
Congress in trying to include in our legislative package are: enhancing 
training programs for sexual assault prevention, including training for 
new military commanders in handling sexual assault matters; 
establishing a ``Special Victim's Unit'' capability within each of the 
Services; allowing Reserve and National Guard personnel who have been 
sexually assaulted while on Active Duty to remain in their Active Duty 
status in order to obtain treatment and support; requiring a record of 
the outcome of disciplinary and administrative proceedings be centrally 
retained; and requiring commanders to conduct annual organizational 
climate assessments. Further, in July 2011, we assigned a general 
officer to lead our Sexual Assault Prevention and Response Office. Some 
of our other accomplishments are highlighted below:

    a.  In April 2011, we activated the anonymous and confidential DOD 
Safe Helpline which is a sexual assault crisis support and resources 
service for adult servicemembers of the DOD community. Users may call, 
click or text anytime, from anywhere for assistance and/or referrals 
regarding a sexual assault. Our most recent data confirm that this is a 
valuable tool being used by our servicemembers to facilitate care and 
reporting.
    b.  In January 2012, we reissued our DOD Directive that sets policy 
for the Department on Sexual Assault Prevention and Response (SAPR). 
The directive expanded support services to military spouses and adult 
military dependents, who will now be able to file confidential 
restricted reports and receive the services of a sexual assault 
response coordinator and victim advocate.
    c.  This Directive also ensures DOD civilian employees and their 
family dependents 18 years of age and older when they are stationed or 
performing duties outside of the continental United States (OCONUS) are 
eligible for treatment in the military healthcare system at military 
installations or facilities OCONUS. Additionally, U.S. citizen DOD 
contractor personnel when they are authorized to accompany the Armed 
Forces in a contingency operation OCONUS and their U.S. citizen 
employees are also eligible for the same emergency care and the help of 
a sexual assault response coordinator and a victim advocate, during 
that emergency care.
    d.  We have established the DOD Sexual Assault Advocate 
Certification Program which will require our sexual assault response 
coordinators and victim advocates obtain a credential aligned with 
national standards. This will ensure our victims of sexual assault 
receive the best care from a professional who can provide crucial 
assistance from the moment an assault is reported through case 
conclusion.
    e.  Sexual assault cases are some of the toughest cases to 
investigate and to prosecute and we must increase the number of subject 
matter experts in this area. To that end I have increased funding for 
military criminal investigators and judge advocates to receive 
specialized training. We are also ensuring that eligible victims have 
the opportunity to receive expanded legal assistance early in the 
process of their case.
    f.  We now have one integrated data system to track sexual assaults 
throughout the Department. The Defense Sexual Assault Incident Database 
(DSAID) achieved initial operational capability 30 March 2012, with the 
U.S. Air Force and the National Guard Bureau as the first users. By 31 
August 2012, it will be fully operational with the integration of the 
rest of the military Services. This data base will ensure the 
transparency of sexual assault-related data and enhance support 
services
    g.  Furthermore, because commanders are responsible to maintain 
good order and discipline of their people, as well as hold offenders 
appropriately accountable, I have directed an assessment of how we 
prepare and train our commanding officers and senior enlisted leaders 
to prevent and respond to sexual assault.
    h.  We are collaborating with the Departments of Labor and Veterans 
Affairs to develop a ``continuum of care'' for sexual assault victims 
transitioning out of military service. By leveraging our DOD Safe 
Helpline infrastructure, the Department is able to present clear and 
easily accessible information on how to get help with counseling, 
benefits determinations, transitions and employment. By bridging the 
gap from DOD to the VA for sexual assault victims, we provide a 
continuum of care from Active Duty to veteran status.
    i.  I recently introduced a new initiative that will elevate the 
disposition authority for the most serious sexual assault offenses to 
the ``Special Court Martial Convening Authority'' level. This reviewing 
officer is at the colonel or Navy captain level and will ensure these 
cases receive a high level of command attention.

    These initiatives are just a start. The Department is focused on 
building a safe environment for our men and women--I have no more 
important mission than to protect the people who protect this country.

                     MENTAL HEALTH IN THE MILITARY

    44. Senator Akaka. Secretary Panetta, ending the stigma associated 
with seeking mental health care is critical for the well-being of our 
men and women who serve in our military. I applaud the Department's 
success in increasing the percentage of those who seek help when 
needed. As we go forward, what do you see as the remaining challenges 
to further reducing the stigma associated with seeking mental health 
care?
    Secretary Panetta. Emphasis on the well-being and fitness of the 
Force, and the prevention of adverse outcomes for servicemembers, is a 
national priority. Early intervention through self-referral for issues 
of concern to servicemembers, and the reduction of stigma that may be 
associated with self-identification of the need for assistance for 
mental health conditions, are of paramount importance to leadership 
throughout DOD. To address these aims, a policy was issued in August 
2011, Command Notification Requirements to Dispel Stigma in Providing 
Mental Health Care to Servicemembers, which emphasizes that mental 
health providers are generally not required to notify Command when 
servicemembers voluntarily seek alcohol education or mental health 
services. This policy is part of the Department's effort to encourage 
servicemembers to come forward for evaluation and treatment before 
symptoms are serious enough to result in an alcohol related incident or 
in situations that might provoke command-directed action.
    All of these steps, and monitoring compliance with these measures 
at commands, should help reduce the stigma associated with seeking 
mental health care. The Deparment recognizes that more needs to be done 
to end that stigma, and we will continue to work toward that end. It is 
imperative for commanders to reinforce the value of help-seeking 
behavior within the military healthcare system. This can be done by 
fostering open discussion of mental health problems, making information 
regarding the means to access care readily available, and assisting 
servicemembers with their return to full duty following treatment.

                           GUARD AND RESERVE

    45. Senator Akaka. Secretary Panetta, as this budget submission 
looks to re-shape the military to be more agile, quick, and flexible--
and incorporate the lessons learned in 10 years of war--I appreciate 
the attention you give the Guard and Reserve components. Our Guard and 
Reserve Forces have been a crucial asset to this Nation and have served 
us well. The budget proposes force structure adjustments for our Active 
and Reserve Forces. How do you think the changes will impact the 
readiness of the Total Force?
    Secretary Panetta. Our goal is to develop a versatile mix of 
scalable organizations operating on a rotational cycle, to provide a 
sustained flow of trained and ready forces for the full range of 
military operations and to hedge against unexpected contingencies at a 
sustainable tempo for our All-Volunteer Force. At the same time, 
ensuring access to the Reserve component which is essential to 
providing the operational depth and flexibility combatant commanders 
require.
    As we have stated, our forces will get smaller; this will emphasize 
the importance of the Reserve component as an operational reserve. The 
Reserve component will also become more important as a steward for 
specialized skill sets to maintain expertise critical to regenerating 
capabilities when greater capacity is required.

    46. Senator Akaka. Secretary Panetta, upon completing deployments 
and returning to the civilian world, many in the Guard and Reserve 
continue to experience problems which may not have been diagnosed upon 
their return. I understand that sometimes post traumatic stress and 
other invisible wounds of war do not surface right away. In your 
opinion, what can be done to better assess and treat these returning 
Guard and Reserve soldiers?
    Secretary Panetta. DOD has revised its deployment mental health 
assessment process to provide comprehensive person-to-person mental 
health assessments before deployment and at 6 months, 1 year, and 2 
years after return from deployment. This process applies to Guard and 
Reserve soldiers who deploy, as well as to members of the Active 
component who deploy. These procedures comply with requirements in the 
NDAA for Fiscal Year 2012 (Section 702). The three post-deployment 
mental health assessments are performed by licensed mental health 
professionals or designated personnel trained and certified in 
performance of the assessments. These mental health assessments include 
an analysis of self-reported responses to mental health questions 
regarding symptoms of depression, posttraumatic stress disorder (PTSD), 
and alcohol misuse, detailed follow-up of positive responses regarding 
previous mental health diagnoses and medication use, and exploration of 
other reported emotional, life stress, or mental health concerns.
    During these assessment sessions, providers weigh risks for suicide 
or violence, offer education on relevant mental health topics, 
administer brief interventions, and, as indicated, make recommendations 
for follow-up assessment and care.
    After returning home from deployment, help for any mental health 
issues, including depression and PTSD, is available through the 
Military Health System for Active Duty and retired servicemembers, or 
through the VA for all veterans. Active Duty, National Guard, and 
Reserve servicemembers who separate and who served in support of a 
contingency operation are eligible for TRICARE's Transitional 
Assistance Management Program (TAMP), which provides health benefits 
for 180 days to assist servicemembers and their families with the 
transition to civilian life. For those who may be separating from the 
Service due to medical disability, VA Federal Recovery Coordinators and 
Service Recovery Care Coordinators assist with servicemember transition 
from DOD to VA care, treatment, and rehabilitation. The DOD 
inTransition program is a free, voluntary, and confidential coaching 
and assistance program that also provides a bridge of support for 
servicemembers while they are transitioning between healthcare systems 
or providers.
    Each Service has a comprehensive program to address the 
reintegration needs of wounded, ill, and injured servicemembers, 
including the Army Wounded Warrior Program, the Marine Wounded Warrior 
Regiment, Navy's Safe Harbor Program, and the Air Force Wounded Warrior 
Program. Across DOD, the Military Family Life Consultants address 
family distress by providing education and information on family 
dynamics, parent education, available support services, and the effects 
of stress and positive coping mechanisms. Military OneSource has 
counselors standing ready 24/7 by phone and email and are available for 
face-to-face counseling. The DOD Yellow Ribbon Reintegration Program 
was established to address the needs of National Guard and Reserve 
servicemembers and their families by facilitating access to support and 
reintegration services. The Defense Centers of Excellence for 
Psychological Health and Traumatic Brain Injury (DCoE) has a number of 
education and outreach programs, including DCoE's Outreach Center, 
``24/7 Help,'' which provides information and resources on 
psychological health and traumatic brain injury, and the 
Afterdeployment.org Web site, which assists servicemembers and their 
families in managing post-deployment challenges.
    The Military Services have developed training programs to mitigate 
the effects of combat-related stress. The Army implemented the 
Comprehensive Soldier Fitness Program Army-wide; the Air Force uses the 
Landing Gear program; the Navy has an Operational Stress Control 
program; and the Marine Corps uses a program called Operational Stress 
Control and Readiness. Each of these programs seeks to prepare 
servicemembers to better cope with combat and deployment stress before, 
during, and after deployment. On a more holistic level, the Office of 
the Chairman of the Joint Chiefs of Staff has promoted the Total Force 
Fitness model to address the need for a synchronized, DOD-wide approach 
to strengthen resilience and maintain optimal military force readiness. 
This model fosters leadership interventions throughout DOD that 
strengthen the comprehensive health of servicemembers across many 
domains: Behavioral, Social, Physical, Environmental, Medical, 
Spiritual, Nutritional, and Psychological.

                        FEMALES IN THE MILITARY

    47. Senator Akaka. Secretary Panetta, last week DOD announced that 
it would open about 14,000 combat-related positions to female troops. 
You also recently announced the President's nomination of the first 
female four-star general for the Air Force. These are both positive 
steps. Can you give me a sense of where you think DOD is with respect 
to diversity initiatives--such as fostering a diverse base of officers 
from which to select our future senior leaders?
    Secretary Panetta. DOD agrees the future military must be comprised 
not only of men and women of different racial and ethnic backgrounds, 
but also of individuals with a wide range of talents, experience, and 
skill sets. Because the military operates as a closed personnel system, 
the demographic diversity of accessions and those retained over the 
course of a career directly influences the potential demographic 
diversity of future senior leaders; on average it takes 25 years to 
``grow'' a General or Flag Officer. As such, given a limited pool of 
eligible candidates, outreach, recruiting, and retention strategies 
play a critical role in attracting and retaining qualified personnel to 
military service.
    DOD has committed a significant amount of resources to expand 
outreach efforts with affinity groups to strengthen the qualifications 
of potential candidates. For example, DOD hosts a number of training 
events particularly in the area of Science, Technology, Engineering, 
and Math (STEM) to strengthen shortcomings in an area critical to 
national security. Currently, a DOD pilot program with an East Los 
Angeles school-age population of roughly 20,000 includes programs to 
train parents and influencers on how to support STEM education in the 
home. The program begins in Kindergarten and ties into the California 
university system. The program is in its fourth year and surveys find 
that 100 percent of program participants have been positively 
influenced by the program. Additionally, DOD supports the STARBASE 
Program, a youth outreach program designed to increase student interest 
in STEM that will help build and enlarge the talent pool of potential 
military and civilian personnel needed by DOD. The DOD STARBASE Program 
operates at 60 locations in 34 States, the District of Columbia, and 
Puerto Rico. Military Commanders (Active, Guard, and Reserve) have 
collaborated with 1,086 schools from 387 school districts, serving 
approximately 64,000 students. Since 1993 more than 609,000 students 
have participated in the STARBASE Program.
    Cooperation and support of affinity groups also positively enhances 
diversity ``in-reach'' efforts to enhance career development, 
mentoring, and networking resources for those currently in uniform. DOD 
continues to work with components' leadership to address integration of 
talent management programs process and practices, mentorship, and 
succession planning to optimize the ability of all servicemembers to 
make informed career choices from accession to retirement.

                              NORTH KOREA

    48. Senator Akaka. Secretary Panetta, in 2011, the United States 
and North Korea agreed to restart efforts to search for and repatriate 
the remains of U.S. soldiers missing from the Korean War. Please 
provide an update on this program.
    Secretary Panetta. The United States and the Democratic People's 
Republic of Korea (DPRK) signed an arrangement on October 20, 2011, to 
resume joint remains recovery operations in the DPRK. The U.S. 
Government has worked diligently to comply with the arrangement and as 
of this hearing date we are on schedule to resume remains recovery 
operations in April.

                      DON'T ASK DON'T TELL POLICY

    49. Senator Akaka. Secretary Panetta, on December 22, 2010, 
President Obama signed the law which repealed the Don't Ask, Don't Tell 
policy. After required certifications were made, the repeal occurred on 
September 20, 2011. Have you encountered any difficulties in 
implementing the repeal of Don't Ask, Don't Tell?
    Secretary Panetta. The Services and combatant commands continue to 
provide monthly progress reports on the implementation of repeal. To 
date, and based on these reports, repeal is going smoothly and we have 
had no significant repeal-related issues. We attribute this success to 
our strong and dedicated leadership, comprehensive pre-repeal training 
programs, continued close monitoring and enforcement of standards by 
our military leaders, and servicemembers' adherence to core values that 
include professionalism, dignity, and respect for all.

    50. Senator Akaka. Secretary Panetta, have any new issues or 
concerns surfaced since the repeal went into effect?
    Secretary Panetta. No. DOD continues to closely monitor 
implementation across the Services and combatant commands. Through our 
monthly progress reports, we have found that the most common concern 
from the field is about benefits-specifically, whether or not benefits 
will be extended to same-sex partners.
    With regard to benefits, DOD is engaged in a comprehensive review 
of the possibility of extending eligibility for additional benefits, 
when legally permitted, to same-sex partners of military members.

                          READINESS CHALLENGES

    51. Senator Akaka. Secretary Panetta, some defense experts believe 
that, with the withdrawal from Iraq last year and considering our plans 
to leave Afghanistan by 2014, the U.S. military will enter a ``post-
counterinsurgency'' era. This view was reinforced by the 
administration's January 26 announcement of a strategic shift to the 
Asia-Pacific and Middle East region. Can you describe what readiness 
challenges U.S. forces will face as we transition to a new era where 
engagement and ensuring freedom of access will likely be the strategic 
norm?
    Secretary Panetta. Our future environment will present an 
increasingly complex set of challenges and opportunities to include:

         Transition in Afghanistan
         Violent extremism (destabilizing threats)
         Building partner security capacity
         Addressing challenges to U.S. power projection and 
        operational access

    For the last decade, the United States has been involved in 
extensive global operations to secure important national interests. The 
focus of these operations has overwhelmingly been counterinsurgency and 
stability operations, and we have focused on preparing ground combat 
forces for those operations, which means there has been less focus on 
training for conventional warfare.
    As these operations draw down and returning ground forces reset, 
our strategic approach will transition toward an increased emphasis on 
meeting future challenges. As it does, our forces will remain ready and 
able to conduct limited counterinsurgency and other stability 
operations. We are rebalancing training and equipment and maintaining a 
broad portfolio of capabilities that will ensure versatility to deal 
with this environment, to include increasing capacity in language, 
regional expertise, and associated culture. During this transition, our 
people and equipment, having endured maximum stress for extended 
periods, must be reset and sustained. To deter and defeat aggression, 
we must provide ready forces for current operations as well as prepare 
for unforeseen crisis and contingency response.

                        FOREIGN LANGUAGE SKILLS

    52. Senator Akaka. Secretary Panetta, in July 2009, DOD testified 
before the Senate Subcommittee on Oversight of Government Management, 
the Federal Workforce, and the District of Columbia on its foreign 
language capabilities. Concerning foreign languages, DOD testified that 
it ``is a priority for the Department of Defense.'' Please discuss how 
the DOD's fiscal year 2013 budget request ensures that the men and 
women in uniform and civilian workforce have the language skills 
necessary to meet DOD's mission.
    Secretary Panetta. DOD will continue to focus on expanding, 
improving, and strengthening language efforts that began in 2005 as a 
result of the Defense Language Transformation Roadmap. The current 
budget request ensures that the Defense Language Institute Foreign 
Language Center provides the men and women in uniform and the civilian 
workforce the language skills necessary to meet DOD's mission for the 
21st century. Our budget request will continue to support our Language 
Training Detachments located across the United States for GPF and 
Special Operations Forces training. We plan to continue funding 
initiatives such as the Afghanistan Pakistan Hands Program, which 
create a cadre of professionals with language and regional knowledge 
equipped to work in regions of U.S. engagement. My staff is working to 
improve and diversify the career paths of our language professionals 
and to improve retention and overall linguistic capabilities. At the 
same time, we are working to improve the process of identifying 
language requirements to better meet the needs of the Services and 
combatant commands. On the national level, we will continue to support 
the ROTC Project GO Programs and the National Security Education 
Program's Boren and Language Flagship programs, which collectively 
improve the school and university pipeline for language-enabled 
civilian and military personnel.

    53. Senator Akaka. Secretary Panetta, the National Language Service 
Corps is a pilot program that provides surge language capacity to DOD 
and the Federal Government during times of emergency and national need. 
Please explain how the National Language Service Corps contributes to 
the DOD's mission and provide specific examples.
    Secretary Panetta. The National Language Service Corps contributes 
to DOD's mission by bringing together 3,300 members who collectively 
speak more than 240 foreign languages in addition to professional level 
English proficiency. These patriotic individuals can be activated to 
meet short-term emergency and surge requirements. The National Language 
Service Corps complements the DOD's organic and contracted capabilities 
by providing a full range of language services to include 
interpretation, translation, participation as subject matter experts in 
standard setting for language assessment tools, and delivery of 
culturally-attuned language training. The members have supported DOD 
operational missions off the Coast of Senegal, critical exercises and 
training events in Indonesia, Thailand, Jordan and Germany, and have 
filled gaps in language support for the intelligence and law 
enforcement communities. We support the National Language Service Corps 
and consider it a key component of our strategy to mitigate uncertainty 
in current and future national security language needs.

    54. Senator Akaka. Secretary Panetta, what key lessons has DOD 
learned from implementing the National Language Service Corps pilot 
program?
    Secretary Panetta. DOD learned through this proof of concept (PoC) 
that there is a great deal of interest and need across the Federal 
Government for short-term foreign language skills that the National 
Language Service Corps (NLSC) provides. NLSC requests have more than 
doubled in the last few months and feedback on performance is 
excellent. We realize there is a great deal of willingness among the 
large number of U.S. citizens who speak more than one language to offer 
their skills in service to our Nation in times of need. Without a 
doubt, the vast majority of individuals who participate in the NLSC are 
professionals and offer more to the Nation than just their high level 
of language capability. The program is win-win.
    We also know now that proactively engaging in cross-agency 
partnerships through the NLSC can lead to increased collaboration and 
efficiencies. For example, the Defense Language and National Security 
Education Office has leveraged DOD efforts through a relationship with 
the Department of Justice and have shared best practices at a recent 
interagency working group.
                                 ______
                                 
            Questions Submitted by Senator Claire McCaskill

                      NATIONAL GUARD AND RESERVES

    55. Senator McCaskill. General Dempsey, the National Guard and 
Reserves have played a major role in combat operations over the past 
decade. National Guard and Reserve Forces have served faithfully in the 
Iraq and Afghanistan wars and there is no doubt that our Nation would 
not have been successful without the contribution of these citizen 
servicemembers. National Guard and Reserve servicemembers are unique in 
that they hold full-time civilian positions and jobs in communities 
across America outside of their military service. This makes the 
National Guard and Reserves an even more precious resource as our 
Nation transitions to a new defense strategy.
    I have concerns on how this transition will affect our National 
Guard and Reserve servicemembers and families. The new Defense 
Strategic Guidance calls for a drawdown of Active Duty servicemembers, 
which will put more emphasis on the readiness of the National Guard and 
Reserves. With a smaller Active Duty military, it is imperative that 
National Guard and Reserve Forces are well-maintained, trained, and 
adequately equipped to meet the Nation's challenges as they arise. In 
our current security environment, we must ensure that the National 
Guard and Reserves are postured for success on and off the battlefield.
    Over the past decade, servicemembers serving in the Guard and 
Reserves have become accustomed to deploying in support of our Nation. 
As these deployments become less frequent due to the drawdown in 
Afghanistan, how does DOD plan to retain the institutional and 
operational knowledge the Guard and Reserves have gained over the past 
decade?
    General Dempsey. As we implement the new Defense Strategic 
Guidance, we must avoid a hollow force and maintain the strongest 
military in the world. Although smaller and leaner, our military will 
remain flexible and ready to deploy quickly--an integral part of this 
agility rests on our ability to mobilize the National Guard and 
Reserves expeditiously. A properly trained and equipped Reserve 
component makes for a strong, capable, and ready National Guard and 
Reserves which is a prudent objective, both operationally and fiscally. 
Because of the investments made and operational experiences gained over 
the last decade, the Reserve component is well-postured to contribute 
valued capacity and capabilities to the Joint Force in the short-term. 
To sustain this over the long-term, we will continue rotational 
deployments, more extensively integrate Active and Reserve Forces, and 
enhance innovative readiness training.
    Each Service continues to reassess the rotational deployment plan 
of its unit formations, including National Guard and Reserves, to 
optimize total force readiness while being responsive to the combatant 
commanders' needs. This ongoing evaluation seeks to find the right 
balance to ensure readiness without overburdening either component 
against the anticipated demand signal. Keeping the Reserve component 
ready through periodic, predictable deployments adds value to the Total 
Force, distributes stress more evenly on all components, and provides 
force structure options in a resource constrained environment.
    The Services plan to retain appropriate levels of Reserve component 
readiness through continued Active and Reserve component integration of 
personnel and equipment. This Total Force integration will provide the 
most efficient training opportunities to all personnel, allow for 
shared use of resources, and maximize operational benefit and mission 
capability.
    We are reviewing Total Force training structure and strategies 
looking for ways to improve efficiencies and effectiveness. As 
deployment opportunities decline, our reliance on training must 
necessarily substitute to a greater degree for actual operational 
experience. We will continue to explore innovative ways to leverage 
technology and our human component as we build and maintain the 
readiness of the current and future Total Force.

    56. Senator McCaskill. General Dempsey, as we wind down combat 
operations in Afghanistan, the Guard and Reserves will transition to a 
posture that involves fewer combat operations overseas. As we plan to 
maintain the strongest force possible in the coming years, has DOD 
identified any problems in future recruitment, as many young men and 
women were drawn to service in a Guard and Reserve Force that was 
highly likely to deploy because of operations in Iraq and Afghanistan? 
If so, how does DOD plan to address these recruitment challenges?
    General Dempsey. In the short-term (3 to 5 years), we expect to 
continue to recruit and train some of our Nation's most talented men 
and women in numbers sufficient to ensure combat capability. For the 
past several years, all of our Military Services met, or exceeded, 
their Reserve component recruiting and retention goals with the 
exception of the Air National Guard. Today's reservists and guardsmen 
expect to deploy and be more operationally engaged than their 
counterparts of the 1990s. While the level of combat and other 
deployment operations is reduced from a few years ago, opportunities 
for Reserve component mobilization still exist. These opportunities 
will be on a more periodic and predictable schedule, which is more 
conducive to the needs of the Reserve component servicemembers, their 
families, and their employers. Programs such as the Post-9/11 GI Bill, 
the reduced retirement program, and stressed career field bonuses are a 
few examples of how we will be able to continue to maintain a strong 
and effective Reserve component.
    In the long-term (5 years and beyond), we may face challenges 
depending on the state of the economy and changing social norms. 
Although we seek only the best to join the Profession of Arms, fewer 
than one in four 17- to 24-year-olds are fully qualified for service, 
and we must attract over 15 percent of those. Today, only about a third 
of that percentage show a propensity to join, and that number may 
decrease as our Nation's economic conditions improve. Additionally, 
although the Reserve and National Guard bring in accessions directly 
from the Active component, not enough Active Duty personnel may be 
available. This will be due to several factors, such as reduced 
military end strength and the requirement that separation bonuses be 
repaid upon entry into the Reserve component. As it has in the past, 
DOD will need to count on congressional support to ensure our military 
remains the best the world has known.

                              F-35 PROGRAM

    57. Senator McCaskill. Secretary Panetta, for the third year in a 
row, DOD has been forced to delay plans for full production of the F-
35. Deputy Secretary of Defense Ash Carter has stated that the delay is 
not a budget issue, but rather a fundamental problem with the F-35 
program. Frank Kendall, Acting Assistant Secretary of Defense for 
Acquisition, Technology, and Logistics, has stated: ``putting the F-35 
into production years before the first test flight was acquisition 
malpractice.''
    While much attention has been given to the problems plaguing the 
Marine Corps F-35B variant, the F-35A and F-35C both suffer from 
significant design issues. For example, the F-35C has encountered a 
problem with its tailhook, a real and significant problem for an 
aircraft designed to land on an aircraft carrier deck. Last year, the 
Navy requested additional Super Hornets in order to mitigate delays in 
the Joint Strike Fighter (JSF) procurement schedule. Fiscal year 2013 
marks the third delay in 3 years for the JSF program, but, under 
current plans, the F/A-18 production line will end in fiscal year 2014, 
well before the F-35C is projected to be combat ready. Ending a viable 
aircraft production line before the JSF program will be able to meet 
full combat capability inevitably assumes a level of risk to the Navy 
and to the U.S. military.
    Does the DOD find that risk acceptable to our warfighters and our 
national security capabilities?
    Secretary Panetta. DOD remains committed to the F-35 program. The 
Department of the Navy does not currently plan to keep the F/A-18 
production line open beyond the final procurement of EA-18G aircraft in 
fiscal year 2013 and F/A-18E/F in fiscal year 2014; however, if further 
delays or significant development or design issues are discovered 
beyond the current F-35 program, as presented in the fiscal year 2013 
President's budget request, then DOD may consider all options, 
including procuring additional F/A-18 Super Hornets. Currently, the F/
A-18 production line shutdown begins with the key long-lead suppliers 
this summer. Regarding EA-18G unique parts, the final orders to support 
the final fiscal year 2013 procurement are also being placed this 
summer. From a force structure perspective, the Navy projects a 
manageable strike fighter shortfall of less than 65 aircraft in the 
2020s. DOD finds this risk acceptable to the Navy, and we are confident 
that we will have sufficient naval strike fighter capability to meet 
our national security requirements.

    58. Senator McCaskill. Secretary Panetta, does DOD have plans to 
mitigate that risk?
    Secretary Panetta. Yes, DOD is mitigating that risk through a 
number of means. The Navy is conducting a Service Life Assessment 
Program of the F/A-18E/F to define the necessary inspection and 
modifications required to extend the currently defined life limits of 
the aircraft.
    We have mitigated risk to the F-35 program by ensuring that the 
completion of the development program is adequately resourced and 
supported by realistic planning factors. The production ramp has been 
reduced to mitigate cost risk due to concurrency. This allows us to buy 
fewer aircraft in the near term that will require modifications while 
the design matures through continued testing and discovery.
    We believe that this risk is acceptable as we strive to shape a 
joint force for the future that is smaller and leaner but will be 
agile, flexible, ready, and technologically advanced.

    59. Senator McCaskill. Secretary Panetta, given the uncertainty 
that continues to plague the F-35 program, is DOD or the Navy 
considering options for keeping the F/A-18 line running beyond fiscal 
year 2014?
    Secretary Panetta. DOD plans to procure the final F/A-18E/F in 
fiscal year 2014. When those aircraft deliver in fiscal year 2016, DOD 
will have completed the program of record of 565 F/A-18E/F aircraft. 
However, if further delays or significant development or design issues 
are discovered beyond the current F-35 program as presented in the 
fiscal year 2013 President's budget request, DOD may consider all 
options, including procuring additional F/A-18 Super Hornets.
                                 ______
                                 
               Questions Submitted by Senator Mark Begich

                  BASE REALIGNMENT AND CLOSURE ISSUES

    60. Senator Begich. Secretary Panetta and General Dempsey, the Air 
Force is proposing to relocate the F-16 Fighter Squadron at Eielson Air 
Force Base (AFB) to Joint Base Elmendorf-Richardson in fiscal year 2013 
to achieve savings in base support costs. The F-16 squadron is the only 
Active Duty mission at Eielson. The Air Force intends to put Eielson in 
warm status by 2015. This proposal is the same one put forth by the Air 
Force in BRAC 2005 and it was rejected by the BRAC Commission due to 
overestimated cost savings and underestimation of the military value of 
Eielson AFB. Last week, the Alaska delegation wrote you a letter 
expressing concern about the proposal, mainly the fact this proposal is 
outside of the formal BRAC Commission process and may be in violation 
of statute as a significant number of military and civilian personnel 
will be impacted. What is your understanding of this proposal?
    Secretary Panetta and General Dempsey. The Air Force must achieve 
spending reductions in the current budget cycle regardless of whether 
additional BRAC rounds may ultimately be authorized. The Air Force is 
therefore making adjustments to its force structure, and the transfer 
of the Aggressor squadron from Eielson AFB to Joint Base Elmendorf-
Richardson is among them. The transfer in fiscal year 2013 garners 
manpower and efficiency savings by consolidating operations/maintenance 
supervision overhead and base support functions. The Air Force 
estimates resultant cost savings to be $3.5 million for fiscal year 
2013 and $169.5 million across the FYDP. These estimates are based on 
eliminating approximately 640 manpower authorizations that 
Headquarters-Pacific Air Forces determined were no longer needed at 
Eielson once the Aggressor squadron relocates. Sufficient capability, 
however, will remain in place at Eielson to support the remaining Air 
Refueling Wing and joint partners at Fort Wainwright. Additionally, the 
base will continue to provide critical training through the Joint 
Pacific Alaska Range Complex.
    DOD has the authority to close and realign military installations 
outside of a traditional BRAC round, provided that action does not 
trigger the thresholds established in 10 U.S.C. 2687. Section 2687 
specifies that DOD cannot take any action to effect or implement the 
closure of any military installation at which at least 300 civilian 
personnel are authorized to be employed, or the realignment of any such 
installation involving a reduction of more than 1,000 or by more than 
50 percent of the number of civilian personnel, whichever is less, 
unless and until certain requirements set out in the statute are met.
    The actions at Eielson do not trigger the thresholds specified in 
section 2687. Specifically, Eielson AFB is not being closed, and the 
realignment will not relocate either 1,000 or 50 percent of the 
permanent DOD civilian positions at Eielson to Elmendorf AFB. Were the 
triggering thresholds of the statute to be exceeded, the Air Force 
would have to report on the proposal, provide certain specified 
analyses, and wait a prescribed period of time before implementing the 
action.
    Finally, if Congress does authorize the requested BRAC rounds, the 
Air Force's currently proposed force structure changes do not 
presuppose what will happen to a particular installation during the 
BRAC analysis. DOD will consider all installations equally with 
military value as the primary consideration.

    61. Senator Begich. Secretary Panetta and General Dempsey, both of 
you have repeatedly stated the formal BRAC Commission process is the 
most objective, thorough, and non-partisan route to pursue with respect 
to real property management. In fact, during the 2005 BRAC round, below 
BRAC threshold actions were included in the formal process in 
recognition of the fact a comprehensive approach allowed DOD to make 
better use of real property and make better decisions. Would you agree 
with this statement? If so, do you support the Air Force's proposal?
    Secretary Panetta and General Dempsey. The statutory BRAC process 
is a fair, objective, and proven process for closing and realigning 
bases in the United States. I agree that ``below BRAC threshold actions 
were included in the formal process in recognition of the fact a 
comprehensive approach allowed DOD to make better use of real property 
and make better decisions.'' But strategic and fiscal imperatives leave 
DOD no alternative but to seek efficiencies at military bases here in 
the United States. While the President has asked Congress for BRAC 
authority, it is not clear how Congress will act on that request, and 
we cannot afford to delay in achieving efficiencies. DOD must use every 
tool at its disposal to address strategic and fiscal imperatives--
including acting within its existing authorities pending congressional 
action on BRAC authorization. The Secretary of Defense has the 
authority to close and realign military installations outside of a 
traditional BRAC round, provided that action does not trigger the 
thresholds established in section 2687 of title 10, U.S.C. Section 2687 
specifies that DOD cannot take any action to effect or implement the 
closure of any military installation at which at least 300 civilian 
personnel are authorized to be employed, or the realignment of any such 
installation involving a reduction of more than 1,000 or by more than 
50 percent of the number of civilian personnel, whichever is less, 
unless and until satisfying certain study and congressional reporting 
requirements and waiting the specified period of time.
    The Air Force must achieve spending reductions in the current 
budget cycle regardless of whether additional BRAC rounds may 
ultimately be authorized. The Air Force is therefore making adjustments 
to its force structure. It is important to note, however, that if 
Congress does authorize the requested BRAC rounds, the Air Force's 
currently proposed force structure changes do not pre-suppose what will 
happen to a particular installation during the BRAC analysis. DOD will 
consider all installations equally, with military value as the primary 
consideration.

    62. Senator Begich. Secretary Panetta and General Dempsey, how is 
the proposal in line with your goal of using the formal BRAC Commission 
process?
    Secretary Panetta. DOD's force structure changes drove both this 
proposal and the request for BRAC authorization. They are consistent. 
However, this proposal does not presuppose what will happen to a 
particular installation during the BRAC analysis. DOD will consider all 
installations equally with military value as the primary consideration.
    General Dempsey. DOD's force structure changes are one of the 
reasons why the President is requesting BRAC authorization. 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, DOD will be 
locked in a status quo configuration that does not match its evolving 
force structure, doctrine, and technology. Moreover, given the expense 
of our installation infrastructure, if we retain bases that are excess 
to strategic and mission requirements, we will be forced to cut 
spending on forces, training, and modernization. That said, recently 
announced force structure changes do not pre-suppose what will happen 
to a particular installation during the BRAC analysis. DOD will 
consider all installations equally with military value as the primary 
consideration.

    63. Senator Begich. Secretary Panetta and General Dempsey, was the 
Air Force's proposal to realign the F-16 squadron at Eielson reviewed 
by DOD Legal Counsel to ensure it is in compliance with BRAC law in 
title 10, U.S.C., section 2687, which mandates a notice and hold period 
when closing or realigning installations?
    Secretary Panetta. The Air Force's proposal was reviewed by the Air 
Force Office of the General Counsel, in consultation with the DOD 
Office of the General Counsel.
    General Dempsey. The Air Force's proposal was reviewed by the Air 
Force Office of the General Counsel in consultation with the DOD Office 
of the General Counsel.
    DOD has the authority to close and realign military installations 
outside of a traditional BRAC round provided that action does not 
trigger the thresholds established in title 10 U.S.C., section 2687. 
Section 2687 specifies that DOD cannot take any action to effect or 
implement the closure of any military installation at which at least 
300 civilian personnel are authorized to be employed, or the 
realignment of any such installation involving a reduction of more than 
1,000, or by more than 50 percent of the number of civilian personnel, 
whichever is less, unless and until certain requirements set out in the 
statute are met.
    The actions at Eielson AFB do not trigger the thresholds specified 
in section 2687. Specifically, Eielson AFB is not being closed, and the 
realignment will not relocate either 1,000 or 50 percent of the 
permanent DOD civilian positions at Eielson to Elmendorf AFB. Were the 
triggering thresholds of the statute to be exceeded, the Air Force 
would have to report on the proposal, provide certain specified 
analyses, and wait a prescribed period of time before implementing the 
action.

    64. Senator Begich. Secretary Panetta and General Dempsey, last 
week, Admiral Locklear, the U.S. Pacific Command (PACOM) commander 
nominee, recognized Alaska's strategic location, calling the State and 
its installations critical and significant to his mission. Yet, the Air 
Force is proposing to place one of the most strategically located bases 
in warm status. How is placing Eielson in warm status conducive to 
DOD's strategic goals?
    Secretary Panetta and General Dempsey. The right-sizing of Eielson 
AFB is tied to DOD's strategic goal of reducing the ``cost of doing 
business.'' This entails reducing the rate of growth of manpower costs, 
finding further efficiencies in overhead and headquarters, and business 
practices. Eielson AFB hosts the only single squadron wing in the 
Active Duty Air Force. The Air Force proposes moving the 18th Aggressor 
Squadron and associated maintenance support to Joint Base Elmendorf-
Richardson in fiscal year 2013. The movement of the Aggressor squadron 
will garner efficiencies by reducing maintenance supervision overhead 
and support base functions. Units, such as flightline and backshop 
maintenance, will relocate to Joint Base Elmendorf-Richardson with the 
18th Aggressor Squadron. There is sufficient capacity at Joint Base 
Elmendorf-Richardson (hangars, flightline parking, and administrative 
space) to beddown the 18th Aggressor Squadron. Further manpower 
reductions will be assessed in fiscal year 2014 for fiscal year 2015 
and tied to installation restructuring and right-sizing, with remaining 
manpower/infrastructure supporting surge/war readiness materiel 
requirements, Alaska Air National Guard's 168th Air Refueling Wing, the 
Joint Pacific Alaska Range Complex, and exercises (e.g., Red Flag and 
Northern Edge).
    The proposal to retain the 168 Air Refueling Wing at Eielson AFB 
and maintain the base and runway operating capability while moving the 
training-coded F-16s to Joint Base Elmendorf-Richardson is directly 
tied to the strategic importance of this base and this location. The 
robust training capability for Red Flag Alaska exercises will remain at 
Eielson, a testament to the quality and capacity for unparalleled, 
world-class training and readiness emphasis, which is of particular 
importance to the Pacific theater. While the training-coded Aggressor 
F-16s are slated to relocate to Joint Base Elmendorf-Richardson, they 
will still participate in and support these large force, joint and 
combined exercises, the same way the combat-coded units at Joint Base 
Elmendorf-Richardson have done for years. The current training and 
readiness focus of effort will remain under the current proposal while 
affording the Air Force the opportunity to expand operations, if 
necessary, in the future specifically to meet the strategic goals in 
the Pacific.

    65. Senator Begich. Secretary Panetta, please provide more details 
regarding DOD's intent to seek authority for BRAC. You have indicated 
if Congress authorizes BRAC, DOD wants to move quickly on the process 
and implementation. The last BRAC took 5 years to complete; in fact, 
DOD sought waivers to extend the deadline for more than five BRAC 
actions. DOD will be responsible for environmental remediation at sites 
and community redevelopment which takes years and cannot be 
circumvented. How does DOD envision completing and implementing BRAC 
immediately?
    Secretary Panetta. Asking for a 2013 round is aggressive; but given 
the magnitude of the cuts we are making in force structure, we cannot 
afford to wait. Moving forward quickly will enable DOD to reap savings 
quickly and adjust to force structure changes in an effective manner. 
With this aggressive timeline in mind, we have started the initial 
preparatory work regarding internal governance for a BRAC process--
inventorying our property and evaluating the extent to which we need to 
update our analytical tools. These efforts will enable us to proceed 
expeditiously once Congress authorizes BRAC. We will be ready to use 
the authority effectively and therefore urge Congress to authorize 
BRAC.
    Additionally, in light of the accelerated timeline, our legislative 
proposal provides us additional time to submit the required Force 
Structure Plan and Installation Inventory not later than 60 days after 
the date of the enactment of the legislation for the fiscal year 2013 
round.

    66. Senator Begich. Secretary Panetta, BRAC 2005 cost DOD $35 
billion to implement. GAO estimated savings from the BRAC 2005 round 
will not be realized for at least a decade. DOD has to find savings 
now. How did DOD conclude BRAC is a financially sound decision in the 
near-term?
    Secretary Panetta. Of all the efficiency measures that DOD has 
undertaken over the years, BRAC is perhaps the most successful and 
significant. The first four rounds of BRAC generated $8 billion in 
annual recurring savings, which now total $100 billion. The comparable 
figure for BRAC 2005 is $4 billion. The annual recurring savings for 
all five rounds ($12 billion) represents the additional costs that DOD 
would incur every year for base operating support, personnel, and 
leasing costs without BRAC. Enough money to buy 300 Apache attack 
helicopters, 124 F/A-18E/F Super Hornets, or four Virginia-class 
submarines.
    Because BRAC is a key priority, DOD will apply the resources 
necessary to support both a robust and thorough BRAC analysis and an 
efficient and effective implementation process. BRAC begins generating 
savings almost immediately, and those savings will partially offset its 
initial costs. BRAC will generate recurring savings far in excess of 
the upfront investment.
    The 2005 round took place during a period of growth in the 
military, and it reflected the needs and goals of that time--aligning 
our infrastructure with our military strategy so as to maximize 
warfighting capacity and efficiency. These efforts contributed 
significantly to DOD's effectiveness; but they necessarily required 
substantial investments. Because the focus of the BRAC 2005 round was 
not on saving money and space, it is a poor gauge of the savings that 
DOD 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 such costs and savings. In those rounds, one-time costs 
ranging from $2.7 billion to $6.6 billion resulted in annual recurring 
savings of $1 billion to $2.7 billion.

    67. Senator Begich. Secretary Panetta, what is DOD's estimated cost 
of another BRAC?
    Secretary Panetta. The costs of a potential BRAC round will not be 
known until after DOD has developed its recommendations, they have been 
reviewed by the independent BRAC Commission and forwarded by the 
President to Congress, and, finally, Congress has failed to enact a 
joint resolution disapproving the recommendations. It is only at the 
end of this process that DOD can develop budget quality estimates of 
the costs.

    68. Senator Begich. Secretary Panetta, the budget is decreasing; 
how will DOD pay for BRAC?
    Secretary Panetta. Because BRAC is a key priority, DOD will apply 
the resources necessary to support both a robust and thorough BRAC 
analysis and an efficient and effective implementation process. As a 
legal obligation of DOD, the normal internal budget deliberation 
process will determine the source of the BRAC implementation costs.

    69. Senator Begich. Secretary Panetta and General Dempsey, the Air 
Force has been the only Service to vocalize strong support for BRAC. 
The Army has not made necessary decisions regarding end strength 
decrease force structure impacts. The last BRAC Commission determined 
another BRAC round would not be required until 2015 at the earliest. 
The request for BRAC appears to be preemptive and driven by budget 
constraints, not by national security needs. Was an assessment 
conducted which determined another BRAC round was required at this 
time?
    Secretary Panetta and General Dempsey. We have not conducted an 
assessment for a future round; however, parametric techniques used to 
analyze various capacity measures in 2004 indicated that DOD had 24 
percent excess capacity overall relative to the fiscal year 2009 force 
structure-based requirements. Because BRAC 2005 eliminated only about 3 
percent of DOD's capacity, we believe we have significant excess 
capacity, and force structure reductions will only exacerbate this 
condition. In accordance with its request for authority to conduct two 
new rounds of BRAC, DOD will undertake a similar analysis used in BRAC 
2005 to give a sense of its current excess capacity.

    70. Senator Begich. Secretary Panetta and General Dempsey, once 
infrastructure is lost in the United States, the capacity may never be 
gained back. What risk is assumed by more base closures?
    Secretary Panetta and General Dempsey. As it has done in prior BRAC 
rounds, DOD will develop closure and realignment recommendations that 
provide it with the flexibility to adapt to changing circumstances, 
particularly surge requirements that can arise from contingencies, 
mobilizations, or extended changes in force levels. Specifically, DOD 
uses a 20-year force structure plan and has specific selection criteria 
\1\ that capture the concept of surge capacity. Criterion one requires 
DOD to consider ``current and future'' mission capabilities, and 
criterion three assesses the ``ability to accommodate contingency, 
mobilization, surge and future total force requirements.'' Furthermore, 
through execution of prior BRAC rounds, and as verified in a 1999 
study, DOD has demonstrated that it will retain within the U.S. 
installation infrastructure sufficient difficult-to-reconstitute assets 
to respond to surge, accommodate a significant reconstitution of the 
force, and support all forces, including those currently based outside 
the United States.
---------------------------------------------------------------------------
    \1\ Congress specified the following criteria for use in the 2005 
BRAC round, and DOD has proposed to use the same criteria for the 
requested rounds in 2013 and 2015.

    Military Value Criteria:
      1. The current and future mission capabilities and the impact on 
operational readiness of the total force of DOD, including the impact 
on joint warfighting, training, and readiness.
      2. The availability and condition of land, facilities, and 
associated airspace (including training areas suitable for maneuver by 
ground, naval, or air forces throughout a diversity of climate and 
terrain areas and staging areas for the use of the Armed Forces in 
Homeland defense missions) at both existing and potential receiving 
locations.
      3. The ability to accommodate contingency, mobilization, surge, 
and future total force requirements at both existing and potential 
receiving locations to support operations and training.
      4. The cost of operations and the manpower implications.

    Other Criteria:
      5. The extent and timing of potential costs and savings, 
including the number of years, beginning with the date of completion of 
the closure or realignment, for the savings to exceed the costs.
      6. The economic impact on existing communities in the vicinity of 
military installations.
      7. The ability of the infrastructure of both the existing and 
potential receiving communities to support forces, missions, and 
personnel.
      8. The environmental impact, including the impact of costs 
related to potential environmental restoration, waste management, and 
environmental compliance activities.

    71. Senator Begich. Secretary Panetta and General Dempsey, 
according to DOD's Base Structure Report for 2011, DOD has 611 military 
sites overseas. Why is DOD not pursuing a more aggressive effort to 
identify sites overseas for closure and realignment?
    Secretary Panetta and General Dempsey. DOD continuously assesses 
U.S. defense posture overseas. The President and Secretary of Defense 
led DOD's civilian and military leadership through extensive 
deliberations to develop the most recent Defense Strategic Guidance, 
which was issued on January 5, 2012. This strategy requires DOD to 
sustain a global presence, with a rebalancing of our forces toward the 
Asia-Pacific region and a sustainment of our presence in the Middle 
East. In Europe, we are sustaining a presence that will meet defense 
commitments, deter aggression, and place greater reliance on rotational 
presence and partnership.
    Over the last several years, we have made significant reductions in 
our overseas infrastructure and personnel. Since 2003, DOD has returned 
more than 100 sites in Europe to our host nations and reduced our 
personnel by one third. Between fiscal year 2012 and fiscal year 2015, 
the Army alone will execute 23 additional site closures that were 
previously approved and announced for return to the host nation. But 
more can and should be done in light of upcoming force structure 
changes.
    Our European footprint today consists of more than 300 discrete 
sites, ranging from small communications sites to robust Main Operating 
Bases. Given the shift in strategic focus to the Pacific, coupled with 
force reductions in Europe and decreases in required support to 
CENTCOM, the legacy footprint in Europe is a prime focus. To that end, 
we are embarking on a European capacity analysis that will seek to 
reduce long-term expenses through footprint consolidations, while 
ensuring our infrastructure properly supports operational requirements 
and strategic commitments.
    Our examination will review opportunities across the theater for 
more extensive joint and coalition utilization of facilities. We will 
gauge the extent to which our installations can shed excess capacity or 
absorb new functions from other installations of lesser military value 
which, in turn, could be reduced or closed. In doing this, we will be 
careful to assess the cost and savings of each action and prioritize 
for implementation those initiatives with the highest payback. We 
expect to identify some preliminary options later this year.

    72. Senator Begich. Secretary Panetta, did DOD or OMB assess the 
impact of a BRAC in the next few years on the economy and unemployment 
rates?
    Secretary Panetta. No. DOD did not assess the impact of a BRAC in 
the next few years on the economy and unemployment rates. If Congress 
authorizes BRAC, DOD will develop recommendations for closures and 
realignments based on 20-year force structure plan and statutory 
selection criteria \2\ that place priority on military value. Economic 
impact is also one of the criteria. Specifically, criteria 6 is ``The 
economic impact on existing communities in the vicinity of military 
installations.''
---------------------------------------------------------------------------
    \2\ Congress specified the following criteria for use in the 2005 
BRAC round, and DOD has proposed to use the same criteria for the 
requested rounds in 2013 and 2015.

    Military Value Criteria:
      1. The current and future mission capabilities and the impact on 
operational readiness of the total force of DOD, including the impact 
on joint warfighting, training, and readiness.
      2. The availability and condition of land, facilities, and 
associated airspace (including training areas suitable for maneuver by 
ground, naval, or air forces throughout a diversity of climate and 
terrain areas and staging areas for the use of the Armed Forces in 
homeland defense missions) at both existing and potential receiving 
locations.
      3. The ability to accommodate contingency, mobilization, surge 
and future total force requirements at both existing and potential 
receiving locations to support operations and training.
      4. The cost of operations and the manpower implications.

    Other Criteria:
      5. The extent and timing of potential costs and savings, 
including the number of years, beginning with the date of completion of 
the closure or realignment, for the savings to exceed the costs.
      6. The economic impact on existing communities in the vicinity of 
military installations.
      7. The ability of the infrastructure of both the existing and 
potential receiving communities to support forces, missions and 
personnel.
      8. The environmental impact, including the impact of costs 
related to potential environmental restoration, waste management and 
environmental compliance activities.

                          ASIA-PACIFIC REGION

    73. Senator Begich. Secretary Panetta and General Dempsey, with our 
defense posture shifting to the Asia-Pacific, shouldn't we ensure the 
military's global footprint is aligned with our strategy?
    Secretary Panetta. Yes, DOD is ensuring that U.S. global defense 
posture is aligned with our strategy. We will have a Joint Force with 
global presence emphasizing the Asia-Pacific region and the Middle 
East, while still ensuring the ability to maintain defense commitments 
to Europe and elsewhere. Wherever possible, we will develop innovative, 
low-cost, and small-footprint approaches to achieve U.S. security 
objectives.
    In the Asia-Pacific region, DOD is pursuing a defense posture that 
is geographically distributed, operationally resilient, and politically 
sustainable. U.S. defense posture and presence in East Asia, Oceania, 
and Southeast Asia demonstrates the fact that the United States is a 
resident power in the region. The budget request for fiscal year 2013 
funds enhancements to our presence in Southeast Asia, such as the 
rotational deployment of U.S. Marine Corps and U.S. Air Force units in 
Australia, and of Littoral Combat Ships to Singapore. The Navy will 
also rebalance the fleet to establish a greater presence in the Pacific 
and all the Services will continue to maintain significant force 
structure in the region as we work to increase interaction with 
partners and allies.
    We are sustaining and, in some cases, enhancing elements of our 
defense posture in the Middle East. We will maintain an operationally 
responsive posture in this critical region to deter threats, as well as 
assure allies and partners in the face of growing security challenges.
    We are also evolving our posture in Europe. Although we plan to 
withdraw two Brigade Combat Teams (BCT) over the next 2 years, we will 
maintain a steady state presence of two BCTs in Europe and allocate a 
U.S.-based BCT to the North Atlantic Treaty Organization (NATO) 
Response Force, including periodic rotation of a battalion task force 
and brigade headquarters staff support to Europe for training and 
exercises to improve interoperability and coalition operations. 
Reflecting the resource-constrained environment, we will also work with 
NATO allies to develop a ``smart defense'' approach to pool, share, and 
specialize capabilities that address future challenges in Europe and 
beyond.
    General Dempsey. Absolutely. Global posture actions are 
continuously adjusted against requirements to support combatant 
commanders, and are designed to position U.S. forces to better conduct 
OCO, ease the burden of a high operational tempo on members of the 
Armed Forces and their families, and improve the ability of the United 
States to meet its commitments, while making these commitments more 
affordable and sustainable.

    74. Senator Begich. Secretary Panetta and General Dempsey, why not 
utilize U.S. locations, like Alaska, as we shift our focus to the Asia-
Pacific region to simultaneously promote economic development and 
readiness?
    Secretary Panetta. We currently leverage a variety of forces and 
capabilities stationed in Alaska to support PACOM assigned missions, 
and will continue to do so as we rebalance toward the Asia-Pacific 
region. Increasing the utilization of capabilities already stationed in 
Alaska, or increasing number of the forces stationed there for 
employment in PACOM-assigned missions, must be assessed against the 
ability of those forces to provide timely response to crises.
    As we implement our strategy, we continually assess the way our 
forces are arrayed and their effectiveness in providing the appropriate 
range of political, security, and economic benefits to the United 
States.
    General Dempsey. As we continue to adapt our existing military 
force posture in the Asia-Pacific region, we are examining a number of 
potential options to ensure that we enhance the Joint Force's ability 
to surge and regenerate forces and capabilities to confront and defeat 
aggression anywhere in the world.

                 GROUND-BASED MIDCOURSE DEFENSE SYSTEM

    75. Senator Begich. Secretary Panetta and General Dempsey, funding 
for the Ground-based Midcourse Defense (GMD) was protected. How does 
the fiscal year 2013 request compare to last year's request of $1.2 
billion? Please describe the importance of this system in defending the 
Homeland and the threat environment.
    Secretary Panetta. The fiscal year 2012 appropriated amount, $1.159 
billion, included a general congressional reduction of $1.5 million. 
Program execution includes Control Test Vehicle-1 (CTV-01) and Flight 
Test Ground-based Interceptor (GBI) (FTG)-06b, completion of the Fort 
Greeley, AK, power plant, completion of Missile Field 2, delivery of a 
second fire direction center node at Fort Greeley, and initiate 
manufacturing for GBIs 48 to 52. During fiscal year 2012, GMD will 
build up two GBIs to support the return to intercept (RTI) flight tests 
in fiscal year 2013. To increase GMD system reliability for Homeland 
defense, the Missile Defense Agency (MDA) will activate the hardened 
power plant at Fort Greeley this year and increase firepower of the 
fielded GBIs by continuing to test and upgrade the reliability of GBI 
components. Of note, on December 2011, GMD awarded the development and 
sustainment contract to Boeing, which gained efficiencies and savings 
across the Future Years Development Program.
    During fiscal year 2013, GMD plans to complete the RTI testing with 
CTV-01 and FTG-06b and to restart interceptor manufacturing, 
incorporating the corrective actions into the GBIs yet to be delivered. 
GMD will continue manufacturing GBIs 48 to 52 and start manufacturing 
GBIs 53 to 57. As part of improving Homeland defense, GMD will continue 
construction on an east coast in-flight interceptor communications 
system data terminal at Fort Drum, NY, planning for FTG-08 in fiscal 
year 2014, including the build-up of the second 2-Stage GBI, planning 
for the FTG-11 first intercontinental ballistic missile (ICBM) and 
salvo test in fiscal year 2015, and continuing software development for 
both the GBI and ground systems products. The fiscal year 2013 GMD 
budget request is $903.2 million. Reductions in fiscal year 2013 
include transferring $5.8 million for Defense Information Systems 
Agency (DISA) to the Command and Control, Battle Management and 
Communications Program and transfer $20.7 million to the MDA Program 
Wide Support account for facilities and environmental support at 
multiple MDA locations. Completing Missile Field 2 and deploying the 
Fort Greeley power plant in fiscal year 2012 resulted in lower funding 
requirements.
    The fiscal year 2013 budget request continues to support the GMD 
system as the primary element of the Ballistic Missile Defense System 
(BMDS) that provides combatant commanders to defend the U.S. Homeland 
against limited attack by intermediate- and long-range ballistic 
missiles. The primary components of the GMD system are the GBIs and the 
ground systems. The GBI is a solid-fuel boost vehicle integrated with a 
single non-explosive exoatmospheric kill vehicle (EKV). There are 
currently 30 GBIs emplaced in two missile complexes, at Fort Greeley, 
AK, and Vandenberg AFB, CA. The system can negate attacks from the 
current and projected threat from Northeast Asia and Southwest Asia.
    General Dempsey. DOD requested $903.2 million in fiscal year 2013 
for GMD RDT&E funding to buy an additional 5 GBIs for delivery in 
fiscal year 2018 and upgrade our current operational fleet of 30 GBIs. 
This will complete the total purchase of 57 GBIs.
    Today, GMD's operational GBIs protect the United States against a 
limited ICBM raid launched from current regional threats. The ballistic 
missile threat is increasing both quantitatively and qualitatively, and 
is likely to continue to do so over the next decade. Current global 
trends indicate the ballistic missile systems are becoming more 
flexible, mobile, survivable, reliable, and accurate, while also 
increasing in range. Regional actors such as North Korea and Iran 
continue to develop long range missiles that will threaten the United 
States, but it is not clear exactly when and how this type of ICBM 
threat to the U.S. Homeland will mature.

    76. Senator Begich. Secretary Panetta and General Dempsey, the Sea-
Based X-Band (SBX) radar is critical to GMD system performance and 
warfighter confidence in the system. Yet, DOD is proposing to make it a 
test asset only. What risk is assumed to GMD system performance by 
making the SBX radar a test asset only?
    Secretary Panetta. SBX's primary mission is discrimination and it 
is not necessary for tracking. Therefore, SBX is not required to be 
part of 24/7 operational kill chain today because there is no evidence 
of sophisticated countermeasures that require discrimination. With 
indications and warnings, SBX could return to full time status.
    In the Limited Test Support Status, the SBX radar will retain its 
unique contingency operations capabilities and will continue to support 
testing. Maintaining SBX in Limited Support Status does not add risk to 
GMD performance.
    Its technical performance capability will continue, including 
connectivity to the GMD Fire Control System. SBX will maintain its 
American Bureau of Shipping (ABS) and Coast Guard certifications, and 
will be staffed to maintain the vessel, X-band radar (XBR) and other 
critical systems for support to both testing and contingency 
activation.
    SBX will continue to participate in BMDS ground and flight testing, 
while being available to support contingency operations as directed by 
OSD and the Joint Staff. The MDA is working with Joint Staff and the 
U.S. Strategic Command's (STRATCOM) Joint Functional Component Command 
for Integrated Missile Defense to determine the appropriate response 
time for contingencies. During contingency operations an unfunded 
requirement reimbursement will be requested.
    Under the direction of OSD and the Joint Staff, SBX deployed from 
Pearl Harbor in less than 72 hours to provide contingency support 
during the North Korean space launch. This was the first operation of 
the SBX under U.S. Pacific Fleet tactical control and with Navy 
ownership and operation of the SBX vessel.
    General Dempsey. DOD intends to place SBX radar in a limited test 
operations status due to affordability reasons, but we will be prepared 
to activate the SBX if indications and warnings of an advanced threat 
from Northeast Asia become evident. MDA is working with the Joint Staff 
and STRATCOM's Joint Functional Component for Integrated Missile 
Defense to determine the appropriate timeline for activation 
contingencies.
    DOD will begin upgrading the Clear Early Warning Radar in Alaska 
for full missile defense capability by 2016. We are requesting $347.0 
million in fiscal year 2013 for BMDS sensors development for Homeland 
defense, including support of the Cobra Dane Radar and the Upgraded 
Early Warning Radars (UEWR) at Beale AFB (California), Fylingdales 
(United Kingdom), and Thule (Greenland). We are requesting $192.1 
million to operate and sustain these radars and $227.7 million to 
procure additional radars and radar spares in fiscal year 2013.
    Based on DOD's robust support of current fielded and future 
sensors, the ability to reactivate SBX, if the threat warrants, 
minimizes the risks to the overall GMD performance.

                   MEDIUM EXTENDED AIR DEFENSE SYSTEM

    77. Senator Begich. Secretary Panetta and General Dempsey, the NDAA 
for Fiscal Year 2012 limited availability of Medium Extended Air 
Defense System (MEADS) funds to 25 percent until DOD submitted a plan 
to use the funds as final obligations for a restructured program or 
termination costs. So why is DOD seeking another $400.9 million in 
fiscal year 2013 for this program, a program the United States does not 
intend to buy?
    Secretary Panetta. The administration has requested funding in the 
fiscal year 2013 budget to complete the MEADS Design and Development 
(D&D) PoC effort with Germany and Italy. DOD is seeking $400.9 million 
in fiscal year 2013 funds to honor the final year of our MEADS D&D 
Memorandum of Understanding (MOU) commitment that will enable 
completion of the MEADS development phase as it is currently planned. 
The PoC effort enables all three nations to obtain benefit from our 
collective program investment to date and will bring the development 
program to an orderly conclusion. Failure to fund our fiscal year 2013 
commitment will be viewed by our allies as reneging on our promises.
    During the Chicago NATO Summit on May 20, 2012, NATO allies 
achieved a major breakthrough on missile defense--10 years in the 
making--by declaring an interim ballistic missile defense (BMD) 
capability as an initial step toward establishing a NATO missile 
defense system. The European Phased Adaptive Approach (EPAA) will be a 
major contributor to NATO missile defense and is designed to protect 
the U.S. Homeland, U.S. deployed forces, and our allies against the 
increasing threats posed by the proliferation of ballistic missiles. 
Where BMD was once a controversial subject within the alliance, we have 
reached consensus to operationalize this capability and have the allies 
share the burden of deterring and defending against those who could 
threaten us with ballistic missiles. This is a major achievement of 
U.S. policy; a decision by Congress to prohibit any additional funding 
for MEADS at this late date would diminish the consensus reached in 
Chicago.
    The United States relies on allies to share the burden of 
peacekeeping and defense in coalition activities and the development of 
effective defense capabilities that are of direct benefit to the United 
States. In this context, I believe it is important to live up to our 
commitments to our allies. We made a commitment to two of our closest 
allies--Germany and Italy--to develop MEADS cooperatively to achieve 
those objectives. Failure to meet our MEADS MOU fiscal year 2013 
funding obligations could negatively affect the willingness of our 
allies to join future cooperative endeavors, bilaterally or through 
NATO, that have been strongly supported by the administration and 
Congress at a time when cooperation through concepts, such as Smart 
Defense, is critical to ensuring NATO and its members are developing 
needed capabilities for the future. In addition, failure of the United 
States to provide funding for fiscal year 2013 would likely lead to a 
dispute with Germany and Italy, both of which have indicated that they 
would assert that the United States has unilaterally withdrawn from the 
MOU. On the other hand, full funding of the final year of the MEADS PoC 
would ensure that the United States receives a return on its 8-year 
investment in the form of a data archival package for future potential 
use on other U.S. air and missile defense improvements. We must act now 
to avoid a situation that would cause harm to our relationships with 
two of our closest allies.
    General Dempsey. In accordance with the NDAA for Fiscal Year 2012, 
DOD has repeatedly consulted and attempted to negotiate with our 
international partners, Germany and Italy, regarding development of a 
plan to further restructure the program in the event that Congress does 
not authorize or appropriate fiscal year 2013 funding to complete our 
MEADS D&D MOU obligations.
    DOD believes that completing the MEADS PoC and securing the benefit 
of the development program is the correct course of action under the 
current constraints. The MEADS elements (advanced 360 degree radars, a 
lightweight launcher with the PAC-3 Missile Segment Enhancement (MSE) 
missile, and a battle management system), if fully realized and 
validated by PoC, would add to the capabilities available to advance 
U.S. air and cruise/terminal BMD architectures.
    While DOD understands the need to make difficult choices in the 
current fiscal environment concerning funding for all of our 
activities, we also note that failure to meet our MEADS MOU funding 
obligations for fiscal year 2013 could negatively affect our allies' 
implementation of current transatlantic projects and multinational 
cooperation--as well as their willingness to join future cooperative 
endeavors with the United States--that are strongly supported by the 
administration and Congress.

    78. Senator Begich. Secretary Panetta and General Dempsey, what 
efforts did both of you personally engage in to terminate or 
restructure the program to ensure last year's appropriation was the 
final obligation in accordance with the law?
    Secretary Panetta. In accordance with the requirements of section 
235 of the NDAA for Fiscal Year 2012, DOD has consulted with the German 
and Italian participants regarding development of a plan to restructure 
the program further in the event that Congress does not authorize or 
appropriate fiscal year 2013 funding for these purposes. We have 
informed the German and Italian participants that there is significant 
risk that fiscal year 2013 funding may not be made available by 
Congress. In response to our attempts to engage in discussions, the 
German and Italian participants have consistently stated that they 
remain fully committed to their MOU obligations and expect that all 
three participants will provide funding in 2013 to complete the PoC 
effort. Although we have engaged with the German and Italian 
participants to seek to complete MEADS MOU efforts using only fiscal 
year 2012 funding, we cannot force them to agree to this course of 
action.
    During his recent visit to the United States, I personally 
discussed this matter with the German Minister of Defense (MoD). I will 
continue to engage my German and Italian counterparts on this issue.
    General Dempsey. In accordance with the NDAA for Fiscal Year 2012, 
DOD has repeatedly consulted and attempted to negotiate with our 
international partners, Germany and Italy, regarding development of a 
plan to further restructure the program in the event that Congress does 
not authorize or appropriate fiscal year 2013 funding to complete our 
MOU obligations. Secretary Panetta met with the German MoD in February 
where the German MoD reiterated his unequivocal support for completing 
the MEADS PoC.
    We have advised Germany and Italy that there is significant risk 
that fiscal year 2013 funding may not be made available. In response, 
our partners have made clear to DOD, and Germany has advised Senator 
Levin directly, that they remain fully committed to their MOU 
obligations and expect that all partner nations will provide their 2013 
funding to complete the PoC effort. They have also made clear that we 
are too late in the development effort to change course again and that 
we jeopardize our ability to realize the benefits of the program if we 
withdraw from our 9-year agreement near the end of the eighth year.

    79. Senator Begich. Secretary Panetta and General Dempsey, in these 
austere budget times, how can DOD justify a half a billion dollar 
investment in a program the warfighters will not use, and justify a 
request in violation of law?
    Secretary Panetta. The administration has requested funding in the 
fiscal year 2013 budget to complete the MEADS D&D PoC effort with 
Germany and Italy. DOD is seeking $400.9 million in fiscal year 2013 
funds to honor the final year of our MEADS D&D MOU commitment that will 
enable completion of the MEADS development phase as it is currently 
planned. The PoC effort enables all three nations to obtain benefit 
from our collective program investment to date and will bring the 
development program to an orderly conclusion. Failure to fund our 
fiscal year 2013 commitment will be viewed by our allies as reneging on 
our promises.
    During the Chicago NATO Summit on May 20, 2012, NATO allies 
achieved a major breakthrough on missile defense--10 years in the 
making--by declaring an interim BMD capability as an initial step 
toward establishing a NATO missile defense system. The EPAA will be a 
major contributor to NATO missile defense and is designed to protect 
the U.S. Homeland, U.S. deployed forces, and our allies against the 
increasing threats posed by the proliferation of ballistic missiles. 
Where BMD was once a controversial subject within the alliance, we have 
reached consensus to operationalize this capability and have the allies 
share the burden of deterring and defending against those who could 
threaten us with ballistic missiles. This is a major achievement of 
U.S. policy; a decision by Congress to prohibit any additional funding 
for MEADS at this late date would diminish the consensus reached in 
Chicago.
    The United States relies on allies to share the burden of 
peacekeeping and defense in coalition activities and the development of 
effective defense capabilities that are of direct benefit to the United 
States. In this context, I believe it is important to live up to our 
commitments to our allies. We made a commitment to two of our closest 
allies--Germany and Italy--to develop MEADS cooperatively to achieve 
those objectives. Failure to meet our MEADS MOU fiscal year 2013 
funding obligations could negatively affect the willingness of our 
allies to join future cooperative endeavors, bilaterally or through 
NATO, that have been strongly supported by the administration and 
Congress at a time when cooperation through concepts, such as Smart 
Defense, is critical to ensuring NATO and its members are developing 
needed capabilities for the future.
    In addition, failure of the United States to provide funding for 
fiscal year 2013 would likely lead to a dispute with Germany and Italy, 
both of which have indicated that they would assert that the United 
States has unilaterally withdrawn from the MOU. On the other hand, full 
funding of the final year of the MEADS PoC would ensure that the United 
States receives a return on its 8-year investment in the form of a data 
archival package for future potential use on other U.S. air and missile 
defense improvements. We must act now to avoid a situation that would 
cause harm to our relationships with two of our closest allies.
    General Dempsey. In accordance with the NDAA for Fiscal Year 2012, 
DOD has repeatedly consulted and attempted to negotiate with our 
international partners, Germany and Italy, regarding development of a 
plan to further restructure the program in the event that Congress does 
not authorize or appropriate fiscal year 2013 funding to complete our 
MEADS D&D MOU obligations.
    DOD believes that completing the MEADS PoC and securing the benefit 
of the development program is the correct course of action. The MEADS 
elements (advanced 360 degree radars, a lightweight launcher with the 
PAC-3 MSE missile, and a battle management system), if fully realized 
and validated by PoC, would add to the capabilities available to 
advance U.S. air and cruise/terminal BMD architectures.
    Failure to meet our MEADS MOU funding obligations for fiscal year 
2013 could negatively affect our allies' implementation of current 
transatlantic projects and multinational cooperation--as well as their 
willingness to join future cooperative endeavors with the United 
States--that are strongly supported by the administration and Congress.

                       DOMESTIC SUPPORT MISSIONS

    80. Senator Begich. Secretary Panetta and General Dempsey, Congress 
has vocalized concerns about DOD resourcing domestic support missions 
repeatedly for the last several years. For fiscal year 2013, the Air 
Force is proposing to retire the Joint Cargo Aircraft and the Army will 
proceed with divestiture of the Sherpa. These actions leave the 
National Guard in many States without needed capability and resources 
to fulfill domestic support missions. How is DOD ensuring domestic 
support missions are not undermined?
    Secretary Panetta. Although the C-27 divestiture and subsequent 
Army C-23 divestiture will reduce National Guard airlift, sufficient 
airlift capacity remains (over 1,000 rotary-wing and over 400 fixed-
wing aircraft) and is spread across the 10 Federal Emergency Management 
Agency (FEMA) regions that States may leverage in response to an 
emergency. In situations where State resources are overwhelmed, the Air 
Force will provide assistance to civil authorities in accordance with 
the Stafford Act or as directed by the President. As such, the analysis 
which formed the rationale for the force structure adjustment included 
supporting civil authorities when requested as part of a larger FEMA-
led Federal response.
    The 2013 presidential budget request reduced the C-130 fleet size 
to 318 aircraft to meet the requirement that was outlined in the newly-
articulated strategy presented by the President and the Secretary of 
Defense. When determining the number of airlift aircraft required to 
meet the new strategy, forces are being sized to meet one large-scale 
campaign internationally, as well as support two domestic missions, a 
major regional disaster, and a Homeland defense event. As a follow-on 
measure, the 2012 NDAA-directed airlift study, due at the end of 2012, 
will further refine plans to support domestic missions without the C-23 
Sherpa.
    General Dempsey. Defending the Homeland and providing support of 
civil authorities is a primary mission of the U.S. Armed Forces. As 
such, DOD carefully considered domestic support missions in our 
analysis of requirements for the fiscal year 2013 budget submission. 
Although not every State will retain organic airlift capability, the 
DOD Total Force remains fully capable of meeting our domestic 
requirements while at the same time deterring and defeating aggression 
by any potential adversary. When called upon, we will leverage existing 
National Guard capabilities along with additional Active and Reserve 
Forces needed to ensure the safety and security of our citizens.

    81. Senator Begich. Secretary Panetta and General Dempsey, how did 
domestic support missions factor in to decisionmaking?
    Secretary Panetta. One of the primary missions of the U.S. Armed 
Forces is to defend the Homeland and provide support to civil 
authorities. With regard to airlift, the Air Force routinely conducts 
defense support of civil authorities and assists at all levels in 
preventing, protecting against, mitigating the effects of, and 
responding to manmade or natural disasters when directed by the 
President or approved by DOD.
    DOD conducted the Mobility Capabilities and Requirements Study 2016 
and Case 3 (270 C-130s) of the study is consistent with the new Defense 
Strategic Guidance. This analysis includes airlift to support two 
domestic missions, a major regional disaster, and a Homeland defense 
event to form the 270 intra-theater aircraft requirements. In support 
of the Homeland defense mission, the Air Force continues to meet 
mission requirements/taskings through the joint Global Force Management 
process that prioritizes all combatant commanders (i.e., Northern 
Command, CENTCOM, PACOM, et cetera) requirements.
    General Dempsey. In last year's Comprehensive Review of the Future 
Role of the Reserve Component, DOD examined Reserve component support 
for Homeland defense and Defense Support of Civil Authorities (DSCA). 
This report concluded that, although Homeland defense and DSCA are 
Total Force responsibilities, ``the Nation needs to focus particular 
attention on better using the competencies of National Guard and 
Reserve component organizations. The National Guard is particularly 
well-suited for DSCA missions.'' The report added that ``except in rare 
circumstances, the National Guard can be expected to support civil 
authorities at the direction of State Governors.''
    DOD's response to the BCA was to provide a balanced force that best 
protects the Nation, both at home and abroad. Although we necessarily 
reduced National Guard forces along with those of Active Duty and 
Reserve, we did so in a manner which allows us to provide capabilities 
adequate for our domestic support mission. Because many domestic 
missions emerge in response to unforeseen crises, when called upon we 
can leverage other State capabilities with the consent of those States' 
Governors on an as-needed basis. Should a national emergency arise, we 
will augment the National Guard using capabilities found within the 
Active component as permitted by Title 10 and, as a last resort, the 
Civil Reserve Air Fleet.

                 U.N. CONVENTION ON THE LAW OF THE SEA

    82. Senator Begich. Secretary Panetta and General Dempsey, do you 
support the Law of the Sea Treaty?
    Secretary Panetta. I strongly support the United States' accession 
to the 1982 U.N. Convention on the Law of the Sea (UNCLOS). DOD's 
civilian and military senior leadership have been strong proponents in 
favor of U.S. accession for more than a decade.
    General Dempsey. I strongly support the United States' accession to 
the 1982 UNCLOS.

    83. Senator Begich. Secretary Panetta and General Dempsey, how will 
accession to the UNCLOS enhance our strategic interests and national 
security?
    Secretary Panetta. Accession to the 1982 UNCLOS would enhance the 
United States' strategic interests and national security in several 
ways. These include the following:

         As a treaty party, the United States can best protect 
        the navigational freedoms enshrined in the 1982 UNCLOS that are 
        key to U.S. global force presence and power projection 
        capability. The current status of the United States requires us 
        to assert our rights through customary international law, 
        subject to change based on state practice.
         The United States would have access to the benefits 
        afforded to treaty parties, which importantly include the 
        UNCLOS's institutions and meetings. The United States would no 
        longer be relegated to observer status and could fully 
        participate in the ongoing development and interpretation of 
        the 1982 UNCLOS. In fact, nearly every maritime power, our NATO 
        allies, and the other permanent members of the U.N. Security 
        Council are already treaty parties. Being a party would allow 
        the United States to exert a level of influence that is 
        reflective of its status as the world's foremost maritime 
        power.
         Accession would solidify a truly massive increase in 
        the United States' resource and economic jurisdiction, not only 
        to 200 nautical miles off our coasts, but to a broad 
        continental margin beyond that.
         Accession would ensure the United States' ability to 
        take advantage of the opening of the Arctic, including the 
        enormous natural resource potential of the Arctic.
         China continues to flex its muscles in the South China 
        Sea at a time when the United States is rebalancing toward the 
        Asia-Pacific region. Lack of accession continues to put the 
        United States in a weaker position in critical bilateral and 
        multilateral discussions--whereas China seeks to use its status 
        as a treaty party to its advantage. Accession would strengthen 
        the United States' hand in regional discussions as we seek to 
        build upon the depth and breadth of regional partnerships and 
        access.

    General Dempsey. Becoming a Party to the UNCLOS would enhance our 
strategic interests and national security by preserving our strategic 
influence as the world's foremost maritime power and strengthening our 
ability to lead developments in global maritime security. The United 
States would also be able to reinforce the UNCLOS's freedoms of 
navigation and overflight, and the other lawful uses of the sea related 
to those freedoms, that are essential to the global presence and 
mobility of our Armed Forces. This includes movement of forces and 
materiel through strategic international straits such as the Straits of 
Gibraltar, Malacca, Hormuz, and Bab el-Mandeb. In addition, becoming a 
party would strengthen combined operations with coalition partners that 
are treaty parties and advance important national security initiatives 
such as the Proliferation Security Initiative. Accession would also 
allow the United States to take better advantage of emerging 
opportunities in the Arctic related to navigation, resources, and other 
activities, as well as enhance our credibility in a large number of 
Asia-focused multilateral venues where we are seeking to diffuse 
tensions and encourage the peaceful resolution of disputes in the South 
China Sea.
                                 ______
                                 
             Questions Submitted by Senator Joe Manchin III

                   DEPARTMENT OF DEFENSE CONTRACTORS

    84. Senator Manchin. Secretary Panetta, how many contractors does 
DOD employ?
    Secretary Panetta. DOD provides this data to Congress annually in 
the Inventory of Contracts for Services required by section 2330a, 
title 10, U.S.C., as amended by section 807 of the NDAA for Fiscal Year 
2008. On August 28, 2011, DOD submitted the Fiscal Year 2010 Inventory, 
reporting 622,722 contractor full-time equivalents for the fiscal year.

    85. Senator Manchin. Secretary Panetta, what is the average salary 
of a DOD contractor?
    Secretary Panetta. DOD awards contracts for a wide range of goods 
and services. The salaries of DOD contractor employees similarly span a 
wide range. Contractor salaries are affected by a number of factors, 
including an individual's experience, training, expertise, and the 
location of performance. DOD endeavors to maximize use of competitive 
procurements. In competitive procurements, the contract award amount is 
generally a function of the market price and therefore contractor 
salaries are influenced by competitive market pressures. Except in 
limited circumstances, such as contracts subject to the Service 
Contract Act or the Davis-Bacon Act, DOD does not dictate private 
sector salaries. Although DOD does not maintain a database of 
contractor employee salaries, our contracting officers use Defense 
Contract Management Agency negotiated labor and overhead rate 
agreements with DOD contractors as a basis for negotiating contracts at 
a fair and reasonable price.

                            FORCE STRUCTURE

    86. Senator Manchin. General Dempsey, having served as a governor, 
I have seen firsthand the value of the Total Force Policy and the cost-
effective value of a multi-missioned force such as the National Guard 
that is rooted in our Nation's communities where we need support. Have 
you effectively evaluated the cost efficiencies of the Army and Air 
National Guard?
    General Dempsey. Yes, and DOD continues to evaluate the cost 
effectiveness of not only the Army and Air National Guard, but all 
Active and Reserve components from all Services. While this task is 
accomplished primarily within the Services themselves, the Joint Staff 
and OSD monitor and provide oversight of the evaluation process, and 
frequently coordinate and/or sponsor their own studies to validate the 
work performed by the Services.

    87. Senator Manchin. General Dempsey, wouldn't it be advisable to 
wait on the data from these reports before making any force structure 
changes?
    General Dempsey. Both OSD and the Joint Staff conducted assessments 
of the Joint Force prior to submitting the current budget. The 
programmed force structure for 2017, which includes force structure 
changes, was assessed against our strategy and we determined that the 
resultant military forces would be sufficient to meet the needs of our 
Nation.

                  AIR FORCE BUDGET--GUARD AND RESERVES

    88. Senator Manchin. Secretary Panetta, the fiscal year 2013 Air 
Force budget disproportionately cuts the Guard and will necessitate 
losing the expertise gained by pilots and capabilities over a decade of 
war. Are you confident that this budget meets the requirements to 
``surge and regenerate forces and capabilities'' that the President 
spelled out in your Priorities for the 21st Century Defense?
    Secretary Panetta. Yes. The new Defense Strategic Guidance for DOD 
articulates priorities for a 21st century defense that sustains U.S. 
global leadership. The Air Force approached this challenging task 
guided by the following principles: ensure the Total Force can fulfill 
surge requirements; maintain a balance between components that allows 
us to fulfill continuing rotational requirements at sustainable rates; 
retain the recruiting, training, and operational seasoning base 
required to sustain the Total Force's needs into the future; and ensure 
the Reserve component remains relevant and engaged in both enduring and 
evolving missions. Maintaining the appropriate mix of forces between 
the Active and Reserve components is critical to sustaining Air Force 
capabilities for forward presence, rapid response, and high-rate 
rotational demands within a smaller overall force. The Air National 
Guard and Air Force Reserve are integrated into all major Air Force 
mission areas, train to the same high standards as the Active 
component, and are invaluable partners in helping meet the Air Force's 
many and varied commitments.

    89. Senator Manchin. Secretary Panetta, the Air Force leadership 
has called this an effort to balance the size of the Active and Reserve 
components. But this seems to work contrary to your plan to ``maintain 
a strong National Guard'' to provide the ``concept of reversibility.'' 
Did the Air Force consider alternative plans that you have said 
``reduce the cost of doing business,'' such as relying more heavily on 
the National Guard and Reserves?
    Secretary Panetta. The Air Force developed a force structure based 
on several important objectives, most importantly ensuring the Air 
Force can provide the capability to accomplish the missions outlined in 
the new Defense Strategic Guidance with a risk-balanced force in the 
context of fiscal reductions. It would be ill-advised to make 
``proportional'' cuts to the Active component and Reserve component for 
the sake of being ``fair'' or return to some Active component/Reserve 
component ratio from days gone by. It is important that we build the 
force with an Active component/Reserve component ratio that sustains 
the symbiotic relationship between the Active component/Reserve 
component and is based on maximizing our capabilities and balancing the 
risk across the assigned missions in the new Defense Strategic Guidance 
with the given funding. This is what the Air Force did in its budget 
request. Relying more heavily on the National Guard and Reserves does 
not necessarily reduce costs if either the demand cannot be met or the 
symbiotic balance to sustain the Total Force cannot be maintained.
    The Air Force rigorously evaluated the mix of Active and Reserve 
component forces to sustain the symbiotic relationship of the 
components while ensuring the Total Force is postured to meet both 
surge and post-surge demands in the new strategy as well as the current 
and near-term demand for forces from the combatant commanders. This 
deliberate and considerable effort provides the best way to set the 
conditions for success in the new strategy through a properly sized 
Total Force, to include maintaining a strong National Guard, Reserve, 
and Active Force.
                                 ______
                                 
             Questions Submitted by Senator Jeanne Shaheen

                          DON'T ASK DON'T TELL

    90. Senator Shaheen. Secretary Panetta, you may be aware, despite 
the repeal of Don't Ask Don't Tell, a number of policies and programs 
within DOD continue to exclude same-sex couples. I understand the 
limitations imposed by the Defense of Marriage Act (DOMA), however 
there are a number of DOD policies that could be modified immediately 
to alleviate many of the lingering inequalities. The Servicemember's 
Legal Defense Network (SLDN) has identified 11 of these discriminatory 
policies, which I have included here. Please provide DOD's feedback on 
the feasibility of altering these policies in a manner consistent with 
the spirit of the repeal of Don't Ask/Don't Tell.
       
    
    
      
    
    
      
    
    
      
    Secretary Panetta. Following the effective date of repeal, 
September 20, 2011, DOD began a deliberative and comprehensive review 
of the possibility of extending eligibility for benefits, when legally 
permitted, to same-sex partners. The joint team responsible for this 
review is examining the benefits, including those on the SLDN list, 
from a policy, fiscal, legal, and feasibility perspective. This review 
is ongoing, and the team will report its findings and recommendations 
to me once the review is completed.

                    FORCES IN THE PACIFIC AND EUROPE

    91. Senator Shaheen. Senator Panetta, though I understand DOD's 
assessment of the geo-political landscape and the need to rebalance our 
forces toward the Pacific, I remain committed to working with our 
allies to ensure the strength of the NATO alliance and collective 
European defense. To that end, I believe the upcoming NATO summit in 
Chicago will provide an excellent opportunity to reassure our allies 
that despite the realignment of our forces, the United States remains 
committed to both NATO and Europe. Will you make that a priority for 
the upcoming summit?
    Secretary Panetta. Yes. The United States remains committed to both 
NATO and Europe.
    NATO remains of vital importance, and is a net provider of global 
security. As President Obama has said, ``Europe remains the cornerstone 
of our engagement with the world,'' and NATO is ``the most capable 
alliance in history.'' Our NATO allies are our most reliable and 
capable partners for advancing our shared international security 
objectives. The transatlantic relationship is critical to confronting 
the challenges of a complex, dangerous, and fast-changing world. The 
President, Secretary Clinton, and I have been emphasizing this to 
allies since we announced our new Defense Strategic Guidance in January 
and will continue to do so during the NATO summit in Chicago.

    92. Senator Shaheen. Secretary Panetta, in your view, what can 
Congress to do help achieve that objective?
    Secretary Panetta. DOD appreciates Congress' support for the United 
States' commitment to Europe and to working with allies to ensure the 
strength of the NATO alliance. The U.S. defense strategy reaffirms the 
enduring importance of NATO. We appreciate congressional support for 
the upcoming NATO summit in Chicago, including support for achieving 
our objectives in the next phase of transition in Afghanistan, 
reforming NATO so that it has the capabilities it needs, and 
strengthening partnerships beyond NATO's borders.

                           FORCE FLEXIBILITY

    93. Senator Shaheen. Secretary Panetta, obviously, our strategic 
shift toward the Asia-Pacific region prioritizes assets in that AOR. 
However, as recent operations in Libya highlighted, we must maintain 
the capability to quickly respond to contingencies on the Atlantic side 
of the country as well. Considering the uncertain and complex world of 
threats we face today, how important is it to maintain flexibility and 
balance in making sure a renewed focus on the Asia-Pacific region does 
not leave us vulnerable on the Atlantic side of the country?
    Secretary Panetta. U.S. forces will continue to be capable of 
protecting the Homeland--from the Pacific to the Atlantic coasts--and 
U.S. security interests in every region of the world.
    As the Chairman of the Joint Chiefs of Staff and I have said, we 
are at a strategic turning point. DOD conducted an intensive, strategy-
driven review to guide defense priorities and spending over the coming 
decade. One result of this review is that the United States will 
emphasize the Asia-Pacific and the Middle East. Yet, even in a 
resource-constrained era, we remain committed to the strength and 
security of our allies and partners across Europe. One example of this 
is the increased missile defense capabilities we are implementing in 
Europe.
    We will maintain a military presence that meets our enduring NATO 
Article 5 security commitment, deters aggression, and promotes enhanced 
capacity and interoperability. The real measure of U.S. commitment to 
Europe is the ability and will to work together to promote shared 
regional and global interests, and to build and employ collective 
capabilities as an alliance, as we did in Libya.
    Additionally, building partnership capacity globally remains 
important for sharing the costs and responsibilities of global 
leadership. We will seek to be the security partner of choice by 
strengthening existing alliances and partnerships and pursuing new 
partnerships with a growing number of nations--including those in 
Africa and Latin America.

    94. Senator Shaheen. Secretary Panetta, what are your priorities 
and objective capabilities for U.S. forces remaining in Europe?
    Secretary Panetta. Even in this resource-constrained era, we remain 
committed to the strength and security of our allies and partners 
across Europe. The peace and prosperity of Europe are critically 
important to the United States, and Europe remains our security partner 
of choice for military operations and diplomacy around the world. Our 
priorities include promoting regional security and Euro-Atlantic 
integration, strengthening NATO, maintaining our Article 5 commitments 
to allied security, and promoting enhanced capacity and 
interoperability for coalition operations. The evolving inventory of 
U.S. forces in Europe will provide the Commander of U.S. European 
Command with the needed capability to meet operational and training 
requirements, including activities to ensure that European allies and 
partners have the capability to conduct expeditionary operations in 
defense of our common interests. The allocation of a U.S.-based brigade 
to the NATO Response Force to bolster the training and exercises we 
conduct with allies is an example of this. Our focus on the evolving 
security environment includes investing in BMD capability for Europe in 
response to the emerging threats.
                                 ______
                                 
           Questions Submitted by Senator Kirsten Gillibrand

                         RAPID INNOVATION FUND

    95. Senator Gillibrand. Secretary Panetta, Congress has been very 
supportive of the Rapid Innovation Fund (RIF), which is intended to 
increase research and development of new innovative technologies 
important for our military. This is such a great program. It is my hope 
that it fosters more U.S.-made nano and other chip-related technologies 
to address the very serious insecurity in our IT procurement. Yet DOD 
has been very slow to roll out contracting for this funding, putting 
only about $100 million out, out of $600 million. And this year's 
budget has no additional funding. Please explain why DOD does not seem 
to support this program to foster American innovation in cutting edge 
military technologies.
    Secretary Panetta. Congress directed the Secretary of Defense to 
establish the RIF in section 1073 of the Ike Skelton NDAA for Fiscal 
Year 2011, Public Law 111-383, and identified $520 million ($460 
million research, development, test and evaluation (RDT&E); and $60 
million in procurement) for the RIF in DOD and Full-Year Continuing 
Appropriations Act, 2011, which was signed into law on April 15, 2011. 
Section 1073 establishes a funding limitation of $3 million and 24-
month completion per award.
    In response to section 1073, DOD issued guidelines in August 2011 
for implementation of the RIF, directing the use of open, competitive, 
and merit-based processes. DOD subsequently published 4 Broad Area 
Announcements (BAA) during the period September to November 2011 to 
solicit proposals; more than 3,500 responses were received.
    Given the large number of responses, the source selection period 
has been justifiably longer than anticipated. Each proposal received a 
fair and thorough evaluation using source selection criteria included 
in the four public solicitations. However, DOD intends to obligate all 
of the fiscal year 2011 $460 million RDT&E funds prior to October 2012. 
We anticipate approximately 160 to 180 contract awards. None of the 
proposals received in response to the four BAAs met the criteria to use 
the $60 million procurement funds, and DOD is assessing plans to 
obligate these funds before they expire in September 2013.
    Congress identified another $200 million for the RIF in the 
Division A-DOD Appropriations, the Consolidated Appropriations Act, 
2012. DOD intends to issue solicitations this summer to use these 
funds.
    DOD worked to structure the RIF for success, but it is too early at 
this time to determine the overall effectiveness of the program in 
meeting the goals outlined in section 1073. Contract awards are a 
necessary but insufficient metric; we will also need to assess the 
number of RIF-funded projects that are successfully completed and 
transitioned to a DOD acquisition program. Early next year, DOD will 
assess the performance and transition potential of the contracts 
awarded via the fiscal year 2011 funds. At that time, DOD will 
determine whether it should program funds for the RIF in future budget 
requests.

                        BARRIERS TO SERVICEWOMEN

    96. Senator Gillibrand. Secretary Panetta, on February 9, 2012, DOD 
announced a change in the combat exclusion policy that bars women from 
formally serving in combat roles. The change was in part due to 
recommendations made by the Military Leadership Diversity Commission in 
their March 2011 report. Women are now able to formally serve in roles 
such as intelligence officer and medic at the battalion level, and 
receive credit for this service toward promotions; however, women are 
still barred from serving in the infantry, armor, and special 
operations forces. This new policy has the most direct impact on women 
serving in the Army and Marine Corps, as the Navy and Air Force have 
already opened up almost all positions to women. As stated in DOD's 
report to Congress ``the Department of Defense is committed to removing 
all barriers that would prevent servicemembers from rising to the 
highest level of responsibility that their talents and capabilities 
warrant.'' With this new step forward, what are DOD's future plans for 
eliminating all of the barriers to our servicewomen?
    Secretary Panetta. The Direct Ground Combat Assignment policy 
prohibits the assignment of women to certain units and occupational 
specialties. As documented in the Military Leadership Diversity 
Commission findings, changes to DOD policies will require time to 
implement fully. There are serious practical barriers, which if not 
approached in a deliberate manner, could adversely impact the health of 
our servicemembers and degrade mission accomplishment. Based on opening 
of the new positions to women, DOD will assess the direct ground combat 
unit assignment prohibition to inform future policy decisions. 
Additionally, DOD will review development of gender-neutral physical 
standards for occupational specialties.
    I have directed the Services to report back to me on their 
assessment of these newly opened positions in 6 months with an 
assessment of additional positions that can be opened and barriers to 
opening additional positions to qualified women.

    97. Senator Gillibrand. Secretary Panetta, the Coast Guard 
currently allows women to serve in all career fields. Could this be a 
model for the other branches of Service?
    Secretary Panetta. As the mission of each of the Services is 
significantly different, so are the elements of their specific position 
restrictions. Additionally, there is a wide variance among the Services 
in the number of occupations closed to women. Given the unique 
environment of military service, DOD is working to eliminate barriers 
with the goal of allowing all servicemembers to serve in any capacity, 
based on their ability and qualifications, and not constrained by 
gender restrictive policies.

                         HAZING IN THE MILITARY

    98. Senator Gillibrand. Secretary Panetta, over the last year, 
there have been several high-profile cases of hazing in the military, 
including those of Marine Lance Corporal Harry Lew, Army Private Danny 
Chen, and allegedly Marine Private Hamson McPherson, Jr. In the cases I 
highlighted, the hazing victim committed suicide immediately following 
a hazing incident. In the past month, both the Army and Marine Corps 
issued statements reinforcing their policy against hazing in their 
respective Service. Additionally, last week the Navy discharged eight 
sailors after video surfaced of a hazing incident aboard a Navy ship. 
What steps has DOD as a whole taken to address this issue and ensure 
that all types of hazing cease to occur in our military?
    Secretary Panetta. DOD takes hazing very seriously. As a result, we 
are examining responsive courses of action in three areas: (1) a 
reiteration of existing policy prohibitions of hazing across the chain 
of command; (2) increased emphasis in training; and (3) new reporting 
options. These proposed actions are all designed to improve our ability 
to prevent, identify, and take immediate action to address hazing 
before it leads to serious consequences.
    DOD's policy prohibiting hazing is unambiguous, and Service leaders 
have clearly stated that they take incidents of hazing very seriously. 
The following recent leadership statements reiterate that hazing is 
contrary to good order and discipline and is unacceptable behavior: the 
Secretary of Defense's message of December 2011, the Secretary of the 
Army's tri-signed message of January 2012, and the Marine 
Administrative Messages and the revised Marine Corps Order 1700.28A of 
February 2012. Leadership at all levels will continue to emphasize to 
subordinates that such behavior will not be tolerated.
    Second, DOD is examining methods of improving training to prevent, 
identify, and provide direction on how to respond to possible incidents 
of hazing. We are evaluating options including: raising awareness of 
both existing hazing policy and the associated offenses under the 
Uniform Code of Military Justice (UCMJ), training to identify leading 
indicators and to prevent or stop incidents from escalating, training 
resiliency, training peer groups, and emphasizing this issue at 
training courses administered by the Defense Equal Opportunity 
Management Institute (DEOMI).
    Third, DOD is considering options to identify hazing distinctly in 
surveys and reporting mechanisms. Potential courses of action in this 
area include: adding hazing to the Services' Serious Incident Report 
thresholds, adding hazing to law enforcement reporting codes, 
identifying reported incidents of hazing in UCMJ cases, Inspector 
General hotlines and databases, Sexual Assault Prevention and Response 
Office's Defense Sexual Assault Incident Database, the DEOMI 
Organizational Climate Survey, Defense Manpower Data Center Status of 
Forces Survey, and Services' peer programs.

    99. Senator Gillibrand. Secretary Panetta, given the remote 
locations of two aforementioned hazing cases, what systems are in place 
to protect a victim of hazing when their chain of command is either the 
perpetrator of the hazing or implicit to the acts of hazing?
    Secretary Panetta. The military chain of command is designed to 
function in remote locations.
    A fundamental function of the military chain of command is 
communication. Just as the command channel transmits orders from higher 
to lower levels, the command channel also extends upward to communicate 
official matters from subordinate to senior. If a servicemember 
believes he or she has been wronged by his or her superior, then the 
servicemember has a right to communicate the problem, or grievance, 
through formal or informal processes.
    Each Service has formal complaint procedures to bring issues to the 
attention of commander. The Services train their members in complaint 
and problem solving procedures as part of Initial Entry Training. For 
example, Article 138 (the right to request redress of grievances from a 
superior) procedures are explained to an Active Duty servicemember 
within 14 days after the member's initial entrance on Active Duty, 
again after completing 6 months of Active Duty, and again at the time 
when the member reenlists.
    Protecting servicemembers is also a fundamental function of the 
chain of command. If the chain of command believes that a servicemember 
may be at risk of retaliation, the chain of command may immediately 
apply administrative or operational procedures, including reassignment 
or removal of the victim to a safer location.
    In less isolated locations, servicemembers have several avenues to 
highlight complaints to personnel and offices other than their chain of 
command. These include: the Office of the Inspector General hotlines, 
legal assistance attorney, or law enforcement.

    100. Senator Gillibrand. Secretary Panetta, since the repeal of 
Don't Ask Don't Tell almost 6 months ago, gay and lesbian 
servicemembers have been serving openly without fear of discharge. This 
was a wonderful achievement for our military, and I commend DOD for 
continually reiterating its commitment that gay and lesbian 
servicemembers will be treated with respect and dignity. Are there 
plans for DOD to formally add sexual orientation to the DOD Human Goals 
Charter?
    Secretary Panetta. All servicemembers, regardless of sexual 
orientation, are entitled to an environment free from personal, social, 
or institutional barriers that prevent them from rising to the highest 
level of responsibility possible, dependent only on individual talent 
and diligence. Harassment or abuse based on sexual orientation is 
unacceptable and will be dealt with through command or Inspector 
General channels. Therefore, there are no plans to add sexual 
orientation as a class under the Military Equal Opportunity program, 
nor to the DOD's Human Goals Charter. Servicemembers will continue to 
be treated equally, regardless of sexual orientation.
                                 ______
                                 
               Questions Submitted by Senator John McCain

                            IRAQ INSTABILITY

    101. Senator McCain. General Dempsey, in your opinion, is al Qaeda 
a significant military threat in Iraq?
    General Dempsey. Al Qaeda in Iraq (AQI) does not have the capacity 
to overthrow the Government of Iraq, but the group has significant 
capabilities to strike Iraqi Government targets, including Iraqi 
Security Forces, as well as Shia civilians. AQI claims daily small-
scale assassination attacks, primarily using small arms and 
magnetically-attached bombs. These attacks suggest an increase in 
attack capability following U.S. force withdrawal. We anticipate AQI 
will maintain a heightened operational tempo in 2012, absent sustained 
increase in Iraqi counterterrorism pressure. Since the conclusion of 
Operation New Dawn in late 2011, AQI has claimed responsibility for 
multiple coordinated suicide and vehicle-borne IED attacks, including 
December attacks across Baghdad and January and March attacks 
throughout multiple Iraqi provinces.

    102. Senator McCain. General Dempsey, can you assess the threat 
posed by AQI, and whether that threat is growing or diminishing?
    General Dempsey. The threat from AQI has increased since the 
conclusion of Operation New Dawn in late 2011 and is growing. The 
absence of sustained effective counterterrorism pressure has allowed 
AQI to maintain an increased operational tempo inside Iraq. Although 
AQI primarily focuses attacks against the Iraqi Government, the group 
remains an active member of the broader al Qaeda associated movement 
and is committed to projecting its influence outside Iraq as part of 
its long-term strategy. The United States and Europe are standing 
targets for potential AQI attacks and are a recurring theme in its 
public statements. On 25 January, AQI indicated publicly it would 
strike the United States abroad now that U.S. forces have departed 
Iraq--an allusion similarly made in AQI's August 2011 video eulogy for 
al Qaeda leader Osama bin Ladin.

                    U.S. FORCE LEVELS IN AFGHANISTAN

    103. Senator McCain. Secretary Panetta, the administration's 
announcement to end combat operations in Afghanistan in 2013 sends 
exactly the wrong signal to our friends and enemies in this conflict. 
It continues the administration's policy of publicly telegraphing exit 
plans in a way that fundamentally undermines our overall strategy and 
our determination to succeed. What incentive can the Taliban possibly 
have to negotiate meaningfully with the Afghanistan Government or with 
us when they know that the United States is leaving regardless?
    Secretary Panetta. In 2013, coalition forces will continue to 
transition security responsibilities to the ANSF, and will assume a 
supporting role as part of the Security Force Assistance strategy. 
Coalition forces will continue to operate side-by-side with their ANSF 
counterparts while providing key enabler support to combat insurgent 
threats. Coalition forces' transition to a supporting role in 
Afghanistan is a critical and necessary step toward mission 
accomplishment. Doing this with less coalition combat power on the 
ground will increase ANSF confidence and lead to their success while 
reducing insurgent capacity. As the ANSF grows in capacity, capability, 
and confidence, fewer coalition forces will be required.
    At the end of 2014, U.S. forces will complete their drawdown and 
end combat operations; however the U.S. Government will continue to 
support the ANSF. The Strategic Partnership Agreement, which is 
currently under negotiation, will specify the U.S. role in Afghanistan 
after 2014, and outline the U.S. Government's long-term commitment to 
Afghanistan.

    104. Senator McCain. Secretary Panetta, reportedly, the top 
military commander in Afghanistan privately recommended holding off new 
U.S. troop reductions until 2014. Is this true and, if so, why did you 
decide to announce a plan that does not take the views of our military 
commanders into account?
    Secretary Panetta. I know of no such private recommendation 
concerning U.S. forces reductions. The force reductions that have 
occurred and will occur are part of the recovery of the U.S. surge 
forces, first ordered into Afghanistan at the time of the President's 
2009 West Point speech. DOD's recommendations concerning these 
reductions as well as future force reductions will be made in full 
cooperation with the Commander, U.S. Forces-Afghanistan. His 
recommendations will be key to any decision regarding U.S. force 
strength.

    105. Senator McCain. Secretary Panetta, exactly what conditions on 
the ground will be assessed to determine the pace of combat force 
reductions?
    Secretary Panetta. The campaign plan calls for several conditions 
to be met before completion of the transition in Afghanistan. The 
ability of the Afghanistan National Security Forces (ANSF) to provide 
suitable and sustainable security for a given area will be a key factor 
in determining U.S. and coalition forces presence.

    106. Senator McCain. General Dempsey, in your opinion, what is the 
military value of announcing a U.S. combat force withdrawal schedule as 
it pertains to the operations of the Taliban?
    General Dempsey. The administration stated we will reduce 23,000 
additional troops by October 2012, thereby fully recovering the surge 
force ordered by the President at his December 2009 West Point speech. 
Beyond the surge force, we have not specifically laid out the timeline 
of further reductions as these will be based on conditions on the 
ground. We believe the reductions that have been planned support our 
goal of transitioning lead for security to ANSF. Transitioning security 
lead will be an orderly process and will ensure the ANSF can retain the 
hard fought security gains even in the most contested areas of the 
country. The transition must signal to the Taliban that there will be a 
capable, indigenous force that will maintain security for the long-
term.

    107. Senator McCain. General Dempsey, wouldn't quickly cutting U.S. 
troop levels below 68,000 make it harder to clear and hold insurgent 
havens and complicate efforts to protect supply lines and bases ahead 
of the scheduled 2014 handover?
    General Dempsey. General Allen presented the plan to recover the 
33,000 member surge force to the President, which will bring the number 
of U.S. forces in Afghanistan to 68,000. The plan for further 
reductions will be based on conditions on the ground. There are several 
initiatives in place that will serve to counter insurgent havens and 
protect supply lines. Developing a capable and sustainable ANSF will 
provide long-term security for Afghanistan. Pursuing programs such as 
the Afghan Local Police will serve to maintain security gains, and 
building the Afghan Public Protection Force will provide security at 
bases and along supply routes.

    108. Senator McCain. General Dempsey, is there a risk of a troop 
withdrawal below 68,000 before 2014 negatively affecting the rapid-
response capabilities that now allow the military to evacuate wounded 
soldiers to combat hospitals within 1 hour of their injuries?
    General Dempsey. We currently plan on drawing down to 68,000 with 
no further plans to go below 68,000 until conditions on the ground 
allow. Regardless of the number of boots-on-the-ground, enablers such 
as medical evacuation (MEDEVAC) will be of key importance not only to 
U.S. troops, but our coalition partners as well. In February, MEDEVAC 
response times were well below 1 hour in 90 percent of operations.

                             SEQUESTRATION

    109. Senator McCain. Secretary Panetta, as you may know, the 
President's proposal to address sequestration with an alternative of 
tax increases and entitlement adjustments may not make it through 
Congress. Other than this proposal, this budget proposal does not 
account for the current spending cap imposed by sequestration for 
defense programs in fiscal year 2013. You have described the 
consequences of sequestration as catastrophic. Exactly how would these 
consequences be catastrophic? Please be specific.
    Secretary Panetta. DOD is concerned that the sequestration process 
would have significant consequences due to the uncertainty surrounding 
the process and the rigid formula which Congress has prescribed for its 
application. Assuming the fiscal year 2013 Defense Appropriations Act 
Conference Report contains language similar to the Joint Explanatory 
Statement of the Committee of Conference accompanying Division A-DOD 
Appropriations Act, 2012, DOD would be forced to reduce each line item 
within each procurement appropriation by the same percentage and each 
program element within each research and development appropriation by 
the same percentage. This percentage would be calculated based on the 
total budgetary resources, primarily the enacted fiscal year 2013 
appropriation and any unobligated balances carried forward at the end 
of fiscal year 2012. Some obvious examples of the problems this method 
would cause are found in line items such as those for a ship, where it 
is not feasible to buy a fraction of a ship, or in a line item funding 
a multiyear contract where a fraction of the funding would not be 
sufficient to pay the negotiated cost of the multiyear contract. With 
over 1,500 individual line items in these accounts, DOD could not fix 
all of these issues with the transfer authority that Congress typically 
provides; this would leave broken programs across DOD. Additionally, 
sequestration would force an immediate reduction in our operation and 
maintenance accounts which could damage readiness. Funding provided for 
OCO is also not excluded from sequestration.

    110. Senator McCain. Secretary Panetta, will you exempt military 
personnel from sequestration?
    Secretary Panetta. The President's budget makes the necessary 
budget constrictions to avoid devastating DOD through sequestration. If 
sequestration becomes an inevitability, DOD will evaluate all options 
available to comply with the law.

    111. Senator McCain. Secretary Panetta, when will you provide to 
Congress a detailed impact of sequester on the fiscal year 2013 budget?
    Secretary Panetta. Congress should enact comprehensive, balanced 
deficit reduction legislation that avoids sequestration. The 
President's budget offers one path for doing so. If and when necessary, 
the administration will address important technical questions 
concerning sequestration. If there were to be a sequester, a detailed 
impact of sequester could not be provided until we know what the actual 
funding level would be for fiscal year 2013 by account and program.

    112. Senator McCain. Secretary Panetta, when will the Military 
Services be able to provide Congress with a list of programs and 
accounts to be reduced or terminated as a result of imposing 
sequestration caps for the fiscal year 2014 budget?
    Secretary Panetta. The fiscal year 2014 budget will be developed 
using DOD's Planning, Programming, Budgeting, and Execution process. 
This process will be implemented in coordination with the White House 
and OMB. Any changes to our budget required by revised caps on the 
defense budget will be developed through this process and delivered to 
Congress in February 2013.

    113. Senator McCain. General Dempsey, in your opinion, what impact 
will the cuts have on our ability to carry out operational plans in 
support of national security interests around the world?
    General Dempsey. The across-the-board cuts called for by 
sequestration would pose unacceptable risk in the execution of 
operational plans. These cuts would significantly reduce military 
readiness, investment, and force structure, hollowing the force and 
degrading U.S. military power.

    114. Senator McCain. General Dempsey, will you provide the 
President with an operational risk assessment on the impact of 
sequestration before the end of the fiscal year?
    General Dempsey. All strategies and their associated budgets carry 
some risk, but sequestration goes beyond the level of acceptable risk. 
Sequestration would likely result in a smaller force structure that is 
ill-equipped, ill-trained, and ill-prepared to meet future challenges. 
Because of its wide-ranging impact on the health of the force, 
sequestration would require a complete reevaluation of our defense 
strategy and priorities to determine the true operational risks 
involved.

    115. Senator McCain. General Dempsey, will you also provide this 
assessment to Congress so that it will be available to inform debate on 
the issue?
    General Dempsey. All strategies and their associated budgets carry 
some risk, but sequestration goes beyond the level of acceptable risk. 
Sequestration would likely result in a smaller force structure that is 
ill-equipped, ill-trained, and ill-prepared to meet future challenges. 
Because of its wide-ranging impact on the health of the force, 
sequestration would require a complete reevaluation of our defense 
strategy and priorities to determine the true operational risks 
involved.

    116. Senator McCain. General Dempsey, the President has indicated 
that he will veto any legislation that undoes sequestration without tax 
increases. Have you raised your concerns on this matter to the 
President?
    General Dempsey. The administration and the military and civilian 
leadership of DOD are united behind the strategy and budget that we 
have presented. Sequestration, however, would subject DOD to roughly 
another $500 billion in cuts across all accounts and would hollow out 
the force, driving unacceptable risk to national defense.

    117. Senator McCain. General Dempsey, do you support proposed 
congressional legislation to protect defense accounts from being 
affected by sequestration?
    General Dempsey. The administration and the military and civilian 
leadership of DOD are united behind the strategy and budget that we 
have presented. Sequestration, however, would clearly pose unacceptable 
risk by significantly reducing U.S. military readiness, investment, and 
force structure, hollowing the force and degrading U.S. military power. 
We will continue to work with OMB and Congress to properly resource the 
capability to defend our Nation and our allies.

    118. Senator McCain. Secretary Panetta, the BCA in August 2011 did 
not actually mandate a specific reduction to defense budgets of $487 
billion over 10 years. The administration stated on July 31, 2011, 
that: ``The deal puts us on track to cut $350 billion from the defense 
budget over 10 years. These reductions will be implemented based on the 
outcome of a review of our missions, roles, and capabilities that will 
reflect the President's commitment to protecting our national 
security.'' The reduction of $487 billion in defense budgets was 
provided to you by OMB in November 2011 after imposing an arbitrary 10 
percent reduction to all Federal agencies. The administration's goal 
was for more than half of the first tranche of reductions in total 
discretionary spending ($917 billion) imposed by the BCA caps to come 
from the national security accounts. Given the significant increase to 
the risk to our national security from the cuts to military personnel 
end strength and force structure, why do you believe a $487 billion 
reduction is acceptable to incur?
    Secretary Panetta. The defense budget cuts we are absorbing are 
difficult but manageable. Specific reductions were guided by a 
comprehensive DOD strategic review which identified missions and 
capabilities essential to safeguarding U.S. and allied security 
interests in light of the most likely challenges posed by the future 
global environment. While U.S. Armed Forces will be smaller in number, 
we will ensure that they are ready, agile, flexible, and capable 
forces, with a forward presence that positions them to respond quickly 
in the event of threats or contingencies. The budget also preserves or 
enhances investments in key areas of continuing urgency, such as 
counterterrorism efforts and counter WMD, and areas that will grow in 
prominence in coming years, such as space, cyber, and missile defense.

    119. Senator McCain. Secretary Panetta, did you have an opportunity 
to advocate to the OMB or the President for a smaller reduction than 
$487 billion in cuts over 10 years?
    Secretary Panetta. The fiscal year 2013 budget reflects the results 
of a comprehensive DOD strategic review which identified missions and 
capabilities essential to safeguarding U.S. and allied security 
interests in light of the most likely challenges posed by the future 
global environment. This strategic shift would have occurred regardless 
of the Nation's fical situation. DOD's most senior leaders led the 
review, which included extensive engagement by the National Security 
Staff and the President. Given the size and mandatory missions of the 
other national security agencies, the President was limited in making 
significant funding allocations among agencies within the security 
category cap imposed by the BCA. DOD employed a strategy-based process 
in formulating its fiscal year 2013 budget request. OMB and the White 
House were represented throughout the process. The budget resulting 
from this process is adequate to meet our current requirements.

    120. Senator McCain. Secretary Panetta, aside from the issue of 
sequestration, do you anticipate that DOD will be asked by this 
administration to cut defense budgets even deeper than you have 
proposed in the fiscal year 2013 FYDP or deeper than the $487 billion 
in cuts you have proposed over the next 10 years?
    Secretary Panetta. We currently do not anticipate a further 
reduction in defense spending in future budgets, provided Congress 
enacts a deficit reduction package and avoids sequestration and the 
further impact of the BCA. If no action is taken to change the 
provisions of the BCA, DOD's 2014 budget would be required to be 
reduced further to meet the revised security limit provided in the Act. 
The fiscal year 2013 President's budget reflects the administration's 
national defense plan for the next 10 years. The plan calls for DOD's 
base budget to grow, albeit slowly, over that period.

                          ASIA-PACIFIC REGION

    121. Senator McCain. Secretary Panetta, on February 8, 2012, the 
Governments of the United States and Japan issued a joint statement on 
the U.S. strategic review of its defense posture in Asia. The two 
governments have officially started discussions to change the terms the 
2006 agreement. What is the new plan and timeline for the relocation of 
marines from Okinawa?
    Secretary Panetta. Since February, we have been engaged in 
intensive discussions with the Government of Japan regarding U.S. plans 
to relocate some U.S. marines from Okinawa to Guam. The size of the 
U.S. Marine Corps force we establish on Guam will be smaller than 
previously planned, and this change will be made in the context of our 
overall laydown of Marine Corps forces in the Asia-Pacific region. The 
new plan and timeline is pending the outcome of our current discussions 
with the Government of Japan and the completion of necessary 
environmental studies.

    122. Senator McCain. Secretary Panetta, what are DOD's estimates 
for costs to build facilities at new locations?
    Secretary Panetta. The Navy has provided the response via a 
classified briefing to Senate Armed Services Committee staff.

    123. Senator McCain. Secretary Panetta, are all of these costs 
included in the current budget or the FYDP?
    Secretary Panetta. No. The Marine Corps continues to generate, 
revise, and analyze projected costs associated with Marine Corps force 
posture revision and bilateral negotiations. As outlined in section 
2207 of the NDAA for Fiscal Year 2012, we will present a master plan 
for construction once completed.

    124. Senator McCain. Secretary Panetta, how is the President's 
strategic direction to rebalance toward the Asia-Pacific region 
actually reflected in the budget proposal for fiscal year 2013?
    Secretary Panetta. The fiscal year 2013 budget request protects 
and, in some cases, increases investments that are critical to our 
ability to rebalance toward the Asia-Pacific region, to include our 
ability to project power. For instance, this budget funds the 
development of next-generation bomber and new aerial refueling 
aircraft. Additionally, the Navy will invest in a design for Virginia-
class submarines that will allow these submarines to carry 
significantly more cruise missiles, and potentially provide an undersea 
conventional prompt strike capability. This budget also invests 
resources in increasing stocks of our most capable cruise missiles; 
purchasing advanced maritime patrol aircraft; upgrading avionics and 
communications systems in our current bomber fleet; and enhancing 
capabilities in space, cyber, electronic warfare, missile defense, and 
ISR systems.
    The strategy envisions more elements of the Joint Force postured 
forward in the Asia-Pacific region--reinforcing our stabilizing and 
deterrence presence in the region, as well as increasing potential 
combat power. The budget request funds the rotational deployment of 
marines and U.S. Air Force aircraft to Australia and the potential for 
rotational deployment of Littoral Combat Ships to Singapore. The Navy 
will also rebalance its fleet so that a greater percentage is in the 
Pacific, and all the Services will continue to maintain significant 
force structure in the region as they look to increase interaction with 
allies and partners.

    125. Senator McCain. Secretary Panetta, since announced plans call 
for Marine Corps forces to rotate to Australia or Guam, 8,700 marines 
and their families will be leaving Okinawa to be stationed somewhere 
else--where will they go?
    Secretary Panetta. Many of the marines based in Okinawa are 
rotational. These marines deploy to Okinawa unaccompanied under the 
Unit Deployment Program (UDP). Their family members remain behind at 
the unit's home base, either in Hawaii or CONUS. Under DOD's current 
plan, some of these UDP units will continue to deploy to Okinawa, some 
will deploy to Guam, and others will rotate through Australia. These 
rotational forces will be supported by small headquarters and logistics 
elements that will be permanently stationed at these locations and may 
be accompanied by their families. The planned numbers of marines and 
their family members at each location is currently under review and has 
not been finalized.

    126. Senator McCain. Secretary Panetta, since the U.S. Government 
has signaled its intent to delink tangible progress on the construction 
of a replacement facility for Marine Corps Air Station (MCAS) Futenma 
on Okinawa from other actions to relocate marines from bases in the 
southern part of Okinawa, what is DOD's plan for the future of the MCAS 
Futenma?
    Secretary Panetta. The February 8, 2012, U.S.-Japan Joint Statement 
confirmed the continued mutual support for the current Futenma 
Replacement Facility (FRF) plan as the only viable alternative to 
continued operation of MCAS Futenma. Recognizing that even under the 
best scenario, the realization of that plan is several years away, we 
are currently discussing with the Government of Japan conditions under 
which they can contribute to the sustainment of operations at MCAS 
Futenma until the FRF is complete.

    127. Senator McCain. Secretary Panetta, will DOD abide by the 
requirements in section 2207 of the NDAA for Fiscal Year 2012?
    Secretary Panetta. We will abide by the requirements in section 
2207 of the NDAA for Fiscal Year 2012. I look forward to the 
opportunity to update the committee on our progress for these 
requirements later in the year.

                    NAVY FORCE STRUCTURE REDUCTIONS

    128. Senator McCain. Secretary Panetta and General Dempsey, 
although DOD's new Defense Strategic Guidance emphasizes a rebalance to 
the Asia-Pacific region--predominantly a maritime theater--the 
administration's plan calls for the Navy to retire seven cruisers and 
two other major amphibious ships needed by the Marine Corps earlier 
than planned. In addition, the administration plans to delay buying a 
large-deck amphibious ship, a Virginia-class attack submarine, two 
Littoral Combat Ships, and eight high-speed transport vessels. What 
effect will fewer cruisers, submarines, and amphibious ships have in 
responding to crises in the Asia-Pacific theater--especially a large-
scale one, with an equal or near-equal peer?
    Secretary Panetta. While the fleet size will fall slightly in the 
next few years, it will return to its current level by the end of the 
FYDP and even grow slightly into the early 2020s. The Navy will 
continue to prioritize readiness, and our fiscal year 2013 budget 
submission fully funds ship maintenance and midlife modernization 
periods. We are also investing in shipbuilding and aircraft 
construction to ensure that the Navy will evolve to remain the world's 
preeminent maritime force in the face of emerging threats and our 
shipbuilding and aircraft construction investments form the foundation 
of the future fleet. In developing our aircraft and ship procurement 
plans, we focused on three approaches: sustaining serial production of 
today's proven platforms, rapidly fielding new platforms in 
development, and improving the capability of today's platforms through 
new payloads of weapons, sensors, and unmanned vehicles.
    The Navy can meet the Defense Strategic Guidance with the current 
and projected force structure provided in the Navy's President's budget 
submission for 2013. Consistent with the Defense Strategic Guidance, 
the Navy will posture continuous, credible combat power in the Western 
Pacific and the Arabian Gulf/Indian Ocean to protect our vital 
interests, assure friends and allies, and deter potential adversaries. 
Naval forces remain flexible and agile, able to swing rapidly in 
response to emergent high priority requirements in other theaters, as 
well as to surge from U.S. homeports in the event of crises. The Navy 
can meet these challenges under our current operational tempo and 
deployment lengths.
    General Dempsey. Specific resourcing decisions were made through a 
comprehensive strategic review that included detailed analysis by the 
Joint Staff, the Services, and OSD. These decisions were made with 
serious consideration of the risk and our ability to mitigate the risk 
by balancing fleet forces across the globe.
    Planned naval force structure maintains the ability to conduct a 
large-scale naval campaign in one region while denying the objectives 
of an opportunistic aggressor in a second region. The strategic review 
and long-range shipbuilding plan accepted risk in generating the 30 
operationally available ships necessary to conduct a two-Marine 
Expeditionary Brigade forcible entry operation, but lowered risk by 
building to an average active inventory of 32 amphibious ships in the 
long-range shipbuilding plan. The 21st Century Battle Force will be 
informed by the completion of a formal Force Structure Assessment and 
the ongoing DOD review of operational plans for potential regional 
contingencies.

    129. Senator McCain. Secretary Panetta and General Dempsey, the 
Marine Corps has a standing requirement for 38 amphibious ships to 
support its amphibious assault mission, which has not changed as a 
result of the new Defense Strategic Guidance. The Marine Corps and the 
Navy have accepted risk by allowing the number of amphibious ships to 
remain at 33. Further reductions below 33 amphibious ships is 
inconsistent with the Marine Corps mission to maintain a viable 
amphibious assault capability and is particularly unjustified with a 
renewed focus on a rotational presence in the Asia-Pacific region. 
Please describe how decommissioning ships early and delays in buying 
new ships--as proposed in the proposed budget request--is consistent 
with: (1) the President's new Defense Strategic Guidance; and (2) the 
maritime mobility needs of the Pacific and the forces needed to oppose 
anti-access area denial strategies in the Asia-Pacific region, 
including China.
    Secretary Panetta. The decision to decommission seven Ticonderoga-
class cruisers and two amphibious ships was made to ensure sufficient 
resources were available for readiness while maintaining the proper mix 
of capability in the battle force in a fiscally constrained 
environment. The Navy selected ships for decommissioning based on an 
analysis of the costs required to sustain their material condition and 
update their combat capability. The selected ships had little or no 
previous modernization completed, were the oldest ships in their class 
and would become increasingly expensive to maintain, operate, and 
upgrade to remain relevant to evolving threats.
    The Navy has certified to the Secretary of Defense that we will 
meet the fiscal year 2013 Global Force Management Allocation Plan and 
requirements in the Defense Strategic Guidance. From fiscal year 2013 
through fiscal year 2020, the Navy ship inventory and extrapolated 
force presence will increase in the Asia-Pacific and Arabian Gulf 
regions.
    General Dempsey. Resourcing decisions were made through a 
comprehensive strategic review that was aligned to the President's 
strategic guidance. The review included detailed analysis by the Joint 
Staff, the Services, and OSD.
    The strategic review focused primarily on sustaining Amphibious 
Readiness Groups and Marine Expeditionary Units forward in the Western 
Pacific and Arabian Gulf in a crisis response role. It took risk in 
generating the 30 operationally available ships necessary to conduct a 
two-Marine Expeditionary Brigade forcible entry operation. To lower 
risk, the long-range shipbuilding plan strives to maintain an average 
active inventory of 32 amphibious ships.

                      EARMARKS IN THE DEFENSE BILL

    130. Senator McCain. Secretary Panetta, the Fiscal Year 2012 
Defense Appropriations Bill contained approximately 100 items and slush 
funds that were neither requested by DOD nor authorized in the NDAA. 
These programs, earmarked by the Appropriations Committees, totaled 
over $3.5 billion. The proposed reductions of $487 billion over 10 
years does not include rolling back the earmarks that were not top DOD 
priorities. Since you are restricted from reprogramming earmarked funds 
to higher DOD priorities by provisions in Defense Appropriations bills 
that require you to carry out the earmark at the exact levels of 
funding provided, and given the fiscal constraints you are under, will 
you work with me to remove these provisions from future appropriations 
bills in order to provide the flexibility to spend funds on urgent, 
unforeseen requirements actually validated by DOD?
    Secretary Panetta. DOD's position is that the President's budget 
requests what is required to meet our mission requirements each year. 
Upon enactment of an appropriations act, DOD executes the enacted 
programs, complying with reprogramming and transfer authorities.

    131. Senator McCain. Secretary Panetta, if you are presented a 
request for a formal position on a particular spending item of this 
nature, can I expect a firm and unequivocal position from you stating 
why you either oppose or support the spending?
    Secretary Panetta. Yes, DOD leaders and I are always prepared to 
state opposition to unrequested changes to the President's budget 
because these changes divert funding from DOD's most pressing 
requirements, as detailed in the budget.

                          JOINT STRIKE FIGHTER

    132. Senator McCain. Secretary Panetta, how well the JSF program 
does under its contract for the fourth block of low-rate initial 
production (LRIP-4) aircraft by the end of the year was supposed to 
indicate how much the program is on track. But, with only about 50 
percent of that work completed to date, we are already expecting a 
total overrun (including concurrency costs) of almost $500 million. In 
addition, on November 29, 2011, DOD's F-35 JSF Concurrency Quick Look 
Report called for serious reconsideration of procurement and production 
planning. And, just a few weeks ago, DOD's Chief Operational Tester 
reported that a team consisting of the Services' operational test 
agencies found that the F-35 program is not on track to meeting 
operational effectiveness or operational suitability requirements. I 
know we don't pay for all of the projected overrun on Lot 4, but with 
that estimate and the assessments I just described, how can taxpayers 
be confident that we're headed in the right direction?
    Secretary Panetta. The strategic and budget reviews carried out 
last fall reaffirmed the importance of the JSF program to the future 
joint force. A number of steps were taken to align the program with the 
outcomes of the these reviews of the Quick Look Report, including the 
decision to slow the production ramp rate and align it with advances in 
program maturity. Control of production costs is being achieved in part 
by movement from cost-plus to fixed-price-type contracts and 
developmental maturity progress. The F-35 program team achieved a 
number of accomplishments over the past year, including the delivery of 
13 aircraft and completion of initial F-35B sea trials on the USS Wasp. 
The program completed F-35C static structural testing and improved the 
schedule and cost performance of assembled wings and forward fuselage 
deliveries to the production line mate station. Production F-35A and F-
35B have started Local Area Flights at Eglin AFB.
    The F-35 LRIP Lot 4 contracts were negotiated as fixed-price 
incentive-fee (firm target)-type contracts. The prime contractor, 
Lockheed Martin Aeronautics Company (LM Aero), is projected to overrun 
LRIP 4 costs by approximately 7 percent. This overrun percentage is 
approximately half the overrun experienced on the F-35 LRIP Lots 1 to 3 
cost-reimbursement-type contracts. On the LRIP Lot 4 contracts, overrun 
costs on the aircraft and engines are shared equally between the 
Government and the contractor until the overrun exceeds 20 percent of 
the target cost, at which point the contractor is responsible for all 
additional overrun costs.
    Overall, there is much work ahead, but, through the multiple 
successful reviews and corresponding adjustments in the past year, I 
believe DOD has put the program on sound footing for the future. DOD's 
assessments over the past year give me reason to believe the basic 
aircraft designs are sound and will deliver. The remaining development 
is focused on testing and integration. Schedule and resource 
adjustments made to the remaining development program underpin a 
realistic plan to deliver the required capability. While there is still 
risk in the program, I have confidence in the resilience of the plan to 
absorb expected further learning and discovery and stay on track as 
long as it remains sufficiently resourced.

    133. Senator McCain. Secretary Panetta, why, given these recent 
developments, did you believe that lifting the F-35B from probation 1 
year early was appropriate?
    Secretary Panetta. In January 2011, Secretary Gates placed the F-
35B on what he referred to as probationary status because it was 
experiencing significant technical issues. F-35B testing was decoupled 
from the other two variants, allowing the program to increase focus on 
F-35B-specific issues while testing on the other variants progressed. 
Of the five specific technical issues identified by Secretary Gates in 
2011, two have been resolved and three have temporary fixes in place 
while efforts to develop permanent solutions are ongoing. All three 
variants improved their testing performance in 2011. In particular, the 
F-35B successfully completed more flights (333 completed/293 planned) 
and more test points (2,636 completed/2,272 planned) than planned.
    I made the decision to lift probation of the F-35B because it is 
now demonstrating development, test, and production maturity comparable 
to and not substantively different from the other variants. As with the 
other variants, some additional technical issues have been identified 
on the F-35B since probation began; however, these are consistent with 
the kinds of issues to be expected in a development program.

    134. Senator McCain. Secretary Panetta, is there a Plan B for the 
F-35 JSF if both procurement and sustainment costs are not controlled 
and if so, what could those options be?
    Secretary Panetta. Currently, we are focused on reducing 
procurement and sustainment costs. The Under Secretary of Defense for 
Acquisition, Technology and Logistics (USD(AT&L)) has directed 
procurement affordability targets that will help ensure that, as the F-
35 program reaches the point that it is ready for full-rate production, 
DOD will be able to afford to procure the quantities it needs. 
Similarly, the USD(AT&L) established sustainment affordability targets 
that will allow us to communicate expectations to the contractor so we 
can control the cost to operate each aircraft, the annual costs to the 
Services, and how much investment will be required over the total life 
cycle of the F-35 program.
    These affordability targets, and more importantly the actual costs 
that we realize over the coming years, will provide us a better 
understanding of whether we can afford to buy, fly, and sustain the 
current total requirement.
    If we are unable to reach affordable F-35 procurement and 
sustainment costs, our first option would be to reduce the total 
planned procurement quantities. Currently, the total planned 
procurement for DOD is 2,443 F-35 aircraft. If the Services and DOD 
determine that this plan is unaffordable, we would have to look at a 
reduction to the total buy that is affordable. A reduction in the total 
procurement quantity would also reduce total sustainment costs. Any 
review of the total quantity would be conducted by assessing 
affordability projections and capability requirements.
    From a capability perspective, there is no alternative to the F-35. 
The fifth generation capabilities that the F-35 will provide are 
essential to accomplishing many of the primary missions identified in 
the National Security Strategy. An affordable F-35 program will allow 
DOD to replace legacy aircraft with fewer, more capable multi-role 
strike fighter aircraft well-suited to meet the leaner requirements of 
the new Defense Strategic Guidance.

                              HEALTH CARE

    135. Senator McCain. Secretary Panetta and General Dempsey, the 
budget proposes further TRICARE reforms which have been endorsed by 
senior military leaders. What are the risks to DOD--in budget and 
readiness terms--if Congress fails to enact the administration's 
proposed health care reforms?
    Secretary Panetta. If Congress does not provide us with needed 
support, DOD's new Defense Strategy Guidance will be at risk. Without 
the needed authority to implement these reforms, DOD will face further 
cuts in forces and investment to be consistent with the BCA. DOD's 
budget proposal already makes substantial reductions in the investment 
accounts, so further cuts might fall mostly on forces. This could mean 
cutting additional Active Duty and Reserve Forces by fiscal year 2017 
to such an extent that DOD's ability to carry out the new Defense 
Strategic Guidance could be jeopardized.
    General Dempsey. If Congress fails to enact the proposed health 
care reforms, DOD will be forced to shoulder the increasing cost of 
military health care, likely at the expense of force structure and in 
modernization. DOD's budget proposal already makes substantial 
reductions in the investment accounts so further cuts could mean 
cutting additional Active Duty and Reserve Forces, which would impact 
DOD's ability to pursue the new Defense Strategic Guidance.

    136. Senator McCain. Secretary Panetta and General Dempsey, what 
additional reforms are necessary to better manage the current and 
future costs of military health care benefits?
    Secretary Panetta and General Dempsey. DOD will continue to 
aggressively pursue all possible avenues to better manage the current 
and future costs of military health care. Changes in beneficiary cost-
sharing represent only one of the key steps that we are taking to 
improve health care and reduce the rate of growth in health care costs. 
We are also employing other approaches, including: (1) Moving from 
healthcare to health, investing in initiatives that keep our people 
well while promoting healthy lifestyle; (2) maximizing internal 
efficiencies that reduce the administrative overhead of our military 
health system; and (3) reforming provider payments by responsibly 
paying private care providers and aligning with Medicare reimbursement 
levels, as required by law.

                  CARE MANAGEMENT FOR WOUNDED WARRIORS

    137. Senator McCain. Secretary Panetta, 5 years have passed since 
revelations by the press of substandard care management for wounded 
warriors at the Walter Reed Army Medical Center, which brought disgrace 
on our Nation and our Government. Since that time, many reforms have 
been instituted, and yet, according to recent testimony by the GAO, 
implementation of reforms intended to streamline the care management 
for the wounded, especially those transitioning to civilian life, 
continue to be plagued by bureaucratic turf battles between DOD and the 
VA, such that, according to GAO `` . . . the intended purpose of these 
programs--to better manage and facilitate care and services--may 
actually have the opposite effect . . . .'' What steps has DOD taken to 
respond to the recommendations of GAO, as well as the Wounded Warrior 
Care Coordination Summit, and numerous other studies to improve care 
management for the wounded?
    Secretary Panetta. First, in response to GAO's findings and 
recommendations in the March 2011 Report titled ``Federal Recovery 
Program Continues to Expand, but Faces Significant Challenges,'' a 
majority of them pertained to implementation and oversight of the VA's 
Federal Recovery Coordination Program. There are, however, two areas of 
the report that directly involve DOD:

         Duplication of case management efforts between VA and 
        DOD
         Lack of access to equipment at installations
Duplication of Case Management Efforts between VA and DOD
    DOD policy is that recovering servicemembers have the service of a 
Recovery Care Coordinator (RCC), and that some may have a Federal 
Recovery Coordinator (FRC) closer to when it is known that the 
servicemember will transition out of the military and become a veteran. 
The Service Wounded Warrior programs, in coordination with the Federal 
Recovery Coordination Program, have drafted policy to implement a 
referral process that is consistent with the Services desire to retain 
responsibility for their recovering servicemembers.
Lack of Access to Equipment at Installations
    Currently, there are 11 FRCs located at 5 major military medical 
treatment facilities. These FRCs have designated workspaces and 
equipment access.
    Second, the Wounded Warrior Care Coordination Summit consisted of 
four chartered working groups, each focused on a key area:

    1.  Education and Employment
    2.  FRC/RCC Collaboration
    3.  In Pursuit of Excellence--Documenting Best Practices
    4.  Wounded Warrior Family Resilience

    Working group participants included multiple Federal agencies (VA, 
Department of Labor, DOD's Offices of Wounded Warrior Care and 
Transition Policy (WWCTP), and Military Community and Family Policy 
(MCFP)), as well as representatives from each of the Military Services.
    Several recommendations are currently being carried out by the 
Recovery Coordination Program or its component programs. Additional 
recommendations are being carried out by other participating agencies.
    The outcomes of the Education and Employment Work Group were 
expected to be: the achievement of a comprehensive strategy to provide 
recovering servicemembers career-focused transition support early in 
their rehabilitation; development of policy and guidance, including the 
provision of resources when necessary; and establishment of outcome 
measures and synchronization and leveraging of existing efforts to 
ensure a consistent experience by all recovering servicemembers who 
seek education or employment opportunities.
    FRC/RCC collaboration resulted in five recommendations for better 
integration and synchronization across these two programs. All have 
been implemented as well as better communication among program 
leadership and participation in each other's program training venues.
    Recommendations of the Best Practices working group are being 
implemented with the goal of achieving a consistent experience for all 
recovering servicemembers across the continuum of care, including equal 
access to resources; and the adaptation of support services to meet the 
potential changing needs of servicemembers and families.
    The Wounded Warrior Family Resiliency Working Group came up with 
several recommendations, most of which are actively being implemented 
by the combined efforts of the two DOD offices, MCFP and WWCTP, charged 
with coordinating and executing these programs.

    138. Senator McCain. Secretary Panetta, do you have confidence that 
the Senior Oversight Committee of DOD and VA is capable of 
strengthening and improving these systems of care for our wounded or is 
there a more efficient mechanism that should be established in its 
place?
    Secretary Panetta. Yes, there is a more efficient mechanism that 
has replaced the Senior Oversight Committee. On January 19, 2012, the 
Joint Executive Committee Co-Chairs, who are the DOD Under Secretary of 
Defense (Personnel & Readiness) and VA Deputy Secretary, agreed to 
consolidate the SOC and JEC forums based on the recommendation from the 
DOD Recovering Warrior Task Force. The new consolidated Joint Executive 
Committee was given the guidance to:

         Clearly articulate wounded, ill, and injured 
        servicemember issues
         Include the appropriate level of senior leadership
         Maintain former Senior Oversight Committee Wounded, 
        Ill, and Injured programs

    In order to maintain a high level of visibility, the membership of 
the new Joint Executive Committee now includes the Services Under 
Secretaries and Vice Chiefs, Special Operations Command, the DOD 
Comptroller, the ASDs for Health Affairs, and Reserve Affairs, and from 
the VA the Under Secretaries for Health and Benefits, Principal Deputy 
Under Secretary for Benefits, VA Assistant Secretaries for Information 
Technology, and Policy and Planning, among other senior level members.
    To ensure that systems of care for our wounded, ill, and injured 
are maintained, strengthened, and improved:

         All ongoing Senior Oversight Committee issues, 
        programs, and initiatives have been identified and 
        appropriately handed off to the Joint Executive Committee for 
        continued oversight and support.
         In order to ensure any new and emerging recovery 
        warrior issues are quickly and adequately addressed, a new 
        joint Wounded, Ill, and Injured Subcommittee has been created 
        under the Joint Executive Committee to oversee these matters.
         Emerging Wounded Warrior issues are now addressed 
        bimonthly at Joint Executive Committee meeting and quarterly 
        with DOD and VA Secretaries.

    The integration of DOD and VA into a single team under the Joint 
Executive Committee allows a world class continuum of care for our 
wounded, ill, and injured warriors in such areas as:

         Integrated Disability Evaluation System
         Caregivers
         Environmental/Toxic Exposures
         Integrated Mental Health Strategy
         Suicide Prevention
         Electronic Health Record
         Benefits

    Some of the accomplishments to date include:

         Increased sharing of health information between DOD 
        and VA
         Implementation of new approaches to support patients, 
        their families, and caregivers
         Development of new approaches to address suicide, 
        Traumatic Brain Injury, and Post-Traumatic Stress Disorder
         Developed and implemented a Disability Evaluation 
        System pilot aimed toward one disability rating system 
        administered by both DOD and VA
         Coordinated health care, rehabilitation, and delivery 
        of services that resulted in facilitating the highest level of 
        support ever to the wounded, ill, and injured
         Comprehensive legislative and public affairs efforts 
        to keep servicemembers, veterans, family members, the public, 
        DOD/VA leadership, and Congress informed of new developments in 
        care

                 non-competitive health care contracts
    139. Senator McCain. Secretary Panetta, DOD is required by law to 
enter into sole source, non-competitive contracts with six commercial 
health plans, known as the Uniformed Services Family Health Plan 
(USFHP) that provide health care services to a small portion of DOD 
family members and retirees at a cost of approximately $1.2 billion per 
year. Do the contracts in effect today comply with the statutory 
requirement for cost neutrality? If not, why not?
    Secretary Panetta. Based on the most current data available to DOD 
(fiscal year 2011), the negotiated rates provided to the USFHP plans 
currently exceed the amounts mandated under Sec 726(b) of Public Law 
104-201.
    Beneficiaries Under Age 65--For beneficiaries under the age 65, DOD 
estimates that the average cost per USFHP Prime enrollee was about 13 
percent higher than the average cost per non-USFHP Prime enrollee, even 
after adjusting for both geography and age/gender mix differences. This 
cost difference is due to the fact that the fiscal year 2011 USFHP 
rates were based on fiscal year 2009 costs trended to fiscal year 2011. 
During the fiscal years 2009 to 2011 period, TRICARE Management 
Activity introduced the Outpatient Prospective Payment System (OPPS) 
rates which decreased non-USFHP Prime costs significantly. In addition, 
TRICARE Management Activity started to receive significant retail 
pharmacy rebates which also decreased the costs for Prime enrollees. As 
a result, costs for non-USFHP Prime enrollees increased more slowly 
from fiscal years 2009 to 2011 than projected. The USFHP rates 
incorporate the impact of pharmacy changes like OPPS and policy rebates 
on a lagged basis. As a result, the USFHP rates for future years will 
reflect these policy changes.
    Beneficiaries Age 65 and Over--For beneficiaries age 65 and over, 
with adjustments for geography or the age/gender mix, the USFHP costs 
per enrollee were about 29 percent higher than the costs of the average 
TRICARE For Life (TFL) beneficiary. The key reason for this 29 percent 
difference is that the fiscal year 2011 USFHP rates were based upon the 
costs of Medicare fee-for-service beneficiaries, rather than the costs 
of TFL beneficiaries. Now that reliable and accurate TFL data are 
available for both the DOD and Medicare portions of TFL beneficiary 
costs, the government has proposed to use actual TFL experience rather 
than non-DOD Medicare experience to calculate the fiscal year 2013 
ceiling rates, which we expect will lead to a significant decrease in 
rates for this cohort. A second factor is that the fiscal year 2011 
USFHP rates were based upon TRICARE pharmacy costs in fiscal year 2009. 
Since fiscal year 2009, DOD has started to receive large retail 
pharmacy rebates. These rebates are incorporated into the USFHP rates 
on a lagged basis.

    140. Senator McCain. Secretary Panetta, please provide a comparison 
of the per beneficiary costs for those enrolled to the USFHP with: (1) 
those for whom DOD pays for comparable health benefits under TRICARE 
Prime for under age 65 beneficiaries under its competitively awarded 
TRICARE contracts; and (2) over 65 USFHP enrollees compared to 
Medicare/TFL.
    Secretary Panetta. After accounting for differences in both 
geography and the age/gender mix, the average USFHP cost per enrollee, 
both under and over 65, was higher than the average cost per non-USFHP 
Prime enrollee in fiscal year 2011. Due to ongoing contract 
negotiations, the exact differences are not provided above; however DOD 
is willing to provide additional data for the committee's use in a non-
public forum.

    141. Senator McCain. Secretary Panetta, if there is any further 
postponement of transition of future Medicare eligible enrollees to 
Medicare/TFL, what would be the impact on the DOD budget in fiscal year 
2013 and over the FYDP?
    Secretary Panetta. The impact on the DOD budget would depend on the 
specific period of delayed transition, and whether a pattern of 
changing this date is perceived. The Medicare Eligible Retiree Health 
Care Fund (MERHCF) Board of Actuaries responsible for approving the 
methods and assumptions used to calculate the budget impact must adhere 
to professional standards, which requires consideration of 
historically-enacted legislative changes and the past practice or 
pattern of plan changes. If the Board determines a pattern of delay in 
the transition date, it will decide to change assumptions regarding the 
impact of the legislation that will result in a significant increase in 
cost for the DOD budget in required contributions to the MERHCF. 
Additionally, any delay in the effective date of the changes enacted 
last year would increase mandatory spending from the MERHCF during the 
period of delay.

              COST NEUTRALITY OF THE TRICARE PRIME BENEFIT

    142. Senator McCain. Secretary Panetta, under current law, the 
TRICARE Prime benefit for retirees is required not to exceed the costs 
of civilian care obtained under TRICARE Standard. Does the cost of 
TRICARE Prime comply with current law for cost neutrality? If not, why 
not?
    Secretary Panetta. The Prime benefit is no longer cost neutral 
compared to Standard/Extra plans. Under current law, the TRICARE Prime 
is supposed to be cost neutral--that is, government costs for Prime 
should not exceed the government costs for TRICARE Standard. Section 
731(c) of the NDAA for Fiscal Year 1994 required that the benefit that 
became known as TRICARE Prime ``shall be administered so that the costs 
incurred by the Secretary under the TRICARE program are no greater than 
the costs that would otherwise be incurred to provide health care to 
the members of the uniformed services and covered beneficiaries who 
participate in the TRICARE program.''
    When TRICARE was implemented in 1996, the Prime enrollment fee was 
set at a level higher than the standard fee in order to: (1) offset the 
substantially reduced out-of-pocket costs, including the elimination of 
the Standard deductible, the near-total elimination of the 25 percent 
Standard inpatient co-pay, and the substantial reduction of outpatient 
co-pays; and (2) make Prime cost neutral to the government. Subsequent 
enactments regarding TRICARE for Active Duty family members have 
superseded the NDAA for Fiscal Year 1994 requirement for Active Duty 
family members, but not for Prime-eligible retirees.
    Over the intervening years, a significant disparity in the cost to 
government between Prime and Standard developed. This disparity was 
recognized in 2005 and resulted in proposals to adjust cost shares to 
both Prime and Standard/Extra. DOD was largely prohibited from changing 
fees and co-pays until fiscal year 2012. The net result is that Prime 
is not cost neutral in relation to the Standard/Extra plans. For a 
working retiree family of three, the cost to DOD of providing health 
care in fiscal year 2011: Prime--$13,442; Standard--$11,267. Prime 
enrollment fees or other cost-sharing would need to be adjusted to make 
Prime cost-neutral to Standard.

    143. Senator McCain. Secretary Panetta, is cost neutrality an 
appropriate test, and if so, what steps should be taken to restore it?
    Secretary Panetta. Cost neutrality is a laudable goal and our 
efforts should try to move in that direction. However, we cannot get to 
complete cost neutrality without significantly increasing the cost 
shares under Prime above the levels proposed in the President's budget. 
The proposed increases in the Prime enrollment fee are one part. We 
also believe that increases in utilization management envisioned under 
the Patient Center Medical Home concept that we are implementing will 
bring the cost of Prime closer to Standard.

                       FEDERAL CIVILIAN WORKFORCE

    144. Senator McCain. Secretary Panetta, this budget requests a 
precipitous and dangerous drop in military end strength which I believe 
puts our Nation's security at risk. Why is there little or no reduction 
planned for DOD's Federal civilian workforce?
    Secretary Panetta. DOD's fiscal year 2013 budget reflects a 
balanced workforce that decreases overall spending on military end 
strength and DOD's Federal civilian workforce, as well as on contract 
services. It reflects our best judgment today and represents a 
carefully coordinated approach based on DOD's strategy and policy that 
balances operational needs and fiscal reality without placing national 
security and our overall defense posture at risk. Proposed reductions 
in the military personnel levels reflect declines in our current 
overseas commitments; revised strategy, posture, and operational 
planning; and changes to our force structure. Additionally, the budget 
request includes proposed civilian reductions that are proportional, as 
a percentage of the overall civilian workforce, to proposed reductions 
in the military's end strength. Reductions in civilian personnel are 
predominantly associated with ongoing organizational assessments and 
mission/function prioritization in an effort to reduce administrative 
workload. It is important to note that DOD's civilian workforce 
performs key enabling functions for the operating forces, such as 
critical training and preparation to ensure readiness, equipment 
modernization and reset, medical care, family support, and base 
operating and infrastructure services--all vital services that support 
our men and women in uniform and help meet the Nation's security needs.

    145. Senator McCain. Secretary Panetta, what is the current policy 
for hiring new employees?
    Secretary Panetta. DOD fills its positions following Merit Systems 
Principles and Regulations developed by the Office of Personnel 
Management (OPM). Within these parameters, DOD strives to be a fair and 
equitable employer offering equal employment opportunity to all 
qualified citizens. Because of its size and the diversity of its 
missions, DOD uses a wide range of authorities to fill positions in 
both the Competitive and Excepted service in virtually every occupation 
imaginable. Our agencies hire applicants from the public and private 
sectors, and we place special emphasis on hiring veterans, military 
spouses, students, and people with disabilities. We strive to be 
innovative and responsive in our efforts to recruit and retain the best 
talent available to meet our mission objectives in supporting our 
warfighters, and appreciate the support we receive from Congress to 
further this effort.

    146. Senator McCain. Secretary Panetta, why is the administration 
seeking a pay raise for Federal employees who, according to a January 
30, 2012, report from the Congressional Budget Office, are compensated 
16 percent higher than their private sector counterparts, and enjoy a 
48 percent advantage in benefits?
    Secretary Panetta. The pay raise for civilians included in the 
budget request is not set by DOD, but rather is based on a government-
wide determination by OPM on behalf of the President. With the current 
freeze on salary cost-of-living adjustments for Federal workers, the 
Federal Government's benefits package is a necessary factor in 
remaining competitive for a variety of occupations and locations. While 
the Federal Government may lead the market in the area of benefits, it 
still lags the market with regard to salaries for some occupations. It 
is important to note that DOD's civilian workforce performs key 
enabling functions for the operating forces, such as critical training 
and preparation to ensure readiness, equipment modernization and reset, 
medical care, family support, and base operating and infrastructure 
services--all vital services that support our men and women in uniform 
and help meet the Nation's security needs. Further salary freezes are 
not in the best interest of DOD and will have an adverse impact on 
readiness, mission capability, and could result in increased reliance 
on contracted services and increased fiscal obligations.

                     ARMY AND MARINE CORPS DRAWDOWN

    147. Senator McCain. General Dempsey, I am concerned that a rapid 
reduction in the end strength of the Army and the Marine Corps will 
degrade the readiness of the combat forces and break faith with an All-
Volunteer Force that defeated the insurgency in Iraq, that continues to 
fight in Afghanistan, and may be called on again to defend this Nation 
against its enemies. I would like you to explain--with specificity, 
year-by-year--how you foresee the Army reducing its Active Duty 
strength by 70,000 soldiers in 5 years?
    General Dempsey. As part of the new Defense Strategic Guidance, the 
Army will downsize approximately 79,000 soldiers to 490,000 in the 
Active component, and will reduce its Reserve components by 9,000 from 
358,200 to 350,200 in the Army National Guard and from 206,000 to 
205,000 in the U.S. Army Reserve by the end of the FYDP. Temporary end 
strength increase for the Active component was authorized by Congress 
in 2009. By the end of September 2013, the Army will reduce the 22,000 
temporary end strength increase and return back to a permanent Active 
component end strength of 547,400. Generally, the Army will reduce an 
average of 11,000 soldiers per year.

    148. Senator McCain. General Dempsey, how do you envision achieving 
these cuts using the manpower management tools available to shape the 
force with incentives and early retirements?
    General Dempsey. The Army's preliminary strategy provides a high 
quality, mission-capable force, using precision, care, and compassion 
to achieve end strength reductions without jeopardizing readiness. A 
key precept of planning is that the Army will make the choices, to the 
greatest extent possible, on who will remain and who will separate from 
service. Although DOD's force reduction objectives include guidance to 
maximize the use of voluntary separations, the Army's intent is to 
apply lessons learned from the 1990s drawdown when the magnitude of the 
voluntary separations made it difficult for the Army to control the 
quality of those servicemembers choosing to separate. To ensure a 
quality force following the drawdown and maintain faith with soldiers, 
the Army intends to meet DOD's force reduction objectives by 
selectively offering voluntary incentives (such as Temporary Early 
Retirement Act) to soldiers whom the Army deems fully qualified but do 
not meet the highest standards for continued service.

    149. Senator McCain. General Dempsey, do you have a plan to address 
the nondeployable population of our combat forces, such as about 25,000 
Active Duty Army soldiers?
    General Dempsey. Over 10 years of persistent and protracted 
conflict has placed stress on the Army. The strain has increased the 
rate of nondeployers at latest arrival date or date of deployment in 
our BCT from 10 percent to 16 percent between fiscal year 2007 to 
fiscal year 2011. From a tactical perspective, commanders at all levels 
are actively engaged in identifying non-deployable soldiers and, in the 
case of temporary non-deployable conditions, linking the soldier with 
the requisite resources necessary to resolve the non-deployable 
condition. From a strategic perspective, the Army staff is focused on 
policy and implementation decisions necessary to reduce the non-
deployer rates in our units and to gain better visibility on the health 
of the force. The Army established a Non-Deployable Campaign Plan in 
April 2011 to develop systemic and policy changes aimed at reducing 
this population. While we are only half way through fiscal year 2012 
and there remain challenges with the units yet to deploy, we have seen 
a reduction to just fewer than 13 percent so far this year. Since 
medical issues continue to be the greatest contributor to non-
deployables, we are focusing on the Disability Evaluation System to 
enhance, standardize, and establish measures of performance.

    150. Senator McCain. General Dempsey, how do you envision Army 
leaders will accomplish this without demoralizing the force and 
breaking faith with soldiers who have sacrificed greatly?
    General Dempsey. The Army is a values-based organization. The basic 
values of dignity and respect were integral to its drawdown planning. 
First, the Army intends to use reduced accessions and minimize the 
number of currently serving soldiers being asked to leave the Service. 
Second, the Army will use our proven centralized selection board 
processes to identify both commissioned and NCOs with the greatest 
potential for continued service as it shapes the force by grade and 
specialty. Finally, commanders will be empowered to retain only the 
highest quality soldiers. When feasible, fully qualified soldiers 
identified as excess due to strength limitations will be afforded the 
option to volunteer for reclassification into a shortage skill. In lieu 
of involuntary separation, voluntary options (when applicable) will be 
afforded to fully-qualified soldiers targeted to leave the Service.

                             REVERSIBILITY

    151. Senator McCain. General Dempsey, I am concerned that returning 
to pre-September 11 personnel levels within 5 years may damage 
readiness and create structural problems within the Services, while 
subjecting military members to an economy that hardly is in a position 
to welcome them with open arms. You have indicated that ``the Army will 
retain more mid-grade officers and NCOs even as their overall end 
strength decreases to ensure we will have the structure and experienced 
leaders necessary to regrow the force quickly.'' This has been referred 
to as reversibility. I am concerned that at the basic infantry level, 
this will degrade combat capability over time. Can you explain what 
reversibility means and how it will be achieved?
    General Dempsey. The new Defense Strategic Guidance released in 
January 2012 notes that since we cannot predict how the strategic 
environment will evolve with absolute certainty, we need to manage the 
force in ways that protect its ability to regenerate capabilities 
should they be needed to meet future unforeseen demands. The strategy 
also notes that we need to retain intellectual capital and rank 
structure that can be utilized to expand key elements of the force. The 
Army is examining strategies, policies, and investments that would 
posture the Army to slow down and reverse drawdowns of Army end 
strength and formations, and regenerate end strength over the course of 
a number of years in response to a future crisis.
    This will involve reexamining the mix of elements in the Active and 
Reserve components, maintaining a strong National Guard and Army 
Reserve, retaining a healthy cadre of experienced noncommissioned and 
midgrade officers, and preserving the health and viability of the 
Nation's defense industrial base.

    152. Senator McCain. General Dempsey, how will you avoid the repeat 
of the poorly executed drawdown of the 1990s, which slashed recruiting 
and first-term soldier strength, thus creating gaps that hurt the 
Army--in order to retain more mid-career personnel?
    General Dempsey. The Army's intent is to meet the fiscal year 2017 
end strength targets with precision (by grade and skill) while 
maintaining a high level of readiness and capability with an All-
Volunteer Force. We will minimize induced losses by lowering accessions 
without jeopardizing future Army requirements. We will not sacrifice 
our investment in leader development and will continue to shape 
policies to support the Army's leader development strategy. We will 
promote best-qualified soldiers to meet requirements. We will empower 
commanders with the ability to retain soldiers with the greatest 
potential for continued contributions. We will treat soldiers and their 
families (both those who stay and those who leave) fairly.
    The Army will target select NCOs (by means of a centralized 
selection process) for involuntary separation when their grade/skill is 
either projected over-strength or when promotion stagnation jeopardizes 
viable career development paths in select career fields. Drawdown of 
the force begins in fiscal year 2014 and continues over a 4-year 
period. To ensure we prevent talent loss and to retain those 
individuals with the greatest potential for future contributions, the 
Army will decide who stays and who leaves; offering voluntary 
separation options in lieu of involuntary separation when such 
authority exists.
    We will sequentially apply the levers of reduced accessions, 
selective retention, force shaping boards, and voluntary incentives to 
ensure that we retain high quality personnel as we achieve mandated end 
strengths. We will also pursue qualified soldiers for transition to the 
U.S. Army Reserve and National Guard where they can continue to serve.

    153. Senator McCain. General Dempsey, would it not make more sense 
to plan for a 10-year, conditions-based plan or one that adheres to the 
original plan to reduce end strength by 49,000 soldiers?
    General Dempsey. As part of the new Defense Strategic Guidance, the 
Army will downsize approximately 79,000 soldiers to 490,000 in the 
Active component by the end of fiscal year 2017. Initial planning for 
the reduction noted three assumptions that must be achieved: (1) the 
drawdown in Iraq will continue and that it will be completed by 
December 31, 2011, (accomplished); (2) forces in Afghanistan will be 
drawn down in accordance with current administration policy (on track); 
and (3) Army forces will not be involved in a protracted conflict in 
the immediate future (not expected). The Army's deliberate and 
responsible drawdown plans will take into consideration operational 
demands and unit readiness. It will proceed at a pace necessary to 
ensure mission success and retain the flexibility to respond to 
unforeseen demands at a tempo that is predictable and sustainable for 
our All-Volunteer Force. After conducting extensive analysis, the Army 
concluded that maintaining end strength at 490,000 will meet the 
demands described in the new Defense Strategic Guidance.

                    NUCLEAR WEAPONS COMPLEX FUNDING

    154. Senator McCain. Secretary Panetta, last October you told the 
House Armed Services Committee that you opposed attempts by some to 
reduce the funding necessary for achieving the President's nuclear 
modernization plan. When asked about a possible cut by the 
Appropriations Committee, you stated: ``I think it is tremendously 
shortsighted if they reduce funds that are absolutely essential for 
modernization . . . if we aren't staying ahead of it, we jeopardize the 
security of this country. So, for that reason, I certainly would oppose 
any reductions with regards to the funding.'' The fiscal year 2013 
budget for the National Nuclear Security Administration (NNSA) makes a 
number of significant changes to the President's nuclear weapons 
complex modernization plan. I understand many within DOD, including 
STRATCOM, are opposed to these cuts. Do you still agree that a failure 
to honor the carefully crafted modernization plan risks, as you stated 
just 3 months ago, jeopardizing the security of this country?
    Secretary Panetta. Modernization efforts remain critical to 
ensuring a safe, secure, and effective deterrent for the long-term; it 
will take years of sustained funding and effort to achieve this goal. 
Infrastructure modernization, in particular, will offer opportunities 
to reduce the number of reserve warheads needed to hedge against a 
potential technical failure of a warhead type. The Nuclear Posture 
Review of 2010 and the reports to Congress, pursuant to section 1251 of 
the NDAA for Fiscal Year 2010 and section 1043 of the NDAA for Fiscal 
Year 2012, contain detailed and well-supported modernization plans. 
Current fiscal realities, however, have driven DOD and NNSA to make 
difficult decisions in prioritizing plans and funding for these 
efforts, including the deferral or delay of programs and deliverables. 
Such decisions were made to allow the two departments to shift 
resources to certain projects and programs that meet the Nation's most 
pressing nuclear weapons requirements. We are confident that these 
decisions allow us to continue the necessary support to achieve the 
goal of maintaining a safe, secure, and effective deterrent, while also 
supporting the long-term commitment to modernization of the nuclear 
weapons enterprise.

                      2-YEAR DELAY OF THE SSBN(X)

    155. Senator McCain. Secretary Panetta, I understand the budget 
proposes delaying the replacement ballistic missile submarine for 2 
years and estimates doing so will save $4.3 billion. Given prior year 
statements from the Navy claiming that the schedule for procuring the 
12 follow-on ballistic missile submarines is ``inextricably linked to 
legacy [i.e. Ohio-class] ballistic missile submarine (SSBN) 
retirements'' and that there is ``no leeway in this plan to allow a 
start or any delay in the procurement plan,'' I am interested in 
understanding why you now believe that a delay is possible?
    Secretary Panetta. To comply with the BCA, the 2-year delay defers 
and extends design efforts, freeing up $4.3 billion in the FYDP, as 
well as reduces the available SSBN force to 10 ships during the 
transition from the Ohio-class to the Ohio replacement. The absence of 
extended overhauls during this transition period (2029 to 2042) helps 
mitigate this reduced force level, which will meet at-sea presence 
requirements with moderate operational risk during the transition 
period. Unforeseen issues with construction of the Ohio-replacement or 
emergent material problems with the aging Ohio-class could present 
challenges. Full funding for continued design and construction of Ohio-
replacement to ensure on-time delivery and on-time Strategic Patrol 
(lead ship in 2029) and properly resourced maintenance of the Ohio-
class will be crucial to minimizing operational risk during the 
transition (2029 to 2042).
    With the 2-year delay (fiscal year 2019 to fiscal year 2021) to the 
Ohio replacement SSBN, there is no margin for further delay. Additional 
delay would prevent meeting current sea-based strategic deterrent 
requirements. The Navy will be closely managing risk during the 
transition period.

    156. Senator McCain. Secretary Panetta, does a delay instill 
additional risk in the Navy's ability to maintain the same at-sea 
availability rates required under current nuclear force posture? If 
not, please be specific as to why.
    Secretary Panetta. There is some additional risk during the 
transition from Ohio class to Ohio replacement. To comply with the BCA, 
the 2-year delay defers and extends design efforts, freeing up $4.3 
billion in the FYDP as well as reduces the available SSBN force to 10 
ships during the transition from the Ohio-class to the Ohio 
replacement. The absence of extended overhauls during this transition 
period (2029 to 2042) helps mitigate this reduced force level, which 
will meet at-sea presence requirements with moderate operational risk 
during the transition period. Unforeseen issues with construction of 
the Ohio replacement or emergent material problems with the aging Ohio-
class could present challenges. Full funding for continued design and 
construction of Ohio replacement to ensure on-time delivery and on-time 
strategic patrol (lead ship in 2029) and properly resourced maintenance 
of the Ohio-class will be crucial to minimizing operational risk during 
the transition (2029 to 2042).
    With the 2-year delay (fiscal year 2019 to fiscal year 2021) to the 
Ohio replacement SSBN, there is no margin for further delay. Additional 
delay would prevent meeting current sea-based strategic deterrent 
requirements. The Navy will be closely managing risk during the 
transition period.

    157. Senator McCain. Secretary Panetta, does the current strategy 
include any margin for design or development challenges?
    Secretary Panetta. The 2-year delay (fiscal year 2019 to fiscal 
year 2021) allows some additional time to mature designs and address 
the programmatic risks associated with designing new systems and 
integrating existing technology. To control cost and risk, the Ohio 
replacement SSBN is planned to maximize reuse of Virginia- and Ohio-
class components and designs where feasible. Overall design maturity at 
construction start will be no less than originally planned, 
commensurate with the funding provided. However, any further delay to 
Ohio replacement would result in fewer operational ships than necessary 
to meet today's at-sea deterrent requirements during the transition 
(2029 to 2042) from Ohio-class to Ohio replacement. Full funding for 
Ohio replacement design and construction to ensure on-time delivery and 
on-time strategic patrol (lead ship in 2029) is essential to preventing 
further delays.

    158. Senator McCain. Secretary Panetta, does this delay in any way 
infuse additional risk in our national ability to meet our current 
strategic requirements in the future?
    Secretary Panetta. There is some additional risk during the 
transition from Ohio-class to Ohio replacement. To comply with the BCA, 
the 2-year delay defers and extends design efforts, freeing up $4.3 
billion in the FYDP, as well as reduces the available SSBN force to 10 
ships during the transition from the Ohio-class to the Ohio 
replacement. The absence of extended overhauls during this transition 
period (2029 to 2042) helps mitigate this reduced force level, which 
will meet at-sea presence requirements with moderate operational risk 
during the transition period. Unforeseen issues with construction of 
the Ohio replacement or emergent material problems with the aging Ohio-
class could present challenges. Full funding for continued design and 
construction of Ohio replacement to ensure on-time delivery and on-time 
strategic patrol (lead ship in 2029) and properly resourced maintenance 
of the Ohio-class will be crucial to minimizing operational risk during 
the transition (2029 to 2042).
    With the 2-year delay (fiscal year 2019 to fiscal year 2021) to the 
Ohio replacement SSBN, there is no margin for further delay. Additional 
delay would prevent meeting current sea-based strategic deterrent 
requirements. The Navy will be closely managing risk during the 
transition period.

                      AFGHAN SECURITY FORCES FUND

    159. Senator McCain. General Dempsey, U.S. Forces in Afghanistan 
are to draw down to around 68,000 by September of this year. Secretary 
Panetta recently announced that the administration seeks to transition 
lead combat responsibilities to the Afghan security forces in mid- to 
late-2013--an enormous responsibility for a force that still faces 
shortcomings in its ability to conduct operations. You have stated: 
``Key to long-term stability in Afghanistan is the development of the 
Afghan Security Forces.'' Yet, the budget request for the Afghan 
Security Forces Fund (ASFF)--the primary tool for the training and 
equipping of the Afghan Security Forces--is cut nearly in half from 
what was enacted for fiscal year 2012. What is the reasoning behind 
such a significant cut to the ASFF, particularly given the increased 
role Afghan forces are to assume next year?
    General Dempsey. The decrease in the fiscal year 2013 ASFF budget 
is due to the fact that we are approaching the end of ANSF force 
generation, equipment fielding, and facility construction. We are now 
moving to a force development phase. The cost of training required in 
the force development phase decreases for the following reasons: we are 
no longer building a force from the ground up, so the number of 
personnel that require training will decrease; and ANSF training 
facilities are almost finished construction, so facility costs will 
decrease. We are now beginning to transition ANSF training programs to 
Afghan control. All of the ANSF's basic training courses, NCO, and 
officer development courses are currently taught by ANSF personnel. The 
number of Afghan Master Skill Instructors in the branch schools 
continues to grow. The current projection is that the entire Afghan 
training system will be under Afghan control with coalition monitoring 
by the end of fiscal year 2013. This means that overall cost of 
training will decrease dramatically as we move from contract to ANSF 
instructors.

    160. Senator McCain. General Dempsey, do you believe the Afghan 
Security Forces will be capable of assuming lead responsibility for 
combat operations in 2013?
    General Dempsey. Yes. In 2013 when the ANSF assume the lead, we 
will still be standing shoulder-to-shoulder with them. Our forces will 
still be present to advise and assist the ANSF. This will allow the 
ANSF to expand their capabilities and capacity without losing access to 
the resources and enablers that U.S. and coalition forces provide.

    161. Senator McCain. General Dempsey, what capability gaps pose the 
greatest risk to the ability of the Afghan Security Forces to assume 
lead responsibility for combat operations in Afghanistan?
    General Dempsey. The ANSF logistics system is our greatest 
challenge at the moment. Improving their capability in this area is 
critical to the long-term success of the ANSF as they assume lead for 
security.
                                 ______
                                 
             Questions Submitted by Senator Roger F. Wicker

                                 SYRIA

    162. Senator Wicker. Secretary Panetta and General Dempsey, the 
situation in Syria continues to deteriorate. Thousands of innocent 
Syrians have been brutally murdered and countless have been wounded. 
President Obama said in his State of the Union Address that in Syria, 
he has ``no doubt that the Assad regime will soon discover that the 
forces of change can't be reversed, and that human dignity can't be 
denied.'' How do you judge the capabilities of the Free Syrian Army 
(FSA)?
    Secretary Panetta. (Deleted.]
    General Dempsey. The capabilities of the FSA have steadily grown in 
recent months; however, the organization remains beset by logistical 
shortfalls and lack of unity among its leadership. Several of the FSA's 
leaders have taken part in a public feud over the future leadership of 
the movement, with some officers backing its founder, Colonel Riyad al-
As'ad, and others pledging loyalty to Brigadier General Mustapha al-
Shaykh. Both men have attempted to put aside their differences in 
recent weeks by publicly announcing the unification of their efforts to 
overthrow the Asad regime. FSA leadership unity continues to be 
evaluated as a bellwether of the movement's capabilities.
    The ability, or inability, of the FSA to exercise operational 
control over the armed opposition bears continued monitoring. In recent 
months, the FSA has issued several calls for the armed opposition 
operating within Syria to unite under the FSA's banner, suggesting the 
group has had difficulties exercising control over disparate armed 
groups throughout Syria.
    FSA members are actively seeking military aid from foreign 
sponsors, including ammunition, small arms, and advanced weapons 
systems.

    163. Senator Wicker. Secretary Panetta and General Dempsey, members 
of the administration have stated that we will exhaust all diplomatic 
options in an effort to avoid any military confrontation though there 
have been reports that the United States is beginning to rethink its 
military strategy and support. What would this entail?
    Secretary Panetta. The President has said that Assad must halt his 
campaign of killing and crimes against his own people, step aside, and 
allow a democratic transition to proceed immediately.
    A political solution is the best means to achieve a stable, 
democratic transition; military action should always be a last resort. 
We are acting along several tracks. First, through the Department of 
State and the U.S. Agency for International Development, we are 
providing humanitarian relief to the Syrian people. Thus far, we have 
provided more than $25 million to the U.N. High Commission for Refugees 
(UNHCR), the World Food Program (WFP), the International Committee of 
the Red Cross (ICRC), and both local and international nongovernmental 
organizations to provide assistance to those who need it most. Second, 
the Department of State is leading diplomatic efforts to isolate and 
weaken the regime by building international consensus through the U.N. 
Security Council, the Arab League, and the Friends of Syria Group. The 
Department of the Treasury is doing its part by cutting off the 
regime's revenue through sanctions. Third, we are assisting the 
political opposition to strengthen and unite under a clear democratic 
transition plan that brings together Syrians of all creeds and 
ethnicities.
    Even as we continue to examine and revise military options, I would 
like to underscore that there are no simple solutions to the situation 
in Syria, and that military action is not advisable at this time.
    General Dempsey. We remain committed to supporting the 
administration's efforts to achieve a diplomatic solution to the 
situation in Syria. The President has said that U.S. unilateral action 
would be a mistake and we do not believe that military operations--such 
as air strikes or other forms of intervention--are advisable at this 
time. It is important that we continue to shape efforts within the U.N. 
Security Council and with our regional partners in order to achieve a 
positive outcome. The military, in conjunction with the U.S. 
Interagency, continues to explore the provision of non-lethal 
assistance to members of the peaceful opposition. We are reviewing all 
possible additional steps, including military options, but this 
planning does not equate to an intent or recommendation to execute a 
particular plan.

    164. Senator Wicker. Secretary Panetta and General Dempsey, what is 
the extent of the Syrian chemical stockpile?
    Secretary Panetta. Syria's chemical warfare program is well-
established, with a stockpile of chemical warfare agents that can be 
delivered by aerial bombs, ballistic missiles, and artillery rockets. 
Syria has the facilities and expertise domestically to produce, store, 
and deliver chemical agents, and we believe Syria is likely to continue 
to seek to improve its chemical warfare capability for the foreseeable 
future.
    General Dempsey. Syria has a sophisticated chemical weapons program 
that dates back several decades. Over that time, Syria acquired the 
capability to develop and produce blister and nerve agents, including 
mustard gas, sarin, and possibly VX nerve agent. Syria is still 
dependent on foreign sources for some dual-use equipment and precursor 
chemicals for agent production.

    165. Senator Wicker. Secretary Panetta and General Dempsey, what 
can be done to secure the chemical stockpile if the Assad regime loses 
control?
    Secretary Panetta. We remain very concerned about the security of 
chemical and conventional weapons in Syria. We have developed options 
to address those concerns, and we are consulting with allies and 
regional partners about how to address this potential proliferation 
challenge.
    General Dempsey. The United States continues to work very closely 
with the U.N. to support Kofi Annan's U.N. Six-Point Peace Plan. These 
efforts combined with the Friends of Syria Group provide the proper 
international context for stability in Syria should the Assad regime 
lose control. We have plans in place that cover a wide range of 
potential scenarios and options to address those scenarios. We also 
continue to work with our allies and regional partners to share 
information and coordinate activities as we closely watch the security 
and disposition of Syria.

    166. Senator Wicker. Secretary Panetta and General Dempsey, are we 
working with the Israelis to ensure these weapons do not get into the 
wrong hands?
    Secretary Panetta. This issue is of the highest concern to us, the 
Israelis, and the rest of the international community. We are 
cooperating with allies and regional partners across a range of 
potential options to prevent the proliferation of weapons, both 
chemical and conventional weapons. In addition--and in the midst of 
growing instability in the region--the United States has continued to 
strengthen the U.S.-Israel relationship in all aspects of cooperation.
    General Dempsey. Ensuring Syrian chemical and biological warfare 
does not fall into the wrong hands is clearly a shared security 
interest with Israel. From past dialogues with Israeli leadership, I 
know our understanding of the severity of the situation and possible 
consequences of proliferation or use, whether inadvertent or 
deliberate, is aligned. We are leveraging our longstanding and close 
military-to-military cooperation with the Israeli Defense Forces to 
make certain both of our militaries have an accurate assessment of 
Syrian chemical and biological warfare capabilities and 
vulnerabilities. I am confident that should the need to act arise, the 
United States will be able to deconflict or to coordinate with the 
Israeli Defense Forces as the situation demands.

    167. Senator Wicker. Secretary Panetta and General Dempsey, what, 
if any, military options do you see for DOD?
    Secretary Panetta. A core function of DOD is to conduct military 
planning as crises evolve in order to provide options to the President. 
In doing so, DOD looks into a variety of military options for various 
contingencies. I cannot get into the specifics of these options in open 
session, but I will reiterate that, although we continue to examine and 
revise military options, there are no simple solutions to the situation 
in Syria, and military action is not advisable at this time.
    General Dempsey. U.S. unilateral action or military operations are 
not advisable at this time. However, we continue to plan for a wide 
range of potential scenarios and provide options to address those 
scenarios. The Syrian crisis poses complex challenges ranging from 
control of chemical and biological weapons to humanitarian assistance. 
It is imperative that we continue to work with our allies and regional 
partners to share information and coordinate activities within this 
spectrum. The international community is closely monitoring the Syrian 
situation and we support shaping any multilateral responses within U.S. 
Government objectives.

                   TROOP WITHDRAWAL FROM AFGHANISTAN

    168. Senator Wicker. Secretary Panetta and General Dempsey, I do 
not see any tactical or diplomatic sense in your recent announcement 
about telling the enemy the date we are going to pull out troops. This 
gives the enemy an advantage on the ground and also eliminates any 
incentive for the Taliban to engage in substantive political 
negotiations with the Afghan Government. Our strategy in Afghanistan 
must be based solely on the conditions on the ground and not on the 
politics of the 2012 election. How does DOD plan to execute this 
announced withdrawal while not further endangering the lives of our 
troops and while still meeting operational demands?
    Secretary Panetta. The administration announced that the U.S. 
forces surge recovery will be completed by October 2012. We are 
currently working with commanders in the field to determine additional 
force reductions after October 2012. Plans for further reductions are 
developing and not ready for final decision at this time. However, 
future reductions will be tied to conditions on the ground and the 
ability of the ANSF to provide security as they assume the lead for 
security. The safety of our forces and the success of our mission are 
the primary concerns in our planning efforts.
    General Dempsey. We announced completion of surge recovery by 
October 2012. We are currently working with commanders in the field to 
determine further troop reductions post October 2012. Further options 
are being developed and not ready for final decision. Future reductions 
will be tied to conditions on the ground and ANSF capability to provide 
security as they assume lead for security. The safety of our troops and 
success of our mission are the primary concern in our planning efforts.

                       ELECTRONIC MEDICAL RECORDS

    169. Senator Wicker. Secretary Panetta, I recently met with the 
senior leadership of the VA to discuss the ongoing integration of the 
VA database with the DOD database in order to reduce duplication of 
efforts. What current delays is DOD facing on the integration of 
electronic medical records with the VA and when do you anticipate this 
merger will be completed?
    Secretary Panetta. VA and DOD have agreed to an overarching 
strategy for the integration of health record data. VA and DOD are 
currently working on the specific implementation plan for execution of 
the strategy.

                 TRANSITION OF TROOPS TO CIVILIAN LIFE

    170. Senator Wicker. Secretary Panetta, you propose a decrease of 
forces by 22,000 in fiscal year 2013 and 102,000 in the fiscal year 
2013 FYDP. This reduction will take place amidst an American economy 
with a consistent 8 percent unemployment rate. As such, what 
initiatives do you plan to initiate in order to ensure a smooth 
transition for our servicemembers to civilian careers?
    Secretary Panetta. Realizing the state of the economy, the 
requirement to decrease the number of our forces, and the need to 
ensure a smooth transition of our military members into the civilian 
sector, DOD has launched several initiatives that will aid separating 
servicemembers. The initiatives include the:

         Veterans Employment Initiative Task Force: In August 
        2011, the President called for the creation of a Task Force led 
        by the DOD and VA, with the White House economic and domestic 
        policy teams and other agencies, including DOL, to develop 
        proposals to maximize the career readiness of all 
        servicemembers. In coordination with these partners, DOD's role 
        involves implementing and sustaining a comprehensive plan to 
        ensure all transitioning servicemembers have the support they 
        need and deserve when leaving the military. This includes 
        working with other agencies in developing a clear path to 
        civilian employment; admission into and success in an academic 
        or technical training program; and successful start-up of an 
        independent business entity or non-profit organization. This 
        effort is fully aligned with 10 U.S.C. Chapter 58 as amended by 
        the Veterans Opportunity to Work (VOW) to Hire Heroes Act of 
        2011 and is consistent with DOD's commitment to keeping faith 
        with all of our military members and their families, providing 
        them a comprehensive set of transition tools and support 
        mechanisms as they complete their service to our Nation.
         New Transition Service Delivery Model: DOD's long-term 
        aim for a new transition service delivery model is to embed the 
        servicemembers' preparation for transition throughout their 
        Military Life Cycle--from accession through separation, from 
        Active Duty service and reintegration, back into civilian life. 
        This will require thoughtful goal setting and planning to apply 
        military experience to longer-term career goals in the civilian 
        sector, whether after a single enlistment or a 20-plus-year 
        military career. Servicemembers and military leadership will be 
        engaged in mapping and refining development plans to achieve 
        post-military service goals--a significant culture change.

      POST-MILITARY COMMISSION--TRAINING COSTS AND SCHEDULE DELAYS

    171. Senator Wicker. Secretary Panetta, my staff has been working 
with your staff on determining cost and schedule delays for newly 
commissioned military officers. How much money is being spent across 
the Services on personnel between their post-commission and pre-
specialty training?
    Secretary Panetta. Assessment of a cost of handling the annual 
accession surge is not readily available and difficult to calculate 
because of the varied number of valid and meaningful assignments, the 
large number of military training pipelines, and the number of 
personnel within those pipelines who may be delayed due to various 
reasons (medical, weather, et cetera) rather than pipeline 
inefficiencies.
    The wait time a new officer experiences before starting training 
does not directly correlate to down time or poor use of the officers. 
Each of the Services works to maximize the utilization of officers 
awaiting training through meaningful assignments which provide the new 
officer with valuable professional experiences. The following methods 
are used across the Services to stagger input to training:

         Stagger ROTC accessions--law and policy allow the 
        Services to commission ROTC Cadets/Midshipmen and delay their 
        Active Duty start for up to 12 months and serve in a non-
        drilling status in their Services' Reserve component
         Temporarily assign to vacant positions during the time 
        they are awaiting training
         Temporarily assign to supplement recruiting programs
         Temporarily assign to augment staffs and operations to 
        cover work load increases or manning shortages (caused by 
        deployments)
         Assign to ultimate position awaiting training
         Permit the use of extended leave (up to 90 days)
         Complete administrative training courses required for 
        future assignment

    172. Senator Wicker. Secretary Panetta, additionally, what measures 
has DOD implemented to reduce the amount of time and costs associated 
with this down time?
    Secretary Panetta. About two-thirds of DOD's annual officer 
accessions graduate and are commissioned each year in May/June from the 
Service Academies and Reserve Officers Training Corps (ROTC) programs. 
This presents a huge personnel/training logistical challenge--
sequencing over 8,000 initially accessed officers into constrained 
specialty training pipelines without causing a training backlog or 
pool. That sequencing execution is not simple and requires many 
different methods to attempt to mitigate back-ups. However, the wait 
time a new officer experiences before starting training does not 
directly correlate to down time or poor use of the officer. The 
Services strive to maximize the utilization of officers awaiting 
training through meaningful assignments which provide the new officer 
with valuable professional experiences. The following methods are used 
across the Services to stagger input to training:

         Stagger ROTC accessions--law and policy allow the 
        Services to commission ROTC Cadets/Midshipmen and delay their 
        Active Duty start for up to 12 months and serve in a non-
        drilling status in their Services' Reserve component
         Temporarily assign to vacant positions during the time 
        they are awaiting training
         Temporarily assign to supplement recruiting programs
         Temporarily assign to augment staffs and operations to 
        cover work load increases or manning shortages (caused by 
        deployments)
         Assign to ultimate position awaiting training
         Permit the use of extended leave (up to 90 days)
         Complete administrative training courses required for 
        future assignment

    Training facilities are planned on steady state requirements. Over 
the last few years, increases in end strength have caused some 
unusually long backlogs in some training pipelines due to facility 
limitations. These backlogs are being alleviated and have been reduced 
by as much as 50 percent. The most common delay in specialty training 
is caused by weather. For example, in aviation training, an unusually 
wet season can produce a backlog that may take several months to clear. 
Each pipeline and schoolhouse is encouraged to minimize time-to-train, 
and each training commander is evaluated on his/her training 
efficiency.
                                 ______
                                 
             Questions Submitted by Senator Scott P. Brown

                             MEADS PROGRAM

    173. Senator Brown. Secretary Panetta, I understand USD(ATL) 
Kendall is currently engaged in discussions with his German 
counterparts to negotiate the termination of the MEADS program. When 
can I expect a report from DOD on the program's reduced scope?
    Secretary Panetta. On April 26, 2012, DOD provided to the 
congressional defense committees the plan required by section 235 of 
the NDAA for Fiscal Year 2012 that describes DOD's use of fiscal year 
2012 funds as the U.S. final financial contribution under the MEADS 
program.

    174. Senator Brown. Secretary Panetta, last year's NDAA fenced 25 
percent of funds for MEADS until such a report was delivered. Roughly, 
how much of the fiscal year 2012 funding has been spent to date?
    Secretary Panetta. Prior to delivery of the NDAA for Fiscal Year 
2012 section 235 report on MEADS, DOD provided $85 million to the NATO 
MEADS program office, which is less than 25 percent of the $390 million 
in fiscal year 2012 funding authorized and appropriated for MEADS. Upon 
delivery of the report to the congressional defense committees in late 
April, DOD provided an additional $250 million to the NATO MEADS 
program office.

                              GLOBAL HAWK

    175. Senator Brown. Secretary Panetta, with respect to DOD's 
decision to terminate the Global Hawk Block 30 program, what were the 
findings of sustainment cost comparisons between the U-2 and the Global 
Hawk?
    Secretary Panetta. When we initially invested in the Global Hawk 
Block 30 program, it held the promise of providing essentially the same 
capability as the U-2 manned aircraft for significantly less money to 
both buy and operate. As the program has matured, these cost savings 
have not materialized. In this 5-year budget, the cost of the Global 
Hawk program was projected to exceed the cost of the U-2, so we 
cancelled Global Hawk Block 30 and extended the U-2 program, avoiding 
the cost to complete the Global Hawk Block 30 program and saving 
roughly $2.5 billion over the 5 years.

    176. Senator Brown. Secretary Panetta, can the U-2 alone provide 
the ISR necessary in order to meet current and future operational 
requirements?
    Secretary Panetta. For high-altitude airborne ISR, the U-2 meets 
current and future operational multi-intelligence requirements.

         There are two different types of sensors on the U-2 
        and Global Hawk. When comparing sensors, the U-2 imagery sensor 
        suites are more capable than the Global Hawk sensors, whereas 
        the U-2 and Global Hawk Signals Intelligence sensors are 
        comparable.
         High-altitude ISR is only one part of an aggregate 
        capability of space, airborne, and ground systems. These 
        systems operate together to sufficiently meet contingency and 
        enduring ISR needs.
                                 ______
                                 
               Questions Submitted by Senator Rob Portman

                         GROUND COMBAT VEHICLES

    177. Senator Portman. General Dempsey, what shortcomings do you 
feel exist in our ground combat vehicle fleet to operate effectively on 
future battlefields?
    General Dempsey. Current legacy platforms are aging and were 
originally designed within the construct of linear, force-on-force 
battle against conventional threats. They do not possess a sufficient 
combination of force protection, survivability, payload, 
transportability, command and control (C2), and reliability, 
availability, and maintainability (RAM) required to operate in the full 
spectrum of potential conflicts against existing and emerging hybrid 
threats. Current add-on protection systems reduce payload, RAM, and 
mobility needed to meet future operational requirements and add-on C2, 
intelligence, and sensor systems exceed the size, weight, power, and 
cooling constraints of current vehicle platforms. Development programs 
such as ground combat vehicle, JLTV, and amphibious combat vehicle will 
address identified shortcomings.

    178. Senator Portman. General Dempsey, based upon the development 
of Command, Control, Communications, Computers, Intelligence, 
Surveillance and Reconnaissance (C4ISR) systems across the Joint Force, 
do our GCVs possess the necessary capabilities to integrate into these 
systems?
    General Dempsey. The current design of ground combat platforms did 
not envision the sophistication of today's C2 systems. Where feasible, 
these legacy ground combat systems have been integrated into the C4ISR 
network, but are often limited by size, weight, power, and cooling 
constraints. With regard to new systems in development, the Joint Staff 
has updated the Network Ready overarching Key Performance Parameters to 
ensure programs in development are designed to be interoperable and 
supportable with existing C2 programs and other programs under 
development.

    179. Senator Portman. General Dempsey, what risks are associated 
with the reduction of Heavy BCTs from the Army?
    General Dempsey. The Army is carefully managing the force structure 
reduction, ensuring that the resultant force is capable of meeting the 
anticipated future requirements. We have assessed the planned reduction 
in Army BCTs against the strategic guidance for DOD, and the programmed 
inventory of Heavy BCTs is sufficient to meet the demands of our 
strategy.

                        INDUSTRIAL BASE CONCERNS

    180. Senator Portman. General Dempsey, the reduced funding profiles 
in the President's proposed budget along with proposed program 
cancellations will put a strain on different parts of the defense 
industrial base across the spectrum, from the largest prime contractors 
all the way down to third-tier vendors. You stated in your Defense 
Budget Priorities and Choices Guidance, that in support of the 
President's strategic guidance tenet of reversibility, the budget 
sustains segments of the industrial base to regenerate capability, if 
necessary. What criteria did you use to determine which parts of the 
industrial base were sustained?
    General Dempsey. DOD used information from AT&L's S2T2 assessment 
project and insights from other internal and external sources to 
characterize industrial base niches according to their criticality 
(characteristics that make a product or service difficult to replace, 
if disrupted) and fragility (characteristics that make small deviations 
in the status quo likely to have substantial effects on the industrial 
niche).

    181. Senator Portman. General Dempsey, where do you see the 
vulnerabilities and what decisions did you make that were particularly 
influenced by industrial base concerns?
    General Dempsey. Key vulnerabilities that may hinder our global 
posture rebalance are: (1) a potential for atrophy and loss of key D&D 
capabilities in the aviation industrial base; (2) a potential lack of 
engineering and manufacturing skills necessary to support long-range 
missile development; (3) low volume production in our Nation's 
shipyards making it difficult for U.S. shipyards to match improvements 
in technology and productivity seen in international shipyards; and (4) 
disruption to the space industrial base related to solid rocket motors 
due to the retirement of the Space Shuttle.
    The space industrial base is a good example of DOD's efforts to 
mitigate industrial base concerns. Multiple DOD components participate 
in the Space Industrial Base Council Critical Technology Working Group 
(CTWG). The CTWG is an interagency organization tasked to assess 
structural issues in key domestic space industrial base sectors and 
coordinate mitigation activities in areas of shared concern across 
multiple government space agencies. This coherent, systematic effort is 
focused on ensuring continued and reliable access to critical cross-
cutting space technologies, including associated launch vehicles and 
support systems for the U.S. Government space community. DOD has also 
employed authorities of the Defense Production Act to co-finance 
capital expenditures to mitigate technical and business risks 
associated with niche government-unique capabilities, including certain 
batteries, solar cells and arrays, traveling wave tube amplifiers, 
focal plane arrays, and star trackers.

    182. Senator Portman. General Dempsey, how do you intend to monitor 
the health of the industrial base to ensure reversibility, if 
necessary, can be implemented in the future?
    General Dempsey. DOD has adopted an initiative focused on 
developing a more complete understanding of the complexity of the 
defense industrial base. This initiative, known as the S2T2 assessment, 
is a multi-pronged and comprehensive approach for monitoring the health 
of the defense industrial base. It seeks to identify areas of 
criticality (characteristics that make a product or service difficult 
to replace, if disrupted) and fragility (characteristics that make 
small deviations in the status quo likely to have substantial effects 
on the industrial niche) that might require DOD intervention and 
mitigation.

    183. Senator Portman. General Dempsey, as program decisions are 
made over the next 5 years, how will the impacts to the industrial base 
be taken into consideration and if so, how will the assessment be 
incorporated into the overall program decision?
    General Dempsey. DOD continuously considers industrial base impacts 
and adjusts accordingly. For example, prior to eliminating a defense 
contract bidder in our acquisition process, we evaluate the competitive 
marketplace and the consequences to the competitors. At Milestones B 
and C decisions, through the acquisition strategy, the program assesses 
the industrial base's ability to produce, support, and improve/upgrade 
products to meet the program's cost, schedule, and performance 
requirements--including all key sub-tier suppliers, as well as the 
prime contractor. When there is an indication that a necessary 
industrial capability is endangered, DOD will determine if it needs to 
take action to preserve that capability.

                  COMPETITION IN PROCUREMENT PRACTICES

    184. Senator Portman. General Dempsey, the value of competition in 
our procurement practices is critical to achieving the best-value for 
our Government and its taxpayers. It has been noted, to achieve the 
long-term savings of competition, occasionally near-term investments 
are required, something that may be an easy target of the budget axe 
with long-term implications. Your documents outline some strategies to 
overcome these challenges, like dissimilar competition, self-
competition, competition for profit, and other alternatives to classic 
head-to-head, and they also outline some shortcomings in 2011 from 
achieving the goals: delays from the contractors; the award of several 
major weapon system programs; and delays and greater fidelity in data. 
Despite these issues in 2011, we had a high in 2008 of 64 percent of 
contracts competitively awarded, with a multi-year trend down to 58.5 
percent in 2011. You have some modest goals of increasing this number 
by single digit percentages in the coming years. What are the causes of 
this downward trend and how do you plan to keep programs to their 
competition strategies in the face of budget challenges?
    General Dempsey. Much of the drop in the overall competition rate 
is due to an increase in non-competitive contract actions involving 
requirements with only one responsible source for major systems, such 
as the LPD-26, the DDG-1000 ships, the Virginia-class submarine, and 
several aircraft programs such as the F-22, C-17, C5, JSF, and P-8. 
While these contracts were competitively awarded initially, the 
contract actions issued in 2011 were follow-on efforts that were 
carefully reviewed and determined to be non-competitive, with approved 
sole-source justifications. Despite the drop in the overall competition 
rate, there were several high-dollar major-system contracts 
competitively awarded in 2011 such as the Littoral Combat Ships and the 
DDG 114-116 Arleigh Burke-class destroyers.
    DOD is placing renewed emphasis on promoting real competition and 
improving competition rates under the Better Buying Power Initiative. 
In order to encourage competition at the prime and subcontract level, a 
policy was recently put in place that requires program managers to 
present a competition strategy at each program milestone. Senior 
leadership in AT&L reviews each of these strategies for Major Defense 
Acquisition Programs and requires the Component Acquisition Executives 
to do the same for programs under their cognizance. These initiatives 
will facilitate DOD's ability to meet the goals established for the 
upcoming years.
                                 ______
                                 
               Questions Submitted by Senator John Cornyn

                             SEQUESTRATION

    185. Senator Cornyn. Secretary Panetta and General Dempsey, 
according to recent reports, DOD Comptroller Robert Hale has told 
reporters that DOD is not planning for sequestration, explaining, ``I 
know nobody believes us, but I'd know if we were.'' According to these 
reports, this is due to the fact that OMB has not told DOD to do so. 
Can you confirm that DOD has been so directed by the administration?
    Secretary Panetta. Consistent with direction from OMB, DOD did not 
reflect the effects of the sequestration in its fiscal year 2013 budget 
submission. The President's budget proposes over $4 trillion in 
balanced deficit reduction, which Congress could enact and avoid 
sequestration. DOD is not currently planning for sequestration. OMB has 
not directed agencies, including DOD, to initiate any plans for 
sequestration.
    General Dempsey. Per OMB's direction last fall, this budget 
complies with the BCA caps established by Congress. We will continue to 
work with OMB and Congress to properly resource the capability to 
defend our Nation and our allies.

                     REVERSIBILITY OF DEFENSE CUTS

    186. Senator Cornyn. Secretary Panetta and General Dempsey, in your 
strategic guidance announcement last month, both of you highlighted the 
need to build in reversibility as these significant cuts to our 
Nation's defense budget are made. The strategic guidance document also 
states, ``the concept of reversibility--including the vectors on which 
we place our industrial base, our people, our Active/Reserve components 
balance, our posture, and our partnership emphasis--is a key part of 
our decision calculus.'' Reversibility sounds like a euphemism for 
``we're not totally sure that these cuts represent sound policy.'' Is 
it realistic to think that, within a reasonable time frame, we could 
reverse decisions as monumental as downsizing our ground forces by 
nearly 100,000 troops (close to pre-September 11 levels), delaying or 
cancelling major acquisition programs, and retiring significant numbers 
of current aircraft and ships?
    Secretary Panetta. Reversibility represents a recognition that the 
security environment is continually changing. DOD will be responsible 
for a range of missions and activities across the globe of varying 
scope, duration, and strategic priority. This will place a premium on 
flexible and adaptable forces that can respond quickly and effectively 
to a variety of contingencies and potential adversaries. The Joint 
Force of 2020 will be such a force and I am confident that we will have 
the ability to mobilize and regenerate forces and capability as needed.
    General Dempsey. Reversibility is intended to deal with evolutions 
in the strategic environment. Implementing reversibility will certainly 
require vigilance to provide sufficient time to adapt to changes. By 
considering the need for flexibility and the mechanisms to execute 
future adjustments, we will be better prepared to do what is necessary.
    DOD is developing an analytical framework in support of the concept 
of reversibility. We are beginning to apply this framework to 
investment decisions now and in the future.

                     DOWNSIZING OF U.S. LAND FORCES

    187. Senator Cornyn. Secretary Panetta and General Dempsey, 
according to the Defense Strategic Guidance document, the new strategy 
must ``protect key investments in the technologically advanced 
capabilities most needed for the future . . . [and] no longer size 
Active Forces to conduct large and protracted stability operations 
while retaining the expertise of a decade of war.'' As a result, you 
have proposed eliminating about 100,000 soldiers and marines from the 
force. Although weapons development can usually be accelerated, there 
is no real way to accelerate the development of quality military 
leaders during times of crisis. Our force has such leaders in it today, 
including many thousands of NCOs who learned the hard lessons of Iraq 
and Afghanistan. But once they leave the force, in most cases they 
cannot be replaced. Following every war since World War II, the United 
States has significantly reduced Army and Marine Corps levels while 
focusing on developing air and sea forces. In recent decades, when 
confronted with the next crisis--including Korea, Vietnam, and the 
Persian Gulf--we have been forced to try to regenerate sizeable land 
forces. How do you plan to ensure that we retain the expertise and 
experience garnered by our NCOs and other leaders over the past decade, 
preserving it for the next conflict, while making such drastic 
reductions to our Army and Marine Corps?
    Secretary Panetta.
Army
    The new Defense Strategic Guidance released in January 2012 notes 
that since we cannot predict how the strategic environment will evolve 
with absolute certainty, we need to manage the force in ways that 
protect its ability to regenerate capabilities that may be needed to 
meet future, unforeseen demands. The Strategy also notes that we need 
to retain intellectual capital and rank structure that could be called 
up to expand key elements of the force. The Army is examining 
strategies, policies, and investments that would posture the Army to be 
able to slow and reverse a planned drawdown of Army end strength and 
formations, and rapidly expand over the course of a number of years in 
response to a future crisis. To retain intellectual capital and rank 
structure, the Army is identifying billets in its Generating Force that 
can support such expansion.
Marine Corps
    The planned reduction in the end strength of the Marine Corps 
results in an increase in the percentage of staff noncommissioned 
officers (SNCO), NCOs, and field grade officers. Additionally, we did 
not reduce the size of our Reserve Force; this will provide an 
opportunity for many to continue to serve and remain prepared for the 
future.
    These NCOs, SNCOs, field grade officers, and Reserve marines are 
exactly the populations that have the expertise and experience garnered 
from the last decade. Their expertise and professionalism will ensure 
the next generation will receive the best training.
    Perhaps as important as retaining the leaders is the plan to reduce 
the force in a deliberate measured way that remains committed to 
today's warriors. Maintaining the trust and confidence of today's 
marines will go a long way to retain the confidence that is held by the 
average American citizen. If and when the time comes for growth--
America's sons, daughters, mothers, and fathers will be eager to be 
associated with the U.S. Marine Corps.
    General Dempsey. Our NCO corps provides a great value to our Joint 
Force and in winning our Nation's wars. On the heels of Afghanistan and 
Iraq, reshaping our personnel across the Services will impact our 
officers and junior enlisted community as well as our NCOs. Over the 
next 5 years, as the Services implement their separation and retirement 
processes to meet new authorized end strengths, we will ensure that we 
maintain levels of experience and capacity in both our Active component 
and operational reserve.
    The Secretary made it perfectly clear during the budget rollout 
strategy that the Services need to ensure mechanisms are in place to 
retain our mid-grade NCOs and officers, so our pool of experience 
remains balanced, relevant, and ready. My promise to the force in 
keeping the faith is to ensure that our men and women are properly 
trained and educated to meet any emerging requirements as may be 
directed from our Commander in Chief.

    188. Senator Cornyn. Secretary Panetta and General Dempsey, given 
that we are still fighting a land war in Afghanistan, coupled with our 
historical inability to predict the next conflict, on what do you base 
the conclusion that we will rely more heavily on air and sea 
capabilities in the future?
    Secretary Panetta. All Services will play integral roles in 
addressing future U.S. security challenges across all domains.
    The new Defense Strategic Guidance noted that, ``given that we 
cannot predict how the strategic environment will evolve with absolute 
certainty, we will maintain a broad portfolio of military capabilities 
that, in the aggregate, offer versatility across a wide range of 
missions.'' DOD's decision not to divest in the capability to conduct 
any mission reflects this recognition that the future security 
environment is uncertain. Given this unpredictability, the new Defense 
Strategic Guidance commits to managing the force in ways that protect 
its ability to regenerate capabilities that might be needed to meet 
future, unforeseen demands.
    The abilities of our ground forces to ensure access, reassure 
allies, deter adversaries, build security capacity and interoperability 
with partners, and ultimately, respond to and succeed in crises and 
contingencies, are indispensable and distinguishing features of U.S. 
military capabilities. The nature of the future strategic environment 
will require even greater flexibility and agility in projecting power 
to accomplish the Nation's security objectives. As the U.S. Armed 
Forces increase their operational focus on enhanced presence, power 
projection, freedom of action, and deterrence in the Pacific--while 
placing a premium on U.S. and allied military presence and support of 
partner nations in the Middle East--air and sea forces offer distinct 
strengths in accomplishing these global joint missions, alongside a 
range of mutually-reinforcing U.S. ground forces' activities in these 
regions. In other regions also, the complementary efforts of all the 
Services across land, air, and sea, and increasingly, space and cyber 
domains, are necessary to protect U.S. and allied security interests.
    General Dempsey. As we draw down from the operation in Afghanistan, 
and reduce our budget to help protect our Nation's economy, we have 
assessed risks in keeping our Homeland safe and in our ability to 
sustain leadership abroad. After weighing numerous options, an area 
where we accept additional risk is in the size of our land forces--we 
will not be sized to conduct long-term stability operations within the 
Active component.
    Any campaign we are likely to wage in the future will be fully 
joint. After a decade of relying heavily on our ground forces, we must 
ensure that we maintain our decisive edge in the air and maritime 
domains against future challenges. Many of these sea and air 
capabilities you speak of are not combat platforms; they are key 
enablers and essential to power projection of the entire Joint Force, 
to include ground forces--tankers, high-speed vessels, and ISR 
platforms. Many of the air and sea combat systems that are being 
fielded will enable cross-domain strike operations or in the case of 
BMD, joint protection. In an unpredictable strategic environment, the 
ability to project power anywhere on the globe is critical to rapidly 
and effectively responding to emerging threats. Robust air and naval 
capabilities are, and will continue to be, essential to maintaining 
that ability.

                     ASIA-PACIFIC REGION AND CHINA

    189. Senator Cornyn. Secretary Panetta and General Dempsey, last 
month you announced the U.S. military would pivot its focus to the 
Asia-Pacific region. Yet, the significance of this announcement seems 
to have been undermined by the cuts that were announced simultaneously. 
Although the President has said that defense cuts ``will not come at 
the expense of the Asia-Pacific,'' this promise seems hollow. These 
deep and broad defense cuts will impact every aspect of our Nation's 
defense capability and quantitatively reduce the overall capabilities 
and forces that are available in the PACOM AOR. At the same time our 
defense budget is bearing the brunt of our Nation's fiscal woes, China 
is investing substantial funds in the modernization and build-up of its 
military forces. According to DOD, China's official defense budget has 
grown by an average of 12.1 percent each year since 2000. Analysts at 
Jane's Defence have reported they expect China's defense spending to 
accelerate substantially in the next 3 years, at a combined annual rate 
of 18.7 percent per year. At the same time, Secretary Panetta's 
prepared testimony notes that, ``when reduced war-related funding 
requirements are included, we expect total U.S. defense spending to 
drop by more than 20 percent over the next few years . . . '' What is 
your assessment of the risk the United States assumes by making such 
drastic cuts to our defense spending while China grows its defense 
budget and continues its military modernization efforts at an 
unprecedented rate?
    Secretary Panetta. The United States is a resident power in the 
Asia-Pacific region with enduring interests in the region. We will 
maintain, and in some areas enhance, our military presence in the Asia-
Pacific region by making our posture more geographically distributed, 
operationally resilient, and politically sustainable. The United States 
will retain the capacity to deter conflict and, if necessary, prevail 
in any contingency. We are investing in those capabilities most 
relevant to preserving the security, sovereignty, and freedom of the 
United States and that of our allies and partners.
    Despite reductions in the U.S. defense budget, we are improving 
capabilities that maintain our military's technological edge and 
freedom of action, in the Asia-Pacific region and globally. We are 
increasing investments in both defensive and offensive cyber 
capabilities. In terms of power projection, we increased or protected 
investment in capabilities such as the development of a new bomber, 
cruise missile capacity of Virginia-class submarines, a conventional 
prompt strike option from submarines, and electronic warfare 
capabilities. We have sustained Army and Marine Corps force structure 
in the Pacific, and we are increasing our rotational presence--for 
example, through the deployment of marines to Darwin, Australia.
    At the whole-of-government level, reducing risk to U.S. interests 
is a function of all elements of national power. As stated in the new 
Defense Strategic Guidance, we will emphasize our existing alliances 
and expand our networks of cooperation with emerging partners 
throughout the Asia-Pacific region to ensure collective capability and 
capacity for securing common interests.
    General Dempsey. Given our current economic and fiscal situation, 
reduced defense budgets are and will be a fact of life not just for 
DOD, but for the U.S. Government as a whole. The defense budget will of 
necessity be reduced and everyone will be asked to do as much or more 
with fewer available resources. Our military forces are not exempt from 
this reality. However, we should also remain aware that managing risk 
is not simply a matter of how much money we spend on defense.
    Reducing risk to U.S. interests is a function of all elements of 
national power, to include our diplomatic and cooperative efforts. Our 
relationships with Asian allies and key partners are critical to the 
future stability and growth of the region. We will emphasize our 
existing alliances, which provide a vital foundation for Asia-Pacific 
security. We will also expand our networks of cooperation with emerging 
partners throughout the Asia-Pacific to ensure collective capability 
and capacity for securing common interests. It is primarily through 
these efforts that we can best ensure long-term stability in the Asia-
Pacific region and protect U.S. national interests.
    However, we are also continuing to make necessary capability 
investments and adjustments to our force posture in the Asia-Pacific 
region in order to preserve our ability to project power in denied 
environments should the need arise. Additionally, we are also 
protecting other key components of the Joint Force, including Special 
Operations Forces; unmanned air systems; sea-based unmanned ISR 
systems; advanced ISR with increased capabilities; and all three legs 
of our nuclear deterrent. Our focus is to ensure the we are fully 
prepared to meet any threats to the security of the United States, its 
citizens, allies, and partners.

    190. Senator Cornyn. Secretary Panetta and General Dempsey, 
according to DOD's 2011 report, ``Military and Security Developments 
Involving the People's Republic of China,'' China's long-term, 
comprehensive military modernization improves China's capacity to 
conduct high-intensity regional military operations, including anti-
access and area denial operations. What is your assessment of the 
intent behind China's military modernization, both in the region and 
globally?
    Secretary Panetta. (Deleted.]
    General Dempsey. [Deleted.]

    191. Senator Cornyn. Secretary Panetta and General Dempsey, in 
recent years, our Nation has experienced an increasing volley of cyber 
attacks and cyber theft emanating from China, and this is of great 
concern to many Senators. According to an October 2011 report by the 
Office of the National Counterintelligence Executive, ``Chinese actors 
are the world's most active and persistent perpetrators of economic 
espionage.'' The report goes on to highlight that ``computer networks 
of a broad array of U.S. Government agencies . . . were targeted by 
cyber espionage; much of this activity appears to have originated in 
China.'' What is your assessment of this growing threat?
    Secretary Panetta. I agree with the findings of the Biennial Report 
to Congress on Foreign Economic Collection and Industrial Espionage, 
2009-2010: ``Foreign Spies Stealing U.S. Economic Secrets in 
Cyberspace,'' prepared by the Office of National Counterintelligence 
Executive. The threats to our Nation in cyberspace continue to grow at 
an alarming rate. In particular, the extensive cyber-enabled 
exploitation of U.S. intellectual property and trade secrets is a 
direct threat to vital U.S. economic and national security interests, 
including DOD's ability to field the most technologically advanced 
force. DOD is working closely with its interagency partners, including 
the Departments of State, Homeland Security, Justice, and Commerce, to 
facilitate a coordinated approach to cyber threats, not only from 
China, but from others actors as well. We must develop options to 
respond to and impose costs on cyber threat actors to deter future 
exploitation and attack. The President stated in his International 
Strategy for Cyberspace that the United States reserves the right to 
use all necessary means--diplomatic, informational, military, and 
economic--as appropriate and consistent with applicable international 
law--in order to defend our Nation, our allies, our partners, and our 
interests against hostile acts in cyberspace.
    General Dempsey. The number of cyber intrusions appearing to 
originate in China is extensive, and U.S. businesses and government 
agencies will continue to see this type of activity in the coming 
years. China is likely using its computer network exploitation 
capability to support intelligence collection against the U.S. 
diplomatic, economic, and defense industrial base sectors that support 
U.S. national defense programs. The targeted information could 
potentially be used to benefit China's defense industry, high 
technology industries, foreign policy decisionmakers, and military 
planners, who likely are building a picture of U.S. defense networks, 
logistics, and related military capabilities that could be exploited 
during a crisis. Observed intrusions have varied in sophistication and 
Chinese cyber actors appear to have the capability to adapt their 
methods depending on the cyber defenses of the target.

    192. Senator Cornyn. Secretary Panetta and General Dempsey, do you 
agree that such aggression is unacceptable and does serious damage to 
U.S.-China relations?
    Secretary Panetta. I agree with the findings of the Biennial Report 
to Congress on Foreign Economic Collection and Industrial Espionage, 
2009-2010: ``Foreign Spies Stealing U.S. Economic Secrets in 
Cyberspace,'' prepared by the Office of National Counterintelligence 
Executive. The threats to our Nation in cyberspace continue to grow at 
an alarming rate. In particular, the extensive cyber-enabled 
exploitation of U.S. intellectual property and trade secrets is a 
direct threat to vital U.S. economic and national security interests, 
including DOD's ability to field the most technologically advanced 
force. DOD is working closely with its interagency partners including 
the Departments of State, Homeland Security, Justice, and Commerce, to 
facilitate a coordinated approach to cyber threats, not only from 
China, but from others actors as well. We must develop options to 
respond to and impose costs on cyber threat actors to deter future 
exploitation and attack. The President stated in his International 
Strategy for Cyberspace that the United States reserves the right to 
use all necessary means--diplomatic, informational, military, and 
economic--as appropriate and consistent with applicable international 
law--in order to defend our Nation, our allies, our partners, and our 
interests against hostile acts in cyberspace.
    General Dempsey. As cyber events carry the potential to affect 
civilian infrastructure and military readiness, it is important that we 
communicate our concerns regarding the negative impacts of ongoing 
cyber security risks. We are working to engage China on this issue to 
strongly reinforce the potential benefit to our overall relationship by 
improving efforts to curtail cyber attacks emanating from the mainland.

                            ISRAEL AND IRAN

    193. Senator Cornyn. Secretary Panetta, in terms of meeting the 
Iran threat, the United States has certain military capabilities that 
Israel and other allies do not. How are we working with Israel to 
narrow the gaps between our respective capabilities and helping to 
ensure that Israel is able to defend herself against potential threats 
from Iran?
    Secretary Panetta. The U.S.-Israel defense relationship is strong, 
and we are working with Israel more closely than ever before in areas 
such as missile defense technology, counterterrorism, and across a 
range of military exercises--to ensure that Israel is always secure. We 
are engaged in a regular dialogue with senior Israeli officials to 
understand their security requirements and maintain Israel's 
qualitative military edge. A critical element of this is providing 
Israel with the most advanced technology in the region, including the 
fifth generation JSF. Through a combination of providing Israel 
technology like this, and our extensive work with Israel on missile 
defense, we are ensuring that Israel can defend itself.

                            FUTURE OF EGYPT

    194. Senator Cornyn. Secretary Panetta and General Dempsey, just 
over a year ago, the Egyptian people took to the street and overthrew 
President Hosni Mubarak. Today, it appears that Islamist factions are 
poised to take control of the Egyptian Government and the country's 
future. What is your assessment of the Muslim Brotherhood?
    Secretary Panetta. (Deleted.]
    General Dempsey. (Deleted.]

    195. Senator Cornyn. Secretary Panetta and General Dempsey, what 
impact will a Brotherhood-led government have on the longstanding 
relationship between the U.S. military and the Egyptian military?
    Secretary Panetta. DOD and the Egyptian military have been close 
partners for many decades, and the United States is committed to a 
robust bilateral relationship with Egypt today and following the July 
transition to civilian rule. Through annual military exchanges, foreign 
military assistance, combined exercises, and other engagement efforts, 
we look forward to maintaining and strengthening this partnership for 
decades to come. Regardless of political changes, DOD believes that the 
fundamentals of this strategic relationship remain strong.
    The United States expects that Egypt will maintain its 
international security commitments, including its treaty obligations 
with Israel. The Muslim Brotherhood has provided public assurances of 
its commitment to the international obligations undertaken by the 
Government of Egypt.
    General Dempsey. This is a new Egypt and we will need to build new 
partnerships, even as we sustain the old ones. We intend to engage in a 
comprehensive review of how our assistance can best meet the needs of 
the Egyptian people and advance our shared interests and aspirations. 
This is best accomplished through broad-based consultations with all of 
the institutions of the new government. The United States and Egyptian 
militaries have been strong partners, and we expect that partnership to 
continue.

    196. Senator Cornyn. Secretary Panetta and General Dempsey, how are 
we strategically adapting to the new role the military is taking within 
the Egyptian Government?
    Secretary Panetta. The United States is committed to a robust 
bilateral relationship with Egypt today and following the July 2012 
transition to civilian rule.
    We will take steps both to strengthen old partnerships and build 
new ones. DOD will engage in close dialogue with Egyptian military and 
civilian officials on the wide range of security and defense issues of 
mutual interest to our governments.
    Events of the Arab Awakening have clearly demonstrated that 
military-to-military partnerships are critical for protecting enduring 
U.S. security interests, and also for providing a channel through which 
U.S. defense officials can discuss the importance of reform. To this 
end, we will use annual military exchanges, foreign military 
assistance, combined exercises, and other engagement efforts, to 
strengthen our partnership with the Egyptian military and promote 
reform for years to come.
    General Dempsey. The strength of our military relationship with 
Egypt is a source of influence. We saw the importance of the 
relationship in the early days of the revolution during which the 
United States urged Egyptians to refrain from violence. The United 
States now supports the Supreme Council of the Armed Forces and the new 
parliament in the successful completion of the transition. We need a 
strong, stable Egypt as our partner. From here, the only path to 
sustainable stability in Egypt is a successful democratic transition.
    Egypt has made important progress toward democracy over the past 12 
months. For the first time in 60 years, Egyptians have elected a 
representative parliament, which now exercises legislative authority, 
and presidential elections are scheduled for May. These are important 
milestones in Egypt's transition to civilian government. We look to 
Egypt for everything from maintaining its peace treaty with Israel, to 
joint counterterrorism and anti-weapons smuggling efforts, to 
preferential access for U.S. ships transiting the Suez Canal. The 
Egyptian military's role in Egypt will continue to change. As that 
happens, we want to ensure that we protect our longstanding 
relationships and build new ones.

    197. Senator Cornyn. Secretary Panetta and General Dempsey, there 
has been a great deal of discussion in Congress that military 
assistance to Egypt should be cut because of the Egyptian Government's 
actions against American pro-democracy nongovernmental organizations 
(NGO). In your opinion, should this be a factor when determining future 
levels of aid to Egypt?
    Secretary Panetta. The administration remains concerned about the 
ongoing trial of NGO employees, as well as the ability of civil society 
organizations to work in Egypt. Both publicly and in private 
conversations with Egyptian officials, General Dempsey and I have 
discussed the importance of allowing civil society organizations to 
operate freely in Egypt.
    Our strategic relationship with Egypt remains one of the most 
important in the region. U.S. security assistance to Egypt is an 
important demonstration of our commitment to supporting Egypt at this 
moment of historic challenges and remains a cornerstone of our security 
cooperation and partnership on regional security issues.
    Foreign Military Financing (FMF) plays a critical role in efforts 
to professionalize the Egyptian military, so that the armed forces can 
better serve the interests of the Egyptian people and jointly advance 
our mutual security priorities. Notably, the decision by the Egyptian 
military in January 2011 to avoid firing on peaceful demonstrators and 
to side with protesters demanding the resignation of former president 
Hosni Mubarak in February 2011, was a vital step in allowing Egypt's 
democratic transition to take place.
    U.S. bilateral assistance to Egypt is guided by the need to 
safeguard our strategic interests in maintaining a critically important 
bilateral partnership with Egypt and in supporting the success of a 
democratic transition for Egypt that meets the aspirations of all 
Egyptians.
    General Dempsey. First and foremost, our security partnership with 
Egypt, reinforced by FMF, remains critical to our interests across the 
region. We look to Egypt for everything from maintaining its peace 
treaty with Israel to joint counterterrorism and anti-weapons smuggling 
efforts, to preferential access for U.S. ships transiting the Suez 
Canal. Disrupting FMF right now could put these critical interests at 
risk. We also have a powerful interest in a successful democratic 
transition. We need a strong, stable Egypt as our partner. From here, 
the only path to sustainable stability in Egypt is a successful 
democratic transition.

    198. Senator Cornyn. Secretary Panetta and General Dempsey, what is 
the strategic thinking behind the continued provision of U.S. military 
assistance to Egypt?
    Secretary Panetta. Our strategic relationship with Egypt is one of 
the most important in the region. U.S. military assistance to Egypt 
remains an important demonstration of our commitment to supporting 
Egypt at this moment of historic challenges, and reflects the vital 
U.S. interest in continued security cooperation with Egypt, whose peace 
with Israel is a cornerstone of regional stability.
    U.S. bilateral assistance to Egypt is guided by the need to 
safeguard our strategic interests in maintaining this important 
bilateral partnership and in supporting the success of a democratic 
transition for Egypt that meets the aspirations of all Egyptians.
    General Dempsey. Continued U.S. military assistance allows us to 
protect our core national security interests in Egypt. For over 30 
years, Egypt's peace treaty with Israel has been a cornerstone of peace 
and stability as well as security along the Egyptian-Israeli border. 
FMF supports our critical partnership with Egypt on counterterrorism 
and their efforts to stop arms smuggling. Lack of success in either 
mission has the potential to destabilize the region. Issuing this 
waiver allows Egypt's military to maintain its readiness and 
interoperability with U.S. forces, which is essential for effective 
cooperation on regional threats. The recent FMF waiver supports 
America's force posture across the region which relies heavily on 
overflight rights and priority access to the Suez Canal.

                            MILITARY VOTING

    199. Senator Cornyn. Secretary Panetta, the Military and Overseas 
Voter Empowerment (MOVE) Act, enacted by Congress as part of the NDAA 
for Fiscal Year 2010, requires DOD to create a motor voter-style voting 
assistance office on every military installation, thereby providing 
military servicemembers and their families with critical voting 
assistance, regardless of how far they might be from their hometowns. 
As the 2012 elections fast approach, I am concerned that the Military 
Services have dragged their feet on fully implementing this 
requirement. This provision was passed in order to provide 
servicemembers the same level of assistance that civilians receive 
under the Federal motor voter law--the National Voter Registration 
Act--I know you agree that their service and sacrifice demand no less. 
Why has DOD failed, to date, to fully comply with this requirement?
    Secretary Panetta. The first Installation Voting Assistance (IVA) 
Office was established in November 2009 and the final IVA Office was 
established in August 2011. Before finalization of the IVA Office 
regulations, DOD aggressively moved to support the Services with 
training programs and assistance visits. Draft copies of these 
regulations were provided to the Services throughout that regulatory 
coordination process both for the Services' comment and for their IVA 
Office establishment preparation.
    DOD also promptly moved to support the Services before finalization 
of the regulations with IVA Office-in-a-Box training programs, visiting 
36 military concentration areas in August and September 2010, providing 
complete IVA Office training packages, templates, and draft documents, 
copies of which will be provided to this committee and your office. DOD 
also initiated its biennial Voting Assistance Office Workshops this 
spring, with a special training module for IVA Office personnel. During 
those workshop visits, DOD personnel are also conducting assist-and-
assess visits at local IVA Offices to determine compliance with 
departmental regulations and Federal laws, and to provide direct 
assistance for IVA Office personnel. Forty assist-and-assess visits 
have already been conducted this year, and approximately four more are 
conducted every week. A list of those IVA Offices already visited and 
to be visited will be provided to this committee and to your office. 
Additionally, the Services are reporting quarterly on their IVA Office 
utilization, those reports are posted on the FVAP.gov website, and 
copies of those reports will be provided to this committee and to your 
office.

    200. Senator Cornyn. Secretary Panetta, are you willing to get 
personally involved to ensure the Military Services comply with the 
MOVE Act and the motor voter law on every military installation, as 
required?
    Secretary Panetta. Yes, and I share your desire to provide our 
military voters timely and effective voting assistance. I welcome the 
opportunity to work with you and this Committee to assess whether to 
allow the Services to execute this voting assistance at the unit vice 
installation level, increase voter assistance utilization, reducing 
costs to the Services, and providing voters a seamless unit level 
voting assistance process.

                      FINANCIAL MANAGEMENT REFORM

    201. Senator Cornyn. Secretary Panetta, you have shown an 
unprecedented commitment to making DOD audit-ready. It is my hope that 
future Secretaries of Defense will share that impressive level of 
commitment on this important issue. DOD was previously required by law 
to be audit-ready for the first time in 2017. Last year, you raised the 
bar and stated a more ambitious goal for DOD to achieve audit readiness 
of the Statement of Budgetary Resources for general funds by the end of 
2014. What progress has been made to date in achieving this goal?
    Secretary Panetta. In October 2011, I directed DOD to accelerate 
achievement of several goals in DOD's Financial Improvement and Audit 
Readiness (FIAR) Plan and place greater emphasis on the overall effort. 
In response to my October directive, each of the Services and Defense 
Agencies has reviewed their FIAR Plans and adjusted them to speed 
progress. They are now hard at work implementing their plans to achieve 
the accelerated SBR audit readiness date.
    The Service Secretary and Chief of Staff for each Military Service 
have committed to achieving specific near-term goals in support of 
their plans for achieving auditable financial statements. I have 
reviewed these commitments and plans and am holding civilian and 
military senior leaders from across DOD accountable for progress 
against those plans. Senior executives, both inside and outside the 
financial management community, now have audit goals in their 
individual performance plans and we are working to include them in 
General and Flag Officer performance plans as well. Actual performance 
against these plans will be assessed each year during annual 
performance appraisal cycles. This will ensure those under their 
leadership are getting the message that better control over resources 
has a big effect on mission success, and everyone has a part to play.
    I'd offer some recent accomplishments as examples of both our 
commitment and progress:

         DISA achieved a clean opinion on its $6.6 billion 
        working capital fund operations for fiscal year 2011 and it is 
        moving forward with an audit of its fiscal year 2012 general 
        fund business.
         Contract Resource Management of the TRICARE Management 
        Activity received an unqualified opinion on its fiscal year 
        2011 financial statements.
         The Medicare-Eligible Retiree Health Care Fund 
        received a qualified opinion on its fiscal year 2011 financial 
        statement.
         In November 2011, an examination of five business 
        processes at the initial General Fund Enterprise Business 
        Systems Wave 1 sites rendered a qualified opinion, establishing 
        a benchmark for expanding the Army's audit readiness program.
         In November 2011, a commercial audit examination 
        validated that the Air Force could successfully balance its 
        Treasury funds at the transaction level.
         In January 2012, an examination validated the Navy's 
        existence and completeness audit readiness assertion for ships 
        and submarines, Trident missiles, and satellites.

    Leadership commitment from the highest level is setting the tone 
and priority for audit readiness. Auditability is a goal that every 
commander, every manager, and every functional specialist must 
understand and embrace to improve efficiency and accountability within 
DOD.
                                 ______
                                 
              Questions Submitted by Senator David Vitter

                        BARKSDALE AIR FORCE BASE

    202. Senator Vitter. General Dempsey, in your statement submitted 
today, you say, ``We must retrain our personnel on skills used less 
often over the last decade.'' I support this, and I also believe that 
in line with this we must make cuts that do not negatively affect the 
joint effort of our overall training system that has led the United 
States to become the highly effective elite fighting force it is today. 
Which brings me to the Air Force announcement to cut all 24 A-10s from 
Barksdale AFB (21 eliminated, 3 transferred) according to Air Force 
documents. It is my understanding that the Air Force plans to largely 
reduce the total number of A-10s. I believe this hugely effects 
fundamental joint operations. These aircraft were specifically moved to 
Barksdale AFB to support joint training at the Joint Readiness Training 
Center (JRTC) at Fort Polk. My concern is that the A-10s slated to be 
cut entirely from Barksdale AFB are used to support the joint training 
mission of the Army in Fort Polk. Have the joint operational training 
aspects been considered in this decision?
    General Dempsey. Yes, the Air Force continues to source requests 
for close air support (CAS) training at Fort Polk, tasking specific 
units to support various exercises, with the 47th Fighter Squadron 
fulfilling the requirement once over the last 3 fiscal years. The Air 
Force has coordinated with the Army and will continue to provide CAS 
capability as required by our Joint Partners at the JRTC.
    The new Defense Strategic Guidance states that U.S. forces will no 
longer be sized to conduct large-scale, prolonged stability operations. 
Analysis based on scenarios consistent with the Strategic Guidance 
resulted in a reduced requirement for tactical combat aircraft overall 
and a greater utility for multi-role fighters to provide the most 
flexible capability within each scenario. As a result, A-10 retirements 
were selected in greater numbers than other combat aircraft and the Air 
Force made the difficult choice to retire 5 A-10 squadrons comprised of 
102 A-10 aircraft. Previous reductions in fighter force structure 
shifted the Total Force ratio toward Reserve component forces, and Air 
Force decisions in the fiscal year 2013 President's budget request 
rebalanced that ratio to create a more sustainable Total Force 
structure over the long term.
    To meet this end, our Reserve component used the following four 
Capstone principles: (1) ensure aircraft reductions do not negatively 
impact operational support to combatant commands; (2) ensure force 
structure movements do not create any new Air Force bills; (3) ensure 
risk is minimized by optimizing crew ratios to exploit expected 
increases in mission capability rates; and (4) consider locations that 
continue to have an Air Force mission due to the presence of another 
Air Force component. Thus, the Air Force opted to divest A-10s at 
Barksdale versus the only other alternative; Whiteman AFB. The Air 
Force Reserve maintains a B-52 training wing and classic association 
with operational B-52s at Barksdale, and can therefore absorb some of 
the A-10 personnel into the B-52 wing. Additionally, since the Air 
Force Reserve can absorb personnel into the B-52 mission, it preserves 
the potential to migrate them back should the Air Force decide it needs 
additional A-10 Formal Training Unit support. At Whiteman AFB, the Air 
Force Reserves' only presence is an A-10 wing and if the wing were to 
be divested, the personnel assigned to this unit would have limited 
possibilities to continue their service.

    203. Senator Vitter. General Dempsey, additionally, I would like to 
know if you are aware of any consultation between the Army and the Air 
Force regarding the removal of this mission from Fort Polk? If so, I 
would like to see the cost savings to DOD of bringing A-10s into 
Louisiana for training when the nearest planes needed for Army training 
would now be located in Georgia, Florida, Idaho, or Arizona.
    General Dempsey. The Air Force has coordinated with the Army and 
will continue to provide CAS capability as required by our Joint 
Partners at the JRTC. The Air Force has not performed a specific cost 
analysis of using aircraft outside of Louisiana. The Air Force 
continues to source requests for CAS training at Fort Polk, tasking 
specific units to support various exercises. Over the last 12 months, 
the 47th Fighter Squadron has provided 14 percent of the CAS 
requirements for nine JRTC exercises while other CAS was provided from 
outside the State of Louisiana.

    204. Senator Vitter. Secretary Panetta, as a follow-up on the joint 
operations aspect in Fort Polk, this action would appear, instead of 
reducing overall military spending, to oppose your own recent guidance 
to reexamine our programs in pursuit of greater efficiencies and 
affordability to defense operations. I fully understand and support 
improving efficiencies within the U.S. Government. However, in your own 
words you have stated, while not specifically addressing the A-10s, 
that cuts of this nature would do serious damage to DOD's ability to 
``protect this country for the future . . . and we must avoid a hollow 
force, and maintain a military that will always be ready, agile, 
deployable, and capable.'' It is my opinion that we cannot have it both 
ways. We cannot strip away the A-10s from Barksdale while also 
maintaining the force necessary at Fort Polk without increasing cost of 
operations. I am aware there will be A-10s remaining in the inventory 
should the Air Force retire the ones stationed at Barksdale AFB. But of 
all the units to be disbanded, it appears to me that the A-10s located 
at Barksdale AFB were strategically located there to satisfy a specific 
requirement that is not going away. Is it fair to say that the A-10 
training mission at Fort Polk is an existing requirement that is not 
going away anytime in the near future?
    Secretary Panetta. The new Defense Strategic Guidance states that 
U.S. Forces will no longer be sized to conduct large-scale, prolonged 
stability operations. Analysis based on scenarios consistent with the 
Strategic Guidance resulted in a reduced requirement for tactical 
combat aircraft and a preference for multi-role fighters to provide the 
most flexible capability within each scenario. As a result, A-10 
retirements were selected in lieu of other combat aircraft and the Air 
Force made the difficult choice to retire 5 A-10 squadrons comprised of 
102 A-10 aircraft. Previous reductions in fighter force structure 
shifted the Total Force ratio toward Reserve component forces, and Air 
Force decisions in the fiscal year 2013 President's budget request (20 
A-10s from Active Duty, 61 from the Air National Guard, and 21 from the 
Air Force Reserves) rebalanced that ratio to create a more sustainable 
force structure over the long term. In conjunction with Air Force 
Reserve leadership, the Air Force made the difficult decision to select 
Barksdale AFB as the sole Air Force Reserve A-10 unit closure.
    The Air Force does not anticipate any impacts to support training 
operations at the JRTC. We will continue to fill U.S. Army training 
requests for air-to-ground support through the normal Global Force 
Management Allocation process, matching requirements with available 
CAS-capable units across the Air Force, versus a specific squadron and 
type of aircraft.

    205. Senator Vitter. Secretary Panetta, Global Strike Command at 
Barksdale AFB was stood up in December 2009 to improve the safety, 
security, and effectiveness of the Nation's nuclear-capable assets 
following the 2007 nuclear weapons incident. As DOD reinvests in key 
areas across the nuclear enterprise, I would imagine Global Strike 
Command will have a prominent role, including in the development of the 
new bomber program. What are your thoughts on the triad in general and 
the Air Force's commitment to keeping Global Strike Command as an 
independent command at Barksdale AFB, given some of the lessons we have 
learned?
    Secretary Panetta. Maintaining the nuclear triad is essential to 
U.S. national security. Each leg of the triad provides characteristics 
that, combined in a balanced manner, create a synergy producing a total 
deterrent effect. Air Force Global Strike Command, as the major command 
with operational responsibility for land-based ICBMs and nuclear-
capable heavy bombers, plays an essential role in providing the 
deterrent effects contributing to strategic stability.
    Since Air Force Global Strike Command falls under the Air Force's 
Title X organize, train, and equip responsibilities, any decisions 
regarding Air Force Global Strike Command as an independent command 
would be an internal Air Force decision. With the stand-up of Air Force 
Global Strike Command, the Air Force aligned its strategic operational 
nuclear units under a single command to best carry out organize, train, 
and equip functions. As the Air Force's newest major command, its 
positive impact was confirmed by the April 2011 Defense Science Board's 
independent assessment of the Air Force nuclear enterprise stating, 
``The formation of Air Force Global Strike Command has produced a 
nearly universally positive response in the nuclear operating forces.''

    [Whereupon, at 1:50 p.m., the committee adjourned.]


DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR 
               2013 AND THE FUTURE YEARS DEFENSE PROGRAM

                              ----------                              


                       TUESDAY, FEBRUARY 28, 2012

                                       U.S. Senate,
                               Committee on Armed Services,
                                                    Washington, DC.

          U.S. PACIFIC COMMAND AND U.S. TRANSPORTATION COMMAND

    The committee met, pursuant to notice, at 9:34 a.m. in room 
SD-106, Dirksen Senate Office Building, Senator Carl Levin 
(chairman) presiding.
    Committee members present: Senators Levin, Lieberman, Reed, 
Akaka, Webb, Hagan, Blumenthal, Inhofe, Chambliss, Wicker, 
Brown, Ayotte, and Cornyn.
    Committee staff members present: Richard D. DeBobes, staff 
director; and Leah C. Brewer, nominations and hearings clerk.
    Majority staff members present: Richard W. Fieldhouse, 
professional staff member; Creighton Greene, professional staff 
member; Michael J. Kuiken, professional staff member; Jason W. 
Maroney, counsel; Roy F. Phillips, professional staff member; 
and Russell L. Shaffer, counsel.
    Minority staff members present: Ann E. Sauer, minority 
staff director; Adam J. Barker, professional staff member; 
Pablo E. Carrillo, minority investigative counsel; Paul C. 
Hutton IV, professional staff member; Daniel A. Lerner, 
professional staff member; Lucian L. Niemeyer, professional 
staff member; and Diana G. Tabler, professional staff member.
    Staff assistants present: Kathleen A. Kulenkampff, Brian F. 
Sebold, and Bradley S. Watson.
    Committee members' assistants present: Brian Burton, 
assistant to Senator Lieberman; Carolyn Chuhta, assistant to 
Senator Reed; Nick Ikeda, assistant to Senator Akaka; Gordon 
Peterson, assistant to Senator Webb; Patrick Hayes, assistant 
to Senator Manchin; Chad Kreikemeier, assistant to Senator 
Shaheen; Ethan Saxon, assistant to Senator Blumenthal; Anthony 
Lazarski, assistant to Senator Inhofe; Clyde Taylor IV, 
assistant to Senator Chambliss; Joseph Lai, assistant to 
Senator Wicker; William Wright, assistant to Senator Brown; 
Brad Bowman, assistant to Senator Ayotte; and Dave Hanke, 
assistant to Senator Cornyn.

       OPENING STATEMENT OF SENATOR CARL LEVIN, CHAIRMAN

    Chairman Levin. Good morning, everybody. Today we receive 
testimony on the posture of U.S. forces in the Asia Pacific and 
the status of the U.S. military strategic global distribution 
and deployment capabilities.
    On behalf of the committee, I'd like to welcome Admiral 
Robert F. Willard, Commander, USN, U.S. Pacific Command 
(PACOM), and General William M. Fraser III, USAF, Commander, 
U.S. Transportation Command (TRANSCOM). The committee 
appreciates your years of faithful service and the many 
sacrifices that you and your families make for our Nation. 
Likewise, we greatly appreciate the service of the men and 
women, military and civilian, who serve with you in your 
commands. Please convey to them our admiration and our 
appreciation for their selfless dedication.
    Admiral Willard, this will be, in all likelihood, your last 
hearing before this committee after a full and productive tour 
as commander of our forces in the Pacific. On behalf of the 
Senate Armed Services Committee, I'd like to thank you for your 
service and your leadership in this important assignment.
    Before and beyond that, your decades of selfless and 
devoted service to our Nation included assignments as Commander 
of the U.S. Pacific Fleet, Vice Chief of Naval Operations, 
Commander of the U.S. Seventh Fleet, and Commanding Officer of 
the air carrier USS Abraham Lincoln.
    I note that your wife, Donna, is here this morning, as she 
has been in past hearings. I'd also like to especially thank 
her for her many contributions and sacrifices. We all know very 
well the importance of our military families to the success of 
our Armed Forces and we wish you and the entire Willard family 
the very best in the future.
    This is General Fraser's first hearing as Commander of 
TRANSCOM. As we heard from the Secretary of Defense (SECDEF) 
and the Chairman of the Joint Chiefs of Staff earlier this 
month, the President's recently unveiled defense strategic 
guidance includes a reemphasis on the Asia Pacific, a region 
that is impacted by what has been called the tyranny of 
distance, which puts a premium on the capabilities provided by 
TRANSCOM. Capabilities that have been stressed and honed over 
more than 10 years of military operations in Iraq and 
Afghanistan. So we also look forward to General Fraser's 
testimony on the status of TRANSCOM and its important global 
mission.
    Relative to the Asia Pacific, the United States has been, 
and will continue to be, present and active in the region 
because of our commitments to our allies and our partners, and 
also because of the clear U.S. national interests there.
    The leadership change in North Korea occasioned by the 
recent death of long-time dictator Kim Jong Il opens new 
questions about possible future threats from an oppressive 
regime that has shown little interest in cooperating with the 
international community and little concern for the well being 
of its people. We are mindful that the security situation on 
the Korean Peninsula remains tense and as of yet there are no 
indications that the situation will improve under the new 
regime. North Korea continues to pursue its nuclear and 
ballistic missile programs and, with its history of deadly 
unprovoked military attacks on South Korea, there is little 
reason for optimism for a prompt resolution of the tensions on 
the peninsula. In fact, over the weekend North Korea issued its 
usual threats in response to the military training exercises 
conducted by the United States and South Korea every year at 
this time.
    China's rising global influence and rapid military growth, 
coupled with the overbreadth of its claims in the South China 
Sea and the East China Sea, and its increasing propensity for 
challenging conflicting claims of its regional neighbors, 
unsettles the region and raises concerns about the prospects of 
miscalculation. There are also growing concerns about China's 
exploration of cyber space for military and for nonmilitary 
purposes, such as the use of the Internet by Chinese entities 
to conduct corporate espionage. In the current National Defense 
Authorization Act (NDAA), we acted against counterfeit 
electronic parts in defense systems, most of which came from 
China. Nonetheless, it is important that we continue efforts to 
engage with the People's Liberation Army (PLA) and to attempt 
to find common ground and to address common concerns.
    There are many other challenges facing PACOM, such as 
preventing the proliferation of weapons of mass destruction 
(WMD), countering violent extremism, providing humanitarian 
assistance and disaster relief, and protecting critical sea 
lanes of communication.
    Against the backdrop of these developments, the Department 
of Defense (DOD) has been working to realign U.S. military 
forces in countries like South Korea and Japan and also to 
posture our forces further to the south in countries like 
Australia, Singapore, and possibly the Philippines. As we 
rebalance and realign our presence in the Asia Pacific, it is 
important that we get it right, not only in terms of strategy, 
but also in terms of sustainability.
    With respect to the realignment of U.S. marines on Okinawa, 
Senator McCain, Senator Webb, and I have advocated changes to 
the current plan in ways that support the strategic goals of 
the U.S. military posture in the region, while also accounting 
for the fiscal, political, and diplomatic realities associated 
with long-term sustainability. The recent announcement that the 
United States and Japan are reconsidering elements of the plan 
is welcome news. But the new thinking is not yet adequate.
    For instance, there is apparently no intention yet to 
reconsider the plan to build the unaffordable Futenma 
Replacement Facility at Camp Schwab on Okinawa. Nor does it 
appear that the Air Force bases in the region are being 
considered as part of the solution. It is important that any 
changes be jointly agreed upon and jointly announced, with the 
goal of achieving a more viable and sustainable U.S. presence 
in Japan and on Guam.
    So, Admiral, we will look forward to your testimony on our 
strategy in your area of responsibility (AOR) and how the 
fiscal year 2013 budget request adequately addresses the 
threats that you face and how it reflects the reemphasis on the 
Asia Pacific.
    General Fraser, we know that things have been busy for you 
as well ever since you assumed your job at TRANSCOM. TRANSCOM 
continues to play a vital role in transporting our military men 
and women and the supplies and equipment that they need to 
Afghanistan and other overseas contingency operations. In 
carrying out this mission, TRANSCOM faces numerous challenges, 
included among them,uncertain lines of supply due to the 
disruption or closure of routes through Pakistan. TRANSCOM has 
successfully shifted much of the delivery of non-lethal 
supplies and equipment headed for Afghanistan to the Northern 
Distribution Network (NDN) through Eastern Europe, the 
Caucasus, and Central Asia.
    During the past year, TRANSCOM forces were involved in 
supporting forces engaged in operations in Libya and 
humanitarian relief efforts such as those supporting victims of 
the Japanese earthquake and tsunami. We applaud all of these 
efforts.
    With the drawdown of U.S. surge forces and further 
reductions of U.S. forces in Afghanistan through 2014, TRANSCOM 
now faces the daunting task of managing the redeployment home 
of these forces and their equipment. We know that TRANSCOM 
performed commendably in managing the removal of millions of 
pieces of equipment from Iraq by the December 31, 2011, 
deadline, consistent with the U.S. obligations under the U.S.-
Iraq strategic agreement. We would be interested, General, in 
learning how the lessons learned from the withdrawal from Iraq 
inform TRANSCOM's planning and operations as U.S. forces are 
drawn down in Afghanistan.
    A number of other issues confront TRANSCOM. One is 
modernizing the force. One acquisition program supporting 
TRANSCOM has received a lot of visibility and that's the 
Strategic Tanker Modernization Program. There have been 
indications that the contractor may overrun the original 
development contract price, which we will discuss with the Air 
Force at the Air Force posture hearing later this month.
    TRANSCOM has received congressional additions to the budget 
to buy C-17 aircraft in excess of what DOD and TRANSCOM said 
were needed to support wartime requirements. Last year, the Air 
Force was granted authority to retire additional C-5A aircraft 
as it was taking delivery of those added C-17s. This year, the 
Air Force is seeking authorization to retire all remaining C-5A 
aircraft because they believe that they do not need the extra 
aircraft under the new DOD strategic planning assumptions and 
that they cannot afford to operate them.
    We need to be sure that the Air Force's planned retirements 
do not leave us short of the strategic lift capability that we 
need, and General Fraser, you can speak to that issue.
    TRANSCOM is also facing other, less well-known 
modernization challenges. The Ready Reserve Force (RRF), a 
group of cargo ships held in readiness by the Maritime 
Administration, is aging and will need to be modernized with 
newer ships at some point in the not too distant future. 
Sealift may not be quite as glamorous as airlift operations, 
but sealift support is critical to our Nation's capabilities. 
We have relied on sealift to deliver more than 90 percent of 
the cargo to Iraq and Afghanistan, and that is similar to 
previous contingencies.
    So, Admiral, General, it's a pleasure to have you with us 
this morning. We look forward to your testimony on these and 
other challenging topics; and I now call on Senator Inhofe.

              STATEMENT OF SENATOR JAMES M. INHOFE

    Senator Inhofe. Thank you, Mr. Chairman, and thank you, 
Admiral Willard and General Fraser, for your selfless service 
for so many years and your willingness to cooperate and have 
personal conversations. Thank you so much.
    Admiral Willard, I agree with everything you wrote in your 
final assessment of the strategic environment in the Asia-
Pacific region and its significance to the U.S. security. 
However, I am concerned about what appears to me to be a shift 
in focus to Asia and to the Pacific. The United States is a 
global power. We have global threats out there and we need to 
be on all fronts. History has taught this Nation that it can't 
ignore its global responsibilities and threats.
    I am deeply concerned about the proposed $487 billion cut 
in defense in the next 10 years. When you stop and think about 
it, the possibility of sequestration could double that amount. 
It's very disturbing to me. I think these cuts jeopardize reset 
of equipment and delay modification and maintenance of key 
equipment, cut overall research and development (R&D), delay 
modernization, and increase the burden on a shrinking military 
force.
    Our military must possess the ability to deter aggression 
and, if required, aggressively defeat any threat against our 
citizens at home and around the world. Both TRANSCOM and PACOM 
are essential elements to our national defense strategy and 
must be manned, equipped, and maintained to ensure our national 
interests throughout the world.
    In PACOM's AOR, I am increasingly concerned about North 
Korea and the rising power in China, both economically and 
militarily. North Korea has historically proved difficult for 
the intelligence community to gather information. I will have 
some specific questions about that, some of the things that 
have happened in the past, and I want to get your assurance as 
to where we're going to be going in the future. We're obligated 
by law to support Taiwan. We all want to do that anyway. We 
have to continue to sell advanced military equipment to them to 
ensure their safety and security.
    General Fraser, your statement portrays a very active 
supporting commander role. TRANSCOM and its components--the Air 
Mobility Command (AMC) and the Military Sealift Command (MSC)--
have accelerated the redeployment of over 60,000 troops from 
Iraq and Afghanistan. It continues to provide logistical 
support to Afghanistan forces and to deploy and redeploy troops 
and cargo worldwide. It has supported military operations in 
Libya and delivered relief support in response to natural 
disasters at home and around the world. No other country could 
provide such in-depth support anywhere.
    While President Obama's 2013 budget submission represents a 
snapshot of the Services' overall requirements, it also raises 
several questions about our military airlift and sealift 
programs. Is the Air Force taking appropriate action to 
mitigate the potential gap in airlift and the operational 
implications of that gap? What is the risk in TRANSCOM's 
ability along with its maritime component, MSC, to provide 
logistics around the globe in response to the combatant 
commanders' requirements? How does the proposed force structure 
cut fit with the findings of the mobility, capabilities, and 
requirements study of 2016, written in 2009?
    Given the current climate for fiscal austerity, we have to 
do our part in executing our jobs more efficiently. It's very 
disturbing to a lot of us that when we have the President's--
now that all the results are in on his budget, that he's 
actually given us this $5.3 trillion deficit and the only area 
that I can see where we've had reductions in capability and in 
funding are in the area of military. So it's something that's 
very disturbing to me. I know in these hearings it's hard to 
get down to these things, but I do enjoy the personal 
conversations and the concern that's been expressed by a lot of 
our military that I run into here as well as abroad with what's 
happening to our military right now.
    So I'm looking forward to this hearing, Mr. Chairman. Thank 
you.
    Chairman Levin. Thank you very much, Senator Inhofe.
    Admiral.

   STATEMENT OF ADM ROBERT F. WILLARD, USN, COMMANDER, U.S. 
                        PACIFIC COMMAND

    Admiral Willard. Thank you, Chairman Levin. Mr. Chairman, 
in order to accommodate the committee's questions sooner, I'll 
keep my remarks brief and ask that my full statement be 
included for the record.
    Chairman Levin. It will be. All statements will be 
included.
    Admiral Willard. Chairman Levin, Senator Inhofe: Thank you 
for this opportunity to appear before you to discuss PACOM and 
the Asia-Pacific region. I'd like to begin by thanking you for 
recognizing my wife, Donna, who's present here today and has 
been by my side for nearly 38 years. She's an outstanding 
ambassador for our Nation and a tireless advocate for the men 
and women of our military and their families. Together we've 
thoroughly enjoyed this experience with our counterpart foreign 
friends and with all of you who advocate for our men and women 
in uniform.
    I'd like to acknowledge this committee's enduring support 
for our joint forces and by your actions their contribution to 
our Nation's security. Your visits to the region have been and 
will continue to be an important reminder of U.S. interests 
there.
    President Obama and SECDEF Panetta recently reaffirmed the 
strategic importance of the Asia-Pacific region and our 
Nation's future focus on its security challenges in the 
document titled ``Sustaining U.S. Global Leadership, Priorities 
for the 21st Century Defense.'' It appropriately addressed the 
opportunities and challenges that PACOM faces in a region 
covering half the world and containing the majority of great 
powers, economies, populations, and militaries.
    Importantly, our five treaty allies, Australia, Japan, 
South Korea, Republic of the Philippines, and Thailand, 
together with many regional partners, represent the greatest 
opportunities for the United States and PACOM to contribute to 
a broad security association in the region. Of particular note, 
we seek to advance our important relationship with India in 
South Asia.
    We're making progress in adjusting PACOM's force posture 
towards Southeast Asia following overtures from Australia, 
Singapore, and the Philippines to help enable an increased 
rotational U.S. military presence in this important sub-region.
    As was evidenced by U.S. support to Japan during their epic 
triple disaster last March, close military cooperation, 
frequent exercises, and interoperable systems merged to enable 
rapid and effective combined military responses under the most 
trying conditions.
    In contrast, North Korea, the world's only remaining nation 
divided by armistice, continues to threaten peace and security 
in northeast Asia, now under the leadership of a 29-year-old 
son of Kim Jong Il. We're observing closely for signs of 
instability or evidence that the leadership transition is 
faltering. As General Thurman will attest when he testifies, we 
believe Kim Jong Eunto be tightly surrounded by Kim Jong Il 
associates and for the time being the succession appears to be 
on course. That said, we also believe Kim Jong Eun will 
continue to pursue his father's course of strategy that 
embraces nuclearization, missile development, WMD 
proliferation, provocations, and totalitarian control over 
North Korean society.
    Management of the U.S.-China relationship continues to be a 
challenge at many levels. Our military-to-military relationship 
is not where it should be, although a strategic-level exchange 
of views with DOD persisted during 2011. The PLA continues to 
advance its military capabilities at an impressive rate. It's 
growing bolder with regard to their expanded regional and 
global presence, and China continues to challenge the United 
States and our partners in the region in the maritime, cyber, 
and space domains. Nonetheless, we remain committed to evolving 
this security relationship, with the objective of coexisting 
peacefully and both contributing constructively to regional 
security.
    Throughout the Asia Pacific, numerous transnational threats 
such as violent extremist organizations, proliferation, 
trafficking, piracy, and perpetual natural and manmade 
disasters challenge our Nation and our allies and partners in 
the region. Across this wide spectrum of current and potential 
future threats, PACOM must provide persistent overwatch, 
ensuring our Nation retains continued strategic access and 
freedom of movement in the global commons there.
    Amidst these challenges, every day our soldiers, sailors, 
airmen, marines, and civilians devote their efforts to 
contributing to Asia Pacific security. Their success has long 
been enabled by this committee's enduring support, including 
the resources and quality of life you provide them to 
accomplish their important missions.
    During the 2\1/2\ years that I've been in command, you've 
allowed me and my commanders to share our perspectives with 
you, sought to understand the dynamics of this complex region, 
and traveled and met with our military families and foreign 
partners. Yours has been a powerful message in demonstration of 
United States commitment to the 36 nations within the PACOM 
AOR. On behalf of the more than 330,000 men and women of PACOM, 
thank you for your support and for this opportunity to testify 
one final time.
    I look forward to your questions.
    [The prepared statement of Admiral Willard follows:]

            Prepared Statement by ADM Robert F. Willard, USN

                              INTRODUCTION

    Chairman Levin, Senator McCain and distinguished members of the 
committee, thank you for this opportunity to present an update on U.S. 
Pacific Command (PACOM). I consider myself fortunate to have served as 
its commander for the last 2\1/2\ years and look forward to providing 
what will be my final assessment of the strategic environment in the 
Asia-Pacific region. The President has directed his national security 
team to make America's ``presence and mission in the Asia Pacific a top 
priority.'' The testimony that follows will highlight the opportunities 
we seek to illuminate and address the challenges we must overcome to 
sustain U.S. leadership in this critical area of the world.

               STRATEGIC ENVIRONMENT IN THE ASIA PACIFIC

    The security of the PACOM Area of Responsibility (AOR) is of vital 
national interest to the United States--a fact underscored by the 
President's hosting of last year's Asia Pacific Economic Cooperation 
(APEC) Leaders Meeting. The region contains the world's three largest 
economies and supports over $10 trillion of annual bilateral 
merchandise trade, including more than $1 trillion of U.S. commerce.
    The Asia Pacific also hosts the world's largest populations, 
largest militaries, and includes three nuclear armed states (excluding 
the United States) and the Democratic People's Republic of Korea (DPRK) 
which aspires to be a nuclear power. While the Asia Pacific has 
remained relatively peaceful and stable for the past 6 decades, myriad 
challenges to its future security will try U.S. resolve, raise the 
magnitude of our relationships with five treaty allies and many 
strategic partners, and test PACOM as a principle guarantor of security 
in the region.
    Seven major security challenges confront the United States across 
this region, which encompasses half of the Earth's surface, including:

         Defense of the Homeland, U.S. territories, and compact 
        states in the Pacific.
         The need to continuously manage and optimize U.S. 
        alliances and strengthen regional partnerships, in particular, 
        advancing the relationship with India.
         The threat posed by the DPRK's nuclear aspirations, 
        proliferation, provocations, and potential to cause regional 
        instability.
         China's military modernization--in particular its 
        active development of capabilities in the cyber and space 
        domains--and the questions all these emerging military 
        capabilities raise among China's neighbors about its current 
        and long-term intentions.
         Three nuclear armed states, including Russia, China, 
        and India, and North Korea's nuclear aspirations, together with 
        the threat of weapons of mass destruction proliferation.
         Numerous transnational threats, ranging from 
        proliferation, trafficking of narcotics and persons, and 
        piracy, to persistent natural and manmade disasters.
         Challenges to freedom of access to, and security 
        within, maritime and air domains, and space and cyberspace, by 
        both state and non-state actors.

    By contrast, the Asia Pacific also affords immense opportunities, 
particularly through strong ally and partner associations, that can 
lead to a cooperative and constructive security environment for the 
foreseeable future. In large measure, cooperative engagement activities 
leveraging PACOM posture and presence contribute to advancing military 
self-sufficiency and security contributions by our partners in the 
region.

Force Posture Assessment
    Generally, PACOM has been well served with regard to on-hand, ready 
forces with the ability to respond to the demands in the Asia-Pacific 
region. This has occurred despite a decade of wars in the Middle East, 
to include the Command's continual contributions to those wars. As a 
consequence of both history and the nature of challenges in Northeast 
Asia, PACOM forward, permanently based forces are concentrated in Japan 
and the Republic of Korea. While affording a strong deterrent against 
challengers such as North Korea, this has placed a premium on PACOM's 
ability to deploy and sustain forces elsewhere in order to maintain the 
required presence in sub-regions such as Southeast Asia, South Asia, 
and Oceania.
    PACOM's input to the most recent Global Posture Review expressed a 
need to redistribute postured forces closer to Southeast Asia and South 
Asia, in order to more efficiently meet the force presence and response 
demands of those Asia Pacific sub-regions. The recent decisions to 
rotationally operate a Marine Air Ground Task Force (MAGTF) from 
Darwin, Australia and to operate U.S. air forces from Australia's 
northern air bases were initial efforts to rebalance PACOM force 
posture for the future.
    While the Asia Pacific is often regarded as inherently maritime and 
contains some of the world's most expansive archipelagos, strategic 
chokepoints and largest seas and oceans, its militaries tend to be 
army-focused. For PACOM, this generates posture and presence 
considerations to both adapt forces to the maritime challenges of the 
region and to account for the necessary and effective role that Army, 
Marine Corps, and Special Forces play in engaging with the dominant 
foreign services of our regional partners.

                             NORTHEAST ASIA

    Northeast Asia (NEA) contains many of the most significant 
economies and militaries in the Asia Pacific and the world, including 
Japan, South Korea, China, and Russia. U.S. forward presence, permanent 
basing in Japan and South Korea, habitual accesses, and host nation 
support in this important sub-region enable PACOM's front line of 
homeland defense, extended deterrence for allies Japan and South Korea, 
regional deterrence against actors such as North Korea, and rapid 
response to natural disasters and other contingencies that occur in the 
Asia Pacific.
    The DPRK continues to pose one of the most likely and persistent 
threats to the United States, its allies, and to peace and security in 
Northeast Asia. North Korea's conventional military threat to the 
Republic of Korea remains of serious concern and its nuclear program, 
missile development, proliferation activities, and asymmetric military 
provocations are destabilizing. Collectively, these threats demand that 
PACOM Intelligence, Surveillance, and Reconnaissance (ISR) capabilities 
and capacities be sufficiently robust to view across the DPRK's 
military apparatus and warn of unfavorable developments. North Korea's 
continuing pursuit of nuclear weapons and advanced ballistic missile 
systems places a premium on PACOM ballistic missile defenses and close 
cooperation with allies. Japan and the Republic of Korea are strong 
U.S. allies that host U.S. forces, benefit from U.S. extended 
deterrence, and stand with the United States in containing DPRK 
aggression in addition to meeting other regional and global security 
challenges.

Japan
    The 52-year-old alliance between the United States and Japan 
remains a cornerstone of security in the Asia Pacific. As was evident 
in U.S. support to the Japanese Self Defense Forces (JSDF) during the 
epic triple disaster in eastern Honshu last year, the extremely close 
association and inherent interoperability between tenant U.S. forward 
forces and their Japanese hosts enable prompt and extremely effective 
contingency responses under the most trying of circumstances.
    Despite delays in implementing some elements of the Defense Policy 
Review Initiative (DPRI), including the Futenma airfield replacement 
facility in Okinawa, which has occupied policymakers for nearly 20 
years, the alliance remains strong and is a powerful strategic 
stabilizing force in the region. It is important to note that of the 19 
separate elements contained in DPRI, the vast majority are on track and 
progressing.
    In the past year, Japan has increased its regional engagements and 
association with partners such as Australia, India, Singapore, 
Indonesia, and the Republic of Korea, to name a few.

Republic of Korea
    The U.S.-Republic of Korea alliance remains a strong and visible 
deterrent to war on the peninsula. This alliance is also transforming 
in a variety of ways to remain current and relevant in the midst of an 
ever-evolving Asia-Pacific region, changing leadership in North Korea 
and as a consequence of lessons learned following the deadly 
provocations by the DPRK in 2010.
    Current alliance initiatives are underpinned by the planned 
transition of wartime operational control from the Combined Forces 
Command to the Republic of Korea in December 2015. Ongoing 
transformation also includes the repositioning of on-peninsula U.S. 
forces, headquarters, and bases.
    Like the JSDF, Republic of Korea military forces are engaging 
throughout the Asia Pacific at an increasing rate, and contributing to 
international security initiatives, such as peacekeeping, 
counterpiracy, and counterproliferation efforts.

Trilateral Cooperation
    While modest in scope, trilateral cooperation between the United 
States, Japan, and the Republic of Korea continues to progress. This 
important initiative seeks to strengthen the natural synergy among 
three powerful and interoperable Northeast Asia allies. While the 
countries will have to overcome longstanding historical, cultural, and 
political dynamics to fully realize the potential of trilateral 
cooperation, policy advances and increasingly frank dialogue among the 
three allies are encouraging.

Russia
    Russia's Pacific armed forces are very gradually emerging from 
their diminishment following the end of the Cold War. Increased naval 
and strategic air force operations, cyberspace activities, and arms 
sales throughout the Asia Pacific are signaling Russia's emphasis on 
improved posture in the region. PACOM enjoys a generally positive 
military-to-military relationship with Russia, particularly between 
respective Pacific fleets. In coordination with U.S. European Command 
and in accordance with the bilateral Military Cooperation Work Plan, 
PACOM seeks improved engagement with Russia's Pacific forces in areas 
such as counterterrorism (CT), peacekeeping, and search-and-rescue 
operations.

Mongolia
    Mongolia is a small but important partner in Northeast Asia. Its 
active military pursues close engagement with PACOM through our annual 
Khan Quest exercise series and contributes effectively to coalition 
efforts in Afghanistan as well as global peacekeeping operations. With 
Russia to the north and China to the south, Mongolia must finesse its 
relationships in NEA with its broader security interests. As a 
consequence of its experience as part of the Soviet bloc in the 20th 
century, the Mongolian armed forces continue to maintain ties to 
European nations such as Germany and even the DPRK, making them a PACOM 
partner with unique and insightful perspectives.

The People's Republic of China
    China's growing presence and influence in Asia, and the 
opportunities and uncertainties that have resulted from it pose the 
greatest test for PACOM among its seven challenge areas.
    In January 2011, President Obama and Chinese President Hu Jintao 
agreed to ``build a cooperative partnership based on mutual interest 
and mutual respect,'' which also included a commitment to develop 
``continuous, stable, and reliable military-to-military relations.'' To 
meet this mandate, PACOM is effectively positioned to contribute to 
advancing military engagement with the PRC. However, military-to-
military relations continue to lag well behind other U.S.-China 
engagements for three main reasons: differences in philosophy regarding 
the purpose of military-to-military relations in which China emphasizes 
strategic dialogue and the United States seeks comprehensive military 
contact from the strategic to tactical levels as a way to build 
confidence; China's tendency to suspend military-to-military following 
U.S. arms sales to Taiwan and, more generally, its linkage between 
certain U.S. defense policies and continuous bilateral military 
relations; and inherent Chinese distrust of U.S. regional intentions 
resulting in demands that perceived impediments to the relationship be 
conceded before military relations can advance.
    Despite these challenges, China's increasing participation in 
regional and international security activities and forums such as 
multi-lateral exercises, counter piracy operations, and peacekeeping 
can foster informal, but useful U.S.-China military engagement.
    Improvements in China's military capabilities and the regional 
uncertainties this has created also test PACOM's ability to manage the 
evolving security dynamics in the Asia Pacific. Areas in which U.S. 
national interests or those of U.S. allies and partners are being 
challenged include cyberspace and space as well as maritime security in 
the international waters around China. China's anti-access/area denial 
(A2/AD) capabilities extend well into the South China Sea. China 
asserts these military developments are purely defensive in nature and 
that it poses no threat to neighbors in the region. Yet, combined with 
broad maritime and sovereignty claims and incidents with lawful 
operators in the South China Sea and East China Sea, there is ongoing 
international concern regarding China's activities in the South China 
Sea.

Taiwan
    Following Taiwan's recent Presidential and Legislative Yuan 
elections in January 2011, many analysts are hopeful that improvements 
in cross-Strait relations will continue, with a focus on building 
economic and cultural ties. This is in the security interests of the 
United States and of Asia. It is important to note, however, that 
Taiwan remains the most acute sovereignty issue for China and the main 
driver of its military modernization programs. The military balance 
across the Taiwan Strait continues to shift in favor of China. PACOM 
engages regularly with Taiwan's military within policy guidelines and 
in accordance with tenets of the Taiwan Relations Act and three 
communiques.

                             SOUTHEAST ASIA

    Southeast Asia (SEA) is an extremely diverse sub-region, rich in 
natural resources, and strategically located at the crossroads of the 
Pacific and Indian Oceans. It is host to a mix of democratic and 
authoritarian governments, varied economies, contrasting military 
capabilities, and mixed cultures. Prospects for continued economic 
growth are promising, mainly due to China's substantial economic 
influence, steady U.S. regional investment and trade, and universal 
global interest, by the European Union and others, in capitalizing on 
Asia's rise. Many advancing U.S. partnerships and two U.S. treaty 
allies, the Republic of the Philippines and the Royal Kingdom of 
Thailand, are concentrated in this sub-region. Further, the Association 
of Southeast Asian Nations (ASEAN) and its numerous forums, together 
with the East Asian Summit (EAS) and APEC, have advanced to become the 
most effective Asia Pacific multilateral organizations.
    That said, SEA is not without its challenges. Disputed islands and 
features in the South China Sea, including territorial disputes with 
China, have generated broad unease in SEA, and maritime security has 
become a regular theme in multilateral forums. Transnational threats, 
including violent extremist organizations (VEOs) such as Abu Sayyaf 
Group (ASG) and Jemaah Islamiya (JI); trafficking in narcotics and 
humans; piracy; proliferation; and natural and manmade disasters 
regularly combine to challenge PACOM, U.S. allies and partners in this 
sub-region. Resources such as water, food and energy are being 
pressurized across the region, as illustrated by the Mekong River Delta 
crisis. Geography is also a factor as SEA contains some of the most 
extensive archipelagos in the world, including Indonesia and the 
Philippines, and some of the world's most strategic choke points, such 
as the Strait of Malacca. Despite this vast maritime domain where naval 
capabilities and capacities are called for, most SEA militaries are 
army-centric and assigned internal security responsibilities. 
Consequently, few nations are self-sufficient militarily. PACOM's has 
focused its engagement on advancing the self-sufficiency of the partner 
militaries in the region. Programs such as International Military 
Education and Training (IMET) are vital to enhancing the education 
level of military leaders and promoting a network of military-to-
military relations that contribute to broader security cooperation in 
SEA.

Philippines
    Underpinned by the 1951 Mutual Defense Treaty, the U.S.-Philippines 
alliance is an important strategic icon in SEA. Adjoining the South 
China Sea, this vast island nation straddles several strategic sea 
lines of communication (SLOCs) and chokepoints, claims a number of 
disputed islands and features in the South China Sea, and contends with 
several internal insurgent movements and VEOs, such as JI and ASG, with 
assistance from U.S. forces. Possessing an army-centric military as a 
result of its internal security challenges, the Philippines has 
recently begun to focus on improving the ability of its navy and air 
forces to secure the vast maritime area defined by the Philippine 
archipelago. As a consequence, PACOM security assistance is focused 
primarily on supporting the Armed Forces of the Philippines (AFP) in CT 
efforts in southern Mindanao and the Sulu archipelago, and advancing 
AFP naval and air capabilities. Improving maritime domain awareness is 
another primary focus of U.S. security assistance, and we hope to 
provide a second Hamilton-class Coast Guard cutter to the Philippines 
this year.
    Joint Special Operations Task Force-Philippines has operated in a 
strictly non-combat role in support of the AFP for the past 8 years in 
the largely successful efforts to contain ASG and JI VEOs. 
Additionally, PACOM engages with the Philippines through the Joint 
Staff-sponsored exercise Balikatan, as well as through annual military-
to-military consultations, periodic Pacific Partnership missions, and 
numerous Service component-led exercises.
    We welcome recent U.S.-Philippine discussions regarding 
opportunities to increase joint training with our AFP counterparts, 
possibly supported by enhanced rotational access to AFP facilities by 
PACOM forces.

Thailand
    I would begin by offering my personal condolences to the Thai 
people for the losses they suffered in 2011 during the most devastating 
flood their country has experienced in 50 years. Their response to this 
disaster, particularly with regard to containment of potential 
infectious diseases, was a testament to Thailand's resilience and self 
sufficiency.
    Thailand is an enduring U.S. ally in SEA and a valuable security 
partner. They are co-host (with PACOM) to the largest multilateral 
exercise series in SEA, Cobra Gold, and provide liberal access and 
logistics support for transiting PACOM aircraft and ships at their 
military facilities. The United States and Thailand have twice 
partnered to combat piracy off the Horn of Africa, deploying Thai naval 
vessels with U.S. Navy personnel onboard to Combined Task Force-151, 
which Thailand will take command of in the coming year. Additionally, 
the Royal Thai Army assisted U.N. humanitarian relief operations in 
Darfur with a battalion of peacekeepers.
    Despite facing challenges such as land and maritime border disputes 
with neighboring, Cambodia, refugee incursions from Burma, a 
longstanding ethnic insurgency in the south, and transnational 
challenges such as narcotics and human trafficking, the Thai armed 
forces are capable and generally self-sufficient.

Singapore
    Our bilateral relationship with Singapore continues to strengthen 
and broaden. Singapore armed forces comprise a small, but extremely 
capable military. Their main focus continues to be security within the 
Strait of Malacca and Singapore Strait and they cooperate with 
Indonesia, Malaysia and Thailand in conducting security patrols within 
the Straits against piracy and other illicit activities. Singapore's 
armed forces are also deployed to Afghanistan, working alongside 
coalition partners to develop the Afghan National Security Forces. 
Within the context of the 2005 Strategic Framework Agreement, both 
militaries are seeking to increase engagement across all PACOM Service 
components. Singapore's offer to host U.S. Littoral Combat Ships (LCS) 
at Changi naval station will enhance PACOM's SEA posture.

Indonesia
    As the relationship between the United States and Indonesia--the 
world's fourth most populous nation, third largest democracy, and 
largest Muslim-majority country--continues to advance, the PACOM-TNI 
relationship is progressing, as well. Following a decade of political, 
economic, and military reform, Indonesia has surfaced as a vibrant 
democracy, an emerging economy, and a competent military power. In 
areas such as disaster risk reduction, CT, Humanitarian Assistance/
Disaster Relief (HA/DR), and peacekeeping operations, Indonesia is 
increasingly recognized for its leadership role. Indonesia and the 
United States were recently designated co-chairs of the Experts Working 
Group on Counterterrorism for the ASEAN Defense Ministers Meeting-Plus. 
This initiative seeks to encourage greater regional CT cooperation, 
build capacity, and collectively address regional security issues in an 
open consultative forum.
    Following a 12-year hiatus, PACOM has reestablished security 
cooperation activities with the Indonesian Kopassus army special 
forces. The measured pace with which this engagement has advanced has 
included key leader dialogues and small-scale subject matter experts 
exchanges in areas such as military decisionmaking, medical planning 
and law of war/human rights. More activities of this type are planned 
for 2012 and will gradually expand at a pace commensurate with the 
demonstrated progress in Indonesian Armed Force transparency and 
institutional reform.

Vietnam
    Military relations with Vietnam continue to grow in areas such as 
disaster management, search and rescue, conflict resolution, personnel 
recovery and medical operations. Vietnam is modernizing its military 
and looks to the United States as a partner in maintaining security and 
stability in SEA, particularly in the South China Sea. Vietnam's 
successful chairmanship of ASEAN in 2010 affirmed its emerging role as 
a leader and spokesman among SEA nations, as has been evidenced by 
their current role in lower Mekong River delta HA/DR initiatives. 
Vietnam and China have a long history of competition in the South China 
Sea. Both nations' disputes over islands and features, as well as 
natural resources, have led to confrontations in the past. Vietnam's 
continued leadership among SEA nations will be a critical component of 
eventual conflict resolution in this highly important and strategic 
area. PACOM will carry on working closely with Vietnam to advance our 
military relationship and cooperation in providing security across the 
Asia Pacific while remaining mindful of concerns about human rights.

Malaysia
    Malaysia's vibrant economy, advanced military, strategic position 
near Malacca and the Singapore Straits, bordering both the South China 
Sea and Indian Oceans, and regional leadership combine to define it as 
an important partner for the United States and PACOM, and a key actor 
within SEA. Malaysia contributes to Strait of Malacca patrols, maritime 
security in the South China Sea, and efforts to contain transnational 
threats, such as piracy, and VEOs, such as ASG and JI. Its direct 
action against pirates in the Gulf of Aden was evidence of increased 
confidence and capability. In 2011, Malaysia conducted its second 
deployment of medical support units to Afghanistan and remains 
committed to supporting coalition efforts there until 2014. U.S. naval 
vessels frequently call in Malaysian ports, and military-to-military 
exchanges and joint training have expanded over recent years.

Cambodia, Laos, Brunei and Timor-Leste
    The United States has extensive interests across the rest of SEA, 
and PACOM seeks to continue advancing military relations with Cambodia, 
Laos, Brunei, and Timor-Leste. Cambodia has been a strong supporter of 
U.S. military engagement in recent years and demonstrates a strong 
desire to increase military-to-military activities with PACOM. Military 
engagements with Brunei, Laos and Timor-Leste have expanded, albeit 
modestly, over the past year with particular emphasis on relationship-
building and enhanced regional cooperation.

Burma
    To the extent that any military-to-military relationship exists 
with Burma, it is extremely limited due to U.S. policies and sanctions 
directed at the former junta and its actions. However, the Burmese 
Government steps towards credible political and economic reform and 
working toward ceasefires with armed ethnic groups in the past several 
months together have improved U.S.-Burma ties, resulting in several 
initiatives announced during Secretary Clinton's December trip to 
Burma. Prisoner of War (POW)/Missing in Action (MIA) recovery 
operations, is the first opportunity for military-related engagement 
with Burma since 2004. It is estimated that the WWII remains of as many 
as 730 Americans may be present there. Burma's assimilation into the 
broader Asia-Pacific regional security order would be a positive event.

                               SOUTH ASIA

    South Asia as a whole is of major strategic importance to the 
United States. Anchored by India and containing major SLOCs for the 
transport of energy and other commerce to Asia and the Americas from 
the Middle East and Europe, South Asia security partnerships are 
increasingly vital to PACOM's mission.
    South Asia is home to a confluence of challenges, including nuclear 
armed rivals India and Pakistan, numerous transnational VEOs such as 
Lashkar-e-Tayyiba (LeT), piracy, trafficking in narcotics and persons, 
disputed borders, and insurgent movements that have plagued India, 
Nepal, and Sri Lanka. South Asia is particularly prone to natural 
disasters, including cyclones, tsunamis, and earthquakes. Bangladesh 
has long suffered from annual cyclones and flooding and Nepal is 
expected to suffer a major earthquake in the coming years. PACOM 
engages throughout South Asia, assisting its militaries to counter and 
contain VEOs such as LeT, cooperating in maritime security activities 
such as counter piracy, conducting disaster response planning and 
training, and exercising extensively, service-to-service.

India
    Pursuing a U.S.-India strategic partnership through a close 
alignment of respective regional security interests is a priority for 
the U.S. Department of Defense and PACOM. Our security relationship 
involves strategic to tactical-level dialogues, increasingly robust 
military exercises, security assistance, and personnel exchanges. The 
United States and India have made steady progress in military-to-
military cooperation over the past decade.
    It is important that the leaderships and staffs of PACOM and U.S. 
Central Command continue to coordinate our respective military 
activities in this sub-region, especially as they concern India and 
Pakistan.

Bangladesh
    Bangladesh has emerged as a particularly effective partner in the 
fight against terror, cooperating with India as well as the United 
States to counter VEO activity by actors such as LeT. Further, 
Bangladesh's military is advancing its capabilities and contributes 
broadly to U.N.peacekeeping operations. Also, the Bangladesh army is 
primarily responsible for and has achieved major advancements in the 
protection of its citizens during the annual cyclone season and the 
inevitable flooding and related disasters with which Bangladesh 
repeatedly contends.

Maldives, Nepal, Sri Lanka
    Although South Asian nations share similar concerns and challenges, 
they are uniquely individual.
    Due to its proximity to major commercial sea lanes, the Maldives is 
concerned with piracy and other illicit activity in its Exclusive 
Economic Zone (EEZ). For that reason, it is striving to advance its 
maritime security capabilities by reshaping its coast guard, marine and 
special operations forces. Further, curbing recruitment of its youth 
into VEOs and narcotics trafficking and addiction are Maldives' areas 
of focus.
    Nepal has emerged from a lengthy Maoist insurgency in 2006 and is 
seeking to integrate some of the former insurgents into the Nepal Army. 
In partnership with PACOM, Nepal's armed forces are preparing to 
respond to a future earthquake.
    Sri Lanka, too, is focused on developing its maritime security 
capabilities while preventing a resurgence of the Liberation Tigers of 
Tamil Elam. Sri Lanka's military forces continue to assist in de-mining 
and other recovery operations following 25 years of civil war. PACOM's 
engagement with Sri Lanka will continue to be limited, until the 
Government of Sri Lanka demonstrates progress in addressing human 
rights allegations.
    Each of these nations' militaries partner with PACOM at varying 
levels, including leadership exchanges, exercise series, PACOM Assist 
Team CT capacity building actions and activities, and security 
assistance.

LeT
    While several VEOs conduct facilitation, recruitment, and seek safe 
havens throughout South Asia, LeT presents a particularly acute 
problem. Responsible for many attacks in India, including the horrific 
attacks into Mumbai, LeT is headquartered in Pakistan, affiliated with 
al Qaeda and other VEOs, and contributes to terrorist operations in 
Afghanistan and aspires to operate against Asia, Europe, and North 
America. PACOM's fiscal year 2011 Indian Engagement Initiative that 
resourced and hosted Mumbai CT specialists for training, exercises, and 
exchanges throughout the United States, together with capacity-building 
activities with South Asian partners are mainly focused on containing 
LeT and contributing to CT self-sufficiency of the sub-region's 
militaries.

                                OCEANIA

    The U.S. alliance with Australia anchors PACOM's strategy in 
Oceania. Australia, with additional contributions from New Zealand, 
invests extensively in security and assistance efforts in this sub-
region. The Australian continent notwithstanding, most of Oceania is 
comprised of Pacific Island nations spread across the vast expanse of 
the South Pacific Ocean. Security challenges associated with natural 
resources in this sub-region tend to predominate. In particular, 
illegal fishing, resource damage attributed to climate change and 
global warming, and the susceptibility of low lying island nations to 
typhoons and tsunamis define PACOM and U.S. Coast Guard approaches to 
engagement in Oceania, often in concert with Australian and New Zealand 
actions. Two new Shiprider Agreements with the Pacific Island nations 
of Nauru and Tuvalu together with those already in place with the 
Marshall Islands, Micronesia, Palau, Tonga, and Kiribati enable 
transiting U.S. ships to assist in characterizing the maritime domains 
and providing a mechanism for shiprider-nation responses to 
irregularities within these island nations' territories.
    Oceania is also home to the Compact of Free Association nations of 
the Republic of Palau, the Federated States of Micronesia, and the 
Republic of the Marshall Islands, each of which PACOM is obligated to 
defend as part of Compact arrangements putting their territory off 
limits to all armed forces except those of the United States (and other 
countries we have invited). Compact agreements with these three nations 
provide PACOM a strategic buffer along the southern flank of the highly 
strategic U.S. territory of Guam. PACOM is increasing its collaboration 
with the Department of the
    Interior which administers Federal policy in U.S. territories in 
Oceania and administers assistance funds to the Compact Nations. We 
soon expect to have a liaison officer from Interior join the PACOM 
staff.

Australia
    The U.S.-Australia alliance, our most significant partnership in 
Oceania, benefits from two new force posture initiatives, the 
rotational deployment of a Marine Air Ground Task Force (MAGTF) to 
Darwin and enhanced access to airfields in northern Australia. These 
initiatives will enable deeper interoperability of our respective 
forces, expand training opportunities with third countries in the 
region, and improve access to SEA and Oceania. Australia is also the 
largest non-NATO contributor of forces to the coalition efforts in 
Afghanistan.
    A trilateral relationship between Australia, Japan, and the United 
States continues to advance and has the potential to enable 
multilateral approaches to the region's challenges. Bilaterally, the 
U.S. and Australian militaries collaborate extensively in areas such as 
information sharing; ISR; HA/DR; combined arms training in exercise 
Talisman Saber; and space and cyber security.

New Zealand
    New Zealand is also a recognized leader in Oceania. It is a strong 
partner of the United States, and in accordance with the forward-
looking spirit of the 2010 Wellington Declaration, PACOM will continue 
to look for ways to further strengthen the relationship despite 
differences over nuclear policy. The United States and New Zealand 
share many security concerns and are cooperative partners in areas such 
as intelligence sharing, HA/DR and maritime security. In the interest 
of advancing the partnership, New Zealand is participating fully in the 
Rim of the Pacific (RIMPAC) exercise for the first time in 2012.
    We value New Zealand's contributions to Afghanistan. New Zealand 
also supports stabilization efforts in Timor-Leste and the Solomon 
Islands, Armistice enforcement in Korea, and UN peacekeeping efforts 
globally.

                    EXERCISE AND ENGAGEMENT PROGRAMS

Exercises
    In order to maintain ready forces and to plan, train, and exercise 
to accomplish the full range of military contingencies, PACOM requires 
annual congressional support for the Combatant Command Exercise and 
Engagement (CE2) program. PACOM's portion of this essential program 
consists of 18 major exercises involving joint military forces, 
interagency activities, and 27 of 36 PACOM partner nations. CE2 
directly impacts PACOM's ability to conduct Joint training exercises 
and theater security engagement events across the Asia Pacific, and 
therefore plays a vital role in contributing to security of the AOR.

Engagement Programs
    Two very significant engagement programs are Pacific Partnership 
and Pacific Angel. In 2011, the USS Cleveland, with personnel from 11 
nations, conducted a 4-month deployment to Tonga, Vanuatu, Papua New 
Guinea, Timor Leste, and Federated States of Micronesia. Combining 
medical, dental, and engineering support, the mission treated over 
38,000 patients, conducted scores of community relations projects, and 
completed much needed engineering and infrastructure repairs. Likewise, 
Pacific Angel 2011, utilizing C-17 aircraft, cared for thousands of 
patients and completed numerous civic action projects in Mongolia, 
Cambodia, Timor Leste, and Indonesia.
    Both of these engagement programs serve to improve regional 
partnerships, while enhancing the resiliency of object nations to deal 
more effectively with their own humanitarian crises due to natural 
disasters or other causes. Moreover, the experience that our Service 
components gain by working alongside nongovernmental organizations and 
other participating militaries in these controlled conditions improves 
their abilities to conduct disaster response when time is of the 
essence and lives are on the line. PACOM considers Pacific Partnership 
and Pacific Angel to be high payoff engagements in the Asia-Pacific 
region.

                    GLOBAL SECURITY CONTINGENCY FUND

    The Global Security Contingency Fund is a new tool available for 
PACOM and country teams to develop and deliver security sector 
assistance in a coordinated fashion, enhancing the capabilities of 
military forces, other security forces, and relevant government 
agencies. The fund also supports the justice sector (including law 
enforcement and prisons), rule of law programs, and stabilization 
efforts.

                          PACOM ORGANIZATIONS

    The following direct-reporting units uniquely contribute to the 
PACOM mission:

Asia Pacific Center for Security Studies
    Asia Pacific Center for Security Studies (APCSS) fills a unique 
role in multi-national security cooperation and capacity-building 
efforts by equipping and empowering APCSS fellows and alumni to make 
substantive changes to their countries' security architectures. APCSS 
brings together communities of interest and influence, comprised of 
presidents, vice presidents, ministers of defense and foreign affairs, 
chiefs of defense, and ambassadors, to enable collaborative solutions 
to critical regional security challenges. Because the APCSS engages 
regularly and often concurrently with Chinese on both sides of the 
Taiwan Strait, as well as Hong Kong, it is uniquely positioned to 
assist in moving the U.S.-China military-to-military relationship 
towards a ``sustained and reliable'' level of contact.

Joint Intelligence Operations Center
    The PACOM and the U.S. Forces Korea-Combined Forces Command (USFK-
CFC) Joint Intelligence Operations Centers (JIOC) deliver 
strategically-focused, operationally-relevant, and predictive 
intelligence products to support Commander PACOM and our subordinate 
commands. The JIOCs operate within a larger PACOM intelligence 
federation that capitalizes on national intelligence, surveillance, and 
reconnaissance capabilities as well as two-way information sharing 
activities with allies and partners. The JIOCs serve as a focal point 
of intelligence collaboration in close coordination with PACOM 
Component Commands; National, Defense, and Service agencies; other 
combatant commands; subunified commands; and allies and partners. This 
federated approach to intelligence provides for invaluable theater 
situational awareness and advanced threat warning to enable 
decisionmaking.

Joint Interagency Task Force West
    Through the execution of PACOM's counternarcotics program, Joint 
Interagency Task Force West (JIATF West) has significantly affected 
illicit methamphetamine precursor chemical trafficking originating in 
Asia ultimately bound for the Western Hemisphere by focusing its 
efforts on Asian, Iranian, Eurasian, and other transnational criminal 
organizations in the PACOM AOR. In fiscal year 2011, JIATF West's 
support to U.S. and partner nation law enforcement agencies resulted in 
the seizure of over 1,000 metric tons of illicit chemicals used in meth 
production. The seizures were critical in interrupting distribution 
within the United States and contributed to the disruption of Asian and 
Mexican drug trafficking organizations.

Joint POW/MIA Accounting Command
    Joint POW/MIA Accounting Command (JPAC) successfully accomplished 
58 investigation and recovery operations globally last year and is 
projected to execute 78 investigation and recovery operations in 2012.
    Expanded operations begin in fiscal year 2012 as JPAC resumes 
investigation and recovery operations in the DPRK. JPAC is also 
preparing to resume discussions with the government of Burma to renew 
personnel accounting efforts there during fiscal year 2013. JPAC 
accounting operations are ongoing in the People's Republic of China, 
while discussions between JPAC and the governments of India and the 
Philippines continue in an effort to resume investigation and recovery 
operations in those countries.

                               CONCLUSION

    As characterized by the President, the United States ``face[s] an 
inflection point.'' The evolving geopolitical climate and shifting 
fiscal environment, which are significant factors in this change, point 
toward the Asia Pacific and emphasize the ever increasing consequence 
of this theater. The preceding testimony highlights the importance of 
optimizing U.S. posture in this region and underscores the specific 
challenges PACOM faces, as well as the opportunities PACOM seeks. I 
have spent the majority of my career in the Asia Pacific and have never 
been more convinced of its remarkable nature, partnership capacity, and 
criticality to U.S. security.
    In closing, your assistance has enabled the more than 300,000 
members of PACOM to accomplish their mission. Further, your personal 
interest in, and visits to the Asia Pacific have sent a strong signal 
to this region regarding U.S. national interests and staying power. On 
behalf of every PACOM member, thank you for your enduring support for 
our Armed Forces and for this unique and important part of the world.

    Chairman Levin. Thank you so much, Admiral. Thanks for your 
statement and again for all you and your family have done for 
this Nation.
    General Fraser.

STATEMENT OF GEN. WILLIAM M. FRASER III, USAF, COMMANDER, U.S. 
                     TRANSPORTATION COMMAND

    General Fraser. Chairman Levin, Senator Inhofe, and 
distinguished members of this committee: It is indeed my 
distinct privilege to be here with you today representing 
TRANSCOM. We are a total force team of approximately 150,000 
men and women, military and civilian, dedicated to deploying, 
sustaining, and then returning home our Nation's most precious 
resource, our men and women in uniform. TRANSCOM is a lean, 
dynamic organization which plays a critical role in supporting 
our joint force around the world.
    Today I am privileged to be here with my good friend, 
Admiral Bob Willard, Commander, PACOM, whom I've had the honor 
of partnering with closely over many years. As already 
mentioned, I know Admiral Willard will be retiring in the near 
future and I would publicly like to personally thank him for 
his many years of dedicated service to our Nation and his 
wife's continued sacrifices and dedication. Sir, it has been 
indeed an honor and a privilege to serve with you.
    During 2011, TRANSCOM added a new command, the Joint 
Enabling Capabilities Command (JECC), led by Rear Admiral Scott 
Stearney, to our component command leadership team, which is 
comprised of AMC, led by General Ray Johns, MSC, led by Rear 
Admiral Mark Buzby, and the Surface Deployment and Distribution 
Command (SDDC), led by Major General Kevin Leonard.
    Over the last month I have witnessed firsthand the spirit 
and ingenuity of our subordinate commands during my travels 
throughout the United States, Afghanistan, Central Asia, the 
Pacific, and Antarctica, just to name a few. This past year has 
been particularly challenging as our team of Active Duty, 
Guard, Reserve, civil servants, merchant mariners, and 
commercial partners maintain an unusually high operations 
tempo, supporting combat operations, sustainment efforts, 
humanitarian relief, and crisis action responses both at home 
and abroad.
    These efforts from the evacuation in Japan following the 
devastating earthquake and tsunami, to supporting the 
warfighter in Afghanistan, to our withdrawal from Iraq at the 
end of 2011, were made possible by the amazing TRANSCOM 
professionals, who are committed to ensuring our joint force 
maintains global logistics dominance.
    As we now enter a very challenging fiscal environment 
focusing on capabilities needed for the 21st century, as 
defined in the President's defense strategy, our challenge is 
to continue to find fiscally responsible efficiencies to 
deliver the required capability. TRANSCOM strongly supports 
this transition and will remain focused on supporting our 
forces around the world. This will not be an easy task. The new 
strategic guidance requires a military that is smaller and 
leaner, while at the same time being more agile, flexible, and 
ready.
    Having an integrated distribution system will be important 
to our Nation, and TRANSCOM will meet the challenges of this 
new environment. We will continue to build our relationships 
with the interagency, our other nongovernmental organizations, 
commercial, and international partners. Together we will ensure 
our Nation's ability to project national military power and be 
able to confront other national challenges any time and 
anywhere.
    Since taking command last fall, I've been amazed to see the 
unique capabilities that are inherent in the command. I could 
not be prouder of the TRANSCOM team and our partners. No one in 
the world can match our Nation's deployment and distribution 
capability. The foundation of this enterprise is the 
enthusiasm, the dedication, and efficiency of the TRANSCOM 
team.
    Chairman Levin, Senator Inhofe, and all the members of this 
committee, I want to thank you for your continued superb 
support of TRANSCOM and of all of our men and women in uniform. 
I am grateful for the opportunity to appear before this 
committee today and I ask that my written statement be 
submitted for the record. I now look forward to your questions.
    Thank you.
    [The prepared statement of General Fraser follows:]

            Prepared Statement by Gen. William Fraser, USAF

                          MISSION/ORGANIZATION

    It is my privilege as the Commander of the U.S. Transportation 
Command (TRANSCOM) to present you my posture statement for 2012. Our 
Total Force team of Active Duty, Guard, Reserve, civilian, commercial 
partners, and contractors leads a world-class Joint Deployment and 
Distribution Enterprise (JDDE) that provides unfailing support to our 
warfighters and their families around the globe. Through efficient and 
effective execution of our transportation and supply chain distribution 
mission, the TRANSCOM team is revolutionizing military logistics to 
meet the challenges of the 21st century, while adapting to the 
President's Defense Strategy. Our team of dedicated and trained 
professionals working in unison with our joint, commercial, and 
international partners is ready to meet those challenges today and in 
the future.

                      SUPPORTING GLOBAL OPERATIONS

    Our Nation's greatest asymmetric advantage is our ability to 
project and sustain our forces across the globe supported by the 
political, military, and business relationships that enable this 
expansive network. To maintain this advantage, the President assigned 
TRANSCOM the Global Distribution Synchronizer responsibility to 
synchronize planning for global distribution operations. This new 
responsibility enables the Department of Defense (DOD) to shape the 
distribution environment to meet growing access challenges and ensure 
sufficient distribution lanes across multiple theaters to underwrite 
our Nation's ability to successfully project and sustain forces 
globally. Collaboratively, we will ``knit the distribution seams'' 
among multiple Combatant Commands (COCOM) to ensure support for their 
theater campaign and contingency plans. To this effort, our vision is 
to achieve a global network that anticipates demands, maximizes 
strategic flexibility, mitigates potential risks, and provides 
resilient end-to-end distribution.
    While TRANSCOM leads the enterprise, our component commands execute 
the mission. In 2011, Air Mobility Command (AMC) and its Air Force 
Reserve and Air National Guard partners maintained a high operations 
tempo supporting Operations Unified Protector (OUP), New Dawn (OND), 
Enduring Freedom (OEF), and other crises around the world. At the peak 
of global air mobility operations in 2011, AMC deployed a rotational 
force of over 60 C-130 tactical airlift aircraft, plus 120 KC-135 and 
KC-10 aerial refueling aircraft. AMC also employed an additional 21 C-
17s in dedicated support of U.S. Central Command (CENTCOM). 
Additionally, across all COCOMs on a daily basis, at least one third of 
AMC's air mobility fleet was utilized in support of global operations.
    On the surface, the Military Sealift Command (MSC) and the Military 
Surface Deployment and Distribution Command (SDDC) moved over 19.9 
million tons of cargo worldwide. MSC's tankers delivered 1.6 billion 
gallons of fuel to support global operations. SDDC expanded into 
multimodal operations by moving over 3,500 pieces of mission essential 
cargo by commercial liner sealift with follow-on airlift into 
Afghanistan.
    Our newest subordinate command, Joint Enabling Capabilities Command 
(JECC), deployed more than 750 personnel to support four Humanitarian 
Assistance/Disaster Relief (HA/DR) operations and seven contingency 
operations worldwide. The Geographic Combatant Commands (GCC) and U.S. 
Special Operations Command employed the JECC's expertise for a variety 
of real-world missions including Odyssey Dawn, Tomodachi, Pacific 
Passage, Continuing Promise, Odyssey Guard, OUP, OEF, and OND. Though 
the missions were of varying size, scope, and complexity, in each 
instance the JECC provided immediate, short-duration support to 
increase the effectiveness of joint command and control at the 
operational level.

                    SUPPORT TO U.S. CENTRAL COMMAND

    In 2011, the President directed the final drawdown in Iraq by 31 
December 2011 and the start of the Afghanistan surge recovery. Through 
partnership with CENTCOM and aggressive scheduling, TRANSCOM and its 
component AMC accelerated the redeployment of over 60,000 troops (over 
50,000 from Iraq and 10,000 from Afghanistan) returning 99 percent home 
by 24 December and 100 percent by the New Year.
    Equipment retrograde was highlighted by the aggressive push to 
redeploy over one million pieces of equipment from Iraq in calendar 
year 2011. In addition, TRANSCOM and our interagency partners have 
received permissions from some governments of European, Central Asian, 
and Baltic countries to start retrograding materials from Afghanistan 
through the Northern Distribution Network (NDN).
    The Pakistan Ground Lines of Communication (PAK GLOC) provide 
logistical support through the movement of cargo to Afghanistan. In 
2011 more than 35,000 containers were delivered on the PAK GLOC by 
surface transportation. When open, the PAK GLOC remains the quickest 
and most cost-effective route.
    The NDN provides an additional route for cargo to Afghanistan. Over 
the past year, we moved an average of 40 percent of all cargo in 
support of OEF through the NDN's multiple truck, water, rail, and air 
routes in an expanding distribution network. In 2011 a total of 27,000 
containers were delivered by surface transportation on the NDN, an 
increase of 15 percent from 2010. TRANSCOM will continue to work with 
the interagency and governments of the NDN countries to expand NDN 
routes and permissions. This expansion will increase velocity and the 
number of new routes into and out of Afghanistan.

             SUPPORT TO OTHER GEOGRAPHIC COMBATANT COMMANDS

    TRANSCOM supported all GCCs, responding to their unique 
requirements, often testing the ingenuity of the team to develop new 
and complex transportation solutions. In March 2011, TRANSCOM provided 
a top priority movement to all six GCCs--a TRANSCOM first.
    In U.S. Southern Command's area of responsibility (AOR), TRANSCOM 
continues to support the transport and security of detainees during 
detainee movement operations (DMO). Since 2002, TRANSCOM in 
coordination with the Office of the Secretary of Defense, the Office of 
the Secretary of State, Joint Staff, and supported COCOMs has 
successfully completed 88 DMO missions, transporting 1,206 detainees 
without incident.
    In U.S. European Command's (EUCOM) AOR, TRANSCOM deployed and 
redeployed more than 3,500 troops and 1,400 tons of cargo in support of 
the Kosovo Balkan force, providing a safe and secure environment in the 
region.
    In U.S. Africa Command's (AFRICOM) AOR, TRANSCOM deployed and 
redeployed 2,491 troops and 1,340 short tons of cargo in support of 
Commander Joint Task Force Horn of Africa.
    Supporting both AFRICOM and EUCOM and in response to the United 
Nations Security Council resolution to end Libya's military advance on 
its civilian population, TRANSCOM provided tankers and other lift 
assets to support Operations Odyssey Dawn and Unified Protector.
    U.S. tankers flew 435 sorties delivering 23 million pounds of fuel 
to coalition strike aircraft. TRANSCOM also directed 63 time-critical 
airlift missions delivering 886 passengers and 2,220 short tons of 
cargo.
    In U.S. Pacific Command (PACOM) AOR, TRANSCOM responded within 
hours to the immediate needs of the Japanese people, who were 
devastated from the earthquake and tsunami and follow-on nuclear 
crisis, with Operation Tomodachi. TRANSCOM delivered relief supplies, 
nuclear response equipment, a 50-person JECC team, search and rescue 
teams, and disaster response experts totaling over 3,400 short tons and 
over 6,700 passengers as part of that operation. TRANSCOM 
simultaneously supported Operation Pacific Passage, the voluntary 
authorized departure of DOD dependents from Japan, by evacuating more 
than 7,800 passengers on over 25 missions.
    Each year, TRANSCOM provides airlift and sealift assets to 
transport personnel, equipment, and supplies in support of the National 
Science Foundation's (NSF) research in Antarctica as part of Operation 
Deep Freeze. Using unique capabilities such as the Air National Guard's 
ski-equipped LC-130s, TRANSCOM delivered more than 3,250 passengers, 
10,000 short tons of cargo, and five million gallons of fuel to McMurdo 
Station, Antarctica. In 2011, TRANSCOM assets airlifted the King of 
Malaysia and the Prime Minister of Norway to Antarctica in recognition 
of the 100 year anniversary of man's first expedition to the South 
Pole.
    In U.S. Northern Command's (NORTHCOM) AOR, TRANSCOM supported 
training exercises that provided realistic homeland defense and defense 
support to civil authorities training for joint and interagency 
partners. TRANSCOM also deployed the Modular Airborne Fire Fighting 
System (MAFFS) equipped C-130 aircraft to fight fires in Texas, New 
Mexico, Arizona, and Mexico in support of the National Interagency Fire 
Center. The MAFFS aircraft flew 396 sorties and released more than 9.7 
million pounds of fire-retardant during their 74 days of deployment.
    TRANSCOM's WC-130 Hurricane Hunter aircraft flew 129 sorties into 
30 storms to collect valuable hurricane data for the National Oceanic 
and Atmospheric Administration during the 2011 hurricane season. In 
addition to collecting storm data, TRANSCOM airlifted the Federal 
Emergency Management Agency Region II Defense Coordination Officer 
emergency response vehicle to Puerto Rico to assist with monitoring 
Tropical Storm Emily.

                      IMPROVING BUSINESS PRACTICES

    To reduce transportation costs, TRANSCOM continues to pursue both 
military and commercial multimodal transportation solutions. Multimodal 
transportation solutions use both surface and air assets, e.g., moving 
Mine Resistant Ambush Protected (MRAP) vehicles by ship to a major port 
and using cargo airplanes for the final delivery to the warfighter. By 
embracing multimodal transportation solutions, TRANSCOM manages the 
supply chain, controls cost, and creates efficiencies.
    In 2011, commercial multimodal operations began in the CENTCOM AOR. 
Multimodal operations into theater included contracted sealift carriers 
and airlift services through the commercial seaports and airports in 
Dubai, United Arab Emirates, and Aqaba, Jordan. Commercial multimodal 
transportation routes maximize the use of commercial carrier 
capabilities from origin to destination while ``freeing up'' vital 
military capabilities. Multimodal hubs proved invaluable when the PAK 
GLOC routes were no longer available for use in late November. Several 
hundred containers from 39 different ships bound for forces in 
Afghanistan were diverted to Dubai and Aqaba where they were stored and 
then airlifted as needed into Afghanistan to ensure sustained support 
to combat operations.
    Afghanistan's mountainous terrain and poor infrastructure require 
an increased reliance on aerial delivery. In 2011, over 80 million 
pounds of cargo were airdropped, up 20 million from 2010, making 2011 a 
record year. We continue to add new capabilities like Low-Cost, Low-
Altitude Delivery and to explore an extracted container delivery system 
capability to improve aircraft survivability and aerial delivery 
accuracy.
    Piracy continues to threaten our commercial partners, predominantly 
in the Horn of Africa region. TRANSCOM and its component, MSC, continue 
to be active participants in interagency and industry efforts to reduce 
the vulnerability of the U.S. commercial fleet. TRANSCOM is a strong 
advocate for the use of private security teams aboard commercial 
vessels.

        PRESERVING THE JOINT DEPLOYMENT AND DISTRIBUTION PROCESS

    The DOD supply chain is a vast, interdependent enterprise reliant 
on infrastructure availability across the globe. To safeguard this 
infrastructure, we work closely with entities across the DOD and 
Intelligence Community to stay apprised of threats to our 
transportation and distribution assets and to provide global strategic 
force protection oversight for these assets. Our relationships and 
planning efforts with GCCs facilitate threat mitigation and risk 
reduction of vulnerabilities and hostile/criminal activities.
    Preserving and improving our strategic en route infrastructure 
system remains a critical requirement. A relatively small number of en 
route airfields and seaports are available to support global mobility 
operations, so we must champion these ``enduring bases'' that enable 
seamless movement across the various areas of responsibility. TRANSCOM 
advocates for military construction projects that maintain and improve 
the capabilities and capacities of the military's deployment and 
distribution infrastructure. Using analytical data, TRANSCOM's En Route 
Infrastructure Master Plan (ERIMP) identifies construction projects 
that will improve the military's global routes. Adequate infrastructure 
and access agreements allow the United States to maintain the ability 
to project forces globally.
    With the Defense Logistics Agency (DLA), TRANSCOM continues to lead 
DOD supply chain transformation efforts through a series of 
Distribution Process Owner Strategic Opportunities (DSO) initiatives. 
Since 2009, five focused process improvement initiatives generated $400 
million in cost savings and cost avoidance. The initiatives enhanced 
readiness, improved velocity, and reduced costs, while delivering 
higher levels of service to the warfighter.

                       BUILDING TOWARD THE FUTURE

    As TRANSCOM continues to improve our processes across the 
deployment and distribution enterprise, we stand ready to support the 
President's Defense Strategy that maintains a full spectrum force ready 
to deter conflict, project power, and win wars anywhere on the globe.
    In the Pacific, Guam is critical to U.S. national defense as a 
strategic security and stability location providing TRANSCOM access to 
global lines of communications. Guam is a key multimodal logistics node 
to mobility success in the region and has been analytically validated 
in the Global Access and Infrastructure Assessment, TRANSCOM's ERIMP, 
and AMC's En Route Strategy White Paper. TRANSCOM supports 
infrastructure improvements on Guam to ensure successful distribution 
operations in East Asia and Oceania. We have partnered with the DLA 
and, with congressional approval, invested $101.3 million in the 
recapitalization of the fuel hydrant infrastructure and $61 million in 
a JP-8 pipeline between Apra Harbor and Andersen Air Force Base.
    A key element of the President's Defense Strategy is to strengthen 
defense cyber capabilities to operate effectively in cyberspace and to 
counter cyber attacks. Because of TRANSCOM's strong reliance on 
commercial partners, over 90 percent of the distribution and deployment 
transactions are handled in cyberspace. TRANSCOM strives to ensure both 
the integrity of our data and availability for our users and 
essentially serves as an information broker for deployment and 
distribution operations across the globe.
    TRANSCOM is partnering with U.S. Cyber Command (CYBERCOM), 
industry, and educational institutions to introduce innovative new 
technologies and methodologies to protect our essential command and 
control systems and information from attack. Collaborating with 
military and commercial partners to define standards for the process 
and handling of data allows us to improve the security of our 
information and its accuracy. Implementation of these standards will 
streamline our information flow, improve transparency to authorized 
users, and leverage new technologies. The result is trusted and timely 
information supporting a more responsive transportation enterprise 
while reducing costs.
    TRANSCOM's Agile Transportation for the 21st Century (AT21) 
initiative will use industry best practices plus government and 
commercial off-the-shelf optimization and scheduling tools to deliver 
best value, end-to-end deployment and distribution. Business process 
reengineering will improve transportation planning, forecast accuracy, 
and on-time delivery of forces and sustainment to COCOMs at a lower 
cost. Corporate Services Vision will align IT systems with reengineered 
business processes to create a one-stop IT shop.
    TRANSCOM is DOD's lead proponent for In-Transit Visibility (ITV) of 
cargo, equipment, and personnel during deployment and distribution 
options. ITV enables a more effective and efficient supply chain by 
tracking the total volume of supplies moving through the logistics 
pipeline. Active Radio Frequency Identification (RFID) remains the 
primary automatic identification technology for large consolidated 
shipments in the defense transportation system while incorporation of 
passive RFID tags provides great benefits in warehousing, 
prepositioning, and tracking of DOD materiel. We continue to expand 
capabilities with our ITV systems/portfolio.

                 REALIGNING ORGANIZATION AND PERSONNEL

    The disestablishment of U.S. Joint Forces Command reassigned the 
JECC to TRANSCOM on July 1, 2011. The JECC's Joint Planning Support 
Element (JPSE), Joint Communications Support Element (JCSE), and the 
Joint Public Affairs Support Element (JPASE) provide mission tailored 
joint capability packages to COCOMs. These units facilitate rapid 
establishment of Joint Force Headquarters enabling Global Response 
Force execution and the bridging of joint operational requirements.
    The JECC employs a Total Force mix to deliver scalable mission 
tailored packages providing immediate, short duration support 
establishing and organizing a joint force headquarters. The JPSE is an 
employment package composed of experienced personnel in the planning 
and execution of joint military operations. The JCSE delivers secure 
command, control, communications, and computer capabilities. The JPASE 
provides an early entry capability enabling the Joint Force Commander 
to gain and maintain the initiative in the information domain.

                         TRAINING AND EXERCISES

    TRANSCOM Combatant Commander's Exercise Engagement (CE2) program 
directly supports U.S. national security interests by increasing 
military capabilities, strengthening alliances, and retaining strategic 
access around the globe. CE2 enables joint force readiness by enhancing 
interoperability of the JDDE. The CE2 program has maintained strategic 
access for the DOD in an era where many forward deployed capabilities 
are becoming CONUS based. The program allows Combatant Commanders to 
exercise quick deploying contingency capabilities in response to real 
world crises like contingencies and HA/DR operations and allows DOD's 
strategic reserve fleet to remain ready, while saving resources by 
reserving operating capabilities.
    TRANSCOM participated and supported COCOMs in 20 top priority 
command post and field training exercises, including 147 secondary 
training events in 2011. During the exercises, TRANSCOM provided 
command and control, deployed strategic mobility personnel and assets, 
and provided ITV, including patient movement tracking systems and 
global air transport. TRANSCOM also partnered with NORTHCOM, Federal 
agencies, and State and local emergency planners in the development and 
execution of a staff and patient movement exercise as part of the 
National Level Exercise.

                         AIR MOBILITY READINESS

    The President's Defense Strategy relies on rapid global reach and 
rapid global response to deter aggression and deliver worldwide 
capability. An important linchpin to U.S. military dominance in any 
conflict is maintaining the airlift and air-refueling capability 
required for rapid delivery of the Joint Force Team over long 
distances, guaranteeing access to any location in the world. Our 
initial analysis shows the planned air mobility force structure meets 
the strategic airlift and air-refueling requirements for a single large 
scale operation, while maintaining the flexibility and adaptability to 
support the Joint Force in another region.
    C-17s will continue to meet TRANSCOM's future requirements through 
currently funded purchases, upgrade programs, and fleet rotation. The 
newest C-17s arrive with the latest capability and reliability 
improvements installed, while the older aircraft enter into the Global 
Reach Improvement Program to increase their capability and 
sustainability. Aircraft are monitored and analyzed for stress and 
rotated to maintain structural integrity of the fleet.
    The C-5 fleet is critical to our oversized and outsized air cargo 
capability and management of the fleet focuses on retirement of some of 
the oldest aircraft and increased reliability for the remainder. The 
Reliability Enhancement and Re-Engining Program (RERP) increases the C-
5 fleet mission capable rate (MCR) from 55 to 75 percent. All C-5 Bs 
and Cs and 1 C-5A will undergo RERP for a total of 52 C-5Ms. The Air 
Force's new programmed depot maintenance process changed from a 
``failure of major components'' to a preventative replacement process. 
C-5A retirements will improve aircraft availability by removing 
maintenance intensive jets from the fleet.
    Last year the Air Force awarded a contract for the engineering and 
manufacturing development phase of the KC-46A program. The KC-46A will 
replace a portion of the Air Force's aging fleet of KC-135 
Stratotankers and will provide the DOD and allied nation coalition 
aircraft with more aerial refueling capacity, improved efficiency, and 
increased capabilities for cargo, passengers, and aeromedical 
evacuation. These 179 KC-46A tankers are the first increment of a 
three-phased tanker recapitalization approach driven by fleet size and 
fiscal constraints.
    The C-130 continues as an in-theater workhorse supporting 
humanitarian, peacekeeping, disaster relief, and combat operations. 
TRANSCOM supports DOD and Air Force plans to size the tactical airlift 
fleet to align with the President's Defense Strategy and to meet the 
warfighter's demand for intratheater and Direct Support airlift 
missions. Our initial analysis of the planned total purchase of 134 C-
130Js, plus 184 modernized C-130Hs, shows the Air Force fleet of 318 C-
130s will be sufficient to support the warfighter's demands.
    To operate our mobility aircraft safely in threat environments, I 
strongly support continued defensive systems such as the Large Aircraft 
Infrared Countermeasures system and continued development of the 
Advanced Situational Awareness and Countermeasures capability for 
operations in low to medium threat environments.
    The Joint Operational Support Airlift Center (JOSAC) develops and 
implements CONUS Operational Support Airlift (OSA) solutions to provide 
movement visibility for the DOD. The small passenger aircraft provide 
quick, cost-effective transportation for senior officials and special 
cargo. Recently, the JOSAC assumed the responsibility of scheduling OSA 
aircraft in support of the NORTHCOM AOR, including parts of Alaska, 
Canada, and Mexico.
    Operational Support Airlift and Executive Airlift (OSA/EA) is a key 
component of our Global Air Mobility Enterprise. From the President to 
senior civilian and military leaders, immediate airlift is required to 
carry out diplomatic and military missions across the spectrum of 
activities supporting our National Security, National Defense, and the 
National Military Strategies. While we continue to modernize the OSA/EA 
fleet, we plan to develop a single scheduling and management system 
with a common multiservice database and operational picture. The goal 
is to achieve total and real-time asset visibility of worldwide senior 
leader and OSA/EA movements to enable all stakeholders, including key 
leadership to exercise command and control of their fleet assets within 
their area of responsibility.
    TRANSCOM's Civil Reserve Air Fleet (CRAF) is a force enabler, 
providing us the ability to rapidly deploy forces and equipment in 
response to global events. The institution of incentives for commercial 
carriers directed in the 2009 National Defense Authorization Act have 
proven successful in transitioning the CRAF to a more modern fleet that 
increases reliability, improves fuel efficiency, and lowers contract 
rates. TRANSCOM continues to incentivize the use of modern CRAF 
aircraft while eliminating the aging, less efficient aircraft. The CRAF 
Executive Working Group (EWG) of TRANSCOM, AMC and commercial aviation 
leaders has been a continuing success by allowing open discussion of 
fleet modernization, Federal Aviation Administration flightcrew duty 
and rest requirements, fleet reliability, and supporting operations.
    Routing mobility airlift over the polar ice cap opens an additional 
corridor to the CENTCOM AOR mitigating the threat to single lines of 
communication and saves time, fuel, maintenance, and personnel costs. 
West coast bases' routing KC-135 swap outs over the North Pole saves 20 
percent in time and costs over the traditional European-Caucasus 
routing, while long-range cargo aircraft routed over the polar ice caps 
save up to 14 percent. In 2011, TRANSCOM directed AMC and its 
commercial partners to utilize polar routing in order to improve 
operational experience and capability.
    Air Force Contingency Response (CR) forces provide an essential 
capability to support rapidly evolving contingencies throughout the 
world. AMC maintains four Contingency Response Groups and additional 
expeditionary Global Mobility forces to support the airbase opening and 
Joint Task Force-Port Opening missions. These forces directly support 
TRANSCOM and Joint Force Commanders' expeditionary mobility 
requirements by expanding options for early entry force application and 
sustainment. Rapid response capability along with opening and operating 
from distant and austere bases with a small footprint and minimum 
support requirements is a tremendous force enabler. CR forces can 
deploy within 12-hours notice to quickly assess airbase capabilities 
and begin the base opening process to achieve full mission capability 
in the shortest possible time. CR forces provide combatant commanders 
with initial air base opening and global air mobility support 
capability during wartime, contingency or humanitarian assistance/
disaster response operations.
    In 2011, TRANSCOM performed 24,410 safe and rapid aeromedical 
global patient movements, transporting 14,678 patients to definitive 
care. In the days after the liberation of Libya, TRANSCOM, through the 
Global Patient Movement Requirements Center, supported a Department of 
State request and transported wounded Libyan personnel by military 
airlift to medical facilities in Europe and the United States.
    TRANSCOM continues to increase its ability to meet the DOD's 
expanding patient movement mission requirements. We have matched 
advanced in-flight medical care teams to the specific medical needs of 
our Wounded Warriors, forged and field tested unique DOD Health and 
Human Services deployable air evacuation staging facilities, and 
standardized and integrated theater patient movement regulating 
centers. These improvements will build a safer, more agile, and 
efficient world-wide patient movement system.

                           SEALIFT READINESS

    Sealift is the primary means for delivering the preponderance of 
equipment and sustainment for ground forces, and is essential to 
building up combat power and seizing the initiative during major combat 
operations. In a typical operation, over 90 percent of all cargo is 
delivered by sealift. As one of the largest single shippers of ocean 
cargo worldwide, DOD spent approximately $2 billion in fiscal year 2011 
on commercial transportation through our Universal Services Contract. 
By partnering with commercial carriers, we gain beneficial access to 
their global infrastructure. In return, they benefit from our long-term 
commitment to their ships and networks. When necessary, we activate our 
government-owned vessels from the Maritime Administration's (MARAD) 
Ready Reserve Force (RRF) and MSC's Surge Fleet.
    TRANSCOM's partnership with the U.S. commercial sealift industry 
and the Department of Transportation (DOT) has been vital in developing 
new routes for conveying cargo around the globe, particularly to 
regions with undeveloped infrastructure. Through formal programs such 
as the Maritime Security Program (MSP), Voluntary Intermodal Sealift 
Agreement (VISA) and the Voluntary Tanker Agreement (VTA), DOD gains 
critical access to U.S. commercial capabilities, while ensuring the 
availability of a viable U.S. flag maritime industry and U.S. citizen 
mariner pool in times of national emergency.
    The MSP was recently extended an additional 10 years to 2025. 
TRANSCOM looks forward to working with members of Congress to continue 
to refine the program between now and its implementation date in 2015. 
The most critical vessels in our fleets are the Roll-On/Roll-Off (RORO) 
vessels. TRANSCOM also looks forward to working with our partners in 
developing a joint approach to recapitalize our organic fleet through 
the purchase of vessels available at minimal cost due to the declining 
worldwide markets. Doing so keeps U.S. citizens operating these 
vessels, thereby strengthening our maritime base and generating 
business for U.S. shipyards to complete all conversion and life-cycle 
maintenance work on these ships. Additionally, preserving DOD's organic 
fleet of nine Large Medium-Speed Roll-On/Roll-Off (LMSRs) and 48 Ready 
Reserve Force ships is vital to having the surge sealift capacity 
necessary to meet future contingencies.
    TRANSCOM works closely with DLA Energy to meet DOD's fuel 
requirements. Early in 2011, MSC assumed operational control of the 
second of two U.S. built, U.S. flagged State Class tanker vessels. 
These new double hulled 331,000 barrel ships replaced four older T-5 
tankers that have served us well for the past 25 years. The Motor 
Vessel (MV) Empire State and her sister ship, MV Evergreen State, will 
carry refined petroleum products primarily between commercial 
refineries and DOD storage and distribution facilities worldwide. 
Additionally, I support MARAD's proposed Tank Vessel Security Fleet 
which, if approved, would replace the VTA and provide incentives for 
U.S.-flagged tankers to operate in U.S. foreign commerce in return for 
assured access to DOD in support of worldwide operations.
    Finally, I urge continued congressional support of the National 
Defense Sealift Fund and the MSP. TRANSCOM is working diligently with 
Navy, MSC, and MARAD to instill efficiencies and cost savings in the 
way these critical assets are managed. Support of the MSP, in addition 
to supporting a U.S. flagged commercial fleet, is critical to 
maintaining the U.S. merchant mariner base which provides the manpower 
needed for surge operations.
    The delivery of fuel to combat forces is an absolutely critical 
component to any modern combat operation. As we plan for contingencies 
we must always consider the possibility that the normal fuel 
infrastructure may not be in place or may be unusable. The Offshore 
Petroleum Discharge System on MV Wheeler is one unique way to ensure 
fuel support. This system provides up to 1.7 million gallons of fuel 
from up to 8 miles offshore. This one of a kind vessel is programmed 
for purchase in August 2012, and will become part of the organic fleet 
to ensure continued support to the warfighter.

                           SURFACE READINESS

    The declining condition and operation of our highway infrastructure 
between military installations and ports is a concern for the DOD. 
TRANSCOM will continue to work with DOT to identify DOD's rail, 
highway, and port requirements so they are thoroughly integrated into 
the civil sector planning cycle and maintained for the JDDE.
    In addition to maintaining the infrastructure, DOD must also 
maintain railcar capacity to meet military transportation requirements. 
We are working closely with industry to ensure contracted railcar 
capacity is available to augment government-owned railcar capacity in 
the event of any contingency lift requirements.
    Infrastructure improvement projects at the U.S. Army Military Ocean 
Terminal Concord (MOTCO), in Concord, CA, are essential to TRANSCOM's 
support of PACOM's operational plans and DOD's military capability in 
the Pacific theater. Due to the nature and size of this military 
mission, no suitable alternatives to MOTCO exist on the West Coast. We 
continue to work within DOD to find necessary resources to alleviate 
any ammunition throughput issues in the Pacific Theater.
    TRANSCOM also manages the Defense Personal Property System (DPS). 
DPS is a next generation web-based system designed to manage personal 
property shipments and help improve the move experience for 
servicemembers through procurement of best value transportation 
services. In addition, DPS achieves other key Defense Personal Property 
Program objectives to include: Full Replacement Value protection, 
streamlined direct claims settlement between the customer and the 
Transportation Service provider (TSP), faster automated payments to 
TSP, 24/7 self-counseling, on-line status tracking, and reduced storage 
costs. In fiscal year 2011, DPS executed more than 532,000 shipments 
and can now accommodate approximately 90 percent of all household goods 
shipments for DOD military and civilian personnel and their families.

                      DEVELOPING NEW CAPABILITIES

    TRANSCOM is overcoming deployment challenges to enhance our global 
response capabilities. Joint High Speed Vessels (JHSVs) represent a 
transformational sealift capability by offering an enhanced logistics 
response to military and civil contingencies around the globe. These 
vessels close the gap between high-speed low-capacity airlift and low-
speed high-capacity sealift. Forward deployment of JHSVs in combination 
with warehoused stocks of equipment and supplies will leverage their 
speed and capacity into quick delivery of needed cargos for Service, 
joint, and interagency efforts. We are analyzing ways to further 
capitalize on this capability with the Services and other COCOMs.
    With delivery by airdrop nearly doubling yearly since 2005, 
TRANSCOM's investment in a High Speed Container Delivery System (HSCDS) 
will increase airdrop accuracy and payload weights supporting forward 
deployed warfighters. This capability also enhances threat avoidance 
and tactical maneuverability to aircraft and aircrews. HSCDS has 
successfully completed technology demonstrations with a summer 
operational assessment planned.

                           FISCAL STEWARDSHIP

    The JDDE generated $786.9 million in cost avoidance predominately 
through the use of multimodal operations (the cost-effectiveness of 
ships and the flexibility of the C-17s) and forward based warehousing 
in fiscal year 2011. A continuing example of multimodal operations is 
the movement of Mine Resistant Ambush Protected All Terrain Vehicles 
(MATVs) to Afghanistan. The vehicles were shipped to seaports in 
theater then airlifted five at a time aboard C-17s into country. 
TRANSCOM delivered the majority of the 850 MATVs from October 2010 
through September 2011 using multimodal operations.
    TRANSCOM is committed to being part of the DOD solution to long-
term deficit-reduction challenges by continuing to lead the 
certification effort for alternative fuels. AMC C-17s underwent flight 
tests and certification on cutting-edge renewable bio-jet fuel blended 
with JP-8 in August 2011. Additionally, all aircraft in AMC's fleet are 
approved to fly on a synthetic blend of coal or natural gas-based fuel 
and regular jet fuel.
    Additional efficiency efforts include the Mission Index Flying 
Tool, the Next Generation Cargo Capability Program, and other mission 
area enhancements. The Mission Index Flying Tool has allowed AMC to 
reduce aviation fuel consumption beyond expectations. The Next 
Generation Cargo Capability program standardizes air cargo build-up 
from depot suppliers and AMC aerial ports to maximize volume/weight 
utilization, increasing operational effectiveness, and reducing fuel 
costs while meeting the end customer's delivery requirements. 
Collaboration with our supported customers has moved more materiel via 
surface modes to our CONUS strategic aerial ports, thus minimizing 
aircraft costs while effectively meeting warfighter requirements. 
Finally, to optimize over-ocean shipments and reduce enterprise 
operating costs, we continue to identify opportunities to aggregate 
cargo at appropriate locations.

                             FINAL THOUGHTS

    While the Nation and TRANSCOM face significant challenges at home 
and abroad, we recognize there are great opportunities for positive 
change. Such changes will improve effectiveness and efficiency for the 
warfighters and for the citizens who have entrusted us with the 
responsible use of our Nation's resources. The dedicated men and women 
of the TRANSCOM team take enormous pride in providing the world's best 
deployment and distribution support to our great Nation. ``Together, we 
deliver.''

    Chairman Levin. Thank you so much, General.
    Let's try a first round of 7 minutes. We have pretty good 
attendance, so we probably won't have time for a second round.
    Admiral, let me start with you. The United States and Japan 
are reconsidering certain terms of the 2006 roadmap agreement 
to move U.S. marines off of Okinawa. Specifically, we 
apparently now have agreed to de-link the movement of 8,000 
marines off Okinawa from the development of a Futenma 
Replacement Facility. However, the plan to build the 
replacement facility at Camp Schwab apparently still remains 
unchanged.
    Senators McCain and Webb and I believe that the plan to 
build that replacement facility at Camp Schwab is unrealistic 
and is unworkable and unaffordable. Earlier this week the 
Japanese Prime Minister met with the Governor of Okinawa and 
the Governor apparently has reiterated his opposition to that 
replacement facility plan and has repeated his call for the 
airfield to be located outside of Okinawa.
    So it seems clear that we need an alternative to the plan 
to build a replacement facility at Camp Schwab. Otherwise, the 
current Futenma Air Station is going to stay open and 
operational for the foreseeable future.
    Now, in the NDAA we have a number of requirements relative 
to this issue that will need to be met before any funds, 
including funds that are provided by the Government of Japan, 
may be obligated or expended to implement realignment. There is 
the Marine Corps Commandant's submission of a report of his 
preferred force laydown. There's a requirement that we see a 
master plan for the construction of the facilities and 
infrastructure necessary to implement the Commandant's 
preferred force laydown. We need a certification by the SECDEF 
that tangible progress has been made on the replacement 
facility, and a number of other requirements.
    Are you participating or have you participated in meeting 
those requirements that are laid out in our defense 
authorization bill?
    Admiral Willard. We are participating, yes.
    Chairman Levin. In each of them?
    Admiral Willard. Yes.
    Chairman Levin. Do you know how far along they are? When do 
we expect that that will be filed with us?
    Admiral Willard. I don't have a date for you, Senator. I 
can tell you that the deliberations have been continuous. In 
fact, before those conditions were laid down to DOD we were 
offering a variety of options to the SECDEF as events in the 
Okinawa area were stalled over the past couple of years. So 
PACOM has been involved in sharing about 25 options with DOD 
over time and the preferred laydown that you refer to is one of 
those. So we are very much engaged and will continue to assist 
in determining the final answers to your questions. Obviously, 
the Japanese get a vote in this in terms of progress.
    Chairman Levin. Right. Whatever we do, we intend to do it 
jointly with the Japanese, and that's an important part of our 
intent.
    Relative to China, you've testified a bit on the growth of 
the Chinese military. What do you expect the effect of the 
administration's refocus on Asia to be on China's military 
growth and posture in the region?
    Admiral Willard. We've not seen China's military growth 
affected by the announcement, nor do we expect it to be. It has 
continued relatively unabated. The Chinese are obviously very 
interested in the statement that the United States intends to 
focus on the Asia-Pacific region. I think they see themselves 
in that statement, perception or not, and will continue to 
observe very closely the actions that the United States takes 
to back up those words.
    Chairman Levin. Admiral, you've made reference to the 
strategic guidance that was released by the administration 
recently. Do you support that new strategy?
    Admiral Willard. I do.
    Chairman Levin. Are you satisfied that the fiscal year 2013 
budget supports that new strategy?
    Admiral Willard. I am. As we look at the budget submission, 
the strategy establishes global priorities. The budget 
establishes force structure in terms of acquisitions across the 
Services. How that acquisition strategy is applied to the 
strategic priorities globally will, in effect, answer the 
strategy or not. So this is about the application of what we 
buy, I think, more than anything.
    Chairman Levin. Admiral, you have, I believe, indicated 
that you support the United States becoming a party to the 
United Nations Convention on the Law of the Sea (UNCLOS). I 
would like to press you, because this is your last hearing 
before us, a bit more on that. Can you tell us whether, in your 
judgment, joining this treaty, this convention, will support 
our military operations in the Asia Pacific and whether not 
being a party to that convention disadvantages the United 
States?
    Admiral Willard. Thank you, Mr. Chairman. I think it's a 
great question and timely. I do think that not being a signator 
disadvantages the United States in a particular way. I would 
offer that since 1994 the U.S. Armed Forces have been adhering 
to the legal framework that is consistent with the UNCLOS, and 
we continue to, and we continue to share UNCLOS issues and 
debate UNCLOS legal definitions with our counterparts 
throughout the Asia Pacific.
    Chairman Levin. ``UNCLOS'' is Law of the Sea?
    Admiral Willard. Law of the Sea.
    What the United States doesn't have as a non-signator is a 
seat at the table when the convention is debated or as the 
convention evolves by the various countries that have ratified 
it. I think it's important that the United States have a seat 
at that table. At the end of the day we believe that the 
elements that caused the convention to be set aside in the 
1980s, generally in the area of the commercial-related articles 
within it, have all been corrected and should at this point be 
candidate for ratification. We, again because UNCLOS is so 
important as a framework for determining the actions that all 
nations take in the maritime domain around the world, believe 
strongly that the United States must have a voice in this and a 
seat at the table when we debate UNCLOS in the future.
    Chairman Levin. Does China have a seat at the table?
    Admiral Willard. They do.
    Chairman Levin. Thank you.
    Senator Inhofe.
    Senator Inhofe. Thank you, Mr. Chairman.
    First, let me just respond to the last line of questioning. 
I want to make sure our witnesses know that I'm probably not 
the only one on this side of the table here who disagrees with 
the administration's position on UNCLOS. In fact, I'd like to 
make a formal request, and I will do so in writing, Mr. 
Chairman, that we actually have a hearing on this treaty. I 
think that would be very appropriate to have.
    I know that about 10 years ago we had two hearings, one by 
this committee and the other by the Environment and Public 
Works Committee that I was chairing at that time. But I won't 
get into that now.
    I would like to have you send me something for the record, 
Admiral Willard, as to what specific things have changed since 
the 1980s, actually in two shifts, since the 1980s and the 
1990s, that should change our position on UNCLOS, if you would 
do that for the record.
    [The information referred to follows:]

    The legal regime reflected in United Nations Convention for Law of 
the Sea (UNCLOS) promotes two fundamental tenets of the U.S. strategic 
perspective on security and stability in the world: (1) preservation of 
freedom of access and use of the seas, and (2) the rule of law.

         The Convention preserves freedom by codifying the 
        rights, freedoms, and uses of the sea for all nations, 
        including the United States. This, in turn, promotes our 
        economic and security interests.
         The Convention upholds the rule of law by effectively 
        balancing the interests of coastal states and user states, 
        through precise terminology and concise legal rules. As a 
        coastal state and user state, the United States benefits from a 
        stable legal regime, immune to easy manipulation by others.

    U.S. accession to the Convention would send a strong message to the 
world that we are serious about preserving maritime freedoms and 
upholding the rule of law.

         In the U.S. Pacific Command (PACOM) area of 
        responsibility (AOR), nations with longstanding excessive 
        maritime claims (e.g., Philippines and Vietnam) are modifying 
        those claims, consistent with UNCLOS.
         These member-states cite upholding the rules-based 
        approach of the Convention to resolving the South China Sea 
        disputes as a reason for their efforts.
         Throughout the PACOM AOR, my staff, my component 
        commanders, and I are often asked, ``will the United States 
        ever join UNCLOS?'' We interpret this question as a call by our 
        allies and partners to support efforts to uphold the Convention 
        against those who seek to manipulate it and the underlying 
        customary international law.
         U.S. accession would send a strong message to the 
        nations of the Asia-Pacific region that the rule of law 
        reflected in the Convention is worth upholding and preserving.
         U.S. accession could encourage other nations in the 
        region to reform their excessive maritime claims as Vietnam and 
        the Philippines have begun to do.

    Continuing to operate as an outsider to the legal regime 
significantly undermines our credibility when we attempt, on a 
recurring basis, to challenge and protest the failure of other nations 
to adhere to international rules governing uses of the oceans.

         We routinely cite the rules contained in UNCLOS, 
        regarding maritime navigation, maritime safety, sovereignty, 
        and jurisdiction, among others as being universally applicable.
         We rely on the rules in UNCLOS when criticizing 
        nations for various actions that we find inconsistent with 
        international law in the maritime domain.
         The effectiveness of our challenges to violations of 
        international law regarding uses of the oceans, are handicapped 
        by the fact that members of UNCLOS respond ``How can you 
        lecture us about failing to comply with UNCLOS when you are not 
        even a party to it?''
         Consequently, U.S. objections are often ignored or 
        dismissed.
         Becoming a party to UNCLOS would significantly 
        strengthen our standing and credibility when demanding 
        adherence to international law in the uses of the oceans.

    The United States faces a different world today in which some 
rising nations seek to challenge the existing rules-based international 
order.

         When UNCLOS was negotiated, the United States shared a 
        converging interest with its leading competitor (i.e., the 
        Soviet Union) in preserving the rights, freedoms and uses of 
        the sea.
         Today, there are rising nations (e.g., China) that do 
        not share this converging interest in preserving these 
        freedoms. Moreover, those nations also do not fully respect the 
        concepts behind adherence to the rule of law. Instead, they 
        view the law as a tool to be used when useful and ignored when 
        necessary. China refers to this concept as ``Legal Warfare.''
         In our view, the best way to prevent that manipulation 
        of the law is to guard it closely from within the system.
         So long as the United States remains outside the 
        established rule-set of the Convention as a non-party, we face 
        an unnecessary impediment to our ability as a nation, 
        diplomatically and militarily to preserve the rules embodied in 
        the Convention.

    The United States cannot preserve freedoms and uphold the rule of 
law by our military presence or activities alone.

         Unlike conventional law, customary law is constantly 
        subject to change and evolution over time through state 
        practice of all nations.
         Critics of U.S. accession who argue that U.S. military 
        superiority alone can uphold the legal regime reflected in 
        UNCLOS as customary law ignore the reality that the United 
        States cannot depend solely on one element of national power to 
        protect national interests.
         Relying on the U.S. military as the sole means to 
        protect U.S. interests sends the wrong message to rising 
        nations, such as China, that they too should rely upon their 
        militaries to resolve international disputes, such as those in 
        the South China Sea.
         To maximize the likelihood of achieving our strategic 
        objectives, the United States should leverage all elements of 
        national power, including diplomatic, informational, and legal.

    The primary concern of President Reagan with the final text of the 
Convention involved the issue of deep sea-bed mining. According to 
President Clinton, and as agreed to by Presidents Bush and Obama, those 
concerns were effectively mitigated between the time that President 
Reagan decided not to sign the Convention in 1982 and 1994 when changes 
to the Convention were agreed.

         President Clinton submitted the revised Convention to 
        the Senate for ratification in 1994, stating that the changes 
        addressed President Reagan's concerns.
         Presidents Bush and Obama implicitly agreed with 
        President Clinton when they supported Senate ratification.

    According to Presidents Clinton, Bush, and Obama, all of our 
national security interests were preserved in the final text of the 
Convention.

         When the Convention was negotiated in the 1970s and 
        early 1980s, the United States was a leading nation at the 
        table throughout.
         Three successive Presidents, from both parties and 
        leaders of the U.S. military have consistently supported U.S. 
        accession to the Convention.

    As described above, U.S. accession would bolster, not impede, 
global U.S. military activities.

         Codifies rights, freedoms and uses of the sea critical 
        to the global mobility of our military forces, including the 
        rights of innocent passage, transit passage, archipelagic sea 
        lanes passage, the freedoms of navigation and overflight, and 
        ``other internationally lawful uses of the sea'' (e.g., 
        military activities, operations, and exercises).
         The U.S. military will not be subject to compulsory 
        dispute settlement procedures (i.e., international courts or 
        arbitration).

                 The Convention expressly permits member-states 
                to opt out of those procedures for ``disputes 
                concerning military activities.''

         The Convention expressly exempts foreign ``warships, 
        naval auxiliaries, and other vessels or aircraft owned or 
        operated'' by a member-state from coastal state regulations of 
        the marine environment.

    Senator Inhofe. Admiral Willard, I have always been 
concerned about the quality of our intelligence on North Korea. 
There have always been a lot of surprises there. I won't repeat 
the details: my observation back in August 24, 1998, when we 
asked the question how long it would be until North Korea would 
pose an Intercontinental Ballistic Missile threat and they were 
talking about around 3 to 5 years, and it was 7 days later, on 
August 31, 1998, that they actually did fire one. It was a 
Taepodong 1.
    I'm concerned about their progress now and the three-stage 
rocket that they actually were able to launch in 2009. So I 
guess I'd just ask you, are you satisfied with the quality of 
the intelligence we're getting on North Korea?
    Admiral Willard. Senator, we know a great deal about the 
various structures in North Korea, including the efforts 
they're making to nuclearize and develop ballistic missile 
delivery capabilities. That said, there is never perfect 
information with regard to North Korea in virtually any area.
    I'm also satisfied with the emphasis that's being placed on 
North Korea, given the importance of what you've suggested, and 
the efforts specifically by the entire intelligence federation 
to provide me the kind of information that we require to track 
North Korean developments day to day.
    Senator Inhofe. Okay, I think that's significant.
    In terms of the 29-year-old replacement for Kim Jong Il, my 
impression is that it's just more of the same and perhaps not 
really going to be a major change in terms of decisionmaking. 
What is your opinion of Kim Jong Eun?
    Admiral Willard. We think that in general he's a Kim and 
he's surrounded by----
    Senator Inhofe. He's a Kim, yes.
    Admiral Willard. He's surrounded by an uncle and Kim Jong 
Il's sister and others that I think are guiding his actions. So 
in that sense we would expect, as you suggest, more of the 
same. The strategy has been successful through two generations. 
It wouldn't surprise us to see an effort to make the strategy 
work for a third.
    That said, he's a young man and relatively untested and 
those around him may have some differences of opinion regarding 
the direction that North Korea heads. So we are interested in 
seeing the influence of a treaty ally like China or the 
direction that they take in various security areas, including 
proliferation and nuclearization.
    Senator Inhofe. All right, I appreciate it. I'm going to 
ask you something about what you said on China, but first I 
want to ask General Fraser.
    I've had a particular interest in Africa and U.S. Africa 
Command (AFRICOM) for quite some period of time. I'd like to 
ask you, what type of support is TRANSCOM able to give AFRICOM 
in their AOR today?
    General Fraser. Thank you, Senator. As we look to AFRICOM, 
we've managed to meet all their requests and their 
requirements. That has come in the form of support to the 
Libyan operations, where we were able to provide both lift and 
tanker support. They had follow-on requests for Libya, which we 
provided some support for. We sailed in some ships to provide 
equipment into Libya. That's one form. We still provide support 
also to the Combined Joint Task Force for the Horn of Africa, 
meeting those requirements.
    But also our new command, the JECC, has had several 
requests for our planners. So Admiral Stearney and his folks 
have moved forward to help out General Hamm in some of the 
planning that he's been doing. So we have not failed to meet 
any of the requests from AFRICOM.
    Senator Inhofe. Is it your opinion that AFRICOM is getting 
adequate resources to carry out the mission?
    General Fraser. Yes, sir, it is.
    Senator Inhofe. If you find that it's not, if you'd let us 
know it would be very helpful.
    Getting back to something that maybe I misunderstood, in 
terms of China's military buildup, we know that it's been an 
average of what, 18.75 percent a year now. I remember back 
during the Clinton administration when they were even more 
aggressive than that. Did I understand you to say that you 
don't witness the growth in their capabilities or you do? Would 
you clarify your statement as to your observation of China's 
threat and capabilities?
    Admiral Willard. I think I tried to characterize it as 
growth unabated, so they continue to advance their capabilities 
and capacities in virtually all areas.
    Senator Inhofe. In all areas. That's something significant 
because it's conventional forces, and then they seem to be 
having it all. I look at that as a great threat. I remember 
early on when I was first elected. Actually, that was over on 
the House side. There was a book by Anthony Kubek called, 
``Modernizing China.'' I don't know whether you've ever read it 
or not, but I think for anyone who is dealing with China and 
Taiwan, it would be worthwhile reading that.
    Let me ask you, do you still feel the same way about my 
favorite programs, 1206, 1207, 1208, International Military 
Education and Training (IMET) and these programs?
    Admiral Willard. We do, very strongly, Senator. 1206 in 
particular because of the work that we're doing with the 
Philippines and others in counterterror has been very helpful, 
and we continue to rely very heavily on those funds.
    I would just comment that we think IMET is a most powerful 
tool in terms of exposing our foreign counterparts not only to 
U.S. education, military education, and standards and values, 
but also in bringing the nations, the allies, and partners 
together in the region as alumni. So these are very, very 
important programs as it relates to strengthening our allies.
    Senator Inhofe. The IMET program has been so successful in 
our change in focus that we recognize we're not doing them the 
favor, really they're doing us the favor. Once an allegiance, a 
close relationship, is established, it stays forever.
    Admiral Willard. I agree.
    Senator Inhofe. Yes, sir.
    Thank you, Mr. Chairman.
    Chairman Levin. Thank you very much, Senator Inhofe.
    Senator Lieberman.
    Senator Lieberman. Thanks, Mr. Chairman.
    Thanks, Admiral Willard and General Fraser, for your 
service.
    Admiral, thanks for all your years of service, and to your 
wife also. You've really given great service to our country and 
great leadership in the years I've come to know you through my 
membership on this committee. I must say that I've been 
impressed over the years that you've not only proven yourself 
to be an exceptional military leader, but I think you've always 
had an ability, while carrying out the details of your military 
responsibilities, to see the larger picture in which you and 
the United States have been operating, and I've always found my 
conversations with you to be very instructive.
    So I appreciate that very much and wish you the best in 
your next chapter.
    Admiral Willard. Thank you.
    Senator Lieberman. So let me begin, having said that, with 
a larger picture statement and question, which is that in the 
travels over the last year that I've been able to do in the 
PACOM AOR, and meeting people here as they come from the 
region, it strikes me that this rebalancing of our foreign and 
military policy toward the Asia Pacific is not just an 
initiative on our part in pursuit of our economic and security 
interests, but it is really a reaction to a kind of demand from 
within the region that we be more involved.
    It's striking, I think, and perhaps not appreciated enough 
by people around the country, at a time when there's a lot of 
concern about America being in decline, America the unpopular, 
that not only among the more traditional allies has our 
relationship grown stronger, but that there are whole new 
groups of countries that are seeking stronger relations with 
us, such as Vietnam and Myanmar, for instance.
    So I wanted to ask you at the beginning if you agree that 
that's the case and, if so, why? Is it just about fear of China 
and the hope that we will balance China as part of our 
rebalancing? Or is there more to it than that?
    Admiral Willard. Thank you. I do agree with your statement, 
and I think I've testified in the past, the amount of 
encouragement that has come from the region, from virtually all 
the actors in the region, with regard to their desire for U.S. 
staying power and influence in the region and increased 
engagement.
    There was a perception over the course of the last decade 
of warfare that our presence in the Asia-Pacific region was 
diminished, and, in fact, our ground force presence was 
decremented by about 10 percent as we in PACOM rotated forces 
in and out of the theater of wars over the past 10 years. But 
our ship presence, and our aircraft presence, remained 
relatively steady, albeit working the ships and airplanes hard 
to do it. So we've maintained a presence, but there was a sense 
in the region that the U.S. commitment to the region had been 
somewhat diminished for a variety of reasons.
    I think that refrain has not stopped. I don't think it's 
just about China. I do think that the fact that China has 
advanced its military capacities to the extent that it has 
certainly is one element of that. But I think there has been a 
desire, a strong desire in the Asia-Pacific region, 
continuously for U.S. engagement economically and otherwise.I 
think they regard a U.S. presence there as unquestionably 
contributing to the security and stability of the Asia-Pacific 
region.
    It's not lost on anyone that for nearly the past 6 decades 
we've enjoyed relative security and growing prosperity.
    Senator Lieberman. Right.
    Admiral Willard. So I think there's a desire for U.S. 
engagement regardless, and certainly there is, I think, a great 
deal of optimism in the region as a consequence of the recent 
announcements that have been made.
    Senator Lieberman. That, in fact, the role that America has 
played in providing stability and security in the Asia-Pacific 
region over the last 6 decades, as you've said, has been one of 
the preconditions of the enormous growth and prosperity in the 
region over that time.
    Admiral Willard. Absolutely.
    Senator Lieberman. Is it fair to also say that part of what 
draws a lot of people and countries in the Asia Pacific toward 
us may well be our form of government, that during this period 
of time not only has there been an economic prosperity growing 
in the Asia Pacific, but democracy has expanded as well?
    Admiral Willard. It has. I think when you look at countries 
like India and the engagement that's ongoing between the United 
States and India; Indonesia, which has a relatively nascent 
democracy, that has been very successful, and its desire for 
increased engagement with the United States, and others, that 
you are right. There are a lot of U.S. values that are highly 
regarded in the region and I think our form of governance is 
one of them.
    Senator Lieberman. So in the midst of all that, I worry 
that as we get this move toward us and urging us to be more 
involved for mutual economic security, even political 
governance interests, that we're sending a message out by the 
cuts in defense that are part of the Budget Control Act (BCA), 
leaving aside sequestration, that maybe we're not going to be 
able really to deliver on our promise of increased involvement 
or, at worst, that people in the region and countries will 
think it's rhetoric.
    So I wonder how you feel about whether the cuts required 
under the BCA of last year, not the potential sequestration, 
could impose risks on our strategy in the PACOM AOR, and 
whether you've heard any of those concerns from political or 
military leaders in the region.
    Admiral Willard. I think the region broadly recognizes two 
things: one, that post-two wars a decade long that, as the 
United States has in the past, a reduction in the defense 
budget following those wars has generally always occurred and 
is occurring once again. I think when you combine that fact 
with the fiscal circumstances and challenges that our country 
faces in debt and deficit, it does raise questions in the 
region regarding what the true extent of cuts to the defense 
budget could be.
    I think the second dimension to this issue is how in a 
reduced budget environment the Asia Pacific will be attended to 
with regard to force structure and readiness in the future. So 
I think on the one hand it's not particularly surprising to 
anyone in the region that our defense budget is being reduced, 
sequestration aside, but I think that it has raised questions 
and we're asked to clarify how in the reduced budget 
environment that's being widely publicized that we will meet 
our requirements in the Asia-Pacific region. Again, I would 
offer that the answer to that is, regardless of the adjustments 
in force structure that take place, how we emplace that force 
structure, bias that force structure into regions of the world 
that matter most, is I think in the end, what will answer the 
mail.
    Senator Lieberman. Well, to me that's a significant answer, 
and it's one that I hope we will keep in mind as we go forward 
with our work on the defense authorization bill and our 
colleagues in the Appropriations Committee do the same on the 
DOD budget. I hope we can find ways to add on to what the 
administration has requested pursuant to the BCA.
    I thank you very much again for your service, your 
leadership, and your testimony today.
    Admiral Willard. Thank you, Senator Lieberman.
    Chairman Levin. Thank you, Senator Lieberman.
    Senator Chambliss.
    Senator Chambliss. Thanks, Mr. Chairman.
    Admiral, to you, let me just echo what others have said 
with respect to thanking you for your service to our country. 
You have certainly served in multiple roles of leadership 
during the time that you have served America and you're to be 
congratulated for that. Thanks also to your wife for her 
commitment. I'm just pleased to hear you've made the wise 
decision of retiring to the Atlanta area. I look forward to 
continuing to take advantage of you and your expertise since 
you'll be close by.
    Let me talk to you for a minute about China. You discussed 
in your statement the continuing growth of China and their 
increasing military power, obviously. Specifically, you comment 
that China's military modernization, and in particular its 
active development of capabilities in cyber and space domains, 
and the question all these emerging military capabilities raise 
among China's neighbors about its current and long-term 
intentions, is one of the main security challenges confronting 
the United States across the region.
    China is developing anti-access and area denial 
capabilities that may shift the balance of power in the region. 
The types of platforms and capabilities that China is 
developing have been interpreted by some to limit freedom of 
movement by potential adversaries and also to require potential 
adversaries to conduct military operations at increasing 
distances.
    Can you comment on what you believe needs to be done in the 
Pacific theater to preserve the United States' and our allies' 
freedom of movement and access across the region?
    Admiral Willard. Thank you, Senator. I think first of all 
it needs to be understood that in terms of U.S. military 
presence, we remain present throughout the region and in all 
areas wherefreedom of action is required. So whether we're 
talking the South China Sea, East China Sea regions, Philippine 
Sea, or elsewhere in the Asia Pacific, the United States 
remains present.
    In terms of operations in what could be a potentially 
denied environment, I think it's very important that the United 
States make the necessary investments to ensure its military 
access to those regions. I would just offer that in the South 
China Sea alone the sea lines of communication carry $5.3 
trillion of regional commerce, of which $1.2 trillion is U.S. 
commerce, and the U.S. military must be present there to ensure 
the security of those sea lines of communication and that 
important economic commerce for the United States and for our 
regional allies and partners.
    So we will be present, and it's important that we make the 
necessary investments to assure that presence even in a denied 
area scenario.
    Senator Chambliss. In that same vein, part of the assets 
that you have in the inventory there now are a limited number 
of F-22s, limited by the fact that we only have a limited 
number that have been produced. We've maintained air 
superiority and air dominance in that region since the Korean 
War and it's a vital part of our defensive mechanisms and 
posture there. Now, with those limited number of F-22s and it 
looks like potentially a slowdown of the production of F-35s, 
are you concerned long-term? I realize short-term maybe not, 
but long-term do you foresee this as a problem when it comes to 
maintaining air dominance and air superiority?
    Admiral Willard. Sir, I'm satisfied with, as you suggest, 
short-term, the number of F-22s that are on hand and available 
to us. I think we're all somewhat concerned long-term to see 
that the F-35, in its development, provides the kind of 
capabilities to our Air Force, Navy, and Marine Corps that it 
was designed to. So very interested to see that program remain 
healthy and deliver the capabilities that we require out there.
    Senator Chambliss. Would you consider that weapons system 
imperative for the long-term capability of air dominance and 
air superiority?
    Admiral Willard. I would. I think fifth generation 
capability is mandated. We have others in the world that are 
developing those capabilities and, as you suggest, if we 
requiredominance in the air in the event of a contingency, then 
certainly the fifth generation fighter capability is part of 
that equation.
    Senator Chambliss. General Fraser, the President's 2013 
budget plans to cut strategic airlift and retire over 200 
aircraft in fiscal year 2013 and nearly 300 aircraft over the 
Future Years Defense Program. The President's budget will 
reduce mobility capacity by retiring all C-5As, retiring or 
cancelling procurement of all planned C-27Js, and retiring 65 
C-130s. After these retirements there will be a fleet of 275 
strategic airlifters and 318 C-130s. In addition, the Air Force 
will retire 20 KC-135s and maintain a fleet of 453 air 
refueling aircraft.
    With such a reduction of strategic mobility and airlift and 
the cancellation of a whole airplane program, how do you plan 
to maintain supply, personnel transport, and logistics chains 
that require significant airlift capabilities? What additional 
airlift requirements do you foresee in the future for the 
various theaters in which TRANSCOM operates, and how confident 
are you that you're going to have the airlift capabilities that 
you need?
    General Fraser. Senator, thank you very much. First off, I 
would start by saying that we have a new strategy. The force 
structure that is put forth supports that strategy and it is 
also backed by some analysis that we have actually completed in 
looking at that strategy, and also in working with the 
combatant commanders.
    With respect to specific platforms that you talked about 
there, I would comment first on the tankers. You mentioned a 
20-tanker reduction. I certainly support that. What we have 
seen that isactually enabling more capability and capacity with 
respect to tankers is that depots have gotten better. So as we 
look to the future and they have streamlined their processes, 
we're seeing fewer aircraft in the depot, which certainly 
allows us to take out some of the more costly aircraft there 
and therefore the reduction with respect to those tankers.
    Historically, as I recall, they've always planned on about 
19 percent of the force being in depot and we're seeing 
something more along the lines of 10 percent in the future. So 
that's added capability, coupled with the contract, the KC-46, 
which is key to the future, and bringing that system online, 
will give us both air refueling and some lift capability as we 
transition that aircraft into the Active Duty and are able to 
support the various theaters around the world. So the KC-46 is 
a part of that movement to the future and modernizing that 
fleet.
    There's also a modernization effort on the KC-135s that we 
need to continue, which enables them to continue to perform in 
the future. They're going to have to bridge to the future 
tanker assets as they come aboard.
    As I look at the 130s, the numbers that they're talking 
about are supportable. When I look at the 318, that also 
includes approximately 50 C-130s to continue to provide direct 
support to the Army, which is something that the Air Force has 
moved in over time and has shown that we can do that in the 
theater. I think, based on my discussions with the commanders 
in the field, they are very pleased with the support that they 
are getting with the assets that are there.
    The C-27, I had the opportunity recently to be in the 
theater. I talked to the folks there. It's performing well and 
I'm very proud of the service and what those men and women are 
doing. But I'd also comment that it's a costly platform. It's a 
niche platform. So as we look at the strategy and we look to 
move into the future in a multi-capable aircraft, something 
like the C-130, a modernized C-130J as we look to the future, 
something that's going to give us more capability at reduced 
cost, which is something that is certainly worth considering.
    So when I look at that from a holistic standpoint, it's 
certainly supportable. The C-130Hs are going to be modernized. 
That's a program that is ongoing and the Air Force needs to do 
that as they enter into some items that are on that aircraft 
that are going to time out and give them access. So as they 
optimize that fleet of the future, it will be a very capable 
force, a modernized force of 318 C-130 aircraft.
    To the strategic lift, looking at that, I am supportive of 
the strategy that's put forth, and as we evaluated those 
numbers and looking at the positive things that are happening 
with the C-5M, for instance, it has a higher mission capability 
rate, which gives us greater capacity and capability. It's 
currently the only aircraft that we can actually fly the polar 
routes on. You can't do that with the C-5As, for instance, and 
load much on it. So there's great capacity in these Ms as we 
move to the future.
    So modernizing the C-5s and going to 52 C-5Ms in the future 
gives us greater capacity and capability, with increased 
mission capable rates, from what we're seeing currently on the 
As now, around 55 percent, to about 75 percent. So there's 
greater capacity there, and so that's very positive with 
respect to the strategic airlift.
    Also along the same lines, the C-17s continue to perform 
magnificently in the theater. Every time we have turned to the 
C-17, it has always been there. So as we move to the future 
with the C-17s that we have, there will be plenty of them, and 
so that's how we're able to come up with the strategic airlift 
to be able to support the theaters in the future.
    It will support the strategy as I mentioned, and the two-
war construct remains in effect. We just have to manage those 
forces, it's what we'll have to do, and that's what you were 
talking about there. We in TRANSCOM will ensure that we do that 
to support the combatant commanders' requirements.
    Senator Chambliss. Thank you, Mr. Chairman.
    Chairman Levin. Thank you, Senator Chambliss.
    Senator Reed.
    Senator Reed. Thank you very much, Mr. Chairman.
    First let me begin by thanking and commending Admiral 
Willard and Mrs. Willard for their extraordinary service to the 
Navy and to the Nation. Thank you, sir, for what you've done. 
Ma'am, thank you too, and your personal kindness also.
    Let me just quickly follow on the point that Senator 
Chambliss made, General Fraser, about strategic airlift. I 
think it should be noted that Senator Ayotte played a very 
critical role last year in addressing this issue of C-5As, and 
we lowered the threshold to 301. Now your proposal, as you 
indicated, is 275 strategic airlifters.
    Just to follow on the points you made, which I thought were 
excellent, it is not just a question of supporting current 
operations, but also the obligation to reconstitute quickly, if 
necessary. Are you prepared to reconstitute and increase 
efforts if called upon, given the proposed 275?
    General Fraser. Sir, we are postured well to support any of 
the requirements that we have. As you are aware, we have had 
pop-up requirements, and with the flexibility that we have 
within our system as the distribution process owner and 
synchronizer we're able to reach in and get assets when we need 
them. I could give examples of where we're able to do that, 
reaching in with the ability to pull in-service or in-transit 
aircraft to do a different mission.
    A case in point would be support for aeromedical airlift 
that we were asked to do out of Libya. After Libya operations, 
we were asked to find the necessary assets and, using those in-
service assets, diverted and utilized a C-17 to actually pick 
up some critically injured individuals and bring them back to 
the United States with a critical care team. The other thing 
that we were able to do was work with U.S. European Command, 
utilize some of their assets that they actually had for C-130s, 
to bring other injured back.
    We have a very flexible, a very resilient system and 
process to be able to respond to these pop-ups.
    Senator Reed. Is it fair to say that, rather than just the 
number of platforms, it's the capability of individual 
platforms and the system you use that that gives you advantages 
and gives you the comfort that you can reduce the number of 
platforms?
    General Fraser. It is, sir. It's also the support, the 
tremendous support that we actually get through the Civil 
Reserve Air Fleet (CRAF) program. The CRAF and our commercial 
partners play a big role. An example of that is how they were 
able to turn and support us when we were asked to bring the 
troops out of Iraq before the holidays. That's a very busy time 
of the year, and with the accelerated timeline that we were 
given, we were able to get 99 percent of the troops back to the 
United States before the holiday period. That last 1 percent 
came home before the end of the year as they were turning in 
some final equipment.
    So that's the flexibility that we have within the system 
for both organic and our commercial aircraft.
    Senator Reed. Thank you.
    Let me change topics. General Fraser, the NDN is 
increasingly key to our operations in Afghanistan. Primarily at 
this point it's a one-way system, but you and your colleagues 
are trying to make it a two-way system, not only delivering 
material into the country, but also planning to withdraw 
material out. Can you comment on the status and the potential 
importance and growth of the NDN through Kyrgyzstan and other 
countries?
    General Fraser. Sir, thank you very much. We have had 
tremendous support through the NDN. Currently, with the border 
closed in Pakistan, we're able to continue to support ongoing 
operations in Afghanistan and we can continue to do that 
because of the NDN, which is allowing us to bring goods in.
    But I would also comment along the same lines, it's not 
just the NDN that's allowing us to do that. It's the other 
aspects that we have with multi-modal. Multi-modal is allowing 
us to move our assets to the theater via surface and then fly 
them in there at the end. So we have a resilient system that 
gives us more than one way to support the theater, which is not 
allowing us to have a single point of failure.
    Along the lines of the retrograde, it's a daunting task, I 
will admit that. But I'll also say that one of the first trips 
that I made was to Central Asia back in December, a very 
positive trip, and had a very good outcome from that trip. We 
now have two-way approval to move non-lethal equipment back out 
of Afghanistan. In fact, we have already set ourselves up for a 
proof of principle and have received approval from the 
countries to do this through what we call the KKT route, which 
is through Kyrgyzstan, Kazakhstan, and Tajikistan. Also, Russia 
has approved this and Uzbekistan recently approved this. Not 
only have Russia, et cetera, approved the non-lethal, but we 
also have approval to do wheeled armored vehicles. This is 
something that we didn't have before.
    We continue to develop these relationships, and so that was 
a very profitable visit going over there. So now we'll run this 
proof of principle to check the processes, to check the 
procedures, but also check the velocity of what could be in the 
future.
    I will also comment, though, that with the amount of 
equipment, and working with the folks on the ground there, we 
need the Pakistan Ground Lines of Communication (PAK GLOC) open 
because of the large numbers that we're talking about that we 
need to bring out in a timely manner. We're tasked this year to 
bring another 23,000 troops out by the 1st of October. We're 
already identifying excess equipment now with the commanders on 
the ground. We have approval to set up a materiel recovery 
element team that's in theater, which is going to help 
facilitate this.
    The other thing I would comment on is, we're also setting 
up some multi-modal operations, where we are now being more 
flexible with all aircraft that are flying in the theater. As 
every aircraft goes in, if it has pallet positions and it has 
capacity on it, then we are making sure that we put something 
on that aircraft and bring it back out, in order to maximize 
that lift and try to get ahead of it as best we can.
    We have a number of things that are going on, two-way 
flows, all those other things that I mentioned.
    Senator Reed. Thank you.
    Admiral Willard, if I may, you have many challenges in the 
Pacific and you can categorize them in general terms in many 
different ways. But one is basically access. One impression I 
have is that for surface ships access is more problematic 
because of the ability to detect ships and engage with 
precision weapons, and that as a result submarines in the 
Pacific have a greater capability to access places. Is that a 
fair generalization?
    Admiral Willard. It is.
    Senator Reed. So that makes, in your view, the submarine a 
key aspect of your strategy and your ability to gain access in 
contested areas?
    Admiral Willard. It does.
    Senator Reed. Thank you very much.
    Chairman Levin. Thank you, Senator Reed.
    Senator Brown.
    Senator Brown. Thank you, Mr. Chairman.
    So, General Fraser, is it true that we're having difficulty 
going through Pakistan to provide transport.Is it more 
difficult now?
    General Fraser. Sir, the PAK GLOC is shut down at this 
time.
    Senator Brown. Right. We give them billions of dollars in 
aid. That's why, Mr. Chairman, I'm floored that we're giving a 
country billions of dollars in aid and they can't accommodate 
us to allow for the safe transport of goods through their 
country. So that's something I hope, Mr. Chairman, we try to 
address. That's not for you, but it's more for us, sir.
    I just want to take it a little step further. What level of 
risk do we assume by reducing the C-5 fleet, particularly in 
the area of oversized air cargo capability?
    General Fraser. Sir, backed by analysis and against the new 
strategy that has been put forward, we think that any increased 
risk is manageable as we look to the future. Oversized/outsized 
cargo, when we look at the scenarios that we run, we can meet 
the mission.
    Senator Brown. Do you believe that having a robust 
strategic airlift capability on the east coast is part of that 
overall strategy?
    General Fraser. Sir, the inherent flexibility that we have 
with air is, of course, we can shift and we can swing it to 
where we need it. It is not uncommon for us to take forces from 
one theater to another dependent upon the operations that are 
needed, whether it's supporting a Haiti operation where we have 
support of aircraft out of the Pacific, or whether it's in 
support of a Libyan operation, where we engaged the total 
force, we have a number of volunteers to support the tanker 
bridge.
    These types of things, the flexibility of our air fleet we 
can position it where we need it.
    Senator Brown. But in particular with regard to the east 
coast of the United States, do you think that it's important to 
have a strategic airlift capability in this part of the 
country?
    General Fraser. Sir, again it's not about where it is 
located; it's the inherent flexibility that I have that I'm 
able to position it where I need it, and where it comes from is 
not something that I focus on.
    Senator Brown. Well, it's something that I focus on as a 
Senator, and especially when we have a base like Westover, that 
has incredible airlift capability, has a long and historic 
relationship providing those services, not only with great 
honor, but with great capability. So I was wondering if you 
could comment on how TRANSCOM's mission is affected if that 
capability is degraded?
    General Fraser. Sir, we'll still get the support as we work 
with AMC no matter where the assets are located. They've always 
stepped up and provided what we need.
    Senator Brown. Admiral Willard, the Littoral Combat Ship 
(LCS), how important is that ship with respect to meeting the 
regional threats?
    Admiral Willard. I think it will be very important. I think 
the ship has attributes that certainly we favor out there, 
including its speed, capacity, and shallow draft. So if the 
mission modules are properly adapted, I think it will have a 
wide range of capabilities that can be used in contingency or 
peacetime.
    Senator Brown. So do you think your mission will be 
affected by going below the acquisition program of 55 ships? If 
so, how?
    Admiral Willard. Capacity is a capability in and unto 
itself. I think it's important that we maintain the capacities 
of force structure where we need them. I think the total 
acquisition program is less important to PACOM than the number 
of LCSs that ultimately wind up in that AOR. So however we bias 
those ships, I think it's important that the LCS is there to 
meet the needs that PACOM has.
    Senator Brown. General Fraser, back to you. How does the 
reversibility plan factor into the overall strategy? In other 
words, do you feel comfortable that with 275 strategic 
airlifters we'd be prepared to transport troops and equipment 
to the region in response to unforeseen contingencies? If so, 
what sort of risks are involved in that decision?
    General Fraser. Sir, I am confident in the number 275. We 
also have to understand that we are backed by a tremendous 
commercial partnership that we have through the CRAF program 
and the ability to move both passengers and cargo. They have 
been instrumental in continuing to provide support to the 
theater, whether it's direct or actually through multi-modal 
operations.
    Senator Brown. Admiral, do you agree with that? Do you 
think that we need only 275 airlift mobility assets to meet the 
mission requirements?
    Admiral Willard. I agree with General Fraser's assessment 
of how we will make that number work, yes.
    Senator Brown. I'm deeply concerned about the Air Guard and 
Air Force Reserves, General Fraser. I know it's a big part of 
your operations, and as the Air Force begins to downsize some 
of the things I've heard from a lot of the Air Guard, 
especially concerns about the gutting of that asset--I'm 
wondering if you could maybe talk about that and how it 
affects, it factors into TRANSCOM's overall strategy, because I 
have always felt that that's where the best bang for the buck 
is, and I'd just like to get your thoughts on that.
    General Fraser. Sir, our Total Force--the Guard, Reserve, 
and Active Duty--have always come together to meet the mission. 
We very much value the contributions that our Guard and Resere 
continue to provide us. They have always been there when the 
call went out. I would use the operation in Libya again as an 
example, in that when we needed to set up the tanker bridge we 
turned to AMC, who then reached out to our Guard and Reserve. 
They looked for volunteers. They were ready, they raised their 
hand, and they went forward. So they've always been there and 
volunteered to support the mission.
    Senator Brown. Are you getting a handle on the container 
detention fees that resulted in millions of dollars in 
penalties, and can you comment on what has been done to 
mitigate these fees?
    General Fraser. Sir, we're taking a number of different 
actions with respect to the container detention fees. We 
continue to monitor it very closely. A couple of things that we 
have done recently, I have personally engaged the commanders 
not only at U.S. Central Command, but also I talked to General 
Allen about this when I was in the theater, as well as other 
commanders that are in the field in Afghanistan.
    We have learned some lessons from the past in Iraq with 
respect to our containers and how we manage them. A couple of 
things that we're doing is to try and make sure that when we're 
in Afghanistan, we try to use as many government-owned 
containers as we can and then return those that belong to our 
commercial carriers back into the system as rapidly as we can.
    There's an accountability process that we're also going 
through to make sure that we have a container management system 
that more accurately tracks where these containers are.
    We're actually going to address it in our next universal 
services contract (USC) as we move from what we call USC 6 to 
USC 7. So there are some actions that we're taking within that 
contracting vehicle to, one, give us more flexibility, in other 
words increasing the days of ``free-time'' before detention 
charges start accruing. Also, the fact that we'll go from a 
minimum of 90 days to 60 days before we can buy the container, 
which drives the container purchase price down. So these are 
things that we're working with commanders, with education on 
how important it is for commanders to get the containers back 
into the system. It's a holistic approach.
    Senator Brown. Thank you.
    Senator Lieberman [presiding]. Thanks, Senator Brown.
    Senator Inhofe. Just a unanimous consent request, if I 
could, Mr. Chairman.
    Senator Lieberman. Go right ahead.
    Senator Inhofe. Regarding my opposition to the UNCLOS, I 
ask unanimous consent that an article written by John Bolton 
that appeared in the Wall Street Journal on September 29, 2011, 
be made a part of the record.
    Senator Lieberman. Without objection. Thank you.
    [The information referred to follows:]
      
    
    
      
    
    
      
    Senator Lieberman. Senator Hagan.
    Senator Hagan. Thank you, Mr. Chairman.
    I just wanted to express my deep appreciation and thanks 
for your service, Admiral Willard and General Fraser, and 
particularly, Donna Willard, thank you for all of your 
commitment, hard work, and service to our country, too.
    Admiral Willard, China continues to assert its claim to the 
South and East China seas at the expense of its neighbors. 
Would you expand on the excessive maritime claims the Chinese 
are making in these waters, to include increases in aggressive 
behavior?
    Admiral Willard. Thank you, ma'am. I will, although I would 
offer that China is not the only claimant in those waters whose 
claims are regarded as excessive. So there are, as you'll 
recall, six claimants in the South China Sea: Taiwan and China, 
Philippines, Vietnam, Malaysia, and Brunei. All lay claim to 
features and/or islands in the South China Sea region. Some 
have submitted to UNCLOS their continental shelf claims and so 
on, and in many cases they're disputed.
    What makes China unique is that they've laid claim to 
virtually all of it. The assertion that the South China Sea 
writ large is China's historical water and that all the 
features and islands and consequent resources that are located 
there should be regarded as Chinese I think is the contentious 
issue within the region and among those contiguous nations that 
also claim many of those features.
    We've seen fewer confrontations in 2012 than we did in 
previous years. 2010 was quite a landmark in terms of the 
confrontations that were ongoing. That's not to say they're not 
occurring now.
    So China continues to challenge any vessels that are 
conducting resource surveys, oil and gas surveys for example, 
that are within their claimed space. They continue to often 
shadow military ships and activities that are occurring within 
that claimed space, and they're making continuouslegal 
assertions and demarches to reinforce their claims.
    So they remain aggressive. I would offer, Association of 
Southeast Asian Nations (ASEAN) is carrying out discussions 
with China and has been effective as a multinational forum in 
keeping maritime security and issues with regard to excessive 
claims in the South China Sea on the table, and they are in 
discussions with China.
    Senator Hagan. Why do you think the conflict has been less 
in 2012 versus 2010?
    Admiral Willard. I think that the reaction by the ASEAN 
members, the reaction by the United States in Secretary Clinton 
and Secretary Gates' very strong statements at the ASEAN 
regional forum and Shangri-La dialogues, combined with many 
ASEAN members protesting strongly, and the fact that it was 
made somewhat public I think took China aback and has caused 
them to reconsider that particular approach to their South 
China Sea claims, such that they are endeavoring to continue to 
pursue it, but in a more thoughtful manner.
    Senator Hagan. Let me follow up on China's impact in 
Southeast Asia. Their impact will only grow as its economy and 
drive for energy, raw materials, and markets expands. It's 
precisely this behavior that challenges various countries in 
Southeast Asia to debate their policies and look for regional 
and extra-regional allies. In effect, countries in the region 
are playing several strategic games at once, with each move 
requiring consideration of relationships that they have with 
China, the United States, and other regional actors.
    How can the United States maneuver in this environment to 
develop deeper ties and ensure a positive and organically 
integrated presence in the region to contribute to long-term 
stability?
    Admiral Willard. Thank you. I don't disagree with your 
summary statement in terms of the situation in Southeast Asia, 
although I would add that China's economic growth has benefited 
the entire region and has certainly benefited the United States 
and our economic ties to China. So I think it would be unfair 
to imply that China's influence in Southeast Asia should only 
be regarded from the standpoint of the challenge that it poses.
    I think Southeast Asian nations, most of whom now regard 
China as their number one trading partner, are benefiting 
greatly from that association, as is the United States. So from 
a standpoint of regional prosperity, I think China's rise has 
benefited us all, and we should continue to promote that rise 
and the advance of the Asia region for what it connotes.
    That said, the nations, as it relates to security and even 
as it relates, I think, to their economic reliance on any 
single partner, do desire to strike a balance between China, 
the United States, the European Union, and others, rising 
economies like India and established economies like Japan and 
South Korea.
    So there is a balance that has to be struck and the United 
States, I think, is accomplished in maneuvering in that space, 
where we're attempting to either sustain or obtain a greater 
share of market in areas where the United States can affect 
trade in either direction. Trans-Pacific Partnership is a 
fairly recent initiative to try and advance some of this, and 
we have as a consequence of the Asia Pacific Economic 
Cooperation and the East Asia Summit I think advances that have 
occurred there.
    Senator Hagan. Thank you.
    General Fraser, in your written statement you speak to a 
wide variety of missions, everything from humanitarian response 
to obviously supporting our warfighter. Would you highlight 
some of these missions and speak to how you are able to 
accomplish them, given a very constrained environment?
    General Fraser. Thank you, Senator. The mission that we 
have is indeed a global mission, and it is one that I am 
continually amazed at the flexibility that we have within the 
system to respond in many different areas. One area that we 
were most proud of was with the accelerated withdrawal out of 
Iraq and the ability to be able to partner together with our 
commercial partners, with our organic assets, to then 
accomplish the mission before the holidays was tremendous.
    We've also been able to continue to partner to support 
other organizations. I would highlight the National Science 
Foundation (NSF) recently. I made mention in my opening remarks 
about Antarctica. Something that a lot of people don't realize 
is the support that TRANSCOM gives to NSF.
    Recently, there were issues with the ice pier at the 
McMurdo Station and it was going to put NSF and their 
experiments at risk for next year, as well as the winter-over 
force that stays both at the South Pole and at McMurdo. Our 
people were asked to be innovative and so together we worked 
with the Army for a modular causeway system that had not been 
used like this before, in such a harsh environment, which we 
then used our Surface Deployment Distribution Command, who 
worked to move it from the east coast to the west coast. We 
worked with MSC to then get on contract with a contractor to 
load this onto a ship that also had the containers to take the 
supplies and NSF equipment to McMurdo.
    We then sailed down, NSF got the icebreaker in there, and 
we were able to then deploy the causeway system, offload the 
containers, and so we got mission success. That's another 
agency that we wind up supporting. So that's one end of the 
spectrum.
    We talked earlier about other support to operations, but 
I'd highlight the support that we give our commercial partners 
through piracy operations. This actually goes back to AFRICOM 
and support we give there. Working with our commercial 
partners, we work to ensure where we have military cargo headed 
towards the theater and transiting that area, that we put 
security teams aboard.
    Since we have been doing that, we have not had one of our 
ships pirated, and we are very supportive of the initiative in 
the international community to protect the ships. Normally 
those that are what they call high-board, above 25 feet, and 
moving at high speeds, above 20 knots, are not as much at risk, 
but recently we had one hijacked from another country just 
within the past week or so. So it's a dangerous environment. So 
these are other types of things that we do, not only just 
supporting our troops that are engaged in the theater, but a 
couple of quick examples of other operations that we're very 
proud of, of what we do, all while still supporting the 
warfighter, still doing the things that we're asked to do in 
the theater. They're not wanting for anything with respect to 
the current closure of the PAK GLOC, either. I'm very proud of 
them.
    Thank you.
    Senator Hagan. So supporting the private containers, and 
that's only when DOD supplies are on board?
    General Fraser. That's correct.
    Senator Hagan. As far as security forces on board?
    General Fraser. That's correct.
    Senator Hagan. Thank you. I really appreciate your help 
with the NSF. I think R&D goes a long way in everything we do, 
and your support in that area is outstanding.
    Thank you.
    Chairman Levin. Thank you, Senator Hagan.
    Senator Wicker.
    Senator Wicker. Thank you, Mr. Chairman, and thank you, 
gentlemen. We appreciate the service that both of you have 
provided and are providing.
    Let me begin with Admiral Willard. You were correct in your 
oral testimony to go quickly to the issue of Korea and North 
Korea, to mention the transition there and the uncertainty that 
it brings. Our allies in the Republic of Korea, South Korea, 
have a fleet of F-16s, which is known as the KF-16 in Korean 
service. They're eager to replace their mechanically scanned 
array radar with active electronically scanned array (AESA) 
radar, and you can't blame them for wanting to do that.
    Admiral, in case something broke out that involved a 
conflict, do you agree that air dominance will be a key 
differentiator for allied forces during the first 24 hours of 
any potential conflict, including the Korean Peninsula? If you 
do, do you then agree that cooperating with the Koreans and 
supporting their desire for expeditious Korean procurement of 
existing defense technology is a good idea so that they can 
meet their operational requirements?
    Admiral Willard. I do agree, particularly on the Korean 
Peninsula, on the importance of air dominance early in any 
particular conflict that would occur. I also agree that we 
should strive to maximize the level of cooperation between 
ourselves and our Republic of Korea allies with regard to the 
acquisitions they require to continue to advance their 
capabilities.
    Senator Wicker. So you agree that the U.S. Government 
should fully support the Republic of Korea's air force 
requirements and their acquisition timeline in acquiring United 
States export-compliant AESA?
    Admiral Willard. I support the level of cooperation that is 
required to advance the Republic of Korea's military 
capabilities, including their aviation capabilities. With 
regard to that, to whether AESA radar and the exchange of that 
particular technology is appropriate on Korea's timeline, I 
think that should continue to be subject to discussions between 
the two countries. There are certainly compliance requirements 
on the part of the Republic of Korea, as well as the 
releasability requirements on the part of the United States.
    This is not the first country we've had this discussion 
with. But in general, sir, to your assertion, I truly believe 
that we should strive to maximize the potential of our Republic 
of Korea ally, including their military capabilities. In fact, 
more important now perhaps than in the past, as we strive to 
reach December 2015 and operational control transition to the 
South Koreans.
    Senator Wicker. Thank you very much. Let me ask you then, 
staying with North Korea: U.S. and North Korean envoys met last 
week for talks on dismantling North Korea's nuclear 
programs;included in that will be discussions of food aid, 
economic help, diplomatic concessions from the United States of 
America.
    What is your current assessment of the humanitarian food 
situation in North Korea, and do you believe North Korea is 
being sincere and truthful and forthcoming in entering these 
negotiations with the United States?
    Admiral Willard. I think the food situation in North Korea 
is always an issue of global interest. World Food was in there 
conducting an assessment early last year, as I recall, trying 
to ascertain just what the extent of crop success was in North 
Korea. There is always a level of food shortage that exists 
there, and always humanitarian need, as we've witnessed it 
there.
    In terms of the negotiations that have been ongoing, I have 
been supportive of them with regard to the United States' 
proposals for conditional food aid into North Korea and the 
preconditions that have come with it, which now include 
discussions of cessation of nuclearization and ballistic 
missile testing and the allowance of the International Atomic 
Energy Association perhaps back into Yongbyon. So there are 
conditions that are going along with the negotiations with 
regard to the extent of food aid. They've received food aid 
from many other countries this year, and I remain supportive of 
the progress that we're making in the talks with North Korea to 
the extent that they occur.
    Senator Wicker. You don't blame some of us on this side of 
the panel for having a healthy degree of skepticism with regard 
to North Korea's intentions?
    Admiral Willard. I have a healthy degree of skepticism with 
regard to North Korea's intentions, and I think we need to 
observe both their actions and requests with a great deal of 
scrutiny. Certainly we've been through the cycle many times in 
the past, and I know, Senator, you're aware that these requests 
for concessions often lead into a breakdown and a resulting 
next provocation.
    So we are skeptical as well. But with regard to the extent 
of these current negotiations, I think particularly when 
there's a new regime or a new leader in place in North Korea, 
it will be important to ascertain any degree of success that we 
might obtain through these diplomatic channels.
    Senator Wicker. I suppose it's worth a try, but I'm not 
holding out much hope and remain very troubled, as I'm sure you 
are.
    Quickly, let me ask about the 30-year shipbuilding plan and 
the minimum sustaining rates contained therein. Many observe 
this could pose challenges to fulfilling the force requirements 
and possibly give rise to a sealift capability gap and an 
aviation lift gap in 2015. With the pivot to this vast Asia-
Pacific region and your AOR and the Navy's inability to meet 
its own requirement for 313 ships, how will this minimum 
sustaining rate affect your ability to protect American 
security interests?
    Did you support this in discussions with your superiors, 
and are you satisfied that you can fulfill the mission with 
this 30-year shipbuilding plan?
    Admiral Willard. Thank you, Senator. I would fall back on 
the statement that I made earlier. The total acquisition 
program that the Navy has put down to try and sustain itself 
and the capacities of our fleet and eventually grow those 
capacities over time is important and certainly as a naval 
officer something that I've observed with great interest over 
many years.
    But as the PACOM commander, it's more important with regard 
to how we bias those ships globally and whether or not the AOR 
that, as you suggest, is a vast maritime one in the Asia 
Pacific, is being adequately serviced. To date, I am well 
serviced with regard to the Navy. I think Navy capacities are 
very important. Our industrial base capacity is very important 
that they be sustained.
    These minimum sustained production rates that you're 
talking about are intended to maintain our minimum acceptable 
industrial base. All of these things are important for our 
Nation, certainly.
    In terms of PACOM, I think it's important that the right 
number of ships and the right type of ships be present there.
    Senator Wicker. Thank you.
    Chairman Levin. Thank you, Senator Wicker.
    Senator Akaka.
    Senator Akaka. Thank you very much, Mr. Chairman.
    I want to say aloha to the two military leaders before us 
today. It's good to see you.
    Gentlemen, first I want to say thank you so much for your 
dedicated service to our country and also to the communities 
that you've served. We have really gained from your 
responsibilities and your actions.
    Admiral Willard, I would like to add my appreciation to you 
and congratulations on your upcoming retirement, which is soon. 
I want to tell you that I agree 100 percent with your 
UNCLOSposition for our country. It's about time that we become 
serious about that. Also, I want to commend you for the balance 
which you've brought during your time as PACOM commander, and I 
would tell you, you've made a huge difference in the Pacific, 
so thank you for that, and to tell you that your departure will 
be a significant loss to the Navy and to our country.
    I want you to know, and Donna to know, that it has been a 
pleasure to work with you in Hawaii and for our country. You've 
served Hawaii and you've been there on multiple assignments. I 
think you know, I don't have to tell you, that you have a deep 
relationship and connection with the community in Hawaii. I 
want to congratulate you and wish you well in your future with 
Donna and the family.
    Admiral Willard. Thank you, Senator Akaka.
    Senator Akaka. Admiral Willard, it is impossible to 
overstate the importance of our military engagement in the 
Asia-Pacific region. As I said, I commend you for your 
nurturing of balance there in the entire area. If you look at 
continuing developments in the Pacific, our conventional 
adversaries are improving their capabilities, too, as we work 
together on this balance.
    My question to you, Admiral, is, given this rebalance to 
the Pacific and the responsibilities we have in the theater, 
how would you assess our force structure plans in relation to 
military and diplomatic goals for the region as we look to the 
future?
    Admiral Willard. Thank you, Senator Akaka. Before I answer 
your question, I would offer that the State of Hawaii and the 
City of Honolulu have been great supporters of the military 
families and members that are stationed there. Thank you for 
your continued support for us in the region.
    I think as we look at force structure there is the issue of 
the type of forces that are present in the Asia-Pacific region 
and there is the issue of posture and where they're present in 
order that we can maintain the continuous presence in the 
region that's so important to its security and long-term 
stability.
    The initiatives, such as the nation of Australia, the 
nation-state or city-state of Singapore, and now in discussions 
with the Philippines, that are occurring are going to assist us 
in the posture-related issue, which is getting the force 
structure where it can do the most good in terms of providing a 
mechanism to maintain the presence that we need in the region.
    As we view the acquisition programs and force structure of 
the future in this budgetary environment, we, like every other 
combatant, remain focused and guarded as we watch these defense 
reductions occur, to ensure that we don't cut into the kind of 
forces and the quantity of forces that our strategic priorities 
call for.
    We spent time very recently walking through a global 
laydown of forces and looking at the forces that this current 
program will deliver and our ability to meet the strategic 
needs of our Nation, including in the Asia Pacific, and I think 
collectively as combatant commanders and Service Chiefs we felt 
we could do that. I think it's an important study to maintain 
ongoing and there are two additional events that are presently 
scheduled. But I have been well-served in the Asia-Pacific 
region and I'm confident that the force structure that is 
envisioned can continue to serve PACOM well.
    Senator Akaka. Thank you very much.
    General Fraser, the recently announced rebalancing calls 
for a shift in focus to the Asia-Pacific region, a vast 
geographic area encompassing 9,000 square miles, 36 nations, 
and 16 time zones, all of which I'm sure Admiral Willard knows 
really well. My question to you, General Fraser, is, while the 
details of this strategic balancing, rebalancing, have yet to 
be finalized, do you have any preliminary thoughts on how a 
refocus to the Asia-Pacific region could impact TRANSCOM?
    General Fraser. Senator, thank you very much. As we look at 
this shift, we've already seen a lot of engagement in the PACOM 
theater of operations as we have continued to support ongoing 
exercises, as we've continued to support other types of 
engagements within the theater. I think as we come back out or 
have come back out of Iraq already, but as we further reduce 
the force out of Afghanistan, we'll free up some other assets 
maybe for other opportunities for engagement, and then we'll 
have the opportunity to do that.
    It is one that's going to take balance and it's going to 
take a lot of good planning on our part to make sure that we 
properly support each of our ground combatant commanders in 
their various theaters of operations. They all have theater 
engagement plans. We're taking a look at them to ensure that we 
provide the necessary support.
    One of the things that we are able to do in our command is 
not just with our organic assets; it's our commercial partners, 
both sea and air, that will allow us that flexibility in 
utilizing their networks and their connections to also continue 
to provide support. So as those forces are available for 
various engagements, it does not have to be just organic. So in 
peacetime versus wartime, we're able to utilize those assets, 
which is good for the economy, which keeps that industrial base 
alive, too, both across the sea and the air side of the 
business.
    So we're confident that we'll be able to provide that 
support.
    Senator Akaka. Thank you very much.
    Admiral Willard, with the new strategy rebalancing our 
forces with a focus in the Pacific, the need for strategically 
located maintenance facilities, like the Pearl Harbor Shipyard, 
appears critical to the readiness of our fleet. Can you discuss 
the role you see Pearl Harbor Shipyard playing with this 
rebalancing, as well as the importance of continuing the 
modernization efforts at the shipyard in order to support the 
fleet in the future?
    Admiral Willard. I can, thank you, Senator. You know as 
well as I do not only the strategic importance of Pearl Harbor 
Naval Shipyard, but also the other aircraft depots and 
shipyards throughout the Asia-Pacific region that we rely on, 
from the west coast of the United States to our ability to 
conduct voyage repairs in foreign ports such as Singapore.
    But I have stated for the past 5 years and I will continue 
to state the vital strategic importance of the Pearl Harbor 
Shipyard and what it provides. It's unique in the sense that it 
not only conducts the overhauls of our surface ships and our 
submarines, but it also conducts day-to-day maintenance and 
voyage repairs for the ships that are positioned forward.
    It's located, as we all know, in the middle of the Pacific 
Ocean, which is the largest ocean in the world, and provides 
ready access into the Asia Pacific. The three submarines that 
we have homeported in Guam utilize the Pearl Harbor Naval 
Shipyard for their maintenance and overhaul activities and 
rotate back, and don't have to go all the way back to the west 
coast of the United States to obtain that maintenance.
    So it is a vital and pivotal strategic asset for us. The 
need to keep it continually modernized is as important as any 
shipyard that we have in our Nation. It is, I think, a very 
important partner. When we talk about the industrial base, not 
just production but maintenance, it's a vital part of that 
industrial base.
    Senator Akaka. Thank you very much.
    Thank you, Mr. Chairman.
    Chairman Levin. Thank you, Senator Akaka.
    Senator Ayotte.
    Senator Ayotte. Thank you, Mr. Chairman. I appreciate it.
    General Fraser, I wanted to ask you, the Air Force is 
finalizing its KC-46A basing criteria for the Air Force. One of 
the concerns that I have, and I'm hopeful that the Air Force 
will do this, is that the criteria that comes out for the 
basing of the KC-46A will be objective and transparent, in 
terms of what criteria you're using in deciding who will 
receive the KC-46A first. I wanted to ask you about that 
process, where it was at, in particular what the balance will 
be between the Active Duty and the Guard bases, and whether it 
will be taking into account what I think is very, very 
important, which is some of our Guard units already have an 
existing partnership with the Active Duty, including my own, 
that I've been quite impressed with, and I think that will be 
important in terms of utilization. So can you help us with 
that?
    General Fraser. Senator, thank you very much. As you've 
stated, it's an Air Force process, which we are not a part of 
in TRANSCOM. But, having been in the Air Force when we were 
doing this, I think you accurately stated that it is an 
objective process, it's open, it's transparent, it's 
repeatable. The fact that they are very open about that and 
establishing the criteria as to what is going to be needed in 
those discussions that go on in a very open manner with a 
number of different locations, I think, is something that you 
can look forward to as they go through that process.
    You asked where the process is. I don't know where the 
process is right now. I know they are actively engaged in 
working with AMC discussing who will be the lead command for 
the KC-46.
    Senator Ayotte. Thank you. I had to raise the issue because 
when we were home I went up with our 157th Air Refueling Wing 
and had a chance to see them do their work up there, and have 
been incredibly impressed. We actually had the highest 
utilization rate in the entire Air National Guard at Pease Air 
National Guard Base last year for the KC-135, and we already 
have an Active Duty partnership established.
    So it's one of those situations where, I think, if we do 
this in an objective and transparent way to speak to the 
accomplishments of our own unit in New Hampshire, they have 
quite the objective accomplishments and close proximity to the 
refueling track. So I hope that you'll convey, obviously, to 
the Chief of Staff and to your commander how important it is 
that this be an open and objective process.
    General Fraser. Yes, ma'am.
    Senator Ayotte. Thanks so much, I appreciate that.
    I wanted to ask about, Admiral Willard, an issue that I was 
concerned about last year in the National Defense Authorization 
Request. It's something that I learned about that was of deep 
concern to me, and that's the Maritime Prepositioning Force 
(MPF). As I understand it, and this may be a better question 
for General Fraser, whichever of you it is the better question 
for, but last year the Navy announced plans to place 6 of its 
16 ships from the 3-squadron MPFs for the Marine Corps into 
reduced operating status beginning in fiscal year 2013.
    When I learned about this, I was concerned about what this 
would mean in terms of our readiness. I asked the Marine Corps 
about it and the Commandant of the Marine Corps felt that it 
needed additional analysis. So, in last year's NDAA, there is 
actually a requirement that the Marine Corps, as well as the 
Navy, submit an analysis about the readiness implications of 
reducing our MPFs. As I understand it, there may be further 
reductions there in the proposed 2013 budget.
    So I just wanted to ask both of you if you were aware of 
that portion of the Defense Authorization in 2012 and where 
that readiness assessment was and if you can share anything 
with respect to where we are with the MPFs?
    Admiral Willard. Thank you, Senator. From PACOM's 
perspective, yes, we're aware of the proposal to put one of the 
three squadrons in a reduced readiness status. Of importance, 
the two most active squadrons, one located in Guam and one 
located in Diego Garcia, are not candidates for that. So those 
that are there to respond to the major contingencies in the 
Asia-Pacific region remain intact and are, frankly, utilized 
frequently and exercised on a periodic basis in order to ensure 
their readiness.
    So from the standpoint of readiness in terms of Asia 
Pacific contingencies and the contingencies in the Middle East 
that these prepositioned ships service, we remain in pretty 
good shape.
    I can't answer to the tasker that the Services come 
together on their assessment of how this could impact longer-
term readiness as that third squadron is placed in a limited 
readiness status.
    Senator Ayotte. I certainly appreciated your answer and I'm 
hoping that we'll have a follow-up, which I will obviously 
pursue with the Navy, because the NDAA from 2012 requires 
thatthe Commandant of the Marine Corps provides a report 
assessing the impact of the move on military readiness, and the 
SECDEF has to certify that the risks to readiness from such a 
move are acceptable. So I think you'll be consulted, I would 
think, in that analysis.
    My concern is, particularly with what we see happening 
around the world right now, having those MPFs becomes very 
important because, unfortunately, we've been noticeably bad at 
predicting where the next conflict is going to come, and those 
MPFs become very, very critical in terms of our readiness 
posture.
    Admiral Willard. I think we agree with you that the MPFs 
are vital to us.
    Senator Ayotte. Great. Thank you so much for that.
    I just wanted to follow up. I believe at your confirmation, 
Admiral Willard, I'd asked you about the fiscal year 2013 
budget, and the Chief of Naval Operations (CNO) had said last 
spring that in order for us to meet all of our needs around the 
world that we needed a ship force of 313, and this budget 
really maintains us at 285. One of the concerns that I have is 
it delays, for example, production of one Virginia-class 
submarine, as well as some LCSs and some others in terms of 
where we are in production.
    One of the concerns I have is what the strategic analysis 
or strategic thinking was for not meeting the 313 and 
maintaining us at 285 and really delaying production of some of 
our important assets; and I just would like to follow up on 
that and ask you whether you have an answer to that, 
particularly with our shift now to the Asia Pacific?
    Admiral Willard. As you well know, the Navy surface force 
has maintained itself, pretty much sustained itself, at that 
280 to 285 number now for numerous years. In fact, for about 
the last decade we've been struggling to get above that and 
reach the 313 floor, or however it is currently being termed by 
our Navy, in terms of what we aspire to have, to meet all the 
global requirements that the Navy maritime strategy has 
determined we need.
    It's important that over time we recognize where we are 
decremented in comparison to the overall strategic design for 
the Nation as a Navy, as a military. The strategic priorities 
that have been established are intended, I think, to guide us 
in terms of where the maritime commitment should be and will 
pay off the greatest for the United States. The Asia-Pacific 
region has been called out as one of those areas, where it's 
not only vast and inherently maritime, but as a consequence of 
its economic importance to the United States and our allies and 
partners and many of the challenges associated there, it places 
a particular demand on maritime assets.
    So provided that within that body of 285 ships we're able 
to bias those forces properly into the right areas of the world 
where the payoff is great, then I'm satisfied. I think the CNO 
would tell you that in his longer-term view of shipbuilding 
that, while the 2013 budget and the programs that it represents 
doesn't show the 285 on the increase toward the Navy's goals, 
if you look at more than one program, if you look at this long-
term, that he does eventually begin to make some progress as a 
Navy in terms of shipbuilding.
    So I think it's important to recognize that we've been in 
this situation for a while. There is the cost of doing our 
business, of acquiring ships, that continually needs attention 
and gets great help from this committee. We need to reduce ship 
costs and other acquisition costs as we can. But I think what's 
most important is that we put the ships where they'll do the 
most good, and we think that the Asia-Pacific region is one of 
those areas of the world where that will happen. The Middle 
East is obviously going to continue to require our attention, 
too.
    Senator Ayotte. Thank you, Admiral.
    Thank you very much, General.
    Chairman Levin. Thank you, Senator Ayotte.
    Senator Shaheen.
    Senator Shaheen. Thank you, Mr. Chairman.
    Admiral and General, thank you both for being here today.
    I want to follow up, General Fraser, with Senator Ayotte's 
question about the basing criteria for the KC-46. We share an 
interest in that since we both represent New Hampshire. We 
don't often get the opportunity to double-team you all in quite 
the same way we are this morning, so I have to take advantage 
of that.
    In New Hampshire we believe that under any objective 
criteria our strategic location in the Northeast, our proximity 
to operational and training air refueling tracks, our current 
tanker task force mission, and our Active Duty association, 
that we would be a unique choice and would result in a very 
cost-effective utilization of the placement of the KC-46s. So 
we hope that it is a very transparent and open process. I won't 
ask you to comment on that since you've said you can't.
    Senator Ayotte talked about New Hampshire National Guard's 
157th Air Refueling Wing, which has been providing continuous 
operations since September 11th, both for Homeland defense and 
in support of overseas conflicts. Like other Air National Guard 
units, they've done so at a fraction of the cost of Active 
bases around the country. In fact, the Air National Guard 
represents only 6 percent of the Air Force budget, and yet it 
provides nearly 35 percent of its capabilities.
    We've seen in the last couple of days, concern expressed by 
49 Governors about the cuts to the Air Guard as part of the 
proposed budget from the Air Force. Again, I know you can't 
comment on that, but I wonder if you could comment on the role 
that our Air National Guard has played in providing critical 
transport for our operations around the world?
    General Fraser. Thank you, Senator. I do appreciate that. I 
can't tell you how much I do appreciate all that our Guard are 
doing. They've always been there when the call came, not only 
when they were mobilized, but when they were asked to volunteer 
and willing to support any mission that may arise.
    As you know and you commented on, we have been heavily 
tasked in a number of different areas. That's where I think the 
great strength comes, the balance that we have within the total 
force and the ability to use the Active Duty, the Guard, and 
the Reserve in this manner to meet the mission. Therefore, our 
commanders have not had to want for something else and not be 
supported.
    It's that total team effort to get this done. But you have 
to have the right balance. The Guard has been heavily tasked. 
They are also doing a lot more with respect to their boots-on-
the-ground (BOG)/dwell, as we call it, the BOG and the dwell 
time they get back at home, and it's not at the desired rate.
    So, hopefully, if we have the right balance and as we make 
some of these necessary adjustments, we'll then be able to get 
to the desired rates for both the Active Duty as well as the 
Guard and the Reserve. This is something that we're all 
striving to do as we look forward to the future. But we very 
much value and appreciate all the contributions they've made.
    Senator Shaheen. Thank you very much. I appreciate that. I 
think your point about the total force is an important one. I 
do share the concerns of the Governors in looking at the total 
budget reductions that would have the Air Guard absorbing 59 
percent of those aircraft budget reductions and about six times 
the per capita personnel reductions. So again, I know you can't 
comment on that, but I'm interested to hear the rationale at 
the appropriate time.
    Admiral Willard, India has become a much more prominent 
partner of the United States and potential ally on military-to-
military issues in the last several years. Last year, the 
United States cleared the way for the resumption of high 
technology defense and aerospace exports to India. However, it 
does seem that there is still room for growth in our 
relationship. I wonder if you could talk about what PACOM's 
priorities are for the U.S.-India security relationship and how 
those are affected by both China and Pakistan, recognizing that 
Pakistan isn't part of your purview, but critical, obviously, 
to what happens with India?
    Admiral Willard. Thank you very much, and thank you for 
raising India. It's a very important partner in the region and 
one that, as you suggest, there remains room for growth and 
advancement in our partnership. It has advanced in the past 
2\1/2\ years that I've been at PACOM, and in the previous 2\1/
2\ years as Pacific Fleet Commander we were very much engaged 
with India and attempting to advance the relationship then.
    If you range back to our history with India, we are in a 
fairly nascent stage of engagement nation-to-nation, given that 
this is the largest democracy in the world, like-minded in many 
ways, and in a troubled region of the world in South Asia, but 
a very important partnership.
    From a security standpoint, we are engaging across all our 
Services with India at an increasing rate every year. There are 
challenges in the relationship. We overcome still the trust 
deficit as it relates to having departed South Asia years ago 
and having terminated relationships with both India and 
Pakistan following nuclear tests in the late 1990s. But I think 
that the current dialogue that is from the President on down 
and certainly at a military level is very robust in overcoming 
all of this. There is certainly a China factor in India. They 
have a long-term border dispute that continues to be a 
challenge for both countries, and they fought a war over it in 
1962.
    China is a very strong partner of Pakistan and Pakistan-
India have the relationship that we're all aware of, both 
nuclear-armed and with a long-term history of animosity between 
the two of them.
    To India's credit, they're maintaining ministerial-level 
dialogue with Pakistan and have for the past nearly 2 years, 
even post-Mumbai and all of the tension that that created.
    So, I think your emphasis on India and its importance is 
exactly the right one. From a security standpoint and a 
security assistance standpoint, they remain very important and 
a partner of focus for PACOM.
    Senator Shaheen. Thank you very much. My time has expired.
    Chairman Levin. Thank you, Senator Shaheen.
    Senator Cornyn.
    Senator Cornyn. Thank you, Mr. Chairman.
    Admiral, General, thank you for being here. Thank you for 
your service.
    I want to tell Senator Shaheen I appreciate her questions 
about the U.S.-India relationship, as one of the co-founders of 
the U.S.-India Caucus in the Senate, which has a strong and 
robust membership and a lot of interaction. I appreciate your 
acknowledgment and statement about the importance of that 
relationship from a security standpoint, an economic 
standpoint, and across the board.
    My questions, you'll have to forgive me, General, I'm going 
to ask Admiral Willard some questions about China and 
particularly Taiwan.
    Admiral, you say in your prepared testimony that: ``Taiwan 
remains the most acute sovereignty issue for China and the main 
driver for military modernization programs. The military 
balance across the Taiwan Strait continues to shift in China's 
favor.''
    Would you agree that were China to launch some sort of 
military offensive against Taiwan that such a scenario would 
have the potential to draw the United States into a dangerous 
large-scale conflict in the region?
    Admiral Willard. Thank you, Senator. Certainly the Taiwan 
Relations Act (TRA) and three communiques combined, but the TRA 
in particular, establishes the position the United States would 
take on such coercion were it to be launched against Taiwan, 
and it then becomes a decision by our President and by Congress 
to decide what the U.S. reaction to that would be.
    But does it have the potential? We regard the defense of 
Taiwan as a PACOM responsibility. So, yes, it would have the 
potential to draw the United States into conflict.
    Senator Cornyn. According to DOD, China's official defense 
budget has grown by an average of 12.1 percent since 2001. So 
it seems as we are talking about scaling back our defense 
budget, China has continued to grow by leaps and bounds.
    Would you agree that the likelihood of Chinese aggression 
against Taiwan becomes more likely as Taiwan's ability to 
defend itself deteriorates?
    Admiral Willard. I'm not sure that I would contend that. I 
think it's important and we've established the importance 
through policy for a long time that Taiwan should have a self-
defense capability, and our responsibility in working with DOD 
and in working with you is to ensure that the defense articles 
and services that we assist Taiwan with provide for that self-
defense.
    As we've seen the administrations change on Taiwan and the 
reelection of President Ma and his administration just this 
year, we would offer that the tensions across the Strait have, 
in fact, relaxed during his administration and that 
advancements in relations between the People's Republic of 
China (PRC) and Taiwan have occurred. So, I think it would be 
presumptive to assume that simply that imbalance in combat 
power would necessarily encourage conflict. That said, there's 
no question that the balance of combat power resides with the 
PRC.
    Senator Cornyn. I recently wrote a letter to President 
Obama--actually it was last November 18, 2011--and received a 
response on February 15, 2012, from James N. Miller, Acting 
Under Secretary of Defense for Policy. Mr. Chairman, I'd like 
to ask unanimous consent to have both letters made part of the 
record.
    Chairman Levin. They will be made part of the record.
    [The information referred to follows:]
      
    
    
      
    
    
      
    
    
      
    Senator Cornyn. Let me just quote a couple of sentences 
from this letter. Mr. Miller says: ``A key conclusion in the 
Report to Congress on Taiwan's Air Defense Force is that 
Taiwan's approach to defense cannot match the Mainland one-for-
one. Taiwan defense spending cannot match the Mainland's, nor 
can it develop the same type of military the Mainland is 
developing. The report concludes that Taiwan needs to focus its 
planning and procurement efforts on nontraditional, innovative 
and asymmetric approaches, and we are working with Taiwan to do 
so.''
    That was not a very encouraging letter I received from 
Secretary Miller. But let me just get down to some of the 
specifics with regard to operational combat aircraft. According 
to DOD, the PRC has 2,300 operational aircraft and the 
Government of Taiwan has only 490 operational aircraft. The 
administration recently notified Congress of its intent to 
upgrade some of the existing F-16 A and B versions, 145 of 
those, and I support the retrofit for these older F-16s.
    But it does nothing to replace the growing obsolescence of 
Taiwan's fighter jets. By 2020 it's estimated that virtually 
all of Taiwan's fighter jets will have to be retired except for 
the 145 F-16 As and Bs that we sold Taiwan during the George 
Herbert Walker Bush administration, and which are now the 
subject of this upgrade.
    Can you give me a little more confidence that we are 
meeting our obligations under the TRA and the three communiques 
you mentioned? Because it seems to me that China is growing its 
military capability while Taiwan is losing its military 
capability, and the United States, which is legally obligated 
to provide defensive material to Taiwan, is not meeting its 
full obligations to equip them with what they need to defend 
themselves against the potential of a Chinese attack.
    Admiral Willard. Thank you, Senator. I've been on the 
record in the past acknowledging that eventually Taiwan's 
aviation capability will have to be recapitalized. I too was 
encouraged when the F-16A-B upgrade was approved. I think that 
is the right thing to do. I think it does, in fact, enhance the 
reduction of their air forces. It was an upgrade much needed 
and it will improve their capabilities.
    I'm not sure that a comparison of combat capability or 
capacity with the PRC and Taiwan is a fair one to make. Nor do 
I believe that there is any reasonable desire for or ability to 
achieve parity between the two. China is as big as the United 
States, maintains a fighter fleet, as you suggest, of over 
2,000 aircraft, but has a lot of territory to cover. Taiwan's 
an island 200 miles long, maintains a fighter force of about 
450 aircraft.
    So an apples-to-apples comparison, I don't think, is 
necessarily the argument in this particular instance. The 
argument is whether or not Taiwan is sufficiently defensible in 
the context of the TRA and what was intended from a policy 
standpoint. We contribute to some of that at PACOM in our 
engagement with the Taiwanese military and trying to understand 
their needs. But we look more broadly than just their aviation 
needs and try to look across their armed forces and in all 
domains how well they are equipped and manned to defend 
themselves.
    I think that balance is important for us to recognize and 
also sufficiency in that regard across all of those various 
areas. So, I see the recapitalization needs having been in the 
near-term met. As you suggest, I'm not sure that in the 
longest-term it's going to meet all their needs in the aviation 
area. But in their other services, they have needs as well, and 
I think the defense budget of Taiwan needs to be reflective of 
a balanced approach to achieving a sufficient amount of 
defense.
    Senator Cornyn. If I can conclude, Mr. Chairman, just with 
this one comment.
    Thank you for your answer, but I'm concerned as I see China 
continuing to grow its military, Taiwan's military capability 
continues to recede in comparison, that that will cause perhaps 
a greater potential that the United States would be required to 
come to the aid of our ally under the TRA and the three 
communiques you mentioned.
    It strikes me that the more capable that Taiwan is to 
defend itself, the less the likelihoodthat the United States 
might be called upon to share in that defense in the event of 
an attack.
    Thank you both, gentlemen.
    Admiral Willard. Thank you, Senator.
    Chairman Levin. Thank you, Senator Cornyn.
    I just have a few questions for the second round. First, I 
was also glad, Admiral, to hear your answers relative to our 
relations with India, our security and military relations. It's 
a very significant partner in the region. The growing and 
robust relationship, I believe, is good news and the right way 
to go, and your answer is very reassuring to me, as it was to 
other members of the committee.
    Admiral, relative to North Korea, has the change in 
leadership of North Korea impacted the agreement which was 
reached in October 2011 with North Korea to allow U.S. 
personnel back in North Korea to resume the recovery of remains 
of U.S. servicemembers missing from the Korean War?
    Admiral Willard. Senator, there was a pause in discussions, 
but no pause in terms of initiative on our part to proceed with 
what was agreed to in terms of Joint Personnel Accounting 
Command (JPAC) returning to North Korea to seek additional 
remains. We currently have a ship in Nampo that has been 
offloading a first wave of equipment to support that.
    My concern is for the security of the personnel from JPAC 
that would execute these missions, and so I continue to view 
into North Korea carefully to assure DOD and myself that these 
individuals will be treated in accord with the agreement that 
we struck in 2011.
    Chairman Levin. Is there a timetable for that effort to 
take the next step?
    Admiral Willard. There is. This particular offload is 
occurring. We have another one scheduled. There are a series of 
steps that we have planned, and I'd be happy to provide those 
to you if that would be helpful.
    Chairman Levin. That would be good, if you would do that 
for the record.
    [The information referred to follows:]

    The attached slide lists Joint Personnel Accounting Command (JPAC) 
Democratic People's Republic of Korea (DPRK) critical milestones.
      
    
    

    Chairman Levin. Relative to the record, General, if you 
could for the record, give us some detail about the critical 
needs of TRANSCOM for cyber security. You made a comment in the 
press about TRANSCOM being the most cyber-attacked command in 
DOD, and if you could for the record, give us a list of your 
critical needs and whether those needs are being met, and 
whatever you can tell us in an unclassified way about attacks 
on your systems and progress that you might be making in 
defending those systems.
    It's a large question. It's an important one that we're 
grappling with in a major way here in Congress. So if you could 
give us kind of a whole review for the record, it would be 
helpful.
    General Fraser. Sir, thank you very much. I have stated 
that we are aggressively attacked. In fact, as we were looking 
at the numbers just this last year as it was wrapping up, from 
2010 to 2011, we have seen an increase of about 30 percent of 
the number of attempts to get within our systems.
    As this committee also knows, though, the majority of our 
business is done on the unclassified net. We are working very 
aggressively on a number of different fronts, though, and it's 
not only within TRANSCOM, but also with our commercial 
partners. Because of 90 percent of that business being done on 
the unclassified net, which is where our commercial partners 
are, we need to partner with them to strengthen our defenses. 
We're working that through contracting actions and looking 
forward to continuing to partner with industry.
    Within TRANSCOM, we aggressively have a program whereby we 
train all of our individuals. Before they get in and on, they 
have to go through initial training. Then there's annual 
training. In fact, I just finished completing it. It takes over 
an hour and you're not going to get out of it, because once 
you're into it you're going to go through the whole thing. It's 
very thorough.
    So we have to work that aspect of it. So there's a training 
piece to this as we harden our people and make them aware of 
what's going on.
    There's also another piece to this with respect to our 
systems. So with a corporate services vision for the future, we 
have a number of systems out there that we're trying to bring 
into our net so that we can collapse the net and not have as 
broad a base so that the bad guys will be able to attack us. 
It'll be easier to defend if we're able to collapse the net, 
have less hardware out there, and actually be able to control 
that.
    The other thing is that we're very aggressively certifying 
our net defenders. Over 99 percent of our net defenders that we 
have within TRANSCOM now have professional certification. So 
this is helping us.
    So I go back to the 30 percent increase. We do not know of 
any known successful attack into our systems this last year. We 
are working with our people and with the hardware piece to our 
system. There's some business practices out there that we're 
also bringing in. We continue to partner with the Defense 
Information Systems Agency. We partner with U.S. Cyber Command 
and also with U.S. Strategic Command, as well as the National 
Security Agency, as we try to strengthen the net as best we 
can.
    As the distribution process owner, looking forward to what 
we call a secure enclave, too. As we partner with these other 
organizations, they're very encouraged by what they're seeing 
and the initiatives that we're taking. We're working it from a 
holistic standpoint and we are properly funded within TRANSCOM 
right now.
    Chairman Levin. If you could keep this committee informed, 
we would appreciate it.
    General Fraser. Yes, sir, I will.
    [The information referred to follows:]

    Sir, during my earlier testimony you had asked for a list of U.S. 
Transportation Command's (TRANSCOM) critical needs and whether those 
needs were being met, and attacks on TRANSCOM systems and progress that 
we are making in defending those systems.
    I previously addressed the latter aspect and mentioned that we 
noted a 30 percent increase overall from 2010 to 2011 in attempts to 
penetrate our network. I had also briefly addressed our approach in 
defending against those threats by training and certifying our cyber 
defenders and overall workforce. I also mentioned another important 
part of our cyber strategy is regular engagement with our commercial 
transportation partners to make them aware of the common threat we 
face, as well as common solutions.
    Regarding your request for a list of TRANSCOM's critical needs and 
whether those needs were being met, we are holding the line today, but 
are working to improve cyber defense capabilities to ensure we remain 
adequately postured for the future. First, we need to ensure our 
commercial partners have the tools and business practices necessary to 
protect TRANSCOM information residing in their environments. We are 
continuing to reduce this vulnerability in partnership with our 
commercial partners, our internal cyber defense staff, Federally Funded 
Research and Development Centers, and other partner agencies. 
Additionally, we need to enhance protection of our high value command 
and control systems, and also provide a secure development environment 
in which our cleared defense contractors can develop software 
supporting our deployment and distribution functions.
    We also need to improve the capability to distinguish adversarial 
actions from authorized users actions within systems and networks. If 
the adversaries are successful in gaining entry to our networks, we 
will need more effective mechanisms not only to detect them, but also 
to contain and limit their potential damage to our information, and 
rapidly rebuild any damage done to our networks or information so we 
can continue to execute our mission.
    A holistic and unified response to threats across the Department of 
Defense and the U.S. Government remains one of our greatest challenges, 
and is planned to be a major area of discussion at our upcoming cyber 
summit. Cyber security will remain a top priority for TRANSCOM in all 
of our engagements with partners, whether they are commercial 
companies, the U.S. Government, or DOD entities.

    Chairman Levin. This is really a major subject for all 
Members of Congress.
    Admiral, you were asked, I believe, by Senator Inhofe to 
give us for the record in writing, how some of the objections 
which were raised to UNCLOS some time ago have been met, and 
that is important for all of us. If you can do that, if 
possible before you leave, it would be something, another item 
on your agenda to complete, I hope that's not too burdensome, 
but it would be very helpful.
    Admiral Willard. I'll get right on it.
    Chairman Levin. Also, you made a comment, Admiral, that I 
just want to see if you might wish to clarify. In response to a 
question of Senator Inhofe, and this had to do with North 
Korea, you indicated that their strategy has been successful 
for two generations. I assume that what you meant by that was 
that their strategy is to stay in power, essentially, and 
that's basically what they care about, and that strategy has 
succeeded, but not in terms of any success for their country?
    Admiral Willard. That's exactly what I intended. This is a 
coercive strategy that has about five dimensions to it, all of 
which are bad news for the region and a challenge for our 
Nation.
    Chairman Levin. Bad news for their own people.
    Admiral Willard. Very bad news for their own people.
    Chairman Levin. We thank you both, and it's been a very, 
very useful hearing. Best of luck to you and your family, 
Admiral, again as you take on new responsibilities, new 
challenges, new wonders.
    Admiral Willard. Thank you, Senator Levin.
    Chairman Levin. General, thanks so much.
    General Fraser. Thank you, sir.
    Chairman Levin. This hearing will stand adjourned.
    [Questions for the record with answers supplied follow:]

               Questions Submitted by Senator Carl Levin

                OPERATIONAL RESPONSIVE SPACE-1 SATELLITE

    1. Senator Levin. Admiral Willard, U.S. Central Command (CENTCOM) 
recently brought on line a small tactically responsive satellite, 
Operational Responsive Space-1 (ORS-1), based on an urgent needs 
statement it issued. The satellite was assembled, launched, and brought 
on line in less than 32 months for cost below $225 million. My 
understanding is that CENTCOM has been very pleased with the capability 
of the satellite, which it directly controls with Air Force Space 
Command, to satisfy tactical reconnaissance needs in denied access 
regions. My understanding is that other combatant commands have tasked 
CENTCOM to use this satellite for urgent needs in their area of 
responsibility (AOR), offering for the first time the use of a small 
satellite outside the normal tasking sequence for space assets with 
direct control by the combatant command. Given the success, cost, and 
innovation of ORS-1, does U.S. Pacific Command (PACOM) believe that a 
similar system dedicated to PACOM would have a positive impact on 
reducing PACOM's intelligence, surveillance, and reconnaissance (ISR) 
collection gaps?
    Admiral Willard. PACOM has been working closely with the 
Operationally Responsive Space (ORS) program on a satellite of our own. 
ORS-2 is in development and is scheduled to be launched in 2015. While 
it has a different payload than ORS-1, the capability will definitely 
have a positive impact on PACOM ISR collection gaps.
    CENTCOM has shared feedback with us on the utility and quality of 
ORS-1 collection. Based on CENTCOM's success with that system, we've 
had recent discussions with the ORS program on developing an ORS-1 
system for PACOM as well.
    These systems will be particularly useful in enhancing PACOM's 
ability to collect in denied areas that we cannot reach with airborne 
systems.

    2. Senator Levin. Admiral Willard, in addition, given the extremely 
large denied airspaces in PACOM's theater and widely dispersed land 
masses surrounded by large bodies of water, how would a tactical ISR 
satellite system dedicated to PACOM compare to a series of airborne ISR 
assets?
    Admiral Willard. A tactical satellite system dedicated to PACOM 
would be very useful, particularly with regards to collection in denied 
areas that airborne sensors cannot reach. However, there are 
limitations that make a straight comparison to airborne assets very 
difficult. Sensor quality, orbit, data throughput, and timeliness of 
collection can constrain our ability to answer many intelligence 
requirements. Airborne platforms often provide the persistence, 
flexibility, and fidelity that cannot be matched by tactical ISR 
satellite systems. Airborne ISR also provides a visible presence in the 
theater that creates a deterrent effect against potential adversaries 
and strengthens our commitment to our partners and allies.
    Used together, overhead and airborne systems complement each other 
extremely well and serve to mitigate our collection gaps.

    3. Senator Levin. Admiral Willard, given the recent statements by 
the Defense Intelligence Agency (DIA) Director, General Burgess, 
regarding the counterspace capabilities being developed in the PACOM 
theater, could a system of ORS-class satellites help in increasing the 
resiliency and responsiveness of PACOM's space capabilities?
    Admiral Willard. Yes. The future potential for rapid reconstitution 
of overhead systems in the face of adversary counterspace capabilities 
is very important to increasing the resiliency and responsiveness of 
PACOM's space capabilities. PACOM is a strong proponent of ORS-class 
satellites.

    4. Senator Levin. Admiral Willard, could ORS-class satellites be 
beneficial in reconstituting a thin line, good enough to win, space 
layer to support PACOM operations in a campaign in which space was a 
contested domain?
    Admiral Willard. [Deleted.]
                                 ______
                                 
            Questions Submitted by Senator Claire McCaskill

                          CONTAINER MANAGEMENT

    5. Senator McCaskill. General Fraser, the Department of Defense 
(DOD) is spending nearly $720 million in late fees for leased shipping 
containers used for delivery of parts, supplies, and other items for 
overseas contingency operations. At times the late fees have even been 
more costly than if the containers were bought outright. I realize that 
using leased containers makes sense in a number of situations. However, 
wasting millions of dollars on late fees is inexcusable. What has U.S. 
Transportation Command (TRANSCOM) done to address this issue?
    General Fraser. As mentioned in your question, there are instances 
when keeping carrier-owned containers longer than the anticipated time 
period to meet operational requirements makes fiscal sense. Whether 
containers are required to enhance the force protection of our 
warfigthers or required for critical temporary storage capability in an 
austere environment, we keep a mindful eye on the fiscal impact of 
these decisions. TRANSCOM, in coordination with the Surface Deployment 
and Distribution Command (SDDC), is actively working several measures 
to mitigate container detention in the CENTCOM AOR. We are taking the 
following actions to reduce detention costs: making improvements in 
contract provisions in the forthcoming Universal Services Contract-7 
(USC-7); transloading from individual carriers to U.S. Government-owned 
containers where practical; accomplishing container buyouts earlier 
when carrier-owned containers are required to meet mission objectives; 
expanding container management training and support for Mobile 
Container Assessment Teams; aggressively enhancing key leader 
engagement on adherence to established policies and procedures; and 
developing a single container management system capability.

    6. Senator McCaskill. General Fraser, how can the cost of late fees 
be reduced in the future?
    General Fraser. TRANSCOM, in coordination with SDDC and other Joint 
Deployment and Distribution Enterprise stakeholders, are taking several 
proactive steps to mitigate container detention. First, we have 
included improvements to container-related provisions in the USC-7 
tentatively set for an effective date of 15 August 12. Based on 
analysis of detention for containers delivered to Afghanistan over the 
last 2 years, the additional 5 days of free time in USC-7 would have 
represented a 22 percent reduction in detention costs for an annual 
$12.6 million in cost avoidance. Second, we continue to implement 
successful lessons learned from our experiences supporting operations 
in Iraq, most notably increased usage of government-owned containers 
where practical. Third, we continue to work with theater leadership to 
enhance their cargo reception capability and infrastructure support to 
return carrier-owned containers within the prescribed timelines. Last, 
we continue to leverage technology to improve our intransit visibility 
of cargo and management of our critical distribution assets.

    7. Senator McCaskill. General Fraser, have steps been taken to 
renegotiate container contracts and the leases currently in place?
    General Fraser. Yes, TRANSCOM negotiated more favorable container 
detention and purchase terms for the USC-7. The contract is due to 
start this summer. The terms include lower purchase prices for the 
containers, more ``free-time'' before detention charges start to 
accrue, and allowing purchase of containers 30 days sooner. The 
enclosed fact sheet (in response to previous Senate questions on 
container costs) provides the estimated cost impact of the new terms.
    More importantly, in addition to the contract terms, TRANSCOM, 
through its component, the Military SDDC, is actively engaging the 
Military Departments and Government agencies to improve container 
management procedures and contractual terms and conditions that will 
reduce container detention costs. As DOD's Global Container Manager, 
SDDC has decreased container detention charges by instituting improved 
processes, such as standing up sites to transload from commercial to 
Government containers in theater. SDDC is also working to prioritize 
cargo in the carrier holding yards, improve procedures for receipt and 
release of containers, and enforce accuracy standards and completion of 
monthly inventories. Another significant effort is the development of a 
single container management system that will enable better container 
tracking and reporting to further decrease detention charges.

 Proposed Universal Services Contract (USC)-7 Container Detention and 
                          Purchase Fact Sheet

    The following information is provided in response to questions the 
Military Surface Deployment and Distribution Command (SDDC) received 
from Senator Tom Carper's and Senator Scott Brown's staffs during a 
December 14, 2011, teleconference.

    1.  Free time \1\ cost comparison between the current requirements 
in USC-6 and the proposed changes for USC-7, which are tentatively 
scheduled to take effect June 1, 2012:
---------------------------------------------------------------------------
    \1\ Container detention charges are imposed by shipping lines for 
containers kept beyond the assigned ``free time'' and not made 
available for pickup within that period.

         Under USC-6, the U.S. Government is currently 
        authorized 15 days of free time before detention fees begin for 
        containers delivered in Afghanistan.
         Under USC-7's proposed language, an additional 5 days 
        would be added, for a total of 20 days free time before 
        detention charges begin on containers in Afghanistan.
         Based on analysis of detention for containers 
        delivered to Afghanistan over the last 2 years, the additional 
        5 days of free time would have represented a 22 percent 
        reduction in detention costs for an annual $12.6 million in 
        cost avoidance.

    2.  Containers are often used for storage, force protection, and 
other purposes, given the lack of infrastructure in theater. The 
Department can purchase containers to mitigate detention costs in one 
of two ways.

         Deliberate container purchase cost comparison using 
        the current requirements in USC-6 and the proposed changes for 
        USC-7:

                 Currently with USC-6, in order to purchase a 
                container, 90 days worth of detention costs must be 
                paid. To purchase a container under the proposed USC-7, 
                the number of days' worth of mandatory detention costs 
                drops to 60 days.
                 On a per container basis, purchase of a 40-
                foot dry container under USC-6 at the earliest possible 
                time (Day 91) would cost $5,100 to purchase the 
                container plus 90 days of mandatory detention ($35/day) 
                $3,150, for a total of $8,250.
                 Purchase of a 40-foot dry container under the 
                proposed USC-7 at the earliest possible time (Day 61) 
                would cost $4,590 to purchase the container plus 60 
                days of mandatory detention ($35/day) $2,100, for a 
                total of $6,690.
                 USC-7 proposed changes would have resulted in 
                a cost avoidance of $1,560 per purchased container 
                (18.9 percent reduction).
                 These purchase cost reductions are due to 
                lowering mandatory detention payment from 90 to 60 
                days, earlier commencement of credit on day 61 versus 
                day 91, and the reduced container purchase prices 
                negotiated by U.S. Transportation Command (TRANSCOM) 
                under the proposed USC-7.

         Container purchase in the event containers are 
        indefinitely retained by the U.S. Government (cumulative Credit 
        Against Purchase (CAP)), using the current requirements in USC-
        6 and the proposed changes for USC-7:

                 Currently with USC-6, daily detention costs 
                are capped at day 358 for a 40-foot dry container and 
                day 1,090 for a 40-foot refrigerated container, at 
                which time credit paid through detention costs equals 
                the purchase price of the container and the container 
                becomes the property of the DOD. For example, under 
                USC-6 the CAP cost of a 40-foot dry container is 
                $12,530 ($35/day  358).
                 Under USC-7, daily detention costs are capped 
                at day 350 for 40-foot dry containers and day 700 for 
                40-foot refrigerated containers, at which time credit 
                paid through detention costs equals the purchase price 
                of the container and the container becomes the property 
                of the DOD.For example, under USC-7 the CAP cost of a 
                40-foot dry container is $12,250 ($35/day  
                350).
                 This reduction in detention days would have 
                resulted in a 9 percent reduction in detention costs 
                for an annual $3.2 million in cost avoidance.

    3.  SDDC is also actively engaged in reducing commercial container 
detention costs through the increased use of U.S. Government-owned 
containers, where cost effective. As this business practice proved 
extremely successful in Iraq, we continue to look for opportunities to 
implement it in Afghanistan, when appropriate.

                 PAKISTAN GROUND LINES OF COMMUNICATION

    8. Senator McCaskill. General Fraser, TRANSCOM and our interagency 
partners have received permission from governments of some European, 
Central Asian, and Baltic countries to start retrograding materials 
from Afghanistan through the Northern Distribution Network (NDN). As we 
begin the drawdown of troops in Afghanistan in the next few years, the 
retrograde of materials and equipment from Afghanistan will 
increasingly become more important. The Pakistan Ground Lines of 
Communication (PAK GLOC) provides logistical support through the 
movement of cargo to Afghanistan. When open, the PAK GLOC remains the 
quickest and most cost-effective route. If the PAK GLOC is not open for 
retrograde operations, what additional cost will the United States 
incur in order to move equipment out of Afghanistan?
    General Fraser. The financial impact of the PAK GLOC closure 
continues to be analyzed as TRANSCOM gains more fidelity on the factors 
related to costing. At this time it is difficult to determine with any 
degree of confidence what that additional cost will be. TRANSCOM 
continues to explore and develop multiple retrograde options in order 
to meet warfighter operational requirements in the most cost effective 
manner.

    9. Senator McCaskill. General Fraser, has TRANSCOM conducted an 
analysis of what will be necessary to ensure the PAK GLOC is open?
    General Fraser. No. TRANSCOM does not control the conditions on the 
ground that would be necessary to conduct such an analysis on the PAK 
GLOC. However, CENTCOM states Pakistan leadership has made it clear to 
us that reopening the PAK GLOC, as well as all other issues related to 
Pakistan's relationship with the United States, must go through a 
process which begins with recommendations produced by their parliament. 
The administration plans to send a negotiating team to Pakistan to 
discuss the steps required to reopen the PAK GLOC, consistent with 
parliament's recommendations and U.S. laws and interests.

                     NORTHERN DISTRIBUTION NETWORK

    10. Senator McCaskill. General Fraser, the NDN provides an 
additional route for cargo to Afghanistan. Over the past year, around 
40 percent of all cargo in support of Operation Enduring Freedom (OEF) 
was moved through the NDN's multiple truck, water, rail, and air routes 
in an expanding distribution network. TRANSCOM continues to work with 
the interagency and governments of the NDN countries to expand NDN 
routes. However, many of the NDN countries do not want materials from 
Afghanistan to retrograde back through their countries. If the NDN is 
not open or partially open for retrograde operations, how will this 
affect the retrograding of materials and equipment from Afghanistan?
    General Fraser. TRANSCOM currently has two-way permissions on all 
our NDN routes for commercial-type items. Additionally, one of the NDN 
routes (the Russian route) is authorized to move wheeled armored 
vehicles. At this time, TRANSCOM is executing multiple proofs of 
principle to exercise these permissions. The lessons learned will be 
used to determine the best way to employ each route in the overall 
retrograde operation. Any additional permissions from countries 
supporting the NDN would further enhance retrograde flexibility, 
capacity, and redundancy with potential cost savings.

    11. Senator McCaskill. General Fraser, what additional costs will 
the United States incur in order to move equipment out of Afghanistan 
if the NDN route is closed?
    General Fraser. Assuming the PAK GLOC remains closed and the NDN 
closes, the cost to move all equipment out of Afghanistan would be 
significantly higher. The only option remaining would be airlift 
equipment and supplies direct air back to the States or to multi-modal 
locations. While this option is feasible it will not meet the current 
departure timelines. TRANSCOM has been working Proof of Principles to 
test using the NDNfor limited cargo coming out of Afghanistan, but this 
is still in the very early stages and the costs associated with cargo 
leaving Afghanistan has not been determined.

                           STRATEGIC AIRLIFT

    12. Senator McCaskill. General Fraser, our defense strategy relies 
on rapid global reach and rapid global response to deter aggression and 
deliver worldwide capability. An important component of maintaining 
U.S. military dominance is maintaining the airlift and air-refueling 
capability required for rapid delivery of our forces and equipment over 
long distances. C-17s will continue to be the workhorse for strategic 
airlift. Even though TRANSCOM is currently funding purchases, upgrade 
programs, and fleet rotation, I still have concerns that the stress of 
supporting two wars over the past decades will cause our current C-17 
fleet to age faster than expected. What is being done to ensure that we 
do not have any gaps in our strategic airlift capabilities as the 
current C-17 fleet begins to age?
    General Fraser. The C-17 fleet averages more than the planned 1,000 
actual flight hours per year, but the life-limiting effects felt by the 
fleet are within limits. The C-17 fleet will meet its service life of 
30 years, and based on historic usage severity, should be available 
much longer. Targeted fleet service life extension programs (SLEP) are 
being utilized to refresh specific aging aircraft drivers (wing upper 
cover, landing gear) as appropriate to enable continued safe/reliable/
economic C-17 operations. A requirement for an overall aircraft SLEP 
has not been established.
                                 ______
                                 
               Questions Submitted by Senator Mark Begich

                ORGANIZATIONAL REVIEW OF ALASKAN COMMAND

    13. Senator Begich. Admiral Willard, I understand at your direction 
PACOM has been conducting an organizational review of Alaskan Command. 
Although I am cognizant the renewed focus on the Asia-Pacific region is 
driving a need to shift PACOM resources, I firmly believe Alaskan 
Command is and will remain an integral component of enabling PACOM to 
carry out its mission. As you may know, Alaskan Command was founded due 
to a lack of unity of forces in Alaska during World War II. With more 
than 22,000 Active Duty personnel in Alaska, Alaskan Command provides 
PACOM mission assurance in the State, ensures a ready force, and 
expedites the deployment of forces in support of contingencies. I am 
aware that after the creation of U.S. Northern Command (NORTHCOM), some 
of the missions in Alaska are now under that combatant command, and 
organizational challenges have surfaced. Resolution of these 
organizational challenges will require coordination between PACOM and 
NORTHCOM. Could you please describe the scope of the PACOM 
organizational review of Alaskan Command?
    Admiral Willard. In accordance with the 2010 Secretary of Defense 
efficiencies tasking, PACOM performed a review of all PACOM missions 
and associated manpower requirements to identify potential savings and 
internal efficiencies. The scope of the Alaskan Command study included 
a determination of requirements for manpower support to gain a better 
understanding of the roles, missions, and responsibilities that impact 
Alaskan Command. The scope of the study also included mission analysis 
and functional capabilities analysis as related to wartime requirements 
and a review of level of support provided to PACOM missions assigned to 
Alaskan Command.
    To date, no final decision has been made. PACOM will ensure that 
any course of action is fully coordinated with all stakeholders prior 
to a final decision being reached.

    14. Senator Begich. Admiral Willard, what is the desired outcome?
    Admiral Willard. PACOM began looking at Alaskan Command as part of 
the Secretary of Defense Efficiency Review in late 2010. During a 
detailed examination of Alaskan Command, it was determined that the 
operations performed for PACOM in Alaska do not require a permanent 
Joint Headquarters and the potential operations performed for NORTHCOM 
can be handled by Joint Task Force-Alaska. Based on joint doctrine, 
there is no reason to maintain a permanent subordinate unified command 
in Alaska. Subsequently, Operation Tomodachi validated an identified 
need to operationalize U.S. Forces-Japan (USFJ) to increase the 
capacity/capability of USFJ as an operational headquarters to support 
the defense of Japan from increasing threats.
    This need coupled with the direction in the recently released 
``Sustaining U.S. Global Leadership: Priorities for 21st Century 
Defense,'' PACOM intends to shift some of its joint staff positions to 
strengthen relationships with Asian allies and key partners 
specifically Japan through a more robust USFJ capability. This 
relationship is critical to the future stability and growth in the 
Asia-Pacific region. Shifting these joint staff positions from Alaskan 
Command to other, more critical priorities is one step in strengthening 
these relationships in a period of constrained resources.
    PACOM does not intend to move any units, exercises, or activities 
out of Alaska, as these are critical to maintaining forces that are 
able to respond in a crisis in Alaska or throughout the Asia Pacific.

    15. Senator Begich. Admiral Willard, would you please describe 
coordination with NORTHCOM to reach an organizational solution mutually 
beneficial to both combatant commands?
    Admiral Willard. In November 2011, I directed the PACOM staff to 
develop a way ahead for achieving the desired end-state of shifting 
joint staff billets and civilian positions from Alaskan Command to 
higher priorities in the theater. The PACOM staff formed a planning 
team which consisted of representatives from the staff directorates, 
the Service components (Army, Air Force, Navy, and Marine Corps), 
Alaskan Command, and NORTHCOM. The purpose of the planning team was to 
examine the situation and offer recommendations based on competing 
priorities.
    In February 2012, the planning team offered their recommendation to 
retain Alaskan Command as a Subordinate Unified Command to PACOM and 
shift 45-50 joint staff billets and civilian positions to higher 
priorities with critical allies. Both the Commander of Alaskan Command 
and the Chief of Staff for NORTHCOM offered dissenting recommendations 
to transfer Alaskan Command and the majority of its 65 joint staff 
billets and civilian positions from PACOM to NORTHCOM. I directed my 
staff to examine the question of whether Alaskan Command still fits the 
criteria of a Subordinate Unified Command and deferred making a final 
decision.

                   ALASKAN COMMAND MANPOWER SUMMARIES

    16. Senator Begich. Admiral Willard, would you please provide 
manpower summaries (military, contractor, and civilian billets) for 
Alaskan Command for fiscal year 2012, and projected for fiscal years 
2013 through 2017?
    Admiral Willard. The manpower authorizations for fiscal year 2012 
are as follows:

        Military - 42 (Joint Table Distribution (JTD) shows 43, one 
        position identified as billpayer for DOS)
        Civilian - 23
        Total - 65

    Fiscal year 2013 through 2017 may or may not be the same as fiscal 
year 2012, depending on the outcome of PACOM's Alaskan Command review.

                      NORTHERN EDGE FUNDING LEVELS

    17. Senator Begich. Admiral Willard, Northern Edge is a critical 
exercise to prepare forces for contingencies in the PACOM AOR. Would 
you please provide funding levels for the exercise for fiscal year 2012 
and projected for fiscal years 2013 through 2017?
    Admiral Willard. [Deleted.]
                                 ______
                                 
               Questions Submitted by Senator John McCain

                   MILITARY QUALITY-OF-LIFE CONCERNS

    18. Senator McCain. Admiral Willard, please identify the top 
quality-of-life concerns for military families assigned within PACOM.
    Admiral Willard. America's All-Volunteer Force is our greatest 
strategic asset and we commit our full support for the 300,000 PACOM 
servicemembers and their families. We know quality-of-life for Active 
Duty soldiers, sailors, airmen, marines, and their dependents continues 
to be a key enabler and retention factor for these Americans serving in 
the PACOM AOR.
    We must ensure that the needs of our servicemembers and their 
families continue to be met, even during this time of fiscal 
constraint. We must sustain critical quality of life programs and make 
improvements where needed in the quality-of-life of assigned personnel. 
Current key focus areas include:

         Military Pay and Compensation

                 With the numerous challenges that come with 
                military life, pay and financial difficulties should 
                not be added stressors. We need to ensure that our 
                servicemembers and their families are provided with a 
                comfortable life which includes fair pay and 
                compensation. The National Defense Authorization Act 
                (NDAA) for Fiscal Year 2012 provides an increase of 1.6 
                percent for military basic pay. This raise is equal to 
                the Employment Cost Index as of 30 September 2010, as 
                prescribed by law, and will keep military pay increases 
                in line with those in the private sector. In addition, 
                the NDAA funds bonuses and other incentives to meet 
                recruiting and retention quality and quantity goals--
                especially for our most critical skills and experience 
                levels.

         Care for Wounded, Ill, and Injured Military Members

                 We continue our intense focus on the care of 
                our wounded, ill, and injured military members--those 
                who sacrificed so much in defense of our Nation. We are 
                working to achieve the highest level of care and 
                management to ensure quality care and as smooth a 
                transition back to normalcy as medically possible.
                 Recent key initiatives include:

                         Achieving a seamless transition to 
                        veteran status for members leaving the military 
                        and superlative cooperation between DOD and the 
                        Department of Veterans Affairs (DVA).
                         Ensuring a high standard for 
                        facilities caring for wounded warriors, i.e., 
                        first rate hospitals and trained staff.
                         Enhancing case management of 
                        individuals needing care and transition to 
                        civilian life.
                         Establishing an Integrated Disability 
                        Evaluation System--to create a simpler, faster, 
                        more consistent process for determining which 
                        members may continue their military service and 
                        helping them become as independent and self-
                        supporting as possible.
                         Working with the DVA to create Virtual 
                        Lifetime Electronic Records--critical to 
                        improve veteran care and services.
                         Continuing investments to modernize 
                        the Electronic Health Record--to improve 
                        provider satisfaction, system speed, 
                        reliability, and to record all healthcare 
                        encounters from the battlefield through each 
                        phase of treatment.

                 The NDAA for Fiscal Year 2012 provides $2.3 
                billion for enduring wounded, ill, and injured military 
                member programs. Of this amount, $415 million provides 
                for the continued support of cutting edge wounded, ill, 
                and injured medical research. This research is highly 
                focused on psychological health/post-traumatic stress 
                disorder (PTSD) and traumatic brain injuries (TBI), but 
                also includes prosthetics, vision loss, hearing loss, 
                and other conditions directly relevant to the injuries 
                our soldiers are currently receiving on the 
                battlefield.

         Prevention of Sexual Assault

                 Sexual assault is criminal conduct punishable 
                under the Uniform Code of Military Justice and will not 
                be tolerated. Our commitment is zero tolerance of 
                sexual assault or related behaviors within the PACOM 
                AOR. We will not allow sexual assault to injure our 
                personnel, our friends, our families, destroy our 
                professional values, or compromise readiness.
                 Requirements included in the recently released 
                DOD instruction 6495.02, Sexual Assault Prevention and 
                Response Program Procedures, are:

                         Policies and procedures for all 
                        commanders, at all levels, to take action to 
                        prevent sexual assault, protect and support 
                        victims, hold offenders accountable, and to 
                        ensure a safe and healthy environment.
                         All uniformed members, spouses, 
                        civilians, and contractors are afforded victim 
                        services.
                         Victim advocates will be well-trained 
                        and credentialed.
                         Funding will be provided for training 
                        investigators and lawyers.
                         All commanding officers and senior 
                        enlisted leaders will be fully trained, and 
                        committed to eradicating sexual assault.
                         Ensure the length of time sexual 
                        assault records are kept is standardized for 
                        all Services.
                         Victims filing unrestricted cases will 
                        now have the option to request an expedited 
                        transfer from their unit or installation.

         Suicide Prevention

                 The suicide rate among our servicemembers and 
                their families is at a record high. We have an 
                obligation and responsibility to take care of the men 
                and women who volunteer to sacrifice for our country. 
                Our military servicemembers and their families are 
                resilient and strong, but we want them to know that 
                they should not needlessly suffer through depression 
                and anxiety. Suicide prevention is a leadership 
                responsibility from the most senior leaders down to 
                front-line supervisors.
                 Marine Corps (Marine Forces Pacific 
                (MARFORPAC)): Improving the Family Readiness in the 
                Marine Corps has been accomplished by implementing 
                Behavioral Health programs to protect and strengthen 
                the health and well-being of Marines and their 
                families. Behavior Health programs consist of Combat 
                and Operational Stress Control, Suicide Prevention, 
                Family Advocacy, Sexual Assault Response and 
                Prevention, and Substance Abuse Prevention.

         Spouse Employment

                 Maintaining a career in the face of frequent 
                moves is an issue that has plagued military spouses for 
                years. Job availability and employer willingness to 
                hire transient spouses is always a concern. With one in 
                three working spouses holding jobs that require 
                licenses or certifications, transferability of 
                professional credentials from one State to another 
                complicates the employment issue. In many overseas 
                locations, availability of these professional jobs can 
                be limited, resulting in unemployment or under-
                employment. Many young spouses don't have the requisite 
                background for the civil service jobs offered and the 
                status of forces agreements or other foreign assignment 
                areas prevent military exchanges and commissaries from 
                opening all positions to U.S. candidates.

         Education

                 K-12 Education (Hawaii): Data is being 
                collected at PACOM to interpret if there is a 
                recruiting or retention issue for military families 
                with school-aged children stationed in Hawaii.
                 K-12 Education (DODEA): The Department of 
                Defense Education Activity (DODEA) Pacific oversees 49 
                schools in 3 countries and 1 Territory, with a 
                population of 23,500 students. DODEA is currently 
                unable to support varied educational options desired by 
                families, e.g., providing universal preschool within 
                all DOD overseas schools and home school families' 
                access to the DODEA Virtual School.

         Child Care and Youth Programs

                 Sufficient, reliable, yet affordable child 
                care is a key readiness issue for servicemembers and 
                their families. Our highest priority is ensuring 100 
                percent availability of child care, especially in 
                overseas locations. Additional unmet child care needs 
                include access to care during nontraditional hours to 
                accommodate servicemembers' work schedules, limited 
                availability of child care slots for lower priority 
                families requiring care (i.e., not Single Parent and 
                Dual Military), and drop-in and respite care for 
                families with a deployed servicemember.
                 Army (U.S. Army Pacific): Army Child 
                Development Centers (CDCs) are available on post with a 
                full day, part day, and hourly care for children. The 
                Youth Services are designed specifically for middle 
                school youth and teens and ensures services such as 
                sports, fitness and health, life skills, leadership 
                opportunities, academic, and intervention support and 
                services are available. Transportation to and from 
                school to the center is available in various locations. 
                The Army Family Child Care (FCC) home is another child 
                care choice for military family members, DOD civilians, 
                and DOD contractors in which family members work as 
                independent contractors in individual housing units 
                located on a military installation. Special services 
                may include 24-hour and long-term care during 
                mobilization and training exercises, evening and 
                weekend care, and care for special needs children and 
                mildly ill children. Parents can expect to receive the 
                same quality of care in an Army FCC home as in an Army 
                CDC or School-Age Program. FCC providers receive the 
                same training and support as facility-based staff.
                 An additional program available is the Armed Services 
                YMCA (ASYMCA), which provides military families, Active 
                Duty personnel, the National Guard, and military 
                reservists with access to youth development, family 
                strengthening, and health and well-being programs. The 
                Boys and Girls Clubs of America inspires young people 
                to become responsible citizens. The Clubs create a safe 
                place for kids to grow, provide mentoring by a 
                professionally-trained staff and caring volunteers, 
                nurture character development and life-enhancing 
                skills, and provide hope and opportunity.

         Housing

                 Housing availability and affordability is a 
                recurring readiness issue for servicemembers and their 
                families. Waiting lists for base housing can vary from 
                immediate occupancy to waits exceeding 24 months, 
                depending on rank, installation, and required housing 
                unit size. Overseas Housing Allowance (OHA) or Basic 
                Allowance for Housing (BAH) is paid to servicemembers 
                stationed in overseas locations (OHA) or in Hawaii and 
                Alaska (BAH) and is designed to provide equitable 
                housing compensation when government quarters are not 
                provided. However, servicemembers still report 
                significant out-of-pocket expenses while living off-
                base when on-base housing is not available.
                 Joint Base Pearl Harbor-Hickam (JBPH-H): 
                Public-Private Venture (PPV) housing has improved the 
                quality of our homes for our servicemembers over the 
                last few years. There is high demand for PPV homes as 
                their quality exceeds most of what is available in the 
                community. PPV only satisfies a portion of our housing 
                requirement, as we are expected to rely on the local 
                community. In some instances, we are not keeping up 
                with the demand for housing for several pay grades, 
                specifically Senior Enlisted and Field Grade Officers 
                who are experiencing wait list times of 6 to 12 months.
                 Navy (Navy Region Hawaii (NRH)): PPV housing 
                has improved the quality of our homes for our 
                servicemembers over the last few years. There is high 
                demand for PPV homes as their quality exceeds most of 
                what is available in the community. PPV only satisfies 
                a portion of our housing requirement (4,451 homes), as 
                we are expected to rely on the local community. NRH 
                continues to meet the requirements for housing. 
                However, we are not keeping up with the demand for 
                housing for several pay grades, specifically Senior 
                Enlisted and Field Grade Officers who are experiencing 
                wait list times of 6 to 12 months.
                 Army (U.S. Army Pacific): Availability of 
                housing for servicemembers is another top quality of 
                life concern. Servicemembers pay several hundred 
                dollars more a month in rent living in the same quality 
                home off-post when on-post housing is not available 
                upon their arrival. Additionally, when on-post housing 
                is subsequently available, some to all costs associated 
                to the move is the responsibility of the servicemember, 
                resulting in additional out-of-pocket costs affecting 
                many of our new military families and creating 
                financial hardship.

    19. Senator McCain. Admiral Willard, what progress has been made in 
those areas, especially spouse employment opportunities, child care, 
and education programs and facilities for DOD dependent school-aged 
children?
    Admiral Willard.

         Spouse Employment

                 Navy (NRH): The Navy manages the Joint 
                Employment Management System (JEMS), an online job bank 
                dedicated to military spouses, dependents, and retirees 
                of all services. JEMS was first established in 
                September 1985 to serve as a single point of contact 
                for the business community to offer employment 
                opportunities to job seekers from the military 
                community. JEMS averages 2,000 job openings at any 
                given time. In fiscal year 2011, over 4,800 spouses, 
                dependents, and retirees registered in JEMS and were 
                seeking employment. JEMS holds one job fair per year at 
                JBPH-H, averaging over 800 attendees and 100 companies. 
                JEMS also holds one job fair at Marine Corps Base 
                Hawaii averaging just over 300 attendees with 40 
                companies.
                 Navy (Navy Region Singapore): For those 
                spouses who want to work outside the home, there are 
                jobs available locally and on base primarily with 
                Morale, Welfare, and Recreation (MWR), the Navy 
                Exchange (NEX), and Navy Federal Credit Union. Spouses 
                have also found employment at the American Embassy and 
                Singapore American School. All civil service jobs are 
                open for overseas spouses and dependents as local. The 
                Family Services Office has provided assistance to many 
                spouses seeking employment.
                 Navy (Navy Region Marianas): Spouses who meet 
                the minimum qualifications are always given first 
                priority when it comes to NAF employment.
                 Navy (Navy Region Japan): To support 
                successful job searching, installation Fleet and Family 
                Service Centers (FFSC) provide Job Search Strategies 
                and Federal Employment and Resume Writing classes on a 
                regular basis. On average, more than 3,000 spouses 
                participate in these one-on-one and group seminar 
                programs annually. To further enhance spouse employment 
                opportunity, Navy Region Japan worked with the Navy 
                Civilian Human Resource chain of command to permit 
                foreign spouses of uniformed military personnel to 
                receive special appointment hiring authority to non-
                sensitive civil service positions.
                 Air Force (Pacific Air Forces (PACAF)): 
                Priority Placement is approved by DOD for employment of 
                spouses already employed by the U.S. Government prior 
                to arrival at overseas bases. The DOD Military Spouse 
                Employment Partnership (MSEP) website and job fair 
                support programs are now accessible to all PACAF bases.
                 Army (U.S. Army Pacific): MSEP has helped 
                military spouses access career resources and connects 
                with corporations who are ready to help spouses explore 
                career options for their mobile lifestyles. MSEP has 
                partnered with numerous companies such as H&R Block, 
                Army Career and Alumni Program, Army Air Force Exchange 
                Service, Wal-Mart, Verizon, Dell, et cetera, to smaller 
                community-based, local companies together working to 
                aid military spouses in finding and identifying 
                portable jobs, as well as reducing the wage gap between 
                military and civilian spouses. In addition, MSEP has 
                increased the U.S. partnerships by collaborating with 
                the Civilian Personnel Advisory Center (CPAC) to assist 
                spouses of military members stationed in South Korea 
                find local positions, gain awareness/education on home 
                based business options, and awareness of local job 
                fairs.

         Child Care and Youth Programs

                 Marine Corps (Marine Forces Pacific): To 
                alleviate the childcare challenge, the Marine Corps 
                established numerous CDCs over the past several years 
                and have more planned. Adequate funding will ensure CDC 
                Military Construction (MILCON) will take place as 
                planned.
                 JBPH-H: JBPH-H has made significant progress 
                in the area of child and youth programs.

                         CDCs: Peltier CDC reopened on 08 Mar 
                        2012. The Peltier CDC renovation and expansion 
                        enabled the consolidation of children from two 
                        older CDCs and netted 16 additional spaces 
                        bringing the net total to 130. Three additional 
                        CDCs are scheduled to open across JBPH-H. The 
                        Wahiawa CDC (replaces older CDC at Wahiawa) is 
                        scheduled to open on 26 April 2012, increasing 
                        capacity from 46 to 70 spaces. The new Center 
                        Drive CDC opens the end of May this year with a 
                        capacity of 304 spaces.
                         The new Ford Island CDC is scheduled 
                        to open mid-July this year with a capacity of 
                        304 spaces. When all 4 are opened, JBPH-H will 
                        have a total of 9 CDCs operating on Oahu with a 
                        total capacity of 1,306, including one 24/7 CDC 
                        accommodating 10 children day and night. This 
                        unit is designated for use by swing shift 
                        personnel and has the capacity to expand if 
                        need is identified. Anticipate reducing the 
                        overall wait list by at least 50 percent. There 
                        are no additional projects to increase CDC 
                        capacity on Oahu. Pacific Missile Range 
                        Facility (PMRF) continues to be able to 
                        accommodate all CDC requirements in its 34 
                        space CDC. The new CDCs will result in 230 new 
                        jobs.
                         School Age Care: JBPH-H has two School 
                        Age Care centers that accommodate 290 children. 
                        The PMRF on Kauai has seven children enrolled 
                        in their School Age Care program. Neither 
                        location has a waiting list.

                 Navy (Navy Region Singapore): There is no 
                Child and Youth Program in the region to assist 
                families with young children. Residents in Family 
                housing are allowed to hire foreign domestic workers or 
                live-in-aides. This currently alleviates the need for a 
                CDC. For parents who would rather have their children 
                supervised at a facility, they can choose to pay for 
                care on the economy. Many of these facilities are 
                within walking distance from the base. For children 5 
                years and under, the region offer a ``Little Tykes'' 
                program that is provided 3 days a week. The program 
                offers interactive socialization, crafts, and story 
                hours. Navy Region Singapore currently does not have 
                the population to justify a CDC. Funding is another 
                obstacle if the population increases.
                 Navy (Navy Region Marianas): Child care is 
                available for youth of all ages as well as before and 
                after school care, Child Development Homes, youth 
                sports, and youth leisure/recreation classes on both 
                bases.
                 Army (U.S. Army Pacific): Army CDCs are 
                available on post with a full day, part day, and hourly 
                care for children. The Youth Services are designed 
                specifically for middle school youth and teens and 
                ensure services such as sports, fitness and health, 
                life skills, leadership opportunities, academic and 
                intervention support and services are available. 
                Transportation to and from school to the center is 
                available in various locations. The Army Family Child 
                Care (FCC) home is another child care choice for 
                military family members, DOD civilians, and DOD 
                contractors in which family members work as independent 
                contractors in individual housing units located on a 
                military installation. Special services may include 24-
                hour and long-term care during mobilization and 
                training exercises, evening and weekend care, and care 
                for special needs children and mildly ill children. 
                Parents can expect to receive the same quality of care 
                in an Army FCC home as in an Army CDC or School-Age 
                Program. FCC providers receive the same training and 
                support as facility-based staff.
                 An additional program available is the ASYMCA, which 
                provides military families, Active Duty personnel, the 
                National Guard, and military reservists with access to 
                youth development, family strengthening, and health and 
                well-being programs. The Boys and Girls Clubs of 
                America inspires young people to become responsible 
                citizens. The Clubs create a safe place for kids to 
                grow, provide mentoring by a professionally-trained 
                staff and caring volunteers, nurture character 
                development and life-enhancing skills, and provide hope 
                and opportunity.

         Education

                 PACOM's Education Branch is dedicated to 
                promoting quality education for all military students 
                in the Pacific. PACOM's goal is to work in conjunction 
                with the civilian education community to offer a 
                comprehensive array of high quality educational 
                opportunities that allow parents to select the option 
                that matches the needs of each child to include public, 
                public charter, private, religious, DOD, and home 
                schools or on-line/virtual schools. PACOM's goal is to 
                ensure families receive support with their school 
                choice. For parents with certain school issues that 
                cannot be resolved by other means, the Interstate 
                Compact for Educational Opportunities for Military 
                Children may enlist their military representative.
                 PACOM has designated representatives for many 
                educational related boards and committees within the 
                PACOM theater and specifically, Hawaii. PACOM and all 
                combatant commands are represented on the DODEA 
                Dependents Education Council--a forum for the Services 
                to elevate the matters relating to facilities, 
                logistics, and administrative support provided to 
                DODschools. PACOM is also represented on the Pacific 
                Theater Education Council which identifies educational 
                concerns of parents, students, military leaders, and 
                educators within the PACOM AOR.
                 PACOM has a seat on the Advisory Council on Dependents 
                Education which recommends programs and practices, 
                ensuring a quality education system to the Secretary of 
                Defense and the DODEA Director.
                 In 2012, the DODEA started virtual courses for 
                students in Hawaii with a vision to prepare students to 
                live, learn, work, and serve the public good in a 
                digital, global society through engaging, synchronous 
                and asynchronous instruction. DODEA enacted the 
                Bullying Awareness and Prevention Program, a new 
                mathematics curriculum for all grades to include more 
                math unit coursework for graduation, a new attendance 
                policy providing specific guidance on attendance and 
                absences, identifies support services for students at 
                risk for not fulfilling the grade or course 
                requirements, and established the use of Gradespeed 
                which is a full-featured web-based grade book for both 
                parents and teachers. DODEA also utilizes Facebook as a 
                means to connect with administrators, teachers, 
                parents, and students.
                 In Hawaii, the Joint Venture Education Forum 
                is a partnership that has existed since 1999 between 
                the military community, business community, and Hawaii 
                Department of Education. It addresses education 
                concerns and provides support for children of military 
                families stationed in Hawaii. It also promotes good 
                will between the military and public schools.
                 To continue supporting military families with 
                school age children in Hawaii, PACOM partnered with 
                Johns Hopkins University to conduct a 3-year 
                longitudinal study to understand family members' 
                preconceptions prior to arrival in Hawaii and how 
                attitudes and beliefs are impacted and change during 
                their tour of duty. At the conclusion of the study, 
                information will be provided to PACOM, the Services, 
                and civic agencies to improve policy, programming, and 
                services for children and youth.
                 Continuous progress was made to Hawaii schools 
                in 2011 when the National Math and Science Initiative 
                began which brought advanced placement (AP) courses in 
                math, science, and English in schools serving a high 
                concentration of students from military families. 
                Courses are designed to increase students' potential 
                for success in college. Schools profit from training 
                for their APteachers and assistance with building their 
                AP programs.
                 Navy (Navy Region Hawaii): Navy in Hawaii will 
                continue to move toward strengthening relationships 
                with our military impacted schools, improving our 
                partnership with our educators and our students. Navy 
                children attend 59 public schools in Hawaii. We 
                currently have 35 active school partnerships with 
                military impacted schools where Navy children are 
                predominate and are working on establishing 
                partnerships at 5 schools with Navy children that do 
                not currently have a partnership. A partnership has 
                been established for all schools expressing interest. 
                Our School Liaisons foster relationships between 
                parents, educators, and the military families. They 
                also facilitate permanent change of station 
                transitions. The Commander Navy Region Hawaii (CNRH) 
                meets frequently with local education leaders to 
                discuss ways the Navy can assist with educational 
                improvements. CNRH will continue our robust school 
                partnership program. K-12 Education will remain a key 
                focus of the Navy in Hawaii.
                 Navy (Navy Region Marianas): Three issues were 
                prepared by Commander Navy Region Japan (CNRJ) at the 
                2011 PACOM area Dependents Education Council (DEC) 
                meeting. Specifically:

                         Need for additional gifted student 
                        services. An evaluation of school offerings in 
                        Japan is being conducted by DODEA and will 
                        provide the DEC with an update at its next 
                        meeting.
                         Universal Pre-K. The DOD Education 
                        Review has examined the current state of 
                        education for military children and, based on 
                        this analysis, has provided strategies for 
                        improving the quality of DOD's early childhood 
                        programs. When the results of the study are 
                        released, they will be reviewed and discussed 
                        in order to plan the next steps for improving 
                        access to early childhood education for 
                        military associated children.
                         The effect of DODEA staffing template 
                        use at small DODEA schools. DODEA is currently 
                        examining program offerings and instructional 
                        modalities, based upon student needs and 
                        interests and fiscal guidance. The review is 
                        ongoing and DEC will be given periodic updates.

                 Marine Corps (Marine Forces Pacific 
                (MARFORPAC)): DODEA has an extensive MILCON program 
                planned through fiscal year 2017 that will fund 
                renovating or replacing DODEA schools in the MARFORPAC 
                AOR; however, they are not scheduled to begin before 
                fiscal year 2013. In addition to DODEA schools, the 
                Office of Economic Adjustment has reviewed and ranked 
                over 150 public schools located on military 
                installations by facility quality and capacity issues. 
                To date (Mar 2012), the funding to improve schools 
                ranked in the MARFORPAC AOR has not been distributed.
                 Air Force (Pacific Air Forces): Approximately 
                $493 million funded for new school construction on Air 
                Force installations in the PACOM AOR between fiscal 
                years 2012-2016.
                 Army (U.S. Army Pacific): Army families in 
                Hawaii benefit from a strong School Support Program 
                which is tasked with coordinating and assisting Army 
                school-age youth with educational opportunities and 
                assistance, and providing them the information 
                necessary to achieve success. Tutorial programs offered 
                to Army students include:

                         Online tutoring/homework help through 
                        the ``Study Strong'' program (via the Tutor.com 
                        website) available in school-age and middle 
                        school/teen programs, and at home 24-hours-a-
                        day, 7-days-a-week.
                         March2Success, an Army-sponsored site 
                        providing free educational content to help 
                        students improve knowledge and test scores.
                         Army Family Covenant-authorized buses 
                        and vans provide transportation to after-school 
                        care and programs.
                         School Liaison Officers serve as 
                        installation subject matter experts for youth 
                        education and school transition issues, 
                        championing and working toward achievement of a 
                        ``level playing field'' for Army youth 
                        transitioning among installations and school 
                        systems.

    20. Senator McCain. Admiral Willard, how many command-sponsored 
dependents reside within PACOM, by Service, including official 
civilians?
    Admiral Willard.

----------------------------------------------------------------------------------------------------------------
                                                                                   South      Other
                                                  Hawaii      Guam      Japan      Korea    Locations    Total
----------------------------------------------------------------------------------------------------------------
Army..........................................     30,823        120      2,029      6,542        435     39,949
Navy..........................................     15,456      2,445     11,979        224        546     30,650
Air Force.....................................      7,460      3,289     13,168      1,175        314     25,406
Marine Corps..................................      6,722         10     12,076        125         24     18,957
Civilian......................................          *        290      5,179      4,568          6     10,043
                                                                                                      ----------
                                                                                                         125,005
----------------------------------------------------------------------------------------------------------------
* No data collected for DOD Civilian Dependents inside the United States.
Note: Japan numbers provided by U.S. Forces Japan. Korea numbers provided by U.S. Forces Korea. Guam numbers
  provided by Joint Region Marianas. All other data provided by Defense Manpower Data Center (DMDC).


    21. Senator McCain. Admiral Willard, what do you see as the 
greatest challenges to the military command structure regarding 
assignment of families within PACOM?
    Admiral Willard.
Facilities (Housing)
         Hawaii. Housing has improved significantly. Military 
        Housing has transformed through a privatization initiative. The 
        housing is now leased to a private managing entity. The company 
        is responsible for maintenance and renovation. They have since 
        built hundreds of new houses within Mainland housing standards. 
        Family and Unaccompanied Housing are expected to meet the OSD 
        goal for housing by the end of fiscal year 2012 and fiscal year 
        2017 respectively (90 percent rated Q1/Q2).
         AOR. Construction and renovation of inadequate 
        buildings is ongoing in order to meet OSD housing goals. Family 
        and Unaccompanied Housing are expected to meet the OSD goal for 
        housing by the end of fiscal year 2012 and fiscal year 2017 
        respectively (90 percent rated Q1/Q2). The current ratings are 
        as follows:

                 Navy

                         Japan, Guam, and Korea: 75 percent of 
                        Family Housing is rated Q1/Q2.
                         Guam: 40 percent of Unaccompanied 
                        Housing is rated Q1/Q2.
                         Japan and Korea: 47 percent of 
                        Unaccompanied Housing is rated Q1/Q2.

                 Marines

                         Iwakuni: 98 percent of Family Housing 
                        is rated Q1/Q2.
                         Camp Butler, Iwakuni, and Korea: 60 
                        percent of Unaccompanied Housing is rated Q1/
                        Q2.

                 Army. Korea is the point of interest within 
                the AOR. The number of inadequate government owned 
                houses remains higher than what is expected due to the 
                ongoing relocation plans. Delays to the relocation have 
                only worsened the condition of the houses. The greatest 
                concern is the impact continued delay of the Yongsan 
                relocation plan will have on the existing inventory of 
                houses on Yongsan Garrison. At USAG Humphreys, the Army 
                is pursuing a privatization strategy that delivers 
                apartment style homes using servicemembers OHA as rent. 
                The private partner will own, operate, maintain, and 
                recapitalize the units. This transformation effort will 
                provide quality of life for the families. This strategy 
                is in lieu of MILCON and leasing, both of which have 
                been unsuccessful in funding Family Housing in Korea.

Medical Support
         We see no medical issues with family assignments to 
        the AOR. EFMP is in place and works through the Services with 
        no identifiable issues or negative trends.
         There are limitations to the specialized care that is 
        available in certain areas of the AOR but there are systems in 
        place to either get the patient to the care or the care to the 
        patient. This can be done through host nation support, movement 
        to a U.S. location where the care is available, et cetera. We 
        will never be able to afford having specialized care at every 
        location but we are committed to providing the care to our 
        beneficiaries.

Family Separation
    Being assigned to a location far from family creates challenges as 
well as financial stress. Service and family members are frequently 
reluctant to accept orders in the PACOM AOR due to the distance from 
family support systems. Personnel assigned to Guam are a good example 
of such challenges.

         Personnel living in Guam find airline costs 
        prohibitive to travel to/from U.S. Mainland, especially for 
        larger families. Airline tickets range from $1,900 to $2,500 
        per person, depending on peak seasons. A typical family of four 
        pays approximately $10,000 for one roundtrip. As a result, many 
        families cannot afford to travel home during a 3-year tour.
         Space-A. Travel is limited and difficult as the member 
        would need to obtain space availability to a larger hub, such 
        as Japan or Korea, and obtain further flight availability from 
        there to get home.
         Patriot Express. Patriot Express is a U.S. Government 
        contract flight which provides support to U.S. military members 
        and their families. This potential opportunity has been 
        researched for service to and from Guam. Due to the low 
        population of military members in the area, the use of Patriot 
        Express was determined to be cost prohibitive.

Spouse Careers
    Maintaining a career in the face of frequent moves, in particular 
to overseas areas, is an issue that continues to plague military 
spouses. Job availability and employer willingness to hire transient 
spouses is always a concern. With one in three working spouses holding 
jobs that require licenses or certifications, transferability of 
professional credentials from one State to another complicates the 
employment issue. In many overseas locations, availability of these 
professional jobs can be limited, resulting in unemployment or under-
employment. Many young spouses don't have the requisite background for 
civil service jobs offered and the status of forces agreements or other 
foreign assignment areas prevent military exchanges and commissaries 
from opening all positions to U.S. candidates.
Education
         PACOM's goal is to work in conjunction with the 
        civilian education community to offer a comprehensive array of 
        high quality educational opportunities that allow parents to 
        select the option that matches the needs of each child to 
        include public, public charter, private, religious, DOD, and 
        home schools or on-line/virtual schools. PACOM's goal is to 
        ensure families receive support with their school choice. For 
        parents with certain school issues that cannot be resolved by 
        other means, the Interstate Compact for Educational 
        Opportunities for Military Children may enlist their military 
        representative.
         To continue supporting military families with school 
        age children in Hawaii, PACOM partnered with Johns Hopkins 
        University to conduct a 3-year longitudinal study to understand 
        family members' preconceptions prior to arrival in Hawaii and 
        how attitudes and beliefs are impacted and change during their 
        tour of duty. At the conclusion of the study, information will 
        be provided to PACOM, the Services, and civic agencies to 
        improve policy, programming, and services for children and 
        youth.

    22. Senator McCain. Admiral Willard, are resources to support 
quality-of-life activities affected by the reduction in the defense 
budget in fiscal year 2013 and beyond? If so, what programs are 
impacted and will they degrade or enhance support for quality of life?
    Admiral Willard. It is too soon to identify the full impact of 
budget constraints on our quality-of-life activities as the Office of 
the Secretary of Defense and the Services continue to develop guidance 
and plan for military family programs.
    We know quality of life for Active Duty soldiers, sailors, airmen, 
marines, and their dependents continues to be a key enabler and 
retention factor for these Americans serving in the PACOM AOR, far from 
family and loved ones. Our continued focus has to be to ensure adequate 
support for these men, women, and their families, even during this time 
of fiscal austerity: our force must have our full support.
    Undoubtedly, however, budget cuts will have some impact on our 
programs, and some impact has already been felt. Services have 
indicated that any significant resource cuts to quality-of-life 
programs this fiscal year and beyond will significantly impair the 
quality-of-life enterprise. The following are some examples provided by 
the commands within the PACOM AOR:

         PACAF personnel report that manpower reductions, 
        including a drawdown of Service Staffs at major commands, will 
        impact the ability to effectively manage and support quality-
        of-life programs at their bases. In addition, a major services 
        transformation is underway to completely reevaluate which base 
        quality-of-life programs and activities will be provided at Air 
        Force installations. A part of the transformation is to 
        establish which quality-of-life programs will remain; 
        currently, only seven ``core'' functions have been approved: 
        appropriated fund (APF) Dining, Fitness, Outdoor Recreation, 
        Child Care/School Age Care, Library, Youth Programs, and Airmen 
        and Family Readiness Centers. All other programs are being 
        evaluated by installation leadership for submission to their 
        major commands for approval to continue to operate, based on 
        financial solvency and customer and base support.
         The drawdown in the Middle East and longer soldier 
        dwell time, coupled with Army budget cuts to family programs, 
        play a role in the quality of life in the Pacific. For example, 
        as of January 2012, Army Community Service (ACS) centers in the 
        Pacific Region were staffed at 67 percent of requirements 
        because of budget reductions and the resulting hiring freeze. 
        Statistically, when soldiers return from combat the need for 
        all support services increases significantly. The fiscal 
        constraints have a critical impact on the capability of 
        garrisons to provide essential services to soldiers and their 
        families. The ACS centers at highly impacted garrisons, e.g. 
        Fort Wainwright and U.S. Army Garrison-Hawaii are carrying an 
        increasingly heavy workload due to high risk behaviors 
        including domestic violence, child abuse/neglect, and sexual 
        assault. The impending redeployment of the 1/25 Brigade Combat 
        Team at Fort Wainwright and the 3/25 Brigade Combat Team at 
        Schofield Barracks will add additional stress on an already 
        taxed support system.
         Due to the budget reduction and resulting Installation 
        Management Command (IMCOM) hiring freeze, hiring new Department 
        of the Army Civilian Victim Advocates, and New Parent Support 
        Program Home Visitors has been delayed. These positions were 
        scheduled to be hired in fiscal year 2012 because of the 
        planned end to temporary contracts. There is the likelihood of 
        a gap in Victim Advocate support when the Army central contract 
        ends and the positions have not been hired. Emergency Hire 
        actions have allowed for short-term relief along with support 
        provided by the Medical Treatment Facility Social Workers and 
        ACS Family Advocacy staff in the interim. However, the 
        Emergency Hire personnel will only be available for two 30-day 
        periods, which may not be adequate time to complete permanent 
        hiring actions once approval to hire these positions is 
        granted. Region and Headquarters IMCOM leadership are actively 
        pursuing resolution to this problem.
         Programs hit hardest may likely be highly regulated 
        and labor intensive programs. For example, Marine Corps CDC 
        monthly fees and labor requirements are regulated and beyond 
        local control. As costs rise, CDCs will incur greater losses, 
        staffs will be stretched, maintenance deferred, and services 
        likely compromised.
         In our overseas schools, DODEA MILCON funds and 
        programs reductions will delay health and safety improvements.
         Further direct impact to children and families can be 
        seen in the elimination of an Exceptional Family Member Program 
        (EFMP) position at JBPH-H and School Liaison Officer (SLO) 
        positions in three of four Air Force overseas installations. 
        The responsibilities from the full time SLO positions will be 
        divided between the Deputy Mission Support Group and Airman and 
        Family Readiness Center personnel.
         The ACS EFMP support and the Respite Care program have 
        been severely affected by the reduction in the defense budget. 
        The EFMP program manager reports diminished availability of 
        programs that cater to children with Special Needs. Recent 
        modifications to the Respite Care program, which offers 
        temporary relief to family members caring for other family 
        members with severe chronic medical conditions, resulted in a 
        loss of services for several families due to revised criteria 
        regarding severity of chronic medical conditions.
         Spouse employment is the single biggest quality of 
        life issue in Korea according to the ACS Directors and senior 
        leadership. It is a recurring Army Family Action Plan (AFAP) 
        issue and is raised at every town hall meeting. The cost of 
        living is high and financially challenging if a spouse is not 
        employed to supplement the family's income. An added limitation 
        is the requirement for professional degrees/licenses and the 
        ability to speak Korean.
         In many overseas locations, family members rely on 
        employment in base exchanges and morale, welfare, and 
        recreation facilities. Navy Region Center Singapore indicates 
        that with budget cuts, manpower reductions may occur and 
        employment opportunities jeopardized.
         Cutbacks are already apparent in some non-appropriated 
        fund programs, a critical component of the ``non-financial 
        compensation'' provided to our servicemembers. At Joint Region 
        Marianas, for example, Category ``C'' facilities (such as the 
        auto hobby shop) have closed. Reduction of gym and pool hours 
        is under consideration; golf course renovations have been 
        placed on hold. Higher costs for goods, fuel, and 
        transportation have made it increasingly difficult to offer 
        lower prices on goods and activities for servicemembers and 
        families; personnel are looking off base for more affordable 
        options.
         U.S. Army Pacific (ARPAC) families worry that morale, 
        welfare, and recreation facilities, such as the bowling alley 
        and auto center, may close due to funding cutbacks. The 
        reduction of resources to support these quality of life 
        activities may lead to fee increases, with Army Families forced 
        to share more of the cost of providing child and youth 
        programs.
         Servicemembers and their families are generous 
        volunteers, but even volunteering has been affected by 
        cutbacks. Volunteers with organizations such as Army Community 
        Service, Survivor Outreach Service, and the Army Family Action 
        Plan have noted that provision of/funding for child care while 
        volunteering is no longer available.

    Our quality-of-life programs are critical to ensuring the well-
being of our troops. We realize that we have much to do to minimize 
negative impacts to our families resulting from budget cuts. We will 
work to streamline programs and further encourage sharing among the 
Services, eliminate redundancies and avoid duplication of effort; we 
must keep our quality-of-life focus relevant while making programs more 
efficient. Leaders in the PACOM area play a critical role now and in 
the future to ensure that our increasingly scarce defense dollars are 
wisely allocated and our Services continue to work together to maximize 
family support programming.

    23. Senator McCain. Admiral Willard, what lessons were learned 
following the triple disasters in March 2011--earthquake, tsunami, and 
nuclear crisis--regarding communication with and accountability for 
military families, evacuation warning, access to DOD quality of life 
support programs, including health and mental health care, access to 
schools for dependent school aged children, and the potential health 
effects of exposure to radiation?
    Admiral Willard.
Communication
    Previously established base and operational commanders' 
communication and family support plans as well as townhall meetings, 
Family Support Centers, and the MilitaryOne Source website proved very 
effective in disseminating timely and critical information to military 
families and helped ease concerns. Within the first couple of days, the 
full spectrum of media products (Facebook, email, base broadcasts, 
Armed Forces Network) were focused on providing the most up-to-date and 
pertinent information. One lesson learned, especially in the opening 
days, was the importance of quickly ensuring a common message across 
the Services.
Accountability
    100 percent accountability of servicemembers and dependents was 
reported quickly from the Services after the event. Fortunately, our 
force concentrations were outside of the areas of major damage and we 
experienced no casualties. What we learned as the harder part of 
accountability was maintaining the 100 percent accountability and 
support as family members left Japan on their own or as part of the 
voluntary departure. We called this the challenge of ``the last 
tactical mile'' and found improvements are needed in the repatriation 
process as well as ensuring support for the displaced military families 
once they have arrived at their safe haven.
Evacuation Warning
    In areas where there is a large DOD dependent presence (Japan, 
Korea), we must sustain close coordination between the Department of 
State and PACOM to ensure departure guidance is clearly disseminated 
and executed.
DOD Quality of Life Programs
    There was no degradation to quality-of-life programs on the bases 
during the event. Family Service Centers remained open and manned 
throughout the crisis and continued to provide support to affected 
family members.
Education
    All DODEAs remained open in Japan throughout the crisis. Some 
degradation was noticed due to departing teachers who were also 
military dependents. This was offset by the number of students who also 
departed. Official DODEA teachers remained on station throughout the 
event and maintained a quality education curriculum for the students.
    For the students who departed Japan during the crisis, the 
Interstate Compact for Military School Age Children, which addresses 
issues such as eligibility, enrollment, placement, and graduation 
requirements, eased enrollment challenges in safe haven locations. We 
also found the most effective lever for the displaced students was 
asking the schools to apply the McKinney-Vento Homeless Assistance Act 
provision to their enrollment. This allowed for further flexibility and 
support for these displaced families. Ease of student enrollment in 
these situations is critical.
Medical
    The medical community experienced challenges initially in regard to 
effective communication of the potential health effects of radiation 
exposure to military members and their families--particularly when 
trying to reassure the population given the minimal levels present in 
most areas. An initial barrier was keeping the message and 
responsibility strictly within medical circles. This was quickly 
addressed by coordinating with leadership to deliver a consistent 
health risk message derived in a centralized manner and promulgated 
through various media outlets across all identified audiences.
    During Tomodachi, there were no identified degradations to military 
health services in Japan. In fact, there was an increase in capability 
in some areas due to the large number of specialty skill sets arriving 
to support operations.
    With respect to medical accountability, where applicable, all 
service and family members' medical records have been annotated to 
document their activities during Tomodachi to support any future 
unforeseen health concerns.

                    MARINE CORPS AIR STATION FUTENMA

    24. Senator McCain. Admiral Willard, the administration's recent 
announcement to adjust our current posture plans set forth in the 
Realignment Roadmap, in particular delinking both the movement of 
marines to Guam and resulting land returns south of Kadena Air Base 
from progress on the Futenma Replacement Facility, puts the future of 
the Marine Corps Air Station (MCAS) Futenma in limbo. In your opinion, 
what do you see as the future of maintaining a base for Marine Corps 
aviation on Okinawa over the long term?
    Admiral Willard. Both the United States and Japan agree that a 
Futenma Replacement Facility (FRF) is necessary and, after 
comprehensive study, conclude that constructing that facility in the 
waters off Camp Schwab in Okinawa is the best way forward. Both 
countries remain committed to the FRF plan agreed to in the Realignment 
Roadmap in 2006. We consider it to be an operationally feasible plan. 
If for some reason the FRF is not constructed, MCAS Futenma will remain 
the U.S. Marine Corps' aviation base in Okinawa.

    25. Senator McCain. Admiral Willard, what risks are incurred 
continuing to operate from the existing MCAS Futenma?
    Admiral Willard. The United States and Japan agree that Futenma 
replacement is necessary and that the urbanization that has developed 
around the airfield is problematic and will remain so if we continue to 
operate from Futenma. Additionally, over the past several years we have 
made little or no investment in Futenma's infrastructure, so if the FRF 
were to be delayed further, I think Futenma will require some 
infrastructure investment to keep it a viable facility for our marines. 
The longer we delay the FRF, this shortfall in necessary infrastructure 
investments will have a greater impact.

                     RELOCATION OF MARINES TO GUAM

    26. Senator McCain. Admiral Willard, the administration's recent 
announcement to adjust our current posture plans set forth in the 
Realignment Roadmap with the Government of Japan indicated that the two 
governments will be reviewing the unit composition and the number of 
marines who will relocate to Guam. What composition and status of 
forces (permanent or rotational) do you recommend on Guam and other 
locations in your AOR?
    Admiral Willard. [Deleted.]

    27. Senator McCain. Admiral Willard, can you describe your ideal 
force composition?
    Admiral Willard. An ideal force composition is one-sized, 
sustained, and positioned to react in a timely manner to address likely 
contingencies. While we currently have the appropriate Marine Corps 
force size to execute contingency operations in our AOR, we are lacking 
in the Amphibious Lift and Combat Logistics Force (CLF) vessels to 
support and sustain these forces. Additionally, relocation of existing 
forces further from likely conflict areas exasperates the situation. As 
we rebalance to the Asia Pacific, we need to be cognizant of the 
tyranny of time and distance on the ability of our forces to adequately 
react to crisis contingencies and engagement opportunities.
    Although we are discussing politically and fiscally-influenced 
force adjustments with our allies, we need to maintain the most optimal 
aspects of current operational agreements which directly support the 
warfighter.

    28. Senator McCain. Admiral Willard, why does Guam make sense from 
an operational perspective as opposed to locating U.S. military forces 
in other of your AORs?
    Admiral Willard. [Deleted.]

                 STATUS OF FUNDS FOR HOUSING ON OKINAWA

    29. Senator McCain. Admiral Willard, I note that the budget request 
for fiscal year 2013 includes $32 million to improve military housing 
infrastructure on Okinawa, which is the latest installment of hundreds 
of millions over the past 5 years. Despite our continued investment of 
U.S. taxpayers' funds, over $1 billion for upgrades to housing at Camp 
Foster on Okinawa has been tied up by the Japanese Government for 3 
years pending the outcome of land issues. Would you please provide a 
plan to release these funds and to complete the renovations?
    Admiral Willard. The Special Action Committee on Okinawa (SACO) 
bilateral agreement of 1995, which reduces the U.S. military footprint 
on Okinawa, has an 8-phase program that will improve 1,770 units using 
more than $1 billion in Japanese funding. Phases 1-4 are nearly 
finished with 670 units completed and cultural asset surveys to be 
conducted on the site of another 56 within the next 2-3 years. 
Investments to the remaining homes remain on hold pending the outcome 
of U.S.-Japanese negotiations regarding the Defense Policy Review 
Initiative. Similarly, a request for replacement through the Japanese 
Facility Improvement Program (JFIP) of another 1,275 homes on Kadena 
Air Base, an effort valued at $764 million, remains on hold for the 
same reasons.

                           QUALITY OF HOUSING

    30. Senator McCain. Admiral Willard, please provide your general 
assessment of the quality of unaccompanied and family housing in your 
AOR. Are there particular areas of concern?
    Admiral Willard. Overall, the condition of unaccompanied and family 
is good and continues to improve. A few locations in the AOR have 
further than others to go to meet the mandated goals. For example, the 
number of inadequate government owned houses in Korea remains higher 
than what is expected due to the ongoing relocation plans. Delays to 
the relocation have only worsened the condition of the houses. The 
greatest concern is the impact that the continued delay of the Yongsan 
Relocation Plan will have on the existing inventory of houses on the 
Yongsan Garrison.

    31. Senator McCain. Admiral Willard, what are the Military 
Services' plans to address those concerns?
    Admiral Willard. The Services continue to invest in unaccompanied 
and family housing based on a deliberate planning process to meet these 
goals through new construction, renovation, and demolition of outdated 
facilities. For Korea, the Army is pursuing a privatization strategy 
that delivers apartment style homes using servicemembers OHA as rent at 
Camp Humphreys. The private partner will own, operate, maintain, and 
recapitalize the units. The Army provides no occupancy guarantees. 
Humphreys Housing Opportunity Program is a critical element to the 
transformation efforts in Korea that will provide quality of life for 
these families. This strategy is in lieu of MILCON and leasing both of 
which have been unsuccessful in funding family housing in Korea.

             INVESTMENTS TO IMPLEMENT THE STRATEGIC REVIEW

    32. Senator McCain. Admiral Willard, the President announced that a 
strategic review was used to guide development of the budget request 
for fiscal year 2013 which resulted in a delicate balance of 
capabilities and risks. But yet, the costs for most of the initiatives 
presented to rebalance forces in the Asia Pacific are not known, nor 
are they represented in the budget. How does this budget support your 
plans for rebalancing forces in the Asia-Pacific region?
    Admiral Willard. The force structure envisioned can continue to 
serve PACOM well. It is important, however, that we bias the force 
structure into the regions of the world that are most important to our 
national security, regardless of the adjustments in force structure 
that take place as a result of the fiscal environment.

    33. Senator McCain. Admiral Willard, do you have a rough idea what 
costs will be incurred from establishing a rotational presence in 
Australia or Guam as well as enhancing capabilities in Singapore, South 
Asia, and the Philippines?
    Admiral Willard. The costs of the Marine Corps lay-down in Guam 
will be the result of ongoing discussions with Japan on Marine Corps 
force lay-down and adjustments to our agreements with Japan.
    With an emphasis on rotational force presence in Singapore and 
Australia, costs are not expected to be large. The majority of the 
forces rotationally deployed to Singapore and Australia will be 
deployed without families, much as the Services already deploy units 
worldwide.
    Depending on the facilities available for our use in each country, 
there may be some facility construction requirement, but that 
requirement will be negotiated with the host country. We do not 
anticipate that the United States will cover all costs of the 
initiatives in Singapore and Australia.

            STRATEGIC AIRLIFT SUPPORT FOR FORCE REALIGNMENTS

    34. Senator McCain. General Fraser, the proposed realignment of 
U.S. military forces in Europe and dispersal of forces in the Pacific 
theater with an emphasis on rotational force will inevitably change 
strategic lift requirements for TRANSCOM. As an example--moving up to 
5,000 marines to Guam will drive a significant new requirement to get 
them from Guam during contingencies. Have you been able to determine 
what these new requirements will be?
    General Fraser. TRANSCOM is actively working with the geographic 
combatant commanders on their proposed realignments and drawdown plans. 
Throughout this process TRANSCOM has identified its requirements within 
geographic combatant commanders theater campaign plans, theater posture 
plans and theater distribution plans, and will incorporate them into 
our global campaign plan for distribution. With reference to the 
projected move of marines to Guam; once PACOM and the Marine Corps 
determine their concept of operations, TRANSCOM will conduct analysis 
to determine the capability required to project the force. TRANSCOM is 
supporting projects on Guam that will increase the velocity and 
capability to project these forces (e.g. fiscal year 2012 Air Freight 
Terminal Complex, $37 million; fiscal year 2014 X-Ray Wharf $55.6 
million; and fiscal year 2014 Joint Military Deployment Center, $28 
million). Continued funding support for these projects and others 
within the en route system will further enable TRANSCOM's force 
projection.

    35. Senator McCain. General Fraser, can these requirements be 
supported with the current en route infrastructure?
    General Fraser. Yes, the current requirements identified by the 
combatant commanders can be supported by the current en route 
infrastructure. TRANSCOM validated this requirement within the Mobility 
Capabilities and Requirements Study 2016 (MCRS-16) and more recently 
within the Global Access and Infrastructure Assessment. TRANSCOM's 
annual En Route Mobility Infrastructure Master Plan (ERIMP), recently 
released in February 2012, provides the locations, capabilities, and 
shortfalls to the en route network, and proposes solution sets for 
eliminating identified capability gaps. Through the ERIMP, the 
combatant commanders are able to determine TRANSCOM's requirements and 
account for them within their Theater Posture Plans.

    36. Senator McCain. General Fraser, are you confident that plans 
are in place to mitigate limiting factors so that TRANSCOM will be able 
to meet combatant command requirements?
    General Fraser. Yes. Following release of the President's and 
Secretary of Defense's new strategic guidance, we conducted a 
comparison of its principles to those requirements outlined in MCRS-16. 
The comparison validated 275 aircraft (223 C-17s and 52 C-5Ms) and our 
Civil Reserve Air Fleet (CRAF) partners can support a large scale 
operation in one region, with a capability to deny the objectives of an 
opportunistic aggressor in a second region, while defending the 
Homeland and providing support to civil authorities.

                            PATRIOT EXPRESS

    37. Senator McCain. General Fraser, TRANSCOM has operated the 
Patriot Express charter flight program to offer cost effective travel 
options for servicemembers and their families assigned overseas. This 
program has been an important quality of life benefit for military 
families assigned far away from home. What is the current status of the 
Patriot Express charter flight system?
    General Fraser. The Patriot Express program continues to provide a 
valuable quality of life travel benefit to military families. With duty 
travelers paying prices equal to the GSA City Pair rate, results 
exceeded expectations. While achieving 80 percent seat utilization, 95 
percent on-time performance and 102 percent recovery of costs, the 
fiscal year 2010 to fiscal year 2011 ridership increased 5 percent. 
Approximately 200,000 official duty and 100,000 military family 
passengers enjoyed the benefits of economic, reliable travel on modern, 
newer aircraft during fiscal year 2011.

    38. Senator McCain. General Fraser, how many flights are operated 
and where are they operated?
    General Fraser. 10 weekly routes depart from three CONUS gateways 
at Baltimore, Norfolk, and Seattle to 16 international destinations: 
Germany, Portugal, Spain, Italy, Turkey, Bahrain, Crete, Diego Garcia, 
Cuba, Djibouti, Kuwait, Qatar, Kyrgyzstan, Japan, Okinawa, and Korea.

    39. Senator McCain. General Fraser, is this program operated on a 
cost neutral basis? If not, why not?
    General Fraser. In accordance with Title 10 of the U.S.C., Section 
2208--Working Capital Funds, the Patriot Express program is operating 
on a cost neutral basis.

    40. Senator McCain. General Fraser, what is your projection for 
continuation and further improvements to this system in fiscal year 
2013 and beyond?
    General Fraser. To execute continued operations flying modern fuel 
efficient aircraft with significant savings to ensure long-term 
readiness, identify options to expand worldwide Patriot Express 
passenger capacity and retain enterprise ability to respond to 
contingency operations while maintaining CRAF passenger carrier 
viability.

                   SPACE AVAILABLE TRAVEL ELIGIBILITY

    41. Senator McCain. General Fraser, recent legislative proposals 
seek to expand eligibility for Space-Available Travel (Space-A) on 
military aircraft. Specifically, these proposals would open Space-A to 
members of the Reserve components, a member or former member of a 
Reserve component who is eligible for retired pay but has not reached 
age 60, and widows and widowers of retired members and their 
dependents. Please assume that this legislation is enacted and made 
effective no later than January 2013. Could you explain with 
specificity what the impact will be on current eligible personnel and 
on the Air Mobility Command's (AMC) air passenger operations?
    General Fraser. The Under Secretary of Defense for Acquisition, 
Technology, and Logistics (AT&L) promulgates policy for the DOD Space 
Available Program and publishes Department-wide Space-Available policy. 
The Space-A travel system's primary purpose of Space-A travel is to 
provide Active Duty members and their dependents respite from the 
rigors of military service and the primary objective is to enhance the 
morale and welfare of our Active-Duty Force.
    Our sense is the potential for expanding the eligibility pool 
cannot be accommodated without having a detrimental impact to our 
Active Duty members. Under the current wartime situation, DOD does not 
have the global ability to support this expansion. The expansion would 
increase support costs for security identification, administration, 
processing, baggage handling, safety equipment, training, personnel, 
and facilities and would undermine the current policy that execution of 
the Space-A travel is at no cost to the DOD.
    Members of our Reserve component, as well as former members of a 
Reserve component who are eligible for retired pay but have not reached 
age 60 (known as ``Gray Area'' retirees) are authorized Space-A 
transportation although on a limited basis. In the current resource-
constrained environment, an expansion of the program to widows and 
widowers of retired members and their dependents would diminish the 
value of the limited benefit currently available to Active Duty 
personnel and their dependents.
    In terms of quantifiable impact, the NDAA for Fiscal Year 2012 has 
levied a congressional report requirement concerning space-available 
travel. Specifically, the Comptroller General of the United States is 
tasked to conduct a review of the DOD system for space-available 
travel. The review shall determine the capacity of the system presently 
and as projected in the future and shall examine the efficiency and 
usage of space-available travel.

                        JOINT HIGH SPEED VESSEL

    42. Senator McCain. General Fraser, the Joint High Speed Vessels 
(JHSV) represents a transformational sealift capability by offering an 
enhanced logistics response to military and civil contingencies around 
the globe. In your statement, you mention that JHSVs are critical, ``in 
closing the gap between high-speed, low-capacity airlift and low-speed, 
high-capacity sealift.'' In the proposed 2013 defense budget, the Obama 
administration proposes to cut the buy of JHSVs in half from the 
requirement stated just a year ago. What is the risk in your ability to 
provide logistics response to military and civil contingencies around 
the globe in response to combatant command requirements?
    General Fraser. The reduction of the Program of Record for JHSVs to 
10 incurs no additional risk to TRANSCOM's ability to meet combatant 
command requirements.

                              AFGHANISTAN

    43. Senator McCain. General Fraser, PAK GLOC remains the quickest 
and most cost-effective route to move cargo, Afghanistan Security Force 
Fund material, Foreign Military Sales (FMS), and unit cargo and 
equipment to Afghanistan. Multi-modal hubs in Dubai, United Arab 
Emirates, and Aqaba, Jordan, proved invaluable when PAK GLOC routes 
were no longer available for use in November of last year. Based on 
recent and potential future closures of the PAK GLOC, how is TRANSCOM 
postured to support the future sustainment, deployments, and 
redeployment of forces in Afghanistan?
    General Fraser. TRANSCOM has benefited from previous efforts to 
develop additional routes and capacities in order to mitigate potential 
supply disruptions such as the PAK GLOC closure. Routes such as the NDN 
and the multi-modal operations have proven invaluable to weather the 
current situation.
    TRANSCOM continues to seek, explore, and develop additional 
opportunities to strengthen the redundancy, capacity, and support we 
provide to the warfighter. For example, TRANSCOM currently is 
evaluating two-way flow on the NDN and through multi-modal ports. Once 
validated and implemented, this will be an important addition to 
retrograde capacity and redundancy.

    44. Senator McCain. General Fraser, with the proposed cuts in 
President Obama's 2013 defense budget to large cargo aircraft (i.e., C-
5As) and smaller cargo airplanes (i.e., C-130s and C-27s), does 
TRANSCOM and its component, AMC, have the capacity to support combat 
operations in Afghanistan and respond to all geographic combatant 
command requests worldwide? Please explain your answer fully.
    General Fraser. With respect to strategic lift, President Obama's 
2013 defense budget provides for 223 C-17s, 52 C-5Ms, and 318 C-130s. 
TRANSCOM through its component, AMC, has sufficient capacity to support 
combat operations in Afghanistan and respond to all geographic 
combatant command requests worldwide. The 2013 defense budget retires 
the remainder of the older and less reliable C-5A fleet. The remaining 
fleet of C-17s and modernized C-5s will provide 30.4 MTM/D of capacity. 
Recent Department assessments indicate that this capacity is sufficient 
to meet the airlift demand for the revised defense guidance with 
respect to theater operational lift. The budget also eliminates the C-
27J from the airlift fleet. The C-27J aircraft was designed to perform 
the direct support mission for the Army. The C-130 is capable of 
performing that mission and the Air Force is committed to performing 
the Army direct support mission using its fleet of 318 C-130s with no 
adverse affect to its intratheater airlift mission.

                                 PIRACY

    45. Senator McCain. General Fraser, piracy continues to threaten 
commercial shipping of U.S.- and foreign-flagged ships predominantly in 
the Horn of Africa region. What are TRANSCOM and its component, 
Military Sealift Command (MSC), doing to reduce the vulnerability of 
the U.S. commercial fleet from piracy?
    General Fraser. Since 2009, TRANSCOM has reimbursed our commercial 
maritime partners for the cost of deploying Privately-Contracted Armed 
Security (PCAS) teams aboard ships carrying DOD cargo through seas 
designated by the U.S. Coast Guard as ``High Risk'' for piracy. PCAS 
teams have proven to be a 100 percent-effective deterrent to piracy, 
ensuring the safety of U.S. mariners, DOD cargo, and enabling the 
success of our mission. The United Nation's International Maritime 
Organization (IMO) has recently published recommended guidance for all 
nations to employ these teams, in a manner very similar to our 
standards.
    TRANSCOM has reimbursed our commercial maritime partners 
approximately $9 million to cover the cost of PCAS teams and we 
continue to work in concert with MSC, our interagency partners, and the 
Maritime Industry to incorporate industry Best Management Practices 
(BMP) and enhance the security posture of U.S.-flagged vessels moving 
DOD cargo.
    In view of the unquestionable success of PCAS teams in deterring 
piracy, TRANSCOM will continue to encourage the employment of PCAS 
teams. In addition, continued U.S. support for multi-national counter-
piracy efforts pays significant dividends. Thus, we will continue our 
engagement with other DOD agencies and combatant commands, our 
interagency partners, our foreign partners, and commercial industry 
partners to stay abreast of the latest threats and BMP.

           MOBILITY CAPABILITIES AND REQUIREMENTS STUDY 2016

    46. Senator McCain. General Fraser, is the MCRS-16 requirement 
still operative with the current budget reductions proposed by the 
Obama administration and DOD's new strategic guidance? Please explain 
your answer fully.
    General Fraser. MCRS-16 is the current study of record, however, it 
does not reflect current strategic guidance and the new defense 
strategy. DOD's new strategy is not reflected in the basic scenarios 
used in MCRS-16 and some specific cases no longer capture the necessary 
mobility capabilities for the future. That said, MCRS-16 is still 
useful as a baseline analysis of mobility capabilities to understand 
what has changed and why.
    DOD analyzed the airlift and tanker adjustments in the President's 
budget, and I agree with those decisions. However, the new strategy 
warrants another comprehensive study of future mobility capabilities to 
provide the Department and Congress with additional insight on future 
mobility needs.
    The analysis done by the Office of Secretary of Defense and Joint 
Staff shows that under certain circumstances I may have to manage 
operational air mobility risk when confronted with competing demands 
and ask our warfighters to prioritize or phase their force movements. 
However, the strategic airlift fleet is more capable today than 2001 
and our ability to swing capabilities rapidly to meet global demands is 
a significant capability that gives me confidence we can meet future 
airlift requirements. Our strategic sealift capabilities are also 
consequential and can move massive amounts of equipment and cargo when 
time permits.
    For air refueling, we can meet the daily demands experienced in the 
high OPTEMPO environment over the last 10 years with a smaller fleet of 
453 tanker aircraft. But, there is no excess in the tanker fleet. The 
new strategy does not significantly change the continued need for a 
fleet of tankers which is why we must have the KC-46 delivered on 
schedule.
                                 ______
                                 
             Questions Submitted by Senator James M. Inhofe

                            QUALITY OF LIFE

    47. Senator Inhofe. Admiral Willard, I understand there may be 
significant issues in the enlisted quarters at Osan Air Base. Issues 
may include plumbing, lead concerns, and mold issues at Building 746, 
Building 708, and Building 475. Does the PACOM and Air Force-requested 
dormitory for Osan Air Base in the fiscal year 2012 budget submission 
address enlisted quarters that are below standards?
    Admiral Willard. Yes, the recently awarded fiscal year 2012 MILCON 
project (156-person dormitory) at Osan Air Base replaces four 
inadequate enlisted dormitories at Osan and provides for their 
demolition. In reference to the dormitories you specifically ask about 
(buildings 746, 708, and 475), I offer the following.

         - Building 746: Over the years, this dormitory has experienced 
        problems with lead. The Air Force fixed the problem by 
        installing filters and routinely flushing the lines. The water 
        is routinely tested by biological and environmental health 
        professionals and continues to remain well within health 
        standards. The facility is in compliance with the EPA lead and 
        copper rule. The Air Force also replaced the heating, 
        ventilating, and air conditioning system in fiscal year 2008.
         - Building 708: This dormitory was renovated in fiscal year 
        2010; bringing the dormitory into compliance and up to 
        standards. The renovation included the installation of new hot 
        and cold water lines and replacing the heating, ventilating, 
        and air conditioning boiler and controls. The repairs fixed the 
        health concerns, and provide quality housing for our joint 
        forces.
         - Building 475: The Air Force continues to make significant 
        investments in its dormitories in accordance with the 2010 
        Dormitory Master Plan. Building 475 is planned to receive a 
        $3.1 million renovation, to include replacing the hot and cold 
        water lines and the heating, ventilating, and air conditioning 
        boiler and controls, similar to Building 708.

    48. Senator Inhofe. Admiral Willard, are there other dormitories 
outside of this proposed dormitory that are not addressed?
    Admiral Willard. Yes, Osan Air Base, in accordance with its 
dormitory master plan, will demolish three additional dormitories. 
These three dormitories are being replaced by a single dormitory using 
Host Nation Funding. The dormitory is currently under design and 
scheduled to be completed by January 2015. The Air Force continues to 
invest to sustain and modernize its dormitories in accordance with the 
2010 Dormitory Master Plan to maintain the quality of life for our 
joint forces.

    49. Senator Inhofe. Admiral Willard, what is the wing commander's 
assessment of the enlisted dormitory situation at Osan Air Base (active 
mission assigned personnel as well as support/tenant units)?
    Admiral Willard. Osan Air Base has a large inventory of dormitories 
with a range of age, condition, and adequacy. For instance, the level 
or existence of modern amenities in all of the dormitories is not 
consistent due to the relative newness of the different dormitories. 
According to DOD standards, all of the occupied dormitories at Osan are 
considered adequate. According to the personal assessment of the Wing 
Commander, however, there are three dormitories at Osan that are not 
adequate.
    One of the dormitories, 475, was mentioned in a previous question. 
The other two dormitories, like 475, have had no recent improvements in 
accordance with the dormitory master plan and base master plan that 
supported tour normalization. To mitigate the conditions in these 
dorms, the Wing Commander is looking at a couple of options. The first 
is to actively seek programming for an additional major renovation for 
one dormitory using operations and maintenance funds, including 
demolition of another and a fiscal year 2015 MILCON request for a 127-
person noncommissioned officer dormitory. The second is to conduct a 
review of options to potentially move the next projected occupants of 
those facilities into off-base housing. The Wing Commander will 
continue to advocate for renovation of existing facilities along with 
the continued replacement of dormitories approaching or already past 
their useful life in accordance with the Air Force's current programmed 
dormitory master plan.

    50. Senator Inhofe. Admiral Willard, are there any plans to correct 
the substandard rooms remaining?
    Admiral Willard. The 2010 Dormitory Master Plan provides a detailed 
investment strategy, to include sustainment of substandard rooms, to 
provide adequate and quality housing for our joint forces. Based on 
this master plan, the Air Force continues to make significant 
investments to sustain its facilities in order to provide safe, 
adequate housing and work environments for our joint forces.
                                 ______
                                 
             Questions Submitted by Senator Saxby Chambliss

                        STRATEGIC AIRLIFT FLEET

    51. Senator Chambliss. General Fraser, many studies have examined 
the proper size of the strategic airlift fleet. Two years ago, 316 
strategic airlifters were described as the sweet spot. Last year the 
Air Force requested a reduction of the strategic fleet to 301, based on 
analysis of the most stressing scenarios, and Congress approved. Now 
suddenly, the Air Force proposes 275. As the combatant commander 
responsible for air, land, and sea transportation for DOD, would you 
please share and describe the objective studies TRANSCOM has done to 
ensure we have the fleet size correct this time, as opposed to the 
extensive analysis that supported a minimum floor of 301?
    General Fraser. The current mobility study of record is MCRS-16, 
however, it does not reflect current strategic guidance and the new 
defense strategy. The DOD analysis supporting the reductions of the 
President's budget for 2013 indicates that the President's budget for 
2013 level will meet daily demands for strategic airlift. However, if 
certain circumstances occur in which we have concurrent demands and/or 
elevated defense levels in the Homeland, I am confident that we can 
manage the operational risk.

                          RETIRING C-5A FLEET

    52. Senator Chambliss. General Fraser, the Air Force proposes to 
retire the entire C-5A fleet, yet DOD has a long history of contracting 
former Soviet-bloc AN-124s to meet its needs. Retiring C-5s should be 
offered to the CRAF to establish the first ever U.S.-flagged outsized 
cargo carrier and stop outsourcing these missions to the Russians, at 
the cost of billions of dollars to U.S. taxpayers. C-5s are national 
assets, have decades of service life remaining, and have operationally 
demonstrated exceptional reliability and performance when upgraded to 
the C-5M Super Galaxy configuration. Would TRANSCOM be willing to take 
a serious look at offering some of these aircraft to its CRAF partners 
or even international allies who cannot afford new aircraft? This seems 
to be a win-win opportunity and something I believe members of this 
committee could help enable.
    General Fraser. The C-5As that are being retired under the NDAA for 
Fiscal Year 2012 and prior years are being put into storage for 
reclamation and can be used for spare parts. The Air Force delivered 
the ``Report on Retirements of C-5A Aircraft'' to four congressional 
defense committees in October 2010 which pointed out that the transfer 
of these aircraft to the commercial fleet creates a capacity increase 
that's not required and there is a high cost to demilitarize the C-5As.
    The C-5As proposed for retirement under the fiscal year 2013 
presidential budget will be put into Type 1000 storage for use at a 
future time, if needed. This provides the enterprise options for the 
future.
                                 ______
                                 
             Questions Submitted by Senator Roger F. Wicker

                            TRANSCOM SEALIFT

    53. Senator Wicker. General Fraser, I understand that in any 
typical operation, over 90 percent of all cargo is delivered by 
sealift, is that correct?
    General Fraser. It truly depends upon the operation, but in 
general, and especially for sustainment cargo once an operation is 
underway, yes, approximately 90 percent is carried by sealift. Through 
a combination of our government-owned strategic sealift fleet and the 
maritime security program vessels owned and operated by our commercial 
maritime partners, well over 90 percent of the deployment, sustainment, 
and redeployment cargo can be delivered. When restricted timelines or 
the sensitive nature of certain cargo requires it, we have the option 
to have it delivered via airlift.

    54. Senator Wicker. General Fraser, I understand from your prepared 
testimony that DOD spent approximately $2 billion on sealift through 
United Services Contract. How do you exploit your current commercial 
relationships as we pivot to Asia and the Pacific?
    General Fraser. We maintain longstanding partnerships with numerous 
U.S. flag carriers. Most of these companies are integrated into their 
parent companies' global intermodal networks, providing TRANSCOM 
instant access to their existing infrastructure around the world. Some 
of these U.S. flag carriers concentrate their ocean services in the 
Asia and Pacific region; therefore, transitioning to that geographic 
area should not be challenging. Our current global ocean services 
contract already covers locations in Asia and the Pacific. 
Additionally, our large global carriers have historically collaborated 
with us and created or altered routings and repositioned vessels when 
our cargo flows shifted due to mission requirements. Finally, we 
maintain the ability to charter commercial vessels when necessary to 
support requirements in Asia and the Pacific.

    55. Senator Wicker. General Fraser, is a 60-ship program adequate 
for what this nation needs to accomplish?
    General Fraser. In short, yes, with acceptable risk.
    The 60-ship Maritime Security Program provides 1 of 3 primary 
components of our total Strategic Sealift force; the other 2 being our 
organic fleet under the MSC and the Maritime Administration and the 
forward deployed Maritime Prepositioning Forces (MPF). Our analysis 
completed in MCRS-16 showed adequate sealift capacity available to 
close our forces in the most demanding scenarios with acceptable risk.
    A 60-ship fleet also employs a significant number of U.S. citizen 
mariners and maintains a U.S. flag fleet operating in international 
trade, providing DOD assured access to established international 
intermodal infrastructure.

                         AIR FORCE BUDGET CUTS

    56. Senator Wicker. General Fraser, on January 26, the Secretary 
and Chief of Staff of the Air Force held a press conference to discuss 
the aircraft force structure overview. The budget proposes retiring 286 
aircraft in the Future Years Defense Plan, including 227 in fiscal year 
2013 alone. Some of these cuts include the divestiture of some C-130J 
aircraft (eliminating 10 aircraft from Keesler Air Force Base in fiscal 
year 2014) and divestiture of all C-27 aircraft (eliminating all 6 
aircraft from the Meridian fiscal year 2013) and 20 KC-135s. How is 
TRANSCOM adversely affected by the Air Force's proposal?
    General Fraser. The overall number of aircraft is based on 
established studies of record providing a balanced fleet of modern and 
sustainable aircraft and does not adversely affect TRANSCOM's 
capability to meet wartime requirements. MCRS-16 Case III provides a 
requirement for 270 intratheater (C-130H/J) aircraft. The RAND Direct 
Support Study identified a minimum requirement of 50 intra-theater 
aircraft to maintain moderate risk or lower. The study also stated C-
130s and C-27Js are equally effective in the direct support mission. 
Therefore, the recent President's budget for 2013 airlift assessment 
recommends a reduction of intra-theater aircraft.

    57. Senator Wicker. General Fraser, Air Force leadership has stated 
that one method in which will help them deal with budget cuts is to 
remission bases and assets. What impacts will this have on your 
operational readiness and responsiveness?
    General Fraser. We are confident the proposed fiscal year 2013 Air 
Force force structure adjustments will have no impact on our ability to 
support combatant commanders' requirements based on the new 2012 
Defense Strategic Guidance.

     foreign language training and retention of qualified personnel
    58. Senator Wicker. Admiral Willard, I am a strong proponent of 
foreign language and cultural training at the military academies, 
Reserve Officers' Training Corps cadets and midshipmen, as well as 
similar training and incentives for college students interested in the 
intelligence community. These initiatives include the Center for 
Intelligence and Security Studies at the University of Mississippi. I 
am quite proud to be associated with this program which trains 
undergraduate students for careers in intelligence analysis. To what 
extent do you believe education and training in foreign languages and 
cultures are important in preparing the next generations of military 
officers and civilian analysts?
    Admiral Willard. I believe it is easier to promote U.S. interests 
when you can engage leadership in their native language and demonstrate 
an understanding of cultural sensitivities. When a U.S. senior officer 
speaks to his or her peer in a native language, it tells the foreign 
officer their country is valued as an ally and creates an immediate 
connection on multiple levels. In those many instances where our 
leaders may not speak a specific language, is it critical that they are 
prepared for their interactions by experts with language and cultural 
depth.
    Investment in foreign languages and understanding cultural 
differences permits military and civilian professionals to connect to 
the global environment. Acquisition of these skills takes years, 
however, and requires periodic refreshment and dedicated concentration. 
Training must begin at the beginning of military careers with programs 
like the one in Mississippi and others. U.S. national security relies 
upon our intelligence analysts' capabilities to stay proficient not 
only in the traditional languages such as Arabic, Mandarin, Japanese, 
and Russian, but in the hundreds of languages and dialects in the PACOM 
AOR that are less commonly learned.

    59. Senator Wicker. Admiral Willard, can you elaborate on PACOM's 
ongoing efforts to recruit and retain qualified and capable Active Duty 
and civilian analysts and operators?
    Admiral Willard. Recruiting and retaining a high-quality analytic 
workforce is a top priority. Realizing that state universities train 
students in languages; we reach out to provide internship and entry 
analyst opportunities to students with an interest in a career in 
national security. The National Security Education Program's Language 
Flagship Program graduates a variety of language-capable professionals 
including Chinese and Korean scholars. The only Korean flagship program 
is at the University of Hawaii at Manoa.
    The retention of both military and civilian personnel is an ongoing 
effort with a focus on professional development opportunities. Analysts 
with language expertise can take advantage of immersion opportunities 
to enhance their skills. Another development tool aiding retention is 
taking advantages of opportunities to travel within the theater, which 
improves cultural and language skills to add context analysis.

    60. Senator Wicker. Admiral Willard, what challenges do you face?
    Admiral Willard. One of the biggest challenges we face is the sheer 
number of languages spoken in our AOR. There are over 1,000 languages/
dialects in PACOM and most of them are less commonly taught languages. 
It is nearly impossible to have the readily available capability in 
these languages that is needed to handle military-to-military 
engagement and deal with emerging contingencies, such as humanitarian 
assistance and counterterrorism. In a large crisis, we also face the 
problem with having insufficient analysts in more commonly taught 
languages like Mandarin, Korean, and Bahasa Indonesia to handle the 
array of military tasks that require these abilities.
    Another challenge we have is the process of hiring proficient 
linguists for classified work. It can take over a year for some 
linguists to obtain a security clearance; by then short-term 
contingencies or mission requirements are often complete. We need to 
find a way to streamline this process without sacrificing quality 
background checks in order to translate classified documents.
    Finally, we face the continual challenge of maintaining high 
proficiency levels for our military and civilian force. Language 
fluency requires dedicated self study and recurring attendance in 
immersion programs to maintain the requisite language proficiency. 
Continued funding for these programs, as well as additional incentives 
for critical skill sets, should be explored.

                         U.S. IMAGE IN OKINAWA

    61. Senator Wicker. Admiral Willard, members of this committee 
continue to be concerned about the tremendous MILCON costs of 
relocating U.S. troops from Okinawa to Guam. I am concurrently 
concerned about the public diplomacy ramifications of any changes to 
our proposed relocation of troops from Okinawa. What is your current 
assessment of the image of U.S. forces in the eyes of the Okinawans and 
the Japanese Government?
    Admiral Willard. I believe that our servicemembers who live and 
work in Okinawa enjoy a very positive relationship with the Okinawan 
people on the personal and local level. Significantly, this impression 
has endured through the long-term, despite crises and controversies 
regarding U.S. facilities in Okinawa. I think we can attribute this to 
both the Okinawans' character as courteous and welcoming people and to 
the excellent training of our servicemembers, who are very much aware 
that they are guests and diplomats in Japan. More broadly, the Japanese 
people have consistently viewed America favorably. Recently, this good 
will has sharply increased; the December 2011 Japanese Cabinet Office 
report showed a record 82 percent of Japanese polled have a friendly 
view toward the United States. Similarly, the 2011 Pew Global Attitudes 
survey showed 85 percent of Japanese respondents see the United States 
favorably.
    Our interactions with the Japanese Government also reflect a 
favorable view of U.S. forces. From senior staff level relations with 
ministry officials to local commanders' close work with municipal 
governments our servicemembers meet a positive attitude from our 
Japanese colleagues. Even in Okinawa, despite the politically charged 
challenges regarding U.S. facilities there, we find that local 
officials seem to hold U.S. servicemembers in high regard.

                        JOINT HIGH SPEED VESSEL

    62. Senator Wicker. General Fraser, JHSVs represent a 
transformational sealift capability by offering an enhanced logistics 
response to military and civil contingencies around the globe. In your 
statement, you mention that JHSVs are critical, ``in closing the gap 
between high-speed, low-capacity airlift and low-speed, high-capacity 
sealift.'' In the proposed 2013 defense budget, the Obama 
administration proposes to cut the buy of JHSVs in half from the 
requirement stated just a year ago. What is the risk in your ability to 
provide logistics response to military and civil contingencies around 
the globe in response to combatant command requirements?
    General Fraser. The reduction of the Program of Record for JHSVs to 
10 incurs no additional risk to TRANSCOM's ability to meet combatant 
command requirements.

                                 PIRACY

    63. Senator Wicker. General Fraser, piracy continues to threaten 
commercial shipping of U.S.- and foreign-flagged ships predominantly in 
the Horn of Africa region. What are TRANSCOM and its component, MSC, 
doing to reduce the vulnerability of the U.S. commercial fleet from 
piracy?
    General Fraser. Since 2009, TRANSCOM has reimbursed our commercial 
maritime partners for the cost of deploying PCAS teams aboard ships 
carrying DOD cargo through seas designated by the U.S. Coast Guard as 
``High Risk'' for piracy. PCAS teams have proven to be a 100 percent-
effective deterrent to piracy, ensuring the safety of U.S. mariners, 
DOD cargo, and enabling the success of our mission. The United Nation's 
IMO has recently published recommended guidance for all nations to 
employ these teams, in a manner very similar to our standards.
    TRANSCOM has reimbursed our commercial maritime partners 
approximately $9 million to cover the cost of PCAS teams and we 
continue to work in concert with MSC, our interagency partners, and the 
Maritime Industry to incorporate industry BMP and enhance the security 
posture of U.S.-flagged vessels moving DOD cargo.
    In view of the unquestionable success of PCAS teams in deterring 
piracy, TRANSCOM will continue to encourage the employment of PCAS 
teams. In addition, continued U.S. support for multi-national counter-
piracy efforts pays significant dividends. Thus, we will continue our 
engagement with other DOD agencies and combatant commands, our 
interagency partners, our foreign partners, and commercial industry 
partners to stay abreast of the latest threats and BMP.

    64. Senator Wicker. General Fraser, are you a strong advocate for 
the use of private security teams aboard commercial vessels?
    General Fraser. Absolutely. The effectiveness of PCAS teams is 
unquestionable. No ship that has employed a PCAS team has been 
hijacked. Since 2009, we have reimbursed our commercial maritime 
partners for the cost of employing PCAS teams aboard their ships when 
they carry DOD cargo through ``High Risk Waters'' as designated by the 
U.S. Coast Guard.
    To date, TRANSCOM has paid approximately $9 million for these 
teams. We consider their 100percent success rate in ensuring the safety 
of U.S.-citizen mariners, DOD cargo, and the preservation of our 
mission capabilities to justify our investment. We will continue to 
work in concert with our naval component MSC, our interagency partners, 
and the maritime industry to incorporate industry's BMPs and enhance 
the security posture of U.S.-flagged vessels moving DOD cargo. We must 
continue to encourage the employment of private security teams as our 
most viable deterrent.
                                 ______
                                 
             Questions Submitted by Senator Kelly A. Ayotte

                       COMMERCIAL VARIANT OF C-17

    65. Senator Ayotte. General Fraser, setting aside current strategic 
airlift requirements, would it be advantageous for military readiness 
to have the additional capability in the CRAF--at no cost to 
taxpayers--that a commercial variant of the C-17 would provide?
    General Fraser. The C-17 is a strategic airlift aircraft 
categorized to carry DOD outsized and oversized cargo requirements. 
Based upon our wartime requirements, DOD does not require civil 
aircraft to support outsized and oversized cargo requirements. However, 
when not operating at full wartime capacity and utilization rates, the 
use of commercial contracts with our CRAF carriers and their partners 
to move outsize cargo reduces wear-and-tear on our organic assets when 
not mobilized for warfighting efforts, increasing their service life.

                        MARITIME PREPOSITIONING

    66. Senator Ayotte. General Fraser, in the fiscal year 2013 
proposed budget, the Navy announced a plan to reduce the number of 
Maritime Prepositioning Squadrons (MPSRON) from 3 to 2 and the number 
of prepositioning ships to 12. How will this decision slow response 
times to potential contingencies?
    General Fraser. This decision was made by the Department of Navy 
and they are currently developing a risk assessment which the CNO and 
Commandant will be providing as required by theNDAA for Fiscal Year 
2012.
    We have completed limited analysis on the impacts of this force 
reduction, using the DOD's current planning scenarios. Two MPSRONs meet 
the requirements of all combatant command approved operation plans. In 
the limited instances where global contingency requirements call for a 
third MPSRON, reconstituting and deploying an equivalent cargo set from 
CONUS to the Mediterranean could be delayed by 30 days.

    67. Senator Ayotte. General Fraser, what are the readiness risks 
associated with these slower response times?
    General Fraser. The Department of Navy is currently developing a 
risk assessment which the CNO and Commandant will be providing as 
required by the NDAA for Fiscal Year 2012.
    That said, we have identified a potential response time risk of up 
to 30 days in the event of having to respond with a third MPSRON. The 
readiness and response time risks, as a result of reducing from three 
to two MPSRONs, will be examined in greater detail using the most up-
to-date scenarios during the next mobility study.

    68. Senator Ayotte. General Fraser, was this proposed change 
developed in full collaboration with the Marine Corps?
    General Fraser. This proposed change was developed by the Marine 
Corps, in partnership with Navy, as part of their budget proposal for 
fiscal year 2013 and fiscal year 2014. The change was fully 
collaborated with the Marines Corps, Navy, Office of the Secretary of 
Defense, the Joint Staff, and the combatant commands.
    We concur with the proposal because the ships still remain a part 
of our total force meeting necessary sealift capacity requirements.

    69. Senator Ayotte. General Fraser, were these readiness risks 
associated with this proposed MPF reduction included in the DOD risk 
assessment that is being finalized?
    General Fraser. I believe they are. Although MPSRON reset 
conditions are just now being finalized, the approximate end-state was 
known during DOD's Program Review process last summer. The Department 
of Navy and the Marine Corps are currently developing an updated risk 
assessment which the CNO and Commandant will be providing as required 
by the NDAA for Fiscal Year 2012.

    70. Senator Ayotte. General Fraser, what is the strategic rationale 
for no longer having a MPSRON in the Mediterranean?
    General Fraser. This was a decision made by Navy and Marine Corps 
and would be better addressed by the Service Chiefs, however I can 
offer TRANSCOM's perspective. Neither U.S. European Command (EUCOM) nor 
U.S. Africa Command (AFRICOM) have an approved operation plan which 
requires a MPSRON and the new strategic guidance has shifted our focus 
to PACOM and CENTCOM, while assuming risk to the EUCOM and AFRICOM AOR.
    Combatant commanders' contingency requirements can be satisfied by 
two MPSRONs. Requirements for a third MPSRON to support a notional 
EUCOM or AFRICOM contingency scenario can be met with an approximate 
30-day delay.

                          JOINT STRIKE FIGHTER

    71. Senator Ayotte. Admiral Willard, Secretary Panetta and the 
Service Chiefs have reaffirmed DOD's commitment to the Joint Strike 
Fighter (JSF) program. In light of the Chinese development of their own 
advanced fighter, DOD has certified that there are no suitable 
alternatives to the F-35 JSF. How critical is the JSF to protecting 
U.S. interests and maintaining U.S. air dominance around the world but 
more specifically in the Asia-Pacific region?
    Admiral Willard. [Deleted.]

                      NORTH KOREAN MISSILE THREAT

    72. Senator Ayotte. Admiral Willard, do you agree with the 
assessment that North Korea is becoming a direct threat to the United 
States and that North Korea will likely possess an intercontinental 
ballistic missile (ICBM) capable of targeting the continental United 
States within the next 5 years?
    Admiral Willard. [Deleted.]

                   DEFENSE AGAINST NORTH KOREA THREAT

    73. Senator Ayotte. Admiral Willard, does the United States 
currently possess enough ground based interceptors (GBIs) to counter 
this emerging North Korean ICBM threat to the continental United 
States?
    Admiral Willard. [Deleted.]

    74. Senator Ayotte. Admiral Willard, can North Korea currently 
target Hawaii will ballistic missiles? If yes, how confident are you of 
our ability to protect the citizens of Hawaii and our military 
facilities in Hawaii from North Korean missile attack?
    Admiral Willard. [Deleted.]

    75. Senator Ayotte. Admiral Willard, what more should be done to 
ensure the people of the United States are protected now and in the 
future from a North Korean missile attack?
    Admiral Willard. [Deleted.]
                                 ______
                                 

               Questions Submitted by Senator John Cornyn

                    TAIWAN'S DETERIORATING AIR FORCE

    76. Senator Cornyn. Admiral Willard, sadly, Taiwan's air defense 
capabilities are nearly obsolete, while China's military capabilities 
are growing at an alarming rate. According to DOD, the People's 
Republic of China (PRC) has 2,300 operational combat aircraft, while 
the Government of Taiwan has only 490 operational combat aircraft. 
Taiwan's air force is clearly deteriorating. Its problems can be 
separated into two categories--qualitative and quantitative. In terms 
of quality, there are certainly serious deficiencies. According to the 
DIA in an unclassified 2010 report: ``Many of Taiwan's fighter aircraft 
are close to or beyond service life, and many require extensive 
maintenance support.'' In September, the Obama administration notified 
Congress of a $5.9 billion upgrade package for Taiwan's existing fleet 
of 145 F-16 A/Bs. I support this so-called retrofit package as a step 
to qualitatively improve Taiwan's air force. But, the upgrades do 
absolutely nothing to address what I see as a much bigger problem for 
Taiwan's air force--the quantitative one. Essentially, Taiwan is about 
to experience a massive shortfall in fighter aircraft. By 2020, 
virtually all of Taiwan's fighter jets will have to be retired, except 
for those 145 F-16A/Bs that we sold Taiwan during the George H.W. Bush 
administration. How many viable fighter aircraft do you believe Taiwan 
would need to patrol its own airspace and deter a potential Chinese 
attack and is 145 aircraft enough or do they need more?
    Admiral Willard. [Deleted.]

    77. Senator Cornyn. Admiral Willard, in my opinion, there now 
exists a serious airpower imbalance between China and Taiwan. Do you 
disagree?
    Admiral Willard. I do not disagree, however airpower parity across 
the Strait is not achievable given that PRC military modernization far 
outpaces Taiwan's ability to modernize its own military, and Taiwan 
cannot afford to go one-for-one with the PRC. The Taiwan military must 
look more broadly across its armed forces in all domains to determine 
what capabilities are best to ensure a sufficient self-defense.

    78. Senator Cornyn. Admiral Willard, what is your assessment of the 
risk to both Taiwanese and U.S. interests as a result of this growing 
cross-Strait imbalance in airpower?
    Admiral Willard. [Deleted.]

    79. Senator Cornyn. Admiral Willard, for years, DOD has documented 
a steady increase in advanced Chinese weaponry and aircraft positioned 
opposite Taiwan. It is consensus belief among security and military 
experts that Taiwan has lost its technological edge in defense 
weaponry. What is the tipping point, in terms of Chinese force buildup, 
that would necessitate the sale of additional U.S. fighter aircraft to 
Taiwan?
    Admiral Willard. [Deleted.]

    80. Senator Cornyn. Admiral Willard, the United States is currently 
facing a serious fiscal crisis and, as a result, DOD is staring down 
the barrel at sweeping budget cuts. Do you agree that a capable 
Taiwanese air force would lessen the burden on U.S. forces in the 
region?
    Admiral Willard. Taiwan's self defense capability across the board, 
not just the air force, enhances stability across the Strait and 
enables its dialogue with the PRC. This contributes to stability in the 
region.

                         SALE OF F-16 TO TAIWAN

    81. Senator Cornyn. Admiral Willard, although Taiwan has attempted 
to submit a Letter of Request for the purchase of these 66 new F-16 C/D 
aircraft, to date, the United States has not accepted it. Shortly after 
the administration announced the F-16 A/B upgrade package, I wrote to 
President Ma to ask him for clarification on Taiwan's military 
requirement for new F-16C/Ds. On October 14, I received an unequivocal 
response, stating that Taiwan needs both the upgraded F-16A/Bs and the 
new F-16C/D purchase to fulfill its ``self-defense needs in qualitative 
and quantitative terms.'' If we fail to sell additional F-16s to 
Taiwan, the Taiwanese air force will continue to shrink in size. By 
2020, it is likely that Taiwan's fleet of combat aircraft will be half 
the size it is today. How would that impact Taiwan's capacity to defend 
itself?
    Admiral Willard. [Deleted.]

    82. Senator Cornyn. Admiral Willard, in your opinion, would 66 new 
F-16 C/Ds for Taiwan serve as a deterrent to China?
    Admiral Willard. [Deleted.]

    83. Senator Cornyn. Admiral Willard, DOD, in a letter to me dated 
February 15, 2012, characterized its 2010 report to Congress on 
Taiwan's Air Defense Force as concluding that ``Taiwan needs to focus 
its planning and procurement efforts on non-traditional, innovative, 
and asymmetric approaches.'' Yet at the same time, ``the report's 
findings also indicate that a capable air force is important--indeed 
critical--in a variety of scenarios and to maintain peacetime 
deterrence.'' Do you agree that F-16 C/Ds would have a deterrent effect 
that no nontraditional, innovative, or asymmetric approach could match?
    Admiral Willard. [Deleted.]

    84. Senator Cornyn. Admiral Willard, the F-16 production line may 
shut down before the administration authorizes additional F-16 sales to 
Taiwan. If that is allowed to happen, would you be in favor of selling 
the highly innovative F-35B Short Take Off and Vertical Landing (STOVL) 
aircraft to Taiwan to ensure that Taiwan can deter threats from China?
    Admiral Willard. Though I have not seen studies analyzing 
specifically the utility of the F-35B STOVL variant to Taiwan, 
airframes that are STOVL-capable could be beneficial because of their 
ability to take off from damaged runways. Any such capability would 
still need to be part of a truly integrated air and missile defense 
system that is mobile and redundant, and an air force protection plan 
that promotes airbase hardening.

    85. Senator Cornyn. Admiral Willard, DOD's new strategic guidance, 
released in January, highlights the importance of building partner 
nation capacity, committing to expanding ``our networks of cooperation 
with emerging partners throughout the Asia Pacific to ensure collective 
capability and capacity for securing common interests.'' The document 
goes on to state that ``building partnership capacity elsewhere in the 
world also remains important for sharing the costs and responsibilities 
of global leadership''--an important point at a time when our Nation 
faces a fiscal crisis and DOD is attempting to absorb drastic cuts to 
the defense budget. Does this goal of building partner capacity not 
also apply to Taiwan?
    Admiral Willard. I believe that Taiwan's self-defense capability 
contributes to stability across the Strait and enables its dialogue 
with the Mainland, which in turn enhances stability in the region.

    86. Senator Cornyn. Admiral Willard, what message do you think the 
administration's de facto denial of Taiwan's request for new F-16 C/Ds 
has sent to other U.S. allies, both in the region and around the world?
    Admiral Willard. [Deleted.]

                         AIR-SEA BATTLE CONCEPT

    87. Senator Cornyn. Admiral Willard, the Air-Sea Battle concept has 
been described by some as a new way for the Navy and Air Force to work 
together to fight future wars against major powers. As I understand it, 
the Air-Sea Battle concept is aimed at maintaining U.S. dominance of 
the air and sea domains and to overpower any nation-state that might 
try to defeat our military forces through the use of advanced missiles, 
stealth aircraft, and/or a blue-water naval fleet of its own. China is 
currently pursuing advanced missiles, stealth aircraft, and a blue-
water naval fleet. Does the implementation of the Air-Sea Battle 
concept represent the U.S. policy response to a rising military threat 
from China?
    Admiral Willard. Air-Sea Battle is an evolutionary concept, a 
natural development in joint military doctrine and capability. It 
represents a suite of capabilities which, when coupled with a military 
strategy, will enhance our military options in the Asia Pacific 
theater. China is developing a range of capabilities which threaten to 
hold at risk our continued access and freedom of navigation to the 
Asia-Pacific region in support of normal operations or contingencies. 
However, China is not the only country that is developing these 
capabilities. Air-Sea Battle is not directed at China, but it does 
offer one solution to the type of challenge that China could represent.

    88. Senator Cornyn. Admiral Willard, why is it important that the 
U.S. military have a strategy to deal with China?
    Admiral Willard. [Deleted.]

    89. Senator Cornyn. Admiral Willard, in your opinion, does China 
pose a threat to the United States?
    Admiral Willard. We welcome a strong, prosperous, and successful 
China that reinforces international rules and norms and enhances 
security and peace both regionally and globally. However, China is 
developing capabilities that seem intended to counter our own forces 
and they are not always clear in communicating their intentions. We see 
China's development as a positive trend and do not view them as a 
threat today, but we are concerned about the lack of transparency and 
clarity of their long-term aspirations.

                        ANTI-ACCESS/AREA-DENIAL

    90. Senator Cornyn. Admiral Willard, in your opinion, what kinds of 
investments should we be making to counter anti-access/area-denial 
activities?
    Admiral Willard. [Deleted.]

                              F-35 PROGRAM

    91. Senator Cornyn. Admiral Willard, how important is the F-35 to 
preserving our interests and freedom of action in the Asia-Pacific 
region?
    Admiral Willard. Adversaries are fielding anti-access/area-denial 
capabilities designed to deny U.S. forces freedom of action in the 
global commons and threaten U.S. sanctuaries/rear areas. Failure to 
field and demonstrate concepts, capabilities, and capacity to defeat 
anti-access/area-denial threats can undermine confidence in the commons 
and American security, unravel U.S. alliances around the world, along 
with associated agreements on trade, economic integration, and 
diplomatic alignment, cause the United States to lose the ability to 
threaten or conduct proportional military responses to aggression, and 
add to international instability by making U.S. deterrence less 
credible and U.S. responses more escalatory. Developing 5th generation 
fighters like the F-35 will enable the United States and its allies the 
ability to stay abreast of developing threats allowing for U.S. ground, 
air and naval forces to maintain freedom of action to follow-on 
operations. The JSF's sensor fusion capacity, electronic attack 
capabilities, and stealth will enhance the U.S. supremacy across the 
Range of Military Operations in the Asia-Pacific region.

                       BUILDING PARTNER CAPAC